-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JjjOVauUA2EEogZBh77dQHKQh4u2fOtETMaAKHD0o2pzdzq4gOXT03lgitDQEAi9 dxWYqFhVMp2fgzXsum+Grw== 0000871839-10-000034.txt : 20100503 0000871839-10-000034.hdr.sgml : 20100503 20100503153021 ACCESSION NUMBER: 0000871839-10-000034 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20100503 DATE AS OF CHANGE: 20100503 EFFECTIVENESS DATE: 20100503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Small-Cap Stock Fund, Inc. CENTRAL INDEX KEY: 0000075170 IRS NUMBER: 231622210 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-12171 FILM NUMBER: 10792522 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STRET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STRET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE SMALL CAP STOCK FUND INC DATE OF NAME CHANGE: 19980513 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE OTC FUND INC DATE OF NAME CHANGE: 19930210 FORMER COMPANY: FORMER CONFORMED NAME: OVER THE COUNTER SECURITIES GROUP INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price New Horizons Fund, Inc. CENTRAL INDEX KEY: 0000080248 IRS NUMBER: 520791372 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-18099 FILM NUMBER: 10792525 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE NEW HORIZONS FUND INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Growth Stock Fund, Inc. CENTRAL INDEX KEY: 0000080257 IRS NUMBER: 520655816 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-10780 FILM NUMBER: 10792536 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE GROWTH STOCK FUND INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price New Era Fund, Inc. CENTRAL INDEX KEY: 0000216907 IRS NUMBER: 520888855 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-29866 FILM NUMBER: 10792526 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE NEW ERA FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PRICE ROWE INFLATION FUND INC DATE OF NAME CHANGE: 19690617 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price International Funds, Inc. CENTRAL INDEX KEY: 0000313212 IRS NUMBER: 521175211 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-65539 FILM NUMBER: 10792531 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL FUNDS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL TRUST DATE OF NAME CHANGE: 19900301 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL FUND INC DATE OF NAME CHANGE: 19890914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Growth & Income Fund, Inc. CENTRAL INDEX KEY: 0000706211 IRS NUMBER: 521268241 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-79190 FILM NUMBER: 10792515 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE GROWTH & INCOME FUND INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price New America Growth Fund CENTRAL INDEX KEY: 0000773485 IRS NUMBER: 521416752 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-99122 FILM NUMBER: 10792527 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE NEW AMERICA GROWTH FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE COMMON STOCK FUND DATE OF NAME CHANGE: 19851003 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Equity Income Fund CENTRAL INDEX KEY: 0000775688 IRS NUMBER: 521424600 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-00070 FILM NUMBER: 10792539 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE EQUITY INCOME FUND DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Capital Appreciation Fund CENTRAL INDEX KEY: 0000793347 IRS NUMBER: 521465786 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-05646 FILM NUMBER: 10792544 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE CAPITAL APPRECIATION FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE CAPITAL ADVANTAGE FUND DATE OF NAME CHANGE: 19860629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Spectrum Fund, Inc. CENTRAL INDEX KEY: 0000808303 IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-10992 FILM NUMBER: 10792520 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE SPECTRUM FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE OMNI TRUST DATE OF NAME CHANGE: 19870726 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Science & Technology Fund, Inc. CENTRAL INDEX KEY: 0000819930 IRS NUMBER: 521533832 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-16567 FILM NUMBER: 10792523 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE SCIENCE & TECHNOLOGY FUND INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Small-Cap Value Fund, Inc. CENTRAL INDEX KEY: 0000834798 IRS NUMBER: 521575325 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-43237 FILM NUMBER: 10792521 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE SMALL CAP VALUE FUND INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Institutional International Funds, Inc. CENTRAL INDEX KEY: 0000852254 IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-29697 FILM NUMBER: 10792532 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: T ROWE PRICE INSTITUTIONAL INTERNATIONAL FUNDS INC DATE OF NAME CHANGE: 20011217 FORMER COMPANY: FORMER CONFORMED NAME: INSTITUTIONAL INTERNATIONAL FUNDS INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Index Trust, Inc. CENTRAL INDEX KEY: 0000858581 IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-32859 FILM NUMBER: 10792534 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INDEX TRUST INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INSTITUTIONAL EQUITY FUNDS INC DATE OF NAME CHANGE: 19900227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Balanced Fund, Inc. CENTRAL INDEX KEY: 0000871839 IRS NUMBER: 521725684 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-38791 FILM NUMBER: 10792519 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE BALANCED FUND INC DATE OF NAME CHANGE: 19920717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Mid-Cap Growth Fund, Inc. CENTRAL INDEX KEY: 0000887147 IRS NUMBER: 521784828 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-47806 FILM NUMBER: 10792529 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE MID CAP GROWTH FUND INC DATE OF NAME CHANGE: 19920717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Dividend Growth Fund, Inc. CENTRAL INDEX KEY: 0000894024 IRS NUMBER: 521805594 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-49187 FILM NUMBER: 10792540 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE DIVIDEND GROWTH FUND INC DATE OF NAME CHANGE: 19921112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Blue Chip Growth Fund, Inc. CENTRAL INDEX KEY: 0000902259 IRS NUMBER: 521827505 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-49581 FILM NUMBER: 10792545 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE BLUE CHIP GROWTH FUND INC DATE OF NAME CHANGE: 19930426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Media & Telecommunications Fund, Inc. CENTRAL INDEX KEY: 0000910671 IRS NUMBER: 521840883 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-27963 FILM NUMBER: 10792530 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE MEDIA & TELECOMMUNICATIONS FUND INC DATE OF NAME CHANGE: 19980513 FORMER COMPANY: FORMER CONFORMED NAME: NEW AGE MEDIA FUND INC DATE OF NAME CHANGE: 19930827 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE NEW AGE MEDIA FUND INC DATE OF NAME CHANGE: 19930817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Value Fund, Inc. CENTRAL INDEX KEY: 0000927845 IRS NUMBER: 521892646 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-54963 FILM NUMBER: 10792517 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE VALUE FUND INC DATE OF NAME CHANGE: 19940803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Capital Opportunity Fund, Inc. CENTRAL INDEX KEY: 0000931151 IRS NUMBER: 521905304 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-56015 FILM NUMBER: 10792543 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE CAPITAL OPPORTUNITY FUND INC DATE OF NAME CHANGE: 19941007 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Health Sciences Fund, Inc. CENTRAL INDEX KEY: 0001002624 IRS NUMBER: 521952906 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-63759 FILM NUMBER: 10792535 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE HEALTH SCIENCES FUND INC DATE OF NAME CHANGE: 19980513 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE HEALTH & LIFE SCIENCES FUND INC DATE OF NAME CHANGE: 19951023 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Mid-Cap Value Fund, Inc. CENTRAL INDEX KEY: 0001012678 IRS NUMBER: 521977812 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-02993 FILM NUMBER: 10792528 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE MID CAP VALUE FUND INC DATE OF NAME CHANGE: 19960425 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Institutional Equity Funds, Inc. CENTRAL INDEX KEY: 0001012968 IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-04753 FILM NUMBER: 10792533 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: T ROWE PRICE INSTITUTIONAL EQUITY FUNDS INC DATE OF NAME CHANGE: 20011105 FORMER COMPANY: FORMER CONFORMED NAME: INSTITUTIONAL DOMESTIC EQUITY FUNDS INC DATE OF NAME CHANGE: 19960428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Financial Services Fund, Inc. CENTRAL INDEX KEY: 0001019286 IRS NUMBER: 522024849 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-09551 FILM NUMBER: 10792538 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE FINANCIAL SERVICES FUND INC DATE OF NAME CHANGE: 19960720 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Diversified Small-Cap Growth Fund, Inc. CENTRAL INDEX KEY: 0001038469 IRS NUMBER: 522044216 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-26323 FILM NUMBER: 10792541 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE DIVERSIFIED SMALL CAP GROWTH FUND INC DATE OF NAME CHANGE: 19970430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Real Estate Fund, Inc. CENTRAL INDEX KEY: 0001046404 IRS NUMBER: 522070587 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-36137 FILM NUMBER: 10792524 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE REAL ESTATE FUND INC DATE OF NAME CHANGE: 19970919 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Global Technology Fund, Inc. CENTRAL INDEX KEY: 0001116626 IRS NUMBER: 522024849 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-40086 FILM NUMBER: 10792516 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: T ROWE PRICE GLOBAL TECHNOLOGY FUND INC DATE OF NAME CHANGE: 20000614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Diversified Mid-Cap Growth Fund, Inc. CENTRAL INDEX KEY: 0001267862 IRS NUMBER: 421615933 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-109958 FILM NUMBER: 10792542 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: T ROWE PRICE DIVERSIFIED MID CAP GROWTH FUND INC DATE OF NAME CHANGE: 20031022 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price Global Real Estate Fund, Inc. CENTRAL INDEX KEY: 0001440930 IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-153130 FILM NUMBER: 10792537 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T. Rowe Price U.S. Large-Cap Core Fund, Inc. CENTRAL INDEX KEY: 0001462712 IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-158764 FILM NUMBER: 10792518 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 410-345-2000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 0000075170 S000002120 T. Rowe Price Small-Cap Stock Fund, Inc. C000005508 T. Rowe Price Small-Cap Stock Fund, Inc. OTCFX C000005509 T. Rowe Price Small-Cap Stock Fund-Advisor Class PASSX 0000080248 S000002106 T. Rowe Price New Horizons Fund, Inc. C000005478 T. Rowe Price New Horizons Fund, Inc. PRNHX 0000080257 S000002087 T. Rowe Price Growth Stock Fund, Inc. C000005453 T. Rowe Price Growth Stock Fund, Inc. PRGFX C000005454 T. Rowe Price Growth Stock Fund-Advisor Class TRSAX C000005455 T. Rowe Price Growth Stock Fund-R Class RRGSX 0000216907 S000002105 T. Rowe Price New Era Fund, Inc. C000005477 T. Rowe Price New Era Fund, Inc. PRNEX 0000313212 S000001489 T. Rowe Price International Bond Fund C000004007 T. Rowe Price International Bond Fund RPIBX C000004008 T. Rowe Price International Bond Fund-Advisor Class PAIBX 0000313212 S000001490 T. Rowe Price Emerging Markets Bond Fund C000004009 T. Rowe Price Emerging Markets Bond Fund PREMX 0000706211 S000002086 T. Rowe Price Growth & Income Fund, Inc. C000005452 T. Rowe Price Growth & Income Fund, Inc. PRGIX 0000773485 S000002104 T. Rowe Price New America Growth Fund C000005476 T. Rowe Price New America Growth Fund PRWAX C000012105 T. Rowe Price New America Growth Fund-Advisor Class PAWAX 0000775688 S000002076 T. Rowe Price Equity Income Fund C000005436 T. Rowe Price Equity Income Fund PRFDX C000005437 T. Rowe Price Equity Income Fund-Advisor Class PAFDX C000005438 T. Rowe Price Equity Income Fund-R Class RRFDX 0000793347 S000002070 T. Rowe Price Capital Appreciation Fund C000005427 T. Rowe Price Capital Appreciation Fund PRWCX C000005428 T. Rowe Price Capital Appreciation Fund-Advisor Class PACLX 0000808303 S000002122 Spectrum Income Fund C000005512 Spectrum Income Fund RPSIX 0000808303 S000002123 Spectrum Growth Fund C000005513 Spectrum Growth Fund PRSGX 0000808303 S000002124 Spectrum International Fund C000005514 Spectrum International Fund PSILX 0000819930 S000002119 T. Rowe Price Science & Technology Fund, Inc. C000005506 T. Rowe Price Science & Technology Fund, Inc. PRSCX C000005507 T. Rowe Price Science & Technology Fund-Advisor Class PASTX 0000834798 S000002121 T. Rowe Price Small-Cap Value Fund, Inc. C000005510 T. Rowe Price Small-Cap Value Fund, Inc. PRSVX C000005511 T. Rowe Price Small-Cap Value Fund-Advisor Class PASVX 0000852254 S000014469 T. Rowe Price Institutional Emerging Markets Bond Fund C000039420 T. Rowe Price Institutional Emerging Markets Bond Fund TREBX 0000852254 S000017718 T. Rowe Price Institutional International Bond Fund C000048951 T. Rowe Price Institutional International Bond Fund RPIIX 0000858581 S000002089 T. Rowe Price Equity Index 500 Fund C000005457 T. Rowe Price Equity Index 500 Fund PREIX 0000858581 S000002090 T. Rowe Price Extended Equity Market Index Fund C000005458 T. Rowe Price Extended Equity Market Index Fund PEXMX 0000858581 S000002091 T. Rowe Price Total Equity Market Index Fund C000005459 T. Rowe Price Total Equity Market Index Fund POMIX 0000871839 S000002068 T. Rowe Price Balanced Fund, Inc. C000005423 T. Rowe Price Balanced Fund, Inc. RPBAX 0000887147 S000002102 T. Rowe Price Mid-Cap Growth Fund, Inc. C000005470 T. Rowe Price Mid-Cap Growth Fund, Inc. RPMGX C000005471 T. Rowe Price Mid-Cap Growth Fund-Advisor Class PAMCX C000005472 T. Rowe Price Mid-Cap Growth Fund-R Class RRMGX 0000894024 S000002075 T. Rowe Price Dividend Growth Fund, Inc. C000005435 T. Rowe Price Dividend Growth Fund, Inc. PRDGX C000012104 T. Rowe Price Dividend Growth Fund-Advisor Class TADGX 0000902259 S000002069 T. Rowe Price Blue Chip Growth Fund, Inc. C000005424 T. Rowe Price Blue Chip Growth Fund, Inc. TRBCX C000005425 T. Rowe Price Blue Chip Growth Fund-Advisor Class PABGX C000005426 T. Rowe Price Blue Chip Growth Fund-R Class RRBGX 0000910671 S000002101 T. Rowe Price Media & Telecommunications Fund, Inc. C000005469 T. Rowe Price Media & Telecommunications Fund, Inc. PRMTX 0000927845 S000002125 T. Rowe Price Value Fund, Inc. C000005515 T. Rowe Price Value Fund, Inc. TRVLX C000005516 T. Rowe Price Value Fund-Advisor Class PAVLX 0000931151 S000002071 T. Rowe Price Capital Opportunity Fund, Inc. C000005429 T. Rowe Price Capital Opportunity Fund, Inc. PRCOX C000005430 T. Rowe Price Capital Opportunity Fund-Advisor Class PACOX C000005431 T. Rowe Price Capital Opportunity Fund-R Class RRCOX 0001002624 S000002088 T. Rowe Price Health Sciences Fund, Inc. C000005456 T. Rowe Price Health Sciences Fund, Inc. PRHSX 0001012678 S000002103 T. Rowe Price Mid-Cap Value Fund, Inc. C000005473 T. Rowe Price Mid-Cap Value Fund, Inc. TRMCX C000005474 T. Rowe Price Mid-Cap Value Fund-Advisor Class TAMVX C000005475 T. Rowe Price Mid-Cap Value Fund-R Class RRMVX 0001012968 S000002092 T. Rowe Price Institutional Mid-Cap Equity Growth Fund C000005460 T. Rowe Price Institutional Mid-Cap Equity Growth Fund PMEGX 0001012968 S000002093 T. Rowe Price Institutional Large-Cap Value Fund C000005461 T. Rowe Price Institutional Large-Cap Value Fund TILCX 0001012968 S000002094 T. Rowe Price Institutional Small-Cap Stock Fund C000005462 T. Rowe Price Institutional Small-Cap Stock Fund TRSSX 0001012968 S000002095 T. Rowe Price Institutional Large-Cap Growth Fund C000005463 T. Rowe Price Institutional Large-Cap Growth Fund TRLGX 0001012968 S000002096 T. Rowe Price Institutional Large-Cap Core Growth Fund C000005464 T. Rowe Price Institutional Large-Cap Core Growth Fund TPLGX 0001012968 S000019417 T. Rowe Price Institutional U.S. Structured Research Fund C000053975 T. Rowe Price Institutional U.S. Structured Research Fund TRISX 0001019286 S000002084 T. Rowe Price Financial Services Fund, Inc. C000005450 T. Rowe Price Financial Services Fund, Inc. PRISX 0001038469 S000002074 T. Rowe Price Diversified Small-Cap Growth Fund, Inc. C000005434 T. Rowe Price Diversified Small-Cap Growth Fund, Inc. PRDSX 0001046404 S000002107 T. Rowe Price Real Estate Fund, Inc. C000005479 T. Rowe Price Real Estate Fund, Inc. TRREX C000005480 T. Rowe Price Real Estate Fund-Advisor Class PAREX 0001116626 S000002085 T. Rowe Price Global Technology Fund, Inc. C000005451 T. Rowe Price Global Technology Fund, Inc. PRGTX 0001267862 S000002073 T. Rowe Price Diversified Mid-Cap Growth Fund, Inc. C000005433 T. Rowe Price Diversified Mid-Cap Growth Fund, Inc. PRDMX 0001440930 S000024038 T. Rowe Price Global Real Estate Fund, Inc. C000070253 T. Rowe Price Global Real Estate Fund, Inc. TRGRX C000070254 T. Rowe Price Global Real Estate Fund--Advisor Class PAGEX 0001462712 S000026126 T. Rowe Price U.S. Large-Cap Core Fund, Inc. C000078270 T. Rowe Price U.S. Large-Cap Core Fund, Inc. TRULX C000078271 T. Rowe Price U.S. Large-Cap Core Fund--Advisor Class PAULX 497 1 combinedsai4975110.htm
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 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 May 1, 2010.

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 Capi tal 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 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 IN DEX 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 PROTECTED BOND FUND, INC. (PRIPX)

T. ROWE PRICE INSTITUTIONAL EQUITY FUNDS, INC. ("Institutional Equity Funds")
< font style="font-size:10.0pt;" face="Berkeley Black" color="Black"> 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 (TR ISX)

statement of additional information

C00-043 5/1/10

T. ROWE PRICE INSTITUTIONAL INCOME FUNDS, INC.
 T. Rowe Price Institutional Core Plus Fund (TICPX)
 T. Rowe Price Institutional Floating Rate Fund (RPIFX)
 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 Emerging Markets Bond Fund (TREBX)
 T. Rowe Price Institutional Emerging Markets Equity Fund (IEMFX)
 T. Rowe Price Institutional Foreign 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 International Bond Fund (RPIIX)

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price Africa & Middle East Fund (TRAMX)
 T. Rowe Price Emerging Europe & Mediterranean Fund (TREMX)
 T. Rowe Price Emerging Markets Bond Fund (PREMX)
 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 (PAG SX)
 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 As ia Fund (PRASX)
 T. Rowe Price Overseas Stock Fund (TROSX)

T. ROWE PRICE INTERNATIONAL INDEX FUND, INC.

T. Rowe Price Internationa l 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)

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)

2

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. RO WE PRICE REAL ESTATE FUND, INC. (TRREX)

T. Rowe Price Real Estate Fund—Advisor Class (PAREX)

T. ROWE PRICE RESERVE INVESTMENT FUNDS, INC. ("TRP Reserve Investment 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)
 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 SHORTTERM BOND FUND, INC. (PRWBX)

T. Rowe Price Short-Term Bond Fund—Advisor Class (PASHX)

T. ROWE PRICE SHORTTERM INCOME FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC. (OTCFX)

T. Rowe Price Small-Cap Stock Fund—Advisor Class (PASSX)

3

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 Income Fund (PRINX)

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC. ("Tax-Efficient Funds")

T. Rowe Price Tax-Efficient Equity Fund (formerly the T. Rowe Price Tax-Efficient Multi-Cap

Growth 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 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 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)

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 shoul d 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

4

reference into this SAI. The Global Infrastructure Fund and the Global Infrastructure 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.

< div style="text-align:Center;margin-left:0.0";margin-right:0.0";text-indent:0.0";width:100%">5


PART I — TABLE OF CONTENTS
































Page








Page
















Management of the Funds
12

Distributor for the Funds
134
Principal Holders of Securities
78

Portfolio Transactions
137

Investment Management Agreements
112

Independent Registered Public Accounting Firm
161
Other Shareholder Services
129

Part II
162

References to the following are as indicated:

Internal Revenue Code of 1986, as amended ("Code")
Investment Company Act of 1940 ("1940 Act")
Moody`s Investors Service, Inc. ("Moody`s")
Securities Act of 1933 ("1933 Act")
Securities and Excha nge Commission ("SEC")
Securities Exchange Act of 1934 ("1934 Act")
Standard & Poor`s Corporation ("S&P")
T. Rowe Price Associates, Inc. ("T. Rowe Price")
T. 60;Rowe Price International, Inc. ("T. Rowe Price International")

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.

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, including brokers, dealers, banks, insurance companies, retirement plan recordkeepers, and others.

TRP Government Reserve Investment, TRP Reserve Investment and Short-Term Income Funds

These funds are not available for direct purchase by members of the public.

Institutional Funds

These funds have a $1,000,000 initial investment minimum and are designed for institutional investors. Institutional investors typically include banks, pension plans, and trust and investment companies.

PART I

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.Dec 31
< td style="text-indent:0.0";">Retirement 2025

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
Blue Chip Growth Portfolio
Equity
Variable Annuity
Dec 31
Dec 31
June 30
May 1
Blue Chip Grow th Portfolio—II
Equity
Variable Annuity
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
De c 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 & Mediterranean
International Equity
Oct 31
Oct 31
Apr 30
March 1< br>
Emerging Markets Bond
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
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 Income Portfolio
Equity
Variable Annuity
Dec 31
Dec 31
June 30
May 1
Equity Income Portfolio—II
Equity
Variable Annuity
Dec 31
Dec 31
June 30
May 1
Equity Index 500
Index Equity
Dec 31
Dec 31
June 30
May 1
Equity Index 500 Portfolio
Index Equity
Variable Annuity
Dec 31
Dec 31
June 30
May 1
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
Georgia Tax-Free Bond
State Tax-Free Bond
Feb 28Feb 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 31Dec 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
Health Sciences Portfolio
Equity
Variable Annuity
Dec 31
Dec 31
June 30
May 1
Health Sciences Portfolio—II
Equity
Variable Annuity
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
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 Core Plus
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 Foreign Equity
International Equity
Oct 31
Oct 31
Apr 30
March 1
Institutional Global Equity
International Equity
Oct 31
Oct 31
Apr 30
March 1
Institutional Global Large-Cap 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 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< /font>
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
Int ernational 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
In ternational 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 31Oct 31
Apr 30
March 1
International Stock Portfolio
International Equity Variable Annuity
Dec 31
Dec 31
June 30
May 1
Japan
International Equity
Oct 31
Oct 31
Apr 30
March 1
Latin America
International Equity
Oct 31
Oct 31
Apr 30
March 1
Limited-Term Bond Portfolio
 Bond
Variable Annuity
Dec 31
Dec 31
June 30
May 1
Limited-Term Bond Portfolio—II
Bond
Variable Annuity
Dec 31
Dec 31
June 30
May 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
Mid-Cap Growth Portfolio
Equity
Variable Annuity
Dec 31
Dec 31
June 30
May 1
Mid-Cap Gro wth Portfolio—II
Equity
Variable Annuity
Dec 31
Dec 31
June 30
May 1
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
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 America Growth Portfolio
Equity
Variable Annuity
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< br>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 BalancedBlended
May 31
May 31
Nov 30
Oct 1
Personal Strategy Balanced Portfolio
Blended
Variable Annuity
Dec 31
Dec 31
June 30
May 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
Prime Reserve Portfolio
 Money
Variable Annuity
Dec 31
Dec 31
June 30
May 1
Real Estate
Equity
Dec 31
Dec 31
June 30
May 1
Real Estate Fund—Adv isor 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
Fund-of-Funds
May 31
May 31
Nov 30
Oct 1
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
Fun d-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
Short-Term Income
T axable 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
Spect rum 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
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 Intermediate
 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 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< /font>
Feb 28
Aug 30
July 1
Total Equity Market Index
Index Equity
Dec 31
Dec 31
June 30
May 1
U.S. Bond 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
Oc t 1
Value
Equity
Dec 31
Dec 31
June 30
May 1
Value Fund& #151;Advisor Class
Equity
Dec 31
Dec 31
June 30
May 1
Virginia Tax-Free Bond
State Tax-Free B ond
Feb 28
Feb 28
Aug 30
July 1

6

7

8

9

10

11

Management of the Funds

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 T. Rowe Price Internationa l. Each of the independent directors 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 T. Rowe Price International for five or more 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 rep resents 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 and T. Rowe Price International and

12

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 Board and the Joint Audit Committee receive 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, T. Rowe Price International, and the other service providers are reasonably designed to be effective, those policies and their implementation vary among service providers, 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, T. Rowe Price International, or their 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 three formal meetings in 2009. The committee is chaired by the Lead Independent Director.

The Joint Audit Committee is composed of Jeremiah E. Casey, Anthony W. Deering, Theo C. Rodgers, and Mark R. Tercek, all independent directors. Theo C. Rodgers 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 accou nting, tax, compliance, or other 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 two times in 2009.

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 took action by written consent on behalf of five funds during 2009.

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 re view 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

13

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 Price Funds for more than 18 years, and Messrs. Casey and Rodgers and Ms. Horn have each served as a director of Price Funds for more than 5 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, for the past two years, has been the chief executive officer of a non-profit entity. 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 Board. In addition, specific experience and qualifications of the independent director s with respect to their occupations and directorships of public companies and other investment companies are set forth in the following table.

Independent Directors(a)

<R>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)

Name, Year of Birth, and Number
of Portfolios in Fund Complex
Overseen by Director


Principal Occupation(s)
During Past 5 Years


Directorships of Public
Companies and Other
Investment Companies
During Past 5 Years

William R. Brody
1944
125 portfolios
Novartis, Inc. (2009 to present); IBM (2007 to present); Medtronic, Inc. (1998 to 2007); Mercantile Bankshares (1997 to 2007)
Jeremiah E. Casey
1940
125 portfolios
Retired
National Life Insurance (2001 to 2005); NLV Financial Corporation (2004 to 2005)
Anthony W. Deering
1945
125 portfolios
Chairman, Exeter Capital, LLC, a private investment firm (2004 to present)
Under Armour (2008 to present); Vornado Real Estate Investment Trust (2004 to present); Mercantile Bankshares (20 02 to 2007); Deutsche Bank North America (2004 to present)
Donald W. Dick, Jr.
1943
125 portfolios
Principal, EuroCapital Partners, LLC, an acquisition and management advisory firm (1995 to present)
None
Karen N. Horn
1943
125 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); Georgia Pacific (2004 to 2005); Fannie Mae (2006 to 2008)
Theo C. Rodgers
1941
125 portfolios
President, A&R Development Corporation (1977 to present)
None
John G. Schreiber
1946
125 portfolios
Owner/President, Centaur Capital Partners, Inc., a real estate investment company (1991 to present); Co-Founder and Partner, Blackstone Real Estate Advisors, L.P. (1992 to present)
None
Mark R. Tercek
1957
125 portfolios
President and Chief Executive Officer, The Nature Conservancy (2008 to present); Managing Director, The Goldman Sachs Group, Inc. (1984 to 2008)
None
</R>

14

(a)All information about the directors was current as of December 31, 2009, 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/or T. Rowe Price or T. Rowe Price International. 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 earlier 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
of Portfolios in Fund Complex
Overseen by Director


Principal Occupation(s)
During Past 5 Years


Directorships of Public
Companies and Other
Investment Companies
During Past 5 Years

Edward C. Bernard
1956
125 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 Global Asset Management Limited, T. Rowe Price Global Investment Services Limited, T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Savings Bank, and T. Rowe Price Services, Inc.; Director, T. Rowe Price International, Inc.; Chief Executive Officer, Chairman of the Board, Director, and President, T. Rowe Price Trust Company
Chairman of the Board, all funds
None
Michael C. Gitlin
1970
39 portfolios
Director of Fixed Income, T. Rowe Price (2009 to Present); Global Head of Trading, T. Rowe Price (2007-2009); Head of U.S. Equity Sales, Citigroup Global Markets (2005 to 2007)
Vice President, T. Rowe Price, T. Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc.
None
John H. Laporte; CFA
1945
16 portfolios
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
Executive Vice President, Spectrum Funds; Vice President, Diversified Small-Cap Growth Fund, Health Sciences Fund, New Horizons Fund, Personal Strategy Funds, and Retirement Funds
None
Brian C. Rogers; CFA, CIC
1955
70 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

15

(a)All information about the directors was current as of December 31, 2009, except for the number of portfolios and the data pertaining to Michael C. Gitlin, which are 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 accompanyi ng 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 T. Rowe Price International 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, T. Rowe Price, and T. Rowe Price International will carefully analyze the situation and take all steps they believe reasonable to minimize and, where possible, eliminate the potential conflict.

16

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).< /tr>2001
2006

Fund/Corporation/Trust


Number of
 portfolios


Independent Directors
























Brody


Casey


Deering


Dick


Horn


Rodgers


Schreiber


Tercek

Balanced
1
2009
2005
2001
1991
2003
2005
2001
2009
Blue Chip Growth
1
2009
2005
2001
1993
2003
2005
2009
California Tax-Free Income Trust
2
2009
2006
1986
2001
2003
2005
1992
2009
Capital Appreciation
1
2009
2005
2001
1986
2003
2005
2001
2009
Capital Opportunity
1
2009
2005
2001
1994
2003
2005
2001
2009
Corporate Income
1
2009
2006
1995
2001
2003
2005
1995
2009
Diversified Mid-Cap Growth
1
2009
2005
2003
2003
2003
2005
2003
2009
Diversified Small-Cap Growth
1
2009
2005
2001
1997
2003
2005
2001
2009
Dividend Growth
1
2009
2005
2001
1992
2003
2005
2001
2009< /font>
Equity Income
1
2009
2005
2001
1994
2003
2005
2001
2009
Equity Series
7
2009
2005
2001
19942003
2005
2001
2009
Financial Services
1
2009
2005< br>2001
1996
2003
2005
2001
2009
Fixed Income Series
2
2009
2006
1994
2001
2003
2005
1994
2009
Global Real Estate
1
2009
2008
2008
2008
2008
2008
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">2008
2009
Global Technology
1
2009
2005
2001
2000
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">2003
2005
2001
2009
GNMA
1
2009
2006
1985
2001
2003
2005
1992
2009
Growth & Income
1
2009
2005
2001
1982
2003
2005
2001
2009
Growth Stock
1
2009
2005
2001
1980
2003
2005
2001
2009
Health Sciences
1
2009
2005
2001
1995
2003
2005
2001
2009
High Yield
1
2009
2006
1984
2001
2003
2005
1992
2009
Index Trust
3
2009
2005
2001
1994
2003
2005
2001
2009
Inflation Protected Bond
1
2009
2006
2002
2002
2003
2005
2002
2009
Institutional Equity
6
2009
2005
2001
1996
2003
2005
2001
2009
Institutional Income
3
2009
2006
 2002
2002
2003
2005
2002
2009
Institutional International
7
2009
2006
1991
1989
2003
2006
2001
2009
International
16
2009
2006
1991
1988
2003
2006
2001
2009
International Index
1
2009
2006
2000
2000
2003
2006
2001
2009
International Series
1
2009
2006
1994
1994
2003
2006
2001
2009
Media & Telecommunications
1
2009
2005
2001
1997
2003
2005
2001
2009
Mid-Cap Growth
1
2009
2005
2001
1992
2003
2005
2001
2009
Mid-Cap Value
1
2009
2005
2001
1996
2003
2005
2001
2009
New America Growth
1
2009
2005
2001
1985
2003
2005
2001
2009
New Era
1
2009
2005
2001
1994
2003
2005
2001
2009
New Horizons
1
2009
2005
2001
1994
2003
2005
2001
2009
New Income
1
2009
2006
1980
2001
< /td>		2003
2005
1992
2009
Personal Strategy
3
2009
2005
< /td>		2001
1994
2003
2005
2001
2009
Prime Reserve
1
2009
2006
1979
2001
2003
2005
1992
2009
Real Estate
1
2009
2005
2001
1997
2003
2005
2001
2009
TRP Reserve Investment
2
2009
2006
1997
2001
2003
2005
1997
2009
Retirement
12
2009
2005
2002
2002
2003
2005
2002
2009
Science & Technology
1
2009
2005
2001
1994
2003
2005
2001
2009
Short-Term Bond
1
2009
2006
1983
2001
2003
2005
1992
2009
Short-Term Income
1
2009
2006
2006
2006
2006
2006
2006
2009
Small-Cap Stock
1
2009
2005
2001
1992
2003
2005
2001
2009
Small-Cap Value
1
2009
2005
2001
1994
2003
2005
2001
2009
Spectrum
3
2009
2005
2001
1999
20 03
2005
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
Sum mit
2
2009
2006
1993
2001
2003
2005
1993
2009
Summit Municipal
3
2009
2006
1993
2001
2003
2005
1993
2009
Tax-Efficient
1
2009
2005
2001
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">1997
2003
2005
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 Index
1
2009
2000
2001
2003
2005
2000
2009
U.S. Large-Cap Core
1
2009
2009
2009
2009
2009
2009
2009
2009
U.S. Treasury
3
2009
2006
1989
2001
2003
2005
1992
2009
Value
1
2009
2005
2001
1994
2003
2005
2001
2009

17

< /tr>

Fund/Corporation/Trust



Number of Portfolios


Inside Directors

















Bernard


Gitlin


Laporte


Rogers

Balanced
1
2006
—
—
2006
Blue Chip Growth
1
2006
—< br>—
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
Equity Series
7
2006
—
1994
—
Financial Services
1
2006
—
—
2006
Fixed Income Series
2
2006
2010
—
—
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 Protected Bond
1
2006
2010
—
—
Institutional Equity
6
2006
—
—
2006
Institutional Income
3
2006
2010
—
—
Institutional International
7
2006
—
—
2006
International
16
2006
—
—
2006
International Index
1
2006
—
—
2006
International Series
1
2006
—
—
2006
Media & Telecommunications
1
2006
—
—
2006
Mid-Cap Growth
1
2006
—
—
2006
Mid-Cap Value
1
2006
—
—
2006
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 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
—
—
Short-Term Income
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
—
—
Tax-Free High Yield
1
2006
2010
—
—
Tax-Free Income
1
 2006
2010
—
—
Tax-Free Short-Intermediate
1
2006
2010
—
—
U.S. Bond Index
1
2006
2010
—
—
U.S. Large-Cap Core
1
2009
—
—
2009
U.S. Treasury
3
2006
2010
—
—
Value
1
2006
—
—
2006

18

19

Officers


Fund


Name


Position Held
With Fund

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

< td style="text-indent:0.0";">New Era












Fund


Name


Position Held
With Fund

Balanced










Edmund M. Notzon III
Richard T. Whitney
E. Frederick Bair
Wendy R. Diffenbaugh
Anna M. Dopkin
Paul A. Karpers
Robert M. Larkins
John D. Linehan
Raymond A. Mills
Larry J. Puglia
(See preceding table for remaining officers)
President
Executive Vice President
Vice President
Vice President
Vice President
Vice President
< /font>Vice President
Vice President
Vice President
Vice President
Blue Chip Growth














Larry J. Puglia
P. Robert Bartolo
Peter J. Bates
G. Mark Bussard
Richard de los Reyes
Shawn T. Driscoll
David J. Eiswert
Henry M. Ellenbogen
Thomas J. Huber
Joshua B. Nelson
Jason Nogueira
Timothy E. Parker
Robert W. Sharps
Taymour R. Tamaddon
(See preceding table for remaining officers)
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
G. Richard Dent
Charles E. Emrich
Alan D. Levenson
Lind a A. Murphy
Timothy G. Taylor
M. Helena Condez
Chen Shao
(See preceding table for remaining officers)
President
Executive Vice President
Executive 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
Francisco Alonso
Jeffrey W. Arricale
Ryan Burgess
Mark S. Finn
Paul D. Greene II
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
(See preceding table for remaining officers)
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
V ice President
Capital Opportunity














Anna M. Dopkin
Kennard W. Allen
Francisco Alonso
Peter J. Bates
David J. Eiswert
Ann M. Holcomb
Jennifer O`Hara Martin
Philip A. Nestico
Jason Nogueira
Timothy E. Pa rker
Charles G. Pepin
Robert T. Quinn, Jr.
Gabriel Solomon
Eric L. Veiel
(See preceding table for remaining officers)
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
Mark J. Vaselkiv
Steve Boothe
Steven G. Brooks
Alan D. Levenson
Michael J. McGonigle
Vernon A. Reid, Jr.
Theodore E. Robson
Edward A. Wiese
Thea N. Williams
Michael J. Grogan
(See preceding table for remaining officers)
President
Executive 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
Brian W.H. Berghuis
Sudhir Nanda
Philip A. Nestico
John F. Wakeman
Mark R. Weigman
(See preceding table for remaining officers)
President
Executive Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Diversified Small-Cap Growth








Sudhir Nanda
Wendy R. Diffenbaugh
Anna M. Dopkin
Donald J. Easley
John H. Laporte
Curt J. Organt
Michael T. Roberts< br>J. David Wagner
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Dividend Growth










Thomas J. Huber
Peter J. Bates
David M. Lee
< /font>Daniel Martino
Jason Nogueira
Timothy E. Parker
Robert T. Quinn, Jr.
Gabriel Solomon
William J. Stromberg
Eric L. Veiel
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Equity Income











Brian C. Rogers
Jeffrey W. Arricale
Andrew M. Brooks
Mark S. Finn
David R. Giroux
Paul D. Greene II
Thomas J. Huber
John D. Linehan
Jason B. Polun
Robert T. Quinn, Jr.
Eric L. Veiel
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Financial Services












Jeffrey W. Arricale
Anna M. Dopkin
Christopher T. Fortune
Ian C. McDonald
Michael J. McGonigle
Hwee Jan Ng
Jason B. Polun
Frederick A. Rizzo
Gabriel Solomon
Mitchell J.K. Todd
Eric L. Veiel
Tamara P. Wiggs
(See preceding table for remaining officers)
President
Vice Presiden t
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Global Real Estate








David M. Lee
Nina P. Jones
Yoichiro Kai
 Robert J. Marcotte
Raymond A. Mills
Eric C. Moffett
Philip A. Nestico
Marta Yago
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Global Technology













David J. Eiswert
Kennard W. Allen
Christopher W. Carlson
Henry M. Ellenbogen
Daniel Flax
Robert N. Gensler
Rhett K. Hunter
Daniel Martino
Hiroaki Owaki
Joshua K. Spencer
Thomas H. Watson
Alison Mei Ling Yip
Nalin Yogasundram
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President< /font>
Vice President
Vice President
Vice President
Vice President
GNMA





Andrew C. McCormick
Christopher P. Brown
Keir R. Joyce
Alan D. Levenson
John D. Wells
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Growth & Income










Thomas J. Huber
Francisco Alonso
Jeffrey W. Arricale
G. Mark Bussard
Shawn T. Driscoll
David R. Giroux
David M. Lee
David L. Rowlett
Gabriel Solomon
Joshua K. Spencer
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Growth Stock













P. Robert Bartolo
Kennard W. Allen
Hen ry M. Ellenbogen
Joseph B. Fath
Robert N. Gensler
Barry Henderson
Kris H. Jenner
Jason Nogueira
Larry J. Puglia
Robert W. Sharps
Robert W. Smith
Taymour R. Tamaddon
Eric L. Veiel
(See preceding table for remaining officers)
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
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">Health Sciences











Kris H. Jenner
G. Mark Bussard
Melissa C. Gallagher
Andrew R. Hyman
Susan J. Klein
John H. Laporte
Graham M. McPhail
Jason Nogueira
Charles G. Pepin
John C.A. Sherman
Taymour R. Tamaddon
(See preceding table for remaining officers)
Pr esident
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
David C. Beers
< /font>Andrew M. Brooks
Justin T. Gerbereux
Paul A. Karpers
Paul M. Massaro
Michael J. McGonigle
Brian A. Rubin
Walter P. Stuart III
Thomas E. Tewksbury
Thea N. Williams
(See preceding table for remaining officers)
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
Wendy R. Diffenbaugh
Sharon E. Janvier
Sudhir Nanda
Paul W. Wojcik
(See preceding table for remaining officers)
President
Executive Vice President
Vice President
Vice President
Vice President
Vice President
Inflation Protected Bond






Daniel O. Shackelford
Brian J. Brennan
Alan D. Levenson
Andrew C. McCormick
Dimitri V. Grech enko
Geoffrey M. Hardin
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Assistant 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
David R. Giroux
John D. Linehan< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">
Gregory A. McCrickard
Larry J. Puglia
Robert W. Sharps
Ann M. Holcomb
Joseph M. Milano
J. David Wagner
John F. Wakeman
(See preceding table for remaining officers)
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
Institutional Income Funds
 Institutional Core Plus
 Institutional Floating Rate
 Instit utional High Yield















Mark J. Vaselkiv
Brian J. Brennan
Justin T. Gerbereux
Paul A. Karpers
Paul M. Massaro
Andrew M. Brooks
Michael J. Conelius
Steven C. Huber
Ian D. Kelson
Andrew C. McCormick
Michael J. McGonigle
Daniel O. Shackelford
Walter P. Stuart III
Thomas E. Tewksbury
David A. Tiberii
Thea N. Williams
David C. Beers
Brian A. Rubin
(See preceding table for remaining officers)
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
Assistant Vice President
Assistant Vice President
Institutional International Funds
 Institutional Africa & Middle East
 Institutional Emerging Markets Bond
 Institutional Emerging Markets Equity
 Institutional Foreign Equity
 Institutional Global Equity
 Institutional Global Large-Cap Equity
 Institutional Internatio nal Bond












< /font>

Christopher D. Alderson
R. Scott Berg
Michael J. Conelius
Robert N. Gensler
Ian D. Kelson
Gonzalo Pangaro
Joseph Rohm
Federico Santilli
Robert W. Smith
Jeffrey W. Arricale
Mark C.J. Bickford-Smith
Richard N. Clattenburg
Mark J.T. Edwards
Henry M. Ellenbogen
M. Campbell Gunn
Kris H. Jenner
Anh Lu
Charles M. Ober
Jeffrey Rottinghaus
Robert W. Sharps
Dean Tenerelli
(See preceding table for remaining officers)
President
Executive Vice President
Executive Vice President
Executive Vice President
Executive Vice President
Executive Vice President
Executive Vice President
Execu tive Vice President
Executive Vice President
Vice President
Vice President
Vice President
Vice President
Vice Preside nt
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
International Funds
 Africa & Middle East
 Emerging Europe & Mediterranean
 Emerging Markets 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
R. Scott Berg
Jose Costa Buck
Michael J. Conelius
Robert N. Gensler
M. Campbell Gunn
Leigh Innes
Ian D. Kelson
Anh Lu
Raymond A. Mills
Gonzalo Pangaro
Joseph Rohm
Federico Santilli
Robert W. Smith
Dean Tenerelli
Justin Thomson
Ulle Adamson
Jeffrey W. Arricale
Mark C.J. Bickford-Smith
Brian J. Brennan
Archibald A. Ciganer
Richard N. Clattenburg
Richard de los Reyes
Mark J.T. Edwards
Henry M. Ellenbogen
May Foo
Benjamin Griffiths
Kris H. Jenner
Lillian Yan Li
John D. Linehan
Sebastien Mallet
Susanta Mazumdar
Inigo Mijangos
Philip A. Nestico
Hwee Jan Ng
Sridhar Nishtala
Charles M. Ober
Hiroaki Owaki
Austin Powell
Frederick A. Rizzo
Christopher J. Rothery
Jeffrey Rottinghaus
Francisco Sersale
Robert W. Sharps
John C.A. Sherman
Jonty Starbuck
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 Pres ident
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 PresidentVice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
International Funds (continued)
 Africa & Middle East
 Emerging Europe & Mediterranean
 Emerging Markets 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
Miki Takeyama
Mitchell J.K. Todd
Verena E. Wachnitz
Hiroshi Watanabe
Christopher S. Whitehouse
Clive M. Williams
Ernest C. Yeung
Alison Mei Ling Yip
Christopher Yip
(See preceding table for remaining officers)
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
International Index Fund
 Inte rnational Equity Index



E. Frederick Bair
Neil Smith
Ken D. Uematsu
Paul W. Wojcik
(See preceding table for remaining officers)
President
Executive Vice President
Vice President
Vice President
Media & Telecommunications













P. Robert Bartolo
Daniel Martino
Ulle Adamson
David J. Eiswert
Henry M. Ellenbogen
Joseph B. Fath
May Foo
Paul D. Greene II
Curt J. Organt
Robert W. Smith
Justin P. White
Christopher S. Whitehouse
Ernest C. Yeung
(See preceding table for remaining officers)
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 Growth












Brian W.H. Berghuis
John F. Wakeman
Kennard W. Allen
P. Robert Bartolo
Donald J. Easley
Henry M. Ellenbogen
Kris H. Jenner
Robert J. Marcotte
Daniel Martino
Joseph M. Milano
Clark R. Shields
Taymour R. Tamaddon
(See preceding table for remaining officers)
President
Executive 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
Henry M. Ellenbogen
Mark S. Finn
Gregory A. McCrickard
Joseph M. Milano
J. David Wagner
(See preceding table for remaining officers)
President
Executive Vice President
Vice President
Vice President
 Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
New America Growth












Joseph M. Milano
Francisco Alonso
Jeffrey W. Arricale
P. Robert Bartolo
Brian W.H. Berghuis
Shawn T. Driscoll
Jason Nogueira
Curt J. Organt
Robert W. Sharps
Clark R. Shields
Craig A. Thiese
Eric L. Veiel
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Charles M. Ober
Ryan Burgess
Richard de los Reyes
Shawn T. Driscoll
Mark S. Finn
David M. Lee
Susanta Mazumdar
Heather K. McPherson
Timothy E. Parker
Craig A. Thiese
David J. Wallack
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice Presid ent
Vice President
Vice President
Vice President
Vice President
New Horizons


















Henry M. Ellenbogen
Kennard W. Allen
Francisco Alonso
Brian W.H. Berghuis
G. Mark Bussard
Christopher W. Carlson
Hugh M. Evans III
Joseph B. Fath
Kris H. Jenner
John H. Laporte
Graham M. McPhail
Joshua Nelson
Jason Nogueira
Timothy E. Parker
Clark R. Shields
Michael F. So la
Taymour R. Tamaddon
Ashley R. Woodruff
(See preceding table for remaining officers)
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 Income









Daniel O. Shackelford
Brian J. Brennan
Steven C. Huber
Alan D. Levenson
Andrew C. McCormick
Vernon A. Reid, Jr.
David A. Tiberii
Dimitri V. Grechenko
Michael J. Grogan
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Assistant Vice President
Assistant Vice President
Personal Strategy Funds
 Personal Strategy Balanced
 Personal Strategy Growth
 Personal Strategy Income










Edmund M. Notzon III
Christopher D. Alderson
Jerome A. Clark
Ian D. Kelson
John H. Laporte
John D. Linehan
Raymond A. Mills
Larry J. Puglia
Brian C. Rogers
Charles M. Shriver
Robert W. Smith
Mark J. Vaselkiv
Richard T. Whitney
(See preceding table for remaining officers)
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
Steve Boothe
Steven G. Brooks
G. Richard Dent
Alisa Fiumara-Yoch
Dylan Jones
Alan D. Levenson
Susan G. Troll
Edward A. Wiese
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Real Estate










David M. Lee
Richard N. Clattenburg
Anna M. Dopkin
Joseph B. Fath
Thomas J. Huber
Nina P. Jones
Michael M. Lasota
Philip A. Nestico
Charles M. Ober
Theodore E. Robson
(See preceding table for remaining officers)
President
Vice President
Vice 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
Steve Boothe
Steven G. Brooks
G. Richard Dent
Alan D. Levenson
Edward A. Wiese
Dylan Jones
(See preceding table for remaining officers)
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
Edmund M. Notzon III
Jerome A. Clark
Christopher D. Alderson
Ian D. Kelson
John H. Laporte
Wyatt A. Lee
Brian C. Rogers
Robert W. Smith
Mark J. Vaselkiv
Richard T. Whitney
(See preceding table for remaining officers)
President
Executive 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
Henry M. Ellenbogen
Daniel Flax
Rhett K. Hunter
Hiroaki Owaki
Michael F. Sola
Joshua K. Spencer
Thomas H. Watson
Alison Mei Ling Yip
Nalin Yogasundram
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Short-Term Bond













Edward A. Wiese
Brian J. Brennan
Steven G. Brooks
Charles B. Hill
Andrew C. McCormick
Cheryl A. Mickel
Vernon A. Reid, Jr.
Daniel O. Shackelford
John D. Wells
Bridget A. Ebner
Michael J. Grogan
Geoffrey M. Hardin
Keir R. Joyce
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Short-Term Income













Edward A. Wiese
Brian J. Brennan
Steven G. Brooks
Jerome A. Clark
Charles B. Hill
Edmund M. Notzon III
Vernon A. Reid, Jr.
Daniel O. Shackelford
John D. Wells
Bridget A. Ebner
Michael J. Grogan
Geoffrey M. Hardin
Keir R. Joyce
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Small-Cap Stock












Gregory A. McCrickard
Francisco Alonso
Preston G. Athey
Ira W. Carnahan
Hugh M. Evans III
Christopher T. Fortune
Robert J. Marcotte
Joseph M. Milano
Curt J. Organt
Michael F. Sola
J. David Wagner
Kwame C. Webb
(See preceding table for remaining officers)
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
Hugh M. Evans III
Christopher T. Fortune
Susan J. Klein
Gregory A. McCrickard
Curt J. Organt
J. David Wagner
Kwame C. Webb
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Spectrum Funds
 Spectrum Growth
 Spectrum Income
 Spectrum International





Edmund M. Notzon III
Christopher D. Alderson
John H. Laporte
Mark C.J. Bickford-Smith
Raymond A. Mills
Brian C. Rogers
Charles M. Shriver
Robert W. Smith
(See preceding table for remaining officers)
President
Executive Vice President
Executive Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
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
Jonathan M. Chirunga
G. Richard Dent
Charles E. Emrich
Kathryn A. Floyd
Marcy M. Lash
Alan D. Levenson
Linda A. Murphy
Timothy G. Taylor
M. Helena Condez
Chen Shao
(See preceding table for remaining officers)
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
Assistant Vice President
Assistant Vice President
Strategic Income








Steven C. Huber
Michael J. Conelius
Ian D. Kelson
Andrew C. McCormick
Michael J. McGonigle
David Stanley
David A. Tiberii
Mark J. Vaselkiv
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Summit Funds
 Summit Cash Reserves
 Summit GNMA










Edward A. Wiese
Joseph K. Lynagh
Andrew C. McCormick
Steve Boothe
Christopher P. Brown
G. Richard Dent
Alisa Fiumara-Yoch
Keir R. Joyce
Alan D. Levenson
Susan G. Troll
John D. Wells
Dylan Jones
(See preceding table for remaining officers)
President
Executive Vice President
Executive Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Assistant Vice President
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.
G. Richard Dent
Marcy M. Lash
Alan D. Levenson
James M. Murphy
Timothy G. Taylor
Edward A. Wiese
M. Helena Condez
Kathryn A. Floyd
Homero J.F. Radway
Chen Shao
(See preceding table for remaining officers)
President
Executive Vice President
Executive Vice President
Executive Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Tax-Efficient Funds
 Tax-Efficient Equity





Donald J. Peters
Hugh D. McGuirk
Donald J. Easley
Charles E. Emrich
William J. Stromberg
Mark R. Weigman
 (See preceding table for remaining officers)
President
Executive Vice President
Vice President
Vice President
Vice President
Vice President
Tax-Exempt Money








Joseph K. Lynagh
Steven G. Brooks
G. Richard Dent
Marcy M. Lash
Alan D. Levenson
Edward A. Wiese
M. Helena Condez
Chen Shao
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Assistant Vice President
Assistant Vice President
Tax-Free High Yield










James M. Murphy
R. Lee Arnold, Jr.
G. Richard Dent
Charles B. Hill
Marcy M. Lash
Konstantine B. Mallas
Hugh D. McGuirk
M. Helena Condez
Chen Shao
Timothy G. Taylor
(See preceding table for remaining officers)
President
Executive Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Tax-Free Income










Konstantine B. Mallas
R. Lee Arnold, Jr.
G. Richard Dent
Charles B. Hill
Marcy M. Lash
Hugh D. McGuirk
James M. Murphy
M. Helena Condez
Chen Shao
Timothy G. Taylor
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Tax-Free Short-Intermediate











Charles B. Hill
G. Richard Dent
Charles E. Emrich
Marcy M. Lash
Konstantine B. Mallas
Hugh D. McGuirk
Timothy G. Taylor
Edward A. Wiese
M. Helena Condez
Homero J.F. Radway
Chen Shao
(See preceding table for remaining officers)
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Assistant Vice President
Assistant Vice President
Assistant Vi ce President
U.S. Bond Index

Robert M. Larkins
(See preceding table for remaining officers)
President
U.S. Large-Cap Core Fund











Jeffrey Rottinghaus
Jeffrey W. Arricale
Peter J. Bates
Shawn T. Driscoll
Joseph B. Fath
Mark S. Finn
John D. Linehan
George Marzano
Jason Nogueira
Timothy E. Parker
Robert T. Quinn, Jr.
Robert W. Sharps
(See preceding table for remaining officers)
President
Vice 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
Steve Boothe
Steven G. Brooks
G. Richard Dent
Dimitri V. Grechenko
Geoffrey M. Hardin
Alan D. Levenson
Vernon A. Reid, Jr.
Daniel O. Shackelford
Dylan Jones
(See preceding table for remaining officers)
President
Executive Vice President
Vice PresidentVice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Assistant Vice President
Value












John D. Linehan
Mark S. Finn
Jeffrey W. Arricale
Peter J. Bates
Ryan Burgess
Ira W. Carnahan
David R. Giroux
Heather K. McPherson
Robert T. Quinn, Jr.
Brian C. Rogers
Eric L. Veiel
Tamara P. Wiggs
(See preceding table for remaining officers)
President
Executive Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

Officers

< /tr>Assistant Vice President, California Tax-Free Income Trust, 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

Name, Year of Birth, and Principal Occupation(s)
During Past 5 Years


Position(s) Held With Fund(s)


Ulle Adamson, 1979
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; CFA
Vice President, International Funds and Media & Telecommunications Fund
Christopher D. Alderson, 1962
Chief Executive Officer, Director, and President, T. Rowe Price International, Inc.; Vice President, T. Rowe Price Global Investment Services Limited and T. Rowe Price Group, Inc.
President, Institutional International Funds and International Funds; Executive Vice President, Spectrum Funds; Vice President, Personal Strategy Funds and Retirement Funds
Kennard W. Allen, 1977
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
President, Science & Technology Fund; Vice President, Capital Opportunity Fund, Global Technology Fund, Growth Stock Fund, Mid-Cap Growth Fund, and New Horizons Fund
Francisco Alonso, 1978
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Vice President, Capital Appreciation Fund, Capital Opportunity Fund, Growth & Income Fund, New America Growth Fund, New Horizons Fund, and Small-Cap Stock Fund
R. Lee Arnold, Jr., 1970
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc.; CFA, CPA
Executive Vice President, Tax-Free High Yield Fund; Vice President, Summit Municipal Funds and Tax-Free Income Fund
Jeffrey W. Arricale, 1971
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CPA
President, Financial Services Fund; Vice President, Capital Appreciation Fund, Equity Income Fund, Growth & Income Fund, Institutional International Funds, International Funds, New America Growth Fund, U.S. Large-Cap Core Fund, and Value Fund
Preston G. Athey, 1949
Vice President, T. Rowe Price, T. Ro we Price Global Investment Services Limited, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA, CIC
President, Small-Cap Value Fund; Vice President, Small-Cap Stock Fund
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
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 and Media & Telecommunications Fund; Vice President, Blue Chip Growth Fund, Mid-Cap Growth Fund, and New America Growth Fund
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, Dividend Growth Fund, Mid-Cap Value Fund, U.S. Large-Cap Core Fund, and Value Fund
David C. Beers, 1970
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA
Vice President, High Yield Fund; Assistant Vice President, Institutional Income 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
Mark C.J. Bickford-Smith, 1962
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Vice President, Institutional International Funds, International Funds, and Spectrum Funds
Steve Boothe, 1977
Vice President, T. Rowe Price; CFA
Vice President, Corporate Income Fund, Prime Reserve Fund, TRP Reserve Investment Funds, Summit Funds, and U.S. Treasury Funds
Brian J. Brennan, 1964
Vice President, T. Rowe Price, T. Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA
President, U.S. Treasury Funds; Executive Vice President, Institutional Income Fu nds; Vice President, Inflation Protected Bond Fund, International Funds, New Income Fund, Short-Term Bond Fund, and Short-Term Income Fund
Andrew M. Brooks, 1956
Vice President, T. Rowe Price an d 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, Prime Reserve Fund, TRP Reserve Investment Funds, Short-Term Bond Fund, Short-Term Income Fund, Tax-Exempt Money Fund, and U.S. Treasury Funds
Christopher P. Brown, 1977
Assistant Vice President, T. Rowe Price
Vice President, GNMA Fund and Summit Funds
Jose Costa Buck, 1972
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Executive Vice President, International Funds
Ryan Burgess, 1974
Vice President, T. Rowe Price; formerly intern, T. Rowe Price (to 2006); Vice President and Senior Portfolio Manager, Evergreen Private Asset Management (to 2005); CFA
Vice President, Capital Appreciation Fund, New Era Fund, and Value Fund
G. Mark Bussard, 1972
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Vice President, Blue Chip Growth Fund, Growth & Income Fund, Health Sciences Fund, and New Horizons Fund
Christopher W. Carlson, 1967
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Vice President, Global Technology Fund, Mid-Cap Value Fund, and New Horizons Fund
Ira W. Carnahan,< font style="font-size:10.0pt;" face="Berkeley Book" color="Black"> 1963
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA
Vice President, Small-Cap Stock Fund and Value Fund
Jonathan M. Chirunga, 1966
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Vice President, State Tax-Free Income Trust
Jonathan Chou, 1980
Employee, T. Rowe Price; student, Darden Graduate School of Business Administration, University of Virginia (to 2008); and Principal, Gladstone Management Corporation (to 2006)
Vice President, Mid-Cap Value Fund
Archibald A. Ciganer, 1976
Vice President, T. Rowe Price Global Investment Services Limited and T. Rowe Price Group, Inc.; formerly Senior Associate, Corporate Finance (Tokyo) (to 2005); CFA
Vice President, 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
Executive Vice President, Retirement Funds; Vice President, Personal Strategy Funds and Short-Term Income Fund
Richard N. Clattenburg, 1979
Vice President, T. Rowe Price, T. Rowe Price Global Investment Services Limited, and T. Rowe Price Group, Inc.; CFA
Vice President, Institutional International Funds, International Funds, and Real Estate Fund
M. Helena Condez, 1962
Vice President, T. Rowe Price
Assistant Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, Summit Municipal Fun ds, Tax-Exempt Money Fund, Tax-Free High Yield Fund, Tax-Free Income Fund, and Tax-Free Short-Intermediate Fund
Michael J. Conelius, 1964
Vice President, T. Rowe Price, T. Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company; CFA
Executive Vice President, Institutional International Funds and International Funds; Vice President, Institutional Income Funds and Strategic Income Fund
Richard de los Reyes, 1975
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Analyst, Soros Fund Management (to 2006)
Vice President, Blue Chip Growth Fund, International Funds, and New Era Fund
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
Wendy R. Diffenbaugh, 1954
Vice President, T. Rowe Price
Vice President, Balanced Fund, Diversified Small-Cap Growth Fund, and Index Trust
Anna M. Dopkin, 1967
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., 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, Financial Services Fund, and Real Estate Fund
Shawn T. Driscoll, 1975
Vice President, T. Rowe Price Group, Inc.; formerly Equity Research Analyst, MTB Investment Advisors (to 2006);
Vice President, Blue Chip Growth Fund, Growth & Income 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
Assistant Vice President, Short-Term Bond Fund and Short-Term Income Fund
Mark J.T. Edwards, 1957
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">International, Inc.
Vice President, Institutional International Funds and International Funds
David J. Eiswert, 1972
Vice President, T. Rowe Price, T. Rowe Price Global Investment Services Limited, and T. Rowe Price Group, Inc.; CFA
President, Global Technology Fund; Vice President, Blue Chip Growth Fund, Capital Opportunity 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, Blue Chip Growth Fund, Global Technology Fund, Growth Stock Fund, Institutional International Funds, International Funds, Media & Telecommunications Fund. Mid-Cap Growth Fund, Mid-Cap Value Fund, and Science & Technology Fund
Charles E. Emrich, 1961
Vice President, T. Rowe Price
Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, Tax-Efficient 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, New Horizons Fund, 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, New Horizons Fund, Real Estate Fund, and U.S. Large-Cap Core Fund
Roger L. Fiery III, 1959
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company; CPA
Vice President, all funds
Mark S. Finn, 1963
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA, CPA
E xecutive Vice President, Value Fund; Vice President, Capital Appreciation Fund, Equity Income Fund, Mid-Cap Value Fund, New Era Fund, and U.S. Large-Cap Core Fund
Alisa Fiumara-Yoch, 1974
Vice President, T. Rowe Price; CFA
Vice President, Prime Reserve Fund and Summit Funds
Daniel Flax, 1974
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, Columbia Business School (to 2006); Equity Analyst/Trader, Madoff Securities International (London) (to 2004)
Vice President, Global Te chnology Fund and Science & Technology Fund
Kathryn A. Floyd, 1982
Vice President, T. Rowe Price
Vice President, State Tax-Free Income Trust; Assistant Vice President, Summit Municipal Funds
May Foo, 1977
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price < /font>International, Inc.; CFA
Vice President, International Funds and Media & Telecommunications Fund
Christopher T. Fortune, 1973
Vice President, T. Rowe Pr ice and T. Rowe Price Group, Inc.
Vice President, Financial Services Fund, Small-Cap Stock Fund, and Small-Cap Value 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
Robert N. Gensler, 1957
Vice President, T. Rowe Price, T Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc.
E xecutive Vice President, Institutional International Funds and International Funds; Vice President, Global Technology Fund and Growth Stock Fund
Justin T. Gerbereux, 1975
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA
Executive Vice President, Institutional Income Funds; Vice President, High Yield 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; Executive Vice President, Institutional Equity Funds; Vice President, Equity Income Fund, Growth & Income Fund, an d Value Fund
Gregory S. Golczewski, 1966
Vice President, T. Rowe Price and T. Rowe Price Trust Company
Vice President, all funds
Dimitri V. Grechenko, 1963
Assistant Vice President, T. Rowe Price; formerly Investment Analytics Specialist, Assistant Vice President, Legg Mason Wood Walker, Inc. (to 2006); and Wealth Advisor, Legg Mason Wood Walker, Inc. (to 2005); CFA
Vice President, U.S. Treasury Funds; Assistant Vice President, Inflation Protected Bond Fund and New Income Fund
Paul D. Greene II, 1978
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, Graduate School of Business, Stanford University (to 2006); Finance & Operations Analyst, ArvinMeritor, Inc. (to 2004)
Vice President, Capital Appreciation Fund, Equity Income Fund, and Media & Telecommunications Fund
Benjamin Griffiths, 1977
 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; formerly Investment Manager, Baillie Gifford (to 2006); CFA
Vice President, International Funds
Michael J. Grogan, 1971
Vice President, T. Rowe Price; CFA
Assistant Vice President, Corporate Income Fund, New Income Fund, Short-Term Bond Fund, and Short-Term Income Fund
M. Campbell Gunn, 1956
Vice President, T. Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc.
Executive Vice President, International Funds; Vice President, Institutional International Funds
Geoffrey M. Hardin, 1971
Vice President, T. Rowe Price; formerly Investment Analyst, Morgan Stanley`s Alternative Investment Partners Group (to 2007); Associate Portfolio Manager, Smith Breeden Associates (to 2005)
Vice President, U.S. Treasury Funds; Assistant Vice President, Inflation Protected Bond Fund, Short-Term Bond Fund, and Short-Term Income Fund
Barry Henderson, 1966
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Research Analyst, Soros Fund Management (to 2006)
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, Short-Term Bond Fund, Short-Term Income Fund, Tax-Free High Yield Fund, and Tax-Free Income F und
Gregory K. Hinkle, 1958
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; formerly partner, PricewaterhouseCoopers, LLP (to 2007); 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 Gr oup, Inc.; formerly chief investment officer, Maryland State Retirement Agency pension fund (to 2006); CFA, FSA
President, Strategic Income Fund; Vice President, Institutional Income Funds and New Income 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
Rhett K. Hunter, 1977
Vice President , T. Rowe Price; formerly student, MIT Sloan School of Management (to 2007), and Bowdoin College (to 2005)
Vice President, Global Technology Fund and Science & Technology Fund
Andrew R. Hyman, 1968
Vice President, T. Rowe Price International, Inc.; formerly Principal, L. Capital Partners (to 2007); Health Care Analyst, Columbus Circle Investors (to 2005); M.D.
Vice President, Health Scie nces Fund
Leigh Innes, 1976
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; CFA
Executive Vice President, International Funds
Sharon E. Janvier, 1975
Assistant Vice President, T. Rowe Price
Vice President, Index Trust
Kris H. Jenner, 1962
Vice President, T.  Rowe Price, T. Rowe Price Global Investment Services Limited, and T. Rowe Price Group, Inc.; 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
Dylan Jones, 1971
Assistant Vice President, T. Rowe Price; CFA
Vice President, Prime Reserve Fund; Assistant < /font>Vice President, TRP Reserve Investment Funds, Summit Funds, and U.S. Treasury Funds
Nina P. Jones, 1980
Employee, T. Rowe Price; formerly intern, T. Rowe Price (summer 2007); Senior Associate KPMG LLP; student, Columbia Business School; CPA
Vice President, Global Real Estate Fund and Real Estate Fund
Keir R. Joyce, 1972
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA
< /td>		Vice President, GNMA Fund and Summit Funds; Assistant Vice President, Short-Term Bond Fund and Short-Term Income Fund
Yoichiro Kai, 1973
Vice President, T. Rowe Price Global Investment Services Limited; 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, Global Real Estate Fund
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 and High Yield Fund
Ian D. Kelson, 1956
Vice President, T. Rowe Price, T. Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc.
Executive Vice President, Institutional International Funds and International Funds; Vice President, Institutional Income Funds, Personal Strategy Funds, Retirement Funds, and Strategic Income Fund
Susan J. Klein, 1950
Vice President, T. Rowe Pri ce
Vice President, Health Sciences Fund and Small-Cap Value 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 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
Employee, T. Rowe Price; formerly student, University of Chicago, Graduate School of Business (to 2008); associate, The Boston Consulting Group (to 2006)
Vice President, Real Estate Fund
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, and New Era Fund
Wyatt A. Lee, 1971
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA
Vice President, Retirement Funds
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, 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
Lillian Yan Li, 1979
Vice President, T. Rowe Price International, Inc.; formerly Analyst, Deutsche Bank (Hong Kong) (to 2007); CFA
Vice President, International Funds
John D. Linehan, 1965
< /font>Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA
President, Value Fund; Executive Vice President, Institutional Equity Funds; Vice President, Balanced Fund, Capital Appreciation Fund, Equity Income Fund, International Funds, Personal Strategy Funds, and U.S. Large-Cap Core Fund
Patricia B. Lippert,< font style="font-size:10.0pt;" face="Berkeley Book" color="Black"> 1953
Assistant Vice President, T. Rowe Price and T. Rowe Price Investment Services, Inc.
Secretary, all funds
Anh Lu, 1968
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, 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, Tax-Exempt Money Fund, and TRP Reserve Investment Funds; Executive Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, Summit Funds, Summit Municipal Funds, and U.S. Treasury Funds
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, Inc.
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 O`Hara 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.; formerly Research Analyst and Co-portfolio Manager, Taurus Asset Management (to 2006), Onex Public Markets Group (to 2006), and MFS Investment Management (to 2005); CFA
Executive Vice President, Media & Telecommunications Fund; Vice President, Dividend Growth Fund, Global Technology Fund, and Mid-Cap Growth Fund
George Marzano, 1980
Assistant Vice President, T. Rowe Price
Vice President, U.S. Large-Cap Core Fund
Paul M. Massaro, 1975
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA
Executive Vice President, Institutional Income Funds; Vice President, Capital Appreciation Fund and High Yield Fund
Susanta Mazumdar, 1968
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Vice President, International Funds and New Era 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); Senior Portfolio Manager, Avenue Capital Group (to 2006), and Senior Vice President, Portfolio Transactions, Federal National Mortgage Association (to 2005)
Pr esident, GNMA Fund; Executive Vice President, Summit Funds; Vice President, Inflation Protected Bond Fund, Institutional Income Funds, New Income Fund, Short-Term Bond Fund, and Strategic Income Fund
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 < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">President, Mid-Cap Value Fund and Small-Cap Value Fund
Ian C. McDonald, 1971
Vice President, T. Rowe Price; formerly Insurance Correspondent, The Wall Street Journal (to 2007); and Sta ff Reporter, The Wall Street Journal (2006)
Vice President, Financial Services Fund
Michael J. McGonigle, 1966
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Vice President, Corporate Income Fund, Financial Services Fund, High Yield Fund, Institutional Income Funds, 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; Executive Vice President, Tax-Efficient Funds; Vice President, Tax-Free High Yield Fund, Tax-Free Income Fund, and Tax-Free Short-Intermediate Fund
Graham M. McPh ail, 1975
Employee, T. Rowe Price; formerly Analyst, The Boston Company Asset Management (to 2008); Junior Portfolio Manager, J.L. Kaplan Associates (to 2006)
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, 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, Short-Term Bond Fund
Inigo Mijangos, 1975
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Vice President, International Funds
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, 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, Inc., and T. Rowe Price Trust Company; Ph.D., CFA
Executive Vice President, International Funds; Vice President, Balanced Fund, Global Real Estate Fund, Personal Strategy Funds, and Spectrum Funds
Eric C. Moffett, 1974
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; formerly Analyst, Fayez Sarofim & Company (to 2007)
Vice President, Global Real Estate 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, 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 and State Tax-Free Income Trust
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 Index Trust
Joshua Nelson, 1977
Vice President, T. Rowe Price; formerly Assistant Vice President of Investment Banking, Citigroup Global Markets, Inc. (to 2005)
Vice President, Blue Chip Growth Fund and New Horizons Fund
Philip A. Nestico,< /font> 1976
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Vice President, Capital Opportunity Fund, Diversified Mid-Cap Growth Fund, Global Real Estate Fund, International Funds, and Real Estate Fund
Hwee Jan Ng, 1966
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; CFA
Vice President, Financial Services Fund and International Funds
Sridhar Nishtala, 1975
Vice President, < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Vice President, International Funds
Jason Nogueira, 1974
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA
Vice President, Blue Chip Growth Fund, Capital Opportunity Fund, Dividend Growth Fund, Growth Stock Fund, Health Sciences Fund, New America Growth Fund, New Horizons Fund, and U.S. Large-Cap Core Fund
Edmund M. Notzon III, 1945
Vice President, T. Rowe Price, T. Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Trust Company; Ph.D., CFA
President, Balanced Fund, Personal Strategy Funds, Retirement Funds, and Spectrum Funds; Vice President, Short-Term Income Fund
Charles M. Ober, 1950
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA
President, New Era Fund; Vice President, Institutional International Funds, International Funds, and Real Estate Fund
David Oestreicher, 1967
Director and Vice President, T. Rowe Price Investment Services, Inc., T. Rowe Price Trust Company, and T. Rowe Price Services, Inc.; Vice President, T. Rowe Price, T. Rowe Price Global Asset Management Limited, T. Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Retirement Plan Services, Inc.
Vice President, all 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
Hiroaki Owaki, 1962
Vice President, T. Rowe Price Global Investment Services Limited and T. Rowe Price Group, Inc.; 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, Inc.; CFA
Executive Vice President, Institutional International Funds and International Funds
Timothy E. Parker, 1974
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA
Vice President, Blue Chip Growth Fund, Capital Opportunity Fund, Dividend Growth Fund, New Era Fund, New Horizons Fund, and U.S. Large-Cap Core 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, Equity Income Fund and Financial Services Fund
Austin Po well, 1969
Vice President, T. Rowe Price Global Investment Services Limited and T. Rowe Price Group, Inc.; CFA
< /td>		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 Strateg y 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, U.S. Large-Cap Core Fund, and Value Fund
Homero J.F. Radway, 1976
Assistant Vice President, T. Rowe Price; formerly Fixed Income and Derivative Associates, Credit Suisse First Boston (to 2007)
Assistant Vice President, Summit Municipal Funds and Tax-Free Short-Intermediate Fund
Vernon A. Reid, Jr., 1954
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Vice President, Corporate Income Fund, New Income Fund, Short-Term Bond Fund, Short-Term Income Fund, and U.S. Treasury Funds
Frederick A. Rizzo, 1969
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; formerly Analyst, F&C Asset Management (London) (to 2006); Senior Equity Analyst, Citigroup (London) (to 2004)
Vice President, Financial Services Fund and International Funds
Michael T. Roberts, 1980
Vice President, T. Rowe Price; formerly student, Brown University, and Research Analyst, Chicago Board of Options Exchange (to 2005)
Vice President, Diversified Small-Cap Growth Fund
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 and Real Estate Fund
Joseph Rohm, 1966
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Executive Vice President, Institutional International Funds and International Funds
Christopher J. Rothery, 1963
Vice President, T Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc.
Vice President, International Funds
Jeffrey Rottinghaus, 1970
Vice President, T. Rowe Price, T Rowe Price Global Investment Services Limited, and T. Rowe Price Group, Inc.; CPA
President, U.S. Large-Cap Core Fund; Vice President, Institutional International Funds and International Funds
David L. Rowlett, 1975
Vice President, T. Rowe Price; formerly Analyst and Portfolio Manager, Neuberger Berman (to 2008); and Investment Banking Associate, Merrill Lynch & Company (to 2005); CFA
Vice President, Growth & Income Fund
Brian A. Rubin, 1974
Vice President, T. Rowe Price and T. Ro we Price Trust Company; CPA
Vice President, High Yield Fund; Assistant Vice President, Institutional Income Funds
Federico Santilli, 1974
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; CFA
Executive Vice President, Institutional International Funds and International Funds
Deborah D. Seidel, 1962
Vice President, T. Rowe Price, T. Rowe Price Investment Services, Inc., and T. Rowe Price Services, Inc.
Vice President, all funds
Francisco Sersale, 1980
Employee, T. Rowe Price; formerly Investment Analyst, Explorador Capital Management, LLC (to 2005)
Vice President, International Funds
Daniel O. Shackelford, 1958
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA
President, Inflation Protected Bond Fund and New Income Fund; Vice President, Institutional Income Funds, Short-Term Bond Fund, Short-Term Income Fund, and U.S. Treasury Funds
Chen Shao, 1980
Employee, T. Rowe Price; formerly Junior Accountant, News America Corporation, and Reconciliation Associate, Cablevision Corporation (to 2005)
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, Inc.
Vice President, Health Sciences Fund and International Funds
Clark R. Shi elds, 1976
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, Harvard Business School (to 2006); Associate, MDT Advisers (to 2004)
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 Global Investment Services Limited, and T. Rowe Price Group, Inc.; CFA
Vice President, Personal Strategy Funds and Spectrum Funds
Neil Smith, 1972
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Executive Vice President, International Index Fund
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
Michael F. Sola, 1969
Vice President, T. Rowe Price and T.< /font> Rowe Price Group, Inc.; CFA
Vice President, New Horizons 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
Joshua K. Spencer, 1973
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA
Vice President, Global Technology Fund, Growth & Income Fund, and Science & Technology Fund
David Stanley, 1963
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International , Inc.
Vice President, Strategic Income Fund
Jonty Starbuck, 1975
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; Ph.D.
Vice President, International Funds
William J. Stromberg, 1960
Director and Vice President, T. Rowe Price; Vice President, T. Rowe Price Global Investment Services, T. Rowe Price Group, Inc., T. Rowe Price International, Inc., 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, High Yield Fund and Institutional Income Funds
Miki Takeyama, 1970
Vice President, T. Rowe Price Global Investment Services Limited and T. Rowe Price Group, Inc.
Vice President, International Funds
Taymour R. Tamaddon, 1976
Vice President, T. < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">Rowe Price and T. Rowe Price Group, Inc.; CFA
Vice President, Blue Chip Growth Fund, Capital Appreciation Fund, Growth Stock Fund, Health Sciences Fund, Mid-Cap Growth Fund, and New Horizons Fund
Timothy G. Taylor, 1975
Vice President, T. Rowe Price; CFA
Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, Summit Municipal Funds, and Tax-Free Short-Intermediate Fu nd; Assistant Vice President, Tax-Free High Yield Fund and Tax-Free Income Fund
Dean Tenerelli, 1964
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Executive Vice President, International Funds; Vice President, Institutional International Funds
Thomas E. Tewksbury, 1961
Vice President, T. Rowe Price, T.& #160;Rowe Price Group, Inc., and T. Rowe Price Trust Company
Vice President, High Yield Fund and Institutional Income Funds
Craig A. Thiese, 1975
Vice President, T. Rowe Price; formerly Equity Trader, Rydex Investments (to 2006)
Vice President, New America Growth Fund and New Era Fund
Justin Thomson, 1968
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Executive Vice President, International Funds
David A. Tiberii, 1965
Vice President, T. Rowe Price, T Rowe Price Global Investment Services Limited, and T. Rowe Price Group, Inc.; CFA
President, Corporate Income Fund; Vice President, Institutional Income Funds, New Income Fund, and Strategic Income Fund
Mitchell J.K. Todd, 1974
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
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, Prime Reserve Fund, and Summit Funds
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., T. Rowe Pric e International, Inc., and T. Rowe Price Trust Company
President, High Yield Fund and Institutional Income Funds; Executive Vice President, Corporate Income Fund; Vice President, Personal Strategy Funds, Retirement Funds, and Strategic Income Fund
Eric L. Veiel, 1972
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA
Vice President, Capital Appreciation Fund, Capital Opportunity Fund, Dividend Growth Fund, Equity Income Fund, Financial Services Fund, Growth Stock Fund, New America Growth Fund, and Value Fund
Verena E. Wachnitz, 1978
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; CFA
Vice President, International Funds
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, 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, New Era Fund
Julie L. Waples, 1970
Vice President, T. Rowe Price
Vice President, all funds
Hiroshi Watanabe, 1975
Vice President, T. Rowe Price Global Investment Services Limited and T. Rowe Price Group, Inc.; formerly Deputy Director, Space Industry Office, Manufacturing Industries Bureau (to 2006); Assistant Manager, Gas Safety Division, Nuclear and Industrial Safety Agency (to 2003); CFA
Vice President, International Funds
Thomas H. Watson, 1977
Vice President, T. Rowe Price; formerly Strategy Analyst, Forrester Research (to 2005)
Vice President, Global Technology Fund and Science & Technology Fund
Kwame C. Webb, 1982
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Vice President, Small-Cap Stock Fund and Small-Cap Value 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, Diversified Mid-Cap Growth Fund and 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, Short-Term Bond Fund, Short-Term Income Fund, and Summit Funds
Justin P. White, 1981
Employee, T. Rowe Price; formerly student, Tuck School of Business at Dartmouth (to 2008); and Senior Analyst, Analysis Group (to 2006)
Vice President, Media & Telecommunications Fund
Christopher S. Whitehouse, 1972
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Vice President, International Funds and Media & Telecommunications Fund
Richard T. Whitney, 1958
Vice President, T. Rowe Price, T.< font style="font-size:10.0pt;" face="Berkeley Book" color="Black"> Rowe Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company; CFA
Executive Vice President, Balanced Fund; Vice President, Pers onal Strategy Funds and Retirement Funds
Edward A. Wiese, 1959
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; Chief Investment Officer, Director, and Vice President, T. Rowe Price Savings Bank; CFA
President, Short-Term Bond Fund, Short-Term Income Fund, and Summit Funds; Vice President, Corporate Income Fund, Prime Reserve Fund, TRP Reserve Investment Funds, Summit Municipal Funds, Tax-Exempt Money Fund, and Tax-Free Short-Intermediate Fund
Tamara P. Wiggs, 1979
Vice President, T. Rowe Price; 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, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.
Vice President, International Funds
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, High Yield Fund, and Institutional Income Funds
Paul W. Wojcik, 1970
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; 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 2006); CFA
Vice President, New Horizons Fund
Marta Yago, 1977
Vice President, T. Rowe Price International, Inc.; formerly a student, Columbia Business School (to 2007); Senior Associate, Fixed Income Division, Citigroup Investment Banking (to 2005)
Vice President, Global Real Estate Fund
Ernest C. Yeung, 1979
Vice President, T. Rowe Price Group, In c. and T. Rowe Price International, Inc.; CFA
Vice President, International Funds and Media & Telecommunications Fund
Alison Mei Ling Yip, 1966
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; formerly Analyst, Credit Suisse First Boston (to 2006)
Vice President, Global Technology Fund, International Funds, and Science & Technology Fund
Christopher Yip, 1975
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.; CFA
Vice President, International Funds
Nalin Yogasundram, 1975
Vice President, T. Rowe Price; formerly Equity Analyst Intern, American Century Investments (to 2006); Project Lead, Ceterus Networks (to 2005); Project Lead, Mahi Networks, (to 2004)
Vice President, Global Technology Fund and Science & Technology Fund

