<PAGE>
PAGE 1
Registration Nos. 2-67029/811-3055
Registration Nos. 2-87059/811-3872
Registration Nos. 33-49117/811-7051
Registration Nos. 2-57265/811-2684
Registration Nos. 2-94641/811-4163
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Post-Effective Amendment No. 26 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/ X /
Amendment No. 18 / X /
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
___________________________________________________
(Exact name of Registrant as Specified in Charter)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Post-Effective Amendment No. 19 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/ X /
Amendment No. 16 / X /
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
__________________________________________________________
(Exact name of Registrant as Specified in Charter)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Post-Effective Amendment No. 3 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/ X /
Amendment No. 4 / X /
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND FUND, INC.
_____________________________________________________
(Exact name of Registrant as Specified in Charter)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Post-Effective Amendment No. 36 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/ X /
Amendment No. 20 / X /
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
_________________________________________________
(Exact name of Registrant as Specified in Charter)
<PAGE>
PAGE 2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Post-Effective Amendment No. 15 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/ X /
Amendment No. 14 / X /
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
_____________________________________________________
(Exact name of Registrant as Specified in Charter)
Fiscal Years Ended February 28, 1994
100 East Pratt Street, Baltimore, Maryland
21202
___________________________________________
___________
(Address of Principal Executive Offices) (Zip
Code)
Registrant's Telephone Number, Including Area Code 410-
547-2000
____________
Henry H. Hopkins
100 East Pratt Street
Baltimore, Maryland 21202
________________________________________
(Name and Address of Agent for Service)
<PAGE>
PAGE 3
It is proposed that this filing will become effective (check
appropriate box):
/___/immediately upon filing pursuant to paragraph (b)
/___/on (date) pursuant to paragraph (b)
/___/60 days after filing pursuant to paragraph (a)
/_X_/on July 1, 1994 pursuant to paragraph (a) of Rule 485
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933+
_________________________________________________________________
____________
Pursuant to Section 24f-2 of the Investment Company Act of 1940,
the Registrant has registered an indefinite number of securities
under the Securities Act of 1933 and intends to file a 24f-2
Notice by April 29, 1994.
+ Not applicable, as no securities are being registered by this
Post-
Effective Amendment No. 26 to the Registration Statement.
Pursuant to Section 24f-2 of the Investment Company Act of 1940,
the Registrant has registered an indefinite number of securities
under the Securities Act of 1933 and intends to file a 24f-2
Notice by April 29, 1994.
+ Not applicable, as no securities are being registered by this
Post-
Effective Amendment No. 19 to the Registration Statement.
Pursuant to Section 24f-2 of the Investment Company Act of 1940,
the Registrant has registered an indefinite number of securities
under the Securities Act of 1933 and intends to file a 24f-2
Notice by April 29, 1994.
+ Not applicable, as no securities are being registered by this
Post-
Effective Amendment No. 3 to the Registration Statement.
Pursuant to Section 24f-2 of the Investment Company Act of 1940,
the Registrant has registered an indefinite number of securities
under the Securities Act of 1933 and intends to file a 24f-2
Notice by April 29, 1994.
+ Not applicable, as no securities are being registered by this
Post-
Effective Amendment No. 36 to the Registration Statement.
Pursuant to Section 24f-2 of the Investment Company Act of 1940,
the Registrant has registered an indefinite number of securities
under the Securities Act of 1933 and intends to file a 24f-2
Notice by April 29, 1994.
+ Not applicable, as no securities are being registered by this
Post-
Effective Amendment No. 15 to the Registration Statement.
<PAGE>
PAGE 4
CROSS REFERENCE SHEET-TAX-EXEMPT MONEY FUND
N-1A Item No. Location
_____________ ________
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Transaction Costs and Fund
Expenses
Item 3. Condensed Financial InformationFinancial Highlights
Item 4. General Description of RegistrantTransaction Costs and
Fund
Expenses; Fund and Market
Characteristics: What to
Expect; The Fund's
Organization
and Management;
Understanding
Performance Information;
Investment Policies and
Practices; Ratings of
Municipal Debt Securities
Item 5. Management of the Fund Transaction Costs and Fund
Expenses; Fund and Market
Characteristics: What to
Expect; The Fund's
Organization
and Management
Item 6. Capital Stock and Other SecuritiesUseful Information on
Distributions and Taxes;
The
Fund's Organization and
Management
Item 7. Purchase of Securities Being Pricing Shares and
Receiving
Offered Sale Proceeds; Transaction
Procedures and Special
Requirements; Meeting
Requirements for New
Accounts;
Shareholder Services
Item 8. Redemption or Repurchase Pricing Shares and
Receiving
Sale Proceeds; Transaction
Procedures and Special
Requirements; Exchanging
and
Redeeming Shares;
Shareholder
Services
Item 9. Pending Legal Proceedings +
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History+
Item 13. Investment Objectives and PoliciesInvestment Objectives
and
Policies; Risk Factors;
Investment Programs;
Investment
Restrictions; Investment
Performance
Item 14. Management of the Registrant Management of Funds
Item 15. Control Persons and Principal Principal Holders of
Holders of Securities Securities
Item 16. Investment Advisory and Other Investment Management
Services Services; Custodian;
Independent Accountants;
Legal Counsel
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other SecuritiesDividends; Capital
Stock
<PAGE>
PAGE 5
Item 19. Purchase, Redemption and PricingRatings of Municipal
Debt
of Securities Being OfferedSecurities; Ratings of
Municipal Notes and
Variable Rate Securities;
Ratings of Commercial
Paper; Redemptions in
Kind; Pricing of
Securities; Net Asset
Value Per Share;
Federal and State
Registration
of Shares
Item 20. Tax Status Tax Status
Item 21. Underwriters Distributor for Funds
Item 22. Calculation of Yield Quotations of
Money Market Funds Yield Information
Item 23. Financial Statements Incorporated by Reference
from Annual Report
PART C
Information required to be included in Part C is set forth under
the appropriate item, so numbered, in Part C to this Registration
Statement
___________________________________
+Not applicable or negative answer
<PAGE>
PAGE 6
CROSS REFERENCE SHEET-TAX-FREE SHORT-INTERMEDIATE FUND
N-1A Item No. Location
_____________ _________
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Transaction Costs and Fund
Expenses
Item 3. Condensed Financial InformationFinancial Highlights
Item 4. General Description of RegistrantTransaction Costs and
Fund
Expenses; Fund and Market
Characteristics: What to
Expect; The Fund's
Organization
and Management;
Understanding
Performance Information;
Investment Policies and
Practices; Ratings of
Municipal Debt Securities
Item 5. Management of the Fund Transaction Costs and Fund
Expenses; Fund and Market
Characteristics: What to
Expect; The Fund's
Organization
and Management
Item 6. Capital Stock and Other SecuritiesUseful Information on
Distributions and Taxes;
The
Fund's Organization and
Management
Item 7. Purchase of Securities Being Pricing Shares and
Receiving
Offered Sale Proceeds; Transaction
Procedures and Special
Requirements; Meeting
Requirements for New
Accounts;
Shareholder Services
Item 8. Redemption or Repurchase Pricing Shares and
Receiving
Sale Proceeds; Transaction
Procedures and Special
Requirements; Exchanging
and
Redeeming Shares;
Shareholder
Services
Item 9. Pending Legal Proceedings +
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History+
Item 13. Investment Objectives and PoliciesInvestment Objectives
and
Policies; Risk Factors;
Investment Programs;
Investment
Restrictions; Yield
Information; Investment
Performance
Item 14. Management of the Registrant Management of Funds
Item 15. Control Persons and Principal Principal Holders of
Holders of Securities Securities
Item 16. Investment Advisory and Other Investment Management
Services Services; Custodian;
Independent Accountants;
Legal Counsel
<PAGE>
PAGE 7
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other SecuritiesDividends; Capital
Stock
Item 19. Purchase, Redemption and PricingRatings of Municipal
Debt
of Securities Being OfferedSecurities; Ratings of
Municipal Notes and
Variable Rate Securities;
Ratings of Commercial
Paper; Redemptions in
Kind; Pricing of
Securities; Net Asset
Value Per Share;
Federal and State
Registration of Shares
Item 20. Tax Status Tax Status
Item 21. Underwriters Distributor for Funds
Item 22. Calculation of Yield Quotations of
Money Market Funds +
Item 23. Financial Statements Incorporated by Reference
from Annual Report
PART C
Information required to be included in Part C is set forth under
the appropriate item, so numbered, in Part C to this Registration
Statement.
____________________________
+Not applicable or negative answer
<PAGE>
PAGE 8
CROSS REFERENCE SHEET-TAX-FREE INCOME FUND
N-1A Item No. Location
_____________ _________
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Transaction Costs and Fund
Expenses
Item 3. Condensed Financial InformationFinancial Highlights
Item 4. General Description of RegistrantTransaction Costs and
Fund
Expenses; Fund and Market
Characteristics: What to
Expect; The Fund's
Organization
and Management;
Understanding
Performance Information;
Investment Policies and
Practices; Ratings of
Municipal Debt Securities
Item 5. Management of the Fund Transaction Costs and Fund
Expenses; Fund and Market
Characteristics: What to
Expect; The Fund's
Organization
and Management
Item 6. Capital Stock and Other SecuritiesUseful Information on
Distributions and Taxes;
The
Fund's Organization and
Management
Item 7. Purchase of Securities Being Pricing Shares and
Receiving
Offered Sale Proceeds; Transaction
Procedures and Special
Requirements; Meeting
Requirements for New
Accounts;
Shareholder Services
Item 8. Redemption or Repurchase Pricing Shares and
Receiving
Sale Proceeds; Transaction
Procedures and Special
Requirements; Exchanging
and
Redeeming Shares;
Shareholder
Services
Item 9. Pending Legal Proceedings +
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History+
Item 13. Investment Objectives and PoliciesInvestment Objectives
and
Policies; Risk Factors;
Investment Programs;
Investment
Restrictions; Yield
Information; Investment
Performance
Item 14. Management of the Registrant Management of Funds
Item 15. Control Persons and Principal Principal Holders of
Holders of Securities Securities
Item 16. Investment Advisory and Other Investment Management
Services Services; Custodian;
Independent Accountants;
Legal Counsel
<PAGE>
PAGE 9
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other SecuritiesDividends; Capital
Stock
Item 19. Purchase, Redemption and PricingRatings of Municipal
Debt
of Securities Being OfferedSecurities; Ratings of
Municipal Notes and
Variable Rate Securities;
Ratings of Commercial
Paper; Redemptions in
Kind; Pricing of
Securities; Net Asset
Value Per Share;
Federal and State
Registration of Shares
Item 20. Tax Status Tax Status
Item 21. Underwriters Distributor for Funds
Item 22. Calculation of Yield Quotations of
Money Market Funds +
Item 23. Financial Statements Incorporated by Reference
from Annual Report
PART C
Information required to be included in Part C is set forth under
the appropriate item, so numbered, in Part C to this Registration
Statement
___________________________________
+Not applicable or negative answer
<PAGE>
PAGE 10
CROSS REFERENCE SHEET-TAX-FREE HIGH YIELD FUND
N-1A Item No. Location
____________ ________
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Transaction Costs and Fund
Expenses
Item 3. Condensed Financial InformationFinancial Highlights
Item 4. General Description of RegistrantTransaction Costs and
Fund
Expenses; Fund and Market
Characteristics: What to
Expect; The Fund's
Organization
and Management;
Understanding
Performance Information;
Investment Policies and
Practices; Ratings of
Municipal Debt Securities;
Asset Composition
Item 5. Management of the Fund Transaction Costs and Fund
Expenses; Fund and Market
Characteristics: What to
Expect; The Fund's
Organization
and Management
Item 6. Capital Stock and Other SecuritiesUseful Information on
Distributions and Taxes;
The
Fund's Organization and
Management
Item 7. Purchase of Securities Being Pricing Shares and
Receiving
Offered Sale Proceeds; Transaction
Procedures and Special
Requirements; Meeting
Requirements for New
Accounts;
Shareholder Services
Item 8. Redemption or Repurchase Pricing Shares and
Receiving
Sale Proceeds; Transaction
Procedures and Special
Requirements; Exchanging
and
Redeeming Shares;
Shareholder
Services
Item 9. Pending Legal Proceedings +
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History+
Item 13. Investment Objectives and PoliciesInvestment Objectives
and
Policies; Risk Factors;
Investment Programs;
Investment
Restrictions; Yield
Information; Investment
Performance
Item 14. Management of the Registrant Management of Funds
Item 15. Control Persons and Principal Principal Holders of
Holders of Securities Securities
Item 16. Investment Advisory and Other Investment Management
Services Services; Custodian;
Independent Accountants;
Legal Counsel
<PAGE>
PAGE 11
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other SecuritiesDividends; Capital
Stock
Item 19. Purchase, Redemption and PricingRatings of Municipal
Debt
of Securities Being OfferedSecurities; Ratings of
Municipal Notes and
Variable Rate Securities;
Ratings of Commercial
Paper; Redemptions in
Kind; Pricing of
Securities; Net Asset
Value Per Share;
Federal and State
Registration of Shares
Item 20. Tax Status Tax Status
Item 21. Underwriters Distributor for Funds
Item 22. Calculation of Yield Quotations of
Money Market Funds +
Item 23. Financial Statements Incorporated by Reference
from Annual Report
PART C
Information required to be included in Part C is set forth under
the appropriate item, so numbered, in Part C to this Registration
Statement.
+Not applicable or negative answer
<PAGE>
PAGE 12
CROSS REFERENCE SHEET-TAX-FREE INSURED INTERMEDIATE BOND FUND
N-1A Item No. Location
_____________ _________
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Transaction Costs and Fund
Expenses
Item 3. Condensed Financial InformationFinancial Highlights
Item 4. General Description of RegistrantTransaction Costs and
Fund
Expenses; Fund and Market
Characteristics: What to
Expect; The Fund's
Organization
and Management;
Understanding
Performance Information;
Investment Policies and
Practices; Ratings of
Municipal Debt Securities;
Asset Composition
Item 5. Management of the Fund Transaction Costs and Fund
Expenses; Fund and Market
Characteristics: What to
Expect; The Fund's
Organization
and Management
Item 6. Capital Stock and Other SecuritiesUseful Information on
Distributions and Taxes;
The
Fund's Organization and
Management
Item 7. Purchase of Securities Being Pricing Shares and
Receiving
Offered Sale Proceeds; Transaction
Procedures and Special
Requirements; Meeting
Requirements for New
Accounts;
Shareholder Services
Item 8. Redemption or Repurchase Pricing Shares and
Receiving
Sale Proceeds; Transaction
Procedures and Special
Requirements; Exchanging
and
Redeeming Shares;
Shareholder
Services
Item 9. Pending Legal Proceedings +
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History+
Item 13. Investment Objectives and PoliciesInvestment
Objective and Policies;
Risk
Factors; Investment
Program;
Investment Restrictions;
Yield Information;
Investment Performance
Item 14. Management of the Registrant Management of Fund
Item 15. Control Persons and PrincipalPrincipal Holders of
Holders of Securities Securities
Item 16. Investment Advisory and OtherInvestment Management
Services Services; Custodian;
Independent Accountants;
Legal Counsel
<PAGE>
PAGE 13
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other SecuritiesDividends; Capital
Stock
Item 19. Purchase, Redemption and PricingRatings of Municipal
Debt
of Securities Being Offered Securities; Ratings of
Municipal Notes and
Variable
Rate Securities; Ratings
of
Commercial Paper;
Pricing of Securities;
Net Asset Value Per Share;
Redemptions in Kind;
Federal and State
Registration
of Shares
Item 20. Tax Status Tax Status
Item 21. Underwriters Distributor for the Fund
Item 22. Calculation of Yield Quotations of
Money Market Funds +
Item 23. Financial Statements Incorporated by Reference
from
Annual Report
PART C
Information required to be included in Part C is set forth under
the appropriate item, so numbered, in Part C to this Registration
Statement
___________________________________
+ Not applicable or negative answer<PAGE>
PAGE 14
PAGE 1
T. Rowe Price
Tax-Free Funds
July 1, 1994
Facts at a Glance
Objectives The highest
possible levels of income
exempt from federal
income taxes, consistent
with each Fund's
prescribed investment
program. As with all
mutual funds, these Funds
may not meet their
objectives.
Strategy and Risk/Reward Contents
Potential _________________________________
Tax-Exempt Money Fund, 1 About the Tax-Free Funds
Inc.R Invests in high- _________________________________
quality, short-term Transaction Costs and Fund Expenses
municipal securities, and _________________________________
its average maturity will Financial Highlights
not exceed 90 days. The _________________________________
Fund is managed to Fund and Market Characteristics
maintain a stable share _________________________________
price of $1.00 but there 2 About Your Account
is no assurance the price _________________________________
will always be stable. Pricing Shares;
Your investment in the Receiving Sale Proceeds
Fund is neither insured _________________________________
nor guaranteed by the Distributions and Taxes
U.S. Government. _________________________________
Risk/Reward: Lowest Transaction Procedures and Special
potential risk and Requirements
reward. _________________________________
3 More About the Funds
Tax-Free Short- _________________________________
Intermediate Fund, Inc.R Organization and Management
Invests primarily in _________________________________
higher-quality short- and Understanding Fund Performance
intermediate-term _________________________________
municipal bonds rated A Investment Policies and Practices
or above. Its average _________________________________
portfolio maturity will 4 Investing With T. Rowe Price
not exceed five years. _________________________________
Risk/Reward: Moderate Meeting Requirements for New Accounts
income level and share- _________________________________
price fluctuation. Opening a New Account
_________________________________
Tax-Free Insured Purchasing Additional Shares
Intermediate Bond Fund, _________________________________
Inc. Invests primarily in Exchanging and Redeeming
intermediate-term _________________________________
municipal bonds whose Shareholder Services
interest and principal _________________________________
payments are insured by
private insurance This prospectus contains information you
companies. Insurance should know before investing. Please keep
does not apply to the it for future reference. A Statement of
Fund's share price, which Additional Information about the Funds,
will fluctuate. Average dated July 1, 1994, has been filed with the
maturity will range Securities and Exchange Commission and is
between 5 and 10 years. incorporated by reference in this
Risk/Reward: Somewhat prospectus. To obtain a free copy, call 1-
higher income and 800-638-5660.
potential share-price
fluctuation than the
Short-Intermediate Fund.
(See discussion on
insurance on pages 17 and
18.)
Tax-Free Income Fund,
Inc.R Invests in longer-
term, investment-grade
municipal bonds with an
average maturity
generally exceeding 15
years. Risk/Reward:
Higher income and
potential share-price
fluctuation than the
shorter-term Funds.
Tax-Free High Yield Fund,
Inc.R Invests in long-
term municipal bonds
whose credit quality
ranges from upper-medium
to lower, including
"junk" bonds. The
average maturity will
generally exceed 15
years. Risk/Reward:
Highest income, greatest
credit risk, and highest
potential share-price
volatility.
Investor Profile
Investors whose income
tax level enables them to
benefit from tax-exempt
income. Not appropriate
for tax-deferred
retirement plans.
Fees and Charges 100% no
load. No fees or charges
to buy or sell shares or
to reinvest dividends; no
12b-1 marketing fees;
free telephone exchange.
Investment Manager
Founded in 1937 by the
late Thomas Rowe Price,
Jr., T. Rowe Price
Associates, Inc. ("T.
Rowe Price") and its
affiliates currently
manage over $40 billion,
including over $4 billion
in municipal bond assets,
for approximately two and
a half million individual
and institutional
investors.
THESE SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION, OR ANY STATE
SECURITIES COMMISSION,
NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
1 About the Tax-Free Transaction Costs and Fund Expenses
Funds
These tables should help you understand the
kinds of expenses you will bear directly or
indirectly as a Fund shareholder.
In Table 1 below, "Shareholder Transaction
Costs," shows that you pay no direct costs
to buy, sell, or exchange shares in the
Fund. All the money you invest in a Fund
goes to work for you.
_________________________ ___________________________________________
Like all T. Rowe Price Fund Expenses
Funds, the Tax-Free Shareholder Transaction Costs
Funds are 100% no-load. Money Short- Insured
Intermediate Intermediate
___________________________________________
Sales "Charge" None None None
(load) on purchases
___________________________________________
Sales "Charge" None None None
(load) on reinvested dividends
___________________________________________
Redemption fees* None None None
___________________________________________
Exchange fees None None None
___________________________________________
Income High
Yield
___________________________________________
None None
___________________________________________
None None
___________________________________________
None None
___________________________________________
None None
___________________________________________
Annual Mutual Fund Expenses
Percentage of Fiscal 1994 Average
Net Assets
Money Short- Insured
Intermediate Intermediate
(After Re-
duction)**
___________________________________________
Management
Fee 0.45% 0.45% 0.50%
___________________________________________
Distribution None None None
(12b-1) Fee
___________________________________________
Other admin-0.14% 0.15% 0.15%
istrative and servicing costs
___________________________________________
Total Fund
Expenses* 0.59% 0.60% 0.65%
___________________________________________
Income High
Yield
___________________________________________
0.50% 0.65%
___________________________________________
None None
___________________________________________
0.09% 0.14%
___________________________________________
0.59% 0.79%
___________________________________________
*The Funds charge a $5.00 fee for wire
redemptions under $5,000, subject to change
without notice.
**The Fund's management fee and its total
expense ratio would have been 0.40% and
0.90%, respectively, had T. Rowe Price not
agreed to reduce management fees in
accordance with the expense limitation.
From July 1, 1993 through February 28,
1994, T. Rowe Price will bear any expenses
that would cause the Fund's ratio of
expenses to average net assets to exceed
0.50%. Expenses paid or assumed under this
agreement are subject to reimbursement to
T. Rowe Price by the Fund whenever the
Fund's expense ratio is below 0.50%.
However, no reimbursement will be made
after February 29, 1996, or if it would
result in the expense ratio exceeding
0.50%.
_________________________________________
Table 1
The second half of the table "Annual Mutual
Fund Expenses" provides an estimate of how
much it will cost to operate the Fund for a
year, based on 1994 fiscal year expenses.
These are costs you pay indirectly, because
they are deducted from the Fund's total
assets before the daily share price is
calculated and before dividends and other
distributions are made. In other words, you
will not see these expenses on your account
statement.
The main types of expenses, which all
mutual funds may charge against fund
assets, are:
0 A management fee -- the percent of
Fund assets paid to the Fund's
investment manager. Each Fund's fee
comprises both a group fee,
described later, and an individual
fund fee, as follows: Money 0.10%;
Short-Intermediate 0.10%; Insured
Intermediate 0.05%; Income 0.15%;
and High Yield 0.30%,
0 "Other" administrative expenses --
primarily the servicing of
shareholder accounts, such as
providing statements, reports,
custodial services, and disbursing
dividends. For the fiscal year ended
February 28, 1994, the Funds paid
the following fees to T. Rowe Price
Services, Inc. for transfer and
dividend disbursing functions and
shareholder services and to T. Rowe
Price for Fund accounting services.
Transfer Agent
and
Shareholder Services Accounting
___________________________________________
Money $461,000 $93,000
___________________________________________
Short-
Intermediate$308,00 $85,000
___________________________________________
Insured
Intermediate$123,000 $53,000
___________________________________________
Income $641,000 $100,000
___________________________________________
High Yield $574,000 $110,000
___________________________________________
Table 2A
0 Marketing or distribution fees -- an
annual charge ("12b-1") to existing
shareholders to defray the cost of
selling shares to new shareholders. T.
Rowe Price Funds do not levy 12b-1
fees. For further details on the
composition of Fund fees, please see
"The Fund's Organization and
Management."
0 Assume you invest at least $1,000, the
Fund returns 5% annually, expense
ratios remain as listed above, and you
close your account at the end of the
time periods shown. Your expenses per
$1,000 invested would be:
___________________________________________
The table at right is Example of Fund Expenses
just an example. The 5%
return does not represent 1 year 3 years5 years 10 years
the Funds' past or future ___________________________________________
performance, and actual Money $6 $19 $33 $74
expenses can be higher or ___________________________________________
lower than those shown. Short-
Intermediate $6 $19 $33 $75
___________________________________________
Insured
Intermediate $7 $21 $36 $81
___________________________________________
Income $6 $19 $33 $74
___________________________________________
High Yield $8 $25 $44 $98
___________________________________________
Table 2B
FINANCIAL HIGHLIGHTS
Table 3 reflects the Funds' history in
terms of a single share outstanding during
each Fund's fiscal year. The information
has been audited by the Funds' independent
accountants, whose respective unqualified
report for each Fund covers the periods
shown and is included in each Fund's Annual
Report to shareholders. The latter is
incorporated by reference into the
Statement of Additional Information, which
is available to shareholders.
Investment Activities Distributions
Net RealizedTotal
and from
Net Asset Net UnrealizedInvest- Net
Value,Invest- Gain ment Invest- Net Total
Year Ended, Beginning ment (Loss) onActivi- ment
Realized Distri-
February 28 of PeriodIncome Investments
ties Income
___________________________________________________________________
Money Fund
1985 $1.000 $.058 -- $.058$(.058) -- $(.058)
1986 1.000 .049 -- .049 (.049) -- (.049)
1987 1.000 .042 -- .042 (.042) -- (.042)
1988## 1.000 .044 -- .044 (.044) -- (.044)
1989 1.000 .050 -- .050 (.050) -- (.050)
1990 1.000 .057 -- .057 (.057) -- (.057)
1991 1.000 .051 -- .051 (.051) -- (.051)
1992## 1.000 .036 -- .036 (.036) -- (.036)
1993 1.000 .023 -- .023 (.023) -- (.023)
1994 1.000 .020 -- .020 (.020) -- (.020)
End of Period
Ratio
of Net
Ratio ofInvestment
Net Asset Expenses Income Portfolio
Value, End Total Net Assets to Average
to AverageTurnover
of Period Return(in thousands)Net Assets
Net Assets Rate
____________________________________________
1985 $1.000 5.93% $948,941 0.61% 5.81% --
1986 1.000 5.02% 872,040 0.61% 4.89% --
1987 1.000 4.30% 1,131,755 0.60% 4.23% --
1988## 1.000 4.47% 1,247,256 0.60% 4.41% --
1989 1.000 5.08% 1,157,246 0.60% 4.97% --
1990 1.000 5.87% 1,064,141 0.60% 5.75% --
1991 1.000 5.22% 977,638 0.60% 5.12% --
1992## 1.000 3.69% 801,846 0.61% 3.65% --
1993 1.000 2.36% 695,699 0.60% 2.35% --
1994 1.000 2.05% 732,900 0.59% 2.04% --
Investment Activities Distributions
Net RealizedTotal
and from
Net Asset Net UnrealizedInvest- Net
Value,Invest- Gain ment Invest- Net Total
Year Ended, Beginning ment (Loss) onActivi-
ment RealizedDistri-
February 28 of PeriodIncome
Investmentsties Incom
_______________________________________________________________________
Short-Intermediate Fund
1985 $4.97 $.32 $.05 $.37 $(.32) -- $(.32)
1986 5.02 .32 .18 .50 (.32) -- (.32)
1987 5.20 .29 .13 .42 (.29) -- (.29)
1988## 5.33 .27 (.16) .11 (.27) $(.02) (.29)
1989 5.15 .28 (.12) .16 (.28) -- (.28)
1990 5.03 .30 .06 .36 (.30) -- (.30)
1991 5.09 .29 .06 .35 (.29) -- (.29)
1992## 5.15 .28 .07 .35 (.28) -- (.28)
1993 5.22 .24 .14 .38 (.24) -- (.24)
1994 5.36 .22 .04 .18 (.22) -- (.22)
End of Period
Ratio
of Net
Ratio ofInvestment
Net Asset Expenses Income Portfolio
Value, End Total Net Assets to Average
to AverageTurnover
of Period Return(in thousands)Net Assets
Net Assets Rate
________________________________________________
1985 $5.02 7.70% $68,015 0.90%+ 6.51% 300.7%
1986 5.20 10.30% 155,420 0.90% 6.26% 128.7%
1987 5.33 8.41% 405,092 0.73% 5.60% 119.5%
1988## 5.15 2.25% 291,850 0.74% 5.29% 225.2%
1989 5.03 3.14% 249,489 0.74% 5.46% 53.4%
1990 5.09 7.36% 223,180 0.75% 5.93% 190.8%
1991 5.15 7.06% 232,923 0.74% 5.67% 190.1%
1992## 5.22 6.94% 328,312 0.67% 5.34% 81.3%
1993 5.36 7.51% 454,162 0.63% 4.61% 38.5%
1994 5.32 3.49% 540,728 0.60% 4.18% 51.1%
<PAGE>21
Investment Activities Distributions
Net RealizedTotal
and from
Net Asset Net UnrealizedInvest- Net
Value,Invest- Gain ment Invest- Net Total
Year Ended, Beginning ment (Loss) onActivi-
ment RealizedDistri-
February 28 of PeriodIncome
Investmentsties Incom
____________________________________________
___________________________
Insured Intermediate Fund
1993* $10.00 $.13 $(.55) $.68 $(.13) -- $(.13)
1994 10.55 .48 (.09) .57 (.48) $(.06) (.54)
End of Period
Ratio
of Net
Ratio ofInvestment
Net Asset Expenses Income Portfolio
Value, End Total Net Assets to Average
to AverageTurnover
of Period Return(in thousands)Net Assets
Net Assets Rate
__________________________________
1993*$10.55 6.81% $37,960 0.00%** 5.08% 65.3%
1994 10.58 5.49% 99,162 0.33%** 4.45% 74.8%
<PAGE>22
Investment Activities Distributions
Net RealizedTotal
and from
Net Asset Net UnrealizedInvest- Net
Value,Invest- Gain ment Invest- Net Total
Year Ended, Beginning ment (Loss) onActivi- ment
RealizedDistri-
February 28 of PeriodIncome
Investmentsties Income G
____________________________________________________
Income Fund
1985 $8.48 $.65 $(.07) $.58 $(.65) -- $(.65)
1986 8.41 .71 1.32 2.03 (.71) -- (.71)
1987 9.73 .68 .54 1.22 (.68) -- (.68)
1988## 10.27 .59 (.92) (.33) (.59) $(.54) (1.13)
1989 8.81 .59 (.24) .35 (.59) -- (.59)
1990 8.57 .59 .09 .68 (.59) -- (.59)
1991 8.66 .57 .13 .70 (.57) -- (.57)
1992## 8.79 .57 .30 .87 (.57) -- (.57)
1993 9.09 .56 .75 1.31 (.56) -- (.56)
1994 9.84 .54 -- .54 (.54) (.18) (.72)
End of Period
Ratio
of Net
Ratio ofInvestment
Net Asset Expenses Income Portfolio
Value, End Total Net Assets to Average
to AverageTurnover
of Period Return(in thousands)Net Assets
Net Assets Rate
______________________
1985 $8.41 7.24% $936,791 0.63% 7.84% 277.2%
1986 9.73 25.37% 1,325,179 0.63% 8.07% 187.8%
1987 10.27 13.07% 1,558,795 0.61% 6.94% 236.6%
1988## 8.81 -3.17% 1,094,430 0.65% 6.72% 180.6%
1989 8.57 4.11% 1,023,204 0.66% 6.81% 115.9%
1990 8.66 8.15% 1,123,143 0.64% 6.80% 140.5%
1991 8.79 8.40% 1,128,635 0.63% 6.59% 79.7%
1992## 9.09 10.17% 1,245,297 0.62% 6.34% 57.9%
1993 9.84 14.88% 1,441,646 0.61% 5.98% 76.7%
1994 9.66 5.50% 1,452,581 0.59% 5.40% 71.2%
<PAGE>23
Investment Activities Distributions
Net RealizedTotal
and from
Net Asset Net UnrealizedInvest- Net
Value,Invest- Gain ment Invest- Net Total
Year Ended, Beginning ment (Loss) onActivi-
ment RealizedDistri-
February 28 of PeriodIncome
Investmentsties Income Gain butions
_________________________________________
High Yield Fund
1986! $10.00 $.87 $1.43 $2.30 $(.87) -- $(.87)
1987 11.43 .87 .78 1.65 (.87) -- (.87)
1988## 12.21 .83 (.77) .06 (.83) $(.25)(1.08)
1989 11.19 .83 .06 .89 (.83) -- (.83)
1990 11.25 .84 .20 1.04 (.84) (.06) (.90)
1991 11.39 .83 .04 .87 (.83) (.03) (.86)
1992## 11.40 .81 .35 1.16 (.81) (.10) (.91)
1993 11.65 .78 .78 1.56 (.78) (.10) (.88)
1994 12.33 .74 .16 .90 (.74) (.23) (.97)
End of Period
Ratio
of Net
Ratio ofInvestment
Net Asset Expenses Income Portfolio
Value, End Total Net Assets to Averageto Average
Turnover
of Period Return(in thousands)Net Assets
_____________________________________________
1986!$11.43 24.24% $168,308 1.00%# 8.47% 156.8%
1987 12.21 15.04% 324,094 0.98% 7.45% 111.4%
1988##11.19 0.83% 280,580 0.96% 7.49% 127.6%
1989 11.25 8.27% 331,329 0.92% 7.45% 61.8%
1990 11.39 9.54% 443,372 0.88% 7.38% 72.4%
1991 11.40 7.93% 505,025 0.85% 7.30% 51.2%
1992##11.65 10.56% 623,877 0.83% 7.01% 51.0%
1993 12.33 13.94% 853,185 0.81% 6.58% 34.7%
1994 12.26 7.49% 941,295 0.79% 5.95% 59.3%
_____________________________________________
+ Excludes investment management fees and fund expenses in excess
0.90% voluntary expense limitation in effec
1985.
* For the period November 30, 1992 (commencement of operations) to
February 28, 1993.
**
T. Rowe Price voluntarily agreed to bear all expenses of the Fund
through June 30, 1993. Excludes expenses in excess of a 0.20%
voluntary expense limitation in effect July 1, 1993 through
July 31,
1993, a 0.30% voluntary expense limitation in effect August 1, 1993
through August 31, 1993, a 0.40% voluntary expense limitation in
effect September 1, 1993 through September 30, 1993, and a 0.50%
voluntary expense limitation in effect October 1, 1993 through
February 28, 1994.
! For the period March 1, 1985 (commencement of operations) to
February
28, 1986.
# Excludes investment management fees in excess of a 1.0% voluntary
expense limitation in effect through February 28, 1986.
##Year ended February 29.
Fund and Market Characteristics: What to
Expect
To help you decide whether a tax-free fund
is appropriate for you, this section takes
a closer look at the T. Rowe Price Funds'
investment programs and the securities in
which they invest.
Who issues tax-exempt securities?
State and local governments and
governmental authorities
sell notes and bonds (usually called
"municipals") to pay
for public projects and services.
Who buys municipal securities?
Individuals are the primary investors, and
a principal way they invest is through
mutual funds. Because mutual funds have
become a major source of demand, prices of
municipals may be affected by major changes
in flows of money into or out of municipal
bond and money market funds. For example,
substantial and sustained redemptions from
municipal bond funds could result in lower
prices for municipal securities and for
shares of funds investing in them.
_______________________ What is "tax-free" about municipal bonds
Characteristics of and bond funds?
municipal securities. The regular income dividends you receive
from the Fund are exempt from federal
income taxes. In addition, your state may
not tax that portion of the Fund's income
earned on their own obligations (if any).
However, capital gains distributed by the
Funds are taxable to you. (See "Useful
Information on Distributions and Taxes",
page , for details.)
Is a fund's yield fixed or will it vary?
It will vary. The yield is calculated
every day by dividing a Fund's income
(expressed at annual rates) by the share
price. Even if the income stays the same,
the yield will vary as the Fund's price
fluctuates.
Is a Fund's yield the same thing as the
total return?
"Yes" for money funds, "no" for all bond
funds. Your total return is the net result
of reinvested income and the net change in
share price for a given time period. Since
money funds are managed to maintain a
stable share price, their yield and total
return should be the same.
What are the main risks of bond funds?
As with all fixed-income funds, the main
risks are:
0 interest rate or market risk, which
refers to the fact that a Fund's price
will decline to some degree when general
interest rate levels rise. (This should
not apply to money funds, which are
managed to maintain a stable share
price); and
0 credit risk, which is the chance that
any of a Fund's holdings will default (fail
to make scheduled interest and principal
payments) and adversely affect the Fund's
income level and share price.
How do fund managers try to reduce risk?
Consistent with each Fund's objective, T.
Rowe Price Municipal Bond Funds are
actively managed to minimize risks and
maximize total return. Risk management
tools include:
_________________________ 0 maturity adjustments to reflect our
For further details about interest rate outlook;
the Funds' investment 0 broad diversification of assets to reduce
programs and fundamental the impact of a single holding on the
policies, please see the Fund's net asset value; and
section, "Investment 0 thorough credit research by our own
Policies and Practices." analysts.
What is the relation between a bond fund's
average maturity and its price?
As interest rate levels change, prices of
outstanding bonds adjust so that their
yields stay in line with those on newly
issued securities. The bond's maturity
affects the extent of the adjustment
(Please see Table 4.)
_________________________ __________________________________________
Generally speaking, the How Interest Rates May Affect High-Quality
longer the bond's Bond Prices
maturity, the greater the Bond Coupon Principal Value of $1,000
potential price movement Maturity Bond if Interest Rates:
in response to a given Increase Decrease:
change in interest rates, 1% 2% 1% 2%
as shown in the table at 1 Year 2.25% $990 $981 $1,010 $1,020
right. 5 Years 4.00 $956 $915 $1,046 $1,095
10 Years 4.70 $925 $856 $1,083 $1,174
20 Years 5.40 $880 $793 $1,132 $1,289
30 Years 5.50 $869 $763 $1,164 $1,370
___________________________________________
Table 4 Coupons reflect yields on AAA-rated
municipals as of February 28, 1993. This
is an illustration and does not represent
expected share price changes of any Fund.
How can I decide which investments are most
appropriate for me?
Review your own financial objectives, time
horizon, and risk tolerance. Use the table
below, which summarizes the Funds' main
characteristics, to choose a fund (or
funds) suitable for your particular needs.
For example, only the Tax-Exempt Money Fund
provides principal stability, which makes
it a good choice for money you may need for
contingencies. However, if you are
investing for the highest possible tax-free
income and can tolerate some price
fluctuation, you should consider a longer-
term bond fund. Keep in mind that the
share prices of the Bond Funds will
fluctuate. The price you receive when you
sell your shares may be higher or lower
than the price you paid originally.
__________________________________________
Differences Among Funds
Fund Credit Income Risk of
Quality Share-Price
Categories Fluctuation
__________________________________________
Money Two highest Low Stable
__________________________________________
Short- Three highest Low to Low to
Intermediate Moderate Moderate
__________________________________________
Insured Two highest Moderate Moderate
Intermediate
__________________________________________
Income Predominantly Moderate Greater
four highest
__________________________________________
High Yield Generally High Highest
upper-medium
to low quality
__________________________________________
Expected
Average Maturity
__________________________________________
No more than 90 days
__________________________________________
Less than 5 years
__________________________________________
5 to 10 years
__________________________________________
15+ years
__________________________________________
15+ years
__________________________________________
Table 5
Is there additional information about the
five funds to help me make a decision?
You should review the following details
about each Fund's program:
________________________
The Fund or Funds you Tax Exempt Money Fund. The Fund's
select should reflect objectives are to seek preservation of
your individual capital, liquidity and, consistent with
investment goals, but these objectives, the highest current
should not represent your income exempt from federal income taxes.
complete investment While the Fund's share price has been $1.00
program. No Fund should since inception, there is no assurance this
be used for short-term will always be so. The Fund's yield will
trading purposes. fluctuate in response to changes in the
general level of interest rates. Unlike a
bank account or certificate of deposit,
your investment is not insured or
guaranteed by the U.S. Government.
The Fund generally purchases securities
with maturities of 13 months or less, and
its dollar weighted average maturity will
not exceed 90 days. All securities
purchased by the Fund will have ratings in
the two highest categories established by
well known rating agencies, or, if unrated,
will be of equivalent quality as determined
by T. Rowe Price analysts.
Incorporated in Maryland in 1980, the
Fund has an Investment Advisory Committee
composed of the following members: Patrice
L. Berchtenbreiter, Chairman, Janet G.
Albright, Paul W. Boltz, Michael P.
Buckley, Patricia S. Deford, Laura L.
McAree, Mary J. Miller, William T.
Reynolds, and Edward A. Wiese. The
Chairman has day-to-day responsibility for
managing the Fund and works with the
Committee in developing and executing the
Fund's investment program. Ms.
Berchtenbreiter joined T. Rowe Price in
1972 and has been managing investments
since 1987.
Short-Intermediate Fund. The Fund's
objective is to seek a high level of income
exempt from federal income taxes consistent
with modest price fluctuation by investing
primarily in municipal securities in the
three highest credit categories. The Fund
will not purchase any bonds which are rated
below investment grade (e.g., BBB) by a
national rating agency (or if unrated the
T. Rowe Price equivalent). This policy
does not prohibit the fund from retaining a
security which is downgraded after
purchase. Investment-grade securities
include a range of securities from the
highest rated to medium quality (BBB).
Securities in the BBB category may be more
susceptible to adverse economic conditions
or changing circumstances and the
securities at the lower end of the BBB
category have certain speculative
characteristics. This is the most
conservative of the four T. Rowe Price tax-
free bond funds. With a dollar weighted
average maturity of five years or less, its
price fluctuation should be modest in
response to changes in interest rates. Its
interest income should be above the money
fund but lower than the other bond funds.
Incorporated in Maryland in 1983, the
Fund has an Investment Advisory Committee
composed of the following members: Mary J.
Miller, Chairman, Janet G. Albright,
Patrice L. Berchtenbreiter, Paul W. Boltz,
Michael P. Buckley, Patricia S. Deford,
Konstantine B. Mallas, and William T.
Reynolds. The Chairman has day-to-day
responsibility for managing the Fund and
works with the Committee in developing and
executing the Fund's investment program.
Ms. Miller joined T. Rowe Price in 1983 and
has been managing investments since
1987.
Tax-Free Insured Intermediate. The
Fund's objective is to seek a high level of
income exempt from federal income taxes,
maximum credit protection, and moderate
price fluctuation by investing primarily in
insured municipal securities. By
maintaining a dollar weighted average
maturity between five and ten years, this
Fund should provide higher income and
volatility than the Short-Intermediate Fund
and lower income and volatility than the
other bond funds.
For extra credit-quality protection, the
Fund will invest at least 65% of its total
assets in municipals insured by companies
carrying the highest credit rating from a
national rating organization, e.g., AAA by
Standard & Poor's or Aaa by Moody's
Investors Service. (The insurer's rating
determines the rating of the insured bond.)
Up to 35% of assets may also be invested in
other municipals rated at least AA or Aa by
rating agencies or, if unrated, which are
believed to be of comparable quality at the
time of purchase.
Incorporated in Maryland in 1992, the
Fund has an Investment Advisory Committee
composed of the following members: William
T. Reynolds, Chairman, Paul W. Boltz,
Patricia S. Deford, Charles B. Hill,
Konstantine B. Mallas, and Mary J. Miller.
The Chairman has day-to-day responsibility
for managing the Fund and works with the
Committee in developing and executing the
Fund's investment program. Mr. Reynolds
joined T. Rowe Price in 1981 and has been
managing investments since 1981.
________________________ Tax-Free Income Fund. The Fund's
The Funds are not objective is to seek a high level of income
prohibited from retaining exempt from federal income taxes by
a holding that is investing primarily in long-term,
subsequently downgraded. investment-grade municipal securities. The
Fund has no maturity restrictions but
normally its dollar weighted average
maturity will exceed 15 years. As such,
the Fund is suitable for more aggressive
investors than the Funds with shorter
average maturities. It will be actively
managed to seek capital appreciation and
minimize losses due to interest rate
movements. From time to time, the Fund may
purchase below investment grade securities
(including securities which have received
the lowest rating or are not rated by a
national rating organization) however, no
such purchase will be made if it would
cause the Fund's investments in non-
investment grade bonds to exceed 5% of
total assets.
Incorporated in Maryland in 1976, the
Fund has an Investment Advisory Committee
composed of the following members: William
T. Reynolds, Chairman, Paul W. Boltz,
Patricia S. Deford, Charles B. Hill, Mary
J. Miller, Konstantine B. Mallas, and C.
Stephen Wolfe II. The Chairman has day-to-
day responsibility for managing the Fund
and works with the Committee in developing
and executing the Fund's investment
program. Mr. Reynolds joined T. Rowe Price
in 1981 and has been managing investments
since 1981.
_________________________
The combination of long Tax-Free High Yield Fund. The Fund's
maturity and lower credit objective is to seek to provide a high
quality makes the High level of income exempt from federal income
Yield Fund potentially tax by investing primarily in long-term,
the most risky as well as low- to upper-medium quality municipal
potentially the most securities. This is the most aggressive of
rewarding of the Tax-Free our bond funds and should provide the
Funds. highest income, because the average credit
quality of its holdings is lower than our
other funds. Less creditworthy borrowers
must offer higher interest payments to
compensate investors for taking greater
risk. The Fund may invest a substantial
portion of assets in noninvestment-grade
municipal bonds, which have a higher risk
of default than investment-grade bonds.
Similar bonds in the taxable bond market
are called "junk." The Fund may also
purchase bonds which are in default, but
such bonds are not expected to exceed 10%
of the Fund's total assets. Lower-quality
municipals are more vulnerable to real or
perceived changes in the business climate
than higher-quality bonds, they may also be
considerably less liquid and more volatile
in price. As a result, we rely heavily on
our proprietary research when selecting
investments and judgement may play a bigger
role in valuing the Fund's securities.
The Fund has no maturity restrictions, but
normally 80% of its holdings will have
maturities over 15 years.
Incorporated in Maryland in 1984, the
Fund has an Investment Advisory Committee
composed of the following members: William
T. Reynolds, Chairman, Patricia S. Deford,
Charles O. Holland, and C. Stephen Wolfe
II. The Committee Chairman has day-to-day
responsibility for managing the Fund and
works with the Committee in developing and
executing the Fund's investment program.
Mr. Reynolds joined T. Rowe Price in 1981
and has been managing investments since
1981.
Note: Although each Fund offers only its
own shares, it is possible that a Fund
might become liable for a misstatement in
this prospectus about another Fund. The
Board of each Fund has considered this
factor in approving the use of a single
combined prospectus.
2 About Your Account
Pricing Shares and Receiving Sale Proceeds
_________________________
This section applies to Here are some procedures you should know if
all T. Rowe Price tax- you invest in a T. Rowe Price bond or money
free bond and money fund.
funds.
How and when shares are priced
Bond and Money Funds. The share price (also
called "net asset value" or NAV) for each
fund is calculated at 4 p.m. ET each day
the New York Stock Exchange is open for
business. To find the NAV, the fund's
assets are priced and totaled, the fund's
liabilities are subtracted from the asset
total, and the balance, called net assets,
is divided by the number of shares
outstanding.
_________________________ Money fund NAVs are calculated at noon ET
The various ways you can each day as well as 4 p.m. Amortized cost
buy, sell, and exchange or amortized market value is used to value
shares are explained at money fund securities that mature in 60
the end of this days or less.
prospectus and on the New
Account Form.
How your purchase, sale, or exchange price
is determined
_________________________
When filling out the New If we receive your request in correct form
Account Form, you may before 4 p.m. ET, your transaction will be
wish to give yourself the priced at that day's NAV. If we receive it
widest range of options after 4 p.m., it will be priced at the next
for receiving proceeds business day's NAV.
from a sale.
Sorry, but we cannot accept orders that
request a particular day or price for your
transaction or any other special
conditions.
Note: The fund reserves the right to change
the time at which transactions are priced
in case of an emergency or if the New York
Stock Exchange closes at a time other than
4 p.m. ET.
How you can receive the proceeds from a
sale
_________________________
If for some reason we Proceeds can be sent to you by mail, or to
cannot accept your your bank account by ACH or bank wire.
request to sell shares, Proceeds sent by bank wire should be
we will contact you. credited to your bank account the next
business day, and proceeds sent by ACH
transfer should be credited the second day
after the sale. If your request is
received in correct form, proceeds are
usually sent on the business day following
the completion of the transaction.
Exception:
0 Under certain circumstances and when
deemed to be in the fund's best
interests, the fund can delay sending
your proceeds for up to five business
days after receiving your sale or
exchange request. If you were exchanging
into another bond or money market fund,
your new investment would not begin to
earn dividends until the sixth business
day.
Useful Information on Distributions and
Taxes
Dividends and other distributions
Dividend and capital gain distributions are
reinvested in additional fund shares unless
you select another option on your New
Account Form. Dividends not reinvested are
paid by check or transmitted to your bank
account via ACH. If the Postal Service
cannot deliver your check, or if your check
remains uncashed for six months, the fund
________________________ reserves the right to reinvest your
The fund distributes all distribution check in your account at the
net investment income and then current NAV and to reinvest all
realized capital gains to subsequent distributions in shares of the
shareholders. fund.
Income dividends
o Bond funds declare income dividends
daily at 4 p.m. ET to shareholders of
record on the previous business day.
o Money funds declare income dividends
daily at noon ET to shareholders of
record at that time.
o Bond and money funds pay dividends on
the last business day of each month.
Capital gains
o A capital gain or loss is the difference
between the purchase and sale price of a
security.
o If the fund has net capital gains (after
subtracting any capital losses) for the
year, they are usually "declared" in
December to shareholders of record on a
specified date that month and usually
paid in early January. If a second
distribution is necessary, it is usually
declared and paid during the first
quarter of the following year.
Tax information
_________________________ Although the income dividends you receive
from municipal money market and bond funds
T. Rowe Price sends are exempt from federal income taxes, you
timely information for need to be aware of the possible tax
your tax filing needs. consequences when:
o the fund makes a capital gain
distribution to your account, or
o you sell fund shares, including an
exchange from one fund to another.
As a result of 1993 tax legislation, it is
more likely that municipal funds will pay
an annual short-term capital gain derived
from the amortization of market discounts
on bonds with original maturities beyond
one year. This payment, if any, will be
included in your December monthly dividend
and will be reported as ordinary income on
your 1099-DIV for that year.
Note: You must report your total tax-
exempt income on IRS Form 1040. The IRS
uses this information to help determine the
tax status of any social security payments
you may have received during the year.
_________________________ Taxes on Fund Distributions
Capital gain
distributions are taxable In January, the T. Rowe Price funds will
whether reinvested in send you and the IRS Form 1099-DIV
additional shares or indicating the tax status of any capital
received in cash. gain distribution made in each of your fund
accounts. Dividends are expected to be tax
exempt, and if there were no capital gain
distributions, a 1099-DIV is not sent. All
capital gain distributions are taxable to
you for the year in which they were paid.
The only exception is that distributions
declared during the last three months of
the year and paid in January are taxed as
though they were paid by December 31.
Short-term capital gains are taxable as
ordinary income and long-term gains at the
applicable rate for long-term gains. The
gain is long or short term depending on how
long the Fund held the securities, not how
long you held shares in the fund.
If the funds invest in certain "private
activity" bonds, shareholders who are
subject to the alternative minimum tax
(AMT) must include income generated by
these bonds in their AMT computation. The
portion of your fund's income which should
be included in your AMT calculation, if
any, will be reported to you in January.
Taxes on your fund transactions. When you
sell shares in any stock or bond fund, you
may realize a gain or loss. An exchange
from one fund to another is still a sale
for tax purposes.
If you realize a loss on the sale or
exchange of fund shares held six months or
less, your capital loss is redeemed by the
tax-exempt dividends received on those
shares.
In January, T. Rowe Price will send you and
the IRS Form 1099-B, indicating the date
and amount of each sale you made in a stock
or bond fund during the prior year. A copy
is filed with the IRS.
_________________________
T. Rowe Price furnishes We will also tell you the average cost of
average cost and capital the shares you sold, provided your account
gain (loss) information was opened by purchase or exchange after
on most share December 31, 1983. This information is not
redemptions. reported to the IRS, and you do not have to
use it. You may calculate the cost basis
using other methods acceptable to the IRS,
such as "specific identification."
To help you maintain accurate records, we
send you a confirmation immediately
following each transaction you make and a
year-end statement detailing all your
transactions in each fund account during
the year.
Tax effect of buying shares before a
capital gain distribution. If you buy
shares near or on the "record date"- the
date that establishes you as the person to
receive the upcoming distribution - you
will receive in the form of a taxable
distribution a portion of the money you
just invested. Therefore, you may wish to
find out a fund's record date(s) before
investing. Of course, a fund's share price
may reflect undistributed capital gains or
unrealized appreciation, at any time.
Transaction Procedures and Special
Requirements
_________________________ Purchase Conditions
Following these Nonpayment. If your payment is not received
procedures helps assure or you pay with a check or ACH transfer
timely and accurate that does not clear, your purchase will be
transactions. cancelled. You will be responsible for any
losses or expenses incurred by the fund or
transfer agent, and the fund can redeem
shares you own in this or another
identically registered T. Rowe Price fund
as reimbursement. The fund and its agents
have the right to reject or cancel any
purchase, exchange, or redemption due to
nonpayment.
U.S. Dollars. All purchases must be paid
for in U.S. dollars; checks must be drawn
on U.S. banks.
Sale (Redemption) Conditions
10-day Hold. If you sell shares that you
just purchased and paid for by check or ACH
transfer, the fund will process your
redemption but will generally delay sending
you the proceeds for up to 10 calendar days
to allow the check or transfer to clear. If
your redemption request was sent by mail or
mailgram, proceeds will be mailed no later
than the seventh day following receipt
unless the check has not cleared. If,
during the clearing period, we receive a
check drawn against your bond or money
market account, it will be returned marked
"uncollected." (The hold does not apply to
purchases paid for by bank wire; cashier's,
certified, or treasurer's checks; or
automatic purchases through your paycheck.)
Telephone Transactions. Telephone exchange
and redemption are established
automatically when you sign the New Account
Form unless you check the box which states
that you do not want these services. The
fund uses reasonable procedures (including
shareholder identity verification) to
confirm that instructions given by
telephone are genuine. If these procedures
are not followed, it is the opinion of
certain regulatory agencies that the fund
may be liable for any losses that may
result from acting on the instructions
given. All conversations are recorded, and
a confirmation is sent within five business
days after the telephone transaction.
Redemptions over $250,000. Large sales can
adversely affect the fund. If you redeem
(sell) more than $250,000, or your sales
amount to more than 1% of the fund's net
assets in any 90-day period, the fund has
the right to delay sending your proceeds
for up to five business days after
receiving your request, or to pay the
difference between the redemption amount
and the lesser of the two previously
mentioned figures with securities from the
fund.
_________________________ Excessive Trading
T. Rowe Price may bar Frequent trades involving either
excessive traders from substantial fund assets, or a substantial
purchasing shares. portion of your account or accounts
controlled by you, can disrupt management
of the fund and raise its expenses. We
define "excessive trading" as exceeding one
purchase and sale involving the same fund
within any 120-day period, excluding trades
between money funds.
For example, you are in fund A. You can
move substantial assets from A to fund B,
and, within the next 120 days, sell your
shares in fund B to return to fund A or
move to fund C.
If you exceed the number of trades
described above, you may be barred
indefinitely from further purchases of T.
Rowe Price funds.
Three types of transactions are exempt from
excessive trading guidelines: (1) trades
solely between money market funds, (2)
redemptions that are not part of exchanges,
and (3) systematic purchases or redemptions
(see "Shareholder Services").
Keeping Your Account Open
Due to the relatively high cost of
maintaining small accounts, we ask you to
maintain an account balance of at least
$1,000. If your balance is below $1,000 for
three months or longer, the fund has the
right to close your account after giving
you 60 days in which to increase your
balance. (These conditions may vary for
retirement plan accounts.)
_________________________ Signature Guarantees
A signature guarantee is You may need to have your signature
designed to protect you guaranteed in certain situations, such as:
and the fund from fraud o Written requests for redemptions over
by verifying your $50,000 or to wire redemption proceeds.
signature. o Remitting redemption proceeds to any
person, address, or bank account not on
record.
o Transferring redemption proceeds to a T.
Rowe Price fund account with a different
registration from yours.
o Establishing certain services after the
account is opened.
You can obtain a signature guarantee from
most banks, savings institutions,
broker/dealers and other guarantors
acceptable to T. Rowe Price. We cannot
accept guarantees from notaries public or
organizations that do not provide
reimbursement in the case of fraud.
3 More About the Funds
The Funds' Organization and Management
How are the Funds organized?
The Funds are "diversified, open-end
investment companies," or mutual funds.
Mutual funds pool money received from
shareholders and invest it to try to
achieve specified objectives.
_____________________
Shareholders benefit from What is meant by "shares"?
T. Rowe Price's 56 years As with all mutual funds, investors receive
of investment management "shares" when they put money in a Fund.
experience. These shares are part of the Fund's
authorized capital stock. (The Funds do not
issue share certificates to shareholders.)
Each share and fractional share entitles
the shareholder to:
0 receive a proportional interest in the
Fund's income and capital gain
distributions;
0 cast one vote per share on certain Fund
matters, including the election of Fund
directors or trustees, changes in
fundamental policies, or approval of the
Fund's management contract.
Does each Fund have an annual shareholder
meeting?
The Funds are not required to hold meetings
but will so when certain matters, such as a
change in the Fund's fundamental policies,
are to be decided. If a meeting is held and
you cannot attend, you can vote by proxy.
Well before the meeting, T. Rowe Price will
send you proxy materials that explain the
issues to be decided and include a voting
card for you to mail back.
Who runs the Funds?
_______________________
All decisions regarding General oversight. Each Fund is governed
the purchase and sale of by a Board of Directors or Trustees that
Fund investments are made meets regularly to review the Fund's
by T. Rowe Price investments, performance, expenses, and
Associates--specifically other business affairs. The Board elects
by the Funds' portfolio the Fund's officers.
managers. Marketing. T. Rowe Price Investment
Services, Inc., a wholly-owned subsidiary
of T. Rowe Price, distributes (sells)
shares of this and all other T. Rowe Price
funds.
Services. T. Rowe Price Services, Inc.,
another wholly-owned subsidiary, acts as
the Fund's transfer and dividend disbursing
agent and provides shareholder and
administrative services. The address for
each is 100 East Pratt St., Baltimore, MD
21202.
How are Fund expenses determined?
The management agreement spells out the
expenses to be paid by each Fund. In
addition to the management fee, the Fund
pays 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 director/trustee fees
(See Appendix) and expenses.
_________________________
Price Funds' assets The Management Fee. This fee has two parts
As of February 28, 1994 -- an "individual fund fee" (discussed on
$__ billion page ) which reflects the Fund's
particular investment management costs, and
a "group fee." The group fee, which
reflects the benefits each Fund derives
from sharing the resources of the T. Rowe
Price investment management complex, is
calculated monthly based on the net
combined assets of all T. Rowe Price funds
(except Equity Index and both Spectrum
Funds). The fee schedule (shown below) is
graduated, declining as the asset total
rises, so shareholders benefit from the
overall growth in mutual fund assets.
0.48% of the first $1 billion
0.45% of the next $1 billion
0.42% of the next $1 billion
0.39% of the next $1 billion
0.37% of the next $1 billion
0.36% of the next $2 billion
0.35% of the next $2 billion
0.34% of the next $5 billion
0.33% of the next $10 billion
0.32% of the next $10 billion
0.31% thereafter
The Fund's portion of the Group fee is
determined by the ratio of its daily net
assets to the daily net assets of all the
Price Funds as described above. Based on a
February 28, 1994 asset total of
approximately $__ billion, the group fee
was 0.34%.
UNDERSTANDING PERFORMANCE INFORMATION
This section should help you understand the
terms used to describe the Fund's
performance. You will come across them in
shareholder reports you receive from us
four times a year, in our newsletter,
"Insights" reports, in T. Rowe Price
advertisements, and in the media.
_____________________
Total return is the most Total Return
widely used performance This tells you how much an investment in a
measure. Detailed fund has changed in value over a given time
performance information period. It reflects any net increase or
is included in the Funds' decrease in the share price and assumes
Annual Reports and that all dividends and capital gains (if
quarterly shareholder any) paid during the period were reinvested
reports. in additional shares. Reinvesting
distributions means that total return
numbers include the effect of compounding,
i.e., you receive income and capital gain
distributions on a rising number of shares.
Advertisements for a Fund may include
cumulative or compound average annual total
return figures, which may be compared with
various indices, other performance
measures, or other mutual funds.
Cumulative Total Return
This is the actual rate of return on an
investment for a specified period. A
cumulative return does not indicate how
much the value of the investment may have
fluctuated between the beginning and the
end of the period specified.
Average Annual Total Return
This is always hypothetical. Working
backward from the actual cumulative return,
it tells you what constant year-by-year
return would have been produced by the
actual, cumulative return. By smoothing out
all the variations in annual performance,
it gives you an idea of the investment's
annual contribution to your portfolio
provided you held it for the entire period
in question.
___________________
You will see frequent Yield
references to the Funds' The current or "dividend yield" on the Fund
yield and tax equivalent or any investment tells you the
yields in our reports, relationship between the investment's
advertisements, in media current level of annual income and its
stories, and so on. price on a particular day. For example, a
Fund providing $5 of annual income per
share and selling at $50 has a current
yield of 10%. Yields can be calculated for
any time period. The Money Fund may
advertise a "current yield", reflecting the
latest 7-day income annualized, or an
"effective yield" which assumes the income
has been reinvested in the Fund.
For the Bond Funds, the advertised or "SEC
yield" is found by determining the net
income per share (as defined by the SEC)
earned by the Fund during a 30-day base
period and dividing this amount by the per-
share price on the last day of the base
period. The "SEC yield" may differ from the
dividend yield.
Investment Policies and Practices
This section takes a detailed look at some
of the types of securities the Funds may
hold in its portfolio and the various kinds
of investment practices that may be used in
day-to-day portfolio management. Each
Fund's investment program is subject to
further restrictions and risks described in
the "Statement of Additional Information."
_________________________ Shareholder approval is required to
Fund managers have substantively change each Fund's objective
considerable leeway in (stated on page ) and to change certain
choosing investment investment restrictions noted in the
strategies and selecting following section as "fundamental
securities they believe policies." The managers also follow certain
will help the Funds "operating policies" which can be changed
achieve their objectives. without shareholder approval. However,
significant changes are discussed with
shareholders in Fund reports.
Types of Portfolio Securities
In seeking to meet their investment
objectives, the Funds may invest in any
type of interest-bearing security whose
yield, credit quality, and maturity
characteristics are consistent with the
Funds' investment programs. These and some
of the other investment techniques the
Funds may use are described in the
following pages.
Municipal Securities. Each Fund's assets
are invested primarily in various
income-producing tax-free municipal debt
_________________________ securities. The issuers have a contractual
In purchasing municipals, obligation to pay interest at a stated rate
the Funds rely on the on specific dates and to repay principal
opinion of the issuer's (the bond's face value) on a specified date
bond counsel regarding or dates. An issuer may have the right to
the tax-exempt status of redeem or "call" a bond before maturity,
the investment. and the investor may have to reinvest the
proceeds at lower rates.
There are two broad categories of
municipal bonds. General obligation bonds
are backed by the issuer's "full faith and
credit," that is, its full taxing and
revenue raising power. Revenue bonds
usually rely exclusively on a specific
revenue source, such as charges for water
and sewer service, to generate money for
debt service.
Fundamental Policy. A Fund will not
purchase a security if, as a result with
respect to 75% of its total assets, more
than 5% of its total assets would be
invested in securities of that issuer.
Private Activity Bonds. While income
from most municipals is exempt from federal
income taxes, the income from certain types
of so-called private activity bonds (a type
of revenue bond) may be subject to the
alternative minimum tax (AMT). However,
only persons subject to AMT pay this tax.
Private activity bonds may be issued for
purposes such as housing or airports or to
benefit a private company. (Being subject
to the AMT does not mean the investor
necessarily pays this tax. For further
information, please see "Distributions and
Taxes.")
Fundamental Policy. Under normal market
conditions, the Funds will not purchase any
security if, as a result, less than 80% of
the funds' income would be exempt from
federal income taxes. The income from
securities subject to AMT is not counted
when determining whether 80% of the Fund's
income is exempt from federal income
tax.
Operating Policies. The income derived
from securities subject to the AMT does not
count in meeting the above referenced 80%
test. During periods of abnormal market
conditions, for temporary defensive
purposes, the funds may invest without
limit in high-quality, short-term
securities whose income is subject to
federal income tax.
In addition to general obligation and
revenue bonds, the Funds' investments may
include, but are not limited to, the
following types of securities:
Municipal Lease Obligations. A lease is not
a full faith and credit obligation of the
issuer and is usually backed only by the
borrowing government's unsecured pledge to
make annual appropriation for lease
payments. There have been challenges to the
legality of lease financing in numerous
states and, from time to time, certain
municipalities have considered not
appropriating money to make lease payments.
In deciding whether to purchase a lease
obligation, the Fund would assess the
financial condition of the borrower, the
merits of the project, the level of public
support for the project, and the
legislative history of lease financing in
the state. These securities may be less
readily marketable than other municipals.
The Fund may also purchase unrated
lease-obligations. Based on information
supplied by T. Rowe Price, the Fund's Board
of Directors will periodically review the
credit quality of non-rated leases and
assess the likelihood of their being
cancelled.
Operating Policy. Each Fund may invest
no more than 20% of its assets in lease
obligations.
Securities with "Puts" or other Demand
Features. Some longer-term municipals give
the investor the right to "put" or sell the
security at par (face value) within a
specified number of days following the
investor's request--usually one to seven
days. This demand feature enhances a
security's liquidity by dramatically
shortening its effective maturity and
enables it to trade at a price equal to or
very close to par. If the demand feature
were terminated prior to being exercised,
the Fund would hold the longer-term
security.
Securities with Credit Enhancements.
0 Letters of Credit. Letters of credit
are issued by a third party, usually a
bank, to enhance liquidity and/or
ensure repayment of principal and any
accrued interest if the underlying
municipal security should default.
0 Municipal Bond Insurance. This
insurance, which is usually purchased
by the bond issuer from a private,
nongovernmental insurance company,
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 a bond or the
share price of any Fund. The credit
rating of an insured bond reflects the
credit rating of the insurer, based on
its claims paying ability. T. Rowe
Price periodically reviews the credit
quality of the insurer.
The obligation of a municipal bond
insurance company to pay a claim
extends over the life of each insured
bond. Although defaults on insured
municipal bonds have been low to date
and municipal insurers have met these
claims, there is no assurance this
will continue. A higher than expected
default rate could strain the
insurer's loss reserves and adversely
affect its ability to pay claims to
bondholders, such as the Funds. The
number of municipal bond insurers is
relatively small, and not all of them
have the highest rating.
While all the Funds may buy insured
bonds from time to time, such bonds
will compose at least 65% of the total
assets of the Insured Intermediate
Fund. The Insured Intermediate Fund's
purchase of insured bonds will be
limited to those which, at the time of
purchase, have the highest credit
rating from a national rating agency.
There is no guarantee that this rating
will be maintained.
0 Standby Repurchase Agreements. A
Standby Bond Purchase Agreement is a
liquidity facility provided to pay the
purchase price of bonds that cannot be
remarketed. The obligation of the
liquidity provider (usually a bank) is
only to advance funds to purchase
tendered bonds which cannot be
remarketed and does not cover
principal or interest under any other
circumstances. The liquidity
provider's obligations under the SBPA
are usually subject to numerous
conditions, including the continued
creditworthiness of the underlying
borrower.
Synthetic or Derivative Securities.
These securities are created from
existing municipal bonds:
0 Residual Interest Bonds (Bond Funds).
The income stream provided by an
underlying bond is divided to create
two securities, one short-term and one
long-term. The interest rate on the
short-term component is reset by an
index or auction process normally
every seven to 35 days. After income
is paid on the short-term securities
at current rates, the residual income
goes to the long-term securities.
Therefore, rising short-term interest
rates result in lower income for the
longer-term portion, and vice versa.
The longer-term bonds can be very
volatile and may be less liquid than
other municipals of comparable
maturity.
Operating Policy: Each Fund will
not invest more than 10% of its total
assets in residual interest bonds.
0 Participation Interests. This term
covers various types of securities
created by converting fixed-rate bonds
into short-term, variable-rate
certificates. These securities have
been developed in the secondary market
to meet the demand for short-term,
tax-exempt securities. The Funds will
invest only in securities deemed
tax-exempt by a nationally recognized
bond counsel, but there is no
guarantee the interest will be exempt
because the IRS has not issued a
definitive ruling on the matter.
0 Embedded Interest Rate Swaps and Caps
(Bond Funds). In a fixed-rate,
long-term municipal bond with an
interest rate swap attached to it, the
bondholder usually receives the bond's
fixed-coupon payment as well as a
variable rate payment that represents
the difference between a fixed rate
for the term of the swap (which is
typically shorter than the bond it is
attached to) and a variable rate
short-term municipal index. The
bondholder receives excess income when
short-term rates remain below the
fixed interest rate swap rate. If
short-term rates rise above the
fixed-income swap rate, the
bondholder's income is reduced. At the
end of the interest rate swap term,
the bond reverts to a single
fixed-coupon payment. Embedded
interest rate swaps enhance yields,
but also increase interest rate risk.
An embedded interest rate cap allows
the bondholder to receive payments
whenever short-term rates rise above a
level established at the time of
purchase. They normally are used to
hedge against rising short-term
interest rates.
Both instruments may be volatile and
of limited liquidity and their use may
adversely affect a Fund's total
return.
Operating Policy: Each Fund will
not invest more than 10% of its total
assets in embedded interest rate swaps
and caps.
The Funds may invest in other types of
derivative instruments as they become
available.
Private Placements. The Funds may seek
to enhance their yield through the purchase
of private placements. These securities are
sold through private negotiations, usually
to institutions or mutual funds, and may
have resale restrictions. Their yields are
usually higher than comparable public
securities to compensate the investor for
their limited marketability.
Operating Policy. Each Fund may not
invest more than 15% of its net assets (10%
for the Money Fund) in illiquid securities,
including unmarketable private placements.
Types of Fund Management Practices
Cash Reserves (Bond Funds). Each Fund
_________________________ will hold a portion of its assets in
Cash reserves provide short-term, tax-exempt money market
flexibility and serve as securities maturing in one year or less.
a short-term defense The reserve position: provides flexibility
during periods of unusual in meeting redemptions, expenses, and the
market volatility. timing of new investments; can help in
structuring a Fund's weighted average
maturity; and serves as a short-term
defense during periods of unusual market
volatility. The Fund's cash reserve
position will be comprised of short-term,
investment-grade securities including
tax-exempt commercial paper, municipal
notes and short- term maturity bonds. Some
of these securities may have adjustable,
variable or floating rates.
When-Issued Securities (All Funds) and
Forwards (Bond Funds). New issues of
municipals are often sold on a
"when-issued" basis, that is, delivery and
payment take place 15-45 days after the
buyer has agreed to the purchase. Some
bonds, called "forwards," have longer than
standard settlement dates, in some cases
exceeding one to three years. When buying
these securities, the Fund identifies cash
or high-grade marketable securities held by
its custodian equal in value to its
commitment for these securities. The Funds
do not earn interest on when-issued and
forward securities until settlement, and
the value of the securities may fluctuate
between purchase and settlement. Municipal
"forwards" typically carry a substantial
yield premium to compensate the buyer for
their greater interest rate, credit, and
liquidity risks.
Interest Rate Futures (Bond Funds).
Futures are often used to manage risk,
because they enable the investor to buy or
sell an asset in the future at an agreed
upon price. Specifically, the Funds may use
futures (and options on futures) to hedge
against a potentially unfavorable change in
interest rates and to adjust their exposure
to the municipal bond market. The use of
futures for hedging and non-hedging
purposes may not always be successful.
Their prices can be highly volatile, using
them could lower the fund's total return
and the potential loss from their use could
exceed the Fund's initial investment in
such contracts.
Operating Policy. Initial margin deposits
on futures and premiums on options used for
non-hedging purposes will not equal more
than 5% of a Fund's net asset value.
Borrowing Money and Transferring Assets.
Each Fund can borrow money from banks as a
temporary measure for emergency purposes,
to facilitate redemption requests, or for
other proper purposes consistent with the
Fund's investment objective and program.
Such borrowings may be collateralized with
Fund assets, subject to restrictions.
Fundamental Policy. Borrowings may not
exceed 33 1/3% of total Fund assets.
Operating Policy. Each Fund may not
transfer as collateral any portfolio
securities except as necessary in
connection with permissible borrowings or
investments and then such transfers may not
exceed 33 1/3% of the Fund's total assets.
Each Fund may not purchase additional
securities when borrowings exceed 5% of
total assets.
Portfolio _____________________
Turnover (Bond Portfolio Turnover
Funds). Each Fund Rates
generally purchases
securities with the 1992 1993 1994
intention of _____________________
holding them for Short-
investment, Intermediate
however, when
market conditions 81.3% 38.5% 51.1%
or other
circumstances _____________________
warrant, securities Insured
may be purchased Intermediate
and sold without * 65.3% 74.8%
regard to the _____________________
length of time Income
held. Due to the 57.9% 76.7% 71.2%
nature of each _____________________
Fund's investment High Yield
program, a Fund's 51.0% 34.7% 59.3%
portfolio turnover _____________________
rate may exceed *Prior to Fund's
100%. Although the inception.
Funds do not expect _____________________
to generate any Table 6
taxable income, a
high turnover rate
may increase
transaction costs
and may affect
taxes paid by
shareholders to the
extent short-term
grains are
distributed. The
Funds' portfolio
turnover rates for
the previous three
fiscal years are
shown in Table
6.
Sector Concentration. It is possible
that each Fund could have a considerable
amount of assets (25% or more) in
securities that would tend to respond
similarly to particular economic or
political developments. An example would
be, securities of issuers related to a
single industry, such as health care or
nuclear energy.
Operating Policy. Each Fund will not invest
more than 25% of total assets in any single
state or in industrial development bonds of
projects in the same industry (such as
solid waste, nuclear utility or airlines).
Bonds which are refunded with escrowed U.S.
Government securities are not subject to
the 25% limitation.
Credit Quality Considerations. The credit
quality of most bond issues is evaluated by
rating agencies such as Moody's and
Standard & Poor's. Credit quality refers to
the issuer's ability to meet all required
interest and principal payments. The
highest ratings are assigned to issuers
perceived to be the best credit risks. T.
Rowe Price research analysts also evaluate
all portfolio holdings of each Fund,
including those rated by outside agencies.
The lower the rating on a bond, the higher
the yield, other things being equal.
Table 7 shows the rating scale used by the
major rating agencies. T. Rowe Price
considers publicly available ratings, but
emphasizes its own credit analysis when
selecting investments.
___________________________________________
Ratings of Municipal Debt Securities
Moody's Standard Fitch Definition
Investors & Poor'sInvestors
Service, Corpora-Service,
Inc. tion Inc.
___________________________________________
Long-Term Aaa AAA AAA Highest
quality
_________________________________
Aa AA AA High
quality
_________________________________
A A A Upper
medium
grade
_________________________________
Baa BBB BBB Medium
grade
_________________________________
Ba BB BB Specula-
tive
_________________________________
B B B Highly
specula-
tive
_________________________________
Caa CCC,CC CCC,CC Vulner-
able to
default
_________________________________
Ca C C Default
is immi-
nent
_________________________________
C D DDD, Probably
DD, D in
default
_________________________________
Moody's S&P Fitch
___________________________________________
Short- MIG1/VMIG1 SP1+ Very F-1+
Term Best quality strong Exception-
quality ally
SP1 strong
Strong quality
grade F-1 Very
strong
quality
___________________________________
MIG2/VMIG2 SP2 F-2 Good
High quality Satisfac- credit
tory quality
grade
___________________________________
MIG3/VMIG3 Favorable F-3 Fair
quality credit
quality
___________________________________
MIG4/VMIG4 Adequate
quality
___________________________________
SG Specu- SP3 Specu-F-S Weak
lative grade lative credit
grade quality
___________________________________________
Commer- P-1 Superior A-1+ F-1+
cial quality Extremely Exception-
paper strong ally strong
quality quality
A-1 F-1 Very
Strong strong
quality quality
___________________________________
P-2 Strong A-2 F-2 Good
quality Satisfac- credit
tory quality
quality
___________________________________
P-3 A-3 F-3 Fair
Acceptable Adequate credit
quality quality quality
___________________________________
B Specu- F-S Weak
lative credit
quality quality
___________________________________
C Doubtful
quality
___________________________________________
Table 7
___________________________________________________________________________
Explanation of Quality Ratings
Bond
Rating Explanation
___________________________________________________________________________
Moody's Investors Aaa Highest quality, smallest degree of
Service, Inc. investment risk
________________________________________________
Aa High quality; together with Aaa bonds,
they compose the high-grade bond group.
________________________________________________
A Upper-medium grade obligations; many
favorable investment attributes.
________________________________________________
Baa Medium-grade obligations; neither highly
protected nor poorly secured. Interest
and principal appear adequate for the
present but certain protective elements
may be lacking or may be unreliable over
any great length of time.
_________________________________________________
Ba More uncertain, with speculative
elements. Protection of interest and
principal payments not well safeguarded
during good and bad times.
_________________________________________________
B Lack characteristics of desirable
investment; potentially low assurance of
timely interest and principal payments or
maintenance of other contract terms over
time.
_________________________________________________
Caa Poor standing, may be in default;
elements of danger with respect to
principal or interest payments.
_________________________________________________
Ca Speculative in a high degree; could be in
default or have other marked
shortcomings.
_________________________________________________
C Lowest-rated; extremely poor prospects of
ever attaining investment standing.
_________________________________________________
___________________________________________________________________________
Standard & Poor's AAA Highest rating; extremely strong capacity
Corporation to pay principal and interest.
_________________________________________________
AA High quality; very strong capacity to pay
principal and interest.
_________________________________________________
A Strong capacity to pay principal and
interest; somewhat more susceptible to
the adverse effects of changing
circumstances and economic conditions.
_________________________________________________
BBB Adequate capacity to pay principal and
interest; normally exhibit adequate
protection parameters, but adverse
economic conditions or changing
circumstances more likely to lead to a
weakened capacity to pay principal and
interest than for higher-rated bonds.
_________________________________________________
BB, B Predominantly speculative with respect to
CCC, the issuer's capacity to meet required
CC interest and principal payments. BB--
lowest degree of speculation; CC--the
highest degree of speculation. Quality
and protective characteristics outweighed
by large uncertainties or major risk
exposure to adverse conditions.
_________________________________________________
D In default.
_________________________________________________
__________________________________________________________________________
Fitch Investors AAA Highest quality; obligor has
Service, Inc. exceptionally strong ability to pay
interest and repay principal, which is
unlikely to be affected by reasonably
foreseeable events.
_________________________________________________
AA Very high quality; obligor's ability to
pay interest and repay principal is very
strong. Because bonds rated in the AAA
and AA categories are not significantly
vulnerable to foreseeable future
developments, short-term debt of these
issuers is generally rated F-1+.
_________________________________________________
A High quality; obligor's ability to pay
interest and repay principal is
considered to be strong, but may be more
vulnerable to adverse changes in economic
conditions and circumstances than higher-
rated bonds.
_________________________________________________
BBB Satisfactory credit quality; obligor's
ability to pay interest and repay
principal is considered adequate.
Unfavorable changes in economic
conditions and circumstances are more
likely to adversely affect these bonds
and impair timely payment. The
likelihood that the ratings of these
bonds will fall below investment grade is
higher than for higher-rated bonds.
_________________________________________________
BB, Not investment-grade; predominantly
CCC, speculative with respect to the issuer's
CC, C capacity to repay interest and repay
principal in accordance with the terms of
the obligation for bond issues not in
default. BB is least speculative. C is
the most speculative.
_________________________________________________________________
Table 8
_________________________ Credit Quality and _______________________
the High Yield Tax-Free High Yield
Fund. In seeking Fund: Asset Composition
Portfolio managers its primary TRPA's
diversify Fund assets to objective of high Assess-
lower risk. income, the Tax- Percent-
Free High Yield age Not
Fund invests a Standard of Rated
portion of its & Poor's Total Securi-
assets in bonds Rating* Assets ties
rated below- ______________________
investment-grade AAA 7.6 0.1
(BB or lower). ______________________
Such bonds are AA 10.7 0.0
regarded as ______________________
speculative with A 17.5 1.6
respect to the ______________________
issuer's ability to BBB 25.1 10.1
meet interest and ______________________
principal payments. BB 3.8 15.4
______________________
For the fiscal year B 0.3 2.2
ended February 28, ______________________
1994, the High CCC-D 0.0 0.4
Yield Fund's assets
(CC
were invested in ______________________
the credit Not
categories shown at Rated 29.8 --
right. Percentages ______________________
are computed on a Reserves 5.2 --
dollar-weighted ______________________
basis and are an 100.0% 29.8%
average of 12 ______________________
monthly *Equivalent ratings by
calculations. Moody's used in the
absence of a S&P
rating.
______________________
Table 9
Note: Although each Fund offers only its own shares, it is possible that a
Fund might become liable for a misstatement in this prospectus about
another Fund. The Board of each Fund has considered this factor in
approving the use of a single combined prospectus.
4
Investing with T. Rowe
Price
Meeting
Requirements for
New Accounts
_________________________ Tax Identification
Always verify your Number
transactions by carefully We must have your
reviewing the correct social
confirmation we send you. security or
Please report any corporate tax
discrepancies to identification
Shareholder Services. number and a signed
New Account Form or
W-9 Form.
Otherwise, federal
law requires the
fund to withhold a
percentage
(currently 31%) of
your dividends,
capital gain
distributions, and
redemptions, and
may subject you to
an IRS fine. You
will also be
prohibited from
opening another
account by
exchange. If this
information is not
received within 60
days after your
account is
established, your
account may be
redeemed, priced at
the NAV on the date
of redemption.
Unless you request
otherwise, one
shareholder report
will be mailed to
multiple account
owners with the
same tax
identification
number and same zip
code and to those
shareholders who
have requested that
their account be
combined with
someone else's for
financial
reporting.
_________________________
Regular Mail Opening a New
T. Rowe Price Account: $2,500
Account Services minimum initial
P.O. Box 17300 investment; $1,000
Baltimore, MD for gifts or
21298-9353 transfers to minors
(UGMA/UTMA)
accounts
Account
Registration
Mailgram, Express, If you own other T.
Registered, or Certified Rowe Price funds,
Mail be sure to register
T. Rowe Price any new account
Account Services just like your
10090 Red Run Blvd. existing accounts
Owings Mills, MD so you can exchange
21117 among them easily.
(The name and
account type would
have to be
identical.)
By Mail
Please make your
check payable to T.
Rowe Price Funds
(otherwise it may
be returned) and
send it together
with the New
Account Form to the
address at left.
By Wire
o
Call Investor
Services for an
account number and
use the wire
address below.
o
Complete a New
Account Form and
mail it to one of
the appropriate
addresses listed at
left.
o
Give the following
wire address to
your bank: Morgan
Guaranty Trust Co.
of New York, ABA#
021000238, T. Rowe
Price [fund name],
AC-00153938.
Provide fund name,
account name(s),
and account number.
By Exchange
Call Shareholder
Services. The new
account will have
the same
registration as the
account from which
you are exchanging.
Services for the
new account may be
carried over by
telephone request
if preauthorized on
the existing
account. (See
explanation of
"Excessive Trading"
under "Transaction
Procedures.")
_________________________ In Person
Drop-off locations Drop off your New
101 East Lombard St. Account Form at any
Baltimore, MD of the locations
listed at left and
T. Rowe Price obtain a receipt.
Financial Center
10090 Red Run Blvd. Note: The fund and
Owings Mills, MD its agents have the
right to waive or
Farragut Square lower investment
900 17th Street, N.W. minimums, to accept
Washington, D.C. initial purchases
by telephone or
ARCO Tower mailgram, to cancel
31st Floor or reject any
515 S. Flower St. purchase or
Los Angeles, CA exchange if the
written
confirmation has
not been received
by the shareholder,
or to otherwise
modify the
conditions of
purchase or any
services at any
time.
Purchasing
Additional Shares:
$100 minimum
purchase; $5,000
minimum for
telephone purchases
By ACH Transfer
Use Tele*Access
(registered
trademark),
PC*Access
(registered
trademark) or call
Shareholder
Services if you
have established
electronic
transfers using the
ACH network ($100
minimum).
By Automatic Asset
Builder
Fill out the
Automatic Asset
Builder section on
the New Account or
Shareholder
Services Form.
______________________ By Wire
Regular Mail Call Shareholder
T. Rowe Price Funds Services or use the
Account Services wire address in
P. O. Box 89000 "Opening a New
Baltimore, MD Account."
21289-1500
By Mail
o
Provide your
account number and
the fund name on
your check.
o
Mail the check to
us at the address
shown at left with
either a
reinvestment slip
or a note
indicating the fund
and account number
in which you wish
to purchase shares.
By Phone
Call Shareholder
Services to lock in
that day's closing
price; payment is
due within five
days ($5,000
minimum).
Exchanging and
Redeeming Shares
By Phone
Call Shareholder
Services. If you
find our phones
busy during
unusually volatile
markets, please
consider placing
your order by
Tele*Access or
PC*Access (if you
have previously
authorized
telephone
services), or by
express mail or
mailgram. For
exchange policies,
please see
"Transaction
Procedures and
Special
Requirements -
Excessive Trading."
Redemption proceeds
can be mailed to
your account
address, sent by
ACH transfer, or
wired to your bank.
(For charges, see
"Electronic
Transfers - By
Wire" on the next
page.)
_________________________ By Mail
Regular Mail Provide account
T. Rowe Price name(s) and
Account Services numbers, fund
P.O. Box 89000 name(s), and
Baltimore, MD exchange or
21289-0220 redemption amount.
For exchanges, mail
Mailgram, Express, to the appropriate
Registered, or Certified address at left,
Mail indicate the fund
T. Rowe Price you are exchanging
Account Services from and the
10090 Red Run Blvd. fund(s) you are
Owings Mills, MD 21117 exchanging into. T.
Rowe Price requires
the signatures of
all owners exactly
as registered, and
possibly a
_________________________ signature guarantee
Investor Services (see "Transaction
1-800-977-1577 Procedures and
1-410-547-2308 Special
Requirements -
Shareholder Services Signature
1-800-225-5132 Guarantees").
1-410-625-6500
Note: Shareholders
holding
certificates must
conduct
transactions by
mail. If you lose
a stock
certificate, there
may be a charge to
replace it. Call
Shareholder
Services for
further
information.
Shareholder
Services
Many services are
available to you as
a T. Rowe Price
shareholder; some
you receive
automatically and
others you must
authorize on the
New Account Form.
By signing up for
services on the New
Account Form rather
than later on, you
avoid having to
complete a separate
form and obtain a
signature
guarantee. This
section reviews
some of the
principal services
currently offered.
Our Services Guide
contains detailed
descriptions of
these and other
services. If you
are a new T. Rowe
Price investor, you
will receive a
Services Guide with
our Welcome Kit.
Exchange Service
You can move money
from one account to
an existing
identically
registered account,
or open a new
identically
registered account.
Remember, exchanges
are purchases and
sales for tax
purposes.
(Exchanges into a
state tax-free fund
are limited to
investors living in
states where the
funds are
registered.) Some
of the T. Rowe
Price funds may
impose a redemption
fee of .50%-2%,
payable to such
funds, on shares
held for less than
one year, or in
some funds, six
months.
Telephone Services
Tele*Access.
24-hour service via
toll-free number
provides
information such as
yields, prices,
dividends, account
balances, and your
latest transaction,
as well as the
ability to request
prospectuses and
account forms and
initiate purchase,
redemption and
exchange orders in
your accounts (see
"Electronic
Transfers" below).
PC*Access. 24-hour
service via dial-up
modem provides the
same information as
Tele*Access, but on
a personal
computer. Please
call Investor
Services for an
information guide.
Shareholder
Services. Buy,
sell, or exchange
shares by calling
one of our service
representatives or
by visiting one of
our four investor
center locations.
Electronic
Transfers
By ACH. With no
charges to pay, you
can initiate a
purchase or
redemption for as
little as $100 or
as much as $100,000
between your bank
account and fund
account
using the ACH
network. Enter
instructions via
Tele*Access,
PC*Access or call
Shareholder
Services.
By Wire. Electronic
transfers can also
be conducted via
bank wire. There is
currently a $5 fee
for wire
redemptions under
$5,000, and your
bank may charge for
wire transfers
regardless of size.
Checkwriting
You may write an
unlimited number of
free checks on bond
and money market
funds, with a
minimum of $500 per
check. Keep in
mind, however that
a check results in
a redemption; a
check written on a
bond fund will
create a taxable
event which you and
we must report to
the IRS.
Automatic Investing
You can invest
automatically in
several different
ways, including:
o
Automatic Asset
Builder. You
instruct us to move
$50 or more once a
month or less often
from your bank
account, or you can
instruct your
employer to send
all or a portion of
your paycheck, to
the fund or funds
you designate.
o
Automatic Exchange.
Enables you to set
up systematic
investments from
one fund account
into another, such
as from a money
fund into a stock
fund.
Discount Brokerage
You can trade
stocks, bonds,
options, precious
metals and other
securities at a
substantial savings
over regular
commission rates.
Call Investor
Services for
information.
Note: If you buy or
sell T. Rowe Price
funds through
anyone other than
T. Rowe Price, such
as broker-dealers
or banks, you may
be charged
transaction or
service fees by
those institutions.
No such fees are
charged by T. Rowe
Price Investment
Services or the
fund for
transactions
conducted directly
with the fund.
PAGE
Prospectus
To Open an Account
Investor Services Tax-Free Funds
1-800-638-5660
1-410-547-2308
For Existing Accounts T. Rowe Price
Shareholder Services Tax-Free Funds,
1-800-225-5132 Inc. ______________
1-410-625-6500 To help you July 1, 1994 A family of
achieve your municipal bond
For Yields & Prices financial goals, and money
Tele*AccessR T. Rowe Price funds for
1-800-638-2587 offers a wide investors
1-410-625-7676 range of stock, seeking income
24 hours, 7 days bond, and money that is exempt
market from federal
Investor Centers investments, as income taxes.
well as
First Floor convenient
101 East Lombard St. services and
Baltimore, MD timely,
T. Rowe Price informative
Financial Center reports.
First Floor
10090 Red Run Blvd.
Owings Mills, MD
ARCO Tower
31st Floor
515 S. Flower St.
Los Angeles, CA
<PAGE>
PAGE 15
STATEMENT OF ADDITIONAL INFORMATION
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
(the "Funds")
This Statement of Additional Information is not a
prospectus but should be read in conjunction with the Funds'
prospectus dated July 1, 1994, which may be obtained from T. Rowe
Price Investment Services, Inc., 100 East Pratt Street,
Baltimore, Maryland 21202.
The date of this Statement of Additional Information is
July 1, 1994. <PAGE>
PAGE 16
TABLE OF CONTENTS
Page Page
Capital Stock. . . . . .52 Investment Restrictions . . 23
(page 14 in Prospectus) . .Legal Counsel54
Custodian. . . . . . . .37 Management of Funds . . . . 32
Determination of Maturity of
Municipal Securities . . 7
Securities. . . . . . .14 Net Asset Value Per Share . 44
Distributor for Funds. .37 Options . . . . . . . . . . 23
Dividends. . . . . . . .45 Participation Interests . . 11
Federal and State Registration
Portfolio Transactions .38
of Shares . . . . . . .54 Portfolio Turnover. . . . . 14
Forwards . . . . . . . .12 Pricing of Securities . . . 43
Futures Contracts. . . .15 Principal Holders of Securities34
General Information and History 51
Ratings of Commercial Paper 31
Independent Accountants.55 Ratings of Municipal Debt
Securities . . . . . . .29
Investment Management Services 34 Ratings of Municipal Notes
and Variable
(page 14 in Prospectus) Rate Securities31
Investment in Taxable Money Market
Residual Interest Bonds.31
Securities . . . . . .13 Risk Factors. . . . . . . . .4
Investment Objectives. . 3 Tax-Exempt vs. Taxable Yields47
(pages 1 and 16 in Prospectus)Tax Status (page 11 in
Prospectus)45
Investment Objectives and Policies 2Variable and Floating Rate
Investment Performance .47 Securities . . . . . . . 10
Investment Programs. . . 7 When-Issued Securities. . . 12
(pages 6-9 and 16-23 in Prospectus) Yield Information46
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of
each Fund's investment objectives and policies discussed on pages
1 and 16, and 6 through 9 and 16 through 23 of the prospectus.
The Funds will not make a material change in their investment
objectives without obtaining shareholder approval. Unless
otherwise specified, the investment programs and restrictions of
the Funds are not fundamental policies. Each Fund's operating
policies are subject to change by its Board of Directors without
shareholder approval. However, shareholders will be notified of
a material change in an operating policy. Each Fund's
fundamental policies may not be changed without the approval of
at least a majority of the outstanding shares of the Fund or, if
it is less, 67% of the shares represented at a meeting of
shareholders at which the holders of 50% or more of the shares
are represented.
<PAGE>
PAGE 17
RISK FACTORS
All Funds
The Funds are designed for investors who, because of
their tax bracket, can benefit from investment in municipal bonds
whose income is exempt from federal taxes. The Funds are not
appropriate for qualified retirement plans where income is
already tax deferred.
Municipal Securities
There can be no assurance that the Funds will achieve
their investment objectives. 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 obligation,
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
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, 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 interest on
municipal securities, and similar proposals may be introduced in
the future. 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, a Fund would reevaluate its investment objectives
and policies.
Although the banks and securities dealers with which
the Fund 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 Fund with respect to such securities.
After purchase by a Fund, a security may cease to be
rated or its rating may be reduced below the minimum required for
purchase by the Fund.
PAGE 18
For the Money Fund, the procedures set forth in Rule 2a-7, under
the Investment Company Act of 1940, may require the prompt sale
of any such security. For the other Funds, neither event would
require a sale of such security by the Fund. However, T. Rowe
Price Associates, Inc. ("T. Rowe Price") will consider such event
in its determination of whether the Fund should continue to hold
the security. To the extent that the ratings given by Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's
Corporation ("S&P"), or Fitch Investors Service, Inc. ("Fitch")
may change as a result of changes in such organizations or their
rating systems, the Fund will attempt to use comparable ratings
as standards for investments in accordance with the investment
policies contained in the prospectus. When purchasing unrated
securities, T. Rowe Price, under the supervision of the Fund's
Board of Directors, determines whether the unrated security is of
a qualify comparable to that which the Fund is allowed to
purchase.
Municipal Bond Insurance. All of 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. The guarantee is purchased from a private, non-governmental
insurance company.
There are two 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 order to improve the bond's
credit rating. By meeting the insurer's standards and paying an
insurance premium based on the bond's principal value, the issuer
is able to obtain a higher credit rating for the bond. Once
purchased, municipal bond insurance cannot be cancelled, and the
protection it affords continues as long as the bonds are
outstanding and the insurer remains solvent.
The Funds may also purchase bonds which 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 obligation of a municipal bond
insurance company may have to pay 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. Although defaults
on insured municipal bonds have been low to date and municipal
insurers have met these claims, there is no assurance this low
rate will continue in the future. A higher than expected default
rate could deplete loss reserves and adversely affect the ability
of a municipal bond insurer to pay claims to holders of insured
bonds, such as the Fund.
<PAGE>
PAGE 19
Money Fund
The Fund will limit its purchases of portfolio
instruments to those U.S. dollar-denominated securities which the
Fund's Board of Directors determines present minimal credit risk,
and which are Eligible Securities as defined in Rule 2a-7 under
the Investment Company Act of 1940 (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 rating categories by
nationally recognized statistical rating organizations or, in the
case of any instrument that is not so rated, is of comparable
high quality as determined by T. Rowe Price pursuant to written
guidelines established in accordance with Rule 2a-7 under the
Investment Company Act of 1940 under the supervision of the
Fund's Board of Directors. 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 Money Fund will
achieve its investment objectives or be able to maintain its net
asset value per share at $1.00. The price stability and
liquidity of the Money Fund may not be equal to that of a taxable
money market fund which exclusively invests in short-term taxable
money market securities. The taxable money market is a broader
and more liquid market with a greater number of investors,
issuers, and market makers than the short-term municipal
securities market. The weighted average maturity of the Fund
varies: the shorter the average maturity of a portfolio, the
less its price will be impacted by interest rate fluctuations.
Bond Funds
Because of their investment policies, the Bond Funds
may not be suitable or appropriate for all investors. The Funds
are designed for investors who wish to invest in non-money market
funds for income, and who would benefit, because of their tax
bracket, from receiving income that is exempt from federal income
taxes. The Funds' investment programs permit the purchase of
investment grade securities that do not meet the high quality
standards of the Money Fund. Since investors generally perceive
that there are greater risks associated with investment in lower
quality securities, the yields from such securities normally
exceed those obtainable from higher quality securities. In
addition, the principal value of long term lower-rated securities
generally will fluctuate more widely than higher quality
securities. Lower quality investments entail a higher risk of
default--that is, the nonpayment of interest and principal by the
issuer than higher quality investments. The value of the
portfolio securities of the Bond Funds will fluctuate based upon
market conditions. Although these Funds seek to reduce credit
risk by investing in a diversified portfolio, such
diversification does not eliminate all risk. The Funds are also
not intended to provide a vehicle for short-term trading
purposes.
<PAGE>
PAGE 20
Special Risks of High Yield Investing.
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 leverage 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 a Fund to dispose of its 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.
Reference is also made to the sections entitled "Types
of Securities" and "Portfolio Management Practices" for
discussions of the risks associated with the investments and
practices described therein.
INVESTMENT PROGRAMS
(Throughout the discussion on Investments, the term "the Fund" is
intended to refer to each of the Funds eligible to invest in the
security or engage in the practice being described)
Type of Securities
Municipal Securities
Subject to the investment objectives and programs
described in the prospectus and the additional investment
restrictions described in this Statement of Additional
Information, each Fund's portfolio may consist of any combination
of the various types of municipal securities described below or
other types of municipal securities that may be developed. The
amount of each Fund's 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
exempt from federal income tax. In determining the tax-exempt
status of a municipal security, the Fund relies 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 Fund
from such a security might not be exempt from federal income tax.
Municipal securities are classified by maturity as
notes, bonds, or adjustable rate securities.
Municipal Notes. Municipal notes generally are used to
provide for short-term operating or capital needs and generally
have maturities of one year or less. Municipal notes include:
PAGE 21
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 other types of
revenue, such as federal or state revenues available
under the revenue sharing or grant programs.
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. 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. Two additional categories of
potential purchases are lease revenue bonds and pre-
refunded/escrowed to maturity bonds. Another type of municipal
bond is referred to as an Industrial Development Bond.
General Obligation Bonds. Issuers of general
obligation bonds include 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 facilities; 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.
PAGE 22
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 Fund's
Board determines such securities are illiquid, they
will be subject to the Fund's 15% limit on illiquid
securities (10% limit for the Money Fund). 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) 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.
Pre-refunded/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
"pre-refunded" or "escrowed to maturity" and are
considered as high quality investments. While still
tax-exempt, the security is the proceeds of the escrow
account. To the extent permitted by the Securities and
Exchange Commission 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 Fund, be
considered as an investment in the U.S. Treasury
securities.
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.
PAGE 23
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. Some, but not
all, private activity bonds are subject to alternative
minimum tax.
Industrial Development Bonds. Industrial 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.
Adjustable Rate Securities. Municipal securities may
be issued with adjustable interest rates that are reset
periodically by pre-determined formulas or indexes in order to
minimize movements in the principal value of the investment.
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 the following
forms:
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. Subject to the provisions of Rule
2a-7 under the Investment Company Act of 1940, (1)
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; (2) a variable rate instrument which is
subject to a demand feature which entitles the
purchaser to receive the principal amount of the
underlying security or securities either (i) upon
notice of usually 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; and (3) an instrument
that is issued or guaranteed by the U.S. government
or any agency thereof which has a variable rate of
interest readjusted no less frequently than every
762 days may be deemed to have a maturity equal to
the period remaining until the next readjustment of
the interest rate. Should the provisions of Rule
2a-7 change, the Fund will determine the maturity
of these securities in accordance with the amended
provisions of such rule.
PAGE 24
Floating Rate Securities. Floating rate
instruments are those whose terms provide for the
adjustment of their interest rates whenever a
specified interest rate changes and which, at any
time, can reasonably be expected to have a market
value that approximates its par value. Subject to
the provisions of Rule 2a-7 under the Investment
Company Act of 1940, (1) the maturity of a floating
rate instrument 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; and (2) floating rate
instruments with demand features are deemed to have
a maturity equal to the period remaining until the
principal amount can be recovered through demand.
Should the provisions of Rule 2a-7 change, the Fund
will determine the maturity of these securities in
accordance with the amended provisions of such
rule.
Put Option Bonds. Long-term obligations with
maturities longer than one year may provide
purchasers an optional or mandatory tender of the
security at par value at predetermined intervals,
often ranging from one month to several years
(e.g., a 30-year bond with a five-year tender
period). These instruments are deemed to have a
maturity equal to the period remaining to the put
date.
Residual Interest Bonds (Bond Funds). 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 variable rate securities will be
determined by an index or auction process held
approximately every 7 to 35 days while the bond
holders 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.
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 or be
at deep discounts. This is a relatively new
product in the municipal market with limited
liquidity to date.
PAGE 25
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 Intermediate
and Income 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 holds participation
interests is exempt from federal income tax to the
Funds. However, there is no guarantee the IRS
would treat such interest income as tax-exempt.
Embedded Interest Rate Swaps and Caps (Bond Funds).
In a fixed-rate, long-term municipal bond with an
interest rate swap attached to it, the bondholder
usually receives the bond's fixed-coupon payment as
well as a variable rate payment that represents the
difference between a fixed rate for the term of the
swap (which is typically shorter than the bond it
is attached to) and a variable rate short-term
municipal index. The bondholder receives excess
income when short-term rates remain below the fixed
interest rate swap rate. If short-term rates rise
above the fixed-income swap rate, the bondholder's
income is reduced. At the end of the interest rate
swap term, the bond reverts to a single
fixed-coupon payment. Embedded interest rate swaps
enhance yields, but also increase interest rate
risk.