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

Directors` Compensation

The following table shows remuneration paid by the funds to the independent directors. The independent directors are paid $210,000 for their service on the Boards. A director serving on the Joint Audit Committee receives an additional $7,500 for his/her service and the chairman of the Joint Audit Committee receives an additional $15,000 for his/her service. The Lead Independent Director receives an additional $100,000 for serving in this capacity. Any director of the fund who is an officer or employee of T. Rowe Price or T. Rowe Price International (inside directors) does not receive any remuneration from the funds. The funds do not pay pension or retirement benefits to any of their directors or officers.

The following table shows the total compensation from the funds paid to the directors for the calendar year 2009:

Directors


Total Compensation

Brody
$210,000
Casey
217,500
Deering (Lead)
317,500
Dick
210,000
Horn
210,000
Rodgers
225,000
Schreiber
210,000
Tercek
217,500

54

The following table shows the amounts paid to the directors by each fund based on accrued compensation for the calendar year 2009:< /tr>< /tr>< td style="text-indent:0.0";">617

Fund


Aggregate Compensation From Fund


























Brody


Casey


Deering


Dick


Horn


Rodg ers


Schreiber


Tercek

Africa & Middle East
$116
$805
$1,162
$777
$815
$807
$777
$569
Balanced
332
2,008
2,903
1,939
2,031
2,014
1,939
1,478
Blue Chip Growth
867
5,604
8,101
5,411
5,668
5,621
5,411
4,201
California Tax-Free Bond
125
876
1,264
845
887
878
845
623
California Tax-Free Money
105
764
1,102
737
774
766
737
538
Capital Appreciation
867
5,165
7,468
4,987
5,222
5,180
4,987
3,856
Capital Opportunity
117
807
1,166
779
818
810
779
574
Corporate Income
145
941
1,360
909
953
944
909
687
Diversified Mid-Cap Growth
105
738
1,066
713
748
740
713
522
Diversified Small-Cap Growth
103
728
1,051
703
738
730
703
514
Dividend Growth
183
1,144
1,654
1,105
1,158
1,148
1,105
833
Emerging Europe & Mediterranean
158
947
1,369
914
957
949
914
694
Emerging Markets Bond
243
1,242
1,799
1,199
1,252
1,245
1,199
946
Emerging Markets Stock
512
2,600
3,767
2,510
2,621
2,608
2,510
2,022
Equity Income
867
6,221
8,982
6,007
6,304
6,239
6,007
4,373
Equity Index 500
867
5,669
8,194
5,474
5,733
5,686
5,474
4,267
European Stock
164
1,046
1,512
1,010
1,059
1,049
1,010
755
Extended Equity Market Index
124
843
1,218
814
854
846
814
600
Financial Services
129
865
1,249
835
875
867
835
619
Georgia Tax-Free Bond
111
775
1,119
748
785
777
748
549
Global Infrastructure(a)
4,583
4,583
4,583
4,583
4,583
4,583
4,583
4,583
Global Large-Cap Stock
99
703
1,015
679
712
705
679
496
Global Real Estate
98
697
1,007
673
707
699
673
491
Global Stock
166
1,069
1,545
1,032
1,082
1,072
1,032
774
Global Technology
116
775
1,120
749
785
777
749
555
GNMA
232
1,532
2,213
1,479
1,552
1,536
1,479
1,114
TRP Government Reserve Investment
202
1,248
1,803
1,205
1,262
1,251
1,205
907
Growth & Income
189
1,214
1,754
1,172
1,229
1,217
1,172
878
Growth Stock
867
6,221
8,982
6,007
6,304
6,239
6,007
4,373
Health Sciences
279
1,757
2,540
1,697
1,778
1,762
1,697
1,280
High Yield
697
3,947
5,710
3,811
3,987
3,958
3,811
3,031
Inflation Protected Bond
122
844
1,219
815
855
846
815
602
Institutional Africa & Middle East
103
723
1,044
698
733
725
698
512
Institutional Core Plus
105
744
1,075
719
754
746
719
525
Institutional Emerging Markets Bond
110
733
1,059
708
742
735
708
524
Institutional Emerging Markets Equity
135
870
1,257
840
880
873
840
628
Institutional Floating Rate
163
1,098
1,585
1,060
1,112
1,101
1,060
789
Institutional Foreign Equity
102
721
1,042
697
731
723
697
509
Institutional Global Equity
113
776
1,121
749
786
778
749
553
Institutional Global Large-Cap Equity
98
697
1,006
673
706
699
673
491
Institutional High Yield
208
1,213
1,754
1,171
1,226
1,216
1,171
910
Institutional International Bond
106
735
1,062
710
745
737
710
522
Institutional Large-Cap Core Growth
108
751
1,084
725
760
753
725
532
Institutional Large-Cap Growth
234
1,397
2,020
1,349
1,412
1,401
1,349
1,037
Institutional Large-Cap Value
128
865
1,249
835
876
867
835
618
Institutional Mid-Cap Equity Growth
140
918
1,326
886
929
920
886
659
Institutional Small-Cap Stock
122
837
1,209
809
848
840
809
593
Institutional U.S. Structured Research
110
763
1,101
736
772
765
736
541
International Bond
432
2,355
3,407
2,273
2,377
2,361
2,273
1,752
International Discovery
295
1,640
2,373
1,583
1,656
1,645
1,583
1,230
International Equity Index
135
899
1,299
868
910
902
868
644
International
Growth & Income
363
2,066
2,989
1,995
2,087
2,072
1,995
1,555
International Stock
617
3,364
4,869
3,248
3,396
3,374
3,248
2,564
Japan
115
821
1,185
792
832
823
792
575
Latin America
353
1,802
2,610
1,740
1,816
1,807
1,740
1,383
Maryland Short-Term Tax-Free Bond
119
820
1,184
792
830
822
792
585
Maryland Tax-Free Bond
248
1,591
2,299
1,536
1,611
1,595
1,536
1,167
Maryland Tax-Free Money
113
817
1,180
789
829
820
789
577
Media & Telecommunications
227
1,342
1,941
1,296
1,357
1,346
1,296
994
Mid-Cap Growth
867
6,119
8,836
5,908
6,198
6,137
5,908
4,373
Mid-Cap Value
727
3,881
5,619
 3,748
3,916
3,893
3,748
2,961
New America Growth
171
1,077
1,556
1,040
1,089
1,080
1,040
789
New Asia
447
2,225
3,225
2,148
2,240
2,232
2,148
1,739
New Era
548
2,991
4,328
2,888
3,021
3,000
2,888
2,269
< /td>
New Horizons
586
3,376
4,884
3,260
3,411
3,386
3,2602,536
New Income
867
5,074
7.337
4,899
5,131
5,088< br>4,899
3,777
New Jersey Tax-Free Bond
118
823
1,188
794
833
825
794
584
New York Tax-Free Bond
126
868
1,254
838
880
871
838
619
New York Tax-Free Money
107
775
1,119
749
786
777
749
546
Overseas Stock
277
1,623
2,347
1,567
1,640
1,628
1,567
1,215
Personal Strategy Balanced
220
1,377
1,990
1,330
1,394
1,381
1,330
1,003
Personal Strategy Growth
190
1,199
1,733
1,158
1,214
1,203
1,158
873
Personal Strategy Income
169
1,097
1,585
1,060
1,111
1,100
1,060
792
Prime Reserve
624
< /td>		4,508
6,504
4,353
4,574
4,520
4,353
3,251
Real Estate< br>290
1,666
2,411
1,609
1,683
1,671
1,609
1,226
TRP Reserve Investment
867
5,735
8,288
5,537
5,801
5,752
5,537
4,357
Retirement 2005
178
1,149
1,660
1,109
1,163
1,152
1,109
833
Retirement 2010
526
3,077
4,449
2,971< /font>
3,110
3,086
2,971
2,294
Retirement 2015
466
2,639
 3,818
2,548
2,666
2,647
2,548
1,985
Retirement 2020
867
4,798
6,943
4,632
4,844
4,812
4,632
3,669
Retirement 2025
470
2,564
3,711
2,475
2,588
2,571
2,475
1,953
Retirement 2030
711
3,741
5,417
3,612
3,774
3,753
3,612
2,888
Retirement 2035
331
1,819
2,632
1,756
1,836
1,824
1,756
1,382
Retirement 2040
473
2,489
3,605
2,404
2,511
2,497
2,404
1,923
Retirement 2045
203
1,181
1,708
1,140
1,1 93
1,184
1,140
884
Retirement 2050
142
878
1,270
8 48
888
881
848
644
Retirement 2055
107
739
1,067
714
749
741
714
525
Retirement Income
243
1,492
2,157
1,441
1,509
1,496
1,441
1,098
Science & Technology
341
1,949
2,820
1,882
1,969
1,955
1,882
1,481
Short-Term Bond
435
2,199
3,184
2,123
2,217
2,205
2,123
1,691
Short-Term Income
250
1,483
2,144
1,432
1,499
1,487
1,432
1,087
Small-Cap Stock
541
3,092
4,472
2,985
3,124
3,101
2,985
2,314
Small-Cap Value
579
3,271
4,733
3,158
3,303
3,281
3,158
2,457
Spectrum Growth
354
2,082
3,011
2,010
2,105
2,088
2,010
1,543
Spectrum Income
580
3,489
5,043
3,368
3,529
3,498
3,368
2,584
Spectrum Internationa l
140
901
1,302
870
911
903
870
651
Strategic Income
107
734
1,061
709
744
737
709
523
Summit Cash Reserves
635
4,416
6,374
4,264
4,478
4,428
4,264
3,193
Summit GNMA
111
774
1,117
747
784
776
747
551
Summit Municipal Income
133
902
1,303
871
914
905
871
644
Summit Municipal Intermediate
194
1,228
1,775
1,186
1,243
1,232
1,186
895
Summit Municipal Money Market
121
871
1,257
841
883
873
841
615
Tax-Efficient Equity
103
713
1,030
689
722
715
689
504
Tax-Exempt Money
181
1,279
1,846
1,235
1,297
1,283
1,235
916
Tax-Free High Yield
247
1,517
2,193
1,465
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">1,535
1,521
1,465
1,126
Tax-Free Income
293
1,825
2,638
1,762
1,847
1,830
1,762
1,349
Tax-Free Short-Intermediate
187
1,139
1,646
1,100
1,152
1,142
1,100
837
Total Equity Market Index
137
917
1,324
885
928
919
885
656
U.S. Bond Index
136
914
1,321
883
926
917
883
657
U.S. Large-Cap Core(b)
98
329
481
317
325
331
317
325
U.S. Treasury Intermediate
145
1,050
1,515
1,014
1,065
1,053
1,014
738
U.S. Treasury Long-Term
121
884
1,275
853
896
886
853
U.S. Treasury Money
265
1,927
2,781
1,861
1,955
1,9321,861
1,383
Value
867
4,859
7,032
4,692
4,906
4,874
4,692
3,707
Virginia Tax-Free Bond
162
1,075
1,554
1,038
1,089
1,078
1,038
778

55

56

57

(a)Estimated for the period January 28, 2010, through December 31, 2010.

(b)For the period June 27, 2009, through December 31, 2009.

58

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, 2009, unless otherwise indicated.

None
None
< td style="text-indent:0.0";">None
None

Aggregate Holdings,
All Funds


Independent Directors


























Brody


Casey


Deering


Dick


Horn


Rodgers


Schreiber


Tercek





None


over $100,000


over $100,000


over $100,000


over $100,000


over $100,000


over $100,000


None

Africa & Middle East
None
None
None
None
None
$10,001-$50,000
None
None
Balanced
None
None
None
None
None
None
None
< /td>		None
Blue Chip Growth
None
over
$100,000
None
$10,001-$50,000$50,000-4100,000
 None
over $100,000
None
Blue Chip Growth Fund—Advisor Class
None
None
None
None
None
None
None
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">None
Blue Chip Growth Fund—
R Class
None
None
None
None
None
None
None
None
Blue Chip Growth Portfolio
None
None
None
None
None
None
None
None
Blue Chip Growth Portfolio—II
None
None
None
None
None
None
None
None
California Tax-Free Bond
None
None
None
None
None
None
None
None
California Tax-Free Money
None
None
None
None
None
None
None
None
Capital Appreciation
None
None
None
over $100,000
None
over $100,000
None
None
Capital Appreciation Fund—Advisor Class
None
None
None
None
None
None
None
None
Capital Opportunity
None
$50,001-$100,000
None
None
None
None
None
None
Capital Opportunity Fund—Advisor Class
None
None
None
None
None
None
None
None
Capital Opportunity Fund—R Class
None
None
None
None
None
None
None
None
Corporate Income
None
over
$100,000
None
$50,001-$100,000
None
None
None
None
Diversified Mid-Cap Growth
None
None
None
None
None
$10,001-$50,000
None
None
Diversified Small-Cap Growth
None
None
None
None
None
None
None
None
Dividend Growth
None
None
NoneNone
None
None
None
None
Dividend Growth Fund—Advisor Class
None
None
None
None
None
None
None
None
Emerging Europe & Mediterranean
None
None
None
None
None
None
None
None
Emerging Markets Bond
None
None
None
None
None
over
$100,000
None
None
Emerging Markets Stock
None
$10,001-$50,000
over $100,000
None
None
$50,001-$100,000
None
None
Equity Income
$50,001-$100,000
over $100,000
$50,001-$100,000
None
None
None
None
Equity Income Fund—Advisor Class
None
None
None
None
None
None
None
None
Equity Income Fund—
R Class
None
None
None
None
None
None
None
None
Equity Income Portfolio
None
None
None
None
None
None
None
None
Equity Income Portfolio—II
None
None
None
None
None
None
None
None
Equity Index 500
None
None
None
None
None
None
None
None
Equity Index 500 Portfolio
None
None
None
None
None
None
None
None
European Stock
None
None
None
None
None
None
None
None
Extended Equity Market Index
None
None
None
None
None
$10,001-$50,000
None
None
Financial Services
None
None
None
$10,001-$50,000
None
None
None
None
Georgia Tax-Free Bond
None
None
None
None
None
None
None
None
Global Large-Cap Stock
None
None
None
None
None
None
None
None
Global Large-Cap Stock Fund—Advisor Class
None
None
None
None
None
None< br>None
None
Global Real Estate
None
None
None
None
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">None
None
None
None
Global Real Estate Fund—Advisor Class
None
None
None
None
None
None
None
None
Global Stock
None
None
over $100,000
$50,001-$100,000
 None
None
None
None
Global Stock Fund—Advisor Class
None
 None
None
None
None
None
None
None
Global Technology
None
None
None
None
None
None
None
None
GNMA
None
None
None
None
None
None
over $100,000
None
TRP Government Reserve Investment
None
None
None
None
None
None
None
None
Growth & Income
None
None
None
$1-$10,000
None
None
over $100,000
None
Growth Stock
None
None
None
over
$100,000
None
None
None
None
Growth Stock Fund—Advisor Class
None
None
None
None
None
None
None
None
Growth Stock Fund—
R Class
None
None
None
None
None
None
None
None
Health Sciences
None
None
None
$10,001-$50,000
None
None
None
None
Health Sciences Portfolio
None
None
None
None
None
None
None
None
Health Sciences Portfolio—II
None
None
None
None
None
None
None
None
High Yield
None
over
$100,000
None
$50,001- $100,000
None
$10,001-$50,000
over $100,000
None
High Yield Fund—Advisor Class
None
None
None
None
None
None
None
None
Inflation Protected Bond
None
None
None
$50,001-$100,000
None
None
None
None
Institutional Africa & Middle East
None
None
None
None
None
None
None
None
Institutional Core Plus
None
None
None
None
None
None
None
None
Institutional Emerging Markets Bond
None
None
None
None
None
None
None
None
Institutional Emerging Markets Equity
None
None
None
None
None
None
None
None
Institutional Floating Rate
None
None
None
None
None
None
None
None
Institutional Foreign Equity
None
None
None
None
None
None
None
None
Institutional Glob al Equity
None
None
None
None
None
None
None
None
Institutional Global Large-Cap Equity
None
None
None
None
None
None
None
None
Institutional High Yield
None
None
None
None
None
None
None
None
Institutional International Bond
None
None
None
None
None
None
None
None
Institutional Large-Cap Core Growth
None
None
None
None
None
None
None
None
Institutional Large-Cap Growth
None
None
None
None
None
None
None
None
Institutional Large-Cap Value
None
None
None
None
None
None
None
None
Institutional Mid-Cap Equity Growth
None
None
None
None
None
None
None
None
Institutional Small-Cap Stock
None
None
None
None
None
None
None
None
Institutional U.S. Structured Research
None
None
None
None
None
None
None
None
International Bond
None
None
None
$50,001-$100,000
None
None
None
None
International Bond Fund—Advisor Class
None
None
None
None
None
None
None
None
International Discovery
None
$10,001-$50,000
None
None
None
None
None
None
International Equity Index
None
None
None
None
None
None
None
None
International Gro wth & Income
None
None
None
None
None
None
None
None
International Growth & Income Fund—Advisor Class
None
None
None
None
None
None
None
None
International Growth & Income Fund—R Class
None
None
None
None
None
None
None
None
International Stock
None
None
None
None
None
None
None
None
International Stock Fund—Advisor Class
None
None
None
None
None
None
None
None
International Stock Fund—
R Class
None
Non e
None
None
None
None
None
None
International Stock Portfolio
None
None
None
None
None
None
None
None
Japan
None
None
None
None
None
None
over $100,000
None
Latin America
None
None
None
None
None
over $100, 000
None
None
Limited-Term Bond Portfolio
None
None
None
None
None
None
None
None
Limited-Term Bond Portfolio—II
None
None
None
None
None
None
None
None
Maryland Short-Term
Tax-Free Bond
None
None
None
None
None
None
None
None
Maryland Tax-Free Bond
None
None
None
None
None
None
None
None
Maryland Tax-Free Money
None
None
None
None
None
None
None
None
Media & Telecommunications
None
$10,001-$50,000
None
None
None
None
None
None
Mid-Cap Growth
None
None
None
None
None
None
None
None
Mid-Cap Growth Fund— ;Advisor Class
None
None
None
None
None
None
None
None
Mid-Cap Growth Fund—
R Class
None
None
None
None
None
None
None
None
Mid-Cap Growth Portfolio
None
None
N one
None
None
None
None
None
Mid-Cap Growth
Portfolio— II
None
None
None
None
None
None
None
None
Mid-Cap Value
None
None
None
None
None
None
None
None
Mid-Cap Value Fund—Advisor Class
None
None
None
None
None
None
None
None
Mid-Cap Value Fund—
R Class
None
None
None
None
None
None
None
None
New America Growth
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
New America Growth Portfolio
None
None
None
None
None
None
None
None
New Asia
None
< /td>		None
None
None
None
None
None
None
New Era
None
None
None
None
None
$50,001-$100,000
None
None
New Horizons
None
over $100,000
None
None
None
None
None
None
New Income
None
over $100,000
None
over $100,000
None
None
over $100,000
None
New Income Fund—Advisor Class
None
None
None
None
None
None
None
None
New Income Fund—
R Class
None
None
None
None
None
None
None
None
New Jersey Tax-Free Bond
None
None
None
None
None
None
None
None
New York Tax-Free Bond
None
None
None
None
None
None
None
None
New York Tax-Free Money
None
None
None
None
None
None
None
None
Overseas Stock
None
None
None
None
None
None
None
None
Personal Strategy Balanced
None
None
None
None
None
None
None
None
Personal Strategy Balanced Portfolio
None
None
None
None
None
None
None
None
Personal Strategy Growth
None
None
None
None
None
None
None
None
Personal Strategy Income
None
None
None
None
None
None
None
None
Prime Reserve
None
None
None
$1-$10,000
None
over $100,000
$10,001-$50,000
None
Prime Reserve Portfolio
None
None
None
None
None
None
None
None
Real Estate
None
$50,001-$100,000
None
None
None
None
None
None
Real Estate Fund—Advisor Class
None
None
None
None
None
None
None
None
TRP Reserve Investment
None
None
None
None
None
None
None
None
Retirement 2005
None
None
None
None
None
None
None
None
Retirement 2005 Fund—Advisor Class
None
None
None
None
None
None
None
None
Retirement 2005 Fund—
R Class
 None
None
None
None
None
None
None
None
Retirement 2010
None
None
None
None
None
None
None
None
Retirement 2010 Fund—Advisor Class
None
None
None
None
None
None
None
None
Retirement 2010 Fund—
R Class
None
None
None
None
None
None
None
None
Retirement 2015
None
None
None
None
over $100,000
None
None
None
Retirement 2015 Fund—Advisor Class
None
None
None
None
None
No ne
None
None
Retirement 2015 Fund—
R Class
None
None
None
None
None
None
None
None
Retirement 2020
None
None
None
None
$50,001-$100,000
None
None
None
Retirement 2020 Fund—Advisor Class
None
None
None
None
None
None
None
None
Retirement 2020 Fund—
R Class
None
None
None
None
None
None
None
None
Retirement 2025
None
None
None
None
None
None
None
None
Retirement 2025 Fund—Advisor Class
None
None
None
None
None
None
None
None
Retirement 2025 Fund—
R Class
None
None
None
None
None
None
None
None
Retirement 2030
None
None
None
None
None
None
None
None
Retirement 2030 Fund—Advisor Class
None
None
None
None
None
None
None
None
Retirement 2030 Fund—
R Class
None
None
None
None
None
None
None
None
Retirement 2035
None
None
None
None
None
None
None
None
Retirement 2035 Fund—Advisor Class
None
None
None
None
None
None
None
None
Retirement 2035 Fund—
R Class
None
None
None
None
None
None
None
None
Retirement 2040
None
None
None
None
None
None
None
None
Retirement 2040 Fund—Advisor Class
None
None
None
None
None
None
None
Retirement 2040 Fund—
R Class
None
None
None
None
None
None
None
Retirement 2045
None
None
None
 None
None
None
None
None
Retirement 2045 Fund—Advisor Class
None
None
None
None
None
None
None
None
Retirement 2045 Fund—
R Class
None
None
None
None
None
None
None
None
Retirement 2050
None
None
None
None
None
None
None
None
Retirement 2050 Fund—Advisor Class
None
None
None
None
None
None
None
None
Retirement 2050 Fund—
R Class
None
None
None
None
None
None
None
None
Retirement 2055
 None
None
None
None
None
None
None
None
Retirement 2055 Fund—Advisor Class
None
None
None
None
None
None
None
None
Retirement 2055 Fund—
R Class
None
None
None
None
None
None
None
None
Retirement Income
None
None
None
None
None
None
None
None
Retirement Income Fund—Advisor Class
None
None
None
None
None
None
None
None
Retirement Income Fund—
R Class
None
None
None
None
None
None
None
None
Science & Technology

None
None
None
None
$50,001-$100,000
None
None
Science & Technology Fund—Advisor Class
None
None
None
None
None
None
None
None
Short-Term Bond
None
over $100,000
None
$50,001-$100,000
None
None
over $100,000
None
Short-Term Bond Fund—Advisor Class
None
None
None
None
None
None
None
None
Short-Term Income
None
None
None
None
None
None
None
None
Small-Cap Stock
None
None
None
None
None
None
None
None
Small-Cap Stock Fund—Advisor Class
None
None
None
None
None
None
None
None
Small-Cap Value
None
None
None
None
None
None
None
None
Small-Cap Value Fund—Advisor Class
None
None
None
None
None
None
None
None
Spectrum Growth
None
None
None
None
None
$10,001-$50,000
None
None
Spectrum Income
None
None
None
over $100,000
None
None
None
None
Spectrum International
None
None
None
None
None
None
None
None
Strategic Income
None
None
None
None
None
None
None
None
Strategic Income Fund—Advisor Class
None
None
None
None
None
None
None
Summit Cash Reserves
None
None
None
< /td>		over $100,000
$10,001-$50,000
None
$1-$10,000
None
Summit GNMA
None
None
None
over $100,000
None
None
None
None
Summit Municipal Income
None
None
None
None
None
None
over $100,000
None
Summit Municipal Intermediate
None
None
None
None
None
None
over $100,000
None
Summit Municipal Money Market
None
None
None
None
None
None
$50,001-$100,000
None
Tax-Efficient Equity
None
None
None
None
None
None
None
None
Tax-Exempt Money
None
None
None
None
None
None
$1-$10,000
None
Tax-Free High Yield
None
None
None
None
None
None
over $100,000
None
Tax-Free Income
None
< /td>		None
None
None
None
None
over $100,000
None
Tax-Free Income Fund—Advisor Class
None
None
None
None
None
None
None
None
Tax-Free Short-Intermediate
None
None
None
None
None
None
over $100,000
None
Total Equity Market Index
None
None
None
None
None
None
None
None
U.S. Bond Index
None
None
None
None
None
None
None
None
U.S. Large-Cap Core
None
None
None
None
None
None
None
None
U.S. Large-Cap Core Fund—Advisor Class
None
None
None
None
None
None
None
None
U.S. Treasury Intermediate
None
None
None
$1-$10,000
None
None
over $100,000
None
U.S. Treasury Long-Term
None
None
None
None
None
None
over $100,000
None
U.S. Treasury Money
None
None
None
None
None
None
$1-$10,000
None
Value
None
None
None
None
None
None
over $100,000
None
Value Fund—Advisor Class
None
None
None
None
None
None
None
None
Virginia Tax-Free Bond
None
None
None
None
None
None
None
None

59

60

61

62

63

64

65

None
< tr bgcolor="#CCEEFF" width="0">

Aggregate Holdings,
All Funds


Inside Directors














Bernard


Gitlin


Laporte


Rogers





over $100,000


over $100,000


over $10 0,000


over $100,000

Africa & Middle East
None
$50,001-$100,000
None
None
Balanced
None
None
None
None
Blue Chip Growth
None
$10,001-$50,000
None
None
Blue Chip Growth Fund—Advisor Class
None
None
None
None
Blue Chip Growth Fund—R Class
None
None
None
None
Blue Chip Growth Portfolio
None
None
None
None
Blue Chip Growth Portfolio—II
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
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
None
None
None
Dividend Growth Fund—Advisor Class
None
None
None
None
Emerging Europe & Mediterranean
None
None
None
None
Emerging Markets Bond
None
None
None
None
Emerging Markets Stock
over $100,000
None
None
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 Income Portfolio
None
None
None
None
Equity Income Portfolio—II
None
None
None
None
Equity Index 500
NoneNone
None
None
Equity Index 500 Portfolio
None
None
None
N one
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
Georgia Tax-Free Bond
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—Ad visor 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 Stoc k
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
$10,001-$50,000
None
None
Health Sciences Portfolio
None
None
None
None
Health Sciences Portfolio—II
None
None
None
None
High Yield
$10,001-$50,000
None
None
None
High Yield Fund—Advisor Class
None
None
None
None
Inflation Protected Bond
None
None
None
None
Institutional Africa & Middle East
None
None
None
Non e
Institutional Core Plus
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 Foreign Equity
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
Institutional International Bond
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
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">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
$50,001-$ 100,000
$10,001-$50,000
over $100,000
None
International Stock Fund—Advisor Class
None
None
None
None
International Stock Fund—R Class
None
None
None
None
International Stock Portfolio
None
None
None
None
Japan
None
None
None
over $100,000
Latin America
None
None
None
None
Limited-Term Bond Portfolio
None
None
None
None
Limited-Term Bond Portfolio—II
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 $100,0 00
$50,001-$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 Cl ass
None
None
None
None
Mid-Cap Growth Portfolio
None
None
None
None
Mid-Cap Growth Portfolio—II
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 America Growth Portfolio< br>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
Overseas Stock
None
None
None
None
Personal Strategy Balanced
None
None
None
None
Personal Strategy Balanced Portfolio
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
$10,001-$50,000
Prime Reserve Portfolio
None
None
None
None
Real Estate
None
None
None
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
None
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
None
None
None
Retirement 2030 Fund—Advisor Class
None
None
None
None
Retirement 2030 Fund—R Class
None
None
None
None
Retirement 2035
None
$50,001-$100,000
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
Reti rement 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
Retirement Income Fund—Advisor Class
None
None
None
None
Reti rement 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
Short-Term Income
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
$50,001-$100,000
None
None
None
Small-Cap Value Fund—Advisor Class
None
None
None
None
Spectrum Growth
over $100,000
None
None
None
Spectrum Income
$10,001-$50,000
None
None
over $100,000
Spectrum International
$10,001-$50,000
None
None
None
Strategic Income
None
None
None
None
Strategic Income Fund—Advisor Class
None
None
None
None
Summit Cash Reserves
over $100,000
over $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
None
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
None
None
U.S. Bond Index
None
None
None
None
U.S. Large-Cap Core
None
None
None
None
U.S. Large-Cap Core—Advisor Class
None
None
None
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">None
U.S. Treasury Intermediate
None
None
None
None
U.S. Treasury Long-Term
None
None
None
None
U.S. Treasury Money
None
None
None
None
Value
None
$10,001-$50,000
over $100,000
over $100,000
Value Fund—Adviso r Class
None
None
None
None
Virginia Tax-Free Bond
None
None
None
None

66

67

68

69

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





Range of Fund Holdings
as of Fund`s Fiscal Year a


All Funds
Range as of
12/31/09





Portfolio Manager







Africa & Middle East
Joseph Rohm
none
none
Balanced
Edmund M. Notzon III
$100,001-$500,000
over $1,000,000
Blue Chip Growth
Larry J. Puglia
$500,001—$1,000,000
over $1,000,000
Capital Appreciation
David R. Giroux
$500,001—$1,000,000
$500,001—$1,000,000
Capital Opportunity
Anna Dopkin
over $1,000,000
over $1,000,000
Corporate Income
David A. Tiberii
$10,001—$50,000
$500,001—$1,000,000
Diversified Mid-Cap Growth
Donald J. Easley
Donald J. Peters
$100,001—$500,000
$500,001—$1,000,000
over $1,000,000
over $1,000,000
Diversified Small-Cap Growth
Sudhir Nanda
$50,001—$100,000
$100,001—$500,000
Dividend Growth
Thomas J. Huber
$100,001—$500,000
over $1,000,000
Emerging Europe & Mediterranean
Leigh Innes
none
none
Emerging Markets Bond
Michael J. Conelius
$100,001—$500,000
 over $1,000,000
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
$50,001—$100,000
$100,001—$500,000
European Stock 
Dean Tenerelli
none
none
Extended Equity Market Index
E. Frederick Bair
Ken D. Uematsu
$10,001—$50,000$1—$10,000
$100,001—$500,000
$100,001—$500,000
Financial Services< /font>
Jeffrey W. Arricale
$100,001—$500,000
$100,001—$500,000
Global Infrastructure
Susanta Mazumdar
(b)
none
Global Large-Cap Stock
R. Scott Berg
$100,001—$500,000
$100,001—$500,000
Global Real Estate
David M. Lee
$100,001—$500,000
over $1,000,000
Global Stock
Robert N. Gensler
over $1,000,000
over $1,000,000
Global Technology
David J. Eiswert
$100,001—$500,000
$500,001—$1,000,000
GNMA
Andrew C. McCormick
$50,001—$100,000
$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
$100,001—$500,000
over $1,000,000
Inflation Protected Bond
Daniel O. Shackelford
$50,001—$100,000
over $1,000,000
International Bond
Ian D. Kelson
$100,001—$500,000
$100,001—$500,000
International Discovery 
Justin Thomson
Ernest C. Yeung
$100,001—$500,000
none
over $1,000,000
$10,001 to $50,000
International Equity Index
E. Frederick Bair
Neil Smith
$10,001—$50,000
none
$100,001—$500,000
none
International Growth & Income
Raymond A. Mills(c)
$100,001—$500,000
over $1,000,000
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
$50,001—$100,000
over $1,000,000
Maryland Tax-Free Bond
Hugh D. McGuirk
$100,001—$500,000
over $1,000,000
Maryland Tax-Free Money
Joseph K. Lynagh
 $1-$10,000
over $1,000,000
Media & Telecommunications
Daniel Martino
$100,001—$500,000
$100,001—$500,000
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
Charles M. Ober(d)
$100,001—$500,000
over $1,000,000
New Horizons
Henry Ellenbogen
$100,001—$500,000
$500,001 51;$1,000,000
New Income
Daniel O. Shackelford
$50,001—$100,000
over $1,000,000
Overseas Stock
Raymond A. Mills
$100,001—$500,000
over $1,000,000
Personal Strategy Balanced
Edmund M. Notzon III
$100,001—$500,000
over $1,000,000
Personal Strategy Growth
Edmund M. Notzon III
$100,001—$500,000
over $1,000,000
Personal Strategy Income
Edmund M. Notzon III
$100,001—$500,000
over $1,000,000
Prime Reserve
Joseph K. Lynagh
$10,001—$50,000
over $1,000,000
Real Estate
David M. Lee
 $100,001—$500,000
over $1,000,000
Science & Technology
Kennard W. Allen
$100,001—$500,000
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">over $1,000,000
Short-Term Bond
Edward A. Wiese
$100,001—$500,000
over $1,000,000
Small-Cap Stock
Gregory A. McCrickard
$500,001—$1,000,000
over $1,000,000
Small-Cap Value
Preston G. Athey
over $1,000,000
over $1,000,000
Spectrum Growth
Edmund M. Notzon III
$500,001—$1,000,000
over $1,000,000
Spectrum Income
Edmund M. Notzon III
$500,001—$1,000,000
over $1,000,000
Spectrum International
Christopher D. Alderson
none
over $1,000,000
Strategic Income
Steven C. Huber
Michael J. Conelius
Andrew C. McCormick
Michael J. McGonigle
David Stanley
$10,001—$50,000
$10,001—$50,000
$10,001—$50,000
$10,001—$50,000
none
$100,001—$500,000
over $1,000,000
$500,001—$1,000,000
over $1,000,000
none
Summit Cash Reserves
Joseph K. Lynagh
$1-$10,000
over $1,000,000
Summit GNMA
Andrew C. McCormick
$50,001—$100,000
over $1,000,000
Summit Municipal Income
Konstantine B. Mallas
$100,001—$500,000
over $1,000,000
Summit Municipal Intermediate
Charles B. Hill
$100,001—$500,000
over $1,000,000
Summit Municipal Money Market
Joseph K. Lynagh
none
over $1,000,000
Tax-Efficient Equity(e)
Donald J. Peters
$500,001—$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
$50,001—$100,000
$500,001—$1,000,000
Tax-Free Income
Konstantine B. Mallas
$50,001—$100,000
over $1,000,000
Tax-Free Short-Intermediate
Charles B. Hill
$50,001—$100,000
over $1,000,000
Total Equity Market Index
E. Frederick Bair
Ken D. Uematsu
$10,001—$50,000
$1-$10,000
$100,001—$500,000
$100,001—$500,000
U.S. Bond Index
Robert M. Larkins
$1-$10,000
$100,001—$500,000
U.S. Large-Cap Core
Jeffrey Rottinghaus
$500,001—$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. Lynag h
none
over $1,000,000
Value
Mark Finn
$100,001—$500,000
$500,001—$1,000,000

70

71

(a)See table beginning on page 6 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 6.

(b)The fund incepted on January 27, 2010, therefore the range of fund holdings is not yet available.

(c)On July 1, 2010, Jonathan Matthews will replace Raymond A. Mills as Portfolio Manager of the fund.

(d)On June 30, 2010, Timothy E. Parker will replace Charles M. Ober as Portfolio Manager of the fund.

(e)The fund was formerly named Tax-Efficient Multi-Cap Growth Fund.

72

The following funds may be purchased only by institutional investors.< tr bgcolor="#CCEEFF" width="0">

Fund





Range of Fund Holdings
as of Fund`s Fiscal Year a


All Funds
Range as of
12/31/09





Portfolio Manager







Institutional Africa & Middle East
Joseph Rohm
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
none
none
$100,001—< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">$500,000
$100,001—$500,000
Institutional Foreign Equity
Robert W. Smith
none
over $1,000,000
Institutional Global Equity
Robert N. Gensler
none
over $1,000,000
Institutional Global Large-Cap Equity
R. Scott Berg
none
$100,001—$500,000
Institutional High Yield 
Paul A. Karpers
none
over $1,000,000
Institutional International Bond
Ian D. Kelson
none
$100,001—$500,000
Institutional Large-Cap Core Growth
Larry J. Puglia
none
over $1,000,000
Institutional Large-Cap Growth
Robert W. Sharps
$100,001—$500,000
over $1,000,000
Institutional Large-Cap Value
Mark Finn
John D. Linehan
Brian C. Rogers
none
$100,001—$500,000
none
$500,001—$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 Dopkin
none
over $1,000,000

(a)See table beginning on page 6 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 6.

The following f unds are designed as investment options for insurance companies issuing variable annuity or variable life insurance contracts. Variable life insurance contracts may not be suitable investments for these portfolio managers.

Fund





Range of Fund Holdings
as of Fund`s Fiscal Yeara


All Funds
Range as of
12/31/09





Portfolio Manager







Blue Chip Growth Portfolio
Larry J. Puglia
none
over $1,000,000
Equity Income Portfolio
Brian C. Rogers
none
over $1,000,000
Equity Index 500 Portfolio
E. Frederick Bair
none
$100,001—$500,000
Health Sciences Portfolio
Kris H. Jenner
none
$500,001—$1,000,000
International Stock Portfolio
Robert W. Smith
none
over $1,000,000
Limited-Term Bond Portfolio
Edward A. Wiese
none
over $1,000,000
Mid-Cap Growth Portfolio
Brian W.H. Berghuis
none
over $1,000,000
New America Growth Portfolio
Joseph M. Milano
none
over $1,000,000
Personal Strategy Balanced Portfolio
Edmund M. Notzon III
none
over $1,000,000
Prime Reserve Portfolio
Joseph K. Lynagh
none
over $1,000,000

(a)See table beginning on page 6 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 6.

73

The following funds are designed for persons residing in the indicated state. The portfolio managers reside in Maryland.

Fund





Range of Fund Holdings
a s of Fund`s Fiscal Year a


All Funds
Range as of
12/31/09





Portfolio Manager







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
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">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 6 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 6.

The following funds are designed such that a single individual would normally select one fund based on that person`s expected retirement date.

Fund





Range of Fund Holdings
as of Fund`s Fiscal Year a


All Funds
Range as of
12/31/09





Portfolio Manager







Retirement 2005
Jerome A. Clark
Edmund M. Notzon III
none
none
$500,001—$1,000,000
over $1,000,000
Retirement 2010 
Jerome A. Clark
Edmund M. Notzon III
none
none
$500,001—$1,000,000
over $1,000,000
Retirement 2015
Jerome A. Clark
Edmund M. Notzon III
none
none
$500,001—$1,000,000
over $1,000,000
Retirement 2020 
Jerome A. Clark
Edmund M. Notzon III
none
none
$500,001—$1,000,000
over $1,000,000
Retirement 2025
Jerome A. Clark
Edmund M. Notzon III		none
none
$500,001—$1,000,000
over $1,000,000
Retirement 2030
Jerome A. Clark
Edmund M. Notzon III
none
none
$500,001—$1,000,000
over $1,000,000
Retirement 2035
Jerome A. Clark
Edmund M. Notzon III
none
none
$500,001—$1,000,000
over $1,000,000
Retirement 2040
Jerome A. Clark
Edmund M. Notzon III
$500,001—$1,000,000
none
$500,001—$1,000,000
over $1,000,000
Retirement 2045
 Jerome A. Clark
Edmund M. Notzon III
none
$100,001-$500,000
$500,001—$1,000,000
over $1,000,000
Retirement 2050

Jerome A. Clark
Edmund M. Notzon III
none
none
$500,001— $1,000,000
over $1,000,000
Retirement 2055

Jerome A. Clark
Edmund M. Notzon III
none
none
$500,001—$1,000,000
over $1,000,000
Retirement Income
Jerome A. Clark
Edmund M. Notzon III
none
none
$500,001—$1,000,000
over $1,000,000

(a)See table beginning on page 6 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 6.

74

The following funds are not available for direct purchase by members of the public.

Fund





Range of Fund Holdings
as of Fund`s Fiscal Year a


All Funds
Range as of
12/31/09





Portfolio Manager







TRP Government Reserve Investment
Joseph K. Lynagh
none
over $1,000,000
TRP Reserve Investment
Joseph K. Lynagh
none
over $1,000,000
Short-Term Income
Edward A. Wiese
none
over $1,000,000

(a)See table beginning on page 6 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 6.

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 T. Rowe Price International, as appropriate, evaluate performance in absolute, relative, and risk-adjusted terms. Relative performance and risk-adjusted 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 return s 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 those funds are the same ones 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 t he 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 our overall investment process is an important consideration as well. Sharing ideas with other portfolio managers, working effectively with and mentoring our younger analysts, and being g ood corporate citizens are important components of our 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, al l 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.

75

6




Registered Investment
Companies


Other Pooled Investment
Vehicles


Other Accounts











Portfolio Manager


Number


Total Assets


Number


Total Assets


Number


Total Assets

Kennard Allen
3
$3,271,677,128
—
—
—
—
Christopher D. Alderson
7
1,494,503,001
7
$3,833,433,479
7
$3,276,110,935
Preston G. Athey
8
7,467,123,081
1
13,042,680
9
554,493,659
Jeffrey W. Arricale
1
331,127,908
—
—
—
—
E. Frederick Bair
7
13,090,810,946
3
2,130,715,684
1
601,728,450
P. Robert Bartolo
13
25,522,412,403
1
189,929,528
7
524,565,198
R. Scott Berg
5
533,984,007
—
—
—
—
Brian W.H. Berghuis
8
20,165,051,858
1
28,599,801
6
858,958,652
Brian J. Brennan
4
928,881,824
5
3,184,164,356
5
675,321,036
Jerome A. Clark
50
33,902,646,481
15
403,643,847
5
653,116,232
Michael J. Coneliu s
12
2,323,750,248
6
3,237,464,421
—
—
Jose Costa Buck
2
2,655,981,172
—
—
1
82,583,070
Anna M. Dopkin
8
1,733,134,792
4
5,175,692,683
52
14,572,851,207
Henry M. Ellenbogen
2
5,898,252,703
3
450,0 75,033
9
868,402,572
Donald J. Easley
1
99,676,403
—
—
2
37,685,235
David J. Eiswert
3
1,469,323,634
—
—
3
44,945,937
Mark S. Finn
8
10,858,570,713
—
—
—
—
Robert N. Gensler
12
3,029,924,550
27
5,117,091,750
18
6,090,332,458
Justin T. Gerbereux
1
665,498,770
—
—
—
—
David R. Giroux
5
14,467,919,406
—
—
—
—
M. Campbell Gunn
1
204,505,859
3
404,846,218
3
1,867,035,018
Charles B. Hill
3
2,337,171,619
2
321,512,511
8
1,253,915,634
Steven C. Huber
1
73,443,256
—
—
—
—
Thomas J. Huber
2
2,060,296,399
1
185,267,998
—
—
Leigh Innes
1
640,471,057
1
8,457,208
—
—
Kris H. Jenner
5
2,633,408,580
1
66,095,409
2
53,345,032
Paul A. Karpers
5
953,943,268
4
872,794,814
5
1,027,470,217
Ian D. Kelson
4
4,492,957,863
13
852,589,723
1
751,925
John H. Laporte
2
4,238,068,702
3
194,848,652
9
594,450,745
Robert M. Larkins
3
1,229,143,784
3
1,115,317,340
10
987,155,630
David M. Lee
3
2,520,712,493
—
—
2
33,512,903
John D. Linehan
3
905,377,274
4
1,196,427,730
19
1,156,064 ,403
Anh Lu
3
3,770,766,907
1
896
3
28,809,351
Joseph K. Lynagh
1,528,374,237
—
—
8
287,237,248
Konstantine B. Mallas
5
3,466,602,235
—
—
5
111,565,664
Daniel Martino
2
1,636,126,091
—
—
—
—
Paul M. Massaro
1
665,498,77 0
—
—
—
—
Susanta Mazumdar (a)
1
6,000,000
—
—
—
—
Andrew C. McCormick
5
1,882,066,276
—
—
2
230,480,558
Gregory A. McCrickard
4
4,183,352,136
2
123,807,005
4
358,760,769
Michael J. McGonigle
1
73,443,256
3
705,137,002
8
1,643,776,847
Hugh D. McGuirk
4
2,204,866,601
—
—
9
297,238,633
Joseph M. Milano
2
969,405,729
—
—
—
—
Mary J. Miller
1
1,781,287,223
—
—
2
186,529,869
Raymond A. Mills
5
4,933,781,730
1
121,531,969
—
—
James M. Murphy
1
1,219,369,733
—
—
—
—
Sudhir Nanda
3
643,012,957
—
—
—
—
Edmund M. Notzon III
18
13,186,411,738
6
1,496,941,515
6
477,894,717
Charles M. Ober
2
5,720,286,665
1
148,189,131
7
791,910,747
Gonzalo Pangaro
10
5,427,734,517
3
3,762,139,735
6
2,527,662,880
Donald J. Peters
7
1,389,500,455
—
—
18
1,376,218,347
Larry J. Puglia
10
16,185,492,180
1
87,265,238
13
1,879,815,991
Joseph Rohm
3
311,470,0991
—
—
—
—
Brian C. Rogers
13
25,533,518< /font>,843
3
562,161,207
16
1,633,862,089
Jeffrey Rottinghaus
3
112,636,271
2
6,306,711
—
—
Daniel O. Shackelford
6
8,034,838,919
1
272,708,334
4
758,988,044
Robert W. Sharps
8
3,636,149,33 3
7
3,355,778,360
34
8,745,209,536
Neil Smith
1
403,631,372
1
90,627,647
—
—
Robert W. Smith
3
6,295,102,362
1
72,447,214
1
120,263
David Stanley
1
73,443,256
4
39,062,171
—
—
Dean Tenerelli
1
711,597,316
3
425,703,906
—
—
Justin Thomson
1
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">2,103,418,574
1
10,933,716
—
—
David A. Tiberii
2
463,159,813
2
144,613,423
6
1,518,683,129
Ken D. Uematsu
3
540,156,630
 2
1,733,520,002
1
497,159,380
Mark J. Vaselkiv
7
6,247,618,409
8
1,844,363,073
21
2,707,596,921
David J. Wallack
3
8,432,287,247
1
28,057,940
2
297,173,476
Edward A. Wiese
7
7,103,029,306
2
270,905,402
11
 4,156,499,646
Ernest C. Yeung
1
2,067,602,114
—
—
—
—

76

(a)This individual assumed portfolio management responsibility of a mutual fund on January 27, 2010. The information on accounts managed is as of January 27, 2010.

Conflicts of Interest

Portfolio managers at T. Rowe Price and T. Rowe Price International 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 universitie s, 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 f or one portfolio and not another portfolio. T. Rowe Price and T. Rowe Price International 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

77

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.

Principal Holders of Securities

As of the dates indicated, the directors and 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.