An embedded interest rate cap allows the bondholder
to receive payments whenever short-term rates rise
above a level established at the time of purchase.
They normally are used to hedge against rising
short-term interest rates.
Both instruments may be volatile and of limited
liquidity and their use may adversely affect a
fund's total return.
The Funds may invest in other types of derivative
instruments as they become available.
There are, of course, other types of municipal
securities that are, or may become, available, and the Funds
reserve the right to invest in them.
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 the Funds' investment
manager, 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.
PAGE 26
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
the interest rate that will be received on the securities are
each fixed at the time the buyer enters into the commitment. A
Fund will only make a commitment to purchase such securities with
the intention of actually acquiring the securities. However, a
Fund may sell these securities before the settlement date if it
is deemed advisable as a matter of investment strategy. Each
Fund will maintain cash and/or high-grade marketable debt
securities with its custodian bank equal in value to commitments
for when-issued securities. Such securities either will mature
or, if necessary, be sold on or before the settlement date.
Securities purchased on a when-issued basis and the securities
held in a Fund's portfolio 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
a Fund remains fully invested or almost fully invested at the
same time that it has purchased securities on a when-issued
basis, there will be greater fluctuations in its net asset value
than if it solely set aside cash to pay for when-issued
securities. In the case of the Money Fund, this could increase
the possibility that the market value of the Fund's assets could
vary from $1.00 per share. In addition, there will be a greater
potential for the realization of capital gains, which are not
exempt from federal income tax. When the time comes to pay for
when-issued securities, a Fund will meet its 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 a Fund upon
notice to its shareholders.
Forwards
(Bond Funds)
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.
<PAGE>
PAGE 27
Investment in Taxable Money Market Securities
Although the Funds expect to be solely invested in
municipal securities, for temporary defensive purposes they may
elect to invest in the taxable money market securities listed
below (without limitation) when such action is deemed to be in
the best interests of shareholders. The interest earned on these
money market securities is not exempt from federal income tax and
may be taxable to shareholders as ordinary income.
U.S. Government Obligations - direct obligations of
the government and its agencies and instrumentalities;
U.S. Government Agency Securities - obligations
issued or guaranteed by U.S. government sponsored enterprises,
federal agencies, and international institutions. Some of these
securities are supported by the full faith and credit of the U.S.
Treasury; others are supported by the right of the issuer; and
the remainder are supported only by the credit of the
instrumentality;
Bank Obligations - certificates of deposit,
bankers' acceptances, and other short-term obligations of U.S.
and Canadian banks and their foreign branches;
Commercial Paper - paper rated A-2 or better by
S&P, Prime-2 or better by Moody's, or F-2 or better by Fitch, or,
if not rated, is issued by a corporation having an outstanding
debt issue rated A or better by Moody's, S&P or Fitch and, with
respect to the Money Fund, is of equivalent investment quality as
determined by the Board of Directors; and
Short-Term Corporate Debt Securities - short-term
corporate debt securities rated at least AA by S&P, Moody's or
Fitch.
Determination of Maturity of Money Market Securities
The Money Fund may only purchase securities which at
the time of investment have remaining maturities of 397 calendar
days or less, or with respect to U.S. government securities, have
remaining maturities of 762 calendar days or less. The other
Funds may also purchase money-market securities. In
determining the maturity of money market securities, the Funds
will follow the povisions of Rule 2a-7 under the Investment
Company Act of 1940.
Futures Contracts
Bond Funds (Throughout the discussion on Futures Contracts, the
Funds are referred to as "the Fund")
Transactions in Futures
The Fund may enter into interest rate futures contracts
("futures" or "futures contracts"). Interest rate futures
contracts may be used as a hedge against changes in prevailing
levels of interest rates in order to establish more definitely
the effective return on securities held or intended to be
acquired by the Fund. The Fund could sell interest rate futures
as an offset against the effect of expected increases in interest
rates and purchase such futures as an offset against the effect
of expected declines in interest rates. Futures can also be used
as an efficient means of regulating a Fund's exposure to the
market.
PAGE 28
The Fund will enter into futures contracts which are
traded on national 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 Fund's objectives
in these areas.
Regulatory Limitations
The Fund will engage in futures contracts and
options thereon only for bona fide hedging, yield enhancement,
and risk management purposes, in each case in accordance with
rules and regulations of the CFTC and applicable state law.
The Fund may not purchase or sell futures contracts
or related options if, with respect to positions which do not
quality as bona fide hedging under applicable CFTC rules, the sum
of the amounts of initial margin deposits and premiums paid on
those positions would exceed 5% of the net asset value of the
Fund after taking into account unrealized profits and unrealized
losses on any such contracts it has 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 traded on a commodities exchange
will be considered "related options." This policy may be
modified by the Board of Directors without a shareholder vote and
does not limit the percentage of the Fund's assets at risk to
5%.
In accordance with the rules of the State of
California, the Fund will apply the above 5% test without
excluding the value of initial margin and premiums paid for bona
fide hedging purposes.
The Fund's use of futures will not result in
leverage. Therefore, to the extent necessary, in instances
involving the purchase of futures contracts or the writing of
calls or put options thereon by the Fund, an amount of cash, U.S.
government securities or other liquid, high-grade debt
obligations, equal to the market value of the futures contracts
and options thereon (less any related margin deposits), will be
identified in an account with the Fund's custodian 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
portion of a Fund's assets to cover or identified accounts could
impede portfolio management or the Fund's 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 Fund would comply with such new restrictions.
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 debt security)
for a specified price, date, time and place designated at the
time the contract is made. Brokerage fees are
PAGE 29
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.
It is possible that the Fund's hedging activities will
occur primarily through the use of municipal bond index futures
contracts since the uniqueness of that index contract should
better correlate with the Fund's portfolio and thereby be more
effective. However, there may be times when it is deemed in the
best interest of shareholders to engage in the use of Treasury
bond futures, and the Fund reserves to right to use Treasury bond
futures at any time. Use of these futures could occur, as an
example, when both the Treasury bond contract and municipal bond
index futures contract are correlating well with municipal bond
prices, but the Treasury bond contract is trading at a more
advantageous price making the hedge less expensive with the
Treasury bond contract than would be obtained with the municipal
bond index futures contract. The Fund's activity in futures
contracts generally will be limited to municipal bond index
futures contracts and Treasury bond and note contracts.
Unlike when the Fund purchases or sells a security, no
price would be paid or received by the Fund upon the purchase or
sale of a futures contract. Upon entering into a futures
contract, and to maintain the Fund's open positions in futures
contracts, the Fund would be required to deposit with its
custodian in a segregated account in the name of the futures
broker an amount of cash, U.S. government securities, suitable
money market instruments, or liquid, high-grade debt securities,
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.
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 broker will require an increase in the margin.
However, if the value of a position increases because of
favorable price changes in the futures contract so that the
margin deposit exceeds the required margin, the broker will pay
the excess to the Fund.
These subsequent payments, called "variation margin,"
to and from the futures broker, are made on a daily basis as the
price of the underlying assets fluctuate making the long and
short positions in the futures contract more or less valuable, a
process known as "marking to the market." The Fund expects to
earn interest income on its margin deposits.
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 Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting
sale price is more than the original purchase price, the Fund
realizes a gain; if it is less, the Fund realizes a loss. The
transaction costs must also be included in these calculations.
There can be
PAGE 30
no assurance, however, that the Fund will be able to enter into
an offsetting transaction with respect to a particular futures
contract at a particular time. If the Fund is not able to enter
into an offsetting transaction, the Fund will continue to 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
municipal bond index futures 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 municipal bond index
futures 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 Fund.
<PAGE>
PAGE 31
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 United States 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.
Because of the low margin deposits required, futures
trading involves an extremely high degree of leverage. 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.
However, the Fund would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in
the underlying financial instrument and sold it after the
decline. Furthermore, in the case of a futures contract
purchase, in order to be certain that the Fund has sufficient
assets to satisfy its obligations under a futures contract, the
Fund earmarks to the futures contract money market instruments
equal in value to the current value of the underlying instrument
less the margin deposit.
Liquidity. The Fund may elect to close some or all
of its futures positions at any time prior to their expiration.
The Fund would do so to reduce exposure represented by long
futures positions or short futures positions. The Fund may close
its positions by taking opposite positions which would operate to
terminate the Fund's position in the futures contracts. Final
determinations of variation margin would then be made, additional
cash would be required to be paid by or released to the Fund, and
the Fund 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 Fund intends 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 Fund would continue to be
required to make daily cash payments of variation margin.
However, in the event futures contracts have been used to hedge
the
PAGE 32
underlying instruments, the Fund would continue to hold the
underlying instruments subject to the hedge until the futures
contracts could be terminated. 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 below, 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 of 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, market or interest rate trends. There are
several risks in connection with the use by the Fund 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
Fund's underlying instruments sought to be hedged.
Successful use of futures contracts by the Fund 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 Fund has sold futures to hedge its
portfolio against a decline in the market, the index, indices, or
instruments underlying futures are written might advance and the
value of the underlying instruments held in the Fund's portfolio
might decline. If this were to occur, the Fund would lose money
on the futures and also would experience a decline in value in
its underlying instruments. However, while this might occur to a
certain degree, T. Rowe Price believes that over time the value
of the Fund's portfolio will tend to move in the same direction
as the market indices used to hedge the portfolio. It is also
possible that if the Fund were to hedge against the possibility
of a decline in the market (adversely affecting the underlying
instruments held in its portfolio) and prices instead increased,
the Fund would lose part or all of the benefit of increased value
of those underlying instruments that it has hedged, because it
would have offsetting losses in its futures positions. In
addition, in such situations, if the Fund had insufficient cash,
it might have to sell underlying instruments to meet daily
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 Fund 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 perfectly 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 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 do.
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
PAGE 33
and also because of the 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
The Fund might trade in municipal bond index option
futures or similar options on futures developed in the future.
In addition, the Fund may also trade in options on futures
contracts on U.S. government securities and any U.S. government
securities futures index contract which might be developed. In
the opinion of T. Rowe Price, there is a high degree of
correlation in the interest rate, and price movements of U.S.
government securities and municipal securities. However, the
U.S. government securities market and municipal securities
markets are independent and may not move in tandem at any point
in time.
The Fund will purchase put options on futures contracts
to hedge its portfolio of municipal securities against the risk
of rising interest rates, and the consequent decline in the
prices of the municipal securities it owns. The Funds will also
write call options on futures contracts as a hedge against a
modest decline in prices of the municipal securities held in the
Fund's portfolio. If the futures price at expiration of a
written call option is below the exercise price, the Fund will
retain the full amount of the option premium, thereby partially
hedging against any decline that may have occurred in the Fund's
holdings of debt securities. If the futures price when the
option is exercised is above the exercise price, however, the
Fund will incur a loss, which may be wholly or partially offset
by the increase of the value of the securities in the Fund's
portfolio which were being hedged.
Writing a put option on a futures contract serves as a
partial hedge against an increase in the value of securities the
Fund intends to acquire. If the futures price at expiration of
the option is above the exercise price, the Fund 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 Fund intends to acquire. If the futures
price when the option is exercised is below the exercise price,
however, the Fund will incur a loss, which may be wholly or
partially offset by the decrease in the price of the securities
the Fund intends to acquire.
Options 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
option, the delivery of the futures position by the writer of the
option to the holder of the option will be accompanied by
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.
From time to time a single order to purchase or sell
futures contracts (or options thereon) may be made on behalf of
the Fund and other T.
PAGE 34
Rowe Price Funds. Such aggregated orders would be allocated
among the Fund and the other T. Rowe Price Funds in a fair and
non-discriminatory manner.
Special Risks of Transactions in Options on Futures Contracts
The risks described under "Special Risks of
Transactions on Futures Contracts" are substantially the same as
the risks of using options on futures. In addition, where the
Fund seeks 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, its 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: (i) there may be
insufficient trading interest in certain options; (ii)
restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading
halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options, or underlying
instruments; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of
an exchange or a clearing corporation may not at all times be
adequate to handle current trading volume; or (vi) 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 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 Fund maintains a position, in
the case of a written option, the Fund would have to wait to sell
the underlying securities or futures positions until the option
expires or is exercised. The Fund 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 a municipal securities index
future is used to hedge a municipal bond portfolio. Another risk
is that the movements in the price of options on futures
contracts may not move inversely with changes in interest rates.
If the Fund has written a call option on a futures contract and
the value of the call increases by more than the increase in the
value of the securities held as cover, the Fund 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 of
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
PAGE 35
appreciating, the Fund may experience poorer overall performance
than if it had not entered into any options on futures contracts.
General Considerations
Transactions by the Fund 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 class 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 Fund may
write or purchase may be affected by contracts written or
purchased by other investment advisory clients of T. Rowe Price.
An exchange, board 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 Fund has 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.
Federal Tax Treatment of Futures Contracts
Although the Fund invests almost exclusively in
securities which generate income which is exempt from federal
income taxes, the instruments described above are not exempt from
such taxes. Therefore, use of the investment techniques
described above could result in taxable income to shareholders of
the Fund.
Generally, the Fund is required, for federal income tax
purposes, to recognize as income for each taxable year its net
unrealized gains and losses on futures contracts as of the end of
the year as well as those actually realized during the year.
Gain or loss recognized with respect to a futures contract will
generally be 60% long-term capital gain or loss and 40% short-
term capital gain or loss, without regard to the holding period
of the contract.
Futures contracts which are intended to hedge against a
change in the value of securities may be classified as "mixed
straddles," in which case the recognition of losses may be
deferred to a later year. In addition, sales of such futures
contracts on securities may affect the holding period of the
hedged security and, consequently, the nature of the gain or loss
on such security on disposition.
In order for the Fund to continue to qualify for
federal income tax treatment as a regulated investment company,
at least 90% of its gross income for a taxable year must be
derived from qualifying income; i.e., dividends, interest, income
derived from loans of securities, and gains from the sale of
securities. Gains realized on the sale or other disposition of
securities, including futures contracts on securities held for
less than three months, must be limited to less than 30% of the
Fund's annual gross income. In order to avoid realizing
excessive gains on securities held less than three months, the
Fund may be required to defer the closing out of futures
contracts beyond the time when it would otherwise be advantageous
to do so. It is
PAGE 36
anticipated that unrealized gains on futures contracts, which
have been open for less than three months as of the end of the
Fund's fiscal year and which are recognized for tax purposes,
will not be considered gains on securities held less than three
months for purposes of the 30% test.
The Fund will distribute to shareholders annually any
net gains which have been recognized for federal income tax
purposes from futures transactions (including unrealized gains at
the end of the Fund's fiscal year). Such distributions will be
combined with distributions of ordinary income or capital gains
realized on the Fund's other investments. Shareholders will be
advised of the nature of the payments. The Fund's ability to
enter into transactions in options on futures contracts may be
limited by the Internal Revenue Code's requirements for
qualification as a regulated investment company.
Options on Securities
Bond Funds
The Funds have no current intention of investing in
options on securities, although they reserve the right to do so.
Appropriate disclosure would be added to the Funds' prospectus
and Statement of Additional Information when and if the Funds
decide to invest in options.
INVESTMENT RESTRICTIONS
All Funds
Fundamental policies may not be changed without the
approval of the lesser of (1) 67% of a Fund's 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 a Fund's outstanding shares. Other restrictions in
the form of operating policies are subject to change by a Fund's
Board of Directors 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, a
Fund.
Fundamental Policies
As a matter of fundamental policy, the Fund may not:
(1) Borrowing. Borrow money except that the Fund may (i)
borrow for non-leveraging, temporary or emergency
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 Fund's investment
objective and program, provided that the combination
of (i) and (ii) shall not exceed 33 1/3% of the value
of the Fund's 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 Fund
may borrow from banks, other Price Funds or other
persons to the extent permitted by applicable law.
PAGE 37
(2) Commodities. Purchase or sell physical commodities;
except that the Fund (other than the Money Fund) may
enter into futures contracts and options thereon;
(3) Industry Concentration. 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;
(4) Loans. Make loans, although the Fund 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 33 1/3% of the
value of the Fund's total assets; (ii) purchase money
market securities and enter into repurchase
agreements; and (iii) acquire publicly-distributed or
privately-placed debt securities and purchase debt;
(5) Percent Limit on Assets Invested in Any One Issuer.
Purchase a security if, as a result, with respect to
75% of the value of its total assets, more than 5% of
the value of the Fund's total assets would be
invested in the securities of a single issuer, except
securities issued or guaranteed by the U.S.
Government or any of its agencies or
instrumentalities;
(6) Percent Limit on Share Ownership of Any One Issuer.
Purchase a security if, as a result, with respect to
75% of the value of the Fund's total assets, more
than 10% of the outstanding voting securities of any
issuer would be held by the Fund (other than
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities);
(7) Real Estate. Purchase or sell real estate unless
acquired as a result of ownership of securities or
other instruments (but this shall not prevent the
Fund from investing in securities or other
instruments backed by real estate or securities of
companies engaged in the real estate business);
(8) Senior Securities. Issue senior securities except in
compliance with the Investment Company Act of 1940;
(9) Taxable Securities. During periods of normal market
conditions, purchase any security if, as a result,
less than 80% of the Fund's income would be exempt
from federal income tax. The income from securities
subject to the alternative minimum tax (AMT) is not
counted when determining whether 80% of the Fund's
income is exempt from federal income tax; or
(10) Underwriting. Underwrite securities issued by other
persons, except to the extent that the Fund may be
deemed to be an underwriter within the meaning of the
Securities Act of 1933 in connection with the
purchase and sale of its portfolio securities in the
ordinary course of pursuing its investment program.
NOTES
PAGE 38
The following Notes should be read in connection with the
above-described fundamental policies. The Notes are not
fundamental policies.
With respect to investment restrictions (1) and (4) the
Fund will not borrow from or lend to any other T. Rowe
Price Fund unless they apply for and receive an exemptive
order from the SEC or the SEC issues rules permitting
such transactions. The Fund has no current intention of
engaging in any such activity and there is no assurance
the SEC would grant any order requested by the Fund or
promulgate any rules allowing the transactions.
With respect to investment restriction (1), the Money
Fund has no current intention of engaging in any
borrowing transactions.
With respect to investment restriction (2), the Fund does
not consider hybrid instruments to be commodities.
For purposes of investment restriction (3), U.S., state
or local governments, or related agencies or
instrumentalities, are not considered an industry.
Industrial development bonds issued by nongovernmental
users are not considered municipal securities for
purposes of this exception.
With respect to investment restriction (9), the income
derived from securities subject to the alternative
minimum tax does not count toward meeting this 80% test.
Operating Policies
As a matter of operating policy, the Fund may not:
(1) Borrowing. The Fund will not purchase additional
securities when money borrowed exceeds 5% of its
total assets.
(2) Control of Portfolio Companies. Invest in companies
for the purpose of exercising management or control;
(3) Equity Securities. Purchase any equity security or
security convertible into an equity security provided
that the Fund (other than the Money Funds) may invest
up to 10% of its total assets in equity securities
which pay tax-exempt dividends and which are
otherwise consistent with the Fund's investment
objective and, further provided, that the Money Fund
may invest up to 10% of its total assets in equity
securities of other tax-free open-end money market
funds;
(4) Futures Contracts. 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 positions would exceed 5% of the
Fund's net asset value.
(5) Illiquid Securities. Purchase illiquid securities
if, as a result, more than 15% (10% for the Money
Fund) of its net assets would be invested in such
securities;
PAGE 39
(6) Investment Companies. Purchase securities of open-
end or closed-end investment companies except in
compliance with the Investment Company Act of 1940
and applicable state law provided that, the Money
Fund may only purchase the securities of other open-
end investment companies;
(7) Margin. Purchase securities on margin, except (i)
for use of short-term credit necessary for clearance
of purchases of portfolio securities and (ii) it may
make margin deposits in connection with futures
contracts or other permissible investments;
(8) Mortgaging. Mortgage, pledge, hypothecate or, in any
manner, transfer any security owned by the Fund 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 33 1/3% of the Fund's
total assets at the time of borrowing or investment;
(9) Oil and Gas Programs. Purchase participations or
other direct interests or enter into leases with
respect to, oil, gas, or other mineral exploration or
development programs;
(10) Options, Etc. Invest in puts, calls, straddles,
spreads, or any combination thereof, except to the
extent permitted by the prospectus and Statement of
Additional Information;
(11) Ownership of Portfolio Securities by Officers and
Directors. Purchase or retain the securities of any
issuer if, to the knowledge of the Fund's management,
those officers and directors of the Fund, and of its
investment manager, who each own beneficially more
than .5% of the outstanding securities of such
issuer, together own beneficially more than 5% of
such securities.
(12) Short Sales. Effect short sales of securities;
(13) Unseasoned Issuers. Purchase a security (other than
obligations issued or guaranteed by the U.S., any
foreign, state or local government, their agencies or
instrumentalities) if, as a result, more than 5% of
the value of the Fund's total assets would be
invested in the securities issuers which at the time
of purchase had been in operation for less than three
years (for this purpose, the period of operation of
any issuer shall include the period of operation of
any predecessor or unconditional guarantor of such
issuer). This restriction does not apply to
securities of pooled investment vehicles or mortgage
or asset-backed securities; or
PAGE 40
(14) Warrants. Invest in warrants if, as a result
thereof, more than 2% of the value of the total
assets of the Fund would be invested in warrants
which are not listed on the New York Stock Exchange,
the American Stock Exchange, or a recognized foreign
exchange, or more than 5% of the value of the total
assets of the Fund would be invested in warrants
whether or not so listed. For purposes of these
percentage limitations, the warrants will be valued
at the lower of cost or market and warrants acquired
by the Fund in units or attached to securities may be
deemed to be without value.
For purposes of investment restriction (6), the Fund has no
current intention of purchasing the securities of other
investment companies. Duplicate fees could result from any
such purchases.
For purposes of investment restriction (13), the Fund will
not consider industrial development bonds issued by
nongovernmental users as municipal securities.
RATINGS OF 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.
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 rated 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 future 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 characterize
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 principal or interest.
Ca - Bonds rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked short-comings.
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.
PAGE 41
AA - Debt rated AA has a very strong capacity to pay principal
and interest and differs from highest rated issues only in a
small degree.
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 - Bonds rated BB, B, CCC, and CC 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 CC the highest
degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse
conditions.
Fitch Investors Service, Inc.
AAA - Bonds rated AAA are considered to be investment grade and
of the highest credit quality. The obligor has an exceptionally
strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events.
AA - Bonds rated AA are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest
and repay principal is very strong, although not quite as strong
as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rate
F-1+.
A - Bonds rated A are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and
repay principal 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 are regarded on balance as predominantly
speculative with respect to the issuer's capacity to repay
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 grades.
Market access for refinancing, in particular, is likely to be
less well established. VMIG4/MIG4: adequate quality but there is
specific risk.
PAGE 42
STANDARD & POOR'S CORPORATION. Note rating symbols are as
follows: SP-1: very strong or strong capacity to pay principal
and interest. Those issues determined to possess overwhelming
safety characteristics 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 INVESTORS SERVICE. 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. F-5: Weak credit quality, having
characteristics suggesting a minimal degree of assurance for
timely payment.
RATINGS OF COMMERCIAL PAPER
MOODY'S INVESTORS SERVICES, 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 (+) designation. A-
2: satisfactory capacity to pay principal and interest. A-3:
adequate capacity for timely payment, but are vulnerable to
adverse effects of changes in circumstances than higher rated
issues. B and C: speculative capacity to pay principal and
interest.
FITCH INVESTORS SERVICE. 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. F-5: Weak credit quality, having
characteristics suggesting a minimal degree of assurance for
timely payment.
MANAGEMENT OF FUNDS
The officers and directors of each of the Funds are listed
below. Unless otherwise noted, the address of each is 100 East
Pratt Street, Baltimore, Maryland 21202. Except as indicated,
each has been an employee of T. Rowe Price for more than five
years. In the list below, the Funds' directors who are
considered "interested persons" of T. Rowe Price as defined under
Section 2(a)(19) of the Investment Company Act of 1940 are noted
with an asterisk (*). These directors are referred to as inside
directors by virtue of their officership, directorship, and/or
employment with T. Rowe Price.
ROBERT P. BLACK, Director--Retired; formerly President,
Federal Reserve Bank of
Richmond; Address: 10 Dahlgren Road, Richmond, Virginia
23233
CALVIN W. BURNETT, PH.D., Director--President, Coppin State
College; Director, Maryland
Chamber of Commerce and Provident Bank of Maryland;
President, Baltimore Area Council Boy Scouts of America;
Vice President, Board of Directors, The Walters Art
Gallery; Address: 2000 North Warwick Avenue, Baltimore,
Maryland 21216
PAGE 43
@*GEORGE J. COLLINS, Chairman of the Board--President, Managing
Director, and Chief
Executive Officer, T. Rowe Price; Director, Rowe
Price-Fleming International, Inc., T. Rowe Price Trust
Company and T. Rowe Price Retirement Plan Services, Inc.,
Chartered Investment Counselor
ANTHONY W. DEERING, Director--Director, President and Chief
Operating Officer, The
Rouse Company, real estate developers, Columbia, Maryland;
Advisory Director, Kleinwort, Benson (North America)
Corporation, a registered broker-dealer; Address: 10275
Little Patuxent Parkway, Columbia, Maryland 21044
F. PIERCE LINAWEAVER, Director--President, F. Pierce Linaweaver &
Associates, Inc.; formerly
(1987-1991) Executive Vice President, EA Engineering,
Science, and Technology, Inc., and (1987-1990) President,
EA Engineering, Inc., Baltimore, Maryland; Address: The
Legg Mason Tower, 111 South Calvert Street, Suite 2700,
Baltimore, Maryland 21202
+*MARY J. MILLER, President and Director--Managing Director, T.
Rowe Price
++*WILLIAM T. REYNOLDS, President and Director--Managing
Director, T. Rowe Price
@@*JAMES S. RIEPE, Vice President and Director--Managing
Director, T. Rowe Price; Chairman
of the Board, T. Rowe Price Services, Inc., T. Rowe Price
Retirement Plan Services, Inc. and T. Rowe Price Trust
Company; President and Director, T. Rowe Price Investment
Services, Inc.; Director, Rhone-Poulenc Rorer, Inc.
JOHN G. SCHREIBER, Director--President, Schreiber Investments, a
real estate investment
company; Director and formerly (1/80-12/90) Executive Vice
President, JMB Realty Corporation, a national real estate
investment manager and developer; Address: 1115 East
Illinois Road, Lake Forest, Illinois 60045
Anne Marie Whittemore, Director--Partner, law firm of McGuire,
Woods, Batte & Boothe;
formerly, Chairman and Director, Federal Reserve Bank of
Richmond; Director, Owens & Minor, Inc., USF&G Corporation,
Old Dominion University and nominated to the Board of James
River Corporation; Member, Richmond Bar Association and
American Bar Association; Address: One James Center, 901
East Cary Street, Richmond, Virginia 23219-4030
JANET G. ALBRIGHT, Vice President--Vice President, T. Rowe Price
+++PATRICE L. BERCHTENBREITER, Executive Vice President--Vice
President, T. Row Price
#C. STEPHEN WOLFE, II, Executive Vice President-- Vice President,
T. Rowe Price
##PAUL W. BOLTZ, Vice President--Vice President and Financial
Economist, T. Rowe Price
MICHAEL P. BUCKLEY, Vice President--Vice President, T. Rowe Price
PATRICIA S. DEFORD, Vice President--Vice President, T. Rowe Price
!CHARLES B. HILL, Vice President--Assistant Vice President, T.
Rowe Price; formerly (9/86-
11/91) managed municipal bonds at Riggs National Bank,
Washington, D.C.
CHARLES O. HOLLAND, Vice President--Vice President, T. Rowe Price
HENRY H. HOPKINS, Vice President--Managing Director, T. Rowe
Price; Vice President and
PAGE 44
Director, T. Rowe Price Investment Services, Inc., T. Rowe
Price Services, Inc., and T. Rowe Price Trust Company; Vice
President, Rowe Price-Fleming International, Inc. and T.
Rowe Price Retirement Plan Services, Inc.; Director, ICI
Mutual Insurance Company
ALAN P. RICHMAN, Vice President--Vice President, T. Rowe Price;
formerly (10/89-6/91)
Manager, Public Finance, Credit Local de France, New York,
New York and Public Finance, Tokai Bank, New York, New York
LENORA V. HORNUNG, Secretary--Vice President, T. Rowe Price
CARMEN F. DEYESU, Treasurer--Vice President, T. Rowe Price, T.
Rowe Price Services, Inc.,
and T. Rowe Price Trust Company
DAVID S. MIDDLETON, Controller--Vice President, T. Rowe Price, T.
Rowe Price Services, Inc.,
and T. Rowe Price Trust Company
ROGER L. FIERY, Assistant Vice President--Vice President, Rowe
Price-Fleming International,
Inc.
!!KONSTANTINE B. MALLAS, Assistant Vice President--Assistant Vice
President, T. Rowe Price
!!!LAURA McAREE, Assistant Vice President--Assistant Vice
President, T. Rowe Price; formerly
(4/90-11/90) trader, Boeing Company, Seattle, Washington
and (8/87-3/90) financial analyst, Harvard Management
Company, Boston, Massachusetts
EDWARD T. SCHNEIDER, Assistant Vice President--Vice President, T.
Rowe Price Services, Inc.
INGRID I. VORDEMBERGE, Assistant Vice President--Employee, T.
Rowe Price
@ Mr. Collins is Chairman of the Board of the Money, Short-
Intermediate, Income, and High Yield Funds and a Director
of the Insured Intermediate Bond Fund.
@@ Mr. Riepe is a Vice President and Director of the Money,
Short-Intermediate, Income, and High Yield Funds and a
Director of Insured Intermediate Bond Fund.
+ Ms. Miller is President and Director of the Short-
Intermediate Fund only and a Vice President of the Money,
Insured Intermediate Bond, Income, and High Yield Funds.
++ Mr. Reynolds is President and Director of the Income,
Insured Intermediate Bond, and High Yield Funds, a Vice
President and Director of the Money Fund, and a Vice
President of the Short-Intermediate Fund.
+++ Ms. Berchtenbreiter is President of the Money Fund only and
a Vice President of the Short-Intermediate, Insured
Intermediate Bond, Income, and High Yield Funds.
# Mr. Wolfe is Executive Vice President of the High Yield
Fund only and a Vice President of the Money, Short-
Intermediate, Insured Intermediate Bond, and Income Funds.
## Mr. Boltz is a Vice President of the Money Fund only.
! Mr. Hill is a Vice President of the Short-Intermediate,
Insured Intermediate Bond, Income, and High Yield Funds.
!! Mr. Mallas is an Assistant Vice President of the Short-
Intermediate, Insured Intermediate Bond, Income, and High
Yield Funds.
!!! Ms. McAree is an Assistant Vice President of the Money and
Insured Intermediate Bond Funds only.
The Executive Committee of the Money, Income, and High
Yield Funds, comprised of Messrs. Collins, Reynolds, and Riepe,
the Executive Committee of the Short-Intermediate Fund, comprised
of Mrs. Miller and Messrs. Collins and
PAGE 45
Riepe, and the Executive Committee of the Insured Intermediate
Bond Fund, comprised of Messrs. Collins and Riepe, have been
authorized by their respective Board of Directors to exercise all
powers of the Board to manage the Fund in the intervals between
meetings of the Board, except the powers prohibited by statute
from being delegated.
PRINCIPAL HOLDERS OF SECURITIES
As of the date of the prospectus, the officers and
directors of the Funds, as a group, owned less than 1% of the
outstanding shares of each Fund.
INVESTMENT MANAGEMENT SERVICES
Services Provided by T. Rowe Price
Under each Fund's Management Agreement, T. Rowe Price
provides each Fund with discretionary investment services.
Specifically, T. Rowe Price is responsible for supervising and
directing the investments of each Fund in accordance with its
investment objectives, programs, and restrictions as provided in
the prospectus and this Statement of Additional Information. T.
Rowe Price is also responsible for effecting all security
transactions on behalf of each Fund, including the allocation of
principal business and portfolio brokerage and the negotiation of
commissions. In addition to these services, T. Rowe Price
provides each Fund with certain corporate administrative
services, including: maintaining the Fund's corporate existence,
corporate records, and registering and qualifying the Fund's
shares under federal and state laws; monitoring the financial,
accounting, and administrative functions of each Fund;
maintaining liaison with the agents employed by each Fund such as
the Fund's custodian and transfer agent; assisting each Fund in
the coordination of such agents' activities; and permitting T.
Rowe Price's employees to serve as officers, directors, and
committee members of each Fund without cost to the Fund.
Each Fund's Management Agreement also provides that T.
Rowe Price, its directors, officers, employees, and certain other
persons performing specific functions for the Fund will only be
liable to the Fund for losses resulting from willful misfeasance,
bad faith, gross negligence, or reckless disregard of duty.
Management Fee
Each Fund pays T. Rowe Price 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 T. Rowe Price on the first business day of the next
succeeding calendar month and is calculated as described below.
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 Fund's 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:
PAGE 46
Price Funds'
Annual Group Base Fee
Rate for Each Level of Assets
_____________________________
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
0.330% Next $10 billion
0.320% Next $10 billion
0.310% Thereafter
For the purpose of calculating the Group Fee, the Price
Funds include all the mutual funds distributed by T. Rowe Price
Investment Services, Inc. (excluding T. Rowe Price Spectrum Fund,
Inc. and any institutional or any 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 the 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 Rate and
multiplying this product 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 for each
Fund are listed in the chart below:
Individual Fund Fees
Money Fund 0.10%
Short-Intermediate Fund 0.10%
Insured Intermediate Bond Fund 0.05%
Income Fund 0.15%
High Yield 0.30%
Listed below are the total amounts paid to T. Rowe
Price by the Money, Short-Intermediate, Income and High Yield
Funds under the investment management contract which was in
effect, for each of the last three fiscal years.
Insured
Short-IntermediateIntermediate High Yield
YearMoney Fund Fund Bond Fund Income Fund Fund
____ _______ ____________________________________ ________
1994 $ 3,132,000 $ 2,256,000 $ 9,000$
7,362,000 $ 5,954,000
1993 $ 3,404,000 $ 1,753,000 *$
6,609,000 $ 4,681,000
1992 $ 3,964,000 $ 1,308,000 *$
6,105,000 $ 3,809,000
PAGE 47
* Due to the effect of the Insured Intermediate Bond Fund's
expense limitation, for the fiscal periods ended February
28, 1993 and February 29, 1994, the Fund did not pay T.
Rowe Price an investment management fee.
Limitation on Fund Expenses
The Management Agreement between each Fund and T. Rowe
Price provides that each Fund will bear all expenses of its
operations not specifically assumed by T. Rowe Price. However,
in compliance with certain state regulations, T. Rowe Price will
reimburse a Fund for any expenses (excluding interest, taxes,
brokerage, other expenditures which are capitalized in accordance
with generally accepted accounting principles, and extraordinary
expenses) which in any year exceed the limits prescribed by any
state in which a Fund's shares are qualified for sale.
Presently, the most restrictive expense ratio limitation imposed
by any state is 2.5% of the first $30 million of the Fund's
average daily net assets, 2% of the next $70 million of such
assets, and 1.5% of net assets in excess of $100 million.
Money, Short-Intermediate, Income, and High Yield Funds
For the purpose of determining whether a Fund is
entitled to reimbursement, the expenses of a Fund are calculated
on a monthly basis. If a Fund is entitled to reimbursement, that
month's advisory fee will be reduced or postponed, with any
adjustment made after the end of the year.
Insured Intermediate Bond Fund
Reimbursement by the Fund to T. Rowe Price of any
expenses paid or assumed under a state expense limitation may not
be made more than two years after the end of the fiscal year in
which the expenses were paid or assumed.
The Management Agreement provides that T. Rowe Price
may voluntarily agree to limit the expenses of the Fund. In the
interest of limiting the expenses of the Fund during its initial
period of operations, T. Rowe Price agreed to bear all expenses
of the Fund through June 30, 1993. Thereafter, T. Rowe Price has
agreed to bear any expenses through February 28, 1994, which
would cause the Fund's ratio of expenses to average daily net
assets to exceed 0.50%. Effective March 1, 1994, T. Rowe Price
agreed to bear any expenses that would cause the Fund's ratio of
expenses to average net assets to exceed 0.65%. Expenses paid or
assumed under the second and third agreements are subject to
reimbursement to T. Rowe Price by the Fund whenever its expense
ratio is below 0.50% or 0.65%, respectively; however, no
reimbursement will be made after February 29, 1996 (for the
second agreement) or February 28, 1998 (for the third agreement),
or if it would result in the expense ratio exceeding 0.50% or
0.65%, respectively.
DISTRIBUTOR FOR FUNDS
T. Rowe Price Investment Services, Inc. ("Investment
Services"), a Maryland corporation formed in 1980 as a wholly-
owned subsidiary of T. Rowe Price, serves as the distributor of
the Funds. Investment Services is registered as a broker-dealer
under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. The offering of
each Fund's shares is continuous.
Investment Services is located at the same address as
the Funds and T. Rowe T. Rowe Price -- 100 East Pratt Street,
Baltimore, Maryland 21202.
PAGE 48
Investment Services serves as distributor to the Funds
pursuant to individual Underwriting Agreements ("Underwriting
Agreements"), which provide that each Fund will pay all fees and
expenses in connection with: registering and qualifying its
shares under the various state "blue sky" laws; preparing,
setting in type, printing, and mailing its prospectuses and
reports to shareholders; and issuing its shares, including
expenses of confirming purchase orders.
The Underwriting Agreements provide that Investment
Services will pay all fees and expenses in connection with:
printing and distributing prospectuses and reports for use in
offering and selling shares for each Fund; 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 their shares in all states in which
the shares are qualified and 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. No sales charges are paid by investors or the Funds.
CUSTODIAN
State Street Bank and Trust Company is the custodian
for each Fund's securities and cash, but it does not participate
in the Funds' investment decisions. The Funds have authorized
the Bank to deposit certain portfolio securities in central
depository systems as allowed by federal law. In addition, the
Funds 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. The Bank's main office is 225 Franklin Street,
Boston, Massachusetts 02107.
PORTFOLIO TRANSACTIONS
Investment or Brokerage Discretion
Decisions with respect to the purchase and sale of
portfolio securities on behalf of the Fund are made by T. Rowe
Price. T. Rowe Price is also responsible for implementing these
decisions, including the negotiation of commissions and the
allocation of portfolio brokerage and principal business. The
Fund's purchases and sales of portfolio securities are normally
done on a principal basis and do not involve the payment of a
commission although they may involve the designation of selling
concessions. That part of the discussion below relating solely
to brokerage commissions would not normally apply to the Funds.
However, it is included because T. Rowe Price does manage a
significant number of common stock portfolios which do engage in
agency transactions and pay commissions and because some research
and services resulting from the payment of such commissions may
benefit the Fund.
How Brokers and Dealers are Selected
Fixed Income Securities
PAGE 49
Fixed income securities are generally purchased from
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 an
undisclosed compensation. Transactions placed through dealers
serving as primary market-makers reflect the spread between the
bid and asked prices. Securities may also be purchased from
underwriters at prices which include underwriting fees.
T. Rowe Price may effect principal transactions on
behalf of the Fund with a broker or dealer who furnishes
brokerage and/or research services, designate any such broker or
dealer to receive selling concessions, discounts or other
allowances, or otherwise deal with any such broker or dealer in
connection with the acquisition of securities in underwritings.
T. Rowe Price may receive brokerage and research services in
connection with such designations in fixed price
underwritings.
How Evaluations are Made of the Overall Reasonableness of
Brokerage Commissions Paid
On a continuing basis, T. Rowe Price seeks to determine
what levels of commission rates are reasonable in the marketplace
for transactions executed on behalf of the Fund. In evaluating
the reasonableness of commission rates, T. Rowe Price considers:
(a) historical commission rates, both before and since rates have
been fully negotiable; (b) rates which other institutional
investors are paying, based on available public information; (c)
rates quoted by brokers and dealers; (d) the size of a particular
transaction, in terms of the number of shares, dollar amount, and
number of clients involved; (e) the complexity of a particular
transaction in terms of both execution and settlement; (f) the
level and type of business done with a particular firm over a
period of time; and (g) the extent to which the broker or dealer
has capital at risk in the transaction.
Description of Research Services Received from Brokers and
Dealers
T. Rowe Price receives a wide range of research
services from brokers and dealers. These services include
information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax
law interpretations, political developments, legal developments
affecting portfolio securities, technical market action, pricing
and appraisal services, credit analysis, risk measurement
analysis, performance analysis and analysis of corporate
responsibility issues. These services provide both domestic and
international perspective. Research services are received
primarily in the form of written reports, computer generated
services, telephone contacts and personal meetings with security
analysts. In addition, such services may be provided in the form
of meetings arranged with corporate and industry spokespersons,
economists, academicians and government representatives. In some
cases, research services are generated by third parties but are
provided to T. Rowe Price by or through broker-dealers.
Research services received from brokers and dealers are
supplemental to T. Rowe Price's own research effort and, when
utilized, are subject to internal analysis before being
incorporated by T. Rowe Price into its investment process. As a
practical matter, it would not be possible for T. Rowe Price's
Equity Research Division to generate all of the information
presently provided by brokers and dealers. T. Rowe Price pays
cash for certain research services received from external
sources. T. Rowe Price also allocates brokerage for research
services which are available for cash. While receipt of research
services from brokerage firms has not reduced T. Rowe Price's
normal research activities, the expenses of T. Rowe Price could
be
PAGE 50
materially increased if it attempted to generate such additional
information through its own staff. To the extent that research
services of value are provided by brokers or dealers, T. Rowe
Price may be relieved of expenses which it might otherwise bear.
T. Rowe Price has a policy of not allocating brokerage
business in return for products or services other than brokerage
or research services. In accordance with the provisions of
Section 28(e) of the Securities Exchange Act of 1934, T. Rowe
Price may from time to time receive services and products which
serve both research and non-research functions. In such event,
T. Rowe Price makes a good faith determination of the anticipated
research and non-research use of the product or service and
allocates brokerage only with respect to the research component.
Commissions to Brokers who Furnish Research Services
Certain brokers and dealers who provide quality
brokerage and execution services also furnish research services
to T. Rowe Price. With regard to the payment of brokerage
commissions, T. Rowe Price has adopted a brokerage allocation
policy embodying the concepts of Section 28(e) of the Securities
Exchange Act of 1934, which permits an investment adviser to
cause an account to pay commission rates in excess of those
another broker or dealer would have charged for effecting the
same transaction, if the adviser determines in good faith that
the commission paid is reasonable in relation to the value of the
brokerage and research services provided. The determination may
be viewed in terms of either the particular transaction involved
or the overall responsibilities of the adviser with respect to
the accounts over which it exercises investment discretion.
Accordingly, while T. Rowe Price cannot readily determine the
extent to which commission rates or net prices charged by broker-
dealers reflect the value of their research services, T. Rowe
Price would expect to assess the reasonableness of commissions in
light of the total brokerage and research services provided by
each particular broker. T. Rowe Price may receive research, as
defined in Section 28(e), in connection with selling concessions
and designations in fixed price offerings in which the Funds
participate.
Internal Allocation Procedures
T. Rowe Price has a policy of not precommitting a
specific amount of business to any broker or dealer over any
specific time period. Historically, the majority of brokerage
placement has been determined 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.
However, T. Rowe Price does have an internal brokerage allocation
procedure for that portion of its discretionary client brokerage
business where special needs do not exist, or where the business
may be allocated among several brokers or dealers which are able
to meet the needs of the transaction.
Each year, T. Rowe Price assesses the contribution of
the brokerage and research services provided by brokers or
dealers, and attempts to allocate a portion of its brokerage
business in response to these assessments. Research analysts,
counselors, various investment committees, and the Trading
Department each seek to evaluate the brokerage and research
services they receive from brokers or dealers and make judgments
as to the level of business which would recognize such services.
In addition, brokers or dealers sometimes suggest a level of
business they would like to receive in return for the various
brokerage and research services they provide. Actual brokerage
received by any firm may be less than the suggested allocations
but can, and often does, exceed the suggestions, because the
total business is
PAGE 51
allocated on the basis of all the considerations described above.
In no case is a broker or dealer excluded from receiving business
from T. Rowe Price because it has not been identified as
providing research services.
Miscellaneous
T. Rowe Price's brokerage allocation policy is
consistently applied to all its fully discretionary accounts,
which represent a substantial majority of all assets under
management. Research services furnished by brokers or dealers
through which T. Rowe Price effects securities transactions may
be used in servicing all accounts (including non-Fund accounts)
managed by T. Rowe Price. Conversely, research services received
from brokers or dealers which execute transactions for the Fund
are not necessarily used by T. Rowe Price exclusively in
connection with the management of the Fund.
From time to time, orders for clients may be placed
through a computerized transaction network.
The Fund does not allocate business to any broker-
dealer on the basis of its sales of the Fund's shares. However,
this does not mean that broker-dealers who purchase Fund shares
for their clients will not receive business from the Fund.
Some of T. Rowe Price's other clients have investment
objectives and programs similar to those of the Fund. T. Rowe
Price may occasionally make recommendations to other clients
which 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 increase, and this could have an adverse effect on the price
of those securities. It is T. Rowe Price's policy not to favor
one client over another in making recommendations or in placing
orders. T. Rowe Price frequently follows the practice of
grouping orders of various clients for execution which generally
results in lower commission rates being attained. In certain
cases, where the 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 reflects the average
price paid or received with respect to the total order. T. Rowe
Price has established a general investment policy that it will
ordinarily not make additional purchases of a common stock of a
company for its clients (including the T. Rowe Price Funds) if,
as a result of such purchases, 10% or more of the outstanding
common stock of such company would be held by its clients in the
aggregate.
To the extent possible, T. Rowe Price intends to
recapture solicitation fees paid in connection with tender offers
through T. Rowe Price Investment Services, Inc., the Fund's
distributor. At the present time, T. Rowe Price does not
recapture commissions or underwriting discounts or selling group
concessions in connection with taxable securities acquired in
underwritten offerings. T. Rowe Price does, however, attempt to
negotiate elimination of all or a portion of the selling-group
concession or underwriting discount when purchasing tax-exempt
municipal securities on behalf of its clients in underwritten
offerings.
Other
The Funds engaged in portfolio transactions involving
broker-dealers in the following amounts for the fiscal years
ended February 28, 1994, February 28, 1993, and February 29,
1992:
1994 1993 1992
PAGE 52
Tax-Exempt Money Fund $3,848,865,486 $4,251,498,766
Tax-Free Short-Intermediate
Fund $1,368,139,000 1,111,763,067
1,080,195,909
Tax-Free Insured Intermediate
Bond Fund 883,604,000 75,345,466+ *
Tax-Free Income Fund 3,328,250,640 2,593,636,961
Tax-Free High Yield Fund 1,408,187,092 1,322,907,667
The following amounts consisted of principal
transactions as to which the Funds have no knowledge of the
profits or losses realized by the respective broker-dealers for
the fiscal years ended February 28, 1994, February 28, 1993, and
February 29, 1992:
1994 1993 1992
Tax-Exempt Money Fund $3,832,043,696 $4,231,418,766
Tax-Free Short-Intermediate Fund 1,250,892,000 1,111,763,067
1,080,195,909
Tax-Free Insured Intermediate
Bond Fund 843,890,000 70,657,019+ *
Tax-Free Income Fund 3,328,250,640 2,593,636,961
Tax-Free High Yield Fund 1,408,187,092 1,322,907,667
The following amounts involved trades with brokers
acting as agents or underwriters for the fiscal years ended
February 28, 1994, February 28, 1993, and February 29, 1992:
1994 1993 1992
Tax-Exempt Money Fund $16,821,790 $20,081,000
Tax-Free Short-Intermediate Fund 117,247,000 72,966,445
23,436,017
Tax-Free Insured Intermediate
Bond Fund 39,714,000 4,688,447+ *
Tax-Free Income Fund 430,457,963 136,376,415
Tax-Free High Yield Fund 172,407,132 51,825,895
The following amounts involved trades with brokers
acting as agents or underwriters, in which such brokers received
total commissions, including discounts received in connection
with underwritings for the fiscal years ended February 28, 1994,
February 28, 1993, and February 29, 1992:
1994 1993 1992
Tax-Exempt Money Fund $22,695 $15,000
Tax-Free Short-Intermediate
Fund 582,000 367,470 123,414
Tax-Free Insured Intermediate
Bond Fund 256,000 25,094+ *
Tax-Free Income Fund 3,068,760 970,894
Tax-Free High Yield Fund 1,281,863 398,343
Of all such portfolio transactions, none were placed
with firms which provided research, statistical, or other
services to T. Rowe Price in connection with the management of
the Funds, or in some cases, to the Funds.
The portfolio turnover rates of the Funds for the
fiscal years ended February 28, 1994, February 28, 1993, and
February 29, 1992, have been as follows:
PAGE 53
1994 1993 1992
Tax-Free Short-Intermediate Fund 51.1% 38.5% 81.3%
Tax-Free Insured Intermediate
Bond Fund 74.8% 65.3%+ *
Tax-Free Income Fund 71.2% 76.7% 57.9%
Tax-Free High Yield Fund 59.3% 34.7% 51.0%
+Fiscal period ended February 28, 1993.
*Prior to commencement of operations.
PRICING OF SECURITIES
Fixed income securities are generally traded in the over-
the-counter market. Investments in securities with remaining
maturities of one year or more are stated at fair value using a
bid-side valuation as 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.
Except with respect to certain securities held by the
Money Fund, securities with remaining maturities less than one
year are stated at fair value which is determined by using a
matrix system that establishes a value for each security based on
bid-side money market yields. Securities originally purchased by
the Money Fund with remaining maturities of 60 days or less are
valued at amortized cost. In addition, securities purchased by
the Money Fund with maturities in excess of 60 days, but which
currently have maturities of 60 days or less, are valued at their
amortized cost for the 60 days prior to maturity--such
amortization being based on the fair value of the securities on
the 61st day prior to maturity.
There are a number of pricing services available, and
the Directors of the Funds, on the basis of ongoing evaluation of
these services, may use or may discontinue the use of any pricing
service in whole or in part.
Securities or other assets for which the above valuation
procedures are deemed not to reflect fair value will be appraised
at prices deemed best to reflect their fair value. Such
determinations will be made in good faith by or under the
supervision of officers of each Fund as authorized by the Board
of Directors.
Maintenance of Money Fund's Net Asset Value Per Share at $1.00
It is the policy of the Fund to attempt to maintain a net
asset value of $1.00 per share by rounding to the nearest one
cent. This method of valuation is commonly referred to as "penny
rounding" and is permitted by Rule 2a-7 under the Investment
Company Act of 1940. Under Rule 2a-7:
(a)The Board of Directors of the Fund must undertake to
assure, to the extent reasonably practical taking into
account current market conditions affecting the Fund's
investment objectives, that the Fund's net asset value
will not deviate from $1.00 per share;
PAGE 54
(b)The Fund must (i) maintain a dollar-weighted average
portfolio maturity appropriate to its objective of
maintaining a stable price per share, (ii) not purchase
any instrument with a remaining maturity greater than
397 days (or in the case of U.S. government securities
greater than 762 days), and (iii) maintain a
dollar-weighted average portfolio maturity of 90 days
or less;
(c)The Fund must limit its purchase of portfolio
instruments, including repurchase agreements, to those
U.S. dollar-denominated instruments which the Fund's
Board of Directors determines present minimal credit
risks, and which are eligible securities as defined by
Rule 2a-7 (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 rating categories by nationally
recognized statistical rating organizations or, in the
case of any instrument that is not so rated, is of
comparable quality as determined by procedures adopted
by the Fund's Board of Directors); and
(d)The Board of Directors must determine that (i) it is
in the best interest of the Fund and its shareholders
to maintain a stable net asset value per share or
stable price per share under the penny rounding method;
and (ii) the Fund will continue to use the penny
rounding method only so long as the Board of Directors
believes that it fairly reflects the market based net
asset value per share.
Although the Fund believes that it will be able to
maintain its net asset value at $1.00 per share under most
conditions, there can be no absolute assurance that it will be
able to do so on a continuous basis. If the Fund's net asset
value per share declined, or was expected to decline, below $1.00
(rounded to the nearest one cent), the Board of Directors of the
Fund 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 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 Fund's net asset value per share were to increase,
or were anticipated to increase above $1.00 (rounded to the
nearest one cent), the Board of Directors of the Fund might
supplement dividends in an effort to maintain the net asset value
at $1.00 per share.
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.
Each Fund determines its net asset value per share by subtracting
the Funds' liabilities (including accrued expenses and dividends
payable) from its total assets (the market value of the
securities the Fund holds plus cash and other assets, including
income accrued but not yet received) and dividing the result by
the total number of shares outstanding. The net asset value per
share of each Fund is calculated as of the close of trading on
the New York Stock Exchange ("NYSE") every day the NYSE is open
for trading. The net asset value of the Money Fund is also
calculated as of 12:00 noon (Eastern time) every day the NYSE is
open for trading. The NYSE is closed on the following days: New
Year's Day,
PAGE 55
Washington's Birthday, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day.
Determination of net asset value (and the offering,
sale redemption and repurchase of shares) for a Fund 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 a Fund of securities
owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net
assets, or (d) during which a governmental body having
jurisdiction over the Fund may by order permit such a suspension
for the protection of the Fund's shareholders; provided that
applicable rules and regulations of the Securities and Exchange
Commission (or any succeeding governmental authority) shall given
as to whether the conditions prescribed in (b), (c), or (d)
exist.
DIVIDENDS
Unless you elect otherwise, the Fund's annual capital
gain distributions, if any, will be reinvested on the
reinvestment date using the NAV per share of that date. The
reinvestment date normally precedes the payment date by about 10
days although the exact timing is subject to change.
TAX STATUS
Each Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986,
as amended ("Code").
Dividends and distributions paid by any of the Funds
are not eligible for the dividends-received deduction for
corporate shareholders. For tax purposes, it does not make any
difference whether dividends and capital gain distributions are
paid in cash or in additional shares. Each Fund must declare
dividends equal to at least 90% of net tax-exempt income (as of
its year-end) to permit pass-through of tax-exempt income to
shareholders, and 98% of capital gains (as of October 31) in
order to avoid a federal excise tax and 100% of capital gains (as
of its tax year-end) to avoid federal income tax.
At the time of your purchase, a Fund's net asset value
may reflect undistributed capital gains or net unrealized
appreciation of securities held by the Fund. A subsequent
distribution to you of such amounts, although constituting a
return of your investment, would be taxable as a capital gain
distribution. For federal income tax purposes, a Fund is
permitted to carry forward its net realized capital losses, if
any, for eight years and realize net capital gains up to the
amount of such losses without being required to pay taxes on, or
distribute such gains. On May 31, 1994, the books of each Fund
indicated that the Fund's aggregate net assets included:
Realized Capital Unrealized
Gains/(Losses)
Appreciation
________________
____________
Tax-Exempt Money Fund $ $
Tax-Free Short-Intermediate Fund
Tax-Free Insured Intermediate Bond Fund
Tax-Free Income Fund
Tax-Free High Yield Fund
If, in any taxable year, the Funds should not qualify as
regulated investment companies under the Code: (i) each Fund
would be taxed at normal
PAGE 56
corporate rates on the entire amount of its taxable income, if
any, without deduction for dividends or other distributions to
shareholders; and (ii) each 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).
The Funds anticipate acquiring bonds after initial
issuance at a price less than the principal amount of such bonds
("market discount bonds"). Gain on the disposition of such bonds
is treated as taxable ordinary income to the extent of accrued
market discount. Such gains cannot be offset by losses on the
sale of other securities but must be distributed to shareholders
annually and taxed as ordinary income.
Each year, the Funds will mail you information on the tax
status of dividends and distributions. The Funds anticipate that
substantially all of the dividends to be paid by each Fund will
be exempt from federal income taxes. If any portion of a Fund's
dividends is not exempt from federal income taxes, you will
receive a Form 1099 stating the taxable portion. The Funds will
also advise you of the percentage of your dividends, if any,
which should be included in the computation of alternative
minimum tax. Social security recipients who receive interest
from tax-exempt securities may have to pay taxes on a portion of
their social security benefit.
Because the interest on municipal securities is tax
exempt, any interest on money you borrow that is directly or
indirectly used to purchase Fund shares is not deductible. (See
Section 265(2) of the Internal Revenue Code.) Further, entities
or persons who 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 a Fund. The income from such bonds may not
be tax exempt for such substantial users.
YIELD INFORMATION
Money Fund
The Fund's current and historical yield for a period is
calculated by dividing the net change in value of an account
(including all dividends accrued and dividends reinvested in
additional shares) by the account value at the beginning of the
period to obtain the base period return. This base period return
is divided by the number of days in the period then multiplied by
365 to arrive at the annualized yield for that period. The
Fund's annualized compound yield for such period is compounded by
dividing the base period return by the number of days in the
period, and compounding that figure over 365 days.
Bond Funds
From time to time, a Fund may advertise a yield figure
calculated in the following manner:
An income factor is calculated for each security in the
portfolio based upon the security's market value at the beginning
of the period and yield as determined in conformity with
regulations of the Securities and Exchange Commission. The
income factors are then totalled for all securities in the
portfolio. Next, expenses of the Fund for the period net of
expected reimbursements are deducted from the income to arrive at
net income, which is
PAGE 57
then converted to a per-share amount by dividing net income by
the average number of shares outstanding during the period. The
net income per share is divided by the net asset value on the
last day of the period to produce a monthly yield which is then
annualized. A taxable equivalent yield is calculated by dividing
this yield by one minus the effective federal income tax rate.
Quoted yield factors are for comparison purposes only, and are
not intended to indicate future performance or forecast the
dividend per share of the Fund.
The yield of each Fund calculated under the above-
described method for the month ended May 31, 1994 was:
Tax-Free Short-Intermediate ____%
Tax-Free Insured Intermediate Bond____%
Tax-Free Income ____%
Tax-Free High Yield ____%
The tax equivalent yields for these funds for the
same period were _____% (Short-Intermediate), _____% (Insured
Intermediate) _____% (Income), and ______% (High Yield). This
assumes a federal tax bracket of 31.0%. Assuming a federal tax
bracket of 28.0%, the tax-equivalent yields for the period would
be _____% (Short-Intermediate), _____% (Insured Intermediate),
_____% (Income), and _____% (High Yield).
From time to time, a Fund may also illustrate the
effect of tax equivalent yields using information such as that
set forth below:
TAX-EXEMPT VS. TAXABLE YIELDS
_________________________________________________________________
__________
Taxable Income (1994)*
Joint Return Single Return
Federal
Tax Rates+
_________________________________________________________________
__________
$38,001- $91,850 $22,751- $55,100 28.0%
91,851- 140,000 55,101- 115,000 31.0
140,001- 250,000 115,001- 250,000 36.0
250,001 and above 250,001 and above 39.6
_________________________________________________________________
______
A Tax-Exempt Yield Of:
3% 4% 5% 6% 7% 8% 9% 10% 11%
Is Equivalent to a Taxable Yield of:
_________________________________________________________________
______
4.2 5.6 6.9 8.3 9.7 11.1 12.5 13.9 15.3
4.3 5.8 7.2 8.7 10.1 11.6 13.0 14.5 15.9
4.7 6.3 7.8 9.4 10.9 12.5 14.1 15.6 17.2
5.0 6.6 8.3 9.9 11.6 13.2 14.9 16.6 18.2
* Net amount subject to federal income tax after deductions and
exemptions.
+ Federal rates may vary depending on family size and amount and
nature of itemized deductions.
PAGE 58
INVESTMENT PERFORMANCE
Total Return Performance
Each Fund's calculation of total return performance includes
the reinvestment of all capital gain distributions and income
dividends for the period or periods indicated, without regard to
tax consequences to a shareholder in the Fund. Total return is
calculated as the percentage change between the beginning value
of a static account in the Fund and the ending value of that
account measured by the then current net asset value, including
all shares acquired through reinvestment of income and capital
gains dividends. The results shown are historical and should not
be considered indicative of the future performance of the Fund.
Each average annual compound rate of return is derived from the
cumulative performance of the Fund over the time period
specified. The annual compound rate of return for the Fund over
any other period of time will vary from the average.
Cumulative Performance Percentage Change
1 Yr. 5 Yrs. 10 Yrs. Since
Ended Ended Ended Inception
2/28/94 2/28/94 2/28/94 2/28/94
Short-Intermediate Fund 3.49 36.75 85.70 86.88%
12/23/83
Insured Intermediated Bond Fund 5.49 12.67
11/30/92
Income Fund 5.50 56.54 139.86 249.81
10/26/76
High Yield Fund 7.49 60.10 149.82
3/01/85
Average Annual Compound Rates of Return
1 Yr. 5 Yrs. 10 Yrs. Since
Ended Ended Ended Inception
2/28/94 2/28/94 2/28/94 2/28/94
Short-Intermediate Fund 3.49 6.46 6.39 6.33%
12/23/83
Insured Intermediated Bond Fund 5.49 10.05
11/30/92
Income Fund 5.50 9.38 9.14 7.49
10/26/76
High Yield Fund 7.49 9.87 10.71 3/01/85
All Funds
From time to time, in reports and promotional
literature, the Funds' performance will be compared to (1)
indices of broad groups of managed and unmanaged securities
considered to be representative of or similar to Fund portfolio
holdings (2) other mutual funds, or (3) other measures of
performance set forth in publications such as:
Bond Buyer 20 - an estimation of the yield which would
be offered on 20-year general obligation bonds with a
composite rating of approximately "A." Published
weekly by The Bond Buyer, a trade paper of the
municipal securities industry;
PAGE 59
Shearson Lehman/American Express Municipal Bond Index -
a composite measure of the total return performance of
the municipal bond market. Based upon approximately
1500 bonds;
Lipper General Purpose Municipal Bond Avg. - an average
of municipal mutual funds which invest 60% or more of
their assets in the top four tax-exempt credit ratings;
Lipper Analytical Services, Inc. - a widely used
independent research firm which ranks mutual funds by
overall performance, investment objectives, and assets;
Lipper Intermediate Municipal Avg. - an average of
municipal mutual funds which restrict their holdings to
bonds with maturities between 5 and 10 years;
Lipper Insured Municipal Avg. - an average of municipal
mutual funds which utilize insured municipal securities
for 65% of their portfolios.
Lipper High-Yield Municipal Bond Avg. - an average of
municipal mutual funds which may utilize lower rated
bonds for 50% of their portfolio;
Lipper Insured Municipal Avg. - an average of municipal
mutual funds which utilize insured municipal securities
for 65% of their portfolios.
Donoghue's Tax-Exempt Money Fund Avg. - an average of
municipal money market funds as reported in Donoghue's
Money Fund Report, which tracks the performance of all
money market mutual funds;
Prime General Obligations - bonds with maturities from
1-30 years which are secured by the full faith and
credit of issuers with taxing power;
MIG 1 - Moody's Investment Grade 1 - a short-term note
with a top quality rating from Moody's Investors
Service, Inc.; and
Morningstar, Inc. - a widely used independent research
firm which rates mutual funds by overall performance,
investment objectives, and assets.
Indices prepared by the research departments of such
financial organizations as Merrill Lynch, Pierce, Fenner & Smith,
Inc., will be used, as well as information provided by the
Federal Reserve Board.
Information reported in the Bank Rate Monitor, an
independent publication which tracks the performance of certain
bank products, such as money market deposit accounts and
certificates of deposit, will also be used. Bank certificates of
deposit differ from mutual funds in several ways: the interest
rate established by the sponsoring bank is fixed for the term of
a CD; there are penalties for early withdrawal from CDs; and the
principal on a CD is insured.
Performance rankings and ratings reported periodically
in national financial publications such as MONEY, FORBES,
BUSINESS WEEK, BARRON'S, etc. may also be used.
PAGE 60
Other Features and Benefits
Each Fund is a member of the T. Rowe Price Family of
Funds and may help investors achieve various long-term investment
goals, such as saving for a down payment on a home or paying
college costs. To explain how a Fund could be used to assist
investors in planning for these goals and to illustrate basic
principles of investing, various worksheets and guides prepared
by T. Rowe Price and/or T. Rowe Price Investment Services, Inc.
may be made available. These currently include: the Asset Mix
Worksheet which is designed to show shareholders how to reduce
their investment risk by developing a diversified investment plan
and the College Planning Guide which discusses various aspects of
financial planning to meet college expenses and assists parents
in projecting the costs of a college education for their
children. From time to time, other worksheets and guides may be
made available as well. Of course, an investment in a Fund
cannot guarantee that such goals will be met.
From time to time, Insights, a T. Rowe Price
publication of reports on specific investment topics and
strategies, may be included in the Fund's fulfillment kit. Such
reports may include information concerning: calculating taxable
gains and losses on mutual fund transactions, coping with stock
market volatility, benefiting from dollar cost averaging,
understanding international markets, investing in high-yield
"junk" bonds, growth stock investing, conservative stock
investing, value investing, investing in small companies, tax-
free investing, fixed income investing, investing in mortgage-
backed securities, as well as other topics and strategies.
CAPITAL STOCK
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 are 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 Fund, in which event the holders of the remaining shares
will be unable to elect any person as director. The Board of
Directors of each Fund may increase or decrease the aggregate
number of shares of stock or the number of shares of stock of any
class or series authorized to be issued without shareholder
approval.
As set forth in the By-Laws of each Fund, a special
meeting of shareholders of a Fund shall be called by the
Secretary of the Fund on the written request of shareholders
entitled to cast at least 10% of all the votes of the Fund
entitled to be cast at such meeting. Shareholders requesting
such a meeting must pay to the Fund the reasonably estimated
costs of preparing and mailing the notice of the meeting. Each
Fund, however, will otherwise assist the shareholders seeking to
hold the special meeting in communicating to the other
shareholders of the Fund to the extent required by Section 16(c)
of the Investment Company Act of 1940.
PAGE 61
Short-Intermediate, Insured Intermediate Bond, Income and High
Yield Funds
Each Fund's Charter authorizes the Board of Directors
to classify and reclassify any 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 Board subject to the
Investment Company 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 rights,
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 Board of Directors 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 Fund has authorized to
issue without shareholder approval.
Except to the extent that the Boards of Directors of
these three Funds might provide by resolution that holders of
shares 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 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 Funds' Charters
contain no provision entitling the holders of the present class
of capital stock to a vote as a class on any matter.
Accordingly, the preferences, rights, and other characteristics
attaching to any class of shares, including the present class of
capital stock, 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 of vote as a class by the holders of the capital
stock or of another affected class or classes.
Redemptions in Kind
In the unlikely event a shareholder were to receive an
in kind redemption of portfolio securities of the Funds,
brokerage fees could be incurred by the shareholder in a
subsequent sale of such securities.
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.
GENERAL INFORMATION AND HISTORY
Money Fund
The Money Fund, which commenced operation under the
name Rowe Price Prime Reserve Fund II, Inc., was organized as a
money market mutual fund with an investment objective and program
substantially identical to that of the T. Rowe Price Prime
Reserve Fund, Inc. ("Prime Reserve Fund"), another T.
PAGE 62
Rowe Price Fund. The Fund was initially established to make
available shares of a money market fund to those investors who
were not eligible to invest in the Prime Reserve Fund because of
the restrictions placed by the Board of the Prime Reserve Fund on
the sale of its shares as a result of the Credit Control Program
adopted by the Federal Reserve Board on March 14, 1980. When
that program was discontinued on July 28, 1980, the Board of
Directors concluded that the continued operation of the Fund as a
general purpose money market fund was unnecessary. On August 11,
1980, the sale of the Fund's shares was suspended and the shares
of all shareholders of the Fund (except T. Rowe Price) were
exchanged for shares in the Prime Reserve Fund. Subsequently, T.
Rowe Price, the sole shareholder of the Fund, recommended to the
Board of Directors of the Fund that the Fund's name be changed to
T. Rowe Price Tax-Exempt Money Fund, Inc. and that its investment
objective and investment program be amended for the purpose of
changing the Fund from a money market fund to a tax-exempt money
market fund. Such changes were approved by the Fund's sole
shareholder, T. Rowe Price, on January 8, 1981. The Fund
commenced operation as a tax-exempt money market fund on
March 30, 1981.
FEDERAL AND STATE REGISTRATION OF SHARES
The Funds' shares are registered for sale under the
Securities Act of 1933 and the Fund or their shares are
registered under the laws of all states which require
registration, as well as the District of Columbia and Puerto
Rico.
LEGAL COUNSEL
Shereff, Friedman, Hoffman & Goodman, whose address is
919 Third Avenue, New York, New York 10022, is legal counsel to
each of the Funds.
<PAGE>
PAGE 63
INDEPENDENT ACCOUNTANTS
Money, Insured Intermediate Bond, and High Yield Funds.
Coopers & Lybrand, 217 East Redwood Street, Baltimore, Maryland
21202, are independent accountants to the Funds. The financial
statements of the Funds for the fiscal year ended February 28,
1994 and the report of independent accountants are included in
each Fund's Annual Report on pages 2 - 12, pages 1-11, and pages
2 - 18, respectively. A copy of each Annual Report accompanies
this Statement of Additional Information. The following
financial statements and the report of independent accountants
appearing in each Annual Report for the fiscal year ended
February 28, 1994, are incorporated into this Statement of
Additional Information by reference:
Money Fund High Yield Fund
Annual Annual
Report Page Report Page
___________ _______________
Report of Independent Accountants 12 18
Statement of Net Assets, February 28, 1994 2-82-13
Statement of Operations, year ended
February 28, 1994 9 14
Statement of Changes in Net Assets,
years ended February 28, 1994 and
February 28, 1993 10 15
Notes to Financial Statements,
February 28, 1994 10-11 16-17
Financial Highlights 11 17
Insured
Intermediate
Bond Fund
Annual Report Page
___________
Report of Independent Accountants 11
Portfolio Investments, February 28, 1994 1-5
Statement of Assets and Liabilities
February 28, 1994 6
Statement of Operations, year ended, February 28, 1994 7
Statement of Changes in Net Assets, year ended
February 28, 1994 and November 30, 1992
(Commencement of Operations) to February 28, 1993 8
Notes to Financial Statements, February 28, 1994 9-10
Financial Highlights, February 28, 1994
<PAGE>
PAGE 64
Short-Intermediate and Income Funds. Price Waterhouse,
7 St. Paul Street, Suite 1700, Baltimore, Maryland 21202, are
independent accountants to each Fund. The financial statements
of the Funds for the fiscal year ended February 28, 1994, and the
report of independent accountants are included in each Fund's
Annual Report for the year ended February 28, 1994, on pages 2-15
and 2-16, respectively. A copy of each Annual Report accompanies
this Statement of Additional Information. The following
financial statements and the report of independent accountants
appearing in each Annual Report for the fiscal year ended
February 28, 1994 are incorporated into this Statement of
Additional Information by reference:
Short-Intermediate
Fund
Annual
Report Page
___________
Report of Independent Accountants 15
Portfolio of Investments, February 28, 1994 2-9
Statement of Assets and Liabilities,
February 28, 1994 10
Statement of Operations, year ended
February 28, 1994 11
Statement of Changes in Net Assets,
years ended February 28, 1994 and
February 28, 1993 12
Notes to Financial Statements,
February 28, 1994 12-13
Financial Highlights 14
Income Fund
Annual
Report Page
_______________
Report of Independent Accountants 16
Statement of Net Assets, February 28, 1994 2-12
Statement of Operations, year ended
February 28, 1994 12
Statement of Changes in Net Assets,
years ended February 28, 1994 and
February 28, 1993 13
Notes to Financial Statements,
February 28, 1994 14-15
Financial Highlights 15
<PAGE>
PAGE 65
PART C-TAX-EXEMPT MONEY FUND
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements. The Condensed Financial
Information (Financial
Highlights table) is included in Part A of the
Registration
Statement.
Statement of Net Assets, Statement of Operations, and
Statement of
Changes in Net Assets are included in the Annual Report
to
Shareholders, the pertinent portions of which are
incorporated in Part
B of the Registration Statement.
(b) Exhibits.
(1) Articles of Incorporation of Registrant, dated
March 25, 1980
(1.1)
Articles of Amendment of Articles of Incorporation
(2) By-Laws of Registrant, as amended July 1, 1991
(3) Inapplicable
(4) Specimen Stock Certificate (filed with Amendment
No. 1)
(5) Investment Management Agreement between Registrant
and T. Rowe
Price Associates, Inc.
(6) Underwriting Agreement between Registrant and T.
Rowe Price
Investment Services, Inc.
(7) Inapplicable
(8) Custodian Agreement between the Price Funds and
State Street
Bank and Trust Company, dated September 28, 1987,
amended to
June 24, 1988, October 19, 1988, February 22,
1989, July 19,
1989, September 15, 1989, December 15, 1989,
December 20, 1989,
January 25, 1990, February 21, 1990, June 12,
1990, July 18,
1990, October 15, 1990, February 13, 1991, March
6, 1991,
September 12, 1991, November 6, 1991, April 23,
1992, September
2, 1992, November 3, 1992, December 16, 1992,
December 21, 1992,
January 28, 1993, April 21, 1993, September 16,
1993, November
3, 1993, and March 1, 1994
(8a) Subcustodian Agreements between T. Rowe Price
Tax-Free Funds and
Irving Trust Company and Morgan Guaranty Trust
Company (filed
with Amendment No. 8)
<PAGE>
PAGE 66
(8a) Subcustodian Agreement between Irving Trust
Company and State
Street Bank and Trust Company (filed with
Amendment No. 12)
(8b) Global Custody Agreement between the Chase
Manhattan Bank, N.A.
and the T. Rowe Price Funds, dated January 3, 1994
(9)(a)
Transfer Agency and Service Agreement between T.
Rowe Price
Services, Inc. and T. Rowe Price Funds, dated
January 1, 1994,
as amended March 1, 1994
(9)(b)
Agreement between T. Rowe Price Associates, Inc.
and T.Rowe
Price Funds for Fund Accounting Services, dated
January 1, 1994,
as amended March 1, 1994
(10) Inapplicable
(11) Consent of Independent Accountants
(12) Inapplicable
(13) Inapplicable
(14) Inapplicable
(15) Inapplicable
(16) The Registrant hereby incorporates by reference
the methodology
used in calculating the performance information
included in
Post-Effective Amendment No. 36 and Amendment No.
20 of the T.
Rowe Price Tax-Free Income Fund, Inc. (SEC. File
Nos. 2-57265
and 811-2684 and CIK 202927) dated April 22, 1994.
Item 25.Persons Controlled by or Under Common Control With
Registrant.
None.
Item 26.Number of Holders of Securities.
As of February 28, 1994, there were 19,000 shareholders
in the T. Rowe
Price Tax-Exempt Money Fund, Inc.
Item 27.Indemnification.
The Registrant maintains comprehensive Errors and Omissions
and Officers and
Directors insurance policies written by the Evanston Insurance
Company, The
Chubb Group and ICI Mutual Insurance Co. These policies
PAGE 67
provide coverage for the named insureds, which include T. Rowe
Price Associates,
Inc. ("Manager"), Rowe Price-Fleming International, Inc.
("Price-Fleming"), T.
Rowe Price Investment Services, Inc., T. Rowe Price Services,
Inc., T. Rowe
Price Trust Company, T. Rowe Price Stable Asset Management, Inc.,
RPF
International Bond Fund and thirty-five other investment
companies, namely, T.
Rowe Price Growth Stock Fund, Inc., T. Rowe Price New Horizons
Fund, Inc., T.
Rowe Price New Era Fund, Inc., T. Rowe Price New Income Fund,
Inc., T. Rowe
Price Prime Reserve Fund, Inc., T. Rowe Price Tax-Free Income
Fund, Inc.,
T. Rowe Price International Funds, Inc., T. Rowe Price Growth &
Income Fund,
Inc., T. Rowe Price Tax-Free Short-Intermediate Fund, Inc., T.
Rowe Price
Short-Term Bond Fund,
<PAGE>
PAGE 68
Inc., T. Rowe Price High Yield Fund, Inc., T. Rowe Price Tax-Free
High Yield
Fund, Inc., T. Rowe Price New America Growth Fund, T. Rowe Price
Equity Income
Fund, T. Rowe Price GNMA Fund, T. Rowe Price Capital Appreciation
Fund, T. Rowe
Price State Tax-Free Income Trust, T. Rowe Price California
Tax-Free Income
Trust, T. Rowe Price Science & Technology Fund, Inc., T. Rowe
Price Small-Cap
Value Fund, Inc., Institutional International Funds, Inc., T.
Rowe Price U.S.
Treasury Funds, Inc., T. Rowe Price Index Trust, Inc., T. Rowe
Price Spectrum
Fund, Inc., T. Rowe Price Balanced Fund, Inc., T. Rowe Price
Adjustable Rate
U.S. Government Fund, Inc., T. Rowe Price Mid-Cap Growth Fund,
Inc., T. Rowe
Price OTC Fund, Inc., T. Rowe Price Tax-Free Insured Intermediate
Bond Fund,
Inc., T. Rowe Price Dividend Growth Fund, Inc., T. Rowe Price
Blue Chip Growth
Fund, Inc., T. Rowe Price Summit Income Funds, Inc., T. Rowe
Price Summit
Municipal Funds, Inc., T. Rowe Price Equity Series, Inc., and T.
Rowe Price
International Series, Inc. The Registrant and the thirty-five
investment
companies listed above, with the exception of Institutional
International Funds,
Inc., T. Rowe Price Equity Series, Inc., and T. Rowe Price
International Series,
Inc., will be collectively referred to as the Price Funds. The
investment
manager for the Price Funds, including T. Rowe Price Equity
Series, Inc. is the
Manager. Price-Fleming is the investment manager to T. Rowe
Price International
Funds, Inc., Institutional International Funds, Inc., and T. Rowe
Price
International Series, Inc., and is 50% owned by TRP Finance,
Inc., a wholly-
owned subsidiary of the Manager, 25% owned by Copthall Overseas
Limited, a
wholly-owned subsidiary of Robert Fleming Holdings Limited, and
25% owned by
Jardine Fleming Holdings Limited. In addition to the corporate
insureds, the
policies also cover the officers, directors, and employees of
each of the named
insureds. The premium is allocated among the named corporate
insureds in
accordance with the provisions of Rule 17d-1(d)(7) under the
Investment Company
Act of 1940.
Article X, Section 10.0l of the Registrant's By-Laws provides as
follows:
Section 10.01. Indemnification and Payment of Expenses in
Advance. The
Corporation shall indemnify any individual ("Indemnitee") who is
a present or
former director, officer, employee, or agent of the Corporation,
or who is or
has been serving at the request of the Corporation, as a
director, officer,
employee or agent of the Corporation, or who is or has been
serving at the
request of the Corporation as a director, officer, employee or
agent of another
corporation, partnership, joint venture, trust or other
enterprise, who, by
reason of his position was, is, or is threatened to be made a
party to any
threatened, pending, or completed action, suit, or proceeding,
whether civil,
criminal, administrative, or investigative (hereinafter
collectively referred to
as a "Proceeding") against any judgments, penalties, fines,
settlements, and
reasonable expenses (including attorneys' fees) incurred by such
Indemnitee in
connection with any Proceeding, to the fullest extent that such
indemnification
may be lawful under applicable Maryland law, as from time to time
amended. The
Corporation shall pay any reasonable expenses so incurred by such
Indemnitee in
defending a Proceeding in advance of the final disposition
thereof to the
fullest extent that such advance payment may be lawful under
applicable Maryland
law, as from time to time amended. Subject
<PAGE>
PAGE 69
to any applicable limitations and requirements set forth in the
Corporation's
Articles of Incorporation and in these By-Laws, any payment of
indemnification
or advance of expenses shall be made in accordance with the
procedures set forth
in applicable Maryland law, as from time to time amended.
Notwithstanding the foregoing, nothing herein shall protect
or purport to
protect any Indemnitee against any liability to which he would
otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence, or
reckless disregard of the duties involved in the conduct of his
office
("Disabling Conduct").
Anything in this Article X to the contrary
notwithstanding, no
indemnification shall be made by the Corporation to any
Indemnitee unless:
(a) there is a final decision on the merits by a court or
other body before
whom the Proceeding was brought that the Indemnitee was
not liable by
reason of Disabling Conduct; or
(b) in the absence of such a decision, there is a reasonable
determination,
based upon a review of the facts, that the Indemnitee was
not liable by
reason of Disabling Conduct, which determination shall be
made by:
(i) the vote of a majority of a quorum of directors
who are
neither "interested persons" of the Corporation
as defined in
Section 2(a)(19) of the Investment Company Act
of 1940, nor
parties to the Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Anything in this Article X to the contrary
notwithstanding, any advance
of expenses by the Corporation to any Indemnitee shall be
made only upon
the undertaking by such Indemnitee to repay the advance
unless it is
ultimately determined that such Indemnitee is entitled to
indemnification
as above provided, and only if one of the following
conditions is met:
(a)
the Indemnitee provides a security for his undertaking;
or
(b)
the Corporation shall be insured against losses
arising by reason
of any lawful advances; or
<PAGE>
PAGE 70
(c)
there is a determination, based on a review of readily
available facts,
that there is reason to believe that the Indemnitee will
ultimately be
found entitled to indemnification, which determination
shall be made
by:
(i) a majority of a quorum of directors who are
neither "interested
persons" of the Corporation as defined in Section
2(a)(19) of
the Investment Company Act of 1940, nor parties
to the
Proceeding; or
(ii)
an independent legal counsel in a written opinion.
Section 10.02 of the Registrant's By-Laws provides as
follows:
Section 10.02. Insurance of Officers, Directors,
Employees and Agents.
To the fullest extent permitted by applicable Maryland law
and by Section
17(h) of the Investment Company Act of 1940, as from time to
time amended,
the Corporation may purchase and maintain insurance on behalf
of any person
who is or was a director, officer, employee, or agent of the
Corporation,
or who is or was serving at the request of the Corporation as
a director,
officer, employee, or agent of another corporation,
partnership, joint
venture, trust or other enterprise, against any liability
asserted against
him and incurred by him in or arising out of his position,
whether or not
the Corporation would have the power to indemnify him against
such
liability.
Insofar as indemnification for liability arising under the
Securities Act
of 1933 may be permitted to directors, officers and
controlling persons of
the Registrant pursuant to the foregoing provisions, or
otherwise, the
registrant has been advised that in the opinion of the
Securities and
Exchange Commission such indemnification is against public
policy as
expressed in the Act and is, therefore, unenforceable. In
the event that a
claim for indemnification against such liabilities (other
than the payment
by the Registrant of expenses incurred or paid by a director,
officer or
controlling person of the Registrant in the successful
defense of any
action, suit or proceeding) is asserted by such director,
officer or
controlling person in connection with the securities being
registered, the
Registrant will, unless in the opinion of its counsel the
matter has been
settled by controlling precedent, submit to a court of
appropriate
jurisdiction the question whether such indemnification by it
is against
public policy as expressed in the Act and will be governed by
the final
adjudication of such issue.
<PAGE>
PAGE 71
Item 28.Business and Other Connections of Investment Manager.
Rowe Price-Fleming International, Inc. ("Price-Fleming"), a
Maryland
corporation, is a corporate joint venture 50% owned by TRP
Finance, Inc., a
wholly-owned subsidiary of the Manager, and was organized in 1979
to provide
investment counsel service with respect to foreign securities for
institutional
investors in the United States. Price-Fleming, in addition to
managing private
counsel client accounts, also sponsors registered investment
companies which
invest in foreign securities, serves as general partner of RPFI
International
Partners, Limited Partnership, and provides investment advice to
the T. Rowe
Price Trust Company, trustee of the International Common Trust
Fund.
T. Rowe Price Investment Services, Inc. ("Investment Services"),
a wholly- owned
subsidiary of the Manager, is a Maryland corporation organized in
1980 for the
purpose of acting as the principal underwriter and distributor
for the Price
Funds. Investment Services is registered as a broker-dealer
under the
Securities Exchange Act of 1934 and is a member of the National
Association of
Securities Dealers, Inc. In 1984, Investment Services expanded
its activities
to include a discount brokerage service.
TRP Distribution, Inc., a wholly-owned subsidiary of Investment
Services, is a
Maryland corporation organized in 1991. It was organized for and
engages in the
sale of certain investment related products prepared by
Investment Services.
T. Rowe Price Associates Foundation, Inc., was organized in 1981
for the purpose
of making charitable contributions to religious, charitable,
scientific,
literary and educational organizations. The Foundation (which is
not a
subsidiary of the Manager) is funded solely by contributions from
the Manager
and income from investments.
T. Rowe Price Services, Inc. ("Price Services"), a wholly-owned
subsidiary of
the Manager, is a Maryland corporation organized in 1982 and is
registered as a
transfer agent under the Securities Exchange Act of 1934. Price
Services
provides transfer agent, dividend disbursing, and certain other
services,
including shareholder services, to the Price Funds.
T. Rowe Price Retirement Plan Services, Inc. ("RPS"), a
wholly-owned subsidiary
of the Manager, was incorporated in Maryland in 1991 and is
registered as a
transfer agent under the Securities Exchange Act of 1934. RPS
provides
administrative, recordkeeping, and subaccounting services to
administrators of
employee benefit plans.
T. Rowe Price Trust Company ("Trust Company"), a wholly-owned
subsidiary of the
Manager, is a Maryland chartered limited purpose trust company,
organized
in 1983 for the purpose of providing fiduciary services. The
Trust Company
serves as trustee/custodian for employee benefit plans, common
trust funds and a
few trusts.
PAGE 72
T. Rowe Price Threshold Fund II, L.P., a Delaware limited
partnership, was
organized in 1986 by the Manager, and invests in private
financings of small
companies with high growth potential; the Manager is the General
Partner of the
partnership.
RPFI International Partners, Limited Partnership, is a Delaware
limited
partnership organized in 1985 for the purpose of investing in a
diversified
group of small and medium-sized rapidly growing non-U.S.
companies.
Price-Fleming is the general partner of this partnership, and
certain clients of
Price-Fleming are its limited partners.
T. Rowe Price Real Estate Group, Inc. ("Real Estate Group"), is a
Maryland
corporation and a wholly-owned subsidiary of the Manager
established in 1986 to
provide real estate services. Subsidiaries of Real Estate Group
are: T. Rowe
Price Realty Income Fund I Management, Inc., a Maryland
corporation (General
Partner of T. Rowe Price Realty Income Fund I, A No-Load Limited
Partnership),
T. Rowe Price Realty Income Fund II Management, Inc., a Maryland
corporation
(General Partner of T. Rowe Price Realty Income Fund II,
America's
Sales-Commission-Free Real Estate Limited Partnership), T. Rowe
Price Realty
Income Fund III Management, Inc., a Maryland corporation (General
Partner of T.
Rowe Price Realty Income Fund III, America's
Sales-Commission-Free Real Estate
Limited Partnership, a Delaware limited partnership), and T. Rowe
Price Realty
Income Fund IV Management, Inc., a Maryland corporation (General
Partner of T.
Rowe Price Realty Income Fund IV, America's Sales-Commission-Free
Real Estate
Limited Partnership). Real Estate Group serves as investment
manager to T. Rowe
Price Renaissance Fund, Ltd., A Sales-Commission-Free Real Estate
Investment,
established in 1989 as a Maryland corporation which qualifies as
a REIT.
T. Rowe Price Stable Asset Management, Inc. ("Stable Asset
Management") is a
Maryland corporation organized in 1988 as a wholly-owned
subsidiary of the
Manager. Stable Asset Management, which is registered as an
investment adviser
under the Investment Advisers Act of 1940, specializes in the
management of
investment portfolios which seek stable and consistent investment
returns
through the use of guaranteed investment contracts, bank
investment contracts,
structured or synthetic investment contracts, and short-term
fixed-income
securities.
T. Rowe Price Recovery Fund Associates, Inc., a Maryland
corporation, is a
wholly-owned subsidiary of the Manager organized in 1988 for the
purpose of
serving as the General Partner of T. Rowe Price Recovery Fund,
L.P., a Delaware
limited partnership which invests in financially distressed
companies.
T. Rowe Price (Canada), Inc. is a Maryland corporation organized
in 1988 as a
wholly-owned subsidiary of the Manager. This entity is
registered as an
investment adviser under the Investment Advisers Act of 1940, and
may apply for
registration as an investment manager under the Securities Act of
Ontario in
order to be eligible to provide certain services to the RPF
International Bond Fund, a trust (whose shares are sold in
Canada) which
Price-Fleming serves as investment adviser.
PAGE 73
Since 1983, the Manager has organized several distinct Maryland
limited
partnerships, which are informally called the Pratt Street
Ventures
partnerships, for the purpose of acquiring interests in
growth-oriented
businesses.
Tower Venture, Inc., a wholly-owned subsidiary of the Manager, is
a Maryland
corporation organized in 1989 for the purpose of serving as a
general partner of
100 East Pratt St., L.P., a Maryland limited partnership whose
limited partners
also include the Manager. The purpose of the partnership is to
further develop
and improve the property at 100 East Pratt Street, the site of
the Manager's
headquarters, through the construction of additional office,
retail and parking
space.
TRP Suburban, Inc. is a Maryland corporation organized in 1990 as
a wholly-owned
subsidiary of the Manager. TRP Suburban has entered into
agreements with
McDonogh School and CMANE-McDonogh-Rowe Limited Partnership to
construct an
office building in Owings Mills, Maryland, which houses the
Manager's transfer
agent, plan administrative services, retirement plan services and
operations
support functions.
TRP Finance, Inc. and TRP Finance MRT, Inc., wholly-owned
subsidiaries of the
Manager, are Delaware corporations organized in 1990 to manage
certain passive
corporate investments and other intangible assets. TRP Finance
MRT, Inc. was
dissolved on October 4, 1993.
T. Rowe Price Strategic Partners Fund, L.P. is a Delaware limited
partnership
organized in 1990 for the purpose of investing in small public
and private
companies seeking capital for expansion or undergoing a
restructuring of
ownership. The general partner of the Fund is T. Rowe Price
Strategic Partners,
L.P., a Delaware limited partnership whose general partner is T.
Rowe Price
Strategic Partners Associates, Inc., ("Strategic Associates"), a
Maryland
corporation which is a wholly-owned subsidiary of the Manager.
Strategic
Associates also serves as the general partner of T. Rowe Price
Strategic
Partners II, L.P., a Delaware limited partnership established in
1992, which in
turn serves as general partner of T. Rowe price Strategic
Partners Fund II,
L.P., a Delaware limited partnership organized in 1992.
Listed below are the directors of the Manager who have other
substantial
businesses, professions, vocations, or employment aside from that
of Director of
the Manager:
JAMES E. HALBKAT, JR., Director of the Manager. Mr. Halbkat is
President of
U.S. Monitor Corporation, a provider of public response systems.
Mr. Halbkat's
address is: P.O. Box 23109, Hilton Head Island, South Carolina
29925.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is the
Tayloe Murphy
Professor at the University of Virginia, and a director of:
Chesapeake
Corporation, a manufacturer of paper products, Cadmus
Communications Corp., a
provider of printing and communication services; Comdial
Corporation, a
manufacturer of telephone systems for businesses; and Cone Mills
Corporation, a
textiles producer. Mr. Rosenblum's address is: P.O. Box 6550,
Charlottesville,
Virginia 22906.
PAGE 74
ROBERT L. STRICKLAND, Director of the Manager. Mr. Strickland is
Chairman of
Lowe's Companies, Inc., a retailer of specialty home supplies.
Mr. Strickland's
address is 604 Two Piedmont Plaza Building, Winston-Salem, North
Carolina 27104.
PHILIP C. WALSH, Director of the Manager. Mr. Walsh is a
Consultant to Cyprus
Amax Minerals Company, Englewood, Colorado, and a director of
Piedmont Mining
Company, Inc., Charlotte, North Carolina. Mr. Walsh's address
is: Blue Mill
Road, Morristown, New Jersey 07960.
With the exception of Messrs. Halbkat, Rosenblum, Strickland, and
Walsh, all of
the directors of the Manager are employees of the Manager.
George J. Collins, who is Chief Executive Officer, President, and
a Managing
Director of the Manager, is a Director of Price-Fleming.
George A. Roche, who is Chief Financial Officer and a Managing
Director of the
Manager, is a Vice President and a Director of Price-Fleming.
M. David Testa, who is a Managing Director of the Manager, is
Chairman of the
Board of Price-Fleming.
Henry H. Hopkins, Charles P. Smith, and Peter Van Dyke, who are
Managing
Directors of the Manager, are Vice Presidents of Price-Fleming.
Robert P. Campbell, Roger L. Fiery, III, Robert C. Howe, Veena A.
Kutler, George
A. Murnaghan, William F. Wendler, II, and Edward A. Wiese, who
are Vice
Presidents of the Manager, are Vice Presidents of Price-Fleming.
Alvin M. Younger, Jr., who is a Managing Director and the
Secretary and
Treasurer of the Manager, is Secretary and Treasurer of
Price-Fleming.
Nolan L. North, who is a Vice President and Assistant Treasurer
of the Manager,
is Assistant Treasurer of Price-Fleming.
Leah P. Holmes, who is an Assistant Vice President of the
Manager, is a Vice
President of Price-Fleming.
Barbara A. Van Horn, who is Assistant Secretary of the Manager,
is Assistant
Secretary of Price-Fleming.
Certain directors and officers of the Manager are also officers
and/or directors
of one or more of the Price Funds and/or one or more of the
affiliated entities
listed herein.
See also "Management of Fund," in Registrant's Statement of
Additional
Information.
Item 29.Principal Underwriters.
PAGE 75
(a) The principal underwriter for the Registrant is Investment
Services.
Investment Services acts as the principal underwriter for the
other thirty-five
Price Funds. Investment Services is a wholly-owned subsidiary of
the Manager is
registered as a broker-dealer under the Securities Exchange Act
of 1934 and is a
member of the National Association of Securities Dealers, Inc.
Investment
Services has been formed for the limited purpose of distributing
the shares of
the Price Funds and will not engage in the general securities
business. Since
the Price Funds are sold on a no-load basis, Investment Services
will not
receive any commission or other compensation for acting as
principal
underwriter.
<PAGE>
PAGE 76
(b) The address of each of the directors and officers of
Investment Services
listed below is 100 East Pratt Street, Baltimore, Maryland 21202.
Positions and
Name and Principal Positions and Offices Offices with
Business Address With Underwriter Registrant
__________________ _____________________ _____________
James Sellers Riepe President and Director Vice President
and
Director
Henry Holt Hopkins Vice President and Vice President
Director
Mark E. Rayford Director None
Charles E. Vieth Vice President and None
Director
Patricia M. Archer Vice President None
Edward C. Bernard Vice President None
Joseph C. Bonasorte Vice President None
Meredith C. Callanan Vice President None
Laura H. Chasney Vice President None
Victoria C. Collins Vice President None
Christopher W. Dyer Vice President None
Forrest R. Foss Vice President None
Patricia O'Neil Goodyear Vice President None
James W. Graves Vice President None
Andrea G. Griffin Vice President None
Thomas Grizzard Vice President None
David J. Healy Vice President None
Joseph P. Healy Vice President None
Walter J. Helmlinger Vice President None
Eric G. Knauss Vice President None
Douglas G. Kremer Vice President None
Sharon Renae Krieger Vice President None
Keith Wayne Lewis Vice President None
David L. Lyons Vice President None
Sarah McCafferty Vice President None
Maurice Albert Minerbi Vice President None
Nancy M. Morris Vice President None
George A. Murnaghan Vice President None
Steven Ellis Norwitz Vice President None
Kathleen M. O'Brien Vice President None
Charles S. Peterson Vice President None
PAGE 77
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Terri L. Westren Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and Treasurer None
Mark S. Finn Controller None
Richard J. Barna Assistant Vice President None
Catherine L.
Berkenkemper Assistant Vice President None
Ronae M. Brock Assistant Vice President None
Brenda E. Buhler Assistant Vice President None
Patricia Sue Butcher Assistant Vice President None
John A. Galateria Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Keith J. Langrehr Assistant Vice President None
C. Lillian Matthews Assistant Vice President None
Janice D. McCrory Assistant Vice President None
Sandra J. McHenry Assistant Vice President None
JeanneMarie B. Patella Assistant Vice President None
Kristin E. Seeberger Assistant Vice President None
Arthur J. Silber Assistant Vice President None
Linda C. Wright Assistant Vice President None
Nolan L. North Assistant Treasurer None
Barbara A. VanHorn Assistant Secretary None
Item 30. Location of Accounts and Records.
All accounts, books, and other documents required to be
maintained by the T.
Rowe Price Tax-Exempt Money Fund, Inc. under Section 31(a) of the
Investment
Company Act of 1940 and the rules thereunder will be maintained
by T. Rowe Price
Tax-Exempt Money Fund, Inc. at its offices at 100 East Pratt
Street, Baltimore,
Maryland 21202. Transfer, dividend disbursing, and shareholder
service
activities are performed by T. Rowe Price Services, Inc. at 100
East Pratt
Street, Baltimore, Maryland 21202. Custodian activities for T.
Rowe Price Tax-
Exempt Money Fund, Inc. are performed at State Street Bank and
Trust Company's
Service Center (State Street South), 1776 Heritage Drive, Quincy,
Massachusetts
02171.
<PAGE>
PAGE 78
Item 31. Management Services.
Registrant is not a party to any management-related
service contract,
other than as set forth in the Prospectus.
Item 32. Undertakings
(a) The Fund agrees to furnish, upon request and
without charge, a
copy of its Annual Report to each person to whom a
prospectus is
delivered.
<PAGE>
PAGE 79
Pursuant to the requirements of the Securities Act of 1933,
as amended, and
the Investment Company Act of 1940, as amended, the Registrant
has duly caused
this Registration Statement to be signed on its behalf by the
undersigned,
thereunto duly authorized, in the City of Baltimore, State of
Maryland, this
22nd day of April, 1994.
T. ROWE PRICE TAX-EXEMPT MONEY FUND,
INC.
/s/George J. Collins
By:George J. Collins, Chairman of the
Board
Pursuant to the requirements of the Securities Act of 1933,
as amended,
this Registration Statement has been signed below by the
following persons in
the capacities and on the dates indicated:
SIGNATURE TITLE DATE
________ _____ ____
/s/George J. Collins Chairman of the Board April 22, 1994
George J. Collins (Chief Executive Officer)
/s/Carmen F. Deyesu Treasurer April 22, 1994
Carmen F. Deyesu (Chief Financial Officer)
/s/Calvin W. Burnett Director April 22, 1994
Calvin W. Burnett
/s/Anthony W. Deering Director April 22, 1994
Anthony W. Deering
/s/F. Pierce Linaweaver DirectorApril 22,
1994
F. Pierce Linaweaver
/s/William T. Reynolds President and Director April 22, 1994
William T. Reynolds
/s/James S. Riepe Vice President and DirectorApril 22, 1994
James S. Riepe
/s/John Sagan Director April 22, 1994
John Sagan
/s/John G. Schrieber Director April 22, 1994
John G. Schreiber
PAGE 80
PART C-TAX-FREE SHORT-INTERMEDIATE FUND
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements. Condensed Financial Information
(Financial
Highlights table) is included in Part A of the
Registration Statement.
Portfolio of Investments, Statement of Assets and
Liabilities,
Statement of Operations, and Statement of Changes in Net
Assets are
included in the Annual Report to Shareholders, the
pertinent portions
of which are incorporated by reference in Part B of the
Registration
Statement.
(b) Exhibits.
(1) Articles of Incorporation of Registrant, dated
October 7, 1983
(2) By-Laws of Registrant, as amended July 1, 1991
(3) Inapplicable
(4) Specimen Stock Certificate (filed with Amendment
No. 1)
(5) Investment Management Agreement between
Registrant and T. Rowe
Price Associates, Inc.
(6) Underwriting Agreement between Registrant and T.
Rowe Price
Investment Services, Inc.
(7) Inapplicable
(8) Custodian Agreement between the T. Rowe Price
Funds and State
Street Bank and Trust Company, dated September
28, 1987,
amended to June 24, 1988, October 19, 1988,
February 22, 1989,
July 19, 1989, September 15, 1989, December 15,
1989, December
20, 1989, January 25, 1990, February 21, 1990,
June 12, 1990,
July 18, 1990, October 15, 1990, February 13,
1991, March 6,
1991, September 12, 1991, November 6, 1991, April
23, 1992,
September 2, 1992, and November 3, 1992, December
16, 1992,
December 21, 1992, January 28, 1993, April 21,
1993, September
16, 1993, November 3, 1993, and March 1, 1994
(8)(a)
Subcustodian Agreements between T. Rowe Price
Tax-Free Funds
and Irving Trust Company and Morgan Guaranty
Trust Company
(filed with Amendment No. 4)
<PAGE>
PAGE 81
(8) Subcustodian Agreement between Irving Trust
Company and State
Street Bank and Trust Company (filed with
Amendment No. 11)
(8)(b)
Global Custody Agreement between The Chase Manhattan Bank,
N.A. and T. Rowe
Price Funds, dated January 3, 1994
(9)(a)
Transfer Agency and Service Agreement between T.
Rowe Price
Services, Inc. and T. Rowe Price Funds, dated
January 1, 1994,
as amended March 1, 1994
(9)(b)
Agreement between T. Rowe Price Associates, Inc.
and T.Rowe
Price Funds for Fund Accounting Services, dated
January 1,
1994, as amended March 1, 1994
(10) Inapplicable
(11) Consent of Independent Accountants
(12) Inapplicable
(13) Inapplicable
(14) Inapplicable
(15) Inapplicable
(16) The Registrant hereby incorporates by reference
the methodology
used in calculating the performance information
included in
Post-Effective Amendment No. 36 and Amendment No.
20 of the T.
Rowe Price Tax-Free Income Fund, Inc. (SEC. File
Nos. 2-57265
and 811-2684 and CIK 202927) dated April 22,
1994.
Item 25. Persons Controlled by or Under Common Control With
Registrant.
None.
Item 26. Number of Holders of Securities.
As of February 28, 1994, there were 13,000 shareholders
in the T. Rowe
Price Tax-Free Short-Intermediate Fund, Inc.
Item 27. Indemnification.
The Registrant maintains comprehensive Errors and Omissions
and Officers and
Directors insurance policies written by the Evanston Insurance
Company, The
Chubb Group and ICI Mutual Insurance Co. These policies
PAGE 82
provide coverage for the named insureds, which include T. Rowe
Price Associates,
Inc. ("Manager"), Rowe Price-Fleming International, Inc.
("Price-Fleming"), T.
Rowe Price Investment Services, Inc., T. Rowe Price Services,
Inc., T. Rowe
Price Trust Company, T. Rowe Price Stable Asset Management, Inc.,
RPF
International Bond Fund and thirty-five other investment
companies, namely, T.
Rowe Price Growth Stock Fund, Inc., T. Rowe Price New Horizons
Fund, Inc., T.
Rowe Price New Era Fund, Inc., T. Rowe Price New Income Fund,
Inc., T. Rowe
Price Prime Reserve Fund, Inc., T. Rowe Price Tax-Free Income
Fund, Inc.,
T. Rowe Price International Funds, Inc., T. Rowe Price Tax-Exempt
Money Fund,
Inc., T. Rowe Price Growth & Income Fund, Inc., T. Rowe Price
Short-Term Bond
Fund,
Inc., T. Rowe Price High Yield Fund, Inc., T. Rowe Price Tax-Free
High Yield
Fund, Inc., T. Rowe Price New America Growth Fund, T. Rowe Price
Equity Income
Fund, T. Rowe Price GNMA Fund, T. Rowe Price Capital Appreciation
Fund, T. Rowe
Price State Tax-Free Income Trust, T. Rowe Price California
Tax-Free Income
Trust, T. Rowe Price Science & Technology Fund, Inc., T. Rowe
Price Small-Cap
Value Fund, Inc., Institutional International Funds, Inc., T.
Rowe Price U.S.
Treasury Funds, Inc., T. Rowe Price Index Trust, Inc., T. Rowe
Price Spectrum
Fund, Inc., T. Rowe Price Balanced Fund, Inc., T. Rowe Price
Adjustable Rate
U.S. Government Fund, Inc., T. Rowe Price Mid-Cap Growth Fund,
Inc., T. Rowe
Price OTC Fund, Inc., T. Rowe Price Tax-Free Insured Intermediate
Bond Fund,
Inc., T. Rowe Price Dividend Growth Fund, Inc., T. Rowe Price
Blue Chip Growth
Fund, Inc., T. Rowe Price Summit Income Funds, Inc., T. Rowe
Price Summit
Municipal Funds, Inc., T. Rowe Price Equity Series, Inc., and T.
Rowe Price
International Series, Inc. The Registrant and the thirty-five
investment
companies listed above, with the exception of Institutional
International Funds,
Inc., T. Rowe Price Equity Series, Inc., and T. Rowe Price
International Series,
Inc., will be collectively referred to as the Price Funds. The
investment
manager for the Price Funds, including T. Rowe Price Equity
Series, Inc. is the
Manager. Price-Fleming is the investment manager to T. Rowe
Price International
Funds, Inc., T. Rowe Price International Series, Inc., and
Institutional
International Funds, Inc., and is 50% owned by TRP Finance, Inc.,
a wholly-owned
subsidiary of the Manager, 25% owned by Copthall Overseas
Limited, a wholly-
owned subsidiary of Robert Fleming Holdings Limited, and 25%
owned by Jardine
Fleming Holdings Limited. In addition to the corporate insureds,
the policies
also cover the officers, directors, and employees of each of the
named
insureds.
The premium is allocated among the named corporate insureds in
accordance with
the provisions of Rule 17d-1(d)(7) under the Investment Company
Act of 1940.
Article X, Section 10.0l of the Registrant's By-Laws provides
as follows:
Section 10.01. Indemnification and Payment of Expenses in
Advance. The
Corporation shall indemnify any individual ("Indemnitee") who is
a present or
former director, officer, employee, or agent of the Corporation,
or who is or
has been serving at the request of the Corporation, as a
director, officer,
employee or agent of the Corporation, or who is or has been
serving at the
request of the Corporation as a director, officer, employee or
agent of another
corporation, partnership, joint venture, trust or other
enterprise, who, by
reason of his position was, is, or is threatened to be made a
party to any
threatened, pending, or completed action, suit, or proceeding,
whether civil,
criminal, administrative, or investigative (hereinafter
collectively referred to
as a "Proceeding") against any judgments, penalties, fines,
settlements, and
reasonable expenses (including attorneys' fees) incurred by such
Indemnitee in
connection with any Proceeding, to the fullest extent that such
indemnification
may be lawful under applicable Maryland law, as from time to time
amended. The
Corporation shall pay any reasonable expenses so incurred by such
PAGE 83
Indemnitee in defending a Proceeding in advance of the final
disposition thereof
to the fullest extent that such advance payment may be lawful
under
applicable Maryland law, as from time to time amended. Subject
to any
applicable limitations and requirements set forth in the
Corporation's Articles
of Incorporation and in these By-Laws, any payment of
indemnification or advance
of expenses shall be made in accordance with the procedures set
forth in
applicable Maryland law, as from time to time amended.
Notwithstanding the foregoing, nothing herein shall protect
or purport to
protect any Indemnitee against any liability to which he would
otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence, or
reckless disregard of the duties involved in the conduct of his
office
("Disabling Conduct").
Anything in this Article X to the contrary notwithstanding,
no
indemnification shall be made by the Corporation to any
Indemnitee unless:
(a) there is a final decision on the merits by a court
or other body
before whom the Proceeding was brought that the
Indemnitee was not
liable by reason of Disabling Conduct; or
(b) in the absence of such a decision, there is a
reasonable
determination, based upon a review of the facts,
that the
Indemnitee was not liable by reason of Disabling
Conduct, which
determination shall be made by:
(i) the vote of a majority of a quorum of
directors who are
neither "interested persons" of the
Corporation as defined
in Section 2(a)(19) of the Investment Company
Act of 1940,
nor parties to the Proceeding; or
(ii)
an independent legal counsel in a written
opinion.
Anything in this Article X to the contrary notwithstanding,
any advance of
expenses by the Corporation to any Indemnitee shall be made only
upon the
undertaking by such Indemnitee to repay the advance unless it is
ultimately
determined that such Indemnitee is entitled to indemnification as
above
provided, and only if one of the following conditions is met:
(a) the Indemnitee provides a security for his undertaking;
or
(b) the Corporation shall be insured against losses arising
by reason of
any lawful advances; or
<PAGE>
PAGE 84
(c) there is a determination, based on a review of readily
available facts,
that there is reason to believe that the Indemnitee will
ultimately be
found entitled to indemnification, which determination
shall be made
by:
(i) a majority of a quorum of directors who are
neither
"interested persons" of the Corporation as
defined in
Section 2(a)(19) of the Investment Company Act
of 1940, nor
parties to the Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Section 10.02 of the Registrant's By-Laws provides as
follows:
Section 10.02. Insurance of Officers, Directors, Employees
and Agents. To
the fullest extent permitted by applicable Maryland law and by
Section 17(h) of
the Investment Company Act of 1940, as from time to time amended,
the
Corporation may purchase and maintain insurance on behalf of any
person who is
or was a director, officer, employee, or agent of the
Corporation, or who is or
was serving at the request of the Corporation as a director,
officer, employee,
or agent of another corporation, partnership, joint venture,
trust or other
enterprise, against any liability asserted against him and
incurred by him in or
arising out of his position, whether or not the Corporation would
have the power
to indemnify him against such liability.
Insofar as indemnification for liability arising under the
Securities Act
of 1933 may be permitted to directors, officers and controlling
persons of the
Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission
such indemnification is against public policy as expressed in the
Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against
such liabilities (other than the payment by the Registrant of
expenses incurred
or paid by a director, officer or controlling person of the
registrant in the
successful defense of any action, suit, or proceeding) is
asserted by such
director, officer or controlling person in connection with the
securities being
registered, the registrant will, unless in the opinion of its
counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate
jurisdiction the question whether such indemnification by it is
against public
policy as expressed in the Act and will be governed by the final
adjudication of
such issue.
<PAGE>
PAGE 85
Item 28. Business and Other Connections of Investment
Manager.
Rowe Price-Fleming International, Inc. ("Price-Fleming"), a
Maryland
corporation, is a corporate joint venture 50% owned by TRP
Finance, Inc., a
wholly-owned subsidiary of the Manager, and was organized in 1979
to provide
investment counsel service with respect to foreign securities for
institutional
investors in the United States. Price-Fleming, in addition to
managing private
counsel client accounts, also sponsors registered investment
companies which
invest in foreign securities, serves as general partner of RPFI
International
Partners, Limited Partnership, and provides investment advice to
the T. Rowe
Price Trust Company, trustee of the International Common Trust
Fund.
T. Rowe Price Investment Services, Inc. ("Investment Services"),
a wholly- owned
subsidiary of the Manager, is a Maryland corporation organized in
1980 for the
purpose of acting as the principal underwriter and distributor
for the Price
Funds. Investment Services is registered as a broker-dealer
under the
Securities Exchange Act of 1934 and is a member of the National
Association of
Securities Dealers, Inc. In 1984, Investment Services expanded
its activities
to include a discount brokerage service.
TRP Distribution, Inc., a wholly-owned subsidiary of Investment
Services, is a
Maryland corporation organized in 1991. It was organized for and
engages in the
sale of certain investment related products prepared by
Investment Services.
T. Rowe Price Associates Foundation, Inc., was organized in 1981
for the purpose
of making charitable contributions to religious, charitable,
scientific,
literary and educational organizations. The Foundation (which is
not a
subsidiary of the Manager) is funded solely by contributions from
the Manager
and income from investments.
T. Rowe Price Services, Inc. ("Price Services"), a wholly-owned
subsidiary of
the Manager, is a Maryland corporation organized in 1982 and is
registered as a
transfer agent under the Securities Exchange Act of 1934. Price
Services
provides transfer agent, dividend disbursing, and certain other
services,
including shareholder services, to the Price Funds.
T. Rowe Price Retirement Plan Services, Inc. ("RPS"), a
wholly-owned subsidiary
of the Manager, was incorporated in Maryland in 1991 and is
registered as a
transfer agent under the Securities Exchange Act of 1934. RPS
provides
administrative, recordkeeping, and subaccounting services to
administrators of
employee benefit plans.
T. Rowe Price Trust Company ("Trust Company"), a wholly-owned
subsidiary of the
Manager, is a Maryland chartered limited purpose trust company,
organized
in 1983 for the purpose of providing fiduciary services. The
Trust Company
serves as trustee/custodian for employee benefit plans, common
trust funds and a
few trusts.
PAGE 86
T. Rowe Price Threshold Fund II, L.P., a Delaware limited
partnership, was
organized in 1986 by the Manager, and invests in private
financings of small
companies with high growth potential; the Manager is the General
Partner of the
partnership.
RPFI International Partners, Limited Partnership, is a Delaware
limited
partnership organized in 1985 for the purpose of investing in a
diversified
group of small and medium-sized rapidly growing non-U.S.
companies.
Price-Fleming is the general partner of this partnership, and
certain clients of
Price-Fleming are its limited partners.
T. Rowe Price Real Estate Group, Inc. ("Real Estate Group"), is a
Maryland
corporation and a wholly-owned subsidiary of the Manager
established in 1986 to
provide real estate services. Subsidiaries of Real Estate Group
are: T. Rowe
Price Realty Income Fund I Management, Inc., a Maryland
corporation (General
Partner of T. Rowe Price Realty Income Fund I, A No-Load Limited
Partnership),
T. Rowe Price Realty Income Fund II Management, Inc., a Maryland
corporation
(General Partner of T. Rowe Price Realty Income Fund II,
America's
Sales-Commission-Free Real Estate Limited Partnership), T. Rowe
Price Realty
Income Fund III Management, Inc., a Maryland corporation (General
Partner of T.
Rowe Price Realty Income Fund III, America's
Sales-Commission-Free Real Estate
Limited Partnership, a Delaware limited partnership), and T. Rowe
Price Realty
Income Fund IV Management, Inc., a Maryland corporation (General
Partner of T.
Rowe Price Realty Income Fund IV, America's Sales-Commission-Free
Real Estate
Limited Partnership). Real Estate Group serves as investment
manager to T. Rowe
Price Renaissance Fund, Ltd., A Sales-Commission-Free Real Estate
Investment,
established in 1989 as a Maryland corporation which qualifies as
a REIT.
T. Rowe Price Stable Asset Management, Inc. ("Stable Asset
Management") is a
Maryland corporation organized in 1988 as a wholly-owned
subsidiary of the
Manager. Stable Asset Management, which is registered as an
investment adviser
under the Investment Advisers Act of 1940, specializes in the
management of
investment portfolios which seek stable and consistent investment
returns
through the use of guaranteed investment contracts, bank
investment contracts,
structured or synthetic investment contracts, and short-term
fixed-income
securities.
T. Rowe Price Recovery Fund Associates, Inc., a Maryland
corporation, is a
wholly-owned subsidiary of the Manager organized in 1988 for the
purpose of
serving as the General Partner of T. Rowe Price Recovery Fund,
L.P., a Delaware
limited partnership which invests in financially distressed
companies.
T. Rowe Price (Canada), Inc. is a Maryland corporation organized
in 1988 as a
wholly-owned subsidiary of the Manager. This entity is
registered as an
investment adviser under the Investment Advisers Act of 1940, and
may apply for
registration as an investment manager under the Securities Act of
Ontario in
order to be eligible to provide certain services to the RPF
International Bond Fund, a trust (whose shares are sold in
Canada) which
Price-Fleming serves as investment adviser.
PAGE 87
Since 1983, the Manager has organized several distinct Maryland
limited
partnerships, which are informally called the Pratt Street
Ventures
partnerships, for the purpose of acquiring interests in
growth-oriented
businesses.
Tower Venture, Inc., a wholly-owned subsidiary of the Manager, is
a Maryland
corporation organized in 1989 for the purpose of serving as a
general partner of
100 East Pratt St., L.P., a Maryland limited partnership whose
limited partners
also include the Manager. The purpose of the partnership is to
further develop
and improve the property at 100 East Pratt Street, the site of
the Manager's
headquarters, through the construction of additional office,
retail and parking
space.
TRP Suburban, Inc. is a Maryland corporation organized in 1990 as
a wholly-owned
subsidiary of the Manager. TRP Suburban has entered into
agreements with
McDonogh School and CMANE-McDonogh-Rowe Limited Partnership to
construct an
office building in Owings Mills, Maryland, which houses the
Manager's transfer
agent, plan administrative services, retirement plan services and
operations
support functions.
TRP Finance, Inc. and TRP Finance MRT, Inc., wholly-owned
subsidiaries of the
Manager, are Delaware corporations organized in 1990 to manage
certain passive
corporate investments and other intangible assets. TRP Finance
MRT, Inc. was
dissolved on October 4, 1993.
T. Rowe Price Strategic Partners Fund, L.P. is a Delaware limited
partnership
organized in 1990 for the purpose of investing in small public
and private
companies seeking capital for expansion or undergoing a
restructuring of
ownership. The general partner of the Fund is T. Rowe Price
Strategic Partners,
L.P., a Delaware limited partnership whose general partner is T.
Rowe Price
Strategic Partners Associates, Inc., ("Strategic Associates"), a
Maryland
corporation which is a wholly-owned subsidiary of the Manager.
Strategic
Associates also serves as the general partner of T. Rowe Price
Strategic
Partners II, L.P., a Delaware limited partnership established in
1992, which in
turn serves as general partner of T. Rowe price Strategic
Partners Fund II,
L.P., a Delaware limited partnership organized in 1992.
Listed below are the directors of the Manager who have other
substantial
businesses, professions, vocations, or employment aside from that
of Director of
the Manager:
JAMES E. HALBKAT, JR., Director of the Manager. Mr. Halbkat is
President of
U.S. Monitor Corporation, a provider of public response systems.
Mr. Halbkat's
address is: P.O. Box 23109, Hilton Head Island, South Carolina
29925.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is the
Tayloe Murphy
Professor at the University of Virginia, and a director of:
Chesapeake
Corporation, a manufacturer of paper products, Cadmus
Communications Corp., a
provider of printing and communication services; Comdial
Corporation, a
manufacturer of telephone systems for businesses; and Cone Mills
Corporation, a
textiles producer. Mr. Rosenblum's address is: P.O. Box 6550,
Charlottesville,
Virginia 22906.
PAGE 88
ROBERT L. STRICKLAND, Director of the Manager. Mr. Strickland is
Chairman of
Lowe's Companies, Inc., a retailer of specialty home supplies.
Mr. Strickland's
address is 604 Two Piedmont Plaza Building, Winston-Salem, North
Carolina 27104.
PHILIP C. WALSH, Director of the Manager. Mr. Walsh is a
Consultant to Cyprus
Amax Minerals Company, Englewood, Colorado, and a director of
Piedmont Mining
Company, Inc., Charlotte, North Carolina. Mr. Walsh's address
is: Blue Mill
Road, Morristown, New Jersey 07960.
With the exception of Messrs. Halbkat, Rosenblum, Strickland, and
Walsh, all of
the directors of the Manager are employees of the Manager.
George J. Collins, who is Chief Executive Officer, President, and
a Managing
Director of the Manager, is a Director of Price-Fleming.
George A. Roche, who is Chief Financial Officer and a Managing
Director of the
Manager, is a Vice President and a Director of Price-Fleming.
M. David Testa, who is a Managing Director of the Manager, is
Chairman of the
Board of Price-Fleming.
Henry H. Hopkins, Charles P. Smith, and Peter Van Dyke, who are
Managing
Directors of the Manager, are Vice Presidents of Price-Fleming.
Robert P. Campbell, Roger L. Fiery, III, Robert C. Howe, Veena A.
Kutler, George
A. Murnaghan, William F. Wendler, II, and Edward A. Wiese, who
are Vice
Presidents of the Manager, are Vice Presidents of Price-Fleming.
Alvin M. Younger, Jr., who is a Managing Director and the
Secretary and
Treasurer of the Manager, is Secretary and Treasurer of
Price-Fleming.
Nolan L. North, who is a Vice President and Assistant Treasurer
of the Manager,
is Assistant Treasurer of Price-Fleming.
Leah P. Holmes, who is an Assistant Vice President of the
Manager, is a Vice
President of Price-Fleming.
Barbara A. Van Horn, who is Assistant Secretary of the Manager,
is Assistant
Secretary of Price-Fleming.
Certain directors and officers of the Manager are also officers
and/or directors
of one or more of the Price Funds and/or one or more of the
affiliated entities
listed herein.
See also "Management of Fund," in Registrant's Statement of
Additional
Information.
PAGE 89
Item 29. Principal Underwriters.
(a) The principal underwriter for the Registrant is Investment
Services.
Investment Services acts as the principal underwriter for the
other thirty-five
Price Funds. Investment Services is a wholly-owned subsidiary of
the Manager is
registered as a broker-dealer under the Securities Exchange Act
of 1934 and is a
member of the National Association of Securities Dealers, Inc.
Investment
Services has been formed for the limited purpose of distributing
the shares of
the Price Funds and will not engage in the general securities
business. Since
the Price Funds are sold on a no-load basis, Investment Services
will not
receive any commission or other compensation for acting as
principal
underwriter.
<PAGE>
PAGE 90
(b) The address of each of the directors and officers of
Investment Services
listed below is 100 East Pratt Street, Baltimore, Maryland 21202.
Positions and
Name and Principal Positions and Offices Offices with
Business Address With Underwriter Registrant
__________________ _____________________ _____________
James Sellers Riepe President and Director Vice President
and
Director
Henry Holt Hopkins Vice President and Vice President
Director
Mark E. Rayford Director None
Charles E. Vieth Vice President and None
Director
Patricia M. Archer Vice President None
Edward C. Bernard Vice President None
Joseph C. Bonasorte Vice President None
Meredith C. Callanan Vice President None
Laura H. Chasney Vice President None
Victoria C. Collins Vice President None
Christopher W. Dyer Vice President None
Forrest R. Foss Vice President None
Patricia O'Neil Goodyear Vice President None
James W. Graves Vice President None
Andrea G. Griffin Vice President None
Thomas Grizzard Vice President None
David J. Healy Vice President None
Joseph P. Healy Vice President None
Walter J. Helmlinger Vice President None
Eric G. Knauss Vice President None
Douglas G. Kremer Vice President None
Sharon Renae Krieger Vice President None
Keith Wayne Lewis Vice President None
David L. Lyons Vice President None
Sarah McCafferty Vice President None
Maurice Albert Minerbi Vice President None
Nancy M. Morris Vice President None
George A. Murnaghan Vice President None
Steven Ellis Norwitz Vice President None
Kathleen M. O'Brien Vice President None
Charles S. Peterson Vice President None
PAGE 91
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Terri L. Westren Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and Treasurer None
Mark S. Finn Controller None
Richard J. Barna Assistant Vice President None
Catherine L.
Berkenkemper Assistant Vice President None
Ronae M. Brock Assistant Vice President None
Brenda E. Buhler Assistant Vice President None
Patricia Sue Butcher Assistant Vice President None
John A. Galateria Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Keith J. Langrehr Assistant Vice President None
C. Lillian Matthews Assistant Vice President None
Janice D. McCrory Assistant Vice President None
Sandra J. McHenry Assistant Vice President None
JeanneMarie B. Patella Assistant Vice President None
Kristin E. Seeberger Assistant Vice President None
Arthur J. Silber Assistant Vice President None
Linda C. Wright Assistant Vice President None
Nolan L. North Assistant Treasurer None
Barbara A. VanHorn Assistant Secretary None
(c) Not applicable. Investment Services will not receive any
compensation
with respect to its activities as underwriter for the Price Funds
since the
Price Funds are sold on a no-load basis.
<PAGE>
PAGE 92
Item 30. Location of Accounts and Records.
All accounts, books, and other documents required to be
maintained by T. Rowe
Price Tax-Free Short-Intermediate Fund, Inc. under Section 31(a)
of the
Investment Company Act of 1940 and the rules thereunder will be
maintained by T.
Rowe Price Tax-Free Short-Intermediate Fund, Inc. at its offices
at 100 East
Pratt Street, Baltimore, Maryland 21202. Transfer, dividend
disbursing, and
shareholder service activities are performed by T. Rowe Price
Services, Inc., at
100 East Pratt Street, Baltimore, Maryland 21202. Custodian
activities for T.
Rowe Price Tax-Free Short-Intermediate Fund, Inc. are performed
at State Street
Bank and Trust Company's Service Center (State Street South),
1776 Heritage
Drive, Quincy, Massachusetts 02171.
Item 31. Management Services.
Registrant is not a party to any management-related
service contract,
other than as set forth in the Prospectus.
Item 32. Undertakings.
(a) The Fund agrees to furnish, upon request and
without charge, a
copy of its Annual Report to each person to whom a
prospectus is
delivered.
<PAGE>
PAGE 93
Pursuant to the requirements of the Securities Act of 1933,
as amended, and
the Investment Company Act of 1940, as amended, the Registrant
has duly caused
this Registration Statement to be signed on its behalf by the
undersigned,
thereunto duly authorized, in the City of Baltimore, State of
Maryland, this
22nd day of April, 1994.
T. ROWE PRICE TAX-FREE
SHORT-INTERMEDIATE
FUND, INC.
/s/George J. Collins
By:George J. Collins, Chairman of the
Board
Pursuant to the requirements of the Securities Act of 1933,
as amended,
this Registration Statement has been signed below by the
following persons in
the capacities and on the dates indicated:
SIGNATURE TITLE DATE
________ _____ ____
/s/George J. Collins Chairman of the Board April 22, 1994
George J. Collins (Chief Executive Officer)
/s/Carmen F. Deyesu Treasurer April 22, 1994
Carmen F. Deyesu (Chief Financial Officer)
/s/Calvin W. Burnett Director April 22, 1994
Calvin W. Burnett
/s/Anthony W. Deering Director April 22, 1994
Anthony W. Deering
/s/F. Pierce Linaweaver DirectorApril 22,
1994
F. Pierce Linaweaver
/s/Mary J. Miller President and Director April 22, 1994
William T. Reynolds
/s/James S. Riepe Vice President and DirectorApril 22, 1994
James S. Riepe
/s/John Sagan Director April 22, 1994
John Sagan
/s/John G. Schrieber Director April 22, 1994
John G. Schreiber
PAGE 94
PART C-TAX-FREE INSURED INTERMEDIATE BOND FUND
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements. The Condensed Financial
Information
(Financial Highlights table) is included in Part A
of the
Registration Statement. Portfolio of Investments,
Statement of
Assets and Liabilities, Statement of Operations,
and Statement of
Changes in Net Assets are included in the Annual
Report to
Shareholders, the pertinent portions of which are
incorporated by
reference in Part B of the Registration Statement.
(b) Exhibits
(1) Articles of Incorporation of Registrant, dated
October 14, 1992
(filed with initial Registration Statement)
(2) By-Laws of Registrant (filed with initial
Registration Statement)
(3) Inapplicable
(4) Inapplicable
(5) Investment Management Agreement between Registrant
and T. Rowe
Price Associates, Inc., dated November 3, 1992
(filed with
Amendment No. 1)
(6) Underwriting Agreement between Registrant and T.
Rowe Price
Investment Services, Inc., dated November 3, 1992
(filed with
Amendment No. 1)
(7) Inapplicable
(8)(a) Custodian Agreement between T. Rowe
Price Funds
and State Street Bank and Trust
Company, dated
September 28, 1987, as amended to
June 24, 1988,
October 19, 1988, February 22,
1989, July 19,
1989, September 15, 1989, December
15, 1989,
December 20, 1989, January 25,
1990, February 21,
1990, June 12, 1990, July 18, 1990,
October 15,
1990, February 13, 1991, March 6,
1991, September
12, 1991, November 6, 1991, April
23, 1992,
September 2, 1992, and November 3,
1992, December
16, 1992, December 21, 1992,
January 28, 1993,
April 21, 1993, September 16, 1993,
November 3,
1993, and March 1, 1994
<PAGE>
PAGE 95
(8)(b) Global Custody Agreement between
The Chase
Manhattan Bank, N.A. and the T.
Rowe Price Funds,
dated January 3, 1994
(9)(a) Transfer Agency and Service
Agreement between T.
Rowe Price Services, Inc. and T.
Rowe Price Funds,
dated January 1, 1994, as amended
to March 1, 1994
(9)(b) Agreement between T. Rowe Price
Associates, Inc.
and T.Rowe Price Funds for Fund
Accounting
Services, dated January 1, 1994, as
amended March
1, 1994
(10) Inapplicable
(11) Consent of Independent Accountants
(12) Inapplicable
<PAGE>
PAGE 96
(13) Inapplicable
(14) Inapplicable
(15) Inapplicable
(16) The Registrant hereby incorporates by reference the
methodology
used in calculating the performance information
included in Post-
Effective Amendment No. 36 and Amendment No. 20 of
the T. Rowe
Price Tax-Free Income Fund, Inc. (SEC. File Nos.
2-57265 and 811-
2684 and CIK 202927) dated April 22, 1994.
Item 25. Persons Controlled by or Under Common Control.
None.
Item 26. Number of Holders of Securities
As of February 28, 1994, there were 4,000 shareholders in the T.
Rowe Price Tax-
Free Insured Intermediate Bond Fund, Inc.
Item 27. Indemnification
If approved by the other named insureds the Registrant intends
to become a
named insured on comprehensive Errors and Omissions and Officers
and Directors
insurance policies written by the Evanston Insurance Company, The
Chubb Group
and ICI Mutual. These policies provide coverage for the named
insureds, which
include T. Rowe Price Associates, Inc. ("Manager"), Rowe
Price-Fleming
International, Inc. ("Price-Fleming"), T. Rowe Price Investment
Services, Inc.,
T. Rowe Price Services, Inc., T. Rowe Price Trust Company, T.
Rowe Price Stable
Asset Management, Inc., RPF International Bond Fund and
thirty-five other
investment companies, namely, T. Rowe Price Growth Stock Fund,
Inc., T. Rowe
Price New Horizons Fund, Inc., T. Rowe Price New Era Fund, Inc.,
T. Rowe Price
New Income Fund, Inc., T. Rowe Price Prime Reserve Fund, Inc., T.
Rowe Price
Tax-Free Income Fund, Inc., T. Rowe Price Tax-Exempt Money Fund,
Inc., T. Rowe
Price International Funds, Inc., T. Rowe Price Growth & Income
Fund,Inc., T.
Rowe Price Tax-Free Short-Intermediate Fund, Inc., T. Rowe Price
Short-Term Bond
Fund, Inc., T. Rowe Price High Yield Fund, Inc., T. Rowe Price
Tax-Free High
Yield Fund, Inc., T. Rowe Price New America Growth Fund, T. Rowe
Price Equity
Income Fund, T. Rowe Price GNMA Fund, T. Rowe Price Capital
Appreciation Fund,
T. Rowe Price State Tax-Free Income Trust, T. Rowe Price
California Tax-Free
Income Trust, T. Rowe Price Science & Technology Fund, Inc., T.
Rowe Price
Small-Cap Value Fund, Inc., Institutional International Funds,
Inc., T. Rowe
Price U.S. Treasury Funds, Inc., T. Rowe Price Index Trust, Inc.,
T. Rowe Price
Spectrum Fund, Inc., T. Rowe Price Balanced Fund, Inc., T. Rowe
Price Adjustable
Rate U.S. Government Fund, Inc., T. Rowe Price Mid-Cap Growth
Fund, Inc., T.
Rowe Price OTC Fund, Inc., T. Rowe Price Dividend Growth Fund,
Inc., T. Rowe
Price Blue Chip Growth Fund, Inc., T. Rowe Price Summit Income
Funds, Inc., T.
Rowe Price Summit Municipal Funds, Inc., T. Rowe Price Equity
Series, Inc., and
T. Rowe Price International Series, Inc. The Registrant and the
thirty-
PAGE 97
five investment companies listed above, with the exception of T.
Rowe Price
Equity Series, Inc., T. Rowe Price International Series, Inc.,
and Institutional
International Funds, Inc., will be collectively referred to as
the Price Funds.
The investment manager for the Price Funds, including T. Rowe
Price Equity
Series, Inc., is the Manager. Price-Fleming is the investment
manager to the T.
Rowe Price International Funds, Inc., T. Rowe Price International
Series, Inc.,
and Institutional International Funds, Inc. and is 50% owned by
TRP Finance,
Inc., a wholly-owned subsidiary of the Manager, 25% owned by
Copthall Overseas
Limited, a wholly-owned subsidiary of Robert Fleming Holdings
Limited, and 25%
owned by Jardine Fleming International Holdings Limited. In
addition to the
corporate insureds, the policies also cover the officers,
directors, and
employees of each of the named insureds. The premium is
allocated among the
named corporate insureds in accordance with the provisions of
Rule l7d-1(d)(7)
under the Investment Company Act of 1940.
Article X, Section 10.01 of the Registrant's By-Laws provides
as follows:
Section 10.01 Indemnification and Payment of Expenses in
Advance. The
Corporation shall indemnify any individual ("Indemnitee") who is
a present or
former director, officer, employee, or agent of the Corporation,
or who is or
has been serving at the request of the Corporation as a director,
officer,
employee or agent of another corporation, partnership, joint
venture, trust or
other enterprise, who, by reason of his position was, is, or is
threatened to
be made a party to any threatened, pending, or completed action,
suit, or
proceeding, whether civil, criminal, administrative, or
investigative
(hereinafter collectively referred to as a "Proceeding") against
any judgments,
penalties, fines, settlements, and reasonable expenses (including
attorneys' fees) incurred by such Indemnitee in connection with
any
Proceeding, to the fullest extent that such indemnification may
be lawful
under applicable Maryland law, as from time to time amended. The
Corporation
shall pay any reasonable expenses so incurred by such Indemnitee
in defending
a Proceeding in advance of the final disposition thereof to the
fullest extent
that such advance payment may be lawful under applicable Maryland
law, as from
time to time amended. Subject to any applicable limitations and
requirements
set forth in the Corporation's Articles of Incorporation and in
these By-Laws,
any payment of indemnification or advance of expenses shall be
made in
accordance with the procedures set forth in applicable Maryland
law, as from
time to time amended.
Notwithstanding the foregoing, nothing herein shall
protect or purport
to protect any Indemnitee against any liability to which he
would otherwise
be subject by reason of willful misfeasance, bad faith, gross
negligence,
or reckless disregard of the duties involved in the conduct
of his office
("Disabling Conduct").
Anything in this Article X to the contrary
notwithstanding, no
indemnification shall be made by the Corporation to any
Indemnitee unless:
PAGE 98
(a) there is a final decision on the merits by a court
or other body
before whom the Proceeding was brought that the
Indemnitee was
not liable by reason of Disabling Conduct; or
(b) in the absence of such a decision, there is a
reasonable
determination, based upon a review of the facts,
that the
Indemnitee was not liable by reason of Disabling
Conduct, which
determination shall be made by:
(i) the vote of a majority of a quorum of directors who
are neither
"interested persons" of the Corporation as defined
in Section
2(a)(19) of the Investment Company Act of 1940, nor
parties to
the Proceeding; or
<PAGE>
PAGE 99
(ii) an independent legal counsel in a written opinion.
Anything in this Article X to the contrary
notwithstanding, any advance
of expenses by the Corporation to any Indemnitee shall be
made only upon
the undertaking by such Indemnitee to repay the advance
unless it is
ultimately determined that such Indemnitee is entitled to
indemnification
as above provided, and only if one of the following
conditions is met:
(a) the Indemnitee provides a security for his
undertaking; or
(b) the Corporation shall be insured against losses
arising by reason
of any lawful advances; or
(c) there is a determination, based on a review of
readily available
facts, that there is reason to believe that the
Indemnitee will
ultimately be found entitled to indemnification,
which
determination shall be made by:
(i) a majority of a quorum of directors who are
neither
"interested persons" of the Corporation as
defined in
Section 2(a)(19) of the Investment Company
Act of 1940, nor
parties to the Proceeding; or
(ii)
an independent legal counsel in a written
opinion.
Section 10.02 of the Registrant's By-Laws provides as
follows:
Section 10.02 Insurance of Officers, Directors, Employees
and Agents. To
the fullest extent permitted by applicable Maryland law and by
Section 17(h) of
the Investment Company Act of 1940, as from time to time amended,
the
Corporation may purchase and maintain insurance on behalf of any
person who is
or was a director, officer, employee, or agent of the
Corporation, or who is or
was serving at the request of the Corporation as a director,
officer, employee,
or agent of another corporation, partnership, joint venture,
trust, or other
enterprise, against any liability asserted against him and
incurred by him in or
arising out of his position, whether or not the Corporation would
have the power
to indemnify him against such liability.
Insofar as indemnification for liability arising under the
Securities Act of
1933 may be permitted to directors, officers and controlling
persons of the
registrant pursuant to the foregoing provisions, or otherwise,
the registrant
has been advised that in the opinion of the Securities and
Exchange Commission
such indemnification is against public policy as expressed in the
Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against
such liabilities (other than the payment by the registrant of
expenses incurred
or paid by a director, officer or controlling person of the
registrant in the
successful defense of any action, suit proceeding) is asserted by
such director,
officer or controlling person in connection with the securities
being
registered, the registrant will, unless in the opinion of its
PAGE 100
counsel the matter has been settled by controlling precedent,
submit to a court
of appropriate jurisdiction the question whether such
indemnification by it is
against public policy as expressed in the Act and will be
governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment
Manager.
Rowe Price-Fleming International, Inc. ("Price-Fleming"), a
Maryland
corporation, is a corporate joint venture 50% owned by TRP
Finance, Inc., a
wholly-owned subsidiary of the Manager, and was organized in 1979
to provide
investment counsel service with respect to foreign securities for
institutional
investors in the United States. Price-Fleming, in addition to
managing private
counsel client accounts, also sponsors registered investment
companies which
invest in foreign securities, serves as general partner of RPFI
International
Partners, Limited Partnership, and provides investment advice to
the T. Rowe
Price Trust Company, trustee of the International Common Trust
Fund.
T. Rowe Price Investment Services, Inc. ("Investment Services"),
a wholly- owned
subsidiary of the Manager, is a Maryland corporation organized in
1980 for the
purpose of acting as the principal underwriter and distributor
for the Price
Funds. Investment Services is registered as a broker-dealer
under the
Securities Exchange Act of 1934 and is a member of the National
Association of
Securities Dealers, Inc. In 1984, Investment Services expanded
its activities
to include a discount brokerage service.
TRP Distribution, Inc., a wholly-owned subsidiary of Investment
Services, is a
Maryland corporation organized in 1991. It was organized for and
engages in the
sale of certain investment related products prepared by
Investment Services.
T. Rowe Price Associates Foundation, Inc., was organized in 1981
for the purpose
of making charitable contributions to religious, charitable,
scientific,
literary and educational organizations. The Foundation (which is
not a
subsidiary of the Manager) is funded solely by contributions from
the Manager
and income from investments.
T. Rowe Price Services, Inc. ("Price Services"), a wholly-owned
subsidiary of
the Manager, is a Maryland corporation organized in 1982 and is
registered as a
transfer agent under the Securities Exchange Act of 1934. Price
Services
provides transfer agent, dividend disbursing, and certain other
services,
including shareholder services, to the Price Funds.
T. Rowe Price Retirement Plan Services, Inc. ("RPS"), a
wholly-owned subsidiary
of the Manager, was incorporated in Maryland in 1991 and is
registered as a
transfer agent under the Securities Exchange Act of 1934. RPS
provides
administrative, recordkeeping, and subaccounting services to
administrators of
employee benefit plans.
PAGE 101
T. Rowe Price Trust Company ("Trust Company"), a wholly-owned
subsidiary of the
Manager, is a Maryland chartered limited purpose trust company,
organized
in 1983 for the purpose of providing fiduciary services. The
Trust Company
serves as trustee/custodian for employee benefit plans, common
trust funds and a
few trusts.
T. Rowe Price Threshold Fund II, L.P., a Delaware limited
partnership, was
organized in 1986 by the Manager, and invests in private
financings of small
companies with high growth potential; the Manager is the General
Partner of the
partnership.
RPFI International Partners, Limited Partnership, is a Delaware
limited
partnership organized in 1985 for the purpose of investing in a
diversified
group of small and medium-sized rapidly growing non-U.S.
companies.
Price-Fleming is the general partner of this partnership, and
certain clients of
Price-Fleming are its limited partners.
T. Rowe Price Real Estate Group, Inc. ("Real Estate Group"), is a
Maryland
corporation and a wholly-owned subsidiary of the Manager
established in 1986 to
provide real estate services. Subsidiaries of Real Estate Group
are: T. Rowe
Price Realty Income Fund I Management, Inc., a Maryland
corporation (General
Partner of T. Rowe Price Realty Income Fund I, A No-Load Limited
Partnership),
T. Rowe Price Realty Income Fund II Management, Inc., a Maryland
corporation
(General Partner of T. Rowe Price Realty Income Fund II,
America's
Sales-Commission-Free Real Estate Limited Partnership), T. Rowe
Price Realty
Income Fund III Management, Inc., a Maryland corporation (General
Partner of T.
Rowe Price Realty Income Fund III, America's
Sales-Commission-Free Real Estate
Limited Partnership, a Delaware limited partnership), and T. Rowe
Price Realty
Income Fund IV Management, Inc., a Maryland corporation (General
Partner of T.
Rowe Price Realty Income Fund IV, America's Sales-Commission-Free
Real Estate
Limited Partnership). Real Estate Group serves as investment
manager to T. Rowe
Price Renaissance Fund, Ltd., A Sales-Commission-Free Real Estate
Investment,
established in 1989 as a Maryland corporation which qualifies as
a REIT.
T. Rowe Price Stable Asset Management, Inc. ("Stable Asset
Management") is a
Maryland corporation organized in 1988 as a wholly-owned
subsidiary of the
Manager. Stable Asset Management, which is registered as an
investment adviser
under the Investment Advisers Act of 1940, specializes in the
management of
investment portfolios which seek stable and consistent investment
returns
through the use of guaranteed investment contracts, bank
investment contracts,
structured or synthetic investment contracts, and short-term
fixed-income
securities.
T. Rowe Price Recovery Fund Associates, Inc., a Maryland
corporation, is a
wholly-owned subsidiary of the Manager organized in 1988 for the
purpose of
serving as the General Partner of T. Rowe Price Recovery Fund,
L.P., a Delaware
limited partnership which invests in financially distressed
companies.
T. Rowe Price (Canada), Inc. is a Maryland corporation organized
in 1988 as a
wholly-owned subsidiary of the Manager. This entity is
registered as an
investment adviser under the Investment Advisers Act of 1940, and
PAGE 102
may apply for registration as an investment manager under the
Securities Act of
Ontario in order to be eligible to provide certain services to
the RPF
International Bond Fund, a trust (whose shares are sold in
Canada) which
Price-Fleming serves as investment adviser.
Since 1983, the Manager has organized several distinct Maryland
limited
partnerships, which are informally called the Pratt Street
Ventures
partnerships, for the purpose of acquiring interests in
growth-oriented
businesses.
Tower Venture, Inc., a wholly-owned subsidiary of the Manager, is
a Maryland
corporation organized in 1989 for the purpose of serving as a
general partner of
100 East Pratt St., L.P., a Maryland limited partnership whose
limited partners
also include the Manager. The purpose of the partnership is to
further develop
and improve the property at 100 East Pratt Street, the site of
the Manager's
headquarters, through the construction of additional office,
retail and parking
space.
TRP Suburban, Inc. is a Maryland corporation organized in 1990 as
a wholly-owned
subsidiary of the Manager. TRP Suburban has entered into
agreements with
McDonogh School and CMANE-McDonogh-Rowe Limited Partnership to
construct an
office building in Owings Mills, Maryland, which houses the
Manager's transfer
agent, plan administrative services, retirement plan services and
operations
support functions.
TRP Finance, Inc. and TRP Finance MRT, Inc., wholly-owned
subsidiaries of the
Manager, are Delaware corporations organized in 1990 to manage
certain passive
corporate investments and other intangible assets. TRP Finance
MRT, Inc. was
dissolved on October 4, 1993.
T. Rowe Price Strategic Partners Fund, L.P. is a Delaware limited
partnership
organized in 1990 for the purpose of investing in small public
and private
companies seeking capital for expansion or undergoing a
restructuring of
ownership. The general partner of the Fund is T. Rowe Price
Strategic Partners,
L.P., a Delaware limited partnership whose general partner is T.
Rowe Price
Strategic Partners Associates, Inc., ("Strategic Associates"), a
Maryland
corporation which is a wholly-owned subsidiary of the Manager.
Strategic
Associates also serves as the general partner of T. Rowe Price
Strategic
Partners II, L.P., a Delaware limited partnership established in
1992, which in
turn serves as general partner of T. Rowe price Strategic
Partners Fund II,
L.P., a Delaware limited partnership organized in 1992.
Listed below are the directors of the Manager who have other
substantial
businesses, professions, vocations, or employment aside from that
of Director of
the Manager:
JAMES E. HALBKAT, JR., Director of the Manager. Mr. Halbkat is
President of
U.S. Monitor Corporation, a provider of public response systems.
Mr. Halbkat's
address is: P.O. Box 23109, Hilton Head Island, South Carolina
29925.
PAGE 103
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is the
Tayloe Murphy
Professor at the University of Virginia, and a director of:
Chesapeake
Corporation, a manufacturer of paper products, Cadmus
Communications Corp., a
provider of printing and communication services; Comdial
Corporation, a
manufacturer of telephone systems for businesses; and Cone Mills
Corporation, a
textiles producer. Mr. Rosenblum's address is: P.O. Box 6550,
Charlottesville,
Virginia 22906.
ROBERT L. STRICKLAND, Director of the Manager. Mr. Strickland is
Chairman of
Lowe's Companies, Inc., a retailer of specialty home supplies.
Mr. Strickland's
address is 604 Two Piedmont Plaza Building, Winston-Salem, North
Carolina 27104.
PHILIP C. WALSH, Director of the Manager. Mr. Walsh is a
Consultant to Cyprus
Amax Minerals Company, Englewood, Colorado, and a director of
Piedmont Mining
Company, Inc., Charlotte, North Carolina. Mr. Walsh's address
is: Blue Mill
Road, Morristown, New Jersey 07960.
With the exception of Messrs. Halbkat, Rosenblum, Strickland, and
Walsh, all of
the directors of the Manager are employees of the Manager.
George J. Collins, who is Chief Executive Officer, President, and
a Managing
Director of the Manager, is a Director of Price-Fleming.
George A. Roche, who is Chief Financial Officer and a Managing
Director of the
Manager, is a Vice President and a Director of Price-Fleming.
M. David Testa, who is a Managing Director of the Manager, is
Chairman of the
Board of Price-Fleming.
Henry H. Hopkins, Charles P. Smith, and Peter Van Dyke, who are
Managing
Directors of the Manager, are Vice Presidents of Price-Fleming.
Robert P. Campbell, Roger L. Fiery, III, Robert C. Howe, Veena A.
Kutler, George
A. Murnaghan, William F. Wendler, II, and Edward A. Wiese, who
are Vice
Presidents of the Manager, are Vice Presidents of Price-Fleming.
Alvin M. Younger, Jr., who is a Managing Director and the
Secretary and
Treasurer of the Manager, is Secretary and Treasurer of
Price-Fleming.
Nolan L. North, who is a Vice President and Assistant Treasurer
of the Manager,
is Assistant Treasurer of Price-Fleming.
Leah P. Holmes, who is an Assistant Vice President of the
Manager, is a Vice
President of Price-Fleming.
Barbara A. Van Horn, who is Assistant Secretary of the Manager,
is Assistant
Secretary of Price-Fleming.
PAGE 104
Certain directors and officers of the Manager are also officers
and/or directors
of one or more of the Price Funds and/or one or more of the
affiliated entities
listed herein.
See also "Management of Fund," in Registrant's Statement of
Additional
Information.
Item 29. Principal Underwriters.
(a) The principal underwriter for the Registrant is Investment
Services.
Investment Services acts as the principal underwriter for the
other thiry-five
Price Funds. Investment Services is a wholly-owned subsidiary of
the Manager is
registered as a broker-dealer under the Securities Exchange Act
of 1934 and is a
member of the National Association of Securities Dealers, Inc.
Investment
Services was formed for the limited purpose of distributing the
shares of the
Price Funds and will not engage in the general securities
business. Since the
Price Funds are sold on a no-load basis, Investment Services does
not receive
any commission or other compensation for acting as principal
underwriter.
(b) The address of each of the directors and officers of
Investment Services
listed below is 100 East Pratt Street, Baltimore, Maryland 21202.
Positions and
Name and Principal Positions and Offices Offices with
Business Address With Underwriter Registrant
__________________ _____________________ _____________
James Sellers Riepe President and Director Vice President
and
Director
Henry Holt Hopkins Vice President and Vice President
Director
Mark E. Rayford Director None
Charles E. Vieth Vice President and None
Director
Patricia M. Archer Vice President None
Edward C. Bernard Vice President None
Joseph C. Bonasorte Vice President None
Meredith C. Callanan Vice President None
Laura H. Chasney Vice President None
Victoria C. Collins Vice President None
Christopher W. Dyer Vice President None
Forrest R. Foss Vice President None
Patricia O'Neil Goodyear Vice President None
James W. Graves Vice President None
PAGE 105
Andrea G. Griffin Vice President None
Thomas Grizzard Vice President None
David J. Healy Vice President None
Joseph P. Healy Vice President None
Walter J. Helmlinger Vice President None
Eric G. Knauss Vice President None
Douglas G. Kremer Vice President None
Sharon Renae Krieger Vice President None
Keith Wayne Lewis Vice President None
David L. Lyons Vice President None
Sarah McCafferty Vice President None
Maurice Albert Minerbi Vice President None
Nancy M. Morris Vice President None
George A. Murnaghan Vice President None
Steven Ellis Norwitz Vice President None
Kathleen M. O'Brien Vice President None
Charles S. Peterson Vice President None
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Terri L. Westren Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and Treasurer None
Mark S. Finn Controller None
Richard J. Barna Assistant Vice President None
Catherine L.
Berkenkemper Assistant Vice President None
Ronae M. Brock Assistant Vice President None
Brenda E. Buhler Assistant Vice President None
Patricia Sue Butcher Assistant Vice President None
John A. Galateria Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Keith J. Langrehr Assistant Vice President None
C. Lillian Matthews Assistant Vice President None
Janice D. McCrory Assistant Vice President None
Sandra J. McHenry Assistant Vice President None
JeanneMarie B. Patella Assistant Vice President None
Kristin E. Seeberger Assistant Vice President None
PAGE 106
Arthur J. Silber Assistant Vice President None
Linda C. Wright Assistant Vice President None
Nolan L. North Assistant Treasurer None
Barbara A. VanHorn Assistant Secretary None
(c) Not applicable. Investment Services will not receive any
compensation
with respect to its activities as underwriter for the Price Funds
since the
Price Funds are sold on a no-load basis.
<PAGE>
PAGE
Item 30. Location of Accounts and Records.
All accounts, books, and other documents required to be
maintained by T. Rowe
Price Tax-Free Insured Intermediate Bond Fund, Inc. under Section
31(a) of the
Investment Company Act of 1940 and the rules thereunder will be
maintained by T.
Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc., at its
offices at 100
East Pratt Street, Baltimore, Maryland 21202. Transfer, dividend
disbursing,
and shareholder service activities are performed by T. Rowe Price
Services,
Inc., at 100 East Pratt Street, Baltimore, Maryland 21202.
Custodian activities
for T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
are performed at
State Street Bank and Trust Company's Service Center (State
Street South), 1776
Heritage Drive, Quincy, Massachusetts 02171.
Item 31. Management Services.
The Registrant is not a party to any management-related service
contract, other
than as set forth in the Prospectus.
Item 32. Undertakings.
(a) The Fund agrees to furnish, upon request and
without charge, a
copy of its Annual Report to each person to whom a
prospectus is
delivered.
<PAGE>
PAGE 108
Pursuant to the requirements of the Securities Act of 1933,
as amended, and
the Investment Company Act of 1940, as amended, the Registrant
has duly caused
this Registration Statement to be signed on its behalf by the
undersigned,
thereunto duly authorized, in the City of Baltimore, State of
Maryland, this
22nd day of April, 1994.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
BOND FUND, INC.
/s/George J. Collins
By: George J. Collins, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933,
as amended,
this Registration Statement has been signed below by the
following persons in
the capacities and on the dates indicated:
SIGNATURE TITLE DATE
____________ _________ ________
/s/George J. Collins Chairman of the Board April 22, 1994
George J. Collins (Chief Executive Officer)
/s/Carmen F. Deyesu Treasurer
Carmen F. Deyesu (Chief Financial Officer)April 22, 1994
/s/Calvin W. Burnett Director April 22, 1994
Calvin W. Burnett
/s/Anthony W. Deering Director April 22, 1994
Anthony W. Deering
/s/F. Pierce Linaweaver Director April 22, 1994
F. Pierce Linaweaver
/s/James S. Riepe Vice President and DirectorApril 22,
1994
James S. Riepe
/s/John Sagan Director April 22, 1994
John Sagan
/s/John G. Schreiber Director April 22, 1994
John G. Schreiber
<PAGE>
PAGE 109
PART C-TAX-FREE INCOME FUND
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements. Condensed Financial Information
(Financial
Highlights table) is included in Part A of the
Registration Statement.
Statement of Net Assets, Statement of Operations, and
Statement of
Changes in Net Assets are included in the Annual Report
to
Shareholders, the pertinent portions of which are
incorporated by
reference in Part B of the Registration Statement.
(b) Exhibits.
(1) Articles of Incorporation of Registrant
(2) By-Laws of Registrant, as amended July 1, 1991
(3) Inapplicable
(4) Specimen Stock Certificate (filed with Amendment
No. 2)
(5) Investment Management Agreement between
Registrant and T. Rowe
Price Associates, Inc.
(6) Underwriting Agreement between Registrant and T.
Rowe Price
Investment Services, Inc.
(7) Inapplicable
(8) Custodian Agreement between the Price Funds and
State Street
Bank and Trust Company, dated September 28, 1987,
amended to
June 24, 1988, October 19, 1988, February 22,
1989, July 19,
1989, September 15, 1989, December 15, 1989,
December 20, 1989,
January 25, 1990, February 21, 1990, June 12,
1990, July 18,
1990, October 15, 1990, February 13, 1991, March
6, 1991,
September 12, 1991, November 6, 1991, April 23,
1992, September
2, 1992, and November 3, 1992, December 16, 1992,
December 21,
1992, January 28, 1993, April 21, 1993, September
16, 1993,
November 3, 1993, and March 1, 1994
(8)(a)
Subcustodian Agreements between T. Rowe Price
Tax-Free Funds
and Irving Trust Company, and Morgan Guaranty
Trust Company
(filed with Amendment No. 10)
(8) Subcustodian Agreement between Irving Trust
Company and State
Street Bank and Trust Company, dated November 30,
1987 (filed
with Amendment No. 19)
PAGE 110
(8)(b)
Global Custody Agreement between The Chase Manhattan Bank,
N.A. and the T.
Rowe Price Funds, dated January 3, 1994
(9)(a)
Transfer Agency and Service Agreement between T.
Rowe Price
Services, Inc. and T. Rowe Price Funds, dated
January 1, 1994,
as amended March 1, 1994
(9)(b)
Agreement between T. Rowe Price Associates, Inc.
and T.Rowe
Price Funds for Fund Accounting Services, dated
January 1,
1994, as amended March 1, 1994
(10) Inapplicable
(11) Consent of Independent Accountants
(12) Inapplicable
(13) Inapplicable
(14) Inapplicable
(15) Inapplicable
(16) Total Return Performance
Item 25. Persons Controlled by or Under Common Control With
Registrant.
None.
Item 26. Number of Holders of Securities.
As of February 28, 1994, there were 34,000 shareholders
in the T. Rowe
Price Tax-Free Income Fund, Inc.
Item 27. Indemnification.
The Registrant maintains comprehensive Errors and Omissions
and Officers and
Directors insurance policies written by the Evanston Insurance
Company, The
Chubb Group and ICI Mutual Insurance Co. These policies provide
coverage for
the named insureds, which include T. Rowe Price Associates, Inc.
("Manager"),
Rowe Price-Fleming International, Inc. ("Price-Fleming"), T. Rowe
Price
Investment Services, Inc., T. Rowe Price Services, Inc., T. Rowe
Price Trust
Company, T. Rowe Price Stable Asset Management, Inc., RPF
International Bond
Fund and thirty-five other investment companies, namely, T. Rowe
Price Growth
Stock Fund, Inc., T. Rowe
PAGE 111
Price New Horizons Fund, Inc., T. Rowe Price New Era Fund, Inc.,
T. Rowe Price
New Income Fund, Inc., T. Rowe Price Prime Reserve Fund, Inc., T.
Rowe Price
International Funds, Inc., T. Rowe Price Tax-Exempt Money Fund,
Inc., T. Rowe
Price Growth & Income Fund, Inc., T. Rowe Price Tax-Free
Short-Intermediate
Fund, Inc., T. Rowe Price Short-Term Bond Fund,
Inc., T. Rowe Price High Yield Fund, Inc., T. Rowe Price Tax-Free
High Yield
Fund, Inc., T. Rowe Price New America Growth Fund, T. Rowe Price
Equity Income
Fund, T. Rowe Price GNMA Fund, T. Rowe Price Capital Appreciation
Fund, T. Rowe
Price State Tax-Free Income Trust, T. Rowe Price California
Tax-Free Income
Trust, T. Rowe Price Science & Technology Fund, Inc., T. Rowe
Price Small-Cap
Value Fund, Inc., Institutional International Funds, Inc., T.
Rowe Price U.S.
Treasury Funds, Inc., T. Rowe Price Index Trust, Inc., T. Rowe
Price Spectrum
Fund, Inc., T. Rowe Price Balanced Fund, Inc., T. Rowe Price
Adjustable Rate
U.S. Government Fund, Inc., T. Rowe Price Mid-Cap Growth Fund,
Inc., T. Rowe
Price OTC Fund, Inc., T. Rowe Price Tax-Free Insured Intermediate
Bond Fund,
Inc., T. Rowe Price Dividend Growth Fund, Inc., T. Rowe Price
Blue Chip Growth
Fund, Inc., T. Rowe Price Summit Income Funds, Inc., T. Rowe
Price Summit
Municipal Funds, Inc., T. Rowe Price Equity Series, Inc., and T.
Rowe Price
International Series, Inc. The Registrant and the thirty-five
investment
companies listed above, with the exception of Institutional
International Funds,
Inc., T. Rowe Price Equity Series, Inc., and T. Rowe Price
International Series,
Inc., will be collectively referred to as the Price Funds. The
investment
manager for the Price Funds, including T. Rowe Price Equity
Series, Inc. is the
Manager. Price-Fleming is the investment manager to T. Rowe
Price International
Funds, Inc., T. Rowe Price International Series, Inc., and
Institutional
International Funds, Inc., and is 50% owned by TRP Finance, Inc.,
a wholly-owned
subsidiary of the Manager, 25% owned by Copthall Overseas
Limited, a wholly-
owned subsidiary of Robert Fleming Holdings Limited, and 25%
owned by Jardine
Fleming Holdings Limited. In addition to the corporate insureds,
the policies
also cover the officers, directors, and employees of each of the
named insureds.
The premium is allocated among the named corporate insureds in
accordance with
the provisions of Rule 17d-1(d)(7) under the Investment Company
Act of 1940.
Article X, Section 10.0l of the Registrant's By-Laws provides
as follows:
Section 10.01. Indemnification and Payment of Expenses in
Advance. The
Corporation shall indemnify any individual ("Indemnitee") who is
a present or
former director, officer, employee, or agent of the Corporation,
or who is or
has been serving at the request of the Corporation, as a
director, officer,
employee or agent of the Corporation, or who is or has been
serving at the
request of the Corporation as a director, officer, employee or
agent of another
corporation, partnership, joint venture, trust or other
enterprise, who, by
reason of his position was, is, or is threatened to be made a
party to any
threatened, pending, or completed action, suit, or proceeding,
whether civil,
criminal, administrative, or investigative (hereinafter
collectively referred to
as a "Proceeding") against any judgments, penalties, fines,
settlements, and
reasonable expenses (including attorneys' fees) incurred by such
Indemnitee in
connection with any Proceeding, to the fullest extent that such
indemnification
may be lawful under applicable Maryland law, as from time to time
amended. The
Corporation shall pay any reasonable expenses so incurred by such
Indemnitee in
defending a Proceeding in advance of the final disposition
thereof to the
fullest extent that
PAGE 112
such advance payment may be lawful under applicable Maryland law,
as from time
to time amended. Subject to any applicable limitations and
requirements set
forth in the Corporation's Articles of Incorporation and in these
By-Laws, any
<PAGE>
PAGE 113
payment of indemnification or advance of expenses shall be made
in accordance
with the procedures set forth in applicable Maryland law, as from
time to time
amended.
Notwithstanding the foregoing, nothing herein shall protect or
purport to
protect any Indemnitee against any liability to which he would
otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence, or
reckless disregard of the duties involved in the conduct of his
office
("Disabling Conduct").
Anything in this Article X to the contrary notwithstanding, no
indemnification shall be made by the Corporation to any
Indemnitee unless:
(a) there is a final decision on the merits by a court or
other body
before whom the Proceeding was brought that the Indemnitee was
not liable by
reason of Disabling Conduct; or
(b) in the absence of such a decision, there is a reasonable
determination, based upon a review of the facts, that the
Indemnitee was not
liable by reason of Disabling Conduct, which determination
shall be made by:
(i) the vote of a majority of a quorum of directors
who are neither
"interested persons" of the Corporation as
defined in Section
2(a)(19) of the Investment Company Act of 1940,
nor parties to
the Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Anything in this Article X to the contrary notwithstanding,
any advance of
expenses by the Corporation to any Indemnitee shall be made only
upon the
undertaking by such Indemnitee to repay the advance unless it is
ultimately
determined that such Indemnitee is entitled to indemnification as
above
provided, and only if one of the following conditions is met:
(a) the Indemnitee provides a security for his undertaking;
or
(b) the Corporation shall be insured against losses arising
by reason of
any lawful advances; or
(c) there is a determination, based on a review of readily
available
facts, that there is reason to believe that the
Indemnitee will
ultimately be found entitled to indemnification, which
determination
shall be made by:
<PAGE>
PAGE 114
(i) a majority of a quorum of directors who are
neither "interested
persons" of the Corporation as defined in Section
2(a)(19) of
the Investment Company Act of 1940, nor parties
to the
Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Section 10.02 of the Registrant's By-Laws provides as follows:
Section 10.02. Insurance of Officers, Directors, Employees
and Agents. To
the fullest extent permitted by applicable Maryland law and by
Section 17(h) of
the Investment Company Act of 1940, as from time to time amended,
the
Corporation may purchase and maintain insurance on behalf of any
person who is
or was a director, officer, employee, or agent of the
Corporation, or who is or
was serving at the request of the Corporation as a director,
officer, employee,
or agent of another corporation, partnership, joint venture,
trust or other
enterprise, against any liability asserted against him and
incurred by him in or
arising out of his position, whether or not the Corporation would
have the power
to indemnify him against such liability.
Insofar as indemnification for liability arising under the
Securities Act of
1933 may be permitted to directors, officers and controlling
persons of the
Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission
such indemnification is against public policy as expressed in the
Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against
such liabilities (other than the payment by the Registrant of
expenses incurred
or paid by a director, officer or controlling person of the
registrant is in the
successful defense of any action, suit or proceeding) is asserted
by such
director, officer or controlling person in connection with the
securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate
jurisdiction the question whether such indemnification by it is
against public
policy as expressed in the Act and will be governed by the final
adjudication of
such issue.
<PAGE>
PAGE 115
Item 28. Business and Other Connections of Investment Manager.
Rowe Price-Fleming International, Inc. ("Price-Fleming"), a
Maryland
corporation, is a corporate joint venture 50% owned by TRP
Finance, Inc., a
wholly-owned subsidiary of the Manager, and was organized in 1979
to provide
investment counsel service with respect to foreign securities for
institutional
investors in the United States. Price-Fleming, in addition to
managing private
counsel client accounts, also sponsors registered investment
companies which
invest in foreign securities, serves as general partner of RPFI
International
Partners, Limited Partnership, and provides investment advice to
the T. Rowe
Price Trust Company, trustee of the International Common Trust
Fund.
T. Rowe Price Investment Services, Inc. ("Investment Services"),
a wholly- owned
subsidiary of the Manager, is a Maryland corporation organized in
1980 for the
purpose of acting as the principal underwriter and distributor
for the Price
Funds. Investment Services is registered as a broker-dealer
under the
Securities Exchange Act of 1934 and is a member of the National
Association of
Securities Dealers, Inc. In 1984, Investment Services expanded
its activities
to include a discount brokerage service.
TRP Distribution, Inc., a wholly-owned subsidiary of Investment
Services, is a
Maryland corporation organized in 1991. It was organized for and
engages in the
sale of certain investment related products prepared by
Investment Services.
T. Rowe Price Associates Foundation, Inc., was organized in 1981
for the purpose
of making charitable contributions to religious, charitable,
scientific,
literary and educational organizations. The Foundation (which is
not a
subsidiary of the Manager) is funded solely by contributions from
the Manager
and income from investments.
T. Rowe Price Services, Inc. ("Price Services"), a wholly-owned
subsidiary of
the Manager, is a Maryland corporation organized in 1982 and is
registered as a
transfer agent under the Securities Exchange Act of 1934. Price
Services
provides transfer agent, dividend disbursing, and certain other
services,
including shareholder services, to the Price Funds.
T. Rowe Price Retirement Plan Services, Inc. ("RPS"), a
wholly-owned subsidiary
of the Manager, was incorporated in Maryland in 1991 and is
registered as a
transfer agent under the Securities Exchange Act of 1934. RPS
provides
administrative, recordkeeping, and subaccounting services to
administrators of
employee benefit plans.
T. Rowe Price Trust Company ("Trust Company"), a wholly-owned
subsidiary of the
Manager, is a Maryland chartered limited purpose trust company,
organized
in 1983 for the purpose of providing fiduciary services. The
Trust Company
serves as trustee/custodian for employee benefit plans, common
trust funds and a
few trusts.
PAGE 116
T. Rowe Price Threshold Fund II, L.P., a Delaware limited
partnership, was
organized in 1986 by the Manager, and invests in private
financings of small
companies with high growth potential; the Manager is the General
Partner of the
partnership.
RPFI International Partners, Limited Partnership, is a Delaware
limited
partnership organized in 1985 for the purpose of investing in a
diversified
group of small and medium-sized rapidly growing non-U.S.
companies.
Price-Fleming is the general partner of this partnership, and
certain clients of
Price-Fleming are its limited partners.
T. Rowe Price Real Estate Group, Inc. ("Real Estate Group"), is a
Maryland
corporation and a wholly-owned subsidiary of the Manager
established in 1986 to
provide real estate services. Subsidiaries of Real Estate Group
are: T. Rowe
Price Realty Income Fund I Management, Inc., a Maryland
corporation (General
Partner of T. Rowe Price Realty Income Fund I, A No-Load Limited
Partnership),
T. Rowe Price Realty Income Fund II Management, Inc., a Maryland
corporation
(General Partner of T. Rowe Price Realty Income Fund II,
America's
Sales-Commission-Free Real Estate Limited Partnership), T. Rowe
Price Realty
Income Fund III Management, Inc., a Maryland corporation (General
Partner of T.
Rowe Price Realty Income Fund III, America's
Sales-Commission-Free Real Estate
Limited Partnership, a Delaware limited partnership), and T. Rowe
Price Realty
Income Fund IV Management, Inc., a Maryland corporation (General
Partner of T.
Rowe Price Realty Income Fund IV, America's Sales-Commission-Free
Real Estate
Limited Partnership). Real Estate Group serves as investment
manager to T. Rowe
Price Renaissance Fund, Ltd., A Sales-Commission-Free Real Estate
Investment,
established in 1989 as a Maryland corporation which qualifies as
a REIT.
T. Rowe Price Stable Asset Management, Inc. ("Stable Asset
Management") is a
Maryland corporation organized in 1988 as a wholly-owned
subsidiary of the
Manager. Stable Asset Management, which is registered as an
investment adviser
under the Investment Advisers Act of 1940, specializes in the
management of
investment portfolios which seek stable and consistent investment
returns
through the use of guaranteed investment contracts, bank
investment contracts,
structured or synthetic investment contracts, and short-term
fixed-income
securities.
T. Rowe Price Recovery Fund Associates, Inc., a Maryland
corporation, is a
wholly-owned subsidiary of the Manager organized in 1988 for the
purpose of
serving as the General Partner of T. Rowe Price Recovery Fund,
L.P., a Delaware
limited partnership which invests in financially distressed
companies.
T. Rowe Price (Canada), Inc. is a Maryland corporation organized
in 1988 as a
wholly-owned subsidiary of the Manager. This entity is
registered as an
investment adviser under the Investment Advisers Act of 1940, and
may apply for
registration as an investment manager under the Securities Act of
Ontario in
order to be eligible to provide certain services to the RPF
International Bond Fund, a trust (whose shares are sold in
Canada) which
Price-Fleming serves as investment adviser.
PAGE 117
Since 1983, the Manager has organized several distinct Maryland
limited
partnerships, which are informally called the Pratt Street
Ventures
partnerships, for the purpose of acquiring interests in
growth-oriented
businesses.
Tower Venture, Inc., a wholly-owned subsidiary of the Manager, is
a Maryland
corporation organized in 1989 for the purpose of serving as a
general partner of
100 East Pratt St., L.P., a Maryland limited partnership whose
limited partners
also include the Manager. The purpose of the partnership is to
further develop
and improve the property at 100 East Pratt Street, the site of
the Manager's
headquarters, through the construction of additional office,
retail and parking
space.
TRP Suburban, Inc. is a Maryland corporation organized in 1990 as
a wholly-owned
subsidiary of the Manager. TRP Suburban has entered into
agreements with
McDonogh School and CMANE-McDonogh-Rowe Limited Partnership to
construct an
office building in Owings Mills, Maryland, which houses the
Manager's transfer
agent, plan administrative services, retirement plan services and
operations
support functions.
TRP Finance, Inc. and TRP Finance MRT, Inc., wholly-owned
subsidiaries of the
Manager, are Delaware corporations organized in 1990 to manage
certain passive
corporate investments and other intangible assets. TRP Finance
MRT, Inc. was
dissolved on October 4, 1993.
T. Rowe Price Strategic Partners Fund, L.P. is a Delaware limited
partnership
organized in 1990 for the purpose of investing in small public
and private
companies seeking capital for expansion or undergoing a
restructuring of
ownership. The general partner of the Fund is T. Rowe Price
Strategic Partners,
L.P., a Delaware limited partnership whose general partner is T.
Rowe Price
Strategic Partners Associates, Inc., ("Strategic Associates"), a
Maryland
corporation which is a wholly-owned subsidiary of the Manager.
Strategic
Associates also serves as the general partner of T. Rowe Price
Strategic
Partners II, L.P., a Delaware limited partnership established in
1992, which in
turn serves as general partner of T. Rowe price Strategic
Partners Fund II,
L.P., a Delaware limited partnership organized in 1992.
Listed below are the directors of the Manager who have other
substantial
businesses, professions, vocations, or employment aside from that
of Director of
the Manager:
JAMES E. HALBKAT, JR., Director of the Manager. Mr. Halbkat is
President of
U.S. Monitor Corporation, a provider of public response systems.
Mr. Halbkat's
address is: P.O. Box 23109, Hilton Head Island, South Carolina
29925.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is the
Tayloe Murphy
Professor at the University of Virginia, and a director of:
Chesapeake
Corporation, a manufacturer of paper products, Cadmus
Communications Corp., a
provider of printing and communication services; Comdial
Corporation, a
manufacturer of telephone systems for businesses; and Cone Mills
Corporation, a
textiles producer. Mr. Rosenblum's address is: P.O. Box 6550,
Charlottesville,
Virginia 22906.
PAGE 118
ROBERT L. STRICKLAND, Director of the Manager. Mr. Strickland is
Chairman of
Lowe's Companies, Inc., a retailer of specialty home supplies.
Mr. Strickland's
address is 604 Two Piedmont Plaza Building, Winston-Salem, North
Carolina 27104.
PHILIP C. WALSH, Director of the Manager. Mr. Walsh is a
Consultant to Cyprus
Amax Minerals Company, Englewood, Colorado, and a director of
Piedmont Mining
Company, Inc., Charlotte, North Carolina. Mr. Walsh's address
is: Blue Mill
Road, Morristown, New Jersey 07960.
With the exception of Messrs. Halbkat, Rosenblum, Strickland, and
Walsh, all of
the directors of the Manager are employees of the Manager.
George J. Collins, who is Chief Executive Officer, President, and
a Managing
Director of the Manager, is a Director of Price-Fleming.
George A. Roche, who is Chief Financial Officer and a Managing
Director of the
Manager, is a Vice President and a Director of Price-Fleming.
M. David Testa, who is a Managing Director of the Manager, is
Chairman of the
Board of Price-Fleming.
Henry H. Hopkins, Charles P. Smith, and Peter Van Dyke, who are
Managing
Directors of the Manager, are Vice Presidents of Price-Fleming.
Robert P. Campbell, Roger L. Fiery, III, Robert C. Howe, Veena A.
Kutler, George
A. Murnaghan, William F. Wendler, II, and Edward A. Wiese, who
are Vice
Presidents of the Manager, are Vice Presidents of Price-Fleming.
Alvin M. Younger, Jr., who is a Managing Director and the
Secretary and
Treasurer of the Manager, is Secretary and Treasurer of
Price-Fleming.
Nolan L. North, who is a Vice President and Assistant Treasurer
of the Manager,
is Assistant Treasurer of Price-Fleming.
Leah P. Holmes, who is an Assistant Vice President of the
Manager, is a Vice
President of Price-Fleming.
Barbara A. Van Horn, who is Assistant Secretary of the Manager,
is Assistant
Secretary of Price-Fleming.
Certain directors and officers of the Manager are also officers
and/or directors
of one or more of the Price Funds and/or one or more of the
affiliated entities
listed herein.
See also "Management of Fund," in Registrant's Statement of
Additional
Information.
PAGE 119
Item 29. Principal Underwriters.
(a) The principal underwriter for the Registrant is
Investment Services.
Investment Services acts as the principal underwriter for the
other thirty-five
Price Funds. Investment Services is a wholly-owned subsidiary of
the Manager is
registered as a broker-dealer under the Securities Exchange Act
of 1934 and is a
member of the National Association of Securities Dealers, Inc.
Investment
Services has been formed for the limited purpose of distributing
the shares of
the Price Funds and will not engage in the general securities
business. Since
the Price Funds are sold on a no-load basis, Investment Services
will not
receive any commission or other compensation for acting as
principal
underwriter.
<PAGE>
PAGE 120
(b) The address of each of the directors and officers of
Investment
Services listed below is 100 East Pratt Street, Baltimore,
Maryland 21202.
Positions and
Name and Principal Positions and Offices Offices with
Business Address With Underwriter Registrant
__________________ _____________________ _____________
James Sellers Riepe President and Director Vice President
and
Director
Henry Holt Hopkins Vice President and Vice President
Director
Mark E. Rayford Director None
Charles E. Vieth Vice President and None
Director
Patricia M. Archer Vice President None
Edward C. Bernard Vice President None
Joseph C. Bonasorte Vice President None
Meredith C. Callanan Vice President None
Laura H. Chasney Vice President None
Victoria C. Collins Vice President None
Christopher W. Dyer Vice President None
Forrest R. Foss Vice President None
Patricia O'Neil Goodyear Vice President None
James W. Graves Vice President None
Andrea G. Griffin Vice President None
Thomas Grizzard Vice President None
David J. Healy Vice President None
Joseph P. Healy Vice President None
Walter J. Helmlinger Vice President None
Eric G. Knauss Vice President None
Douglas G. Kremer Vice President None
Sharon Renae Krieger Vice President None
Keith Wayne Lewis Vice President None
David L. Lyons Vice President None
Sarah McCafferty Vice President None
Maurice Albert Minerbi Vice President None
Nancy M. Morris Vice President None
George A. Murnaghan Vice President None
Steven Ellis Norwitz Vice President None
Kathleen M. O'Brien Vice President None
Charles S. Peterson Vice President None
PAGE 121
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Terri L. Westren Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and Treasurer None
Mark S. Finn Controller None
Richard J. Barna Assistant Vice President None
Catherine L.
Berkenkemper Assistant Vice President None
Ronae M. Brock Assistant Vice President None
Brenda E. Buhler Assistant Vice President None
Patricia Sue Butcher Assistant Vice President None
John A. Galateria Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Keith J. Langrehr Assistant Vice President None
C. Lillian Matthews Assistant Vice President None
Janice D. McCrory Assistant Vice President None
Sandra J. McHenry Assistant Vice President None
JeanneMarie B. Patella Assistant Vice President None
Kristin E. Seeberger Assistant Vice President None
Arthur J. Silber Assistant Vice President None
Linda C. Wright Assistant Vice President None
Nolan L. North Assistant Treasurer None
Barbara A. VanHorn Assistant Secretary None
(c) Not applicable. Investment Services will not receive any
compensation
with respect to its activities as underwriter for the Price Funds
since the
Price Funds are sold on a no-load basis.
Item 30. Location of Accounts and Records.
All accounts, books, and other documents required to be
maintained by T.
Rowe Price Tax-Free Income Fund, Inc. under Section 31(a) of the
Investment
Company Act of 1940 and the rules thereunder will be maintained
by T. Rowe Price
Tax-Free Income Fund, Inc. at its offices at 100 East Pratt
Street, Baltimore,
Maryland 21202. Transfer, dividend disbursing, and shareholder
service
activities are performed by T. Rowe Price Services, Inc., at 100
East Pratt
Street, Baltimore, Maryland 21202. Custodian activities for T.
Rowe
PAGE 122
Price Tax-Free Income Fund, Inc. are performed at State Street
Bank and Trust
Company's Service Center (State Street South), 1776 Heritage
Drive, Quincy,
Massachusetts 02171.
Item 31. Management Services.
Registrant is not a party to any management-related
service contract,
other than as set forth in the Prospectus.
Item 32. Undertakings.
(a) The Fund agrees to furnish, upon request and
without charge, a
copy of its Annual Report to each person to whom a
prospectus is
delivered.
<PAGE>
PAGE 123
Pursuant to the requirements of the Securities Act of 1933, as
amended, and
the Investment Company Act of 1940, as amended, the Registrant
has duly caused
this Registration Statement to be signed on its behalf by the
undersigned,
thereunto duly authorized in the City of Baltimore, State of
Maryland, this 22nd
day of April, 1994.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
/s/William T. Reynolds
By: William T. Reynolds, President and
Director
Pursuant to the requirements of the Securities Act of 1933,
as amended,
this Registration Statement has been signed below by the
following persons in
the capacities and on the dates indicated:
SIGNATURE TITLE DATE
________ _____ ____
/s/George J. Collins Chairman of the Board April 22, 1994
George J. Collins (Chief Executive Officer)
/s/Carmen F. Deyesu Treasurer April 22, 1994
Carmen F. Deyesu (Chief Financial Officer)
/s/Calvin W. Burnett Director April 22, 1994
Calvin W. Burnett
/s/Anthony W. Deering Director April 22, 1994
Anthony W. Deering
/s/F. Pierce Linaweaver DirectorApril 22,
1994
F. Pierce Linaweaver
/s/William T. Reynolds President and Director April 22, 1994
William T. Reynolds
/s/James S. Riepe Vice President and DirectorApril 22, 1994
James S. Riepe
/s/John Sagan Director April 22, 1994
John Sagan
/s/John G. Schreiber Director April 22, 1994
John G. Schreiber
PAGE 124
PART C-TAX-FREE HIGH YIELD FUND
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements. Condensed Financial Information
(Financial
Highlights table) is included in Part A of the
Registration
Statement. Statement of Net Assets, Statement of
Operations, and
Statement of Changes in Net Assets are included in the
Annual Report
to Shareholders, the pertinent portions of which are
incorporated by
reference in Part B of the Registration Statement.
(b) Exhibits.
(1) Articles of Incorporation of Registrant, dated
November 30,
1984
(2) By-Laws of Registrant, as amended July 1, 1991
(3) Inapplicable
(4) Specimen Stock Certificate (filed with Amendment
No. 1)
(5) Investment Management Agreement between
Registrant and T. Rowe
Price Associates, Inc.
(6) Underwriting Agreement between Registrant and T.
Rowe Price
Investment Services, Inc.
(7) Inapplicable
(8) Custodian Agreement between the Price Funds
and State
Street Bank and Trust Company, dated September
28, 1987,
amended to June 24, 1988, October 19, 1988,
February 22, 1989,
July 19, 1989, September 15, 1989, December 15,
1989, December
20, 1989, January 25, 1990, February 21, 1990,
June 12, 1990,
July 18, 1990, October 15, 1990, February 13,
1991, March 6,
1991, September 12, 1991, November 6, 1991, April
23, 1992,
September 2, 1992, and November 3, 1992, December
16, 1992,
December 21, 1992, January 28, 1993, April 21,
1993, September
16, 1993, November 3, 1993, and March 1, 1994
(8)(a)
Subcustodian Agreements between T. Rowe Price
Tax-Free Funds
and Irving Trust Company and Morgan Guaranty
Trust Company
(filed with Amendment No. 7)
<PAGE>
PAGE 125
(8) Subcustodian Agreement between Irving Trust
Company and State
Street Bank and Trust Company, dated November 30,
1987 (filed
with Amendment No. 13)
(8)(b)
Global Custody Agreement between The Chase Manhattan Bank,
N.A. and the T.
Rowe Price Funds, dated January 3, 1994
(9)(a)
Transfer Agency and Service Agreement between T.
Rowe Price
Services, Inc. and T. Rowe Price Funds, dated
January 1, 1994,
as amended March 1, 1994
(9)(b)
Agreement between T. Rowe Price Associates, Inc.
and T.Rowe
Price Funds for Fund Accounting Services, dated
January 1,
1994, as amended March 1, 1994
(10) Inapplicable
(11) Consent of Independent Accountants
(12) Inapplicable
(13) Inapplicable
(14) Inapplicable
(15) Inapplicable
(16) The Registrant hereby incorporates by reference
the methodology
used in calculating the performance information
included in
Post-Effective Amendment No. 36 and Amendment No.
20 of the T.
Rowe Price Tax-Free Income Fund, Inc. (SEC. File
Nos. 2-57265
and 811-2684 and CIK 202927) dated April 22,
1994.
Item 25. Persons Controlled by or Under Common Control.
None
Item 26. Number of Holders of Securities.
As of February 28, 1994, there were 26,000 shareholders
in the T.
Rowe Price Tax-Free High Yield Fund, Inc.
Item 27. Indemnification.
PAGE 126
The Registrant maintains comprehensive Errors and Omissions
and Officers and
Directors insurance policies written by the Evanston Insurance
Company, The
Chubb Group and ICI Mutual Insurance Co. These policies provide
coverage for
the named insureds, which include T. Rowe Price Associates, Inc.
("Manager"),
Rowe Price-Fleming International, Inc. ("Price-Fleming"), T. Rowe
Price
Investment Services, Inc., T. Rowe Price Services, Inc., T. Rowe
Price Trust
Company, T. Rowe Price Stable Asset Management, Inc., RPF
International Bond
Fund and thirty-five other investment companies, namely, T. Rowe
Price Growth
Stock Fund, Inc., T. Rowe Price New Horizons Fund, Inc., T. Rowe
Price New Era
Fund, Inc., T. Rowe Price New Income Fund, Inc., T. Rowe Price
Prime Reserve
Fund, Inc., T. Rowe Price Tax-Free Income Fund, Inc., T. Rowe
Price
International
Funds, Inc., T. Rowe Price Tax-Exempt Money Fund, Inc., T. Rowe
Price Growth &
Income Fund, Inc., T. Rowe Price Tax-Free Short-Intermediate
Fund, Inc., T. Rowe
Price Short-Term Bond Fund, Inc., T. Rowe Price High Yield Fund,
Inc., T. Rowe
Price New America Growth Fund, T. Rowe Price Equity Income Fund,
T. Rowe Price
GNMA Fund, T. Rowe Price Capital Appreciation Fund, T. Rowe Price
State Tax-Free
Income Trust, T. Rowe Price California Tax-Free Income Trust, T.
Rowe Price
Science & Technology Fund, Inc., T. Rowe Price Small-Cap Value
Fund, Inc.,
Institutional International Funds, Inc., T. Rowe Price U.S.
Treasury Funds,
Inc., T. Rowe Price Index Trust, Inc., T. Rowe Price Spectrum
Fund, Inc., T.
Rowe Price Balanced Fund, Inc., T. Rowe Price Adjustable Rate
U.S. Government
Fund, Inc., T. Rowe Price Mid-Cap Growth Fund, Inc., T. Rowe
Price OTC Fund,
Inc., T. Rowe Price Tax-Free Insured Intermediate Bond Fund,
Inc., T. Rowe Price
Dividend Growth Fund, Inc., T. Rowe Price Blue Chip Growth Fund,
Inc., T. Rowe
Price Summit Income Funds, Inc., T. Rowe Price Summit Municipal
Funds, Inc., T.
Rowe Price Equity Series, Inc., and T. Rowe Price International
Series, Inc.
The Registrant and the thirty-five investment companies listed
above, with the
exception of Institutional International Funds, Inc., T. Rowe
Price Equity
Series, Inc., and T. Rowe Price International Series, Inc., will
be collectively
referred to as the Price Funds. The investment manager for the
Price Funds,
including T. Rowe Price Equity Series, Inc. is the Manager.
Price-Fleming is
the investment manager to T. Rowe Price International Funds,
Inc., T. Rowe Price
International Series, Inc., and Institutional International
Funds, Inc., and is
50% owned by TRP Finance, Inc., a wholly owned subsidiary of the
Manager, 25%
owned by Copthall Overseas Limited, a wholly-owned subsidiary of
Robert Fleming
Holdings Limited, and 25% owned by Jardine Fleming Holdings
Limited. In
addition to the corporate insureds, the policies also cover the
officers,
directors, and employees of each of the named insureds. The
premium is
allocated among the named corporate insureds in accordance with
the provisions
of Rule 17d-1(d)(7) under the Investment Company Act of 1940.
Article X, Section 10.01 of the Registrant's By-Laws
provides as follows:
Section 10.01. Indemnification and Payment of Expenses in
Advance. The
Corporation shall indemnify any individual ("Indemnitee") who is
a present or
former director, officer, employee, or agent of the Corporation,
or who is or
has been serving at the request of the Corporation as a director,
officer,
employee or agent of another corporation, partnership, joint
venture, trust or
other enterprise, who, by reason of his position was, is, or is
threatened to be
made a party to any threatened, pending, or completed action,
suit, or
proceeding, whether civil, criminal, administrative, or
investigative
(hereinafter collectively referred to as a "Proceeding") against
any judgments,
penalties, fines, settlements, and reasonable expenses (including
attorneys'
fees) incurred by such Indemnitee in connection with any
Proceeding, to the
fullest extent that such indemnification may be lawful under
applicable Maryland
law, as
PAGE 127
from time to time amended. The Corporation shall pay any
reasonable expenses so
incurred by such Indemnitee in defending a Proceeding in advance
of the final
disposition thereof to the fullest extent that such advance
payment may be
lawful under applicable Maryland law, as from time to time
amended. Subject to
any applicable limitations and requirements set
forth in the Corporation's Articles of Incorporation and in these
By-Laws, any
payment of indemnification or advance of expenses shall be made
in accordance
with the procedures set forth in applicable Maryland law, as from
time to time
amended.
Notwithstanding the foregoing, nothing herein shall protect
or purport to
protect any Indemnitee against any liability to which he would
otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence, or
reckless disregard of the duties involved in the conduct of his
office
("Disabling Conduct").
Anything in this Article X to the contrary notwithstanding,
no
indemnification shall be made by the Corporation to any
Indemnitee unless:
(a) there is a final decision on the merits by a court or
other body
before whom the Proceeding was brought that the
Indemnitee was not
liable by reason of Disabling Conduct; or
(b) in the absence of such a decision, there is a
reasonable
determination, based upon a review of the facts, that
the Indemnitee
was not liable by reason of Disabling Conduct, which
determination
shall be made by:
(i) the vote of a majority of a quorum of directors
who are
neither "interested persons" of the Corporation
as defined in
Section 2(a)(19) of the Investment Company Act
of 1940, nor
parties to the Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Anything in this Article X to the contrary notwithstanding,
any advance of
expenses by the Corporation to any Indemnitee shall be made only
upon the
undertaking by such Indemnitee to repay the advance unless it is
ultimately
determined that such Indemnitee is entitled to indemnification as
above
provided, and only if one of the following conditions is met:
(a) the Indemnitee provides a security for his
undertaking; or
(b) the Corporation shall be insured against losses
arising by reason of
any lawful advances; or
<PAGE>
PAGE 128
(c) there is a determination, based on a review of readily
available
facts, that there is reason to believe that the
Indemnitee will
ultimately be found entitled to indemnification, which
determination
shall be made by:
(i) a majority of a quorum of directors who are
neither
"interested persons" of the Corporation as
defined in Section
2(a)(l9) of the Investment Company Act of l940,
nor parties to
the Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Section 10.02 of the Registrant's By-Laws provides as
follows:
Section 10.02. Insurance of Officers, Directors, Employees
and Agents. To
the fullest extent permitted by applicable Maryland law and by
Section 17(h) of
the Investment Company Act of 1940, as from time to time amended,
the
Corporation may purchase and maintain insurance on behalf of any
person who is
or was a director, officer, employee, or agent of the
Corporation, or who is or
was serving at the request of the Corporation as a director,
officer, employee,
or agent of another corporation, partnership, joint venture,
trust, or other
enterprise, against any liability asserted against him and
incurred by him in or
arising out of his position, whether or not the Corporation would
have the power
to indemnify him against such liability.
Insofar as indemnification for liability under the Securities
Act of 1933
may be permitted to directors, officers and controlling
persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the
Registrant has been advised that in the opinion of the
Securities and
Exchange Commission such indemnification is against public
policy as
expressed in the Act and is, therefore, unenforceable. In
the event that a
claim for indemnification against such liabilities (other
than the payment
by the Registrant of expenses incurred or paid by a director,
officer or
controlling person of the Registrant in the successful
defense of any
action, suit or proceeding) is asserted by such director,
officer or
controlling person in connection with the securities being
registered, the
Registrant will, unless in the opinion of its counsel the
matter has been
settled by controlling precedent, submit to a court of
appropriate
jurisdiction the question whether such indemnification by it
is against
public policy as expressed in the Act and will be governed by
the final
adjudication of such issue.
<PAGE>
PAGE 129
Item 28. Business and Other Connections of Investment Manager.
Rowe Price-Fleming International, Inc. ("Price-Fleming"), a
Maryland
corporation, is a corporate joint venture 50% owned by TRP
Finance, Inc., a
wholly-owned subsidiary of the Manager, and was organized in 1979
to provide
investment counsel service with respect to foreign securities for
institutional
investors in the United States. Price-Fleming, in addition to
managing private
counsel client accounts, also sponsors registered investment
companies which
invest in foreign securities, serves as general partner of RPFI
International
Partners, Limited Partnership, and provides investment advice to
the T. Rowe
Price Trust Company, trustee of the International Common Trust
Fund.
T. Rowe Price Investment Services, Inc. ("Investment Services"),
a wholly- owned
subsidiary of the Manager, is a Maryland corporation organized in
1980 for the
purpose of acting as the principal underwriter and distributor
for the Price
Funds. Investment Services is registered as a broker-dealer
under the
Securities Exchange Act of 1934 and is a member of the National
Association of
Securities Dealers, Inc. In 1984, Investment Services expanded
its activities
to include a discount brokerage service.
TRP Distribution, Inc., a wholly-owned subsidiary of Investment
Services, is a
Maryland corporation organized in 1991. It was organized for and
engages in the
sale of certain investment related products prepared by
Investment Services.
T. Rowe Price Associates Foundation, Inc., was organized in 1981
for the purpose
of making charitable contributions to religious, charitable,
scientific,
literary and educational organizations. The Foundation (which is
not a
subsidiary of the Manager) is funded solely by contributions from
the Manager
and income from investments.
T. Rowe Price Services, Inc. ("Price Services"), a wholly-owned
subsidiary of
the Manager, is a Maryland corporation organized in 1982 and is
registered as a
transfer agent under the Securities Exchange Act of 1934. Price
Services
provides transfer agent, dividend disbursing, and certain other
services,
including shareholder services, to the Price Funds.
T. Rowe Price Retirement Plan Services, Inc. ("RPS"), a
wholly-owned subsidiary
of the Manager, was incorporated in Maryland in 1991 and is
registered as a
transfer agent under the Securities Exchange Act of 1934. RPS
provides
administrative, recordkeeping, and subaccounting services to
administrators of
employee benefit plans.
T. Rowe Price Trust Company ("Trust Company"), a wholly-owned
subsidiary of the
Manager, is a Maryland chartered limited purpose trust company,
organized
in 1983 for the purpose of providing fiduciary services. The
Trust Company
serves as trustee/custodian for employee benefit plans, common
trust funds and a
few trusts.
PAGE 130
T. Rowe Price Threshold Fund II, L.P., a Delaware limited
partnership, was
organized in 1986 by the Manager, and invests in private
financings of small
companies with high growth potential; the Manager is the General
Partner of the
partnership.
RPFI International Partners, Limited Partnership, is a Delaware
limited
partnership organized in 1985 for the purpose of investing in a
diversified
group of small and medium-sized rapidly growing non-U.S.
companies.
Price-Fleming is the general partner of this partnership, and
certain clients of
Price-Fleming are its limited partners.
T. Rowe Price Real Estate Group, Inc. ("Real Estate Group"), is a
Maryland
corporation and a wholly-owned subsidiary of the Manager
established in 1986 to
provide real estate services. Subsidiaries of Real Estate Group
are: T. Rowe
Price Realty Income Fund I Management, Inc., a Maryland
corporation (General
Partner of T. Rowe Price Realty Income Fund I, A No-Load Limited
Partnership),
T. Rowe Price Realty Income Fund II Management, Inc., a Maryland
corporation
(General Partner of T. Rowe Price Realty Income Fund II,
America's
Sales-Commission-Free Real Estate Limited Partnership), T. Rowe
Price Realty
Income Fund III Management, Inc., a Maryland corporation (General
Partner of T.
Rowe Price Realty Income Fund III, America's
Sales-Commission-Free Real Estate
Limited Partnership, a Delaware limited partnership), and T. Rowe
Price Realty
Income Fund IV Management, Inc., a Maryland corporation (General
Partner of T.
Rowe Price Realty Income Fund IV, America's Sales-Commission-Free
Real Estate
Limited Partnership). Real Estate Group serves as investment
manager to T. Rowe
Price Renaissance Fund, Ltd., A Sales-Commission-Free Real Estate
Investment,
established in 1989 as a Maryland corporation which qualifies as
a REIT.
T. Rowe Price Stable Asset Management, Inc. ("Stable Asset
Management") is a
Maryland corporation organized in 1988 as a wholly-owned
subsidiary of the
Manager. Stable Asset Management, which is registered as an
investment adviser
under the Investment Advisers Act of 1940, specializes in the
management of
investment portfolios which seek stable and consistent investment
returns
through the use of guaranteed investment contracts, bank
investment contracts,
structured or synthetic investment contracts, and short-term
fixed-income
securities.
T. Rowe Price Recovery Fund Associates, Inc., a Maryland
corporation, is a
wholly-owned subsidiary of the Manager organized in 1988 for the
purpose of
serving as the General Partner of T. Rowe Price Recovery Fund,
L.P., a Delaware
limited partnership which invests in financially distressed
companies.
T. Rowe Price (Canada), Inc. is a Maryland corporation organized
in 1988 as a
wholly-owned subsidiary of the Manager. This entity is
registered as an
investment adviser under the Investment Advisers Act of 1940, and
may apply for
registration as an investment manager under the Securities Act of
Ontario in
order to be eligible to provide certain services to the RPF
International Bond Fund, a trust (whose shares are sold in
Canada) which
Price-Fleming serves as investment adviser.
PAGE 131
Since 1983, the Manager has organized several distinct Maryland
limited
partnerships, which are informally called the Pratt Street
Ventures
partnerships, for the purpose of acquiring interests in
growth-oriented
businesses.
Tower Venture, Inc., a wholly-owned subsidiary of the Manager, is
a Maryland
corporation organized in 1989 for the purpose of serving as a
general partner of
100 East Pratt St., L.P., a Maryland limited partnership whose
limited partners
also include the Manager. The purpose of the partnership is to
further develop
and improve the property at 100 East Pratt Street, the site of
the Manager's
headquarters, through the construction of additional office,
retail and parking
space.
TRP Suburban, Inc. is a Maryland corporation organized in 1990 as
a wholly-owned
subsidiary of the Manager. TRP Suburban has entered into
agreements with
McDonogh School and CMANE-McDonogh-Rowe Limited Partnership to
construct an
office building in Owings Mills, Maryland, which houses the
Manager's transfer
agent, plan administrative services, retirement plan services and
operations
support functions.
TRP Finance, Inc. and TRP Finance MRT, Inc., wholly-owned
subsidiaries of the
Manager, are Delaware corporations organized in 1990 to manage
certain passive
corporate investments and other intangible assets. TRP Finance
MRT, Inc. was
dissolved on October 4, 1993.
T. Rowe Price Strategic Partners Fund, L.P. is a Delaware limited
partnership
organized in 1990 for the purpose of investing in small public
and private
companies seeking capital for expansion or undergoing a
restructuring of
ownership. The general partner of the Fund is T. Rowe Price
Strategic Partners,
L.P., a Delaware limited partnership whose general partner is T.
Rowe Price
Strategic Partners Associates, Inc., ("Strategic Associates"), a
Maryland
corporation which is a wholly-owned subsidiary of the Manager.
Strategic
Associates also serves as the general partner of T. Rowe Price
Strategic
Partners II, L.P., a Delaware limited partnership established in
1992, which in
turn serves as general partner of T. Rowe price Strategic
Partners Fund II,
L.P., a Delaware limited partnership organized in 1992.
Listed below are the directors of the Manager who have other
substantial
businesses, professions, vocations, or employment aside from that
of Director of
the Manager:
JAMES E. HALBKAT, JR., Director of the Manager. Mr. Halbkat is
President of
U.S. Monitor Corporation, a provider of public response systems.
Mr. Halbkat's
address is: P.O. Box 23109, Hilton Head Island, South Carolina
29925.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is the
Tayloe Murphy
Professor at the University of Virginia, and a director of:
Chesapeake
Corporation, a manufacturer of paper products, Cadmus
Communications Corp., a
provider of printing and communication services; Comdial
Corporation, a
manufacturer of telephone systems for businesses; and Cone Mills
Corporation, a
textiles producer. Mr. Rosenblum's address is: P.O. Box 6550,
Charlottesville,
Virginia 22906.
PAGE 132
ROBERT L. STRICKLAND, Director of the Manager. Mr. Strickland is
Chairman of
Lowe's Companies, Inc., a retailer of specialty home supplies.
Mr. Strickland's
address is 604 Two Piedmont Plaza Building, Winston-Salem, North
Carolina 27104.
PHILIP C. WALSH, Director of the Manager. Mr. Walsh is a
Consultant to Cyprus
Amax Minerals Company, Englewood, Colorado, and a director of
Piedmont Mining
Company, Inc., Charlotte, North Carolina. Mr. Walsh's address
is: Blue Mill
Road, Morristown, New Jersey 07960.
With the exception of Messrs. Halbkat, Rosenblum, Strickland, and
Walsh, all of
the directors of the Manager are employees of the Manager.
George J. Collins, who is Chief Executive Officer, President, and
a Managing
Director of the Manager, is a Director of Price-Fleming.
George A. Roche, who is Chief Financial Officer and a Managing
Director of the
Manager, is a Vice President and a Director of Price-Fleming.
M. David Testa, who is a Managing Director of the Manager, is
Chairman of the
Board of Price-Fleming.
Henry H. Hopkins, Charles P. Smith, and Peter Van Dyke, who are
Managing
Directors of the Manager, are Vice Presidents of Price-Fleming.
Robert P. Campbell, Roger L. Fiery, III, Robert C. Howe, Veena A.
Kutler, George
A. Murnaghan, William F. Wendler, II, and Edward A. Wiese, who
are Vice
Presidents of the Manager, are Vice Presidents of Price-Fleming.
Alvin M. Younger, Jr., who is a Managing Director and the
Secretary and
Treasurer of the Manager, is Secretary and Treasurer of
Price-Fleming.
Nolan L. North, who is a Vice President and Assistant Treasurer
of the Manager,
is Assistant Treasurer of Price-Fleming.
Leah P. Holmes, who is an Assistant Vice President of the
Manager, is a Vice
President of Price-Fleming.
Barbara A. Van Horn, who is Assistant Secretary of the Manager,
is Assistant
Secretary of Price-Fleming.
Certain directors and officers of the Manager are also officers
and/or directors
of one or more of the Price Funds and/or one or more of the
affiliated entities
listed herein.
See also "Management of Fund," in Registrant's Statement of
Additional
Information.
PAGE 133
Item 29. Principal Underwriters.
(a) The principal underwriter for the Registrant is Investment
Services.
Investment Services acts as the principal underwriter for the
other thirty-five
Price Funds. Investment Services is a wholly-owned subsidiary of
the Manager is
registered as a broker-dealer under the Securities Exchange Act
of 1934 and is a
member of the National Association of Securities Dealers, Inc.
Investment
Services has been formed for the limited purpose of distributing
the shares of
the Price Funds and will not engage in the general securities
business. Since
the Price Funds are sold on a no-load basis, Investment Services
will not
receive any commission or other compensation for acting as
principal
underwriter.
<PAGE>
PAGE 134
(b) The address of each of the directors and officers of
Investment Services
listed below is 100 East Pratt Street, Baltimore, Maryland 21202.
Positions and
Name and Principal Positions and Offices Offices with
Business Address With Underwriter Registrant
__________________ _____________________ _____________
James Sellers Riepe President and Director Vice President
and
Director
Henry Holt Hopkins Vice President and Vice President
Director
Mark E. Rayford Director None
Charles E. Vieth Vice President and None
Director
Patricia M. Archer Vice President None
Edward C. Bernard Vice President None
Joseph C. Bonasorte Vice President None
Meredith C. Callanan Vice President None
Laura H. Chasney Vice President None
Victoria C. Collins Vice President None
Christopher W. Dyer Vice President None
Forrest R. Foss Vice President None
Patricia O'Neil Goodyear Vice President None
James W. Graves Vice President None
Andrea G. Griffin Vice President None
Thomas Grizzard Vice President None
David J. Healy Vice President None
Joseph P. Healy Vice President None
Walter J. Helmlinger Vice President None
Eric G. Knauss Vice President None
Douglas G. Kremer Vice President None
Sharon Renae Krieger Vice President None
Keith Wayne Lewis Vice President None
David L. Lyons Vice President None
Sarah McCafferty Vice President None
Maurice Albert Minerbi Vice President None
Nancy M. Morris Vice President None
George A. Murnaghan Vice President None
Steven Ellis Norwitz Vice President None
Kathleen M. O'Brien Vice President None
Charles S. Peterson Vice President None
PAGE 135
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Terri L. Westren Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and Treasurer None
Mark S. Finn Controller None
Richard J. Barna Assistant Vice President None
Catherine L.