<R>
<R>

Fund


%*

Africa & Middle East
1.0
Capital Opportunity
1.1
Diversified Mid-Cap Growth
2.5
Global Large-Cap Stock
1.9
Global Stock
1.7
Maryland Short-Term Tax-Free Bond
1.8
Maryland Tax-Free Money
2.6
Summit Cash Reserves
1.4
Tax-Efficient Equity
2.7
Tax-Exempt Money
1.5< br>
U.S. Large-Cap Core
5.3
</R>

</R>

<R>
*Based on March 31, 2010 data for the inside directors and officers and December 31, 2009, data for the independent directors.
</R>

As of March 31, 2010, 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.
Reinvest Account
Attn.: Mutual Fund Department
101 Montgomery Street
San Francisco, California 94104

MLPF&S for the Sole Benefit of Its Customers
4800 Deerlake Drive East, 3rd Floor
Jackson, Florida 32246

National Financial Services for the Exclusive Benefit of
Our Customers
200 Liberty Street
One World Financial Center, 5th Floor
New York, New York 10281
8.08





5.00



9.76
Balanced
T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
P.O. Box 17215
Baltimore, Maryland 21297
45.30(c)
Blue Chip Growth
Edward D. Jones & Company
Shareholder Accounting
Attn.: Mutual Fund
201 Progress Parkway
Maryland Heights, Montana 63043

National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Ret irement Plan Services TR
Blue Chip Growth Fund
Attn.: Asset Reconciliations
P.O. Box 17215
Baltimore, Maryland 21297
6.55





11.54


19.73

Blue Chip Growth Fund—Advisor Class
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

Union Central Life Insurance Company
Attn.: Retirement Plans
1876 Waycross Road
Cincinnati, Ohio 45240

Vanguard Fiduciary Trust Company
T. Rowe Price Advisor Class Funds
Attn.: Outside F unds
P.O. Box 2900
Valley Forge, Pennsylvania 19482
6.90


23.90


9.25




6.88
Blue Chip Growth Fund—R Class
American United Life
Separate Account II
Attn.: Dan Schluge
P.O. Box 1995< /font>
Indianapolis, Indiana 46206

Massachusetts Mutual Life Insurance Company
1295 State Street
Fund Operations/N255
Sprin gfield, Massachusetts 01111

Nationwide Trust Company FSB
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, Ohio 43218

State Street Bank & Trust Company
FBO ADP Daily Valuation B
Attn.: Susan McDonough
105 Rosemont Road
Westwood, Massachusetts 02090
14.18





8.84




14.58




5.32
California Tax-Free Bond
Charles Schwab & Company, Inc.
Reinvest Account
5.84
California Tax-Free Money
Georgette O`Connor Day TR
Georgette O`Connor Day Trust
301 N. Bundy Drive
Los Angeles, California 90049
10.95
Capital Appreciation
Charles Schwab & Company, Inc.
Reinvest Accou nt

National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company
8.94


9.87


6.58
Capital Appreciation Fund—Advisor Class
Ameritas Life Insurance Corporation
Separate Account G
5900 O Street
Lincoln, Nebraska 68510
< /font>
Charles Schwab & Company, Inc.
Reinvest Account

JPMorgan Chase Bank
NA Trustee/Custodian
For TIAA-CREF Retirement Plans
3 Metrotech Center, 5th Floor
Brooklyn, New York 11245

National Financial Services for the Exclusive Benefit of
Our Customers

Union Central Life Insurance Company
Attn.: Retirement Plans
12.26




16.10


6.85




< br>21.04


5.67
Capital Opportunity
McWood & Company
P.O. Box 29522
Raleigh, North Carolina 27626

Swebak & Company
c/o Amcore Investment Group NA
P.O. Box 4599
Rockford, Illinois 61110

T. Rowe Price Associates
Attn.: Financial Reporting Department
47.34(a)



6.03




6.88
Capital Opportunity Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers

Reliance Trust Company Custodian
FBO Lima Memorial Health System 401(k)
8515 East Orchard Road 2T2
Greenwood Village, Colorado 80111
59.76(a)


28.28(a)
Capital Opportunity Fund—R Class
Charles Schwab & Company, Inc.
Reinvest Account

Counsel Trust DBA MATC
FBO Light Age Inc. 401(k) Profit Sharing Plan & Trust
1251 Waterfront Place, Suite 525
Pittsburgh, Pennsylvania 15222

FIIOC as Agent
FBO A/R Packaging Corporation 401(k) Salary
Reduction Plan & Trust
100 Magellan Way (KW1C)
Covington, Kentucky 41015

Nationwide Trust Company FSB

Reliance Trust Company
FBO MTRMLS Inc.
P.O. Box 48529
Atlanta, Georgia 30362
35.36(a)


13.64




20.32





20.28

5.26
Corporate Income
Yachtcrew & Company
T. Rowe Price Associates
Attn.: Fund Accounting Department
53.39(d)
Dividend Growth
Charles Schwab & Company, Inc.
Reinvest Account

Edward D. Jones & Company
Shareholder Accounting
Attn.: Mutual Fund

National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company
Dividend Growth Fund (DGF)
Attn.: Asset Reconciliation
5.08


19.03



6.31


8.37
Dividend Growth Fund—Advisor Class
FIIOC as Agent
FBO J.M. Smith Corporation

National Financial Services for the Exclusive Benefit of
Our Customers

Pershing LLC
P.O. Box 2052
Jersey City, New Jersey 07303
14.72


51.87(a)


5.64
Emerging Europe & Mediterranean
National Financial Services for the Exclusive Benefit of
Our Customers
11.32
Emerging Markets Bond
Charles Schwab & Company, Inc.
Reinvest Account

Retirement Portfolio 2010
T. Rowe Price Associates
Attn.: Fund Accounting Department

Retirement Portfolio 2015
T. Rowe Price Associates
Attn.: Fund Accounting Department

Retirement Portfolio 2020
T. Rowe Price Associates
Attn.: Fund Accounting Department

Yachtcrew & Company
T. Rowe Price Associates
Attn.: Fund Accounting Department
5.56


< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">8.13



6.20



11.24



16.35
Emerging Markets Stock
National Financial Services for the Exclusive Benefit of< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">
Our Customers

T. Rowe Price Associates TR
Default 2030-RETIP PSP

T. Rowe Price Associates TR
Attn.: Fund Accounting Department PSP
12.75


5.45



6.00
Equity Income
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
5.97


17.84
Equity Income Fund—Advisor Class
Citigroup Global Markets Inc.
333 West 34th Street, 3rd Floor
New York, New York 10001

John Hancock Life Insurance USA
RPS SEG Funds and Accounting ET-7
601 Congress Str eet
Boston, Massachusetts 02210

National Financial Services for the Exclusive Benefit of
Our Customers
7.46



16.84




45.35(a)
Equity Income Fund—R Class
American United Life
Separate Account II

Guardian Insurance & Annuity Corporation
3900 Burgess Place
Equity Accounting 3S
Bethlehem, Pennsylvania 18017

Nationwide Trust Company FSB

Wachovia Bank
FBO Various Retirement Plans
1525 West WT Harris Boulevard
Charlotte, North Carolina 28288
16.72


7.66




8.27

7.53
Equity Index 500
Retirement Portfolio 2010

Retirement Portfolio 2015

Retirement Portfolio 2020

Retirement Portfolio 2025
T. Rowe Price Associates
Attn.: Fund Accounting Department

Retirement Portfolio 2030
T. Rowe Price Associates
Attn.: Fund Accounting Department
11.91

9.19

16.73

6.56



8.86
European Stock
Bobstay & Company
T. Rowe Price Associates
Attn.: Fund Accounting Department

Charles Schwab & Company, Inc.
Reinvest Account
16.88



5.23
Extended Equity Market Index
T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
25.21(c)
Financial Services
T. Rowe Price Retirement Plan Services, Inc.
New Business Group for #117
5.26
Georgia Tax-Free Bond
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers
13.12


9.24
Global Infrastructure
T. Rowe Price International
Attn.: Financial Reporting Department
100 East Pratt Street
Baltimore, Maryland 21202
30.88(f)
Global Infrastructure Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers
100.00(a)
Global Large-Cap Stock
T. Rowe Price Associates
Attn.: Financial Reporting Department

Trustees of T. Rowe Price U.S. Retirement Program
Attn.: Financial Reporting Department
P.O. Box 89000
Baltimore, Maryland 21289
19.57


7.71
Global Large-Cap Stock Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers
T. Rowe Price Associates
Attn.: Financial Reporting Department
10.17


80.79(e)
Global Real Estate
T. Rowe Price Associates, Inc.
Attn.: Financial Reporting Department

Trustees of T. Rowe Price U.S. Retirement Program
Attn.: Financial Reporting Department
40.37(e)

< /font>
5.05
Global Real Estate Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Associates
Attn.: Financial Reporting Department
10.94

87.47(e)
Global Stock
Charles Schwab & Company, Inc.
Reinvest Account

JPMorgan as Directed Trustee for Ernest & Young Defined
Benefit Retirement Plan Trust
Attn.: Phyllis Mancini
4 New York Plaza, Floor 15
New York, New York 10004

National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Retirement Plan Services, Inc.
Omnibus Plan
6.49

12.11





6.02


7.11
Global Stock Fund—Advisor Class
JPMorgan Chase Bank
Trust FBO ADP Enterprise 401(k) Product

National Financial Services for the Exclusive Benefit of
Our Customers

UMB Bank NA SFR
FBO Fiduciary for Tax Deferred Accounts Group
1 SW Security Benefit Plac e
Topeka, Kansas 66636
47.90(a)


37.46(a)


8.67
Global Technology
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers
9.72


13.38
GNMA
Yachtcrew & Company
34.50(d)
TRP Government Reserve Investment
Barnaclesail
c/o T. Rowe Price Associates
Attn.: Mid-Cap Growth Fund

Bridgesail & Company
c/o T. Rowe Price Associates
Attn.: Science & Technology Fund

T. Rowe Price Retirement Plan Services, Inc.
Attn.: RPS Cash Group
65.29(d)



12.89



8.95
Growth & Income
T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
9.32
Growth Stock
National Financial Services for the Exclusive Benefit of
Our Customers

Retirement Portfolio 2020

Retirement Portfolio 2030

Retirement Portfolio 2040
T. Rowe Price Associates
Attn.: Fund Accounting Department

T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
8.33


7.07

8.40

5.87



9.90
Growth Stock Fund—Advisor Class
ICMA Retirement Trust
777 North Capitol Street NE, Suite 600
Washington, D.C. 20002
National Financial Services for the Exclusive Benefit of
Our Customers

U.S. Bank
FBO Private Asset Department
OA Platform
P.O. Box 1787
Milwaukee, Wisconsin 53201
5.78



25.35(a)


8.22
Growth Stock Fund—R Class
American United Life
Separate Account II

Guardian Insurance & Annuity Corporation

Hartford Life Insurance Company
Separate Account
Attn.: UIT Operations
P.O. Box 2999
Hartford, Connecticut 06140

Nationwide Trust Company FSB
5.06


5.37

5.87





8.88
Health Sciences
Charles Schwab & Company, Inc.
Reinvest Account

John Hancock Life Insurance Company USA
RPS SEG Funds and Accounting ET-7

National Financial Services for the Exclusive Benefit of
Our Customers
6.76


10.0 7


9.70
High Yield
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

Retirement Portfolio 2020

Yachtcrew & Company
6.02


5.43


5.05

19.93
High Yield Fund—Advisor Class
Genworth Financial Trust Company
FBO Genworth Financial WMGT & Mutual Clients & FBO Other Custodial Clients
3200 North Central Avenue, Floor 6
Phoenix, Arizona 85012

National Financial Services for the Exclusive Benefit of
Our Customers
5.04





88.99(a)
Inflation Protected Bond
T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account
Inflation Protected Bond
8.92
Institutional Africa & Middle East
CIA Agent for its Clients-CCC
c/o Choate Hall & Stewart LLP
Two International Place
Boston, Massachusetts 02110

Goucher College
1021 Dulaney Valley Road
Baltimore, Maryland 21204

John S. and James L. Knight Foundation
Wachovia Financial Center, Suite 3300
200 South Biscayne Boulevard
Miami, Florida 33131

Mac & Company
Attn.: Mutual Fund Ops
P.O. Box 3198
Pittsburgh, Pennsylvania 15230

The John E. Fetzer Institute Inc.
9292 West KL Avenue
Kalamazoo, Michigan 49009
31.57(a)



6.49



20.65




30.52(a)




5.66
Institutional Core Plus
JPMorgan Chase TR
FBO ADP Enterprise 401(k) Product

Jeanette Stump
Robert J. Hennessy TR
Special Metals Corporation Retiree Benefit Trust
60 Boulevard of the Allies, Floor 5
Pittsburgh, Pennsylvania 15222

 National Financial Services for the Exclusive Benefit of
Our Customers

Saxon and Company
P.O. Box 7780-1888
Philadelphia, Pennsylvania 19182

SEI Private Trust Company
c/o Mellon ID 225
One Freedom Valley Drive
Oaks, Pennsylvania 19456

The Church Foundation
240 South 4th Street
Philadelphia, Pennsylvania 19106

T. Rowe Price Associates
Attn.: Financial Reporting Department
20.28


12.24





5.64


9.95



5.13




24.69



14.97
Institutional Emerging Markets Bond
DBTCO 0
P.O. Box 747
Dubuq ue, Iowa 52004

Ladybird & Company
c/o T. Rowe Price Associates
Attn.: Personal Strategy Income Fund

Ladybug & Company
c/o T. Rowe Price Associates
Attn.: Personal Strategy Balanced Fund

Lakeside & Company
c/o T. Rowe Price Associates
Attn.: Personal Strategy Growth Fund

National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Associates
Attn.: Financial Reporting Department
6.27



28.06(d)



30.39(d)



10.46



5.33


6.41
Institutional Emerging Markets Equity
Ladybug & Company
c/o T. Rowe Price Associates
Attn.: Personal Strategy Balanced Fund

Lakeside & Company
c/o T. Rowe Price As sociates
Attn.: Personal Strategy Growth Fund

Mac & Company
Attn.: Mutual Fund Ops

MLPF&S for the Sole Benefit of Its Customers

Patterson & Company Omnibus
1525 West W.T. Harris Boulevard
Charlotte, North Carolina 28288
7.80



7.03



5.43


27.19(a)

12.16
Institutional Floating Rate
Genworth Financial Trust Company
FBO Genworth Financial WMGT & Mutual Clients & FBO Other Custodial Clients

Nutmeg &am p; Company
c/o T. Rowe Price Associates
Attn.: Value Fund

Seamile & Company
c/o T. Rowe Price Associates
Attn.: Capital Appreciation Fund

Taskforce & Company
c/o T. Rowe Price Associates
Attn.: Equity Income Fund

Tuna & Company
c/o T. Rowe Price Associates
Attn.: New Income Fund
10.15



9.77



28.23(d)



19.55



23.60
Institutional Foreign Equity
Network Fully Disclosed FBO DL Pension Plan
152 5 West W. T. Harris Boulevard
Charlotte, North Carolina 28288

Saxon and Company

State Street Bank & Trust Company Cust.
Houston Metro Transit Authority Fund—MTA Union
805 Pennsylvania Avenue
Tower 2, 5th Floor
Kansas City, Missouri 64105

State Street Bank & Trust CompanyHouston Metro Transit Authority Fund—MTA Non-Union

The Church Foundation
5.90



16.86

34.26(a)





26.16(a)


9.10
Institutional Global Equity
Keybank NA
FBO JCF - T. Rowe Price
P.O. Box 94871
Cleveland, Ohio 44101

SEI Private Trust Company
c/ o SunTrust Bank

State Street Bank & Trust Company
Trustee for Riverside Health System Retirement Income Plan
125 Sunnynoll Court, Suite 200
Winston Salem, North Carolina 27106

The Bank of New York Mellon as Trustee for
Computer Science Trust Pension
1 Wall Street, 12th Floor
New York, New York 10286

U.S. Bank Trustee
FBO NREL/MRI
Mutual Fund Trading
P.O. Box 1787
Milwaukee, Wisconsin 53201
11.25




5.84


< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">18.22




42.60(a)




6.78
Institutional Global Large-Cap Equity
Croda Inc. Def. Benefit Pl Master Trust
c/o State Street Bank and Trust Company
801 Pennsylvania Avenue
Attn.: Steve Chiles
Tower 1 - 5th Floor
Kansas City, Montana 64105

State Street Bank & Trust Company
Trustee for Master Trust for Defined Benefit Plans
of Syngenta Corporation

T. Rowe Price Associates
Attn.: Financial Reporting Department
13.90






5< /font>9.19(a)



24.56
Institutional High Yield
Bread & Company
c/o T. Rowe Price Associates
Attn.: Balanced Fund

Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

State Street Bank & Trust Company
Trustee for the Ford Motor Company

Tuna & Company
c/o T. Rowe Price Associates
Attn.: New Income Fund
8.99



9.76


5.93


7.11


10.29
Institutional International Bond
< /td>		Charles Schwab & Company, Inc.
Special Custody A/C FBO Customers

Ladybird & Company
c/o T. Rowe Price Associates
Attn.: Personal Strategy Income Fund

Ladybug & Company
c/o T. Rowe Price Associates
Attn.: Personal Strategy Balanced Fund

Lakeside & Company
c/o T. Rowe Price Associates
Attn.: Personal Strategy Growth Fund
31.27(a)


21.16



23.68



7.78
Institutional Large-Cap Core Growth
Charles Schwab & Company, Inc.
Reinvest Account
Attn.: Mut ual Fund Department

Immaculate Heart Missions, Inc.
Common Account
Casa Generalizia
Via S. Giovanni Eudes 95
Rome, Italy 00163

Middlesex Health System Inc.
Pension Plan
Attn.: Susan Martin
28 Crescent Street
Middletown, Connecticut 06457

National Financial Services for the Exclusive Benefit of
Our Customers

SEI Private Trust Company
Attn.: Mutual Funds

The Jewish Foundation of Cincinnati
8044 Montgomery Road, Suite 700
Cincinnati, Ohio 45236
5.13



5.07





5.18





54.28(a)


14.07


6.31
Institutional Large-Cap Growth
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

SEI Private Trust Company
< /font>c/o SunTrust Bank

State Street Bank & Trust Company
Savannah River Nuclear Solutions
11.80


12.71


9.35


7.80
Institutional Large-Cap Value
Charles Schwab & Company, Inc.
Reinvest Account< /font>

National Financial Services for the Exclusive Benefit of
Our Customers

Prudential Bank & TrustFSB Trustee < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">New York Metro Transit Authority
Attn.: Andrew F. Levesque
280 Trumbull Street
One Commercial Plaza
Hartford, Connecticut 06103
The Church Foundation

The Harry and Jeanette Weinberg Foundation, Inc.
26.66(a)


24.56


17.75






5 .41

7.96
Institutional Mid-Cap Equity Growth
Charles Schwab & Company, Inc.
Reinvest Account

Kentucky Public Employees Deferred Compensation Authority
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, Ohio 43218

National Financial Services for the Exclusive Benefit of
Our Customers

Wells Fargo Bank NA
FBO Land O` Lakes Inc. Retirement Trust
P.O. Box 1533
Minneapolis, Minnesota 55480
12.55


18.77





6.55


10.65
Institutional Small-Cap Stock
National Financial Services for the Exclusive Benefit of
Our Customers

Wells Fargo Bank NA
FBO Pinnacol Assurance Equity Mutual Funds
59.06(a)


6.39
Institutional U.S. Structured Research
Mitra & Co FB< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">O 98 ERISA Only
c/o Marshall & Ilsley TR CO NA
11270 West Park Place, Suite 400
Wisconsin 53224

Northern Trust Company Cust odian
FBO ALSAC
P.O. Box 92956
Chicago, Illinois 60675

The Harry and Jeanette Weinberg Foundation, Inc.

< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">The UCLA Foundation
10920 Wilshire Boulevard, Suite 900
Los Angeles, California 90024

U.S. Bank
FBO Adams County

 Wells Fargo Bank NA
FBO PHP - T. Rowe Price Institutional Structured Research
P.O. Box 1533
Minneapolis, Minnesota 55480
6.18




10.38




10.64

10.75



5.38


15.00
International Bond
Charles Schwab & Company, Inc.
Reinvest Account

Edward D. Jones & Company
Shareholder Accounting
Attn.: Mutual Fund

National Financial Services for the Exclusive Benefit of
Our Customers

Retirement Portfolio 2020
T. Rowe Price Associates
Attn.: Fund Accounting Department

Yachtcrew & Company
11.52


11.20



10.51


5.09



17.23
International Bond Fund—Advisor Class
Citigroup Global Markets Inc.

National Financial Services for the Exclusive Benefit of
Our Customers
19.43

7.05
International Discovery
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

State Street Bank & Trust Company
As TTEE for the Ford Motor Company
Master Trust

T. Rowe Price Retirement Plan Services, Inc.
Attn.: Asset Reconciliation

Vanguard Fiduciary Trust Company
T. Rowe Price Retail Class Funds
Attn.: Outside Funds
P.O. Box 2600 VM 613
Valley Forge, Pennsylvania 19482
5.10

8.47


11.06



6.29


10.31
International Equity Index
T. Rowe Price Retirement Plan Services, Inc.
Omnibus Plan
New Business Conv. Assets
34.65(b)
International Growth & Income
Pirateline & Company
T. Rowe Price Associates
Attn.: Fund Accounting Department
100 East Pratt Street
Baltimore, Maryland 21202

Retirement Portfolio 2010

Retirement Portfolio 2015

Retirement Portfolio 2020

Retirement Portfolio 2025

Retirement Portfolio 2030

Retirement Portfolio 2035
T. Rowe Price Associates
Attn.: Fund Accounting Department

Retirement Portfolio 2040
8.01





5.21

5.59< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">

13.55

7.00

12.15

5.05



8.07
International Growth & Income Fund—Advisor Class
State Street Bank & Trust Company
FBO ADP Daily Valuation B
Attn.: Susan McDonough

U.S. Bank
FBO Private Asset Department
OA Platform
6.62



37.21(a)
International Growth & Income Fund—R Class
American United Life
Separate Account II

Delaware Charter Guarantee & Trust
FBO Various Qualified Plans
711 High Street
Des Moines, Iowa 50309

JPMorgan Chase TR
FBO ADP Access 401(k)

Nationwide Trust Company FSB
22.62


11.49




7.17


9.< /font>90
International Stock
Retirement Portfolio 2020

Retirement Portfolio 2030

T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
7.81

7.00

8.42
International Stock Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers

U.S. Bank
FBO Private Asset Department
OA Platform
61.25(a)


7.01
International Stock Fund—R Class
American United Life
American Unit Trust

American United Life
Separate Account II

Nationwide Trust Company FSB
7.35


42.49(a)


9.07
Japan
Bobstay & Company

Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

RCAB Collective Investment Partnership
66 Brooks Drive
Braintree, Massachusetts 02184
17.92

8.39


9.07


5.42


Latin America
Charles Schwab & Company, Inc.
Reinvest Account
8.18
Maryland Short-Term Tax-Free Bond
Charles Schwab & Company, Inc.
Reinvest Account
11.56
Maryland Tax-Free Money
T. Rowe Price Associates
Attn.: Financial Reporting Department
10.16
Media & Telecommunications
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company
Media & Telecommunications Fund
6.60


5.40


9.23
Mid-Cap Growth
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company
Attn.: Asset Reconciliations
6.50


11.72


18.15
Mid-Cap Growth Fund—Advisor Class
MLPF&S for the Sole Benefit of its Customers

National Financial Services for the Exclusive Benefit of
Our Customers

Vanguard Fiduciary Trust Company
T. Rowe Price Advisor Class Funds
7.49

16.55


5.58
Mid-Cap Growth Fund—R Class
American United Life
Separate Account II

ING Life Insurance & Annuity Company
1 Orange Way B3N
Windsor, Connecticut 06095

Nationwide Trust Company FSB
7.84


18.60



13.74
Mid-Cap Value
National Financial Services for the Exclusive Benefit of
Our Customers

Retirement Portfolio 2020

T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account
New Business Group
12.16


5.04

8.18
Mid-Cap Value Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers

U.S. Bank
FBO Private Asset Department
OA Platform
41.77(a)


5.92
Mid-Cap Value Fund—R Class
ING Life Insurance & Annuity Company

JP Morgan Chase TR
FBO ADP Mid Market Product
Attn.: Lisa Glenn
3 Metrotech Center 6th Floor
Brooklyn, New York 11245

Nationwide Trust Company FSB

State Street Bank & Trust
FBO ADP Daily Valuation B
8.03

7.90





15.< /font>23

27.67(a)
New America Growth
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
5.01


6.44


16.14
New America Growth Fund—Advisor Class
ING National Trust
1 Orange Way B3N
Windsor, Connecticut 06095

National Financial Services for the Exclusive Benefit of
Our Customers

PIMS Prudential Retirement
As Nominee for the Trustee/Custodian PL 006
Program-Schultz 401(k) Plan
600 Galleria Parkway, SE, Suite 100
Atlanta, Georgia 30339
8.54



51.55(a)


8.90
New Asia
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers
6.19


7.88
New Era
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers
8.83


11.07
New Horizons
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
5.51


21.34
New Income
National Financial Services for the Exclusive Benefit of
Our Customers

Retirement Portfolio 2010

Retirement Portfolio 2015

Retirement Portfolio 2020

Retirement Portfolio 2025

Retirement Portfolio 2030

Yachtcrew & Company
7.19


10.67

8.22

14.86

5.58

6.42

12.12
New Income Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers
90.72(a)
New Income Fund—R Class
DWS Trust Company TTEE
Biery Cheese Co. Emp. PSP
Attn.: Share Recon. Department 063699
P. O. Box 1757
Salem, New Hampshire 03079

Emjay Corporation Customers
FBO Plans of RPSA Customers
c/o Great West
8515 East Orchard Road 2T2
Greenwood Village, Colorado 80111

Nationwide Trust Company FSB

NFS LLC FEBO
Marshall & Ilsley Trust Company NA
FBO Bank 98 Daily Recordkeeping
Attn.: Mutual Funds
11270 West Park Place, Suite 400
Milwaukee, Wisconsin 53224

NFS LLC FEBO
Alerus Financial NA
P.O. Box 64535
Saint Paul, Minnesota 55164

Wachovia Bank
FBO Various Retirement Plans

Wilmington Trust Company TTEE FBO
Mueller Inc. 401(k) Plan
c/o Mutual Funds
P.O. Box 8880
Wilmington, Delaware 19899
16.92





6.28





13.88

11.90






9.67




13.63


9.03
New Jersey Tax-Free Bond
National Financial Services for the Exclusive Benefit of
Our Customers

PFPC Inc. as Agent for PFPC Trust
FBO JJB Hilliard WL Lyons Inc.
760 Moore Road
King of Prussia, Pennsylvania 19406
5.10


11.89
New York Tax-Free Money
H. Mark Glasberg
Paula D. Glasberg Joint Tenants
New York, New York 10023
8.88
Overseas Stock
Retirement Portfolio 2010

Retirement Portfolio 2015

Retirement Portfolio 2020

Retirement Portfolio 2025

Retirement Portfolio 2030

Retirement Portfolio 2035

Retirement Portfolio 2040
7.37

7.78

19.17

9.79

17.16

7.08

11.33
Personal Strategy Balanced
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company TR
Balanced
Attn.: Asset Reconciliation
7.32


37.10(c)
Personal Strategy Growth
T. Rowe Price Trust Company TR
Attn.: Growth Asset
28.65(c)
Personal Strategy In come
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company TR
Income
Attn.: Asset Reconciliation
5.04


22.44
Prime Reserve
T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
11.51
Real Estate
Charles Schwab & Compa ny, Inc.
Reinvest Account

Prudential Investment Management Service
FBO Mutual Funds Clients
Attn.: Pruchoice Unit
Mail Stop 194-201
194 Wood Avenue South
Iselin, New Jersey 08830

SEI Private Trust Company
c/o SunTrust
Attn.: Mutual Funds Administration

Wachovia Bank
Omnibus
5.08


8.09






5.64



20.10
Real Estate Fund—Advisor Class
GPC Securities Incorporated as Agent for
Reliance Trust Company
FBO Plexus Corp. 401(k) Savings Plan

National Financial Services for the Exclusive Benefit of
Our Customers
6.05



70.29(a)
TRP Reserve Investment
Seamile & Company
c/o T. Rowe Price Associates
Attn.: Capital Appreciation Fund

State Street Bank & Trust Company
Agent for T. Rowe Price Institutional Funds
1 Lincoln Street
3rd Floor
Boston, Massachusetts 02111

TaskForce & Company

TRP Managed GIC
8.00



20.34





6.10

6.25
Retirement 2005 Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers

New York Life Trust Company
Client Account
169 Lackawanna Avenue
Parsippany, New Jersey 07054

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife
8515 East Orchard Road 2T2
Greenwood Village, Colorado 80111
42.58(a)< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">


14.05




5.51
Retirement 2005 Fund—R Class
State Street Bank & Trust Company Trustee
NFS LLC FEBO Various Retirement Plans
4 Manhattanville Road
Purchase, New York 10577
96.26(a)
Retirement 201 0
T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account
Retirement 2010
45.12(b)
Retirement 2010 Fund—Advisor Class
Charles Schwab & Company, Inc.
Reinvest Account

Massachusetts Mutual Life Insurance Company
Attn.: RS Fund Operations

National Financial Services for the Exclusive Benefit of
Our Customers

Taynik & Company
c/o Investors Bank & Trust< /font>
P.O. Box 9130
Boston, Massachusetts 02117
7.56


9.63


17.78


5.06
Retirement 2010 Fund—R Class
Hartford Life Insurance Company
Separate Account
Attn.: UIT Operations

Massachusetts Mutu al Life Insurance Company

Saxon and Company

State Street Bank & Trust Company
FBO ADP Daily Valuation B

State Street Bank & Trust Company Trustee
American Red Cross Savings Plan

Taynik & Company
7.86



5.82

5.92

5.95


11.55


6.66
Retirement 2015
T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account Retirement
55.17(b)
Retirement 2015 Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers

New York Life Trust Company
Client Account

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife
22.71


9.62


12.22
Retirement 2015 Fund—R Class
State Street Bank & Trust Company Trustee
NFS LLC FEBO Various Retirement Plans

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife

T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account
TRP R Class

Taynik & Company

Wachovia Bank
FBO Various Retirement Plans
25.52(a)


20.20


6.90



7.32

8.55
Retirement 2020
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account
Retirement 2020
5.32


53.58(b)
Retirement 2020 Fund—Advisor Class
Charles Schwab & Company, Inc.
Reinvest Account

Massachusetts Mutual Life Insurance Company
Attn.: RS Fund Operations

Nationa l Financial Services for the Exclusive Benefit of
Our Customers
6.35


11.67


18.34
Retirement 2020 Fund—R Class
Hartford Life Insurance Company
Separate Account

Massachusetts Mutual Life Insurance Company

Saxon and Company

State Street Bank & Trust Company
FBO ADP Daily Valuation B

Taynik & Company
10.65


7.43

5.88

9.06


8.72
Retirement 2025
T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account Retirement
61.45(b)
Retirement 2025 Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers

New York Life Trust Company
Client Account

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife

State Street Bank & Trust
FBO Apogee Enterprises Defined Contribution Plan
21.43


14.50


9.39


5.85
Retirement 2025 Fund—R Class
Emjay Corporation Custodian
FBO Joseph D. Fail Engineering Company, Inc. 401(k) Profit Sharing Plan
8515 East Orchard Road 2T2
Greenwood Village, Colorado 80111

State Street Bank & Trust Company
NFS LLCFEBOTrustee: Various Retirement Plans

Orchard Trust Company Trustee
Employee Benefits Clients

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife

Wachovia Bank
FBO Various Retirement Plans
7.16





22.73


6.99


18.16


11.49
Retirement 2030
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account
Retirement 2030
5.07

56.33(b)
Retirement 2030 Fund—Advisor Class
Charles Schwab & Company, Inc.
Reinvest Account

Massachusetts Mutual Life Insurance Company

National Financial Services for the Exclusive Benefit of
Our Customers

Taynik & Company
5.69


12.30

15.71


5.52
Retirement 2030 Fund—R Class
Hartford Life Insurance Company
Separate Account

Massachusetts Mutual Life Insurance Company

Saxon and Company

State Street Bank & Trust Company
FBO ADP Daily Valuation B

Taynik & Company
10.12


8.21

5.45

11.85


9.81
Retirement 2035
T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account Retirement
62.38(b)
Retirement 2035 Fund—Advisor Class
Charles Schwab & Company, Inc.
Special Custody A/C FBO Customers

National Financial Services for the Exclusive Benefit of
Our Customers

New York Life Trust Company
Client Account

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife
5.27


22.69


17.65


6.48
Retirement 2035 Fund—R Class
Emjay Corporation Custodian
FBO Joseph D. Fail Engineering Company, Inc. 401(k)
Profit Sharing Plan

State Street Bank & Trust Company Trustee
NFS LLC FEBO Various Retirement Plans

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife

Wachovia Bank
FBO Various Retirement Plans
6.54



26.86(a)


22.22


15.05
Retirement 2040
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account
Retirement 2040
 5.43


57.21(b)
Retirement 2040 Fund—Advisor Class
Massachusetts Mutual Life Insurance Company

National Financial Services for the Exclusive Benefit of
Our Customers

New York Life Trust Company
Client Account

Taynik & Company
12.14

17.19


5.50


6.14
Retirement 2040 Fund—R Class
Hartford Life Insurance Company
Separate Account

Massachusetts Mutual Life Insurance Company

Saxon and Company

State Street Bank & Trust
FBO ADP Daily Valuation B

Taynik & Company
9.17


8.49

5.04

12.57


8.95
Retirement 2045
T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account Retirement
65.58(b)
Retirement 2045 Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers

New York Life Trust Company
Client Account

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife
24.07


20.80


7.21
Retirement 2045 Fund—R Class
State Street Bank & Trust Company Trustee
NFS LLC FEBO
Various Retirement Plans

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife

Wachovia Bank
FBO Various Retirement Plans
26.63(a)



21.42


22.31
Retirement 2050
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account Retirem ent
7.10


60.43(b)
Retirement 2050 Fund—Advisor Class
Massachusetts Mutual Life Insurance Company

National Financial Services for the Exclusive Benefit of
Our Customers

New York Life Trust Company
Client Account

Taynik & Company
12.83

21.29


5.38


8< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">.48
Retirement 2050 Fund—R Class
Hartford Life Insurance Company
Separate Account
JP Morgan Chase TR
FBO ADP/Access 401(k)
4 New York Plaza, Floor 15
New York, New York 10004

Massachusetts Mutual Life Insurance Company

Saxon and Company

State Street Bank & Trust
FBO ADP Daily Valuation B

Taynik & Company
17.33


9.56




7.62

6.54

 12.95


10.17
Retirement 2055
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account Retirement
6.04


55.31(b)
Retirement 2055 Fund—Advisor Class
Massachusetts Mutual Life Insurance Company

National Financial Services for the Exclusive Benefit of
Our Customers

New York Life Trust Company
Client Account

Orchard Trust Company Trustee
Employee Benefits Clients
5.37

23.10


9.19


30< /font>.47(a)
Retirement 2055 Fund—R Class
Bankers Trust Company
NFS LLC FEBO< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">
P.O. Box 897
Des Moines, Iowa 50306

Massachusetts Mutual Life Insurance Company

State Street Bank & Trust Company Trustee
NFS LLC FEBO
Various Retirement Plans

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife

Wachovia Bank
FBO Various Retirement Plans
7.78




33.55(a)


9.78



20.46


7.77
Retirement Income
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Retirement Plan Services, Inc.
Omnibus Account
Retirement Income
7.01


31.11(b)
Retirement Income Fund—Advisor Class
Massachusetts Mutual Life Insurance Company

National Financial Services for the Exclusive Benefit of
Our Customers

Reliance Trust Company
FBO Retirement Plans Serviced by MetLife

Taynik & Company
9.47

24.82


5.55


6.14
Retirement Income Fund—R Class
Hartford Life Insurance Company
Separate Account

ING
Core 3
Trustee: State Street Bank & Trust
1 Heritage Drive
Quincy, Massachusetts 02171

JP Morgan Chase TR
FBO ADP/Access 401(k)

Massachusetts Mutual Life Insurance Company

State Street Bank & Trust
FBO ADP Daily Valuation B

Taynik & Company

Wachovia Bank
FBO Various Retirement Plans
6.91


5.83





5.16


6.27

11.89


8.97

7.04
Science & Technology
Super Saver Capital Accumulation Plan
For Employees of AMR Corporation Subsidiaries
JP Morgan Chase Bank as directed TR
c/o JP Morgan Am Century Retirement Services
P.O. Box 419784
Attn.: MGMT RPTG Team
Kansas City, Missouri 64141< br>
T. Rowe Price Retirement Plan Services, Inc.
Omnibus Plan
New Business Group Conv. Assets
6.16







19.10
Science & Technology—Advisor Class
John Hancock Life Insurance Company USA
RPS Seg. Funds and Accounting ET-7
86.60(a)
Short-Term Bond
National Financial Services for the Exclusive Benefit of
Our Customers

Prudential Investment Management Services

Ya chtcrew & Company
8.82


7.74

13.19
Short-Term Bond Fund—Advisor Class
Genworth Financial Trust Company
FBO Genworth Financial WMGT & Mutual Clients & FBO Other Custodial Clients
87.91(a)
Short-Term Income
Short-Term Income Fund
T. Rowe Price Associates
Attn.: Fund Accounting Department

T. Rowe Price Services, Inc.
FBO Alaska College Savings Trust
Portfolio 2009-2012
Attn.: Kim Vanscoy, Fixed Income
85.95(d)



5.66
Small-Cap Stock
Minnesota State Retirement System
Defined Contribution Plans
60 Empire Drive, Suite 300
Saint Paul, Minnesota 55103

National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company
T. Rowe Price OTC Fund
Attn.: RPS Control Departme nt

Vanguard Fiduciary Trust Company
T. Rowe Price Retail Class Funds
6.60

< br>

9.82


16.02



5.97
Small-Cap Stock Fund—Advisor Class
Fifth Third Bank TR
FBO Cintas Partners Plan
Attn.: Michelle Hodgeman, M.D.
38 Fountain Square Plaza
Cincinnati, Ohio 45263

Horace Mann Life Insurance Company
Separat e Account
1 Horace Mann Plaza
Springfield, Illinois 62715

Minnesota Life
401 Robert Street North
Saint Paul, Minnesota 55101

National Financial Services for the Exclusive Benefit of
Our Customers

Vanguard Fiduciary Trust Company
T. Rowe Price Advisor Class Funds
11.16





7.17




27.04(a)



6.53


19.70
Small-Cap Value
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
8.68


25.17(c)
Small-Cap Value Fund—Advisor Class
ICMA Retirement Trust

John Hancock Life Insurance Company USA
RPS Seg. Funds and Accounting ET-7

National Financial Services for the Exclusive Benefit of
Our Customers
30.08(a)
16.94


10.73
Spectrum Growth
T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
13.72
Spectrum Income
T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
22.18
Spectrum International
T. Rowe Price Retirement Plan Services, Inc.
Omniplan Account
New Business Group
5.39
Strategic Income
National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Associates
Attn.: Financial Reporting Department
12.46


20.53
Strategic Income Fund—Advisor Class
T. Rowe Price Associates
Attn.: Financial Reporting Department
80.72(e)
Summit Cash Reserves
T. Rowe Price Trust Company
Attn.: Asset Reconciliations
13.10
Summit Municipal Income
Edward D. Jones & Company
Shareholder Accounting
Attn.: Mutual Fund

National Financial Services for the Exclusive Benefit of
Our Customers

Saxon and Company
5.71



15.05


16.62
Summit Municipal Intermediate
Charles Schwab & Company, Inc.
Reinvest Account

Edward D. Jones & Company
Shareholder Accounting
Attn.: Mutual Fund

National Financial Services for the Exclusive Benefit of
Our Customers

Prudential Investment Management Services
FBO Mutual Funds Clients
5.80


19.49



11.99


11.64
Summit Municipal Money Market
M. David Testa
Hobe Sound, Florida 33455

T. Rowe Price Trust Company
Attn.: Asset Reconciliations
6.06


5.12
Tax-Exempt Money
Edward D. Jones & Company
Shareholder Accounting
Attn.: Mutual Fund

Susan A. Feith
Wisconsin Rapids, Wisconsin 54494

Pershing Division of DLJ Securities Corporation for
Exclusive Benefit of TRP Money Fund Customer Accounts
11.03



5.38


6.05
Tax-Free High Yield
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

Patterson & Company
FBO Omnibus Cash/Cash
6.17


8.35


10.61
Tax-Free Income Fund—Advisor Class
National Financial Services for the Exclusive Benefit of
Our Customers
94.57(a)
Tax-Free Short-Intermediate
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers

Prudential Investment Management Services
Attn.: Pruchoice Unit
8.81


7.60


17.44
Total Equity Market Index
Maryland College Investment Plan
Total Equity Market Index
Attn.: Fund Accounting
100 East Pratt Street, Floor 7
Baltimore Maryland 21202
6.21
U.S. Bond Index
Alaska College Savings Trust
ACT Portfolio
c/o T. Rowe Price Associates

National Financial Services for the Exclusive Benefit of
Our Customers

T. Rowe Price Retirement Plan Services, Inc.
Omnibus Plan
New Business Group Conv. Asset
5.98



6.54


15.42
U.S. Large-Cap Core
T. Rowe Price Associates
Attn.: Financial Reporting Department
40.42(e)
U.S. Large-Cap Core—Advisor Class
T. Rowe Price Associates
Attn.: Financial Reporting Department
99.58(e)
U.S. Treasury Intermediate
MLPF&S for the Sole Benefit of Its Customers

T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
15.68

10.10
U.S. Treasury Long-Term
T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department

Yachtcrew & Company
16.82


8.48
U.S. Treasury Money
T. Rowe Price Trust Company
Attn.: TRPS Institutional Control Department
10.60
Value
Pirateline & Company
T. Rowe Price Associates
Attn.: Fund Accounting Department

Retirement Portfolio 2020

Retirement Portfolio 2025

Retirement Portfolio 2030

Retirement Portfolio 2035

Retirement Portfolio 2040
5.18



15.11

9.05

17.64

7.65

12.26
Value Fund—Advisor Class
Bost & Company A/C
FBO Directed Account Plan
Mutual Fund Operations
P. O. Box 3198
Pittsburgh, Pennsylvania 15230

Citigroup Global Markets, Inc.
ING Life Insurance & A nnuity Company

ING National Trust

National Financial Services for the Exclusive Benefit of
Our Customers
5.63



11.86

9.83

12.18

43.09(a)
Virginia Tax-Free Bond
Charles Schwab & Company, Inc.
Reinvest Account

National Financial Services for the Exclusive Benefit of
Our Customers
7.46


5.30

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

100

101

102

103

104

105

106

107

108

109

110

(a)At the level of ownership indicated, the shareholder would be able to determine the outcome of most issues that are submitted to shareholders for vote.

(b)T. R owe Price Retirement Plan Services, Inc., is a wholly owned subsidiary of T. Rowe Price Associates, Inc., which is a wholly owned subsidiary of T. Rowe Price Group, Inc., each a Maryland corporation. T. Rowe Price Retirement Plan Services is not the beneficial owner of these shares. Such shares are held of record by T. Rowe Price Retirement Plan Services and are normally voted by various retirement plans and retirement plan participants.

(c)T. Rowe Price Trust Company is a wholly owned subsidiary of T. Rowe Price Associates, Inc., which is a wholly owned subsidiary of T. Rowe Price Group, Inc., each a Maryland corporation. T. Rowe Price Trust Company is not the beneficial owner of these shares. Such shares are held of record by T. Rowe Price Trust Company and are normally voted by various retirement plans and retirement plan participants.

(d) The indicated percentage of the outstanding shares of this fund are owned by another T. Rowe Price fund and held in the nominee name indicated. Shares of the fund are "echo-voted" by the T. Rowe Price fund that owns the shares in the same proportion that the shares of the underlying fund are voted by other shareholders.

(e)T. Rowe Price Associates is a wholly owned subsidiary of T. Rowe Price Group, Inc., each a Maryland corporation. Securities owned by T. Rowe Price Associates are the result of contributio ns to the fund at the fund`s inception in order to provide the fund with sufficient capital to invest in accordance with its investment program. At the level of ownership indicated, T. Rowe Price Associates would be able to determine the outcome of most issues that were submitted to shareholders for vote.

(f)T. Rowe Price International, Inc. is a wholly owned subsidiary of T. Rowe Price Associat es, Inc., which is a wholly owned subsidiary of T. Rowe Price Group, Inc., each a Maryland corporation. Securities owned by T. Rowe Price International are the result of its contributions to the fund at the fund`s inception in order to provide the fund with sufficient capital to invest in accordance with its investment program. At the level of ownership indicated, T. Rowe Price International would be able to determine the outcome of most issues that were submitted to shareholders for vote.

111

Investment Management Agreements

T. Rowe Price International, Inc. is the investment manager for all international and foreign Price Funds and has executed an Investment Management Agreement with each such fund. T. Rowe Price Associates, Inc. is the investment manager for all other Price Funds and has executed an Investment Management Agreement with each such fund. T. Rowe Price Associates and T. Rowe Price International are hereinafter referred to as "Investment Managers." T. Rowe Price Associates is a wholly owned subsidiary of T. Rowe Price Group, Inc. T. Rowe Price International is a wholly owned subsidiary of T. Rowe Price Associates.

Services

Under the Investment Management Agreements (except with respect to the Japan Fund and the Japanese investments of the International Discovery Fund), the Investment Managers provide the funds with discretionary investment services. Sp ecifically, the Investment Managers are responsible for supervising and directing the investments of the funds in accordance with the funds` investment objectives, programs, and restrictions as provided in the funds` prospectuses and this SAI. The Investment Managers are also responsible for effecting all security transactions on behalf of the funds, including the negotiation of commissions and the allocation of principal busin ess and portfolio brokerage. For the Japan Fund and the Japanese investments of the International Discovery Fund, T. Rowe Price International has entered into a subadvisory agreement with T. Rowe Price Global Investment Services Limited ("Global Investment Services") under which, subject to the supervision of T. Rowe Price International, Global Investment Services provides the same services described above that T. Rowe Price International provides for the other funds. A substantially similar subadvisory agreement is in place for the Institutional Foreign Equity and International Stock Funds which permits Global Investment Services personnel to trade Asian securities and make limited discretionary investment decisions on behalf of the funds at times when the portfolio manager is unavailable. For the Strategic Income Fund, T. Rowe Price Associates has entered into a subadvisory agreement with T. Rowe Price International, under which, subject to the supervision of T. Rowe Price Associates, T. Rowe Price International selects the fund`s foreign fixed income investments in developed market countries.

In addition to the services described above, the Investment Managers provide the funds with certain corporate administrative services, including: maintaining the funds` corporate existence and corporate records; registering and qualifying fund shares under federal laws; monitoring the financial, accounting, and administrative functions of the funds; maintaining liaison with the agents employed by the funds such as the funds` custodian and transfer agent; assisting the funds in the coordination of such agent`s activities; and permitting employees of the Investment Managers to serve as officers, directors, and committee members of the funds without cost to the funds.

The Investment Management Agreements also provide that the Investment Managers, their directors, officers, employees, and certain other persons performing specific functions for the funds will be liable to the funds only for losses resulting from willful misfeasance, bad faith, gross negligence, or reckless disregard of duty. The subadvisory agreements with respect to the Institutional Foreign Equity, International Discovery, International Stock, and Japan Funds have a similar provision limiting the liability of Global Investment Services for errors, mistakes, and losses other than those caused by its willful misfeasance, bad faith, or gross negligence. The subadvisory agreement with respect to the Strategic Income Fund has a similar provision limiting the liability of T. Rowe Price International for errors, mistakes, and losses other than those caused by its willful misfeasance, bad faith, or gross negligence.

Under the Investment Management Agreements, the Investment Managers are permitted to utilize the services or facilities of others to provide them or the funds with statistical and other factual information, advice regarding economic factors and trends, advice as to occasional transactions in specific securities, and such other information, advice, or assistance as the Investment Managers may deem necessary, appropriate, or convenient for the discharge of their obligations under the Investment Management Agreements or otherwise helpful to the funds. The subadvisory agreement with respect to the Japan and International Discovery Funds has a similar provision permitting Global Investment Services to utilize, at its own cost, the services or facilities of others.

112

All funds except Index, Institutional, TRP Reserve Investment, Retirement, Spectrum, Summit Income, and Summit Municipal Funds

Management Fees

The funds pay the Investment Managers a fee ("Fee") which consists of two components: a Group Management Fee ("Group Fee") and an Individual Fund Fee ("Fund Fee"). The Fee is paid monthly to the Investment Managers on the first business day of the next succeeding calendar month and is calculated as described next.

The monthly Group Fee ("Monthly Group Fee") is the sum of the daily Group Fee accruals ("Daily Group Fee Accruals") for each month. The Daily Group Fee Accrual for any particular day is computed by multiplying the Price Funds` group fee accrual as determined below ("Daily Price Funds` Group Fee Accrual") by the ratio of the Price Funds` net assets for that day to the sum of the aggregate net assets of the Price Funds for that day. The Daily Price Funds` Group Fee Accrual for any particular day is calculated by multiplying the fraction of one (1) over the number of calendar days in the year by the annualized Daily Price Funds` Group Fee Accrual for that day as determined in accordance with the following schedule:

0.480%
First $1 billion
0.360%
Next $2 billion
0.310%
Next $16 billion

0.450%
Next $1 billion
0.350%
Next $2 billion
0.305%
Next $30 billion

0.420%
Next $1 billion
0.340%
Next $5 billion
0.300%
Next $40 billion

0.390%
Next $1 billion
0.330%
Next $10 billion
0.295%
Next $40 billion

0.370%
Next $1 billion
0.320%
Next $10 billion
0.290%
Next $60 billion





0.285%
Thereafter

For the purpose of calculating t he Group Fee, the Price Funds include all the mutual funds distributed by Investment Services (excluding the Retirement Funds, Spectrum Funds, TRP Reserve Investment Funds, and any Index or private label mutual funds). For the purpose of calculating the Daily Price Funds` Group Fee Accrual for any particular day, the net assets of each Price Fund are determined in accordance with each fund`s prospectus as of the close of business on the previous business day on which the fund was open for business.

The monthly Fund Fee ("Monthly Fund Fee") is the sum of the daily Fund Fee accruals ("Daily Fund Fee Accruals") for each month. The Daily Fund Fee Accrual for any particular day is computed by multiplying the fraction of one (1) over the number of calendar days in the year by the individual fund fee. The product of this calculation is multiplied by the net assets of the fund for that day, as determined in accordance with the fund`s prospectus as of the close of business on the previous business day on which the fund was open for business. The individual fund fees are listed in the following tables:

Fund


Fee %

Africa & Middle East
0.75
Balanced
0.15< /font>
Blue Chip Growth
0.30(a)
California Tax-Free Bond
0.10
California Tax-Free Money
0.10
Capital Appreciation
0.30
Capital Opportunity
0.20
Corporate Income
0.15
Diversified Mid-Cap Growth
0.35
Diversified Small-Cap Growth
0.35
Dividend Growth
0.20
Emerging Europe & Mediterranean
0.75
Emerging Markets Bond
0.45
Emerging Markets Stock
0.75
Equity Income
0.25(b)
European Stock
0.50
Financial Services
0.35
GNMA
0.15
Georgia Tax-Free Bond
0.10
Global Infrastructure
0.50
Global Large-Cap Stock
0.35
Global Real Estate
0.40
Global Stock
0.35
Global Technology
0.45
Growth & Income
0.25
Growth Stock
0.25(b)
Health Sciences
0.35
High Yield
0.30
Inflation Protected Bond
 0.05
International Bond
0.35
International Discovery
0.75
International Growth & Income
0.35
International Stock
0.35
Japan
0.50
Latin America
0.75
Maryland Short-Term Tax-Free Bond
0.10
Maryland Tax-Free Bond
0.10
Maryland Tax-Free Money
0.10
Media & Telecommunications
0.35
Mid-Cap Growth
0.35(c)
Mid-Cap Value
0.35
New America Growth
0.35
New Asia
0.50
New Era
0.25
New Horizons
0.35
New Income
0.15
New Jersey Tax-Free Bond
0.10
New York Tax-Free Bond
0.10
New York Tax-Free Money
0.10
Overseas Stock
0.35
Personal Strategy Balanced
0.25
Personal Strategy Growth
0.30
Personal Strategy Income
0.15
Prime Reserve
0.05
Real Estate
0.30
Science & Technology
0.35
Short-Term Bond
0.10
Small-Cap Stock
0.45
Small-Cap Value
0.35
Strategic Income
0.20
Tax-Efficient Equity
0.35
Tax-Exempt Money
0.10
Tax-Free High Yield
0.30
Tax-Free Income
0.15
Tax-Free Short-Intermediate
0.10
U.S. Large-Cap Core
0.25
U.S. Treasury Intermediate
0.00
U.S. Treasury Long-Term
0.00
U.S. Treasury Money
0.00
Value
0.35
Virginia Tax-Free Bond
0.10

113

114

(a)On assets up to $15 billion and 0.255% on assets above $15 billion.

(b)On assets up to $15 billion and 0.21% on assets above $15 billion.

(c)On assets up to $15 billion and 0.30% on assets above $15 billion.

Index, Institutional, Summit Income, and Summit Municipal Funds

The following funds pay the Investment Managers an annual investment management fee in monthly installments of the amount listed below based on the average daily net asset value of the fund.

Fund


Fee %

Equity Index 500
0.10
Institutional Africa & Middle East
1.00
Institutional Foreign Equity
0.70
Institutional Global Equity
0.65
Institutional Global Large-Cap Equity
0.65
Institutional Large-Cap Core Growth
0.55
Institutional Large-Cap Growth
0.55
Institutional Large-Cap Value
0.55
Institutional Mid-Cap Equity Growth
0.60
Institutional Small-Cap Stock
0.65
Institutional U.S. Structured Research
0.50

The following funds ("Single Fee Funds") pay the Investment Managers a single annual investment management fee in monthly installments of the amount listed below based on the average daily net asset value of the fund.

Fund


Fee %

Extended Equity Market Index
0.40
Institutional Core Plus
0.45
Institutional Emerging Markets Bond
0.70
Institutional Emerging Markets Equity
1.10
Institutional Floating Rate
0.55
Institutional High Yield
0.50
Institutional International Bond
0.55
International Equity Index
0.50
Short-Term Income
0.50
Summit Cash Reserves
0.45
Summit GNMA
0.60
Summit Municipal Mo ney Market
0.45
Summit Municipal Intermediate
0.50
Summit Municipal Income
0.50
Total Equity Market Index
0.40
U.S. Bond Index
0.30

115

The Investment Management Agreement between each Single Fee Fund and the Investment Managers provides that the Investment Managers will pay all expenses of each fund`s operations, except interest, taxes, brokerage commissions, and other charges incident to the purchase, sale, or lending of the fund`s portfolio securities, and such non-recurring or extraordinary expenses that may arise, including the costs of actions, suits, or proceedings to which the fund is a party and the expense s the fund may incur as a result of its obligation to provide indemnification to its officers, directors, and agents. However, the Boards for the funds reserve the right to impose additional fees against shareholder accounts to defray expenses which would otherwise be paid by the Investment Managers under the Investment Management Agreement. The Boards do not anticipate levying such charges; such a fee, if charged, may be retained by the funds or paid to the Investment Managers.

The Fee is paid monthly to the Investment Managers on the first business day of the next succeeding calendar month and is the sum of the Daily Fee accruals for each month. The Daily Fee accrual for any particular day is calculated by multiplying the fraction of one (1) over the number of calendar days in the year by the appropriate Fee. The product of this calculation is multiplied by the net assets of the fund for that day, as determined in accordance with each fund`s prospectus as of the close of business on the previous business day on which the fund was open for business.

TRP Government Reserve Investment, TRP Reserve Investment, Retirement, and Spectrum Funds

None of these funds pays T. Rowe Price an investment management fee.

Japan Fund

Under a subadvisory agreement between T. Rowe Price International and Global Investment Services approved by the directors of the Japan Fund, Global Investment Services, (subject to the supervision of T. Rowe Price International), manages all the investments of the Japan Fund. For its services, Global Investment Services receives 50% of the investment management fee received by T. Rowe Price International from the Japan Fund.

International Discovery Fund

Under a subadvisory agreement between T. Rowe Price International and Global Investment Services approved by the directors of the International Discovery Fund, Global Investment Services, (subject to the supervision of T. Rowe Price International), manages the yen-denominated investments of the International Discovery Fund. For its services, Global Investment Services receives 50% of the investment management fee received by T. Rowe Price International from the International Discovery Fund attributable to the yen-denominated investments of the International Discovery Fund.

Institutional Foreign Equity and International Stock Funds

Under a subadvisory agreement between T. Rowe Price International and Global Investment Services, Global Investment Services (subject to the supervision of T. Rowe Price International) is authorized to trade Asian securities and make limited discretionary investment decisions on behalf of the Institutional Foreign Equity and International Stock Funds at times when the portfolio manager for these funds is unavailable.

Strategic Income Fund

Under a subadvisory agreement between T. Rowe Price Associates and T. Rowe Price International, T. Rowe Price International (subject to the supervision of T. Rowe Price Associates) is responsible for selecting the Strategic Income Fund`s foreign fixed income investments in developed market countries.

116

Management Fee Compensation

The following table sets forth the total management fees, if any, paid to the Investment Managers by each fund, during the fiscal years indicated:

Fund


Fiscal Year Ended











2/28/09


2/29/08


2/28/07

California Tax-Free Bond
$1,288,000
$1, 266,000
$1,215,000
California Tax-Free Money
545,000
489,000
457,000
Georgia Tax-Free Bond
536,000
526,000
471,000
Maryland Short-Term Tax-Free Bond
679,000
589,000
639,000
Maryland Tax-Free Bond
5,877,000
5,888,000
5,681,000
Maryland Tax-Free Money
959,000
905,000
744,000
New Jersey Tax-Free Bond
894,000
871,000
786,000
New York Tax-Free Bond
1,171,000
1,134,000
1,063,000
New York Tax-Free Money
616,000
540,000
495,000
Tax-Efficient Equity
225,000
265,000
234,000
Tax-Exempt Money
4,208,000
4,070,000
3,817,000
Tax-Free High Yield
8,193,000
9,250,000
9,183,000
Tax-Free Income(a)
8,174,000
8,413,000
8,228,000
Tax-Free Short-Intermediate
2,308,000
2,059,000
2,010,000
Virginia Tax-Free Bond
2,389,000
2,260,000
2,056,000

(a)The fund has two classes of shares. The management fee is allocated to each class based on relative net assets.

117

(a)The fund does not pay an investment management fee.

(b)The fund has two classes of shares. The management fee is allocated to each class based on relative net assets.

(c)The fee includes investment and administrative expenses.

(d)Prior to commencement of operations.

(e)The fund has three classes of shares. The management fee is allocated to each class based on relative net assets.


Fund


Fiscal Year Ended











5/31/09


5/31/08


5/31/07

Corporate Income
$1,351,000
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">$1,004,000
$945,000
GNMA
6,290,000
6,066,000
5,703,000
TRP Government Reserve Investment
(a)
(a)
(a)
High Yield(b)
29,591,000
31,095,000
29,564,000
Inflation Protected Bond
857,000
488,000
371,000
Institutional Core Plus(c)
416,000
351,000
183,000
Institutional Floating Rate(c)
3,501,000
763,000
(d)
Institutional High Yield(c)
3,091,000
2,377,000
1,865,000
New Income(e)
33,374,000
32,498,000
20,717,000
Personal Strategy Balanced
6,609,000
8,280,000
7,611,000
Personal Strategy Growth
5,482,000
7,393,000
6,431,000
Personal Strategy Income
3,12 5,000
3,396,000
2,698,000
Prime Reserve
23,484,000
21,268,000
19,238,000
TRP Reserve Investment
(a)
(a)
(a)
Retirement 2005
(a)
(a)
(a)
Retirement 2010
(a)
(a)
(a)
Retirement 2015
(a)
(a)
(a)
Retirement 2020
(a)
(a)
(a)
Retirement 2025
(a)
(a)
(a)
Retirement 2030
(a)
(a)
(a)
Retirement 2035
(a)
(a)
(a)
Retirement 2040
(a)
(a)
(a)
Retirement 2045
(a)
(a)
(a)
Retirement 2050
(a)
(a)
(a)
Retirement 2055
(a)
(a)
(a)
Retirement Income
(a)
(a)
(a)
Short-Term Bond(b)
8,029,000
6,261,000
5,934,000
Short-Term Income(c)
6,418,000
6,158,000
2,349,000
Strategic Income(b)
113,000
(d)
(d)
U.S. Treasury Intermediate
655,000
861,000
727,000
U.S. Treasury Long-Term
593,000
1,350,000
905,000
U.S. Treasury Money
5,876,000
3,588,000
2,897,000

Fund


Fiscal Year Ended











10/31/09


10/31/08


10/31/07

Africa & Middle East
$2,071,000
$5,764,000
$55,000
Emerging Europe & Mediterr anean
4,338,000
15,506,000
17,207,000
Emerging Markets Stock
32,265,000
47,426,000
33,350,000
European Stock
4,687,000
7,919,000
8,716,000
Global Infrastructure(b)
(a)
(a)
(a)
Global Large-Cap Stock(b)
121,000
1,000
(a)
Global Stock(b)
4,090,000
6,579,000
3,726,000
Institutional Africa & Middle East
524,000
420,000
(a)
Institutional Emerging Markets Equity(c)
3,172,000
4,375,000
2,506,000
Institutional Foreign Equity
345,000
700,000
1,256,000
Institutional Global Equity
882,000
590,000
18,000
Institutional Global Large-Cap Equity
50,000
0
(a)
International Discovery
16,235,000
26,803,000
27,857,000
International Equity Index(c)
1,697,000
2,589,000
2,169,000
International Growth & Income(d)
14,634,000
18,380,000
16,832,000
International Stock(d)
28,577,000
41,493,000
45,077,000
Japan
1,773,000
2,706,000
3,936,000
Latin America
18,537,000
35,622,000
29,000,000
New Asia
19,857,000
33,489,000
25,366,000
Overseas Stock
9,892,000
9,698,000
3,992,000
Summit Cash Reserves(c)
28,319,000
27,033,000
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">22,987,000
Summit GNMA(c)
804,000
493,000
448,000
Summit Municipal Income(c)
1,765,000
2,089,000
2,219,000
Summit Municipal Intermediate(c)
4,429,000
3,496,000
2,765,000
Summit Municipal Money Market(c)
1,371,000
1,534,000
1,348,000
U.S. Bond Index(c)
1,097,000
857,000
641,000

118

(a)Prior to commencement of operations.

(b)The fund has two classes of shares. The management fee is allocated to each class based on relative net assets.

(c)The fee includes investment management fees and administrative expenses.

(d)The fund has three classes of shares. The management fee is allocated to each class based on rela tive net assets.


Fund


Fiscal Year Ended











12/31/09


12/31/08


12/31/07

Balanced
$10,384,000
$12,449,000
$14,293,000
Blue Chip Growth(a)
53,303,000
64,712,000
68,145,000
Capital Appreciation(b)
47,301,000
55,950,000
63,628,000
Capital Opportunity(a)
1,015,000
1,128,000
1,206,000
Diversified Mid-Cap Growth
536,000
662,000
691,000
Diversified Small-Cap Growth
422,000
498,000
584,000
Dividend Growth
4,034,000
3,931,000
4,521,000
Emerging Markets Bond
8,069,000
5,093,000
4,873,000
Equity Income(a)
81,940,000
105,615,000
132,535,000
Equity Index 500
13,656,000
14,160,000
13,738,000
Extended Equity Market Index(c)
1,052,000
1,342,000
1,611,000
Financial Services
1,954,000
2,164,000
2,853,000
Global Real Estate(b)
82,000
9,000
(d)
Global Technology
1,186,000
1,101,000
1,235,000< /font>
Growth & Income
5,001,000
6,536,000
8,655,000
Growth Stock(a)
94,838,000
118,143,000
128,122,000
Health Sciences
12,095,000
13,735,000
12,874,000
Institutional Emerging Markets Bond(c)
614,000
179,000
183,000
Institutional International Bond(e)
455,000
341,000
223,000
Institutional Large-Cap Core Growth
575,000
599,000
229,000
Institutional Large-Cap Growth
6,888,000
7,437,000
6,378,000
Institutional Large-Cap Value
1,674,000
1,684,000
1,372,000
Institutional Mid-Cap Equity Growth
2,368,000
2,697,000
2,728,000
Institutional Small-Cap Stock
1,644,000
2,400,000
2,716,000
Institutional U.S. Structured Research
644,000
615,000
52,000
International Bond(b)
19,301,000
19,258,000
16,095,000
Media & Telecommunications
7,603,000
9,646,000
12,475,000
Mid-Cap Growth(a)
79,530,000
92,941,000
110,090,000
Mid-Cap Value(a)
37,085,000
41,155,000
52,862,000
New America Growth
4,493,000
4,806,000
5,482,000
New Era
22,381,000
34,039,000
30,900,000
New Horizons
30,750,000
38,581,000
48,350,000
Real Estate(b)
10,445,000
12,540,000
15,234,000
Science & Technology(b)
14,663,000
16,219,000
21,145,000
Small-Cap Stock(b)
31,647,000
39,706,000
57,945,000
Small-Cap Value(b)
29,616,000
32,423,000
41,099,000
Spectrum Growth
(e)
(e)
(e)
Spectrum Incom e
(e)
(e)
(e)
Spectrum International
(e)
(e)
(e)
U.S. Large-Cap Core(b)
38,000
(d)
(d)
Total Equity Market Index(c)
1,555,000
1,825,000
2,045,000
Value(b)
48,229,000
47,909,000
50,381,000

119

(a)The fund has three classes of shares. The management fee is allocated to each class based on relative net assets.

(b)The fund has two classes of shares. The management fee is allocated to each class based on relative net assets.

(c)The fee includes investment management fees and administrative expenses.

(d)Prior to commencement of operations.

(e)The fund does not pay an investment management fee.

Expense Limitations and Reimbursements

The following chart sets forth contractual expense ratio limitations and the periods for which they are effective. For each fund, the Investment Managers have agreed to bear any fund expenses (other than interest, taxes, brokerage, and other expenditures that are capitalized in accordance with generally accepted accounting principles and extraordinary expenses) which would cause the funds` ratio of expenses to average net assets to exceed the indicated percentage limitation. The expenses borne by the Investment Managers are subject to reimbursement by the funds through the indicated reimbursement date, provided no reimbursement will be made if it would result in the funds` expense ratios exceeding their applicable limitations.

Fund


Limitation Period


Expense
Ratio
Limitation %


Reimbursement
Date

Africa & Middle East
September 4, 2007 — February 28, 2010
1.75
(a)
California Tax-Free Money(b)
July 1, 2009 — June 30, 2011
0.55
(a)
Capital Opportunity Fund—Advisor Class(c)
May 1, 2010 — April 30, 2012
1.10
April 30, 2014(d)
Capital Opportunity Fund—R Class(e)
May 1, 2010 — April 30, 2012
1.35
April 30, 2014(d)
Diversified Mid-Cap Growth
May 1, 2009 — April 30, 2011
1.50
(a)
Diversified Small-Cap Growth(f)
May 1, 2010 — April 30, 2012
1.25
April 30, 2014(d)
Dividend Growth Fund—Advisor Class
May 1, 2008 — April 30, 2010
1.05
April 30, 2012(d)
Emerging Europe & Mediterranean
May 1, 2009 — February 28, 2011
2.00
(a)
Equity Index 500(g)
May 1, 2010 — April 30, 2012
0.30
April 30, 2014(d)
Global Infrastructure
January 27, 2010 — February 29, 2012
1.10
(a)
Global Infrastructure Fund—Advisor Class
January 27, 2010 — February 29, 2012
1.20
(a)
Global Large-Cap Stock
October 27, 2008 — February 28, 2011
1.00
(a)
Global Large-Cap Stock Fund—Advisor Class
October 27, 2008 — February 28, 2011
1.10
(a)
Global Real Estate
October 27, 2008 — April 30, 2011
1.05
(a)
Global Real Estate Fund—Advisor Class
October 27, 2008 — April 30, 2011
1.15
(a)
Global Stock Fund—Advisor Class(h)
March 1, 2010 — February 29, 2012
1.15
February 28, 2014(d)
Inflation Protected Bond(i)
October 1, 2008 — September 30, 2010
0.50
September 30, 2012(d)
Institutional Africa & Middle East
April 30, 2008 — February 28, 2011
1.25
(a)
Institutional Foreign Equity(j)
November 1, 2009 - February 29, 2012
0.75
(a)
Institutional Global Equity(k)
March 1, 2009 — February 28, 2011
0.75
(a)
Institutional Global Large-Cap Equity
October 27, 2008 — February 28, 2011
0.75
(a)
Institutional Large-Cap Core Growth(l)
May 1, 2009 — April 30, 2011
0.65
April 30, 2013(d)
Institutional Large-Cap Growth(m)
May 1, 2009 — April 30, 2011
0.58
April 30, 2013(d)
Institutional Large-Cap Value
May 1, 2008 — April 30, 2010
0.65
April 30, 2012(d)
Institutional U.S. Structured Research(n)
May 1, 2010 — April 30, 2012
0.55
(a)
International Growth & Income Fund—
R Class
March 1, 2008 — February 28, 2010
1.40
February 29, 2012(d)
International Stock Fund—Advisor Class
March 1, 2008 — February 28, 2010
1.15
(a)
International Stock Fund—R Class(o)
March 1, 2010 — February 29, 2012
1.40
(a)
New America Growth Fund—Advisor Class(p)
May 1, 2010 — April 30, 2012
1.10
(a)
New Income Fund—Advisor Class(q)
October 1, 2008 — September 30, 2010
0.90
(a)
New Income Fund—R Class(r)
October 1, 2008 — September 30, 2010
1.15
(a)
New York Tax-Free Money(s)
July 1, 2009 — June 30, 2011
0.55
(a)
Short-Term Bond(t)
October 1, 2009 — September 30, 2011
0.55
(a)
Short-Term Bond Fund—Advisor Class(u)
October 1, 2009 — September 30, 2011
0.85
(a)
Strategic Income Fund
December 15, 2008 — September 30, 2011
0.80
(a)
Strategic Income Fund—Advisor Class
December 15, 2008 — September 30, 2011
0.95
(a)
Tax-Efficient Eq uity(v)
July 1, 2008 — June 30, 2010
1.25
June 30, 2012(d)
U.S. Large-Cap Core Fund
June 26, 2009 — April 30, 2012
1.15
(a)
U.S. Large-Cap Core Fund—Advisor Class
June 26, 2009 — April 30, 2012
1.20
(a)
U.S. Treasury Intermediate Fund
November 1, 2009 — September 30, 2012
0.55
(a)
U.S. Treasury Long-Term Fund
November 1, 2009 — September 30, 2012
0.55
(a)

120

(a)No reimbursement will be made more than three years after any waiver or payment.

(b)The California Tax-Free Money Fund previously operated under a 0.55% expense limitation that expired June 30, 2009.

(c)The Capital Opportunity Fund—Advisor Class previously operated under a l.10% expense limitation that expired April 30, 2010. The reimbursement period for this limitation extends through April 30, 2012.

(d)No reimbursement will be made after the reimbursement date or three years after any waiver or payment, whichever is sooner.

(e)The Capital Opportunity Fund—R Class previously operated under a 1.35% expense limitation that expired April 30, 2010. The reimbursement period for this limitation extends through April 30, 2012.

(f)The Diversified Small-Cap Growth Fund previously operated under a 1.25% expense limitation that expired April 30, 2010. The reimbursement period for this limitation extends through April 30, 2012.

(g)The Equity Index 500 Fund previously operated under a 0.35% expense limitation that expired April 30, 2010. The reimbursement period for this limitation extends through April 30, 2012.

(h)The Global Stock Fund—Advisor Class previously operated under a 1.15% expense limitation that expired February 28, 2010. The reimbursement period for this limitation extends through February 28, 2012.

(i)The Inflation Protected Bond Fund previously operated under a 0.50% expense l imitation that expired September 30, 2008. The reimbursement period for this limitation extends through September 30, 2010.

(j)The Institutional Foreign Equity Fund previously operated under a 1.50% expense limitation. Effective November 1, 2009, the expense limitation was lowered to 0.75%.

(k)The Institutional Global Equity Fund previously operated under a 0.75% expense limitation that expired February 28, 2009.

(l)The Institutional Large-Cap Core Growth Fund previously operated u nder a 0.65% expense limitation that expired April 30, 2009. The reimbursement period for this limitation extends through April 30, 2011.

(m)The Institutional Large-Cap Growth Fund previously operated under a 0.58% expense limitation that expired April 30, 2009. The reimbursement period for this limitation extends through April 30, 2011.

121

(n)The Institutional U.S. Structured Research Fund previously operated under a 0.55% expense limitation that expired on April 30, 2010.

(o)The International Stock Fund—R Class previously operated under a 1.40% expense limitation that expired February 28, 2010.

(p)The New America Growth Fund—Advisor Class previously operated under a l.10% expense limitation that expired April 30, 2010.

(q)The New Income Fund—Advisor Class previously operated under a 0.90% expense limitation that expired September 30, 2008.

(r)The New Income Fund—R Class previously operated under a 1.15% expense limitation that expired September 30, 2008.

(s)The New York Tax-Free Money Fund previously operated under a 0.55% expense limitation that expired June 30, 2009.

(t)The Short-Term Bond Fund previously operated under a 0.55% expense limitation that expired September 30, 2009.

(u)The Short-Term Bond Fund—Advisor Class previously operated under a 0.85% expense limitation that expired September 30, 2009.

(v)The Tax-Efficient Equity Fund previously operated under a 1.25% expense limitation that expired June 30, 2008. The reimbursement period for this limitation extends through June 30, 2010.

The Investment Management Agreements between the funds and the Investment Managers provide that each fund will bear all expenses of its operations not specifically assumed by the Investment Managers.

For the purpose of determining whether a fund is entitled to expense limitation, the expenses of a fund are calculated on a monthly basis. If a fund is entitled to expense limitation, that month`s advisory fee will be reduced or postponed, with any adjustment made after the end of the year.

Except for the California and New York Funds, each of the above-referenced funds` Investment Management Agreement also provides that one or more additional expense limitation periods (of the same or different time periods) may be implemented after the expiration of the current expense limitation, and that with respect to any such additional li mitation period, the funds may reimburse the Investment Managers, provided the reimbursement does not result in the funds` aggregate expenses exceeding the additional expense limitation. No reimbursement may be made by the California and New York Funds unless approved by shareholders.

Africa & Middle East Fund At October 31, 2009, there were no amounts subject to repayment by the fund. The fund operated below its expense limitation.

California Tax-Free Money Fund At February 28, 2009, management fees in the amount of $84,000 were waived. Including these amounts, management fees waived in the amount of $215,000 remain subject to repayment.

Capit al Opportunity Fund, Capital Opportunity Fund—Advisor and R Classes At December 31, 2009, expenses in the amount of $6,000 were reimbursed by the manager. Including these amounts, expenses previously reimbursed by the manager in the amount of $24,000 remain subject to repayment.

Diversified Mid-Cap Growth Fund At December 31, 2009, there were no amounts subject to repayment by the fund. The fund operated below its expense limitation.

Diversified Small-Cap Growth Fund At December 31, 2009, management fees in the amount of $93,000 were waived. Including these amounts, management fees waived and expenses previously reimbursed by the manager in the amount of $190,000 remain subject to repayment.

Dividend Growth Fund —Advisor Class At December 31, 2009, expenses in the amount of $6,000 were reimbursed repaid to the manager. Including these amounts, expenses previously reimbursed by the manager in the amount of less than $1,000 remain subject to repayment.

Emerging Europe and Mediterranean Fund At October 31, 2009, there were no amounts subject to repayment by the fund. The fund operated below its expense limitation.

Equity In dex 500 Fund At December 31, 2009, management fees in the amount of $2,937,000 were waived. Including these amounts, management fees waived in the amount of $5,672,000 remain subject to repayment.

Global Large-Cap Stock Fund and Global Large-Cap Stock Fund—Advisor Class At October 31, 2009, management fees in the amount of $116,000 were waived and expenses previously reimbursed by the manager in the amount of $263,000 remain subject to repayment.

122

Global Real Estate Fund and Global Real Estate Fund—Advisor Class At December 31, 2009, management fees in the amount of $82,000 were waived and expenses in the amount of $308,000 were reimbursed by the manager. Including these amounts, management fees waived and expenses previously reimbursed by the manager in the amount of $438,000 remain subject to repayment.