Berkenkemper Assistant Vice President None
Ronae M. Brock Assistant Vice President None
Brenda E. Buhler Assistant Vice President None
Patricia Sue Butcher Assistant Vice President None
John A. Galateria Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Keith J. Langrehr Assistant Vice President None
C. Lillian Matthews Assistant Vice President None
Janice D. McCrory Assistant Vice President None
Sandra J. McHenry Assistant Vice President None
JeanneMarie B. Patella Assistant Vice President None
Kristin E. Seeberger Assistant Vice President None
Arthur J. Silber Assistant Vice President None
Linda C. Wright Assistant Vice President None
Nolan L. North Assistant Treasurer None
Barbara A. VanHorn Assistant Secretary None
(c) Not applicable. Investment Services will not receive any
compensation
with respect to its activities as underwriter for the Price Funds
since the
Price Funds are sold on a no-load basis.
<PAGE>
PAGE 136
Item 30. Location of Accounts and Records.
All accounts, books, and other documents required to be
maintained by
T. Rowe Price Tax-Free High Yield Fund, Inc. under
Section 31(a) of the
Investment Company Act of 1940 and the rules thereunder
will be
maintained by T. Rowe Price Tax-Exempt Money Fund, Inc.
at its offices
at 100 East Pratt Street, Baltimore, Maryland 21202.
Transfer,
dividend disbursing, and shareholder service activities
are performed
by T. Rowe Price Services, Inc., at 100 East Pratt
Street, Baltimore,
Maryland 21202. Custodian activities for T. Rowe Price
Tax-Exempt
Money Fund, Inc. are performed at State Street Bank and
Trust Company's
Service Center (State Street South), 1776 Heritage Drive,
Quincy,
Massachusetts 02171.
Item 31. Management Services.
Registrant is not a party to any management related
service contract,
other than as set forth in the Prospectus.
Item 32. Undertakings.
(a) The Fund agrees to furnish, upon request and without
charge, a copy of
its Annual Report to each person to whom a prospectus is
delivered.
<PAGE>
PAGE 137
Pursuant to the requirements of the Securities Act of 1933, as
amended, and
the Investment Company Act of 1940, as amended, the Registrant
has duly caused
this Registration Statement to be signed on its behalf by the
undersigned,
thereunto duly authorized, in the City of Baltimore, State of
Maryland, this rd
day of April 22, 1994.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND,
INC.
/s/William T. Reynolds
By: William T. Reynolds, President and
Director
Pursuant to the requirements of the Securities Act of 1933,
as amended,
this Registration Statement has been signed below by the
following persons in
the capacities and on the dates indicated:
SIGNATURE TITLE DATE
___________ ______ ______
/s/George J. Collins Chairman of the Board April 22, 1994
George J. Collins (Chief Executive Officer)
/s/Carmen F. Deyesu Treasurer April 22, 1994
Carmen F. Deyesu (Chief Financial Officer)
/s/Calvin W. Burnett Director April 22, 1994
Calvin W. Burnett
/s/Anthony W. Deering Director April 22, 1994
Anthony W. Deering
/s/F. Pierce Linaweaver DirectorApril 22,
1994
F. Pierce Linaweaver
/s/William T. Reynolds President and
DirectorApril 22,
1994
William T. Reynolds
/s/James S. Riepe Vice President and DirectorApril 22, 1994
James S. Riepe
/s/John Sagain Director April 22, 1994
John Sagan
/s/John G. Schrieber Director April 22, 1994
John G. Schreiber
<PAGE>
PAGE 1
ARTICLES OF INCORPORATION
OF
ROWE PRICE PRIME RESERVE FUND II, INC.
FIRST: The undersigned, Henry H. Hopkins
and Edward A.
Taber, each of whose post office address is 100 East Pratt
Street, Baltimore,
Maryland 21202, and each being at least eighteen (18) years of
age, do hereby
form a corporation under the General Laws of the State of
Maryland.
SECOND: The name of the Corporation is:
ROWE PRICE PRIME RESERVE FUND II, INC.
THIRD: The purposes for which the
Corporation is formed
are as follows:
(1) To operate as and
carry on the
business of an investment company, and exercise all the powers
necessary and
appropriate to the conduct of such operations.
(2) To invest in,
hold for
investment, or reinvest in, securities, including but not limited
to common and
preferred stocks; warrants, bonds, debentures, bills, time notes
and all other
evidences of indebtedness; negotiable or non-negotiable
instruments; government
securities; and money market instruments including bank
certificates of deposit,
finance paper, commercial paper, bankers acceptances and all
kinds of repurchase
agreements, of any corporation, company, trust, association, firm
or other
business organization however established, and of any country,
state,
municipality or other political subdivision, or of any other
governmental or
quasi-governmental agency or instrumentality.
(3) To acquire (by
purchase,
subscription, or otherwise), to hold, to trade in and deal in, to
sell or
otherwise dispose of, to lend, and to pledge any such securities
and repurchase
agreements.
(4) To exercise all
rights, powers,
and privileges of ownership or interest in all securities and
repurchase
agreements held by the Corporation, including the right to vote
thereon and
otherwise act with respect thereto and to do all acts for the
preservation,
protection, improvement, and enhancement in value of all such
securities and
repurchase agreements.
(5) To aid by further
investment
any corporation, company, trust, association, firm or other
business
organization, any obligation of or interest in which is held by
the Corporation
or in the affairs of which the Corporation has any direct or
indirect interest,
and to do anything designed to protect, preserve, improve, or
enhance the value
of such obligation or interest.
(6) To promote or aid
the
incorporation of any organization or enterprise under the laws of
any
PAGE 2
country, state, municipality, or other political subdivision, and
to cause the
same to be dissolved, wound up, liquidated, merged, or
consolidated.
(7) In general, to
carry on any
other business in connection with or incidental to any of the
foregoing objects
and purposes, to have and exercise all the powers conferred upon
corporations by
the laws of the State of Maryland as in force from time to time,
to do
everything necessary, suitable or proper for the accomplishment
of any purpose
or the attainment of any object or the furtherance of any power
hereinbefore set
forth, either alone or in association with others, and to take
any action
incidental or appurtenant to or growing out of or connected with
the aforesaid
business or purposes, objects, or powers.
The Corporation shall have the power to
conduct and carry
on its business, or any part thereof, and to have one or more
offices, and to
exercise any or all of its corporate powers and rights, in the
State of
Maryland, in any other states, territories, districts, colonies,
and
dependencies of the United States, and in any or all foreign
countries.
The foregoing clauses shall be constructed
both as
objects and powers, and the foregoing enumeration of specific
powers shall not
be held to limit or restrict in any manner the general powers of
the
Corporation.
FOURTH: The post office address of the
principal office
of the Corporation in the State of Maryland is:
100 East Pratt Street
Baltimore, Maryland 21202
The name and post office address of the resident agent of the
Corporation in the
State of Maryland is:
Henry Holt Hopkins
100 East Pratt Street
Baltimore, Maryland 21202
Said resident agent is a citizen of the State of Maryland, and
actually resides
therein.
FIFTH: The total number of shares of all
classes of
Capital Stock which the Corporation has authority to issue is Two
Hundred
Million (200,000,000) shares of a single class of the par value
of One Dollar
($1.00) per share, such shares having an aggregate par value of
Two Hundred
Million Dollars ($200,000,000).
SIXTH: The number of directors of the
Corporation shall
be seven (7), or such other number as may from time to time be
fixed by the By-
Laws of the Corporation, or pursuant to authorization contained
in such By-Laws,
but the number of directors shall never be less than three (3).
The names of
the directors who shall act as such until the first annual
meeting of
shareholders and until their successors are duly chosen and
qualify are as
follows:
George J. Collins
Anthony W. Deering
Carter O. Hoffman
Karen N. Horn
F. Pierce Linaweaver
Edward A. Taber, III
PAGE 3
Hubert D. Vos
SEVENTH: Regulation of the Powers of the
Corporation and
Its Directors and Shareholders.
SECTION I
ISSUE OF THE CORPORATION'S SHARES
1.01 General. The
Board of
Directors may from time to time issue and sell or cause to be
issued and sold
any of the Corporation's authorized shares, including any
additional shares
hereafter authorized and any shares redeemed or repurchased by
the Corporation,
except that only shares previously contracted to be sold may be
issued during
any period when the determination of net asset value is suspended
pursuant to
the provisions of Section III hereof. All such authorized
shares, when issued
in accordance with the terms of this Section I, shall be fully
paid and non-
assessable. No holder of any shares of the Corporation shall be
entitled, by
reason of holding or owning such shares, to any prior, preemptive
or other right
to subscribe to, purchase or otherwise acquire any additional
shares of the
Corporation subsequently issued for cash or other consideration
or by way of a
dividend or otherwise.
1.02 Price. No shares
of the
Corporation shall be issued or sold by the Corporation, except as
a stock
dividend distributed to shareholders, for less than an amount
which would result
in proceeds to the Corporation, before taxes payable by the
Corporation in
connection with such transaction, of at least the net asset value
per share
determined as set forth in Section III hereof as of such time as
the Board of
Directors shall have by resolution theretofore prescribed, but
not earlier than
the close of business on the business day (which term, as used
herein, shall be
defined to mean a day on which the New York Stock Exchange is
open all or part
of the day for unrestricted trading, or such other definition as
the Board of
Directors shall have by resolution theretofore prescribed
pursuant to Section
6.01 hereof), next preceding the date of receipt of an
unconditional purchase
order for such shares. In the absence of a resolution of the
Board of Directors
applicable to the transaction, such net asset value shall be that
next
determined after receipt of such purchase order. For this
purpose, the time of
receipt of such an unconditional order shall be the time it is
first received by
the principal underwriter, the custodian or depository of the
Corporation's
assets, the transfer agent of the Corporation, or by another
agent of the
Corporation designated for the purpose.
1.03 On Merger or
Consolidation. In
connection with the acquisition of all or substantially all the
assets or stock
of another investment company or investment trust, the Board of
Directors may
issue or cause to be issued shares of the Corporation and accept
in payment
therefor, in lieu of cash, such assets at their market value, or
such stock at
the market value of the as sets held by such investment company
or investment
trust, either with or without adjustment for contingent costs or
liabilities,
provided that the funds of the Corporation are permitted by law
to be invested
in such assets or stock.
1.04 Fractional
Shares. The Board
of Directors may issue and sell fractions of shares having pro
rata all the
rights of full shares, including, without limitation, the right
to vote and to
receive dividends.
SECTION II
PAGE 4
REDEMPTION AND REPURCHASE OF
THE CORPORATION'S SHARES
2.01 Redemption of
Shares. The
Corporation shall redeem its shares, subject to the conditions
and at the price
determined as hereinafter set forth, upon proper application of
the record
holder thereof at such office or agency as may be designated from
time to time
for that purpose by the Board of Directors. Any such application
must be
accompanied by the certificate or certificates, if any,
evidencing such shares,
duly endorsed or accompanied by a proper instrument of transfer.
The Board of
Directors shall have power to determine or to delegate to the
proper officers of
the Corporation the power to determine from time to time the form
and the other
accompanying documents which shall be necessary to constitute a
proper
application for redemption.
2.02 Price. Such
shares shall be
redeemed at their net asset value determined as set forth in
Section III hereof
as of such time as the Board of Directors shall have theretofore
prescribed by
resolution, which time shall not be later than the close of
business on the next
business day succeeding, and not earlier than the close of
business on the next
business day preceding, the date on which proper application is
made for
redemption. In the absence of such resolution, the redemption
price of shares
deposited shall be the net asset value of such shares next
determined as set
forth in Section III hereof after receipt of such application.
2.03 Payment. Payment
for such
shares shall be made to the shareholder of record within seven
(7) days after
the date upon which proper application is received, subject to
the provisions of
Section 2.04 hereof. Such payment shall be made in cash or other
assets of the
Corporation or both, as the Board of Directors shall prescribe.
For the
purposes of such payment for shares redeemed, the value of assets
delivered
shall be determined as set forth in Section III hereof as of the
same time as of
which the per share net asset value of such shares is determined.
2.04 Effect of
Suspension of
Determination of Net Asset Value. If, pursuant to Section 3.03
hereof, the Board
of Directors shall declare a suspension of the determination of
net asset value,
the rights of shareholders (including those who shall have
applied for
redemption pursuant to Section 2.01 hereof but who shall not yet
have received
payment) to have shares redeemed and paid for by the Corporation
shall be
suspended until the termination of such suspension is declared.
Any record
holder whose redemption right is so suspended may, during the
period of such
suspension, by appropriate written notice of revocation to the
office or agency
where application was made, revoke his application and withdraw
any share
certificates which accompanied such application. The redemption
price of shares
for which redemption applications have not been revoked shall be
the net asset
value of such shares next determined as set forth in Section III
after the
termination of such suspension, and payment shall be made within
seven (7) days
after the date upon which the application was made plus the
period after such
application during which the determination of net asset value was
suspended.
2.05 Repurchase by
Agreement. The
Corporation may repurchase shares of the Corporation directly, or
through its
principal underwriter or other agent designated for the purpose,
by agreement
with the owner thereof, at a price not exceeding the net asset
value per share
determined as of the time when the purchase or contract
PAGE 5
of purchase is made or the net asset value as of any time which
may be later
determined pursuant to Section III hereof, provided payment is
not made for the
shares prior to the time as of which such net asset value is
determined.
2.06 Corporation's
Option to Redeem
Shares
(a) The Corporation shall have the right at any
time and
without prior notice to the shareholder to redeem all shares in
any account for
their then-current net asset value per share if all shares in the
account have
an aggregate net asset value of less than $1,000, or such lesser
amount as the
Board of Directors may from time to time determine;
(b) The Corporation shall have the right at any
time and
without prior notice to the shareholder to redeem shares in any
account for
their then-current net asset value per share if and to the extent
it shall be
necessary to reimburse the Corporation for any loss sustained by
the Corporation
by reason of the failure of the shareholder in whose name such
account is
registered to make full payment for shares of the Corporation
purchased by such
shareholder.
(c) The right of redemption provided by each of
the foregoing
subsections of this Section 2.06 shall be subject to such terms
and conditions
as the Board of Directors may from time to time approve, and
subject to the
Corporation's giving general notice of its intention to avail
itself of such
right, either by publication in the Corporation's prospectus or
by such means as
the Board of Directors shall determine.
SECTION III
NET ASSET VALUE OF SHARES
3.01 By Whom
Determined. The Board
of Directors shall have the power and duty to determine from time
to time the
net asset value per share of the outstanding shares of the
Corporation. It may
delegate such power and duty to one or more of the directors and
officers of the
Corporation, to the custodian or depository of the Corporation's
assets, or to
another agent of the Corporation appointed for such purpose. Any
determination
made pursuant to this section by the Board of Directors, or its
delegate, shall
be binding on all parties concerned.
3.02 When Determined.
The net asset
value shall be determined at such times as the Board of Directors
shall
prescribe by resolution, provided that such net asset value shall
be determined
at least once each week as of the close of business on a business
day. In the
absence of a resolution of the Board of Directors, the net asset
value shall be
determined as of the close of trading on the New York Stock
Exchange on each
business day.
3.03 Suspension of
Determination of
Net Asset Value. The Board of Directors may declare a suspension
of the
determination of net asset value for the whole or any part of any
period (a)
during which the New York Stock Exchange is closed other than
customary weekend
and holiday closings, (b) during which trading on the New York
Stock Exchange is
restricted, (c) during which an emergency exists as a result of
which disposal
by the Corporation of securities owned by it is not reasonably
practicable or it
is not reasonably practicable for the Corporation fairly to
determine the value
of its net assets, or (d) during which a governmental body having
jurisdiction
over the Corporation may by order permit
PAGE 6
for the protection of the security holders of the Corporation.
Such suspension
shall take effect at such time as the Board of Directors shall
specify, which
shall not be later than the close of business on the business day
next following
the declaration, and thereafter there shall be no determination
of net asset
value until the Board of Directors shall declare the suspension
at an end,
except that the suspension shall terminate in any event on the
first day on
which (1) the condition giving rise to the suspension shall have
ceased to exist
and (2) no other condition exists under which suspension is
authorized under
this Section 3.03. Each declaration by the Board of Directors
pursuant to this
Section 3.03 shall be consistent with such official rules and
regulations, if
any, relating to the subject matter thereof as shall have been
promulgated by
the Securities and Exchange Commission or any other governmental
body having
jurisdiction over the Corporation and as shall be in effect at
the time. To the
extent not inconsistent with such official rules and regulations,
the
determination of the Board of Directors shall be conclusive.
3.04 Computation of
Per Share Net
Asset Value.
a. Net Asset Value Per Share. Except as
hereinafter
provided in Section 3.05, the net asset value of each share as of
any particular
time shall be the quotient obtained by dividing the value of the
net assets of
the Corporation by the total number of shares outstanding.
b. Value of Corporation's Net Assets. The
value of the
Corporation's net assets as of any particular time shall be the
value of the
Corporation's assets less its liabilities, determined and
computed as follows:
(1) Corporation's
Assets. The
Corporation's assets shall be deemed to include: (A) all cash on
hand or on
deposit, including any interest accrued thereon, (B) all bills
and demand notes
and accounts receivable, (C) all securities owned or contracted
for by the
Corporation, (D) all stock and cash dividends and cash
distributions payable to
but not yet received by the Corporation (when the valuation of
the underlying
security is being determined exdividend), (E) all interest
accrued on any
interest-bearing securities owned by the Corporation (except
accrued interest
included in the valuation of the underlying security), (F) all
repurchase
agreements, and (G) all other property of every kind and nature,
including
prepaid expenses.
(2) Valuation of
Assets. The value
of such assets is to be determined as follows:
(i)Cash and
Prepaid Expenses.
The value of any cash on hand and of any prepaid expenses shall
be deemed to be
their full amount.
(ii)Other Current
Assets. The
value of any cash on deposit, bills, demand notes, accounts
receivable, and cash
dividends and interest declared or accrued as aforesaid and not
yet received
shall be deemed to be the full amount thereof, unless the Board
of Directors or
its delegates shall determine that any such item is not worth its
full amount.
In such case, the value of the item shall be deemed to be its
reasonable value,
as determined by the Board of Directors or its delegates.
PAGE 7
(iii) Securities. The short-term money
market securities
in which the Fund invests are traded primarily in the
over-the-counter market.
Securities for which representative market quotations are readily
available are
valued at the most recent bid price or yield equivalent as quoted
by one or more
dealers who make markets in such securities. Other securities
are appraised at
values deemed best to reflect their fair value as determined in
good faith by or
under the supervision of officers of the Fund specifically
authorized by the
Board of Directors.
(3)The
Corporation's
Liabilities. The Corporation's liabilities shall not be deemed
to include
outstanding shares and surplus. They shall be deemed to include:
(A) all bills
and accounts payable, (B) all administrative expenses accrued,
(C) all
contractual obligations for the payment of money or property,
including the
amount of any declared but unpaid dividends upon the
Corporation's shares, (D)
all reserves authorized or approved by the Board of Directors for
taxes or
contingencies, and (E) all other liabilities of whatsoever kind
and nature
except any liabilities represented by the Corporation's
outstanding shares and
surplus.
3.05 Interim
Determinations. Any
determination of net asset value other than as of the close of
trading on the
New York Stock Exchange may be made either by appraisal or by
calculation or
estimate. Any such calculation or estimate shall be based on
changes in the
market value of representative or selected securities or on
changes in
recognized market averages since the last closing appraisal and
made in a manner
which in the opinion of the Board of Directors, or its delegate,
will fairly
reflect the changes in the net asset value.
3.06 Miscellaneous. For the purposes of Section
III:
a. Shares of the
Corporation sold
shall be deemed to be outstanding as of the time, not before an
unconditional
purchase order therefor has been received by the Corporation
(directly or
through one of its agents) or by one of its underwriters and the
sale price in
currency has been determined, when the sale is reported to the
Corporation or to
its agent for determining net asset value, and the net sale price
thereof to the
Corporation (less commission, if any, and less any stamp or other
tax payable by
the Corporation in connection with the issue and sale thereof)
shall be
thereupon deemed to be an asset of the Corporation.
b. Shares of the Corporation for which an
application for
redemption has been made or which are subject to repurchase by
the Corporation
shall be deemed to be outstanding up to and including the time as
of which the
redemption or repurchase price is determined. After such time,
they shall be
deemed to be no longer outstanding and the price until paid shall
be deemed to
be a liability of the Corporation.
c. Funds on deposit
and
contractual obligations payable to the Corporation in foreign
currency and
liabilities and contractual obligations payable by the
Corporation in foreign
currency shall be taken at the current cable rate of exchange as
nearly as
practicable at the time as of which the net asset value is
computed.
SECTION IV
COMPLIANCE WITH INVESTMENT
COMPANY ACT OF 1940
PAGE 8
4.01 Notwithstanding
any of the
foregoing provisions of this Article SEVENTH, the Board of
Directors may
prescribe, in its absolute discretion, such other bases and times
for
determining the per share net asset value of the Corporation's
shares as it
shall deem necessary or desirable to enable the Corporation to
comply with any
provision of the Investment Company Act of 1940, or any rule or
regulation
thereunder, including any rule or regulation adopted pursuant to
Section 22 of
the Investment Company Act of 1940 by the Securities and Exchange
Commission or
any securities association registered under the Securities Act of
1934, all as
in effect now or as hereafter amended or added.
SECTION V
MISCELLANEOUS
5.01 Compensation of Directors. The Board of
Directors shall
have power from time to time to authorize payment of compensation
to the
directors for services to the Corporation, including fees for
attendance at
meetings of the Board of Directors and of committee.
5.02 Inspection of Corporation's Books. The
Board of Director
shall have power from time to time to determine whether and to
what extent, and
at what times and places, and under what conditions and
regulations the accounts
and books of the Corporation (other than the stock ledger) or any
of them shall
be open to the inspection of shareholders; and no shareholder
shall have any
right of inspecting any account, book or document of the
Corporation except as
at the time conferred by statute, unless authorized by a
resolution of the
shareholders or the Board of Directors.
5.03 Majority Vote of Shareholders.
Notwithstanding any
provision of the laws of the State of Maryland requiring a
greater proportion
than a majority of the votes of all classes or of any class of
stock entitled to
be cast, to take or authorize any action, such action may,
subject to other
applicable provisions of law, these Articles of Incorporation and
the By-Laws,
be taken or authorized upon the concurrence of a majority of the
aggregate
number of the votes entitled to be cast thereon.
5.04 Name. The Corporation acknowledges that it
is adopting
its corporate name through permission of T. Rowe Price
Associates, Inc., a
Maryland corporation, and agrees that T. Rowe Price Associates,
Inc. reserves to
itself and any successor to its business the right to grant the
nonexclusive
right to use the name "Rowe Price" or any similar name to any
other corporation
or entity, including, but not limited to, any investment company
of which T.
Rowe Price Associates, Inc. or any subsidiary or affiliate
thereof or any
successor to the business of any thereof shall be the investment
adviser.
5.05 Reservation of Right to Amend. The
Corporation reserves
the right to make any amendment of its charter, now or hereafter
authorized by
law, including any amendment which alters the contract rights, as
expressly set
forth in its charter, of any outstanding stock, and all rights
herein conferred
upon shareholders are granted subject to such reservation.
5.06 Determination of Net Profits, Etc.;
Dividends. The Board
of Directors is expressly authorized to determine in accordance
with generally
accepted accounting principles and practices what constitutes net
profits,
earnings, surplus, or net assets in excess of capital, and to
PAGE 9
determine what accounting periods shall be used by the
Corporation for any
purpose, whether annual or any other period, including daily; to
set apart out
of any funds of the Corporation such reserves for such purposes
as it shall
determine and to abolish the same; to declare and pay dividends
and
distributionS in cash, securities, or other property from surplus
or any funds
legally available therefor, at such intervals (which may be as
frequently as
daily) or on such other periodic basis, as it shall determine; to
declare such
dividends or distributions by means of a formula or other method
of
determination, at meetings held less frequently than the
frequency of the
effectiveness of such declarations; to establish payment dates
for dividends or
any other distributions on any basis, including dates occurring
less frequently
than the effectiveness of the declaration thereof; and to provide
for the
payment of declared dividends on a date earlier than the
specified payment date
in the case of shareholders of the Corporation redeeming their
entire ownership
of shares of the Corporation.
5.07 Contracts. The
Board of
Directors may in its discretion from time to time enter into an
exclusive or
nonexclusive underwriting contract or contracts providing for the
sale of the
shares of Capital Stock of the Corporation to net the Corporation
not less than
the amount provided for in Section 1.02 of Article SEVENTH
hereof, whereby the
Corporation may either agree to sell the shares to the other
party to the
contract or appoint such other party its sales agent for such
shares (such other
party being herein sometimes called the "underwriter"), and in
either case, on
such terms and conditions as may be prescribed in the By-Laws, if
any, and such
further terms and conditions as the Board of Directors may in its
discretion
determine not inconsistent with the provisions of Article SEVENTH
hereof or of
the By-Laws; and such contract may also provide for the
repurchase of shares of
the Corporation by such other party as agent of the Corporation.
The Board of
Directors may in
its discretion from time to time enter into an investment
advisory or management
contract whereby the other party to such contract shall undertake
to furnish to
the Corporation such management, investment advisory, statistical
and research
facilitieS and services and such other facilities and services,
if any, and all
upon such terms and conditions, as the Board of Directors may in
its discretion
determine.
Any contract of
the character
described in the paragraphs above or for services as custodian,
transfer agent,
or disbursing agent or related services may be entered into with
any
corporation, firm, trust, or association, although one or more of
the directors
or officers of the Corporation may be an officer, director,
trustee,
shareholder, or member of such other party to the contract, and
no such contract
shall be invalidated or rendered voidable by reason of the
existence of any such
relationship, nor shall any person holding such relationship be
liable merely by
reason of such relationship for any loss or expense to the
Corporation under or
by reason of said contract or accountable for any profit realized
directly or
indirectly therefrom, provided that the contract, when entered
into, was
reasonable and fair and not inconsistent with the provisions of
this Section
5.07. The same person (including a firm, corporation, trust, or
association)
may be the other party to contracts entered into pursuant to the
above
paragraphs, and any individual may be financially interested or
otherwise
affiliated with persons who are parties to any or all of the
contracts mentioned
in this paragraph.
Any contract entered into pursuant to the
first two
paragraphs of this Section 5.07 shall be consistent with and
subject to the
PAGE 10
requirements of Section 15 of the investment Company Act of 1940
(including any
amendment thereof or other applicable Act of Congress hereafter
enacted) with
respect to its continuance in effect, its termination and the
method of
authorization and approval of such contract or renewal thereof.
IN WITNESS WHEREOF, we have signed these
Articles of
Incorporation and acknowledge the same to be our act on this 21st
day of March,
1980.
/s/Henry H. Hopkins
Henry H. Hopkins
/s/Edward A. Taber, III
Edward A. Taber, III
STATE OF MARYLAND )
) ss:
CITY OF BALTIMORE )
I HEREBY CERTIFY, that on this 21st day of
March, 1980,
before me, the subscriber, a Notary Public of the State of
Maryland, in and for
the City of Baltimore, personally appeared HENRY H. HOPKINS and
EDWARD A. TABER,
III, and they acknowledged the foregoing Articles of
Incorporation to be their
act.
WITNESS my hand and Notarial Seal this 21st
day of March,
1980.
/s/Elizabeth R. Thompson
Elizabeth R. Thompson
Notary Public
My Commission expires:
July 1, 1982
<PAGE>
PAGE 11
ROWE PRICE PRIME RESERVE FUND II, INC.
ARTICLES OF AMENDMENT
Rowe Price Prime Reserve Fund II, Inc., a
Maryland
corporation having its principal office in the City of Baltimore,
Maryland
(hereinafter called the "Corporation"), hereby certifies to the
State Department
of Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is
hereby amended
by deleting there from Article Second and inserting in lieu
thereof a new
Article Second to read in full as follows:
"SECOND: The name
of the
Corporation is:
T. ROWE PRICE
TAX-EXEMPT MONEY
FUND, INC."
SECOND: The Charter of the Corporation is
hereby amended
by deleting therefrom Section (2) of Article Third and inserting
in lieu thereof
a new section (2) to read in full as follows:
"(2) to invest and reinvest its funds in
and hold for
investment the securities (including but
not limited to
bonds, debentures, time notes, repurchase
agreements, and
all other evidences of indebtedness and
shares, stock,
subscription rights, profit sharing
interests or
participations in other contracts for or
evidences of
equity interests) of any corporation,
company, trust,
association, firm or other business
organization however
established, and of any country, state,
municipality or
other political subdivision, or of any
other governmental
or quasi-governmental agency or
instrumentality."
THIRD: The Charter of the Corporation is
hereby amended
by deleting therefrom Article Fourth and inserting in lieu
thereof a new Article
Fourth to read in full as follows:
"FOURTH: The post
office
address of the principal office of the
Corporation in the
State of Maryland is:
100 East Pratt
Street
Baltimore,
Maryland 21202
PAGE 12
The name and post office address of the resident agent of the
Corporation in the
State of Maryland is:
Henry Holt
Hopkins
100 East Pratt
Street
Baltimore,
Maryland 21202
Said resident agent is a citizen of the State of Maryland and
actually resides
therein."
FOURTH: The Charter of the Corporation is hereby amended by
deleting therefrom
Article Fifth and inserting in lieu thereof a new Article Fifth
to read in full
as follows:
"FIFTH: The total number of shares of all classes of Capital
Stock which the
Corporation has authority to issue is Five Billion
(5,000,000,000) shares of a
single class of the par value of One Cent ($.01) per share, such
shares having
an aggregate par value of Fifty Million Dollars ($50,000,000)."
FIFTH: The Charter of the Corporation is hereby amended by
deleting therefrom
subsection 3.04b. (2) (iii) of Article Seventh and inserting in
lieu thereof a
new subsection 3.04b. (2) (iii) to read in full as follows:
"(iii) Securities. The securities in which the Fund may invest
are traded
primarily in the over-the-counter market. Municipal securities
which have
remaining maturities of more than 60 days are valued at the mean
between the
quoted bid and asked prices when representative market quotations
are readily
available. Money market securities which have remaining
maturities of more than
60 days are valued at the bid price or yield equivalent when
representative
market quotations are readily available. Both municipal and
money market
securities originally purchased witch remaining maturities of 60
days or less
are valued at their amortized cost value. The value of
securities originally
purchased with maturities in excess of 60 days, but which
currently have
maturities of 60 days or less is also determined by using
amortized cost
valuation for the 60 days prior to maturity--such amortization
being based on
the market or fair value of the securities on the 61st day prior
to maturity.
Securities and other assets for which such procedures are not
deemed to reflect
fair value, or for which representative quotations are not
readily available,
are appraised at prices deemed best to reflect their fair value
as determined in
good faith by or under the supervision of officers of the
Corporation in a
manner specifically authorized by the Board of Directors and
applied on a
consistent basis. The Board of Directors may by resolution adopt
the use of such
other system process, pricing service or such other means as may
be deemed
appropriate for valuing the portfolio securities of the
Corporation from time to
time, provided the Board determines that such manner of pricing
will reflect the
fair value of the Corporation's portfolio securities."
SIXTH: The Board of Directors of the
Corporation, on
January 8, 1981, duly adopted resolutions in which were set forth
the foregoing
amendments to the Charter of the Corporation, declaring that the
PAGE 13
said amendments as proposed was advisable and directing that they
be submitted
for action thereon by the sole shareholder of the Corporation.
SEVENTH: The amendments of the Charter as
hereinabove
set forth were approved by T. Rowe Price Associates, Inc., the
sole shareholder
of the Corporation, on January 9, 1981, and a written consent
which sets forth
the Charter amendments and is duly executed on behalf of T. Rowe
Price
Associates, Inc. is filed with the records of the Corporation.
EIGHTH: The amendments of the Charter as
hereinabove set
forth have been duly advised by the Board of Directors and
approved by T. Rowe
Price Associates, Inc., the sole shareholder of the Corporation.
IN WITNESS WHEREOF, ROWE PRICE PRIME
RESERVE FUND II,
INC. has caused these presents to be signed in its name and on
its behalf by its
Vice President, and its corporate seal to be affixed hereto and
attested by its
Secretary, on January 9, 1981.
ROWE PRICE PRIME
RESERVE FUND
II, INC.
/s/Henry H.
Hopkins
Henry H. Hopkins,
Vice
President
<PAGE>
PAGE 14
ATTEST:
/s/Lenora V. Hornung
Lenora V. Hornung, Secretary
STATE OF MARYLAND )
) SS.:
CITY OF BALTIMORE )
I HEREBY CERTIFY that on January 9, 1981,
before me the
subscriber, a Notary public of the State of Maryland, in and for
the City of
Baltimore, personally appeared Henry H. Hopkins, Vice President
of ROWE PRICE
PRIME RESERVE FUND II, INC., a Maryland corporation, and in the
name and on
behalf of said Corporation acknowledged the foregoing Articles of
Amendment to
be the corporate act of said Corporation; and at the same time
made oath in due
form of law that the matters and facts set forth in said Articles
of Amendment
with respect to the approval of the said amendments are true to
the best of his
knowledge, information and belief.
WITNESS my hand and notarial seal, the day
and year last
above written.
/s/Catherine L.
Boch
Catherine L. Boch
Notary Public
My commission expires: July 1, 1982
<PAGE>
PAGE 15
ARTICLES OF INCORPORATION
OF
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
FIRST: The undersigned, Henry H. Hopkins and James S.
Riepe, each of
whose post office address is 100 East Pratt Street, Baltimore,
Maryland 21202,
and each being at least eighteen (18) years of age, do hereby
form a corporation
under the General laws of the State of Maryland.
SECOND: The name of the Corporation is:
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
THIRD: The purposes for which the Corporation is
formed are as
follows:
(1) To operate as and carry on the business of an
investment
company, and
exercise all the powers necessary and appropriate to
the conduct
of such
operations.
(2) In general, to carry on any other business in
connection with or
incidental to the foregoing purpose, to have and
exercise all the
powers
conferred upon corporations by the laws of the State of
Maryland as in
force from time to time, to do everything necessary,
suitable or
proper for
the accomplishment of any purpose or the attainment of
any object
or the
furtherance of any power not inconsistent with Maryland
law,
either alone
or in association with others, and to take any action
incidental or
appurtenant to or growing out of or connected with the
the
Corporation's
business or purposes, objects, or powers.
The Corporation shall have the power to conduct and
carry on its
business, or
any part thereof, and to have one or more offices, and to
exercise any or
all of its
corporate powers and rights, in the State of Maryland, in any
other states,
territories,
districts, colonies, and dependencies of the United States, and
in any or
all foreign
countries.
The foregoing clauses shall be construed both as
objects and powers,
and the
foregoing enumeration of specific powers shall not be held to
limit or
restrict in any
manner the general powers of the Corporation.
FOURTH: The post office address of the principal
office of the
Corporation in
the State of Maryland is:
100 East Pratt Street
Baltimore, Maryland 21202
The name and post office address of the resident agent of the
Corporation in
the State of
Maryland is:
PAGE 16
Henry Holt Hopkins
100 East Pratt Street
Baltimore, Maryland 21202
Said resident agent is a citizen of the State of Maryland, and
actually resides therein.
FIFTH: (a) The total number of shares of stock which the
Corporation, by
resolution or resolutions of the Board of Directors,
shall have authority to
issue is One Billion (1,000,000,000) shares, par value
One Cent ($0.01) per
share, such shares having an aggregate par value of Ten
Million Dollars
($10,000,000). All of such shares may be issued as
shares of a class
designated Capital Stock, subject, however, to the
authority hereinafter
granted to the Board of Directors to classify or
reclassify any such shares
and, incident to such classification or reclassification,
to increase or
decrease such number of shares.
(b) The balance of shares authorized but unissued
may be issued as
Capital Stock, or in any new class or classes, each
consisting of such number
of shares and having such designations, such powers,
preferences and rights
and such qualifications, limitations and restrictions as
shall be fixed and
determined from time to time by resolution or resolutions
providing for the
issuance of such stock adopted by the Board of Directors,
to whom authority
so to fix and determine the same is hereby expressly
granted.
(c) Without limiting the generality of the
foregoing, the dividends
and distributions of investment income and capital gains
with respect to
Capital Stock and with respect to each class that may
hereafter be created
shall be in such amount as may be declared from time to
time by the Board of
Directors, and such dividends and distributions may vary
from class to class
to such extent and for such purposes as the Board of
Directors may deem
appropriate, including, but not limited to, the purpose
of complying with
requirements of regulatory or legislative authorities.
(d) The Board of Directors is hereby expressly
granted authority to
(1) classify or reclassify any unissued stock (whether
now or hereafter
authorized and whether of Capital Stock or any other
class) from time to time
by setting or changing the preferences, conversion or
other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, or terms
or conditions of redemption of the stock and (2) pursuant
to such
classification or reclassification to increase or
decrease the number of
authorized shares of any class, but the number of shares
of any class shall
not be decreased by the Board of Directors below the
number of shares thereof
then outstanding and the total number of authorized
shares of stock shall not
be increased above
1,000,000,000 shares except by amendment to the Corporation's
charter.
SIXTH: The number of directors of the Corporation
shall be three (3), or such
other number as may from time to time be fixed by the By-Laws of
the Corporation, or
pursuant to authorization contained in such By-Laws, but
PAGE 17
the number of directors shall never be less than (i) three (3) or
(ii) the number of
shareholders of the Corporation, whichever is less. George J.
Collins, Peter J. D.
Gordon, and James S. Riepe shall serve as directors until the
first meeting of
shareholders and until their successors are duly chosen and
qualify.
SEVENTH: Regulation of the Powers of the Corporation
and Its Directors and
Shareholders.
SECTION I
ISSUE OF THE CORPORATION'S SHARES
1.01General. The Board of Directors may from time to
time issue and sell or
cause to be issued and sold any of the Corporation's authorized
shares, including any
additional shares hereafter authorized and any shares redeemed or
repurchased by the
Corporation, except that only shares previously contracted to be
sold may be issued during
any period when the determination of net asset value is suspended
pursuant to the
provisions of Section III hereof. All such authorized shares,
when issued in accordance
with the terms of this Section I, shall be fully paid and
nonassessable. No holder of any
shares of the Corporation shall be entitled, by reason of holding
or owning such shares,
to any prior, preemptive or other right to subscribe to, purchase
or otherwise acquire any
additional shares of the Corporation subsequently issued for cash
or other consideration
or by way of a dividend or otherwise.
1.02Price. No shares of the Corporation shall be
issued or sold by the
Corporation, except as a stock dividend distributed to
shareholders, for less than an
amount which would result in proceeds to the Corporation, before
taxes payable by the
Corporation in connection with such transaction, of at least the
net asset value per share
determined as set forth in Section III hereof as of such time as
the Board of Directors
shall have by resolution theretofore prescribed, but not earlier
than the close of
business on the business day (which term, as used herein, shall
be defined to mean a day
on which the New York Stock Exchange is open all or part of the
day for unrestricted
trading, or such other definition as the Board of Directors shall
have by resolution
theretofore prescribed pursuant to Section 2.02 hereof) next
preceding the date of receipt
of an unconditional purchase order for such shares. In the
absence of a resolution of the
Board of Directors applicable to the transaction, such net asset
value shall be that next
determined after receipt of such purchase order. For this
purpose, the time of receipt of
such an unconditional order shall be the time it is first
received by the principal
underwriter, the custodian or depository of the Corporation's
assets, the transfer agent
of the Corporation, or by another agent of the Corporation
designated for the purpose.
1.03On Merger or Consolidation. In connection with the
acquisition of all or
substantially all the assets or stock of another investment
company or investment trust,
the Board of Directors may issue or cause to be issued shares of
the Corporation and
accept in payment therefor, in lieu of cash, such assets at their
market value, or such
stock at the market value of the assets held by such investment
company or investment
trust, either with or without adjustment for contingent costs or
liabilities, provided
that the funds of the Corporation are permitted by law to be
invested in such assets or
stock.
1.04Fractional Shares. The Board of Directors may
issue and sell fractions of
shares having pro rata all the rights of full shares, including,
without limitation, the
right to vote and to receive dividends.
PAGE 18
SECTION II
REDEMPTION AND REPURCHASE OF
THE CORPORATION'S SHARES
2.01Redemption of Shares. The Corporation shall redeem
its shares, subject to
the conditions and at the price determined as hereinafter set
forth, upon proper
application of the record holder thereof at such office or agency
as may be designated
from time to time for that purpose by the Board of Directors.
Any such application must
be accompanied by the certificate or certificates, if any,
evidencing such shares, duly
endorsed or accompanied by a proper instrument of transfer. The
Board of Directors shall
have power to determine or to delegate to the proper officers of
the Corporation the power
to determine from time to time the form and the other
accompanying documents which shall
be necessary to constitute a proper application for redemption.
2.02Price. Such shares shall be redeemed at their net
asset value determined as
set forth in Section III hereof as of such time as the Board of
Directors shall have
theretofore prescribed by resolution. In the absence of such
resolution, the redemption
price of shares deposited shall be the net asset value of such
shares next determined as
set forth in Section III hereof after receipt of such
application.
2.03Payment. Payment for such shares shall be made to
the shareholder of record
within seven (7) days after the date upon which proper
application is received, subject to
the provisions of Section 2.04 hereof. Such payment shall be
made in cash or other assets
of the Corporation or both, as the Board of Directors shall
prescribe.
2.04Effect of Suspension of Determination of Net Asset
Value. If, pursuant to
Section 3.03 hereof, the Board of Directors shall declare a
suspension of the
determination of net asset value, the rights of shareholders
(including those who shall
have applied for redemption pursuant to Section 2.01 hereof but
who shall not yet have
received payment) to have shares redeemed and paid for by the
Corporation shall be
suspended until the termination of such suspension is declared.
Any record holder whose
redemption right is so suspended may, during the period of such
suspension, by appropriate
written notice of revocation to the office or agency where
application was made, revoke
his application and withdraw any share certificates which
accompanied such application.
The redemption price of shares for which redemption applications
have not been revoked
shall be the net asset value of such shares next determined as
set forth in Section III
after the termination of such suspension, and payment shall be
made within seven (7) days
after the date upon which the application was made plus the
period after such application
during which the determination of net asset value was suspended.
2.05Repurchase by Agreement. The Corporation may
repurchase shares of the
Corporation directly, or through its principal underwriter or
other agent designated for
the purpose, by agreement with the owner thereof, at a price not
exceeding the net asset
value per share determined as of the time when the purchase or
contract of purchase is
made or the net asset value as of any time which may be later
determined pursuant to
Section III hereof, provided payment is not made for the shares
prior to the time as of
which such net asset value is determined.
2.06Corporation's Option to Redeem Shares.
PAGE 19
(a) The Corporation shall have the right at any
time and without prior
notice to the shareholder to redeem all shares in any account for
their then-current net
asset value per share if all shares in the account have an
aggregate net asset value of
less than $10,000, or such lesser amount as the Board of
Directors may from time to time
determine;
(b) The Corporation shall have the right at any
time and without prior
notice to the shareholder to redeem shares in any account for
their then-current net asset
value per share if and to the extent it shall be necessary to
reimburse the Corporation or
its principal underwriter or distributor for any loss sustained
by the Corporation by
reason of the failure of the shareholder in whose name such
account is registered to make
full payment for shares of the Corporation purchased by such
shareholder.
(c) The right of redemption provided by each of the
foregoing subsections of
this Section 2.06 shall be subject to such terms and conditions
as the Board of Directors
may from time to time approve, and subject to the Corporation's
giving general notice of
its intention to avail itself of such right, either by
publication in the Corporation's
prospectus or by such means as the Board of Directors shall
determine.
SECTION III
NET ASSET VALUE OF SHARES
3.01By Whom Determined. The Board of Directors shall
have the power and duty to
determine from time to time the net asset value per share of the
outstanding shares of the
Corporation. It may delegate such power and duty to one or more
of the directors and
officers of the Corporation, to the custodian or depository of
the Corporation's assets,
or to another agent of the Corporation appointed for such
purpose. Any determination made
pursuant to this section by the Board of Directors, or its
delegate, shall be binding on
all parties concerned.
3.02When Determined. The net asset value shall be
determined at such times as
the Board of Directors shall prescribe by resolution, provided
that such net asset value
shall be determined at least once each week as of the close of
business on a business day.
In the absence of a resolution of the Board of Directors, the net
asset value shall be
determined as of the close of trading on the New York Stock
Exchange on each business day.
3.03Suspension of Determination of Net Asset Value.
The Board of Directors may
declare a suspension of the determination of net asset value for
the whole or any part of
any period (a) during which the New York Stock Exchange is closed
other than customary
weekend and holiday closings, (b) during which trading on the New
York Stock Exchange is
restricted, (c) during which an emergency exists as a result of
which disposal by the
Corporation of securities owned by it is not reasonably
practicable or it is not
reasonably practical for the Corporation fairly to determine the
value of its net assets,
or (d) during which a governmental body having jurisdiction over
the Corporation may by
order permit for the protection of the security holders of the
Corporation. Such
suspension shall take effect at such time as the Board of
Directors shall specify, which
shall not be later than the close of business on the business day
next following the
declaration, and thereafter there shall be no determination of
net asset value until the
Board of Directors shall declare the suspension at an end, except
that the suspension
shall terminate in any event on the first day on which (1) the
condition
PAGE 20
giving rise to the suspension shall have ceased to exist and (2)
no other condition exists
under which suspension is authorized under this Section 3.03.
Each declaration by the
Board of Directors pursuant to this Section 3.03 shall be
consistent with such official
rules and regulations, if any, relating to the subject matter
thereof as shall have been
promulgated by the Securities and Exchange Commission or any
other governmental body
having jurisdiction over the Corporation and as shall be in
effect at the time. To the
extent not inconsistent with such official rules and regulations,
the determination of the
Board of Directors shall be conclusive.
3.04Computation of Per Share Net Asset Value.
(a) Net Asset Value Per Share. The net asset value
of each share as of any
particular time shall be the quotient obtained by dividing the
value of the net assets of
the Corporation by the total number of shares outstanding.
(b) Value of Corporation's Net Assets. The value
of the Corporation's net
assets as of any particular time shall be the value of the
Corporation's assets less its
liabilities, determined and computed as prescribed by the Board
of Directors.
SECTION IV
COMPLIANCE WITH INVESTMENT
COMPANY ACT OF 1940
Notwithstanding any of the foregoing provisions of this
Article SEVENTH, the
Board of Directors may prescribe, in its absolute discretion,
such other bases and times
for determining the per share net asset value of the
Corporation's shares as it shall deem
necessary or desirable to enable the Corporation to comply with
any provision of the
Investment Company Act of 1940, or any rule or regulation
thereunder, including any rule
or regulation adopted pursuant to Section 22 of the Investment
Company Act of 1940 by the
Securities and Exchange Commission or any securities association
registered under the
Securities Exchange Act of 1934, all as in effect now or as
hereafter amended or added.
SECTION V
MISCELLANEOUS
5.01 Compensation of Directors. The Board of
Directors shall have power from
time to time to authorize payment of compensation to the
directors for services to the
Corporation, including fees for attendance at meetings of the
Board of Directors and of
committees.
5.02 Inspection of Corporation's Books. The Board
of Directors shall have
power from time to time to determine whether and to what extent,
and at what times and
places, and under what conditions and regulations the accounts
and books of the
Corporation (other than the stock ledger) or any of them shall be
open to the inspection
of shareholders; and no shareholder shall have any right of
inspecting any account, book
or document of the Corporation except as at the time conferred by
statute, unless
authorized by a resolution of the shareholders or the Board of
Directors.
PAGE 21
5.03 Majority Vote of Shareholders. Notwithstanding
any provision of the
laws of the State of Maryland requiring a greater proportion than
a majority of the votes
of all classes or of any class of stock entitled to be cast, to
take or authorize any
action, such action may, subject to other applicable provisions
of law, these Articles of
Incorporation and the By-Laws, be taken or authorized upon the
concurrence of a majority
of the aggregate number of the votes entitled to be cast thereon.
5.04 Name. The Corporation acknowledges that it is
adopting its corporate
name through permission of T. Rowe Price Associates, Inc., a
Maryland corporation, and
agrees that T. Rowe Price Associates, Inc. reserves to itself and
any successor to its
business the right to grant the nonexclusive right to use the
name "T. Rowe Price" or any
similar name to any other corporation or entity, including, but
not limited to, any
investment company of which T. Rowe Price Associates, Inc. or any
subsidiary or affiliate
thereof or any successor to the business of any thereof shall be
the investment adviser.
5.05 Reservation of Right to Amend. The Corporation
reserves the right to
make any amendment of its charter, now or hereafter authorized by
law, including any
amendment which alters the contract rights, as expressly set
forth in its charter, of any
outstanding stock, and all rights herein conferred upon
shareholders are granted subject
to such reservation.
5.06 Determination of Net Profits, Etc.; Dividends.
The Board of Directors
is expressly authorized to determine in accordance with generally
accepted accounting
principles and practices what constitutes net profits, earnings,
surplus, or net assets in
excess of capital, and to determine what accounting periods shall
be used by the
Corporation for any purpose, whether annual or any other period,
including daily; to set
apart out of any funds of the Corporation such reserves for such
purposes as it shall
determine and to abolish the same; to declare and pay dividends
and distributions in cash,
securities, or other property from surplus or any funds legally
available therefor, at
such intervals (which may be as frequently as daily) or on such
other periodic basis, as
it shall determine; to declare such dividends or distributions by
means of a formula or
other method of determination, at meetings held less frequently
than the frequency of the
effectiveness of such declarations; to establish payment dates
for dividends or any other
distributions on any basis, including dates occurring less
frequently than the
effectiveness of the declaration thereof; and to provide for the
payment of declared
dividends on a date earlier than the specified payment date in
the case of shareholders of
the Corporation redeeming their entire ownership of shares of the
Corporation.
5.07 Contracts. The Board of Directors may in its
discretion from time to
time enter into an exclusive or nonexclusive underwriting
contract or contracts providing
for the sale of the shares of Capital Stock of the Corporation to
net the Corporation not
less than the amount provided for in Section 1.02 of Article
SEVENTH hereof, whereby the
Corporation may either agree to sell the shares to the other
party to the contract or
appoint such other party its sales agent for such shares (such
other party being herein
sometimes called the "underwriter"), and in either case, on such
terms and conditions as
may be prescribed in the By-Laws, if any, and such further terms
and conditions as the
Board of Directors may in its discretion determine not
inconsistent with the provisions of
Article SEVENTH hereof or of the By-Laws; and such contract may
also provide for the
repurchase of shares of the Corporation by such other party as
agent of the Corporation.
PAGE 22
The Board of Directors may in its discretion from time
to time enter into an
investment advisory or management contract whereby the other
party to such contract shall
undertake to furnish to the Corporation such management,
investment advisory, statistical
and research facilities and services and such other facilities
and services, if any, and
all upon such terms and conditions, as the Board of Directors may
in its discretion
determine.
Any contract of the character described in the
paragraphs above or for services
as custodian, transfer agent, or disbursing agent or related
services may be entered into
with any corporation, firm, trust, or association, although one
or more of the directors
or officers of the Corporation may be an officer, director,
trustee, shareholder, or
member of such other party to the contract, and no such contract
shall be invalidated or
rendered voidable by reason of the existence of any such
relationship, nor shall any
person holding such relationship be liable merely by reason of
such relationship for any
loss or expense to the Corporation under or by reason of said
contract or accountable for
any profit realized directly or indirectly therefrom, provided
that the contract, when
entered into, was reasonable and fair and not inconsistent with
the provisions of this
Section 5.07. The same person (including a firm, corporation,
trust, or association) may
be the other party to contracts entered into pursuant to the
above paragraphs, and any
individual may be financially interested or otherwise affiliated
with persons who are
parties to any or all of the contracts mentioned in this
paragraph.
Any contract entered into pursuant to the first two
paragraphs of this Section
5.07 shall be consistent with and subject to the requirements of
Section 15 of the
Investment Company Act of 1940 (including any amendment thereof
or other applicable Act of
Congress hereafter enacted) with respect to its continuance in
effect, its termination and
the method of authorization and approval of such contract or
renewal thereof.
IN WITNESS WHEREOF, we have signed these Articles of
Incorporation and
acknowledge the same to be our act on this 7th day of October,
1983.
Henry H. Hopkins
James S. Riepe
STATE OF MARYLAND )
) ss:
CITY OF BALTIMORE )
I HEREBY CERTIFY, that on this 7th day of October,
1983, before me, the
subscriber, a Notary Public of the State of Maryland, in and for
the City of Baltimore,
personally appeared HENRY H. HOPKINS and JAMES S. RIEPE, and they
acknowledged the
foregoing Articles of Incorporation to be their act.
WITNESS my hand and Notarial Seal this 7th day of
October, 1983.
Notary Public
PAGE 23
My Commission expires:
<PAGE>
PAGE 24
ARTICLES OF INCORPORATION
OF
ROWE PRICE TAX-FREE INCOME FUND, INC.
FIRST: The undersigned, Henry H. Hopkins and H.
Spencer Everett, Jr., each of
whose post office address is 100 East Pratt Street, Baltimore,
Maryland 21202, and each
being at least eighteen years of age, do hereby form a
corporation under the General Laws
of the State of Maryland.
SECOND: The name of the Corporation is:
ROWE PRICE TAX-FREE INCOME FUND, INC.
THIRD: The purposes for which the Corporation is
formed are as follows:
(1) To operate as and carry on the business of an
investment company, and
exercise all the powers necessary and appropriate to the conduct
of such operations.
(2) To invest and reinvest its funds in and hold
for investment the
securities (including but not limited to bonds, debentures, time
notes, repurchase
agreements, and all other evidences of indebtedness and shares,
stock, subscription
rights, profit-sharing interests or participations and all other
contracts for or
evidences of equity interests) of any corporation, company,
trust, association, firm or
other business organization however established, and of any
country, state, municipality
or other political subdivision, or of any other governmental or
quasi-governmental agency
or instrumentality.
(3) To acquire (by purchase, subscription or
otherwise), to hold, to trade
in and deal in, to sell or otherwise dispose of, to lend, and to
pledge any such
securities and repurchase agreements.
(4) To exercise all rights, powers and privileges
of ownership or interest
in all securities and repurchase agreements held by the
Corporation, including the right
to vote thereon and otherwise act with respect thereto and to do
all acts for the
preservation, protection, improvement and enhancement in value of
all such securities and
repurchase agreements.
(5) To aid by further investment any corporation,
company, trust,
association, firm or other business organization, any obligation
of or interest in which
is held by the Corporation or in the affairs of which the
Corporation has any direct or
indirect interest, and to do anything designed to protect,
preserve, improve or enhance
the value of such obligation or interest.
(6) To promote or aid the incorporation of any
organization or enterprise
under the laws of any country, state, municipality or other
political subdivision, and to
cause the same to be dissolved, wound up, liquidated, merged or
consolidated.
(7) In general, to carry on any other business in
connection with or
incidental to any of the foregoing objects and purposes, to have
and exercise all the
powers conferred upon corporations by the laws of the State of
Maryland as in force from
time to time, to do everything necessary, suitable or proper for
the accomplishment of any
purpose or the attainment of any object or the furtherance of any
power hereinbefore set
PAGE 25
forth, either alone or in association with others, and to take
any action incidental or
appurtenant to or growing out of or connected with the aforesaid
business or purposes,
objects or powers.
The Corporation shall have the power to conduct and
carry on its business, or
any part thereof, and to have one or more offices, and to
exercise any or all of its
corporate powers and rights, in the State of Maryland, in any
other states, territories,
districts, colonies and dependencies of the United States, and in
any or all foreign
countries.
The foregoing clauses shall be construed both as
objects and powers, and the
foregoing enumeration of specific powers shall not be held to
limit or restrict in any
manner the general powers of the Corporation.
FOURTH: The post office address of the principal
office of the Corporation in
the State of Maryland is:
100 East Pratt Street
Baltimore, Maryland
21202
The name and post office address of the resident agent of the
Corporation in the State of
Maryland is:
H. Spencer Everett,
Jr.
100 East Pratt Street
Baltimore, Maryland
21202
FIFTH: The total number of shares of stock which the
Corporation has authority
to issue is Two Hundred Million (200,000,000) shares of a single
class of the par value of
One Dollar ($1.00) per share, such shares having an aggregate par
value of Two Hundred
Million Dollars ($200,000,000).
SIXTH: The number of directors of the Corporation
shall be five, or such other
number as may from time to time be fixed by the By-Laws of the
Corporation or pursuant to
authorization contained in such By-Laws, but the number of
directors shall never be less
than three. The names of the directors who shall act as such
until the first annual
meeting of stockholders and until their successors are duly
chosen and qualify are as
follows:
Donald E. Bowman
George J. Collins
Carter O. Hoffman
W. Ernest Issel
Lawrence P. Naylor,
III
SEVENTH: Regulation of the Powers of the Corporation
and Its Directors and
Shareholders.
SECTION I
ISSUE OF THE CORPORATION'S SHARES
1.01 General. The Board of Directors may from time
to time issue and sell
or cause to be issued and sold any of the Corporation's
authorized shares, including any
additional shares hereafter authorized and any shares redeemed or
repurchased by the
Corporation, except that only shares previously contracted to be
sold may be issued during
any period when the determination of net asset value is suspended
pursuant to the
provisions of Section III hereof. All such authorized shares,
when issued in accordance
with the terms of this Section I, shall be fully paid and
nonassessable. No holder of any
shares of the Corporation shall be entitled, by reason of holding
or owning such shares,
to any prior, preemptive or other right to
PAGE 26
subscribe to, purchase or otherwise acquire any additional shares
of the Corporation
subsequently issued for cash or other consideration or by way of
a dividend or otherwise.
1.02 Price. No shares of the Corporation shall be
issued or sold by the
Corporation, except as a stock dividend distributed to
shareholders, for less than an
amount which would result in proceeds to the Corporation, before
taxes payable by the
Corporation in connection with such transaction, of at least the
net asset value per share
determined as set forth in Section III hereof as of such time as
the Board of Directors
shall have by resolution theretofore prescribed but not earlier
than the close of business
on the business day (which term, as used herein, shall mean a day
on which the New York
Stock Exchange is open all or part of the day for unrestricted
trading) next preceding the
date of receipt of an unconditional purchase order for such
shares. In the absence of a
resolution of the Board of Directors applicable to the
transaction, such net asset value
shall be that next determined after receipt of such purchase
order. For this purpose, the
time of receipt of such an unconditional order shall be the time
it is first received by
the Corporation, its principal underwriter, the custodian or
depository of the
Corporation's assets, the transfer agent of the Corporation, or
by another agent of the
Corporation designated for the purpose.
1.03 On Merger or Consolidation. In connection
with the acquisition of all
or substantially all the assets or stock of another investment
company or investment
trust, the Board of Directors may issue or cause to be issued
shares of the Corporation
and accept in payment therefor, in lieu of cash, such assets at
their market value, or
such stock at the market value of the assets held by such
investment company or investment
trust, either with or without adjustment for contingent costs or
liabilities, provided
that the funds of the Corporation are permitted by law to be
invested in such assets or
stock.
1.04 Fractional Shares. The Board of Directors may
issue and sell fractions
of shares having pro rata all the rights of full shares,
including, without limitation,
the right to vote and to receive dividends.
SECTION II
REDEMPTION AND REPURCHASE OF
THE CORPORATION'S SHARES
2.01 Redemption of Shares. The Corporation shall
redeem its shares, subject
to the conditions and at the price determined as hereinafter set
forth, upon proper
application of the record holder thereof at such office or agency
as may be designated
from time to time for that purpose by the Board of Directors.
Any such application must
be accompanied by the certificate or certificates, if any,
evidencing such shares, duly
endorsed or accompanied by a proper instrument of transfer. The
Board of Directors shall
have power to determine from time to time the form and the other
accompanying documents
which shall be necessary to constitute a proper application for
redemption.
2.02 Price. Such shares shall be redeemed at their
net asset value
determined as set forth in Section III hereof as of such time as
the Board of Directors
shall have theretofore prescribed by resolution, which time shall
not be later than the
close of business on the next business day succeeding, and not
earlier than the close of
business on the next business day preceding, the date on which
proper application is made
for redemption. In the absence of such resolution, the
redemption price of shares
deposited shall be the net asset value of such shares next
determined as set forth in
Section III hereof after receipt of such application.
PAGE 27
2.03 Payment. Payment for such shares shall be
made to the shareholder of
record within seven days after the date upon which proper
application is received, subject
to the provisions of Section 2.04 hereof. Such payment shall be
made in cash or other
assets of the Corporation or both, as the Board of Directors
shall prescribe. For the
purposes of such payment for shares redeemed, the value of assets
delivered shall be
determined as set forth in Section III hereof as of the same time
as of which the per
share net asset value of such shares is determined.
2.04 Effect of Suspension of Determination of Net
Asset Value. If, pursuant
to Section 3.03 hereof, the Board of Directors shall declare a
suspension of the
determination of net asset value, the rights of shareholders
(including those who shall
have applied for redemption pursuant to Section 2.01 hereof but
who shall not yet have
received payment) to have shares redeemed and paid for by the
Corporation shall be
suspended until the termination of such suspension is declared.
Any record holder whose
redemption right is so suspended may, during the period of such
suspension, by appropriate
written notice of revocation to the office or agency where
application was made, revoke
his application and withdraw any share certificates which
accompanied such application.
The redemption price of shares for which redemption applications
have not been revoked
shall be the net asset value of such shares next determined as
set forth in Section III
after the termination of such suspension, and payment shall be
made within seven days
after the date upon which the application was made plus the
period after such application
during which the determination of net asset value was suspended.
2.05 Repurchase by Agreement. The Corporation may
repurchase shares of the
Corporation directly, or through its principal underwriter or
other agent designated for
the purpose, by agreement with the owner thereof, at a price not
exceeding the net asset
value per share determined as of the time when the purchase or
contract of purchase is
made or the net asset value as of any time which may be later
determined pursuant to
Section III hereof, provided payment is not made for the shares
prior to the time as of
which such net asset value is determined.
2.06 Corporation's Option to Redeem Shares. The
Corporation shall have the
right at any time and without prior notice to the shareholder to
redeem shares in any
account for their then-current net asset value per share if and
to the extent it shall be
necessary to reimburse the Corporation for any loss sustained by
the Corporation by reason
of the failure of the shareholder in whose name such account is
registered to make full
payment for shares of the Corporation purchased by such
shareholder.
The right of redemption provided by this
Section 2.06 shall be subject
to such terms and conditions as the Board of Directors may from
time to time approve, and
subject to the Corporation's giving general notice of its
intention to avail itself of
such right, either by publication in the Corporation's prospectus
or by such means as the
Board of Directors shall determine.
SECTION III
NET ASSET VALUE OF SHARES
3.01 By Whom Determined. The Board of Directors
shall have the power and
duty to determine from time to time the net asset value per share
of the outstanding
shares of the Corporation. It may delegate such power and duty
to one or more of the
directors and officers of the Corporation, to the custodian or
depository of the
Corporation's assets, or to another agent of the Corporation
appointed for such purpose.
Any
PAGE 28
determination made pursuant to this Section by the Board of
Directors or its delegate
shall be binding on all parties concerned.
3.02 When Determined. The net asset value shall be
determined at such times
as the Board of Directors shall prescribe by resolution, provided
that such net asset
value shall be determined at least once each week as of the close
of business on a
business day. In the absence of a resolution of the Board of
Directors, the net asset
value shall be determined as of the close of trading on the New
York Stock Exchange on
each business day.
3.03 Suspension of Determination of Net Asset
Value. The Board of Directors
may declare a suspension of the determination of net asset value
for the whole or any part
of any period (a) during which the New York Stock Exchange is
closed other than customary
weekend and holiday closings, (b) during which trading on the New
York Stock Exchange is
restricted, (c) during which an emergency exists as a result of
which disposal by the
Corporation of securities owned by it is not reasonably
practicable or it is not
reasonably practicable for the Corporation fairly to determine
the value of its net
assets, or (d) during which a governmental body having
jurisdiction over the Corporation
may by order permit for the protection of the security holders of
the Corporation. Such
suspension shall take effect at such time as the Board of
Directors shall specify, which
shall not be later than the close of business on the business day
next following the
declaration, and thereafter there shall be no determination of
net asset value until the
Board of Directors shall declare the suspension at an end, except
that the suspension
shall terminate in any event on the first day on which (1) the
condition giving rise to
the suspension shall have ceased to exist and (2) no other
condition exists under which
suspension is authorized under this Section 3.03. Each
declaration by the Board of
Directors pursuant to this Section 3.03 shall be consistent with
such official rules and
regulations, if any, relating to the subject matter thereof as
shall have been promulgated
by the securities and Exchange Commission or any other
governmental body having
jurisdiction over the Corporation and as shall be in effect at
the time. To the extent
not inconsistent with such official rules and regulations, the
determination of the Board
of Directors shall be conclusive.
3.04 Computation of Per Share Net Asset Value.
a. Net Asset Value Per Share. The net asset
value of each share as of any
particular time shall be the quotient obtained by dividing the
value of the net assets of
the Corporation by the total number of shares outstanding.
b. Value of Corporation's Net Assets. The value
of the Corporation's net
assets as of any particular time shall be the value of the
Corporation's assets less its
liabilities, determined and computed as follows:
(1) Corporation's Assets.
The Corporation's
assets shall be deemed to include: (A) all cash on hand
or on deposit, including
any interest accrued thereon, (B) all bills and demand
notes and accounts
receivable, (C) all securities owned or contracted for
by the Corporation, (D)
all stock and cash dividends and cash distributions
payable to but not yet
received by the Corporation (when the valuation of the
underlying security is
being determined exdividend), (E) all interest accrued
on any interest-bearing
securities owned by the Corporation (except accrued
interest included in the
valuation of the underlying security), (F) all
repurchase agreements, and (G)
all other property of every kind and nature, including
prepaid expenses.
PAGE 29
(2) Valuation of Assets.
The value of such assets
is to be determined as follows:
(i)Cash and Prepaid
Expenses. The value of
any cash on hand and of any prepaid expenses
shall be deemed to be
their full amount.
(ii)Other Current
Assets. The value of any
cash on deposit, bills, demand notes, accounts
receivable, and cash
dividends and interest declared or accrued as
aforesaid and not yet
received shall be deemed to be the full amount
thereof, unless the
Board of Directors shall determine that any
such item is not worth its
full amount. In such case, the value of the
item shall be deemed to be
its reasonable value, as determined by the
Board of Directors.
(iii) Securities.
The securities in which the
Fund may invest are traded primarily in the
over-the-counter market.
Portfolio securities are valued at quoted bid
prices when
representative quotes are readily available.
Securities and other
assets for which representative quotes are not
readily available are
appraised at prices deemed best to reflect
their fair market value as
determined in good faith by or under the
supervision of officers of the
Fund in a manner specifically authorized by
the Board of Directors.
(3) The Corporation's
Liabilities. The
Corporation's liabilities shall not be deemed to
include outstanding shares and
surplus. They shall be deemed to include: (A) all
bills and accounts payable,
(B) all administrative expenses accrued, (C) all
contractual obligations for the
payment of money or property, including the amount of
any declared but unpaid
dividends upon the Corporation's shares, (D) all
reserves authorized or approved
by the Board of Directors for taxes or contingencies
and (E) all other
liabilities of whatsoever kind and nature except any
liabilities represented by
the Corporation's outstanding shares and surplus.
3.05 Interim Determinations. Any determination of
net asset value other
than as of the close of trading on the New York Stock Exchange
may be made either by
appraisal or by calculation or estimate. Any such calculation or
estimate shall be based
on changes in the market value of representative or selected
securities or on changes in
recognized market averages since the last closing appraisal and
made in a manner which in
the opinion of the Board of Directors or its delegate will fairly
reflect the changes in
the net asset value.
3.06 Miscellaneous. For the purposes of the
Section III:
a. Shares of the
Corporation sold shall be deemed
to be outstanding as of the time, not before an
unconditional purchase order
therefor has been received by the Corporation (directly
or through one of its
agents) or by one of its underwriters and the sale
price in currency has been
determined, when the sale is reported to the
Corporation or to its agent for
determining net asset value, and the net sale price
thereof to the Corporation
(less commission, if any, and less any stamp or other
tax payable by the
Corporation in connection with
PAGE 30
the issue and sale thereof) shall be thereupon deemed to be an
asset of the Corporation.
b. Shares of the
Corporation for which an
application for redemption has been made or which are
subject to repurchase by
the Corporation shall be deemed to be outstanding up to
and including the time
as of which the redemption or repurchase price is
determined. After such time,
they shall be deemed to be no longer outstanding and
the price until paid shall
be deemed to be a liability of the Corporation.
c. Funds on deposit and
contractual obligations
payable to the Corporation in foreign currency and
liabilities and contractual
obligations payable by the Corporation in foreign
currency shall be taken at the
current cable rate of exchange as nearly as practicable
at the time as of which
the net asset value is computed.
SECTION IV
COMPLIANCE WITH INVESTMENT
COMPANY ACT OF 1940
Notwithstanding any of the foregoing
provisions of this Article
SEVENTH, the Board of Directors may prescribe, in its absolute
discretion, such other
bases and times for determining the per share net asset value of
the Corporation's shares
as it shall deem necessary or desirable to enable the Corporation
to comply with any
provision of the Investment Company Act of 1940, or any rule or
regulation thereunder,
including any rule or regulation adopted pursuant to Section 22
of the Investment Company
Act of 1940 by the Securities and Exchange Commission or any
securities association
registered under the Securities Act of 1934, all as in effect now
or as hereafter amended
or added.
SECTION V
MISCELLANEOUS
5.01 Compensation of Directors. The Board of
Directors shall have power
from time to time to authorize payment of compensation to the
directors for services to
the Corporation, including fees for attendance at meetings of the
Board of Directors and
of committees.
5.02 Inspection of Corporation's Books. The Board
of Directors shall have
power from time to time to determine whether and to what extent,
and at what times and
places and under what conditions and regulations the accounts and
books of the Corporation
(other than the stock ledger) or any of them shall be open to the
inspection of
shareholders; and no shareholder shall have any right of
inspecting any account, book or
document of the Corporation except as at the time conferred by
statute, unless authorized
by a resolution of the shareholders or the Board of Directors.
5.03 Majority Vote of Shareholders.
Notwithstanding any provision of the
laws of the State of Maryland requiring a greater proportion than
a majority of the votes
of all classes or of any class of stock entitled to be cast, to
take or authorize any
action, such action may, subject to other applicable provisions
of law, these Articles of
Incorporation and the By-Laws, be taken or authorized upon the
concurrence of a majority
of the aggregate number of the votes entitled to be cast thereon.
5.04 Name. The Corporation acknowledges that it is
adopting its corporate
name through permission of T. Rowe Price Associates, Inc., a
PAGE 31
Maryland corporation, and agrees that T. Rowe Price Associates,
Inc. reserves to itself
and any successor to its business the right to grant the
nonexclusive right to use the
name "Rowe Price" or any similar name to any other corporation or
entity, including but
not limited to any investment company of which T. Rowe Price
Associates, Inc. or any
subsidiary or affiliate thereof or any successor to the business
of any thereof shall be
the investment adviser.
5.05 Reservation of Right to Amend. The
Corporation reserves the right to
make any amendment of its charter, now or hereafter authorized by
law, including any
amendment which alters the contract rights, as expressly set
forth in its charter, of any
outstanding stock, and all rights herein conferred upon
stockholders are granted subject
to such reservation.
5.06 Determination of Net Profits, etc.; Dividends.
The Board of Directors
is expressly authorized to determine in accordance with generally
accepted accounting
principles and practices what constitutes net profits, earnings,
surplus or net assets in
excess of capital, and to determine what accounting periods shall
be used by the
Corporation for any purpose, whether annual or any other period,
including daily; to set
apart out of any funds of the Corporation such reserves for such
purposes as it shall
determine and to abolish the same; to declare and pay dividends
and distributions in cash,
securities or other property from surplus or any funds legally
available therefor, at such
intervals (which may be as frequently as daily) or on such other
periodic basis, as it
shall determine; to declare such dividends or distributions by
means of a formula or other
method of determination, at meetings held less frequently than
the frequency of the
effectiveness of such declarations; to establish payment dates
for dividends or any other
distributions on any basis, including dates occurring less
frequently than the
effectiveness of the declaration thereof; and to provide for the
payment of declared
dividends on a date earlier than the specified payment date in
the case of stockholders of
the Corporation redeeming their entire ownership of shares of the
Corporation.
5.07 Contracts. The Board of Directors may in its
discretion from time to
time enter into an exclusive or non-exclusive underwriting
contract or contracts providing
for the sale of the shares of Capital Stock of the Corporation to
net the Corporation not
less than the amount provided for in Section 1.02 of Article
SEVENTH hereof, whereby the
Corporation may either agree to sell the shares to the other
party to the contract or
appoint such other party its sales agent for such shares (such
other party being herein
sometimes called the "underwriter"), and in either case on such
terms and conditions as
may be prescribed in the By-Laws, if any, and such further terms
and conditions as the
Board of Directors may in its discretion determine not
inconsistent with the provisions of
Article SEVENTH hereof or of the By-Laws; and such contract may
also provide for the
repurchase of shares of the Corporation by such other party as
agent of the Corporation.
The Board of Directors may in its discretion
from time to time enter
into an investment advisory or management contract whereby the
other party to such
contract shall undertake to furnish to the Corporation such
management, investment
advisory, statistical and research facilities and services and
such other facilities and
services, if any, and all upon such terms and conditions, as the
Board of Directors may in
its discretion determine.
Any contract of the character described in the
paragraphs above or for
services as custodian, transfer agent or disbursing agent or
related services may be
entered into with any corporation, firm, trust or association,
although one or more of the
directors or officers of the
PAGE 32
Corporation may be an officer, director, trustee, shareholder or
member of such other
party to the contract, and no such contract shall be invalidated
or rendered voidable by
reason of the existence of any such relationship, nor shall any
person holding such
relationship be liable merely by reason of such relationship for
any loss or expense to
the Corporation under or by reason of said contract or
accountable for any profit realized
directly or indirectly there from, provided that the contract
when entered into was
reasonable and fair and not inconsistent with the provisions of
this Section 5.07. The
same person (including a firm, corporation, trust or association)
may be the other party
to any contract entered into pursuant to the above paragraphs,
and any individual may be
financially interested or otherwise affiliated with persons who
are parties to any or all
of the contracts mentioned in this paragraph.
Any contract entered into pursuant to the
first two paragraphs of this
Section 5.07 shall be consistent with and subject to the
requirements of Section 15 of the
Investment Company Act of 1940 (including any amendment thereof
or other applicable Act of
Congress hereafter enacted) with respect to its continuance in
effect, its termination and
the method of authorization and approval of such contract or
renewal thereof.
IN WITNESS WHEREOF, we have signed these Articles of
Incorporation and
acknowledge the same to be our act on this 24th
day of September, 1976.
/s/H. Spencer
Everett, Jr.
H. Spencer Everett,
Jr.
/s/Henry H. Hopkins
Henry H. Hopkins
STATE OF MARYLAND )
: to wit:
CITY OF BALTIMORE )
I hereby certify that on this 24th day of September,
1976, before me, the
subscriber, a Notary Public of the State of Maryland in and for
the City of Baltimore,
personally appeared H. Spencer Everett, Jr. and Henry H. Hopkins
and acknowledged the
foregoing Articles of Incorporation to be their act.
Witness my hand and notarial seal this 24th day of
September, 1976.
/s/Elizabeth R.
Thomason
Elizabeth R. Thomason
Notary Public
Baltimore, Maryland
<PAGE>
PAGE 33
ROWE PRICE TAX-FREE INCOME FUND, INC.
ARTICLES OF AMENDMENT
Rowe Price Tax-Free income Fund, Inc., a Maryland
corporation having its
principal office in the City of Baltimore, Maryland (hereinafter
called the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of
Maryland that:
FIRST: The Charter of the Corporation is hereby
amended by deleting therefrom
Subsection 3.04(b) (2) (iii) of Section III of Article SEVENTH
and inserting in lieu
thereof a new Subsection 3.04(b) (2) (iii) to read in full as
follows:
"(iii) Securities. The securities in which
the Fund may invest are
traded primarily in the over-the-counter market.
Portfolio securities are
valued at the mean between quoted bid and asked prices
when representative
quotes are readily available. Securities and other
assets for which (a) such
procedure is deemed not to reflect fair market value or
(b) representative
quotes are not readily available, are appraised at
prices deemed best to reflect
their fair market value as determined in good faith by
or under the supervision
of officers of the Fund in a manner specifically
authorized by the Board of
Directors. The Board of Directors may by resolution
adopt the use of such other
system process, pricing service or such other means as
may be deemed appropriate
for valuing the portfolio securities of the Fund from
time to time, provided the
Board determines that such manner of pricing will
actually reflect the fair
market value of the Fund's portfolio securities."
SECOND: The Board of Directors of the Corporation, on
November 3, 1976, duly
adopted a resolution in which was set forth the foregoing
amendment to the Charter of the
Corporation, declaring that the said amendment as proposed was
advisable and directing
that it be submitted for action thereon by the stockholders of
the Corporation.
THIRD: The amendment of the Charter as hereinabove set
forth was approved by T.
Rowe Price Associates, Inc., the sole stockholder of the
Corporation, on November 4, 1976,
and a written consent which sets forth the Charter amendment and
is duly executed on
behalf of T. Rowe Price Associates, Inc. is filed with the
records of the Corporation.
PAGE 33
FOURTH: The amendment of the Charter as hereinabove
set forth has been duly
advised by the Board of Directors and approved by the
stockholders of the Corporation.
IN WITNESS WHEREOF, ROWE PRICE TAX-FREE INCOME FUND,
INC. has caused these
presents to be signed in its name and on its behalf by one of its
Vice Presidents, and its
corporate seal to be hereunto affixed and attested by its
Secretary, on November 4, 1976.
ROWE PRICE TAX-FREE
INCOME FUND, INC.
/s/William B.
Thompson
William B. Thompson,
Vice President
ATTEST:
/s/Lenora V. Hornung
Lenora V. Hornung, Secretary
STATE OF MARYLAND )
) SS:
CITY OF BALTIMORE )
I HEREBY CERTIFY that on November 4, 1976, before me
the subscriber, a Notary
Public of the State of Maryland, in and for the City of
Baltimore, personally appeared
William B. Thompson, Vice President of ROWE PRICE TAX-FREE INCOME
FUND, INC., a Maryland
corporation, and in the name and on behalf of said Corporation
acknowledged the foregoing
Articles of Amendment to be the corporate act of said
Corporation; and at the same time
made oath in due form of law that she matters and facts set forth
in said Articles of
Amendment with respect to the approval of the said amendment are
true to the best of his
knowledge, information and belief.
WITNESS my hand and notarial seal, the day and year
last above written.
/s/Carolynn Kendall
Carolynn Kendall
Notary Public
My commission expires July l, 1978
PAGE 34
ROWE PRICE TAX-FREE INCOME FUND, INC.
ARTICLES OF AMENDMENT
Rowe Price Tax-Free Income Fund, Inc., a Maryland
corporation having its
principal office in the City of Baltimore, Maryland (hereinafter
called the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of
Maryland that:
FIRST: The Charter of the Corporation is hereby
amended by deleting therefrom
Article SECOND and inserting in lieu thereof a new Article SECOND
to read in full as
follows:
"SECOND: The name of the Corporation is:
T. ROWE PRICE TAX-FREE INCOME FUND, INC."
SECOND: The Board of Directors of the Corporation, on
January 22, 1981, duly
adopted resolutions in which were set forth the foregoing
amendment to Article SECOND of
the Charter of the Corporation, declaring that the said amendment
as proposed was
advisable and directing that it be submitted for action thereon
by the shareholders of the
Corporation at the annual meeting of shareholders to be held on
April 7, 1981.
THIRD: Notice setting forth a summary of the changes
to be effected by said
amendments of the Charter, and stating that a purpose of said
meeting of shareholders
Would be to take action thereon, was given, as required by law,
to all shareholders
entitled to vote thereon.
FOURTH: The amendment to Article SECOND of the Charter
as hereinabove set forth
was approved by the shareholders of the Corporation at said
meeting on April 7, 1981, by
the affirmative vote of 19,568,663.901 shares of the
32,999,129.147 shares of common stock
issued and outstanding, or 59.32% of the votes entitled to be
cast thereon, which vote was
sufficient to approve such amendment pursuant to the provisions
of the Charter of the
Corporation which requires the approval of a majority of the
votes entitled to be cast on
any such amendment, notwithstanding any provision of the law
requiring a greater
proportion.
PAGE 35
FIFTH: The amendment of the Charter as hereinabove set
forth has been duly
advised by the Board of Directors and approved by the
shareholders of the Corporation.
IN WITNESS WHEREOF, ROWE PRICE TAX-FREE INCOME FUND,
INC. has caused these
presents to be signed in its name and on its behalf by its Vice
President, and its
corporate seal to be hereunto affixed and attested by its
Secretary, on May l, 1981.
ROWE PRICE TAX-FREE
INCOME FUND, INC.
/s/Howard P. Colhoun
Howard P. Colhoun,
Vice President
ATTEST:
/s/Lenora V. Hornung
Lenora V. Hornung, Secretary
STATE OF MARYLAND )
) SS.:
CITY OF BALTIMORE )
I HEREBY CERTIFY that on May l, 1981, before me the
subscriber, a Notary Public
of the State of Maryland, in and for the City of Baltimore,
personally appeared Howard P.
Colhoun, Vice President of ROWE PRICE TAX-FREE INCOME FUND, INC.,
a Maryland corporation,
and in the name and on behalf of said Corporation acknowledged
the foregoing Articles of
Amendment to be the corporate act of said Corporation; and at the
same time made
oath in due form of law that the matters and facts set forth in
said Articles of Amendment
with respect to the approval of the said amendments are true to
the best of his knowledge,
information and belief.
WITNESS my hand and notarial seal, the day and year
last above written.
/s/Catherine L. Boch
Catherine L. Boch
Notary Public
My commission expires: July 1, 1982
<PAGE>
PAGE 36
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
ARTICLES OF AMENDMENT
T. Rowe Price Tax-Free Income Fund, Inc., a Maryland
corporation, having its
principal office in the City of Baltimore, Maryland (hereinafter
called the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of
Maryland that:
FIRST: The Charter of the Corporation is hereby
amended by deleting therefrom
Article FIFTH and inserting in lieu thereof a new Article FIFTH
to read in full as
follows:
"FIFTH: (a) The total number of shares of
stock which the Corporation
shall have authority to issue is Five Hundred
Million (500,000,000)
shares of a single class of the par value of
One Dollar ($1.00) per
share, such shares having an aggregate par
value of Five Hundred
Million Dollars ($500,000,000).
(b) The balance of shares
authorized but unissued
may be issued as Capital Stock, or in any new
class or classes, each
consisting of such number of shares and having
such designations, such
powers, preferences and rights and such
qualifications, limitations and
restrictions as shall be fixed and determined
from time to time by
resolution or resolutions providing for the
issuance of such stock
adopted by the Board of Directors, to whom
authority so to fix and
determine the same is hereby expressly
granted.
(c) Without limiting the
generality of the
foregoing, the dividends and distributions of
investment income and
capital gains with respect to Capital Stock
and with respect to each
class that may hereafter be created shall be
in such amount as may be
declared from time to time by the Board of
Directors, and such
dividends and distributions may vary from
class to class to such extent
and for such purposes as the Board of
Directors may deem appropriate,
including but not limited to, the purpose of
complying with
requirements of regulatory or legislative
authorities.
(d) The Board of
Directors is hereby expressly
wanted authority to (1) classify or reclassify
an unissued stock
(whether now or hereafter authorized and
whether of Capital Stock or
any other class) from time to time by setting
or changing the
preferences, conversion or other rights,
voting powers, restrictions,
limitations as to dividends, qualifications,
or terms or conditions of
redemption of the stock and (2) pursuant to
such classification or
reclassification to increase or decrease the
number of authorized
shares of any class, but the number of shares
of any class shall not be
decreased by the Board of Directors below the
number of shares thereof
then outstanding and the total number of
authorized shares of stock
shall not be increased above the number of
shares authorized in
subsection (a) of this Article FIFTH except by
amendment to the
Corporation's charter.
SECOND: The Board of Directors of the Corporation, on
January 19, 1983, duly
adopted a resolution which set forth the foregoing amendment to
subsection (a) of Article
FIFTH of the Charter of the Corporation, declaring that said
amendment as proposed was
advisable and directing that it be submitted for action thereon
by the shareholders of the
Corporation at the annual meeting of shareholders to be held on
June 8, 1983.
THIRD: The Board of Directors of the Corporation, on
April 14, 1983, duly
adopted a resolution which set forth the addition of subsections
(b), (c), and (d) to
Article FIFTH of the Charter of the Corporation, declaring that
said additions were
advisable and directing that they be submitted for action thereon
by the shareholders of
the Corporation at the annual meeting of shareholders to be held
on June 8, 1983.
FOURTH: Notice setting forth a summary of the changes
to be effected by said
amendments of the Charter, and stating that a purpose of said
meeting of shareholders
would be to take action thereon, was given, as required by law,
to all shareholders
entitled to vote thereon.
FIFTH: The amendment to subsection (a) of Article
FIFTH of the Charter as
hereinabove set forth was approved by the shareholders of the
Corporation at said meeting
on June 8, 1983, by the affirmative vote of 72,676,929.215 shares
of the 106,299,338.147
shares of common stock issued and outstanding, or 68.37% of the
votes entitled to be cast
thereon, which vote was sufficient to approve such amendment
pursuant to the provisions of
the Charter of the Corporation which require the approval of a
majority of the votes
entitled to be cast on any such amendment, notwithstanding any
provision of the law
requiring a greater proportion.
SIXTH: The addition of subsections (b), (c), and (d)
of Article FIFTH of the
Charter as hereinabove set forth was approved by the shareholders
of the Corporation at
said meeting on June 8, 1983, by the affirmative vote of
PAGE 37
66,392,632.584 shares of the 106,299,338.147 shares of common
stock issued and
outstanding, or 62.46% of the votes entitled to be cast thereon,
which vote was sufficient
to approve such amendment pursuant to the provisions of the
Charter of the Corporation
which require the approval of a majority of the votes entitled to
be cast on any such
amendment, notwithstanding any provision of the law requiring a
greater proportion.
SEVENTH: The amendments of the Charter as hereinabove
set forth have been duly
advised by the Board of Directors and approved by the
shareholders of the Corporation.
EIGHTH: (a) The total number of shares of stock which
the Corporation was
heretofore authorized by its Charter to issue was One Hundred
Million (100,000,000)
shares, all of one class, of the par value of One Dollar ($1.00)
each, having an aggregate
par value of One Hundred Million Dollars ($100,000,000).
(b) The total number
of shares of stock which
the Corporation is to be hereafter authorized to issue is Five
Hundred Million
(500,000,000) shares, all of one class, of the par value of One
Dollar ($1.00) each,
having an aggregate par value of Five Hundred Million Dollars
($500,000,000).
(c) The stock of the
Corporation is not
currently divided into classes.
IN WITNESS WHEREOF, T. ROWE PRICE TAX-FREE INCOME FUND,
INC. has caused these
presents to be signed in its name and on its behalf by its Vice
President, and its
corporate seal to be hereunto affixed and attested by its
Secretary, on July 1, 1983.
T. ROWE PRICE
TAX-FREE INCOME
FUND, INC.
PAGE 38
/s/James S. Riepe
James S. Riepe, Vice
President
ATTEST:
/s/Lenora V. Hornung
Lenora V. Hornung, Secretary
STATE OF MARYLAND )
) SS.:
CITY OF BALTIMORE )
I HEREBY CERTIFY that on July 1, 1983, before me the
subscriber, a Notary Public
of the State of Maryland, in and for the City of Baltimore,
personally appeared James S.
Riepe, Vice President of T. ROWE PRICE TAX-FREE INCOME FUND,
INC., a Maryland corporation,
and in the name and on behalf of said Corporation acknowledged
the foregoing Articles of
Amendment to be the corporate act of said Corporation; and at the
same time made oath in
due form of law that the matters and facts set forth in said
Articles of Amendment with
respect to the approval of the said amendments are true to the
best of his knowledge,
information and belief.
WITNESS my hand and notarial seal, the day and year
last above written.
/s/Ingrid Vordemberge
Ingrid Vordemberge
Notary Public
My commission expires: July 1, 1986
<PAGE>
PAGE 39
ARTICLES OF INCORPORATION
OF
T. ROWE PRICE TAX-FREE HIGH-YIELD FUND,
INC.
FIRST: The undersigned, Henry H. Hopkins and James S.
Riepe, each of whose post
office address is 100 East Pratt Street, Baltimore, Maryland
21202, and each being at
least eighteen (18) years of age, do hereby form a corporation
under the General laws of
the State of Maryland.
SECOND: The name of the Corporation is:
T. ROWE PRICE TAX-FREE HIGH-YIELD FUND, INC.
THIRD: The purposes for which the Corporation is
formed are as follows:
(1) To operate as and carry on the business of an
investment company, and
exercise all the powers necessary and appropriate to
the conduct of such
operations.
(2) In general, to carry on any other business in
connection with or
incidental to the foregoing purpose, to have and
exercise all the powers
conferred upon corporations by the laws of the State of
Maryland as in
force from time to time, to do everything necessary,
suitable or proper for
the accomplishment of any purpose or the attainment of
any object or the
furtherance of any power not inconsistent with Maryland
law, either alone
or in association with others, and to take any action
incidental or
appurtenant to or growing out of or connected with the
the Corporation's
business or purposes, objects, or powers.
The Corporation shall have the power to conduct and
carry on its business, or
any part thereof, and to have one or more offices, and to
exercise any or all of its
corporate powers and rights, in the State of Maryland, in any
other states, territories,
districts, colonies, and dependencies of the United States, and
in any or all foreign
countries.
The foregoing clauses shall be construed both as
objects and powers, and the
foregoing enumeration of specific powers shall not be held to
limit or restrict in any
manner the general powers of the Corporation.
FOURTH: The post office address of the principal
office of the Corporation in
the State of Maryland is:
100 East Pratt Street
Baltimore, Maryland 21202
The name and post office address of the resident agent of the
Corporation in the State of
Maryland is:
Henry Holt Hopkins
100 East Pratt Street
Baltimore, Maryland 21202
<PAGE>
PAGE 40
Said resident agent is a citizen of the State of Maryland, and
actually resides therein.
FIFTH: (a) The total number of shares of stock which the
Corporation, by
resolution or resolutions of the Board of Directors,
shall have authority to
issue is One Billion (1,000,000,000) shares, par value
One Cent ($0.01) per
share, such shares having an aggregate par value of Ten
Million Dollars
($10,000,000). All of such shares may be issued as
shares of a class
designated Capital Stock, subject, however, to the
authority hereinafter
granted to the Board of Directors to classify or
reclassify any such shares
and, incident to such classification or reclassification,
to increase or
decrease such number of shares.
(b) The balance of shares authorized but unissued
may be issued as
Capital Stock, or in any new class or classes, each
consisting of such number
of shares and having such designations, such powers,
preferences and rights
and such qualifications, limitations and restrictions as
shall be fixed and
determined from time to time by resolution or resolutions
providing for the
issuance of such stock adopted by the Board of Directors,
to whom authority
so to fix and determine the same is hereby expressly
granted.
(c) Without limiting the generality of the
foregoing, the dividends
and distributions of investment income and capital gains
with respect to
Capital Stock and with respect to each class that may
hereafter be created
shall be in such amount as may be declared from time to
time by the Board of
Directors, and such dividends and distributions may vary
from class to class
to such extent and for such purposes as the Board of
Directors may deem
appropriate, including, but not limited to, the purpose
of complying with
requirements of regulatory or legislative authorities.
(d) The Board of Directors is hereby expressly
granted authority to
(1) classify or reclassify any unissued stock (whether
now or hereafter
authorized and whether of Capital Stock or any other
class) from time to time
by setting or changing the preferences, conversion or
other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, or terms
or conditions of redemption of the stock and (2) pursuant
to such
classification or reclassification to increase or
decrease the number of
authorized shares of any class, but the number of shares
of any class shall
not be decreased by the Board of Directors below the
number of shares thereof
then outstanding and the total number of authorized
shares of stock shall not
be increased above
1,000,000,000 shares except by amendment to the Corporation's
charter.
SIXTH: The number of directors of the Corporation
shall be three (3), or such
other number as may from time to time be fixed by the By-Laws of
the Corporation, or
pursuant to authorization contained in such By-Laws, but the
number of directors shall
never be less than (i) three (3) or (ii) the number of
shareholders of the Corporation,
whichever is less. Peter J.D. Gordon, George J. Collins, and
James S. Riepe shall serve
as directors until the first meeting of shareholders and until
their successors are duly
chosen and qualify.
SEVENTH: Regulation of the Powers of the Corporation
and Its Directors and
Shareholders.
PAGE 41
SECTION I
ISSUE OF THE CORPORATION'S SHARES
1.01General. The Board of Directors may from time to
time issue and sell or
cause to be issued and sold any of the Corporation's authorized
shares, including any
additional shares hereafter authorized and any shares redeemed or
repurchased by the
Corporation, except that only shares previously contracted to be
sold may be issued during
any period when the determination of net asset value is suspended
pursuant to the
provisions of Section III hereof. All such authorized shares,
when issued in accordance
with the terms of this Section I, shall be fully paid and
nonassessable. No holder of any
shares of the Corporation shall be entitled, by reason of holding
or owning such shares,
to any prior, preemptive or other right to subscribe to, purchase
or otherwise acquire any
additional shares of the Corporation subsequently issued for cash
or other consideration
or by way of a dividend or otherwise.
1.02Price. No shares of the Corporation shall be
issued or sold by the
Corporation, except as a stock dividend distributed to
shareholders, for less than an
amount which would result in proceeds to the Corporation, before
taxes payable by the
Corporation in connection with such transaction, of at least the
net asset value per share
determined as set forth in Section III hereof as of such time as
the Board of Directors
shall have by resolution theretofore prescribed, but not earlier
than the close of
business on the business day (which term, as used herein, shall
be defined to mean a day
on which the New York Stock Exchange is open all or part of the
day for unrestricted
trading, or such other definition as the Board of Directors shall
have by resolution
theretofore prescribed pursuant to Section 2.02 hereof) next
preceding the date of receipt
of an unconditional purchase order for such shares. In the
absence of a resolution of the
Board of Directors applicable to the transaction, such net asset
value shall be that next
determined after receipt of such purchase order. For this
purpose, the time of receipt of
such an unconditional order shall be the time it is first
received by the principal
underwriter, the custodian or depository of the Corporation's
assets, the transfer agent
of the Corporation, or by another agent of the Corporation
designated for the purpose.
1.03On Merger or Consolidation. In connection with the
acquisition of all or
substantially all the assets or stock of another investment
company or investment trust,
the Board of Directors may issue or cause to be issued shares of
the Corporation and
accept in payment therefor, in lieu of cash, such assets at their
market value, or such
stock at the market value of the assets held by such investment
company or investment
trust, either with or without adjustment for contingent costs or
liabilities, provided
that the funds of the Corporation are permitted by law to be
invested in such assets or
stock.
1.04Fractional Shares. The Board of Directors may
issue and sell fractions of
shares having pro rata all the rights of full shares, including,
without limitation, the
right to vote and to receive dividends.
SECTION II
REDEMPTION AND REPURCHASE OF
THE CORPORATION'S SHARES
2.01Redemption of Shares. The Corporation shall redeem
its shares, subject to
the conditions and at the price determined as hereinafter set
forth, upon proper
application of the record holder thereof at such office or agency
as may be designated
from time to time for that purpose by the Board of Directors.
Any such application must
be accompanied by the certificate or certificates, if any,
evidencing such shares, duly
endorsed or accompanied by a proper instrument of transfer. The
Board of Directors shall
have power to determine or to delegate
PAGE 42
to the proper officers of the Corporation the power to determine
from time to time the
form and the other accompanying documents which shall be
necessary to constitute a proper
application for redemption.
2.02Price. Such shares shall be redeemed at their net
asset value determined as
set forth in Section III hereof as of such time as the Board of
Directors shall have
theretofore prescribed by resolution. In the absence of such
resolution, the redemption
price of shares deposited shall be the net asset value of such
shares next determined as
set forth in Section III hereof after receipt of such
application.
2.03Payment. Payment for such shares shall be made to
the shareholder of record
within seven (7) days after the date upon which proper
application is received, subject to
the provisions of Section 2.04 hereof. Such payment shall be
made in cash or other assets
of the Corporation or both, as the Board of Directors shall
prescribe.
2.04Effect of Suspension of Determination of Net Asset
Value. If, pursuant to
Section 3.03 hereof, the Board of Directors shall declare a
suspension of the
determination of net asset value, the rights of shareholders
(including those who shall
have applied for redemption pursuant to Section 2.01 hereof but
who shall not yet have
received payment) to have shares redeemed and paid for by the
Corporation shall be
suspended until the termination of such suspension is declared.
Any record holder whose
redemption right is so suspended may, during the period of such
suspension, by appropriate
written notice of revocation to the office or agency where
application was made, revoke
his application and withdraw any share certificates which
accompanied such application.
The redemption price of shares for which redemption applications
have not been revoked
shall be the net asset value of such shares next determined as
set forth in Section III
after the termination of such suspension, and payment shall be
made within seven (7) days
after the date upon which the application was made plus the
period after such application
during which the determination of net asset value was suspended.
2.05Repurchase by Agreement. The Corporation may
repurchase shares of the
Corporation directly, or through its principal underwriter or
other agent designated for
the purpose, by agreement with the owner thereof, at a price not
exceeding the net asset
value per share determined as of the time when the purchase or
contract of purchase is
made or the net asset value as of any time which may be later
determined pursuant to
Section III hereof, provided payment is not made for the shares
prior to the time as of
which such net asset value is determined.
2.06Corporation's Option to Redeem Shares.
(a) The Corporation shall have the right at any
time and without prior
notice to the shareholder to redeem all shares in any account for
their then-current net
asset value per share if all shares in the account have an
aggregate net asset value of
less than $10,000, or such lesser amount as the Board of
Directors may from time to time
determine;
(b) The Corporation shall have the right at any
time and without prior
notice to the shareholder to redeem shares in any account for
their then-current net asset
value per share if and to the extent it shall be necessary to
reimburse the Corporation or
its principal underwriter or distributor for any loss sustained
by the Corporation by
reason of the failure of the shareholder in whose name such
account is registered to make
full payment for shares of the Corporation purchased by such
shareholder.
PAGE 33
(c) The right of redemption provided by each of the
foregoing subsections of
this Section 2.06 shall be subject to such terms and conditions
as the Board of Directors
may from time to time approve, and subject to the Corporation's
giving general notice of
its intention to avail itself of such right, either by
publication in the Corporation's
prospectus or by such means as the Board of Directors shall
determine.
SECTION III
NET ASSET VALUE OF SHARES
3.01By Whom Determined. The Board of Directors shall
have the power and duty to
determine from time to time the net asset value per share of the
outstanding shares of the
Corporation. It may delegate such power and duty to one or more
of the directors and
officers of the Corporation, to the custodian or depository of
the Corporation's assets,
or to another agent of the Corporation appointed for such
purpose. Any determination made
pursuant to this section by the Board of Directors, or its
delegate, shall be binding on
all parties concerned.
3.02When Determined. The net asset value shall be
determined at such times as
the Board of Directors shall prescribe by resolution, provided
that such net asset value
shall be determined at least once each week as of the close of
business on a business day.
In the absence of a resolution of the Board of Directors, the net
asset value shall be
determined as of the close of trading on the New York Stock
Exchange on each business day.
3.03Suspension of Determination of Net Asset Value.
The Board of Directors may
declare a suspension of the determination of net asset value for
the whole or any part of
any period (a) during which the New York Stock Exchange is closed
other than customary
weekend and holiday closings, (b) during which trading on the New
York Stock Exchange is
restricted, (c) during which an emergency exists as a result of
which disposal by the
Corporation of securities owned by it is not reasonably
practicable or it is not
reasonably practicable for the Corporation fairly to determine
the value of its net
assets, or (d) during which a governmental body having
jurisdiction over the Corporation
may by order permit for the protection of the security holders of
the Corporation. Such
suspension shall take effect at such time as the Board of
Directors shall specify, which
shall not be later than the close of business on the business day
next following the
declaration, and thereafter there shall be no determination of
net asset value until the
Board of Directors shall declare the suspension at an end, except
that the suspension
shall terminate in any event on the first day on which (1) the
condition giving rise to
the suspension shall have ceased to exist and (2) no other
condition exists under which
suspension is authorized under this Section 3.03. Each
declaration by the Board of
Directors pursuant to this Section 3.03 shall be consistent with
such official rules and
regulations, if any, relating to the subject matter thereof as
shall have been promulgated
by the Securities and Exchange Commission or any other
governmental body having
jurisdiction over the Corporation and as shall be in effect at
the time. To the extent
not inconsistent with such official rules and regulations, the
determination of the Board
of Directors shall be conclusive.
<PAGE>
PAGe 34
3.04Computation of Per Share Net Asset Value.
(a) Net Asset Value Per Share. The net asset value
of each share as of any
particular time shall be the quotient obtained by dividing the
value of the net assets of
the Corporation by the total number of shares outstanding.
(b) Value of Corporation's Net Assets. The value
of the Corporation's net
assets as of any particular time shall be the value of the
Corporation's assets less its
liabilities, determined and computed as prescribed by the Board
of Directors.
SECTION IV
COMPLIANCE WITH INVESTMENT
COMPANY ACT OF 1940
Notwithstanding any of the foregoing provisions of this
Article SEVENTH, the
Board of Directors may prescribe, in its absolute discretion,
such other bases and times
for determining the per share net asset value of the
Corporation's shares as it shall deem
necessary or desirable to enable the Corporation to comply with
any provision of the
Investment Company Act of 1940, or any rule or regulation
thereunder, including any rule
or regulation adopted pursuant to Section 22 of the Investment
Company Act of 1940 by the
Securities and Exchange Commission or any securities association
registered under the
Securities Exchange Act of 1934, all as in effect now or as
hereafter amended or added.