Global Stock Fund—Advisor Class At October 31, 2009, expenses in the amount of $5,000 were reimbursed by the manager. Including these amounts, expenses previously reimbursed by the manager in the amount of $18,000 remain subject to repayment.

Inflation Protected Bond Fund At May 31, 2009, management fees in the amount of $448,000 were waived and expenses in the amount of $4,000 were reimbursed by the manager. Including these amounts, management fees waived and expenses previously reimbursed by the manager in the amount of $997,000 remain subject to repayment.

Institutional Africa & Middle East Fund At October 31, 2009, management fees in the amount of $223,000 were waived. Including the amounts, management fees waived in the amount of $279,000 remain subject to repayment.

Institutional Global Equity Fund At October 31, 2009, management fees in the amount of $195,000 were waived. Including these amounts, management fees waived and expenses previously reimbursed by the manager in the amount of $645,000 remain subject to repayment.

Institutional Global Large-C ap Equity Fund At October 31, 2009, management fees in the amount of $50,000 were waived and expenses in the amount of $191,000 were reimbursed by the manager. Including these amounts, management fees waived and expenses previously reimbursed by the manager in the amount of $ 243,000 remain subject to repayment.

Institutional Large-Cap Core Growth Fund At December 31, 2009, management fees in the amount of $138,000 were waived. Including these amounts, management fees waived and expenses previously reimbursed in the amount of $408,000 remain subject to repayment.

Institutional Large-Cap Growth Fund At December 31, 2009, management fees in the amount of $29,000 were repaid. There were no amounts subject to repayment. The fund operated below its expense limitation.

Institutional Large-Cap Value Fund At December 31, 2009, there were no amounts subject to repayment by the fund. The fund operated below its expense limitation.

Institutional U.S. Structured Research Fund At December 31, 2009, management fees in the amount of $173,000 were waived. Including these amounts, management fees waived in the amount of $466,000 remain subject to repayment.

International Growth & Income Fund—R Class At October 31, 2009, the R class operated below its expense limitation.

International Stock Fund—Advisor and R Classes At October 31, 2009, expenses in the amount of $7,000 were reimbursed by the manager. Including these amounts, expenses previously reimbursed by the manager < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">in the amount of $12,000 remain subject to repayment. The Advisor Class operated below its expense limitation.

New America Growth Fund—Advisor Class At December 31, 2009, expenses in the amount of $5,000 were reimbursed repaid to the manager. Including these amounts, expenses previously reimbursed by the manager in the amount of $4,000 remain subject to repayment.

New Income Fund—Advisor and R Classes At May 31, 2009, expenses in the amount of $3,000 were repaid to the manager. Including these amounts, expenses previously reimbursed by the manager in the amount of $10,000 remain subject to repayment.

New York Tax-Free Money Fund At February 28, 2009, management fees in the amount of $62,000 were waived. Including these amounts, management fees waived in the amount of $156,000 remain subject to repayment.

123

Short-Term Bond Fund and Short-Term Bond Fund—Advisor Class At May 31, 2009, management fees in the amount of $0 were repaid and expenses in the amount of $915,000 were reimbursed by the manager. Including these amounts, management fees waived and expenses previously reimbursed by the manager in the amount of $2,025< /font>,000 remain subject to repayment.

Strategic Income Fund and Strategic Income Fund—Advisor Class At May 31, 2009, management fees in the amount of $88,000 were waived and expenses in the amount of $42,000 were reimbursed by the manager. Including these amounts, management fees waived and expenses previously reimbursed by the manager in the amount of $130,000 remain subject to repayment.

Tax-Efficient Equity Fund At February 28, 2009, management fees in the amount of $71,000 were waived and expenses in the amount of $1,000 were reimbursed by the manager. Including these amounts, management fees waived in the amount of $105,000 remain subject to repayment.

U.S. Large-Cap Core and U.S. Large-Cap Core Growth At December 31, 2009, management fees in the amount of $38,000 were waived and expenses in the amount of $85,000 were reimbursed by the manager; all of which remain subject to repayment.

Management Related Services

In addition to the management fee, the funds (other than the Single-Fee Funds) pay for the following: shareholder service expenses; custodial, accounting, legal, and audit fees; costs of preparing and printing prospectuses and reports sent to shareholders; registration fees and expenses; proxy and annual meeting expenses (if any); and directors` fees and expenses.

T. Rowe Price Services, Inc. ("Services"), a wholly owned subsidiary of T. Rowe Price, acts as the funds` transfer and dividend disbursing agent and provides shareholder and administrative services. T. Rowe Price Retirement Plan Services, Inc. ("RPS"), also a wholly owned subsidiary, provides recordkeeping, sub-transfer agency, and administrative services for certain types of retirement plans investing in the funds. The fees paid by the funds to Services are based on the costs to Services of providing these services plus a return on capital employed in support of the services.

The fees paid to RPS are based on the percentage of Price Fund assets fo r which RPS provides recordkeeping and sub-transfer agency services. The fees paid to Services and RPS are set forth in each fund`s shareholder report under "Related Party Transactions." The address for Services and RPS is 100 East Pratt Street, Baltimore, Maryland 21202.

T. Rowe Price, under a separate agreement with the funds, provides accounting services to the funds. The funds paid the expenses shown in the following table during the fiscal years indicated to T. Rowe Price for accounting services.

Fund


Fiscal Year Ended











2/28/09


2/29/08


2/28/07

California Tax-Free Bond
$103,000
$96,000
$69,000
California Tax-Free Money
103,000
96,000
69,000
Georgia Tax-Free Bond
103,000
96,000
69,000
Maryland Short-Term Tax-Free Bond
103,000
96,000
69,000
Maryland Tax-Free Bond
135,000
125,000
91,000
Maryland Tax-Free Money
103,000
96,000
69,000
New Jersey Tax-Free Bond
103,000
96,000
69,000
New York Tax-Free Bond
103,000
96,000
69,000
New York Tax-Free Money
103,000
96,000
69,000
Tax-Efficient Equity
103,000
96,000
69,000
Tax-Exempt Money
135,000
125,000
91,000
Tax-Free High Yield
169,000
155,000
112,000
Tax-Free Income
152,000
139,000
100,000
Tax-Free Income Fund—Advisor Class
32,000
31,000
22,000
Tax-Free Short-Intermediate
103,000
96,000
69,000
Virginia Tax-Free Bond
103,000
96,000
69,000

124


Fund


Fiscal Year Ended











5/31/09


5/31/08


5/31/07

Corporate Income
$164,000
$159,000
$124,000
GNMA
164,000
159,000
124,000
TRP Government Reserve Investment
98,000
98,000
77,000
High Yield
166,000
161,000
126,000
High Yield Fund—Advisor Class
47,000
44,000
33,000
Inflation Protected Bond
144,000
128,000
100,000
Institutional Core Plus
198,000
173,000
112,000
Institutional Floating Rate
198,000
68,000
(a)
Institutional High Yield
198,000
190,000
148,000
New Income
230,000
225,000
171,000
New Income Fund—Advisor Class
(b)
(b)
(b)
New Income Fund—R Class
(b)
(b)
(b)
Personal Strategy Balanced
199,000
191,000
148,000
Personal Strategy Growth
199,000
191,000
148,000
Personal Strategy Income
198,000
191,000
148,000
Prime Reserve
130,000
128,000
100,000
TRP Reserve Investment
144,000
128,000
100,000
Retirement 2005
(c)
(c)
(c)
Retirement 2005 Fund—Advisor Class
(c)
(c)
(a)
Retirement 2005 Fund—R Class
(c)
(c)
(a)
Retirement 2010
(c)
(c)
(c)
Retirement 2010 Fund—Advisor Class
(c)
(c)
(c)
Retirement 2010 Fund—R Class
(c)
(c)
(c)
Retirement 2015
(c)
(c)
(c)
Retirement 2015 Fund—Advisor Class
(c)
(c)
(a)
Retirement 2015 Fund—R Class
(c)
(c)
(a)
Retirement 2020
(c)
(c)
(c)
Retirement 2020 Fund—Advisor Class
(c)
(c)
(c)
Retirement 2020 Fund—R Class
(c)
(c)
(c)
Retirement 2025
(c)
(c)
(c)
Retirement 2025 Fund—Advisor Class
(c)
(c)
(a)
Retirement 2025 Fund—R Class
(c)
(c)
(a)
Retirement 2030
(c)
(c)
(c)
Retirement 2030 Fund—Advisor Class
(c)
(c)
(c)
Retirement 2030 Fund—R Class
(c)
(c)
(c)
Retirement 2035
(c)
(c)
(c)
Retirement 2035 Fund—Advisor Class
(c)
(c)
(a)
Retirement 2035 Fund—R Class
(c)
(c)
(a)
Retirement 2040
< /td>		(c)
(c)
(c)
Retirement 2040 Fund—Advisor Class
(c)
(c)
(c)
Retirement 2040 Fund—R Class
(c)
(c)
(c)
Retirement 2045
(c)
(c)
(c)
Retirement 2045 Fund—Advisor Class
(c)
(c)
(a)
Retirement 2045 Fund—R Class
(c)
(c)
(a)
Retirement 2050
(c)
(c)
(c)
Retirement 2050 Fund—Advisor Class
(c)
(c)
(c)
Retirement 2050 Fund—R Class
(c)
(c)
(c)
Retirement 2055
(c)
(c)
(c)
Retirement 2055 Fund—Advisor Class
(c)
(c)
(a)
Retirement 2055 Fund—R Class
(c)
(c)
(a)
Retirement Income
(c)
(c)
(c)
Short-Term Bond
179,000
174,000
135,000
Short-Term Bond Fund—Advisor Class
(b)
(b)
(b)
Short-Term Income
164,000
159,000
89,000
Strategic Income
95,000
(a)
(a)
Strategic Income—Advisor Class
(b)
(a)
(a)
U.S. Treasury Intermedia te
98,000
98,000
77,000
U.S. Treasury Long-Term
98,000
98,000
77,000
U.S. Treasury Money
98,000
98,000
77,000

125

(a)Prior to commencement of operations.

(b)Less than $1,000.

(c)Paid b y underlying Price funds pursuant to the Special Servicing Agreement.


Fund


Fiscal Year Ended











10/31/09


10/31/08


10/31/07

Africa & Middle East
$167,000
$199,000
$30,000
Emerging Europe & Mediterranean
104,000
134,000
117,000
Emerging Markets Stock
165,000
165,000
121,000
European Stock< /font>
106,000
135,000
118,000
Global Infrastructure
(a)
(a)
(a)
Global Infrastructure Fund—Advisor Class
(a)
(a)
(a)
Global Large-Cap Stock
125,000
2,000
(a)
Global Large-Cap Stock Fund—Advisor Class
3,000
(b)
(a)
Global Stock
116,000
147,000
130,000
Global Stock Fund—Advisor Class
2,000
2,000
(b)
Institutional Africa & Middle East
178,000
102,000
(a)
Institutional Emerging Markets Equity
136,000
161,000
117,000
Institutional Foreign Equity
104,000
133,000
120,000
Institutional Global Equity
104,000
133,000
117,000
Institutional Global Large-Cap Equity
114,000
1,000
(a)
International Discovery
141,000
165,000
120,000
International Equity Index
137,000
167,000
145,000
International Growth & Income
123,000
142,000
122,000
International Growth & Income Fund—Advisor Class
12,000
23,000
1 ,700
International Growth & Income Fund—
R Class
2,000
3,000
3,000
International Stock
172,000
202,000
180,000
International Stock Fund—Advisor Class
1,000
2,000
2,000
International Stock Fund—R Class
(b)< br>(b)
(b)
Japan
75,000
102,000
91,000
Latin America
100,000
104,000
91,000
New Asia
142,000
167,000
119,000
Overseas Stock
136,000
166,000
127,000
Summit Cash Reserves
104,000
133,000
117,000
Summit GNMA
104,000
133,000
117,000
Summit Municipal Income
74,000
102,000
90,000
Summit Municipal Intermediate
74,000
102,000
90,000
Summit Municipal Money Market
104,000
133,000
117,000
U.S. Bond Index
104,000
133,000
117,000

126

(a)Prior to commencement of operations.

(b)Less than $1,000.

< tr bgcolor="#FFFFFF" width="0">

Fund
< br>
Fiscal Year Ended











12/31/09


12/31/08


12/31/07

Balanced
$159,000
$286,000
$153,000
Blue Chip Growth
86,000
149,000
112,000
Blue Chip Growth Fund—Advisor Class
9,000
18,000
11,000
Blue Chip Growth Fund—R Class
(a)
1,000
1,000
Capital Appreciation
138,000
214,000
137,000
Capital Appreciation Fund—Advisor Class
2,000
3,000
2,000
Capital Opportunity
118,000
208,000
151,000
Capital Opportunity Fund—Advisor Class
5,000
1,000
(a)
Capital Opportunity Fund—R Class
(a)
(a)
(a)
Diversified Mid-Cap Growth
68,000
145,000
95,000
Diversified Small-Cap Growth
68,000
149,000
95,000
Dividend Growth
81,000
152,000
109,000
Dividend Growth Fund—Advisor Class
(a)
(a)
(a)
Emerging Markets Bond
157,000
244,000
181,000
Equity Income
87,000
149,000
111,000
Equity Income Fund—Advisor Class
10,000
19,000
13,000
Equity Income Fund—R Class
1,000
2,000
1,000
Equity Index 500
147,000
228,000
153,000
Extended Equity Market Index
128,000
308,000
153,000
Financial Services
68,000
139,000
95,000
Global Real Estate
177,000
42,000
(b)
Global Real Estate Fund—Advisor Class
5,000
2,000
(b)
Global Technology
96,000
167,000
123,000
Growth & Income
69,000
137,000
95,000
Growth Stock
107,000
168,000
126,000
Growth Stock Fund—Advisor Class
13,000
26,000
21,000
Growth Stock Fund—R Class
4,000
7,000
5,000
Health Sciences
157,000
217,000
152,000
Institutional Emerging Markets Bond
157,000
231,000
181,000
Institutional International Bond
157,000
235,000
106,000
Institutional Large-Cap Core Growth
68,000
138, 000
95,000
Institutional Large-Cap Growth
68,000
135,000
95,000
Institutional Large-Cap Value
68,000
135,000
95,000
Institutional Mid-Cap Equity Growth
69,000
140,000
95,000
Institutional Small-Cap Stock
68,000
147,000
95,000
Institutional U.S. Structured Research
96,000
171,000
20,000
International Bond
144,000
217,000
176,000
International Bond Fund—Advisor Class
27,000
42,000
19,000
Media & Telecommunications
96,000
169,000
95,000
Mid-Cap Growth
95,000
163,000
119,000
Mid-Cap Growth Fund—Advisor Class
4,000
6,000
4,000
Mid-Cap Growth Fund—R Class
1,000
2,000
1,000
Mid-Cap Value
85,000
151,000
112,000
Mid-Cap Value Fund—Advisor Class
6,000
12,000
10,000
Mid-Cap Value Fund—R Class
4,000
8,000
7,000
New America Growth
81,000
150,000
10 9,000
New America Growth Fund—Advisor Class
1,000
1,000
(a)
New Era
69,000
139,000
96,000
New Horizons
96,000
184,000
123,000
Real Estate
106,000
146,000
107,000
Real Estate Fund—Advisor Class
4,000
3,000
2,000
Science & Technology
113,000
186,000
118,000
Science & Technology Fund—Advisor Cla ss
18,000
31,000
19,000
Small-Cap Stock
77,000
151,000
101,000
Small-Cap Stock Fund—Advisor Class
5,000
13,000
9,000
Small-Cap Value
124,000
183 ,000
121,000
Small-Cap Value Fund—Advisor Class
17,000
23,000
17,000
Spectrum Growth
(c)
(c)
(c)
Spectrum Income
(c)
(c)
(c)
Spectrum International
(c)
(c)
(c)
Total Equity Market Index
128,000
290,000
152,000
U.S. Large-Cap Core
39,000
(b)
(b)
U.S. Large-Cap Core Fund—Advisor Class
(a)
(b)
(b)
Value
77,000
131,000
91,000
Value Fund—Advisor Cl ass
9,000
24,000
19,000

127

128

(a)Less than $1,000.

(b)Prior to commencement of operations.

(c)Paid b y underlying Price funds pursuant to the Special Servicing Agreement.

Other Shareholder Services

The funds (other than the Institutional Funds, Short-Term Income Fund, and TRP Reserve Investment Funds) have adopted an administrative fee payme nt ("AFP") program that authorizes the funds to make payments for services provided on behalf of the funds. Payments are made to retirement plans, retirement plan recordkeepers, insurance companies, banks, and broker-dealers for transfer agency, recordkeeping, and other administrative services. These services include, but are not limited to: transmitting net purchase and redemption orders; maintaining separate records for shareholders reflecting purchases, redemptions, and share balance s; mailing shareholder confirmations and periodic statements; processing dividend payments; and telephone services in connection with the above. Under the AFP program, the funds paid the amounts set forth below in calendar year 2009.< td style="text-indent:0.0";">Institutional Global Equity

Fund


Payment

Africa & Middle East
$28,295
Balanced
438,213
Blue Chip Growth
3,066,239
California Tax-Free Bond
14,730
California Tax-Free Money
1,502
Capital Appreciation
1,574,031
Capital Opportunity
20,165
Corporate Income
18,949
Diversified Mid-Cap Growth
< /td>		4,857
Diversified Small-Cap Growth
1,570
Dividend Growth
185,825
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">Emerging Europe & Mediterranean
41,876
Emerging Markets Bond
76,954
Emerging Markets Stock
777,219
Equity Income
2,883,166
Equity Index 500
49,311
European Stock
42,069
Extended Equity Market Index
9< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">,724
Financial Services
64,184
Georgia Tax-Free Bond
13,026
GNMA
41,035
TRP Government Reserve Investment
(a)
Global Infrastructure
(b)
Global Large-Cap Stock
121
Global Real Estate
19
Global Stock
57,431
Global Technology
17,133
Growth & Income
27,265
Growth Stock
4,215,992
Health Sciences
542,525
High Yield
421,132
Inflation Protected Bond
29,084
Institutional Africa & Middle East
(a)
Institutional Core Plus
(a)
Institutional Emerging Markets Bond
(a)
Institutional Emerging Markets Equity
(a)
Institutional Floating Rate
(a)
Institutional Foreign Equity
(a)
(a)
Institutional Global Large-Cap Equity
(a)
Institutional High Yield
(a)
Institutional International Bond
(a)
Institutional Large-Cap Core Growth
(a)
Institutional Large-Cap Growth
(a)
Institutional Large-Cap Value
(a)
Institutional Mid-Cap Equity Growth
(a)
Institutional Small-Cap Stock
(a)
Institutional U.S. Structured Research
(a)
International Bond
468,468
International Discovery
747,667
International Equity Index
18,632
International Growth & Income
207,467
International Stock
288,899
Japan
22,037
Latin America
387,036
Maryland Short-Term Tax-Free Bond
23,415
Maryland Tax-Free Bond
129,173
Maryland Tax-Free Money
1,896
Media & Telecommunications
140,726
Mid-Cap Growth
4,994,628
Mid-Cap Value
1,513,005
New America Growth
97,399
New Asia
821,472
New Era
746,021
New Horizons
1,052,375
New Income
180,841
New Jersey Tax-Free Bond
9,529
New York Tax-Free Bond
12,508
New York Tax-Free Money
120
Overseas Stock
23,351
Personal Strategy Balanced
449,251
Personal Strategy Growth
248,132
Personal Strategy Income
167,644
Prime Reserve
119,322
Real Estate
467,383
TRP Reserve Investment
(a)
Retirement 2005
(c)
Retirement 2010
(c)
Retirement 2015
(c)
Retirement 2020
(c)
Retirement 2025
(c)
Retirement 2030
(c)
Retirement 2035
(c)
Retirement 2040
(c)
Retirement 2045
(c)
Retirement 2050
(c)
Retirement 2055
(c)
Retirement Income
(c)
Science & Technology
332,484
Short-Term Bond
443,409
Short-Term Income
(a)
Small-Cap Stock
2,179,520
Small-Cap Value
832,925
Spectrum Growth
(c)
Spectrum Income
(c)
Spectrum International
(c)
Strategic Income
2,103
Summit Cash Reserves
10,208
Summit GNMA
4,527
Summit Municipal Income
132,424
Summit Municipal Intermediate
377,983
Summit Municipal Money Market
499
Tax-Efficient Balanced(d)
689
Tax-Efficient Equity(e)
686
Tax-Efficient Growth(f)
329
Tax-Exempt Money
35,030
Tax-Free High Yield
94,889
Tax-Free Income
102,541
Tax-Free Short-Intermediate
190,351
Total Equity Market Index
41,947
U.S. Bond Index
33,530
U.S. Large-Cap Core
0
U.S. Treasury Intermediate
164,065
U.S. Treasury Long-Term
16,251
U.S. Treasury Money
124,838
Value
288,156
Virginia Tax-Free Bond
76,373

129

130

(a)Did not participate in AFP program.

(b)Prior to commencement of operations.

(c)Paid by underlying Price funds pursuant to the Special Servicing Agreement.

131

(d)The Tax-Efficient Balanced Fund merged into the Balanced Fund on August 28, 2009.

(e)The fund was formerly named Tax-Efficient Multi-Cap Growth Fund.

(f)The Tax-Efficient Growth Fund merged into the Tax-Efficient Equity Fund on August 28, 2009.

Each Advisor and R Class has adopted an AFP program under which various third parties, including third parties receiving 12b-1 payments, may receive payments from the class in addition to 12b-1 fees for providing various recordkeeping, transfer agency, and administrative services to the classes and/or shareholders thereof. These services include, but are not limited to: transmitting net purchase and redemption orders; maintaining separate records for shareholders reflecting purchases, redemptions, and share balances; mailing shareholder confirmations and periodic statements; processing dividend payments; and telephone services in connection with the above. Under this AFP program, the funds paid the amounts set forth below in calendar year 2009.< td style="text-indent:0.0";">Retirement 2025 Fund—R Class

Fund


Payment

Blue Chip Growth Fund—Advisor Class
$1,002,176
Blue Chip Growth Fund—R Class
98,402
Capital Appreciation Fund—Advisor Class
160,491
Capital Opportunity Fund—Advisor Class
8,269
Capital Opportunity Fund—R Class
344
Dividend Growth Fund—Advisor Class
10,184
Equity Income Fund—Advisor Class
1,605,303
Equity Income Fund—R Class
218,404
Global Infrastructure Fund—Advisor Class
(a)
Global Large-Cap Stock Fund—Advisor Class
5
Global Real Estate Fund—Advisor Class
3
Global Stock Fund—Advisor Class
13,962
Growth Stock Fund—Advisor Class
2,024,222
Growth Stock Fund—R Class
817,659
High Yield Fund—Advisor Class
1,307,476
International Bond Fund—Advisor Class
339,726
International Growth & Income Fund—Advisor Class
241,694
International Growth & Income Fund—
R Class
40,436
International Stock Fund—Advisor Class
24,742
International Stock Fund—R Class
2,496
Mid-Cap Growth Fund—Advisor Class
588,326
Mid-Cap Growth Fund—R Class
179,032
Mid-Cap Value Fund—Advisor Class
505,836
Mid-Cap Value Fund—R Class
330,301
New America Growth Fund—Advisor Class
12,627
New Income Fund—Advisor Class
17,390
New Income Fund—R Class
10,108
Real Estate Fund—Advisor Class
67,201
Retirement 2005 Fund—Advisor Class
(b)
Retirement 2005 Fund—R Class
(b)
Retirement 2010 Fund—Advisor Class
(b)
Retirement 2010 Fund—R Class
(b)
Retirement 2015 Fund—Advisor Class
(b)
Retirement 2015 Fund—R Class
(b)
Retirement 2020 Fund—Advisor Class
(b)
Retirement 2020 Fund—R Class
(b)
Retirement 2025 Fund—Advisor Class
(b)
(b)
Retirement 2030 Fund& #151;Advisor Class
(b)
Retirement 2030 Fund—R Class
(b)
Retirement 2035 Fund—Advisor Class
(b)
Retirement 2035 Fund—R Class
(b )
Retirement 2040 Fund—Advisor Class
(b)
Retirement 2040 Fund—R Class
(b)
Retirement 2045 Fund—Advisor Class
(b)
Retirement 2045 Fund—R Class
(b)
Retirement 2050 Fund—Advisor Class
(b)
Retirement 2050 Fund—R Class
(b)
Retirement 2055 Fund—Advisor Class
(b)
Retirement 2055 Fund—R Class
(b)
Retirement Income Fund—Advisor Class
(b)
Retirement Income Fund—R Class
(b)
Science & Technology Fund—Advisor Class
437,870
Short-Term Bond Fund—Advisor Class
161,671
Small-Cap Stock Fund—Advisor Class
318,323
Small-Cap Value Fund—Advisor Class
743,136
Strategic Income Fund—Advisor Class
51
Tax-Free Income Fund—Advisor Class
421,768
U.S. Large-Cap Core Fund—Advisor Class
0
Value Fund—Advisor Class
689,427

132

(a)Prior to commencement of operations.

(b)Paid by underlying Price funds pursuant to the Special Servicing Agreement.

529 Plans

T.  Rowe Price is the investment manager of several college savings plans established by states under section 529 of the Code. Each plan has a number of portfolios that invest in underlying Price Funds including Blue Chip Growth, Emerging Markets Stock, Equity Index 500, Extended Equity Market Index, International Growth & Income, International Stock, Mid-Cap Growth, Mid-Cap Value, New Income, Overseas Stock, Short-Term Bond, Short-Term Income, Small-Cap Stock, Spectrum Income, Summit Cash Reserves, Total Equity Market Index, U.S. Bond Index, U.S. Treasury Money, and Value Funds. Each portfolio establishes an omnibus account in the underlying Price Funds. Transfer agent and recordkeeping expenses in curred by the portfolios as a result of transactions by participants in the 529 plans that invest in the Price Funds are paid for by the underlying Price Funds under their agreement with their transfer agent, T. Rowe Price Services, Inc. The expenses borne by each underlying Price Fund are set forth in the shareholder report of the underlying fund under "Related Party Transactions."

Control of Investment Adviser

T. Rowe Price Group, Inc. ("Group") is a publicly owned company and owns 100% of the stock of T. Rowe Price Associ ates, Inc., which in turn owns 100% of T. Rowe Price International, Inc. Group was formed in 2000 as a holding company for the T. Rowe Price-affiliated companies.

133

Distributor for the Funds

Investment Services, a Maryland corporation formed in 1980 as a wholly owned subsidiary of T. Rowe Price, serves as distributor for all T. Rowe Price mutual funds on a continuous basis. Investment Services is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA").

Investment Services is located at the same address as the funds and T. Rowe Price—100 East Pratt Street, Baltimore, Maryland 21202.

Investment Services serves as distributor to the funds, pursuant to an Underwriting Agreement ("Underwriting Agreement"), which provides that the funds (other than the Single-Fee Funds) will pay all fees and expenses in connection with necessary state filings; preparing, setting in type, printing, and mailing of prospectuses and reports to shareholders; and issuing shares, including expenses of confirming purchase orders. For the Single-Fee Funds, the Underwriting Agreement provides that Investment Services will pay, or will arrange for others to pay, all of these fees and expenses.

The Underwriting Agreement also provides that Investment Services will pay all fees and expenses in connection with printing and distributing prospectuses and reports for use in offering and selling fund shares; preparing, setting in type, printing, and mailing all sales literature and advertising; Investment Services` federal and state registrations as a broker-dealer; and offering and selling shares for each fund, except for those fees and expenses specifically assumed by the funds. Investment Services` expenses are paid by T. Rowe Price.

Investment Services acts as the agent of the funds, in connection with the sale of fund shares in the various states in which Investment Services is qualified as a broker-dealer. Under the Underwriting Agreement, Investment Services accepts orders for fund shares at net asset value. Other than as described below with respect to the Advisor and R C lass shares, no sales charges are paid by investors or the funds and no compensation is paid to Investment Services.

Advisor and R Class

Distribution and Shareholder Services Plan

The fund directors adopted a plan pursuant to Rule 12b-1 with respect to each Advisor and R Class (collectively "Class"). Each plan provides that the Class may compensate Investment Services or such other persons as the funds or Investment Services designates, to finance any or all of the distribution, shareholder servicing, maintenance of shareholder accounts, and/or other administrative services with respect to Class shares. It is expected that most, if not all, payments under each plan will be made (either directly, or indirectly through Investment Services) to intermediaries other than Investment Services such as broker-dealers, banks, insurance companies, and retirement plan recordkeepers. Under each plan, the Advisor Class pays a fee at the annual rate of up to 0.25% of that class`s average daily net assets and the R Class pays a fee at the annual rate of up to 0.50% of that class`s average daily net assets. Normally, the full amount of the fee is paid to the intermediary on shares sold through that intermediary; however, a lesser amount may be paid. In addition, the fee may be split among intermediaries based on the level of services provided by each. Intermediaries may use the payments for, among other purposes, compensating employees engaged in sales and/or shareholder servicing of the Class, as well as for a wide variety of other purposes associated with supporting, distributing, and servicing Class shares. The amount of fees paid by a Class during any year may be more or less than the cost of distribution and other services provided to the Class and its investors. FINRA rules limit the amount of annual distribution and service fees that may be paid by a mutual fund and impose a ceiling on the cumulative distribution fees paid. The plan complies with these rules.

The plan requires that Investment Services provide, or cause to be provided, a quarterly written report < /font>identifying the amounts expended by each Class and the purposes for which such expenditures were made to the fund directors for their review.

Prior to approving the plan, the funds considered various factors relating to the implementation of the plan and determined that there is a reasonable likelihood that the plan will benefit each fund, its Class, and the Class`s shareholders. The fund directors noted that to the extent the plan allows a fund to sel l Class shares in markets to which it would not otherwise have access, the plan may result in additional sales of fund shares.

134

This may enable a fund to achieve economies of scale that could reduce expenses. In addition, certain ongoing shareholder services may be provided more effectively by intermediaries with which shareholders have an existing relationship.

The plan is renewable from year to year with respect to each fund, so long as its continuance is approved at least annually (1) by the vote of a majority of the fund directors and (2) by a vote of the majority of the funds` independent directors cast in person at a meeting called for the purpose of voting on such approval. The plan may not be ame nded to increase materially the amount of fees paid by any Class thereunder unless such amendment is approved by a majority vote of the outstanding shares of such Class and by the fund directors in the manner prescribed by Rule 12b-1 under the 1940 Act. The plan is terminable with respect to a Class at any time by a vote of a majority of the independent d irectors or by a majority vote of the outstanding shares in the Class.

Payments under the 12b-1 plans will normally be made for funds that are closed to new investors. Such payments are made for the various services provided to the investors by the intermediaries receiving such payments.

The following payments for the fiscal year indicated were made to intermediaries, including broker-dealers and insurance companies, for the distribution, shareholder servicing, maintenance of shareholder accounts, and/or other administrative services under the plan.


Fund


Fiscal Year Ended
 2/28/09

Tax-Free Income Fund—Advisor Class
$769,000


F und


Fiscal Year Ended
5/31/09

High Yield Fund—Advisor Class
$ 2,661,000
New Income Fund—Advisor Class
20,000
New Income Fund—R Class
22,000
Retirement 2005 Fund—Advisor Class
19,000
Retirement 2005 Fund—R Class
85,000
Retirement 2010 Fund —Advisor Class
1,079,000
Retirement 2010 Fund—R Class
1,381,000
Retirement 2015 Fund—Advisor Class
201,000
Retireme nt 2015 Fund—R Class
46,000
Retirement 2020 Fund—Advisor Class
1,817,000
Retirement 2020 Fund—R Class
2,201,000
Retirement 2025 Fund—Advisor Class
228,000
Retirement 2025 Fund—R Class
37,000
Retirement 2030 Fund—Advisor Class
1,348,000
Retirement 2030 Fund—R Class
1,607,000
Retirement 2035 Fund—Advisor Class
151,000
Retirement 2035 Fund—R Class
26,000
Retirement 2040 Fund—Advisor Class
821,000
Retirement 2040 Fund—R Class
921,000
Retirement 2045 Fund—Advisor Class
65,000
Retirement 2045 Fund—R Class
11,000
Retirement 2050 Fund—Advisor Class
62,000
Retirement 2050 Fund—R Class
72,000
Retirement 2055 Fund—Advisor Class
9,000
Retirement 2055 Fund—R Class
2,000
Retirement Income Fund—Advisor Class
307,000
Retirement Income Fund—R Class
313,000
Short-Term Bond Fund—Advisor Class
9,000
Strategic Income Fund—Advisor Class
0

135


Fund


Fiscal Year Ended
10/31/09

Global Infrastructure Fund—Advisor Class
(a)
Global Large-Cap Stock Fund—Advisor Class
$1,000
Global Stock Fund—Advisor Class
26,000
International Growth & Income Fund—Advisor Class
479,000
International Growth & Income Fund—
R Class
132,000
International Stock Fund—Advisor Class
35,000
International Stock Fund—R Class
9,000

(a)Prior to commencement of operations.


Fund


Fiscal Year Ended
12/31/09

Blue Chip Growth Fund—Advisor Class
$1,947,000
Blue Chip Growth Fund—R Class
311,000
Capital Appreciation Fund—Advisor Class
340,000
Capital Opportunity Fund—Advisor Class
19,000
Capital Opportunity Fund—R Class
2,000
Dividend Growth Fund—Advisor Class
20,000
Equity Income Fund—Advisor Class
3,687,000
Equity Income Fund—R Class
764,000
Global Real Estate Fund—Advisor Class
1,000
Growth Stock Fund—Advisor Class
4,004,000
Growth Stock Fund—R Class
2,826,000
International Bond Fund—Advisor Class
1,057,000
Mid-Cap Growth Fund—Advisor Class
1,127,000
Mid-Cap Growth Fund—R Class
646,000
Mid-Cap Value Fund—Advisor Class
920,000
Mid-Cap Value Fund—R Class
1,149,000
New America Growth Fund—Advisor Class
31,000
Real Estate Fund—Advisor Class
150,000
Science & Technology Fund—Advisor Class
774,000
Small-Cap Stock Fund—Advisor Class
568,000
Small-Cap Value Fund—Advisor Class
1,463,000
U.S. Large-Cap Core Fund—Advisor Class
0
Value Fund—Advisor Class
1,735,000

136

(a)Prior to commencement of operations.

Portfolio Transactions

Investment or Brokerage Discretion

Decisions with respect to the selection, purchase, and sale of portfolio securities on behalf of the international Price Funds are made by T. Rowe Price International. Decisions with respect to the selection, purchase, and sale of portfolio securities on behalf of all other Price Funds are made by T. Rowe Price. T. Rowe Price and T. Rowe Price International are responsible for implementing these decisions for the Price Funds, including, where applicable, the negotiation of commissions, the allocation of portfolio brokerage and principal business, and the use of affiliates to assist in routing orders for execution.

How Broker-Dealers Are Selected

With respect to equity and debt securities, T. Rowe Price or T. Rowe Price International may effect principal transactions on behalf of a fund with a broker-dealer that furnishes brokerage and/or research services; designate any such broker-dealer to receive selling concessions, discounts, or other allowances; or otherwise deal with any such broker-dealer in connection with the acquisition of securities in underwritings. T. Rowe Price or T. Rowe Price International may receive research services in connection with brokerage transactions, including designations in fixed-price offerings.

Debt Securities

In purchasing and selling debt securities, T. Rowe Price and T. Rowe Price International ordinarily place transactions with the issuer or a primary market-maker acting as principal for the securities on a net basis, with no brokerage commission being paid by the client (although the price usually includes undisclosed compensation) and may involve the designation of selling concessions. Debt securities may also be purchased from underwriters at prices which include underwriting fees. Any transactions placed through broker-dealers serving as primary market-makers reflect the spread between the bid and ask prices. Funds that invest exclusively or primarily in debt securities may nonetheless benefit from research and services received through the use of commissions generated by funds investing in equity securities.

Equity Securities

In purchasing and selling equity securities, T. Rowe Price and T. Rowe Price International seek to obtain quality execution at favorable security prices through responsible broker-dealers and, in the case of agency transactions, at competitive commission rates. However, under certain conditions, higher brokerage commissions may be paid in return for a mix of brokerage and research services.

In selecting broker-dealers to execute the Price Funds` portfolio transactions, consideration is given to such factors as the price of the security, the rate of the commission, the size and difficulty of the order, the reliability, integrity, general execution, and operational capabilities of competing broker-dealers, their expertise in particular markets, and brokerage and research services provided by them. It is not the policy of T. Rowe Price or T. Rowe Price International to seek the lowest available commission rate where it is believed that a broker-dealer charging a higher commission rate would offer greater reliability or provide better price or execution.

As a general practice, transactions involving U.S. equity securities are executed in the primary market with market-makers, or through an electronic communications network (< /font>"ECN") or Alternative Trading System. In selecting from among these options, T. Rowe Price generally seeks to select the broker-dealers or electronic

137

venue it believes to be actively and effectively trading the security being purchased or sold. In an effort to obtain quality execution, orders for foreign equity securities may be placed through T. Rowe Price International`s trading desk. Executions of orders may be directed to an affiliated trading desk that is best situated to execute a particular order.

Transactions on stock exchanges involve the payment of brokerage commissions. In transactions on stock exchanges in the U.S., these commissions are negotiated. Traditionally, commission rates have generally not been negotiated on stock markets outside the U.S. However, an increasing number of overseas stock markets have adopted a system of negotiated rates or ranges of rates, although a small number of markets continue to be subject to an established schedule of minimum commission rates. It is expected that equity securities will ordinarily be purchased in the primary markets, whether over-the-counter or listed, and that listed securities may be purchased in the over-the-counter market if such market is deemed the primary market. In the case of securities traded on the over-the-counter markets, there is generally no stated commission, but the price usually includes an undisclosed commission or markup. In underwritten offerings, the price includes a disclosed, fixed commission or discount.

Evaluating the Overall Reasonableness of Brokerage Commissions Paid

On a continuing basis, T. Rowe Price and T. Rowe Price International seek to determine what levels of commission rates are reasonable in the marketplace for transactions executed on behalf of mutual funds and other institutional clients. In evaluating the reasonableness of commission rates, T. Rowe Price and T. Rowe Price International may consider any or all of the following: (a) rates quoted by broker-dealers; (b) the size of a particular transaction, in term s of the number of shares, dollar amount, and number of clients involved; (c) the complexity of a particular transaction in terms of both execution and settlement; (d) the level and type of business done with a particular firm over a period of time; (e) the extent to which the broker-dealer has capital at risk in the transaction; (f)  historical commission rates; and (g) rates paid by other institutional investors based on available public information.

Commissions Paid to Broker-Dealers for Research

T. Rowe Price and T. Rowe Price International receive a wide range of research services from broker-dealers. The services provide domestic and international perspectives and may cover investment opportunities throughout the world. These services include information on the economy, industries, groups of securities, individual companies, statistics, accounting and tax law interpretations, political developments, legal developments affecting portfolio securities, technical market action, pricing and appraisal services, performance analysis, credit analysis, risk measurement analysis, and analysis of corporate responsibility issues. Research services are received primarily in the form of written reports, e-mails, computer-generated services, telephone contacts, and personal meetings with security analysts. Such services may also be provided through meetings arranged with corporate management, industry spokespersons, economists, academicians, and government representatives. Some research may be incorporated into firm-wide systems or communications. Therefore, T. Rowe Price may have access to research obtained through commissions generated by T. Rowe Price International and T. Rowe Price International may have access to research obtained through commissions generated by T. Rowe Price.

Certain broker-dealers that provide quality brokerage and execution services also furnish proprietary research services to T. Rowe Price and T. Rowe Price International. Proprietary research may also include research provided by an affiliate of the broker-dealer. With regard to the payment of brokerage commissions and receipt of proprietary research, T. Rowe Price and T. Rowe Price International have adopted brokerage allocation policies which embody the concepts of Section 28(e) of the 1934 Act and which are in accordance with the Conduct of Business Rules of the United Kingdom Financial Services Authority. Section 28(e) permits an investment adviser to cause its accounts or clients to pay a higher commission to a broker-dealer that furnishes research services than what might be charged by another broker-dealer that does not furnish research services (or that furnishes brokerage and research services deemed to be of lesser value). The adviser must determine in good faith that the commission is reasonable in relation to the value of the research services (and any brokerage services) provided. The determination may be viewed in terms of either that particular transaction or the overall responsibilities of the adviser with respect to the accounts over which it exercises

138

investment discretion. As a result, research may not necessarily benefit all accounts paying commissions to such broker-dealers.

Except as set forth in the following section on "Directed Brokerage," T. Rowe Price and T. Rowe Price International have policies of not allocating brokerage business in return for products or services other than brokerage or research services, although from time to time each receives third-party vendor services and products serving both research and non-research functions in accordance with the provisions of Section 28(e). T. Rowe Price and T. Rowe Price International cannot always readily determine the extent to which commissions charged by broker-dealers reflect the value of their research services. However, in accordance with regulations issued by the United Kingdom Financial Services Authority, T. Rowe Price International makes a good faith determination of the amount of its clients` commissions attributable to research.

T. Rowe Price and T. Rowe Price International may receive proprietary research from broker-dealers in connection with brokerage transactions, including selling concessions and designations in fixed-price offerings in which a Price Fund or non-ERISA client participates.

Research services received from broker-dealers are supplemental to the research efforts of T. Rowe Price and T. Rowe Price International and, when utilized, are subject to internal analysis before being incorporated into their investment processes. As a practical matter, it would not be possible to take into consideration all of the information and varied opinions presently provided by broker-dealers. Independent third-party research is an important component of the Price Funds` investment selection process and may b e paid for directly by T. Rowe Price or T. Rowe Price International, obtained through commission sharing arrangements ("CSAs"), or acquired through "step-out" transactions.

T. Rowe Price and T. Rowe Price International may obtain third-party research from broker-dealers or non-broker-dealers by entering into CSAs. Under a CSA, the executing broker-dealer agrees that part of the commissions it earns on certain equity trades for the Price Funds will be allocated to one or more research providers, as directed by T. Rowe Price and T. Rowe Price International, as payment for research. The u se of CSAs allows T. Rowe Price and T. Rowe Price International to direct broker-dealers to pool commissions that are generated from orders executed at that broker-dealer (for equity transactions on behalf of the Price Funds and other client accounts), and then periodically direct the broker-dealer to pay third party research providers for research. All such uses of CSAs by T. Rowe Price and T. Rowe Price International shall be subject to applicable law and their best execution obligations.

In addition, proprietary research and services may be acquired or received either directly from executing brokers-dealers or indirectly through other brokers-dealers in step-out transactions or similar arrangements. A "step-out" is an arrangement by which an investment manager executes a trade through one broker-dealer but instructs that entity to step-out all or a portion of the trade to another broker-dealer. This second broker-dealer will clear, settle, and receive commissions for, the stepped-out portion. T. Rowe Price and T. Rowe Price International may use a step-out to compensate broker-dealers who provide valuable proprietary research services to the Price Funds. T. Rowe Price may also use full service broker-dealers that provide "bundled" proprietary research, either directly or through step-out transactions with other brokers. All such uses of brokerage by T. Rowe Price and T. Rowe Price International to acquire research shall be subject to applicable law and their best execution obligations. Lower commissions may be available from other broker-dealers that do not provide research.

While receipt of research services from brokerage firms has not reduced normal research activities by T. Rowe Price or T. Rowe Price International, the expenses of either could be materially increased if it attempted to generate such additional information through its own staff. To the extent that r esearch services of value are provided by broker-dealers, T. Rowe Price and T. Rowe Price International are relieved of expenses which they might otherwise bear.

Directed Brokerage

The Price Funds that invest in U.S. equity securities have adopted a commission recapture program. Under the program, a percentage of commissions generated by the portfolio transactions of those funds is rebated to the funds by the broker-dealers and credited to short-term security gain/loss.

139

At the present time, the Price Funds do not recapture commissions, underwriting discounts, or selling group concessions in connection with debt securities acquired in underwritten offerings. T. Rowe Price and T. Rowe Price International may, however, have the opportunity to designate a portion of the underwriting spread to broker-de alers that participate in the offering.

Allocation of Brokerage Commissions

T. Rowe Price and T. Rowe Price International have policies of not pre-committing a specific amount of business to any broker-dealer over any specific time period. Historically, brokerage placement has been determined, as appropriate, by the needs of a specific transaction such as market-making, availability of a buyer or seller of a particular security, or specialized execution skills. T. Rowe Price and T. Rowe Price International may choose to allocate brokerage among several broker-dealers that are able to meet the needs of the transaction.

Each year, T. Rowe Price and T. Rowe Price International assess the contributions of the equity brokerage and research services provided by broker-dealers and create a ranking of broker-dealers in response to these assessments. Portfolio managers, research analysts, and the trading d epartment each evaluate the brokerage, execution, and research services they receive from broker-dealers and make judgments as to the quality of such services. Actual business received by a particular firm may not directly reflect its ranking in the voting process. It may be less than the suggested target but can, and often does, exceed the suggestions because the total business is allocated on the basis of all the considerations described above. Allocation of brokerage business is monitored on a periodic basis by the Equity and Fixed Income Brokerage and Trading Control Committees. In no event is a broker-dealer excluded from receiving business from T. Rowe Price or T. Rowe Price International because it has not been identified as providing research services. Discount or execution-only brokers, as well as ECNs, are used where deemed appropriate.

Trade Allocation Policies

T. Rowe Price and T. Rowe Price International have developed written tra de allocation guidelines for their trading desks. Generally, when the amount of securities available in a public offering or the secondary markets is insufficient to satisfy the volume or price requirements for the participating client portfolios, the guidelines require a pro-rata allocation based upon the relative sizes of the participating client portfolios or the relative sizes of the participating client orders, depending upon the market involved. In allocating trades made on a combined basis, the trading desks seek to achieve the same net unit price of the securities for each participating client. Because a pro-rata allocation may not always adequately accommodate all facts and circumstances, the guidelines provide for exceptions to allocate trades on an adjusted basis, which may include a system-generated random allocation. For example, adjustments may be made: (i) to eliminate de minimis positions; (ii) to give priority to accounts with specialized investment policies and objectives; and (iii) to reallocate in light of a participating portfolio`s characteristics (e.g., available cash, industry or issuer concentration, duration, credit exposure). With respect to any private placement transactions, conditions imposed by the issuer may limit availability of allocations to client accounts.

Miscellaneous

The brokerage allocation policies for T. Rowe Price and T. Rowe Price International are generally applied to all of their fully discretionary accounts, which represent a substantial majority of all assets under management. Research services furnished by broker-dealers through which T. Rowe Price or T. Rowe Price International effect securities transactions may be used in servicing all accounts (including non-Price Funds) managed by T. Rowe Price or T. Rowe Price International. Therefore, research services received from broker-dealers that execute transactions for a particular fund will not necessarily be used by T. Rowe Price or T. Rowe Price International in connection with the management of that fund. The Price Funds do not allocate business to any broker-dealer on the basis of its sales of the funds` shares. However, this does not mean that broker-dealers who purchase fund shares for their clients will not receive business from the fund.

Since certain clients of T. Rowe Price and T. Rowe Price International have similar investment objectives and programs to those of a particular Price Fund, T. Rowe Price or T. Rowe Price International may make recommendations to other clients that result in their purchasing or selling securities simultaneously with the fund. As a result, the demand for securities being purchased or the supply of securities being sold may

140

increase, and this could have an adverse effect on the price of those securities. It is the policy of T. Rowe Price and T. Rowe Price International not to favor one client over another in making recommendations or in placing orders. T. Rowe Price fre quently follows the practice of grouping orders of various clients for execution. T. Rowe Price International may also follow this practice. Clients should be aware, however, that the grouping of their orders with other clients` orders may sometimes result in a more favorable price and at other times may result in a less favorable price than if the client orders had not been grouped. Where an aggregate order is executed in a series of transactions at various prices on a given day, each participating client`s proportionate share of such order will reflect the average price paid or received with respect to the total order.

T. Rowe Price may also include orders on behalf of the T. Rowe Price Associates Foundation, Inc. and the T.  Rowe Price Program for Charitable Giving, Inc., not for profit entities, and the T. Rowe Price Savings Bank in aggregated orders from time to time.

T. Rowe Price and T. Rowe Price International may give advice and take action for clients, including the Price Funds, which differs from advice given or the timing or nature of action taken for other clients. T. Rowe Price and T. Rowe Price International are not obligated to initiate transactions for clients in any security that their principals, affiliates, or employees may purchase or sell for their own accounts or for other clients.

Purchase and sale transact ions may be effected directly among and between non-ERISA client accounts (including affiliated mutual funds), provided no commission is paid to any broker-dealer, the security traded has readily available market quotations, and the transaction is effected at the independent current market price.

T. Rowe Price and T. Rowe Price International have established the Equity and Fixed Income Brokerage and Trading Control Committees, which are responsible for developing and monitoring brokerage policies and resolving questions relating to those policies.

T. Rowe Price and T. Rowe Price International have established a general investment policy that they will ordinarily not make additional purchases of a common stock for their clients (including the Price funds) if, as a result of such purchases, 10% or more of the outstanding common stock of the issuer would be held by clients in the aggregate. In certain limited instances, however, T. Rowe Price or T. Rowe Price International may increase aggregate ownership to a maximum of 15% or more. All aggregate ownership decisions are reviewed by the appropriate oversight committee. For purposes of monitoring both of these limits, securities held by clients and clients of affiliated advisers are included.

Total Brokerage Commissions

For the fiscal years indicated, the total brokerage commissions paid by each fund, including the discounts received by securities dealers in connection with underwritings, and the percentage of these commissions paid to firms which provided research, statistical, or other services to T. Rowe Price or T. Rowe Price International in connection with the management of e ach fund that invests in equity securities, are shown below.


Fund


Fiscal Year Ended




















2/28/09


%


2/29/08


%


2/28/07


%

California Tax-Fr ee Bond
$228,000
(a)
$255,000
 (a)
$251,000
(a)
California Tax-Free Money
8,000
(a)
0
(a)
2,000
(a)
Georgia Tax-Free Bond
75,000
(a)
60,000
(a)
67,000
(a)
Maryland Short-Term Tax-F ree Bond
36,000
(a)
35,000
(a)
32,000
(a)
Maryland Tax-Free Bond
319,000
(a)
390,000
(a)
665,000
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">(a)
Maryland Tax-Free Money
11,000
(a)
2,000
(a)
26,000
(a)
New Jersey Tax-Free Bo nd
109,000
(a)
132,000
(a)
146,000
(a)
New York Tax-Free Bond
195,000
(a)
168,000
(a)
325,000
(a)
New York Tax-Free Money
4,000
(a)
4,000
(a)
0
(a)
Tax-Efficient Equity
14,000
1.7
11,000
1.4
10,000
2.4
Tax-Exempt Money
13,000
(a)
2,000
(a)
5,000< br>(a)
Tax-Free High Yield
1,564,000
(a)
1,256,000
(a)
720,000
(a)
Tax-Free Income
1,676,000
(a)
1,136,000
(a)
1,121,000
(a)
Tax-Free Short-Intermediate
283,000
(a)
96,000
(a)
98,000
(a)
Virginia Tax-Free Bond
300,000
(a)
261,000
(a)
245,000
(a)

141

(a)Percentages are not required for funds that do not invest in equity securities.

< td style="text-indent:0.0";">95.7

Fund


Fiscal Year Ended




















5/31/09


%


5/31/08


%


5/31/07


%

Corporate Income
$823,000
86.6
$415,000
$148,000
93.2
GNMA
11,000
(a)
85,000
(a)
200,000
(a)
TRP Government Reserve Investment
(b)
(b)
(b)
(b)
(b)
(b)
High Yield
15,219,000
78.2
6,936,000
92.1
18,250,000
91.8
Inflation Protected Bond
5,000
(a)
4,000
(a)
3,000
(a)
Institutional Core Plus
38,000
90.5
43,000
96.2
19,000
94.2
Institutional Floating Rate
1,033,000
(a)
(b)
(b)
(c)
(c)
Institutional High Yield
2,414,000
76.0
1,063,000
90.9
1,399,000
91.8
New Income
3,102,000
94.9
3,519,000
96.2
2,152,000
93.7
Personal Strategy Balanced
957,000
23.6
873,000
15.5
648,000
24.5
Personal Strategy Growth
855,000
26.1
817,000
18.4
540,000
28.9
Personal Strategy Income
636,000
14.2
370,000
13.0
230,000
20.3
Prime Reserve
(b)
(b)
(b)
(b)
(b)
(b)
TRP Reserve Investment
(b)
(b)
(b)
(b)
(b)
(b)
Retirement 2005
(b)
(b)
(b)
(b)
(b)
(b)
Retirement 2010
(b)
(b)
(b)
(b)
(b)
(b)
Retirement 2015
(b)
(b)
(b)
(b)
(b)
(b)
Retirement 2020
(b)
(b)
(b)
(b)
(b)
(b)
Retirement 2025
(b)
(b)
(b)
(b)
(b)
(b)
Retirement 2030
(b)
(b)
(b)
(b)
(b)
(b)
Retireme nt 2035
(b)
(b)
(b)
(b)
(b)
(b)
Retirement 2040
(b)
(b)
(b)
(b)
(b)
(b)
Retirement 2045
(b)
(b)
(b)
(b)
(b)
(b)
Retirement 2050
(b)
(b)
(b)
(b)
(b)
(b)
Retirement 2055
(b)
(b)
(b)
(b)
(b)
(b)
Retirement Income
(b)
(b)
(b)
(b)
(b)
(b)
Short-Term Bond
1,262,000
(a)
658,000
(a)
471,000
(a)
Short-Term Income
345,000
(a)
550,000
(a)
175,000
(a)
Strategic Income
125,000
81.9
(c)
(c)
(c)
(c)
U.S. Treasury Intermediate
58,000
(a)
8,000
(a)
7,000
(a)
U.S. Treasury Long-Term
39,000
(a)
20,000
(a)
13,000
(a)
U.S. Treasury Money
(b)
(b)
(b)
(b)
(b)
(b)

(a)Percentages are not required for funds that do not invest in equity securities.

(b)Not applicable.

(c)Prior to commencement of operations.

142


Fund


Fiscal Year Ended




















10/31/09


%


10/31/08


%


10/31/07


%

Africa & Middle East
$932,000
1.6
$4,194,000
0.2
$193,000
8.6
Emerging E urope & Mediterranean
687,000
4.0
2,516,000
1.1
4,009,000
4.9
Emerging Markets Stock
4,855,000
32.5
7,467,000
31.2
6,981,000
3.9
European Stock
1,227,000
6.7
3,064,000
1.3
2,949,000
0.6
Global Infrastructure
(a)
(a)
(a)
(a)
(a)
(a)
Global Large-Cap Stock
130,000
2.6
3,000
23.0
(a)
(a)
Global Stock
1,610,000
18.0
3,705,000
28.8
2,013,000
13.1
Institutional Africa & Middle East
547,000
1.0
523,000
0.4
(a)
(a)
Institutional Emerging Markets Equity
458,000
33.3
911,000
31.5
486,000
3.8
Institutional Foreign Equity
90,000
27.8
215,000
20.0
426,000
1.6
Institutional Global Equity
195,000
26.7
433,000
31.4
11,000
10.2
Institutional Global Large-Cap Equity
312,000
0.5
2,000
23.4
(a)
(a)
International Discovery
3,039,000
29.6
5,598,000
19.8
6,898,000
0.5
International Equity Index
344,000
0.2
135,000
1.1
246,000
0.0
International Growth & Income
1,777,000
10.9
1,544,000
16.8
1,488,000
1.2
International Stock
7,836,000
28.0
11,743,000
26.8
15,191,000
1.6
Japan
546,000
59.3
809,000
48.6
1,415,000
0.0
Latin America
1,752,000
38.3
3,657,000
51.7
6,254,000
9.8
New Asia
5,776,000
46.5
9,508,000
40.4
11,086,000
0.5
Overseas Stock
700,000
21.8
1,371,000
21.7
1,040,000
0.4
Summit Cash Reserves
0
(b)
0
(b)
0
(b)
Summit GNMA
2, 000
(b)
2,000
(b)
5,000
(b)
Summit Municipal Income
370,000
(b)
323,000
(b)
569,000
(b)
Summit Municipal Intermediate
634,000
(b)
368,000
(b)
132,000
(b)
Summit Municipal Money Market
4,000
(b)
0
(b)
2,200
(b)
U.S. Bond Index
217,000
(b)
111,000
(b)
54,000
(b)

(a)Prio r to commencement of operations.

(b)Percentages are not required for funds that do not invest in equity securities.

17.2

Fund


Fiscal Year Ended




















12/31/09


%


12/31/08


%


12/31/07


%

Balanced
$1,738,000
15.6
$1,791,000
26.5
$887,000
8.6
Blue Chip Growth
8,282,000
35.4
8,826,000
45.3
5,546,000
33.9
Capital Appreciation
17,381,000
9.2
13,893,000
24.3
7,240,000
38.7
Capital Opportunity
264,000
13.9
301,000
35.9
219,000
31.0
Diversified Mid-Cap Growth
79,000
0.3
46,000
5.2
44,000
8.9
Diversified Small-Cap Growth
31,000
7.6
24,000
12.8
49,000
16.4
Dividend G rowth
363,000
12.5
499,000
34.9
290,000
38.7
Emerging Markets Bond
(a)
(b)
(a)
(b)
0
(b)
Equity Income
5,217,000
13,095,000
26.0
12,007,000
25.1
Equity Index 500
1,617,000
0.3
1,200,000
0.8
483,000
3.3
Extended Equity Market Index
57,000
0.5
43,000
3.5
116,000
2.1
Financial Services
1,312,000
9.1
1,681,000
16.1
1,451,000
30.7
Global Real Estate
328,000
17.8
3,000
13.1
(c)
(c)
Global Technology
575,000
18.2
314,000
46.7
676,000
25.7
Growth & Income
12,917,000
13.2
614,000
36.5
928,000
45.4
Growth Stock
10,844,000
5.4
19,995,000
36.3
25,290,000
23.2
Health Sciences
2,638,000
0.9
3,463,000
21.0
5,621,000
22.2
Institutional Concentrated Large-Cap Va lue


4,000
6.3
1,000
22. 1
Institutional Emerging Markets Bond
(a)
(b)
0
(b)
0
(b)
Institutional International Bond
(a)
(b)
0
(b)
0
(b)
Institutional Large-Cap Core Growth
94,000
30.9
121,000
31.2
33,000
15.5
Institutional Large-Cap Growth
1,280,000
8.5
1,408,000
34.4
1,268,000
32.8
Institutional Large-Cap Value
193,000
15.0
186,000
13.8
60,000
27.9
Institutional Mid-Cap Equity Growth
648,000
9.5
382,000
27.2
416,000
25.6
Institutional Small-Cap Stock
455,000
10.0
456,000
23.5
463,000
21.5
Institutional U.S. Structured Research
200,000
10.8
177,000
33.6
26,000
14.1
International Bond
(a)
(b)
(a)
(b)
0
(b)
Media & Telecommunications
3,025,000
21.9
3,017,000
26.1
4,653,000
10.4
Mid-Cap Growth
16,707,000
8.8
12,067,000
29.0
14,570,000
29.1
Mid-Cap Value
20,713,000
16.9
12,194,000
58.0
14,064,000
 55.0
New America Growth
1,173,000
13.1
794,000
40.4
720,000
44.0
New Era
2,571,000
16.3
3,027,000
28.8
2,438,000
25.3
New Horizons
8,728,000
9.9
7,356,000
31.6
14,497,000
19.0
Real Estate
4,863,000
7.1
1,251,000
52.5
1,624,000
28.9
Science & Technology
5,789,000
12.9
4,719,000
39.8
7,083,000
24.5
Small-Cap Stock
7,431,000
10.5
5,894,000
26.7
8,137,000
23.3
Small-Cap Value
5,791,000
2.4
3,460,000
15.7
5,001,000
31.3
Spectrum Growth
(d)
(d)
(d)
(d)
(d)
(d)
Spectrum Income
(d)
(d)
(d)
(d)
(d)
(d)
Spectrum International
(d)
(d)
(d)
(d)
(d)
(d)
Total Equity Market Index
85,000
0.3
63,000
2.0
37,000
4.6
U.S. Large-Cap Core
7,000
0.8
(c)
(c)
(c)
(c)
Value
7,069,000
13.2
6,498,000
14.3
4,054,000
25.1

143

(a)Less than $1,000.

(b)Percentages are not required for funds that do not invest in equity securities.

(c)Prior to commencement of operations.

(d)Not applicable.

144

Fund Holdings in Securities of Brokers and Dealers

The following lists the funds` holdings in securities of its regular brokers and dealers as of the end of the fiscal years indicated.








Fiscal Year Ended 2/28/09





Fund


Broker


Value of Stock Holdings


Value of Bond Holdings

California Tax-Free Bond




Banc of America Securities
—
$1,734,000

Goldman Sachs
—
1,341,000

JPMorgan Chase
—
660,000

Merrill Lynch Pierce Fenner & Smith
—
3,184,000
California Tax-Free Money




Banc of America Securities
—
2,220,000

JPMorgan Chase
—
3,210,000
Maryland Tax-Free Money




Banc of America Securities
—
17,575,000
New York Tax-Free Bond




Goldman Sachs
—
1,661,000
Tax-Exempt Money




Banc of America Securities
—
33,230,000

JPMorgan Chase
—
40,525,000
Tax-Free High Yield




Banc of America Securities
—
4,366,000
Tax-Free Income




Citigroup
—
800,000

Goldman Sachs
—
27,683,000

Merrill Lynch Pierce Fenner & Smith
—
736,000
Tax-Free Short-
Intermediate




Goldman Sachs
—
9,012,000

Merrill Lynch Pierce Fenner & Smith
—
3,347,000

145









Fiscal Year Ended 5/31/09





Fund


Broker


Value of Stock Holdings


Value of Bond Holdings

Corporate Income




Banc of America Securities
$175
$7,962

Barclays Capital
—
591

Citigroup Global Markets
—
8,257

CS First Boston
—
770

Deutsche Bank
—
1,405

Goldman Sachs
—
14,823

Greenwich Capital Markets
—
461

JP Morgan Chase
—
16,982

Morgan Stanley
—
13,507

UBS Securities
—
1,233

Wachovia Securities
—
2,296
GNMA




Greenwich Capital Markets
—
5,958

JP Morgan Chase
—
5,640
TRP Government Reserve Investment




Banc of America Securities
—
70,000

Barclays Capital
—
54,000

Citigroup Global Markets
—
69,974

CS First Boston
—
48,982

Deutsche Bank
—
52,000

JP Morgan Chase
—
25,000

Morgan Stanley
—
20,000
High Yield




Banc of America Securities
14,958
—

Goldman Sachs
9,383
— ;

JPMorgan Chase
6,457
—
Inflation Protected Bond




CS First Boston
—
1,266

JPMorgan Chase
—
739
Institutional Core Plus




Banc of America Securities
—
1,572

Barclays Capital
—
99

Citigroup Global Markets
—
1,375

CS First Boston
—
881

Deutsche Bank
—
558

Goldman Sachs
—
846

JP Morgan Chase
—
1,741

Merrill Lynch Pierce, Fenner & Smith
—
469

Morgan Stanley
—
1,550

UBS Securities
—
179

Wachovia Securities
—
234
Institutional High Yield




Banc of America Securities
1,728
—

Goldman Sachs
1,084
—

JP Morgan Chase
775
—
Institutional Floating Rate




Banc of America Securities
—
1,601
New Income




Banc of America Securities
1,575
111,345

Barclays Capital
—
7,376

Citigroup Global Markets
—
98,906

CS First Boston
—
94,098

Deutsche Bank
—
 15,330

Goldman Sachs
—
81,483

Greenwich Capital Markets
—
9,995

JPMorgan Chase
—
187,423

Merrill Lynch Pierce, Fenner & Smith
—
40,712

Morgan Stanley
—
165,117

Wachovia Securities
—
19,967
Personal Strategy
Balanced




Banc of America Securities
6,907
4,397

Barclays Capital
1,126
278

Citigroup Global Markets
352
2,587

CS First Boston
4
2,899

Deutsche Bank
1,363
—

Goldman Sachs
8,920
2,981

Greenwich High Yield
—
261

JPMorgan Chase
8,428
7,933

Merrill Lynch
—
2,095

Morgan Stanley
4,239
3,235

UBS Investment Bank
—
430
Personal Strategy Growth




Banc of America Securities
6,693
1,858

Barclays Capital
1,146
99

Citigroup Global Markets
328
606

CS First Boston
18
1,151

Deutsche Bank
806
—

Goldman Sachs
8,790
522< /font>

Greenwich High Yield
—
81

JPMorgan Chase
8,218
1,877

Merrill Lynch
—
1,063

Morgan Stanley
4,187
779

UBS Inves tment Bank
—
160
Personal Strategy Income




Banc of America Securities
2,857
3,199

Barclays Capital
462
219

Citigroup Global Markets
147
2,697

CS First Boston
9
2,493

Deutsche Bank
340
1,084

Goldman Sachs
3,759
2,651

Greenwich High Yield
—
152

JPMorgan Chase
3,568
5,256

Merrill Lynch
—
1,390

Morgan Stanley
1,756
3,014

UBS Investment Bank
—
1,036
Prime Reserve




Banc of America Securities
—
78,761

Barclays Capital
—
82,501

Citigroup Global Markets
—
129,246

Deutsche Bank
—
75,000

Goldman Sachs
—
75,000

JPMorgan Chase
—
6,200
TRP Reserve
Investment




Banc of America Securities
—
61,787

Barclays Capital
—
109,001

Citigroup Global Markets
—
359,831

CS First Boston
—
149,544

Deutsche Bank
—
25,000

Goldman Sachs
—
113,893

JPMorgan Chase
—
43,000
Short-Term Bond




Banc of America Securities
—
38,790

Barclays Capital
—
6,352

BB&T Capital Market
—
13,919

Citigroup Global Markets
—
16,012
CS First Boston
—
24,584

Deutsche Bank
—
3,780

Goldman Sachs
—
16,793

Greenwich Capital Markets
—
13,720

JPMorgan Chase
—
30,257

Morgan Stanley
—
35,726

UBS Securities
—
13,952
Short-Term Income




Banc of America Securities
—
13,179

Barclays Capital
—
2,683

BB&T Capital Market
—
7,297

Citigroup Global Markets
—
13,032

CS First Boston
—
14,514

< /td>		Deutsche Bank
—
1,900

Goldman Sachs
—
7,614

Greenwich Capital Markets
—
10,409

JPMorgan Chase
—
15,873

Lehman Brothers
—
11,835

Morgan Stanley
—
13,565

UBS Securities
—
11,835
Strategic Income




Banc of America Securities
163
763

Barclays Capital
—
181

BNP Paribas Securities
—
74

Citigroup Global Markets
—
1,103

CS First Boston
—
1,000

Deutsche Bank
—
479

Goldman Sachs
—
1,164

Greenwich Capital Markets
—
382

JPMorgan Chase
—
1,798

Merrill Lynch Pierce, Fenner & Smith
—
459

Morgan Stanley
—
1,645

Wachovia Securities
—
690
U.S. Treasury
Intermediate




Banc of America Securities
—
6,164

Goldman Sachs
—
13,109

JPMorgan Chase
—
14,297
U.S. Treasury Long-Term




JPMorgan Chase
—
3,425
U.S. Treasury Money




Banc of America Securities
—
205,000

Barclays Capital
—
105,000

Citigroup Global Markets
—
159,956

CS First Boston
—
105,000

Deutsche Bank
—
105,000

JPMorgan Chase
—
105,000

Morgan Stanley
—
105,000

UBS Securities
—
94,162

146

147

148

149








Fiscal Year Ended 10/31/09





Fund


Broker


Valu e of Stock Holdings


Value of Bond Holdings

Africa & Middle East




Deutsche Bank
$9,898,000
—

HSBC Brokerage
18,256,000
—

Morgan Stanley
7,191,000
—
Emerging Europe & Mediterranean




Merrill Lynch
—
$445,000

Goldman Sachs
—
89,000
European Stock




CS F< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">irst Boston
13,826,000
—
Global Large-Cap S tock




CS First Boston
167,000
—

Gol dman Sachs
146,000
—

JPMorgan Chase
459,000
—

Macquarie Equities USA
144,000
—

Morgan Stanley
202,000
—
Global Stock




Goldman Sachs
7,317,000
515,000

JPMorgan Chase
29,239,000
—

Merrill Lynch
—
2,578,000
Institutional Africa & Middle East




Deutsche Bank
3,411,000
—

EFG Hermes
1,635,000
—

HSBC Securities
6,517,000
—

Morgan Stanley
2,539,000
—
Institutional Emerging Markets Equity




EFG Hermes
2,503,000
—
Institutional F oreign Equity




CS First Boston
506,000
—

Goldman Sachs
—
40,000

Macquarie Equities
299,000
—

Merrill Lynch
—
201,000
Institutional Global Equity



< br>Goldman Sachs
1,787,000
—

JPMorgan Chase
7,113,000
—
Institutional Global Large-Cap Equity




CS First Boston
128,000
—

EFG Hermes
144,000
—

Goldman Sachs
104,000
—

JPMorgan Chase
334,000
—

Macquarie Equities USA
105,000
—

Morgan Stanley
148,000
—
International Equity Index




Barclays Capital
2,118,000
—

CS First Boston
 2,226,000
—

Deutsche Bank
1,652,000
—

Goldman Sachs
—
858,000

Macquarie Equities USA
762,000
—

Merrill Lynch
—
4,296,000

UBS Investment Bank
2,162,000
—
International Growth & Income




Deutsche Bank
35,128,000
—

Goldman Sachs
—
5,913,000

HSBC Securities
26,448,000
—

Macquarie Equities USA
17,691
—

Merrill Lynch
—
29,597,000
International Stock




CS First Boston
47,943,000
—

Macquarie Equities USA
28,311
—
Japan




Goldman Sachs
—
625,000

Merrill Lynch
—
3,126,000
Latin America




Goldman Sachs
—
1,969,000

Merrill Lynch
—
9,854,000
Overseas Stock




Deutsche Bank
12,406,000
—

Macquarie Equities USA
10,605,000
—
Summit Cash Reserves




Banc of America Securities
—
11,454,000

Barclays Capital
—
50,000,000

Citigroup
—
123,470,000

CS First Boston
—
 24,003,000

Goldman Sachs
—
50,000,000

Greenwich Capital Markets
—
37,495,000

JPMorgan Chase
—
59,675,000

Morgan Stanley
—
22,008,000
Summit GNMA




Citigroup
—
1,000

Deutsche Bank
—
1,000

Morgan Stanley
—
1,000
Summit Municipal Income




Banc of America Securities
—
2,110,000

Goldman Sachs
—
4,298,000

Merrill Lynch Pierce Fenner & Smith
—
1,253,000
Summit Municipal Intermediate




Goldman Sachs
—
13,854,000
Summit Municipal Money Market




Banc of America Securities
—
5,565,000

JPMorgan Chase
—
7,675,000

Merrill Lynch Pierce Fenner & Smith
—
1,500,000
U.S. Bond Index




Banc of America Securities
—
6,434,000

Barclays Capital
—
507,000

Citigroup
—
4,651,000

CS First Boston
—
1,933,000

Deutsche Bank
—
1,803,000

Goldman Sachs
—
4,196,000

Greenwich Capital Markets
—
1,094,000

JPMorgan Chase
—
5,039,000

Morgan Stanley
—
6,387,000

UBS Securities
—
1,730,000

Wells Fargo
—
2,789,000

150

151

152

< tr bgcolor="#CCEEFF" width="0">







Fiscal Year Ended 12/31/09





Fund


Broker


Value of Stock Holdings


Value of Bond Holdings

Balanced




Banc of America Securities
$22,064,000
$7,576,000

Barclays Capital
3,571,000
893,000

Citigroup
3,555,000
19,441,000

Credit Suisse
2,236,000
6,517,000

Deutsche Bank
2,026,000
9,881,000

Goldman Sachs
19,500,000
5,791,000

JPMorgan Chase
23,319,000
19,122,000

Merrill Lynch
—
3,015,000

Morgan Stanley
8,920,000
6,710,000
Blue Chip Growth




Credi t Suisse
10,835,000
—

Goldman Sachs
256,975,000
—

JPMorgan Chase
179,181,000
—

Morgan Stanley
82,880,000
—

Wells Fargo Van Kasper
125,773,000
—
Capital Appreciation




Banc of America Securities
175,068,000
—

JPMorgan Chase
150,006,000
—
Capital Opportunity




Banc of America Securities
4,247,000
 —

Citigroup
1,001,000
—

Goldman Sachs
2,212,000
—

JPMorgan Chase
4,275,000
—

Morgan Stanley
1,282,000
—
Dividend Growth




Goldman Sachs
9,016,000
—

JPMorgan Chase
16,935,000
—

Morgan Stanley
6,841,000
—

Wells Fargo Van Kasper
15,074,000
—< /font>
Equity Income




Banc of America Securities
375,272,000
—

JPMorgan Chase
581,330,000
—

Wells Fargo Van Kasper
329,991,000
—
Equity Index 500




Banc of America Securities
168,066,000
—

Citigroup
72,489,000
—

Goldman Sachs
97,492,000
—

JPMorgan Chase
184,449,000
—

Mor gan Stanley
45,156,000
—

Wells Fargo Van Kasper
154,921,000
—
Extended Equity
Market Index




Investment Technology Group
146,000
—

Stifel Financial
370,000
—
Financial Services




Citigroup
1,967,000
—

Goldman Sachs
10,350,000
—

JPMorgan Chase
18,560,000
—

Morgan Stanley
7,379,000
—
Growth & Income




Goldman Sachs
10,012,000
—

JPMorgan Chase
16,339,000
—

Morgan Stanley
7,575,000
—

Suntrust Robinson Humphrey
5,186,000
—

Wells Fargo Van Kasper
6,003,000
—
Growth Stock




Goldman Sachs
216,740,000
—

JPMorgan Chase
407,478,000
—

Morgan Stanley
180,418,000
—

Wells Fargo Van Kasper
155,290,000
—
Institutional
International Bond




Banc of America Securities
—
390,000

Barclays Capital
—
1,128,000

Citigroup
—
514,000

Credit Suissse
—
328,000

Deutsche Bank
—
602,000

Goldman Sachs< /font>
—
416,000

HSBC Securities
—
567,000

ING Barings
—
130,000

JPMorgan Chase
—
437,000

Morgan Stanley
—
344,000

Societe Generale Securities
—
237,000

UBS Securities
—
400,000

Wells Fargo Securities
—
23,000
Institutional Large-Cap Core Growth




Credit Suisse
121,000
—

Goldman Sachs
3,292,000
—

JPMorgan Chase
2,317,000
—

Morgan Stanley
1,071,000
—

Wells Fargo Van Kasper
1,601,000
—
Institutional Large-Cap Growth




Goldman Sachs
30,104,000
—

JPMorgan Chase
29,273,000
—

Morgan Stanley
18,385,000
—

Wells Fargo Van Kasper
34,396,000
—
Institutional Large-Cap Value




Citigroup
1,547,0 00
—

Goldman Sachs
4,145,000
—

JPMorgan Chase
14,238,000
—

Morgan Stanley
3,218,000
—

Wells Fargo Van Kasper
1,357,000
—
Institutional
U.S. Structured Research




Citigroup
1,151,000
—

Goldman Sachs
2,609,000
—

JPMorgan Chase
5,021,000
—

Morgan Stanley
1,474,000
—

Wells Fargo Van Kasper
4,237,000
—
International Bond




Banc of America Securities
—
10,522,000

Barclays Capital
—
37,595,000

Citigroup
—
18,426,000

Credit Suisse
—
11,950,000

Deutsche Bank
—
7,150,000

Goldman Sachs
—
12,420,000

HSBC Securities
—
17,788,000

ING Barings
—
4,451,000

JPMorgan Chase
—
10,430,000

Morgan Stanley
—
14,384,000

RBC Capital Market
—
29,779,000

Societe Generale Securities
—
7,025,000

UBS Securities
—
12,445,000
New America Growth




Goldman Sachs
3,039,000
—

JPMorgan Chase
3,125,000
—

Morgan Stanley
3,700,000
—

Wells Fargo Van Kasper
2,707,000
—
Science & Technology




JPMorgan Chase
—
13,343,000
Small-Cap Value




Stifel Nicolaus
23,696,000
—
Total Equity Market Index

Banc of America Securities
5,639,000
—

Citigroup
2,350,000
—

Goldman Sachs
3,117,000
—

Investment Technology Group
67,000
—

JPMorgan Chase
5,979,000
—

Morgan Stanley
1,453,000
—

Sti fel Nicolaus
121,000
—

Wells Fargo Van Kasper
4,943,000
—
U.S. Large-Cap Core




Banc of America Securities
330,000
—

Goldman Sachs
331,000
—

JPMorgan Chase
388,000
—

Wells Fargo Van Kasper
214,000
—
Value< /font>




Citigroup
30,460,000
—

Goldman Sachs
61,795,000
—

JPMorgan Chase
126,885,000
—

Morgan Stanley
48,544,000
—

153

154

155

156

Portfolio Turnover

The portfolio turnover rates for the funds (if applicable) for the fiscal years indicated are as follows:

Fund


Fiscal Year Ended











2/28/09


2/29/08


2/28/07

California Tax-Free Bond
22.5%
18.1%
27.5%
California Tax-Free Money
(a)
< /font>(a)
(a)
Georgia Tax-Free Bond
28.2
19.7
27.0
Maryland Short-Term Tax-Free Bond
23.0
29.4
69.7
Maryland Tax-Free Bond
21.9
22.9
19.6
Maryland Tax-Free Money
(a)
(a)
(a)
New Jersey Tax-Free Bond
12.5
16.7
14.8
New York Tax-Free Bond
21.3
28.4
26.6
New York Tax-Free Money
(a)
(a)
(a)
Tax-Efficient Equity
35.5
21.3
16.7
Tax-Exempt Money
(a)
(a)
(a)
Tax-Free High Yield
28.7
31.2
25.2
Tax-Free Income
41.4
29.9
28.1
Tax-Free Short-Intermediate
24.9
43.2
46.9
Virginia Tax-Free Bond
27.1
26.4
28.7

(a)Money funds are not required to show portfolio turnover.

157

< td style="text-indent:0.0";">Retirement 2040

Fund


Fiscal Year Ended











5/31/09


5/31/08


5/31/07

Corporate Income
36.3
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">38.9%
42.8%
< font style="font-size:10.0pt;" face="Berkeley Book" color="Black">GNMA
108.3(a)
89.6(a)
80.7(a)
TRP Government Reserve Investment
(b)
(b)
(b)
High Yield
54.4
68.9
72.0
Inflation Protected Bond
33.6(c)
7.5
14.3
Institutional Core Plus
92.7
146.7
110.0
Institutional Floating Rate
74.8
70.8(d)
(e)
Institutional High Yield
46.4
61.9
73.0
New Income
81.5(a)
128.3(a)
104.8(a)
Personal Strategy Balanced
62.4
73.3
62.4
Personal Strategy Growth
55.7
57.7
50.1
Personal Strategy Income
67.1
81.4
70.0
Prime Reserve
(b)
(b)
(b)
TRP Reserve Investment
(b)
(b)
(b)
Retirement 2005
37.0
15.3
22.3
Retirement 2010
26.6
7.8
13.1
Retirement 2015
24.2
7.6
10.3
Retirement 2020
18.0
6.7
8.4
Retirement 2025
17.3
5.9
8.7
Retirement 2030
12.4
5.6
7.8
Retirement 2035
10.8
5.4
8.0
9.7
7.3
8.4
Retirement 2045
11.9
6.4
8.9
Retirement 2050
8.0
13.4
24.0(d)
Retirement 2055
19.0
17.0
33.0(d)
Retirement Income
31.8
7.8
36.3
Short-Term Bond
32.0
58.8
70.4
Short-Term Income
26.7
59.0
39.0(d)
Strategic Income
88.6
(e)
 (e)
U.S. Treasury Intermediate
101.5
101.1
37.3
U.S. Treasury Long-Term
84.1
64.9
33.6
U.S. Treasury Money
(b)
(b)
(b)

(a)The portfolio turnover rate calculation includes purchases and sales from mortgage dollar roll transactions.

(b)Money funds are not required to show portfolio turnover.

(c)The increase in the fund` portfolio turnover rate from fiscal 2008 to fiscal 2009 was due to efforts to reposition the portfolio as a result of the unprecedented market conditions in the second half of 2008 and into 2009.

(d)Annualized.

(e)Prior to commencement of operations.

158

Global Large-Cap Stock

Fund


Fiscal Year Ended











10/31/09


10/31/0 8


10/31/07

Africa & Middle East
93.2%
77.3%
16.6%(a)
Emerging Europe & Mediterranean
39.7
< /font>36.0
59.6
Emerging Markets Stock
37.0
30.9
43.5
European Stock
88.3
105.9
88.4
Global Infrastructure
(b)
(b)
(b)
122.0
5.5
(b)
Global Stock
90.2
< /td>		145.6
109.8
Institutional Africa & Middle East
121.7
37.9
(b)
Institutional Emerging Markets Equity
43.5
37.5
49.9
Institutional Foreign Equity
61.4
71.9
73.7
Institutional Global Equity
91.1
168.3
138.0
Institutional Global Large-Cap Equity
128.5
5.5
(b)
International Discovery
64.5
66.7
67.9
International Equity Index
23.4
29.5
30.5
International Growth & Income
16.6
23.8
32.8
International Stock
65.0
63.7
74.1
Japan
121.5
105.3
110.8
Latin America
21.2
19.7
23.3
New Asia
59.6
55.4
53.4
Overseas Stock
20.9
34.2
46.2(a)
Summit Cash Reserves
(c)
(c)
(c)
Summit GNMA
61.0
130.0
92.4
Summit Municipal Income
25.1
36.8
37.4
Summit Municipal Intermediate
8.9
23.9
24.4
Summit Municipal Money Market
(c)
(c)
(c)
U.S. Bond Index
25.7
66.2(d)
73.7(d)

(a)Annualized.

(b)Prior to commencement of operations.

(c)Money funds are not required to show portfolio turnover.

(d)Includes purchases and sales from the mortgage and dollar roll transactions.


Fund


Fiscal Year Ended











12/31/09


12/31/08


12/31/07

Balanced
43.1%
58.2%
60.4%
Blue Chip Growth
60.0
53.8
31.5
Capital Appreciation
86.0
94.3
52.6
Capital Opportunity
43.2
 64.1
53.9
Diversified Mid-Cap Growth
31.3
37.8
27.9
Diversified Small-Cap Growth
27.7
30.2
47.2
Dividend Growth
14.3
23.1
16.5
Emerging Markets Bond
37.0
57.1
 63.4
Equity Income
13.5
31.6
25.7
Equity Index 500
4.8
7.0
4.4
Extended Equity Market Index
1 8.2
19.6
37.6
Financial Services
83.5
122.6
139.8
Global Real Estate
12.4
0.3
(a)
Global Technology
109.9
95.8
107.3
Growth & Income
17.7
20.1
30.8
Growth Stock
59.0
55.6
51.2
Health Sciences
33.4
47.4
44.8
Institutional Emerging Markets Bond
31.3
116.5
83.8
Institutional International Bond
68.6
93.6
69.3(b)
Institutional Large-Cap Core Growth
60.2
61.8
78.4
Institutional Large-Cap Growth
60.9
65.5
61.2
Institutional Large-Cap Value
15.3
17.8
21.5
Institutional Mid-Cap Equity Growth
45.1
40.8
52.4
Institutional Small-Cap Stock
36.9
37.3
39.8
Institutional U.S. Structured Research
41.2
67.6
42.5(b)
International Bond
57.6
69.2
78.4
Media & Telecommunications
68.9
72.0
64.6
Mid-Cap Growth
30.7
32.7
35.2
Mid-Cap Value
58.1
74.3
73.4
New America Growth
67.7
88.0
60.1
New Era
20.5
21.0
17.5
New Horizons
26.6
25.8
27.7
Real Estate
19.5
14.9
32.5
Science & Technology
110.9
93.7
80.3
Small-Cap Stock
28.2
24.2
21.7
Small-Cap Value
7.8
13.2
14.0
Spectrum Growth
10.3
14.8(c)
5.0
Spectrum Income
16.0
24.0(d)
9.0
Spectrum International
15.7
5.1
1.4
Total Equity Market Index
9.0
5.9
9.1
U.S. Large-Cap Core
37.1
(a)
(a)
Value
20.2
19.9
18.8

159

(a)Prior to commencement of operations.

(b)Annualized.

(c)The in crease in the fund`s portfolio turnover rate from 2007 to 2008 was primarily the result of adjustments to the fund`s investment program to more closely align the fund with its new benchmark. In addition to reallocating assets among different asset classes, the fund added two new underlying funds during 2008.

(d)The increase in the fund`s portfolio turnover rate from 2007 to 2008 was primarily the result of reducing the fund`s exposure to certain asset classes and increasing exposure to other asset classes that were more attractively valued.

160

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP, 100 East Pratt Street, Suite 1900, Baltimore, Maryland 21202, is the independent registered public accounting firm to the funds.

The financial statements and Report of Independent Registered Public Accounting Firm of the funds included in each fund`s annual report are incorporated into this SAI by reference. A copy of the annual report of each fund with respect to which an inquiry is made will accompany this SAI.

161


PART II — TABLE OF CONTENTS
































Page








Page
















Investment Objectives and Policies
162

In-Kind Redemptions and Purchases
224
Risk Factors
162

Tax Status
225
Portfolio Securities
178

Capital Stock
227
Derivatives
195

Organization of the Fund s
233
Portfolio Management Practices
211

Proxy Voting — Process and Policies
234
Investment Restrictions
213

Federal Registration of Shares
237
Custodian
219

Legal Counsel
237
Code of Ethics
219

Ratings of Commercial Paper
237
Disclosure of Fund Portfolio Information
219

Ratings of Corporate and Municipal Debt Securities
238

Pricing of Securities
222

Ratings of Municipal Notes and Variable Rate Securities
239
Net Asset Value Per Share
223

Index
240
Dividends and Distributions
224



PART II

Part II of this SAI describes risks, policies, and practices that apply to the funds in the T. Rowe Price family of funds.

Investment Objectives and Policies

The following information supplements the discussion of the funds` investment objectives and policies discussed in the funds` prospectuses. You should refer to each fund`s prospectus to determine the types of securities in which the fund invests. You will then be able to review additional information set forth herein on those types of securities and their risks.

Shareholder approval is required to substantively change fund objectives. Unless otherwise specified, the investment programs and restrictions of the funds are not fundamental policies. The funds` operating policies are subject to change by the funds` Boards without shareholder approval. The funds` fundamental policies may not be changed without the approval of at least a majority of the outstanding shares of the funds or, if it is less, 67% of the shares represented at a meeting of shareholders at which the holders of more than 50% of the shares are represented.

Risk Factors

You may also refer to the sections entitled "Portfolio Securities" and "Portfolio Management Practices" for discussions of the risks associated with the investments and practices described therein as they apply to the funds.

162

Risk Factors of Investing in Foreign Securities

General

Foreign securities include U.S. dollar-denominated and non-U.S. dollar-denominated securities of foreign issuers.

There are special risks in foreign investing. Certain of these risks are inherent in any mutual fund investing in foreign securities while others relate more to the countries in which the funds will invest. Many of the risks are more pronounced for investments in developing or emerging market countries, such as many of the countries of Africa, Asia, Eastern Europe, Latin America, the Middle East, and Russia. There is no universally accepted definition of an emerging market country, but the funds generally use the classification made by MSCI Barra, an independent party provider of investment tools and data services for institutions worldwide.

  • Political and Economic Factors Foreign investments involve risks unique to the local political, economic, and regulatory structures in place, as well as the potential for social instability, military unrest, or diplomatic developments that could prove adverse to the interests of U.S. investors. Individual foreign economies can differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency, and balance of payments position. In addition, significant external political < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">and economic risks currently affect some foreign countries. For example, both Taiwan and China still claim sovereignty over one another and there is a demilitarized border and hostile relations between North and South Korea. War and terrorism affect many countries, especially those in Africa and the Middle East. Many countries throughout the world are dependent on a healthy U.S. economy and are adversely affected when the U.S. economy weakens or its markets decline. For example, in 2007 and 2008, the meltdown in the U.S. subprime mortgage market quickly spread throughout global credit markets, triggering a liquidity crisis that affected fixed-income and equity markets around the world. European countries can be significantly affected by the tight fiscal and monetary controls that the European Economic and Monetary Union ("EMU") imposes for membership. Europe`s economies are diverse, its governments are decentralized, and its cultures vary widely. Europe`s economies are diverse, its governments are decentralized, and its cultures vary widely. In 2010, several EU countries, including Greece, Ireland, Italy, Spain, and Portugal, began to face budget issues. Some of which may have negative long-term effects for the economies of those countries and other EU countries. The re is continued concern about national-level support for the euro and the accompanying coordination of fiscal and wage policy among EMU member countries. Member countries are required to maintain tight control over inflation, public debt, and budget deficit to qualify for membership in the EMU. These requirements can severely limit EMU member countries` ability to implement monetary policy to address regional economic conditions.

    • Governments in certain foreign countries continue to participate to a significant degree, through ownership interest or regulation, in their respective economies. Action by these governments could have a significant effect on market prices of securities and payment of dividends. The economies of many foreign countries are heavily dependent upon international trade and are accordingly affected by protective trade barriers and economic conditions of their trading partners. The enactment by these trading partners of protectionist trade legislation could have a significant adverse effect upon the securities markets of such countries.

  • Currency Fluctuations Investments in foreign securities will normally be denominated in foreign currencies. Accordingly, a change in the value of any such currency against the U.S. dollar will result in a corresponding change in the U.S. dollar value of the funds` assets denominated in that currency. Such changes will also affect the funds` income. Generally, when a given currency appreciates against the U.S. dollar (the U.S. dollar weakens), the value of the funds` securities denominated in that currency will rise. When a given currency depreciates against the U.S. dollar (the U.S. dollar strengthens), the value of the funds` securities denominated in that currency will decline.

  • Investment and Repatriation Restrictions Foreign investment in the securities markets of certain foreign countries is restricted or controlled to varying degrees. These restrictions limit and, at times, preclude investment in such countries and increase the cost and expenses of the funds. Investments by foreign investors < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">are subject to a variety of restrictions in many developing countries. These restrictions may take the form of prior governmental approval, limits on the amount or type of securities held by foreigners, and limits on the types of companies in which foreigners may invest. Additional or different restrictions may be imposed at any time by these or other countries in which the funds invest. In addition, the repatriation of both investment

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  • income and capital from several foreign countries is restricted and controlled under certain regulations, including in some cases the need for certain government consents.

  • Market Characteristics Foreign securities markets are generally not as developed or efficient as, and more volatile than, those in the United States. While growing in volume, they usually hav e substantially less volume than U.S. markets and the funds` portfolio securities may be less liquid and subject to more rapid and erratic price movements than securities of comparable U.S. companies. Securities may trade at price/earnings multiples higher than comparable U.S. securities and such levels may not be sustainable. Commissions on foreign securities trades are generally higher than commissions on U.S. exchanges, and while there are an increasing number of overseas securities markets that have adopted a system of negotiated rates, a number are still subject to an established schedule of minimum commission rates. There is generally less government supervision and regulation of foreign securities exchanges, brokers, and listed companies than in the United States. Moreover, settlement practices for transactions in foreign markets may differ from those in U.S. markets. Such differences include delays beyond periods customary in the United States and practices, such as delivery of securities prior to receipt of payment, which increase the likelihood of a "failed settlement." Failed settlements can result in losses to the funds.

  • Depositary Receipts It is expected that most foreign securities will be purchased in over-the-counter markets or on securities exchanges located in the countries in which the issuers of the various securities are located, provided that is the best available market. However, the funds may also purchase American Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs" ), which are certificates evidencing ownership of underlying foreign securities, as alternatives to directly purchasing the foreign securities in their local markets and currencies. An advantage of ADRs and GDRs is that investors do not have to buy shares through the issuing company`s home exchange, which may be difficult or expensive. ADRs and GDRs are subject to many of the same risks associated with investing directly in foreign securities.

    • Generally, ADRs are de nominated in U.S. dollars and are designed for use in the U.S. securities markets. The depositaries that issue ADRs are usually U.S. financial institutions, such as a bank or trust company, but the underlying securities are issued by a foreign issuer.

    GDRs may be issued in U.S. dollars or other currencies and are generally designed for use in securities markets outside the United States. GDRs represent shares of foreign securities that can be traded on the exchanges of the depositary`s country. The issuing depositary, which may be a foreign or a U.S. entity, converts dividends and the share price into the shareholder`s home currency.

    For purposes of a fund`s investment policies, investments in ADRs and GDRs are deemed to be investments in the underlying securities. For example, an ADR representing ownership of common stock will be treated as common stock.

  • Participation Notes The funds may gain exposure to securities in certain foreign markets through investments in participation notes ("P-notes"). P-notes may be used while a fund is awaiting approval from a foreign exchange to trade securities directly or to invest in foreign markets that restrict foreign investors. For instance, foreign investors such as the funds are restricted from investing directly in individual stocks traded on the Saudi stock exchange, but are permitted to access the Saudi Arabian market by purchasing P-notes. P-notes are generally issued by banks or broker-dealers and are designed to offer a return linked to a particular underlying equity security and the P-note`s performance may differ from the underlying security`s performance. An investment in a P-note involves additional risks beyond the risks normally associated with a direct investment in the underlying security and the P-note`s performance may differ from the underlying security`s performance. While the holder of a P-note is entitled to receive from the broker-dealer or bank any dividends paid by the underlying security, the holder is not entitled to the same rights as an owner of the underlying stock, such as voting rights. P-notes are considered general unsecured contractual obligations of the banks or broker-dealers that issue them as the counterparty. As such, the funds must rely on the creditworthiness of the counterparty for its investment returns on the P-notes and would have no rights against the issuer of the underlyi ng security. There is also no assurance that there will be a secondary trading market for a P-note or that the trading price of a P-note will equal the value of the underlying security. Additionally, issuers of P-notes and the calculation agent may have broad authority to control the foreign exchange rates related to the P-notes and discretion to adjust the P-note`s terms in response to certain events.

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  • Investment Funds The funds may invest in investment funds which have been authorized by the governments of certain countries specifically to permit foreign investment in securities of companies listed and traded on the stock exchanges in these respective countries. Investment in these funds is subject to the provisions of the 1940 Act. If the funds invest in such investment funds, shareholders will bear not only their proportionate share of the expenses of the fund (includin g operating expenses and the fees of the investment manager), but also will indirectly bear similar expenses of the underlying investment funds. In addition, the securities of these investment funds may trade at a premium over their net asset value.

  • Information and Supervision There is generally less publicly available information about foreign companies comparable to reports and ratings that are published about companies in the United States. Foreign companies are also generally not subject to uniform accounting, auditing and financial reporting standards, practices, and requirements comparable to those applicable to U.S. companies. It also is often more difficult to keep currently informed of corporate actions which affect the prices of portfolio securities.

  • Taxes The dividends and interest payable on certain of the funds` foreign portfolio securities may be subject to foreign withholding taxes, thus reducing the net amount of income available for distribution to the funds` shareholders. In addition, some governments may impose a tax on purchases by foreign investors of certain securities that trade in their country.

  • Costs Investors should understand that the expense ratios of a fund investing primarily in foreign securities can be expected to be higher than investment companies investing in domestic securities, since the cost of maintaining the custody of foreign securities and the rate of advisory fees paid by the fund is higher.

  • Other With respect to certain foreign countries, especially developing and emerging ones, there is the possibility of adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitations on the removal of funds or other assets of the funds, political or social instability, or diplomatic developments which could affect investments by U.S. persons in those countries.

  • Small Companies Small companies may have less experienced management and fewer management resources than larger firms. A smaller company may have greater difficulty obtaining access to capital markets and may pay more for the capital it obtains. In addition, smaller companies are more likely to be involved in fewer market segments, making them more vulnerable to any downturn in a given segment. Some of these factors may also apply, to a lesser extent, to medium-sized companies.

  • Emerging Europe, Middle East, and Africa

    • Political Instability Many formerly communist, eastern European countries have experienced significant political and economic reform in recent years, and the eastward expansion of the European Union could help anchor this reform process. However, the democratization process is still relatively new in a number of the smaller states and political turmoil and popular uprisings remain threats. Russia has made advances in establishing a new political outlook and a market economy, but political risk remains high. Many Middle Eastern economies have little or no democr atic tradition and are led by family structures. Opposition parties are often banned, leading to dissidence and militancy. Despite a growing trend toward a democratic process, many African nations have a history of dictatorship, military intervention, and corruption. In all regions, such developments, if they were to recur, could reverse favorable trends toward economic and market reform, privatization, and removal of trade barriers, and result in significant disruptions in securities markets.

    Foreign Currency Certain countries in the region may have managed currencies which are pegged to the U.S. dollar or the euro, rather than at levels determined by the market. This type of system can lead to sudden and large adjustments in the currency, which may, in turn, have a disruptive and negative effect on investors. There is no significant foreign exchange market for certain currencies, and it would, as a result, be difficult for the funds to engage in foreign currency transactions designed to protect the value of the funds` interests in securities denominated in such currencies.

    Energy/Resources Russia, the Middle East, and many African nations are highly reliant on income from oil sales. Oil prices can have a major impact on the domestic economy. Other commodities such as base and precious metals are also important to these economies. Fluctuating supply and demand can significantly impact the price of such commodities.

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  • Latin America

    • Inflation Most Latin American countries have experienced, at one time or another, severe and persistent levels of inflation, including, in some cases, hyperinflation. This has, in turn, led to high interest rates, extreme measures by governments to keep inflation in check, and a generally debilitating effect on economic growth. Although in flation in many countries has lessened, there is no guarantee it will remain at lower levels.

    Political Instability The political history of certain Latin American countries has been characterized by political uncertainty, intervention by the military in civilian and economic spheres, and political corruption. Such developments, if they were to recur, could reverse favorable trends toward market and economic reform, privatization, and removal of trade barriers, and result in significant disruption in securities markets.

    Foreign Currency Certain Latin American countries may experience sudden and large adjustments in their currency which, in turn, can have a disruptive and negative effect on foreign investors. Certain Latin American countries may impose restrictions on the free conversion of their currency into foreign currencies, including the U.S. dollar. There is no significant foreign exchange market for many currencies and it would, as a result, be difficult for the funds to engage in foreign currency transactions designed to protect the value of the funds` interests in securities denominated in such currencies.

    Sovereign Debt A number of Latin American countries have been among the largest debtors of developing countries. There have been moratoria on, and reschedulings of, repayment with respect to these debts. Such events can restrict the flexibility of these debtor nations in the international markets and result in the imposition of onerous conditions on their economies.

  • Japan

    • Japan has experienced earthquakes and tidal waves of varying degrees of severity, and the risks of such phenomena, and damage resulting theref rom, continue to exist. Japan also has one of the world`s highest population densities. A significant percentage of the total population of Japan is concentrated in the metropolitan areas of Tokyo, Osaka, and Nagoya. Therefore, a natural disaster centered in or very near to one of these cities could have a particularly devastating effect on Japan`s financial markets.

    Energy Japan has historically depended on oil for most of its energy requirements. Almost all of its oil is imported, the majority from the Middle East. In the past, oil prices have had a major impact on the domestic economy, but more recently Japan has worked to reduce its dependence on oil by encouraging energy conservation and use of alternative fuels. In addition, a restructuring of industry, with emphasis shifting from basic industries to processing and assembly type industries, has contributed to the reduction of oil consumption. However, there is no guarantee that this favorable trend will continue.

    Foreign Trade Overseas trade is important to Japan`s economy. Japan has few natural resources and must export to pay for its imports of these basic requirements. Because of the concentration of Japanese exports in highly visible products such as automobiles, machine tools, and semiconductors and the large trade surpluses ensuing therefrom, Japan has had difficult relations with its trading partners, particularly the U.S. It is possible that trade sanctions or other protectionist measures could impact Japan adversely in both the short term and long term.

  • Asia (ex-Japan)

    • Political Instability The political history of some Asian countries has been characterized by political uncertainty, intervention by the military in civilian and economic spheres, and political corruption. Such developments, if they continue to occur, could reverse favorable trends toward market and economic reform, privatization, and removal of trade barriers, and could result in significant disruption to securities markets.

    Foreign Currency Certain Asian countries may have managed currencies which are maintained at artificial levels to the U.S. dollar rather than at levels determined by the market. This type of system can lead to sudden and large adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign investors. Certain Asian countries also may restrict the free conversion of their currency into foreign currencies, including the U.S. dollar. There is no significant foreign exchange market for certain currencies, and it would, as a result, be difficult for the funds to engage in foreign currency transactions designed to protect the value of the funds` interests in securities denominated in such currencies.

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    Economy A number of Asian companies are highly dependent on foreign loans for their operation, some of which may impose strict repayment term schedules and require significant economic and financial restructuring. The economies of many countries in the region are heavily dependent on international trade and are accordingly affect ed by protective trade barriers and the economic conditions of their trading partners. China has had an increasingly significant and positive impact on the global economy, but its continued success depends on its ability to retain the legal and financial policies that have fostered economic freedom and market expansion.

    China A-Shares The China Securities Regulatory Commission ("CSRC") may grant qualified foreign institutional investor ("QFII") licenses, which allow foreign investments in A-shares on the Shanghai and Shenzhen Stock Exchanges and certain other securities historically not eligible for investment by non-Chinese investors. Each QFII is authorized to invest in China A-shares only up to a specified quota established by the Chinese State Administration of Foreign Exchange ("SAFE"). T. Rowe Price International has received a QFII license permitting it to invest a portion of the assets of the Emerging Markets Stock, Institutional Emerging Markets Equity, International Discovery, and New Asia Funds in local Chinese securities. Although the laws of China permit the use of nominee accounts for clients of investment managers who are QFIIs, the Chinese regulators require the securities trading and settlemen t accounts to be maintained in the name of the QFII. It has been made clear to Chinese regulators, through T. Rowe Price International`s investment plan and compliance filings, that T. Rowe Price International is acting as investment manager only and that any assets invested in A-shares belong to the funds. The funds` custodian bank will maintain a specific sub-account for the A-share investments in the name of each fund. However, there is a risk that creditors of T. Rowe Price International may assert that T. Rowe Price International, and not the individual fund, is the legal owner of the securities and other assets in the accounts. If a court upholds such an assertion, creditors of T. Rowe Price International could seek payment from the funds` A-share investments.

    Additional risks include a potential lack of liquidity, greater price volatility, and restrictions on the repatriation of invested capital. Because of low trading volume and various restrictions on the free flow of capital into the A-share market, the A-share market could be less liquid and trading prices of A-shares could be more volatile th an other local securities markets. In addition, net realized profits on fund investments in A-shares may only be repatriated under certain conditions and upon the approval of SAFE.

    Risk Factors of Investing in Taxable Debt Obligations

    General

    Yields on short-, intermediate-, and long-term securities are dependent on a variety of factors, including the general conditions of the money, bond, and foreign exchange markets; the size of a particular offering; the maturity of the obligation; and the rating of the issue. Debt securities with longer maturities tend to carry higher yields and are generally subject to greater capital appreciation and depreciation than obligations with shorter maturities and lower yields. The market prices of debt securities usually vary, depending upon available yields. An increase in interest rates will generally reduce the value of portfolio investments, and a decline in interest rates will generally increase the value of portfolio investments. The ability of funds investing in debt securities to achieve their investment objectives is also dependent on the continuing ability of the issuers of the debt securities in which the funds invest to meet their obligations for the payment of interest and principal when due.

    After purchase by the funds, a debt security may cease to be rated o r its rating may be reduced below the minimum required for purchase by the funds. Neither event will require a sale of such security by the funds. However, such events will be considered in determining whether the funds should continue to hold the security. To the extent that the ratings given by Moody`s, S&P, or others may change as a result of changes in such organizations or their rating systems, the funds will attempt to use comparable ratings as standards for investments in accordance with the investment policies contained in the prospectus. The ratings of Moody`s, S&P, and others represent their opinions as to the quality of securities that they undertake to rate. Ratings are not absolute standards of quality. When purchasing unrated securities, T. Rowe Price, under the supervision of the funds` Boards, determines whether the unrated security is of a quality comparable to that which the funds are allowed to purchase.

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    Full Faith and Credit Securities

    Securities backed by the full faith and credit of the United States (for example, GNMA and U.S. Treasury securities) are generally considered to be among the most, if not the most, creditworthy investments available. While the U.S. government has honored its credit obligations continuously for the last 200 years, political events have, at times, called into question whether the United States wo uld default on its obligations. Such an event would be unprecedented and there is no way to predict its results on the securities markets or the funds. However, it is very likely that default by the United States would result in losses to the funds.

    Mortgage Securities

    Mortgage-backed securities, including Government National Mortgage Association ("Ginnie Mae" or "GNMA") securities differ from conventional bonds in that principal is paid back over the life of the security rather than at maturity. As a result, the holder of a mortgage-backed security (i.e., a fund) receives monthly scheduled payments of principal and interest, and may receive unscheduled principal payments represent ing prepayments on the underlying mortgages. Therefore, GNMA securities may not be an effective means of "locking in" long-term interest rates due to the need for the funds to reinvest scheduled and unscheduled principal payments. The incidence of unscheduled principal prepayments is also likely to increase in mortgage pools owned by the funds when prevailing mortgage loan rates fall below the mortgage rates of the securities underlying the individual pool. The effect of such prepayments in a falling rate environment is to (1) cause the funds to reinvest principal payments at the then lower prevailing interest rate, and (2) reduce the potential for capital appreciation beyond the face amount of the security and adversely affect the return to the funds. Conversely, in a rising interest rate environment such prepayments can be reinvested at higher prevailing interest rates which will reduce the potential effect of capital depreciation to which bonds are subject when interest rates rise. When interest rates rise and prepayments decline, GNMA securities become subject to extension risk or the risk that the price of the securities will fluctuate more. In addition, prepayments of mortgage securities purchased at a premium (or discount) will cause such securities to be paid off at par, resulting in a loss (gain) to the funds. T. Rowe Price will actively manage the funds` portfolios in an attempt to reduce the risk associated with investment in mortgage-backed securities.

    The market value of adjustable rate mortgage securities ("ARMs"), like other U.S. government securities, will generally vary inversely with changes in market interest rates, declining when interest rates rise and rising when interest rates decline. Because of their periodic adjustment feature, ARMs should be more sensitive to short-term interest rates than long-term rates. They should also display less volatility than long-term mortgage-backed securities. Thus, while having less risk of a decline during periods of rapidly rising rates, ARMs may also have less potential for capital appreciation than other investments of comparable maturities. Interest rate caps on mortgages underlying ARMs may prevent income on the ARMs from increasing to prevailing interest rate levels and cause the securities to decline in value. In addition, to the extent ARMs are purchased at a premium, mortgage foreclosures and unscheduled principal prepayments may result in some loss of the holders` principal investment to the extent of the premium paid. On the other hand, if ARMs are purchased at a discount, both a scheduled payment of principal and an unscheduled prepayment of principal will increase current and total returns and will accelerate the recognition of income that, when distributed to shareholders, will be taxable as ordinary income.

    High-Yield Secur ities

    Special Risks of Investing in Junk Bonds The following special considerations are additional risk factors of funds investing in lower-rated securities.

  • Lower-Rated Debt Securities Market An economic downturn or increase in interest rates is likely to have a greater negative effect on this market, the value of lower-rated debt securit ies in the funds` portfolios, the funds` net asset value and the ability of the bonds` issuers to repay principal and interest, meet projected business goals, and obtain additional financing than on higher-rated securities. These circumstances also may result in a higher incidence of defaults than with respect to higher-rated securities. Investment in funds which invest in lower-rated debt securities is more risky than investment in shares of funds which invest only in higher-rated debt securities.

  • Sensitivity to Interest Rate and Economic Changes Prices of lower-rated debt securities may be more sensitive to adverse economic changes or corporate developments than higher-rated investments. Debt securities with

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  • longer maturities, which may have higher yields, may increase or decrease in value more than debt securities with shorter maturities. Market prices of lower-rated debt securities structured as zero-coupon or pay-in-kind securities are affected to a greater extent by interest rate changes and may be more volatile than securities which pay interest periodically and in cash. Where it deems it appropriate and in the best interests of fund shareholders, the funds may incur additional expenses to seek recovery on a debt security on which the issuer has defaulted and to pursue litigation to protect the interests of security holders of its portfolio companies.

  • Liquidity and Valuation Because the market for lower-rated securities may be thinner and less active than for higher-rated securities, there may be market price volatility for these securities and limited liquidity in the resale market. Nonrated securities are usually not as attractive to as many buyers as rated securities are, a factor which may make n onrated securities less marketable. These factors may have the effect of limiting the availability of the securities for purchase by the funds and may also limit the ability of the funds to sell such securities at their fair value either to meet redemption requests or in response to changes in the economy or the financial markets.

    • Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of lower-rated debt securities, especially in a thinly traded market. To the extent the funds own or may acquire illiquid or restricted lower-rated securities, these securities may involve special registration responsibilities, liabilities, costs, and liquidity and valuation difficulties. Changes in values of debt securities which the funds own will affect its net asset value per share. If market quotations are not readily available for the funds` lower-rated or nonrated securities, these securities will be valued by a method that the funds` Boards believe accurately reflects fair value. Judgment plays a greater role in valuing lower-rated debt se curities than with respect to securities for which more external sources of quotations and last sale information are available.

  • Taxation Special tax considerations are associated with investing in lower-rated debt securities structured as zero-coupon or pay-in-kind securities. The funds accrue income on these securities prior to the receipt of cash payments. The funds must distribute substantially all of its income to its shareholders to qualify for pass-t hrough treatment under the tax laws and may, therefore, have to dispose of portfolio securities to satisfy distribution requirements.

    • Risk Factors of Investing in Municipal Securities

    General

    Yields on municipal securities are dependent on a variety of factors, including the general conditions of the money market and the municipal bond market, the size of a particular offering, the maturity of the obligations, and the rating of the issue. Municipal securities with longer maturities tend to produce higher yields and are generally subject to potentially greater capital appreciation and depreciation than obligations with shorter maturities and lower yields. The market prices of municipal securities usually vary, depending upon available yields. An increase in interest rates will generally reduce the value of portfolio investments, and a decline in interest rates will generally increase the value of portfolio investments. The ability of all the funds to achieve their investment objectives is also dependent on the continuing ability of the issuers of municipal securities in which the funds invest to meet their obligations for the payment of interest and principal when due. The ratings of Moody`s, S&P, and Fitch IBCA, Inc. ("Fitch") represent their opinions as to the quality of municipal securities which they undertake to rate. Ratings are not absolute standards of quality; consequently, municipal securities with the same maturity, coupon, and rating may have different yields. There are variations in municipal securities, both within a particular classification and between classifications, depending on numerous factors. It should also be pointed out that, unlike other types of investments, offerings of municipal securities have traditionally not been subject to regulation by, or registration with, the SEC, although there have been proposals which would provide for regulation in the future.

    The federal bankruptcy statutes relating to the debts of political subdivisions and authorities of states of the United States provide that, in certain circumstances, such subdivisions or authorities may be authorized to initiate bankruptcy proceedings without prior notice to or consent of creditors, which proceedings could result in material and adverse changes in the rights of holders of their obligations.

    Proposals have been introduced in Congress to restrict or eliminate the federal income tax exemption for inte rest on municipal securities, and similar proposals may be introduced in the future. Proposed "Flat Tax"

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    and "Value Added Tax" proposals would also have the effect of eliminating the tax preference for municipal securities. Some of the past proposals would have applied to interest on municipal securities issued before the date of enactment, which would have adversely affected their value to a material degree. If such a proposal were enacted, the availability of municipal securities for investment by the funds and the value of a fund`s portfolio would be affected and, in such an event, the funds would reevaluate their investment objectives and policies.

    Although the banks and securities dealers with which the funds will transact business will be banks and securities dealers that T. Rowe Price believes to be financially sound, there can be no assurance that they will be able to honor their obligations to the funds with respect to such transactions.

    Municipal Bond Insurance The funds may purchase insured bonds from time to time. Municipal bond insurance provides an unconditional and irrevocable guarantee that the insured bond`s principal and interest will be paid when due. Insurance does not guarantee the price of the bond. The guarantee is purchased from a private, nongovernmental insurance company.

    There are t wo types of insured securities that may be purchased by the funds: bonds carrying either (1) new issue insurance; or (2) secondary insurance. New issue insurance is purchased by the issuer of a bond in an effort to improve the bond`s credit rating. By meeting the insurer`s standards and paying an insurance premium based on the bond`s principal v alue, the issuer may be able to obtain a higher credit rating for the bond. The credit rating assigned to an insured municipal bond will usually reflect the financial strength of the issuer or insurer, whichever is higher. Once purchased, municipal bond insurance cannot be canceled, and the protection it affords continues as long as the bonds are outstanding and the insurer remains solvent.

    The funds may also purchase bonds that carry secondary insurance purchased by an investor after a bond`s original issuance. Such policies insure a security for the remainder of its term. Generally, the funds expect that portfolio bonds carrying secondary insurance will have been insured by a prior investor. However, the funds may, on occasion, purchase secondary insurance on their own behalf.

    Each of the municipal bond insurance companies has established reserves to cover estimated losses. Both the method of establishing these reserves and the amount of the reserves vary from company to company. The risk that a municipal bond insurance company may experience a claim extends over the life of each insured bond. Municipal bond insurance companies are obligated to pay a bond`s interest and principal when due if the issuing entity defaults on the insured bond. Defaults on insured municipal bonds have been fairly low to date, but certain insurers` ratings have recently been downgraded. Therefore, it is possible that default rates on insured bonds could increase substantially, which could further deplete an insurer`s loss reserves and adversely affect the ability of a municipal bond insurer to pay claims to holders of insured bonds, such as the funds. The inability of an insurer to pay a particular claim, or a downgrade of the insurer`s rating, could adversely affect the values of all the bonds it insures despite the quality of the underlying issuer. The number of municipal bond insurers is relatively small and, therefore, a significant amount of a municipal bond fund`s assets may be insured b y a single issuer.

    High-Yield Securities Lower-quality bonds, commonly referred to as "junk bonds," are regarded as predominantly speculative with respect to the issuer`s continuing ability to meet principal and interest payments. Because investment in low- and lower-medium-quality bonds involves greater investment risk, to the extent the funds invest in such bonds, achievement of their investment objectives will be more dependent on T. Rowe Price`s credit analysis than would be the case if the funds were investing in higher-quality bonds. High-yield bonds may be more susceptible to real or perceived adverse economic conditions than investment-grade bonds. A projection of an economic downturn or higher interest rates, for example, could cause a decline in high-yield bond prices because the advent of such events could lessen the ability of highly leveraged issuers to make principal and interest payments on their debt securities. In addition, the secondary trading market for high-yield bonds may be less liquid than the market for higher-grade bonds, which can adversely affect the ability of the funds to dispose of their portfolio securities. Bonds for which there is only a "thin" market can be more difficult to value inasmuch as objective pricing data may be less available, and judgment may play a greater role in the valuation process.

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    Risk Factors of Investing in Taxable and Tax-Free Money Market Funds

    The T. Rowe Price money market funds will limit their purchases of portfolio instruments to those U.S. dollar-denominated securities which the funds` Boards determine present minimal credit risk and which are eligible securities as defined in Rule 2a-7 under the 1940 Act. Eligible securities are generally securities which have been rated (or whose issuer has been rated or whose issuer has comparable securities rated) in one of the two highest short-term rating categories (which may include sub-categories) by nationally recognized statistical rating organizations ("NRSROs") or, in the case of any instrument that is not so rated, is of comparable high quality as determined by T. Rowe Price pursuant t o written guidelines established under the supervision of the funds` Boards. In addition, the funds may treat variable and floating rate instruments with demand features as short-term securities pursuant to Rule 2a-7 under the 1940 Act.

    There can be no assurance that the funds will achieve their investment objectives or be able to maintain their net asset values per share at $1.00. The price of the funds is not guaranteed or insured by the U.S. government < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">and their yields are not fixed. While the funds invest in high-grade money market instruments, investment in the funds is not without risk even if all portfolio instruments are paid in full at maturity. An increase in interest rates could reduce the value of the funds` portfolio investments, and a decline in interest rates could increase the value.

    State Tax-Free Funds

    The following information about the state tax-free funds is updated in June of each year. More current information is available in shareholder reports for these funds.

    California Tax-Free Bond and California Tax-Free Money Funds

    Risk Factors Associated with a California Portfolio

    The funds` concentration in the debt obligations of a single state carries a higher risk than a portfolio that is more geographically diversified.

    Types of Municipal Debt The funds invest in municipal bonds and other municipal debt instruments issued by the state of California and its various political subdivisions and agencies. The issuers of these debt obligations include the state of California and its agencies and authorities, counties and municipalities and their agencies and authorities, various California public institutions of higher education, and certain California not-for-profit organizations (e.g., hospitals, private colleges, and nursing hom es). The credit quality and risks of these investments will vary according to each security`s structure and underlying economics.

    Debt is issued for a wide variety of public purposes, including transportation, housing, education, electric power, and healthcare. The state of California, and its local governments, agencies and authorities, issue two basic types of debt: general obligation bonds and revenue bonds. General obligation bonds are backed by the unlimited taxing power of the issuer. However, bonds issued by certain counties, municipalities, and agencies of the state and local government are not backed by the full faith and credit of the state. Revenue bonds are typically secured by specific pledged fees or charges for a related project, such as fees generated from the use of facilities or enterprises financed by the bonds. As part of its cash management program, the state regularly issues short-term notes to meet its disbursement requirements in advan ce of the receipt of revenues. Included within the revenue bond sector are tax-exempt lease obligations that are subject to annual appropriations of a governmental body, usually with no implied tax or specific revenue pledge. Local governments also raise capital through the use of Mello-Roos, 1915 Act Bonds, and Tax Increment Bonds, all of which are generally riskier than general obligation debt as they often rely on tax revenues to be generated by future development for their support.

    The funds may also invest in private activity bond issues for corporate and nonprofit borrowers. Sold through various governmental conduits, these issues are backed solely by the revenues pledged by the respective borrowing corporations. No governmental support is provided or implied.

    Political and Legislative Conditions Certain provisions of the California state constitution and state statutes limit the taxing and spending authority of California governmental entities, thus affecting their ability to meet debt service obligations. For example, the constitution limits ad valorem taxes on real property to 1% of "full cash value" and restricts the ability of taxing entities to increase real property taxes. It also prohibits the state

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    from spending revenues beyond its annually adjusted "appropriations limit." Yet another provision further restricts the ability of local governments to levy and collect existing and future taxes, assessments, and fees. In addition to limiting the financial flexibility of local governments in the state, the provision also increases the possibility of voter-determined tax rollbacks and repeals.

    One effect of the tax and spending limitations in Cali fornia has been a broad scale shift by local governments away from general obligation debt requiring voter approval and pledging of future tax revenues toward lease revenue financing that is subject to abatement and does not require voter approval. Lease-backed debt is generally viewed as a less secure form of borrowing and therefore entails greater credit risk.

    Future initiatives, if proposed and adopted, or future court decisions could create renewed pressure on California governments and their ability to raise revenues. Although Oran ge County notably filed for protection under the U.S. Bankruptcy Code in 1994, overall the state and its underlying governments have displayed flexibility in overcoming the negative effects of past initiatives.

    Economic and Financial Conditions To a large degree, the credit risk of the portfolios is dependent upon the financial strength of the state of California, its localities and agencies. Financial strength is, in turn, influenced by changing economic conditions which affect the level of taxes collected and revenues earned. While California`s economy has been diverse and resilient, and is typically the largest among the 50 states, the state of California is also normally among the most highly indebted states in the nation. The state has historically experienced more extreme swings in employment levels and property values relative to the rest of the country. In addition, California is more prone to earthquakes, which can result in sudden economic downturns and the unexpected inability of issuers to meet their obligations. More detailed information regarding economic conditions and the financial strength of California is available in the funds` annual and semi-annual shareholder reports.

    Sectors Investment concentration in a particular sector can present unique risks. For example, a significant portion of the funds` assets may be i nvested in issues related to health care providers. The hospital industry has been under significant pressure to reduce expenses and shorten length of hospital stays, a phenomenon that has negatively affected the financial health of some hospitals. All hospitals are dependent on third-party reimbursement mechanisms that are typically complex, subject to numerous conditions, and uncertain as to how long they will continue.

    The funds may from time to time invest in electric revenue issues. The financial performance of these utilities was impacted by the industry`s moves toward deregulation and increased competition. California`s original electric utility restructuring plan proved to be flawed as it placed over-reliance on the spot market for power purchases during a period of substantial supply and demand imbalance. Now that deregulation has been suspended, municipal utilities face a more traditional set of challenges. In particular, some electric revenue issuers have exposure to or participate in nuclear power plants, which could af fect the issuer`s financial performance. Other risks include unexpected outages, plant shutdowns, and more stringent environmental regulations.

    Georgia Tax-Free Bond Fund

    Risk Factors Associated with a Georgia Portfolio

    The fund`s concentration in the debt obligations of a single state carries a higher risk than a portfolio that is more geographically diversified.

    Types of Municipal Debt The fund invests in municipal bonds and other municipal debt instruments issued by the state of Georgia and its various political subdivisions and agencies. The issuers of these debt obligations include the state of Georgi a and its agencies and authorities, counties and municipalities and their agencies and authorities, various Georgia public institutions of higher education, and certain Georgia not-for-profit organizations (e.g., hospitals, private colleges, and nursing homes). The credit quality and risks of these investments will vary according to each security`s structure and underlying economics.

    The state of Georgia, and its local governments, agencies and authorities, issue two basic types of debt: general obligation bonds and revenue bonds. General obligation bonds are backed by the unlimited taxing power of the issuer. However, bonds issued by certain counties, municipalities, and agencies of the state and local

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    government are not backed by the full faith and credit of the state and may or may not be subject to annual appropriations from the state`s general fund. Revenue bonds are typically secured by specific pledged fees or charges for a related project, such as fees generated from the use of facilities or enterprises financed by the bonds. Included within the revenue bond sector are tax-exempt lease obligations that are subject to annual appropriations of a governmental body, usually with no implied tax or specific revenue pledge.

    The Georgia Constitution imposes certain debt limits and controls. The state`s general obligation debt service cannot exceed 10% of total revenue receipts less refunds of the state treasury and state-issued general obligation bonds have a 25-year maturity limit. The state also established "debt affordability" limits which provide that outstanding debt will not exceed 2.7% of personal income or that maximum annual debt service will not exceed 5% of the prior year`s revenues.

    The fund may also invest in private activity bond issues for corporate and nonprofit borrowers. Sold through various governmental conduits, these issues are backed solely by the revenues pledged by the respective borrowing corporations. No governmental support is provided or implied.

    Economic and Fi nancial Conditions To a large degree, the credit risk of the portfolio is dependent upon the financial strength of the state of Georgia, its localities and agencies. Financial strength is, in turn, influenced by changing economic conditions which affect the level of taxes collected and revenues earned. While local governments in Georgia are primarily reliant on independent revenue sources, such as property taxes, they are not immune to budget shortfalls caused by cutbacks in state aid. More detailed information regarding economic conditions and the financial strength of Georgia is available in the fund`s annual and semi-annual shareholder reports.

    Sectors Investment concentration in a particular sector can present unique risks. For example, a significant portion of the fund`s assets may be invested in issues related to health care providers. The hospital industry has been under significant pressure to reduce expenses and shorten length of hospital stays, a phenomenon that has negatively affected the financial health of some hospitals. All hospitals are dependent on third-party reimbursement mechanisms that are typically complex, subject to numerous conditions, and uncertain as to how long they will continue.

    The fund may from time to time invest in electric revenue issues that have exposure to or participate in nuclear power plants, w hich could affect the issuer`s financial performance. Such risks include delay in construction and operation due to increased regulation, unexpected outages or plant shutdowns, increased Nuclear Regulatory Commission surveillance, or inadequate rate relief. In addition, the financial performance of electric utilities may be impacted by increased competition and deregulation of the industry.

    The fund may invest in issues related to life care, which includes nursing homes, assisted living facilities, and continuing care retirement communi ties. These bonds are typically issued with longer-term maturities, although they are usually callable by the issuer on prescribed dates before maturity. Many life care municipal bonds are considered below investment-grade or are not rated by a credit rating agency. Reasons for the higher credit risk include uncertainty over future regulations and Medicaid funding, increased competition, and a lack of affordability.

    Maryland Short-Term Tax-Free Bond, Maryland Tax-Free Bond, and Maryland Tax-Free Money Funds

    Risk Factors Associated with a Maryland Portfolio

    The funds` concentration in the debt obligations of a single state carries a higher risk than a portfolio that is more geographically diversified.

    Types of Municipal Debt The funds invest in municipal bonds and other municipal debt instruments issued by the state of Maryland and its various political subdivisions and agencies. The issuers of these debt obligations include the state of Maryland and its agencies and authorities, counties and municipalities and their agencies and authorities, various Maryland public institutions of higher education, and certain Maryland not-for-profit organizations (e.g., hospitals, private colleges, and nursing homes). The credit quality and risks of these investments will vary according to each security`s structure and underlying economics.

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    The state of Maryland, and its local governments, agencies and authorities, issue two basic types of debt: general obligation bonds and revenue bonds. General obligation bonds are backed by the unlimited taxing power of the issuer. However, many counties, municipalities, and agencies of the state and local government are authorized to borrow money under laws expressly providing that the loan obligations are not debts or pledges of the full faith and credit of the state. The state constitution imposes a 15-year maturity limit on state-issued general obligation bonds. Revenue bonds are typically secured by specific pledged fees or charges for a related project, such as fees generated from the use of facilities or enterprises financed by the bonds. Included within the revenue bond sector are tax-exempt lease obligations that are subject to annual appropriations of a governmental body, usually with no implied tax or specific revenue pledge.

    The funds may also invest in private activity bond issues for corporate and nonprofit borrowers. Sold through various governmental conduits, these issues are backed solely by the revenues pledged by the respective borrowing corporations. No governmental support is provided or implied.

    Economic and Financial Conditions To a large degree, the credit risk of the portfolios is dependent upon the financial strength of the state of Maryland, its localities and agencies. Financial strength is, in turn, influenced by changing economic conditions which affect the level of taxes collected and revenues earned. More detailed information regarding economic conditions and the financial strength of Maryland is available in the funds` annual and semi-annual shareholder reports.

    Sectors Investment concentration in a particular sector can present unique risks. For example, a significant portion of the funds` assets may be invested in issues related to health care providers. The hospital industry has been under significant pressure to reduce expenses and shorten length of hospital stays, a phenomenon that has negatively affected the finan cial health of some hospitals. All hospitals are dependent on third-party reimbursement mechanisms that are typically complex, subject to numerous conditions, and of uncertain duration.

    The funds may from time to time invest in electric revenue issues that have exposure to or participate in nuclear power plants, which could affect the issuer`s financial performance. Such risks include delay in construction and operation due to increased regulation, unexpected outages or plant shutdowns, increased Nuclear Regulatory Commission surveillance, or inadequate rate relief. In addition, the financial performance of electric utilities may be impacted by increased competition and deregulation of the industry.

    The funds may invest in issues related to life care, which includes nursing homes, assisted living facilities, and continuing care retirement communities. These bonds are typically issued with longer-term maturities, although they are usually callable by the issuer on prescribed dates before maturity. Many life care municipal bonds are considered below investment-grade or are not rated by a credit rating agency. Reasons for the higher credit risk include uncertainty over future regulations and Medicaid funding, increased competition, and a lack of affordability.

    New Jersey Tax-Free Bond Fund

    Risk Factors Associated with a New Jersey Portfolio

    The fund`s concentration in the debt obligations of a single state carries a higher risk than a portfolio that is more geographically diversified.

    Types of Municipal Debt The fund invests in municipal bonds and other municipal debt instruments issued by the state of New Jersey and its various political subdivisions and agencies. The issuers of these debt obligations include the state of New Jersey and its agencies and authorities, counties and municipalities and their agencies and authorities, various New Jersey public institutions of higher education, and certain New Jersey not-for-profit organizations (e.g., hospitals, private colleges, and nursing homes). The credit quality and risk s of these investments will vary according to each security`s structure and underlying economics.

    The state of New Jersey, and its local governments, agencies and authorities, issue two basic types of debt: general obligation bonds and revenue bonds. General obligation bonds are backed by the unlimited taxing power of the issuer. However, many counties, municipalities, and agencies of the state and local government are authorized to borrow money under laws express ly providing that the loan obligations are not debts or pledges of the full faith and credit of the state. Revenue bonds are typically secured by specific pledged fees or

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    charges for a related project, such as fees generated from the use of facilities or enterprises financed by the bonds. Included within the revenue bond sector are tax-exempt lease obligations that are subject to annual appropriations of a governmental body, usually with no implied tax or specific revenue pledge.

    The majority of the state`s debt is "appropriation-backed." Th is means that the debt service payments on these obligations must be funded annually by the state legislature, but the legislature has no legal obligation to continue to make such appropriations.

    The fund may also invest in private activity bond issues for corporate and nonprofit borrowers. These issues are sold through various governmental conduits, such as the New Jersey Economic Development Authority and various local issuers, and are backed solely by the revenues pledged by the respective borrowing corporations. No governmental support is provided or implied. In the past, a number of New Jersey Economic Development Authority issues have defaulted as a result of borrower financial difficulties.

    Economic and Financial Conditions To a large degree, the credit risk of the portfolio is dependent upon the financial strength of the state of New Je rsey, its localities and agencies. Financial strength is, in turn, influenced by changing economic conditions which affect the level of taxes collected and revenues earned. More detailed information regarding economic conditions and the financial strength of New Jersey is available in the fund`s annual and semi-annual shareholder reports.

    Sectors Investment concentration in a particular sector can present unique risks. For example, a significant portion of the fund`s assets may be invested in issues related to health care providers. The hospital industry has been under significant pressure to reduce expenses and shorten length of hospital stays, a phenomenon that has negatively affected the financial health of some hospitals. All hospitals are dependent on third-party reimbursement mechanisms that are typically complex, subject to numerous conditions, and uncertain as to how long they will continue.

    The fund may from time to time invest in electric revenue issues that have exposure to or participate in nuclear power plants, which could affect the issuer`s financial performance. Such risks include delay in construction and operation due to increased regulation, unexpected outages or plant shutdowns, increased Nuclear Regulatory Commission surveillance, or inadequate rate relief. In addition, the financial performance of electric utilities may be impacted by increased competition and deregulation of the industry.

    The fund may invest in issues related to life care, which includes nursing homes, assisted living facilities, and continuing care retirement communities. These bonds are typically issued with longer-term maturities, although they are usually callable by the issuer on prescribed dates before maturity. Many life care municipal bonds are considered below investment-grade or are not rated by a credit rating agency. Reasons for the higher credit risk include uncertaint y over future regulations and Medicaid funding, increased competition, and a lack of consumer affordability.

    New York Tax-Free Bond and New York Tax-Free Money Funds

    Risk Factors Associated with a New York Portfolio

    The funds ` concentration in the debt obligations of a single state carries a higher risk than a portfolio that is more geographically diversified.

    Types of Municipal Debt The funds invest in municipal bonds and other municipal debt instruments issued by the state of New York and its various political subdivisions and agencies. The issuers of these debt obligations include: the state of New York, New York City, and their agencies and authorities; counties, other municipalities, and their agencies and authorities; various New York public institutions of higher education; and certain New York not-for-profit organizations (e.g., hospitals, private colleges, and nursing homes). The credit quality and risks of these investments will vary according to each security`s structure and underlying economics.

    The state of New York, and its local governments, agencies and authorities, issue two basic types of debt: general obligation bonds and revenue bonds. General obligation bonds are backed by the unlimited taxing power of the issuer. However, bonds issued by certain counties, municipalities, and agencies of the state and local government are not backed by the full faith and credit of the state of New York or New York City. Revenue bonds are typically secured by specific pledged fees or charges for a related project, such as fees

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    generated from the use of facilities or enterprises financed by the bonds. Included within the revenue bond sector are tax-exempt lease obligations that are subject to annual appropriations of a governmental body, usually with no implied tax or specific revenue pledge.

    The majority of the state`s debt is "appropriation-backed." This means that the debt service payments on t hese obligations must be funded annually by the state legislature, but the legislature has no legal obligation to continue to make such appropriations.

    The funds may also invest in private activity bond issues for corporate and nonprofit borrowers. Sold through various governmental conduits, these issues are backed solely by the revenues pledged by the respective borrowing corporations. No governmental support is provided or implied.

    Economic and Financial Conditions To a large degree, the credit risk of the portfolios is dependent upon the financial strength of the state of New York, its localities and agencies. Financial strength is, in turn, influenced by changing economic conditions which affect the level of taxes collected and revenues earned. The state of New York is typically among the most highly indebted states in the nation and New York City is typically one of the most indebted U.S. cities. More detailed information regarding economic conditions and the financial strength of New York is available in the funds` annual and semi-annual shareholder reports.

    Sectors Investment concentration in a particular sector can present unique risks. For example, a significant portion of the funds` assets may be invested in issues related to health care providers. The hospital industry has been under significant pressure to reduce expenses and shorten length of hospital stays, a phenomenon that has negatively affected the financial health of some hospitals. All hospitals are dependent on third-party reimbursement mechanisms that are typically complex, subject to numerous conditions, and uncertain as to how long they will continue.

    The funds may from time to time invest in electric revenue issues that have exposure to or participate in nuclear power plants, which could affect the issuer`s financial performance. Such risks include delay in construction and operation due to increased regulation, unexpected outages or plant shutdowns, increased Nuclear Regulatory Commission surveillance, or inadequate rate relief. In addition, the financial performance of electric utilities may be impacted by increased competition and deregulation of the industry.

    The funds may invest in issues related to life care, which includes nursing homes, assisted living facilities, and continuing care retirement communities. These bonds are typically issued with longer-term maturities, although they are usually callable by the issuer on prescribed dates before maturity. Many life care municipal bonds are considered below investment-grade or are not rated by a credit rating agency. Reasons for the higher credit risk include uncertainty over future regulations and Medicaid f unding, increased competition, and a lack of consumer affordability.

    Virginia Tax-Free Bond Fund

    Risk Factors Associated with a Virginia Portfolio

    The fund`s concentration in the debt obligations of a single state carries a higher risk than a portfolio that is more geographically diversified.

    Types of Municipal Debt The fund invests in municipal bonds and other municipal debt instruments issued by the commonwealth of Virginia and its various political subdivisions and agencies. The issuers of these debt obligations include the common wealth of Virginia and its agencies and authorities, counties and municipalities and their agencies and authorities, various Virginia public institutions of higher education, and certain Virginia not-for-profit organizations (e.g., hospitals, private colleges, and nursing homes). The credit quality and risks of these investments will vary according to each security`s structure and underlying economics.

    Debt is issued for a wide variety of public purposes, includin g transportation, housing, education, healthcare, and industrial development. The commonwealth of Virginia, and its local governments, agencies and authorities, issue two basic types of debt: general obligation bonds and revenue bonds. General obligation bonds are backed by the unlimited taxing power of the issuer. Under Virginia law, general obligation debt is limited to 1.15 times the average of the preceding three years` income tax and sales and use collections. However, bonds issued by many counties, municipalities, and agencies of the commonwealth and local government are not backed by the full faith and credit of the commonwealth but instead are subject to annual

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    appropriations from the commonwealth`s general fund. Revenue bonds are typically secured by specific pledged fees or charges for a related project, such as fees generated from the use of facilities or enterprises financed by the bonds. Included within the revenue bond sector are tax-exempt lease obligations that are subject to annual appropriations of a governmental body, usually with no implied tax or specific revenue pledge.

    The fund may also invest in private activity bond issues for corporate and nonprofit borrowers. Sold through various governmental conduits, these issues are backed solely by the revenues pledged by the respective borrowing corporations. No governmental support is provided or implied.

    Economic and Financial Conditions To a large degree, the credit risk of the portfolio is dependent upon the financial strength of the commonwealth of Virginia, its localities and agencies. Financial strength is, in turn, influenced by changing economic conditions which affect the level of taxes collected and revenues earned. While local governments in Virginia are primarily reliant on independent revenue sources, such as property taxes, they are not immune to budget shortfalls caused by cutbacks in state aid. More detailed information regarding ec onomic conditions and the financial strength of Virginia is available in the fund`s annual and semi-annual shareholder reports.