SECTION V
MISCELLANEOUS
5.01 Compensation of Directors. The Board of
Directors shall have power from
time to time to authorize payment of compensation to the
directors for services to the
Corporation, including fees for attendance at meetings of the
Board of Directors and of
committees.
5.02 Inspection of Corporation's Books. The Board
of Directors shall have
power from time to time to determine whether and to what extent,
and at what times and
places, and under what conditions and regulations the accounts
and books of the
Corporation (other than the stock ledger) or any of them shall be
open to the inspection
of shareholders; and no shareholder shall have any right of
inspecting any account, book
or document of the Corporation except as at the time conferred by
statute, unless
authorized by a resolution of the shareholders or the Board of
Directors.
5.03 Majority Vote of Shareholders. Notwithstanding
any provision of the
laws of the State of Maryland requiring a greater proportion than
a majority of the votes
of all classes or of any class of stock entitled to be cast, to
take or authorize any
action, such action may, subject to other applicable provisions
of law, these Articles of
Incorporation and the By-Laws, be taken or authorized upon the
concurrence of a majority
of the aggregate number of the votes entitled to be cast thereon.
5.04 Name. The Corporation acknowledges that it is
adopting its corporate
name through permission of T. Rowe Price Associates, Inc., a
Maryland corporation, and
agrees that T. Rowe Price Associates, Inc. reserves to itself and
any successor to its
business the right to grant the nonexclusive right to use the
name "T. Rowe Price" or any
similar name to any other corporation or
PAGE 35
entity, including, but not limited to, any investment company of
which T. Rowe Price
Associates, Inc. or any subsidiary or affiliate thereof or any
successor to the business
of any thereof shall be the investment adviser.
5.05 Reservation of Right to Amend. The Corporation
reserves the right to
make any amendment of its charter, now or hereafter authorized by
law, including any
amendment which alters the contract rights, as expressly set
forth in its charter, of any
outstanding stock, and all rights herein conferred upon
shareholders are granted subject
to such reservation.
5.06 Determination of Net Profits, Etc.; Dividends.
The Board of Directors
is expressly authorized to determine in accordance with generally
accepted accounting
principles and practices what constitutes net profits, earnings,
surplus, or net assets in
excess of capital, and to determine what accounting periods shall
be used by the
Corporation for any purpose, whether annual or any other period,
including daily; to set
apart out of any funds of the Corporation such reserves for such
purposes as it shall
determine and to abolish the same; to declare and pay dividends
and distributions in cash,
securities, or other property from surplus or any funds legally
available therefor, at
such intervals (which may be as frequently as daily) or on such
other periodic basis, as
it shall determine; to declare such dividends or distributions by
means of a formula or
other method of determination, at meetings held less frequently
than the frequency of the
effectiveness of such declarations; to establish payment dates
for dividends or any other
distributions on any basis, including dates occurring less
frequently than the
effectiveness of the declaration thereof; and to provide for the
payment of declared
dividends on a date earlier than the specified payment date in
the case of shareholders of
the Corporation redeeming their entire ownership of shares of the
Corporation.
5.07 Contracts. The Board of Directors may in its
discretion from time to
time enter into an exclusive or nonexclusive underwriting
contract or contracts providing
for the sale of the shares of Capital Stock of the Corporation to
net the Corporation not
less than the amount provided for in Section 1.02 of Article
SEVENTH hereof, whereby the
Corporation may either agree to sell the shares to the other
party to the contract or
appoint such other party its sales agent for such shares (such
other party being herein
sometimes called the "underwriter"), and in either case, on such
terms and conditions as
may be prescribed in the By-Laws, if any, and such further terms
and conditions as the
Board of Directors may in its discretion determine not
inconsistent with the provisions of
Article SEVENTH hereof or of the By-Laws; and such contract may
also provide for the
repurchase of shares of the Corporation by such other party as
agent of the Corporation.
The Board of Directors may in its discretion from time
to time enter into an
investment advisory or management contract whereby the other
party to such contract shall
undertake to furnish to the Corporation such management,
investment advisory, statistical
and research facilities and services and such other facilities
and services, if any, and
all upon such terms and conditions, as the Board of Directors may
in its discretion
determine.
Any contract of the character described in the
paragraphs above or for services
as custodian, transfer agent, or disbursing agent or related
services may be entered into
with any corporation, firm, trust, or association, although one
or more of the directors
or officers of the Corporation may be an officer, director,
trustee, shareholder, or
member of such other party to the contract, and no such contract
shall be invalidated or
rendered voidable by reason of the existence of any such
relationship, nor shall any
person holding such relationship be liable merely by reason of
such relationship for any
loss or expense to the Corporation under or by reason of said
contract or accountable for
any profit realized directly or indirectly therefrom, provided
that the contract, when
entered into, was reasonable and fair and not inconsistent with
the provisions of this
Section 5.07. The same person (including a firm, corporation,
trust, or association) may
be the other party to contracts entered
PAGE 36
into pursuant to the above paragraphs, and any individual may be
financially interested or
otherwise affiliated with persons who are parties to any or all
of the contracts mentioned
in this paragraph.
Any contract entered into pursuant to the first two
paragraphs of this Section
5.07 shall be consistent with and subject to the requirements of
Section 15 of the
Investment Company Act of 1940 (including any amendment thereof
or other applicable Act of
Congress hereafter enacted) with respect to its continuance in
effect, its termination and
the method of authorization and approval of such contract or
renewal thereof.
IN WITNESS WHEREOF, we have signed these Articles of
Incorporation and
acknowledge the same to be our act on this day of
November, 1984.
Henry H. Hopkins
James S. Riepe
STATE OF MARYLAND )
) ss:
CITY OF BALTIMORE )
I HEREBY CERTIFY, that on this day of
November, 1984, before me, the
subscriber, a Notary Public of the State of Maryland, in and for
the City of Baltimore,
personally appeared HENRY H. HOPKINS and JAMES S. RIEPE, and they
acknowledged the
foregoing Articles of Incorporation to be their act.
WITNESS my hand and Notarial Seal this day of
November, 1984.
Notary Public
My Commission expires:
<PAGE>
PAGE 37
ARTICLES OF INCORPORATION
OF
T. ROWE PRICE TAX-FREE HIGH-YIELD FUND,
INC.
<PAGE>
PAGE 1
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
(A Maryland Corporation)
BY-LAWS
ARTICLE I
NAME OF CORPORATION,
LOCATION OF OFFICES AND SEAL
Section 1.01.Name: The name of the Corporation is
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
Section 1.02.Principal Office: The principal office of
the Corporation in the State of Maryland shall be located in the
City of Baltimore. The Corporation may, in addition, establish
and maintain such other offices and places of business, within or
outside the State of Maryland, as the Board of Directors may from
time to time determine. [ MGCL, Sections 2-103(4), 2-
108(a)(1) ]*
Section 1.03.Seal: The corporate seal of the
Corporation shall be circular in form, and shall bear the name of
the Corporation, the year of its incorporation, and the words
"Corporate Seal, Maryland." The form of the seal shall be
subject to alteration by the Board of Directors and the seal may
be used by causing it or a facsimile to be impressed or affixed
or printed or otherwise reproduced. In lieu of affixing the
corporate seal to any document it shall be sufficient to meet the
requirements of any law, rule, or regulation relating to a
corporate seal to affix the word "(Seal)" adjacent to the
signature of the authorized officer of the Corporation. Any
officer or Director of the Corporation shall have authority to
affix the corporate seal of the Corporation to any document
requiring the same. [ MGCL, Sections 1-304(b), 2-103(3) ]
ARTICLE II
STOCKHOLDERS
Section 2.01.Annual Meetings: The Corporation shall
not be required to hold an annual meeting of its shareholders in
any year unless the Investment Company Act of 1940 requires an
election of directors by shareholders. In the event that the
Corporation shall be so required to hold an annual meeting, such
meeting shall be held at a date and time set by the Board of
Directors, which date shall be no later than 120 days after the
occurrence of the event requiring the meeting. Any shareholders'
meeting held in accordance with the preceding sentence shall for
all
_________________________
* Bracketed citations are to the General Corporation Law of the
State of Maryland ("MGCL") or to the United States Investment
Company Act of 1940, as amended (the "Investment Company Act"),
or to Rules of the United States Securities and Exchange
Commission thereunder ("SEC Rules"). The citations are inserted
for reference only and do not constitute a part of the By-Laws.
PAGE 2
purposes constitute the annual meeting of shareholders for the
fiscal year of the Corporation in which the meeting is held. At
any such meeting, the shareholders shall elect directors to hold
the offices of any directors who have held office for more than
one year or who have been elected by the Board of Directors to
fill vacancies which result from any cause. Except as the
Articles of Incorporation or statute provides otherwise,
Directors may transact any business within the powers of the
Corporation as may properly come before the meeting. Any
business of the Corporation may be transacted at the annual
meeting without being specially designated in the notice, except
such business as is specifically required by statute to be stated
in the notice. [MGCL, Section 2-501]
(Section 2.01 Annual Meetings as amended April 20, 1990)
Section 2.02.Special Meetings: Special meetings of the
shareholders may be called at any time by the Chairman of the
Board, the President, any Vice President, or by the Board of
Directors. Special meetings of the shareholders shall be called
by the Secretary on the written request of shareholders entitled
to cast at least ten (10) percent of all the votes entitled to be
cast at such meeting, provided that (a) such request shall state
the purpose or purposes of the meeting and the matters proposed
to be acted on, and (b) the shareholders requesting the meeting
shall have paid to the Corporation the reasonably estimated cost
of preparing and mailing the notice thereof, which the Secretary
shall determine and specify to such shareholders. Unless
requested by stockholders entitled to cast a majority of all the
votes entitled to be cast at the meeting, a special meeting need
not be called to consider any matter which is substantially the
same as a matter voted upon at any special meeting of the
shareholders held during the preceding twelve (12) months.
[ MGCL, Section 2-502 ]
(Section 2.02 Special Meetings as amended July 20, 1993)
Section 2.03.Place of Meetings: All stockholders'
meetings shall be held at such place within the United States as
may be fixed from time to time by the Board of Directors.
[ MGCL, Section 2-503 ]
Section 2.04.Notice of Meetings: Not less than ten
(10) days, nor more than ninety (90) days before each
stockholders' meeting, the Secretary or an Assistant Secretary of
the Corporation shall give to each stockholder entitled to vote
at the meeting, and each other stockholder entitled to notice of
the meeting, written notice stating (1) the time and place of the
meeting, and (2) the purpose or purposes of the meeting if the
meeting is a special meeting or if notice of the purpose is
required by statute to be given. Such notice shall be personally
delivered to the stockholder, or left at his residence or usual
place of business, or mailed to him at his address as it appears
on the records of the Corporation. No notice of a stockholders'
meeting need be given to any stockholder who shall sign a written
waiver of such notice, whether before or after the meeting, which
is filed with the records of stockholders' meetings, or to any
stockholder who is present at the meeting in person or by proxy.
Notice of adjournment of a stockholders' meeting to another time
or place need not be given if such time and place are announced
at the meeting, unless the adjournment is for more than one
hundred twenty (120) days after the original record date. [
MGCL, Sections 2-504, 2-511(d) ]
Section 2.05.Voting - In General: At every
stockholders' meeting, each stockholder shall be entitled to one
vote for each share of stock of the Corporation validly issued
and outstanding and held by such stockholder, except that no
shares held by the Corporation shall be entitled to a vote.
Fractional shares shall be entitled to fractional votes. Except
as otherwise
PAGE 3
specifically provided in the Articles of Incorporation, or these
By-Laws, or as required by provisions of the Investment Company
Act, of 1940 ("Investment Company Act"), as amended from time to
time, a majority of all the votes cast at a meeting at which a
quorum is present is sufficient to approve any matter which
properly comes before the meeting. The vote upon any question
shall be by ballot whenever requested by any person entitled to
vote, but, unless such a request is made, voting may be conducted
in any way approved by the meeting. [ MGCL, Sections 2-
214(a)(i), 2-506(a)(2), 2-507(a), 2-509(b) ]
Section 2.06.Stockholders Entitled to Vote: If,
pursuant to Section 8.05 hereof, a record date has been fixed for
the determination of stockholders entitled to notice of or to
vote at any stockholders' meeting, each stockholder of the
Corporation shall be entitled to vote in person or by proxy, each
share or fraction of a share of stock standing in his name on the
books of the Corporation on such record date and outstanding at
the time of the meeting. If no record date has been fixed for
the determination of stockholders, the record date for the
determination of stockholders entitled to notice of or to vote at
a meeting of stockholders shall be at the close of business on
the day on which notice of the meeting is mailed or the 30th day
before the meeting, whichever is the closer date to the meeting,
or, if notice is waived by all stockholders, at the close of
business on the tenth (10th) day next preceding the date of the
meeting. [ MGCL, Sections 2-507, 2-511 ]
Section 2.07.Voting - Proxies: The right to vote by
proxy shall exist only if the instrument authorizing such proxy
to act shall have been executed in writing by the stockholder
himself, or by his attorney thereunto duly authorized in writing.
No proxy shall be valid more than eleven (11) months after its
date unless it provides for a longer period. [ MGCL, Section 2-
507(b) ]
Section 2.08.Quorum: The presence at any stockholders'
meeting, in person or by proxy, of stockholders entitled to cast
a majority of the votes entitled to be cast at the meeting shall
constitute a quorum. [ MGCL, Section 2-506(a) ]
Section 2.09.Absence of Quorum: In the absence of a
quorum, the holders of a majority of shares entitled to vote at
the meeting and present thereat in person or by proxy, or, if no
stockholder entitled to vote is present in person or by proxy,
any officer present who is entitled to preside at or act as
Secretary of such meeting, may adjourn the meeting sine die or
from time to time. Any business that might have been transacted
at the meeting originally called may be transacted at any such
adjourned meeting at which a quorum is present.
Section 2.10.Stock Ledger and List of Stockholders: It
shall be the duty of the Secretary or Assistant Secretary of the
Corporation to cause an original or duplicate stock ledger to be
maintained at the office of the Corporation's transfer agent,
containing the names and addresses of all stockholders and the
number of shares of each class held by each stockholder. Such
stock ledger may be in written form, or any other form capable of
being converted into written form within a reasonable time for
visual inspection. Any one or more persons, who together are and
for at least six (6) months have been stockholders of record of
at least five percent (5%) of the outstanding capital stock of
the Corporation, may submit (unless the Corporation at the time
of the request maintains a duplicate stock ledger at its
principal office) a written request to any officer of the
Corporation or its resident agent in Maryland for a list of the
stockholders of the Corporation. Within twenty (20) days after
such a request, there shall be prepared and filed at the
Corporation's principal office a list, verified under oath by an
officer
PAGE 4
of the Corporation or by its stock transfer agent or registrar,
which sets forth the name and address of each stockholder and the
number of shares of each class which the stockholder holds. [
MGCL, Sections 2-209, 2-513 ]
Section 2.11.Informal Action By Stockholders: Any
action required or permitted to be taken at a meeting of
stockholders may be taken without a meeting if the following are
filed with the records of stockholders' meetings:
(a) A unanimous written consent which sets forth the
action and is signed by each stockholder entitled to
vote on the matter; and
(b) A written waiver of any right to dissent signed by
each stockholder entitled to notice of the meeting,
but not entitled to vote at it. [ MGCL, Section 2-
505 ]
ARTICLE III
BOARD OF DIRECTORS
Section 3.01.Number and Term of Office: The Board of
Directors shall consist of five (5) Directors, which number may
be increased or decreased by a resolution of a majority of the
entire Board of Directors, provided that the number of Directors
shall not be less than three (3), nor more than fifteen (15).
Each Director (whenever elected) shall hold office until the next
annual meeting of stockholders and until his successor is elected
and qualifies or until his earlier death, resignation, or
removal. [ MGCL, Sections 2-402, 2-404, 2-405 ]
Section 3.02.Qualification of Directors: No member of
the Board of Directors need be a stockholder of the Corporation,
but at least one member of the Board of Directors shall be a
person who is not an interested person (as such term is defined
in the Investment Company Act, as amended) of the investment
adviser of the Corporation, nor an officer or employee of the
Corporation. [ MGCL, Section 2-403; Investment Company Act,
Section 10(d) ]
Section 3.03.Election of Directors: Until the first
annual meeting of shareholders or until successors are duly
elected and qualified, the Board of Directors shall consist of
the persons named as such in the Articles of Incorporation.
Thereafter, except as otherwise provided in Sections 3.04 and
3.05 hereof, at each annual meeting, the shareholders shall elect
Directors to hold office until the next annual meeting and/or
until their successors are elected and qualify. In the event
that Directors are not elected at an annual shareholders'
meeting, then Directors may be elected at a special shareholders'
meeting. Directors shall be elected by vote of the holders of a
majority of the shares present in person or by proxy and entitled
to vote thereon. [ MGCL, Section 2-404 ]
(Section 3.03. Election of Directors as amended January 21,
1988)
Section 3.04.Removal of Directors: At any meeting of
stockholders, duly called and at which a quorum is present, the
stockholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any
Director or Directors from office, either with or without cause,
and may elect a successor or successors to fill any resulting
vacancies for the unexpired terms of removed Directors. [ MGCL,
Sections 2-406, 2-407 ]
Section 3.05.Vacancies and Newly Created Directorships:
If any vacancies occur in the Board of Directors by reason of
resignation, removal or otherwise, or if the authorized number of
Directors is increased, the Directors then in office shall
continue to act, and such vacancies (if not
PAGE 5
previously filled by the stockholders) may be filled by a
majority of the Directors then in office, whether or not
sufficient to constitute a quorum, provided that, immediately
after filling such vacancy, at least two-thirds of the Directors
then holding office shall have been elected to such office by the
stockholders of the Corporation. In the event that at any time,
other than the time preceding the first meeting of stockholders,
less than a majority of the Directors of the Corporation holding
office at that time were so elected by the stockholders, a
meeting of the stockholders shall be held promptly and in any
event within sixty (60) days for the purpose of electing
Directors to fill any existing vacancies in the Board of
Directors unless the Securities and Exchange Commission shall by
order extend such period. Except as provided in Section 3.04
hereof, a Director elected by the Board of Directors to fill a
vacancy shall be elected to hold office until the next annual
meeting of stockholders or until his successor is elected and
qualifies. [ MGCL, Section 2-407; Investment Company Act,
Section 16(a) ]
Section 3.06.General Powers:
(a) The property, business, and affairs of the
Corporation shall be managed under the direction of
the Board of Directors which may exercise all the
powers of the Corporation except such as are by law,
by the Articles of Incorporation, or by these By-Laws
conferred upon or reserved to the stockholders of the
Corporation. [ MGCL, Section 2-401 ]
(b) All acts done by any meeting of the Directors or by
any person acting as a Director, so long as his
successor shall not have been duly elected or
appointed, shall, notwithstanding that it be
afterwards discovered that there was some defect in
the election of the Directors or such person acting
as a Director or that they or any of them were
disqualified, be as valid as if the Directors or such
person, as the case may be, had been duly elected and
were or was qualified to be Directors or a Director
of the Corporation.
Section 3.07.Power to Issue and Sell Stock: The Board
of Directors may from time to time authorize by resolution the
issuance and sale of any of the Corporation's authorized shares
to such persons as the Board of Directors shall deem advisable
and such resolution shall set the minimum price or value of
consideration for the stock or a formula for its determination,
and shall include a fair description of any consideration other
than money and a statement of the actual value of such
consideration as determined by the Board of Directors or a
statement that the Board of Directors has determined that the
actual value is or will be not less than a certain sum. [ MGCL,
Section 2-203 ]
Section 3.08.Power to Declare Dividends:
(a) The Board of Directors, from time to time as it may
deem advisable, may declare and the Corporation pay
dividends, in cash, property, or shares of the
Corporation available for dividends out of any source
available for dividends, to the stockholders
according to their respective rights and interests.
[ MGCL, Section 2-309 ]
PAGE 6
(b) The Board of Directors shall cause to be accompanied
by a written statement any dividend payment wholly or
partly from any source other than the Corporation's
accumulated undistributed net income (determined in
accordance with good accounting practice and the
rules and regulations of the Securities and Exchange
Commission then in effect) not including profits or
losses realized upon the sale of securities or other
properties. Such statement shall adequately disclose
the source or sources of such payment and the basis
of calculation and shall be otherwise in such form as
the Securities and Exchange Commission may prescribe.
[ Investment Company Act, Section 19; SEC Rule 19a-1;
MGCL, Section 2-309(c) ]
(c) Notwithstanding the above provisions of this Section
3.08, the Board of Directors may at any time declare
and distribute pro rata among the stockholders a
stock dividend out of the Corporation's authorized
but unissued shares of stock, including any shares
previously purchased by the Corporation, provided
that such dividend shall not be distributed in shares
of any class with respect to any shares of a
different class. The shares so distributed shall be
issued at the par value thereof, and there shall be
transferred to stated capital, at the time such
dividend is paid, an amount of surplus equal to the
aggregate par value of the shares issued as a
dividend and there may be transferred from earned
surplus to capital surplus such additional amount as
the Board of Directors may determine. [ MGCL,
Section 2-309 ]
Section 3.09.Annual and Regular Meetings: The annual
meeting of the Board of Directors for choosing officers and
transacting other proper business shall be held immediately after
the annual shareholders' meeting at such place as may be
specified in the notice of such meeting of the Board of
Directors, or, in the absence of such annual shareholders'
meeting, at such time and place as the Board of Directors may
provide. The Board of Directors from time to time may provide by
resolution for the holding of regular meetings and fix their time
and place (within or outside the State of Maryland). [ MGCL,
Section 2-409(a) ]
(Section 3.09. Annual and Regular Meetings
as amended January 21, 1988)
Section 3.l0.Special Meetings: Special meetings of the
Board of Directors shall be held whenever called by the Chairman
of the Board, the President (or, in the absence or disability of
the President, by any Vice President), the Treasurer, or two or
more Directors, at the time and place (within or outside the
State of Maryland) specified in the respective notices or waivers
of notice of such meetings.
Section 3.11.Notice: Notice of annual, regular, and
special meetings shall be in writing, stating the time and place,
and shall be mailed to each Director at his residence or regular
place of business or caused to be delivered to him personally or
to be transmitted to him by telegraph, cable, or wireless at
least two (2) days before the day on which the meeting is to be
held. Except as otherwise required by the By-Laws or the
Investment Company Act, such notice need not include a statement
of the business to be transacted at, or the purpose of, the
meeting. [ MGCL, Section 2-409(b) ]
Section 3.12.Waiver of Notice: No notice of any
meeting need be given to any Director who is present at the
meeting or to any Director who
PAGE 7
signs a waiver of the notice of the meeting (which waiver shall
be filed with the records of the meeting), whether before or
after the meeting. [ MGCL, Section 2-409(c) ]
Section 3.13.Quorum and Voting: At all meetings of the
Board of Directors the presence of one-third of the total number
of Directors authorized, but not less than two (2) Directors,
shall constitute a quorum. In the absence of a quorum, a
majority of the Directors present may adjourn the meeting, from
time to time, until a quorum shall be present. The action of a
majority of the Directors present at a meeting at which a quorum
is present shall be the action of the Board of Directors unless
the concurrence of a greater proportion is required for such
action by law, by the Articles of Incorporation or by these
By-Laws. [ MGCL, Section 2-408 ]
Section 3.14.Conference Telephone: Members of the
Board of Directors or of any committee designated by the Board,
may participate in a meeting of the Board or of such committee by
means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear
each other at the same time, and participation by such means
shall constitute presence in person at such meeting. [ MGCL,
Section 2-409(d) ]
Section 3.15.Compensation: Each Director may receive
such remuneration for his services as shall be fixed from time to
time by resolution of the Board of Directors.
Section 3.16.Action Without a Meeting: Any action
required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting
if a unanimous written consent which sets forth the action is
signed by all members of the Board or of such committee and such
written consent is filed with the minutes of proceedings of the
Board or committee. [ MGCL, Section 2-408(c) ]
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 4.01.How Constituted: By resolution adopted by
the Board of Directors, the Board may appoint from among its
members one or more committees, including an Executive Committee,
each consisting of at least two (2) Directors. Each member of a
committee shall hold office during the pleasure of the Board.
The President shall be a member of the Executive Committee. [
MGCL, Section 2-411 ]
Section 4.02.Powers of the Executive Committee: Unless
otherwise provided by resolution of the Board of Directors, the
Executive Committee, in the intervals between meetings of the
Board of Directors, shall have and may exercise all of the powers
of the Board of Directors to manage the business and affairs of
the Corporation except the power to:
(a) Declare dividends or distributions on stock;
(b) Issue stock other than as provided in Section
2-411(b) of Article Corporations and Associations of
the Annotated Code of Maryland;
(c) Recommend to the stockholders any action which
requires stockholder approval;
PAGE 8
(d) Amend the By-Laws; or
(e) Approve any merger or share exchange which does not
require stockholder approval.
[ MGCL, Section 2-411(a) ]
Section 4.03.Other Committees of the Board of
Directors: To the extent provided by resolution of the Board,
other committees shall have and may exercise any of the powers
that may lawfully be granted to the Executive Committee. [ MGCL,
Section 2-411(a) ]
Section 4.04.Proceedings, Quorum, and Manner of Acting:
In the absence of appropriate resolution of the Board of
Directors, each committee may adopt such rules and regulations
governing its proceedings, quorum and manner of acting as it
shall deem proper and desirable, provided that the quorum shall
not be less than two (2) Directors. In the absence of any member
of any such committee, the members thereof present at any
meeting, whether or not they constitute a quorum, may appoint a
member of the Board of Directors to act in the place of such
absent member. [ MGCL, Section 2-411(c) ]
Section 4.05.Other Committees: The Board of Directors
may appoint other committees, each consisting of one or more
persons who need not be Directors. Each such committee shall
have such powers and perform such duties as may be assigned to it
from time to time by the Board of Directors, but shall not
exercise any power which may lawfully be exercised only by the
Board of Directors or a committee thereof.
ARTICLE V
OFFICERS
Section 5.01.General: The officers of the Corporation
shall be a President, one or more Vice Presidents (one or more of
whom may be designated Executive Vice President), a Secretary,
and a Treasurer, and may include one or more Assistant Vice
Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be appointed
in accordance with the provisions of Section 5.11 hereof. The
Board of Directors may elect, but shall not be required to elect,
a Chairman of the Board. [ MGCL, Section 2-412 ]
Section 5.02.Election, Term of Office and
Qualifications: The officers of the Corporation (except those
appointed pursuant to Section 5.11 hereof) shall be elected by
the Board of Directors at its first meeting and thereafter at
each annual meeting of the Board. If any officer or officers are
not elected at any such meeting, such officer or officers may be
elected at any subsequent regular or special meeting of the
Board. Except as provided in Sections 5.03, 5.04, and 5.05
hereof, each officer elected by the Board of Directors shall hold
office until the next annual meeting of the Board of Directors
and until his successor shall have been chosen and qualified.
Any person may hold two or more offices of the Corporation,
except that neither the Chairman of the Board nor the President
may hold the office of Vice President, but no person shall
execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law, the Articles of
Incorporation or these By-Laws to be executed, acknowledged or
verified by two or more officers. The Chairman of the Board and
the President shall be selected from among the
PAGE 9
Directors of the Corporation and may hold such offices only so
long as they continue to be Directors. No other officer need be
a Director. [ MGCL, Sections 2-413 and 2-415 ]
(Section 5.02. Election, Term of Office and Qualifications
as amended January 21, 1988)
Section 5.03.Resignation: Any officer may resign his
office at any time by delivering a written resignation to the
Board of Directors, the President, the Secretary, or any
Assistant Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 5.04.Removal: Any officer may be removed from
office by the Board of Directors whenever in the judgment of the
Board of Directors the best interests of the Corporation will be
served thereby. [ MGCL, Section 2-413(c) ]
Section 5.05Vacancies and Newly Created Offices: If
any vacancy shall occur in any office by reason of death,
resignation, removal, disqualification or other cause, or if any
new office shall be created, such vacancies or newly created
offices may be filled by the Board of Directors at any meeting
or, in the case of any office created pursuant to Section 5.11
hereof, by any officer upon whom such power shall have been
conferred by the Board of Directors. [ MGCL, Section 2-413(d) ]
Section 5.06.Chairman of the Board: Unless otherwise
provided by resolution of the Board of Directors, the Chairman of
the Board, if there be such an officer, shall preside at all
stockholders' meetings, and at all meetings of the Board of
Directors. He may sign (unless the President or a Vice President
shall have signed) certificates representing stock of the
Corporation authorized for issuance by the Board of Directors and
shall have such other powers and perform such other duties as may
be assigned to him from time to time by the Board of Directors.
Section 5.07.President: Unless otherwise provided by
resolution of the Board of Directors, the President shall be the
chief executive and operating officer of the Corporation and, at
the request of or in the absence or disability of the Chairman of
the Board, or if no Chairman of the Board has been chosen, he
shall preside at all stockholders' meetings and at all meetings
of the Board of Directors and shall in general exercise the
powers and perform the duties of the Chairman of the Board. He
shall be ex officio a member of all standing committees of the
Board of Directors. Subject to the supervision of the Board of
Directors, he shall have general charge of the business, affairs,
property, and operation of the Corporation and its officers,
employees, and agents. He may sign (unless the Chairman or a
Vice President shall have signed) certificates representing stock
of the Corporation authorized for issuance by the Board of
Directors. Except as the Board of Directors may otherwise order,
he may sign in the name and on behalf of the Corporation all
deeds, bonds, contracts, or agreements. He shall exercise such
other powers and perform such other duties as from time to time
may be assigned to him by the Board of Directors.
Section 5.08.Vice President: The Board of Directors
shall, from time to time, designate and elect one or more Vice
Presidents (one or more of whom may be designated Executive Vice
President) who shall have such powers and perform such duties as
from time to time may be assigned to them by the Board of
Directors or the President. At the request or in the absence or
PAGE 10
disability of the President, the Vice President (or, if there are
two or more Vice Presidents, the Vice President in order of
seniority of tenure in such office or in such other order as the
Board of Directors may determine) may perform all the duties of
the President and, when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Any
Vice President may sign (unless the Chairman, the President, or
another Vice President shall have signed) certificates
representing stock of the Corporation authorized for issuance by
the Board of Directors.
Section 5.09.Treasurer and Assistant Treasurers: The
Treasurer shall be the principal financial and accounting officer
of the Corporation and shall have general charge of the finances
and books of account of the Corporation. Except as otherwise
provided by the Board of Directors, he shall have general
supervision of the funds and property of the Corporation and of
the performance by the custodian of its duties with respect
thereto. He may countersign (unless an Assistant Treasurer or
Secretary or Assistant Secretary shall have countersigned)
certificates representing stock of the Corporation authorized for
issuance by the Board of Directors. He shall render to the Board
of Directors, whenever directed by the Board, an account of the
financial condition of the Corporation and of all his
transactions as Treasurer; and as soon as possible after the
close of each fiscal year he shall make and submit to the Board
of Directors a like report for such fiscal year. He shall cause
to be prepared annually a full and correct statement of the
affairs of the Corporation, including a balance sheet and a
financial statement of operations for the preceding fiscal year,
which shall be submitted at the annual meeting of stockholders
and filed within twenty (20) days thereafter at the principal
office of the Corporation. He shall perform all the acts
incidental to the office of Treasurer, subject to the control of
the Board of Directors. Any Assistant Treasurer may perform such
duties of the Treasurer as the Treasurer or the Board of
Directors may assign, and, in the absence of the Treasurer, he
may perform all the duties of the Treasurer.
Section 5.10.Secretary and Assistant Secretaries: The
Secretary shall attend to the giving and serving of all notices
of the Corporation and shall record all proceedings of the
meetings of the stockholders and Directors in one or more books
to be kept for that purpose. He shall keep in safe custody the
seal of the Corporation and shall have charge of the records of
the Corporation, including the stock books and such other books
and papers as the Board of Directors may direct and such books,
reports, certificates and other documents required by law to be
kept, all of which shall at all reasonable times be open to
inspection by any Director. He shall countersign (unless the
Treasurer, an Assistant Treasurer or an Assistant Secretary shall
have countersigned) certificates representing stock of the
Corporation authorized for issuance by the Board of Directors.
He shall perform such other duties as appertain to his office or
as may be required by the Board of Directors. Any Assistant
Secretary may perform such duties of the Secretary as the
Secretary or the Board of Directors may assign, and, in the
absence of the Secretary, he may perform all the duties of the
Secretary.
Section 5.11.Subordinate Officers: The Board of
Directors from time to time may appoint such other officers or
agents as it may deem advisable, each of whom shall have such
title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The
Board of Directors from time to time may delegate to one or more
officers or agents the power to appoint any such subordinate
officers or
PAGE 11
agents and to prescribe their respective rights, terms of office,
authorities, and duties. [ MGCL, Section 2-412(b) ]
Section 5.12.Remuneration: The salaries or other
compensation of the officers of the Corporation shall be fixed
from time to time by resolution of the Board of Directors, except
that the Board of Directors may by resolution delegate to any
person or group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in
accordance with the provisions of Section 5.11 hereof.
ARTICLE VI
CUSTODY OF SECURITIES AND CASH
Section 6.01.Employment of a Custodian: The
Corporation shall place and at all times maintain in the custody
of a Custodian (including any sub-custodian for the Custodian)
all funds, securities, and similar investments owned by the
Corporation. The Custodian shall be a bank having an aggregate
capital, surplus, and undivided profits of not less than
$10,000,000. The Custodian shall be appointed and its
remuneration fixed by the Board of Directors. [ Investment
Company Act, Section 17(f) ]
Section 6.02.Central Certificate Service: Subject to
such rules, regulations, and orders as the Securities and
Exchange Commission may adopt as necessary or appropriate for the
protection of investors, the Corporation's Custodian may deposit
all or any part of the securities owned by the Corporation in a
system for the central handling of securities established by a
national securities exchange or national securities association
registered with the Commission under the Securities Exchange Act
of 1934, or such other person as may be permitted by the
Commission, pursuant to which system all securities of any
particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged
by bookkeeping entry without physical delivery of such
securities. [ Investment Company Act, Section 17(f) ]
Section 6.03.Cash Assets: The cash proceeds from the
sale of securities and similar investments and other cash assets
of the Corporation shall be kept in the custody of a bank or
banks appointed pursuant to Section 6.01 hereof, or in accordance
with such rules and regulations or orders as the Securities and
Exchange Commission may from time to time prescribe for the
protection of investors, except that the Corporation may maintain
a checking account or accounts in a bank or banks, each having an
aggregate capital, surplus, and undivided profits of not less
than $10,000,000, provided that the balance of such account or
the aggregate balances of such accounts shall at no time exceed
the amount of the fidelity bond, maintained pursuant to the
requirements of the Investment Company Act of 1940 and rules and
regulations thereunder, covering the officers or employees
authorized to draw on such account or accounts. [ Investment
Company Act, Section 17(f) ]
Section 6.04.Free Cash Accounts: The Corporation may,
upon resolution of its Board of Directors, maintain a petty cash
account free of the foregoing requirements of this Article VI in
an amount not to exceed $500, provided that such account is
operated under the imprest system and is maintained subject to
adequate controls approved by the Board of Directors over
disbursements and reimbursements including, but not limited to,
fidelity
PAGE 12
bond coverage for persons having access to such funds. [
Investment Company Act, Rule 17f-3 ]
Section 6.05.Action Upon Termination of Custodian
Agreement: Upon resignation of a custodian of the Corporation or
inability of a custodian to continue to serve, the Board of
Directors shall promptly appoint a successor custodian, but in
the event that no successor custodian can be found who has the
required qualifications and is willing to serve, the Board of
Directors shall call as promptly as possible a special meeting of
the stockholders to determine whether the Corporation shall
function without a custodian or shall be liquidated. If so
directed by vote of the holders of a majority of the outstanding
shares of stock of the Corporation, the custodian shall deliver
and pay over all property of the Corporation held by it as
specified in such vote.
ARTICLE VII
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
Section 7.01.Execution of Instruments: All deeds,
documents, transfers, contracts, agreements, requisitions or
orders, promissory notes, assignments, endorsements, checks and
drafts for the payment of money by the Corporation, and other
instruments requiring execution by the Corporation shall be
signed by the Chairman, the President, a Vice President, or the
Treasurer, or as the Board of Directors may otherwise, from time
to time, authorize. Any such authorization may be general or
confined to specific instances.
Section 7.02.Voting of Securities: Unless otherwise
ordered by the Board of Directors, the Chairman, the President,
or any Vice President shall have full power and authority on
behalf of the Corporation to attend and to act and to vote, or in
the name of the Corporation to execute proxies to vote, at any
meeting of stockholders of any company in which the Corporation
may hold stock. At any such meeting such officer shall possess
and may exercise (in person or by proxy) any and all rights,
powers, and privileges incident to the ownership of such stock.
The Board of Directors may by resolution from time to time confer
like powers upon any other person or persons. [ MGCL, Section
2-509 ]
ARTICLE VIII
CAPITAL STOCK
Section 8.01.Ownership of Shares:
(a) Certificates certifying the ownership of shares will
not be issued for shares purchased or otherwise acquired after
July 1, 1991. The ownership of shares, full or fractional, shall
be recorded on the books of the Corporation or its agent. The
record books of the Corporation as kept by the Corporation or its
agent, as the case may be, shall be conclusive as to the number
of shares held from time to time by each such shareholder. The
Corporation reserves the right to require the surrender of
outstanding certificates if the Board of Directors so determines.
[ MGCL, Section 210(c) ]<PAGE>
PAGE 13
(b) Every certificate exchanged, surrendered for
redemption or otherwise returned to the Corporation shall be
marked "Cancelled" with the date of cancellation.
(Section 8.01. Ownership of Shares
as amended July 1, 1991)
Section 8.02.Transfer of Capital Stock:
(a) Shares of stock of the Corporation shall be
transferable only upon the books of the Corporation kept for such
purpose and, if one or more certificates representing such shares
have been issued, upon surrender to the Corporation or its
transfer agent or agents of such certificate or certificates duly
endorsed or accompanied by appropriate evidence of assignment,
transfer, succession, or authority to transfer.
(b) The Corporation shall be entitled to treat the holder
of record of any share of stock as the absolute owner thereof for
all purposes, and accordingly shall not be bound to recognize any
legal, equitable, or other claim or interest in such share on the
part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise expressly provided by
the statutes of the State of Maryland.
Section 8.03.Transfer Agents and Registrars: The Board
of Directors may, from time to time, appoint or remove transfer
agents and registrars of transfers of shares of stock of the
Corporation, and it may appoint the same person as both transfer
agent and registrar.
(Section 8.03. Transfer Agents and Registrars
as amended July 1, 1991)
Section 8.04.Transfer Regulations: The shares of stock
of the Corporation may be freely transferred, and the Board of
Directors may, from time to time, adopt lawful rules and
regulations with reference to the method of transfer of the
shares of stock of the Corporation.
Section 8.05.Fixing of Record Date: The Board of
Directors may fix in advance a date as a record date for the
determination of the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a
meeting, or to receive payment of any dividend or other
distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion, or exchange of
stock, or for any other proper purpose, provided that such record
date shall be a date not more than sixty (60) days nor, in the
case of a meeting of stockholders, less than ten (10) days prior
to the date on which the particular action, requiring such
determination of stockholders, is to be taken. In such case,
only such stockholders as shall be stockholders of record on the
record date so fixed shall be entitled to such notice of, and to
vote at, such meeting or adjournment, or to give such consent, or
to receive payment of such dividend or other distribution, or to
receive such allotment of rights, or to exercise such rights, or
to take other action, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any
such record date. A meeting of stockholders convened on the date
for which it was called may be adjourned from time to time
without notice to a date not more than one hundred twenty (120)
days after the original record date. [ MGCL, Section 2-511 ]
PAGE 14
Section 8.06.Lost, Stolen or Destroyed Certificates:
If a certificate for stock of the Corporation is alleged to have
been lost, stolen or destroyed, no new certificate will be
issued. Instead, ownership of the shares formerly represented by
the lost, stolen or destroyed certificate shall be recorded on
the books of the Corporation or its agent, in accordance with the
provisions of Section 8.01 of these By-Laws. Before recording
ownership of such shares, the Board of Directors, or any officer
authorized by the Board, may, in its discretion, require the
owner of the lost, stolen, or any destroyed certificate (or his
legal representative) to give the Corporation a bond or other
indemnity, in such form and in such amount as the Board or any
such officer may direct and with such surety or sureties as may
be satisfactory to the Board of any such officer, sufficient to
indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction
of any such certificate. [ MGCL, Section 2-213 ]
(Section 8.06 Lost, Stolen or Destroyed Certificates
as amended July 1, 1991)
ARTICLE IX
FISCAL YEAR, ACCOUNTANT
Section 9.01.Fiscal Year: The fiscal year of the
Corporation shall be the twelve (12) calendar months beginning on
the 1st day of March in each year and ending on the last day of
the following February, or such other period of twelve (12)
calendar months as the Board of Directors may by resolution
prescribe.
Section 9.02.Accountant:
(a) The Corporation shall employ an independent public
accountant or firm of independent public accountants as its
accountant to examine the accounts of the Corporation and to sign
and certify financial statements filed by the Corporation. The
accountant's certificates and reports shall be addressed both to
the Board of Directors and to the stockholders.
(b) A majority of the members of the Board of Directors
who are not interested persons (as such term is defined in the
Investment Company Act, as amended) of the Corporation shall
select the accountant, by vote cast in person, at any meeting
held before the first annual stockholders' meeting, and
thereafter shall select the accountant annually, by vote cast in
person, at a meeting held within thirty (30) days before or after
the beginning of the fiscal year of the Corporation or within
thirty (30) days before the annual stockholders' meeting in that
year. Such selection shall be submitted for ratification or
rejection at the next succeeding annual stockholders' meeting.
If such meeting shall reject such selection, the accountant shall
be selected by majority vote of the Corporation's outstanding
voting securities, either at the meeting at which the rejection
occurred or at a subsequent meeting of stockholders called for
the purpose.
(c) Any vacancy occurring between annual meetings, due to
the death or resignation of the accountant, may be filled by the
vote of a majority of those members of the Board of Directors who
are not interested persons (as so defined) of the Corporation,
cast in person at a meeting called for the purpose of voting on
such action.
PAGE 15
(d) The employment of the accountant shall be conditioned
upon the right of the Corporation by vote of a majority of the
outstanding voting securities at any meeting called for the
purpose to terminate such employment forthwith without any
penalty. [ Investment Company Act, Section 32(a) ]
ARTICLE X
INDEMNIFICATION AND INSURANCE
Section 10.01. Indemnification and Payment of Expenses
in Advance: The Corporation shall indemnify any individual
("Indemnitee") who is a present or former director, officer,
employee, or agent of the Corporation, or who is or has been
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, who, by reason of his
position was, is, or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative
(hereinafter collectively referred to as a "Proceeding") against
any expenses (including attorneys' fees) judgements, fines and
amounts paid in settlement actually and reasonably incurred by
such Indemnitee in connection with any Proceeding, to the full
extent that such indemnification may be lawful under Maryland
General Corporation Law, as from time to time amended. The
Corporation shall pay any expenses so incurred by such Indemnitee
in defending a Proceeding before the final disposition thereof to
the full extent that such advance may be lawful under Maryland
General Corporation Law, as from time to time amended. Subject
to any applicable limitations and requirements set forth in the
Corporation's Articles of Incorporation and in these By-Laws, any
payment of indemnification or advance of expenses shall be made
in accordance with the procedures set forth in Maryland General
Corporation Law, as from time to time amended.
Notwithstanding the foregoing, nothing herein shall
protect or purport to protect any Indemnitee of the Corporation
against any liability to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his
office ("Disabling Conduct").
Anything in this Article X to the contrary
notwithstanding, no indemnification shall be made by the
Corporation to any Indemnitee unless:
(a) there is a final decision on the merits by a court or
other body before whom the Proceeding was brought
that the Indemnitee was not liable by reason of
Disabling Conduct; or
(b) in the absence of such a decision, there is a
reasonable determination, based upon a review of the
facts, that the Indemnitee was not liable by reason
of Disabling Conduct, which determination shall be
made by:
(i) the vote of a majority of a quorum of directors
who are neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of
the Investment Company Act of 1940, nor parties
to the Proceeding; or
(ii) an independent legal counsel in a written
opinion.
PAGE 16
Anything in this Article X to the contrary
notwithstanding, any advance of expenses by the Corporation to
any Indemnitee shall be made only upon the undertaking by such
Indemnitee to repay the advance unless it is ultimately
determined that such Indemnitee is entitled to indemnification as
above provided, and only if one of the following conditions is
met:
(a) the Indemnitee provides a security for his
undertaking; or
(b) the Corporation shall be insured against losses
arising by reason of any lawful advances; or
(c) there is a determination, based on a review of
readily available facts, that there is reason to
believe that the Indemnitee will ultimately be
found entitled to indemnification, which
determination shall be made by:
(i) a majority of a quorum of directors who are
neither "interested persons" of the Corporation
as defined in Section 2(a)(19) of the
Investment Company Act of 1940, nor parties to
the Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Section 10.02. Insurance of Officers, Directors,
Employees and Agents: To the maximum extent permitted by the
Maryland General Corporation Law, as from time to time amended,
the Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, or agent
of the Corporation, or who is or was serving at the request of
the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other
enterprise, against any liability asserted against him and
incurred by him in or arising out of his position, whether or not
the Corporation would have the power to indemnify him against
such liability. [ MGCL, Section 2-418(h) ]
(ARTICLE X INDEMNIFICATION AND INSURANCE
as amended June 29, 1981)
ARTICLE XI
AMENDMENTS
Section 11.01. General: Except as provided in Section
11.02 hereof, all By-Laws of the Corporation, whether adopted by
the Board of Directors or the stockholders, shall be subject to
amendment, alteration, or repeal, and new By-Laws may be made, by
the affirmative vote of a majority of either:
<PAGE>
PAGE 17
(a) the holders of record of the outstanding shares of
stock of the Corporation entitled to vote, at any annual or
special meeting the notice or waiver of notice of which shall
have specified or summarized the proposed amendment, alteration,
repeal, or new By-Law; or
(b) the Directors present at any regular or special
meeting at which a quorum is present if the notice or waiver of
notice thereof or material sent to the Directors in connection
therewith on or prior to the last date for the giving of such
notice under these By-Laws shall have specified or summarized the
proposed amendment, alteration, repeal, or new By-Law.
Section 11.02. By Stockholders Only:
(a) No amendment of any section of these By-Laws shall be
made except by the stockholders of the Corporation if the
stockholders shall have provided in the By-Laws that such section
may not be amended, altered, or repealed except by the
stockholders.
(b) From and after the issue of any shares of the Capital
Stock of the Corporation, no amendment of this Article XI shall
be made except by the stockholders of the Corporation.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Use of the Term "Annual Meeting": The
use of the term "annual meeting" in these By-Laws shall not be
construed as implying a requirement that a shareholder meeting be
held annually.
(ARTICLE XII MISCELLANEOUS, added on January 21, 1988)
dld/agmts/BYLAWS.TEM
PAGE 18
BY-LAWS
OF
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
AS AMENDED:
JUNE 29, 1981
JANUARY 21, 1988
APRIL 20, 1990
JULY 1, 1991
JULY 20, 1993
<PAGE>
PAGE 19
TABLE OF CONTENTS
Page
ARTICLE I. NAME OF CORPORATION, LOCATION OF OFFICES AND SEAL 1
1.01. Name . . . . . . . . . . . . . . . . . .1
1.02. Principal Office . . . . . . . . . . . .1
1.03. Seal . . . . . . . . . . . . . . . . . .1
ARTICLE II. STOCKHOLDERS . . . . . . . . . . . . . .1
2.01. Annual Meetings. . . . . . . . . . . . .1
2.02. Special Meetings . . . . . . . . . . 2
2.03. Place of Meetings. . . . . . . . . . . .2
2.04. Notice of Meetings . . . . . . . . . . .2
2.05. Voting - in General. . . . . . . . . . .2
2.06. Stockholders Entitled to Vote. . . . . .3
2.07. Voting - Proxies . . . . . . . . . . . .3
2.08. Quorum . . . . . . . . . . . . . . . . .3
2.09. Absence of Quorum. . . . . . . . . . . .3
2.10. Stock Ledger and List of Stockholders. . 3
2.11. Informal Action by Stockholders. . . . .4
ARTICLE III. BOARD OF DIRECTORS . . . . . . . . . . .4
3.01. Number and Term of Office. . . . . . . .4
3.02. Qualification of Directors . . . . . . .4
3.03. Election of Directors. . . . . . . . . .4
3.04. Removal of Directors . . . . . . . . . .4
3.05. Vacancies and Newly Created Directorships. .4
3.06. General Powers . . . . . . . . . . . . .5
3.07. Power to Issue and Sell Stock. . . . . .5
3.08. Power to Declare Dividends . . . . . . .5
3.09. Annual and Regular Meetings. . . . . . .6
3.10. Special Meetings . . . . . . . . . . . .6
3.11. Notice . . . . . . . . . . . . . . . . .6
3.12. Waiver of Notice . . . . . . . . . . . .6
3.13. Quorum and Voting. . . . . . . . . . . .7
3.14. Conference Telephone . . . . . . . . . .7
3.15. Compensation . . . . . . . . . . . . . .7
3.16. Action without a Meeting . . . . . . . .7
<PAGE>
PAGE 20
ARTICLE IV. EXECUTIVE COMMITTEE AND OTHER COMMITTEES . .7
4.01. How Constituted. . . . . . . . . . . . .7
4.02. Powers of the Executive Committee. . 7
4.03. Other Committees of the Board of Directors .8
4.04. Proceedings, Quorum and Manner of Acting . .8
4.05. Other Committees . . . . . . . . . . . .8
ARTICLE V. OFFICERS. . . . . . . . . . . . . . . . . . 8
5.01. General. . . . . . . . . . . . . . . . .8
5.02. Election, Term of Office and Qualifications8
5.03. Resignation. . . . . . . . . . . . . . .9
5.04. Removal. . . . . . . . . . . . . . . . .9
5.05. Vacancies and Newly Created Offices. . .9
5.06. Chairman of the Board. . . . . . . . 9
5.07. President. . . . . . . . . . . . . . . .9
5.08. Vice President . . . . . . . . . . . 9
5.09. Treasurer and Assistant Treasurers . . .10
5.10. Secretary and Assistant Secretaries. . .10
5.11. Subordinate Officers . . . . . . . . . .10
5.12. Remuneration . . . . . . . . . . . . . .11
ARTICLE VI. CUSTODY OF SECURITIES AND CASH . . . 11
6.01. Employment of a Custodian. . . . . . . .11
6.02. Central Certificate Service. . . . . . .11
6.03. Cash Assets. . . . . . . . . . . . . . .11
6.04. Free Cash Accounts . . . . . . . . . . .11
6.05. Action Upon Termination of Custodian Agreement
12
ARTICLE VII. EXECUTION OF INSTRUMENTS, VOTING OF
SECURITIES12
7.01. Execution of Instruments . . . . . . . .12
7.02. Voting of Securities . . . . . . . . 12
ARTICLE VIII. CAPITAL STOCK. . . . . . . . . . . . . .12
8.01. Ownership of Shares. . . . . . . . . . .12
8.02. Transfer of Capital Stock. . . . . . . .13
8.03. Transfer Agents and Registrars . . . 13
8.04. Transfer Regulations . . . . . . . . . .13
8.05. Fixing of Record Date. . . . . . . . . .13
8.06. Lost, Stolen, or Destroyed Certificates. . .14
<PAGE>
PAGE 21
ARTICLE IX. FISCAL YEAR, ACCOUNTANT. . . . . . . . .14
9.01. Fiscal Year. . . . . . . . . . . . . . .14
9.02. Accountant . . . . . . . . . . . . . . .14
ARTICLE X. INDEMNIFICATION AND INSURANCE . . . . . . . 15
10.01. Indemnification and Payment of Expenses in
Advance. . 15
10.02. Insurance of Officers, Directors, Employees
and
Agents . . . . . . . . . . . . . . .16
ARTICLE XI. AMENDMENTS . . . . . . . . . . . . . 16
11.01. General. . . . . . . . . . . . . . . . .16
11.02. By Stockholders Only . . . . . . . . . .17
ARTICLE XII. MISCELLANEOUS. . . . . . . . . . . . 17
12.01. Use of the Term "Annual Meeting" . . 17
<PAGE>
PAGE 22
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
(A Maryland Corporation)
BY-LAWS
ARTICLE I
NAME OF CORPORATION,
LOCATION OF OFFICES AND SEAL
Section 1.01.Name: The name of the Corporation is
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
Section 1.02.Principal Office: The principal office of
the Corporation in the State of Maryland shall be located in the
City of Baltimore. The Corporation may, in addition, establish
and maintain such other offices and places of business, within or
outside the State of Maryland, as the Board of Directors may from
time to time determine. [ MGCL, Sections 2-103(4), 2-
108(a)(1) ]*
Section 1.03.Seal: The corporate seal of the
Corporation shall be circular in form, and shall bear the name of
the Corporation, the year of its incorporation, and the words
"Corporate Seal, Maryland." The form of the seal shall be
subject to alteration by the Board of Directors and the seal may
be used by causing it or a facsimile to be impressed or affixed
or printed or otherwise reproduced. In lieu of affixing the
corporate seal to any document it shall be sufficient to meet the
requirements of any law, rule, or regulation relating to a
corporate seal to affix the word "(Seal)" adjacent to the
signature of the authorized officer of the Corporation. Any
officer or Director of the Corporation shall have authority to
affix the corporate seal of the Corporation to any document
requiring the same. [ MGCL, Sections 1-304(b), 2-103(3) ]
ARTICLE II
SHAREHOLDERS
Section 2.01.Annual Meetings: The Corporation shall
not be required to hold an annual meeting of its shareholders in
any year unless the Investment Company Act of 1940 requires an
election of directors by shareholders. In the event that the
Corporation shall be so required to hold an annual meeting, such
meeting shall be held at a date and time set by the Board of
Directors, which date shall be no later than 120 days after the
occurrence of the event requiring the meeting. Any shareholders'
meeting held in accordance with the preceding sentence shall for
all
_________________________
* Bracketed citations are to the General Corporation Law of the
State of Maryland ("MGCL") or to the United States Investment
Company Act of 1940, as amended (the "Investment Company Act"),
or to Rules of the United States Securities and Exchange
Commission thereunder ("SEC Rules"). The citations are inserted
for reference only and do not constitute a part of the By-Laws.
<PAGE>
PAGE 23
purposes constitute the annual meeting of shareholders for the
fiscal year of the Corporation in which the meeting is held. At
any such meeting, the shareholders shall elect directors to hold
the offices of any directors who have held office for more than
one year or who have been elected by the Board of Directors to
fill vacancies which result from any cause. Except as the
Articles of Incorporation or statute provides otherwise,
Directors may transact any business within the powers of the
Corporation as may properly come before the meeting. Any
business of the Corporation may be transacted at the annual
meeting without being specially designated in the notice, except
such business as is specifically required by statute to be stated
in the notice. [MGCL, Section 2-501]
(Section 2.01. Annual Meetings as amended April 20, 1990)
Section 2.02.Special Meetings: Special meetings of the
shareholders may be called at any time by the Chairman of the
Board, the President, any Vice President, or by the Board of
Directors. Special meetings of the shareholders shall be called
by the Secretary on the written request of shareholders entitled
to cast at least ten (10) percent of all the votes entitled to be
cast at such meeting, provided that (a) such request shall state
the purpose or purposes of the meeting and the matters proposed
to be acted on, and (b) the shareholders requesting the meeting
shall have paid to the Corporation the reasonably estimated cost
of preparing and mailing the notice thereof, which the Secretary
shall determine and specify to such shareholders. Unless
requested by shareholders entitled to cast a majority of all the
votes entitled to be cast at the meeting, a special meeting need
not be called to consider any matter which is substantially the
same as a matter voted upon at any special meeting of the
shareholders held during the preceding twelve (12) months.
[ MGCL, Section 2-502 ]
(Section 2.02. Special Meetings as amended July 30, 1993)
Section 2.03.Place of Meetings: All shareholders'
meetings shall be held at such place within the United States as
may be fixed from time to time by the Board of Directors.
[ MGCL, Section 2-503 ]
Section 2.04.Notice of Meetings: Not less than ten
(10) days, nor more than ninety (90) days before each
shareholders' meeting, the Secretary or an Assistant Secretary of
the Corporation shall give to each shareholder entitled to vote
at the meeting, and each other shareholder entitled to notice of
the meeting, written notice stating (1) the time and place of the
meeting, and (2) the purpose or purposes of the meeting if the
meeting is a special meeting or if notice of the purpose is
required by statute to be given. Such notice shall be personally
delivered to the shareholder, or left at his residence or usual
place of business, or mailed to him at his address as it appears
on the records of the Corporation. No notice of a shareholders'
meeting need be given to any shareholder who shall sign a written
waiver of such notice, whether before or after the meeting, which
is filed with the records of shareholders' meetings, or to any
shareholder who is present at the meeting in person or by proxy.
Notice of adjournment of a shareholders' meeting to another time
or place need not be given if such time and place are announced
at the meeting, unless the adjournment is for more than one
hundred twenty (120) days after the original record date. [
MGCL, Sections 2-504, 2-511(d) ]
Section 2.05.Voting - In General: At every
shareholders' meeting, each shareholder shall be entitled to one
vote for each share of stock of the Corporation validly issued
and outstanding and held by such shareholder, except that no
shares held by the Corporation shall be entitled to a vote.
Fractional shares shall be entitled to fractional votes. Except
as otherwise specifically provided in the Articles of
Incorporation, or these By-Laws, or
PAGE 24
as required by provisions of the Investment Company Act, a
majority of all the votes cast at a meeting at which a quorum is
present is sufficient to approve any matter which properly comes
before the meeting. The vote upon any question shall be by
ballot whenever requested by any person entitled to vote, but,
unless such a request is made, voting may be conducted in any way
approved by the meeting. [ MGCL, Sections 2-214(a)(i), 2-
506(a)(2), 2-507(a), 2-509(b) ]
Section 2.06.Shareholders Entitled to Vote: If,
pursuant to Section 8.05 hereof, a record date has been fixed for
the determination of shareholders entitled to notice of or to
vote at any shareholders' meeting, each shareholder of the
Corporation shall be entitled to vote in person or by proxy, each
share or fraction of a share of stock outstanding in his name on
the books of the Corporation on such record date. If no record
date has been fixed for the determination of shareholders, the
record date for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the
close of business on the day on which notice of the meeting is
mailed or the 30th day before the meeting, whichever is the
closer date to the meeting, or, if notice is waived by all
shareholders, at the close of business on the tenth (10th) day
next preceding the date of the meeting. [ MGCL, Sections 2-507,
2-511 ]
Section 2.07.Voting - Proxies: The right to vote by
proxy shall exist only if the instrument authorizing such proxy
to act shall have been executed in writing by the shareholder
himself, or by his attorney thereunto duly authorized in writing.
No proxy shall be valid more than eleven (11) months after its
date unless it provides for a longer period. [ MGCL, Section 2-
507(b) ]
Section 2.08.Quorum: The presence at any shareholders'
meeting, in person or by proxy, of shareholders entitled to cast
a majority of the votes entitled to be cast at the meeting shall
constitute a quorum. [ MGCL, Section 2-506(a) ]
Section 2.09.Absence of Quorum: In the absence of a
quorum, the holders of a majority of shares entitled to vote at
the meeting and present thereat in person or by proxy, or, if no
shareholder entitled to vote is present in person or by proxy,
any officer present who is entitled to preside at or act as
Secretary of such meeting, may adjourn the meeting sine die or
from time to time. Any business that might have been transacted
at the meeting originally called may be transacted at any such
adjourned meeting at which a quorum is present.
Section 2.10.Stock Ledger and List of Shareholders: It
shall be the duty of the Secretary or Assistant Secretary of the
Corporation to cause an original or duplicate stock ledger to be
maintained at the office of the Corporation's transfer agent,
containing the names and addresses of all shareholders and the
number of shares of each class held by each shareholder. Such
stock ledger may be in written form, or any other form capable of
being converted into written form within a reasonable time for
visual inspection. Any one or more persons, who together are and
for at least six (6) months have been shareholders of record of
at least five percent (5%) of the outstanding capital stock of
the Corporation, may submit (unless the Corporation at the time
of the request maintains a duplicate stock ledger at its
principal office) a written request to any officer of the
Corporation or its resident agent in Maryland for a list of the
shareholders of the Corporation. Within twenty (20) days after
such a request, there shall be prepared and filed at the
Corporation's principal office a list, verified under oath by an
officer of the Corporation or by its stock transfer agent or
registrar, which sets
PAGE 25
forth the name and address of each shareholder and the number of
shares of each class which the shareholder holds. [ MGCL,
Sections 2-209, 2-513 ]
Section 2.11.Informal Action By Shareholders: Any
action required or permitted to be taken at a meeting of
shareholders may be taken without a meeting if the following are
filed with the records of shareholders' meetings:
(a) A unanimous written consent which sets forth the
action and is signed by each shareholder entitled to
vote on the matter; and
(b) A written waiver of any right to dissent signed by
each shareholder entitled to notice of the meeting,
but not entitled to vote at it. [ MGCL, Section 2-
505 ]
ARTICLE III
BOARD OF DIRECTORS
Section 3.01.Number and Term of Office: The Board of
Directors shall consist of one (1) Director, which number may be
increased by a resolution of a majority of the entire Board of
Directors, provided that the number of Directors shall not be
more than fifteen (15) nor less than the lesser of (i) three (3)
or (ii) the number of shareholders of the Corporation. Each
Director (whenever elected) shall hold office until the next
annual meeting of shareholders and until his successor is elected
and qualifies or until his earlier death, resignation, or
removal. [ MGCL, Sections 2-402, 2-404, 2-405 ]
Section 3.02.Qualification of Directors: No member of
the Board of Directors need be a shareholder of the Corporation,
but at least one member of the Board of Directors shall be a
person who is not an interested person (as such term is defined
in the Investment Company Act) of the investment adviser of the
Corporation, nor an officer or employee of the Corporation. [
MGCL, Section 2-403; Investment Company Act, Section 10(d) ]
Section 3.03.Election of Directors: Until the first
annual meeting of shareholders or until successors are duly
elected and qualified, the Board of Directors shall consist of
the persons named as such in the Articles of Incorporation.
Thereafter, except as otherwise provided in Sections 3.04 and
3.05 hereof, at each annual meeting, the shareholders shall elect
Directors to hold office until the next annual meeting and/or
until their successors are elected and qualify. In the event
that Directors are not elected at an annual shareholders'
meeting, then Directors may be elected at a special shareholders'
meeting. Directors shall be elected by vote of the holders of a
majority of the shares present in person or by proxy and entitled
to vote thereon. [ MGCL, Section 2-404 ]
(Section 3.03. Election of Directors as amended January 21,
1988)
Section 3.04.Removal of Directors: At any meeting of
shareholders, duly called and at which a quorum is present, the
shareholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any
Director or Directors from office, either with or without cause,
and may elect a successor or successors to fill any resulting
vacancies for the unexpired terms of removed Directors. [ MGCL,
Sections 2-406, 2-407 ]
Section 3.05.Vacancies and Newly Created Directorships:
If any vacancies occur in the Board of Directors by reason of
resignation, removal or
PAGE 26
otherwise, or if the authorized number of Directors is increased,
the Directors then in office shall continue to act, and such
vacancies (if not previously filled by the shareholders) may be
filled by a majority of the Directors then in office, whether or
not sufficient to constitute a quorum, provided that, immediately
after filling such vacancy, at least two-thirds of the Directors
then holding office shall have been elected to such office by the
shareholders of the Corporation. In the event that at any time,
other than the time preceding the first meeting of shareholders,
less than a majority of the Directors of the Corporation holding
office at that time were so elected by the shareholders, a
meeting of the shareholders shall be held promptly and in any
event within sixty (60) days for the purpose of electing
Directors to fill any existing vacancies in the Board of
Directors unless the Securities and Exchange Commission shall by
order extend such period. Except as provided in Section 3.04
hereof, a Director elected by the Board of Directors to fill a
vacancy shall be elected to hold office until the next annual
meeting of shareholders or until his successor is elected and
qualifies. [ MGCL, Section 2-407; Investment Company Act,
Section 16(a) ]
Section 3.06.General Powers:
(a) The property, business, and affairs of the
Corporation shall be managed under the direction of the Board of
Directors which may exercise all the powers of the Corporation
except such as are by law, by the Articles of Incorporation, or
by these By-Laws conferred upon or reserved to the shareholders
of the Corporation. [ MGCL, Section 2-401 ]
(b) All acts done by any meeting of the Directors
or by any person acting as a Director, so long as his successor
shall not have been duly elected or appointed, shall,
notwithstanding that it be afterwards discovered that there was
some defect in the election of the Directors or such person
acting as a Director or that they or any of them were
disqualified, be as valid as if the Directors or such person, as
the case may be, had been duly elected and were or was qualified
to be Directors or a Director of the Corporation.
Section 3.07.Power to Issue and Sell Stock: The Board
of Directors may from time to time authorize by resolution the
issuance and sale of any of the Corporation's authorized shares
to such persons as the Board of Directors shall deem advisable
and such resolution shall set the minimum price or value of
consideration for the stock or a formula for its determination,
and shall include a fair description of any consideration other
than money and a statement of the actual value of such
consideration as determined by the Board of Directors or a
statement that the Board of Directors has determined that the
actual value is or will be not less than a certain sum. [ MGCL,
Section 2-203 ]
Section 3.08.Power to Declare Dividends:
(a) The Board of Directors, from time to time as
it may deem advisable, may declare and the Corporation pay
dividends, in cash, property, or shares of the Corporation
available for dividends out of any source available for
dividends, to the shareholders according to their respective
rights and interests. [ MGCL, Section 2-309 ]
(b) The Board of Directors shall cause to be
accompanied by a written statement any dividend payment wholly or
partly from any source other
PAGE 27
than the Corporation's accumulated undistributed net income
(determined in accordance with good accounting practice and the
rules and regulations of the Securities and Exchange Commission
then in effect) not including profits or losses realized upon the
sale of securities or other properties. Such statement shall
adequately disclose the source or sources of such payment and the
basis of calculation and shall be otherwise in such form as the
Securities and Exchange Commission may prescribe. [ Investment
Company Act, Section 19; SEC Rule 19a-1; MGCL, Section 2-309(c) ]
(c) Notwithstanding the above provisions of this
Section 3.08, the Board of Directors may at any time declare and
distribute pro rata among the shareholders a stock dividend out
of the Corporation's authorized but unissued shares of stock,
including any shares previously purchased by the Corporation,
provided that such dividend shall not be distributed in shares of
any class with respect to any shares of a different class. The
shares so distributed shall be issued at the par value thereof,
and there shall be transferred to stated capital, at the time
such dividend is paid, an amount of surplus equal to the
aggregate par value of the shares issued as a dividend and there
may be transferred from earned surplus to capital surplus such
additional amount as the Board of Directors may determine. [
MGCL, Section 2-309 ]
Section 3.09.Annual and Regular Meetings: The annual
meeting of the Board of Directors for choosing officers and
transacting other proper business shall be held immediately after
the annual shareholders' meeting at such place as may be
specified in the notice of such meeting of the Board of
Directors, or, in the absence of such annual shareholders'
meeting, at such time and place as the Board of Directors may
provide. The Board of Directors from time to time may provide by
resolution for the holding of regular meetings and fix their time
and place (within or outside the State of Maryland). [ MGCL,
Section 2-409(a) ]
(Section 3.09. Annual and Regular Meetings as amended January
21, 1988)
Section 3.10.Special Meetings: Special meetings of the
Board of Directors shall be held whenever called by the Chairman
of the Board, the President (or, in the absence or disability of
the President, by any Vice President), the Treasurer, or two or
more Directors, at the time and place (within or outside the
State of Maryland) specified in the respective notices or waivers
of notice of such meetings.
Section 3.11.Notice: Notice of annual, regular, and
special meetings shall be in writing, stating the time and place,
and shall be mailed to each Director at his residence or regular
place of business or caused to be delivered to him personally or
to be transmitted to him by telegraph, cable, or wireless at
least two (2) days before the day on which the meeting is to be
held. Except as otherwise required by the By-Laws or the
Investment Company Act, such notice need not include a statement
of the business to be transacted at, or the purpose of, the
meeting. [ MGCL, Section 2-409(b) ]
Section 3.12.Waiver of Notice: No notice of any
meeting need be given to any Director who is present at the
meeting or to any Director who signs a waiver of the notice of
the meeting (which waiver shall be filed with the records of the
meeting), whether before or after the meeting. [ MGCL, Section
2-409(c) ]
Section 3.13.Quorum and Voting: At all meetings of the
Board of Directors the presence of one-third of the total number
of Directors authorized, but not less than two (2) Directors if
there are at least two directors, shall constitute a quorum. In
the absence of a quorum, a majority of the Directors present may
adjourn the meeting, from time to time, until a
PAGE 28
quorum shall be present. The action of a majority of the
Directors present at a meeting at which a quorum is present shall
be the action of the Board of Directors unless the concurrence of
a greater proportion is required for such action by law, by the
Articles of Incorporation or by these By-Laws. [ MGCL, Section
2-408 ]
Section 3.14.Conference Telephone: Members of the
Board of Directors or of any committee designated by the Board,
may participate in a meeting of the Board or of such committee by
means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear
each other at the same time, and participation by such means
shall constitute presence in person at such meeting. [ MGCL,
Section 2-409(d) ]
Section 3.15.Compensation: Each Director may receive
such remuneration for his services as shall be fixed from time to
time by resolution of the Board of Directors.
Section 3.16.Action Without a Meeting: Any action
required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting
if a unanimous written consent which sets forth the action is
signed by all members of the Board or of such committee and such
written consent is filed with the minutes of proceedings of the
Board or committee. [ MGCL, Section 2-408(c) ]
Section 3.17.Director Emeritus: Upon the retirement of
a Director of the Corporation, the Board of Directors may
designate such retired Director as a Director Emeritus. The
position of Director Emeritus shall be honorary only and shall
not confer upon such Director Emeritus any responsibility, or
voting authority, whatsoever with respect to the Corporation. A
Director Emeritus may, but shall not be required to attend the
meetings of the Board of Directors and receive materials normally
provided Directors relating to the Corporation. The Board of
Directors may establish such compensation as it may deem
appropriate under the circumstances to be paid by the Corporation
to a Director Emeritus.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 4.01.How Constituted: By resolution adopted by
the Board of Directors, the Board may appoint from among its
members one or more committees, including an Executive Committee,
each consisting of at least two (2) Directors. Each member of a
committee shall hold office during the pleasure of the Board.
The President shall be a member of the Executive Committee. [
MGCL, Section 2-411 ]
Section 4.02.Powers of the Executive Committee: Unless
otherwise provided by resolution of the Board of Directors, the
Executive Committee, in the intervals between meetings of the
Board of Directors, shall have and may exercise all of the powers
of the Board of Directors to manage the business and affairs of
the Corporation except the power to:
(a) Declare dividends or distributions on stock;
PAGE 29
(b) Issue stock other than as provided in Section
2-411(b) of Corporations and Associations Article of
the Annotated Code of Maryland;
(c) Recommend to the shareholders any action which
requires shareholder approval;
(d) Amend the By-Laws; or
(e) Approve any merger or share exchange which does not
require shareholder approval.
[ MGCL, Section 2-411(a) ]
Section 4.03.Other Committees of the Board of
Directors: To the extent provided by resolution of the Board,
other committees shall have and may exercise any of the powers
that may lawfully be granted to the Executive Committee. [ MGCL,
Section 2-411(a) ]
Section 4.04.Proceedings, Quorum, and Manner of Acting:
In the absence of appropriate resolution of the Board of
Directors, each committee may adopt such rules and regulations
governing its proceedings, quorum and manner of acting as it
shall deem proper and desirable, provided that the quorum shall
not be less than two (2) Directors. In the absence of any member
of any such committee, the members thereof present at any
meeting, whether or not they constitute a quorum, may appoint a
member of the Board of Directors to act in the place of such
absent member. [ MGCL, Section 2-411(c) ]
Section 4.05.Other Committees: The Board of Directors
may appoint other committees, each consisting of one or more
persons who need not be Directors. Each such committee shall
have such powers and perform such duties as may be assigned to it
from time to time by the Board of Directors, but shall not
exercise any power which may lawfully be exercised only by the
Board of Directors or a committee thereof.
ARTICLE V
OFFICERS
Section 5.01.General: The officers of the Corporation
shall be a President, one or more Vice Presidents (one or more of
whom may be designated Executive Vice President), a Secretary,
and a Treasurer, and may include one or more Assistant Vice
Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be appointed
in accordance with the provisions of Section 5.11 hereof. The
Board of Directors may elect, but shall not be required to elect,
a Chairman of the Board. [ MGCL, Section 2-412 ]
Section 5.02.Election, Term of Office and
Qualifications: The officers of the Corporation (except those
appointed pursuant to Section 5.11 hereof) shall be elected by
the Board of Directors at its first meeting and thereafter at
each annual meeting of the Board. If any officer or officers are
not elected at any such meeting, such officer or officers may be
elected at any subsequent regular or special meeting of the
Board. Except as provided in Sections 5.03, 5.04, and 5.05
hereof, each officer elected by the Board of Directors shall hold
office until the next annual meeting of the Board of Directors
and until his successor shall have been chosen and qualified.
Any
PAGE 30
person may hold two or more offices of the Corporation, except
that neither the Chairman of the Board nor the President may hold
the office of Vice President, but no person shall execute,
acknowledge, or verify any instrument in more than one capacity
if such instrument is required by law, the Articles of
Incorporation or these By-Laws to be executed, acknowledged, or
verified by two or more officers. The Chairman of the Board and
the President shall be selected from among the Directors of the
Corporation and may hold such offices only so long as they
continue to be Directors. No other officer need be a Director.
[ MGCL, Sections 2-413, 2-415 ]
(Section 5.02. Election, Term of Office and Qualifications as
amended January 21, 1988)
Section 5.03.Resignation: Any officer may resign his
office at any time by delivering a written resignation to the
Board of Directors, the President, the Secretary, or any
Assistant Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 5.04.Removal: Any officer may be removed from
office by the Board of Directors whenever in the judgment of the
Board of Directors the best interests of the Corporation will be
served thereby. [ MGCL, Section 2-413(c) ]
Section 5.05.Vacancies and Newly Created Offices: If
any vacancy shall occur in any office by reason of death,
resignation, removal, disqualification or other cause, or if any
new office shall be created, such vacancies or newly created
offices may be filled by the Board of Directors at any meeting
or, in the case of any office created pursuant to Section 5.11
hereof, by any officer upon whom such power shall have been
conferred by the Board of Directors. [ MGCL, Section 2-413(d) ]
Section 5.06.Chairman of the Board: Unless otherwise
provided by resolution of the Board of Directors, the Chairman of
the Board, if there be such an officer, shall be the chief
executive and operating officer of the Corporation, shall preside
at all shareholders' meetings, and at all meetings of the Board
of Directors. He shall be ex officio a member of all standing
committees of the Board of Directors. Subject to the supervision
of the Board of Directors, he shall have general charge of the
business, affairs, property, and operation of the Corporation and
its officers, employees, and agents. He may sign (unless the
President or a Vice President shall have signed) certificates
representing stock of the Corporation authorized for issuance by
the Board of Directors and shall have such other powers and
perform such other duties as may be assigned to him from time to
time by the Board of Directors.
Section 5.07.President: Unless otherwise provided by
resolution of the Board of Directors, the President shall, at the
request of or in the absence or disability of the Chairman of the
Board, or if no Chairman of the Board has been chosen, he shall
preside at all shareholders' meetings and at all meetings of the
Board of Directors and shall in general exercise the powers and
perform the duties of the Chairman of the Board. He may sign
(unless the Chairman or a Vice President shall have signed)
certificates representing stock of the Corporation authorized for
issuance by the Board of Directors. Except as the Board of
Directors may otherwise order, he may sign in the name and on
behalf of the Corporation all deeds, bonds, contracts, or
agreements. He shall exercise such other powers and perform such
other duties as from time to time may be assigned to him by the
Board of Directors.
Section 5.08.Vice President: The Board of Directors
shall, from time to time, designate and elect one or more Vice
Presidents (one or more of whom may be designated Executive Vice
President) who shall have such powers
PAGE 31
and perform such duties as from time to time may be assigned to
them by the Board of Directors or the President. At the request
or in the absence or disability of the President, the Vice
President (or, if there are two or more Vice Presidents, the Vice
President in order of seniority of tenure in such office or in
such other order as the Board of Directors may determine) may
perform all the duties of the President and, when so acting,
shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President may sign
(unless the Chairman, the President, or another Vice President
shall have signed) certificates representing stock of the
Corporation authorized for issuance by the Board of Directors.
Section 5.09.Treasurer and Assistant Treasurers: The
Treasurer shall be the principal financial and accounting officer
of the Corporation and shall have general charge of the finances
and books of account of the Corporation. Except as otherwise
provided by the Board of Directors, he shall have general
supervision of the funds and property of the Corporation and of
the performance by the custodian of its duties with respect
thereto. He may countersign (unless an Assistant Treasurer or
Secretary or Assistant Secretary shall have countersigned)
certificates representing stock of the Corporation authorized for
issuance by the Board of Directors. He shall render to the Board
of Directors, whenever directed by the Board, an account of the
financial condition of the Corporation and of all his
transactions as Treasurer; and as soon as possible after the
close of each fiscal year he shall make and submit to the Board
of Directors a like report for such fiscal year. He shall cause
to be prepared annually a full and correct statement of the
affairs of the Corporation, including a balance sheet and a
financial statement of operations for the preceding fiscal year,
which shall be submitted at the annual meeting of shareholders
and filed within twenty (20) days thereafter at the principal
office of the Corporation. He shall perform all the acts
incidental to the office of the Treasurer, subject to the control
of the Board of Directors. Any Assistant Treasurer may perform
such duties of the Treasurer as the Treasurer or the Board of
Directors may assign, and, in the absence of the Treasurer, he
may perform all the duties of the Treasurer.
Section 5.10.Secretary and Assistant Secretaries: The
Secretary shall attend to the giving and serving of all notices
of the Corporation and shall record all proceedings of the
meetings of the shareholders and Directors in one or more books
to be kept for that purpose. He shall keep in safe custody the
seal of the Corporation and shall have charge of the records of
the Corporation, including the stock books and such other books
and papers as the Board of Directors may direct and such books,
reports, certificates and other documents required by law to be
kept, all of which shall at all reasonable times be open to
inspection by any Director. He shall countersign (unless the
Treasurer, an Assistant Treasurer or an Assistant Secretary shall
have countersigned) certificates representing stock of the
Corporation authorized for issuance by the Board of Directors.
He shall perform such other duties as appertain to his office or
as may be required by the Board of Directors. Any Assistant
Secretary may perform such duties of the Secretary as the
Secretary or the Board of Directors may assign, and, in the
absence of the Secretary, he may perform all the duties of the
Secretary.
Section 5.11.Subordinate Officers: The Board of
Directors from time to time may appoint such other officers or
agents as it may deem advisable, each of whom shall have such
title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The
Board of Directors from time to time may delegate to one or more
officers or agents the power to appoint any such subordinate
officers or agents and to prescribe their respective rights,
terms of office, authorities, and duties. [ MGCL, Section
2-412(b) ]
PAGE 32
Section 5.12.Remuneration: The salaries or other
compensation of the officers of the Corporation shall be fixed
from time to time by resolution of the Board of Directors, except
that the Board of Directors may by resolution delegate to any
person or group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in
accordance with the provisions of Section 5.11 hereof.
ARTICLE VI
CUSTODY OF SECURITIES AND CASH
Section 6.01.Employment of a Custodian: The
Corporation shall place and at all times maintain in the custody
of a Custodian (including any sub-custodian for the Custodian)
all funds, securities, and similar investments owned by the
Corporation. The Custodian shall be a bank having an aggregate
capital, surplus, and undivided profits of not less than
$10,000,000. Subject to such rules, regulations, and orders as
the Securities and Exchange Commission may adopt as necessary or
appropriate for the protection of investors, the Corporation's
Custodian may deposit all or a part of the securities owned by
the Corporation in a sub-custodian or sub-custodians situated
within or without the United States. The Custodian shall be
appointed and its remuneration fixed by the Board of Directors.
[ Investment Company Act, Section 17(f) ]
Section 6.02.Central Certificate Service: Subject to
such rules, regulations, and orders as the Securities and
Exchange Commission may adopt as necessary or appropriate for the
protection of investors, the Corporation's Custodian may deposit
all or any part of the securities owned by the Corporation in a
system for the central handling of securities established by a
national securities exchange or national securities association
registered with the Commission under the Securities Exchange Act
of 1934, or such other person as may be permitted by the
Commission, pursuant to which system all securities of any
particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged
by bookkeeping entry without physical delivery of such
securities. [ Investment Company Act, Section 17(f) ]
Section 6.03.Cash Assets: The cash proceeds from the
sale of securities and similar investments and other cash assets
of the Corporation shall be kept in the custody of a bank or
banks appointed pursuant to Section 6.01 hereof, or in accordance
with such rules and regulations or orders as the Securities and
Exchange Commission may from time to time prescribe for the
protection of investors, except that the Corporation may maintain
a checking account or accounts in a bank or banks, each having an
aggregate capital, surplus, and undivided profits of not less
than $10,000,000, provided that the balance of such account or
the aggregate balances of such accounts shall at no time exceed
the amount of the fidelity bond, maintained pursuant to the
requirements of the Investment Company Act and rules and
regulations thereunder, covering the officers or employees
authorized to draw on such account or accounts. [ Investment
Company Act, Section 17(f) ]
Section 6.04.Free Cash Accounts: The Corporation may,
upon resolution of its Board of Directors, maintain a petty cash
account free of the foregoing requirements of this Article VI in
an amount not to exceed $500, provided that such account is
operated under the imprest system and is maintained subject to
adequate controls approved by the Board of Directors over
disbursements and reimbursements including, but not limited to,
fidelity
PAGE 33
bond coverage for persons having access to such funds. [
Investment Company Act, Rule 17f-3 ]
Section 6.05.Action Upon Termination of Custodian
Agreement: Upon resignation of a custodian of the Corporation or
inability of a custodian to continue to serve, the Board of
Directors shall promptly appoint a successor custodian, but in
the event that no successor custodian can be found who has the
required qualifications and is willing to serve, the Board of
Directors shall call as promptly as possible a special meeting of
the shareholders to determine whether the Corporation shall
function without a custodian or shall be liquidated. If so
directed by vote of the holders of a majority of the outstanding
shares of stock of the Corporation, the custodian shall deliver
and pay over all property of the Corporation held by it as
specified in such vote.
ARTICLE VII
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
Section 7.01.Execution of Instruments: All deeds,
documents, transfers, contracts, agreements, requisitions or
orders, promissory notes, assignments, endorsements, checks and
drafts for the payment of money by the Corporation, and other
instruments requiring execution by the Corporation shall be
signed by the Chairman, the President, a Vice President, or the
Treasurer, or as the Board of Directors may otherwise, from time
to time, authorize. Any such authorization may be general or
confined to specific instances.
Section 7.02.Voting of Securities: Unless otherwise
ordered by the Board of Directors, the Chairman, the President,
or any Vice President shall have full power and authority on
behalf of the Corporation to attend and to act and to vote, or in
the name of the Corporation to execute proxies to vote, at any
meeting of shareholders of any company in which the Corporation
may hold stock. At any such meeting such officer shall possess
and may exercise (in person or by proxy) any and all rights,
powers, and privileges incident to the ownership of such stock.
The Board of Directors may by resolution from time to time confer
like powers upon any other person or persons. [ MGCL, Section
2-509 ]
ARTICLE VIII
CAPITAL STOCK
Section 8.01.Ownership of Shares:
(a) Certificates certifying the ownership of
shares will not be issued for shares purchased or otherwise
acquired after July 1, 1991. The ownership of shares, full or
fractional, shall be recorded on the books of the Corporation or
its agent. The record books of the Corporation as kept by the
Corporation or its agent, as the case may be, shall be conclusive
as to the number of shares held from time to time by each such
shareholder. The Corporation reserves the right to require the
surrender of outstanding
PAGE 34
certificates if the Board of Directors so determines. [ MGCL,
Section 210(c) ]
(b) Every certificate exchanged, surrendered for
redemption or otherwise returned to the Corporation shall be
marked "Cancelled" with the date of cancellation.
(Section 8.01 Ownership of Shares as amended July 1, 1991)
Section 8.02.Transfer of Capital Stock:
(a) Shares of stock of the Corporation shall be
transferable only upon the books of the Corporation kept for such
purpose and, if one or more certificates representing such shares
have been issued, upon surrender to the Corporation or its
transfer agent or agents of such certificate or certificates duly
endorsed, or accompanied by appropriate evidence of assignment,
transfer, succession, or authority to transfer.
(b) The Corporation shall be entitled to treat
the holder of record of any share of stock as the absolute owner
thereof for all purposes, and accordingly shall not be bound to
recognize any legal, equitable, or other claim or interest in
such share on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise
expressly provided by the statutes of the State of Maryland.
Section 8.03.Transfer Agents and Registrars: The Board
of Directors may, from time to time, appoint or remove transfer
agents and registrars of transfers of shares of stock of the
Corporation, and it may appoint the same person as both transfer
agent and registrar.
(Section 8.03 Transfer Agents and Registrars as amended July 1,
1991)
Section 8.04.Transfer Regulations: The shares of stock
of the Corporation may be freely transferred, and the Board of
Directors may, from time to time, adopt lawful rules and
regulations with reference to the method of transfer of the
shares of stock of the Corporation.
Section 8.05.Fixing of Record Date: The Board of
Directors may fix in advance a date as a record date for the
determination of the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof,
or to express consent to corporate action in writing without a
meeting, or to receive payment of any dividend or other
distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion, or exchange of
stock, or for any other proper purpose, provided that such record
date shall be a date not more than sixty (60) days nor, in the
case of a meeting of shareholders, less than ten (10) days prior
to the date on which the particular action, requiring such
determination of shareholders, is to be taken. In such case,
only such shareholders as shall be shareholders of record on the
record date so fixed shall be entitled to such notice of, and to
vote at, such meeting or adjournment, or to give such consent, or
to receive payment of such dividend or other distribution, or to
receive such allotment of rights, or to exercise such rights, or
to take other action, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any
such record date. A meeting of shareholders convened on the date
for which it was called may be adjourned from time to time
without notice to a date not more than one hundred twenty (120)
days after the original record date. [ MGCL, Section 2-511 ]
Section 8.06.Lost, Stolen or Destroyed Certificates:
If a certificate for stock of the Corporation is alleged to have
been lost, stolen or destroyed, no new certificate will be
issued. Instead, ownership of the shares formerly represented by
the lost, stolen or destroyed certificate shall be recorded on
the books of the Corporation or its agent, in accordance with the
provisions of Section 8.01 of these By-Laws. Before recording
ownership of such shares, the Board of Directors, or any officer
authorized by the
PAGE 35
Board, may, in its discretion, require the owner of the lost,
stolen, or any destroyed certificate (or his legal
representative) to give the Corporation a bond or other
indemnity, in such form and in such amount as the Board or any
such officer may direct and with such surety or sureties as may
be satisfactory to the Board of any such officer, sufficient to
indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction
of any such certificate. [ MGCL, Section 2-213 ]
(Section 8.06 Lost, Stolen or Destroyed Certificates as amended
July 1, 1991)
ARTICLE IX
FISCAL YEAR, ACCOUNTANT
Section 9.01.Fiscal Year: The fiscal year of the
Corporation shall be the twelve (12) calendar months beginning on
the 1st day of March in each year and ending on the last day of
the following February, or such other period of twelve (12)
calendar months as the Board of Directors may by resolution
prescribe.
Section 9.02.Accountant:
(a) The Corporation shall employ an independent
public accountant or firm of independent public accountants as
its accountant to examine the accounts of the Corporation and to
sign and certify financial statements filed by the Corporation.
The accountant's certificates and reports shall be addressed both
to the Board of Directors and to the shareholders.
(b) A majority of the members of the Board of
Directors who are not interested persons (as such term is defined
in the Investment Company Act) of the Corporation shall select
the accountant, by vote cast in person, at any meeting held
before the first annual shareholders' meeting, and thereafter
shall select the accountant annually, by vote cast in person, at
a meeting held within thirty (30) days before or after the
beginning of the fiscal year of the Corporation or within thirty
(30) days before the annual shareholders' meeting in that year.
Such selection shall be submitted for ratification or rejection
at the next succeeding annual shareholders' meeting. If such
meeting shall reject such selection, the accountant shall be
selected by majority vote of the Corporation's outstanding voting
securities, either at the meeting at which the rejection occurred
or at a subsequent meeting of shareholders called for the
purpose.
(c) Any vacancy occurring between annual
meetings, due to the death or resignation of the accountant, may
be filled by the vote of a majority of those members of the Board
of Directors who are not interested persons (as so defined) of
the Corporation, cast in person at a meeting called for the
purpose of voting on such action.
(d) The employment of the accountant shall be
conditioned upon the right of the Corporation by vote of a
majority of the outstanding voting securities at any meeting
called for the purpose to terminate such employment forthwith
without any penalty. [ Investment Company Act, Section 32(a) ]
<PAGE>
PAGE 36
ARTICLE X
INDEMNIFICATION AND INSURANCE
Section 10.01. Indemnification and Payment of Expenses
in Advance: The Corporation shall indemnify any individual
("Indemnitee") who is a present or former director, officer,
employee, or agent of the Corporation, or who is or has been
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, who, by reason of his
position was, is, or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative
(hereinafter collectively referred to as a "Proceeding") against
any judgments, penalties, fines, settlements, and reasonable
expenses (including attorneys' fees) incurred by such Indemnitee
in connection with any Proceeding, to the fullest extent that
such indemnification may be lawful under applicable Maryland law,
as from time to time amended. The Corporation shall pay any
reasonable expenses so incurred by such Indemnitee in defending a
Proceeding in advance of the final disposition thereof to the
fullest extent that such advance payment may be lawful under
applicable Maryland law, as from time to time amended. Subject
to any applicable limitations and requirements set forth in the
Corporation's Articles of Incorporation and in these By-Laws, any
payment of indemnification or advance of expenses shall be made
in accordance with the procedures set forth in applicable
Maryland law, as from time to time amended.
Notwithstanding the foregoing, nothing herein shall
protect or purport to protect any Indemnitee against any
liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office
("Disabling Conduct").
Anything in this Article X to the contrary
notwithstanding, no indemnification shall be made by the
Corporation to any Indemnitee unless:
(a) there is a final decision on the merits by a court or
other body before whom the Proceeding was brought
that the Indemnitee was not liable by reason of
Disabling Conduct; or
(b) in the absence of such a decision, there is a
reasonable determination, based upon a review of the
facts, that the Indemnitee was not liable by reason
of Disabling Conduct, which determination shall be
made by:
(i) the vote of a majority of a quorum of directors
who are neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of
the Investment Company Act, nor parties to the
Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Anything in this Article X to the contrary
notwithstanding, any advance of expenses by the Corporation to
any Indemnitee shall be made only upon the undertaking by such
Indemnitee to repay the advance unless it is ultimately
determined that such Indemnitee is entitled to indemnification as
above provided, and only if one of the following conditions is
met:
<PAGE>
PAGE 37
(a) the Indemnitee provides a security for his
undertaking; or
(b) the Corporation shall be insured against losses
arising by reason of any lawful advances; or
(c) there is a determination, based on a review of
readily available facts, that there is reason to
believe that the Indemnitee will ultimately be
found entitled to indemnification, which
determination shall be made by:
(i) a majority of a quorum of directors who are
neither "interested persons" of the Corporation
as defined in Section 2(a)(19) of the
Investment Company Act, nor parties to the
Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Section 10.02. Insurance of Officers, Directors,
Employees and Agents: To the fullest extent permitted by
applicable Maryland law and by Section 17(h) of the Investment
Company Act, as from time to time amended, the Corporation may
purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee, or agent of the Corporation,
or who is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against
any liability asserted against him and incurred by him in or
arising out of his position, whether or not the Corporation would
have the power to indemnify him against such liability. [ MGCL,
Section 2-418(k) ]
ARTICLE XI
AMENDMENTS
Section 11.01. General: Except as provided in Section
11.02 hereof, all By-Laws of the Corporation, whether adopted by
the Board of Directors or the shareholders, shall be subject to
amendment, alteration, or repeal, and new By-Laws may be made, by
the affirmative vote of a majority of either:
(a) the holders of record of the outstanding shares
of stock of the Corporation entitled to vote, at any
annual or special meeting the notice or waiver of notice
of which shall have specified or summarized the proposed
amendment, alteration, repeal, or new By-Law; or
(b) the Directors present at any regular or special
meeting at which a quorum is present if the notice or
waiver of notice thereof or material sent to the
Directors in connection therewith on or prior to the last
date for the giving of such notice under these By-Laws
shall have specified or summarized the proposed
amendment, alteration, repeal, or new By-Law.
<PAGE>
PAGE 38
ARTICLE XII
MISCELLANEOUS
Section 12.01. Use of the Term "Annual Meeting": The
use of the term "annual meeting" in these By-Laws shall not be
construed as implying a requirement that a shareholder meeting be
held annually.
(ARTICLE XII - MISCELLANEOUS added January 21, 1988)
dld\agmts\BYLAWS.TFS
<PAGE>
PAGE 39
BY-LAWS
OF
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
AS AMENDED:
JANUARY 21, 1988
APRIL 20, 1990
JULY 1, 1991
JULY 20, 1993
<PAGE>
PAGE 40
TABLE OF CONTENTS
Page
ARTICLE I. NAME OF CORPORATION, LOCATION OF
OFFICES AND SEAL. . . . . . . . . . . . . . . . . . 1
1.01. Name. . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Principal Office. . . . . . . . . . . . . . . . . . 1
1.03. Seal. . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II.
SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.01. Annual Meetings . . . . . . . . . . . . . . . . . . 1
2.02. Special Meetings. . . . . . . . . . . . . . . . . . 2
2.03. Place of Meetings . . . . . . . . . . . . . . . . . 2
2.04. Notice of Meetings. . . . . . . . . . . . . . . . . 2
2.05. Voting - in General . . . . . . . . . . . . . . . . 2
2.06. Shareholders Entitled to Vote . . . . . . . . . . . 3
2.07. Voting - Proxies. . . . . . . . . . . . . . . . . . 3
2.08. Quorum. . . . . . . . . . . . . . . . . . . . . . . 3
2.09. Absence of Quorum . . . . . . . . . . . . . . . . . 3
2.10. Stock Ledger and List of Shareholders . . . . . . . 3
2.11. Informal Action by Stockholders . . . . . . . . . . 4
ARTICLE III.
BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . 4
3.01. Number and Term of Office . . . . . . . . . . . . . 4
3.02. Qualification of Directors. . . . . . . . . . . . . 4
3.03. Election of Directors . . . . . . . . . . . . . . . 4
3.04. Removal of Directors. . . . . . . . . . . . . . . . 4
3.05. Vacancies and Newly Created Directorships . . . . . 5
3.06. General Powers. . . . . . . . . . . . . . . . . . . 5
3.07. Power to Issue and Sell Stock . . . . . . . . . . . 5
3.08. Power to Declare Dividends. . . . . . . . . . . . . 5
3.09. Annual and Regular Meetings . . . . . . . . . . . . 6
3.10. Special Meetings. . . . . . . . . . . . . . . . . . 6
3.11. Notice. . . . . . . . . . . . . . . . . . . . . . . 6
3.12. Waiver of Notice. . . . . . . . . . . . . . . . . . 6
3.13. Quorum and Voting . . . . . . . . . . . . . . . . . 6
3.14. Conference Telephone. . . . . . . . . . . . . . . . 7
3.15. Compensation. . . . . . . . . . . . . . . . . . . . 7
3.16. Action without a Meeting. . . . . . . . . . . . . . 7
3.17. Director Emeritus . . . . . . . . . . . . . . . . . 7
<PAGE>
PAGE 41
ARTICLE IV.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES . . . . . . . . . . . 7
4.01. How Constituted . . . . . . . . . . . . . . . . . . 7
4.02. Powers of the Executive Committee . . . . . . . . . 7
4.03. Other Committees of the Board of Directors. . . . . 8
4.04. Proceedings, Quorum and Manner of Acting. . . . . . 8
4.05. Other Committees. . . . . . . . . . . . . . . . . . 8
ARTICLE V. OFFICERS. . . . . . . . . . . . . . . . . . . . . . 8
5.01. General . . . . . . . . . . . . . . . . . . . . . . 8
5.02. Election, Term of Office and Qualifications . . . . 8
5.03. Resignation . . . . . . . . . . . . . . . . . . . . 9
5.04. Removal . . . . . . . . . . . . . . . . . . . . . . 9
5.05. Vacancies and Newly Created Offices . . . . . . . . 9
5.06. Chairman of the Board . . . . . . . . . . . . . . . 9
5.07. President . . . . . . . . . . . . . . . . . . . . . 9
5.08. Vice President. . . . . . . . . . . . . . . . . . .10
5.09. Treasurer and Assistant Treasurers. . . . . . . . .10
5.10. Secretary and Assistant Secretaries . . . . . . . .10
5.11. Subordinate Officers. . . . . . . . . . . . . . . .10
5.12. Remuneration. . . . . . . . . . . . . . . . . . . .11
ARTICLE VI.
CUSTODY OF SECURITIES AND CASH . . . . . . . . . . . . . . . .11
6.01. Employment of a Custodian . . . . . . . . . . . . .11
6.02. Central Certificate Service . . . . . . . . . . . .11
6.03. Cash Assets . . . . . . . . . . . . . . . . . . . .11
6.04. Free Cash Accounts. . . . . . . . . . . . . . . . .11
6.05. Action Upon Termination of Custodian Agreement. . .12
ARTICLE VII.
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES . . . . . . . .12
7.01. Execution of Instruments. . . . . . . . . . . . . .12
7.02. Voting of Securities. . . . . . . . . . . . . . . .12
ARTICLE VIII. CAPITAL STOCK. . . . . . . . . . . . . . . . . .12
8.01. Ownership of Shares . . . . . . . . . . . . . . . .12
8.02. Transfer of Capital Stock . . . . . . . . . . . . .13
8.03. Transfer Agents and Registrars. . . . . . . . . . .13
8.04. Transfer Regulations. . . . . . . . . . . . . . . .13
8.05. Fixing of Record Date . . . . . . . . . . . . . . .13
8.06. Lost, Stolen, or Destroyed Certificates . . . . . .13
<PAGE>
PAGE 42
ARTICLE IX.
FISCAL YEAR, ACCOUNTANT. . . . . . . . . . . . . . . . . . . .14
9.01. Fiscal Year . . . . . . . . . . . . . . . . . . . .14
9.02. Accountant. . . . . . . . . . . . . . . . . . . . .14
ARTICLE X. INDEMNIFICATION AND INSURANCE . . . . . . . . . . .15
10.01. Indemnification and Payment of Expenses in Advance.15
10.02. Insurance of Officers, Directors, Employees and
Agents 16
ARTICLE XI.
AMENDMENTS 16
11.01. General . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE XII.
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . .17
12.01. Use of the Term "Annual Meeting". . . . . . . . . .17
<PAGE>
PAGE 43
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
(A Maryland Corporation)
BY-LAWS
ARTICLE I
NAME OF CORPORATION,
LOCATION OF OFFICES AND SEAL
Section 1.01.Name: The name of the Corporation is
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
(Section 1.01. Name as amended May 1, 1981)
Section 1.02.Principal Office: The principal office of
the Corporation in the State of Maryland shall be located in the
City of Baltimore. The Corporation may, in addition, establish
and maintain such other offices and places of business, within or
outside the State of Maryland, as the Board of Directors may from
time to time determine. [ MGCL, Sections 2-103(4), 2-
108(a)(1) ]*
Section 1.03.Seal: The corporate seal of the
Corporation shall be circular in form, and shall bear the name of
the Corporation, the year of its incorporation, and the words
"Corporate Seal, Maryland." The form of the seal shall be
subject to alteration by the Board of Directors and the seal may
be used by causing it or a facsimile to be impressed or affixed
or printed or otherwise reproduced. Any officer or Director of
the Corporation shall have authority to affix the corporate seal
of the Corporation to any document requiring the same. [ MGCL,
Section 2-103(3) ]
ARTICLE II
STOCKHOLDERS
Section 2.01.Annual Meetings: The Corporation shall
not be required to hold an annual meeting of its shareholders in
any year unless the Investment Company Act of 1940 requires an
election of directors by shareholders. In the event that the
Corporation shall be so required to hold an annual meeting, such
meeting shall be held at a date and time set by the Board of
Directors, which date shall be no later than 120 days after the
occurrence of the event requiring the meeting. Any shareholders'
meeting held in accordance with the preceding sentence shall for
all purposes constitute the annual meeting of shareholders for
the fiscal year of the Corporation in
_________________________
*Bracketed citations are to the General Corporation Law of the
State of Maryland ("MGCL") or to the United States Investment
Company Act of 1940, as amended (the "Investment Company Act"),
or to Rules of the United States Securities and Exchange
Commission thereunder ("SEC Rules"). The citations are inserted
for reference only and do not constitute a part of the By-Laws.