    Sectors Investment concentration in a particular sector can present unique risks. For example, a significant portion of the fund`s assets may be invested in issues related to health care providers. The hospital industry has been under significant pressure to reduce expenses and shorten length of hospital stays, a phenomenon that has negatively affected the financial health of some hospitals. All hospitals are dependent on third-party reimbursement mechanisms that are typically complex, subject to numerous conditions, and uncertain as to how long they will continue.

    The fund may from time to time invest in electric revenue issues that have exposure to or participate in nuclear power plants, which could affect the issuer `s financial performance. Such risks include delay in construction and operation due to increased regulation, unexpected outages or plant shutdowns, increased Nuclear Regulatory Commission surveillance, or inadequate rate relief. In addition, the financial performance of electric utilities may be impacted by increased competition and deregulation of the industry.

    The fund may invest in issues related to life care, which includes nursing homes, assisted living facilities, and continuing care retirement communities. These bonds are typica lly issued with longer-term maturities, although they are usually callable by the issuer on prescribed dates before maturity. Many life care municipal bonds are considered below investment-grade or are not rated by a credit rating agency. Reasons for the higher credit risk include uncertainty over future regulations and Medicaid funding, increased competition, and a lack of affordability.

    A ll State Tax-Free Funds

    Puerto Rico From time to time, the funds invest in obligations of Puerto Rico and its public corporations, the interest of which may be exempt from federal, state, and local income taxes. As of April 1, 2009, the general obligation debt of the commonwealth was rated Baa3 by Moody`s and BBB- by S&P. Both agencies have assigned stable outlooks to the ratings. The credit ratings reflect, in part, their concerns regarding a weak economy, structural budget imbalance, and rising debt burden.

    Debt As of June 30, 2008, the outstanding debt of Puerto Rico borrowers totaled $47 billion. This includes bonds supported by the commonwealth`s general obligation pledge, appropriations or guarantee; public corporations such as highways, water and sewer, and electric power, and municipalities.

    Guaranteed direct obligations of the commonwealth supported by a general obligation pledge are subject to strict limitat ions imposed by the commonwealth`s constitution. Debts of its municipalities are typically supported by property taxes and municipal license taxes, with support from the commonwealth, if necessary. Debts of its public corporations are generally supported by the entity`s revenues or by the commonwealth appropriations or taxes.

    Though different measures suggest Puerto Rico`s debt burden is high relative to a U.S. state, the commonwealth issues or supports bonds on behalf of municipalities and other governmental units. In many cases, this type of debt would be issued by local government or public agencies which are independent entities

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    in the U.S. One measure to monitor the commonwealth debt levels is by comparing the rate of growth of its debt to the rate of growth of its gross domestic product ("GDP"). For the five -year period that ended in June 2008, total public sector debt increased by 38%, whereas nominal-GDP rose by 18%.

    Economy Puerto Rico`s economy is closely linked to the United States. Like the United States, the commonwealth has been experiencing an economic recession. Government officials estimate that the economy (as measured by real GNP) contracted 1.9% in 2007 and 2.5% in 2008 (preliminary) and will probably continue to decline over the next two years.

    Manufacturing, especially pharmaceuticals, is very important to the local economy. Manufacturing accounted for 40% of GDP in 2008, and 10% of non-farm payroll employment (2008). Services are another component of the local economy, and represented 40% of GDP and 55% of employment. Tourism is an important sub-sector of services, and an important driver of the Puerto Rico`s economy. The number of tourists rose 2.50% annually between 2004 and 2008, while visitors` expenditures increased 5.0%.

    For many years, U.S. companies operating in Puerto Rico were eligible to receive a special tax treatment. Since 1976, Section 936 of the U.S. tax code entitled certain corporations to credit income derived from business activities in the commonwealth against their United States corporate income tax and spurred significant expansion in capital intensive manufacturing, particularly large pharmaceutical firms. The tax benefits, however, were eliminated beginning with the 2006 tax year. While the ultimate impact of the phase outs is being evaluated, preliminary indications are that major pharmaceutical, instrument, and electronic manufacturing firms have not exited the market.

    Financial Government officials estimate that general fund revenues were $8.45 billion and expenditures were $9.10 billion in fiscal year 2008. A new governor for the commonwealth was elected in November 2008. His administration estimates that the general fund deficit will be larger than previously anticipated for fiscal year 2009. As such, the governor is trying to implement various fiscal measures borrowings to reduce the gap over the next few years as well as borrow ings and additional aid from the U.S. government.

    Portfolio Securities

    Types of Securities

    Set forth below is additional information about certain of the investments described in the funds` prospectuses.

    Equity Securities

    Common and preferred stocks both represent an equity or ownership interest in an issuer. Common stock typically entitles the owner to vote on the election of directors and other important matters while preferred stock does not ordinarily carry voting rights. In the event an issuer is liquidated or declares bankruptcy, the claims of secured and unsecured creditors and owners of bonds take precedence over the cl aims of those who own preferred stock, and the owners of preferred stock take precedence over the claims of those who own common stock.

    Although owners of common stock are typically entitled to receive any dividends on such stock, owners of common stock 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. Because increases and decreases in earnings are usually reflected in a company` s stock price, common stocks generally have the greatest appreciation and depreciation potential of all corporate securities.

    Preferred stock, unlike common stock, often has a stated dividend rate payable from the corporation`s earnings. Preferred stock dividends may be cumulative or non-cumulative, participating or non-participating, or adjustable rate. Cumulative dividend provisions require all or a portion of prior unpaid dividends to be paid before dividends can be paid to the issuer`s common stock, while a passed dividend on non-cu mulative preferred stock is generally gone forever. Participating preferred stock may be entitled to a dividend exceeding the declared dividend in certain cases, while non-participating preferred stock is limited to the stipulated

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    dividend. Adjustable rate preferred stock pays a dividend that is adjustable, usually quarterly, based on changes in certain interest rates. Convertible preferred stock is exchangeable for a specified number of common stock shares and is typically more volatile than non-convertible preferred stock, which tends to behave more like a bond.

    Stock may be purchased on a "when-issued" basis, which is used to refer to a security that has not yet been issued but that will be issued in the future. The term may be used for new stocks and stocks that have split but have not yet started trading.

    Debt Securities

  • U.S. Government Obligations  Bills, notes, bonds, and other debt securities issued by th e U.S. Treasury. These are direct obligations of the U.S. government and differ mainly in the length of their maturities.

  • U.S. Government Agency Securities  Issued or guaranteed by U.S. government-sponsored enterprises and federal agencies. These include securities issued by the Federal National Mortgage Association ("Fannie Mae" or "FNMA"), GNMA, Federal Home Loan Bank, Federal Land Banks, Farmers Home Administration, Banks for Cooperatives, Federal Intermediate Credit Banks, Federal Financing Bank, Farm Credit Banks, the Small Business Association, and the Tennessee Valley Authority. Some of these securities are supported by the full faith and credit of the U.S. Treasury; the remainder are supported only by the cre dit of the instrumentality, which may or may not include the right of the issuer to borrow from the U.S. Treasury. These also include securities issued by eligible private depository institutions and guaranteed by the Federal Deposit Insurance Corporation (FDIC) under its Temporary Liquidity Guarantee Program.

  • Bank Obligations  Certificates of deposit, banker`s acceptances, and other short-term debt obligations. Certificates of deposit are short-term obligations of commercial banks. A banker`s acceptance is a time draft drawn on a commercial bank by a borrower, usually in connection with international commercial transactions. Certificates of deposit may have fixed or variable rates. The funds may invest in U.S. banks, foreign branches of U.S. banks, U.S. branches of foreign banks, and foreign branches of foreign banks.

  • Savings and Loan Obligations  Negotiable certificates of deposit and other short-term debt obligations of savings and loan associations.

  • Supranational Agencies  Securities of certain supranational entities, s uch as the International Development Bank.

  • Corporate Debt Securities  Outstanding corporate debt securities (e.g., bonds and debentures). Corporate notes may have fixed, variable, or floating rates.

  • Short-Term Corporate Debt Securities Outstanding nonconvertible corporate debt securities (e.g., bonds and debentures) which have one year or less remaining to maturity. Corporate notes may have fixed, variable, or floating rates.

  • Commercial Paper and Commercial Notes  Short-term promissory notes issued by corporations primarily to finance sho rt-term credit needs. Certain notes may have floating or variable rates and may contain options, exercisable by either the buyer or the seller, that extend or shorten the maturity of the note.

  • Foreign Government Securities  Issued or guaranteed by a foreign government, province, instrumentality, political subdivision, or similar unit thereof.

  • Funding Agreements Obligations of indebtedness negotiated privately between the funds and an insurance company. Often such instruments will have maturities with unconditional put features, exercisable by the funds, requiring return of principal within one year or less.

    • There are, of course, other types of securities that are or may become available that are similar to the foregoing, and the funds may invest in these securities.< /div>

    Mortgage-Related Securities

  • Mortgage-Backed Securities Mortgage-backed securities are securities representing an interest in a pool of mortgages. The mortgages may be of a variety of types, including adjustable rate, conventional 30-year and 15-year fixed rate, and graduated payment mortgages. Principal and interest payments made on the mortgages

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  • in the underlying mortgage pool are passed through to the funds. This is in contrast to traditional bonds where principal is normally paid back at maturity in a lump sum. Unscheduled prepayments of principal shorten the securities` weighted average life and may lower their total return. (When a mortgage in the underlying mortgage pool is prepaid, an unscheduled principal prepayment is passed through to the funds. This principal is returned to the funds at par. As a result, if a mortgage security were trading at a premium, its total return would be lowered by prepayments, and if a mortgage security were trading at a discount, its total return would be increased by prepayments.) The value of these securities also may change because of changes in the market`s perception of the creditworthiness of the federal agency that issued them or a downturn in housing prices. In addition, the mortgage securities market in general may be adversely affected by changes in governmental regulation or tax policies.

  • U.S. Government Agency Mortgage-Backed Securities These are obligations issued or guaranteed by the U.S. government or one of its agencies or instrumentalities, such as GNMA, FNMA, the Federal Home Loan Mortgage Corporation ("Freddie Mac" or "FHLMC"), and the Federal Agricultural Mortgage Corporation ("Farmer Mac" or "FAMC"). FNMA, FHLMC, and FAMC obligations are not backed by the full faith and credit of the U.S. government as GNMA certificates are, but they are supported by the instrumentality`s right to borrow from the U.S. Treasury. On September 7, 2008, FNMA and FHLMC were placed under conservatorship of the Federal Housing Finance Agency, an independent federal agency. U.S. Government Agency Mortgage-Backed Certificates provide for the pass-through to investors of their pro-rata share of monthly payments (including any prepayments) made by the individual borrowers on the pooled mortgage loans, net of any fees paid to the guarantor of such securities and the servicer of the underlying mortgage loans. Each of GNMA, FNMA, FHLMC, and FAMC guarantees timely distributions of interest to certificate holders. GNMA and FNMA guarantee timely distributions of scheduled principal. FHLMC has in the past guara nteed only the ultimate collection of principal of the underlying mortgage loan; however, FHLMC now issues mortgage-backed securities (FHLMC Gold PCS) which also guarantee timely payment of monthly principal reductions.

  • GNMA Certificates GNMA is a wholly owned corporate instrumentality of the United States within the Department of Housing and Urban Development. The National Housing Act of 1934, as amended (the "Housing Act"), authorizes GNMA to guarantee the timely payment of the principal of and interest on certificates that are based on and backed by a pool of mortgage loans insured by the Federal Housing Administration under the Housing Act, or Title V of the Housing Act of 1949 ("FHA Loans"), or guaranteed by the Department of Veterans Affairs under the Servicemen`s Readjustment Act of 1944, as amended ("VA Loans"), or by pools of other eligible mortgage loans. The Housing Act provides that the full faith and credit of the U.S. government is pledged to the payment of all amounts that may be required to be paid under any guaranty. In order to meet its obligations under such guaranty, GNMA is authorized to borrow from the U.S. Treasury with no limitations as to amount.

  • FNMA Certificates FNMA is a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act of 1938. FNMA Certificates represent a pro-rata interest in a group of mortgage loans purchased by FNMA. FNMA guarantees the timely payment of principal and interest on the securities it issues. The obligations of FNMA are not backed by the full faith and credit of the U.S. government.

  • FHLMC Certificates FHLMC is a corporate instrumentality of the United States created pursuant to the Emergency Home Finance Act of 1970, as amended ("FHLMC Act"). FHLMC Certificates represent a pro-rata interest in a group of mortgage loans purchased by FHLMC. FHLMC guarantees timely payment of interest and principal on certain securities it issues and timely payment of interest and eventual payment of principal on other securities it issues. The obligations of FHLMC are obligations solely of FHLMC and are not backed by the full faith and credit of the U.S. government.

  • FAMC Certificates FAMC is a federally chartered instrumentality of the United States established by Title VIII of the Farm Credit Act of 1971, as amended ("Charter Act"). FAMC was chartered primarily to attract new capital for financing of agricultural real estate by making a secondary market in certain qualified agricultural real estate loans. FAMC provides guarantees of timely payment of principal and interest on securities representing interests in, or obligations backed by, pools of mortgages secured by first liens on agricultural real estate. Similar to FNMA and FHLMC, FAMC Certificates are not supported by the full faith

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  • and credit of the U.S. government; rather, FAMC may borrow from the U.S. Treasury to meet its guaranty obligations.

    • As discussed above, prepayments on the underlying mortgages and their effect upon the rate of return of a mortgage-backed security is the principal investment risk for a purchaser of such securities, like the funds. Over time, any pool of mortgages will experience prepayments due to a variety of factors, including (1) sales of the underlying homes (including foreclosures), (2) refinancings of the underlying mortgages, and (3) increased amortization by the mortgagee. These factors, in turn, depend upon general economic factors, such as level of interest rates and economic growth. Thus, investors normally expect prepayment rates to increase during periods of strong economic growth or declining interest rates, and to decrease in recessions and rising interest rate environments. Accordingly, the life of the mortgage-backed security is likely to be substantially shorter than the stated maturity of the mortgages in the underlying pool. Because of such variation in prepayment rates, it is not possible to predict the life of a particular mortgage-backed security, but FHA statistics indicate that 25- to 30-year single family dwelling mortgages have an average life of approximately 12 years. The majority of GNMA Certificates are backed by m ortgages of this type, and, accordingly, the generally accepted practice treats GNMA Certificates as 30-year securities which prepay in full in the 12th year. FNMA and FHLMC Certificates may have differing prepayment characteristics.

    Fixed-rate mortgage-backed securities bear a stated "coupon rate" which represents the effective mortgage rate at the time of issuance, less certain fees to GNMA, FNMA, and FHLMC for providing the guarantee, and the issuer for assembling the pool and for passing through monthly payments of interest and prin cipal.

    Payments to holders of mortgage-backed securities consist of the monthly distributions of interest and principal less the applicable fees. The actual yield to be earned by a holder of mortgage-backed securities is calculated by dividing interest payments by the purchase price paid for the mortgage-backed securities (which may be at a premium or a discount from the face value of the certificate).

    Monthly distributions of interest, as contrasted to semiannual distributions which are common for other fixed interest investments, have the effect of compounding and thereby raising the effective annual yield earned on mortgage-backed securities. Because of the variation in the life of the pools of mortgages which back various mortgage-backed securities, and because it is impossible to anticipate the rate of interest at which future principal payments may be reinvested, the actual yield earned from a portfolio of mortgage-backed securities will differ significantly from the yield estimated by using an assumption of a certain life for each mortgage-backed security included in such a portfolio as described above.

  • Commercial Mortgage-Backed Securities ("CMBS") These are securities created from a pool of commercial mortgage loans, such as loans for hotels, restaurants, shopping centers, office buildings, and apartment buildings. Interest and principal payments from the underlying loans are passed through to the funds according to a schedule of payments. CMBS are structured similarly to mortgage-backed securities in that bot h are backed by mortgage payments. However, CMBS involve loans related to commercial property, whereas mortgage-backed securities are based on loans relating to residential property. Because commercial mortgages tend to be structured with prepayment penalties, CMBS generally carry less prepayment risk than loans backed by residential mortgages. Credit quality depends primarily on the quality of the loans themselves and on the structure of the particular deal. However, the value of these securities may change because of actual or perceived changes in the creditworthiness of the individual borrowers, their tenants, and servicing agents, or due to deterioration in the general state of commercial real estate or overall economic conditions.

  • Collateralized Mortgage Obligations ("CMOs") CMOs are bonds that are collateralized by whole loan mortgages or mortgage pass-through securities. The bonds issued in a CMO deal are divided into groups, and each group of bonds is referred to as a "tranche." Under the traditional CMO structure, the cash flows generated by the mortgages or mortgage pass-through securities in the collateral pool are used to first pay interest and then pay principal to the CMO bondholders. The bonds issued under such a CMO structure are retired sequentially as opposed to the pro-rata return of principal found in traditional pass-through obligations. Subject to the various provisions of individual CMO issues, the cash flow generated by the underlying collateral (to the extent it exceeds the amount required to pay the stated interest) is used to retire the bonds. Under the CMO structure, the repayment of principal among the different tranches is priori tized in accordance with the terms of the particular CMO issuance. The "fastest-pay" tranche of bonds, as specified in

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  • the prospectus for the issuance, would initially receive all principal payments. When that tranche of bonds is retired, the next tranche, or tranches, in the sequence, as specified in the prospectus, receive all of the principal payments until they are retired. The sequential retirement of bond groups continues until the last tranche, or group of bonds, is retired. Accordingly, the CMO structure allows the issuer to use cash flows of long maturity, monthly pay collateral to formulate securities with short, intermediate, and long final maturities and expected average lives.

    • In recent years, new types of CMO tranches have evolved. These include floating-rate CMOs, planned amortization classes, accrual bonds, and CMO residuals. These newer structures affect the amount and timing of principal and interest received by each tranche from the underlying collateral. Under certain of these new structures, given classes of CMOs have priority over others with respect to the receipt of prepayments on the mortgages. Theref ore, depending on the type of CMOs in which the funds invest, the investment may be subject to a greater or lesser risk of prepayment than other types of mortgage-related securities.

    The primary risk of any mortgage security is the uncertainty of the timing of cash flows. For CMOs, the primary risk results from the rate of prepayments on the underlying mortgages serving as collateral and from the structure of the deal (priority of the individual tranches). An increase or decrease in prepayment rates (resulting from a decrease or increas e in mortgage interest rates) will affect the yield, average life, and price of CMOs. The prices of certain CMOs, depending on their structure and the rate of prepayments, can be volatile. Some CMOs may also not be as liquid as other securities.

  • U.S. Government Agency Multi-Class Pass-Through Securities Unlike CMOs, U.S. Government Agency Multi-Class Pass-Through Securities, which include FNMA Guaranteed Real Estate Mortgage Investment Conduit Pass-Through Certificates and FHLMC Multi-Class Mortgage Participation Certificates, are ownership interests in a pool of mortgage assets. Unless the context indicates otherwise, all references herein to CMOs include multi-class pass-through securities.

  • Multi-Class Residential Mortgage Securities Such securities represent interests in pools of mortgage loans to residential home buyers made by commercial banks, savings and loan associations, or other financial ins titutions. Unlike GNMA, FNMA, and FHLMC securities, the payment of principal and interest on Multi-Class Residential Mortgage Securities is not guaranteed by the U.S. government or any of its agencies. Accordingly, yields on Multi-Class Residential Mortgage Securities have been historically higher than the yields on U.S. government mortgage securities. However, the risk of loss due to default on such instruments is higher since they are not guaranteed by the U.S. government or its agencies. Additionally, pools of such securities may be divided into senior or subordinated segments. Although subordinated mortgage securities may have a higher yield than senior mortgage securities, the risk of loss of principal is greater because losses on the underlying mortgage loans must be borne by persons holding subordinated securities before those holding senior mortgage securities.

  • Privately Issued Mortgage-Backed Certificates These are pass-through certificates issued by nongovernmental issuers. Pools of conventional residential or commercial mortgage loans created by such issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government guarantees of payment. Timely payment of interest and principal of these pools is, however, generally supported by various forms of insurance or guarantees, including individual loan, title, pool, and hazard insurance. The insurance and guarantees are issued by government entities, private insurance, or the mortgage poolers. Such insurance and guarantees and the creditworthiness of the issuers thereof will be considered in determining whether a mortgage-relat ed security meets the funds` quality standards. The funds may buy mortgage-related securities without insurance or guarantees if through an examination of the loan experience and practices of the poolers, the investment manager determines that the securities meet the funds` quality standards.

  • Stripped Mortgage-Backed Securities These instruments are a type of potentially high-risk derivative. They represent interests in a pool of mortgages, the cash f low of which has been separated into its interest and principal components. Interest only securities ("IOs") receive the interest portion of the cash flow while principal only securities ("POs") receive the principal portion. IOs and POs are usually structured as tranches of a CMO. Stripped Mortgage-Backed Securities may be issued by U.S. government agencies or by private issuers similar to those described above with respect to CMOs and privately issued mortgage-backed

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  • certificates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. The value of the PO, as with other mortgage-backed securities described herein, and other debt instruments, will tend to move in the opposite direction compared to interest rates. Under the Code, POs may generate taxable income from the current accrual of original issue discount, without a corresponding distribution of cash to the funds.

    • The cash flows and yields on IO and PO classes are extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets. In the case of IOs, prepayments affect the amount of cash flows provided to the investor. In contrast, prepayments on the mortgage pool affect the timing of cash flows received by investors in POs. For example, a rapid or slow rate of principal payments may have a material adverse effect on the prices of IOs or POs, respectively. If the underlying mortgage assets experience greater than anticipated prepayments of principal, investors may fail to fully recoup their initial investment in an IO class of a stripped mortgage-backed security, even if the IO class is rated AAA or Aaa or is derived from a full faith and credit obligation. Conversely, if the underlying mortgage assets experience slower than anticipated prepayments of principal, the price on a PO class will be affected more severely than would be the case with a traditional mortgage-backed security.

    The staff of the SEC has advised the funds that it believes the funds should treat IOs and POs, other than government-issued IOs or POs backed by fixed-rate mortgages, as illiquid securities and, accordingly, limit their investments in such securities, together with all other illiquid securities, to 15% of the funds` net assets. Under the staff`s position, the determination of whether a particular government-issued IO o r PO backed by fixed-rate mortgages is liquid may be made on a case by case basis under guidelines and standards established by the funds` Boards. The funds` Boards have delegated to T. Rowe Price the authority to determine the liquidity of these investments based on the following guidelines: the type of issuer; type of collateral, including age and prepayment characteristics; rate of interest on coupon relative to current market rates and the effect of the rate on the potential for prepayments; complexity of the issue`s structure, including the number of tranches; and size of the issue and the number of dealers who make a market in the IO or PO.

  • Adjustable Rate Mortgage Securities ("ARMs") ARMs, like fixed-rate mortgages, have a specified maturity date, and the principal amount of t he mortgage is repaid over the life of the mortgage. Unlike fixed-rate mortgages, the interest rate on ARMs is adjusted at regular intervals based on a specified, published interest rate "index" such as a Treasury rate index. The new rate is determined by adding a specific interest amount, the "margin," to the interest rate of the index. Investment in ARMs allows the funds to participate in changing interest rate levels through regular adjustments in the coupons of the underlying mortgages, resulting in more variable current income and lower price volatility than longer-term fixed-rate mortgage securities. ARMs are a less effective means of locking in long-term rates than fixed-rate mortgages since the income from adjustable rate mortgages will increase during periods of rising interest rates and decline during periods of falling rates.

  • Other Mortgage-Related Securities Gov ernmental, government-related, or private entities may create mortgage loan pools offering pass-through investments in addition to those described above. The mortgages underlying these securities may be alternative mortgage instruments, that is, mortgage instruments whose principal or interest payments may vary or whose terms to maturity may differ from customary long-term fixed-rate mortgages. As new types of mortgage-related securities are developed and offered to investors, the investment manager will, consistent with the funds` objectives, policies, and quality standards, consider making investments in such new types of securities.

    • Asset-Backed Securities

    Background  The asset-backed securities ("ABS") market has been one of the fastest growing sectors of the U.S. fixed-income market since its inception in late 1985. Although initial ABS transactions were backed by auto loans and credit card receivables, today`s market has evolved to include a variety of asset types including home equity loans, student loans, equipment leases, stranded utility costs, and collateralized bond/loan obligations. For investors, securitization typically provides an opportunity to invest in high-quality securities with higher credit ratings and less downgrade/event risk than corporate bonds. Unlike mortgages, prepayments on ABS collateral are less sensitive to changes in interest rates. They can also be structured into classes that meet the market`s demand for various maturities and credit quality.

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    Structure  Asset-backed securities are bonds that represent an ownership interest in a pool of receivables sold by originators into a special purpose vehicle ("SPV"). The collateral types can vary, so long as they are secured by homogeneous assets with relatively predictable cash flows. Assets that are transferred thro ugh a sale to a SPV are legally separated from those of the seller/servicer, which insulates investors from bankruptcy or other event risk associated with the seller/servicer of those assets. Most senior tranches of ABS are structured to a triple-A rated level through credit enhancement; however, ABS credit ratings range from AAA to non-investment-grade. Many ABS transactions are structured to include payout events/performance triggers which provide added protection against deteriorating credit quality.

    ABS structures are generally categorized by two distinct types of collateral. Amortizing assets (such as home equity loans, auto loans, and equipment leases) typically pass through principal and interest payments directly to investors, while revolving assets (such as credit card receivables, home equity lines of credit, and dealer floor-plan loans) typically reinvest principal and interest payments in new collateral for a specified period of time. The majority of amortizing transactions are structured as straight sequential-pay transactions. In these structures, all principal amortization and prepayments are directed to the shortest maturity class until it is retired, then to the next shortest class and so on. The majority of revolving assets are structured as bullets, whereby investors receive periodic interest payments and only one final payment of principal at maturity.

    Underlying Assets  The asset-backed securities that may be purchased include securities backed by pools of mortgage-related receivables known as home equity loans, or of consumer receivables such as automobile loans or credit card loans. Other types of ABS may also be purchased. The credit quality of most asset-backed securities depends primarily on the credit quality of the assets underlying such securities, how well the entity issuing the securities is insulated from the credit risk of the originator or any other affiliated entities, and the amount and quality of any credit support provided to the securities. The rate of principal payment on asset-backed securities generally depends on the rate of principal payments received on the underlying assets, which in turn may be affected by a variety of economic and other factors. As a result, the yield and return on any asset-backed security is difficult to predict with precision and actual return or yield to maturity may be more or less than the anticipated return or yield to maturity.

    Methods of Allocati ng Cash Flows  While some asset-backed securities are issued with only one class of security, many asset-backed securities are issued in more than one class, each with different payment terms. Multiple class asset-backed securities are issued for two main reasons. First, multiple classes may be used as a method of providing credit support. This is accomplished typically through creation of one or more classes whose right to payments on the asset-backed security is made subordinate to the ri ght to such payments of the remaining class or classes. Second, multiple classes may permit the issuance of securities with payment terms, interest rates, or other characteristics differing both from those of each other and from those of the underlying assets. Asset-backed securities in which the payment streams on the underlying assets are allocated in a manner different than those described above may be issued in the future. The funds may invest in such asset-backed securities if the investment is otherwise consistent with the fund`s investment objectives, policies, and restrictions.

    Types of Credit Support  Asset-backed securities are typically backed by a pool of assets representing the obligations of a diversified pool of numerous obligors. To lessen the effect of failures by obligors on the ability of underlying assets to make payments, such securities may contain elements of credit support. Such credit support falls into two classes: liquidity protection and protection against ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that scheduled payments on the underlying pool are made in a timely fashion. Protection against ultimate default ensures ultimate payment of the obligations on at least a portion of the assets in the pool. Such protection may be provided through guarantees, insurance policies, or letters of credit obtained from third parties, "external credit enhancement," through various means of structuring the transaction, "internal credit enhancement," or through a combination of such approaches. Examples of asset-backed securities with credit support arising out of the structure of the transaction include:

  • Excess Spread  Typically, the first layer of protection against losses, equal to the cash flow from the underlying receivables remaining after deducting the sum of the investor coupon, servicing fees, and losses.

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  • Subordination  Interest and principal that would have otherwise been distributed to a subordinate class is used to support the more senior classes. This feature is intended to enhance the likelihood that the holder of the senior class certificate will receive regular payments of interest and principal. Subordinate classes have a greater risk of loss than senior classes.

  • Reserve Funds  Cash that is deposited and/or captured in a designated account that may be used to cover any shortfalls in principal, interest, or servicing fees.

  • Overcollateralization  A form of credit enhancement whereby the principal amount of collateral used to secure a given transaction exceeds the principal of the securities issued. Overcollateralization can be created at the time of issuance or may build over time.

  • Surety Bonds  Typically consist of third- party guarantees to irrevocably and unconditionally make timely payments of interest and ultimate repayment of principal in the event there are insufficient cash flows from the underlying collateral.

    • The degree of credit support provided on each issue is based generally on historical information respecting the level of credit risk associated with such payments. Depending upon the type of assets securitized, historical information on credit risk and prepayment rates may be limited or even unavailable. Delinquency or loss in excess of that anticipated could adversely affect the return on an investment in an asset-backed security. There is no guarantee that the amount of any type of credit enhancement available will be sufficient to protect against future losses on the underlying collateral.

    Some of the specific types of ABS that the funds may invest in include the following:

  • < font style="font-size:9.5pt;" face="MetaPlusLF-MediumRoman" color="Black">Home Equity Loans  These ABS typically are backed by pools of mortgage loans made to subprime borrowers or borrowers with blemished credit histories. The underwriting standards for these loans are more flexible than the standards generally used by banks for borrowers with non-blemished credit histories with regard to the borrower`s credit standing and repayment ability. Borrowers who qualify generally have impaired credit histories, which may include a record of major derogatory credit items such as outstanding judgments or prior bankruptcies. In addition, they may not have the documentation required to qualify for a standard mortgage loan.

    • As a result, the mortgage loans in the mortgage pool are likely to experience rates of delinquency, foreclosure, and bankruptcy that are higher, and that may be substantially higher, than those experienced by mortgage loans underwritten in a more traditional manner. Furthermore, changes in the values of the mortgaged properties, as well as changes in interest rates, may have a greater effect on the delinquency, foreclosure, bankruptcy, and loss experience of the mortgage loans in the mortgage pool than on mortgage loans originated in a more traditional manner.

    With respect to first lien mortgage loans, the underwriting standards do not prohibit a mortgagor from obtaining, at the time of origination of the originator`s first lien mortgage loan, additional financing which is subordinate to that first lien mortgage loan, which subordinate financing would reduce the equity the mortgagor would otherwise appear to have in the related mortgaged property as indicated in the loan-to-value ratio.

    Risk regarding mortgage rates

    The pass-through rates on the adjustable-rate certificates may adjust monthly and are generally based on one-month LIBOR. The mortgage rates on the mortgage loans are either fixed or adjusted semiannually based on six-month LIBOR, which is referred to as a mortgage index. Because the mortgage index may respond to various economic and market factors different than those affecting one-month LIBOR, there is not necessarily a correlation in the movement between the interest rates on those mortgage loans and the pass-through rates of the adjustable rate certificates. As a result, the interest payable on the related interest-bearing certificates may be reduced because of the imposition of a pass-through rate cap called the "net rate cap."

    Yield and reinvestment could be adversely affected by unpredictability of prepayments

    No one can accurately predict the level of prepayments that an asset-backed mortgage pool may experience. Factors which influence prepayment behavior include general economic conditions, the level of prevailing interest rates, the availability of alternative financing, the applicability of prepayment charges, and ho meowner

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    mobility. Reinvestment risk results from a faster or slower rate of principal payments than expected. A rising interest rate environment and the resulting slowing of prepayments could result in greater volatility of these securities. A falling interest rate environment and the resulting increase in prepayments could require reinvestment in lower yielding securities.

    Credit Card-Backed Securities  These ABS are backed by revolving pools of credit card receivables. Due to the revolving nature of these assets, the credit quality could change over time. Unlike most other asset-backed securities, credit card receivables are unsecured obligations of the cardholder and payments by cardholders are the primary source of payment on these securities. The revolving nature of these card accounts generally provides for monthly payments to the trust. In order to issue securities with longer dated maturities, most Credit Card-Backed Securities are issued with an initial "revolving" period during which collections are reinvested in new receivables. The revolving period may be shortened upon the occurrence of specified events which may signal a potential deterioration in the quality of the assets backing the security.

    Automobile Loans  These ABS are backed by receivables from motor vehicle installment sales contracts or installment loans secured by motor vehicles. These securities are primarily discrete pools of assets which pay down over the life of the ABS. The securities are not obligations of the seller of the vehicle, or servicer of the loans. The primary source of funds for payments on the securities comes from payment on the underlying trust receivables as well as from credit support.

    Term Asset-Backed Securities Loan Facility

    Certain funds that may purchase ABS and CMBS may also participate in the Term Asset-Backed Securities Loan Facility ("TALF"), provided by the Federal Reserve Bank of New York ("FRBNY"). The TALF provides eligible borrowers, such as the funds, with non-recourse funding secured by eligible ABS and CMBS owned by the bor rower or acquired with the proceeds from the loans. "TALF-eligible securities" include certain ABS and CMBS as determined by the FRBNY, and may change from time to time. TALF loans are considered non-recourse because, if the fund does not repay the principal and interest on the loans, the FRBNY may generally enforce its rights only against the pledged collateral and not against other assets of the fund.

    Under the TALF, a fund is able to borrow from the FRBNY to purchase TALF-eligible securities by pledging such securities as collateral for the loan, paying an up-front haircut amount that usually ranges from 5-15% of the value of the TALF-eligible securities that serve as collateral, and paying an administrative fee to the FRBNY. The terms of TALF loans are generally three or five years depending upon the type of collateral pledged by the fund.

    The FRBNY receives interest and principal payments on the collateral, which are applied to repayment of the TALF loan, and any amounts remaining are paid to the fund. The fund remains responsible for any principal loss on a TALF-eligible security purchased by the fund. If, however, the fund determines that the principal loss is in an amount equal to or greater than the fund`s haircut for the related TALF loan, the fund may choose to exercise its rights under the TALF to put such TALF-eligible security back to the FRBNY in complete satisfaction of the fund`s obligations under the related TALF loan. Thus, a fund should not be at risk, except in very limited circumstances, for losses in excess of its haircut because of the non-recourse nature of the TALF loan and the fund`s ability to put back the collateral to cancel the loan.

    Borrowing money from the FRBNY under the TALF involves leverage because the fund will reinvest the proceeds from the TALF loan in other assets. Borrowings may amplify the effect on the Fund`s net asset value of any increase or decrease in the value of the security purchased with the borrowings. However, since the TALF loans are non-recourse and the fund may surrender collateral pledged at any time in full satisfaction of its obligation, this may minimize some of the risks of leverage.

    < div style="margin-left:0.33333";margin-right:0.0";text-indent:0.33333";width:100%">While not anticipated, if the periodic interest and principal payments due on a TALF loan exceed the amounts received on the pledged TALF-eligible security, the fund may be required to pay such additional amounts from its other portfolio assets which could cause the fund to sell other holdings at times when it might not otherwise choose to do so. The fund may, however, surrender the collateral and terminate the TALF loan.

    Funds may gain exposure to the TALF either by borrowing directly from the FRBNY or by investing in pooled vehicles that participate directly in TALF. Such pooled vehicles may be managed by T. Rowe Price or its

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    affiliates. There will be no additional management fees charged to the investing funds by a pooled vehicle focusing its investments in TALF if it is managed by T. Rowe Price or its affiliates.

    Inflation-Linked Securities

    Inflation-linked securities are income-generating instruments whose interest and principal payments are adjusted for inflation—a sustained increase in prices that erodes the purchasing power of money. TIPS, or 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, states, 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 (CPI). 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. Municipal inflation bonds generally have a fixed principal amount and the inflation component is reflected in the nominal coupon.

    I nflation-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 the rate of inflation is 2%, the real interest rate is 3%.) If inflation is negative, the principal and income of an inflation-protected bond will decline and could result in losses for the fund.

    Inflation adjustments or TIPS that exceed deflation adjustments for the year will be distributed by a fund as a short-term capital gain, resulting in ordinary income to shareholders. Net deflation adjustments for a year could result in all or a portion of dividends paid earlier in the year by a fund being treated as a return of capital.

    Collateralized Bond or Loan Obligations

    Collateralized Bond Obligations ("CBOs") are bonds collateralized by corporate bonds, mortgages, or asset-backed securities and Collateralized Loan Obligations ("CLOs") are bonds collateralized by bank loans. CBOs and CLOs are structured into tranches, and payments are allocated such that each tranche has a predictable cash flow stream and average life. CBOs are fairly recent entrants to the fixed-income market. Most CBOs issued to date have been collateralized by high-yield bonds or loans, with heavy credit enhancement.

    Loan Participations and Assignments

    Loan participations and assignments (collectively, "participations") will typically be participating interests in loans made by a syndicate of banks, represented by an agent bank which has negotiated and structured the loan, to corporate borrowers to finance internal growth, mergers, acquisitions, stock repurchases, leveraged buyouts, and other corporate activities. Such loans may also have been made to governmental borrowers, especially governments of developing countries which is referred to as Loans to Developing Countries debt ("LDC debt"). LDC debt will involve the risk that the governmental entity responsible for the repayment of the debt may be unable or unwilling to do so when due. The loans underlying such participations may be secured or unsecured, and the funds may invest in loans collateralized by mortgages on real property or which have no collateral. The loan participations themselves may extend for the entire term of the loan or may extend only for short "strips" that correspond to a quarterly or monthly floating-rate interest period on the underlying loan. Thus, a term or revolving credit that extends for several years may be subdivided into shorter periods.

    The loan participations in which the f unds will invest will also vary in legal structure. Occasionally, lenders assign to another institution both the lender`s rights and obligations under a credit agreement. Since this type of assignment relieves the original lender of its obligations, it is called a novation. More typically, a lender assigns only its right to receive payments of principal and interest under a promissory note, credit agreement, or similar document. A true assignment shifts to the assignee the direct debtor-creditor relationship with the underlying borrower. Alternatively, a lender may assign only part of its rights to receive payments pursuant to the underlying instrument or loan agreement. Such partial assignments, which are more accurately characterized as "participating interests," do not shift the debtor-creditor relationship to the assignee, who

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    must rely on the original lending institution to collect sums due and to otherwise enforce its rights against the agent bank which administers the loan or against the underlying borrower.

    There may not be a recognizable, liquid public market for loan participations. To the extent this is the case, the funds would consider the loan participation as illiquid and subject to the funds` restriction on investing no more than 15% of their net assets in illiquid securities.

    Where required by applicable SEC positions, the funds will treat both the corporate borrower and the bank selling the participation interest as an issuer for purposes of its fundamental investment restriction on diversification.

    Various service fees received by the funds from loan participations may be treated as non-interest income depending on the nature of the fee (commitment, takedown, commission, servi ce, or loan origination). To the extent the service fees are not interest income, they will not qualify as income under Section 851(b) of the Code. Thus the sum of such fees plus any other nonqualifying income earned by the funds cannot exceed 10% of total income.

    Zero-Coupon and Pay-in-Kind Bonds

    A zero-coupon security has no cash coupon payments. Instead, the issuer sells the security at a substantial discount from its maturity value. The interest received by the investor from holding this security to maturity is the difference between the maturity value and the purchase price. The advantage to the investor is that reinvestment risk of the income received during the life of the bond is eliminated. However, zero-coupon bonds, like other bonds, retain interest rate and credit risk and usually display more price volatility than those securities that pay a cash coupon.

    Pay-in-Kind ("PIK") Instruments are securities that pay interest in either cash or additional securities, at the issuer`s option, for a specified period. PIKs, like zero-coupon bonds, are designed to give an issuer flexibility in managing cash flow. PIK bonds can be either senior or subordinated debt and trade flat (i.e., without accrued interest). The price of PIK bonds is expected to reflect the market value of the underlying debt plus an amount representing accrued interest since the last payment. PIKs are usually less volatile than zero-coupon bonds, but more volatile than cash pay securities.

    For federal income tax purposes, these types of bonds will require the recognition of gross income each year even though no cash may be paid to the funds until the maturity or call date of the bond. The funds will nonetheless be required to distribute substantially all of this gross income each year to comply with the Code, and such distributions could reduce the amount of cash available for investment by the funds.

    < div style="text-align:Center;margin-left:0.333";margin-right:0.0";text-indent:0.333";width:100%">Trade Claims

    Trade claims are non-securitized rights of payment arising from obligations other than borrowed funds. Trade claims typically arise when, in the ordinary course of business, vendors and suppliers extend credit to a company by offering payment terms. Generally, when a company files for bankruptcy protection, payments on these trade claims cease and the claims are subject to compromise along with the other debts of t he company. Trade claims typically are bought and sold at a discount reflecting the degree of uncertainty with respect to the timing and extent of recovery. In addition to the risks otherwise associated with low-quality obligations, trade claims have other risks, including the possibility that the amount of the claim may be disputed by the obligor.

    Over the last few years, a market for the trade claims of bankrupt companies has developed. Many vendors are < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">either unwilling or lack the resources to hold their claim through the extended bankruptcy process with an uncertain outcome and timing. Some vendors are also aggressive in establishing reserves against these receivables, so that the sale of the claim at a discount may not result in the recognition of a loss.

    Trade claims can represent an attractive investment opportunity because these claims typically are priced at a discount to comparable public securities. This discount is a reflection of a less liquid market, a smaller universe of potential buyers, and the risks peculiar to trade claim investing. It is not unusual for trade claims to be priced at a discount to public securities that have an equal or lower priority claim.

    As noted above, investing in trade claims does carry some unique risks which include:

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  • Establishing the Amount of the Claim Frequently, the supplier`s estimate of its receivable will differ from the customer`s estimate of its payable. Resolution of these differences can result in a reduction in the amount of the claim. This risk can be reduced by only purchasing scheduled claims (claims already listed as liabilities by the debtor) and seeking representations from the seller.

  • Defenses to Claims The debtor has a variety of defenses that can be asserted under the bankruptcy code against any claim. Trade claims are subject to these defenses, the most common of which for trade claims relates to preference payments. (Preference payments are all payments made by the debtor during the 90 days prior to the filing. These payments are presumed to have benefited the receiving creditor at the expense of the other creditors. The receiving creditor may be required to return the payment unless it can show the payments wer e received in the ordinary course of business.) While none of these defenses can result in any additional liability of the purchaser of the trade claim, they can reduce or wipe out the entire purchased claim. This risk can be reduced by seeking representations and indemnification from the seller.

  • Documentation/Indemnification Each trade claim purchased requires documentation that must be negotiated between the buyer and seller. This documentation is extremely important since it can protect the purchaser from losses such as those described above. Legal expenses in negotiating a purchase agreement can be fairly high. Additionally, it is important to note that the value of an indemnification depends on the seller`s credit.

  • Volatile Pricing Due to Illiquid Market There are only a handful of brokers for trade claims and the quoted price of these claims can be volatile. Generally, it is expected that trade claims would be considered illiquid investments.

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  • No Current Yield/Ultimate Recovery Trade claims are almost never entitled to earn interest. As a result, the return on such an investment is very sensitive to the length of the bankruptcy, which is uncertain. Although not unique to trade claims, it is worth noting that the ultimate recovery on the claim is uncertain and there is no way to calculate a conventional yield to maturity on this investment. Additionally, the exit for this investment is a plan of reorganization w hich may include the distribution of new securities. These securities may be as illiquid as the original trade claim investment.

  • Tax Issue Although the issue is not free from doubt, it is likely that trade claims would be treated as non-securities investments. As a result, any gains would be considered "nonqualifying" under the Code. The funds may have up to 10% of their gross income (including capital gains) derived from nonqualifying sources.

    • Municipal Securities

    Subject to the investment objectives and programs described in the prospectus and the additional investment restrictions described in this SAI, the funds` portfolios may consist of any combination of the various types of municipal securities described below or other types of municipal securities that may be develope d. The amount of the funds` assets invested in any particular type of municipal security can be expected to vary.

    The term "municipal securities" means obligations issued by or on behalf of states, territories, and possessions of the United States and the District of Columbia and their political subdivisions, agencies, and instrumentalities, as well as certain other persons and entities, the interest from which is generally exempt from federal income tax. In determining the tax-exempt status of a municipal security, the funds rely on the opinion of the issuer`s bond counsel at the time of the issuance of the security. However, it is possible this opinion could be overturned, and, as a result, the interest received by the funds from a municipal security assumed to be tax-exempt might not be exempt from federal income tax.

    Municipal securities are normally classified by maturity as notes, bonds, or adjustable rate securities. Municipal securities include the following:

    Municipal notes generally are used to provide short- term operating or capital needs and generally have maturities of one year or less.

  • Tax Anticipation Notes Tax anticipation notes are issued to finance working capital needs of municipalities. Generally, they are issued in anticipation of various seasonal tax revenue, such as income, property, use, and business taxes, and are payable from these specific future taxes.

  • Revenue Anticipation Notes Revenue anticipation notes are issued in expectation of receipt of revenues, such as sales taxes, toll revenues, or water and sewer charges, that are used to pay off the notes.

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  • Bond Anticipation Notes Bond anticipation notes are issued to provide interim financing until long-term financing can be arranged. In most cases, the long-term bonds then provide the money for the repayment of the notes.

  • Tax-Exempt Commercial Paper Tax-exempt commercial paper is a short-term obligation with a stated maturity of 270 days or less. It is issued by state and local governments or their agencies to finance seasonal working capital needs or as short-term financing in anticipation of longer-term financing.

    • Municipal bonds, which meet longer-term capital needs and generally have maturities of more than one year when issued, have two principal classifications: general obligation bonds and revenue bonds. Additional categories of potential purchases include lease revenue bonds and prerefunded/escrowed to maturity bonds, private activity bonds, industrial development bonds, and participation interests.

  • General Obligation Bonds Issuers of general obligation bonds i nclude states, counties, cities, towns, and special districts. The proceeds of these obligations are used to fund a wide range of public projects, including construction or improvement of schools, public buildings, highways and roads, and general projects not supported by user fees or specifically identified revenues. The basic security behind general obligation bonds is the issuer`s pledge of its full faith and credit and taxing power for the payment of principal and interest. The taxes that can be levied for the payment of debt service may be limited or unlimited as to the rate or amount of special assessments. In many cases voter approval is required before an issuer may sell this type of bond.

  • Revenue Bonds The principal security for a revenue bond is generally the net revenues derived from a particular facility or enterprise or, in some cases, the proceeds of a special charge or other pledged revenue source. Revenue bonds are issued to finance a wide variety of capital projects including: electric, gas, water, and sewer systems; highways, bridges, and tunnels; port and airport facilitie s; colleges and universities; and hospitals. Revenue bonds are sometimes used to finance various privately operated facilities provided they meet certain tests established for tax-exempt status.

    • Although the principal security behind these bonds may vary, many provide additional security in the form of a mortgage or debt service reserve fund. Some authorities provide further security in the form of the state`s ability (without obligation) to make up deficiencies in the debt service reserve fund. Revenue bonds usually do not require prior voter approval before they may be issued.

  • Lease Revenue Bonds Municipal borrowers may also finance capital improvements or purchases with tax-exempt leases. The security for a lease is generally the borrower`s pledge to make annual appropriations for lease payments. The lease payment is treated as an operating expense subject to appropriation risk and not a full faith and credit obligation of the issuer. Lease revenue bonds are generally considered less secure than a general obligation or revenue bond and often do not include a debt service reserve fund. To the extent the funds` Boards determine such securities are illiquid, they will be subject to the funds` limit on illiquid securities. There have also been certain legal challenges to the use of lease revenue bonds in various states.

    • The liquidity of such securities will be determined based on a variety of factors which may include, among others: (1)& #160;the frequency of trades and quotes for the obligation; (2) the number of dealers willing to purchase or sell the security and the number of other potential buyers; (3) the willingness of dealers to undertake to make a market in the security; (4) the nature of the marketplace trades, including the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer; and (5) the rating assigned to the obligation by an established rating agency or T. Rowe Price.

  • Prerefunded/Escrowed to Maturity Bonds Certain municipal bonds have been refunded with a later bond issue from the same issuer. The proceeds from the later issue are used to defease the original issue. In many cases the original issue cannot be redeemed or repaid until the first call date or original maturity date. In these cases, the refunding bond proceeds typically are used to buy U.S. Treasury securities that are held in an escrow account until the original call date or maturity date. The original bonds then become "prerefunded" or "escrowed to maturity" and are considered high-quality investments. While still tax-exempt, the security is the proceeds of the escrow account. To the extent permitted by the SEC and the Internal Revenue Service, a fund`s investment in such securities refunded with U.S. Treasury securities will, for purposes of diversification rules applicable to the funds, be considered an investment in U.S. Treasury securities.

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  • Private Activity Bonds Under current tax law, all municipal debt is divided broadly into two groups: governmental purpose bonds and private activity bonds. Governmental purpose bonds are issued to finance traditional public purpose projects such as public buildings and roads. Private activity bonds may be issued by a state or local government or public authority but principally benefit private users and are considered taxable unless a specific exemption is provided.

    • The tax code currently provides exemptions for certain private activity bonds such as not-for-profit hospital bonds, small-issue industrial development revenue bonds, and mortgage subsidy bonds, which may still be issued as tax-exempt bonds. Interest on tax exempt private activity bonds has generally been subject to alternative minimum tax (AMT). However, interest on all private activity bonds issued in 2009 or 2010 will be exempt from AMT. In addition, interest on private activity bonds that were issued after 2003, and refunded during 2009 or 2010, will be exempt from AMT.

  • Industrial Development Bonds Industria l development bonds are considered municipal bonds if the interest paid is exempt from federal income tax. They are issued by or on behalf of public authorities to raise money to finance various privately operated facilities for business and manufacturing, housing, sports, and pollution control. These bonds are also used to finance public facilities such as airports, mass transit systems, ports, and parking. The payment of the principal and interest on such bonds is dependent solely on the ability of the facility`s user to meet its financial obligations and the pledge, if any, of real and personal property so financed as security for such payment.

  • Build America Bonds The American Recovery and Reinvestment Act of 2009 created Build America Bonds, which allow state and local governments to issue taxable bonds in 2009 and 2010 to finance any capital expenditures for which they otherwise could issue tax-exempt governmental bonds. State and local governments receive a federal subsidy payment for a portion of their borrowing costs on these bonds equal to 35% of the total coupon interest paid to investors. The municipality can elect to either take the federal subsidy or it can pass a 35% tax credit along to bondholders. Investments in these bonds will result in taxable interest income and the funds may elect to pass through to shareholders any corresponding tax credits. The tax credits can generally be used to offset federal income taxes and the alternative minimum tax, but those tax credits are generally not refundable.

  • Participation Interests The funds may purchase from third parties participation interests in all or part of specific holdings of municipal securities. The purchase may take different forms: in the case of short-term securities, the participation may be backed by a liquidity facility that allows the interest to be sold back to the third party (such as a trust, broker, or bank) for a predetermined price of par at stated intervals. The seller may receive a fee from the funds in connection with the arrangement.

    • In the case of longer-term bonds, the funds may purchase interests in a pool of municipal bonds or a single municipal bond or lease without the right to sell the interest back to the third party.

    The funds will not purchase participation interests unless a satisfactory opinion of counsel or ruling of the Internal Revenue Service has been issued that the interest earned from the municipal securities on which the funds hold participation i nterests is exempt from federal income tax to the funds. However, there is no guarantee the IRS would treat such interest income as tax-exempt.

    When-Issued Securities

    New issues of municipal securities are often offered on a when-issued basis; that is, delivery and payment for the securities normally takes place 15 to 45 days or more after the date of the commitment to purchase. The payment obligation and th e interest rate that will be received on the securities are each fixed at the time the buyer enters into the commitment. The funds will only make a commitment to purchase such securities with the intention of actually acquiring the securities. However, the funds may sell these securities before the settlement date if it is deemed advisable as a matter of investment strategy. The funds will maintain cash, high-grade marketable debt securities, or other suitable cover with its custodian bank equal in value to commitments for when-issued securities. Such securities either wil l mature or, if necessary, be sold on or before the settlement date. Securities purchased on a when-issued basis and the securities held in the funds` portfolios are subject to changes in market value based upon the public perception of the creditworthiness of the issuer and changes in the level of interest rates (which will generally result in similar changes in value, i.e., both experiencing appreciation when interest rates decline and depreciation when interest rates rise). Therefore, to the extent the funds

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    remain fully invested or almost fully invested at the same time that they have purchased securities on a when-issued basis, there will be greater fluctuations in their net asset value than if they solely set aside cash to pay for when-issued securities. In the case of the money funds, this could increase the possibility that the market value of the funds` assets could vary from $1.00 per share. In addition, there will be a greater potential for the realization of capital gains, whic h are not exempt from federal income tax. When the time comes to pay for when-issued securities, the funds will meet their obligations from then-available cash flow, sale of securities, or, although it would not normally expect to do so, from sale of the when-issued securities themselves (which may have a value greater or less than the payment obligation). The policies described in this paragraph are not fundamental and may be changed by the funds upon notice to shareholders.

    Forwards

    In some cases, the funds may purchase bonds on a when-issued basis with longer-than-standard settlement dates, in some cases exceeding one to two years. In such cases, the funds must execute a receipt evidencing the obligation to purchase the bond on the specified issue date, and must segregate cash internally to meet that forward commitment. Municipal "forwards" typically carry a substantial yield premium to compensate the buyer for the risks associated with a long when-issued period, including : shifts in market interest rates that could materially impact the principal value of the bond, deterioration in the credit quality of the issuer, loss of alternative investment options during the when-issued period, changes in tax law or issuer actions that would affect the exempt interest status of the bonds and prevent delivery, failure of the issuer to complete various steps required to issue the bonds, and limited liquidity for the buyer to sell the escrow receipts during the when-issued period.

    Residual Interest Bonds

    Residual interest bonds are a type of high-risk derivative. The funds may purchase municipal bond issues that are structured as two-part, residual interest bond and variable rate security offerings. The issuer is obligated only to pay a fixed amount of tax-free income that is to be divided among the holders of the two securities. The interest rate for the holders of the short-term, variable rate securities will typically be determined by an index or auction process held approximately every seven to 35 days while the long-term bondholders will receive all interest paid by the issuer minus the amount given to the variable rate security holders and a nominal auction fee. Therefore, the coupon of the residual interest bonds, and thus the income received, will move inversely with respect to short-term, 7- to 35-day tax-exempt interest rates. There is no assurance that the auction will be successful and that the variable rate security will provide short-term liquidity. The issuer is not obligated to provide such liquidity. In general, these securities offer a significant yield advantage over standard municipal securities, due to the uncertainty of the shape of the yield curve (i.e., short-term versus long-term rates) and consequent income flows, but tend to be more volatile than other municipal securities of similar maturity and credit quality.

    Unlike many adjustable rate securities, residual interest bonds are not necessarily expected to trade at par and in fact present significant market risks. In certain market environments, residual interest bonds may carry substantial premiums, trade at deep discounts, or have limited liquidity. Residual interest bonds entail varying degrees of leverage, which could result in greater volatility and losses greater than investing directly in the underlying municipal bond.

    The funds may invest in other types of derivative instruments as they become available.

    For the purpose of the funds` investment restrictions, the identification of the "issuer" of municipal securities which are not general obligation bonds is made by T. Rowe Price, on the basis of the characteristics of the obligation as described above, the most significant of which is the source of funds for the payment of principal and interest on such securities.

    There are, of course, other types of securities that are or may become available that are similar to the foregoing, and the funds may invest in these securities.

    Real Estate Investment Trusts ("REITs")

    Investments in REITs may experience many of the same risks involved with investing in real estate directly. These risks include: declines in real estate values, risks related to local or general economic conditions, particularly lack of demand, overbuilding and increased competition, increases in property taxes and

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    operating expenses, changes in zoning laws, heavy cash flow dependency, possible lack of availability of mortgage funds, obsolescence, losses due to natural disasters, condemnation of properties, regulatory limitations on rents and fluctuations in rental income, variations in market rental rates, and possible environmental liabilities. REITs may own real estate properties (Equity REITs) and be subject to these risks directly, or may make or purchase mortgages (Mortgage REITs) and be subject to these risks indirectly through underlying construction, development, and long-term mortgage loans that may default or have payment problems.

    Equity REITs can be affected by rising interest rates that may cause investors to demand a high annual yield from future distributions which, in turn, could decrease the market prices for the REITs. In addition, rising interest rates also increase the costs of obtaining financing for real estate projects. Since many real estate projects are dependent upon receiving financing, this could cause the value of the Equity REITs in which the funds invest to decline.

    Mortgage REITs may hold mortgages that the mortgagors elect to prepay during periods of declining interest rates, which may diminish the yield on such REITs. In addition, borrowers may not be able to repay mortgages when due, which could have a negative effect on the funds.

    Some REITs have relatively small market capitalizations which could increase thei r volatility. REITs tend to be dependent upon specialized management skills and have limited diversification so they are subject to risks inherent in operating and financing a limited number of properties. In addition, when the funds invest in REITs, a shareholder will bear his proportionate share of fund expenses and indirectly bear similar expenses of the REITs. REITs depend generally on their ability to generate cash flow to make distributions to shareholders. Certain REITS may be able to pay up to 90% of their dividends in the form of stock instead of cash. Even if a f und receives all or part of a REIT distribution in stock, the fund will still be deemed to have received 100% of the distribution in cash and the entire distribution will be part of the fund`s taxable income. In addition, both Equity and Mortgage REITs are subject to the risks of failing to qualify for tax-free status of income under the Code or failing to maintain their exemptions from the 1940 Act.

    Adjustable Rate Securities

    Generally, the maturity of a security is deemed to be the period remaining until the date (noted on the face of the instrument) on which the principal amount must be paid or, in the case of an instrument called for redemption, the date on which the redemption payment must be made. However, certain securities may be issued with demand features or adjustable interest rates that are reset periodically by predet ermined formulas or indexes in order to minimize movements in the principal value of the investment in accordance with Rule 2a-7 under the 1940 Act. Such securities may have long-term maturities, but may be treated as a short-term investment under certain conditions. Generally, as interest rates decrease or increase, the potential for capital appreciation or depreciation on these securities is less than for fixed rate obligations. These securities may take a variety of forms, including variable rate, floating rate, and put option securities.

    Variable Rate Securities Variable rate instruments are those whose terms provide for the adjustment of their interest rates on set dates and which, upon such adjustment, can reasonably be expected to have a market value that approximates its par value. A variable rate instrument, the principal amount of which is scheduled to be paid in 397 days or less, is deemed to have a maturity equal to the period remaining until the next readjustment of the interest rate. A variable rate instrument which is subject to a demand feature entitles the purchaser to receive the principal amount of the underlying security or securities, either (i) upon notice of no more than 30 days or (ii) at specified intervals not exceeding 397 days and upon no more than 30 days` notice, is deemed to have a maturity equal to the longer of the period remaining until the next readjustment of the interest rate or the period remaining until the principal amount can be recovered through demand.

    Forward Commitment Contracts

    The price of such securities, which may be expressed in yield terms, is fixed at the time the commitment to purchase is made, but delivery and payment take place at a later date. Normally, the settlement date occurs within 90 days of the purchase for when-issueds, but may be substantially longer for forwards. During the period between purchase and settlement, no payment is made by the funds to the issuer and no interest accrues to the funds. The purchase of these securities will result in a loss if their values decline prior to the settlement date. This could occur, for example, if interest rates increase prior to settlement. The longer the

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    period between purchase and settlement, the greater the risks. At the time the funds make the commitment to purchase these securities, it will record the transaction and reflect the value of the security in determining its net asset value. The funds will cover these securities by maintaining cash, liquid, high-grade debt securities, or other suitable cover as permitted by the SEC with its custodian bank equal in value to its commitments for the securities during the time between the purchase and the settlement. Therefore, the longer this period, the longer the period during which alternative investment options are not available to the funds (to the extent of the securities used for cover). Such securities either will mature or, if necessary, be sold on or before the settlement date.

    To the extent the funds remain fully or almost fully invested (in securities with a remaining maturity of more than one year) at the same time they purchase these securities, there will be greater fluctuations in the funds` net asset v alue than if the funds did not purchase them.

    Illiquid or Restricted 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 at approximately the price at which the fund values them. The determinati on of whether a holding is considered liquid or illiquid involves a variety of factors. Certain restricted securities may be sold only in privately negotiated transactions or in a public offering with respect to which a registration statement is in effect under the 1933 Act. Where registration is required, the fund may be obligated to pay all or part of the registration expenses, and a considerable period may elapse between the time of the decision to sell and the time the fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the fund might obtain a less favorable price than that which prevailed when it decided to sell. Restricted securities will be priced at fair value as determined in accordance with procedures prescribed by the funds` Boards. If, through the appreciation of illiquid securities or the depreciation of liquid securities, the funds should be in a position where more than the allowable amount of its net assets is invested in illiquid assets, including rest ricted securities, the funds will take appropriate steps to protect liquidity.

    Notwithstanding the above, the funds may purchase securities which, while privately placed, are eligible for purchase and sale under Rule 144A under the 1933 Act. This rule permits certain qualified institutional buyers, such as the funds, to trade in privately placed securities even though such securities are not registered under the 1933 Act. The liquidity of these securities is monitored based on a variety of factors.

    All Funds (other than the Money Funds)

    Investments in Other Investment Companies

    Unaffiliated Investment Companies The funds may invest in other investment companies that are not sponsored by T. Rowe Price, which include open-end funds, closed-end funds, exchange-traded funds ("ETFs"), unit investment trusts, and other investment companies that have elected to be treated as business development companies under the 1940 Act.

    The funds may purchase shares 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 funds 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 a fund`s objective and investment program.

    Investing in another investment company involves risks similar to those of investing directly in the investment company`s portfolio securities, including the risk that the values of the portfolio securit ies may fluctuate due to changes in the financial condition of the securities` issuers and other market factors. 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 trade on a stock exchange or in the over-the-counter market and ETFs trade on a securities exchange, their shares may trade at a substantial premium or discount to the actual net asset value of its portfolio securities and their potential lack of liquidity could res ult in greater volatility.

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    If a fund invests in a non-T. Rowe Price investment company, the fund must pay its proportionate share of that investment company`s fees and expenses, which are in addition to the management fee and other operational expenses incurred by the fund. The expenses associated with certain investment companies, such as business development companies, may be significant. The fund could also incur a sales charge or redemption fee in connection with purchasing or redeeming an investment company security.

    The fund`s investments in non-T. Rowe Price registered investment companies are subject to the limits that apply to such investments under the 1940 Act. The 1940 Act generally provides that a fund may invest up to 10% of its total assets in securities of other investment companies. In addition, a fund may not own more than 3% of the total outstanding voting stock of any investment company and not more than 5% of the fund`s total assets may be in invested in a particular investment company.

    Affiliated Investment Companies The funds may also invest in certain other T. Rowe Price mutual funds as a means of gaining efficient and cost-effective exposure to specific asset classes, provided the investment is consistent with an investing 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 invest include high yield bonds, floating rate loans, international bonds, emerging market bonds, and emerging market stocks. To ensure that the fund does not incur duplicate management fees as a result of its investment in another T. Rowe Price fund, the management fee paid by the fund will be reduced in an amount sufficient to offset the fees paid by the underlying fund related to the investment.

    Money Funds

    Determination of Maturity of Money Market Securities

    The funds may only purchase securities which at the time of investment have remaining maturities of 397 calendar days or less. The other funds may also purchase money market securities. In determining the maturity of money market securities, funds will follow the provisions of Rule 2a-7 under the 1940 Act.

    Prime Reserve, Summit Cash Reserves, and TRP Reserve Investment Funds

    First Tier Money Market Securities Defined

    At least 97% of the funds` total assets will be maintained in first tier money market securities. First tier money market securities are those which are described as First Tier Securities under Rule 2a-7 of the 1940 Act. These include any security with a remaining maturity of 397 days or less that is rated (or that has been issued by an issuer that is rated with respect to a class of short-term debt obligations, or any security within that class that is comparable in priority and security with the security) by any two nationally recognized statistical rating organizations (or if only one NRSRO has issued a rating, that NRSRO) in the highest rating category for short-term debt obligations (within which there may be sub-categories). First Tier Securities also include unrated securities comparable in quality to rat ed securities, as determined by T. Rowe Price pursuant to written guidelines established in accordance with Rule 2a-7 under the 1940 Act under the supervision of the funds` Boards.

    Derivatives

    The funds may use derivatives whose characteristics are consistent with the funds` investment program.

    A derivative is a financial instrument that has a value based on — or "derived from" — the value of other assets, reference rates, or indexes. Derivatives generally take the form of contracts under which the parties agree to payments between them based upon the performance of a wide variety of underlying references, such as stocks, bonds, commodities, interest rates, currency exchange rates, and various domestic and foreign indexes. The main types of derivatives are futures, options, forward contracts, swaps, and hybrid instruments.

    Like most other fund investments, derivatives are subject to the ris k that the market value of the underlying asset will change in a way detrimental to the funds` interest. However, the risks associated with the use of

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    derivatives are different from, and potentially much greater than, the risks associated with investing directly in the instruments on which the derivatives are based. Because some derivatives involve leverage, returns can be magnified, either positively or negatively, and adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the derivative itself.

    Some derivatives are traded on exchanges, while other derivatives are privately negotiated and entered into in the over-the-counter ("OTC") market. Exchange-traded derivatives are traded via specialized derivatives exchanges or other securities exchanges. The exchange acts as an intermediary to the transactions and the terms for each type of contr act are generally standardized. OTC derivatives are traded between two parties directly without going through a regulated exchange. The terms of the contract are subject to negotiation by the parties to the contract.

    OTC derivatives are subject to counterparty risk, whereas the exposure to default for exchange-traded derivatives is assumed by the exchange`s clearinghouse. Counterparty risk is the risk that a party to an OTC derivatives contract may fail to perform on its obligations. A loss may be sustained as a result of the insolvency or bankruptcy of the counterparty, or the failure of the counterparty to make required payments or comply with the terms of the contract. In the event of insolvency of the counterparty, the funds may be unable to liquidate a derivatives position. Because the purchase and sale of an OTC derivative does not have the guarantee of a central clearing organization, the creditworthiness of the counterparty is an additional risk factor that the funds need to consider and monitor.

    Futures Contracts

    Futures contracts are a type of potentially high-risk derivative.

    Transactions in Futures

    The funds may enter into futures contracts including stock index, interest rate, and currency futures ("futures" or "futures contracts").

    Interest rate or currency futures contracts may be used as a hedge against changes in prevailing levels of interest rate s or currency exchange rates in order to establish more definitely the effective return on securities or currencies held or intended to be acquired by the funds. Interest rate or currency futures can be sold as an offset against the effect of expected increases in interest rates or currency exchange rates and purchased as an offset against the effect of expected declines in interest rates or currency exchange rates.

    Futures can also be used as an efficient means of regulating the funds` exposure to the market.

    Index Funds may only enter into futures contracts that are appropriate for their investment programs to provide an efficient means of maintaining liquidity while being invested in the market, to facilitate trading, or to reduce transaction costs. Otherwise, the nature of such futures and the regulatory limitations and risks to which they are subject are the same as those described below.

    Stock index futures contracts may be used to provide a hedge for a portion of the funds` portfolios, as a cash management tool, or as an efficient way to implement either an increase or decrease in portfolio market exposure in response to changing market conditions. The funds may purchase or sell futures contracts with respect to any stock index. Nevertheless, to hedge the funds` portfolios successfully, the funds must sell futures contracts with respect to indices or subindices whose movements will have a significant correlation with movements in the prices of the funds` portfolio securities.

    The funds will enter into futures contracts that are traded on national (or foreign) futures exchanges and are standardized as to maturity date and underlying financial instrument. A public market exists in futures contracts covering various taxable fixed-income securities as well as municipal bonds. Futures exchanges and trading in the United States are regulated under the Commodity Exchange Act by the Commodity Futures Trading Commission ("CFTC"). Although techniques other than the sale and purchase of futures contracts could be used for the above-referenced purposes, futures contracts offer an effective and relatively low cost means of implementing the funds` objectives in these areas.