<PAGE>
PAGE 44
which the meeting is held. At any such meeting, the shareholders
shall elect directors to hold the offices of any directors who
have held office for more than one year or who have been elected
by the Board of Directors to fill vacancies which result from any
cause. Except as the Articles of Incorporation or statute
provides otherwise, Directors may transact any business within
the powers of the Corporation as may properly come before the
meeting. Any business of the Corporation may be transacted at
the annual meeting without being specially designated in the
notice, except such business as is specifically required by
statute to be stated in the notice. [MGCL, Section 2-501]
(Section 2.01. Annual Meetings as amended April 20, 1990)
Section 2.02.Special Meetings: Special meetings of the
shareholders may be called at any time by the Chairman of the
Board, the President, any Vice President, or by the Board of
Directors. Special meetings of the shareholders shall be called
by the Secretary on the written request of shareholders entitled
to cast at least ten (10) percent of all the votes entitled to be
cast at such meeting, provided that (a) such request shall state
the purpose or purposes of the meeting and the matters proposed
to be acted on, and (b) the shareholders requesting the meeting
shall have paid to the Corporation the reasonably estimated cost
of preparing and mailing the notice thereof, which the Secretary
shall determine and specify to such shareholders. Unless
requested by shareholders entitled to cast a majority of all the
votes entitled to be cast at the meeting, a special meeting need
not be called to consider any matter which is substantially the
same as a matter voted upon at any special meeting of the
shareholders held during the preceding twelve (12) months.
[ MGCL, Section 2-502 ]
(Section 2.02. Special Meetings as amended July 20, 1993)
Section 2.03.Place of Meetings: All stockholders'
meetings shall be held at such place within the United States as
may be fixed from time to time by the Board of Directors.
[ MGCL, Section 2-503 ]
Section 2.04.Notice of Meetings: Not less than ten
(10) days, nor more than ninety (90) days before each
stockholders' meeting, the Secretary or an Assistant Secretary of
the Corporation shall give to each stockholder entitled to vote
at the meeting and each other shareholder entitled to notice of
the meeting written notice stating (1) the time and place of the
meeting and, (2) the purpose or purposes of the meeting if the
meeting is a special meeting or if notice of the purpose is
required by statute to be given. Such notice shall be personally
delivered to the shareholder, or left at his residence or usual
place of business, or mailed to him at his address as it appears
on the records of the Corporation. No notice of a shareholders'
meeting need be given to any shareholder who shall sign a written
waiver of such notice, whether before or after the meeting, which
is filed with the records of stockholders' meetings, or to any
stockholder who is present at the meeting in person or by proxy.
Notice of adjournment of a stockholders' meeting to another time
or place need not be given if such time and place are announced
at the meeting, unless the adjournment is for more than 30 days
or a new record date is fixed. [ MGCL, Section 2-504 ]
Section 2.05.Voting - In General: At every
stockholders' meeting each stockholder shall be entitled to one
vote for each share of stock of the Corporation validly issued
and outstanding and held by such stockholder, except that no
shares held by the Corporation shall be entitled to a vote.
Fractional shares shall be entitled to fractional votes. Except
as otherwise specifically provided in the Articles of
Incorporation or these By-Laws or as required by provisions of
the United States Investment Company Act as amended from time to
time, a majority of all the votes cast at a meeting at which a
quorum is present is sufficient to approve any matter which
properly comes
PAGe 45
before the meeting. The vote upon any questions shall be by
ballot whenever requested by any person entitled to vote, but,
unless such a request is made voting may be conducted in any way
approved by the meeting. [ MGCL, Sections 2-506(a)(2), 2-507(a),
2-509(b) ]
Section 2.06.Stockholders Entitled to Vote: If,
pursuant to Section 8.05 hereof, a record date has been fixed for
the determination of stockholders entitled to notice of or to
vote at any stockholders' meeting, each stockholder of the
Corporation shall be entitled to vote in person or by proxy, each
share or fraction of a share of stock standing in his name on the
books of the Corporation on such record date and outstanding at
the time of the meeting. If no record date has been fixed for
the determination of stockholders, the record date for the
determination of stockholders entitled to notice of or to vote at
a meeting of stockholders shall be at the close of business on
the day on which notice of the meeting is mailed or the 30th day
before the meeting whichever is the closer date to the meeting,
or, if notice is waived by all stockholders, at the close of
business on the tenth day next preceding the date of the meeting.
[ MGCL, Sections 2-507, 2-511 ]
Section 2.07.Voting - Proxies: The right to vote by
proxy shall exist only if the instrument authorizing such proxy
to act shall have been executed in writing by the stockholder
himself, or by his attorney thereunto duly authorized in writing.
No proxy shall be valid more than eleven months after its date
unless it provides for a longer period. [ MGCL, Section 2-507 ]
Section 2.08.Quorum: The presence at any stockholders'
meeting, in person or by proxy, of stockholders entitled to cast
a majority of the votes entitled to be cast at the meeting shall
constitute a quorum. [ MGCL, Section 2-506 ]
Section 2.09.Absence of Quorum: In the absence of a
quorum, the holders of a majority of shares entitled to vote at
the meeting and present thereat in person or by proxy, or if no
stockholder entitled to vote is present in person or by proxy,
any officer present who is entitled to preside at or act as
Secretary of such meeting, may adjourn the meeting sine die or
from time to time. Any business that might have been transacted
at the meeting originally called may be transacted at any such
adjourned meeting at which a quorum is present.
Section 2.10.Stock Ledger and List of Stockholders: It
shall be the duty of the Secretary or Assistant Secretary of the
Corporation to cause an original or duplicate stock ledger to be
maintained at the office of the Corporation's transfer agent,
containing the names and addresses of all stockholders and the
number of shares of each class held by each stockholder. Such
stock ledger may be in written form or any other form capable of
being converted into written form within a reasonable time for
visual inspection. Any one or more persons, who together are and
for at least six months have been stockholders of record of at
least 5% of the outstanding capital stock of the Corporation, may
submit (unless the Corporation at the time of the request
maintains a duplicate stock ledger at its principal office) a
written request to any officer of the Corporation or its resident
agent in Maryland for a list of the stockholders of the
Corporation. Within 20 days after such a request, there shall be
prepared and filed at the Corporation's principal office a list,
verified under oath by an officer of the Corporation or by its
stock transfer agent or registrar, which sets forth the name and
address of each stockholder and the number of shares of each
class which the stockholder holds. [ MGCL, Sections 2-209, 2-513
]
<PAGE>
PAGE 46
ARTICLE III
BOARD OF DIRECTORS
Section 3.01.Number and Term of Office: The Board of
Directors shall consist of five Directors, which number may be
increased or decreased by a resolution of a majority of the
entire Board of Directors, provided that the number of Directors
shall not be less than three nor more than 15. Each Director
(whenever elected) shall hold office until the next annual
meeting of stockholders and until his successor is elected and
qualifies or until his earlier death, resignation, or removal. [
MGCL, Sections 2-402, 2-404 ]
Section 3.02.Qualification of Directors: No member of
the Board of Directors need be a stockholder of the Corporation
but at least one member of the Board of Directors shall be a
person who is not an interested person (as such term is defined
in the Investment Company Act of 1940, as amended) of the
investment adviser of the Corporation nor an officer or employee
of the Corporation. [ MGCL, Section 2-403; Investment Company
Act, Section 10(d) ]
Section 3.03.Election of Directors: Until the first
annual meeting of shareholders or until successors are duly
elected and qualified, the Board of Directors shall consist of
the persons named as such in the Articles of Incorporation.
Thereafter, except as otherwise provided in Sections 3.04 and
3.05 hereof at each annual meeting, the shareholders shall elect
Directors to hold office until the next annual meeting and/or
until their successors are elected and qualify. In the event
that Directors are not elected at an annual stockholders'
meeting, then Directors may be elected at a special shareholders'
meeting. Directors shall be elected by vote of the holders of a
majority of the shares present in person or by proxy and entitled
to vote. [ MGCL, Section 2-404 ]
(Section 3.03. Election of Directors as amended January 21,
1988)
Section 3.04.Removal of Directors: At any meeting of
stockholders, duly called and at which a quorum is present, the
stockholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any
Director or Directors from office, either with or without cause,
and may elect a successor or successors to fill any resulting
vacancies for the unexpired terms of removed Directors. [ MGCL,
Sections 2-406, 2-407 ]
Section 3.05.Vacancies and Newly Created Directorships:
If any vacancies occur in the Board of Directors by reason of
resignation, removal or otherwise, or if the authorized number of
Directors is increased, the Directors then in office shall
continue to act, and such vacancies (if not previously filled by
the stockholders) may be filled by a majority of the Directors
then in office, whether or not a quorum, provided that,
immediately after filling such vacancy, at least two-thirds of
the Directors then holding office shall have been elected to such
office by the stockholders of the Corporation. In the event that
at any time, other than the time preceding the first meeting of
stockholders, less than a majority of the Directors of the
Corporation holding office at that time were so elected by the
stockholders, a meeting of the stockholders shall be held
promptly and in any event within 60 days for the purpose of
electing Directors to fill any existing vacancies in the Board of
Directors unless the Securities and Exchange Commission shall by
order extend such period. Except as provided in Section 3.04
hereof, a Director elected by the Board of Directors to fill a
vacancy shall be elected to hold office until the next annual
meeting of stockholders or until his successor is elected and
qualifies. [ MGCL, Section 2-407; Investment Company Act,
Section 16(a) ]
PAGE 47
Section 3.06.General Powers:
(a) The property, affairs, and business of the
Corporation shall be managed under the direction of the Board of
Directors, which may exercise all the powers of the Corporation
except such as are by law, by the Articles of Incorporation or by
these By-Laws conferred upon or reserved to the stockholders of
the Corporation. [ MGCL, Section 2-401 ]
(b) All acts done by any meeting of the Directors
or by any person acting as a Director, so long as his successor
shall not have been duly elected or appointed, shall,
notwithstanding that it be afterwards discovered that there was
some defect in the election of the Directors or such person
acting as a Director or that they or any of them were
disqualified, be as valid as if the Directors or such person, as
the case may be, had been duly elected and were or was qualified
to be Directors or a Director of the Corporation.
Section 3.07.Power to Issue and Sell Stock: The Board
of Directors may from time to time authorize by resolution the
issuance and sale of any of the Corporation's authorized shares
to such persons as the Board of Directors shall deem advisable
and such resolution shall set the minimum price or value of
consideration for the stock or a formula for its determination,
and shall include a fair description of any consideration other
than money and a statement of the actual value of such
consideration as then determined by the Board of Directors or a
statement that the Board of Directors has determined that the
actual value is or will be not less than a certain sum. [ MGCL,
Section 2-203 ]
Section 3.08.Power to Declare Dividends:
(a) The Board of Directors, from time to time as
it may deem advisable, may declare and the Corporation pay
dividends, in cash, property or shares of the Corporation
available for dividends out of any source available for
dividends, to the stockholders according to their respective
rights and interests. [ MGCL, Section 2-309 ]
(b) The Board of Directors shall cause to be
accompanied by a written statement any dividend payment wholly or
partly from any source other than the Corporation's accumulated
undistributed net income (determined in accordance with good
accounting practice and the rules and regulations of the
Securities and Exchange Commission then in effect) not including
profits or losses realized upon the sale of securities or other
properties. Such statement shall adequately disclose the source
or sources of such payment and the basis of calculation and shall
be otherwise in such form as the Securities and Exchange
Commission may prescribe. [ Investment Company Act, Section 19;
SEC Rule 19a-1; MGCL, Section 2-309(c) ]
(c) Notwithstanding the above provisions of this
Section 3.08, the Board of Directors may at any time declare and
distribute pro rata among the stockholders a stock dividend out
of the Corporation's authorized but unissued shares of stock,
including any shares previously purchased by the Corporation,
provided that such dividend shall not be distributed in shares of
any class with respect to any shares of a different class. The
shares so distributed shall be issued at the par value thereof,
and there shall be transferred to stated capital, at the time
such dividend is paid, an amount of surplus equal to the
aggregate par value of the shares issued as a dividend and there
may be transferred from earned surplus to capital surplus such
additional amount as the Board of Directors may determine. [
MGCL, Section 2-309 ]
PAGE 48
Section 3.09.Annual and Regular Meetings: The annual
meeting of the Board of Directors for choosing officers and
transacting other proper business shall be held immediately after
the annual shareholders' meeting at such place as may be
specified in the notice of such meeting of the Board of
Directors, or, in the absence of such annual shareholders'
meeting, at such time and place as the Board of Directors may
provide. The Board of Directors from time to time may provide by
resolution for the holding of regular meetings and fix their time
and place (within or outside the State of Maryland). [ MGCL,
Section 2-409 ]
(Section 3.09. Annual and Regular Meetings as amended January
21, 1988)
Section 3.l0.Special Meetings: Special meetings of the
Board of Directors shall be held whenever called by the Chairman
of the Board, the President (or, in the absence or disability of
the President, by any Vice President), the Treasurer, or two or
more Directors, at the time and place (within or outside the
State of Maryland) specified in the respective notices or waivers
of notice of such meetings.
Section 3.11.Notice: Notice of annual, regular, and
special meetings, stating the time and place, shall be mailed to
each Director at his residence or regular place of business or
caused to be delivered to him personally or to be transmitted to
him by telegraph, cable or wireless at least two days before the
day on which the meeting is to be held. Such notice need not
include a statement of the business to be transacted at, or the
purpose of, the meeting. [ MGCL, Section 2-409(b) ]
Section 3.12.Waiver of Notice: No notice of any
meeting need be given to any Director who is present at the
meeting or to any Director who signs a waiver of the notice of
the meeting (which waiver shall be filed with the records of such
meeting), whether before or after the meeting. [ MGCL, Section
2-409(c) ]
Section 3.13.Quorum and Voting: At all meetings of the
Board of Directors the presence of one-third of the total number
of Directors authorized, but not less than two Directors, shall
constitute a quorum. In the absence of a quorum, a majority of
the Directors present may adjourn the meeting, from time to time,
until a quorum shall be present. The action of a majority of the
Directors present at a meeting at which a quorum is present shall
be the action of the Board of Directors unless the concurrence of
a greater proportion is required for such action by law, by the
Articles of Incorporation or by these By-Laws. [ MGCL, Section
2-408 ]
Section 3.14.Conference Telephone: Members of the
Board of Directors or of any committee designated by the Board,
may participate in a meeting of the Board or of such committee by
means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear
each other at the same time, and participation by such means
shall constitute presence in person at such meeting. [ MGCL,
Section 2-409(d) ]
Section 3.15.Compensation: Each Director may receive
remuneration for his services as shall be fixed from time to time
by resolution of the Board of Directors.
Section 3.16.Action Without a Meeting: Any action
required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting
if a unanimous written consent which sets forth the action is
signed by all members of the Board or
PAGE 49
of such committee and such written consent is filed with the
minutes of proceedings of the Board or committee. [ MGCL,
Section 2-408(c) ]
Section 3.17.Director Emeritus: Upon the retirement of
a Director of the Corporation, the Board of Directors may
designate such retired Director as a Director Emeritus. The
position of Director Emeritus shall be honorary only and shall
not confer upon such Director Emeritus any responsibility, or
voting authority, whatsoever with respect to the Corporation. A
Director Emeritus may, but shall not be required to attend the
meetings of the Board of Directors and receive materials normally
provided Directors relating to the Corporation. The Board of
Directors may establish such compensation as it may deem
appropriate under the circumstances to be paid by the Fund to a
Director Emeritus.
(Section 3.17. Director Emeritus added February 23, 1983)
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 4.01.How Constituted: By resolution adopted by
the Board of Directors, the Board may appoint from among its
members one or more committees, including an Executive Committee,
each consisting of at least two Directors. Each member of a
committee shall hold office during the pleasure of the Board. [
MGCL, Section 2-411 ]
(Section 4.01. How Constituted as amended October 27, 1982)
Section 4.02.Powers of the Executive Committee: Unless
otherwise provided by resolution of the Board of Directors, the
Executive Committee, in the intervals between meetings of the
Board of Directors, shall have and may exercise all of the powers
of the Board of Directors to manage the business and affairs of
the Corporation except the power to declare dividends, to issue
stock, or to recommend to stockholders any action which requires
stockholder approval. [ MGCL, Section 2-411(a) ]
Section 4.03.Other Committees of the Board of
Directors: To the extent provided by resolution of the Board,
other committees shall have and may exercise any of the powers
that may lawfully be granted to the Executive Committee. [ MGCL,
Section 2-411(a) ]
Section 4.04.Proceedings, Quorum, and Manner of Acting:
In the absence of appropriate resolution of the Board of
Directors, each committee may adopt such rules and regulations
governing its proceedings, quorum and manner of acting as it
shall deem proper and desirable, provided that the quorum shall
not be less than two Directors. In the absence of any member of
any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a member of
the Board of Directors to act in the place of such absent member.
[ MGCL, Section 2-411(b) ]
Section 4.05.Other Committees: The Board of Directors
may appoint other committees, each consisting of one or more
persons who need not be Directors. Each such committee shall
have such powers and perform such duties as may be assigned to it
from time to time by the Board of Directors, but shall not
exercise any power which may lawfully be exercised only by the
Board of Directors or a committee thereof.
ARTICLE V
PAGE 50
OFFICERS
Section 5.01.General: The officers of the Corporation
shall be a President, one or more Vice Presidents (one or more of
whom may be designated Executive Vice President), a Secretary,
and a Treasurer, and may include one or more Assistant Vice
Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be appointed
in accordance with the provisions of Section 5.11 hereof. The
Board of Directors may elect, but shall not be required to elect,
a Chairman of the Board. [ MGCL, Section 2-412 ]
Section 5.02.Election, Term of Office and
Qualifications: The officers of the Corporation (except those
appointed pursuant to Section 5.11 hereof) shall be elected by
the Board of Directors at its first meeting and thereafter at
each annual meeting of the Board. If any officer or officers are
not elected at any such meeting, such officer or officers may be
elected at any subsequent regular or special meeting of the
Board. Except as provided in Sections 5.03, 5.04 and 5.05
hereof, each officer elected by the Board of Directors shall hold
office until the next annual meeting of the Board of Directors
and until his successor shall have been chosen and qualified.
Any person may hold two or more offices of the Corporation,
except that neither the Chairman of the Board nor the President
may hold the office of Vice President, but no person shall
execute, acknowledge, or verify any instrument in more than one
capacity if such instrument is required by law, the Articles of
Incorporation or these By-Laws to be executed, acknowledged, or
verified by two or more officers. The Chairman of the Board and
the President shall be selected from among the Directors of the
Corporation and may hold such offices only so long as they
continue to be Directors. No other officer need be a Director.
[ MGCL, Sections 2-413, 2-415 ]
(Section 5.02. Election, Term of Office and Qualifications as
amended January 21, 1988)
Section 5.03.Resignation: Any officer may resign his
office at any time by delivering a written resignation to the
Board of Directors, the President, the Secretary, or any
Assistant Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 5.04.Removal: Any officer may be removed from
office by the Board of Directors whenever in the judgment of the
Board of Directors the best interests of the Corporation will be
served thereby. [ MGCL, Section 2-413(c) ]
Section 5.05Vacancies and Newly Created Offices: If
any vacancy shall occur in any office by reason of death,
resignation, removal, disqualification or other cause, or if any
new office shall be created, such vacancies or newly created
offices may be filled by the Board of Directors at any meeting
or, in the case of any office created pursuant to Section 5.11
hereof, by any officer upon whom such power shall have been
conferred by the Board of Directors. [ MGCL, Section 2-413(d) ]
Section 5.06.Chairman of the Board: Unless otherwise
provided by resolution of the Board of Directors, the Chairman of
the Board, if there be such an officer, shall be the chief
executive and operating officer of the Corporation, shall preside
at all shareholders' meetings and at all meetings of the Board of
Directors. He shall be ex officio a member of all standing
committees of the Board of Directors. Subject to the supervision
of the Board of Directors, he shall have general charge of the
business, affairs, property and operation of the Corporation and
its officers, employees and agents. He may sign (unless the
President or a Vice President shall have signed)
PAGE 51
certificates representing stock of the Corporation authorized for
issuance by the Board of Directors and shall have such other
powers and perform such other duties as may be assigned to him
from time to time by the Board of Directors.
(Section 5.06. Chairman of the Board as amended October 27,
1982)
Section 5.07.President: Unless otherwise provided by
resolution of the Board of Directors, the President shall, at the
request of or in the absence or disability of the Chairman of the
Board or if no Chairman of the Board has been chosen, preside at
all shareholders' meetings and at all meetings of the Board of
Directors and shall in general exercise the powers and perform
the duties of the Chairman of the Board. He may sign (unless the
Chairman or a Vice President shall have signed) certificates
representing stock of the Corporation authorized for issuance by
the Board of Directors. Except as the Board of Directors may
otherwise order, he may sign in the name and on behalf of the
Corporation all deeds, bonds, contracts or agreements. He shall
exercise such other powers and perform such other duties as from
time to time may be assigned to him by the Board of Directors.
(Section 5.07. President as amended October 27, 1982)
Section 5.08.Vice President: The Board of Directors
shall, from time to time, designate and elect one or more Vice
Presidents (one or more of whom may be designated Executive Vice
President) who shall have such powers and perform such duties as
from time to time may be assigned to them by the Board of
Directors or the President. At the request or in the absence or
disability of the President, the Vice President (or, if there are
two or more Vice Presidents, the Vice President in order of
seniority of tenure in such office or in such other order as the
Board of Directors may determine) may perform all the duties of
the President and, when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Any
Vice President may sign (unless the Chairman, the President or
another Vice President shall have signed) certificates
representing stock of the Corporation authorized for issuance by
the Board of Directors.
Section 5.09.Treasurer and Assistant Treasurers: The
Treasurer shall be the principal financial and accounting officer
of the Corporation and shall have general charge of the finances
and books of account of the Corporation. Except as otherwise
provided by the Board of Directors, he shall have general
supervision of the funds and property of the Corporation and of
the performance by the custodian of its duties with respect
thereto. He may countersign (unless an Assistant Treasurer or
Secretary or Assistant Secretary shall have countersigned)
certificates representing stock of the Corporation authorized for
issuance by the Board of Directors. He shall render to the Board
of Directors, whenever directed by the Board, an account of the
financial condition of the Corporation and of all his
transactions as Treasurer; and as soon as possible after the
close of each fiscal year he shall make and submit to the Board
of Directors a like report for such fiscal year. He shall cause
to be prepared annually a full and correct statement of the
affairs of the Corporation, including a balance sheet and a
financial statement of operations for the preceding fiscal year,
which shall be submitted at the annual meeting of stockholders
and filed within 20 days thereafter at the principal office of
the Corporation. He shall perform all the acts incidental to the
office of the Treasurer, subject to the control of the Board of
Directors. Any Assistant Treasurer may perform such duties of
the Treasurer as the Treasurer or the Board of Directors may
assign, and, in the absence of the Treasurer, he may perform all
the duties of the Treasurer.
Section 5.10.Secretary and Assistant Secretaries: The
Secretary shall attend to the giving and serving of all notices
of the Corporation and shall record all proceedings of the
meetings of the stockholders and Directors
PAGE 52
in one or more books to be kept for that purpose. He shall keep
in safe custody the seal of the Corporation and shall have charge
of the records of the Corporation, including the stock books and
such other books and papers as the Board of Directors may direct
and such books, reports, certificates and other documents
required by law to be kept, all of which shall at all reasonable
times be open to inspection by any Director. He shall
countersign (unless the Treasurer, an Assistant Treasurer or an
Assistant Secretary shall have countersigned) certificates
representing stock of the Corporation authorized for issuance by
the Board of Directors. He shall perform such other duties as
appertain to his office or as may be required by the Board of
Directors. Any Assistant Secretary may perform such duties of
the Secretary as the Secretary or the Board of Directors may
assign, and, in the absence of the Secretary, he may perform all
the duties of the Secretary.
Section 5.11.Subordinate Officers: The Board of
Directors from time to time may appoint such other officers or
agents as it may deem advisable, each of whom shall have such
title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The
Board of Directors from time to time may delegate to one or more
officers or agents the power to appoint any such subordinate
officers or agents and to prescribe their respective rights,
terms of office, authorities and duties. [ MGCL, Section
2-412(b) ]
Section 5.12.Remuneration: The salaries or other
compensation of the officers of the Corporation shall be fixed
from time to time by resolution of the Board of Directors, except
that the Board of Directors may by resolution delegate to any
person or group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in
accordance with the provisions of Section 5.11 hereof.
ARTICLE VI
CUSTODY OF SECURITIES AND CASH
Section 6.01.Employment of a Custodian: The
Corporation shall place and at all times maintain in the custody
of a Custodian (including any sub-custodian for the Custodian)
all funds, securities and similar investments owned by the
Corporation. The Custodian (and any sub-custodian) shall be a
bank having an aggregate capital, surplus and undivided profits
of not less than $10,000,000. The Custodian shall be appointed
and its remuneration fixed by the Board of Directors. [
Investment Company Act, Section 17(f) ]
Section 6.02.Central Certificate Service: Subject to
such rules, regulations, and orders as the Securities and
Exchange Commission may adopt as necessary or appropriate for the
protection of investors, the Corporation's Custodian may deposit
all or any part of the securities owned by the Corporation in a
system for the central handling of securities established by a
national securities exchange or national securities association
registered with the Commission under the Securities Exchange Act
of 1934, or such other person as may be permitted by the
Commission, pursuant to which system all securities of any
particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged
by bookkeeping entry without physical delivery of such
securities. [ Investment Company Act, Section 17(f) ]
PAGE 53
Section 6.03.Cash Assets: The cash proceeds from the
sale of securities and similar investments and other cash assets
of the Corporation shall be kept in the custody of a bank or
banks appointed pursuant to Section 6.01 hereof, or in accordance
with such rules and regulations or orders as the Securities and
Exchange Commission may from time to time prescribe for the
protection of investors, except that the Corporation may maintain
a checking account in a bank or banks, each having an aggregate
capital, surplus and undivided profits of not less than
$10,000,000, provided that the balance of such account or the
aggregate balances of such accounts shall at no time exceed the
amount of the fidelity bond, maintained pursuant to the
requirements of the Investment Company Act of 1940 and rules and
regulations thereunder, covering the officers or employees
authorized to draw on such account or accounts. [ Investment
Company Act, Section 17(f) ]
Section 6.04.Free Cash Accounts: The Corporation may,
upon resolution of its Board of Directors, maintain a petty cash
account free of the foregoing requirements of this Article VI in
an amount not to exceed $500, provided that such account is
operated under the imprest system and is maintained subject to
adequate controls approved by the Board of Directors over
disbursements and reimbursements including, but not limited to,
fidelity bond coverage for persons having access to such funds.
[ Investment Company Act, Rule 17f-3 ]
Section 6.05.Action Upon Termination of Custodian
Agreement: Upon resignation of a custodian of the Corporation or
inability of a custodian to continue to serve, the Board of
Directors shall promptly appoint a successor custodian, but in
the event that no successor custodian can be found who has the
required qualifications and is willing to serve, the Board of
Directors shall call as promptly as possible a special meeting of
the stockholders to determine whether the Corporation shall
function without a custodian or shall be liquidated. If so
directed by vote of the holders of a majority of the outstanding
shares of stock of the Corporation, the custodian shall deliver
and pay over all property of the Corporation held by it as
specified in such vote.
ARTICLE VII
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
Section 7.01.Execution of Instruments: All deeds,
documents, transfers, contracts, agreements, requisitions or
orders, promissory notes, assignments, endorsements, checks and
drafts for the payment of money by the Corporation, and other
instruments requiring execution by the Corporation shall be
signed by the Chairman, the President, a Vice President, or the
Treasurer, or as the Board of Directors may otherwise, from time
to time, authorize. Any such authorization may be general or
confined to specific instances.
Section 7.02.Voting of Securities: Unless otherwise
ordered by the Board of Directors, the Chairman, the President,
or any Vice President shall have full power and authority on
behalf of the Corporation to attend and to act and to vote, or in
the name of the Corporation to execute proxies to vote, at any
meeting of stockholders of any company in which the Corporation
may hold stock. At any such meeting such officer shall possess
and may exercise
PAGE 54
(in person or by proxy) any and all rights, powers and privileges
incident to the ownership of such stock. The Board of Directors
may by resolution from time to time confer like powers upon any
other person or persons. [ MGCL, Section 2-509 ]
ARTICLE VIII
CAPITAL STOCK
Section 8.01.Ownership of Shares:
(a) Certificates certifying the ownership of
shares will not be issued for shares purchased or otherwise
acquired after July 1, 1991. The ownership of shares, full or
fractional, shall be recorded on the books of the Corporation or
its agent. The record books of the Corporation as kept by the
Corporation or its agent, as the case may be, shall be conclusive
as to the number of shares held from time to time by each such
shareholder. The Corporation reserves the right to require the
surrender of outstanding certificates if the Board of Directors
so determines. [ MGCL, Section 210(c) ]
(b) Every certificate exchanged, surrendered for
redemption or otherwise returned to the Corporation shall be
marked "Cancelled" with the date of cancellation.
(Section 8.01. Ownership of Shares as amended July 1, 1991)
Section 8.02.Transfer of Capital Stock:
(a) Shares of stock of the Corporation shall be
transferable only upon the books of the Corporation kept for such
purpose and, if one or more certificates representing such shares
have been issued, upon surrender to the Corporation or its
transfer agent or agents of such certificate or certificates duly
endorsed or accompanied by appropriate evidence of assignment,
transfer, succession or authority to transfer.
(b) The Corporation shall be entitled to treat
the holder of record of any share of stock as the absolute owner
thereof for all purposes, and accordingly shall not be bound to
recognize any legal, equitable or other claim or interest in such
share on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise
expressly provided by the statutes of the State of Maryland.
Section 8.03.Transfer Agents and Registrars: The Board
of Directors may, from time to time, appoint or remove transfer
agents and registrars of transfers of shares of stock of the
Corporation, and it may appoint the same person as both transfer
agent and registrar.
(Section 8.03. Transfer Agents and Registrars as amended July 1,
1991)
Section 8.04.Transfer Regulations: The shares of stock
of the Corporation may be freely transferred, and the Board of
Directors may, from time to time, adopt lawful rules and
regulations with reference to the method of transfer of the
shares of stock of the Corporation.
Section 8.05.Fixing of Record Date: The Board of
Directors may fix in advance a date as a record date for the
determination of the stockholders entitled to notice of or to
vote at any meeting of shareholders or any
PAGE 55
adjournment thereof, or to express consent to corporate action in
writing without a meeting, or to receive payment of any dividend
or other distribution or allotment of any rights, or to exercise
any rights in respect of any change, conversion or exchange of
stock, or for any other proper purpose, provided that such record
date shall be a date not more than 60 days nor, in the case of a
meeting of stockholders, less than 10 days prior to the date on
which the particular action, requiring such determination of
stockholders, is to be taken. In such case only such
stockholders as shall be stockholders of record on the record
date so fixed shall be entitled to such notice of, and to vote
at, such meeting or adjournment, or to give such consent, or to
receive payment of such dividend or other distribution, or to
receive such allotment of rights, or to exercise such rights, or
to take other action, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any
such record date. [ MGCL, Section 2-511 ]
Section 8.06.Lost, Stolen or Destroyed Certificates:
If a certificate for stock of the Corporation is alleged to have
been lost, stolen or destroyed, no new certificate will be
issued. Instead, ownership of the shares formerly represented by
the lost, stolen or destroyed certificate shall be recorded on
the books of the Corporation or its agent, in accordance with the
provisions of Section 8.01 of these By-Laws. Before recording
ownership of such shares, the Board of Directors, or any officer
authorized by the Board, may, in its discretion, require the
owner of the lost, stolen, or any destroyed certificate (or his
legal representative) to give the Corporation a bond or other
indemnity, in such form and in such amount as the Board or any
such officer may direct and with such surety or sureties as may
be satisfactory to the Board of any such officer, sufficient to
indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction
of any such certificate. [ MGCL, Section 2-213 ]
(Section 8.06. Lost, Stolen or Destroyed Certificates as amended
July 1, 1991)
ARTICLE IX
FISCAL YEAR, ACCOUNTANT
Section 9.01.Fiscal Year: The fiscal year of the
Corporation shall be the twelve (12) calendar months beginning on
the 1st day of March in each year and ending on the last day of
the following February, or such other period of twelve (12)
calendar months as the Board of Directors may by resolution
prescribe.
(Section 9.01 Fiscal Year as amended January 1, 1983)
Section 9.02.Accountant:
(a) The Corporation shall employ an independent
public accountant or firm of independent public accountants as
its accountant to examine the accounts of the Corporation and to
sign and certify financial statements filed by the Corporation.
The accountant's certificates and reports shall be addressed both
to the Board of Directors and to the stockholders.
(b) A majority of the members of the Board of
Directors who are not interested persons (as such term is defined
in the Investment Company Act of 1940 as amended) of the
Corporation shall select the accountant, by vote cast
PAGE 56
in person, at any meeting held before the first annual
stockholders' meeting, and thereafter shall select the accountant
annually, by vote cast in person, at a meeting held within 30
days before or after the beginning of the fiscal year of the
Corporation or 30 days before the annual stockholders' meeting in
that year. Such selection shall be submitted for ratification or
rejection at the next succeeding annual stockholders' meeting.
If such meeting shall reject such selection, the accountant shall
be selected by majority vote of the Corporation's outstanding
voting securities, either at the meeting at which the rejection
occurred or at a subsequent meeting of stockholders called for
the purpose.
(c) Any vacancy occurring between annual
meetings, due to the death or resignation of the accountant, may
be filled by the vote of a majority of those members of the Board
of Directors who are not interested persons (as so defined) of
the Corporation, cast in person at a meeting called for the
purpose of voting on such action.
(d) The employment of the accountant shall be
conditioned upon the right of the Corporation by vote of a
majority of the outstanding voting securities at any meeting
called for the purpose to terminate such employment forthwith
without any penalty. [ Investment Company Act, 32(a) ]
ARTICLE X
INDEMNIFICATION AND INSURANCE
Section 10.01. Indemnification and Payment of Expenses
in Advance: The Corporation shall indemnify any individual
("Indemnitee") who is a present or former director, officer,
employee, or agent of the Corporation, or who is or has been
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, who, by reason of his
position was, is, or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative
(hereinafter collectively referred to as a "Proceeding") against
any judgments, penalties, fines, settlements, and reasonable
expenses (including attorneys' fees) incurred by such Indemnitee
in connection with any Proceeding, to the fullest extent that
such indemnification may be lawful under applicable Maryland law,
as from time to time amended. The Corporation shall pay any
reasonable expenses so incurred by such Indemnitee in defending a
Proceeding in advance of the final disposition thereof to the
fullest extent that such advance payment may be lawful under
applicable Maryland law, as from time to time amended. Subject
to any applicable limitations and requirements set forth in the
Corporation's Articles of Incorporation and in these By-Laws, any
payment of indemnification or advance of expenses shall be made
in accordance with the procedures set forth in applicable
Maryland law, as from time to time amended.
Notwithstanding the foregoing, nothing herein shall
protect or purport to protect any Indemnitee against any
liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office
("Disabling Conduct").
PAGE 57
Anything in this Article X to the contrary
notwithstanding, no indemnification shall be made by the
Corporation to any Indemnitee unless:
(a) there is a final decision on the merits by a
court or other body before whom the
Proceeding was brought that the Indemnitee
was not liable by reason of Disabling
Conduct; or
(b) in the absence of such a decision, there is a
reasonable determination, based upon a review
of the facts, that the Indemnitee was not
liable by reason of Disabling Conduct, which
determination shall be made by:
(i) the vote of a majority of a quorum of directors
who are neither "interested persons" of the
Corporation, as defined in Section 2(a)(19) of
the Investment Company Act, nor parties to the
Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Anything in this Article X to the contrary
notwithstanding, any advance of expenses by the Corporation to
any Indemnitee shall be made only upon the undertaking by such
Indemnitee to repay the advance unless it is ultimately
determined that such Indemnitee is entitled to indemnification as
above provided, and only if one of the following conditions is
met:
(a) the Indemnitee provides a security for his
undertaking; or
(b) the Corporation shall be insured against
losses arising by reason of any lawful
advances; or
(c) there is a determination, based on a review
of readily available facts, that there is
reason to believe that the Indemnitee will
ultimately be found entitled to
indemnification, which determination shall
be made by:
(i) a majority of a quorum of directors who
are neither "interested persons" of the
Corporation as defined in Section 2(a)(19)
of the Investment Company Act nor parties
to the Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Section 10.02. Insurance of Officers, Directors,
Employees and Agents: To the fullest extent permitted by
applicable Maryland law and by Section 17(h) of the Investment
Company Act of 1940, as from time to time amended, the
Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of
the Corporation, or who is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other
enterprise, against any liability asserted against him and
incurred by him in or arising out of his position, whether or not
the Corporation would have the power to indemnify him against
such liability. [ MGCL, Section 2-418(k) ]
(ARTICLE X - INDEMNIFICATION AND INSURANCE - as amended January
21, 1982)
PAGE 58
ARTICLE XI
AMENDMENTS
Section 11.01. General: Except as provided in Section
11.02 hereof, all By-Laws of the Corporation, whether adopted by
the Board of Directors or the stockholders, shall be subject to
amendment, alteration, or repeal, and new By-Laws may be made by
the affirmative vote of a majority of either:
(a) the holders of record of the outstanding shares
of stock of the Corporation entitled to vote, at
any annual or special meeting the notice or
waiver of notice of which shall have specified or
summarized the proposed amendment, alteration,
repeal, or new By-Law; or
(b) the Directors present at any regular or special
meeting at which a quorum is present if the
notice or waiver of notice thereof or material
sent to the Directors in connection therewith on
or prior to the last date for the giving of such
notice under these By-Laws shall have specified
or summarized the proposed amendment, alteration,
repeal, or new By-Law.
Section 11.02. By Stockholders Only:
(a) No amendment of any section of these By-Laws
shall be made except by the stockholders of the
Corporation if the stockholders shall have
provided in the By-Laws that such section may not
be amended, altered, or repealed except by the
stockholders.
(b) From and after the issue of any shares of the
Capital Stock of the Corporation, no amendment of
this Article XI shall be made except by the
stockholders of the Corporation.
<PAGE>
PAGE 59
ARTICLE XII
MISCELLANEOUS
Section 12.01. Use of the Term "Annual Meeting": The
use of the term "annual meeting" in these By-Laws shall not be
construed as implying a requirement that a shareholder meeting be
held annually.
(ARTICLE XII - MISCELLANEOUS - added January 21, 1988)
dld/agmts/BYLAWS.TIF
<PAGE>
PAGE 60
BY-LAWS
OF
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
AS AMENDED:
MAY 1, 1981
JANUARY 21, 1982
OCTOBER 27, 1982
JANUARY 1, 1983
FEBRUARY 23, 1983
JANUARY 21, 1988
APRIL 20, 1990
JULY 1, 1991
JULY 20, 1993
<PAGE>
PAGE 61
TABLE OF CONTENTS
Page
ARTICLE I. NAME OF CORPORATION, LOCATION OF
OFFICES AND SEAL. . . . . . . . . . .1
1.01. Name. . . . . . . . . . . . . . . . .1
1.02. Principal Office. . . . . . . . . . .1
1.03. Seal. . . . . . . . . . . . . . . . .1
ARTICLE II.. . . . . . . . . . . . . STOCKHOLDERS1
2.01 Annual Meetings . . . . . . . . . . .1
2.02. Special Meetings. . . . . . . . . . .2
2.03. Place of Meetings . . . . . . . . . 2
2.04. Notice of Meetings. . . . . . . . . .2
2.05. Voting - in General . . . . . . . . .2
2.06. Stockholders Entitled to Vote . . . .3
2.07. Voting - Proxies. . . . . . . . . . .3
2.08. Quorum. . . . . . . . . . . . . . . .3
2.09. Absence of Quorum . . . . . . . . . .3
2.10. Stock Ledger and List of Stockholders3
ARTICLE III. BOARD OF
DIRECTORS 4
3.01. Number and Term of Office . . . . . .4
3.02. Qualification of Directors. . . . . .4
3.03. Election of Directors . . . . . . . .4
3.04. Removal of Directors. . . . . . . . .4
3.05. Vacancies and Newly Created Directorships4
3.06. General Powers. . . . . . . . . . . .5
3.07. Power to Issue and Sell Stock . . . .5
3.08. Power to Declare Dividends. . . . . .5
3.09. Annual and Regular Meetings . . . . .6
3.10. Special Meetings. . . . . . . . . . .6
3.11. Notice. . . . . . . . . . . . . . . .6
3.12. Waiver of Notice. . . . . . . . . . .6
3.13. Quorum and Voting . . . . . . . . . .6
3.14. Conference Telephone. . . . . . . . .6
3.15. Compensation. . . . . . . . . . . . .6
3.16. Action without a Meeting. . . . . . .6
3.17. Director Emeritus . . . . . . . . . .7
<PAGE>
PAGE 62
ARTICLE IV. EXECUTIVE
COMMITTEE AND OTHER
COMMITTEES. . . . . . . . . . . . . .7
4.01. How Constituted . . . . . . . . . . .7
4.02. Powers of the Executive Committee . .7
4.03. Other Committees of the Board of Directors7
4.04. Proceedings, Quorum and Manner of Acting7
4.05. Other Committees. . . . . . . . . . .7
ARTICLE V. OFFICERS. . . . . . . . . . . . . . .8
5.01. General . . . . . . . . . . . . . . .8
5.02. Election, Terms of Office and Qualifications8
5.03. Resignation . . . . . . . . . . . . .8
5.04. Removal . . . . . . . . . . . . . . .8
5.05. Vacancies and Newly Created Offices .8
5.06. Chairman of the Board . . . . . . . .9
5.07. President . . . . . . . . . . . . . .9
5.08. Vice President. . . . . . . . . . . .9
5.09. Treasurer and Assistant Treasurers. .9
5.10. Secretary and Assistant Secretaries 10
5.11. Subordinate Officers. . . . . . . . 10
5.12. Remuneration. . . . . . . . . . . . 10
ARTICLE VI. CUSTODY OF
SECURITIES AND CASH. . . . . . . . . . . . . . 10
6.01. Employment of Custodian . . . . . . 10
6.02. Central Certificate Service . . . . 10
6.03. Cash Assets . . . . . . . . . . . . 11
6.04. Free Cash Accounts. . . . . . . . . 11
6.05. Action Upon Termination of
Custodian Agreement . . . . . . . . 11
ARTICLE VII. EXECUTION OF
INSTRUMENTS,
VOTING OF SECURITIES. . . . . . . . 11
7.01. Execution of Instruments. . . . . . 11
7.02. Voting of Securities. . . . . . . . 12
ARTICLE VIII. CAPITAL STOCK. . . . . . . . . . 12
8.01. Ownership of Shares . . . . . . . . 12
8.02. Transfer of Capital Stock . . . . . 12
8.03. Transfer Agents and Registrars. . . 12
8.04. Transfer Regulations. . . . . . . . 13
<PAGE>
PAGE 63
8.05. Fixing of Record Date . . . . . . . 13
8.06. Lost, Stolen or Destroyed Certificates13
ARTICLE IX. FISCAL YEAR,
ACCOUNTANT 13
9.01. Fiscal Year . . . . . . . . . . . . 13
9.02. Accountant. . . . . . . . . . . . . 13
ARTICLE X. INDEMNIFICATION AND INSURANCE . . . 14
10.01. Indemnification and Payment of Expenses
in Advance. . . . . . . . . . . . . 14
10.02. Insurance of Officers, Directors,
Employees and Agents. . . . . . . . 15
ARTICLE XI. AMENDMENTS16
11.01. General . . . . . . . . . . . . . . 16
11.02. By Stockholders Only. . . . . . . . 16
ARTICLE XII. MISCELLANEOUS17
12.01 Use of the Term "Annual Meeting". . 17
<PAGE>
PAGE 64
T. ROWE PRICE TAX-FREE HIGH-YIELD FUND, INC.
(A Maryland Corporation)
BY-LAWS
ARTICLE I
NAME OF CORPORATION,
LOCATION OF OFFICES AND SEAL
Section 1.01.Name: The name of the Corporation is
T. ROWE PRICE TAX-FREE HIGH-YIELD FUND, INC.
Section 1.02.Principal Office: The principal office of
the Corporation in the State of Maryland shall be located in the
City of Baltimore. The Corporation may, in addition, establish
and maintain such other offices and places of business, within or
outside the State of Maryland, as the Board of Directors may from
time to time determine. [ MGCL, Sections 2-103(4), 2-
108(a)(1) ]*
Section 1.03.Seal: The corporate seal of the
Corporation shall be circular in form, and shall bear the name of
the Corporation, the year of its incorporation, and the words
"Corporate Seal, Maryland." The form of the seal shall be
subject to alteration by the Board of Directors and the seal may
be used by causing it or a facsimile to be impressed or affixed
or printed or otherwise reproduced. In lieu of affixing the
corporate seal to any document it shall be sufficient to meet the
requirements of any law, rule, or regulation relating to a
corporate seal to affix the word "(Seal)" adjacent to the
signature of the authorized officer of the Corporation. Any
officer or Director of the Corporation shall have authority to
affix the corporate seal of the Corporation to any document
requiring the same. [ MGCL, Sections 1-304(b), 2-103(3) ]
ARTICLE II
SHAREHOLDERS
Section 2.01.Annual Meetings: The Corporation shall
not be required to hold an annual meeting of its shareholders in
any year unless the Investment Company Act of 1940 requires an
election of directors by shareholders. In the event that the
Corporation shall be so required to hold an annual meeting, such
meeting shall be held at a date and time set by the Board of
Directors, which date shall be no later than 120 days after the
occurrence of the event requiring the _________________________
* Bracketed citations are to the General Corporation Law of the
State of Maryland ("MGCL") or to the United States Investment
Company Act of 1940, as amended (the "Investment Company Act"),
or to Rules of the United States Securities and Exchange
Commission thereunder ("SEC Rules"). The citations are inserted
for reference only and do not constitute a part of the By-Laws.
purposes meeting. Any shareholders' meeting held in accordance
with the preceding sentence shall for all constitute the annual
meeting of shareholders for the fiscal year of the Corporation in
which the meeting is held. At any
PAGE 65
such meeting, the shareholders shall elect directors to hold the
offices of any directors who have held office for more than one
year or who have been elected by the Board of Directors to fill
vacancies which result from any cause. Except as the Articles of
Incorporation or statute provides otherwise, Directors may
transact any business within the powers of the Corporation as may
properly come before the meeting. Any business of the
Corporation may be transacted at the annual meeting without being
specially designated in the notice, except such business as is
specifically required by statute to be stated in the notice.
[MGCL, Section 2-501]
(Section 2.01. Annual Meetings as amended April 20,
1990)
Section 2.02.Special Meetings: Special meetings of the
shareholders may be called at any time by the Chairman of the
Board, the President, any Vice President, or by the Board of
Directors. Special meetings of the shareholders shall be called
by the Secretary on the written request of shareholders entitled
to cast at least ten (10) percent of all the votes entitled to be
cast at such meeting, provided that (a) such request shall state
the purpose or purposes of the meeting and the matters proposed
to be acted on, and (b) the shareholders requesting the meeting
shall have paid to the Corporation the reasonably estimated cost
of preparing and mailing the notice thereof, which the Secretary
shall determine and specify to such shareholders. Unless
requested by shareholders entitled to cast a majority of all the
votes entitled to be cast at the meeting, a special meeting need
not be called to consider any matter which is substantially the
same as a matter voted upon at any special meeting of the
shareholders held during the preceding twelve (12) months.
[ MGCL, Section 2-502 ]
(Section 2.02. Special Meetings as amended July 20,
1993)
Section 2.03.Place of Meetings: All shareholders'
meetings shall be held at such place within the United States as
may be fixed from time to time by the Board of Directors.
[ MGCL, Section 2-503 ]
Section 2.04.Notice of Meetings: Not less than ten
(10) days, nor more than ninety (90) days before each
shareholders' meeting, the Secretary or an Assistant Secretary of
the Corporation shall give to each shareholder entitled to vote
at the meeting, and each other shareholder entitled to notice of
the meeting, written notice stating (1) the time and place of the
meeting, and (2) the purpose or purposes of the meeting if the
meeting is a special meeting or if notice of the purpose is
required by statute to be given. Such notice shall be personally
delivered to the shareholder, or left at his residence or usual
place of business, or mailed to him at his address as it appears
on the records of the Corporation. No notice of a shareholders'
meeting need be given to any shareholder who shall sign a written
waiver of such notice, whether before or after the meeting, which
is filed with the records of shareholders' meetings, or to any
shareholder who is present at the meeting in person or by proxy.
Notice of adjournment of a shareholders' meeting to another time
or place need not be given if such time and place are announced
at the meeting, unless the adjournment is for more than one
hundred twenty (120) days after the original record date. [
MGCL, Sections 2-504, 2-511(d) ]
Section 2.05.Voting - In General: At every
shareholders' meeting, each shareholder shall be entitled to one
vote for each share of stock of the Corporation validly issued
and outstanding and held by such shareholder, except that no
shares held by the Corporation shall be entitled to a vote.
Fractional shares shall be entitled to fractional votes. Except
as otherwise specifically provided in the Articles of
Incorporation, or these By-Laws, or as required by provisions of
the Investment Company Act, a majority of all the votes cast at a
meeting at which a quorum is present is sufficient to approve any
matter which properly comes before the meeting. The vote upon
any
PAGE 66
question shall be by ballot whenever requested by any person
entitled to vote, but, unless such a request is made, voting may
be conducted in any way approved by the meeting. [ MGCL,
Sections 2-214(a)(i), 2-506(a)(2), 2-507(a), 2-509(b) ]
Section 2.06.Shareholders Entitled to Vote: If,
pursuant to Section 8.05 hereof, a record date has been fixed for
the determination of shareholders entitled to notice of or to
vote at any shareholders' meeting, each shareholder of the
Corporation shall be entitled to vote in person or by proxy, each
share or fraction of a share of stock outstanding in his name on
the books of the Corporation on such record date. If no record
date has been fixed for the determination of shareholders, the
record date for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the
close of business on the day on which notice of the meeting is
mailed or the 30th day before the meeting, whichever is the
closer date to the meeting, or, if notice is waived by all
shareholders, at the close of business on the tenth (10th) day
next preceding the date of the meeting. [ MGCL, Sections 2-507,
2-511 ]
Section 2.07.Voting - Proxies: The right to vote by
proxy shall exist only if the instrument authorizing such proxy
to act shall have been executed in writing by the shareholder
himself, or by his attorney thereunto duly authorized in writing.
No proxy shall be valid more than eleven (11) months after its
date unless it provides for a longer period. [ MGCL, Section 2-
507(b) ]
Section 2.08.Quorum: The presence at any shareholders'
meeting, in person or by proxy, of shareholders entitled to cast
a majority of the votes entitled to be cast at the meeting shall
constitute a quorum. [ MGCL, Section 2-506(a) ]
Section 2.09.Absence of Quorum: In the absence of a
quorum, the holders of a majority of shares entitled to vote at
the meeting and present thereat in person or by proxy, or, if no
shareholder entitled to vote is present in person or by proxy,
any officer present who is entitled to preside at or act as
Secretary of such meeting, may adjourn the meeting sine die or
from time to time. Any business that might have been transacted
at the meeting originally called may be transacted at any such
adjourned meeting at which a quorum is present.
Section 2.10.Stock Ledger and List of Shareholders: It
shall be the duty of the Secretary or Assistant Secretary of the
Corporation to cause an original or duplicate stock ledger to be
maintained at the office of the Corporation's transfer agent,
containing the names and addresses of all shareholders and the
number of shares of each class held by each shareholder. Such
stock ledger may be in written form, or any other form capable of
being converted into written form within a reasonable time for
visual inspection. Any one or more persons, who together are and
for at least six (6) months have been shareholders of record of
at least five percent (5%) of the outstanding capital stock of
the Corporation, may submit (unless the Corporation at the time
of the request maintains a duplicate stock ledger at its
principal office) a written request to any officer of the
Corporation or its resident agent in Maryland for a list of the
shareholders of the Corporation. Within twenty (20) days after
such a request, there shall be prepared and filed at the
Corporation's principal office a list, verified under oath by an
officer of the Corporation or by its stock transfer agent or
registrar, which sets forth the name and address of each
shareholder and the number of shares of each class which the
shareholder holds. [ MGCL, Sections 2-209, 2-513 ]
<PAGE>
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Section 2.11.Informal Action By Shareholders: Any
action required or permitted to be taken at a meeting of
shareholders may be taken without a meeting if the following are
filed with the records of shareholders' meetings:
(a) A unanimous written consent which sets forth the
action and is signed by each shareholder entitled to
vote on the matter; and
(b) A written waiver of any right to dissent signed by
each shareholder entitled to notice of the meeting,
but not entitled to vote at it. [ MGCL, Section 2-
505 ]
ARTICLE III
BOARD OF DIRECTORS
Section 3.01.Number and Term of Office: The Board of
Directors shall consist of one (1) Director, which number may be
increased by a resolution of a majority of the entire Board of
Directors, provided that the number of Directors shall not be
more than fifteen (15) nor less than the lesser of (i) three (3)
or (ii) the number of shareholders of the Corporation. Each
Director (whenever elected) shall hold office until the next
annual meeting of shareholders and until his successor is elected
and qualifies or until his earlier death, resignation, or
removal. [ MGCL, Sections 2-402, 2-404, 2-405 ]
Section 3.02.Qualification of Directors: No member of
the Board of Directors need be a shareholder of the Corporation,
but at least one member of the Board of Directors shall be a
person who is not an interested person (as such term is defined
in the Investment Company Act) of the investment adviser of the
Corporation, nor an officer or employee of the Corporation. [
MGCL, Section 2-403; Investment Company Act, Section 10(d) ]
Section 3.03.Election of Directors: Until the first
annual meeting of shareholders or until successors are duly
elected and qualified, the Board of Directors shall consist of
the persons named as such in the Articles of Incorporation.
Thereafter, except as otherwise provided in Sections 3.04 and
3.05 hereof, at each annual meeting, the shareholders shall elect
Directors to hold office until the next annual meeting and/or
until their successors are elected and qualify. In the event
that Directors are not elected at an annual shareholders'
meeting, then Directors may be elected at a special shareholders'
meeting. Directors shall be elected by vote of the holders of a
majority of the shares present in person or by proxy and entitled
to vote thereon. [ MGCL, Section 2-404 ]
(Section 3.03. Election of Directors as amended
January 21, 1988)
Section 3.04.Removal of Directors: At any meeting of
shareholders, duly called and at which a quorum is present, the
shareholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any
Director or Directors from office, either with or without cause,
and may elect a successor or successors to fill any resulting
vacancies for the unexpired terms of removed Directors. [ MGCL,
Sections 2-406, 2-407 ]
Section 3.05.Vacancies and Newly Created Directorships:
If any vacancies occur in the Board of Directors by reason of
resignation, removal or otherwise, or if the authorized number of
Directors is increased, the Directors then in office shall
continue to act, and such vacancies (if not
PAGE 68
previously filled by the shareholders) may be filled by a
majority of the Directors then in office, whether or not
sufficient to constitute a quorum, provided that, immediately
after filling such vacancy, at least two-thirds of the Directors
then holding office shall have been elected to such office by the
shareholders of the Corporation. In the event that at any time,
other than the time preceding the first meeting of shareholders,
less than a majority of the Directors of the Corporation holding
office at that time were so elected by the shareholders, a
meeting of the shareholders shall be held promptly and in any
event within sixty (60) days for the purpose of electing
Directors to fill any existing vacancies in the Board of
Directors unless the Securities and Exchange Commission shall by
order extend such period. Except as provided in Section 3.04
hereof, a Director elected by the Board of Directors to fill a
vacancy shall be elected to hold office until the next annual
meeting of shareholders or until his successor is elected and
qualifies. [ MGCL, Section 2-407; Investment Company Act,
Section 16(a) ]
Section 3.06.General Powers:
(a) The property, business, and affairs of the
Corporation shall be managed under the direction of the Board of
Directors which may exercise all the powers of the Corporation
except such as are by law, by the Articles of Incorporation, or
by these By-Laws conferred upon or reserved to the shareholders
of the Corporation. [ MGCL, Section 2-401 ]
(b) All acts done by any meeting of the Directors
or by any person acting as a Director, so long as his successor
shall not have been duly elected or appointed, shall,
notwithstanding that it be afterwards discovered that there was
some defect in the election of the Directors or such person
acting as a Director or that they or any of them were
disqualified, be as valid as if the Directors or such person, as
the case may be, had been duly elected and were or was qualified
to be Directors or a Director of the Corporation.
Section 3.07.Power to Issue and Sell Stock: The Board
of Directors may from time to time authorize by resolution the
issuance and sale of any of the Corporation's authorized shares
to such persons as the Board of Directors shall deem advisable
and such resolution shall set the minimum price or value of
consideration for the stock or a formula for its determination,
and shall include a fair description of any consideration other
than money and a statement of the actual value of such
consideration as determined by the Board of Directors or a
statement that the Board of Directors has determined that the
actual value is or will be not less than a certain sum. [ MGCL,
Section 2-203 ]
Section 3.08.Power to Declare Dividends:
(a) The Board of Directors, from time to time as
it may deem advisable, may declare and the Corporation pay
dividends, in cash, property, or shares of the Corporation
available for dividends out of any source available for
dividends, to the shareholders according to their respective
rights and interests. [ MGCL, Section 2-309 ]
(b) The Board of Directors shall cause to be
accompanied by a written statement any dividend payment wholly or
partly from any source other than the Corporation's accumulated
undistributed net income (determined in accordance with good
accounting practice and the rules and regulations of the
Securities and Exchange Commission then in effect) not including
profits or losses realized upon the sale of securities or other
properties. Such statement shall adequately disclose the source
or sources of such payment and the basis of calculation and shall
be otherwise in such form as the Securities
PAGE 69
and Exchange Commission may prescribe. [ Investment Company Act,
Section 19; SEC Rule 19a-1; MGCL, Section 2-309(c) ]
(c) Notwithstanding the above provisions of this
Section 3.08, the Board of Directors may at any time declare and
distribute pro rata among the shareholders a stock dividend out
of the Corporation's authorized but unissued shares of stock,
including any shares previously purchased by the Corporation,
provided that such dividend shall not be distributed in shares of
any class with respect to any shares of a different class. The
shares so distributed shall be issued at the par value thereof,
and there shall be transferred to stated capital, at the time
such dividend is paid, an amount of surplus equal to the
aggregate par value of the shares issued as a dividend and there
may be transferred from earned surplus to capital surplus such
additional amount as the Board of Directors may determine. [
MGCL, Section 2-309 ]
Section 3.09.Annual and Regular Meetings: The annual
meeting of the Board of Directors for choosing officers and
transacting other proper business shall be held immediately after
the annual shareholders' meeting at such place as may be
specified in the notice of such meeting of the Board of
Directors, or, in the absence of such annual shareholders'
meeting, at such time and place as the Board of Directors may
provide. The Board of Directors from time to time may provide by
resolution for the holding of regular meetings and fix their time
and place (within or outside the State of Maryland). [ MGCL,
Section 2-409(a) ]
(Section 3.09. Annual and Regular Meetings as amended January
21, 1988)
Section 3.10.Special Meetings: Special meetings of the
Board of Directors shall be held whenever called by the Chairman
of the Board, the President (or, in the absence or disability of
the President, by any Vice President), the Treasurer, or two or
more Directors, at the time and place (within or outside the
State of Maryland) specified in the respective notices or waivers
of notice of such meetings.
Section 3.11.Notice: Notice of annual, regular, and
special meetings shall be in writing, stating the time and place,
and shall be mailed to each Director at his residence or regular
place of business or caused to be delivered to him personally or
to be transmitted to him by telegraph, cable, or wireless at
least two (2) days before the day on which the meeting is to be
held. Except as otherwise required by the By-Laws or the
Investment Company Act, such notice need not include a statement
of the business to be transacted at, or the purpose of, the
meeting. [ MGCL, Section 2-409(b) ]
Section 3.12.Waiver of Notice: No notice of any
meeting need be given to any Director who is present at the
meeting or to any Director who signs a waiver of the notice of
the meeting (which waiver shall be filed with the records of the
meeting), whether before or after the meeting. [ MGCL, Section
2-409(c) ]
Section 3.13.Quorum and Voting: At all meetings of the
Board of Directors the presence of one-third of the total number
of Directors authorized, but not less than two (2) Directors if
there are at least two directors, shall constitute a quorum. In
the absence of a quorum, a majority of the Directors present may
adjourn the meeting, from time to time, until a quorum shall be
present. The action of a majority of the Directors present at a
meeting at which a quorum is present shall be the action of the
Board of Directors unless the concurrence of a greater proportion
is required for such action by law, by the Articles of
Incorporation or by these By-Laws. [ MGCL, Section 2-408 ]
PAGE 70
Section 3.14.Conference Telephone: Members of the
Board of Directors or of any committee designated by the Board,
may participate in a meeting of the Board or of such committee by
means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear
each other at the same time, and participation by such means
shall constitute presence in person at such meeting. [ MGCL,
Section 2-409(d) ]
Section 3.15.Compensation: Each Director may receive
such remuneration for his services as shall be fixed from time to
time by resolution of the Board of Directors.
Section 3.16.Action Without a Meeting: Any action
required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting
if a unanimous written consent which sets forth the action is
signed by all members of the Board or of such committee and such
written consent is filed with the minutes of proceedings of the
Board or committee. [ MGCL, Section 2-408(c) ]
Section 3.17.Director Emeritus: Upon the retirement of
a Director of the Corporation, the Board of Directors may
designate such retired Director as a Director Emeritus. The
position of Director Emeritus shall be honorary only and shall
not confer upon such Director Emeritus any responsibility, or
voting authority, whatsoever with respect to the Corporation. A
Director Emeritus may, but shall not be required to attend the
meetings of the Board of Directors and receive materials normally
provided Directors relating to the Corporation. The Board of
Directors may establish such compensation as it may deem
appropriate under the circumstances to be paid by the Corporation
to a Director Emeritus.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 4.01.How Constituted: By resolution adopted by
the Board of Directors, the Board may appoint from among its
members one or more committees, including an Executive Committee,
each consisting of at least two (2) Directors. Each member of a
committee shall hold office during the pleasure of the Board.
The President shall be a member of the Executive Committee. [
MGCL, Section 2-411 ]
Section 4.02.Powers of the Executive Committee: Unless
otherwise provided by resolution of the Board of Directors, the
Executive Committee, in the intervals between meetings of the
Board of Directors, shall have and may exercise all of the powers
of the Board of Directors to manage the business and affairs of
the Corporation except the power to:
(a) Declare dividends or distributions on stock;
(b) Issue stock other than as provided in Section
2-411(b) of Corporations and Associations Article of
the Annotated Code of Maryland;
(c) Recommend to the shareholders any action which
requires shareholder approval;
(d) Amend the By-Laws; or
PAGE 71
(e) Approve any merger or share exchange which does not
require shareholder approval.
[ MGCL, Section 2-411(a) ]
Section 4.03.Other Committees of the Board of
Directors: To the extent provided by resolution of the Board,
other committees shall have and may exercise any of the powers
that may lawfully be granted to the Executive Committee. [ MGCL,
Section 2-411(a) ]
Section 4.04.Proceedings, Quorum, and Manner of Acting:
In the absence of appropriate resolution of the Board of
Directors, each committee may adopt such rules and regulations
governing its proceedings, quorum and manner of acting as it
shall deem proper and desirable, provided that the quorum shall
not be less than two (2) Directors. In the absence of any member
of any such committee, the members thereof present at any
meeting, whether or not they constitute a quorum, may appoint a
member of the Board of Directors to act in the place of such
absent member. [ MGCL, Section 2-411(c) ]
Section 4.05.Other Committees: The Board of Directors
may appoint other committees, each consisting of one or more
persons who need not be Directors. Each such committee shall
have such powers and perform such duties as may be assigned to it
from time to time by the Board of Directors, but shall not
exercise any power which may lawfully be exercised only by the
Board of Directors or a committee thereof.
ARTICLE V
OFFICERS
Section 5.01.General: The officers of the Corporation
shall be a President, one or more Vice Presidents (one or more of
whom may be designated Executive Vice President), a Secretary,
and a Treasurer, and may include one or more Assistant Vice
Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be appointed
in accordance with the provisions of Section 5.11 hereof. The
Board of Directors may elect, but shall not be required to elect,
a Chairman of the Board. [ MGCL, Section 2-412 ]
Section 5.02.Election, Term of Office and
Qualifications: The officers of the Corporation (except those
appointed pursuant to Section 5.11 hereof) shall be elected by
the Board of Directors at its first meeting and thereafter at
each annual meeting of the Board. If any officer or officers are
not elected at any such meeting, such officer or officers may be
elected at any subsequent regular or special meeting of the
Board. Except as provided in Sections 5.03, 5.04 and 5.05
hereof, each officer elected by the Board of Directors shall hold
office until the next annual meeting of the Board of Directors
and until his successor shall have been chosen and qualified.
Any person may hold two or more offices of the Corporation,
except that neither the Chairman of the Board nor the President
may hold the office of Vice President, but no person shall
execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law, the Articles of
Incorporation or these By-Laws to be executed, acknowledged, or
verified by two or more officers. The Chairman of the Board and
the President shall be selected from among the Directors of the
Corporation and may hold such offices only so long as they
continue to be Directors. No other officer need be a Director.
[ MGCL, Sections 2-413 and 2-415 ]
PAGE 72
(Section 5.02. Election, Term of Office and Qualifications: as
amended January 21, 1988)
Section 5.03.Resignation: Any officer may resign his
office at any time by delivering a written resignation to the
Board of Directors, the President, the Secretary, or any
Assistant Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 5.04.Removal: Any officer may be removed from
office by the Board of Directors whenever in the judgment of the
Board of Directors the best interests of the Corporation will be
served thereby. [ MGCL, Section 2-413(c) ]
Section 5.05Vacancies and Newly Created Offices: If
any vacancy shall occur in any office by reason of death,
resignation, removal, disqualification or other cause, or if any
new office shall be created, such vacancies or newly created
offices may be filled by the Board of Directors at any meeting
or, in the case of any office created pursuant to Section 5.11
hereof, by any officer upon whom such power shall have been
conferred by the Board of Directors. [ MGCL, Section 2-413(d) ]
Section 5.06.Chairman of the Board: Unless otherwise
provided by resolution of the Board of Directors, the Chairman of
the Board, if there be such an officer, shall be the chief
executive and operating officer of the Corporation, shall preside
at all shareholders' meetings, and at all meetings of the Board
of Directors. He shall be ex officio a member of all standing
committees of the Board of Directors. Subject to the supervision
of the Board of Directors, he shall have general charge of the
business, affairs, property, and operation of the Corporation and
its officers, employees, and agents. He may sign (unless the
President or a Vice President shall have signed) certificates
representing stock of the Corporation authorized for issuance by
the Board of Directors and shall have such other powers and
perform such other duties as may be assigned to him from time to
time by the Board of Directors.
Section 5.07.President: Unless otherwise provided by
resolution of the Board of Directors, the President shall, at the
request of or in the absence or disability of the Chairman of the
Board, or if no Chairman of the Board has been chosen, he shall
preside at all shareholders' meetings and at all meetings of the
Board of Directors and shall in general exercise the powers and
perform the duties of the Chairman of the Board. He may sign
(unless the Chairman or a Vice President shall have signed)
certificates representing stock of the Corporation authorized for
issuance by the Board of Directors. Except as the Board of
Directors may otherwise order, he may sign in the name and on
behalf of the Corporation all deeds, bonds, contracts, or
agreements. He shall exercise such other powers and perform such
other duties as from time to time may be assigned to him by the
Board of Directors.
Section 5.08.Vice President: The Board of Directors
shall, from time to time, designate and elect one or more Vice
Presidents (one or more of whom may be designated Executive Vice
President) who shall have such powers and perform such duties as
from time to time may be assigned to them by the Board of
Directors or the President. At the request or in the absence or
disability of the President, the Vice President (or, if there are
two or more Vice Presidents, the Vice President in order of
seniority of tenure in such office or in such other order as the
Board of Directors may determine) may perform all the duties of
the President and, when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Any
Vice President may sign (unless the Chairman, the President, or
another Vice President shall have signed) certificates
representing stock of the Corporation authorized for issuance by
the Board of Directors.
PAGE 73
Section 5.09.Treasurer and Assistant Treasurers: The
Treasurer shall be the principal financial and accounting officer
of the Corporation and shall have general charge of the finances
and books of account of the Corporation. Except as otherwise
provided by the Board of Directors, he shall have general
supervision of the funds and property of the Corporation and of
the performance by the custodian of its duties with respect
thereto. He may countersign (unless an Assistant Treasurer or
Secretary or Assistant Secretary shall have countersigned)
certificates representing stock of the Corporation authorized for
issuance by the Board of Directors. He shall render to the Board
of Directors, whenever directed by the Board, an account of the
financial condition of the Corporation and of all his
transactions as Treasurer; and as soon as possible after the
close of each fiscal year he shall make and submit to the Board
of Directors a like report for such fiscal year. He shall cause
to be prepared annually a full and correct statement of the
affairs of the Corporation, including a balance sheet and a
financial statement of operations for the preceding fiscal year,
which shall be submitted at the annual meeting of shareholders
and filed within twenty (20) days thereafter at the principal
office of the Corporation. He shall perform all the acts
incidental to the office of the Treasurer, subject to the control
of the Board of Directors. Any Assistant Treasurer may perform
such duties of the Treasurer as the Treasurer or the Board of
Directors may assign, and, in the absence of the Treasurer, he
may perform all the duties of the Treasurer.
Section 5.10.Secretary and Assistant Secretaries: The
Secretary shall attend to the giving and serving of all notices
of the Corporation and shall record all proceedings of the
meetings of the shareholders and Directors in one or more books
to be kept for that purpose. He shall keep in safe custody the
seal of the Corporation and shall have charge of the records of
the Corporation, including the stock books and such other books
and papers as the Board of Directors may direct and such books,
reports, certificates and other documents required by law to be
kept, all of which shall at all reasonable times be open to
inspection by any Director. He shall countersign (unless the
Treasurer, an Assistant Treasurer or an Assistant Secretary shall
have countersigned) certificates representing stock of the
Corporation authorized for issuance by the Board of Directors.
He shall perform such other duties as appertain to his office or
as may be required by the Board of Directors. Any Assistant
Secretary may perform such duties of the Secretary as the
Secretary or the Board of Directors may assign, and, in the
absence of the Secretary, he may perform all the duties of the
Secretary.
Section 5.11.Subordinate Officers: The Board of
Directors from time to time may appoint such other officers or
agents as it may deem advisable, each of whom shall have such
title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The
Board of Directors from time to time may delegate to one or more
officers or agents the power to appoint any such subordinate
officers or agents and to prescribe their respective rights,
terms of office, authorities, and duties. [ MGCL, Section
2-412(b) ]
Section 5.12.Remuneration: The salaries or other
compensation of the officers of the Corporation shall be fixed
from time to time by resolution of the Board of Directors, except
that the Board of Directors may by resolution delegate to any
person or group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in
accordance with the provisions of Section 5.11 hereof.
ARTICLE VI
PAGE 74
CUSTODY OF SECURITIES AND CASH
Section 6.01.Employment of a Custodian: The
Corporation shall place and at all times maintain in the custody
of a Custodian (including any sub-custodian for the Custodian)
all funds, securities, and similar investments owned by the
Corporation. The Custodian shall be a bank having an aggregate
capital, surplus, and undivided profits of not less than
$10,000,000. Subject to such rules, regulations, and orders as
the Securities and Exchange Commission may adopt as necessary or
appropriate for the protection of investors, the Corporation's
Custodian may deposit all or a part of the securities owned by
the Corporation in a sub-custodian or sub-custodians situated
within or without the United States. The Custodian shall be
appointed and its remuneration fixed by the Board of Directors.
[ Investment Company Act, Section 17(f) ]
Section 6.02.Central Certificate Service: Subject to
such rules, regulations, and orders as the Securities and
Exchange Commission may adopt as necessary or appropriate for the
protection of investors, the Corporation's Custodian may deposit
all or any part of the securities owned by the Corporation in a
system for the central handling of securities established by a
national securities exchange or national securities association
registered with the Commission under the Securities Exchange Act
of 1934, or such other person as may be permitted by the
Commission, pursuant to which system all securities of any
particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged
by bookkeeping entry without physical delivery of such
securities. [ Investment Company Act, Section 17(f) ]
Section 6.03.Cash Assets: The cash proceeds from the
sale of securities and similar investments and other cash assets
of the Corporation shall be kept in the custody of a bank or
banks appointed pursuant to Section 6.01 hereof, or in accordance
with such rules and regulations or orders as the Securities and
Exchange Commission may from time to time prescribe for the
protection of investors, except that the Corporation may maintain
a checking account or accounts in a bank or banks, each having an
aggregate capital, surplus, and undivided profits of not less
than $10,000,000, provided that the balance of such account or
the aggregate balances of such accounts shall at no time exceed
the amount of the fidelity bond, maintained pursuant to the
requirements of the Investment Company Act and rules and
regulations thereunder, covering the officers or employees
authorized to draw on such account or accounts. [ Investment
Company Act, Section 17(f) ]
Section 6.04.Free Cash Accounts: The Corporation may,
upon resolution of its Board of Directors, maintain a petty cash
account free of the foregoing requirements of this Article VI in
an amount not to exceed $500, provided that such account is
operated under the imprest system and is maintained subject to
adequate controls approved by the Board of Directors over
disbursements and reimbursements including, but not limited to,
fidelity bond coverage for persons having access to such funds.
[ Investment Company Act, Rule 17f-3 ]
Section 6.05.Action Upon Termination of Custodian
Agreement: Upon resignation of a custodian of the Corporation or
inability of a custodian to continue to serve, the Board of
Directors shall promptly appoint a successor custodian, but in
the event that no successor custodian can be found who has the
required qualifications and is willing to serve, the Board of
Directors shall call as promptly as possible a special meeting of
the shareholders to determine whether the Corporation shall
function without a custodian or shall
PAGE 75
be liquidated. If so directed by vote of the holders of a
majority of the outstanding shares of stock of the Corporation,
the custodian shall deliver and pay over all property of the
Corporation held by it as specified in such vote.
ARTICLE VII
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
Section 7.01.Execution of Instruments: All deeds,
documents, transfers, contracts, agreements, requisitions or
orders, promissory notes, assignments, endorsements, checks and
drafts for the payment of money by the Corporation, and other
instruments requiring execution by the Corporation shall be
signed by the Chairman, the President, a Vice President, or the
Treasurer, or as the Board of Directors may otherwise, from time
to time, authorize. Any such authorization may be general or
confined to specific instances.
Section 7.02.Voting of Securities: Unless otherwise
ordered by the Board of Directors, the Chairman, the President,
or any Vice President shall have full power and authority on
behalf of the Corporation to attend and to act and to vote, or in
the name of the Corporation to execute proxies to vote, at any
meeting of shareholders of any company in which the Corporation
may hold stock. At any such meeting such officer shall possess
and may exercise (in person or by proxy) any and all rights,
powers, and privileges incident to the ownership of such stock.
The Board of Directors may by resolution from time to time confer
like powers upon any other person or persons. [ MGCL, Section
2-509 ]
ARTICLE VIII
CAPITAL STOCK
Section 8.01.Ownership of Shares:
(a) Certificates certifying the ownership of
shares will not be issued for shares purchased or otherwise
acquired after July 1, 1991. The ownership of shares, full or
fractional, shall be recorded on the books of the Corporation or
its agent. The record books of the Corporation as kept by the
Corporation or its agent, as the case may be, shall be conclusive
as to the number of shares held from time to time by each such
shareholder. The Corporation reserves the right to require the
surrender of outstanding certificates if the Board of Directors
so determines. [ MGCL, Section 210(c) ]
(b) Every certificate exchanged, surrendered for
redemption or otherwise returned to the Corporation shall be
marked "Cancelled" with the date of cancellation.
(Section 8.01. Ownership of Shares as amended July 1, 1991)
Section 8.02.Transfer of Capital Stock:
(a) Shares of stock of the Corporation shall be
transferable only upon the books of the Corporation kept for such
purpose and, if one or more
PAGE 76
certificates representing such shares have been issued, upon
surrender to the Corporation or its transfer agent or agents of
such certificate or certificates duly endorsed, or accompanied by
appropriate evidence of assignment, transfer, succession, or
authority to transfer.
(b) The Corporation shall be entitled to treat
the holder of record of any share of stock as the absolute owner
thereof for all purposes, and accordingly shall not be bound to
recognize any legal, equitable, or other claim or interest in
such share on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise
expressly provided by the statutes of the State of Maryland.
Section 8.03.Transfer Agents and Registrars: The Board
of Directors may, from time to time, appoint or remove transfer
agents and registrars of transfers of shares of stock of the
Corporation, and it may appoint the same person as both transfer
agent and registrar.
(Section 8.03 Transfer Agents and Registrars as amended July 1,
1991)
Section 8.04.Transfer Regulations: The shares of stock
of the Corporation may be freely transferred, and the Board of
Directors may, from time to time, adopt lawful rules and
regulations with reference to the method of transfer of the
shares of stock of the Corporation.
Section 8.05.Fixing of Record Date: The Board of
Directors may fix in advance a date as a record date for the
determination of the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof,
or to express consent to corporate action in writing without a
meeting, or to receive payment of any dividend or other
distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion, or exchange of
stock, or for any other proper purpose, provided that such record
date shall be a date not more than sixty (60) days nor, in the
case of a meeting of shareholders, less than ten (10) days prior
to the date on which the particular action, requiring such
determination of shareholders, is to be taken. In such case,
only such shareholders as shall be shareholders of record on the
record date so fixed shall be entitled to such notice of, and to
vote at, such meeting or adjournment, or to give such consent, or
to receive payment of such dividend or other distribution, or to
receive such allotment of rights, or to exercise such rights, or
to take other action, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any
such record date. A meeting of shareholders convened on the date
for which it was called may be adjourned from time to time
without notice to a date not more than one hundred twenty (120)
days after the original record date. [ MGCL, Section 2-511 ]
Section 8.06.Lost, Stolen or Destroyed Certificates:
If a certificate for stock of the Corporation is alleged to have
been lost, stolen or destroyed, no new certificate will be
issued. Instead, ownership of the shares formerly represented by
the lost, stolen or destroyed certificate shall be recorded on
the books of the Corporation or its agent, in accordance with the
provisions of Section 8.01 of these By-Laws. Before recording
ownership of such shares, the Board of Directors, or any officer
authorized by the Board, may, in its discretion, require the
owner of the lost, stolen, or any destroyed certificate (or his
legal representative) to give the Corporation a bond or other
indemnity, in such form and in such amount as the Board or any
such officer may direct and with such surety or sureties as may
be satisfactory to the Board of any such officer, sufficient to
indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction
of any such certificate. [ MGCL, Section 2-213 ]
(Section 8.06 Lost, Stolen or Destroyed Certificates as amended
July 1, 1991)
PAGE 77
ARTICLE IX
FISCAL YEAR, ACCOUNTANT
Section 9.01.Fiscal Year: The fiscal year of the
Corporation shall be the twelve (12) calendar months beginning on
the 1st day of March in each year and ending on the last day of
the following February, or such other period of twelve (12)
calendar months as the Board of Directors may by resolution
prescribe.
Section 9.02.Accountant:
(a) The Corporation shall employ an independent
public accountant or firm of independent public accountants as
its accountant to examine the accounts of the Corporation and to
sign and certify financial statements filed by the Corporation.
The accountant's certificates and reports shall be addressed both
to the Board of Directors and to the shareholders.
(b) A majority of the members of the Board of
Directors who are not interested persons (as such term is defined
in the Investment Company Act) of the Corporation shall select
the accountant, by vote cast in person, at any meeting held
before the first annual shareholders' meeting, and thereafter
shall select the accountant annually, by vote cast in person, at
a meeting held within thirty (30) days before or after the
beginning of the fiscal year of the Corporation or within thirty
(30) days before the annual shareholders' meeting in that year.
Such selection shall be submitted for ratification or rejection
at the next succeeding annual shareholders' meeting. If such
meeting shall reject such selection, the accountant shall be
selected by majority vote of the Corporation's outstanding voting
securities, either at the meeting at which the rejection occurred
or at a subsequent meeting of shareholders called for the
purpose.
(c) Any vacancy occurring between annual
meetings, due to the death or resignation of the accountant, may
be filled by the vote of a majority of those members of the Board
of Directors who are not interested persons (as so defined) of
the Corporation, cast in person at a meeting called for the
purpose of voting on such action.
(d) The employment of the accountant shall be
conditioned upon the right of the Corporation by vote of a
majority of the outstanding voting securities at any meeting
called for the purpose to terminate such employment forthwith
without any penalty. [ Investment Company Act, Section 32(a) ]
ARTICLE X
INDEMNIFICATION AND INSURANCE
Section 10.01. Indemnification and Payment of Expenses
in Advance: The Corporation shall indemnify any individual
("Indemnitee") who is a present or former director, officer,
employee, or agent of the Corporation, or who is or has been
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, who, by reason of his
position was, is, or is threatened to be made a party to any
threatened, pending, or completed action, suit, or
PAGE 78
proceeding, whether civil, criminal, administrative, or
investigative (hereinafter collectively referred to as a
"Proceeding") against any judgments, penalties, fines,
settlements, and reasonable expenses (including attorneys' fees)
incurred by such Indemnitee in connection with any Proceeding, to
the fullest extent that such indemnification may be lawful under
applicable Maryland law, as from time to time amended. The
Corporation shall pay any reasonable expenses so incurred by such
Indemnitee in defending a Proceeding in advance of the final
disposition thereof to the fullest extent that such advance
payment may be lawful under applicable Maryland law, as from time
to time amended. Subject to any applicable limitations and
requirements set forth in the Corporation's Articles of
Incorporation and in these By-Laws, any payment of
indemnification or advance of expenses shall be made in
accordance with the procedures set forth in applicable Maryland
law, as from time to time amended.
Notwithstanding the foregoing, nothing herein shall
protect or purport to protect any Indemnitee against any
liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office
("Disabling Conduct").
Anything in this Article X to the contrary
notwithstanding, no indemnification shall be made by the
Corporation to any Indemnitee unless:
(a) there is a final decision on the merits by a court or
other body before whom the Proceeding was brought
that the Indemnitee was not liable by reason of
Disabling Conduct; or
(b) in the absence of such a decision, there is a
reasonable determination, based upon a review of the
facts, that the Indemnitee was not liable by reason
of Disabling Conduct, which determination shall be
made by:
(i) the vote of a majority of a quorum of directors
who are neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of
the Investment Company Act, nor parties to the
Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Anything in this Article X to the contrary
notwithstanding, any advance of expenses by the Corporation to
any Indemnitee shall be made only upon the undertaking by such
Indemnitee to repay the advance unless it is ultimately
determined that such Indemnitee is entitled to indemnification as
above provided, and only if one of the following conditions is
met:
(a) the Indemnitee provides a security for his
undertaking; or
(b) the Corporation shall be insured against losses
arising by reason of any lawful advances; or
(c) there is a determination, based on a review of
readily available facts, that there is reason to
believe that the Indemnitee will ultimately be
found entitled to indemnification, which
determination shall be made by:
PAGE 79
(i) a majority of a quorum of directors who are
neither "interested persons" of the Corporation
as defined in Section 2(a)(19) of the
Investment Company Act, nor parties to the
Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Section 10.02. Insurance of Officers, Directors,
Employees and Agents: To the fullest extent permitted by
applicable Maryland law and by Section 17(h) of the Investment
Company Act, as from time to time amended, the Corporation may
purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee, or agent of the Corporation,
or who is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against
any liability asserted against him and incurred by him in or
arising out of his position, whether or not the Corporation would
have the power to indemnify him against such liability. [ MGCL,
Section 2-418(k) ]
ARTICLE XI
AMENDMENTS
Section 11.01. General: Except as provided in Section
11.02 hereof, all By-Laws of the Corporation, whether adopted by
the Board of Directors or the shareholders, shall be subject to
amendment, alteration, or repeal, and new By-Laws may be made, by
the affirmative vote of a majority of either:
(a) the holders of record of the outstanding shares
of stock of the Corporation entitled to vote, at any
annual or special meeting the notice or waiver of notice
of which shall have specified or summarized the proposed
amendment, alteration, repeal, or new By-Law; or
(b) the Directors present at any regular or special
meeting at which a quorum is present if the notice or
waiver of notice thereof or material sent to the
Directors in connection therewith on or prior to the last
date for the giving of such notice under these By-Laws
shall have specified or summarized the proposed
amendment, alteration, repeal, or new By-Law.
<PAGE>
PAGE 80
Section 11.02. By Shareholders Only:
(a) No amendment of any section of these By-Laws
shall be made except by the shareholders of the Corporation if
the shareholders shall have provided in the By-Laws that such
section may not be amended, altered, or repealed except by the
shareholders.
(b) From and after the issue of any shares of the
Capital Stock of the Corporation, no amendment of this Article XI
shall be made except by the shareholders of the Corporation.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Use of the Term "Annual Meeting": The
use of the term "annual meeting" in these By-Laws shall not be
construed as implying a requirement that a shareholder meeting be
held annually.
(ARTICLE XII, MISCELLANEOUS, added January 21, 1988)
dld/agmts/BYLAWS.TFH<PAGE>
PAGE 81
BY-LAWS
OF
T. ROWE PRICE TAX-FREE HIGH-YIELD FUND, INC.
AS AMENDED:
JANUARY 21, 1988
APRIL 20, 1990
JULY 1, 1991
JULY 20, 1993
<PAGE>
PAGE 82
TABLE OF CONTENTS
Page
ARTICLE I. NAME OF CORPORATION, LOCATION OF OFFICES AND SEAL 1
1.01. Name. . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Principal Office. . . . . . . . . . . . . . . . . 1
1.03. Seal. . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. SHAREHOLDERS. . . . . . . . . . . . . . . . . . . 1
2.01. Annual Meetings . . . . . . . . . . . . . . . . . 1
2.02. Special Meetings. . . . . . . . . . . . . . . . . 2
2.03. Place of Meetings . . . . . . . . . . . . . . . . 2
2.04. Notice of Meetings. . . . . . . . . . . . . . . . 2
2.05. Voting - in General . . . . . . . . . . . . . . . 2
2.06. Shareholders Entitled to Vote . . . . . . . . . . 3
2.07. Voting - Proxies. . . . . . . . . . . . . . . . . 3
2.08. Quorum. . . . . . . . . . . . . . . . . . . . . . 3
2.09. Absence of Quorum . . . . . . . . . . . . . . . . 3
2.10. Stock Ledger and List of Shareholders . . . . . . 3
2.11. Informal Action by Shareholders . . . . . . . . . 4
ARTICLE III. BOARD OF DIRECTORS. . . . . . . . . . . . . . . . 4
3.01. Number and Term of Office . . . . . . . . . . . . 4
3.02. Qualification of Directors. . . . . . . . . . . . 4
3.03. Election of Directors . . . . . . . . . . . . . . 4
3.04. Removal of Directors. . . . . . . . . . . . . . . 4
3.05. Vacancies and Newly Created Directorships . . . . 5
3.06. General Powers. . . . . . . . . . . . . . . . . . 5
3.07. Power to Issue and Sell Stock . . . . . . . . . . 5
3.08. Power to Declare Dividends. . . . . . . . . . . . 5
3.09. Annual and Regular Meetings . . . . . . . . . . . 6
3.10. Special Meetings. . . . . . . . . . . . . . . . . 6
3.11. Notice. . . . . . . . . . . . . . . . . . . . . . 6
3.12. Waiver of Notice. . . . . . . . . . . . . . . . . 6
3.13. Quorum and Voting . . . . . . . . . . . . . . . . 6
3.14. Conference Telephone. . . . . . . . . . . . . . . 7
3.15. Compensation. . . . . . . . . . . . . . . . . . . 7
3.16. Action without a Meeting. . . . . . . . . . . . . 7
3.17. Director Emeritus . . . . . . . . . . . . . . . . 7
<PAGE>
PAGE 83
ARTICLE IV. EXECUTIVE COMMITTEE AND OTHER COMMITTEES. . . . . 7
4.01. How Constituted . . . . . . . . . . . . . . . . . 7
4.02. Powers of the Executive Committee . . . . . . . . 7
4.03. Other Committees of the Board of Directors. . . . 8
4.04. Proceedings, Quorum and Manner of Acting. . . . . 8
4.05. Other Committees. . . . . . . . . . . . . . . . . 8
ARTICLE V. OFFICERS. . . . . . . . . . . . . . . . . . . . . 8
5.01. General . . . . . . . . . . . . . . . . . . . . . 8
5.02. Election, Term of Office and Qualifications . . . 8
5.03. Resignation . . . . . . . . . . . . . . . . . . . 9
5.04. Removal . . . . . . . . . . . . . . . . . . . . . 9
5.05. Vacancies and Newly Created Offices . . . . . . . 9
5.06. Chairman of the Board . . . . . . . . . . . . . . 9
5.07. President . . . . . . . . . . . . . . . . . . . . 9
5.08. Vice President. . . . . . . . . . . . . . . . . . 9
5.09. Treasurer and Assistant Treasurers. . . . . . . .10
5.10. Secretary and Assistant Secretaries . . . . . . .10
5.11. Subordinate Officers. . . . . . . . . . . . . . .10
5.12. Remuneration. . . . . . . . . . . . . . . . . . .10
ARTICLE VI. CUSTODY OF SECURITIES AND CASH. . . . . . . . . .11
6.01. Employment of a Custodian . . . . . . . . . . . .11
6.02. Central Certificate Service . . . . . . . . . . .11
6.03. Cash Assets . . . . . . . . . . . . . . . . . . .11
6.04. Free Cash Accounts. . . . . . . . . . . . . . . .11
6.05. Action Upon Termination of Custodian Agreement. .12
ARTICLE VII. EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES. .12
7.01. Execution of Instruments. . . . . . . . . . . . .12
7.02. Voting of Securities. . . . . . . . . . . . . . .12
ARTICLE VIII.
CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . .12
8.01. Ownership of Shares . . . . . . . . . . . . . . .12
8.02. Transfer of Capital Stock . . . . . . . . . . . .13
8.03. Transfer Agents and Registrars. . . . . . . . . .13
8.04. Transfer Regulations. . . . . . . . . . . . . . .13
8.05. Fixing of Record Date . . . . . . . . . . . . . .13
8.06. Lost, Stolen, or Destroyed Certificates . . . . .13
ARTICLE IX. FISCAL YEAR, ACCOUNTANT . . . . . . . . . . . . .14
9.01. Fiscal Year . . . . . . . . . . . . . . . . . . .14
9.02. Accountant. . . . . . . . . . . . . . . . . . . .14
ARTICLE X. INDEMNIFICATION AND INSURANCE . . . . . . . . . .15
10.01. Indemnification and Payment of Expenses in Advance15
10.02. Insurance of Officers, Directors, Employees and
Agents 16
PAGE 84
ARTICLE XI. AMENDMENTS. . . . . . . . . . . . . . . . . . . .16
11.01. General . . . . . . . . . . . . . . . . . . . . .16
11.02. By Shareholders Only. . . . . . . . . . . . . . .17
ARTICLE XII. MISCELLANEOUS . . . . . . . . . . . . . . . . . .17
12.01. Use of the Term "Annual Meeting". . . . . . . . .17
<PAGE>
PAGE 1
INVESTMENT MANAGEMENT AGREEMENT
Between
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
and
T. ROWE PRICE ASSOCIATES, INC.
INVESTMENT MANAGEMENT AGREEMENT, made as of the 1st day
of July, 1987, by and between T. ROWE PRICE TAX-EXEMPT MONEY
FUND, INC., a corporation organized and existing under the laws
of the State of Maryland (hereinafter called the "Fund"), and T.
ROWE PRICE ASSOCIATES, INC., a corporation organized and existing
under the laws of the State of Maryland (hereinafter called the
"Manager").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end
management investment company and is registered as such under the
federal Investment Company Act of l940, as amended (the "Act");
and
WHEREAS, the Manager is engaged principally in the
business of rendering investment supervisory services and is
registered as an investment adviser under the federal Investment
Advisers Act of l940, as amended; and
WHEREAS, the Fund desires the Manager to render
investment supervisory services to the Fund in the manner and on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Duties and Responsibilities of Manager.
A. Investment Advisory Services. The Manager shall
act as investment manager and shall supervise and direct the
investments of the Fund in accordance with the Fund's investment
objectives, program and restrictions as provided in its
prospectus, as amended from time to time, and such other
limitations as the Fund may impose by notice in writing to the
Manager. The Manager shall obtain and evaluate such information
relating to the economy, industries, businesses, securities
markets and securities as it may deem necessary or useful in the
discharge of its obligations hereunder and shall formulate and
implement a continuing program for the management of the assets
and resources of the Fund in a manner consistent with its
investment objectives. In furtherance of this duty, the Manager,
as agent and attorney-in-fact with respect to the Fund, is
authorized, in its discretion and without prior consultation with
the Fund, to:
(i) buy, sell, exchange, convert, lend, and
otherwise trade in any stocks, bonds, and other
securities or assets; and
(ii) place orders and negotiate the commissions (if
any) for the execution of transactions in securities
with or through such brokers, dealers, underwriters
or issuers as the Manager may select.
PAGE 2
B. Financial, Accounting, and Administrative
Services. The Manager shall maintain the corporate existence and
corporate records of the Fund; maintain the registrations and
qualifications of Fund shares under federal and state law;
monitor the financial, accounting, and administrative functions
of the Fund; maintain liaison with the various agents employed by
the Fund (including the Fund's transfer agent, custodian,
independent accountants and legal counsel) and assist in the
coordination of their activities on behalf of the Fund.
C. Reports to Fund. The Manager shall furnish to
or place at the disposal of the Fund such information, reports,
evaluations, analyses and opinions as the Fund may, at any time
or from time to time, reasonably request or as the Manager may
deem helpful to the Fund.
D. Reports and Other Communications to Fund
Shareholders. The Manager shall assist the Fund in developing
all general shareholder communications, including regular
shareholder reports.
E. Fund Personnel. The Manager agrees to permit
individuals who are officers or employees of the Manager to serve
(if duly elected or appointed) as officers, directors, members of
any committee of directors, members of any advisory board, or
members of any other committee of the Fund, without remuneration
from or other cost to the Fund.
F. Personnel, Office Space, and Facilities of
Manager. The Manager at its own expense shall furnish or provide
and pay the cost of such office space, office equipment, office
personnel, and office services as the Manager requires in the
performance of its investment advisory and other obligations
under this Agreement.
2. Allocation of Expenses.
A. Expenses Paid by Manager.
(1) Salaries and Fees of Officers. The Manager
shall pay all salaries, expenses, and fees of the
officers and directors of the Fund who are affiliated
with the Manager.
(2) Assumption of Fund Expenses by Manager. The
payment or assumption by the Manager of any expense
of the Fund that the Manager is not required by this
Agreement to pay or assume shall not obligate the
Manager to pay or assume the same or any similar
expense of the Fund on any subsequent occasion.
B. Expenses Paid by Fund. The Fund shall bear all
expenses of its organization, operations, and business not
specifically assumed or agreed to be paid by the Manager as
provided in this Agreement. In particular, but without limiting
the generality of the foregoing, the Fund shall pay:
(1) Custody and Accounting Services. All expenses
of the transfer, receipt, safekeeping, servicing and
accounting for the Fund's cash, securities, and other
property, including all charges of depositories,
custodians, and other agents, if any;
<PAGE>
PAGE 3
(2) Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts,
including all charges of the Fund's transfer,
shareholder recordkeeping, dividend disbursing,
redemption, and other agents, if any;
(3) Shareholder Communications. All expenses of
preparing, setting in type, printing, and
distributing reports and other communications to
shareholders;
(4) Shareholder Meetings. All expenses incidental
to holding meetings of Fund shareholders, including
the printing of notices and proxy material, and proxy
solicitation therefor;
(5) Prospectuses. All expenses of preparing,
setting in type, and printing of annual or more
frequent revisions of the Fund's prospectus and of
mailing them to shareholders;
(6) Pricing. All expenses of computing the Fund's
net asset value per share, including the cost of any
equipment or services used for obtaining price
quotations;
(7) Communication Equipment. All charges for
equipment or services used for communication between
the Manager or the Fund and the custodian, transfer
agent or any other agent selected by the Fund;
(8) Legal and Accounting Fees and Expenses. All
charges for services and expenses of the Fund's legal
counsel and independent auditors;
(9) Directors' Fees and Expenses. All
compensation of directors, other than those
affiliated with the Manager, and all expenses
incurred in connection with their service;
(10) Federal Registration Fees. All fees and
expenses of registering and maintaining the
registration of the Fund under the Act and the
registration of the Fund's shares under the
Securities Act of 1933, as amended (the "'33 Act"),
including all fees and expenses incurred in
connection with the preparation, setting in type,
printing, and filing of any registration statement
and prospectus under the '33 Act or the Act, and any
amendments or supplements that may be made from time
to time;
(11) State Registration Fees. All fees and
expenses of qualifying and maintaining qualification
of the Fund and of the Fund's shares for sale under
securities laws of various states or jurisdictions,
and of registration and qualification of the Fund
under all other laws applicable to the Fund or its
business activities (including registering the Fund
as a broker-dealer, or any officer of the Fund or any
person as agent or salesman of the Fund in any
state);
<PAGE>
PAGE 4
(12) Issue and Redemption of Fund Shares. All
expenses incurred in connection with the issue,
redemption, and transfer of Fund shares, including
the expense of confirming all share transactions, and
of preparing and transmitting the Fund's stock
certificates;
(13) Bonding and Insurance. All expenses of bond,
liability, and other insurance coverage required by
law or deemed advisable by the Fund's board of
directors;
(14) Brokerage Commissions. All brokers'
commissions and other charges incident to the
purchase, sale, or lending of the Fund's portfolio
securities;
(15) Taxes. All taxes or governmental fees payable
by or with respect of the Fund to federal, state, or
other governmental agencies, domestic or foreign,
including stamp or other transfer taxes;
(16) Trade Association Fees. All fees, dues, and
other expenses incurred in connection with the Fund's
membership in any trade association or other
investment organization; and
(17) Nonrecurring and Extraordinary Expenses. Such
nonrecurring expenses as may arise, including the
costs of actions, suits, or proceedings to which the
Fund is a party and the expenses the Fund may incur
as a result of its legal obligation to provide
indemnification to its officers, directors, and
agents.
3. Management Fee. The Fund shall pay the Manager a
fee ("Fee") which will consist of two components: a Group
Management Fee ("Group Fee"), and an Individual Fund Fee ("Fund
Fee"). The Fee shall be paid monthly to the Manager on the first
business day of the next succeeding calendar month and shall be
calculated as follows:
A. Group Fee. The monthly Group Fee ("Monthly Group
Fee") shall be the sum of the daily Group Fee accruals ("Daily
Group Fee Accruals") for each month. The Daily Group Fee Accrual
for any particular day will be computed by multiplying the Price
Funds' group fee accrual as determined below ("Daily Price Funds'
Group Fee Accrual") by the ratio of the Fund's 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 shall be 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:
<PAGE>
PAGE 5
Price Funds Annual Group
Base Fee Rate for Each Level of Assets
______________________________________
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
0.330% Next $10 billion
0.320% Thereafter
The Price Funds shall include all the mutual funds
distributed by T. Rowe Price Investment Services, Inc. (except
for the T. Rowe Price Institutional Trust and any 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 shall be 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.
B. Fund Fee. The monthly Fund Fee ("Monthly Fund
Fee") shall be the sum of the daily Fund Fee accruals ("Daily
Fund Fee Accruals") for each month. The Daily Fund Fee Accrual
for any particular day will be computed by multiplying the
fraction of one (1) over the number of calendar days in the year
by the Fund Fee Rate of 0.10% and multiplying this product 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.
C. Expense Limitation. To the extent that the
aggregate expenses of every character incurred by the Fund in any
fiscal year, including but not limited to Fees of the Manager
computed as hereinabove set forth, but excluding interest, taxes,
brokerage, and other expenditures which are capitalized in
accordance with generally accepted accounting principles and
extraordinary expenses, shall exceed the limit ("State Expense
Limit") prescribed by any state in which the Fund's shares are
qualified for sale, such excess amount shall be the liability of
the Manager to pay in the manner specified below. To determine
the Manager's liability for the Fund's expenses, the expenses of
the Fund shall be annualized monthly as of the last day of the
month. If the annualized expenses for any month exceed the State
Expense Limit, the payment of the Fee for such month (if there be
any) shall be reduced by such excess ("Excess Amount") and in the
event the Excess Amount exceeds the amount due as the Fee, the
Manager shall remit to the Fund the difference between the Excess
Amount and the amount due as the Fee; provided, however, that an
adjustment shall be made on or before the last day of the first
month of the next succeeding fiscal year if the aggregate
expenses for the fiscal year do not exceed the State Expense
Limit.
D. Proration of Fee. If this Agreement becomes
effective or terminates before the end of any month, the Fee for
the period from the effective date to the end of such month or
from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such
effectiveness or termination occurs.
<PAGE>
PAGE 6
4. Brokerage. Subject to the approval of the board of
directors of the Fund, the Manager, in carrying out its duties
under Paragraph 1.A., may cause the Fund to pay a broker-dealer
which furnishes brokerage or research services [as such services
are defined under Section 28(e) of the Securities Exchange Act of
l934, as amended (the "'34 Act")], a higher commission than that
which might be charged by another broker-dealer which does not
furnish brokerage or research services or which furnishes
brokerage or research services deemed to be of lesser value, if
such commission is deemed reasonable in relation to the brokerage
and research services provided by the broker-dealer, viewed in
terms of either that particular transaction or the overall
responsibilities of the Manager with respect to the accounts as
to which it exercises investment discretion (as such term is
defined under Section 3(a)(35) of the '34 Act).
5. Manager's Use of the Services of Others. The
Manager may (at its cost except as contemplated by Paragraph 4 of
this Agreement) employ, retain or otherwise avail itself of the
services or facilities of other persons or organizations for the
purpose of providing the Manager or the Fund with such
statistical and other factual information, such advice regarding
economic factors and trends, such advice as to occasional
transactions in specific securities or such other information,
advice or assistance as the Manager may deem necessary,
appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to the Fund, or in the discharge
of Manager's overall responsibilities with respect to the other
accounts which it serves as investment manager.
6. Ownership of Records. All records required to be
maintained and preserved by the Fund pursuant to the provisions
of rules or regulations of the Securities and Exchange Commission
under Section 31(a) of the Act and maintained and preserved by
the Manager on behalf of the Fund are the property of the Fund
and will be surrendered by the Manager promptly on request by the
Fund.
7. Reports to Manager. The Fund shall furnish or
otherwise make available to the Manager such prospectuses,
financial statements, proxy statements, reports, and other
information relating to the business and affairs of the Fund as
the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this
Agreement.
8. Services to Other Clients. Nothing herein contained
shall limit the freedom of the Manager or any affiliated person
of the Manager to render investment supervisory and corporate
administrative services to other investment companies, to act as
investment manager or investment counselor to other persons,
firms or corporations, or to engage in other business activities;
but so long as this Agreement or any extension, renewal or
amendment hereof shall remain in effect or until the Manager
shall otherwise consent, the Manager shall be the only investment
manager to the Fund.
9. Limitation of Liability of Manager. Neither the
Manager nor any of its officers, directors, or employees, nor any
person performing executive, administrative, trading, or other
functions for the Fund (at the direction or request of the
Manager) or the Manager in connection with the Manager's
discharge of its obligations undertaken or reasonably assumed
with respect to this Agreement, shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates,
except for loss resulting from willful misfeasance, bad faith, or
gross negligence in the performance of its or his duties on
behalf of the Fund or from reckless disregard by the Manager or
any such person of the duties of the Manager under this
Agreement.
10. Use of Manager's Name The Fund may use the name
"T. Rowe Price Tax-Exempt Money Fund, Inc." or any other name
derived from the name "T. Rowe Price" only for so long as this
Agreement or any extension, renewal or amendment hereof remains
in effect, including any similar agreement with any organization
which shall have succeeded to the business of the Manager as
investment manager. At such time as this Agreement or any
extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, the Fund will (by
corporate action, if necessary) cease to use any name derived
from the name "T. Rowe Price," any name similar thereto or any
other name indicating that it is advised by or otherwise
connected with the Manager, or with any organization which shall
have succeeded to the Manager's business as investment manager.
PAGE 7
11. Term of Agreement. The term of this Agreement
shall begin on the date first above written, and unless sooner
terminated as hereinafter provided, this Agreement shall remain
in effect through April 30, 1988. Thereafter, this Agreement
shall continue in effect from year to year, subject to the
termination provisions and all other terms and conditions hereof,
so long as: (a) such continuation shall be specifically approved
at least annually by the board of directors of the Fund or by
vote of a majority of the outstanding voting securities of the
Fund and, concurrently with such approval by the board of
directors or prior to such approval by the holders of the
outstanding voting securities of the Fund, as the case may be, by
the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the directors of the
Fund who are not parties to this Agreement or interested persons
of any such party; and (b) the Manager shall not have notified
the Fund, in writing, at least 60 days prior to April 30, 1988 or
prior to April 30th of any year thereafter, that it does not
desire such continuation. The Manager shall furnish to the Fund,
promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.
12. Amendment and Assignment of Agreement. This
Agreement may not be amended or assigned without the affirmative
vote of a majority of the outstanding voting securities of the
Fund, and this Agreement shall automatically and immediately
terminate in the event of its assignment.
13. Termination of Agreement. This Agreement may be
terminated by either party hereto, without the payment of any
penalty, upon 60 days' prior notice in writing to the other
party; provided, that in the case of termination by the Fund such
action shall have been authorized by resolution of a majority of
the directors of the Fund who are not parties to this Agreement
or interested persons of any such party, or by vote of a majority
of the outstanding voting securities of the Fund.
14. Miscellaneous.
A. Captions. The captions in this Agreement are
included for convenience of reference only and in no way define
or delineate any of the provisions hereof or otherwise affect
their construction or effect.
B. Interpretation. Nothing herein contained shall be
deemed to require the Fund to take any action contrary to its
Articles of Incorporation or By-Laws, or any applicable statutory
or regulatory requirement to which it is subject or by which it
is bound, or to relieve or deprive the board of directors of the
Fund of its responsibility for and control of the conduct of the
affairs of the Fund.
<PAGE>
PAGE 8
C. Definitions. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the Act shall be
resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested person," "assignment," and "affiliated person," as
used in Paragraphs 2, 8, 11, 12, and 13 hereof, shall have the
meanings assigned to them by Section 2(a) of the Act. In
addition, where the effect of a requirement of the Act reflected
in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized and their respective corporate seals to be
hereunto affixed, as of the day and year first above written.
Attest: T. ROWE PRICE TAX-EXEMPT MONEY FUND,
INC.
By:
Secretary
Attest: T. ROWE PRICE ASSOCIATES, INC.
By:
Secretary
pat/TEMFAdvAgt
<PAGE>
PAGE 9
INVESTMENT MANAGEMENT AGREEMENT
Between
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
and
T. ROWE PRICE ASSOCIATES, INC.
INVESTMENT MANAGEMENT AGREEMENT, made as of the 1st day
of July, 1987, by and between T. ROWE PRICE TAX-FREE INCOME FUND,
INC., a corporation organized and existing under the laws of the
State of Maryland (hereinafter called the "Fund"), and T. ROWE
PRICE ASSOCIATES, INC., a corporation organized and existing
under the laws of the State of Maryland (hereinafter called the
"Manager").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end
management investment company and is registered as such under the
federal Investment Company Act of 1940, as amended (the "Act");
and
WHEREAS, the Manager is engaged principally in the
business of rendering investment supervisory services and is
registered as an investment adviser under the federal Investment
Advisers Act of l940, as amended; and
WHEREAS, the Fund desires the Manager to render
investment supervisory services to the Fund in the manner and on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Duties and Responsibilities of Manager.
A. Investment Advisory Services. The Manager shall
act as investment manager and shall supervise and direct the
investments of the Fund in accordance with the Fund's investment
objective, program and restrictions as provided in its
prospectus, as amended from time to time, and such other
limitations as the Fund may impose by notice in writing to the
Manager. The Manager shall obtain and evaluate such information
relating to the economy, industries, businesses, securities
markets and securities as it may deem necessary or useful in the
discharge of its obligations hereunder and shall formulate and
implement a continuing program for the management of the assets
and resources of the Fund in a manner consistent with its
investment objective. In furtherance of this duty, the Manager,
as agent and attorney-in-fact with respect to the Fund, is
authorized, in its discretion and without prior consultation with
the Fund, to:
(i) buy, sell, exchange, convert, lend, and
otherwise trade in any stocks, bonds, and other
securities or assets; and
(ii) place orders and negotiate the commissions (if
any) for the execution of transactions in securities
with or through such brokers, dealers, underwriters
or issuers as the Manager may select.
<PAGE>
PAGE 10
B. Financial, Accounting, and Administrative
Services. The Manager shall maintain the corporate existence and
corporate records of the Fund; maintain the registrations and
qualifications of Fund shares under federal and state law;
monitor the financial, accounting, and administrative functions
of the Fund; maintain liaison with the various agents employed by
the Fund (including the Fund's transfer agent, custodian,
independent accountants and legal counsel) and assist in the
coordination of their activities on behalf of the Fund.
C. Reports to Fund. The Manager shall furnish to or
place at the disposal of the Fund such information, reports,
evaluations, analyses and opinions as the Fund may, at any time
or from time to time, reasonably request or as the Manager may
deem helpful to the Fund.
D. Reports and Other Communications to Fund
Shareholders. The Manager shall assist the Fund in developing
all general shareholder communications, including regular
shareholder reports.
E. Fund Personnel. The Manager agrees to permit
individuals who are officers or employees of the Manager to serve
(if duly elected or appointed) as officers, directors, members of
any committee of directors, members of any advisory board, or
members of any other committee of the Fund, without remuneration
from or other cost to the Fund.
F. Personnel, Office Space, and Facilities of
Manager. The Manager at its own expense shall furnish or provide
and pay the cost of such office space, office equipment, office
personnel, and office services as the Manager requires in the
performance of its investment advisory and other obligations
under this Agreement.
2. Allocation of Expenses.
A. Expenses Paid by Manager.
(1) Salaries and Fees of Officers. The Manager
shall pay all salaries, expenses, and fees of the
officers and directors of the Fund who are affiliated
with the Manager.
(2) Assumption of Fund Expenses by Manager. The
payment or assumption by the Manager of any expense
of the Fund that the Manager is not required by this
Agreement to pay or assume shall not obligate the
Manager to pay or assume the same or any similar
expense of the Fund on any subsequent occasion.
B. Expenses Paid by Fund. The Fund shall bear all
expenses of its organization, operations, and business not
specifically assumed or agreed to be paid by the Manager as
provided in this Agreement. In particular, but without limiting
the generality of the foregoing, the Fund shall pay:
(1) Custody and Accounting Services. All
expenses of the transfer, receipt, safekeeping,
servicing and accounting for the Fund's cash,
securities, and other property, including all charges
of depositories, custodians, and other agents, if
any;
<PAGE>
PAGE 11
(2) Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts,
including all charges of the Fund's transfer,
shareholder recordkeeping, dividend disbursing,
redemption, and other agents, if any;
(3) Shareholder Communications. All expenses of
preparing, setting in type, printing, and
distributing reports and other communications to
shareholders;
(4) Shareholder Meetings. All expenses
incidental to holding meetings of Fund shareholders,
including the printing of notices and proxy material,
and proxy solicitation therefor;
(5) Prospectuses. All expenses of preparing,
setting in type, and printing of annual or more
frequent revisions of the Fund's prospectus and of
mailing them to shareholders;
(6) Pricing. All expenses of computing the
Fund's net asset value per share, including the cost
of any equipment or services used for obtaining price
quotations;
(7) Communication Equipment. All charges for
equipment or services used for communication between
the Manager or the Fund and the custodian, transfer
agent or any other agent selected by the Fund;
(8) Legal and Accounting Fees and Expenses. All
charges for services and expenses of the Fund's legal
counsel and independent auditors;
(9) Directors' Fees and Expenses. All
compensation of directors, other than those
affiliated with the Manager, and all expenses
incurred in connection with their service;
(10) Federal Registration Fees. All fees and
expenses of registering and maintaining the
registration of the Fund under the Act and the
registration of the Fund's shares under the
Securities Act of 1933, as amended (the "'33 Act"),
including all fees and expenses incurred in
connection with the preparation, setting in type,
printing, and filing of any registration statement
and prospectus under the '33 Act or the Act, and any
amendments or supplements that may be made from time
to time;
(11) State Registration Fees. All fees and
expenses of qualifying and maintaining qualification
of the Fund and of the Fund's shares for sale under
securities laws of various states or jurisdictions,
and of registration and qualification of the Fund
under all other laws applicable to the Fund or its
business activities (including registering the Fund
as a broker-dealer, or any officer of the Fund or any
person as agent or salesman of the Fund in any
state);
(12) Issue and Redemption of Fund Shares. All
expenses incurred in connection with the issue,
redemption, and transfer of Fund shares, including
the expense of confirming all share transactions, and
of preparing and transmitting the Fund's stock
certificates;
<PAGE>
PAGE 12
(13) Bonding and Insurance. All expenses of
bond, liability, and other insurance coverage
required by law or deemed advisable by the Fund's
board of directors;
(14) Brokerage Commissions. All brokers'
commissions and other charges incident to the
purchase, sale, or lending of the Fund's portfolio
securities;
(15) Taxes. All taxes or governmental fees
payable by or with respect of the Fund to federal,
state, or other governmental agencies, domestic or
foreign, including stamp or other transfer taxes;
(16) Trade Association Fees. All fees, dues, and
other expenses incurred in connection with the Fund's
membership in any trade association or other
investment organization; and
(17) Nonrecurring and Extraordinary Expenses.
Such nonrecurring expenses as may arise, including
the costs of actions, suits, or proceedings to which
the Fund is a party and the expenses the Fund may
incur as a result of its legal obligation to provide
indemnification to its officers, directors, and
agents.
3. Management Fee. The Fund shall pay the Manager a
fee ("Fee") which will consist of two components: a Group
Management Fee ("Group Fee"), and an Individual Fund Fee ("Fund
Fee"). The Fee shall be paid monthly to the Manager on the first
business day of the next succeeding calendar month and shall be
calculated as follows:
A. Group Fee. The monthly Group Fee ("Monthly Group
Fee") shall be the sum of the daily Group Fee accruals ("Daily
Group Fee Accruals") for each month. The Daily Group Fee Accrual
for any particular day will be computed by multiplying the Price
Funds' group fee accrual as determined below ("Daily Price Funds'
Group Fee Accrual") by the ratio of the Fund's 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 shall be 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:
Price Funds Annual Group
Base Fee Rate for Each Level of Assets
______________________________________
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
0.330% Next $10 billion
0.320% Thereafter
<PAGE>
PAGE 13
The Price Funds shall include all the mutual funds
distributed by T. Rowe Price Investment Services, Inc. (except
for the T. Rowe Price Institutional Trust and any 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 shall be 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.
B. Fund Fee. The monthly Fund Fee ("Monthly Fund
Fee") shall be the sum of the daily Fund Fee accruals ("Daily
Fund Fee Accruals") for each month. The Daily Fund Fee Accrual
for any particular day will be computed by multiplying the
fraction of one (1) over the number of calendar days in the year
by the Fund Fee Rate of 0.15% and multiplying this product 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.
C. Expense Limitation. To the extent that the
aggregate expenses of every character incurred by the Fund in any
fiscal year, including but not limited to Fees of the Manager
computed as hereinabove set forth, but excluding interest, taxes,
brokerage, and other expenditures which are capitalized in
accordance with generally accepted accounting principles and
extraordinary expenses, shall exceed the limit ("State Expense
Limit") prescribed by any state in which the Fund's shares are
qualified for sale, such excess amount shall be the liability of
the Manager to pay in the manner specified below. To determine
the Manager's liability for the Fund's expenses, the expenses of
the Fund shall be annualized monthly as of the last day of the
month. If the annualized expenses for any month exceed the State
Expense Limit, the payment of the Fee for such month (if there be
any) shall be reduced by such excess ("Excess Amount") and in the
event the Excess Amount exceeds the amount due as the Fee, the
Manager shall remit to the Fund the difference between the Excess
Amount and the amount due as the Fee; provided, however, that an
adjustment shall be made on or before the last day of the first
month of the next succeeding fiscal year if the aggregate
expenses for the fiscal year do not exceed the State Expense
Limit.
D. Proration of Fee. If this Agreement becomes
effective or terminates before the end of any month, the Fee for
the period from the effective date to the end of such month or
from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such
effectiveness or termination occurs.
4. Brokerage. Subject to the approval of the board of
directors of the Fund, the Manager, in carrying out its duties
under Paragraph 1.A., may cause the Fund to pay a broker-dealer
which furnishes brokerage or research services [as such services
are defined under Section 28(e) of the Securities Exchange Act of
1934, as amended (the "'34 Act")], a higher commission than that
which might be charged by another broker-dealer which does not
furnish brokerage or research services or which furnishes
brokerage or research services deemed to be of lesser value, if
such commission is deemed reasonable in relation to the brokerage
and research services provided by the broker-dealer, viewed in
terms of either that particular transaction or the overall
responsibilities of the Manager with respect to the accounts as
to which it exercises investment discretion (as such term is
defined under Section 3(a)(35) of the '34 Act).
5. Manager's Use of the Services of Others. The
Manager may (at its cost except as contemplated by Paragraph 4 of
this Agreement) employ, retain or otherwise avail itself of the
services or facilities of other persons or organizations for the
purpose of providing the Manager or the Fund with such
statistical and other factual information, such advice regarding
economic factors and trends, such advice as to occasional
transactions in specific securities or such other information,
advice or assistance as the Manager may deem necessary,
appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to the Fund, or in the discharge
of Manager's overall responsibilities with respect to the other
accounts which it serves as investment manager.
PAGE 14
6. Ownership of Records. All records required to be
maintained and preserved by the Fund pursuant to the provisions
of rules or regulations of the Securities and Exchange Commission
under Section 31(a) of the Act and maintained and preserved by
the Manager on behalf of the Fund are the property of the Fund
and will be surrendered by the Manager promptly on request by the
Fund.
7. Reports to Manager. The Fund shall furnish or
otherwise make available to the Manager such prospectuses,
financial statements, proxy statements, reports, and other
information relating to the business and affairs of the Fund as
the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this
Agreement.
8. Services to Other Clients. Nothing herein contained
shall limit the freedom of the Manager or any affiliated person
of the Manager to render investment supervisory and corporate
administrative services to other investment companies, to act as
investment manager or investment counselor to other persons,
firms or corporations, or to engage in other business activities;
but so long as this Agreement or any extension, renewal or
amendment hereof shall remain in effect or until the Manager
shall otherwise consent, the Manager shall be the only investment
manager to the Fund.
9. Limitation of Liability of Manager. Neither the
Manager nor any of its officers, directors, or employees, nor any
person performing executive, administrative, trading, or other
functions for the Fund (at the direction or request of the
Manager) or the Manager in connection with the Manager's
discharge of its obligations undertaken or reasonably assumed
with respect to this Agreement, shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates,
except for loss resulting from willful misfeasance, bad faith, or
gross negligence in the performance of its or his duties on
behalf of the Fund or from reckless disregard by the Manager or
any such person of the duties of the Manager under this
Agreement.
10. Use of Manager's Name. The Fund may use the name
"T. Rowe Price Tax-Free Income Fund, Inc." or any other name
derived from the name "T. Rowe Price" only for so long as this
Agreement or any extension, renewal or amendment hereof remains
in effect, including any similar agreement with any organization
which shall have succeeded to the business of the Manager as
investment manager. At such time as this Agreement or any
extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, the Fund will (by
corporate action, if necessary) cease to use any name derived
from the name "T. Rowe Price," any name similar thereto or any
other name indicating that it is advised by or otherwise
connected with the Manager, or with any organization which shall
have succeeded to the Manager's business as investment manager.
11. Term of Agreement. The term of this Agreement
shall begin on the date first above written, and unless sooner
terminated as hereinafter provided, this Agreement shall remain
in effect through April 30, l988. Thereafter, this Agreement
shall continue in effect from year to year, subject to the
termination provisions and all other terms and conditions hereof,
so long as: (a) such continuation shall be specifically approved
at least annually by the board of directors of the Fund or by
vote of a majority of the outstanding voting securities of the
Fund and, concurrently with such approval by the board of
directors or prior to such approval by the holders of the
outstanding voting securities of the Fund, as the case may be, by
the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the directors of the
Fund who are not parties to this Agreement or interested persons
of any such party; and (b) the Manager shall not have notified
the Fund, in writing, at least 60 days prior to April 30, l988 or
prior to April 30th of any year thereafter, that it does not
desire such continuation. The Manager shall furnish to the Fund,
promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.
12. Amendment and Assignment of Agreement. This
Agreement may not be amended or assigned without the affirmative
vote of a majority of the outstanding voting securities of the
Fund, and this Agreement shall automatically and immediately
terminate in the event of its assignment.
PAGE 15
13. Termination of Agreement. This Agreement may be
terminated by either party hereto, without the payment of any
penalty, upon 60 days' prior notice in writing to the other
party; provided, that in the case of termination by the Fund such
action shall have been authorized by resolution of a majority of
the directors of the Fund who are not parties to this Agreement
or interested persons of any such party, or by vote of a majority
of the outstanding voting securities of the Fund.
14. Miscellaneous.
A. Captions. The captions in this Agreement are
included for convenience of reference only and in no way define
or delineate any of the provisions hereof or otherwise affect
their construction or effect.
B. Interpretation. Nothing herein contained shall be
deemed to require the Fund to take any action contrary to its
Articles of Incorporation or By-Laws, or any applicable statutory
or regulatory requirement to which it is subject or by which it
is bound, or to relieve or deprive the board of directors of the
Fund of its responsibility for and control of the conduct of the
affairs of the Fund.
C. Definitions. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the Act shall be
resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested person," "assignment," and "affiliated person," as
used in Paragraphs 2, 8, 11, 12, and 13 hereof, shall have the
meanings assigned to them by Section 2(a) of the Act. In
addition, where the effect of a requirement of the Act reflected
in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
<PAGE>
PAGE 16
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized and their respective corporate seals to be
hereunto affixed, as of the day and year first above written.
Attest: T. ROWE PRICE TAX-FREE INCOME FUND,
INC.
Secretary
Attest: T. ROWE PRICE ASSOCIATES, INC.
Secretary
pat/TFIAdvAgt
<PAGE>
PAGE 17
INVESTMENT MANAGEMENT AGREEMENT
Between
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
and
T. ROWE PRICE ASSOCIATES, INC.
INVESTMENT MANAGEMENT AGREEMENT, made as of the 1st day
of July, 1987, by and between T. ROWE PRICE TAX-FREE HIGH YIELD
FUND, INC., a corporation organized and existing under the laws
of the State of Maryland (hereinafter called the "Fund"), and T.
ROWE PRICE ASSOCIATES, INC., a corporation organized and existing
under the laws of the State of Maryland (hereinafter called the
"Manager").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end
management investment company and is registered as such under the
federal Investment Company Act of l940, as amended (the "Act");
and
WHEREAS, the Manager is engaged principally in the
business of rendering investment supervisory services and is
registered as an investment adviser under the federal Investment
Advisers Act of l940, as amended; and
WHEREAS, the Fund desires the Manager to render
investment supervisory services to the Fund in the manner and on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Duties and Responsibilities of Manager.
A. Investment Advisory Services. The Manager shall
act as investment manager and shall supervise and direct the
investments of the Fund in accordance with the Fund's investment
objective, program and restrictions as provided in its
prospectus, as amended from time to time, and such other
limitations as the Fund may impose by notice in writing to the
Manager. The Manager shall obtain and evaluate such information
relating to the economy, industries, businesses, securities
markets and securities as it may deem necessary or useful in the
discharge of its obligations hereunder and shall formulate and
implement a continuing program for the management of the assets
and resources of the Fund in a manner consistent with its
investment objective. In furtherance of this duty, the Manager,
as agent and attorney-in-fact with respect to the Fund, is
authorized, in its discretion and without prior consultation with
the Fund, to:
(i) buy, sell, exchange, convert, lend, and
otherwise trade in any stocks, bonds, and other
securities or assets; and
<PAGE>
PAGE 18
(ii) place orders and negotiate the commissions (if
any) for the execution of transactions in securities
with or through such brokers, dealers, underwriters
or issuers as the Manager may select.
B. Financial, Accounting, and Administrative
Services. The Manager shall maintain the corporate existence and
corporate records of the Fund; maintain the registrations and
qualifications of Fund shares under federal and state law;
monitor the financial, accounting, and administrative functions
of the Fund; maintain liaison with the various agents employed by
the Fund (including the Fund's transfer agent, custodian,
independent accountants and legal counsel) and assist in the
coordination of their activities on behalf of the Fund.
C. Reports to Fund. The Manager shall furnish to
or place at the disposal of the Fund such information, reports,
evaluations, analyses and opinions as the Fund may, at any time
or from time to time, reasonably request or as the Manager may
deem helpful to the Fund.
D. Reports and Other Communications to Fund
Shareholders. The Manager shall assist the Fund in developing
all general shareholder communications, including regular
shareholder reports.
E. Fund Personnel. The Manager agrees to permit
individuals who are officers or employees of the Manager to serve
(if duly elected or appointed) as officers, directors, members of
any committee of directors, members of any advisory board, or
members of any other committee of the Fund, without remuneration
from or other cost to the Fund.
F. Personnel, Office Space, and Facilities of
Manager. The Manager at its own expense shall furnish or provide
and pay the cost of such office space, office equipment, office
personnel, and office services as the Manager requires in the
performance of its investment advisory and other obligations
under this Agreement.
2. Allocation of Expenses.
A. Expenses Paid by Manager.
(1) Salaries and Fees of Officers. The Manager
shall pay all salaries, expenses, and fees of the
officers and directors of the Fund who are affiliated
with the Manager.
(2) Assumption of Fund Expenses by Manager. The
payment or assumption by the Manager of any expense
of the Fund that the Manager is not required by this
Agreement to pay or assume shall not obligate the
Manager to pay or assume the same or any similar
expense of the Fund on any subsequent occasion.
B. Expenses Paid by Fund. The Fund shall bear all
expenses of its organization, operations, and business not
specifically assumed or agreed to be paid by the Manager as
provided in this Agreement. In particular, but without limiting
the generality of the foregoing, the Fund shall pay:
<PAGE>
PAGE 19
(1) Custody and Accounting Services. All expenses
of the transfer, receipt, safekeeping, servicing and
accounting for the Fund's cash, securities, and other
property, including all charges of depositories,
custodians, and other agents, if any;
(2) Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts,
including all charges of the Fund's transfer,
shareholder recordkeeping, dividend disbursing,
redemption, and other agents, if any;
(3) Shareholder Communications. All expenses of
preparing, setting in type, printing, and
distributing reports and other communications to
shareholders;
(4) Shareholder Meetings. All expenses incidental
to holding meetings of Fund shareholders, including
the printing of notices and proxy material, and proxy
solicitation therefor;
(5) Prospectuses. All expenses of preparing,
setting in type, and printing of annual or more
frequent revisions of the Fund's prospectus and of
mailing them to shareholders;
(6) Pricing. All expenses of computing the Fund's
net asset value per share, including the cost of any
equipment or services used for obtaining price
quotations;
(7) Communication Equipment. All charges for
equipment or services used for communication between
the Manager or the Fund and the custodian, transfer
agent or any other agent selected by the Fund;
(8) Legal and Accounting Fees and Expenses. All
charges for services and expenses of the Fund's legal
counsel and independent auditors;
(9) Directors' Fees and Expenses. All
compensation of directors, other than those
affiliated with the Manager, and all expenses
incurred in connection with their service;
(10) Federal Registration Fees. All fees and
expenses of registering and maintaining the
registration of the Fund under the Act and the
registration of the Fund's shares under the
Securities Act of 1933, as amended (the "'33 Act"),
including all fees and expenses incurred in
connection with the preparation, setting in type,
printing, and filing of any registration statement
and prospectus under the '33 Act or the Act, and any
amendments or supplements that may be made from time
to time;
(11) State Registration Fees. All fees and
expenses of qualifying and maintaining qualification
of the Fund and of the Fund's shares for sale under
securities laws of various states or jurisdictions,
and of registration and qualification of the Fund
under all other laws applicable to the Fund or its
business activities (including registering the Fund
as a broker-dealer, or any officer of the Fund or any
person as agent or salesman of the Fund in any
state);
<PAGE>
PAGE 20
(12) Issue and Redemption of Fund Shares. All
expenses incurred in connection with the issue,
redemption, and transfer of Fund shares, including
the expense of confirming all share transactions, and
of preparing and transmitting the Fund's stock
certificates;
(13) Bonding and Insurance. All expenses of bond,
liability, and other insurance coverage required by
law or deemed advisable by the Fund's board of
directors;
(14) Brokerage Commissions. All brokers'
commissions and other charges incident to the
purchase, sale, or lending of the Fund's portfolio
securities;
(15) Taxes. All taxes or governmental fees payable
by or with respect of the Fund to federal, state, or
other governmental agencies, domestic or foreign,
including stamp or other transfer taxes;
(16) Trade Association Fees. All fees, dues, and
other expenses incurred in connection with the Fund's
membership in any trade association or other
investment organization; and
(17) Nonrecurring and Extraordinary Expenses. Such
nonrecurring expenses as may arise, including the
costs of actions, suits, or proceedings to which the
Fund is a party and the expenses the Fund may incur
as a result of its legal obligation to provide
indemnification to its officers, directors, and
agents.
3. Management Fee. The Fund shall pay the Manager a
fee ("Fee") which will consist of two components: a Group
Management Fee ("Group Fee"), and an Individual Fund Fee ("Fund
Fee"). The Fee shall be paid monthly to the Manager on the first
business day of the next succeeding calendar month and shall be
calculated as follows:
A. Group Fee. The monthly Group Fee ("Monthly Group
Fee") shall be the sum of the daily Group Fee accruals ("Daily
Group Fee Accruals") for each month. The Daily Group Fee Accrual
for any particular day will be computed by multiplying the Price
Funds' group fee accrual as determined below ("Daily Price Funds'
Group Fee Accrual") by the ratio of the Fund's 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 shall be 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:
<PAGE>
PAGE 21
Price Funds Annual Group
Base Fee Rate for Each Level of Assets
______________________________________
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
0.330% Next $10 billion
0.320% Thereafter
The Price Funds shall include all the mutual funds
distributed by T. Rowe Price Investment Services, Inc. (except
for the T. Rowe Price Institutional Trust and any 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 shall be 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.
B. Fund Fee. The monthly Fund Fee ("Monthly Fund
Fee") shall be the sum of the daily Fund Fee accruals ("Daily
Fund Fee Accruals") for each month. The Daily Fund Fee Accrual
for any particular day will be computed by multiplying the
fraction of one (1) over the number of calendar days in the year
by the Fund Fee Rate of 0.30% and multiplying this product 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.
C. Expense Limitation. To the extent that the
aggregate expenses of every character incurred by the Fund in any
fiscal year, including but not limited to Fees of the Manager
computed as hereinabove set forth, but excluding interest, taxes,
brokerage, and other expenditures which are capitalized in
accordance with generally accepted accounting principles and
extraordinary expenses, shall exceed the limit ("State Expense
Limit") prescribed by any state in which the Fund's shares are
qualified for sale, such excess amount shall be the liability of
the Manager to pay in the manner specified below. To determine
the Manager's liability for the Fund's expenses, the expenses of
the Fund shall be annualized monthly as of the last day of the
month. If the annualized expenses for any month exceed the State
Expense Limit, the payment of the Fee for such month (if there be
any) shall be reduced by such excess ("Excess Amount") and in the
event the Excess Amount exceeds the amount due as the Fee, the
Manager shall remit to the Fund the difference between the Excess
Amount and the amount due as the Fee; provided, however, that an
adjustment shall be made on or before the last day of the first
month of the next succeeding fiscal year if the aggregate
expenses for the fiscal year do not exceed the State Expense
Limit.
However, as part of the consideration for the Fund's
entering into this Agreement, the Manager hereby agrees that
through February 28, 1986, the expense limit will be 1.0% of the
average daily net assets of the Fund ("1.0% Expense Limitation");
provided, however, that any amount paid or assumed by the Manager
pursuant to the 1.0% Expense Limitation (but not over any State
Expense Limit) shall be reimbursed by the Fund to the Manager
after February 28, 1986; provided, that no such reimbursement
shall be made to the Manager after February 28, 1988; provided
further, however, that such reimbursement shall only be made to
the extent that it does not result in the Fund's aggregate
expenses exceeding an expense limit of 1.0%.
D. Proration of Fee. If this Agreement becomes
effective or terminates before the end of any month, the Fee for
the period from the effective date to the end of such month or
from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such
effectiveness or termination occurs.
PAGE 22
4. Brokerage. Subject to the approval of the board of
directors of the Fund, the Manager, in carrying out its duties
under Paragraph 1.A., may cause the Fund to pay a broker-dealer
which furnishes brokerage or research services [as such services
are defined under Section 28(e) of the Securities Exchange Act of
l934, as amended (the "'34 Act")], a higher commission than that
which might be charged by another broker-dealer which does not
furnish brokerage or research services or which furnishes
brokerage or research services deemed to be of lesser value, if
such commission is deemed reasonable in relation to the brokerage
and research services provided by the broker-dealer, viewed in
terms of either that particular transaction or the overall
responsibilities of the Manager with respect to the accounts as
to which it exercises investment discretion (as such term is
defined under Section 3(a)(35) of the '34 Act).
5. Manager's Use of the Services of Others. The
Manager may (at its cost except as contemplated by Paragraph 4 of
this Agreement) employ, retain or otherwise avail itself of the
services or facilities of other persons or organizations for the
purpose of providing the Manager or the Fund with such
statistical and other factual information, such advice regarding
economic factors and trends, such advice as to occasional
transactions in specific securities or such other information,
advice or assistance as the Manager may deem necessary,
appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to the Fund, or in the discharge
of Manager's overall responsibilities with respect to the other
accounts which it serves as investment manager.
6. Ownership of Records. All records required to be
maintained and preserved by the Fund pursuant to the provisions
of rules or regulations of the Securities and Exchange Commission
under Section 31(a) of the Act and maintained and preserved by
the Manager on behalf of the Fund are the property of the Fund
and will be surrendered by the Manager promptly on request by the
Fund.
7. Reports to Manager. The Fund shall furnish or
otherwise make available to the Manager such prospectuses,
financial statements, proxy statements, reports, and other
information relating to the business and affairs of the Fund as
the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this
Agreement.
8. Services to Other Clients. Nothing herein contained
shall limit the freedom of the Manager or any affiliated person
of the Manager to render investment supervisory and corporate
administrative services to other investment companies, to act as
investment manager or investment counselor to other persons,
firms or corporations, or to engage in other business activities;
but so long as this Agreement or any extension, renewal or
amendment hereof shall remain in effect or until the Manager
shall otherwise consent, the Manager shall be the only investment
manager to the Fund.
<PAGE>
PAGE 23
9. Limitation of Liability of Manager. Neither the
Manager nor any of its officers, directors, or employees, nor any
person performing executive, administrative, trading, or other
functions for the Fund (at the direction or request of the
Manager) or the Manager in connection with the Manager's
discharge of its obligations undertaken or reasonably assumed
with respect to this Agreement, shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates,
except for loss resulting from willful misfeasance, bad faith, or
gross negligence in the performance of its or his duties on
behalf of the Fund or from reckless disregard by the Manager or
any such person of the duties of the Manager under this
Agreement.
10. Use of Manager's Name The Fund may use the name
"T. Rowe Price Tax-Free High Yield Fund, Inc." or any other name
derived from the name "T. Rowe Price" only for so long as this
Agreement or any extension, renewal or amendment hereof remains
in effect, including any similar agreement with any organization
which shall have succeeded to the business of the Manager as
investment manager. At such time as this Agreement or any
extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, the Fund will (by
corporate action, if necessary) cease to use any name derived
from the name "T. Rowe Price," any name similar thereto or any
other name indicating that it is advised by or otherwise
connected with the Manager, or with any organization which shall
have succeeded to the Manager's business as investment manager.
11. Term of Agreement. The term of this Agreement
shall begin on the date first above written, and unless sooner
terminated as hereinafter provided, this Agreement shall remain
in effect through April 30, 1988. Thereafter, this Agreement
shall continue in effect from year to year, subject to the
termination provisions and all other terms and conditions hereof,
so long as: (a) such continuation shall be specifically approved
at least annually by the board of directors of the Fund or by
vote of a majority of the outstanding voting securities of the
Fund and, concurrently with such approval by the board of
directors or prior to such approval by the holders of the
outstanding voting securities of the Fund, as the case may be, by
the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the directors of the
Fund who are not parties to this Agreement or interested persons
of any such party; and (b) the Manager shall not have notified
the Fund, in writing, at least 60 days prior to April 30, 1988 or
prior to April 30th of any year thereafter, that it does not
desire such continuation. The Manager shall furnish to the Fund,
promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.
12. Amendment and Assignment of Agreement. This
Agreement may not be amended or assigned without the affirmative
vote of a majority of the outstanding voting securities of the
Fund, and this Agreement shall automatically and immediately
terminate in the event of its assignment.
13. Termination of Agreement. This Agreement may be
terminated by either party hereto, without the payment of any
penalty, upon 60 days' prior notice in writing to the other
party; provided, that in the case of termination by the Fund such
action shall have been authorized by resolution of a majority of
the directors of the Fund who are not parties to this Agreement
or interested persons of any such party, or by vote of a majority
of the outstanding voting securities of the Fund.
<PAGE>
PAGE 24
14. Miscellaneous.
A. Captions. The captions in this Agreement are
included for convenience of reference only and in no way define
or delineate any of the provisions hereof or otherwise affect
their construction or effect.
B. Interpretation. Nothing herein contained shall be
deemed to require the Fund to take any action contrary to its
Articles of Incorporation or By-Laws, or any applicable statutory
or regulatory requirement to which it is subject or by which it
is bound, or to relieve or deprive the board of directors of the
Fund of its responsibility for and control of the conduct of the
affairs of the Fund.
C. Definitions. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the Act shall be
resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested person," "assignment," and "affiliated person," as
used in Paragraphs 2, 8, 11, 12, and 13 hereof, shall have the
meanings assigned to them by Section 2(a) of the Act. In
addition, where the effect of a requirement of the Act reflected
in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized and their respective corporate seals to be
hereunto affixed, as of the day and year first above written.
Attest: T. ROWE PRICE TAX-FREE HIGH YIELD FUND,
INC.
By:
Secretary
Attest: T. ROWE PRICE ASSOCIATES, INC.
By:
Secretary
pat/TFHYMgAgt
<PAGE>
PAGE 1
UNDERWRITING AGREEMENT
BETWEEN
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
AND
ROWE PRICE MARKETING, INC.
THIS UNDERWRITING AGREEMENT, made as of this 8th day of
January, 1981, by and between T. ROWE PRICE TAX-EXEMPT MONEY
FUND, INC., a corporation organized and existing under the laws
of the State of Maryland (hereinafter called the "Fund"), and
ROWE PRICE MARKETING, INC., a corporation organized and existing
under the laws of the State of Maryland (hereinafter called the
"Distributor").
WITNESSETH:
WHEREAS, the Fund intends to engage in
business as an open-end management investment company and is
registered as such under the Federal Investment Company Act of
1940, as amended ("ICA-40"); and
WHEREAS, the Distributor proposes to
engage principally in the business of distributing shares of the
investment companies sponsored and managed by either T. Rowe
Price Associates, Inc. ("Price Associates") or Rowe Price-Fleming
International, Inc. ("Price-Fleming") and is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as
amended, ("SEA-34") and is a member of the National Association
of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the Fund desires the
Distributor to act as the distributor in the public offering of
its shares;
NOW, THEREFORE, in consideration of the
premises and the mutual promises hereinafter set forth, the
parties hereto agree as follows:
1.Delivery of Fund Documents. The Fund
has furnished Distributor with copies, properly certified or
authenticated, of each of the following:
(a) Articles of Incorporation, dated June 9,
1980, as amended to date.
(b) By-Laws of the Fund as in effect on the
date hereof.
(c) Resolutions of the Board of Directors of
the Fund selecting Distributor as
principal underwriter and approving this
form of agreement.
The Fund shall furnish the Distributor
from time to time with copies, properly certified or
authenticated, of all the amendments of, or supplements to, the
foregoing, if any.
The Fund shall furnish Distributor
promptly with properly certified or authenticated copies of any
registration statements filed by it with the Securities and
Exchange Commission under the Securities Act of 1933, as amended,
("SA-33") or ICA-40, together with any financial statements and
exhibits included therein, and all amendments or supplements
thereto hereafter filed.
PAGE 2
2.Sale of Shares. Subject to the
provisions of Paragraphs 3, 4 and 6 hereof, and to such minimum
purchase requirements as may from time to time be currently
indicated in the Fund's Prospectus, the Distributor is authorized
to sell, as agent on behalf of the Fund, shares of the Fund's
capital stock ("Shares") authorized for issuance and registered
under SA-33. Distributor may also sell Shares under offers of
exchange between and among the investment companies for which
Price Associates and/or Price-Fleming act as investment advisers
("Price Funds"). Distributor may also purchase as principal such
Shares for resale to the public. Such sale will be made by
Distributor on behalf of the Fund by accepting unconditional
orders to purchase the Shares placed with Distributor by
investors and such purchases will be made by Distributor only
after acceptance by Distributor of such orders. The sales price
to the public of such Shares shall be the public offering price
as defined in Paragraph 5 hereof.
3.Sale of Shares by Fund. The rights
granted to the Distributor shall be non-exclusive in that the
Fund reserves the right to sell its Shares to investors pursuant
to applications received and accepted by the Fund or its transfer
agent. Further, the Fund reserves the right to issue Shares in
connection with the merger or consolidation of any other
investment company, trust or personal holding company with the
Fund or the Fund's acquisition by the purchase or otherwise, of
all or substantially all of the assets of an investment company,
trust or personal holding company. Any right granted to
Distributor to accept orders for Shares, or to make sales on
behalf of the Fund or to purchase Shares for resale, will not
apply to Shares issued in connection with the merger or
consolidation of any other investment company with the Fund or
its acquisition by purchase or otherwise, of all or substantially
all of the assets of any investment company, trust or personal
holding company, or substantially all of the outstanding shares
or interests of any such entity, and such right shall not apply
to Shares that may be offered by the Fund to shareholders by
virtue of their being shareholders of the Fund.
4.Shares Covered by this Agreement.
This Agreement relates to the issuance and sale of Shares that
are duly authorized and registered and available for sale by the
Fund, including redeemed or repurchased Shares if and to the
extent that they may be legally sold and if, but only if, the
Fund authorizes the Distributor to sell them.
5 Public Offering Price. All Shares
sold by the Distributor pursuant to this Agreement shall be sold
at the public offering price. The public offering price for all
accepted subscriptions will be the net asset value per share, as
determined in the manner provided in the Fund's, Articles of
Incorporation, as now in effect, or as they may be amended (and
as reflected in the Fund's then current Prospectus), next after
the order is accepted by the Distributor. The Distributor will
process orders submitted by brokers for the sale of Shares at the
public offering price exclusive of any commission charged by such
broker to his customer.
6.Suspension of Sales. If and whenever
the determination of net asset value is suspended and until such
suspension is terminated, no further orders for Shares shall be
accepted by the Distributor except such unconditional orders
placed with Distributor before it had knowledge of the
suspension. In addition, the Fund reserves the right to suspend
sales and Distributor's authority to accept orders for Shares on
behalf of the Fund if, in the judgment of the Board of Directors
of the Fund, it is in the best interests of the Fund to do so,
such suspension to continue for such period as may be determined
by the Board of Directors of the Fund; and in that event, no
orders to purchase Shares shall be processed or accepted by the
Distributor on behalf of the Fund while such suspension remains
in effect except for Shares necessary to cover unconditional
orders accepted by Distributor before it had knowledge of the
suspension, unless otherwise directed by the Board of Directors
of the Fund.
7.Solicitation of Orders. In
consideration of the rights granted to the Distributor under this
Agreement, Distributor will use its best efforts (but only in
states in which Distributor may lawfully do so) to obtain from
investors unconditional orders for Shares authorized for issuance
by the Fund and registered under SA-33, provided that Distributor
may in its discretion reject any
PAGE 3
order to purchase shares. This does not obligate the Distributor
to register or maintain its registration as a broker or dealer
under the state securities laws of any jurisdiction if, in the
discretion of the Distributor, such registration is not practical
or feasible. The Fund shall make available to the Distributor at
the expense of the Distributor such number of copies of the
Fund's currently effective Prospectus as the Distributor may
reasonably request. The Fund shale furnish to the Distributor
copies of all information, financial statements and other papers
which the Distributor may reasonably request for use in
connection with the distribution of Shares.
8.Authorized Representations. The Fund
is not authorized by the Distributor to give on behalf of the
Distributor any information or to make any representations other
than the information and representations contained in a
registration statement or prospectus filed with the SEC under SA-
33 and/or ICA-40, covering Shares, as such registration statement
and prospectus may be amended or supplemented from time to time.
Distributor is not authorized by the
Fund to give on behalf of the Fund any information or to make any
representations in connection with the sale of Shares other than
the information and representations contained in a registration
statement or prospectus filed with the Securities and Exchange
Commission ("SEC") under SA-33 and/or ICA-40, covering Shares, as
such registration statement and prospectus may be amended or
supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on behalf of
the Fund for the Distributor's use. This shall not be construed
to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may
deem appropriate. No person other than Distributor is authorized
to act as principal underwriter (as such term is defined in ICA-
40, as amended) for the Fund.
9.Registration and Sale of Additional
Shares. The Fund will, from time to time, use its best efforts to
register under SA-33, such Shares of the Fund as Distributor may
reasonably be expected to sell on behalf of the Fund. In
connection therewith, the Fund hereby agrees to register an
indefinite number of Shares pursuant to Rule 24f-2 under ICA-40,
and to register such Shares as shall be deemed advisable pursuant
to Rule 24e-2 under ICA-40, as amended. The Fund will, in
cooperation with the Distributor, take such action as may be
necessary from time to time to qualify such Shares (so registered
or otherwise qualified for sale under SA-33), in any state
mutually agreeable to the Distributor and the Fund, and to
maintain such qualification.
10.Expenses. The Fund shall pay all fees and expenses:
a.in connection with the preparation, setting
in type and filing of any registration statement and prospectus
under SA-33 and/or ICA-40, and any amendments or supplements that
may be made from time to time;
b. in connection with the registration and
qualification of Shares for sale in the various states in which
the Fund shall determine it advisable to qualify such Shares for
sale. (Including registering the Fund as a broker or dealer or
any officer of the Fund or other person as agent or salesman of
the Fund in any state);
c.of preparing, setting in type, printing and
mailing any report or other communication to shareholders of the
Fund in their capacity as such;
d. of preparing, setting in type, printing
and
mailing Prospectuses annually to
existing shareholders;
PAGE 4
e. in connection with the issue and
transfer of
Shared resulting from the acceptance by
Distributor of orders to purchase Shares
placed with the Distributor by
investors, including the expenses of
confirming such purchase orders; and
f. of any issue taxes or (in the case of
Shares
redeemed) any initial transfer taxes.
The Distributor shall pay (or will enter
into arrangements providing that persons other than Distributor
shall pay) all fees and expenses:
a. of printing and distributing any
Prospectuses
or reports prepared for its use in
connection with the distribution of
Shares to the public;
b. of preparing, setting in type, printing
and
mailing any other literature used by the
Distributor in connection with the
distribution of the Shares to the
public;
c. of advertising in connection with the
distribution
of such Shares to the public;
d. incurred in connection with its
registration
as a broker or dealer or the
registration or qualification of its
officers, directors or representatives
under Federal and state laws; and
e. incurred in connection with the sale and
offering
for sale of Shares which have not been
herein specifically allocated to the
Fund.
11.Conformity With Law. Distributor
agrees that in selling Shares it shall duly conform in all
respects with the laws of the United States and any state in
which such Shares may be offered for sale by Distributor pursuant
to this Agreement and to the rules and regulations of the NASD.
12.Independent Contractor. Distributor
shall be an independent contractor and neither Distributor, nor
any of its officers, directors, employees, or representatives is
or shall be an employee of the Fund in the performance of
Distributor's duties hereunder. Distributor shall be responsible
for its own conduct and the employment, control, and conduct of
its agents and employees and for injury to such agents or
employees or to others through its agents or employees.
Distributor assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all
employee taxes thereunder.
13.Indemnification. Distributor agrees
to indemnify and hold harmless the Fund and each of its
directors, officers, employees, representatives and each person,
if any, who controls the Fund within the meaning of Section 15 of
SA-33 against any and all losses, liabilities, damages, claims or
expenses (including the reasonable costs of investigating or
defending any alleged loss, liability, damage, claim or expense
and reasonable legal counsel fees incurred in connection
therewith) to which the Fund or such of its directors, officers,
employees, representatives or controlling person may become
subject under SA-33, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Shares by any
person which (i) may be based upon any wrongful act by
Distributor or any of Distributor's directors, officers,
employees or representatives, or (ii) may be based upon any
untrue statement or alleged
PAGE 5
untrue statement of a material fact contained in a registration
statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance
upon information furnished to the Fund by Distributor. In no
case (i) is Distributor's indemnity in favor of the Fund, or any
person indemnified to be deemed to protect the Fund or such
indemnified person against any liability to which the Fund or
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
his duties or by reason of his reckless disregard of his
obligations and duties under' this Agreement or (ii) is
Distributor to be liable under its indemnity agreement contained
in this Paragraph with respect to any claim made against the Fund
or any person indemnified unless the Fund or such person, as the
case may be, shall have notified Distributor in writing of the
claim within a reasonable time after the summons or other first
written notification giving information of the nature of the
claim shall have been served upon the Fund or upon such person
(or after the Fund or such person shall have received notice of
such service on any designated agent). However, failure to
notify Distributor of any such claim shall not relieve
Distributor from any liability which Distributor may have to the
Fund or any person against whom such action is brought otherwise
than on account of Distributor's indemnity agreement contained in
this Paragraph.
Distributor shall be entitled to
participate, at its own expense, in the defense, or if
Distributor so elects, to assume the defense of any suit brought
to enforce any such claim, but, if Distributor elects to assume
the defense, such defense shall be conducted by legal counsel
chosen by Distributor and satisfactory to the Fund, to its
directors, officers, employees or representatives, or to any
controlling person or persons, defendant or defendants, in the
suit. In the event that Distributor elects to assume the defense
of any such suit and retain such legal counsel, the Fund, its
directors, officers, employees, representatives or controlling
person or persons, defendant or defendants in the suit, shall
bear the fees and expenses of any additional legal counsel
retained by them. If Distributor does not elect to assume the
defense of any such suit, Distributor will reimburse the Fund,
such directors, officers, employees, representatives or
controlling person or persons, defendant or defendants in such
suit for the reasonable fees and expenses of any legal counsel
retained by them. Distributor agrees to promptly notify the Fund
of the commencement of any litigation or proceedings against it
or any of its directors, officers, employees or representatives
in connection with the issue or sale of any Shares.
The Fund agrees to indemnify and hold
harmless Distributor and each of its directors, officers,
employees, representatives and each person, if any, who controls
Distributor within the meaning of Section 15 of SA-33 against any
and all losses, liabilities, damages, claims or expenses
(including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claim or expense and reasonable
legal counsel fees incurred in connection therewith) to which
Distributor or such of its directors, officers, employees,
representatives or controlling person may become subject under
SA-33, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which
(i) may be based upon any wrongful act by the Fund or any of
Fund's directors, officers, employees or representatives, or (ii)
may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance
upon information furnished to Distributor by the Fund. In no
case (i) is the Fund's indemnity in favor of the Distributor, or
any person indemnified to be deemed to protect the Distributor or
such indemnified person against any liability to which the
Distributor or such person would otherwise be subject by reason
of willful misfeasance, bad faith, or gross negligence in the
performance of his duties or by reason of his reckless disregard
of his obligations and duties under this Agreement, or (ii) is
the Fund to be liable under its indemnity agreement contained in
this Paragraph with respect to any claim made against
Distributor, or person indemnified unless Distributor, or such
person, as the case may be, shall have notified the Fund in
PAGE 6
writing of the claim within a reasonable time after the summons
or other first written notification giving information of the
nature of the claim shall have been served upon Distributor or
upon such person (or after Distributor or such person shall have
received notice of such service on any designated agent).
However, failure to notify the Fund of any such claim shall not
relieve the Fund from any liability which the Fund may have to
Distributor or any person against whom such action is brought
otherwise than on account of the Fund's indemnity agreement
contained in this Paragraph.
The Fund shall be entitled to
participate, at its own expense, in the defense, or, if the Fund
so elects, to assume the defense of any suit brought to enforce
any such claim, but, if the Fund elects to assume the defense,
such defense shall be conducted by legal counsel chosen by the
Fund and satisfactory to Distributor, to its directors, officers,
employees or representatives, or to any controlling person or
persons, defendant or defendants, in the suit. In the event that
the Fund elects to assume the defense of any such suit and retain
such legal counsel, Distributor, its directors, officers,
employees, representatives or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If the
Fund does not elect to assume the defense of any such suit, the
Fund will reimburse Distributor, such directors, officers,
employees, representatives or controlling person or persons,
defendant or defendants in such suit for the reasonable fees and
expenses of any legal counsel retained by them. The Fund agrees
to promptly notify Distributor of the commencement of any
litigation or proceedings against it or any of its directors,
officers, employees or representatives in connection with the
issue or sale of any Shares.
14.Duration and Termination of This
Agreement. This Agreement shall become effective upon its
execution ("effective date") and, unless terminated as provided,
shall remain in effect through June 30, 1982, and from year to
year thereafter, but only so long as such continuance is
specifically approved at least annually by the vote of a majority
of the directors of the Fund who are not interested persons of
Distributor or of the Fund, cast in person at a meeting called
for the purpose of voting on such approval, and by vote of the
directors of the Fund or of a majority of the outstanding voting
securities of the Fund. This Agreement may, on 60 days' written
notice, be terminated at any time, without the payment of any
penalty, by the vote of a majority of the directors of the Fund
who are not interested persons of Distributor or the Fund, by a
vote of a majority of the outstanding voting securities of the
Fund, or by Distributor. This Agreement will automatically
terminate in the event of its assignment. In interpreting the
provisions of this Paragraph 3, the definitions contained in
Section 2(a) of ICA-40 (particularly the definitions of
"interested person", "assignment", and "majority of the
outstanding voting securities") shall be applied.
15.Amendment of this Agreement. No
provisions of this Agreement may be changed, waived, discharged,
or terminated orally, but only by an instrument in writing signed
by the party against which enforcement of the change, waiver,
discharge, or termination is sought. If the Fund should at any
time deem it necessary or advisable in the best interests of the
Fund that any amendment of this Agreement be made in order to
comply with the recommendations or requirements of the SEC or
other governmental authority or to obtain any advantage under
state or Federal tax laws and notifies Distributor of the form of
such amendment, and the reasons therefor, and if Distributor
should decline to assent to such amendment, the Fund may
terminate this Agreement forthwith. If Distributor should at any
time request that a change be made in the Fund's Articles of
Incorporation or By-Laws or in its methods of doing business, in
order to comply with any requirements of Federal law or
regulations of the SEC, or of a national securities association
of which Distributor is or may be a member relating to the sale
of Shares, and the Fund should not make such necessary change
within a reasonable time, Distributor may terminate this
Agreement forthwith.
16.Miscellaneous. It is understood and
expressly stipulated that neither the shareholders of the Fund,
nor the directors of the Fund shall be personally liable
hereunder. The captions in this Agreement are included for
convenience of reference only, and in no way define or delimit
any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be
PAGE 7
executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
17.Notice. Any notice required or
permitted to be given by either party to the other shall be
deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to
the party giving notice: if to the Fund, at 100 East Pratt
Street, Baltimore, Maryland 21202, and if to the Distributor, at
100 East Pratt Street, Baltimore, Maryland 21202.
ATTEST:T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
/s/Lenora V. Hornung /s/Henry H. Hopkins
Lenora V. Hornung Henry H. Hopkins
Secretary Vice President
ATTEST: ROWE PRICE MARKETING, INC.
/s/Lenora V. Hornung /s/H. P. Colhoun
Lenora V. Hornung H. P. Colhoun
Secretary Vice President
<PAGE>
PAGE 8
UNDERWRITING AGREEMENT
BETWEEN
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
AND
T. ROWE PRICE MARKETING, INC.
THIS UNDERWRITING AGREEMENT, made as of the 26th day of
October, 1983, by and between T. ROWE PRICE TAX-FREE SHORT-
INTERMEDIATE FUND, INC., a corporation organized and existing
under the laws of the State of Maryland (hereinafter called the
"Fund"), and T. ROWE PRICE MARKETING, INC., a corporation
organized and existing under the laws of the State of Maryland
(hereinafter called the "Distributor").
WITNESSETH:
WHEREAS, the Fund proposes to engage in business as an
open-end management investment company and to register as such
under the federal Investment Company Act of 1940, as amended
("ICA-40"); and
WHEREAS, the Distributor is engaged principally in the
business of distributing shares of the investment companies
sponsored and managed by either T. Rowe Price Associates, Inc.
("Price Associates") or Rowe Price-Fleming International, Inc.
("Price-Fleming") and is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, ("SEA-34") and is a
member of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, the Fund desires the Distributor to act as the
distributor in the public offering of its shares;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Delivery of Fund Documents. The Fund has
furnished Distributor with copies, properly certified or
authenticated, of each of the following:
(a) Articles of Incorporation, dated October 7,
1983.
(b) By-Laws of the Fund as in effect on the date
hereof.
(c) Resolutions of the Board of Directors of the
Fund selecting Distributor as principal
underwriter and approving this form of
agreement.
The Fund shall furnish the Distributor from time to
time with copies, properly certified or authenticated, of all the
amendments of, or supplements to, the foregoing, if any.
The Fund shall furnish Distributor promptly with
properly certified or authenticated copies of any registration
statements filed by it with the Securities and Exchange
Commission under the Securities Act of
PAGE 9
1933, as amended ("SA-33") or ICA-40, together with any financial
statements and exhibits included therein, and all amendments or
supplements thereto hereafter filed.
2. Sale of Shares. Subject to the provisions of
Paragraphs 3, 4, and 6 hereof, and to such minimum purchase
requirements as may from time to time be currently indicated in
the Fund's prospectus, the Distributor is authorized to sell, as
agent on behalf of the Fund, shares of the Fund's capital stock
("Shares") authorized for issuance and registered under SA-33.
Distributor may also sell Shares under offers of exchange between
and among the investment companies for which Price Associates
and/or Price-Fleming act as investment advisers ("Price Funds").
Distributor may also purchase as principal such Shares for resale
to the public. Such sale will be made by Distributor on behalf
of the Fund by accepting unconditional orders to purchase the
Shares placed with Distributor by investors and such purchases
will be made by Distributor only after acceptance by Distributor
of such orders. The sales price to the public of such Shares
shall be the public offering price as defined in Paragraph 5
hereof.
3. Sale of Shares by Fund. The rights granted to
the Distributor shall be nonexclusive in that the Fund reserves
the right to sell its Shares to investors pursuant to
applications received and accepted by the Fund or its transfer
agent. Further, the Fund reserves the right to issue Shares in
connection with the merger or consolidation of any other
investment company, trust or personal holding company with the
Fund or the Fund's acquisition by the purchase or otherwise, of
all or substantially all of the assets of an investment company,
trust or personal holding company. Any right granted to
Distributor to accept orders for Shares, or to make sales on
behalf of the Fund or to purchase Shares for resale, will not
apply to Shares issued in connection with the merger or
consolidation of any other investment company with the Fund or
its acquisition by purchase or otherwise, of all or substantially
all of the assets of any investment company, trust or personal
holding company, or substantially all of the outstanding shares
or interests of any such entity, and such right shall not apply
to Shares that may be offered by the Fund to shareholders by
virtue of their being shareholders of the Fund.
4. Shares Covered by this Agreement. This Agreement
relates to the issuance and sale of Shares that are duly
authorized, registered, and available for sale by the Fund,
including redeemed or repurchased Shares if and to the extent
that they may be legally sold and if, but only if, the Fund
authorizes the Distributor to sell them.
5. Public Offering Price. All Shares sold by the
Distributor pursuant to this Agreement shall be sold at the
public offering price. The public offering price for all
accepted subscriptions will be the net asset value per share, as
determined in the manner provided in the Fund's Articles of
Incorporation, as now in effect, or as they may be amended (and
as reflected in the Fund's then current prospectus), next after
the order is accepted by the Distributor. The Distributor will
process orders submitted by brokers for the sale of Shares at the
public offering price exclusive of any commission charged by such
broker to his customer.
6. Suspension of Sales. If and whenever the
determination of net asset value is suspended and until such
suspension is terminated, no further orders for Shares shall be
accepted by the Distributor except such unconditional orders
placed with the Distributor before it had knowledge of the
suspension. In addition, the Fund reserves the right to suspend
sales and Distributor's authority to accept orders for Shares on
behalf of the Fund if, in the judgment of the Board of Directors
of the Fund, it is in the best interests of the Fund to do so,
such suspension to continue for such period as may be determined
by the Board of Directors of the Fund; and in that event, no
orders to purchase Shares shall be processed or accepted by the
Distributor on behalf of the Fund while such suspension remains
in effect except for Shares necessary to cover unconditional
orders accepted by Distributor before it had knowledge of the
suspension, unless otherwise directed by the Board of Directors
of the Fund.
7. Solicitation of Orders. In consideration of the
rights granted to the Distributor under this Agreement,
Distributor will use its best efforts (but only in states in
which Distributor may lawfully do
PAGE 10
so) to obtain from investors unconditional orders for Shares
authorized for issuance by the Fund and registered under SA-33,
provided that Distributor may in its discretion reject any order
to purchase Shares. This does not obligate the Distributor to
register or maintain its registration as a broker or dealer under
the state securities laws of any jurisdiction if, in the
discretion of the Distributor, such registration is not practical
or feasible. The Fund shall make available to the Distributor at
the expense of the Distributor such number of copies of the
Fund's currently effective prospectus as the Distributor may
reasonably request. The Fund shall furnish to the Distributor
copies of all information, financial statements and other papers
which the Distributor may reasonably request for use in
connection with the distribution of Shares.
8. Authorized Representations. The Fund is not
authorized by the Distributor to give on behalf of the
Distributor any information or to make any representations other
than the information and representations contained in a
registration statement or prospectus filed with the SEC under
SA-33 and/or ICA-40, covering Shares, as such registration
statement and prospectus may be amended or supplemented from time
to time.
Distributor is not authorized by the Fund to give on
behalf of the Fund any information or to make any representations
in connection with the sale of Shares other than the information
and representations contained in a registration statement or
prospectus filed with the Securities and Exchange Commission
("SEC") under SA-33 and/or ICA-40, covering Shares, as such
registration statement and prospectus may be amended or
supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on behalf of
the Fund for the Distributor's use. This shall not be construed
to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may
deem appropriate. No person other than Distributor is authorized
to act as principal underwriter (as such term is defined in
ICA-40, as amended) for the Fund.
9. Registration and Sale of Additional Shares. The
Fund will, from time to time, use its best efforts to register
under SA-33, such Shares of the Fund as Distributor may
reasonably be expected to sell on behalf of the Fund. In
connection therewith, the Fund hereby agrees to register an
indefinite number of Shares pursuant to Rule 24f-2 under ICA-40,
and to register such Shares as shall be deemed advisable pursuant
to Rule 24e-2 under ICA-40, as amended. The Fund will, in
cooperation with the Distributor, take such action as may be
necessary from time to time to qualify such Shares (so registered
or otherwise qualified for sale under SA-33), in any state
mutually agreeable to the Distributor and the Fund, and to
maintain such qualification.
<PAGE>
PAGE 11
10. Expenses. The Fund shall pay all fees and
expenses:
a. in connection with the preparation, setting
in type and filing of any registration
statement and prospectus under SA-33 and/or
ICA-40, and any amendments or supplements
that may be made from time to time;
b. in connection with the registration and
qualification of Shares for sale in the
various states in which the Fund shall
determine it advisable to qualify such
Shares for sale. (Including registering the
Fund as a broker or dealer or any officer of
the Fund or other person as agent or
salesman of the Fund in any state.);
c. of preparing, setting in type, printing and
mailing any report or other communication to
shareholders of the Fund in their capacity
as such;
d. of preparing, setting in type, printing and
mailing prospectuses annually to existing
shareholders;
e. in connection with the issue and transfer of
Shares resulting from the acceptance by
Distributor of orders to purchase Shares
placed with the Distributor by investors,
including the expenses of confirming such
purchase orders; and
f. of any issue taxes or (in the case of Shares
redeemed) any initial transfer taxes.
The Distributor shall pay (or will enter into
arrangements providing that persons other than Distributor shall
pay) all fees and expenses:
a. of printing and distributing any
prospectuses or reports prepared for its use
in connection with the distribution of
Shares to the public;
b. of preparing, setting in type, printing and
mailing any other literature used by the
Distributor in connection with the
distribution of the Shares to the public;
c. of advertising in connection with the
distribution of such Shares to the public;
d. incurred in connection with its registration
as a broker or dealer or the registration or
qualification of its officers, directors or
representatives under Federal and state
laws; and
e. incurred in connection with the sale and
offering for sale of Shares which have not
been herein specifically allocated to the
Fund.
<PAGE>
PAGE 12
11. Conformity With Law. Distributor agrees that in
selling Shares it shall duly conform in all respects with the
laws of the United States and any state in which such Shares may
be offered for sale by Distributor pursuant to this Agreement and
to the rules and regulations of the NASD.
12. Independent Contractor. Distributor shall be an
independent contractor and neither Distributor, nor any of its
officers, directors, employees, or representatives is or shall be
an employee of the Fund in the performance of Distributor's
duties hereunder. Distributor shall be responsible for its own
conduct and the employment, control, and conduct of its agents
and employees and for injury to such agents or employees or to
others through its agents or employees. Distributor assumes full
responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
13. Indemnification. Distributor agrees to indemnify
and hold harmless the Fund and each of its directors, officers,
employees, representatives and each person, if any, who controls
the Fund within the meaning of Section 15 of SA-33 against any
and all losses, liabilities, damages, claims or expenses
(including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claim or expense and reasonable
legal counsel fees incurred in connection therewith) to which the
Fund or such of its directors, officers, employees,
representatives or controlling person may become subject under
SA-33, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which
(i) may be based upon any wrongful act by Distributor or any of
Distributor's directors, officers, employees or representatives,
or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance
upon information furnished to the Fund by Distributor. In no
case (i) is Distributor's indemnity in favor of the Fund, or any
person indemnified to be deemed to protect the Fund or such
indemnified person against any liability to which the Fund or
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement or (ii) is
Distributor to be liable under its indemnity agreement contained
in this Paragraph with respect to any claim made against the Fund
or any person indemnified unless the Fund or such person, as the
case may be, shall have notified Distributor in writing of the
claim within a reasonable time after the summons or other first
written notification giving information of the nature of the
claim shall have been served upon the Fund or upon such person
(or after the Fund or such person shall have received notice of
such service on any designated agent). However, failure to
notify Distributor of any such claim shall not relieve
Distributor from any liability which Distributor may have to the
Fund or any person against whom such action is brought otherwise
than on account of Distributor's indemnity agreement contained in
this Paragraph.
Distributor shall be entitled to participate, at its
own expense, in the defense, or, if Distributor so elects, to
assume the defense of any suit brought to enforce any such claim,
but, if Distributor elects to assume the defense, such defense
shall be conducted by legal counsel chosen by Distributor and
satisfactory to the Fund, to its directors, officers, employees
or representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that
Distributor elects to assume the defense of any such suit and
retain such legal counsel, the Fund, its directors, officers,
employees, representatives or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If
Distributor does not elect to assume the defense of any such
suit, Distributor will reimburse the Fund, such directors,
officers, employees, representatives or controlling person or
persons, defendant or defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them.
Distributor agrees to promptly notify the Fund of the
commencement of any litigation or proceedings against it or any
of its directors, officers, employees or representatives in
connection with the issue or sale of any Shares.
PAGE 13
The Fund agrees to indemnify and hold harmless
Distributor and each of its directors, officers, employees,
representatives and each person, if any, who controls Distributor
within the meaning of Section 15 of SA-33 against any and all
losses, liabilities, damages, claims or expenses (including the
reasonable costs of investigating or defending any alleged loss,
liability, damage, claim or expense and reasonable legal counsel
fees incurred in connection therewith) to which Distributor or
such of its directors, officers, employees, representatives or
controlling person may become subject under SA-33, under any
other statute, at common law, or otherwise, arising out of the
acquisition of any Shares by any person which (i) may be based
upon any wrongful act by the Fund or any of Fund's directors,
officers, employees or representatives, or (ii) may be based upon
any untrue statement or alleged untrue statement of a material
fact contained in a registration statement, prospectus,
shareholder report or other information covering Shares filed or
made public by the Fund or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or
omission was made in reliance upon information furnished to
Distributor by the Fund. In no case (i) is the Fund's indemnity
in favor of the Distributor, or any person indemnified to be
deemed to protect the Distributor or such indemnified person
against any liability to which the Distributor or such person
would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of his duties or by
reason of his reckless disregard of his obligations and duties
under this Agreement, or (ii) is the Fund to be liable under its
indemnity agreement contained in this Paragraph with respect to
any claim made against Distributor, or person indemnified unless
Distributor, or such person, as the case may be, shall have
notified the Fund in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served
upon Distributor or upon such person (or after Distributor or
such person shall have received notice of such service on any
designated agent). However, failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which
the Fund may have to Distributor or any person against whom such
action is brought otherwise than on account of the Fund's
indemnity agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its own
expense, in the defense, or, if the Fund so elects, to assume the
defense of any suit brought to enforce any such claim, but, if
the Fund elects to assume the defense, such defense shall be
conducted by legal counsel chosen by the Fund and satisfactory to
Distributor, to its directors, officers, employees or
representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that the Fund
elects to assume the defense of any such suit and retain such
legal counsel, Distributor, its directors, officers, employees,
representatives or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Fund does not
elect to assume the defense of any such suit, the Fund will
reimburse Distributor, such directors, officers, employees,
representatives or controlling person or persons, defendant or
defendants in such suit for the reasonable fees and expenses of
any legal counsel retained by them. The Fund agrees to promptly
notify Distributor of the commencement of any litigation or
proceedings against it or any of its directors, officers,
employees, or representatives in connection with the issue or
sale of any Shares.
14. Duration and Termination of This Agreement. This
Agreement shall become effective upon its execution ("effective
date") and, unless terminated as provided, shall remain in effect
through April 30, 1984, and from year to year thereafter, but
only so long as such continuance is specifically approved at
least annually by the vote of a majority of the directors of the
Fund who are not interested persons of Distributor or of the
Fund, cast in person at a meeting called for the purpose of
voting on such approval, and by vote of the directors of the Fund
or of a majority of the outstanding voting securities of the
Fund. This Agreement may, on 60 days' written notice, be
terminated at any time, without the payment of any penalty, by
the vote of a majority of the directors of the Fund who are not
interested persons of Distributor or the Fund, by a vote of a
majority of the outstanding voting securities of the Fund, or by
Distributor. This Agreement will automatically terminate in the
event of its assignment. In interpreting the provisions of this
Paragraph 14, the definitions contained in Section 2(a) of ICA-40
(particularly the definitions of "interested person,"
"assignment," and "majority of the outstanding securities") shall
be applied.
PAGE 14
15. Amendment of this Agreement. No provisions of
this Agreement may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or
termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the
recommendations or requirements of the SEC or other governmental
authority or to obtain any advantage under state or Federal tax
laws and notifies Distributor of the form of such amendment, and
the reasons therefor, and if Distributor should decline to assent
to such amendment, the Fund may terminate this Agreement
forthwith. If Distributor should at any time request that a
change be made in the Fund's Articles of Incorporation or By-Laws
or in its methods of doing business, in order to comply with any
requirements of Federal law or regulations of the SEC, or of a
national securities association of which Distributor is or may be
a member relating to the sale of Shares, and the Fund should not
make such necessary change within a reasonable time, Distributor
may terminate this Agreement forthwith.
16. Miscellaneous. It is understood and expressly
stipulated that neither the shareholders of the Fund, nor the
directors of the Fund shall be personally liable hereunder. The
captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
17. Notice. Any notice required or permitted to be
given by either party to the other shall be deemed sufficient if
sent by registered or certified mail, postage prepaid, addressed
by the party giving notice to the other party at the last address
<PAGE>
PAGE 15
furnished by the other party to the party giving notice: if to
the Fund, 100 East Pratt Street, Baltimore, Maryland 21202, and
if to the Distributor, at 100 East Pratt Street, Baltimore,
Maryland 21202.
ATTEST: T. ROWE PRICE TAX-FREE SHORT-
INTERMEDIATE
FUND, INC.
____________________________
By:____________________________________________
Secretary President
ATTEST: T. ROWE PRICE MARKETING, INC.
____________________________
By:____________________________________________
Secretary President
<PAGE>
PAGE 16
UNDERWRITING AGREEMENT
BETWEEN
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
AND
T. ROWE PRICE MARKETING, INC.
THIS UNDERWRITING AGREEMENT, made as of 1st day of May,
1981, by and between T. ROWE PRICE TAX-FREE INCOME FUND, INC., a
corporation organized and existing under the laws of the State of
Maryland (hereinafter called the "Fund"), and T. ROWE PRICE
MARKETING, INC., a corporation organized and existing under the
law of the State of Maryland (hereinafter called the
"Distributor").
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end
management investment company and is registered as such under the
federal Investment Company Act of 1940, as amended ("ICA-40");
and
WHEREAS, the Distributor proposes to engage principally in
the business of distributing shares of the investment companies
sponsored and managed by either T. Rowe Price Associates, Inc.
("Price Associates") or Rowe Price-Fleming International, Inc.
("Price-Fleming") and is registered as a broker-dealer under the
Securities and Exchange Act of 1934, as amended, ("SEA-34") and
is a member of the National Association of Securities Dealers,
Inc. ("NASD"); and
WHEREAS, the Fund desires the Distributor to act as the
distributor in the public offering of its shares;
NOW, THEREFORE, in consideration of the premises and the
mutual promises hereinafter set forth, the parties hereto agree
as follows:
1. Delivery of Fund Documents. The Fund has furnished
Distributor with copies, properly certified or authenticated, of
each of the following:
(a) Articles of Incorporation, dated September 24,
1976, as amended to date.
(b) By-Laws of the Fund as in effect on the date
hereof.
(c) Resolutions of the Board of Directors of the Fund
selecting Distributor as principal underwriter and
approving this form of agreement. The. Fund shall
furnish the Distributor from time to time with
copies, properly certified or authenticated, of
all the amendments of, or supplements to, the
foregoing, if any.
The Fund shall furnish Distributor promptly with properly
certified or authenticated copies of any registration statements
filed by it with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, ("SA-33") or ICA-40, together
with any financial statements and exhibits included therein, and
all amendments or supplements thereto hereafter filed.
2. Sale of Shares. Subject to the provisions of
Paragraphs 3, 4 and 6 hereof, and to such minimum purchase
requirements as may from time to time be currently indicated in
the Fund's Prospectus, the Distributor is authorized to sell, as
agent on behalf of the Fund, shares of the Fund's capital stock
("Shares") authorized for issuance and registered under SA-33.
Distributor may also sell Shares under offers of exchange between
and among the investment companies for which Price Associates
and/or Price-Fleming act as investment advisers ("Price Funds").
Distributor may also purchase as principal such Shares for resale
PAGE 17
to the public. Such sale will be made by Distributor on behalf
of the Fund by accepting unconditional orders to purchase the
Shares placed with Distributor by investors and such purchases
will be made by Distributor only after acceptance by Distributor
of such orders. The sales price to the public of such Shares
shall be the public offering price as defined in Paragraph 5
hereof.
3. Sale of Shares by Fund. The rights granted to the
Distributor shall be non-exclusive in that the Fund reserves the
right to sell its Shares to investors pursuant to applications
received and accepted by the Fund or its transfer agent.
Further, the Fund reserves the right to issue Shares in
connection with the merger or consolidation of any other
investment company, trust or personal holding company with the
Fund or the Fund's acquisition by the purchase or otherwise, of
all or substantially all of the assets of an investment company,
trust or personal holding company. Any right granted to
Distributor to accept orders for Shares, or to make sales on
behalf of the Fund or to purchase Shares four resale, will not
apply to Shares issued in connection with the merger or
consolidation of any other investment company with the Fund or
its acquisition by purchase or otherwise, of all or substantially
all of the assets of any investment company, trust or personal
holding company, or substantially all of the outstanding shares
or interests of any such entity, and such right shall not apply
to Shares that may be offered by the Fund to shareholders by
virtue of their being shareholders of the Fund.
4. Shares Covered by this Agreement. This Agreement
relates to the issuance and sale of Shares that are duly
authorized and registered and available for sale by the Fund,
including redeemed or repurchased Shares if and to the extent
that they may be legally sold and if, but only if, the Fund
authorizes the Distributor to sell them.
5. Public Offering Price. All Shares sold by the
Distributor pursuant to this Agreement shall be sold at the
public offering price. The public offering price for all
accepted subscriptions will be the net asset value per share, as
determined in the manner provided in the Fund's Articles of
Incorporation, as now in effect, or as they may be amended (and
as reflected in the Fund's then current Prospectus), next after
the order is accepted by the Distributor. The Distributor will
process orders submitted by brokers for the sale of Shares at the
public offering price exclusive of any commission charged by such
broker to his customer.
6. Suspension of Sales. If and whenever the determination
of net asset value is suspended and until such suspension is
terminated, no further orders for Shares shall be accepted by the
Distributor except such unconditional orders placed with
Distributor before it had knowledge of the suspension. In
addition, the Fund reserves the right to suspend sales and
Distributor's authority to accept orders for Shares on behalf of
the Fund if, in the judgment of the Board of Directors of the
Fund, it is in the best interests of the Fund to do so, such
suspension to continue for such period as may be determined by
the Board of Directors of the Fund; and in that event, no orders
to purchase Shares shall be processed or accepted by the
Distributor on behalf of the Fund while such suspension remains
in effect except for Shares necessary to cover unconditional
orders accepted by Distributor before it had knowledge of the
suspension, unless otherwise directed by the Board of Directors
of the Fund.
7. Solicitation of Orders. In consideration of the rights
granted to the Distributor under this Agreement, Distributor will
use its best efforts (but only in states in which Distributor may
lawfully do so) to obtain from investors unconditional orders for
Shares authorized for issuance by the Fund and registered under
SA-33, provided that Distributor may in its discretion reject any
order to purchase shares. This does not obligate the Distributor
to register or maintain its registration as a broker or dealer
under the state securities laws of any jurisdiction if, in the
discretion of the Distributor, such registration is not practical
or feasible. The Fund shall make available to the Distributor at
the expense of the Distributor such number of copies of the
Fund's currently effective Prospectus as the Distributor may
reasonably request. The Fund shall furnish to the Distributor
copies of all information, financial statements and other papers
which the Distributor may reasonably request for use in
connection with the distribution of Shares.
PAGE 18
8. Authorized Representations. The Fund is not authorized
by the Distributor to give on behalf of the Distributor any
information or to make any representations ether than the
information and representations contained in a registration
statement or prospectus filed with the SEC under SA-33 and/or
ICA-40, covering Shares, as such registration statement and
prospectus may be amended or supplemented from time to time.
Distributor is not authorized by the Fund to give on
behalf of the Fund any information or to make any representations
in connection with the sale of Shares other than the information
and representations contained in a registration statement or
prospectus filed with the Securities and Exchange Commission
("SEC") under SA-33 and/or ICA-40, covering Shares, as such
registration statement and prospectus may be amended or
supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on behalf of
the Fund for the Distributor's use. This shall not be construed
to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may
deem appropriate. No person other than Distributor is authorized
to act as principal underwriter (as such term is defined in ICA-
40, as amended) for the Fund.
9. Registration and Sale of Additional Shares. The Fund
will, from time to time, use its best efforts to register under
SA-33, such Shares of the Fund as Distributor may reasonably be
expected to sell on behalf of the Fund. In connection therewith,
the Fund hereby agrees to register an indefinite number of Shares
pursuant to Rule 24f-2 under ICA-40, and to register such Shares
as shall be deemed advisable pursuant to Rule 24e-2 under ICA-40,
as amended. The Fund will, in cooperation with the Distributor,
take such action as may be necessary from time to time to qualify
such Shares (so registered or otherwise qualified for sale under
SA-33), in any state mutually agreeable to the Distributor and
the Fund, and to maintain such qualification.
10. Expenses. The Fund shall pay all fees and expenses:
a. in connection with the preparation, setting in
type and filing of any registration statement and
prospectus under SA-33 and/or ICA-40, and any
amendments or supplements that may be made from
time to time;
b. in connection with the registration and
qualification of Shares for sale in the various
states in which the Fund shall determine it
advisable to qualify such Shares for sale.
(Including registering the Fund as a broker or
dealer or any officer of the Fund or other person
as agent or salesman of the Fund in any state.);
c. of preparing, setting in type, printing and
mailing any report or other communication to
shareholders of the Fund in their capacity as
such;
d. of preparing, setting in type, printing and
mailing Prospectuses annually to existing
shareholders;
e. in connection with the issue and transfer of
Shares resulting from the acceptance by
Distributor of orders to purchase Shares placed
with the Distributor by investors, including the
expenses of confirming such purchase orders; and
f. of any issue taxes or (in the case of Shares
redeemed) any initial transfer taxes.
The Distributor shall pay (or will enter into
arrangements providing that persons other than Distributor shall
pay) all fees and expenses:
a. of printing and distributing any Prospectuses or
reports prepared for its use in connection with
the distribution of Shares to the public;
PAGE 19
b. of preparing, setting in type, printing and
mailing any other literature used by the
Distributor in connection with the distribution of
the Shares to the public;
c. of advertising in connection with the distribution
of such Shares to the public;
d. incurred in connection with its registration as a
broker or dealer or the registration or
qualification of its officers, directors or
representatives under Federal and state laws; and
e. incurred in connection with the bale and offering
for sale of Shares which have not been herein
specifically allocated to the Fund.
11. Conformity With Law. Distributor agrees that in
selling Shares it shall duly conform in all respects with the
laws of the United States and any state in which such Shares may
be offered for sale by Distributor pursuant to this Agreement and
to the rules and regulations of the NASD.
12. Independent Contractor. Distributor shall be an
independent contractor and neither Distributor, nor any of its
officers, directors, employees, or representatives is or shall be
an employee of the Fund in the performance of Distributor's
duties hereunder. Distributor shall be responsible for its own
conduct and the employment, control, and conduct of its agents
and employees and for injury to such agents or employees or to
others through its agents or employees. Distributor assumes full
responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
13. Indemnification. Distributor agrees to indemnify and
held harmless the Fund and each of its directors, officers,
employees, representatives and each person, if any, who controls
the Fund within the meaning of Section 15 of SA-33 against any
and all losses, liabilities, damages, claims or expenses
(including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claim or expense and reasonable
legal counsel fees incurred in connection therewith) to which the
Fund or such of its directors, officers, employees,
representatives or controlling person may become subject under
SA-33, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which
(i) may be based upon any wrongful act by Distributor or any of
Distributor's directors, officers, employees or representatives,
or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any.
amendment thereof or supplement there to, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance
upon information furnished to the Fund by Distributor. In no
case (i) is Distributor's indemnity in favor of the Fund, or any
person indemnified to be deemed to protect the Fund or such
indemnified person against any liability to which the Fund or
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement or (ii) is
Distributor to be liable under its indemnity agreement contained
in this Paragraph with respect to any claim made against the Fund
or any person indemnified unless the Fund or such person, as the
case may be, shall have notified Distributor in writing of the
claim within a reasonable time after the summons or other first
written notification giving information of the nature of the
claim shall have been served upon the Fund or upon such person
(or after the Fund or such person shall have received notice of
such service on any designated agent). However, failure to
notify Distributor of any such claim shall not relieve
Distributor from any liability which Distributor may have to the
Fund or any person against whom such action is brought otherwise
than on account of Distributor's indemnity agreement contained in
this Paragraph.
Distributor shall be entitled to participate, at its
own expense, in the defense, or, if Distributor so elects, to
assume the defense of any suit brought to enforce any such claim,
but, if Distributor elects to assume the defense, such defense
shall be conducted by legal counsel chosen by Distributor and
satisfactory to the Fund, to its directors, officers, employees
or representatives, or to any controlling person
PAGE 20
or persons, defendant or defendants, in the suit. In the event
that Distributor elects to assume the defense of any such suit
and retain such legal counsel, the Fund, its directors, officers,
employees, representatives or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If
Distributor does not elect to assume the defense of any such
suit, Distributor will reimburse the Fund, such directors,
officers, employees, representatives or controlling person or
persons, defendant or defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them.
Distributor agrees to promptly notify the Fund of the
commencement of any litigation or proceedings against it or any
of its directors, officers, employees or representatives in
connection with the issue or sale of any Shares.
The Fund agrees to indemnify and hold harmless
Distributor and each of its directors, officers, employees,
representatives and each person, if any, who controls Distributor
within the meaning of Section 15 of SA-33 against any and all
losses, liabilities, damages, claims or expenses (including the
reasonable costs of investigating or defending any alleged loss,
liability, damage, claim or expense and reasonable legal counsel
fees incurred in connection therewith) to which Distributor or
such of its directors, officers, employees, representatives or
controlling person may become subject under SA-33, under any
other statute, at common law, or otherwise, arising out of the
acquisition of any Shares by any person which (i) may be based
upon any wrongful act by the Fund or any of Fund's directors,
officers, employees or representatives, or (ii) may be based upon
any untrue statement or alleged untrue statement of a material
fact contained in a registration statement, prospects,
shareholder report or other information covering Shares filed or
made public by the Fund or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or
omission was made in reliance upon information furnished to
Distributor by the Fund. In no case (i) is the Fund's indemnity
in favor of the Distributor, or any person indemnified to be
deemed to protect the Distributor or such indemnified person
against any liability to which the Distributor or such person
would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of his duties or by
reason of his reckless disregard of his obligations and duties
under this Agreement, or (ii) is the Fund to be liable under its
indemnity agreement contained in this Paragraph with respect to
any claim made against Distributor, or person indemnified unless
Distributor, or such person, as the case may be, shall have
notified the Fund in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served
upon Distributor or upon such person (or after Distributor or
such person shall have received notice of such service on any
designated agent). However, failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which
thee Fund may have to Distributor or any person against whom such
action is brought otherwise than on account of the Fund's
indemnity agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its own
expense, in the defense, or, if the Fund so elects, to assume the
defense of any suit brought to enforce any such claim, but, if
the Fund elects to assume the defense, such defense shall be
conducted by legal counsel chosen by the Fund and satisfactory to
Distributor, to its directors, officers, employees or
representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that the Fund
elects to assume the defense of any such suit and retain such
legal counsel, Distributor, its directors, officers, employees,
representatives or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Fund does not
elect to assume the defense of any such suit, the Fund will
reimburse Distributor, such directors, officers, employees,
representatives or controlling person or persons, defendant or
defendants in such suit for the reasonable fees and expenses of
any legal counsel retained by them. The Fund agrees to promptly
notify Distributor of the commencement of any litigation or
proceedings against it or any of its directors, officers,
employees or representatives in connection with the issue or sale
of any Shares.
14. Duration and Termination of This Agreement. This
Agreement shall become effective upon its execution ("effective
date") and, unless terminated as provided, shall remain in effect
through April 30,
PAGE 21
1982, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the
vote of a majority of the directors of the Fund who are not
interested persons of Distributor or of the Fund, cast in person
at a meeting called for the purpose of voting on such approval,
and by vote of the directors of the Fund or of a majority of the
outstanding voting securities of the Fund. This Agreement may,
on 60 days' written notice, be terminated at any time, without
the payment of any penalty, by the vote of a majority of the
directors of the Fund who are not interested persons of
Distributor or the Fund, by a vote of a majority of the
outstanding voting securities of the Fund, or by Distributor.
This Agreement will automatically terminate in the event of its
assignment. In interpreting the provisions of this Paragraph 3,
the definitions contained in Section 2(a) of ICA-40 (particularly
the definitions of "interested person", "assignment", and
"majority of the outstanding voting securities") shall be
applied.
15. Amendment of this Agreement. No provisions of this
Agreement may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or
termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the
recommendations or requirements of the SEC or other governmental
authority or to obtain any advantage under state or Federal tax
laws and notifies Distributor of the form of such amendment, and
the reasons therefor, and if Distributor should decline to assent
to such amendment, the Fund may terminate this Agreement
forthwith. If Distributor should at any time request that a
change be made in the Fund's Articles of Incorporation or By-Laws
or in its methods of doing business, in order to comply with any
requirements of Federal law or regulations of the SEC, or of a
national securities association of which Distributor is or may be
a member relating to the sale of Shares, and the Fund should not
make such necessary change within a reasonable time, Distributor
may terminate this Agreement forthwith.
16. Miscellaneous. It is understood and expressly
stipulated that neither the shareholders of the Fund, nor the
directors of the Fund shall be personally liable hereunder. The
captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
17. Notice. Any notice required or permitted to be given
by either party to the other shall be deemed sufficient if sent
by registered or certified mail, postage prepaid, addressed by
the party giving notice to the other party at the last address
furnished by the other party to the party giving notice: if to
the Fund, at 100 East Pratt Street, Baltimore, Maryland 21202,
and if to the Distributor, at 100 East Pratt Street, Baltimore,
Maryland 21202.
ATTEST: T. ROWE PRICE TAX-FREE INCOME FUND, INC.
/s/Lenora V. Hornung By: /s/
Lenora V. Hornung _________________________
Secretary President
ATTEST: T ROWE PRICE MARKETING, INC.
/s/Mary Louise Williams By: /s/Thomas C. Barry
Mary Louise Williams Thomas C. Barry
Secretary President
<PAGE>
PAGE 22
UNDERWRITING AGREEMENT
BETWEEN
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
AND
T. ROWE PRICE INVESTMENT SERVICES, INC.
THIS UNDERWRITING AGREEMENT, made as of the 21st day of
December, 1984, by and between T. ROWE PRICE TAX-FREE HIGH YIELD
FUND, INC., a corporation organized and existing under the laws
of the State of Maryland (hereinafter called the "Fund"), and
T. ROWE PRICE INVESTMENT SERVICES, INC., a corporation organized
and existing under the laws of the State of Maryland (hereinafter
called the "Distributor").
WITNESSETH:
WHEREAS, the Fund proposes to engage in business as an
open-end management investment company and to register as such
under the federal Investment Company Act of 1940, as amended
("ICA-40"); and
WHEREAS, the Distributor is engaged principally in the
business of distributing shares of the investment companies
sponsored and managed by either T. Rowe Price Associates, Inc.
("Price Associates") or Rowe Price-Fleming International, Inc.
("Price-Fleming") and is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, ("SEA-34") and is a
member of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, the Fund desires the Distributor to act as the
distributor in the public offering of its shares;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Delivery of Fund Documents. The Fund has
furnished Distributor with copies, properly certified or
authenticated, of each of the following:
(a) Articles of Incorporation, dated November
29, 1984.
(b) By-Laws of the Fund as in effect on the date
hereof.
(c) Resolutions of the Board of Directors of the
Fund selecting Distributor as principal
underwriter and approving this form of
agreement.
The Fund shall furnish the Distributor from time to
time with copies, properly certified or authenticated, of all the
amendments of, or supplements to, the foregoing, if any.
The Fund shall furnish Distributor promptly with
properly certified or authenticated copies of any registration
statements filed by it with the Securities and Exchange
Commission under the Securities Act of 1933, as amended ("SA-33")
or ICA-40, together with any financial statements and exhibits
included therein, and all amendments or supplements thereto
hereafter filed.
PAGE 23
2. Sale of Shares. Subject to the provisions of
Paragraphs 3, 4, and 6 hereof, and to such minimum purchase
requirements as may from time to time be currently indicated in
the Fund's prospectus, the Distributor is authorized to sell, as
agent on behalf of the Fund, shares of the Fund's capital stock
("Shares") authorized for issuance and registered under SA-33.
Distributor may also sell Shares under offers of exchange between
and among the investment companies for which Price Associates
and/or Price-Fleming act as investment advisers ("Price Funds").
Distributor may also purchase as principal such Shares for resale
to the public. Such sale will be made by Distributor on behalf
of the Fund by accepting unconditional orders to purchase the
Shares placed with Distributor by investors and such purchases
will be made by Distributor only after acceptance by Distributor
of such orders. The sales price to the public of such Shares
shall be the public offering price as defined in Paragraph 5
hereof.
3. Sale of Shares by Fund. The rights granted to
the Distributor shall be nonexclusive in that the Fund reserves
the right to sell its Shares to investors pursuant to
applications received and accepted by the Fund or its transfer
agent. Further, the Fund reserves the right to issue Shares in
connection with the merger or consolidation of any other
investment company, trust or personal holding company with the
Fund or the Fund's acquisition by the purchase or otherwise, of
all or substantially all of the assets of an investment company,
trust or personal holding company. Any right granted to
Distributor to accept orders for Shares, or to make sales on
behalf of the Fund or to purchase Shares for resale, will not
apply to Shares issued in connection with the merger or
consolidation of any other investment company with the Fund or
its acquisition by purchase or otherwise, of all or substantially
all of the assets of any investment company, trust or personal
holding company, or substantially all of the outstanding shares
or interests of any such entity, and such right shall not apply
to Shares that may be offered by the Fund to shareholders by
virtue of their being shareholders of the Fund.
4. Shares Covered by this Agreement. This Agreement
relates to the issuance and sale of Shares that are duly
authorized, registered, and available for sale by the Fund,
including redeemed or repurchased Shares if and to the extent
that they may be legally sold and if, but only if, the Fund
authorizes the Distributor to sell them.
5. Public Offering Price. All Shares sold by the
Distributor pursuant to this Agreement shall be sold at the
public offering price. The public offering price for all
accepted subscriptions will be the net asset value per share, as
determined in the manner provided in the Fund's Articles of
Incorporation, as now in effect, or as they may be amended (and
as reflected in the Fund's then current prospectus), next after
the order is accepted by the Distributor. The Distributor will
process orders submitted by brokers for the sale of Shares at the
public offering price exclusive of any commission charged by such
broker to his customer.
6. Suspension of Sales. If and whenever the
determination of net asset value is suspended and until such
suspension is terminated, no further orders for Shares shall be
accepted by the Distributor except such unconditional orders
placed with the Distributor before it had knowledge of the
suspension. In addition, the Fund reserves the right to suspend
sales and Distributor's authority to accept orders for Shares on
behalf of the Fund if, in the judgment of the Board of Directors
of the Fund, it is in the best interests of the Fund to do so,
such suspension to continue for such period as may be determined
by the Board of Directors of the Fund; and in that event, no
orders to purchase Shares shall be processed or accepted by the
Distributor on behalf of the Fund while such suspension remains
in effect except for Shares necessary to cover unconditional
orders accepted by Distributor before it had knowledge of the
suspension, unless otherwise directed by the Board of Directors
of the Fund.
7. Solicitation of Orders. In consideration of the
rights granted to the Distributor under this Agreement,
Distributor will use its best efforts (but only in states in
which Distributor may lawfully do so) to obtain from investors
unconditional orders for Shares authorized for issuance by the
Fund and registered under SA-33, provided that Distributor may in
its discretion reject any order to purchase Shares.
PAGE 24
This does not obligate the Distributor to register or maintain
its registration as a broker or dealer under the state securities
laws of any jurisdiction if, in the discretion of the
Distributor, such registration is not practical or feasible. The
Fund shall make available to the Distributor at the expense of
the Distributor such number of copies of the Fund's currently
effective prospectus as the Distributor may reasonably request.
The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the
Distributor may reasonably request for use in connection with the
distribution of Shares.
8. Authorized Representations. The Fund is not
authorized by the Distributor to give on behalf of the
Distributor any information or to make any representations other
than the information and representations contained in a
registration statement or prospectus filed with the SEC under
SA-33 and/or ICA-40, covering Shares, as such registration
statement and prospectus may be amended or supplemented from time
to time.
Distributor is not authorized by the Fund to give on
behalf of the Fund any information or to make any representations
in connection with the sale of Shares other than the information
and representations contained in a registration statement or
prospectus filed with the Securities and Exchange Commission
("SEC") under SA-33 and/or ICA-40, covering Shares, as such
registration statement and prospectus may be amended or
supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on behalf of
the Fund for the Distributor's use. This shall not be construed
to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may
deem appropriate. No person other than Distributor is authorized
to act as principal underwriter (as such term is defined in
ICA-40, as amended) for the Fund.
9. Registration and Sale of Additional Shares. The
Fund will, from time to time, use its best efforts to register
under SA-33, such Shares of the Fund as Distributor may
reasonably be expected to sell on behalf of the Fund. In
connection therewith, the Fund hereby agrees to register an
indefinite number of Shares pursuant to Rule 24f-2 under ICA-40,
and to register such Shares as shall be deemed advisable pursuant
to Rule 24e-2 under ICA-40, as amended. The Fund will, in
cooperation with the Distributor, take such action as may be
necessary from time to time to qualify such Shares (so registered
or otherwise qualified for sale under SA-33), in any state
mutually agreeable to the Distributor and the Fund, and to
maintain such qualification.
10. Expenses. The Fund shall pay all fees and
expenses:
a. in connection with the preparation, setting
in type and filing of any registration
statement and prospectus under SA-33 and/or
ICA-40, and any amendments or supplements
that may be made from time to time;
b. in connection with the registration and
qualification of Shares for sale in the
various states in which the Fund shall
determine it advisable to qualify such
Shares for sale. (Including registering the
Fund as a broker or dealer or any officer of
the Fund or other person as agent or
salesman of the Fund in any state.);
c. of preparing, setting in type, printing and
mailing any report or other communication to
shareholders of the Fund in their capacity
as such;
d. of preparing, setting in type, printing and
mailing prospectuses annually to existing
shareholders;
e. in connection with the issue and transfer of
Shares resulting from the acceptance by
Distributor of orders to purchase Shares
placed with the Distributor by investors,
including the expenses of confirming such
purchase orders; and
PAGE 25
f. of any issue taxes or (in the case of Shares
redeemed) any initial transfer taxes.
The Distributor shall pay (or will enter into
arrangements providing that persons other than Distributor shall
pay) all fees and expenses:
a. of printing and distributing any
prospectuses or reports prepared for its use
in connection with the distribution of
Shares to the public;
b. of preparing, setting in type, printing and
mailing any other literature used by the
Distributor in connection with the
distribution of the Shares to the public;
c. of advertising in connection with the
distribution of such Shares to the public;
d. incurred in connection with its registration
as a broker or dealer or the registration or
qualification of its officers, directors or
representatives under Federal and state
laws; and
e. incurred in connection with the sale and
offering for sale of Shares which have not
been herein specifically allocated to the
Fund.
11. Conformity With Law. Distributor agrees that in
selling Shares it shall duly conform in all respects with the
laws of the United States and any state in which such Shares may
be offered for sale by Distributor pursuant to this Agreement and
to the rules and regulations of the NASD.
<PAGE>
PAGE 26
12. Independent Contractor. Distributor shall be an
independent contractor and neither Distributor, nor any of its
officers, directors, employees, or representatives is or shall be
an employee of the Fund in the performance of Distributor's
duties hereunder. Distributor shall be responsible for its own
conduct and the employment, control, and conduct of its agents
and employees and for injury to such agents or employees or to
others through its agents or employees. Distributor assumes full
responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
13. Indemnification. Distributor agrees to indemnify
and hold harmless the Fund and each of its directors, officers,
employees, representatives and each person, if any, who controls
the Fund within the meaning of Section 15 of SA-33 against any
and all losses, liabilities, damages, claims or expenses
(including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claim or expense and reasonable
legal counsel fees incurred in connection therewith) to which the
Fund or such of its directors, officers, employees,
representatives or controlling person may become subject under
SA-33, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which
(i) may be based upon any wrongful act by Distributor or any of
Distributor's directors, officers, employees or representatives,
or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance
upon information furnished to the Fund by Distributor. In no
case (i) is Distributor's indemnity in favor of the Fund, or any
person indemnified to be deemed to protect the Fund or such
indemnified person against any liability to which the Fund or
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement or (ii) is
Distributor to be liable under its indemnity agreement contained
in this Paragraph with respect to any claim made against the Fund
or any person indemnified unless the Fund or such person, as the
case may be, shall have notified Distributor in writing of the
claim within a reasonable time after the summons or other first
written notification giving information of the nature of the
claim shall have been served upon the Fund or upon such person
(or after the Fund or such person shall have received notice of
such service on any designated agent). However, failure to
notify Distributor of any such claim shall not relieve
Distributor from any liability which Distributor may have to the
Fund or any person against whom such action is brought otherwise
than on account of Distributor's indemnity agreement contained in
this Paragraph.
Distributor shall be entitled to participate, at its
own expense, in the defense, or, if Distributor so elects, to
assume the defense of any suit brought to enforce any such claim,
but, if Distributor elects to assume the defense, such defense
shall be conducted by legal counsel chosen by Distributor and
satisfactory to the Fund, to its directors, officers, employees
or representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that
Distributor elects to assume the defense of any such suit and
retain such legal counsel, the Fund, its directors, officers,
employees, representatives or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If
Distributor does not elect to assume the defense of any such
suit, Distributor will reimburse the Fund, such directors,
officers, employees, representatives or controlling person or
persons, defendant or defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them.
Distributor agrees to promptly notify the Fund of the
commencement of any litigation or proceedings against it or any
of its directors, officers, employees or representatives in
connection with the issue or sale of any Shares.
The Fund agrees to indemnify and hold harmless
Distributor and each of its directors, officers, employees,
representatives and each person, if any, who controls Distributor
within the meaning of Section 15 of SA-33 against any and all
losses, liabilities, damages, claims or expenses (including the
reasonable costs of investigating or defending any alleged loss,
liability, damage, claim or expense and reasonable legal counsel
fees incurred in connection therewith) to which Distributor or
such of its directors, officers, employees, representatives or
controlling person may become subject under SA-33, under any
other
PAGE 27
statute, at common law, or otherwise, arising out of the
acquisition of any Shares by any person which (i) may be based
upon any wrongful act by the Fund or any of Fund's directors,
officers, employees or representatives, or (ii) may be based upon
any untrue statement or alleged untrue statement of a material
fact contained in a registration statement, prospectus,
shareholder report or other information covering Shares filed or
made public by the Fund or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or
omission was made in reliance upon information furnished to
Distributor by the Fund. In no case (i) is the Fund's indemnity
in favor of the Distributor, or any person indemnified to be
deemed to protect the Distributor or such indemnified person
against any liability to which the Distributor or such person
would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of his duties or by
reason of his reckless disregard of his obligations and duties
under this Agreement, or (ii) is the Fund to be liable under its
indemnity agreement contained in this Paragraph with respect to
any claim made against Distributor, or person indemnified unless
Distributor, or such person, as the case may be, shall have
notified the Fund in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served
upon Distributor or upon such person (or after Distributor or
such person shall have received notice of such service on any
designated agent). However, failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which
the Fund may have to Distributor or any person against whom such
action is brought otherwise than on account of the Fund's
indemnity agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its own
expense, in the defense, or, if the Fund so elects, to assume the
defense of any suit brought to enforce any such claim, but, if
the Fund elects to assume the defense, such defense shall be
conducted by legal counsel chosen by the Fund and satisfactory to
Distributor, to its directors, officers, employees or
representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that the Fund
elects to assume the defense of any such suit and retain such
legal counsel, Distributor, its directors, officers, employees,
representatives or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Fund does not
elect to assume the defense of any such suit, the Fund will
reimburse Distributor, such directors, officers, employees,
representatives or controlling person or persons, defendant or
defendants in such suit for the reasonable fees and expenses of
any legal counsel retained by them. The Fund agrees to promptly
notify Distributor of the commencement of any litigation or
proceedings against it or any of its directors, officers,
employees, or representatives in connection with the issue or
sale of any Shares.