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    Limitations on Futures

    If the funds purchase or sell futures contracts or related options which do not qualify as bona fide hedging under applicable CFTC rules, the aggregate initial margin deposits and premium required to establish those positions cannot exceed 5% of the liquidation value of the funds after taking into account unrealized profits a nd unrealized losses on any such contracts they have entered into, provided, however, that in the case of an option that is in-the-money at the time of purchase, the in-the-money amount may be excluded in calculating the 5% limitation. For purposes of this policy, options on futures contracts and foreign currency options traded on a commodities exchange will be considered "related options." This policy may be modified by the Boards without a shareholder vote and does not limit the percentage of the funds` assets at risk to 5%.

    In instan ces involving the purchase of futures contracts or the writing of call or put options thereon by the funds, an amount of cash, liquid assets, or other suitable cover as permitted by the SEC, equal to the market value of the futures contracts and options thereon (less any related margin deposits), will be identified by the funds to cover the position, or alternative cover (such as owning an offsetting position) will be employed. Assets used as cover or held in an identified account cannot be sold while the position in the corresponding option or future is open, unless they are replaced with similar assets. As a result, the commitment of a large < /font>portion of the funds` assets to cover or identified accounts could impede portfolio management or the funds` ability to meet redemption requests or other current obligations.

    If the CFTC or other regulatory authorities adopt different (including less stringent) or additional restrictions, the funds would comply with such new restrictions.

    For funds that utilize futures contracts, a notice has been filed on behalf of the funds with the National Futures Association claiming an exclusion from the definition of the term "commodity pool operator" ("CPO") under the Commodity Exchange Act, as amended, and the rules of the CFTC promulgated thereunder. Accordingly, such funds are not subject to registration or regulation as CPOs.

    Trading in Futures Contracts

    A futures contract provides for the future sale by one party and purchase by another party of a specified amount of a specific financial instrument (e.g., units of a stock index) for a specified price, date, time, and place designated at the time the contract is made. Brokerage fees are incurred when a futures contract is bought or sold and margin deposits must be maintained. Entering into a contract to buy is commonly referred to as buying or purchasing a contract or holding a long position. Entering into a contract to sell is commonly referred to as selling a contract or holding a short position.

    Unlike when the funds purchase or sell a security, no price would be paid or received by the funds upon the purchase or sale of a futures contract. Upon entering into a futures contract, and to maintain the funds` open positions in futures contracts, the funds would be required to deposit in a segreg ated account with the clearing broker for the futures contract an amount of cash or liquid assets known as "initial margin." The margin required for a particular futures contract is set by the exchange on which the contract is traded and may be significantly modified from time to time by the exchange during the term of the contract. Futures contracts are customarily purchased and sold on margins that may range upward from less than 5% of the value of the contract being traded.

    Financial futures are valued daily at closing settlement prices. If the price of an open futures contract changes (by increase in the case of a sale or by decrease in the case of a purchase) so that the loss on the futures contract reaches a point at which the margin on deposit does not satisfy margin requirements, the clearing broker will require a payment by the funds ("variation margin") to restore the margin account to the amount of the initial margin.

    Subsequent payments ("mark-to-market payments") to and from the futures clearing broker are made on a daily basis as the price of the underlying assets fluctuates, making the long and short positions in the futures contract more or less valuable. If the value of the open futures position increases in the case of a sale or decreases in the case of a purchase, the funds will pay the amount of the daily change in value to the clearing broker. However, if the value of the open futures position decreases in the case of a sale or increases in the case of a purchase, the clearing broker will pay the amount of the daily change in value to the funds.

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    Although certain futures contracts, by their terms, require actual future delivery of and payment for the underlying instruments, in practice, most futures contracts are usually closed out before the delivery date. Closing out an open futures contract purchase or sale is effected by entering into an offsetting futures contract sale or purchase, respectively, for the same aggregate amount of the identical securities and the same delivery date. If the offsetting purchase price is less than the original sale price, the funds realize a gain; if it is more, the funds realize a loss. Conversely, if the offsetting sale price is more than the original purchase price, the funds realize a gain; if it is less, the funds realize a loss. The transaction costs must also be included in these calculations. There can be no assurance, however, that the funds will be able to enter into an offsetting transaction with respect to a particular futures contract at a particular time. If the funds are not able to enter into an offsetting transaction, the funds will continue t o be required to maintain the margin deposits on the futures contract.

    As an example of an offsetting transaction in which the underlying instrument is not delivered, the contractual obligations arising from the sale of one contract of September Treasury bills on an exchange may be fulfilled at any time before delivery of the contract is required (i.e., on a specified date in September, the "delivery month") by the purchase of one contract of September Treasury bills on the same exchange. In such instance, the difference between the price at which the futures contract was sold and the price paid for the offsetting purchase, after allowance for transaction costs, represents the profit or loss to the funds.

    Settlement of a stock index futures contract may or may not be in the underlying security. If not in the underlying security, then settlement will be made in cash, equivalent over time to the difference between the contr act price and the actual price of the underlying asset (as adjusted by a multiplier) at the time the stock index futures contract expires.

    For example, the S&P 500 Stock Index is made up of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The S&P 500 Index assigns relative weightings to the common stocks included in the index, and the index fluctuates with changes in the market values of those common stocks. In the case of futures contracts on the S&P 500 Index, the contracts are to buy or sell 250 units. Thus, if the value of the S&P 500 Index were $150, one contract would be worth $37,500 (250 units x $150). The stock index futures contract specifies that no delivery of the actual stocks making up the index will take place. Instead, settlement in cash occurs. Over the life of the contract, the gain or loss realized by the funds will equal the difference between the purchase (or sale) price of the contract and the price at which the contract is terminated. For example, if the funds enter into a futures contract to buy 250 units of the S&P 500 Index at a specified future date at a contract price of $150 and the S&P 500 Index is at $154 on that future date, the funds will gain $1,000 (250 units x gain of $4). If the funds enter into a futures contract to sell 250 units of the stock index at a specified future date at a contract price of $150 and the S&P 500 Index is at $152 on that future date, the funds will lose $500 (250 units x loss of $2).

    It is possible that hedging activities of funds investing in municipal securities will occur through the use of U.S. Treasury bond futures.

    All funds (other than the Money Funds)

    Special Risks of Transactions in Futures Contracts

  • Volatility and Leverage The prices of futures contracts are volatile and are influenced, among other things, by actual and anticipated changes in the market and interest rates, which in turn are affected by fiscal and monetary policies and national and international political and economic events.

    • Most U.S. futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day`s settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of futures contract, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses.

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    Margin deposits required on futures trading are low. As a result, a relatively small price movement in a futures contract may result in immediate and substantial loss, as well as gain, to the investor. For example, if at the time of purchase, 10% of the value of the futures contract is deposited as margin, a subsequent 10% decrease in the value of the futures contract would result in a total loss of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit, if the contract were closed out. Thus, a purchase or sale of a futures contract may result in losses in excess of the amount invested in the futures contract.

  • Liquidity The funds may elect to close some or all of their futures positions at any time prior to their expiration. The funds would do so to reduce exposure represented by long futures positions or short futures positions. The funds may close their position by taking o pposite positions, which would operate to terminate the funds` position in the futures contracts. Final determinations of mark-to-market payments would then be made, additional cash would be required to be paid by or released to the funds, and the funds would realize a loss or a gain.

    • Futures contracts may be closed out only on the exchange or board of trade where the contracts were initially traded. Although the funds intend to purchase or sell futures contracts only on exchanges or boards of trade where there appears to be an active market, there is no assurance that a liquid market on an exchange or board of trade will exist for any particular contract at any particular time. In such event, it might not be possible to close a futures contract, and in the event of adverse price movements, the funds would continue to be required to make daily mark-to-market and variation margin payments. However, in the event futures contracts have been used to hedge the underlying instruments, the funds would continue to hold the underlying instruments subject to the hedge until the futures contracts could be term inated. In such circumstances, an increase in the price of underlying instruments, if any, might partially or completely offset losses on the futures contract. However, as described next, there is no guarantee that the price of the underlying instruments will, in fact, correlate with the price movements in the futures contract and thus provide an offset to losses on a futures contract.

  • Hedging Risk A decision whether, when, and how to hedge involves skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree because of unexpected market or economic events. There are several risks in connection with the use by the funds of futures contracts as a hedging device. One risk arises because of the imperfect correlation between movements in the prices of the futures contracts and movements in the prices of the underlying instruments which are the subject of the hedge. T. Rowe Price will, however, attempt to reduce this risk by entering into futures contracts whose movements, in its judgment, will have a significant correlation with movements in the prices of the funds` underlying instruments sought to be hedged.

    • Successful use of futures contracts by the funds for hedging purposes is also subject to T. Rowe Price`s ability to correctly predict movements in the direction of the market. It is possible that, when the funds have sold futures to hedge their portfolios against a decline in the market, the index, indices, or instruments` underlying futures might advance, and the value of the underlying instruments held in the funds` portfolios might decline. If this were to occur, the funds would lose money on the futures and also would experience a decline in value in their underlying instruments. However, while this might occur to a certain degree, T. Rowe Price believes that over time the value of the funds` portfolios will tend to move in the same direction as the marke t indices used to hedge the portfolio. It is also possible that, if the funds were to hedge against the possibility of a decline in the market (adversely affecting the underlying instruments held in their portfolios) and prices instead increased, the funds would lose part or all of the benefit of increased value of those underlying instruments that it had hedged because it would have offsetting losses in their futures positions. In addition, in such situations, if the funds have insufficient cash, it might have to sell underlying instruments to meet daily mark-to-market an d variation margin requirements. Such sales of underlying instruments might be, but would not necessarily be, at increased prices (which would reflect the rising market). The funds might have to sell underlying instruments at a time when it would be disadvantageous to do so.

    In addition to the possibility that there might be an imperfect correlation, or no correlation at all, between price movements in the futures contracts and the portion of the portfolio being hedged, the price movements of futures contracts might not correlate perfec tly with price movements in the underlying instruments due to certain market distortions. First, all participants in the futures market are subject to margin deposit and

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    maintenance requirements. Rather than meeting additional margin deposit requirements, investors might close futures contracts through offsetting transactions, which could distort the normal relationship between the underlying instruments and futures markets. Second, the margin requirements in the futures market are less onerous than margin requirements in the securities markets and, as a result, the futures market might attract more speculators than the securities markets. Increased participation by speculators in the futures market might also cause temporary price distortions. Due to the possibility of price distortion in the futures market and also because of imperfect correlation between price movements in the underlying instruments and movements in the prices of futures contracts, even a correct forecast of general market trends by T. Rowe Price might not result in a successful hedging transaction over a very short time period.

    Options on Futures Contracts

    Options (another type of potentially high-risk derivative) on futures are similar to options on underlying instruments, except that options on futures give the purchaser the right, in return for the premium paid, to assume a position in a futures contract (a long position if the option is a call and a short position if the option is a put), rather than to purchase or sell the futures contract at a specified exercise price at any time during the period of the option. Upon exercise of the optio n, the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by the delivery of the accumulated balance in the writer`s futures margin account, which represents the amount by which the market price of the futures contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the futures contract. Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid. Options on futures contracts are valued daily at the last sale price on its primary exchange at the time at which the net asset value per share of the funds are computed (close of New York Stock Exchange), or, in the absence of such sale, the mean of closing bid and ask prices.

    Writing a put option on a futures contract serves as a partial hedge against an increase in the value of securities the funds intend to acquire. If the futures price at expiration of the option is above the exercise price, the funds will retain the full amount of the option premium, which provides a partial hedge against any increase that may have occurred in the price of the debt securities the funds intend to acquire. If the futures price when the option is exercised is below the exercise price, however, the funds will incur a loss, which may be wholly or partially offset by the decrease in the price of the securities the funds intend to acquire.

    Funds investing in municipal securities may trade in municipal bond index option futures or similar options on futures developed in the future. In addition, the funds may trade in options on futures contracts on U.S. government securities and any U.S. government securities futures index contract which might be developed.

    From time to time, a single order to purchase or sell futures contracts (or options thereon) may be made on behalf of a fund and other T. Rowe Price funds. Such aggregated orders would be allocated among the fund and the other T. Rowe Price funds i n a fair and nondiscriminatory manner.

    Call and put options may be purchased or written on financial indices as an alternative to options on futures.

    Special Risks of Transactions in Options on Futures Contracts

    The risks described under "Special Risks of Transactions in Futures Contracts" are substantially the same as the risks of using options on futures. If the funds w ere to write an option on a futures contract, it would be required to deposit initial margin and maintain mark-to-market payments in the same manner as a regular futures contract. In addition, where the funds seek to close out an option position by writing or buying an offsetting option covering the same index, underlying instrument, or contract and having the same exercise price and expiration date, their ability to establish and close out positions on such options will be subject to the maintenance of a liquid secondary market. Reasons for the absence of a liquid secondary market on an exchange include the following: (1) there may be insufficient trading interest in certain options; (2) restrictions may be imposed by an exchange on opening transactions or closing transactions or both; (3) trading halts, suspensions, or other restrictions may be imposed with respect to particular classes or series of options, or underlying instruments; (4) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (5) the facilities of an exchange or a clearing corporation may not at all times be adequate to handle current trading volume; or (6) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in the class or series of options) would cease to

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    exist, although outstanding options on the exchange that had been issued by a clearing corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms. There is no assurance that higher-than-anticipated trading activity or other unforeseen events might not, at times, render certain of the facilities of any of the clearing corporations inadequate, and thereby result in the institution by an exchange of special procedures, which may interfere with the timely execution of customers` orders.

    In the event no such market exists for a particular contract in which the funds maintain a position, in the case of a written option, the funds would have to wait to sell the underlying securities or futures positions until the option expires or is exercised. The funds would be required to maintain margin deposits on payments until the contract is closed. Options on futures are treated for accounting purposes in the same way as the analogous option on securities are treated.

    In addition, the correlation between movements in the price of options on futures contracts and movements in the price of the securities hedged can only be approximate. This risk is significantly increased when an option on a U.S. government securities future or an option on some type of index future is used as a proxy for hedging a portfolio consisting of other types of securities. Another risk is that if the movements in the price of options on futures contracts and the value of the call increase by more than the increase in the value of the securities held as cover, the funds may realize a loss on the call, which is not completely offset by the appreciation in the price of the securities held as cover and the premium received for writing the call.

    The successful use of options on futures contracts requires special expertise and techniques different from those involved in portfolio securities transactions. A decision whether, when, and how to hedge involves skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree because of unexpected market behavior or interest rate trends. During periods when municipal securities market prices are appreciating, the funds may experience poorer overall performance than if it had not entered into any options on futures contracts.

    General Considerations Transactions by the funds in options on futures will be subject to limitations established by each of the exchanges, boards of trade, or other trading facilities governing the maximum number of options in each cla ss which may be written or purchased by a single investor or group of investors acting in concert, regardless of whether the options are written on the same or different exchanges, boards of trade, or other trading facilities or are held or written in one or more accounts or through one or more brokers. Thus, the number of contracts which the funds may write or purchase may be affected by contracts written or purchased by other investment advisory clients of T. Rowe Price. An exchange, boards of trade, or other trading facility may order the liquidations of positions found to be in excess of these limits, and it may impose certain other sanctions.

    Additional Futures and Options Contracts

    Although the funds have no current intention of engaging in futures or options transactions other than those described above, it reserves the right to do so. Such futures and options trading might involve risks which differ from those involved in the futures and options described above.

    Foreign Futures and Options

    Participation in foreign futures and foreign options transactions involves the execution and clearing of trades on, or subject to the rules of, a foreign board of trade. Neither the National Futures Association nor any domestic exchange regulates activities of any foreign boards of trade, including the execution, delivery, and clearing of transactions, or has the power to compel enforcement of the rules of a foreign board of trade or any applicable foreign law. This is true even if the exchange is formally linked to a domestic market so that a position taken on the market may be liquidated by a transaction on another market. Moreover, such laws or regulations will vary depending on the foreign country in which the foreign futures or foreign options transaction occurs. For these reasons, when the funds trade foreign futures or foreign options contracts, it may not be afforded certain of the protective measures provided by the Commodity Exchange Act, the CFTC`s regulations, and the rules of the National Futures Association and any domestic exchange, including the right to use reparations proceedings before the CFTC and arbitration proceedings provided by the National Futures Association or any domestic futures exchange. In particular, proceeds derived from foreign futures or foreign options transactions may not be provided the same protections as proceeds derived from transactions on U.S. futures exchanges. In addition, the price of any foreign futures or foreign options contract and, therefore, the

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    potential profit and loss thereon may be affected by any variance in the foreign exchange rate between the time the funds` orders are placed and the time they are liquidated, offset, or exercised.

    U.S. Treasury Intermediate and U.S. Treasury Long-Term Funds

    Limitations on Futures and Options

    The funds will not purchase a futures contract or option thereon if, with respect to positions in futures or options on futures which do not represent bona fide hedging, the aggregate initial margin and premiums on such positions would exceed 5% of the funds` net asset value. In addition, neither of the funds will enter into a futures transaction if it would be obligated to purchase or deliver amounts that would exceed 15% of the funds` total assets.

    T he funds will not write a covered call or put option if, as a result, the aggregate market value of all portfolio securities covering call options or subject to delivery under put options exceeds 15% of the market value of the funds` total assets.

    The funds have no current intention of investing in options on individual securities. However, they reserve the right to do so in the future and could be subject to the following limitations: the funds may invest up to 15% of total assets in premiums on put options and 15% of total assets in premiums on call options. The total market value of the funds` obligations under futures contracts and premiums on purchased options will not exceed 15% of each fund`s total assets.

    All Funds

    Foreign Currency Transactions

    A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are principally traded in the interbank market conducted directly between currency traders (usually large, commercial banks) and their customers. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades. The funds may enter into forward contracts for a variety of purposes in connection with the management of the foreign securities portion of their portfolios. The funds` use of such contracts would include, but not be limited to, the following:< /div>

    First, when the funds enter into a contract for the purchase or sale of a security denominated in a foreign currency, they may desire to "lock in" the U.S. dollar price of the security. By entering into a forward contract for the purchase or sale, for a fixed amount of dollars, of the amount of foreign currency involved in the underlying security transactions, the funds will be able to protect themselves against a possible loss resulting from an adverse change in the relationship between the U.S. dollar and the subject foreign currency during the period between the date the security is purchased or sold and the date on which payment is made or received.

    Second, when T. Rowe Price believes that one currency may experience a substantial movement against another currency, including the U.S. dollar, it may enter into a forward contract to sell or buy the amount of the former foreign currency, approximating the value of some or all of the funds` portfolio securities denominated in such foreign currency. Alternatively, where appropriate, the funds may hedge all or part of their foreign currency exposure through the use of a basket of currencies or a proxy currency where such currency or currencies act as an effective proxy for other currencies. In such a case, the funds may enter into a forward contract where the amount of the foreign currency to be sold exceeds the value of the securities denominated in such currency. The use of this basket hedging technique may be more efficient and economical than entering into separate forward contracts for each currency held in the funds. The precise matching of the forward contract amounts and the value of the securities involved will not generally be possible since the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the forward contract is entered into and the date it matures. The projection of short-term currency market movement is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Under normal circumstances, consideration of the prospect for relative currency values will be incorporated into the longer-term investment decisions made with regard to overall diversification strategies. However, T. Rowe Price believes that it is important to have

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    the flexibility to enter into such forward contracts when it determines that the best interests of the funds will be served.

    Third, the funds may use forward contracts when the funds wish to hedge out of the dollar into a foreign currency in order to create a synthetic bond or money market instrument—the security would be issued in U.S. dollars but the dollar component would be transformed into a foreign currency through a forward contract.

    At the maturity of a forward contract, the funds may sell the portfolio security and make delivery of the foreign currency, or they may retain the security and either extend the maturity of the forward contract (by "rolling" that contract forward) or may initiate a new forward contract.

    If the funds retain the portfolio security and engage in an offsettin g transaction, the funds will incur a gain or a loss (as described below) to the extent that there has been movement in forward contract prices. If the funds engage in an offsetting transaction, they may subsequently enter into a new forward contract to sell the foreign currency. Should forward prices decline during the period between the funds` entering into a forward contract for the sale of a foreign currency and the date they enter into an offsetting contract for the purchase of the foreign currency, the funds will realize a gain to the extent the price of the currency they have agreed to sell exceeds the price of the currency they have agreed to purchase. Should forward prices increase, the funds will suffer a loss to the extent the price of the currency they have agreed to purchase exceeds the price of the currency they have agreed to sell.

    The funds may also engage in non-deliverable forward transactions to manage currency risk as well as to gain exposure to a currency, whether or not the fund owns securities denominated in that currency. A non-deliverable forward is a transaction that represents an agreement between a fund and a counterparty to buy or sell a specified amount of a particular currency at an agreed upon foreign exchange rate on a future date. Unlike other currency transactions, there is no physical delivery of the currency on the settlement of a non-deliverable forward transaction. Rather, the fund and the counterparty agree to net the settlement by making a payment in U.S. dollars or another fully convertible currency that represents any difference between the foreign exchange rate agreed upon at the inception of the non-deliverable forward agreement and the actual exchange rate on the agreed upon future date. When currency exchange rates do not move as anticipated, a fund could sustain losses on the non-deliverable forward transaction. This risk is heightened when the transactions involve currencies of emerging market countries.

    The funds may enter into forward contracts for any other purpose consistent with the funds` investment objectives and programs. However, the funds will not enter into a forward contract, or maintain exposure to any such contract(s), if the amount of forei gn currency required to be delivered thereunder would exceed the funds` holdings of liquid, high-grade debt securities, currency available for cover of the forward contract(s), or other suitable cover as permitted by the SEC. In determining the amount to be delivered under a contract, the funds may net offsetting positions.

    If the value of the assets being used as cover declines or the amount of the fund`s commitment increases because of changes in currency rates, the fund may need to provide additional cash or securities to satisfy its commitment under the forward agreement. The fund is also subject to the risk that it may be delayed or prevented from obtaining payments owed to it under the forward transaction as a result of the insolvency or bankruptcy of the counterparty or the failure of the counterparty to comply with the terms of the contract. There is no assurance that a fund would succeed in pursuing any contractual remedies available under the agreement.

    The funds` dealing in forward f oreign currency exchange contracts will generally be limited to the transactions described above. However, the funds reserve the right to enter into forward foreign currency contracts for different purposes and under different circumstances. Of course, the funds are not required to enter into forward contracts with regard to their foreign currency-denominated securities and will not do so unless deemed appropriate by T. Rowe Price. It also should be realized that this method of hedging against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange at a future date. Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time, they tend to limit any potential gain which might result from an increase in the value of that currency.

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    Although the funds value their assets daily in terms of U.S. dollars, they do not intend to convert their holdings of foreign currencies into U.S. dollars on a daily basis. They will do so from time to time, and there are costs associated with currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the funds at one rate, while offering a lesser rate of exchange should the funds desire to resell that currency to the dealer.

    Federal Tax Treatment of Options, Futures Contracts, and Forward Foreign Exchange Contracts

    The funds may enter into certain options, futures, forward foreign exchange contracts, and swaps, including options and futures on currencies. Entering into such transactions can affect the timing and character of the income and gains rea lized by the funds and the timing and character of fund distributions.

    Such contracts, if they qualify as Section 1256 contracts, will be considered to have been closed at the end of the funds` fiscal years and any gains or losses will be recognized for tax purposes at that time. Such gains or losses (as well as gains or losses from the normal closing or settlement of such transactions) will be characterized as 60% long-term capital gain (taxable at a maximum rate of 15%) or loss and 40% short-term capital gain or loss regardless of the holding period of the instrument (ordinary income or loss for foreign exchange contracts). The funds will be required to distribute net gains on such transactions to shareholders even though it may not have closed the transaction and received cash to pay such distributions.

    Certain options, futures, forward foreign exchange contracts, and swaps, which offset another security in the fund, including options, futures, and forward exchange contracts on currencies, which offset a foreign dollar-denominated bond or currency position, may be considered straddles for tax purposes. Generally, a loss on any position in a straddle will be subject to deferral to the extent of any unrealized gain in an offsetting position. For securities that were held for one year or less at inception of the straddle, the holding period may be deemed not to begin until the straddle is terminated. If securities comprising a straddle have been held for more than one year at inception of the straddle, losses on offsetting positions may be treated as entirely long-term capital losses even if the offsetting positions have been held for less than one year. However, a fund may choose to comply with certain identification requirements for offsetting positions that are components of a straddle. Losses with respect to identified positions are not deferred, rather the basis of the identified position that offset the los s position is increased.

    In order for the funds to continue to qualify for federal income tax treatment as regulated investment companies, at least 90% of their gross income for a taxable year must be derived from qualifying income, e.g., generally dividends, interest, income derived from loans of securities, and gains from the sale of securities or currencies. Tax regulations could be issued limiting the extent to which the net gain realized from options, futures, or forward foreign exchange contracts on currencies is qualifying income for purposes of the 90% requirement.

    Entering into certain options, futures, forward foreign exchange contracts, or swaps may result in a "constructive sale" of offsetting stocks or debt securities of the funds. In such case the funds will be required to realize gain, but not loss, on the sale of such positions as if the position were sold on that date.

    For certain options, futures, forward foreign exchange contracts, or swaps, the IRS has not issued comprehensive rules relating to the timing and character of income and gains realized on such contracts. Although not anticipated, it is possible that final rules could result in changes to the amounts recorded by the funds, potentially resulting in tax consequences to the funds.

    Options

    Options are a type of potentially high-risk derivative.

    Writing Covered Call Options

    The funds may write (sell) American or European style "covered" call options and purchase options to close out options previously written. In writing covered call options, the funds expect to generate additional premium income, which should serve to enhance the funds` total return and reduce the effect of any price decline of the security or currency involved in the option. Covered call options will generally be written on securities or currencies which, in T. Rowe Price`s opinion, are not expected to have any major price increases

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    or moves in the near future but which, over the long term, are deemed to be attractive investments for the funds.

    A call option gives the holder (buyer) the right to purchase, and the writer (seller) has the obligation to sell, a security or currency at a specified price (the exercise price) at expiration of the option (European style) or at any time until a certain date (the expiration date) (American style). So long as the obligation of the wri ter of a call option continues, he may be assigned an exercise notice by the broker-dealer through whom such option was sold, requiring him to deliver the underlying security or currency against payment of the exercise price. This obligation terminates upon the expiration of the call option or such earlier time at which the writer effects a closing purchase transaction by repurchasing an option identical to that previously sold. To secure his obligation to deliver the underlying security or currency in the case of a call option, a writer is required to deposit in escrow th e underlying security or currency or other assets in accordance with the rules of a clearing corporation.

    The funds generally will write only covered call options. This means that the funds will either own the security or currency subject to the option or an option to purchase the same underlying security or currency having an exercise price equal to or less than the exercise price of the "covered" option. From time to time, the funds will write a call option that is not covered as indicated above but where the funds will establish and maintain, with its custodian for the term of the option, an account consisting of cash, U.S. government securities, other liquid high-grade debt obligations, or other suitable cover as permitted by the SEC, having a value equal to the fluctuating market value of the optioned securities or currencies. While such an option would be "covered" with sufficient collateral to satisfy SEC prohibitions on issuing senior securities, this type of strategy would expose the funds to the risks of writing uncovered options, which could result in unlimited losses if a fund writes an uncovered call option.

    Portfolio securities or currencies on which call options may be written will be purchased solely on the basis of investment considerations consistent with the funds` investment objectives. The writing of covered call options is a conservative investment technique believed to involve relatively little risk (in contrast to the writing of naked or uncovered options, which the funds generally will not do) but capable of enhancing the funds` total return. When writing a covered call option, the funds, in return for the premium, give up the opportunity for profit from a price increase in the underlying security or currency above the exercise price, but conversely retain the risk of loss should the price of the security or currency decline. Unlike one that owns securities or currencies not subject to an option, the funds have no control over when they may be required to sell the underlying securities or currencies, since they may be assigned an exercise notice at any time prior to the expiration of its obligation as a wr iter. If a call option the funds have written expires, the funds will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security or currency during the option period. If the call option is exercised, the funds will realize a gain or loss from the sale of the underlying security or currency. The funds do not consider a security or currency covered by a call to be "pledged" as that term is used in the funds` policy, which limits the pledging or mortgaging of assets. If the fund writes an uncovered option as described above, it will bear the risk of having to purchase the security subject to the option at a price higher than the exercise price of the option. As the price of a security could appreciate substantially, the funds` loss could be significant.

    The premium received is the market value of an option. The premium the funds will receive from writing a call option will reflect, among other things, the current market price of the underlying security or currency, the relationship of the exercise price to such market price, the historical price volatility of the underlying security or currency, and the length of the option period. Once the decision to write a call option has been made, T. Rowe Price, in determining whether a particular call option should be written on a particular security or currency, will consider the reasonableness of the anticipated premium and the likelihood that a liquid secondary market will exist for those options. The premium received by the funds for writing covered call options will be recorded as a liability of the funds. This liability will be adjusted daily to the option`s current market value, which will be the latest sale price on its primary exchange at the time at which the net asset values per share of the funds are computed (close of the New York Stock Exchange) or, in the absence of such sale, the mean of closing bid and ask prices. The option will be terminated upon expiration of the option, the purchase of an identical option in a closing transaction, or delivery of the underlying security or currency upon the exercise of the option.

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    Closing transactions will be effected in order to realize a profit on an outstanding call option, to prevent an underlying security or currency from being called, or to permit the sale of the underlying security or currency. Furthermore, effecting a closing transaction will permit the funds to write another call option on the underlying security or currency with either a different exercise price or expiration date or both. If the funds desire to sell a particular security or currency from their portfolios on which they have written a call option, or purchased a put option, they will seek to effect a closing transaction prior to, or concurrently with, the sale of the security or currency. There is, of course, no assurance that the funds will be able to effect such closing transactions at favorable prices. If the funds cannot enter into such a transaction, they may be required to hold a security or currency that they might otherwise have sold. When the funds write a covered call option, they run the risk of not being able to participate in the appreciation of the underlying securities or currencies above the exercise price, as well as the risk of being required to hold on to securities or currencies that are depreciating in value. This could result in higher transaction costs. The funds will pay transaction costs in connection with the writing of options to close out previously written options. Such transaction costs are normally higher than those applicable to purchases and sales of portfolio securities.

    Call options written by the funds will normally have expiration dates of less than nine months from the date written. The exercise price of the options m ay be below, equal to, or above the current market values of the underlying securities or currencies at the time the options are written. From time to time, the funds may purchase an underlying security or currency for delivery in accordance with an exercise notice of a call option assigned to it, rather than delivering such security or currency from their portfolios. In such cases, additional costs may be incurred.

    The funds will realize a profit or loss from a closing purchase transaction if the cost of the transaction is less or more than the premium received from the writing of the option. Because increases in the market price of a call option will generally reflect increases in the market price of the underlying security or currency, any loss resulting from the repurchase of a call option is likely to be offset in whole or in part by appreciation of the underlying security or currency owned by the funds.

    The funds will not write a covered call option if, as a result, the aggregate market value of all portfolio securities or currencies covering written call or put options exceeds 25% of the market value of the funds` total assets. In calculating the 25% limit, the funds will offset the value of securities underlying purchased calls and puts on identical securities or currencies with identical maturity dates.

    Writing Covered Put Options

    The funds may write American or European style covered put options and purchase options to close out options previously written by the funds. A put option gives the purchaser of the option the right to sell, and the writer (seller) has the obligation to buy, the underlying security or currency at the exercise price during the option period (American style) or at the expiration of the option (European style). So long as the obligation of the writer continues, he may be assigned an exercise notice by the broker-dealer through whom such option was sold, requiring him to make payment to the exercise price against delivery of the underlying security or currency. The operation of put options in other respects , including their related risks and rewards, is substantially identical to that of call options.

    If the funds write put options, they will do so only on a covered basis. This means that the funds would maintain, in a segregated account, cash, U.S. government securities, other liquid high-grade debt obligations, or other suitable cover as determined by the SEC, in an amount not less than the exercise price. Alternatively, the funds will own an option to sell the un derlying security or currency subject to the option having an exercise price equal to or greater than the exercise price of the "covered" option at all times while the put option is outstanding. (The rules of a clearing corporation currently require that such assets be deposited in escrow to secure payment of the exercise price.)

    The funds would generally write covered put options in circumstances where T. Rowe Price wishes to purchase the underlying security or currency for the funds` portfolios at a price lower than the current market price of the security or currency. In such event the funds would write a put option at an exercise price which, reduced by the premium received on the option, reflects the lower price it is willing to pay. Since the funds would also receive interest on debt securities or currencies maintained to cover the exercise price of the option, this technique could be used to enhance current return during periods of market uncertainty. The risk

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    in such a transaction would be that the market price of the underlying security or currency would decline below the exercise price, less the premiums received. Such a decline could be substantial and result in a significant loss to the funds. In addition, the funds, because they do not own the specific securities or currencies which they may be required to purchase in exercise of the put, cannot benefit from appreciation, if any, with respect to such specific securities or currencies.

    The funds will not write a covered put option if, as a result, the aggregate market value of all portfolio securities or currencies covering put or call options exceeds 25% of the market value of the funds` total assets. In calculating the 25% limit, the funds will offset the value of securities underlying purchased puts and calls on identical securities or currencies with identical maturity dates.

    The premium received by the funds for writing covered put options will be recorded as a liability of the funds. This liability will be adjusted daily to the option`s current market value, which will be the latest sale price on its primary exchange at the time at which the net asset value per share of the funds is computed (close of the New York Stock Exchange), or, in the absence of such sale, the mean of the closing bid and ask prices.

    Purchasing Put Options

    The funds may purchase American or European sty le put options. As the holder of a put option, the funds have the right to sell the underlying security or currency at the exercise price at any time during the option period (American style) or at the expiration of the option (European style). The funds may enter into closing sale transactions with respect to such options, exercise them, or permit them to expire. The funds may purchase put options for defensive purposes in order to protect against an anticipated decline in the value of their securities or currencies.

    The funds may purchase a put option on an underlying security or currency (a "protective put") owned by the funds as a defensive technique in order to protect against an anticipated decline in the value of the security or currency. Such hedge protection is provided only during the life of the put option when the funds, as holder of the put option, are able to sell the underlying security or currency at the put exercise price regardless of any decline in the underlying security`s market price or currency`s exchange va lue. For example, a put option may be purchased in order to protect unrealized appreciation of a security or currency where T. Rowe Price deems it desirable to continue to hold the security or currency because of tax considerations. The premium paid for the put option and any transaction costs would reduce any capital gain otherwise available for distribution when the security or currency is eventually sold.

    The funds may also purchase put options at a time when they do not own the underlying security or currency. By purchasing put options on a security or currency they do not own, the funds seek to benefit from a decline in the market price of the underlying security or currency. If the put option is not sold when it has remaining value and if the market price of the underlying security or currency remains equal to or greater than the exercise price during the life of the put option, the funds will lose their entire investment in the put option. In order for the purchase of a put option to be profitable, the market price of t he underlying security or currency must decline sufficiently below the exercise price to cover the premium and transaction costs, unless the put option is sold in a closing sale transaction.

    The funds will not commit more than 5% of total assets to premiums when purchasing put options. The premium paid by the funds when purchasing a put option will be recorded as an asset of the funds in the portfolio of investments. This asset will be adjusted daily to the option`s current market value, which will be the latest sale price on its primary exchange at the time at which the net asset values per share of the funds are computed (close of New York Stock Exchange) or, in the absence of such sale, the mean of closing bid and ask prices. This asset will be terminated upon expiration of the option, the selling (writing) of an identical option in a closing transaction, or the delivery of the underlying security or currency upon the exercise of the option.

    Purchasing Call Options

    The funds may purchase American or European style call options. As the holder of a call option, the funds have the right to purchase the underlying security or currency at the exercise price at any time during the option period (American style) or at the expiration of the option (European style). The funds may enter into closing sale transactions with respect to such options, exercise them, or permit them to expire. The funds may purchase call options for the purpose of increasing their current return or avoiding tax consequences which

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    could reduce their current return. The funds may also purchase call options in order to acquire the underlying securities or currencies. Examples of such uses of call options are provided next.

    Call options may be purchased by the funds for the purpose of acquiring the underlying securities or currencies for their portfolios. Utilized in this fashion, the purchase of call options enables the funds to acquire the securities or currencies at the ex ercise price of the call option plus the premium paid. At times the net cost of acquiring securities or currencies in this manner may be less than the cost of acquiring the securities or currencies directly. This technique may also be useful to the funds in purchasing a large block of securities or currencies that would be more difficult to acquire by direct market purchases. So long as the funds hold such a call option, rather than the underlying security or currency itself, the funds are partially protected from any unexpected decline in the market price of the underlying security or currency and in such event could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option.

    The funds may also purchase call options on underlying securities or currencies they own in order to protect unrealized gains on call options previously written by them. A call option would be purchased for this purpose where tax considerations make it inadvisable to realize such gains through a closing purchase transaction. Call options may also be purchased at times to avoid realizing losses.

    The funds will not commit more than 5% of total assets to premiums when purchasing call and put options. The premium paid by the funds when purchasing a call option will be recorded as an asset of the funds in the portfolio of investments. This asset will be adjusted daily to the option`s current market value, which will be the latest sale price on its primary exchange at the time at which the net asset values per share of the funds are computed (close of New York Stock Exchange), or, in the absence of such sale, the mean of clo sing bid and ask prices.

    Dealer (Over-the-Counter) Options

    The funds may engage in transactions involving dealer options. Certain risks, including credit risk and counterparty risk, are specific to dealer options. While the funds would look to a clearing corporation to exercise exchange-traded options, if the funds were to purchase a dealer option, they would rely primarily on the dealer from whom they purchased the option to perform if the option were exercised. Failure by the dealer to do so could result in the loss of the premium paid by the funds as well as loss of the expected benefit of the transaction.

    Exchange-traded options generally have a continuous liquid market, while dealer options are less liquid or could have no liquidity. Consequently, the funds will generally be able to realize the value of a dealer option they have purchased only by exercising it or reselling it to the dealer who issued it. Under certain conditions, the funds may also be able to resell or assign a purchased dealer option to another dealer on substantially the same terms. Similarly, when the funds write a dealer option, unless they can assign the option to another dealer, they generally will be able to close out the option prior to its expiration only by entering into a closing purchase transaction with the dealer to which the funds originally wrote the option. While the funds will seek to enter into dealer options only with dealers who will agree to and are expected to be capable of entering into closing transactions with the funds, there can be no assurance that the dealers will consent to the closing transaction nor is it assured that the funds will realize a favorable price. Until the funds, as a covered dealer call option writer, are able to effect a closing purchase transaction, th ey will not be able to liquidate securities (or other assets) or currencies used as cover until the option expires or is exercised. In the event of insolvency of the counter-party, the funds may be unable to liquidate a dealer option. With respect to options written by the funds, the inability to enter into a closing transaction may result in material losses to the funds.

    The staff of the SEC has taken the position that purchased dealer options and the assets used to secure the written dealer options are illiquid securities. The funds m ay treat the cover used for written Over-the-Counter ("OTC") options as liquid if the dealer agrees that the funds may repurchase the OTC option they have written for a maximum price to be calculated by a predetermined formula. In such cases, the OTC option would be considered illiquid only to the extent the maximum repurchase price under the formula exceeds the intrinsic value of the option.

    For certain types of OTC options that have substantially similar terms to exchange-traded options, the funds may treat such options, and the underlying cover used for written options, as liquid based on the following

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    factors: (1) the frequency and availability of dealer quotes and the comparability to prices available on an options exchange; (2) the number of dealers willing to purchase or accept assignments of such OTC options; and (3) the nature of the OTC options, their settlement terms and their termination provisions (i.e., the time needed to close out or terminate an OTC position, method of soliciting offers, and mechanics of transfer).

    Warrants

    Warrants can be highly volatile and have no voting rights, pay no dividends, and have no rights with respect to the assets of the corporation issuing them. Warrants basically are options to purchase securities at a specific price valid for a specific period of time. They do not represent ownership of the securities, but only the right to buy them. Warrants differ from call options in that warrants are issued by the issuer of the security which may be purchased on their exercise, whereas call options may be written or issued by anyone. The prices of warrants do not necessarily move parallel to the prices of the underlying securities.

    There are, of course, other types of securities that are or may become available that are similar to the foregoing, and the funds may invest in these securities.

    Hybrid Instruments

    A hybrid instrument is a debt security, preferred stock, depository share, trust certificate, certificate of deposit, or other evidence of indebtedness on which a portion of or all interest payments, and/or the principal or stated amount payable at maturity, redemption, or retirement is determined by reference to prices, changes in prices, or differences between prices of securities, currencies, intangibles, goods, articles, or commodities (collectively, "underlying assets") or by another objective index, economic factor, or other measure, such as interest rates, currency exchange rates, commodity indices, and securities indices (collectively, "benchmarks"). Thus, hybrid instruments may take a variety of forms, including, but not limited to, debt instruments with interest or principal payments or redemption terms determined by reference to the value of a currency or commodity or securities index at a future point in time, prefe rred stock with dividend rates determined by reference to the value of a currency, or convertible securities with the conversion terms related to a particular commodity.

    Hybrid instruments can be an efficient means of creating exposure to a particular market, or segment of a market, with the objective of enhancing total return. For example, the funds may wish to take advantage of expected declines in interest rates in several European countries, but avoid the transaction costs associated with buying and currency-hedging the foreign bond positions. One solution would be to purchase a U.S. dollar-denominated hybrid instrument whose redemption price is linked to the average three-year interest rate in a designated group of countries. The redemption price formula would provide for payoffs of greater than par if the average interest rate was lower than a specified level, and payoffs of less than par if rates were above the specified level. Furthermore, the funds could limit the downside risk of the security by establishing a minimum redemption price so that the principal paid at maturity could not be below a predetermined minimum level if interest rates were to rise significantly. The purpose of this arrangement, known as a structured security with an embedded put option, would be to give the funds the desired European bond exposure while avoiding currency risk, limiting downside market risk, and lowering transaction costs. Of course, there is no guarantee that the strategy will be successful, and the funds could lose money if, for example, interest rates do not move as anticipated or credit problems develop with the issuer of the hybrid instruments.

    The risks of investing in hybrid instruments reflect a combination of the risks of investing in securities, options, futures, and currencies. Thus, an investment in a hybrid instrument may entail significant risks that are not associated with a similar investment in a traditional debt instrument that has a fixed principal amount, is denominated in U.S. dollars, or bears interest either at a fixed rate or a floating rate determined by reference to a common, nationally published benchmark. The risks of a particular hybrid instrument will, of course, depend upon the terms of the instrument, but may include, without limitation, the possibility of significant changes in the benchmarks or the prices of underlying assets to which the instrument is linked. Such risks generally depend upon factors which are unrelated to the operations or credit quality of the issuer of the hybrid instrument and which may not be readily foreseen by the purchaser, such as economic and political events, the supply of and demand for the underlying assets, and interest rate movements. In recent years, various benchmarks and prices for underlying assets have be en highly volatile, and such volatility may be

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    expected in the future. Reference is also made to the discussion of futures, options, and forward contracts herein for a discussion of the risks associated with such investments.

    Hybrid instruments are potentially more volatile and can carry greater market risks than traditional debt instruments. Depending on the structure of the particular hybrid instrument, changes in a b enchmark may be magnified by the terms of the hybrid instrument and have an even more dramatic and substantial effect upon the value of the hybrid instrument. Also, the prices of the hybrid instrument and the benchmark or underlying asset may not move in the same direction or at the same time.

    Hybrid instruments may bear interest or pay preferred dividends at below market (or even relatively nominal) rates. Alternatively, hybrid instruments may bear interest at above market rates but bear an increased risk of principal loss (or gain). The latter scenario may result if "leverage" is used to structure the hybrid instrument. Leverage risk occurs when the hybrid instrument is structured so that a given change in a benchmark or underlying asset is multiplied to produce a greater value change in the hybrid instrument, thereby magnifying the risk of loss as well as the potential for gain.

    Hybrid instruments may also carry liquidity risk since the instruments are often "customized" to meet the portfolio needs of a particular investor, and therefore, the number of investors that are willing and able to buy such instruments in the secondary market may be smaller than that for more traditional debt securities. In addition, because the purchase and sale of hybrid instruments could take place in an over-the-counter market without the guarantee of a central clearing organization or in a transaction between the fund and the issuer of the hybrid instrument, the creditworthiness of the counterparty or issuer of the hybrid instrument would be an additional risk factor which the funds would have to consider and monitor. Hybrid instruments also may not be subject to regulation by the CFTC, which generally regulates the trading of commodity futures by U.S. persons, the SEC, which regulates the offer and sale of securities by and to U.S. persons, or any other governmental regulatory authority.

    Swap Agreements

    A num ber of the funds may enter into interest rate, index, total return, credit, and, to the extent they may invest in foreign currency-denominated securities, currency rate swap agreements. The funds may also enter into options on swap agreements ("swaptions") on the types of swaps listed above as well as swap forwards.

    Swap agreements are typically two-party contracts entered into primarily by institutional investors for a specified period of time. In a standard swap transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on a particular predetermined investment, index, or currency. The gross returns to be exchanged or swapped between the parties are generally calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a basket of securities representing a particular index. A swaption is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement at some designated future time on specified terms. The funds may write (sell) and purchase put and call swaptions. A swap forward is an agreement to enter into a swap agreement at some point in the future, usually in 3 to 6 months.

    One example of the use of swaps by the funds is to manage the interest rate sensitivity of the funds. The funds might receive or pay a fixed-rate interest rate of a particular maturity and pay or receive a floating rate in order to increase or decrease the duration of the funds. Or, the funds may buy or sell swaptions to effect the same result. The funds may also replicate a security by selling it, placing the proceeds in cash deposits, and receiving a fixed rate in the swap market.

    Another example is the use of credit default swaps to buy or sell credit protection. A credit default swap is a contract that enables an investor to buy or sell protection against a predetermined issuer credit event. The seller of a credit default swap may enhance income by guaranteeing the creditworthiness of the debt issuer and the buyer is provided with protection against credit risks of the issuer. Market supply and demand factors may cause distortions between the cash securities market and the default swap market.

    Most swap agreements entered into by the funds would calculate the obligations of the parties to the agreement on a "net basis." Consequently, the funds` current obligations (or rights) under a swap agreement

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    will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). The funds` current obligations under a net swap agreement will be accrued daily (offset against any amounts owed to the funds) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by assets determined to be liquid by T. Rowe Price.

    The use of swap agreements by the funds entails certain risks. Interest rate and currency swaps could result in losses if interest rate or currency changes are not correctly anticipated by the funds. Total return swaps could result in losses if the reference index, security, or investments do not perform as anticipated by the funds. Credit default swaps could result in losses if the funds do not correctly evaluate the creditworthiness of the company on which the credit default swap is based.

    The funds will generally incur a greater degree of risk when it writes a swaption than when it purchases a swaption. When the funds purchase a swaption it risks losing only the amount of the premium they have paid should they decide to let the option expire unexercised. However, when the funds write a swaption they will become obligated, upon exercise of the option, according to the terms of the underlying agreement.

    Because swaps are two-party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, the funds bear the risk of loss of the amount expected to b e received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The funds will enter into swap agreements only with counterparties that meet certain standards of creditworthiness. The swaps market is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the funds` ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

    There are other types of securities that are or may become available that are similar to the foregoing, and the funds may invest in these securities.

    Portfolio Management Practices

    Lending of Portfolio Securities

    Securitie s loans are made to broker-dealers, institutional investors, or other persons pursuant to agreements requiring that the loans be continuously secured by collateral at least equal at all times to the value of the securities lent, marked to market on a daily basis. The collateral received will consist of cash, U.S. government securities, letters of credit, or such other collateral as may be permitted under the funds` investment program. The collateral, in turn, is invested in short-term securities, including shares of the TRP Reserve Investment Funds. While the securities are being lent, the funds making the loan will continue to receive the equivalent of the interest or dividends paid by the issuer on the securities, as well as a portion of the interest on the investment of the collateral. Normally, the funds employ an agent to implement their securities lending program and the agent receives a fee from the funds for its services. The funds have a right to call each loan and obtain the securities within such period of time that coincides with the normal settlement period for purchases and sales of such securities in the respective markets. T he funds will not have the right to vote on securities while they are being lent, but they may call a loan in anticipation of any important vote, when practical. The risks in lending portfolio securities, as with other extensions of secured credit, consist of a possible default by the borrower, delay in receiving additional collateral or in the recovery of the securities, or possible loss of rights in the collateral, should the borrower fail financially. Loans will be made only to firms deemed by T. Rowe Price to be of good standing and will not be made unless, in the judgment of T. Rowe Price, the consideration to be earned from such loans would justify the risk. Additionally, the funds bear the risk that the reinvestment of collateral will result in a principal loss. Finally, there is also the risk that the price of the securities will increase while they are on loan and the collateral will not adequately cover their value.

    Int erfund Borrowing and Lending

    The funds are parties to an exemptive order received from the SEC on December 8, 1998, amended on November 23, 1999, that permits them to borrow money from and/or lend money to other funds in the

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    T. Rowe Price complex. All loans are set at an interest rate between the rates charged on overnight repurchase agreements and short-term bank loans. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds. The program is subject to the oversight and periodic review of the Boards of the Price Funds.

    Repurchase Agreements

    The funds may enter into a repurchase agreement through which an investor (such as the funds) purchases securities (known as the "underlying security") from well-established securities dealers or banks that are members of the Federal Reserve System. Any such dealer or bank will be on T. Rowe Price`s approved list. At that time, the bank or securities dealer agrees to repurchase the underlying security at the same price, plus specified interest. Repurchase agreements are generally for a short period of time, often less than a week. Repurchase agreements that do not provide for payment within seven days will be treated as illiquid securities. The funds will enter into repurchase agreements only where (1) the underlying securities are of the type (excluding maturity limitations) which the funds` investment guidelines would allow them to purchase directly, (2) the market value of the underlying security, including interest accrued, will be at all times equal to or exceed the value of the repurchase agreement, and (3) payment for the underlying security is made only upon physical delivery or evidence of book-entry transfer to the account of the custodian or a bank acting as agent. In the event of a bankruptcy or other default of a seller of a repurchase agreement, the funds could experience both delays in liquidating the underlying security and losses, including: (a) possible decline in the value of the underlying security during the period while the funds seek to enforce their rights thereto; (b) possible subnormal levels of income and lack of access to income during this period; and (c) expenses of enforcing their rights.

    Reverse Repurchase Agreements

    Although the funds have no current intention of engagi ng in reverse repurchase agreements, they reserve the right to do so. Reverse repurchase agreements are ordinary repurchase agreements in which a fund is the seller of, rather than the investor in, securities and agrees to repurchase them at an agreed upon time and price. Use of a reverse repurchase agreement may be preferable to a regular sale and later repurchase of the securities because it avoids certain market risks and transaction costs. A reverse repurchase agreement may be viewed as a type of borrowing by the funds, subject to Investment Restriction (1). (See "Investment Restrictions.")

    Money Market Reserves

    The funds may invest their cash reserves primarily in one or more money market funds established for the exclusive use of the T. Rowe Price family of mutual funds and other clients of T. Rowe Price. Currently, two such money market funds are in operation: T. Rowe Price Government Reserve Investment Fund ("GRF") and T. Rowe Price Reserve Investment Fund ("RIF"), each a series of the T. Rowe Price R eserve Investment Funds, Inc. Additional series may be created in the future. These funds were created and operate under an exemptive order issued by the SEC.

    Both funds must comply with the requirements of Rule 2a-7 under the 1940 Act governing money market funds. GRF invests primarily in a portfolio of U.S. government-backed securities, primarily U.S. Treasuries, and repurchase agreements thereon. RIF invests at least 97% of its total assets in prime money market instruments receiving the highest credit rating.

    GRF and RIF provide a very efficient means of managing the cash reserves of the funds. While neither GRF nor RIF pays an advisory fee to T. Rowe Price, they will incur other expenses. However, GRF and RIF are expected by T. Rowe Price to operate at very low expense ratios. The funds will only invest in GRF or RIF to the extent consistent with their investment objectives and programs.

    Neither fund is insured or guaranteed by the FDIC or any other government agency. Although the funds seek to maintain a stable net asset value of $1.00 per share, it is possible to lose money by investing in them.

    High Yield, I nstitutional Floating Rate, and Institutional High Yield Funds

    Short Sales

    The funds may make short sales for hedging purposes to protect them against companies whose credit is deteriorating. Short sales are transactions in which the funds sell a security they do not own in anticipation of

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    a decline in the market value of that security. The funds` short sales would be limited to situations where the funds own a debt security of a company and would sell short the common or preferred stock or another debt security at a different level of the capital structure of the same company. No securities will be sold short if, after the effect is given to any such short sale, the total market value of all securities sold short would exceed 2% of the value of the funds` net assets.

    To complete a short-sale transaction, the funds must borrow the security to make delivery to the buyer. The funds then are obligated to replace the security borrowed by purchasing it at the market price at the time of replacement. The price at such time may be more or less than the price at which the security was sold by the fund. Until the security is replaced, the funds are required to pay to the lender amounts equal to any dividends or interest which accrue during the period of the loan. To borrow the security, the funds also may be required to pay a premium, which would increase the cost of the security sold. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet margin requirements, until the short position is closed out.

    Until the funds replace a borrowed security in connection with a short sale, the funds will: (a) maintain daily a segregated account, containing cash, U.S. government securities, or other suitable cover as permitted by the SEC, at such a level that (i) the amount deposited in the account plus the amount deposited with the broker as collateral will equal the current value of the security sold short and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time it was sold short; or (b) otherwise cover its short position.

    The funds will incur a loss as a result of the short sale if the price of the security sold short increases between the date of the short sale and the date on which the funds replace the borrowed security. The funds will realize a gain if the security sold short declines in price between those dates. This result is the opposite of what one would expect from a cash purchase of a long position in a security. The amount of any gain will be decreased, and the amount of any loss increased, by the amount of any premium, dividends, or interest the funds may be required to pay in connection with a short sale. Any gain or loss on the security sold short would be separate from a gain or loss on the funds` security being hedged by the short sale.

    The Taxpayer Relief Act of 1997 requires a mutual fund to recognize gain upon entering into a constructive sale of stock, a partnership interest, or certain debt positions occurring after June 8, 1997. A constructive sale is deemed to occur if the funds enter into a short sale, an offsetting notional principal contract, or a futures or forward contract which is substantially identical to the appreciated position. Some of the transactions in which the funds are permitted to invest may cause certain appreciated positions in securities held by the funds to qualify as a "constructive sale," in which case it would be treated as sold and the resulting gain subjected to tax or, in the case of a mutual fund, distributed to shareholders. If this were to occur, the funds would be required to distribute such gains even though it would receive no cash until the later sale of the security. Such distributions could reduce the amount of cash available for investment by the funds. Because these rules do not apply to "straight" debt transactions, it is not anticipated that they will have a significant impact on the funds; however, the effect cannot be determined until the issuance of clarifying regulations.

    Investment Restrictions

    Fundamental policies may not be changed without the approval of the lesser of (1) 67% of the funds` shares present at a meeting of shareholders if the holders of more than 50% of the outstanding shares are present in person or by proxy or (2) more than 50% of the funds` outstanding shares. Other restrictions in the form of operating policies are subject to change by the funds` Boards without shareholder approval. Any investment restriction which involves a maximum percentage of securities or assets shall not be considered to be violated unless an excess over the percentage occurs immediately after, and is caused by, an acquisition of securities or assets of, or borrowings by, the funds. With the exception of the diversification test required by the Code, calculation of the funds` total assets for compliance with any of the following fundamental or operating policies or any other investment restrictions set forth in the funds` prospectuses or SAI will not include collateral held in connection with securities lending activities. For purposes of the tax diversification test, calculation of the fund`s total assets will include investments made with cash received by the funds as

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    collateral for securities loaned. The diversification test required by the Code is set forth in the prospectuses of the funds referred to by name in restrictions (8) and (9) below.

    Fundamental Policies

    As a matter of fundamental policy, the funds may not:

    (a)Borrowing (All funds except Spectrum Funds) Borrow money, except that the funds may (i) borrow for non-leveraging, temporary, or emerg ency purposes; and (ii) engage in reverse repurchase agreements and make other investments or engage in other transactions, which may involve a borrowing, in a manner consistent with the funds` investment objectives and programs, provided that the combination of (i) and (ii) shall not exceed 33xb6 /xb8 % of the value of the funds` total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance with applicable law. The funds may borrow from banks, other Price Funds, or other persons to the extent permitted by applicable law;

    (b)Borrowing (Spectrum Funds) Borrow money, except the funds may borrow from banks or other Price Funds as a temporary measure for extraordinary or emergency purposes, and then only in amounts not exceeding 30% of total assets valued at market. The funds will not borrow in order to increase income (leveraging), but only to facilitate redemption requests which might otherwise require untimely disposition of portfolio securities. Interest paid on any such borrowings will reduce net investment income;

    (a)Commodities (All funds except Spectrum Growth and Spectrum Income Funds) Purchase or sell physical commodities, except that the funds (other than the Money Funds) may enter into futures contracts and options thereon;

    (b)Commodities (Spectrum Growth and Spectrum Income Funds) Purchase or sell commodities or commodity or futures contracts;

    Equity Securities (Summit Municipal Funds) Purchase equity securities or securities convertible into equity securities;

    (a)Industry Concentration (All funds except Equity Index 500, Extended Equity Market Index, Health Sciences, International Equity Index, Financial Services, Global Infrastructure, Global Real Estate, Prime Reserve, Real Estate, TRP Reserve Investment, Retirement, Spectrum, Summit Cash Reserves, Total Equity Market Index, and U.S. Bond Index Funds) Purchase the securities of any issuer if, as a result, more than 25% of the value of the funds` total assets w ould be invested in the securities of issuers having their principal business activities in the same industry;

    (b)Industry Concentration (Financial Services, Global Infrastructure, Global Real Estate, Health Sciences, and Real Estate Funds) Purchase the securities of any issuer if, as a result, more than 25% of the value of the funds` total assets would be invested in the securities of issuers having their principal business activities in the same industry, provided, however, that (i) the Health Sciences Fund will invest more than 25% of its total assets in the health sciences industry as defined in the fund`s prospectus; (ii) the Financial Services Fund will invest more than 25% of its total assets in the financial services industry as defined in the fund`s prospectus; (iii) the Global Infrastructure Fund will invest more than 25% of its total assets in the infrastructure industry as def ined in the fund`s prospectus; and (iv) the Global Real Estate and Real Estate Funds will invest more than 25% of their total assets in the real estate industry as defined in the funds` prospectuses;

    (c)Industry Concentration (Equity Index 500, Extended Equity Market Index, International Equity Index, Total Equity Market Index, and U.S. Bond Index Funds) Purchase the securities of any issuer if, as a result, more than 25% of the value of the fund`s total assets would be invested in the securities of issuers having their principal business activities in the same industry, except that the fund will invest more than 25% of the value of its total assets in issuers having their principal business activities in the same industry to the extent necessary to replicate the index that the fund uses as its benchmark as set forth in its prospectus;

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    (d)Industry Concentration (Prime Reserve, TRP Reserve Investment, and Summit Cash Reserves Funds) Purchase the securities of any issuer if, as a result, more than 25% of the value of the funds` total assets would be invested in th e securities of issuers having their principal business activities in the same industry, provided, however, that this limitation does not apply to securities of the banking industry including, but not limited to, certificates of deposit and banker`s acceptances;

    (e)Concentrati on (Retirement and Spectrum Funds) Concentrate in any industry, except that the funds will concentrate (invest more than 25% of total assets) in the mutual fund industry;

    (a)Loans (All funds except Retirement and Spectrum Funds) Make loans, although the funds may (i) lend portfolio securities and participate in an interfund lending program with other Price Funds provided that no such loan may be made if, as a result, the aggregate of such loans would exceed 33xb6 /xb8 % of the value of the funds` total assets; (ii) purchase money market securities and enter in to repurchase agreements; and (iii) acquire publicly distributed or privately placed debt securities and purchase debt;

    (b)Loans (Retirement and Spectrum Funds) Make loans, although the funds may purchase money market securities and enter into repurchase agreements;

    Margin (Spectrum Funds) Purchase securities on margin, except for use of short-term credit necessary for clearance of purchases of portfolio securities;

    Mortgaging (Spectrum Funds) Mortgage, pledge, hypothecate, or, in any manner, transfer any security owned by the funds as security for indebtedness, except as may be necessary in connection with permissible borrowings, in which event such mortgaging, pledging, or hypothecating may not exceed 30% of the funds` total assets, valued at market;

    Percent Limit on Assets Invested in Any One Issuer (All funds except Africa & Middle East,< /font> Emerging Europe & Mediterranean, Emerging Markets Bond, Global Real Estate, Institutional Africa & Middle East, Institutional Emerging Markets Bond, Institutional International Bond, Institutional Large-Cap Growth, International Bond, Latin America, New Asia, Retirement, and Spectrum Funds, and the State Tax-Free Income Trust) Purchase a security if, as a result, with respect to 75% of the value of the funds` total assets, more than 5% of the value of the funds` total assets would be invested in the securities of a single issuer, except securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities;

    Percent Limit on Share Ownership of Any One Issuer (All funds except Africa & Middle East, Emerging Europe & Mediterranean, Emerging Markets Bond, Global Real Estate, Institutional Africa & Middle East, Institutional Emerging Markets Bond, Institutional International Bond, Institutional Large-Cap Growth, International Bond, Latin America, New Asia, Retirement, and Spectrum Funds, and the State Tax-Free Income Trust) Purchase a security if, as a result, with respect to 75% of the value of the funds` total assets, more than 10% of the outstanding voting securities of any issuer would be held by the funds (other than obligations issued or guaranteed by the U.S. government, its agencies, or instrumentalities);

    (a)Real Estate (All funds except Retirement and Spectrum Funds) Purchase or sell real estate, including limited partnership interests therein, unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the funds from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business);

    (b)Real Estate (Retirement and Spectrum Funds) Purchase or sell real estate, including limited partnership interests therein, unless acquired as a result of ownership of securities or other instruments (although the funds may purchase money market securities secured by real estate or interests therein, or issued by companies or investment trusts which invest in real estate or interests therein);

    (a)Senior Securities (All funds except Spectrum Funds) Issue senior securities except in compliance with the 1940 Act;

    (b)Senior Securities (Spectrum Funds) Issue senior securities;

    Short Sales (Spectrum Funds) Effect short sales of securities;

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    Taxable Securities (California Tax-Free Income Trust, State Tax-Free Income Trust, and Tax-Free Funds) During periods of normal market conditions, purchase any security if, as a result, less than 80% of the funds` income would be exempt from federal and, if applicable, any state, city, or local income t ax. Normally, the funds will not purchase a security if, as a result, more than 20% of the funds` income would be subject to the AMT; or

    Underwriting Underwrite securities issued by other persons, except to the extent that the funds may be deemed to be an underwriter within the meaning of the 1933 Act in connection with the purchase and sale of fund portfolio securities in the ordinary course of pursuing their investment programs.

    NOTES

    The following Notes should be read in connection with the above-described fundamental policies. The Notes are not fundamental policies.

    Money funds With respect to investment res triction (1), the funds have no current intention of engaging in any borrowing transactions.

    All funds except Retirement and Spectrum Funds With respect to investment restriction (2), the funds do not consider currency contracts or hybrid investments to be commodities.

    All fun ds except Retirement and Spectrum Funds For purposes of investment restriction (4):

  • U.S., state, or local governments, or related agencies or instrumentalities, are not considered an industry.

  • Industries are determined by reference to the classifications of industries and sub-industries set forth in the Morgan Stanley Capital International/Standard & Poor`s (MSCI/S&P) Global Industry Classification Standard for the International Equity Funds, Tax-Efficient Equity, and Equity Funds except Financial Services, Global Infrastructure, Global Technology, Media & Telecommunications, New Era, and Science & Technology Funds. F or Financial Services, Global Infrastructure, Global Technology, Media & Telecommunications, New Era, and Science & Technology Funds, industries are determined by reference to industry classifications set forth in their semiannual and annual reports. For the Corporate Income, Inflation Protected Bond, Institutional Core Plus, New Income, Short-Term Bond, Short-Term Income, Strategic Income, and U.S. Bond Index Funds, and the fixed-income investments of the Balanced and Personal Strategy Funds, industries are determined by reference to the classifications of industries and sub-industries set forth in the Barclays Capital Glob al Aggregate Bond Index. For the Emerging Markets Bond, GNMA, High Yield, Institutional Emerging Markets Bond, Institutional Floating Rate, Institutional High Yield, Institutional International Bond, International Bond, Prime Reserve, TRP Reserve Investment, Summit Income, and U.S. Treasury Funds, industries are determined by reference to industry classifications set forth in their semiannual and annual reports. Annual changes by MSCI/S&P or Barclays Capital to their classifications will be implemented within 30 days after the effective date of the change. The Africa & Middle East Fund, Institutional Africa & Middle East Fund, and Latin America Fund consider telephone and banking companies of a single country to be separate industries from telephone and banking companies of any other country. It is the position of the staff of the SEC that foreign governments are industries for purposes of this restriction. For as long as this staff position is in effect, the International Bond Funds will not invest more than 25% of total assets in the securities of any single foreign governmental issuer. For purposes of this restriction, governmental entities are considered separate issuers.

    • All funds except Summit Inco me and U.S. Bond Index Funds For purposes of investment restriction (5), the funds will consider the acquisition of a debt security to include the execution of a note or other evidence of an extension of credit with a term of more than nine months.

    All funds except Spectrum Funds For purposes of investment restrictions (8) and (9), the funds will treat bonds which are refunded with escrow ed U.S. government securities as U.S. government securities.

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    Taxable Bond and Money Funds For purposes of investment restrictions (8) and (9), the funds will consider a repurchase agreement fully collateralized with U.S. government securities to be U.S. government securities.

    With respect to investment restriction (11), under the 1940 Act, an open-end investment company can borrow money from a bank provided that immediately after such borrowing there is asset coverage of at least 300% for all borrowings. If the asset coverage falls below 300%, the company must, within three business days, reduce the amount of its borrowings to satisfy the 300% requirement.

    For purposes of investment restriction (13), the funds measure the amount of their income from taxable securities, including AMT securities, over the course of the funds` ta xable year.

    Operating Policies

    As a matter of operating policy, the funds may not:

    Borrowing Purchase additional securities when money borrowed exceeds 5% of total assets (any borrowings under the TALF are not included with in this 5% limitation);

    Control of Portfolio Companies Invest in companies for the purpose of exercising management or control;

    Equity Securities (California Tax-Free Income Trust, State Tax-Free Income Trust, and Tax-Free Funds) Purchase any equity security or security convertible into an equity security, provided that the funds (other than the Money Funds) may invest up to 10% of total assets in equity securities, which pay tax-exempt dividends and which are otherwise consistent with the funds` investment objectives and, further provided, that Money Funds may invest up to 10% of total assets in equity securities of other tax-free open-end money market funds;

    Forward Currency Contracts (Retirement and Spectrum Funds) Purchase forward currency contracts, although the funds reserve the right to do so in the future;

    (a)Futures Contracts (All funds except Money Funds and Retirement and Spectrum Funds) Purchase a futures contract or an option thereon if, with respect to positions in futures or options on futures which do not represent bona fide hedging, the aggregate initial margin and premiums on such options would exceed 5% of the funds` net asset value;

    (b)Futures (Retirement and Spectrum International Funds) Purchase futures, although the funds reserve the right to do so in the future;

    (c)Futures (Spectrum Growth and Spectrum Income Funds) Invest in futures;

    Illiquid Securities Purchase illiquid securities if, as a result, more than 15% (10% for Spectrum and Money Funds) of net assets would be invested in such securities;

    Investment Companies (All funds except Retirement and Spectrum Funds) Purchase securities of open-end or closed-end investment companies except (i) securities of the TRP Reserve Investment Funds (provided that the investing fund does not invest more than 25% of its total assets in such funds); (ii) securities of T. Rowe Price institutional funds; (iii) in the case of the Money Funds, only securities of other money market funds; or (iv) otherwise consistent with the 1940 Act;

    Margin (All funds except Spectrum Funds) Purchase securities on margin, except (i) for use of short-term credit necessary for clearance of purchases of portfolio securities and (ii) they may make margin deposits in connection with futures contracts or other permissible investments;

    Mortgaging (All funds except Spectrum Funds) Mortgage, pledge, hypothecate, or, in any manner, transfer any security owned by the funds as security for indebtedness, except as may be necessary in connection with permissible borrowings or investments, and then such mortgaging, pledging, or hypothecating may not exceed 33xb6 /xb8 % of the funds` total assets at the time of borrowing or investment;

    Oil and Gas Programs Purchase participations or other direct interests in or enter into leases with respect to oil, gas, or other mineral exploration or development programs if, as a result thereof, more than 5% of the value of the total assets of the funds would be invested in such programs;

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    (a)Options, etc. (All funds except Retirement and Spectrum Funds) Invest in options in excess of the limits set forth in the funds` prospectuses and this SAI;

    (b)Options (Retirement Funds) Invest in options although the funds reserve the right to do so in the future;

    (c)Options (Spectrum Funds) Invest in options;

    (a)Short Sales (All funds except High Yield, Institutional Floating Rate, and Institutional High Yield Funds) Effect short sales of securities;

    (b)Short Sales (High Yield, Institutional Floating Rate, and Institutional High Yield Funds) Effect short sales of securities, other than as set forth in the funds` prospectuses and SAI; and

    Warrants Invest in warrants if, as a result, more than 10% of the value of the fund`s net assets would be invested in warrants, provided that, the Money, Retirement, Spectrum, State Tax-Free, Tax-Free, and Summit Municipal Funds will not invest in warrants.

    NOTES

    The following Notes should be read in connection with the above-described operating policies. The Notes are not operating policies.

    If a fund is subject to an 80% name test as set forth in its prospectus, it will be based on the fund`s net assets plus any borrowings for investment purposes. For purposes of determining whether a fund invests at least 80% of its net assets in a particular country or geographic region, the fund uses the country assigned to a security by MSCI Barra or another unaffiliated third-party data provider. The funds generally follow this same process with respect to the remaining 20% of assets but may occasionally make an exception after assessing various factors relating to a company.

    Blue Chip Growth, Capital Opportunity, Diversified Small - -Cap Growth, Financial Services, Global Technology, Health Sciences, High Yield, Institutional High Yield, Media & Telecommunications, Mid-Cap Value, Personal Strategy, Real Estate, Summit Income, Summit Municipal, U.S. Bond Index, and Value Funds

    Notwithstanding anything in the previously listed fundamental and operating restrictions to the contrary, the funds listed above may invest all of their assets in a single investment company or a series thereof in connection with a "master-feeder" arrangement. Such an investment would be made where the funds (a "Feeder"), and one or more other funds with the same investment objective and program as the funds, sought to accomplish their investment objectives and programs by investing all of their assets in the shares of another investment company (the "Master"). The Master would, in turn, have the same investment objective and < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">program as the funds. The funds would invest in this manner in an effort to achieve the economies of scale associated with having a Master fund make investments in portfolio companies on behalf of a number of Feeder funds.

    Foreign Investments

    In addition to the restrictions previously desc ribed, some foreign countries limit, or prohibit, all direct foreign investment in the securities of their companies. However, P-notes may sometimes be used to gain access to these markets. In addition, the governments of some countries have authorized the organization of investment funds to permit indirect foreign investment in such securities. For tax purposes, these funds may be known as Passive Foreign Investment Companies. The funds are subject to certain percentage limitations under the 1940 Act relating to the purchase of securities of investment companies, and may be subject to the limitation that no more than 10% of the value of the fund`s total assets may be invested in such securities.

    Retirement and Spectrum Funds

    There is no limit on the amount the funds may own of the total outstanding voting securities of registered investment companies which are members of the Price Funds. The funds, in accordance with the ir prospectuses, may invest more than 5% of their total assets in any one or more of the Price Funds. The funds may invest more than 10% of their total assets, collectively, in registered investment companies which are members of the Price Funds.

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    Custodian

    State Street Bank and Trust Company is the custodian for the funds` U.S. securities and cash, but it does not participate in the funds` investment decisions. Portfolio securities purchased in the U.S. are maintained in the custody of the bank and may be entered into the Federal Reserve Book Entry System, or the security depository system of the Depository Trust Corporation, or any central deposi tory system allowed by federal law. In addition, funds investing in municipal securities are authorized to maintain certain of their securities, in particular, variable rate demand notes, in uncertificated form, in the proprietary deposit systems of various dealers in municipal securities. State Street Bank`s main office is at 225 Franklin Street, Boston, Massachusetts 02110. State Street Bank maintains shares of the Retirement and Spectrum Funds in the book entry system of the funds` transfer a gent, T. Rowe Price Services, Inc.

    All funds that can invest in foreign securities have entered into a Custodian Agreement with JPMorgan Chase Bank, London, pursuant to which portfolio securities which are purchased outside the United States are maintained in the custody of various foreign branches of JPMorgan Chase Bank and such other custodians, including foreign banks and foreign securities depositories as are approved in accordance with regulations under the 1940 Act. The address for JPMorgan Chase Bank, London is Woolgate House, Coleman Street, London, EC2P 2HD, England.

    Code of Ethics

    The funds, their investment adviser (T. Rowe Price International for international funds and T.  Rowe Price for all other funds), and their principal underwriter (T. Rowe Price Investment Services) have a written Code of Ethics and Conduct which requires persons with access to investment information ("Access Persons") to obtain prior clearance before engaging in most personal securities transactions. Transactions must be executed within three business days of their clearance. In addition, all Access Persons must report their personal securities transactions within 30 days after the end of the calendar quarter. Aside from certain limited transactions involving securities in certain issuers with high trading volumes, Access Persons are typically not permitted to effect transactions in a security if: there are pending client orders in the security; the security has been purchased or sold by a client within seven calendar days; the security is being considered for purchase for a client; a change has occurred in T. Rowe Price`s rating of the security within seven calendar days prior to the date of the proposed transaction; or the security is subject to internal trading restrictions. In addition, Access Persons are prohibited from profiting from short-term trading (e.g., purchases and sales involving the same security within 60 days). Any person becoming an Access Person must file a statement of personal securities holdings within 10 days of this date. All Access Persons are required to file an annual statement with respect to their personal securities holdings. Any material violation of the Code of Ethics is reported to the Boards of the funds. The Boards also review the administration of the Code of Ethics on an annual basis.

    Disclosure of Fund Portfolio Information

    Each fund`s portfolio holdings are disclosed on a regular basis in its semiannual and annual reports to shareholders as well as Form N-Q which is filed with the SEC within 60 days of a fund`s first and third fiscal quarter-end. In addition, the funds` Boards have adopted policies and procedures with respect to the disclosure of the funds` portfolio securities and the disclosure of portfolio commentary and statistical information about the funds` portfolios and their securitie s. The policy on the general manner in which the funds` portfolio securities are disclosed is set forth in the funds` prospectuses. In addition, portfolio holdings with respect to periods prior to the most recent quarter-end may be disclosed upon request, subject to the sole discretion of T. Rowe Price.

    This SAI sets forth details of the funds` policy on portfolio holdings disclosure as well as the funds` policy on disclosing information about the funds` portfolios. In adopting the policies, the Boards of the funds took into account the views of the equity, fixed income and/or international steering committees of the funds`

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    investment advisers on what information should be disclosed and when and to whom it should be disclosed. The steering committees have oversight responsibilities for managing the T. Rowe Price funds. Each steering committee is comprised of senior investment management personnel of T. Rowe Price or T. Rowe Price International, as applicable. Each committee as a whole determines the funds` policy on the disclosure of portfolio holdings and related information. The funds` Boards believe the policies they have adopted are in the best interests of the funds and that they strike an appropriate balance between the desire of some persons for information about the funds` portfolios and the need to protect the funds from potentially harmful disclosures.

    From time to time, officers of the fun ds, the funds` investment adviser or the funds` distributor (collectively "TRP") may express their views orally or in writing on one or more of the funds` portfolio securities or may state that the funds have recently purchased or sold one or more securities. Such views and statements may be made to members of the press, shareholders in the funds, persons considering investing in the funds or representatives of such shareho lders or potential shareholders, such as fiduciaries of a 401(k) plan or a trust and their advisers and rating and ranking organizations such as Lipper Inc. and Morningstar, Inc. The nature and content of the views and statements provided to each of these persons may differ. The securities subject to these views and statements may be ones that were purchased or sold since the funds` most recent quarter-end and therefore may not be reflected on the list of the funds` most recent quarter-end portfolio holdings disclosed on the Web site.

    Additionally, TRP may provide oral or written information ("portfolio commentary") about the funds, including, but not limited to, how the funds` investments are divided among various sectors, industries, countries, value and growth stocks, small-, mid-, and large-cap stocks, and among stocks, bonds, currencies, and cash, types of bonds, bond maturities, bond coupons, and bond credit quality ratings. This portfolio commentary may also include information on how these various weightings and factors contributed to fund performance. TRP may also provide oral or written information ("statistical information") about various financial characteristics of the funds or their underlying portfolio securities including, but not limited to, alpha, beta, R-squared, duration, maturity, infor mation ratio, Sharpe ratio, earnings growth, payout ratio, price/book value, projected earnings growth, return on equity, standard deviation, tracking error, weighted average quality, market capitalization, percent debt to equity, price to cash flow, dividend yield or growth, default rate, portfolio turnover, and risk and style characteristics. This portfolio commentary and statistical information about the funds may be based on the funds` most recent quarter-end portfolio or on some other interim period such as month-end. The portfolio commentary and statistical information may be provided to members of the press, shareholders in the funds, persons considering investing in the funds or representatives of such shareholders or potential shareholders, such as fiduciaries of a 401(k) plan or a trust and their advisers and rating and ranking organizations. The content and nature of the information provided to each of these persons may differ.

    None of the persons described above will receive any of the information described above if, in the sole judgment of TRP, the information could be used in a manner that would be harmful to the funds. The T. Rowe Price Code of Ethics contains a provision to this effect.

    TRP also discloses portfolio holdings in connection with the day-to-day operations and management of the funds. Full portfolio holdings are disclosed to the funds` custodians and auditors. Portfolio holdings are disclosed to the funds` pricing service vendors and other persons who provide systems or software support in connection with fund operations, including accounting, compliance support, and pricing. Portfolio holdings may also be disclosed to persons assisting the funds in the voting of proxies. In connection with managing the funds, the funds` investment advisers may use analytical systems provided by third parties who may have access to the funds` portfolio holdings. In all of these situations, the funds or TRP have entered into an agreement with the outside party under which the party undertakes to maintain the funds` portfolio holdings on a confidential basis and to refrain from trading on the basis of the information. TRP relies on these non-disclosure agreements in determining that such disclosures are not harmful to the funds. The names of these persons and the services they provide are set forth in the following table under "Fund Service Providers." The policies and procedures adopted by the funds` Boards require that any additions to the list of "Fund Service Providers" be approved by specified officers at TRP.

    Additionally, when purchasing and selling its securities through broker-dealers, requesting bids on securities, obtaining price quotations on securities as well as in connection with litigation involving the funds` portfolio

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    securities, the funds may disclose one or more of their securities. The funds have not entered into formal non-disclosure agreements in connection with these situations; however, the funds would not continue to conduct business with a person who TRP believed was misusing the disclosed information.

    Fund Service Providers


    Service Provider


    Service

    American Stock Exchange
    		Systems Vendor
    Barclays Capital
    		Systems Vendor
    Bloomberg
    		Systems Vendor
    Bowne & Company
    		Systems Vendor
    Broadridge Systems
    		Systems Vendor
    Business Objects
    		Systems Vendor
    Cabot Research
    		Systems Vendor
    Charles River
    		Systems Vendor
    Citigroup
    		Systems Vendor
    Cognizant
    		Systems Vendor
    COR-FS Ltd.
    		Systems Vendor
    DST Global Solutions
    		Systems Vendor
    Eagle
    		Pricing and Systems Vendor
    FactSet
    		Systems Vendor
    F inix Business Strategies
    		Systems Vendor
    Fiserv
    		Systems Vendor
    Interactive Data
    		Pricing and Systems Vendor
    Investor Tools, Inc.
    		Systems Vendor
    ITG, Inc.
    		Pricing and Systems Vendor
    JPMorgan Chase
    		Pricing Vendor
    JPMorgan Chase, London
    		Custodian
    Markit WSO Corporation
    		Systems Vendor
    McArdle Printing Company
    		Printing and Mailing Vendor
    Omgeo LLC
    		Systems Vendor< br>
    Portware, LLC
    		Systems Vendor
    PricewaterhouseCoopers LLP
    		Independent Registered Public Accounting Firm
    RiskMetrics Group, Inc.
    		Proxy and Systems Vendor
    S&P/JJ Kenny
    		Pricing Vendor
    Serena
    		Systems Vendor
    SmartStream Technologies
    		Systems Vendor
    State Street Bank
    		Custodian
    Sybase Inc.
    		Systems Vendor
    Thomson Reuters
    		Pricing Vendor
    Visi on
    		Systems Vendor
    Wall Street Concepts, Inc.
    		Market Information Vendor
    WCI Consulting
    		Systems Vendor
    Wilhelm and Cooper LLC
    		Professional Staffing Service
    Wilshire
    		Systems Vendor

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    Pricing of Securities

    All Price Funds (except Money Funds and Fund-of-Funds)

    Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuat ions are made, except for OTC Bulletin Board securities, which are valued at the mean of the latest bid and asked prices. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the latest bid and asked prices for domestic securities and the last quoted sale price for international securities.

    Debt securities are generally traded in the over-the-counter market. Securities with remaining maturities of one year or more at the time of acquisition are valued using prices furnished by dealers who make markets in such securities or by an independent pricing service, which considers yield or price of bonds of comparable quality, coupon, maturity, and type, as well as prices quoted by dealers who make markets in such securities. Securities with remaining maturities of less than one year at the time of acquisition generally use amortized cost in local currency to approximate fair value. However, if amortized cost is deemed not to reflect fair value or the fund holds a significant amount of such securities with remaining maturities of more than 60 days, the securities are valued at prices furnished by dealers who make markets in such securities, or by an independent pricing service.

    Investments in mutual funds are valued at the mutual fund`s closing net asset value per share on the day of valuation. Purchased and written listed options, and over-the-counter options with a listed equivalent, are valued at the mean of the closing bid and asked prices. Options on futures contracts are valued at the last sale price. Foreign currency forward contracts are valued using the prevailing forward exchange rate. Financial futures contracts are valued at closing settlement prices. Swaps are valued at prices furnished by independent swap dealers or by an independent pricing service.

    Price Funds Investing in Foreign Securities

    Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and asked prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of th< /font>e transaction.

    Trading in the portfolio securities of the funds may take place in various foreign markets on certain days (such as Saturday) when the funds are not open for business and do not calculate their net asset value. As a result, < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">net asset values may be significantly affected by trading on days when shareholders cannot make transactions. In addition, trading in the funds` portfolio securities may not occur on days when the funds are open.

    If a fund determines that developments between the close of a foreign market and the close of the New York Stock Exchange ("NYSE") will, in its judgment, materially affect the value of some or all of its portfolio securities, that fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of the close of the NYSE. The fund uses outside pricing services to provide it with closing prices and information to evaluate and/or adjust those prices. As a means of evaluating its security valuation process, the fund routinely compares closing prices, the next day`s opening prices in the same markets, and adjusted prices.

    Money Funds

    Securities are valued at amortized cost in accordance with Rule 2a-7 under the 1940 Act.

    Fund-of-Funds

    Investments in the underlying Price funds held by each fund are valued at their closing net asset value per share on the day of valuation.

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    All Price Funds

    Other investments, including restricted securities, and those for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by the T. Rowe Price Valuation Committee, established by the funds` Boards.

    Net Asset Value Per Share

    The purchase and redemption price of the funds` shares is equal to the funds` net asset value per share or share price. The funds determine their net asset value per share by subtracting their liabilities (including accrued expenses and dividends payable) from their total assets (the market value of the securities the funds hold plus cash and other assets, including income accrued but not yet received) and dividing the resu lt by the total number of shares outstanding. The net asset value per share of the funds is calculated as of the close of trading on the NYSE every day the NYSE is open for trading. Determination of net asset value (and the offering, sale, redemption, and repurchase of shares) for the funds may be suspended at times (a) during which the NYSE is closed, other than customary weekend and holiday closings, (b) during which trading on the NYSE is restricted, (c) during which an emergency exists as a result of which disposal by the funds of securities owned by them is not reasonably practicable or it is not reasonably practicable for the funds fairly to determine the value of their net assets, or (d) during which a governmental body having jurisdiction over the funds may by order permit such a suspension for the protection of the funds` shareholders, provided that applicable rules and regulations of the SEC (or any succeeding governmental authority) shall govern as to whether the conditions prescribed in (b), (c), or (d) exist.

    Money Funds

    Maintenance of Money Funds` Net Asset Value per Share at $1.00

    It is the policy of the funds to attempt to maintain a net asset value of $1.00 per share by using the amortized cost method of valuation permitted by Rule 2a-7 under the 1940 Act. Under this method, securities are valued by reference to the funds` acquisition costs as adjusted for amortization of premium or accumulation of discount, rather than by reference to their market value. U nder Rule 2a-7:

    (a)The Boards must establish written procedures reasonably designed, taking into account current market conditions and the funds` investment objectives, to stabilize the funds` net asset value per share, as computed for the purpose of distribution, redemption, and repurchase, at a single value;

    (b)The funds must (i) maintain a dollar-weighted average portfolio maturity appropriate to their objective of maintaining a stable price per share; (ii) not purchase any instrument with a remaining maturity greater than 397 days; (iii) maintain a dollar-weighted average portfolio maturity of 60 days or less; (iv) maintain a dollar-weighted average life of 120 days or less; and (v) the taxable funds must hold at least 10% of their total assets in daily liquid assets, as defined in Rule 2a-7, and must hold at least 30% of their total assets in weekly liquid assets, as defined in Rule 2a-7.

    (c)The funds must limit their purchase of portfolio instruments, including repurchase agreements, to those U.S. dollar-denominated instruments which the funds` Boards determine present minimal credit risks and which are eligible securities as defined by Rule 2a-7; and

    (d)The Boards must determine that (i) it is in the best interest of the funds and the shareholders to maintain a stable net asset value per share under the amortized cost method; and (ii)< /font> the funds will continue to use the amortized cost method only so long as the Boards believe that it fairly reflects the market-based net asset value per share.

    Although the funds believe that they will be able to maintain their net asset value at $1.00 per share under most conditions, there can be no absolute assurance that they will be able to do so on a continuous basis. If the funds` net asset value per share declined, or was expected to decline, below $1.00 (rounded to the nearest one cent), the Boards of the funds might temporarily reduce or suspend dividend payments in an effort to maintain the net asset value at $1.00 per share. As a result of such reduction or suspension of dividends, an investor would receive less income during a given period than if such a reduction or suspension had not taken

    223

    place. Such action could result in an investor receiving no dividend for the period during which he holds his shares and in his receiving, upon redemption, a price per share lower than that which he paid. On the other hand, if the funds` net asset value per share were to increase, or were anticipated to increase, above $1.00 (rounded to the nearest one cent), the Boards of the funds might supplement dividends in an effort to maintain the net asset value at $1.00 per share.

    The funds may suspend redemptions and payment of redemption proceeds if: the funds` Board determines that the deviation between a fund`s amortized cost price per share and its market-based net asset value per share may result in material dilution or unfair results; the Board has irrevocably approved the liquidation of the fund; and the fund notifies the SEC of its decision to liquidate prior to suspending redemptions.

    Prime Reserve and TRP Reserve Investment Funds

    Prime Money Market Securities Defined

    Prime money market securities are those which are described as First Tier Securities under Rule 2a-7 of the 1940 Act. These include any security with a remaining maturity of 397 days or less that is rated (or that has been issued by an issuer that is rated with respect to a class of short-term debt obligations, or any security within that class that is comparable in priority and security with the security) by any two nationally recognized statistical rating organizations (NRSROs) (or if only one NRSRO has issued a rating, that NRSRO) in the highest rating category for short-term debt obligations (within which there may be sub-categories). First Tier Securities also include unrated securities comparable in quality to rated securities, as determined by T. Rowe Price under the supervision of the funds` Boards.

    Dividends and Distributions

    Unless you elect otherwise, capital gain distributions, final quarterly dividends and annual dividends, if any, will be reinvested on the reinvestment date using the net asset values per share on that date. The reinvestment date normally precedes the payment date by one day, although the exact timing is subject to change and can be as great as 10 days.

    In-Kind Redemptions and Purchases

    Redemptions In-Kind

    Each Price Fund has filed with the SEC a notice of election under Rule 18f-1 of the 1940 Act. This election permits a fund to effect a redemption in-kind if, in any 90-day period, a shareholder redeems: (i) more than $250,000 from the fund; or (ii) redeems more than 1% of the fund`s net assets. If either of these conditions is met, the fund has the right to pay the difference between the redemption amount and the lesser of these two figures with securities from the fund`s portfolio rather than in cash.

    In the unlikely event a shareholder receives an in-kind redemption of portfolio securities from a fund, it would be the responsibility of the shareholder to dispose of the securities. The shareholder would be subject to the risks that the value of the securities could decline prior to their sale, the securities could be difficult to sell, and brokerage fees could be incurred.

    Issuance of Fund Shares for Securities

    Transactions involving issuance of fund shares for securities or assets other than cash will be limited to (1) bona fide reorganizations; (2) statutory mergers; or (3) other acquisitions of portfolio securities that: (a) meet the investment objectives and policies of the funds; (b) are acquired for investment and not for resale except in accordance with applicable law; (c) have a value that is readily ascertainable via listing on or trading in a recognized United States or international exchange or market; and (d) are not illiquid.

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    Tax Status

    The funds intend to qualify as "regulated investment companies" under Subchapter M of the Code.

    To be entitled to the special tax benefits applicable to regulated investment companies, the funds will be required to distribute the sum of 90% of their investment company taxable income an d 90% of their net tax-exempt income, if any, each year. In order to avoid federal income tax, the funds must distribute all of their investment company taxable income and realized long-term capital gains for each fiscal year within 12 months after the end of the fiscal year. To avoid federal excise tax, the funds must declare dividends by December 31 of each year equal to at least 98% of ordinary income (as of December 31) and capital gains (as of October 31) and distribute such amounts prior t o February 1 of the following calendar year. Shareholders are required to include such distributions in their income for federal income tax purposes whether dividends and capital gain distributions are paid in cash or in additional shares.

    For individual shareholders, a portion of the funds` ordinary dividends representing "qualified dividend income" may be subject to tax at the lower rate applicable to long-term capital gains, rather than ordinary income. Unless extended, this favorable provision will expire on December 31, 2010, and ordinary dividends will again be taxed at tax rates applicable to ordinary income. "Qualified dividend income" is composed of certain dividends received from domestic and qualified foreign corporations. It excludes dividends representing payments in lieu of dividends related to loaned securities, dividends received on certain hedged positions, dividends on non-qualified foreign corporations, and dividends on stocks the funds have not held for more than 60 days during the 121-day period beginning 60 days before the stock became ex-dividend (90 and 181 days for certain preferred stock). Individual shareholders can only apply the lower rate to the qualified portion of the funds` dividends if they have held the shares in the funds on which the dividends were paid for the holding period surrounding the ex-dividend date of the funds` dividends. Little, if a ny, of the ordinary dividends from the Tax-Free, Taxable Bond, and Taxable Money Funds is expected to qualify for this lower rate.

    For corporate shareholders, a portion of the funds` ordinary dividends may be eligible for the 70% deduction for dividends received by corporations to the extent the funds` income consists of dividends paid by U.S. corporations. This deduction does not include dividends representing payments in lieu of dividends related to loaned secur ities, dividends received on certain hedged positions, dividends received from certain foreign corporations, and dividends on stocks the funds have not held for more than 45 days during the 90-day period beginning 45 days before the stock became ex-dividend (90 and 180 days for certain preferred stock). Corporate shareholders can only apply the lower rate to the qualified portion of the funds` dividends if they have held the shares in the funds on which the dividends were paid for the holding period surrounding the ex-dividend date of the funds` dividends. Little, if any, of the ordinary dividends from the Tax-Free, International (except Global Infrastructure, Global Large-Cap Stock, Global Stock, and Institutional Global Large-Cap Equity Funds), Taxable Bond, and Taxable Money Funds is expected to qualify for this deduction. Long-term capital gain distributions paid by the funds are not eligible for the dividends-received deduction.

    At the time of your purch ase of shares (except in Money Funds), the funds` net asset value may reflect undistributed income, capital gains, or net unrealized appreciation of securities held by the funds. A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable as either dividend or capital gain distributions. The funds may be able to reduce the amount of such distributions by utilizing their capital loss carry-overs, if any. For federal income tax purposes, the funds are permitted to carry forward their net realized capital losses, if any, for eight years and use such losses, subject to applicable limitations, to offset net capital gains up to the amount of such losses without being required to pay taxes on, or distribute, such gains.

    However, the amount of capital losses that can be carried forward and used in any single year may be limited if a fund experiences an "ownership change" within the meaning of Section 382 of th e Code. An ownership change generally results when the shareholders owning 5% or more of the fund increase their aggregate holdings by more than 50 percentage points over a three-year period. An ownership change could result in capital loss carry-overs to expire unused, thereby reducing a fund`s ability to offset capital gains with those losses. An increa se in the amount of taxable gains distributed to the fund`s shareholders could result from an ownership change. The Price Funds undertake no obligation to avoid or prevent an ownership change, which

    225

    can occur in the normal course of shareholder purchases and redemptions. Moreover, because of circumstances beyond a fund`s control, there can be no assurance that fund will not experience, or has not already experienced, an ownership change.

    If, in any taxable year, a fund does not qualify as a regulated investment company under the Code: (1) the fund would be taxed at the normal corporate rates on the entire amount of its taxable income, if any, without a deduction for dividends or other distributions to shareholders; (2) the fund`s distributions, to the extent made out of the fund`s current or accumulated earnings and profits, would be taxable to shareholders as ordinary dividends regardless of whether they would otherwise have been considered capital gain dividends; (3)  the fund may qualify for the 70% deduction for dividends received by corporations; and (4) foreign tax credits would not "pass through" to shareholders.

    Taxation of Foreign Shareholders

    Foreign shareholders may be subject to U.S. tax on the sale of shares in any fund, or on distributions of ordinary income and/or capital gains realized by a fund, depending on a number of factors, including the foreign shareholder`s country of tax residence, its other U.S. operations (if any), and the nature of the distribution received. Foreign shareholders should consult their own tax adviser to determine the precise U.S. and local tax consequences to an investment in any fund.

    Retirement and Spectrum Funds

    Distributions by the underlying Price funds, redemptions of shares in the underlying Price funds, and changes in asset allocations may result in taxable distributions of ordinary income or capital gains. In addition, the funds will generally not be able to currently offset gains realized by one underlying Price fund in which the funds invest against losses realized by another underlying Price fund. These factors could affect the amount, timing, and character of distributions to shareholders.

    State Tax-Free and Tax-Free Funds

    The funds anticipate that substantially all of the dividends to be paid by each fund will be exempt from federal income taxes. It is possible that a portion of the funds` dividends is not exempt from federal income taxes. You will receive a Form 1099-DIV, Form 1099-INT, or other IRS forms, as required, reporting the taxability of all dividends. The funds will also advise you of the percentage of your dividends, if any, which should be included in the computation of the alternative minimum tax. Social Security recipients who receive income dividends from tax-free funds may have to pay taxes on a portion of their Social Security benefits.

    Because the income dividends of the funds are expected to be derived from tax-exempt interest on municipal securities, any interest on money you borrow that is directly or indirectly used to purchase fund shares is not deductible. Further, entities or persons that are "substantial users" (or persons related to "substantial users") of facilities financed by industrial development bonds should consult their tax advisers before purchasing shares of these funds. The income from such bonds may not be tax-exempt for such substantial users.

    Foreign Income Taxes

    Income received by the funds from sources within various foreign countries may be subject to foreign income taxes. Under the Code, if more than 50% of the value of the funds` total assets at the close of the taxable year comprises securities issued by foreign corporations or governments, the funds may file an election to "pass through" to t he funds` shareholders any eligible foreign income taxes paid by the funds. There can be no assurance that the funds will be able to do so. Pursuant to this election, shareholders will be required to: (1) include in gross income, even though not actually received, their pro-rata share of foreign income taxes paid by the funds; (2) treat their pro-rata share of foreign income taxes as paid by them; and (3) either deduct their pro-rata share of foreign income taxes in comput ing their taxable income, or use it as a foreign tax credit against U.S. income taxes subject to certain limitations (but not both). A deduction for foreign income taxes may only be claimed by a shareholder who itemizes deductions.

    Foreign Currency Gains and Losses

    Foreign currency gains and losses, including the portion of gain or los s on the sale of debt securities attributable to foreign exchange rate fluctuations, are taxable as ordinary income. If the net effect of these transactions is a gain, the ordinary income dividend paid by the funds will be increased. If the result is a loss,

    226

    the ordinary income dividend paid by the funds will be decreased, or, to the extent such dividend has already been paid, it may be classified as a return of capital. Adjustments to reflect these gains and losses will be made at the end of the funds` taxable year.

    Passive Foreign Investment Companies

    The funds may purc hase, directly or indirectly, the securities of certain foreign investment funds or trusts, called "passive foreign investment companies" for U.S. tax purposes. Sometimes such investments are the only or primary way to invest in companies in certain countries. Some or all of the capital gains on the sale of such holdings may be considered ordinary income regardless of how long the funds held the investment. In addition, the funds may be subject to corporate income tax and/or an interest charge on certain dividends and capital gains earned from these investments, regardless of whether such income and gains are distributed to shareholders.

    To avoid such tax and/or interest, the funds intend to treat these securities, when possible, as sold on the last day of each of their fiscal years and to recognize any gains for tax purposes at that time; deductions for losses may be allowable only to the extent of any gains resulting from these deemed sales in prior taxable years. Such gains and losses will be treated as ordinary income or losses. The funds will be required to distribute any < /font>resulting income, even though they have not sold the security and received cash to pay such distributions.

    Investing in Mortgage Entities

    Special tax rules may apply to the funds` investments in entities which invest in or finance mortgage debt. Such investments include residual interests in Real Estate Mortgage Investment Conduits and interests in a REIT which qualifies as a taxable mortgage pool under the Code or has a qualified REIT subsidiary that is a taxable mortgage pool under the Code. Although it is the practice of the funds not to make such investments, there is no guarantee that the funds will be able t o sustain this practice or avoid an inadvertent investment.

    Such investments may result in the funds receiving excess inclusion income ("EII") in which case a portion of its distributions will be characterized as EII and shareholders receiving such distributions, including shares held through nominee accounts, will be deemed to have received EII. This can result in the funds being required to pay tax on the portion allocated to disqualified organizations: certain cooperatives, agencies or instrumentalities of a government or international organization, and tax-exempt organizations that are not subject to tax on unrelated business taxable income. In addition, such amounts will be treated as unrelated business taxable income to tax-exempt organizations that are not disqualified organizations, and will be subject to a 30% withholding tax for shareholders who are not U.S. persons, notwithstanding any exemptions or rate reductions in any relevant tax treaties.

    Capital Stock (Maryland Corporations)

    All funds except Capital Appreciation, Equity Income, GNMA, and New America Growth Funds, and California Tax-Free Income Trust and State Tax-Free Income Trust

    All of the funds, other than those listed immediately above, are organized as Maryland corporations ("Corporations") or series thereof. The funds` Charters authorize the Boards to classify and reclassify an y and all shares which are then unissued, including unissued shares of capital stock into any number of classes or series; each class or series consisting of such number of shares and having such designations, such powers, preferences, rights, qualifications, limitations, and restrictions as shall be determined by the Boards subject to the 1940 Act and other applicable law. The shares of any such additional classes or series might therefore differ from the shares of the present class and series of capital stock and from each other as to preferences, conversions, or other r ights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption, subject to applicable law, and might thus be superior or inferior to the capital stock or to other classes or series in various characteristics. The Boards may increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the funds have authorized to issue without shareholder approval.

    Except to the extent that the funds` Boards might provide that holders of sh ares of a particular class are entitled to vote as a class on specified matters presented for a vote of the holders of all shares entitled to vote

    227

    on such matters, there would be no right of class vote unless and to the extent that such a right might be construed to exist under Maryland law. The directors have provided that as to any matter with respect to which a separate vote of any class is required by the 1940 Act, such requirement as to a separate vote by that class shall apply in lieu of any voting requirements established by the Maryland General Corporation Law. Otherwise, holders of each class of capital stock are not entitled to vote as a class on any matter. Accordingly, the preferences, rights, and other characteristics attaching to any class of shares might be altered or eliminated, or the class might be combined with another class or classes, by action approved by the vote of the holders of a majority of all the shares of all classes entitled to be voted on the proposal, without any additional right to vote as a class by the holders of the capital stock or of another affected class or classes.

    Shareholders are entitled to one vote for each full share held (and fractional votes for fractional shares held) and will vote in the election of or removal of directors (to the extent hereinafter provided) and on other matters submitted to the vote of shareholders. There will normally be no meetings of shareholders for the purpose of electing directors unless and until such time as less than a majority of the directors holding office have been elected by shareholders, at which time the directors then in office will call a shareholders` meeting for the election of directors. Except as set forth above, the directors shall continue to hold office and may appoint successor directors. Voting rights a re not cumulative, so that the holders of more than 50% of the shares voting in the election of directors can, if they choose to do so, elect all the directors of the funds, in which event the holders of the remaining shares will be unable to elect any person as a director. As set forth in the By-Laws of the Corporations, a special meeting of shareholders of the Corporations shall be called by the secretary of the Corporations on the written request of shareholders entitled to cast (a) in the case of a meeting for the purpose of removing a director, at least ten (10) percent and (b) in the case of a meeting for any other purpose, at least 25 percent, in each case of all the votes entitled to be cast at such meeting, provided that any such request shall state the purpose or purposes of the meeting and the matters proposed to be acted on. Shareholders requesting such a meeting must pay to the Corporations the reasonably estimated costs of preparing and mailing the notice of the meeting. The Corporations, however, will otherwise assist the shareholders seeking to hold the special meeting in communicating to the other shareholders of the Corporations to the extent required by Section 16(c) of the 1940 Act.

    The series (and classes) set forth in the following table have been established by the Boards under the Articles of Incorporation of the indicated Corporations. Each series represents a separate pool of assets of the Corporations` shares and has different objectives and investment policies. Maryland law provides that the debts, liabilities, obligations, and expenses incurred with respect to a particular series or class are enforceable against the assets associated with that series or class only. The Articles of Incorporation also provide that the Boards may issue additional series of shares. Each share of each fund represents an equal proportionate share in that fund with each other share and is entitled to such dividends and distributions of income belonging to that fund as are declared by the directors. In the event of the liquidation of a fund, each share is entitled to a pro-rata share of the net assets of that fund. Classes represent separate shares in the funds but share the same portfolios as the indicated funds. Each fund is registered with the SEC under the 1940 Act as an open-end management investment company, commonly known as a "mutual fund."

    Maryland Corporations

    T. Rowe Price Balanced Fund, Inc. (fund)
    T. Rowe Price Blue Chip Growth Fund, Inc. (fund)
     T. Rowe Price Blue Chip Growth Fund—Advisor Class (class)
     T. Rowe Price Blue Chip Growth Fund—R Class (class)
    T. Rowe Price Capital Opportunity Fund, Inc. (fund)
     T. Rowe Price Capital Opportunity Fund—Advisor Class (class)
     T. Rowe Price Capital Opportunity Fund—R Class (class)
    T. Rowe Price Corporate Income Fund, Inc. (fund)
    T. Rowe Price Diversified Mid-Cap Growth Fund, Inc. (fund)
    T. Rowe Price Diversified Small-Cap Growth Fund, Inc. (fund)
    T. Rowe Price Dividend Growth Fund, Inc. (fund)
     T. Rowe Price Dividend Growth Fund—Advisor Class (class)
    T. Rowe Price Financial Services Fund, Inc. (fund)
    T. Rowe Price Global Real Estate Fund, Inc. (fund)
     T. Rowe Price Global Real Estate Fund—Advisor Class (class)
    T. Rowe Price Global Technology Fund, Inc. (fund)
    T. Rowe Price Growth & Income Fund, Inc. (fund)
    T. Rowe Price Growth Stock Fund, Inc. (fund)
     T. Rowe Price Growth Stock Fund—Advisor Class (class)
     T. Rowe Price Growth Stock Fund—R Class (class)
    T. Rowe Price Health Sciences Fund, Inc. (fund)
    T. Rowe Price High Yield Fund, Inc. (fund)
     T. Rowe Price High Yield Fund—Advisor Class (class)
    T. Rowe Price Index Trust, Inc. (corporation)
     T. Rowe Price Equity Index 500 Fund (series)
     T. Rowe Price Extended Equity Market Index Fund (series)
     T. Rowe Price Total Equity Market Index Fund (series)
    T. Rowe Price Inflation Protected Bond Fund, Inc. (fund)
    T. Rowe Price Institutional Equity Funds, Inc. (corporation)
     T. Rowe Price Institutional Large-Cap Core Growth Fund (series)
     T. Rowe Price Institutional Large-Cap Growth Fund (series)
     T. Rowe Price Institutional Large-Cap Value Fund (series)
     T. Rowe Price Institutional Mid-Cap Equity Growth Fund (series)
     T. Rowe Price Institutional Small-Cap Stock Fund (series)
     T.  Rowe Price Institutional U.S. Structured Research Fund (series)
    T. Rowe Price Institutional Income Funds, Inc. (corporation)
     T. Rowe Price Institutional Core Plus Fund (series)
     T. Rowe Price Institutional Floating Rate Fund (series)
     T. Rowe Price Institutional High Yield Fund (series)
    T. Rowe Price Institutional International Funds, Inc. (corporation)
     T. Rowe Price Institutional Africa & Middle East Fund (serie s) T. Rowe Price Institutional Emerging Markets Bond Fund (series)
     T. Rowe Price Institutional Emerging Markets Equity Fund (series)
     T. Rowe Price Institutional Foreign Equity Fund (series)
     T. Rowe Price Institutional Global Equity Fund (series)
     T. Rowe Price Institutional Global Large-Cap Equity Fund (series)
     T. Rowe Price Institutional International Bond Fund (series)
    T. Rowe Price International Funds, Inc. (corporation)
     T. Rowe Price Africa & Middle East Fund (series)
     T. Rowe Price Emerging Europe & Mediterranean Fund (series)
     T. Rowe Price Emerging Markets Bond Fund (series)
     T. Rowe Price Emerging Markets Stock Fund (series)
     T. Rowe Price European Stock Fund (series)
     T. Rowe Price Global Infrastructure Fund (series)
     T. Rowe Price Global Infrastructure Fund—Advisor Class (class)
     T. Rowe Price Global Large-Cap Stock Fund (series)
     T.     Rowe Price Global Large-Cap Stock Fund—Advisor Class (class)
     T. Rowe Price Global Stock Fund (series)
     T. Rowe Price Global Stock Fund—Advisor Class (class)
     T. Ro we Price International Bond Fund (series)
     T. Rowe Price International Bond Fund—Advisor Class (class)
     T. Rowe Price International Discovery Fund (series)
     T. Rowe Price International Growth & Income Fund (series)
     T. Rowe Price International Growth & Income Fund—Advisor Class (class)
     T. Rowe Price International Growth & Income Fund—< /font>R Class (class)
     T. Rowe Price International Stock Fund (series)
     T. Rowe Price International Stock Fund—Advisor Class (class)
     T. Rowe Price International Stock Fund—R Class (class)
     T. Rowe Price Japan Fund (series)
     T. Rowe Price Latin America Fund (series)
     T. Rowe Price New Asia Fund (series)
     T. Rowe Price Overseas Stock Fund (series)
    T. Rowe Price International Index Fund, Inc. (corporation)
     T. Rowe Price International Equity Index Fund (series)
    T. Rowe Price Media & Telecommunications Fund, Inc. (fund)
    T. Rowe Price Mid-Cap Growth Fund, Inc. (fund)
     T. Rowe Price Mid-Cap Growth Fund—Advisor Class (class)
     T. Rowe Price Mid-Cap Growth Fund—R Class (class)
    T. Rowe Price Mid-Cap Value Fund, Inc. (fund)
     T. Rowe Price Mid-Cap Value Fund—Advisor Class (class)
     T. Rowe Price Mid-Cap Value Fund—R Class (class)
    T. Rowe Price New Era Fund, Inc. (fund)
    T. Rowe Price New Horizons Fund, Inc. (fund)
    T. Rowe Price New Income Fund, Inc. (fund)
     T. Rowe Price New Income Fund—Advisor Class (class)
     T. Rowe Price New Income Fund—R Class (class)
    T. Rowe Price Personal Strategy Funds, Inc. (corporation)
     T. Rowe Price Personal Strategy Ba lanced Fund (series)
     T. Rowe Price Personal Strategy Growth Fund (series)
     T. Rowe Price Personal Strategy Income Fund (series)
    T. Rowe Price Prime Reserve Fund, Inc. (fund)
    T. Rowe Price Real Estate Fund, Inc. (fund)
     T. Rowe Price Real Estate Fund—Advisor Class (class)
    T. Rowe Price Reserve Investment Funds, Inc. (corporation)
    < font style="font-size:10.0pt;" face="Berkeley Book" color="Black"> T. Rowe Price Government Reserve Investment Fund (series)
     T. Rowe Price Reserve Investment Fund (series)
    T. Rowe Price Retirement Funds, Inc. (corporation)
     T. Rowe Price Retirement 2005 Fund (series)
     T. Rowe Price Retirement 2005 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2005 Fund—R Class (class)
     T. Rowe Price Retirement 2010 Fund (series)
     T. Rowe Price Retirement 2010 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2010 Fund—R Class (class)
     T. Rowe Price Retirement 2015 Fund (series)
     T. Rowe Price Retirement 2015 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2015 Fund—R Class (class)
     T. Rowe Price Retirement 2020 Fund (series)
     T. Rowe Price Retirement 2020 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2020 Fund—R Class (class)
     T. Rowe Price Retirement 2025 Fund (series)
     T. Rowe Price Retirement 2025 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2025 Fund—R Class (class)
     T. Rowe Price Retirement 2030 Fund (series)
     T. Ro we Price Retirement 2030 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2030 Fund—R Class (class)
         T. Rowe Price Retirement 2035 Fund (series)
     T. Rowe Price Retirement 2035 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2035 Fund—R Class (class)
     T. < font style="font-size:10.0pt;" face="Berkeley Book" color="Black">Rowe     Price Retirement 2040 Fund (series)
     T. Rowe Price Retirement 2040 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2040 Fund—R Class (class)
     T. Rowe Price Retirement 2045 Fund (series)
     T. Rowe Price Retirement 2045 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2045 Fund—R Class (class)
     T. Rowe Price Retirement 2050 Fund (series)
     T. Rowe Price Retirement 2050 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2050 Fund—R Class (class)
     T. Rowe Price Retirement 2055 Fund (series)
     T. Rowe Price Retirement 2055 Fund—Advisor Class (class)
     T. Rowe Price Retirement 2055 Fund—R Class (class)
     T. Rowe Price Retirement Income Fund (series)
     T. Rowe Price Retirement Income Fund—Advisor Class (class)
     T. Rowe Price Retirement Income Fund—R Class (class)
    T. Rowe Price Science & Technology Fund, Inc. ( fund)
     T. Rowe Price Science & Technology Fund—Advisor Class (class)
    T. Rowe Price Short-Term Bond Fund, Inc. (fund)
     T. Rowe Price Short-Term Bond Fund—Advisor Class (class)
    T. Rowe Price Short-Term Income Fund, Inc. (fund)
    T. Rowe Price Small-Cap Stock Fund, Inc. (fund)
     T. Rowe Price Small-Cap Stock Fund—Advisor Class (class)
    T. Rowe Price Small-Cap Value Fund, Inc. (fund)
     T. Rowe Price Small-Cap Value Fund—Advisor Class (class)
    T. Rowe Price Spectrum Fund, Inc. (corporation)
     Spectrum Growth Fund (series)
     Spectrum Income Fund (series)
     Spectrum International Fund (series)
    T. Rowe Price Strategic Income Fund, Inc. (fund)
     T. Rowe Price Strategic Income Fund—Advisor Class (class)
    T. Rowe Price Summit Funds, Inc. (corporation)
     T. Rowe Price Summit Cash Reserves Fund (series)
     T. Rowe Price Summit GNMA Fund (series)
    T. Rowe Price Summit Municipal Funds, Inc. (corporation)
     T. Rowe Price Summit Municipal Money Market Fund (series)
     T. Rowe Price Summit Municipal Intermediate Fund (series)
     T. Rowe Price Summit Municipal Income Fund (series)
    T. Rowe Price Tax-Efficient Funds, Inc. (corporation)
     T. Rowe Price Tax-Efficient Equity Fund (series)
    T. Rowe Price Tax-Exempt Money Fund, Inc. (fund)
    T. Rowe Price Tax-Free High Yield Fund, Inc. (fund)
    T. Rowe Price Tax-Free Income Fund, Inc. (fund)
     T. Rowe Price Tax-Free Income Fund—Advisor Class (class)
    T. Rowe Price Tax-F ree Short-Intermediate Fund, Inc. (fund)
    T. Rowe Price U.S. Bond Index Fund, Inc. (fund)
    T. Rowe Price U.S. Large-Cap Core Fund, Inc. (fund)
     T. Rowe Price U.S. Large-Cap Core Fund—Advisor Class (class)
    T. Rowe Price U.S. Treasury Funds, Inc. (corporation)
     U.S. Treasury Intermediate Fund (series)
     U.S. Treasury Long-Term Fund (series)
     U.S. Treasury Money Fund (series)
    T. Rowe Price Value Fund, Inc. (fund)
     T. Rowe Price Value Fund—Advisor Class (class)

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    Balanced Fund

    On August 31, 1992, the T. Rowe Price Balanced Fund acquired substantially all of the assets of the Axe-Houghton Fund B, a series of Axe-Houghton Funds, Inc. As a result of this acquisition, the SEC requires that the historical performance information of the Balanced Fund be based on the performance of Fund B. Therefore, all performance information of the Balanced Fund prior to September 1, 1992, reflects the performance of Fund B and investment managers other than T. Rowe Price. Performance information after August 31, 1992, reflects the combined assets of the Balanced Fund and Fund B.

    Media & Telecommunications Fund

    On July 28, 1997, the fund converted its status from a closed-end fund to an open-end mutual fund. Prior to the conversion the fund was known as New Age Media Fund, Inc.

    Small-Cap Stock Fund

    Effective May 1, 1997, the fund`s name was changed from the T. Rowe Price OTC Fund to the T. Rowe Price Small-Cap Stock Fund.

    Equity Index 500 Fund

    Effective January 30, 1998, the fund`s name was changed from T. Rowe Price Equity Index Fund to the T. Rowe Price Equity Index 500 Fun d.

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    Organization of the Funds (Massachusetts Business Trusts)

    Capital Appreciation, Equity Income, GNMA, and New America Growth Funds, and California Tax-Free Income Trust and State Tax-Free Income Trust

    For tax and business reasons, these funds were organized as Massachusetts business trusts ("Trusts"). Each fund is registered with the SEC under the 1940 Act as an open-end management investment company, commonly known as a "mutual fund."

    The Declaration of Trust permits the Boards to issue an unlimited number of full and fractional shares of a single class. The Declaration of Trust also provides that the Boards may issue additional series or classes of shares. Each share represents an equal proportionate beneficial interest in the funds. In the event of the liquidation of the funds, each share is entitled t o a pro-rata share of the net assets of the funds.

    Shareholders are entitled to one vote for each full share held (and fractional votes for fractional shares held) and will vote in the election of or removal of trustees (to the extent hereinafter provided) and on other matters submitted to the vote of shareholders. There will normally be no meetings of shareholders for the purpose of electing trustees unless and until such time as less than a majority of the trustees holding office have been elected by shareholders, at which time the tr ustees then in office will call a shareholders` meeting for the election of trustees. Pursuant to Section 16(c) of the 1940 Act, holders of record of not less than two-thirds of the outstanding shares of the funds may remove a trustee by a vote cast in person or by proxy at a meeting called for that purpose. Except as set forth above, the trustees shall continue to hold office and may appoint successor trustees. Voting rights are not cumulative, so that the holders of more than 50% of the shares voting in the election of trustees can, if they choose to do so, elect all the trustees of the Trusts, in which event the holders of the remaining shares will be unable to elect any person as a trustee. No amendments may be made to the Declaration of Trust without the affirmative vote of a majority of the outstanding shares of the Trusts.

    Shares have no preemptive or conversion rights; the right of redemption and the privilege of exchange are described in the prospectus. Shares are fully paid and nonassessable, except as set forth below. The Trusts may be terminated (i) upon the sale of their assets to another open-end management investment company, if approved by the vote of the holders of two-thirds of the outstanding shares of the Trusts, or (ii) upon liquidation and distribution of the assets of the Trusts, if approved by the vote of the holders of a majority of the outstanding shares of the Trusts. If not so terminated, the Trusts will continue indefinitely.

    Under Massachusetts law, s hareholders could, under certain circumstances, be held personally liable for the obligations of the funds. However, the Declaration of Trust disclaims shareholder liability for acts or obligations of the funds and requires that notice of such disclaimer be given in each agreement, obligation, or instrument entered into or executed by the funds or trustees. The Declaration of Trust provides for indemnification from fund property for all losses and expenses of any shareholder held personally liable for the obligations of the funds. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the funds themselves would be unable to meet their obligations, a possibility which T. Rowe Price believes is remote. Upon payment of any liability incurred by the funds, the shareholders of the funds paying such liability will be entitled to reimbursement from the general assets of the funds. The trustees intend to conduct the operations of the funds in such a way as to avoid, as far as possible, ultimate liability of the shareholders for liabilities of such funds.

    The series and classes set forth in the following table have been established by the Boards under the Declaration of Trust of the indicated trusts.

    Massachusetts Business Trusts

    T. Rowe Price California Tax-Free Income Trust (trust)
     California Tax-Free Bond Fund (series)
     California Tax-Free Money Fund (series)
    T. Rowe Price Capital Appreciation Fund (fund)
    T. Rowe Price Capital Appreciation Fund—Advisor Class (class)
    T. Rowe Price Equity Income Fund (fund)
     T. Rowe Price Equity Income Fund—Advisor Class (class)
     T.&# 160;Rowe Price Equity Income Fund—R Class (class)
    T. Rowe Price GNMA Fund (fund)
    T. Rowe Price New America Growth Fund (fund)
     T. Rowe Price New America Growth Fund—Advisor Class (class)
    T. Rowe Price State Tax-Free Income Trust (trust)
     Georgia Tax-Free Bond Fund (series)
     Maryland Short-Term Tax-Free Bond Fund (series)
     Maryland Tax-Free Bond Fund (series)
     Maryland Tax-Free Money Fund (series)
     New Jersey Tax-Free Bond Fund (series)
     New York Tax-Free Bond Fund (series)
     New York Tax-Free Money Fund (series)
     Virginia Tax-Free Bond Fund (series)

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    Proxy Voting — Process and Policies

    T. Rowe Price Associates, Inc. and T. Rowe Price International, Inc. ("T. Rowe Price") recognize and adhere to the principle that one of the privileges of owning stock in a company is the right to vote on issues submitted to shareholder vote—such as election of directors and important matters affecting a company`s structure and operations. As an investment adviser w ith a fiduciary responsibility to its clients, T. Rowe Price analyzes the proxy statements of issuers whose stock is owned by the investment companies that it sponsors and serves as investment adviser. T. Rowe Price also is involved in the proxy process on behalf of its institutional and private counsel clients who have requested such service. For those private counsel clients who have not delegated their voting responsibility but who request advice, T. Rowe Price makes recommendations regarding prox y voting. T. Rowe Price reserves the right to decline to vote proxies in accordance with client-specific voting guidelines.

    Proxy Administration

    The T. Rowe Price Proxy Committee develops our firm`s positions on all major corporate and social responsibility issues, creates guidelines, and oversees the voting process. The Proxy Committee, composed of portfolio managers, investment operations managers, and internal legal counsel, analyzes proxy policies based on whether they would adversely affect shareholders` interests and make a company less attractive to own. In evaluating proxy policies each year, the Proxy Committee relies upon our own fundamental research, independent proxy research provided by third parties such as RiskMetrics Group ("RMG") (formerly known as Institutional Shareholder Services) and Glass Lewis, and information presented by company managements and shareholder groups.

    Once the Proxy Committee establishes its recommendations, they are distributed to the firm`s portfolio managers as voting guidelines. Ultimately, the portfolio manager decides how to vote on the proxy proposals of companies in his or her portfolio. Because portfolio managers may have differences of opinion on portfolio companies and their proxies, or their portfolios may have different investment objectives, these factors, among others, may lead to different votes between portfolios on the same proxies. When portfolio managers cast votes that are counter to the Proxy Committee`s guidelines, they are required to document their reasons in writing to the Proxy Committee. Annually , the Proxy Committee reviews T. Rowe Price`s proxy voting process, policies, and voting records.

    T. Rowe Price has retained RMG, an expert in the proxy voting and corporate governance area, to provide proxy advisory and voting services. These services include in-depth research, analysis, and voting recommendations as well as vote execution, reporting, auditing and consulting assistance for the handling of proxy voting responsibility and corporate governance-related efforts. While the Proxy Committee relies upon

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    RMG research in establishing T. Rowe Price`s voting guidelines—many of which are consistent with RMG positions—T. Rowe Price deviates from RMG recommendations on some general policy issues and a number of specific proxy proposals.

    Fiduciary Considerations

    T. Rowe Price`s decisions with respect to proxy issues are made in light of the anticipated impact of the issue on the desirability of investing in the portfolio company. Proxies are voted solely in the interests of the client, Price Fund shareholders or, where employee benefit plan assets are involved, in the interests of plan participants and beneficiaries. Practicalities and costs involved with international investing may make it impossible at times, and at other times disadvantageous, to vote proxies in every instance. For example, we might refrain from voting if we or our agents are required to appear in person at a shareholder meeting or if the exercise of voting rights results in the imposition of trading or other ownership restrictions.

    Consideration Given Management Recommendations

    One of the primary factors T. Rowe Price considers when determining the desirability of investing in a particular company is the quality and depth of its management. We recognize that a company`s management is entrusted with the day-to-day operations of the company, as well as its long-term direction and strategic planning, subject to the oversight of the company`s board of directors. Accordingly, our proxy voting guidelines are not intended to substitute our judgment for management`s with respect to the company`s day-to-day operations. Rather, our voting guidelines are designed to promote accountability of a company's management and board of directors to its shareholders, to align the interests of management with those of shareholders, and to encourage companies to adopt best practices in terms of their corporate governance. In addition to our voting guidelines, we rely on a company`s disclosures, its board`s recommendations, a company`s track record, country-specific best practices codes, our research providers and, most importantly, our investment professionals` views, in making voting decisions.

    T. Rowe Price Voting Policies

    Specific voting guidelines have been established by the Proxy Committee for recurring issues that appear on proxies. The following is a summary of the more significant T. Rowe Price policies:

    Election of Directors

    T. Rowe Price generally supports slates with a majority of independent directors. We vote against outside directors that do not meet certain criteria relating to their independence but who serve on key board committees. We vote against directors who are unable to dedicate sufficient time to their board duties due to their commitment to other boards. We may vote against certain directors who have served on company boards where we believe there has been a gross failure in governance or oversight. T. Rowe Price also votes against inside directors serving on key board committees and directors who miss more than one-fourth of the scheduled board meetings. We may vote against directors for failing to establish a formal nominating committee, as well as compensation committee members who approve excessive compensation plans. We support efforts to elect all board members annually because boards with staggered terms act as deterrents to takeover proposals. To strengthen boards` accountability to shareholders, T. Rowe Price generally supports proposals calling for a majority vote threshold fo r the election of directors.

    Executive Compensation

    Our goal is to assure that a company`s equity-based compensation plan is aligned with shareholders` long-term interests. We evaluate plans on a case-by-case basis, using a proprietary, scorecard-based approach that employs a number of factors, including dilution to shareholders, probl ematic plan features, burn rate, and the equity compensation mix. Plans that are constructed to effectively and fairly align executives` and shareholders` incentives generally earn our approval. Conversely, we oppose compensation packages that provide what we view as excessive awards to few senior executives, contain the potential for excessive dilution relative to the company`s peers, or rely on an inappropriate mix of options and full-value awards. We also may oppose equity plans at any company where we deem the overall compensation practices to be problematic. We genera lly oppose plans that give a company the ability to reprice options or to grant options at below market prices, unless such plans appropriately balance shareholder and employee interests, and the retention of key personnel has become a genuine risk to the company`s business. For companies with particularly

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    egregious pay practices, we may vote against compensation committee members. Finally, we vote in favor of proposals (either management or shareholder-sponsored) calling for shareholder ratifi cation of a company`s executive compensation practices ("Say-on-Pay" proposals) a majority of the time.

    Mergers and Acquisitions

    T. Rowe Price considers takeover offers, mergers, and other extraordinary corporate transactions on a case-by-case basis to determine if they are beneficial to shareholders` current and future earnings stream and to ensure that our Price Funds and clients are receiving fair compen sation in exchange for their investment.

    Anti-takeover, Capital Structure, and Corporate Governance Issues

    T. Rowe Price generally opposes anti-takeover measures and other proposals designed to limit the ability of shareholders to act on possible transactions. Such anti-takeover mechanisms include classified boards, superma jority voting requirements, dual share classes and poison pills. We also oppose proposals that give management a "blank check" to create new classes of stock with disparate rights and privileges. When voting on capital structure proposals, we will consider the dilutive impact to shareholders and the effect on shareholder rights. We generally support shareholder proposals that call for the separation of the Chairman and CEO positions unless there are sufficient governance safeguards already in place. With respect to proposals for the approval of a company`s auditor, we typically oppose auditors who have a significant non-audit relationship with the company.

    Social and Corporate Responsibility Issues

    T. Rowe Price generally votes with a company`s management on social, environmental, and corporate responsibility issues unless they have substantial investment implications for the company`s business and operations that have not been adequately addressed by management. T. Rowe Price supports well-targeted shareholder proposals on environmental and other public policy issues that are particularly relevant to a company`s businesses.

    Monitoring and Resolving Conflicts of Interest

    The Proxy Committee is also responsible for monitoring and resolving possible material conflicts between the interests of T. Rowe Price and those of its clients with respect to proxy voting. We have adopted safeguards to ensure that our proxy voting is not influenced by interests other than those of our fund shareholders. While membership on the Proxy Committee is diverse, it does not include individuals whose primary duties relate to client relationship management, marketing, or sales. Since our voting guidelines are predetermined by the Proxy Committee using recommendations from RMG, an independent third party, application of the T. Rowe Price guidelines to vote clients` proxies should in most instances adequately address any possible conflicts of interest. However, for proxy votes inconsistent with T. Rowe Price guidelines, the Proxy Committee reviews all such proxy votes in order to determine whether the portfolio manager`s voting rationale appears reasonable. The Proxy Committee also assesses whether any business or other relationships between T. Rowe Price and a portfolio company could have influenced an inconsistent vote on that company`s proxy. Issues raising possible conflicts of interest are referred to designated members of the Proxy Committee for immediate resolution prior to the time T. Rowe Price casts its vote. With respect to personal conflicts of interest, T. Rowe Price`s Code of Ethics requires all employees to avoid placing themselves in a "compromising position" where their interests may conflict with those of our clien ts and restricts their ability to engage in certain outside business activities. Portfolio managers or Proxy Committee members with a personal conflict of interest regarding a particular proxy vote must recuse themselves and not participate in the voting decisions with respect to that proxy.

    Index, Retirement, and Spectrum Funds

    Voting of T. Rowe Price Group, Inc., common stock (sym: TROW) by certain T. Rowe Price index funds will be done in all instances in accordance with T. Rowe Price policy, and votes inconsistent with policy will not be permitted. The Retirement and Spectrum Funds own shares in underlying T. Rowe Price funds. If an underlying T. Rowe Price fund has a shareholder meeting, the Retirement and Spectrum Funds normally would vote their shares in the underlying fund in the same proportion as the votes of the other shareholders of the underlying fund. This is known as "echo voting" and is designed to avoid any potential for a conflict of interest. This sa me process would be followed with respect to any T. Rowe Price funds owning shares in other T. Rowe Price funds.

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    T. Rowe Price Proxy Vote Disclosure

    T. Rowe Price funds make broad disclosure of their proxy votes on troweprice.com and on the SEC`s Internet site at http://www.sec.gov. All funds, regardless of their fiscal years, must file with the SEC by August 31, their proxy voting records for the most recent 12-month period ended June 30.

    Federal Registration of Shares

    The funds` shares (except for TRP Government Reserve Investment and TRP Reserve Investment Funds) are registered for sale under the 1933 Act. Registration of the funds` shares are not required under any state law, but the funds are required to make certain filings with and pay fees to the states in order to sell their shares in the states.

    Legal Counsel

    Willkie Farr & Gallagher LLP, whose address is 787 Seventh Avenue, New York, New York 10019, is legal counsel to the funds.

    Ratings of Commercial Paper

    Moody`s Investors Service, Inc. P-1 superior capacity for repayment. P-2 strong capacity for repayment. P-3 acceptable capacity for repayment of short-term promissory obligations.

    Standard & Poor`s Corporation A-1 highest category, degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) des ignation. A-2 satisfactory capacity to pay principal and interest. A-3 adequate capacity for timely payment, but are more vulnerable to adverse effects of changes in circumstances than higher-rated issues. B and C speculative capacity to pay principal and interest.

    Fitch Ratings F-1+ exceptionally strong credit quality, strongest degree of assurance for timely payment. F-1 very strong credit quality. F-2 good credit quality, having a satisfactory degree of assurance for timely payment. F-3 fair credit quality, assurance for timely payment is adequate, but adverse changes could cause the securities to be rated below investment grade.

    Moody`s Investors Service, Inc. The rating of Prime-1 is the highest commercial paper rating assigned by Moody`s. Among the factors considered by Moody`s in assigning ratings are the following: valuation of the management of the issuer; economic evaluation of the issuer`s industry or industries and an appraisal of speculative-type risks which may be inherent in certain areas; evaluation of the issuer`s products in relation to competition and customer acceptance; liquidity; amount and quality of long-term debt; trend of earnings over a period of 10 years; financial strength of the parent company and the relationships which exist with the issuer; and recognition by the management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations. These factors are all considered in determi ning whether the commercial paper is rated P1, P2, or P3.

    Standard & Poor`s Corporation Commercial paper rated A (highest quality) by S&P has the following characteristics: liquidity ratios are adequate to meet cash requirements; long-term senior debt is rated "A" or better, although in some cases "BBB" credits may be allowed. The issuer has access to at least two additional channels of borrowing. Basic earnings and cash flow have an upward trend with allowance made for unusual circumstances. Typically, the issuer`s industry is well established and the issuer has a strong position within the industry. The reliability and quality of management are unquestioned. The relative strength or weakness of the above factors determines whether the issuer`s commercial paper is rated A1, A2, or A3.

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    Fitch Ratings Fitch 1—Highest grade Commercial paper assigned this rating is regarded as having the strongest degree of assurance for timely payment. Fitch 2—Very good grade Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than the strongest issues.

    Ratings of Corporate and Municipal Debt Securities

    Moody`s Investors Service, Inc.

    Aaa—Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged."

    Aa—Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high-grade bonds.

    A—Bonds rated A possess many favorable investment attributes and are to be considered as upper medium-grade obligations.

    Baa—Bonds rate d Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present, but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

    Ba—Bonds rated Ba are judged to have speculative elements: their futures cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

    B—Bonds rated B generally lack the characteristics of a desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

    Caa—Bonds rated Caa are of poor standing. Such issues may be in default, or there may be present elements of danger with respect to repayment of principal or payment of interest.

    Ca—Bonds rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

    C—Bonds rated C represent the lowest rated and have extremely poor prospects of attaining investment standing.

    Standard & Poor`s Corporation

    AAA—This is the highest rating assigned by Standard & Poor`s to a debt obligation and indicates an extremely strong capacity to pay principal and interest.

    AA—Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay principal and interest is very strong.

    A—Bonds rated A have a strong capacity to pay principal and interest, although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.

    BBB—Bonds rated BBB are regarded as having an adequate capacity to pay principal and interest. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay principal and interest for bonds in this category than for bonds in the A category.

    BB, B, CCC, CC, C—Bonds rated BB, B, CCC, CC, and C are regarded on balance as predominantly speculative with respect to the issuer`s capacity to pay interest and repay principal. BB indicates the lowest degree of speculation and C the highest degree of speculation. While such bonds will likely have some quality and

    238

    protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.

    D—In default.

    Fitch Ratin gs

    AAA—High grade, broadly marketable, suitable for investment by trustees and fiduciary institutions, and liable to slight market fluctuation other than through changes in the money rate. The prime feature of an AAA bond is the showing of earnings several times or many times interest requirements for such stability of applicable interest that safety is beyond reasonable question whenever changes occur in conditions. Other features may enter, such as wide margin of protection through collateral, security, or direct lien on specific property. Sinking funds or voluntary reduction of debt by call or purchase are often factors, while guarantee or assumption by parties other than the original debtor may influence the rating.

    AA—Of safety virtually beyond question and readily salable. Their merits are not greatly unlike those of AAA class, but a bond so rated may be junior, though of strong lien, or the margin of safety is less strikingly broad. The issue may be the obligation of a small company, strongly secured, but influenced as to rating by the lesser financial power of the enterprise and more local type of market.

    A—Bonds rated A are considered to be investment grade and of high credit quality. The obligor`s ability to pay interest and repay princi pal is considered to be strong but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.

    BBB—Bonds rated BBB are considered to be investment grade and of satisfactory credit quality. The obligor`s ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these bonds and therefore impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings.

    BB, B, CCC, CC, and C—Bonds rated BB, B, CCC, CC, and C are regarded on balance as predominantly speculative with respect to the issuer`s capacity to pay interest and repay principal in accordance with the terms of the obligation for bond issues not in default. BB indicates the lowest degree of speculation and C the highest degree of speculation. The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer, and the current and prospective financial condition and operating performance of the issuer.

    Ratings of Municipal Notes and Variable Rate Securities

    Moody`s Investors Service, Inc. VMIG1/MIG-1 the best quality. VMIG2/MIG-2 high quality, with margins of protection ample, though not so large as in the preceding group. VMIG3/MIG-3 favorable quality, with all security elements accounted for, but lacking the undeniable strength of the preceding grade s. Market access for refinancing, in particular, is likely to be less well established. SG adequate quality, but there is specific risk.

    Standard & Poor`s Corporation SP-1 very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety cha racteristics will be given a plus (+) designation. SP-2 satisfactory capacity to pay interest and principal. SP-3 speculative capacity to pay principal and interest.

    Fitch Ratings F-1+ exceptionally strong credit q uality, strongest degree of assurance for timely payment. F-1 very strong credit quality. F-2 good credit quality, having a satisfactory degree of assurance for timely payment. F-3 fair credit quality, assurance for timely payment is adequate, but adverse changes could cause the securities to be rated below investment grade.

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    INDEX
































    Page








    Page
















    Capital Stock
    		227

    		Organization of the Funds
    		233
    Code of Ethics
    		219

    		Other Shareholder Services
    		129
    Custodian
    		219

    		Part I
    		6
    Derivatives
    		195

    		Part II
    		162
    Disclosure of Fund Portfolio Information
    		219


    Portfolio Management Practices
    		211
    Distributor for the Funds
    		134

    		Portfolio Securities
    		178
    Dividends and Distributions
    		224

    		Portfolio Transactions
    		137
    Federal Registration of Shares
    		237

    		Pricing of Securities
    		222
    Independent Registered Public Accounting Firm
    		161


    Principal Holders of Securities
    		78
    In-Kind Redemptions and Purchases
    		224

    		Proxy Voting — Process and Policies
    		234
    Investment Management Agreements
    		112

    		Ratings of Commercial Paper
    		237

    Investment Objectives and Policies
    		162

    		Ratings of Corporate and Municipal Debt Securities
    		238

    Investment Restrictions
    		213

    		 Ratings of Municipal Notes and Variable Rate Securities
    		239
    Legal Counsel
    		237

    		Risk Factors
    		162
    Management of the Funds
    		12

    		Tax Status
    		225
    Net Asset Value Per Share
    		223



    240

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