14. Duration and Termination of This Agreement. This
Agreement shall become effective upon its execution ("effective
date") and, unless terminated as provided, shall remain in effect
through April 30, 1986 and from year to year thereafter, but only
so long as such continuance is specifically approved at least
annually by the vote of a majority of the directors of the Fund
who are not interested persons of Distributor or of the Fund,
cast in person at a meeting called for the purpose of voting on
such approval, and by vote of the directors of the Fund or of a
majority of the outstanding voting securities of the Fund. This
Agreement may, on 60 days' written notice, be terminated at any
time, without the payment of any penalty, by the vote of a
majority of the directors of the Fund who are not interested
persons of Distributor or the Fund, by a vote of a majority of
the outstanding voting securities of the Fund, or by Distributor.
This Agreement will automatically terminate in the event of its
assignment. In interpreting the provisions of this Paragraph 14,
the definitions contained in Section 2(a) of ICA-40 (particularly
the definitions of "interested person," "assignment," and
"majority of the outstanding securities") shall be applied.
15. Amendment of this Agreement. No provisions of
this Agreement may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or
termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the
recommendations or requirements of the SEC or other governmental
authority or to obtain any advantage under state or Federal tax
laws and notifies Distributor of the form of
PAGE 28
such amendment, and the reasons therefor, and if Distributor
should decline to assent to such amendment, the Fund may
terminate this Agreement forthwith. If Distributor should at any
time request that a change be made in the Fund's Articles of
Incorporation or By-Laws or in its methods of doing business, in
order to comply with any requirements of Federal law or
regulations of the SEC, or of a national securities association
of which Distributor is or may be a member relating to the sale
of Shares, and the Fund should not make such necessary change
within a reasonable time, Distributor may terminate this
Agreement forthwith.
16. Miscellaneous. It is understood and expressly
stipulated that neither the shareholders of the Fund, nor the
directors of the Fund shall be personally liable hereunder. The
captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
17. Notice. Any notice required or permitted to be
given by either party to the other shall be deemed sufficient if
sent by registered or certified mail, postage prepaid, addressed
by the party giving notice to the other party at the last address
<PAGE>
PAGE 29
furnished by the other party to the party giving notice: if to
the Fund, 100 East Pratt Street, Baltimore, Maryland 21202, and
if to the Distributor, at 100 East Pratt Street, Baltimore,
Maryland 21202.
ATTEST: T. ROWE PRICE TAX-FREE HIGH YIELD
FUND, INC.
____________________________
By:_______________________________________
Secretary President
ATTEST: T. ROWE PRICE INVESTMENT SERVICES,
INC.
____________________________
By:_______________________________________
Secretary President
<PAGE>
The Custodian Agreement dated September 28, 1987, as amended,
between State Street Bank and Trust Company and T. Rowe Price
Funds should be inserted here.
PAGE 1
CUSTODIAN CONTRACT
Between
STATE STREET BANK AND TRUST COMPANY
and
EACH OF THE PARTIES INDICATED
ON APPENDIX A
DATED: SEPTEMBER 28, 1987
FRF 07/87
PAGE 2
TABLE OF CONTENTS
1. Employment of Custodian and Property to be Held By It1
2. Duties of the Custodian with Respect to Property of the Fund
Held by the Custodian in the United States.. . . . 2
2.1 Holding Securities. . . . . . . . . . . . . . . 2
2.2 Delivery of Securities. . . . . . . . . . . . . 2
1) Sale . . . . . . . . . . . . . . . . . . . 2
2) Repurchase Agreement . . . . . . . . . . . 2
3) Securities System. . . . . . . . . . . . . 3
4) Tender Offer . . . . . . . . . . . . . . . 3
5) Redemption by Issuer . . . . . . . . . . . 3
6) Transfer to Issuer, Nominee, Exchange. . . 3
7) Sale to Broker . . . . . . . . . . . . . . 3
8) Exchange or Conversion . . . . . . . . . . 4
9) Warrants, Rights . . . . . . . . . . . . . 4
10) Loans of Securities. . . . . . . . . . . . 4
11) Borrowings . . . . . . . . . . . . . . . . 4
12) Options. . . . . . . . . . . . . . . . . . 5
13) Futures. . . . . . . . . . . . . . . . . . 5
14) In-Kind Distributions. . . . . . . . . . . 5
15) Miscellaneous. . . . . . . . . . . . . . . 5
16) Type of Payment. . . . . . . . . . . . . . 6
2.3 Registration of Securities. . . . . . . . . . . 6
2.4 Bank Accounts . . . . . . . . . . . . . . . . . 7
2.5 Sale of Shares and Availability of Federal Funds7
2.6 Collection of Income, Dividends . . . . . . . . 7
2.7 Payment of Fund Monies. . . . . . . . . . . . . 8
1) Purchases. . . . . . . . . . . . . . . . . 8
2) Exchanges. . . . . . . . . . . . . . . . . 9
3) Redemptions. . . . . . . . . . . . . . . . 9
4) Expense and Liability. . . . . . . . . . . 9
5) Dividends. . . . . . . . . . . . . . . . . 9
6) Short Sale Dividend. . . . . . . . . . . .10
7) Loan . . . . . . . . . . . . . . . . . . .10
8) Miscellaneous. . . . . . . . . . . . . . .10
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased. . . . . . . . . . . . .10
2.9 Appointment of Agents . . . . . . . . . . . . .10
2.10 Deposit of Securities in Securities System. . .10
1) Account of Custodian . . . . . . . . . . .11
2) Records. . . . . . . . . . . . . . . . . .11
3) Payment of Fund Monies, Delivery of
Securities . . . . . . . . . . . . . . .11
4) Reports. . . . . . . . . . . . . . . . . .12
5) Annual Certificate . . . . . . . . . . . .12
6) Indemnification. . . . . . . . . . . . . .12
2.11 Fund Assets Held in the Custodian's Direct Paper
System. . . . . . . . . . . . . . . . . . . .13
2.12 Segregated Account. . . . . . . . . . . . . . .14
PAGE 3
2.13 Ownership Certificates for Tax Purposes . . . .15
2.14 Proxies . . . . . . . . . . . . . . . . . . . .15
2.15 Communications Relating to Fund Portfolio
Securities. . . . . . . . . . . . . . . . . .15
2.16 Reports to Fund by Independent Public
Accountants . . . . . . . . . . . . . . . . .16
3. Duties of the Custodian with Respect to Property
of the Fund Held Outside of the United States. . .16
3.1 Appointment of Foreign Sub-Custodians . . . . .16
3.2 Assets to be Held . . . . . . . . . . . . . . .17
3.3 Foreign Securities Depositories . . . . . . . .17
3.4 Segregation of Securities . . . . . . . . . . .17
3.5 Access of Independent Accountants of the Fund .17
3.6 Reports by Custodian. . . . . . . . . . . . . .18
3.7 Transactions in Foreign Assets of the Fund. . .18
3.8 Responsibility of Custodian, Sub-Custodian and
Fund. . . . . . . . . . . . . . . . . . . . .18
3.9 Monitoring Responsibilities . . . . . . . . . .19
3.10 Branches of U.S. Banks. . . . . . . . . . . . .19
4. Payments for Repurchases or Redemptions and Sales of
Shares of the Fund . . . . . . . . . . . . . . . .19
5. Proper Instructions. . . . . . . . . . . . . . . . .20
6. Actions Permitted Without Express Authority. . . . .21
7. Evidence of Authority, Reliance on Documents . . . .21
8. Duties of Custodian with Respect to the Books of Account
and Calculations of Net Asset Value and Net Income22
9. Records, Inventory . . . . . . . . . . . . . . . . .22
10. Opinion of Fund's Independent Accountant . . . . . .23
11. Compensation of Custodian. . . . . . . . . . . . . .23
12. Responsibility of Custodian. . . . . . . . . . . . .23
13. Effective Period, Termination and Amendment. . . . .25
14. Successor Custodian. . . . . . . . . . . . . . . . .26
15. Interpretive and Additional Provisions . . . . . . .28
16. Notice . . . . . . . . . . . . . . . . . . . . . . .28
17. Bond . . . . . . . . . . . . . . . . . . . . . . . .28
18. Confidentiality. . . . . . . . . . . . . . . . . . .29
19. Exemption from Liens . . . . . . . . . . . . . . . .29
20. Massachusetts Law to Apply . . . . . . . . . . . . .29
21. Prior Contracts. . . . . . . . . . . . . . . . . . .29
22. The Parties. . . . . . . . . . . . . . . . . . . . .30
23. Governing Documents. . . . . . . . . . . . . . . . .30
24. Subcustodian Agreement . . . . . . . . . . . . . . .30
25. Directors and Trustees . . . . . . . . . . . . . . .30
26. Massachusetts Business Trust . . . . . . . . . . . .30
27. Successors of Parties. . . . . . . . . . . . . . . .31
PAGE 4
CUSTODIAN CONTRACT
This Contract by and between State Street Bank and Trust
Company, a Massachusetts trust company, having its principal
place of business at 225 Franklin Street, Boston, Massachusetts,
02110 (hereinafter called the "Custodian"), and each fund which
is listed on Appendix A (as such Appendix may be amended from
time to time) and which evidences its agreement to be bound
hereby by executing a copy of this Contract (each such fund
individually hereinafter called the "Fund," whose definition may
be found in Section 22),
WITNESSETH: That in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto agree as
follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of
its assets, including securities it desires to be held in places
within the United States ("domestic securities") and securities
it desires to be held outside the United States ("foreign
securities") pursuant to the Governing Documents of the Fund.
The Fund agrees to deliver to the Custodian all securities and
cash now or hereafter owned or acquired by it, and all payments
of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for
such new or treasury shares of capital stock ("Shares") of the
Fund as may be issued or sold from time to time. The Custodian
shall not be responsible for any property of the Fund held or
received by the Fund and not delivered to the Custodian.
With respect to domestic securities, upon receipt of "Proper
Instructions" (within the meaning of Article 5), the Custodian
shall from time to time employ one or more sub-custodians located
in the United States, but only in accordance with an applicable
vote by the Board of Directors/Trustees of the Fund, and provided
that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of
any sub-custodian so employed than any such sub-custodian has to
the Custodian, and further provided that the Custodian shall not
release the sub-custodian from any responsibility or liability
unless mutually agreed upon by the parties in writing. With
respect to foreign securities and other assets of the Fund held
outside the United States, the Custodian shall employ Chase
Manhattan Bank, N.A., as a sub-custodian for the Fund in
accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of the Fund all
PAGE 5
non-cash property, to be held by it in the United States,
including all domestic securities owned by the Fund, other
than (a) securities which are maintained pursuant to Section
2.10 in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S.
Department of the Treasury, collectively referred to herein
as "Securities System," and (b) commercial paper of an
issuer for which the Custodian acts as issuing and paying
agent ("Direct Paper") which is deposited and/or maintained
in the Direct Paper System of the Custodian pursuant to
Section 2.11.
2.2 Delivery of Securities. The Custodian shall release
and deliver domestic securities owned by the Fund held by
the Custodian or in a Securities System account of the
Custodian or in the Custodian's Direct Paper book entry
system account ("Direct Paper System Account") only upon
receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by mutual agreement of
the parties, and only in the following cases:
1) Sale. Upon sale of such securities for the
account of the Fund and receipt of payment
therefor;
2) Repurchase Agreement. Upon the receipt of payment
in connection with any repurchase agreement
related to such securities entered into by the
Fund;
3) Securities System. In the case of a sale effected
through a Securities System, in accordance with
the provisions of Section 2.10 hereof;
4) Tender Offer. To the depository agent or other
receiving agent in connection with tender or other
similar offers for portfolio securities of the
Fund;
5) Redemption by Issuer. To the issuer thereof or
its agent when such securities are called,
redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) Transfer to Issuer, Nominee. Exchange. To the
issuer thereof, or its agent, for transfer into
the name of the Fund or into the name of any
nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or
nominee name of any sub-custodian appointed
pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other
evidence representing the same aggregate face
amount or number of units and bearing the same
interest rate, maturity date and call provisions,
PAGE 6
if any; provided that, in any such case, the new
securities are to be delivered to the Custodian;
7) Sale to Broker or Dealer. Upon the sale of such
securities for the account of the Fund, to the
broker or its clearing agent or dealer, against a
receipt, for examination in accordance with
"street delivery" custom; provided that in any
such case, the Custodian shall have no
responsibility or liability for any loss arising
from the delivery of such securities prior to
receiving payment for such securities except as
may arise from the Custodian's failure to act in
accordance with its duties as set forth in
Section 12.
8) Exchange or Conversion. For exchange or
conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization,
split-up of shares, change of par value or
readjustment of the securities of the issuer of
such securities, or pursuant to provisions for
conversion contained in such securities, or
pursuant to any deposit agreement provided that,
in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;
9) Warrants, Rights. In the case of warrants, rights
or similar securities, the surrender thereof in
the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or
temporary securities for definitive securities;
provided that, in any such case, the new
securities and cash, if any, are to be delivered
to the Custodian;
10) Loans of Securities. For delivery in connection
with any loans of securities made by the Fund, but
only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and
the Fund, which may be in the form of cash,
obligations issued by the United States
government, its agencies or instrumentalities, or
such other property as mutually agreed by the
parties, except that in connection with any loans
for which collateral is to be credited to the
Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury,
the Custodian will not be held liable or
responsible for the delivery of securities owned
by the Fund prior to the receipt of such
collateral, unless the Custodian fails to act in
accordance with its duties set forth in
Article 12;
PAGE 7
11) Borrowings. For delivery as security in
connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only
against receipt of amounts borrowed, except where
additional collateral is required to secure a
borrowing already made, subject to Proper
Instructions, further securities may be released
for that purpose;
12) Options. For delivery in accordance with the
provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing
Corporation, any registered national securities
exchange, any similar organization or
organizations, or the Investment Company Act of
1940, regarding escrow or other arrangements in
connection with transactions by the Fund;
13) Futures. For delivery in accordance with the
provisions of any agreement among the Fund, the
Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act,
relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any
Contract Market, any similar organization or
organizations, or the Investment Company Act of
1940, regarding account deposits in connection
with transactions by the Fund;
14) In-Kind Distributions. Upon receipt of
instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in
connection with distributions in kind, as may be
described from time to time in the Fund's
currently effective prospectus and statement of
additional information ("prospectus"), in
satisfaction of requests by holders of Shares for
repurchase or redemption;
15) Miscellaneous. For any other proper corporate
purpose, but only upon receipt of, in addition to
Proper Instructions, a certified copy of a
resolution of the Board of Directors/Trustees or
of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities to
be delivered, setting forth the purpose for which
such delivery is to be made, declaring such
PAGE 8
purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of
such securities shall be made; and
16) Type of Payment. In any or all of the above
cases, payments to the Fund shall be made in cash,
by a certified check upon or a treasurer's or
cashier's check of a bank, by effective bank wire
transfer through the Federal Reserve Wire System
or, if appropriate, outside of the Federal Reserve
Wire System and subsequent credit to the Fund's
Custodian account, or, in case of delivery through
a stock clearing company, by book-entry credit by
the stock clearing company in accordance with the
then current street custom, or such other form of
payment as may be mutually agreed by the parties,
in all such cases collected funds to be promptly
credited to the Fund.
2.3 Registration of Securities. Domestic securities held
by the Custodian (other than bearer securities) shall be
registered in the name of the Fund or in the name of any
nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless
the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered
investment companies having the same investment adviser as
the Fund, or in the name or nominee name of any agent
appointed pursuant to Section 2.9 or in the name or nominee
name of any sub-custodian appointed pursuant to Article 1.
All securities accepted by the Custodian on behalf of the
Fund under the terms of this Contract shall be in "street
name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the United States in
the name of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the
provisions hereof all cash received by it from or for the
account of the Fund, other than cash maintained by the Fund
in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for the Fund may be deposited for the
Fund's credit in the Banking Department of the Custodian or
in such other banks or trust companies as the Custodian may
in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the
funds to be deposited with each such bank or trust company
shall be approved by vote of a majority of the Board of
Directors/Trustees of the Fund. Such funds shall be
PAGE 9
deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that
capacity.
2.5 Sale of Shares and Availability of Federal Funds. Upon
mutual agreement between the Fund and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions,
make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for
Shares of the Fund which are deposited into the Fund's
account.
2.6 Collection of Income, Dividends. The Custodian shall
collect on a timely basis all income and other payments with
respect to United States registered securities held
hereunder to which the Fund shall be entitled either by law
or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to United States bearer securities if, on the date
of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income
or other payments, as collected, to the Fund's custodian
account. Without limiting the generality of the foregoing,
the Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on
securities held hereunder. The Custodian will also receive
and collect all stock dividends, rights and other items of
like nature as and when they become due or payable. Income
due the Fund on United States securities loaned pursuant to
the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty
or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Fund is
properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper
Instructions,
which may be continuing instructions when deemed appropriate
by mutual agreement of the parties, the Custodian shall pay
out monies of the Fund in the following cases only:
1) Purchases. Upon the purchase of domestic
securities, options, futures contracts or options
on futures contracts for the account of the Fund
but only (a) against the delivery of such
securities, or evidence of title to such options,
futures contracts or options on futures contracts,
to the Custodian (or any bank, banking firm or
trust company doing business in the United States
or abroad which is qualified under the Investment
PAGE 10
Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian
as its agent for this purpose in accordance with
Section 2.9 hereof) registered in the name of the
Fund or in the name of a nominee of the Fund or of
the Custodian referred to in Section 2.3 hereof or
in other proper form for transfer; (b) in the case
of a purchase effected through a Securities
System, in accordance with the conditions set
forth in Section 2.10 hereof or (c) in the case of
a purchase involving the Direct Paper System, in
accordance with the conditions set forth in
Section 2.11; or (d) in the case of repurchase
agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer
which is a member of NASD, (i) against delivery of
the securities either in certificate form or
through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities
or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the
Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Fund. All coupon bonds
accepted by the Custodian shall have the coupons
attached or shall be accompanied by a check
payable on coupon payable date for the interest
due on such date.
2) Exchanges. In connection with conversion,
exchange or surrender of securities owned by the
Fund as set forth in Section 2.2 hereof;
3) Redemptions. For the redemption or repurchase of
Shares issued by the Fund as set forth in Article
4 hereof;
4) Expense and Liability. For the payment of any
expense or liability incurred by the Fund,
including but not limited to the following
payments for the account of the Fund: interest,
taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund
whether or not such expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) Dividends. For the payment of any dividends or
other distributions to shareholders declared
pursuant to the Governing Documents of the Fund;
6) Short Sale Dividend. For payment of the amount of
dividends received in respect of securities sold
short;
7) Loan. For repayment of a loan upon redelivery of
pledged securities and upon surrender of the
PAGE 11
note(s), if any, evidencing the loan;
8) Miscellaneous. For any other proper purpose, but
only upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of
the Board of Directors/Trustees or of the
Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary
or an Assistant Secretary, specifying the amount
of such payment, setting forth the purpose for
which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be
made.
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased. In any and every case where payment
for purchase of domestic securities for the account of the
Fund is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been
received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time
or times in its discretion appoint (and may at any time
remove) any other bank or trust company, which is itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out
such of the provisions of this Article 2 as the Custodian
may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of
its responsibilities or liabilities hereunder.
2.10 Deposit of Securities in Securities Systems. The
Custodian may deposit and/or maintain domestic securities
owned by the Fund in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal
agencies, collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and
regulations, if any, and subject to the following
provisions:
1) Account of Custodian. The Custodian may keep
domestic securities of the Fund in a Securities
System provided that such securities are
represented in an account ("Account") of the
Custodian in the Securities System which shall not
include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise
PAGE 12
for customers;
2) Records. The records of the Custodian, with
respect to domestic securities of the Fund which
are maintained in a Securities System, shall
identify by book-entry those securities belonging
to the Fund;
3) Payment of Fund Monies, Delivery of Securities.
Subject to Section 2.7, the Custodian shall pay
for domestic securities purchased for the account
of the Fund upon (i) receipt of advice from the
Securities System that such securities have been
transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to
reflect such payment and transfer for the account
of the Fund. Subject to Section 2.2, the
Custodian shall transfer domestic securities sold
for the account of the Fund upon (i) receipt of
advice from the Securities System that payment for
such securities has been transferred to the
Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies
of all advices from the Securities System of
transfers of domestic securities for the account
of the Fund shall identify the Fund, be maintained
for the Fund by the Custodian and be provided to
the Fund at its request. The Custodian shall
furnish the Fund confirmation of each transfer to
or from the account of the Fund in the form of a
written advice or notice and shall furnish to the
Fund copies of daily transaction sheets reflecting
each day's transactions in the Securities System
for the account of the Fund;
4) Reports. The Custodian shall provide the Fund
with any report obtained by the Custodian on the
Securities System's accounting system, internal
accounting control and procedures for safeguarding
domestic securities deposited in the Securities
System, and further agrees to provide the Fund
with copies of any documentation it has relating
to its arrangements with the Securities Systems as
set forth in this Agreement or as otherwise
required by the Securities and Exchange
Commission;
5) Annual Certificate. The Custodian shall have
received the initial or annual certificate, as the
case may be, required by Article 13 hereof;
6) Indemnification. Anything to the contrary in this
Contract notwithstanding, the Custodian shall be
liable to the Fund for any loss or expense,
PAGE 13
including reasonable attorneys fees, or damage to
the Fund resulting from use of the Securities
System by reason of any failure by the Custodian
or any of its agents or of any of its or their
employees or agents or from failure of the
Custodian or any such agent to enforce effectively
such rights as it may have against the Securities
System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the
Custodian with respect to any claim against the
Securities System or any other person which the
Custodian may have as a consequence of any such
loss, expense or damage if and to the extent that
the Fund has not been made whole for any such
loss, expense or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper
System. The Custodian may deposit and/or maintain
securities owned by the Fund in the Direct Paper System of
the Custodian subject to the following provisions:
1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in
the Direct Paper System only if such securities
are represented in an account ("Account") of the
Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to
securities of the Fund which are maintained in the
Direct Paper System shall identify by book-entry
those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased
for the account of the Fund upon the making of an
entry on the records of the Custodian to reflect
such payment and transfer of securities to the
account of the Fund. The Custodian shall transfer
securities sold for the account of the Fund upon
the making of an entry on the records of the
Custodian to reflect such transfer and receipt of
payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation
of each transfer to or from the account of the
Fund, in the form of a written advice or notice,
of Direct Paper on the next business day following
such transfer and shall furnish to the Fund copies
of daily transaction sheets reflecting each day's
transaction in the Securities System for the
account of the Fund;
PAGE 14
6) The Custodian shall provide the Fund with any
report on its system of internal accounting
control as the Fund may reasonably request from
time to time;
2.12 Segregated Account. The Custodian shall, upon receipt
of Proper Instructions, which may be of a continuing nature
where deemed appropriate by mutual agreement of the parties,
establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts
may be transferred cash and/or securities, including
securities maintained in an account by the Custodian
pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund, the Custodian
and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization
or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund, (ii) for purposes
of segregating cash or government securities in connection
with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or
sold by the Fund, (iii) for the purposes of compliance by
the Fund with the procedures required by Investment Company
Act Release No. 10666, or any subsequent release, rule or
policy, of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt
of, in addition to Proper Instructions, a certified copy of
a resolution of the Board of Directors/Trustees or of the
Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate
purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it and in
connection with transfers of such securities.
2.14 Proxies. If the securities are registered other than
in the name of the Fund or a nominee of the Fund, the
Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the
PAGE 15
registered holder of such securities, all proxies, without
indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Fund such proxies,
all proxy soliciting materials and all notices relating to
such securities.
2.15 Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to the Fund all
written information (including, without limitation, pendency
of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund and the
maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the domestic
securities being held for the Fund by the Custodian, an
agent appointed under Section 2.9, or sub-custodian
appointed under Section 1. With respect to tender or
exchange offers, the Custodian shall transmit promptly to
the Fund all written information received by the Custodian,
an agent appointed under Section 2.9, or sub-custodian
appointed under Section 1 from issuers of the domestic
securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer.
If the Fund desires to take action with respect to any
tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian of such
desired action at least 72 hours (excluding holidays and
weekends) prior to the time such action must be taken under
the terms of the tender, exchange offer, or other similar
transaction, and it will be the responsibility of the
Custodian to timely transmit to the appropriate person(s)
the Fund's notice. Where the Fund does not notify the
Custodian of its desired action within the aforesaid 72 hour
period, the Custodian shall use its best efforts to timely
transmit the Fund's notice to the appropriate person.
2.16 Reports to Fund by Independent Public Accountants. The
Custodian shall provide the Fund, at such times as the Fund
may reasonably require, with reports by independent public
accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including
domestic securities deposited and/or maintained in a
Securities System, relating to the services provided by the
Custodian under this Contract; such reports shall be of
sufficient scope and in sufficient detail, as may reasonably
be required by the Fund to provide reasonable assurance that
any material inadequacies existing or arising since the
prior examination would be disclosed by such examination.
The reports must describe any material inadequacies
disclosed and, if there are no such inadequacies, the
reports shall so state.
PAGE 16
3. Duties of the Custodian with Respect to Property of the Fund
Held Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Custodian
is authorized and instructed to employ Chase Manhattan Bank,
N.A, ("Chase") as sub-custodian for the Fund's securities,
cash and other assets maintained outside of the United
States ("foreign assets") all as described in the
Subcustodian Agreement between the Custodian and Chase.
Upon receipt of "Proper Instructions", together with a
certified resolution of the Fund's Board of
Directors/Trustees, the Custodian and the Fund may agree to
designate additional proper institutions and foreign
securities depositories to act as sub-custodians of the
Fund's foreign assets. Upon receipt of Proper Instructions
from the Fund, the Custodian shall cease the employment of
any one or more of such sub-custodians for maintaining
custody of the Fund's foreign assets.
3.2 Assets to be Held. The Custodian shall limit the
foreign assets maintained in the custody of foreign sub-
custodians to foreign assets specified under the terms of
the Subcustodian Agreement between the Custodian and Chase.
3.3 Foreign Securities Depositories. Except as may
otherwise be agreed upon in writing by the Custodian and the
Fund, foreign assets of the Fund shall be maintained in
foreign securities depositories only through arrangements
implemented by the banking institutions serving as sub-
custodians pursuant to the terms hereof.
3.4 Segregation of Securities. The Custodian shall
identify on its books as belonging to the Fund, the foreign
assets of the Fund held by Chase and by each foreign sub-
custodian.
3.5 Access of Independent Accountants of the Fund. Upon
request of the Fund, the Custodian will use its best efforts
(subject to applicable law) to arrange for the independent
accountants, officers or other representatives of the Fund
or the Custodian to be afforded access to the books and
records of Chase and any banking or other institution
employed as a sub-custodian for the Fund by Chase or the
Custodian insofar as such books and records relate to the
performance of Chase or such banking or other institution
under any agreement with the Custodian or Chase. Upon
request of the Fund, the Custodian shall furnish to the Fund
such reports (or portions thereof) of Chase's external
auditors as are available to the Custodian and which relate
directly to Chase's system of internal accounting controls
applicable to Chase's duties as a subcustodian or which
relate to the internal accounting controls of any
subcustodian employed by Chase with respect to foreign
assets of the Fund.
PAGE 17
3.6 Reports by Custodian. The Custodian will supply to the
Fund from time to time, as mutually agreed upon, statements
in respect of the foreign assets of the Fund held pursuant
to the terms of the Subcustodian Agreement between the
Custodian and Chase, including but not limited, to an
identification of entities having possession of the Fund's
foreign assets and advices or notifications of any transfers
of foreign assets to or from each custodial account
maintained by any sub-custodian on behalf of the Fund
indicating, as to foreign assets acquired for the Fund, the
identity of the entity having physical possession of such
foreign assets.
3.7 Transactions in Foreign Assets of the Fund. All
transactions with respect to the Fund's foreign assets shall
be in accordance with, and subject to, the provisions of the
Subcustodian Agreement between Chase and the Custodian.
3.8 Responsibility of Custodian, Sub-Custodian, and Fund.
Notwithstanding anything to the contrary in this Custodian
Contract, the Custodian shall not be liable to the Fund for
any loss, damage, cost, expense, liability or claim arising
out of or in connection with the maintenance of custody of
the Fund's foreign assets by Chase or by any other banking
institution or securities depository employed pursuant to
the terms of any Subcustodian Agreement between Chase and
the Custodian, except that the Custodian shall be liable for
any such loss, damage, cost, expense, liability or claim to
the extent provided in the Subcustodian Agreement between
Chase and the Custodian or attributable to the failure of
the Custodian to exercise the standard of care set forth in
Article 12 hereof in the performance of its duties under
this Contract or such Subcustodian Agreement. At the
election of the Fund, the Fund shall be entitled to be
subrogated to the rights of the Custodian under the
Subcustodian Agreement with respect to any claims arising
thereunder against Chase or any other banking institution or
securities depository employed by Chase if and to the extent
that the Fund has not been made whole therefor. As between
the Fund and the Custodian, the Fund shall be solely
responsible to assure that the maintenance of foreign
securities and cash pursuant to the terms of the
Subcustodian Agreement complies with all applicable rules,
regulations, interpretations and orders of the Securities
and Exchange Commission, and the Custodian assumes no
responsibility and makes no representations as to such
compliance.
3.9 Monitoring Responsibilities. With respect to the
Fund's foreign assets, the Custodian shall furnish annually
to the Fund, during the month of June, information
concerning the sub-custodians employed by the Custodian.
PAGE 18
Such information shall be similar in kind and scope to that
furnished to the Fund in connection with the initial
approval of this Contract. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian
learns of a material adverse change in the financial
condition of a sub-custodian.
3.10 Branches of U.S. Banks. Except as otherwise set forth
in this Contract, the provisions of this Article 3 shall not
apply where the custody of the Fund's assets is maintained
in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment
Company Act of 1940 which meets the qualification set forth
in Section 26(a) of said Act. The appointment of any such
branch as a sub-custodian shall be governed by Section 1 of
this Contract.
4. Payments for Repurchases or Redemptions and Sales of Shares
of the Fund
From such funds as may be available for the purpose but
subject to the limitations of the Governing Documents of the Fund
and any applicable votes of the Board of Directors/Trustees of
the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of the
Fund, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholder. In connection with
the redemption or repurchase of Shares of the Fund, the Custodian
shall honor checks drawn on the Custodian by a holder of Shares,
which checks have been furnished by the Fund to the holder of
Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to
time between the Fund and the Custodian.
The Custodian shall receive from the distributor for the
Fund's Shares or from the Transfer Agent of the Fund and deposit
as received into the Fund's account such payments as are received
for Shares of the Fund issued or sold from time to time by the
Fund. The Custodian will provide timely notification to the Fund
and the Transfer Agent of any receipt by it of payments for
Shares of the Fund.
5. Proper Instructions
Proper Instructions as used herein means a writing signed or
initialled by one or more person or persons as the Board of
Directors/Trustees shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the
purpose for which such action is requested, or shall be a blanket
instruction authorizing specific transactions of a repeated or
PAGE 19
routine nature. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all
oral instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the
authorization by the Board of Directors/Trustees of the Fund
accompanied by a detailed description of procedures approved by
the Board of Directors/Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or
electronic devices provided that the Board of Directors/Trustees
and the Custodian are satisfied that such procedures afford
adequate safeguards for the Fund's assets.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express
authority from the Fund:
1) make payments to itself or others for minor
expenses of handling securities or other similar
items relating to its duties under this Contract,
provided that all such payments shall be accounted
for to the Fund;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments on
the same day as received; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange,
substitution, purchase, transfer and other
dealings with the securities and property of the
Fund except as otherwise directed by the Board of
Directors/Trustees of the Fund.
7. Evidence of Authority, Reliance on Documents
The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other
instrument or paper reasonably and in good faith believed by it
to be genuine and to have been properly executed by or on behalf
of the Fund in accordance with Article 5 hereof. The Custodian
may receive and accept a certified copy of a vote of the Board of
Directors/Trustees of the Fund as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or
(b) of any determination or of any action by the Board of
Directors/Trustees pursuant to the Governing Documents of the
Fund as described in such vote, and such vote may be considered
as in full force and effect until receipt by the Custodian of
written notice to the contrary. So long as and to the extent
that it is in the exercise of the standard of care set forth in
Article 12 hereof, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of
title thereto received by it or delivered by it pursuant to this
PAGE 20
Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party
or parties.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the person or persons appointed by the Board of
Directors/Trustees of the Fund to keep the books of account of
the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do
so by the Fund, shall itself keep such books of account and/or
compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Fund
as described in the Fund's currently effective prospectus and
shall advise the Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various
components. The calculations of the net asset value per share
and the daily income of the Fund shall be made at the time or
times and in the manner described from time to time in the Fund's
currently effective prospectus.
9. Records, Inventory
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the
Fund. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the
Custodian be open for inspection and audit by duly authorized
officers, employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission, and, in the
event of termination of this Agreement, will be delivered in
accordance with Section 14 hereof. The Custodian shall, at the
Fund's request, supply the Fund with a tabulation of securities
owned by the Fund and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall
be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations. The Custodian shall
conduct a periodic inventory of all securities and other property
subject to this Agreement and provide to the Fund a periodic
reconciliation of the vaulted position of the Fund to the
appraised position of the Fund. The Custodian will promptly
report to the Fund the results of the reconciliation, indicating
any shortages or discrepancies uncovered thereby, and take
appropriate action to remedy any such shortages or discrepancies.
PAGE 21
10. Opinion of Fund's Independent Accountant
The Custodian shall cooperate with the Fund's independent
public accountants in connection with the annual and other audits
of the books and records of the Fund and take all reasonable
action, as the Fund may from time to time request, to provide
from year to year the necessary information to such accountants
for the expression of their opinion without any qualification as
to the scope of their examination, including but not limited to,
any opinion in connection with the preparation of the Fund's Form
N-lA, and Form N-SAR or other annual reports to the Securities
and Exchange Commission and with respect to any other
requirements of such Commission.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation
for its services and expenses as Custodian, as agreed upon from
time to time between the Fund and the Custodian.
12. Responsibility of Custodian
Notwithstanding anything to the contrary in this Agreement,
the Custodian shall be held to the exercise of reasonable care in
carrying out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence.
In order for the indemnification provision contained in this
Section to apply, it is understood that if in any case the Fund
may be asked to indemnify or save the Custodian harmless, the
Fund shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further
understood that the Custodian will use all reasonable care to
identify and notify the Fund promptly concerning any situation
which presents or appears likely to present the probability of
such a claim for indemnification against the Fund. The Fund,
shall have the option to defend the Custodian against any claim
which may be the subject of this indemnification, and in the
event that the Fund so elects, it will so notify the Custodian,
and thereupon the Fund shall take over complete defense of the
claim and the Custodian shall in such situation initiate no
further legal or other expenses for which it shall seek
indemnification under this Section. The Custodian shall in no
case confess any claim or make any compromise in any case in
which the Fund will be asked to indemnify the Custodian except
with the Fund's prior written consent. Nothing herein shall be
construed to limit any right or cause of action on the part of
the Custodian under this Contract which is independent of any
right or cause of action on the part of the Fund. The Custodian
shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Fund or such other counsel as may be
agreed to by the parties) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to
such advice. Notwithstanding the foregoing, the responsibility
PAGE 22
of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate Agreement entered into
between the Custodian and the Fund.
If the Fund requires the Custodian to take any action with
respect to securities, which action involves the payment of money
or which action may, in the opinion of the Custodian, result in
the Custodian or its nominee assigned to the Fund being liable
for the payment of money or incurring liability of some other
form, the Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or
securities for any purpose or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the
account of the Fund shall be security therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the Fund's
assets to the extent necessary to obtain reimbursement, provided
that the Custodian gives the Fund reasonable notice to repay such
cash or securities advanced, however, such notice shall not
preclude the Custodian's right to assert any lien under this
provision.
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage
prepaid to the other party, such termination to take effect not
sooner than sixty (60) days after the date of such delivery or
mailing in the case of a termination by the Fund, and not sooner
than 180 days after the date of such delivery or mailing in the
case of a termination by the Custodian; provided, however that
the Custodian shall not act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Directors/Trustees of
the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary
or an Assistant Secretary that the Board of Directors/Trustees
has reviewed the use by the Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company
Act of 1940, as amended and that the Custodian shall not act
under Section 2.11 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the
Board of Directors/Trustees has approved the initial use of the
Direct Paper System and the receipt of an annual certificate of
PAGE 23
the Secretary or an Assistant Secretary that the Board of
Directors/Trustees has reviewed the use by the Fund of the Direct
Paper System; provided further, however, that the Fund shall not
amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the
Governing Documents of the Fund, and further provided, that the
Fund may at any time by action of its Board of Directors/Trustees
(i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event
at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements, provided that the Custodian
shall not incur any costs, expenses or disbursements specifically
in connection with such termination unless it has received prior
approval from the Fund, which approval shall not be unreasonably
withheld.
14. Successor Custodian
If a successor custodian shall be appointed by the Board of
Directors/Trustees of the Fund, the Custodian shall, upon
termination, deliver to such successor custodian at the office of
the Custodian, duly endorsed and in the form for transfer, all
securities, funds and other properties then held by it hereunder
and shall transfer to an account of the successor custodian all
of the Fund's securities held in a Securities System. The
Custodian shall also use its best efforts to assure that the
successor custodian will continue any subcustodian agreement
entered into by the Custodian and any subcustodian on behalf of
the Fund.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Directors/Trustees of the Fund, deliver
at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of
Directors/Trustees shall have been delivered to the Custodian on
or before the date when such termination shall become effective,
then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the Investment
Company Act of 1940, doing business in Boston, Massachusetts, of
its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not
PAGE 24
less than $25,000,000, all securities, funds and other properties
held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this
Contract and to transfer to an account of such successor
custodian all of the Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of the vote referred to or of the Board of
Directors/Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this
Contract relating to the duties and obligations of the Custodian
shall remain in full force and effect. If while this Contract is
in force the Fund shall be liquidated pursuant to law, the
Custodian shall distribute, either in cash or (if the Fund so
orders) in the portfolio securities and other assets of the Fund,
pro rata among the holders of shares of the Fund as certified by
the Transfer Agent, the property of the Fund which remains after
paying or satisfying all expenses and liabilities of the Fund.
Section 12 hereof shall survive any termination of this Contract.
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with
the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Governing Documents of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
16. Notice
Any notice shall be sufficiently given when sent by
registered or certified mail, or by such other means as the
parties shall agree, to the other party at the address of such
party set forth above or at such other address as such party may
from time to time specify in writing to the other party.
17. Bond
The Custodian shall, at all times, maintain a bond in such
form and amount as is acceptable to the Fund which shall be
issued by a reputable fidelity insurance company authorized to do
business in the place where such bond is issued against larceny
PAGE 25
and embezzlement, covering each officer and employee of the
Custodian who may, singly or jointly with others, have access to
securities or funds of the Fund, either directly or through
authority to receive and carry out any certificate instruction,
order request, note or other instrument required or permitted by
this Agreement. The Custodian agrees that it shall not cancel,
terminate or modify such bond insofar as it adversely affects the
Fund except after written notice given to the Fund not less than
10 days prior to the effective date of such cancellation,
termination or modification. The Custodian shall furnish to the
Fund a copy of each such bond and each amendment thereto.
18. Confidentiality
The Custodian agrees to treat all records and other
information relative to the Fund and its prior, present or future
shareholders as confidential, and the Custodian, on behalf of
itself and its employees, agrees to keep confidential all such
information except, after prior notification to and approval in
writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Custodian may be
exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
19. Exemption from Liens
The securities and other assets held by the Custodian for
the Fund shall be subject to no lien or charge of any kind in
favor of the Custodian or any person claiming through the
Custodian, but nothing herein shall be deemed to deprive the
Custodian of its right to invoke any and all remedies available
at law or equity to collect amounts due it under this Agreement.
Neither the Custodian nor any sub-custodian appointed pursuant to
Section 1 hereof shall have any power or authority to assign,
hypothecate, pledge or otherwise dispose of any securities held
by it for the Fund, except upon the direction of the Fund, duly
given as herein provided, and only for the account of the Fund.
20. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth
of Massachusetts.
21. Prior Contracts
Without derogating any of the rights established by such
contracts, this Contract supersedes and terminates, as of the
date hereof, all prior contracts between the Fund and the
Custodian relating to the custody of the Fund's assets.
22. The Parties
All references herein to "the Fund" are to each of the funds
listed on Appendix A individually, as if this Contract were
between such individual fund and the Custodian. In the case of a
series fund or trust, all references to "the Fund" are to the
individual series or portfolio of such fund or trust, or to such
fund or trust on behalf of the individual series or portfolio, as
PAGE 26
appropriate. Any reference in this Contract to "the parties"
shall mean the Custodian and such other individual Fund as to
which the matter pertains.
23. Governing Documents.
The term "Governing Documents" means the Articles of
Incorporation, Agreement of Trust, By-Laws and Registration
Statement filed under the Securities Act of 1933, as amended from
time to time.
24. Subcustodian Agreement.
Reference to the "Subcustodian Agreement" between the
Custodian and Chase shall mean any such agreement which shall be
in effect from time to time between Chase and the Custodian with
respect to foreign assets of the Fund.
25. Directors and Trustees.
It is understood and is expressly stipulated that neither
the holders of shares in the Fund nor any Directors or Trustees
of the Fund shall be personally liable hereunder.
26. Massachusetts Business Trust
With respect to any Fund which is a party to this Contract
and which is organized as a Massachusetts business trust, the
term Fund means and refers to the trustees from time to time
serving under the applicable trust agreement (Declaration of
Trust) of such Trust as the same may be amended from time to
time. It is expressly agreed that the obligations of any such
Trust hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the trust property of the Trust,
as provided in the Declaration of Trust of the Trust. The
execution and delivery of this Contract has been authorized by
the trustees and signed by an authorized officer of the Trust,
acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed
to have been made by any of them but shall bind only the trust
property of the Trust as provided in its Declaration of Trust.
27. Successors of Parties.
This Contract shall be binding on and shall inure to the
benefit of the Fund and the Custodian and their respective
successors.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the dates indicated below.
DATED: September 28, 1987
__________________
PAGE 27
STATE STREET BANK AND TRUST
COMPANY
ATTEST:
/s/Kathleen M. Kubit By/s/Charles Cassidy
_____________________ _________________________________
Assistant Secretary Vice President
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Stock Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
PAGE 28
(SIGNATURES CONTINUED)
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
New York Tax-Free Money Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
New York Tax-Free Bond Fund
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
DATED: September 28, 1987
___________________
ATTEST:
/s/Nancy J. Wortman By/s/Carmen F. Deyesu
____________________________ __________________________________
PAGE 29
Appendix A
The following Funds are parties to this Agreement and have
so indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price California Tax-Free Income Trust on behalf of
the
California Tax-Free Bond Fund and
California Tax-Free Money Fund
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Equity Income Fund
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Institutional Trust on behalf of the
Tax-Exempt Reserve Portfolio
T. Rowe Price International Trust on behalf of the
T. Rowe Price International Bond Fund and
T. Rowe Price International Stock Fund
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price State Tax-Free Income Trust on behalf of the
Maryland Tax-Free Bond Fund,
New York Tax-Free Bond Fund and
New York Tax-Free Money Fund
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
T. Rowe Price U.S. Treasury Money Fund, Inc.
PAGE 30
AMENDMENT NO. 1 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
THIS AGREEMENT, made as of this 24th day of June, 1988, by
and between: T. Rowe Price Growth Stock Fund, Inc., T. Rowe Price
New Horizons Fund, Inc., T. Rowe Price New Era Fund, Inc., T.
Rowe Price New Income Fund, Inc., T. Rowe Price Prime Reserve
Fund, Inc., T. Rowe Price International Trust, T. Rowe Price U.S.
Treasury Money Fund, Inc., T. Rowe Price Growth & Income Fund,
Inc., T. Rowe Price Tax-Exempt Money Fund, Inc., T. Rowe Price
Tax-Free Income Fund, Inc., T. Rowe Price Tax-Free Short-
Intermediate Fund, Inc., T. Rowe Price Short-Term Bond Fund,
Inc., T. Rowe Price High Yield Fund, Inc., T. Rowe Price Tax-Free
High Yield Fund, Inc., T. Rowe Price New America Growth Fund, T.
Rowe Price Equity Income Fund, T. Rowe Price GNMA Fund, T. Rowe
Price Capital Appreciation Fund, T. Rowe Price Institutional
Trust, T. Rowe Price State Tax-Free Income Trust, T. Rowe Price
California Tax-Free Income Trust, T. Rowe Price Science &
Technology Fund, Inc., (hereinafter together called the "Funds"
and individually "Fund") and State Street Bank and Trust Company,
a Massachusetts trust,
W I T N E S S E T H:
It is mutually agreed that the Custodian Contract made by
the parties on the 28th day of September, 1987, is hereby amended
by adding thereto the T. Rowe Price Small-Cap Value Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW HORIZONS FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW ERA FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW INCOME FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
PAGE 31
(SIGNATURES CONTINUED)
T. ROWE PRICE PRIME RESERVE FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE INTERNATIONAL TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
/s/Henry H.Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE GROWTH & INCOME FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE HIGH YIELD FUND, INC.
/s/ Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
PAGE 32
(SIGNATURES CONTINUED)
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW AMERICA GROWTH FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE EQUITY INCOME FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE GNMA FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE CAPITAL APPRECIATION FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE INSTITUTIONAL TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
PAGE 33
(SIGNATURES CONTINUED)
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/William Blackwell
______________________________________________
By:
PAGE 34
AMENDMENT NO. 2 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, between State Street Bank and Trust Company and
each of the Parties listed on Appendix A thereto is hereby
further amended, as of October 19, 1988, by adding thereto the T.
Rowe Price International Discovery Fund, Inc., a separate series
of T. Rowe Price International Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
PAGE 35
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Guy R. Sturgeon
______________________________________________
By:
PAGE 36
AMENDMENT NO. 3 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988 and October 19, 1988, between State Street Bank and
Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of February 22, 1989, by
adding thereto the T. Rowe Price International Equity Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
PAGE 37
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/K. Donelson
______________________________________________
By:
PAGE 38
AMENDMENT NO. 4 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988 and February 22, 1989, between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
July 19, 1989, by adding thereto the Institutional International
Funds, Inc., on behalf of the Foreign Equity Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
PAGE 39
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 40
AMENDMENT NO. 5 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, and July 19,
1989 between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of September 15, 1989, by adding thereto the T. Rowe Price
U.S. Treasury Funds, Inc., on behalf of the U.S. Treasury
Intermediate Fund and the U.S. Treasury Long-Term Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
PAGE 41
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 42
AMENDMENT NO. 6 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19, 1989
and September 15, 1989, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is
hereby further amended, as of December 15, 1989, by restating
Section 2.15 as follows:
2.15 Communications Relating to Fund Portfolio Securities. The
Custodian shall transmit promptly to the Fund all written
information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put
options written by the Fund and the maturity of futures contracts
purchased or sold by the Fund) received by the Custodian from
issuers of the domestic securities being held for the Fund by the
Custodian, an agent appointed under Section 2.9, or sub-custodian
appointed under Section 1. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund all
written information received by the Custodian, an agent appointed
under Section 2.9, or sub-custodian appointed under Section 1
from issuers of the domestic securities whose tender or exchange
is sought and from the party (or his agents) making the tender or
exchange offer. If the Fund desires to take action with respect
to any tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian of such desired
action at least 48 hours (excluding holidays and weekends) prior
to the time such action must be taken under the terms of the
tender, exchange offer, or other similar transaction, and it will
be the responsibility of the Custodian to timely transmit to the
appropriate person(s) the Fund's notice. Where the Fund does not
notify the custodian of its desired action within the aforesaid
48 hour period, the Custodian shall use its best efforts to
timely transmit the Fund's notice to the appropriate person. It
is expressely noted that the parties may negotiate and agree to
alternative procedures with respect to such 48 hour notice period
on a selective and individual basis.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
PAGE 43
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
PAGE 44
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U. S. TREASURY FUNDS, INC.
U. S. Treasury Intermediate Fund
U. S. Treasury Long-Term Fund
/s/Carmen F. Deyesu
______________________________________________
By: Carmen F. Deyesu,
Treasurer
STATE STREET BANK AND TRUST COMPANY
/s/ E. D. Hawkes, Jr.
______________________________________________
By: E. D. Hawkes, Jr.
Vice President
PAGE 45
Amendment No. 7 filed on Form SE January 25, 1990 with
International Trust (CIK 313212) Post Effective Amendment No. 17.
PAGE 46
AMENDMENT NO. 8 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, and December 20,
1989, between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of January 25, 1990, by adding thereto the T. Rowe Price
European Stock Fund, a separate series of T. Rowe Price
International Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 47
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 48
AMENDMENT NO. 9 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
and January 25, 1990 between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of February 21, 1990, by adding thereto the
T. Rowe Price Index Trust, Inc., on behalf of the T. Rowe Price
Equity Index Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 49
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
___________________________________________
By:
PAGE 50
AMENDMENT NO. 10 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, between State Street Bank
and Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of June 12, 1990, by adding
thereto the T. Rowe Price Spectrum Fund, Inc., on behalf of the
Spectrum Growth Fund and the Spectrum Income Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 51
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
___________________________________________
By:
PAGE 52
AMENDMENT NO. 11 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, and June 12, 1990 between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
July 18, 1990, by adding thereto the T. Rowe Price New Asia Fund,
a separate series of the T. Rowe Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
PAGE 53
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Guy R. Sturgeon
___________________________________________
By: Guy R. Sturgeon
PAGE 54
AMENDMENT NO. 12 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, and July 18,
1990 between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of October 15, 1990, by adding thereto the T. Rowe Price
Global Government Bond Fund, a separate series of the T. Rowe
Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 55
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Guy R. Sturgeon
___________________________________________
By:
PAGE 56
AMENDMENT NO. 13 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, and October 15, 1990, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is
hereby further amended, as of February 13, 1991, by adding
thereto the Virginia Tax-Free Bond Fund and New Jersey Tax-Free
Bond Fund, two separate series of the T. Rowe Price State Tax-
Free Income Trust
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
PAGE 57
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Guy Sturgeon
___________________________________________
By: Vice President
PAGE 58
AMENDMENT NO. 14 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, and February 13, 1991, between State
Street Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of March 6,
1991, by adding thereto the T. Rowe Price Balanced Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 59
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
___________________________________________
By:
PAGE 60
AMENDMENT NO. 15 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, and March 6, 1991,
between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of September 12, 1991, by adding thereto the T. Rowe Price
Adjustable Rate U.S. Government Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 61
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S.
GOVERNMENT FUND, INC.
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
PAGE 62
STATE STREET BANK AND TRUST COMPANY
/s/
___________________________________________
By:
PAGE 63
AMENDMENT NO. 16 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as
amended June 24, 1988, October 19, 1988, February 22, 1989, July
19, 1989, September 15, 1989, December 15, 1989, December 20,
1989, January 25, 1990, February 21, 1990, June 12, 1990, July
18, 1990, October 15, 1990, February 13, 1991, March 6, 1991 and
September 12, 1991, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of November 6, 1991, by adding thereto the T.
Rowe Price Japan Fund, a separate series of the T. Rowe Price
International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
PAGE 64
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S.
GOVERNMENT FUND, INC.
PAGE 65
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
___________________________________________
By:
PAGE 66
AMENDMENT NO. 17 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991 and November 6, 1991, between State Street
Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of April 23,
1992, by adding thereto the T. Rowe Price Mid-Cap Growth Fund,
Inc. and T. Rowe Price Short-Term Global Income Fund, a separate
series of the T. Rowe Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
PAGE 67
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
/s/Henry H. Hopkins
__________________________________
By:Henry H. Hopkins, Vice President
PAGE 68
STATE STREET BANK AND TRUST COMPANY
/s/
_________________________________________
By:
PAGE 69
AMENDMENT NO. 18 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, and April 23, 1992, between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
September 2, 1992, by adding thereto the T. Rowe Price OTC Fund,
a series of the T. Rowe Price OTC Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 70
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By:Henry H. Hopkins, Vice President
PAGE 71
STATE STREET BANK AND TRUST COMPANY
/s/
_____________________________________________
By:
PAGE 72
AMENDMENT NO. 19 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, and
September 2, 1992, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of November 3, 1992, by adding thereto the T.
Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 73
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
PAGE 74
/s/Henry H. Hopkins
______________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 75
AMENDMENT NO. 20 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, and November 3, 1992, between State Street Bank and
Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of December 16, 1992, by
adding thereto the T. Rowe Price Dividend Growth Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 76
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
PAGE 77
/s/Henry H. Hopkins
______________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 78
AMENDMENT NO. 21 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, and December 16, 1992, between State
Street Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of December 21,
1992, by adding thereto the Maryland Short-Term Tax-Free Bond
Fund, an additional series to the T. Rowe Price State Tax-Free
Income Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 79
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
PAGE 80
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 81
AMENDMENT NO. 22 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, and December 21,
1992, between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of January 28, 1993, by adding thereto the Georgia Tax-Free
Bond Fund and the Florida Insured Intermediate Tax-Free Fund,
additional series to the T. Rowe Price State Tax-Free Income
Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 82
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
PAGE 83
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 84
AMENDMENT NO. 23 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
and January 28, 1993, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of April 22, 1993, by adding thereto the T.
Rowe Price Blue Chip Growth Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
PAGE 85
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
PAGE 86
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_______________________________________________
By:
PAGE 87
AMENDMENT NO. 24 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, between State Street Bank and
Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of September 16, 1993, by
adding thereto the T. Rowe Price Summit Funds, Inc. and T. Rowe
Price Summit Municipal Funds, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Summit Funds, Inc. and T. Rowe
Price Summit Municipal Funds, Inc. (collectively referred to as
the "Funds") shall not be responsible for paying any of the fees
or expenses set forth herein but that, in accordance with the
Investment Management Agreement, dated September 16, 1993,
between the Funds and T. Rowe Price Associates, Inc. ("T. Rowe
Price"), the Funds will require T. Rowe Price to pay all such
fees and expenses.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
PAGE 88
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 89
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
/s/Henry H. Hopkins
_____________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_____________________________________________
By:
PAGE 90
AMENDMENT NO. 25 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, and September 16, 1993, between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
November 3, 1993, by adding thereto the T. Rowe Price Latin
America Fund, a separate series of the T. Rowe Price
International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
PAGE 91
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
PAGE 92
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
/s/Henry H. Hopkins
_____________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_____________________________________________
By:
PAGE 93
AMENDMENT NO. 26 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, and
November 3, 1993, between State Street Bank and Trust Company and
each of the Parties listed on Appendix A thereto is hereby
further amended, as of March 1, 1994, by adding thereto the T.
Rowe Price Equity Income Portfolio and T. Rowe Price New America
Growth Portfolio, two separate series of the T. Rowe Price Equity
Series, Inc. and T. Rowe Price International Stock Portfolio, a
separate series of the T. Rowe Price International Series, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Equity Series, Inc. and T. Rowe
Price International Series, Inc. (collectively referred to as the
"Funds") shall not be responsible for paying any of the fees or
expenses set forth herein but that, in accordance with the
Investment Management Agreements, dated March 1, 1994, between
the Funds and T. Rowe Price Associates, Inc. and Rowe Price-
Fleming International, Inc. (collectively referred to as "T. Rowe
Price"), the Funds will require T. Rowe Price to pay all such
fees and expenses.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
PAGE 94
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
PAGE 95
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
PAGE 96
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
/s/Henry H. Hopkins
_____________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_____________________________________________
By:
PAGE 97
AMENDMENT NO. 27 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, and March 1, 1994, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is
hereby further amended, as of April 21, 1994, by adding thereto
the T. Rowe Price Limited-Term Bond Portfolio, a separate series
of the T. Rowe Price Fixed Income Series, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Fixed Income Series, Inc.
(referred to as the "Fund") shall not be responsible for paying
any of the fees or expenses set forth herein but that, in
accordance with the Investment Management Agreement, dated April
21, 1994, between the Fund and T. Rowe Price Associates, Inc.
(referred to as "T. Rowe Price"), the Fund will require T. Rowe
Price to pay all such fees and expenses.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
PAGE 98
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 99
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
PAGE 100
/s/Henry H. Hopkins
_____________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_____________________________________________
By:
The Global Custody Agreement dated January 3, 1994, between The
Chase Manhattan Bank, N.A. and T. Rowe Price Funds should be
inserted here.
PAGE 1
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective January 3, 1994, and is between
THE CHASE MANHATTAN BANK, N.A. (the "Bank") and EACH OF THE
ENTITIES LISTED ON SCHEDULE A HERETO, Individually and Separately
(each individually, the "Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following
accounts ("Accounts"):
(a) A custody account in the name of the Customer
("Custody Account") for any and all stocks, shares, bonds,
debentures, notes, mortgages or other obligations for the payment
of money, bullion, coin and any certificates, receipts, warrants
or other instruments representing rights to receive, purchase or
subscribe for the same or evidencing or representing any other
rights or interests therein and other similar property whether
certificated or uncertificated as may be received by the Bank or
its Subcustodian (as defined in Section 3) for the account of the
Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit
Account") for any and all cash in any currency received by the
Bank or its Subcustodian for the account of the Customer, which
cash shall not be subject to withdrawal by draft or check.
The Customer warrants its authority to: 1) deposit the cash
and Securities ("Assets") received in the Accounts and 2) give
Instructions (as defined in Section 11) concerning the Accounts.
The Bank may deliver securities of the same class in place of
those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer,
additional Accounts may be established and separately accounted
for as additional Accounts under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian
Locations.
Unless Instructions specifically require another location
acceptable to the Bank:
(a) Securities will be held in the country or other
jurisdiction in which the principal trading market for such
Securities is located, where such Securities are to be presented
for payment or where such Securities are acquired; and
PAGE 2
(b) Cash will be credited to an account in a country or
other jurisdiction in which such cash may be legally deposited or
is the legal currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest
or non-interest bearing accounts as may be available for the
particular currency. To the extent Instructions are issued and
the Bank can comply with such Instructions, the Bank is
authorized to maintain cash balances on deposit for the Customer
with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in
non-interest bearing accounts as the Customer may direct, if
acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the
custody of an institution other than the established
Subcustodians as defined in Section 3 (or their securities
depositories), such arrangement must be authorized by a written
agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the
subcustodians listed in Schedule B of this Agreement with which
the Bank has entered into subcustodial agreements
("Subcustodians"). The Customer authorizes the Bank to hold
Assets in the Accounts in accounts which the Bank has established
with one or more of its branches or Subcustodians. The Bank and
Subcustodians are authorized to hold any of the Securities in
their account with any securities depository in which they
participate.
The Bank reserves the right to add new, replace or remove
Subcustodians. The Customer will be given reasonable notice by
the Bank of any amendment to Schedule B. Upon request by the
Customer, the Bank will identify the name, address and principal
place of business of any Subcustodian of the Customer's Assets
and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such
Subcustodian.
4. Use of Subcustodian.
(a) The Bank will identify such Assets on its books as
belonging to the Customer.
(b) A Subcustodian will hold such Assets together with
assets belonging to other customers of the Bank in accounts
identified on such Subcustodian's books as special custody
accounts for the exclusive benefit of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will
be subject only to the instructions of the Bank or its agent.
PAGE 3
Any Securities held in a securities depository for the account of
a Subcustodian will be subject only to the instructions of such
Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian
for holding its customer's assets shall provide that such assets
will not be subject to any right, charge, security interest, lien
or claim of any kind in favor of such Subcustodian or its
creditors except for a claim for payment for safe custody or
administration, and that the beneficial ownership of such assets
will be freely transferable without the payment of money or value
other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or
arrangement made by the Customer with any particular
Subcustodian.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from
the Deposit Account upon receipt of Instructions which include
all information required by the Bank.
(b) In the event that any payment to be made under this
Section 5 exceeds the funds available in the Deposit Account, the
Bank, in its discretion, may advance the Customer such excess
amount which shall be deemed a loan payable on demand, bearing
interest at the rate customarily charged by the Bank on similar
loans.
(c) If the Bank credits the Deposit Account on a payable
date, or at any time prior to actual collection and
reconciliation to the Deposit Account, with interest, dividends,
redemptions or any other amount due, the Customer will promptly
return any such amount upon oral or written notification: (i)
that such amount has not been received in the ordinary course of
business or (ii) that such amount was incorrectly credited. If
the Customer does not promptly return any amount upon such
notification, the Bank shall be entitled, upon oral or written
notification to the Customer, to reverse such credit by debiting
the Deposit Account for the amount previously credited. The Bank
or its Subcustodian shall have no duty or obligation to institute
legal proceedings, file a claim or a proof of claim in any
insolvency proceeding or take any other action with respect to
the collection of such amount, but may act for the Customer upon
Instructions after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered
by the Bank or its Subcustodian upon receipt by the Bank of
Instructions which include all information required by the Bank.
Settlement and payment for Securities received for, and delivery
of Securities out of, the Custody Account may be made in
PAGE 4
accordance with the customary or established securities trading
or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs,
including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery.
Delivery of Securities out of the Custody Account may also be
made in any manner specifically required by Instructions
acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the
Accounts on a contractual settlement date with cash or Securities
with respect to any sale, exchange or purchase of Securities.
Otherwise, such transactions will be credited or debited to the
Accounts on the date cash or Securities are actually received by
the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the
Accounts in its discretion if the related transaction
fails to settle within a reasonable period, determined
by the Bank in its discretion, after the contractual
settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this
Section 6 are returned by the recipient thereof, the
Bank may reverse the credits and debits of the
particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets
held in the Accounts. However, until it receives Instructions to
the contrary, the Bank will:
(a) Present for payment any Securities which are called,
redeemed or retired or otherwise become payable and all coupons
and other income items which call for payment upon presentation,
to the extent that the Bank or Subcustodian is actually aware of
such opportunities.
(b) Execute in the name of the Customer such ownership and
other certificates as may be required to obtain payments in
respect of Securities.
(c) Exchange interim receipts or temporary Securities for
definitive Securities.
(d) Appoint brokers and agents for any transaction
involving the Securities, including, without limitation,
affiliates of the Bank or any Subcustodian.
(e) Issue statements to the Customer, at times mutually
agreed upon, identifying the Assets in the Accounts.
PAGE 5
The Bank will send the Customer an advice or notification of
any transfers of Assets to or from the Accounts. Such
statements, advices or notifications shall indicate the identity
of the entity having custody of the Assets. Unless the Customer
sends the Bank a written exception or objection to any Bank
statement within ninety (90) days of receipt, the Customer shall
be deemed to have approved such statement. The Bank shall, to
the extent permitted by law, be released, relieved and discharged
with respect to all matters set forth in such statement or
reasonably implied therefrom as though it had been settled by the
decree of a court of competent jurisdiction in an action where
the Customer and all persons having or claiming an interest in
the Customer or the Customer's Accounts were parties if: (a) the
Customer has failed to provide a written exception or objection
to any Bank statement within ninety (90) days of receipt and
where the Customer's failure to so provide a written exception or
objection within such ninety (90) day period has limited the
Bank's (i) access to the records, materials and other information
required to investigate the Customer's exception or objection,
and (ii) ability to recover from third parties any amounts for
which the Bank may become liable in connection with such
exception or objection, or (b) where the Customer has otherwise
explicitly approved any such statement.
All collections of funds or other property paid or
distributed in respect of Securities in the Custody Account shall
be made at the risk of the Customer. The Bank shall have no
liability for any loss occasioned by delay in the actual receipt
of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the
Custody Account in respect of which the Bank has agreed to take
any action under this Agreement.
8. Corporate Actions; Proxies.
Whenever the Bank receives information concerning the
Securities which requires discretionary action by the beneficial
owner of the Securities (other than a proxy), such as
subscription rights, bonus issues, stock repurchase plans and
rights offerings, or legal notices or other material intended to
be transmitted to securities holders ("Corporate Actions"), the
Bank will give the Customer notice of such Corporate Actions to
the extent that the Bank's central corporate actions department
has actual knowledge of a Corporate Action in time to notify its
customers.
When a rights entitlement or a fractional interest resulting
from a rights issue, stock dividend, stock split or similar
Corporate Action is received which bears an expiration date, the
Bank will endeavor to obtain Instructions from the Customer or
its Authorized Person, but if Instructions are not received in
time for the Bank to take timely action, or actual notice of such
Corporate Action was received too late to seek Instructions, the
PAGE 6
Bank is authorized to sell such rights entitlement or fractional
interest and to credit the Deposit Account with the proceeds or
take any other action it deems, in good faith, to be appropriate
in which case it shall be held harmless for any such action.
The Bank will deliver proxies to the Customer or its
designated agent pursuant to special arrangements which may have
been agreed to in writing. Such proxies shall be executed in the
appropriate nominee name relating to Securities in the Custody
Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and
where bearer Securities are involved, proxies will be delivered
in accordance with Instructions.
9. Nominees.
Securities which are ordinarily held in registered form may
be registered in a nominee name of the Bank, Subcustodian or
securities depository, as the case may be. The Bank may without
notice to the Customer cause any such Securities to cease to be
registered in the name of any such nominee and to be registered
in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by
the issuer, the Bank may allot the called portion to the
respective beneficial holders of such class of security pro rata
or in any other manner that is fair, equitable and practicable.
The Customer agrees to hold the Bank, Subcustodians, and their
respective nominees harmless from any liability arising directly
or indirectly from their status as a mere record holder of
Securities in the Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person"
means employees or agents including investment managers as have
been designated by written notice from the Customer or its
designated agent to act on behalf of the Customer under this
Agreement. Such persons shall continue to be Authorized Persons
until such time as the Bank receives Instructions from the
Customer or its designated agent that any such employee or agent
is no longer an Authorized Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized
Person received by the Bank, via telephone, telex, TWX, facsimile
transmission, bank wire or other teleprocess or electronic
instruction or trade information system acceptable to the Bank
which the Bank believes in good faith to have been given by
Authorized Persons or which are transmitted with proper testing
or authentication pursuant to terms and conditions which the Bank
may specify. Unless otherwise expressly provided, all
PAGE 7
Instructions shall continue in full force and effect until
canceled or superseded.
Any Instructions delivered to the Bank by telephone shall
promptly thereafter be confirmed in writing by an Authorized
Person (which confirmation may bear the facsimile signature of
such Person), but the Customer will hold the Bank harmless for
the failure of an Authorized Person to send such confirmation in
writing, the failure of such confirmation to conform to the
telephone instructions received or the Bank's failure to produce
such confirmation at any subsequent time. The Bank may
electronically record any Instructions given by telephone, and
any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any
testkeys, identification codes or other security devices which
the Bank shall make available to the Customer or its Authorized
Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of
only such duties as are set forth in this Agreement or expressly
contained in Instructions which are consistent with the
provisions of this Agreement. Notwithstanding anything to the
contrary in this Agreement:
(i) The Bank will use reasonable care with respect to
its obligations under this Agreement and the
safekeeping of Assets. The Bank shall be liable to the
Customer for any loss which shall occur as the result
of the failure of a Subcustodian to exercise reasonable
care with respect to the safekeeping of such Assets to
the same extent that the Bank would be liable to the
Customer if the Bank were holding such Assets in New
York. In the event of any loss to the Customer by
reason of the failure of the Bank or its Subcustodian
to utilize reasonable care, the Bank shall be liable to
the Customer only to the extent of the Customer's
direct damages, and shall in no event be liable for any
special or consequential damages.
(ii) The Bank will not be responsible for any act,
omission, default or for the solvency of any broker or
agent which it or a Subcustodian appoints unless such
appointment was made negligently or in bad faith or for
any loss due to the negligent act of such broker or
agent except to the extent that such broker or agent
(other than a Subcustodian) performs in a negligent
manner which is the cause of the loss to the Customer
and the Bank failed to exercise reasonable care in
monitoring such broker's or agent's performance where
Customer has requested and Bank has agreed to accept
such monitoring responsibility.
PAGE 8
(iii) The Bank shall be indemnified by, and
without liability to the Customer for any action taken
or omitted by the Bank whether pursuant to Instructions
or otherwise within the scope of this Agreement if such
act or omission was in good faith, without negligence.
In performing its obligations under this Agreement, the
Bank may rely on the genuineness of any document which
it believes in good faith to have been validly
executed.
(iv) The Customer agrees to pay for and hold the Bank
harmless from any liability or loss resulting from the
imposition or assessment of any taxes or other
governmental charges, and any related expenses with
respect to income from or Assets in the Accounts,
except to the extent that the Bank has failed to
exercise reasonable care in performing any obligations
which the Bank may have agreed to assume (in addition
to those stated in this Agreement) with respect to
taxes and such failure by the Bank is the direct cause
of such imposition or assessment of such taxes, charges
or expenses.
(v) The Bank shall be entitled to rely, and may act,
upon the advice of counsel (who may be counsel for the
Customer) on all legal matters and shall be without
liability for any action reasonably taken or omitted
pursuant to such advice; provided, that the Bank gives
(to the extent practicable) prior notice to Customer of
Bank's intention to so seek advice of counsel and an
opportunity for consultation with Customer on the
proposed contact with counsel.
(vi) The Bank represents and warrants that it currently
maintain a banker's blanket bond which provides
standard fidelity and non-negligent loss coverage with
respect to the Securities and Cash which may be held by
Subcustodians pursuant to this Agreement. The Bank
agrees that if at any time it for any reason
discontinues such coverage, it shall immediately give
sixty (60) days' prior written notice to the Customer.
The Bank need not maintain any insurance for the
benefit of the Customer.
(vii) Without limiting the foregoing, the Bank
shall not be liable for any loss which results from:
(1) the general risk of investing, or (2) investing or
holding Assets in a particular country including, but
not limited to, losses resulting from nationalization,
expropriation or other governmental actions; regulation
of the banking or securities industry; currency
restrictions, devaluations or fluctuations; and market
PAGE 9
conditions which prevent the orderly execution of securities
transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other
for any loss due to forces beyond their control
including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection,
revolution, nuclear fusion, fission or radiation, or
acts of God.
(b) Consistent with and without limiting the first
paragraph of this Section 12, it is specifically acknowledged
that the Bank shall have no duty or responsibility to:
(i) question Instructions or make any suggestions to
the Customer or an Authorized Person regarding such
Instructions;
(ii) supervise or make recommendations with respect to
investments or the retention of Securities;
(iii) advise the Customer or an Authorized Person
regarding any default in the payment of principal or
income of any security other than as provided in
Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an
Authorized Person regarding the financial condition of
any broker, agent (other than a Subcustodian) or other
party to which Securities are delivered or payments are
made pursuant to this Agreement;
(v) review or reconcile trade confirmations received
from brokers. The Customer or its Authorized Persons
(as defined in Section 10) issuing Instructions shall
bear any responsibility to review such confirmations
against Instructions issued to and statements issued by
the Bank.
(c) The Customer authorizes the Bank to act under this
Agreement notwithstanding that the Bank or any of its divisions
or affiliates may have a material interest in a transaction, or
circumstances are such that the Bank may have a potential
conflict of duty or interest including the fact that the Bank or
any of its affiliates may provide brokerage services to other
customers, act as financial advisor to the issuer of Securities,
act as a lender to the issuer of Securities, act in the same
transaction as agent for more than one customer, have a material
interest in the issue of Securities, or earn profits from any of
the activities listed herein.
13. Fees and Expenses.
PAGE 10
The Customer agrees to pay the Bank for its services under
this Agreement such amount as may be agreed upon in writing,
together with the Bank's reasonable out-of-pocket or incidental
expenses, including, but not limited to, reasonable legal fees.
The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under
any provision of this Agreement upon notice to the Customer.
14. Miscellaneous.
(a) Foreign Exchange Transactions. Pursuant to
Instructions, which may be standing Instructions, to facilitate
the administration of the Customer's trading and investment
activity, the Bank is authorized to enter into spot or forward
foreign exchange contracts with the Customer or an Authorized
Person for the Customer and may also provide foreign exchange
through its subsidiaries or Subcustodians. The Bank may
establish rules or limitations concerning any foreign exchange
facility made available. In all cases where the Bank, its
subsidiaries, affiliates or Subcustodians enter into a foreign
exchange contract related to Accounts, the terms and conditions
of the then current foreign exchange contract of the Bank, its
subsidiary, affiliate or Subcustodian and, to the extent not
inconsistent, this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer
certifies that it is a resident of the United States and agrees
to notify the Bank of any changes in residency. The Bank may
rely upon this certification or the certification of such other
facts as may be required to administer the Bank's obligations
under this Agreement. The Customer will indemnify the Bank
against all losses, liability, claims or demands arising directly
or indirectly from any such certifications.
(c) Access to Records. The Bank shall allow the Customer's
independent public accountants, officers and advisers reasonable
access to the records of the Bank relating to the Assets as is
required in connection with their examination of books and
records pertaining to the Customer's affairs. Subject to
restrictions under applicable law, the Bank shall also obtain an
undertaking to permit the Customer's independent public
accountants reasonable access to the records of any Subcustodian
which has physical possession of any Assets as may be required in
connection with the examination of the Customer's books and
records.
(d) Governing Law; Successors and Assigns. This Agreement
shall be governed by the laws of the State of New York and shall
not be assignable by either party, but shall bind the successors
in interest of the Customer and the Bank.
PAGE 11
(e) Entire Agreement; Applicable Riders. Customer
represents that the Assets deposited in the Accounts are (Check
one):
X Employee Benefit Plan or other assets subject to
the Employee Retirement Income
Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities
and Exchange Commission
("SEC") rules and regulations;
X Neither of the above.
With respect to each Customer, this Agreement consists
exclusively of this document together with Schedules A, B,
Exhibits I - _______ and the following Rider(s) to the
extent indicated on Schedule A hereto opposite the name of
the Customer under the column headed "Applicable Riders to
Agreement":
X ERISA
X MUTUAL FUND
SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this
Agreement supersedes any other agreements, whether written or
oral, between the parties. Any amendment to this Agreement must
be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions
of this Agreement are held invalid, illegal or enforceable in any
respect on the basis of any particular circumstances or in any
jurisdiction, the validity, legality and enforceability of such
provision or provisions under other circumstances or in other
jurisdictions and of the remaining provisions will not in any way
be affected or impaired.
PAGE 12
(g) Waiver. Except as otherwise provided in this
Agreement, no failure or delay on the part of either party in
exercising any power or right under this Agreement operates as a
waiver, nor does any single or partial exercise of any power or
right preclude any other or further exercise, or the exercise of
any other power or right. No waiver by a party of any provision
of this Agreement, or waiver of any breach or default, is
effective unless in writing and signed by the party against whom
the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be
effective when actually received. Any notices or other
communications which may be required under this Agreement are to
be sent to the parties at the following addresses or such other
addresses as may subsequently be given to the other party in
writing:
Bank: The Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Investor Services
Telephone: (718) 242-3455
Facsimile: (718) 242-1374
Copy to: The Chase Manhattan Bank, N.A.
Woolgate House
Coleman Street
London EC2P 2HD England
Attention: Global Investor Services
Telephone: 44-71-962-5000
Facsimile: 44-71-962-5377
Telex: 8954681CMBG
Customer: Name of Customer from Schedule A
c/o T. Rowe Price
100 East Pratt Street
Baltimore, MD 21202
Attention: Treasurer
Telephone: (410) 625-6658
Facsimile: (410) 547-0180
(i) Termination. This Agreement may be terminated by the
Customer or the Bank by giving ninety (90) days written notice to
the other, provided that such notice to the Bank shall specify
the names of the persons to whom the Bank shall deliver the
Assets in the Accounts. If notice of termination is given by the
Bank, the Customer shall, within ninety (90) days following
receipt of the notice, deliver to the Bank Instructions
specifying the names of the persons to whom the Bank shall
deliver the Assets. In either case the Bank will deliver the
Assets to the persons so specified, after deducting any amounts
which the Bank determines in good faith to be owed to it under
PAGE 13
Section 13. If within ninety (90) days following receipt of a
notice of termination by the Bank, the Bank does not receive
Instructions from the Customer specifying the names of the
persons to whom the Bank shall deliver the Assets, the Bank, at
its election, may deliver the Assets to a bank or trust company
doing business in the State of New York to be held and disposed
of pursuant to the provisions of this Agreement, or to Authorized
Persons, or may continue to hold the Assets until Instructions
are provided to the Bank.
(j) Entire Agreement. This Agreement, including the
Schedules and Riders hereto, embodies the entire agreement and
understanding of the parties in respect of the subject matter
contained in this Agreement. This Agreement supersedes all other
custody or other agreements between the parties with respect to
such subject matter, which prior agreements are hereby terminated
effective as of the date hereof and shall have no further force
or effect.
EACH OF THE CUSTOMERS, INDIVIDUALLY
AND SEPARATELY LISTED ON SECTION I OF
SCHEDULE A HERETO
/s/Carmen F. Deyesu
By:________________________________
Carmen F. Deyesu
Treasurer & Vice President
EACH OF THE CUSTOMERS, INDIVIDUALLY
AND SEPARATELY LISTED ON SECTION II OF
SCHEDULE A HERETO
/s/Alvin M. Younger
By:____________________________________
Alvin M. Younger
Treasurer
EACH OF THE CUSTOMERS, INDIVIDUALLY
AND SEPARATELY LISTED ON SECTION III OF
SCHEDULE A HERETO
/s/Alvin M. Younger
By:___________________________________
Alvin M. Younger
Treasurer
PAGE 14
THE CHASE MANHATTAN BANK, N.A.
/s/Alan Naughton
By:_________________________________
Alan Naughton
Vice President
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me
personally came , to me known, who
being by me duly sworn, did depose and say that he/she resides in
at ;
that he/she is of
, the entity
described in and which executed the foregoing instrument; that
he/she knows the seal of said entity, that the seal affixed to
said instrument is such seal, that it was so affixed by order of
said entity, and that he/she signed his/her name thereto by like
order.
__________________________________
Sworn to before me this
day of , 19 .
________________________________
Notary
PAGE 15
STATE OF )
: ss.
COUNTY OF )
On this day of
,19 , before me personally came , to
me known, who being by me duly sworn, did depose and say that
he/she resides in
at ; that
he/she is a Vice President of THE CHASE MANHATTAN BANK, (National
Association), the corporation described in and which executed the
foregoing instrument; that he/she knows the seal of said
corporation, that the seal affixed to said instrument is such
corporate seal, that it was so affixed by order of the Board of
Directors of said corporation, and that he/she signed his/her
name thereto by like order.
___________________________________
Sworn to before me this
day of , 19 .
___________________________________
Notary
PAGE 16
Schedule A
Page 1 of 2
LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
GLOBAL CUSTODY AGREEMENT WITH
THE CHASE MANHATTAN BANK, N.A.
DATED JANUARY 3, 1994
APPLICABLE RIDERS TO
CUSTOMER GLOBAL CUSTODY AGREEMENT
I. INVESTMENT COMPANIES/PORTFOLIOS The Mutual Fund Rider is
REGISTERED UNDER THE INVESTMENT applicable to all
COMPANY ACT OF 1940 Customers listed under
Section I of this
Schedule A.
Equity Funds
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
Institutional International Funds, Inc. on behalf of:
Foreign Equity Fund
T. Rowe Price International Funds, Inc. on behalf of:
T. Rowe Price European Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price New Asia Fund
T. Rowe Price Mid-Cap Growth Fund, Inc.
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price OTC Fund, Inc. on behalf of:
T. Rowe Price OTC Fund
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Small Cap Value Fund, Inc.
CUNA Mutual Funds, Inc. on behalf of:
CUNA Mutual Cornerstone Fund
PAGE 17
Schedule A
Page 2 of 2
APPLICABLE RIDERS TO
CUSTOMER GLOBAL CUSTODY AGREEMENT
Income Funds
T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Summit Funds, Inc. on behalf of:
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price International Funds, Inc. on behalf of:
T. Rowe Price Global Government Bond Fund
T. Rowe Price International Bond Fund
T. Rowe Price Short-Term Global Income Fund
II. ACCOUNTS SUBJECT TO ERISA The ERISA Rider is
applicable to all
T. Rowe Price Trust Company, as Customers under Section
Trustee for the Johnson Matthey II of this Schedule A.
Salaried Employee Savings Plan
Common Trust Funds
T. Rowe Price Trust Company, as Trustee
for the International Common Trust Fund
on behalf of the Underlying Trusts:
Foreign Discovery Trust
Foreign Discovery Trust-Augment
Pacific Discovery Trust
European Discovery Trust
Japan Discovery Trust
Latin American Discovery Trust
New York City International Common Trust Fund
III. OTHER No Riders are applicable
to the Customer listed
RPFI International Partners, L.P. under Section III of
this Schedule A.
PAGE 18
ERISA Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
Each of the Entities Listed on Schedule A Hereto
effective January 3, 1994
Customer represents that the Assets being placed in the
Bank's custody are subject to ERISA. It is understood that in
connection therewith the Bank is a service provider and not a
fiduciary of the plan and trust to which the assets are related.
The Bank shall not be considered a party to the underlying plan
and trust and the Customer hereby assumes all responsibility to
assure that Instructions issued under this Agreement are in
compliance with such plan and trust and ERISA.
This Agreement will be interpreted as being in compliance
with the Department of Labor Regulations Section 2550.404b-1
concerning the maintenance of indicia of ownership of plan assets
outside of the jurisdiction of the district courts of the United
States.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
As used in this Agreement, the term Subcustodian and the
term securities depositories include a branch of the Bank,
a branch of a qualified U.S. bank, an eligible foreign
custodian, or an eligible foreign securities depository,
where such terms shall mean:
(a) "qualified U.S. bank" shall mean a U.S. bank as
described in paragraph (a)(2)(ii)(A)(1) of the
Department of Labor Regulations Section 2550.404b-1;
(b) "eligible foreign custodian" shall mean a banking
institution incorporated or organized under the laws
of a country other than the United States which is
supervised or regulated by that country's government
or an agency thereof or other regulatory authority in
the foreign jurisdiction having authority over banks;
and
(c) "eligible foreign securities depository" shall mean a
securities depository or clearing agency,
incorporated or organized under the laws of a country
other than the United States, which is supervised or
regulated by that country's government or an agency
thereof or other regulatory authority in the foreign
jurisdiction having authority over such depositories
or clearing agencies and which is described in
paragraph (c)(2) of the Department of Labor
Regulations Section 2550.404b-1.
Section 4. Use of Subcustodian.
PAGE 19
Subsection (d) of this section is modified by deleting the
last sentence.
Section 5. Deposit Account Payments.
Subsection (b) is amended to read as follows:
(b) In the event that any payment made under this Section
5 exceeds the funds available in the Deposit Account, such
discretionary advance shall be deemed a service provided
by the Bank under this Agreement for which it is entitled
to recover its costs as may be determined by the Bank in
good faith.
Section 10. Authorized Persons.
Add the following paragraph at the end of Section 10:
Customer represents that: a) Instructions will only be issued
by or for a fiduciary pursuant to Department of Labor
Regulation Section 404b-1 (a)(2)(i) and b) if Instructions
are to be issued by an investment manager, such entity will
meet the requirements of Section 3(38) of ERISA and will have
been designated by the Customer to manage assets held in the
Customer Accounts ("Investment Manager"). An Investment
Manager may designate certain of its employees to act as
Authorized Persons under this Agreement.
Section 14(a). Foreign Exchange Transactions.
Add the following paragraph at the end of Subsection 14(a):
Instructions to execute foreign exchange transactions with
the Bank, its subsidiaries, affiliates or Subcustodians will
include (1) the time period in which the transaction must be
completed; (2) the location i.e., Chase New York, Chase
London, etc. or the Subcustodian with whom the contract is to
be executed and (3) such additional information and
guidelines as may be deemed necessary; and, if the
Instruction is a standing Instruction, a provision allowing
such Instruction to be overridden by specific contrary
Instructions.
PAGE 20
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
Each of the Entities Listed on Schedule A Hereto
effective January 3, 1994
Customer represents that the Assets being placed in the
Bank's custody are subject to the Investment Company Act of 1940
(the Act), as the same may be amended from time to time.
Except to the extent that the Bank has specifically agreed to
comply with a condition of a rule, regulation, interpretation
promulgated by or under the authority of the SEC or the Exemptive
Order applicable to accounts of this nature issued to the Bank
(Investment Company Act of 1940, Release No. 12053, November 20,
1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that
the maintenance of Assets under this Agreement complies with such
rules, regulations, interpretations or exemptive order
promulgated by or under the authority of the Securities Exchange
Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in
this Agreement shall mean a branch of a qualified U.S. bank,
an eligible foreign custodian or an eligible foreign
securities depository, which are further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank
as defined in Rule 17f-5 under the Investment Company Act of
1940;
(b) "eligible foreign custodian" shall mean (i) a banking
institution or trust company incorporated or organized under
the laws of a country other than the United States that is
regulated as such by that country's government or an agency
thereof and that has shareholders' equity in excess of $200
million in U.S. currency (or a foreign currency equivalent
thereof), (ii) a majority owned direct or indirect subsidiary
of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other
than the United States and that has shareholders' equity in
excess of $100 million in U.S. currency (or a foreign
currency equivalent thereof)(iii) a banking institution or
trust company incorporated or organized under the laws of a
country other than the United States or a majority owned
direct or indirect subsidiary of a qualified U.S. bank or
bank holding company that is incorporated or organized under
the laws of a country other than the United States which has
such other qualifications as shall be specified in
Instructions and approved by the Bank; or (iv) any other
PAGE 21
entity that shall have been so qualified by exemptive order,
rule or other appropriate action of the SEC; and
(c) "eligible foreign securities depository" shall mean a
securities depository or clearing agency, incorporated or
organized under the laws of a country other than the United
States, which operates (i) the central system for handling
securities or equivalent book-entries in that country, or
(ii) a transnational system for the central handling of
securities or equivalent book-entries.
The Customer represents that its Board of Directors has
approved each of the Subcustodians listed in Schedule B to this
Agreement and the terms of the subcustody agreements between the
Bank and each Subcustodian, which are attached as Exhibits I
through of Schedule B, and further represents that its
Board has determined that the use of each Subcustodian and the
terms of each subcustody agreement are consistent with the best
interests of the Fund(s) and its (their) shareholders. The Bank
will supply the Customer with any amendment to Schedule B for
approval. As requested by the Bank, the Customer will supply the
Bank with certified copies of its Board of Directors
resolution(s) with respect to the foregoing prior to placing
Assets with any Subcustodian so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions
made pursuant to Section 5 and 6 of this Agreement may be
made only for the purposes listed below. Instructions must
specify the purpose for which any transaction is to be made
and Customer shall be solely responsible to assure that
Instructions are in accord with any limitations or
restrictions applicable to the Customer by law or as may be
set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at
prices as confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or
otherwise become payable;
(c) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan or
merger, consolidation, reorganization, recapitalization or
readjustment;
(d) Upon conversion of Securities pursuant to their terms
into other securities;
(e) Upon exercise of subscription, purchase or other similar
rights represented by Securities;
(f) For the payment of interest, taxes, management or
supervisory fees, distributions or operating expenses;
PAGE 22
(g) In connection with any borrowings by the Customer
requiring a pledge of Securities, but only against receipt of
amounts borrowed;
(h) In connection with any loans, but only against receipt
of adequate collateral as specified in Instructions which
shall reflect any restrictions applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock
of the Customer and the delivery to, or the crediting to the
account of, the Bank, its Subcustodian or the Customer's
transfer agent, such shares to be purchased or redeemed;
(j) For the purpose of redeeming in kind shares of the
Customer against delivery to the Bank, its Subcustodian or
the Customer's transfer agent of such shares to be so
redeemed;
(k) For delivery in accordance with the provisions of any
agreement among the Customer, the Bank and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Customer;
(l) For release of Securities to designated brokers under
covered call options, provided, however, that such Securities
shall be released only upon payment to the Bank of monies for
the premium due and a receipt for the Securities which are to
be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities
previously deposited. The Bank will act strictly in
accordance with Instructions in the delivery of Securities to
be held in escrow and will have no responsibility or
liability for any such Securities which are not returned
promptly when due other than to make proper request for such
return;
(m) For spot or forward foreign exchange transactions to
facilitate security trading, receipt of income from
Securities or related transactions;
(n) For other proper purposes as may be specified in
Instructions issued by an officer of the Customer which shall
include a statement of the purpose for which the delivery or
payment is to be made, the amount of the payment or specific
Securities to be delivered, the name of the person or persons
to whom delivery or payment is to be made, and a
certification that the purpose is a proper purpose under the
instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in
Section 14(i).
PAGE 23
Section 12. Standard of Care; Liabilities.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its
opinion, after due inquiry, the established procedures to be
followed by each of its branches, each branch of a qualified
U.S. bank, each eligible foreign custodian and each eligible
foreign securities depository holding the Customer's
Securities pursuant to this Agreement afford protection for
such Securities at least equal to that afforded by the Bank's
established procedures with respect to similar securities
held by the Bank and its securities depositories in New York.
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall
furnish the Customer such reports (or portions thereof) of
the Bank's system of internal accounting controls applicable
to the Bank's duties under this Agreement. The Bank shall
endeavor to obtain and furnish the Customer with such similar
reports as it may reasonably request with respect to each
Subcustodian and securities depository holding the Customer's
assets.
GLOBAL CUSTODY AGREEMENT
WITH
DATE
SPECIAL TERMS AND CONDITIONS RIDER
PAGE 24
January, 1994 Schedule B
SUB-CUSTODIANS EMPLOYED BY
THE CHASE MANHATTAN BANK, N.A. LONDON, GLOBAL CUSTODY
COUNTRY
SUB-
CUSTODIAN
CORRESPOND
ENT BANK
ARGENTINA
The Chase
Manhattan
Bank, N.A.
Main
Branch
25 De Mayo
130/140
Buenos
Aires
ARGENTINA
The Chase
Manhattan
Bank, N.A.
Buenos
Aires
AUSTRALIA
The Chase
Manhattan
Bank,
Australia
Limited
36th Floor
World
Trade
Centre
Jamison
Street
Sydney
New South
Wales 2000
AUSTRALIA
The Chase
Manhattan
Bank
Australia
Limited
Sydney
AUSTRIA
Creditanst
alt -
Bankvereln
Schottenga
sse 6
A - 1011,
Vienna
AUSTRIA
Credit
Lyonnais
Vienna
BANGLADESH
Standard
Chartered
Bank
18-20
Motijheel
C.A.
Box 536,
Dhaka-1000
BANGLADESH
Standard
Chartered
Bank Dhaka
BELGIUM
Generale
Bank
3 Montagne
Du Parc
1000
Bruxelles
BELGIUM
Credit
Lyonnais
Bank
Brussels
BOTSWANA
Standard
Chartered
Bank
Botswana
Ltd.
4th Floor
Commerce
House
The Mall
Gaborone
BOTSWANA
Standard
Chartered
Bank
Botswana
Ltd.
Gaborone
BRAZIL
Banco
Chase
Manhattan,
S.A.
Chase
Manhattan
Center
Rua Verbo
Divino,
1400
Sao Paulo,
SP 04719-
002
BRAZIL
Banco
Chase
Manhattan
S.A.
Sao Paulo
PAGE 25
CANADA
The Royal
Bank of
Canada
Royal Bank
Plaza
Toronto
Ontario
M5J 2J5
CANADA
Canada
Trust
Canada
Trust
Tower
BCE Place
161 Bay at
Front
Toronto
Ontario
M5J 2T2
CANADA
Toronto
Dominion
Bank
Toronto
Toronto
Dominion
Bank
Toronto
CHILE
The Chase
Manhattan
Bank, N.A.
Agustinas
1235
Casilla
9192
Santiago
CHILE
The Chase
Manhattan
Bank, N.A.
Santiago
COLOMBIA
Cititrust
Colombia
S.A.
Sociedad
Fiduciaria
Av.
Jimenez No
8-89
Santafe de
Bogota, DC
COLOMBIA
Cititrust
Colombia
S.A.
Sociedad
Fiduciaria
Santafe de
Bogota
CZECH
REPUBLC
Ceskoslove
nska
Obchodni
Banka,
A.S.
Na
Prikoope
14
115 20
Praha 1
CZECH
REPUBLIC
Ceskoslove
nska
Obchodni
Banka,
A.S.
Praha
DENMARK
Den Danske
Bank
2 Holmens
Kanala DK
1091
Copenhagen
DENMARK
Den Danske
Bak
Copenhagen
EUROBONDS
Cedel S.A.
67
Boulevard
Grande
Duchesse
Charlotte
LUXEMBOURG
A/c The
Chase
Manhattan
Bank, N.A.
London
A/c No.
17817
ECU:Lloyds
Bank PLC
Internatio
nal
Banking
Dividion
London
For all
other
currencies
: see
relevant
country
EURO CDS
First
Chicago
Clearing
Centre
27
Leadenhall
Street
London
EC3A 1AA
UNITED
KINGDOM
ECU:Lloyds
Bank PLC
Banking
Division
London
For all
other
currencies
: see
relevant
country
PAGE 26
FINLAND
Kansallis-
Osake-
Pankki
Aleksanter
inkatu 42
00100
Helsinki
10
FINLAND
Kanasallis
- -Osake-
Pankki
FRANCE
Banque
Paribas
Ref 256
BP 141
3, Rue
D'Antin
75078
Paris
Cedex 02
FRANCE
Societe
Generale
Paris
GERMANY
Chase Bank
A.G.
Alexanders
trasse 59
Postfach
90 01 09
60441
Frankfurt/
Main
GERMANY
Chase Bank
A.G.
Frankfurt
GREECE
National
Bank of
Greece
S.A.
38 Stadiou
Street
Athens
GREECE
National
Bank of
Greece
S.A.
Athens
A/c Chase
Manhattan
Bank,
N.A.,
London
A/c No.
040/7/9215
78-68
HONG KONG
The Chase
Manhattan
Bank, N.A.
40/F One
Exchange
Square
8,
Connaught
Place
Central,
Hong Kong
HONG KONG
The Chase
Manhattan
Bank, N.A.
Hong Kong
HUNGARY
Citibank
Budapest
Rt.
Vaci Utca
19-21
1052
Budapest V
HUNGARY
Citibank
Budapest
Rt.
Budapest
INDIA
The
Hongkong
and
Shanghai
Banking
Corporatio
n Limited
52/60
Mahatma
Gandhi
Road
Bombay 400
001
INDIA
The
Hongkong
and
Shanghai
Banking
Corporatio
n Limited
Bombay
INDONESIA
The
Hongkong
and
Shanghai
Banking
Corporatio
n Limited
World
Trade
Center
J1. Jend
Sudirman
Kav. 29-31
Jakarta
10023
INDONESIA
The Chase
Manhattan
Bank, N.A.
Jakarta
PAGE 27
IRELAND
Bank of
Ireland
Internatio
nal
Financial
Services
Centre
1
Hargourmas
ter Place
Dublin 1
IRELAND
Allied
Irish Bank
Dublin
ISRAEL
Bank Leumi
Le-Israel
B.M.
19 Herzi
Street
65136 Tel
Aviv
ISRAEL
Bank Leumi
Le-Israel
B.M.
Tel Aviv
ITALY
The Chase
Manhattan
Bank, N.A.
Piazza
Meda 1
20121
Milan
ITALY
The Chase
Manhattan
Bank, N.A.
Milan
JAPAN
The Chase
Manhattan
Bank, N.A.
1-3
Marunouchi
1-Chome
Chiyoda-Ku
Tokyo 100
JAPAN
The Chase
Manhattan
Bank, N.A.
Tokyo
JORDAN
Arab Bank
Limited
P.O. Box
950544-5
Amman
Shmeisani
JORDAN
Arab Bank
Limited
Amman
LUXEMBOURG
Banque
Generale
du
Luxembourg
S.A.
27 Avenue
Monterey
LUXEMBOURG
Banque
Generale
du
Luxembourg
S.A.
Luxembourg
MALAYSIA
The Chase
Manhattan
Bank, N.A.
Pernas
Internatio
nal
Jalan
Sultan
Ismail
50250,
Kuala
Lumpur
MALAYSIA
The Chase
Manhattan
Bank, N.A.
Kuala
Lumpur
MEXICO
(Equities)
The Chase
Manhattan
Bank, N.A.
Hamburgo
213, Piso 7
06660
Mexico D.F.
MEXICO
No
corresponde
nt Bank
(Government
Bonds)
Banco
Nacional de
Mexico,
Avenida
Juarez No.
104 - 11
Piso
06040
Mexico D.F.
MEXICO
Banque
Commerciale
du Maroc
Casablanca
PAGE 28
NETHERLANDS
ABN AMRO
N.V.
Securities
Centre
P.O. Box
3200
4800 De
Breda
NETHERLANDS
Credit
Lyonnais
Bank
Nederland
N.V.
Rotterdam
NEW ZEALAND
National
Nominees
Limited
Level 2 BNZ
Tower
125 Queen
Street
Auckland
NEW ZEALAND
National
Bank of New
Zealand
Wellington
NORWAY
Den Norske
Bank
Kirkegaten
21
Oslo 1
NORWAY
Den Norske
Bank
Oslo
PAKISTAN
Citibank
N.A.
State Life
Building
No.1
I.I.
Chundrigar
Road
Karachi
PAKISTAN
Citibank
N.A.
Karachi
PERU
Citibank,
N.A.
Camino Real
457
CC Torre
Real - 5th
Floor
San Isidro,
Lima 27
PERU
Citibank
N.A.
Lima
PHILIPPINES
The
Hongkong
and
Shanghai
Banking
Corporation
Limited
Hong Kong
Bank Centre
3/F
San Miguel
Avenue
Ortigas
Commercial
Centre
Pasig Metro
Manila
PHILIPPINES
The
Hongkong
and Shaghai
Banking
Corporation
Limited
Manila
POLAND
Bank Polska
Kasa Opieki
S.A.
6/12 Nowy
Swiat Str
00-920
Warsaw
POLAND
Bank Potska
Kasa Opieki
S.A.
Warsaw
PORTUGAL
Banco
Espirito
Santo &
Comercial
de Lisboa
Servico de
Gestaode
Titulos
R. Mouzinho
da
Silvelra,
36 r/c
1200 Lisbon
PORTUGAL
Banco Pinto
& Sotto
Mayor
Avenida
Fontes
Pereira de
Melo
1000 Lisbon
PAGE 29
SHANGHAI
(CHINA)
The
Hongkong
and
Shanghai
Banking
Corporation
Limited
Shanghai
Branch
Corporate
Banking
Centre
Unit 504,
5/F
Shanghai
Centre
1376
Hanjing Xi
Lu
Shanghai
THE
PEOPLE'S
REPUBLIC OF
CHINA
The Chase
Manhattan
Bank, N.A.
Hong Kong
SCHENZHEN
(CHINA)
The
Hongkong
and
Shanghai
Banking
Corporation
Limited
1st Floor
Central
Plaza Hotel
No. 1 Chun
Feng Lu
Shenzhen
THE
PEOPLE'S
REPUBLIC OF
CHINA
The Chase
Manhattan
Bank, N.A.
Hong Kong
SINGAPORE
The Chase
Manhattan
Bank, N.A.
Shell Tower
50 Raffles
Place
Singapore
0104
SINGAPORE
The Chase
Manhattan
Bank, N.A.
Singapore
SOUTH KOREA
The
Hongkong &
Shanghai
Banking
Corporation
Limited
6/F Kyobo
Building
#1 Chongro,
1-ka
Chongro-Ku,
Seoul
SOUGH KOREA
The
Hongkong &
Shanghai
Banking
Corporation
Limited
Seoul
SPAIN
The Chase
Manhattan
Bank, N.A.
Calle
Peonias 2
7th Floor
La Piovera
28042
Madrid
SPAIN
Banco
Zaragozano,
S.A.
Madrid
URUGUAY
The First
National
Bank of
Boston
Zabala 1463
Montevideo
URUGUAY
The First
National
Bank of
Boston
Montevideo
U.S.A
The Chase
Manhattan
Bank, N.A.
1 Chase
Manhattan
Plaza
New York
NY 10081
U.S.A.
The Chase
Manhattan
Bank, N.A.
New York
PAGE 30
VENEZUELA
Citibank
N.A.
Carmelitas
a
Altagracia
Edificio
Citibank
Caracas
1010
VENEZUELA
Citibank
N.A.
Caracas
PAGE 31
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT, dated as of April 18, 1994 (the
"Amendment Agreement") to the Global Custody Agreement, effective
January 3, 1994 (the "Custody Agreement") by and between each of
the Entities listed in Attachment A hereto, separately and
individually (each such entity referred to hereinafter as the
"Customer") and THE CHASE MANHATTAN BANK, N.A. (the "Bank").
Terms defined in the Custody Agreement are used herein as therein
defined.
WITNESSETH:
WHEREAS, the Customer wishes to appoint the Bank as its
global custodian and the bank wishes to accept such appointment
pursuant to the terms of the Custody Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendment. Section I of Schedule A of the Custody
Agreement ("Schedule A") shall be amended to add each
Customer listed in Attachment A hereto. The revised
Schedule A incorporating these changes in the form
attached hereto as Attachment B shall supersede the
existing Schedule A in its entirety.
2. Agreement. The Customer agrees to be bound in all
respects by all the terms and conditions of the Custody
Agreement and shall be fully liable thereunder as a
"Customer" as defined in the Custody Agreement.
3. Confirmation of Agreement. Except as amended hereby, the
Custody Agreement is in full force and effect and as so
amended is hereby ratified, approved and confirmed by the
Customer and the Bank in all respects.
4. Governing Law. This Amendment Agreement shall be
construed in accordance with and governed by the law of
the State of New York without regard to its conflict of
law principles.
PAGE 32
IN WITNESS WHEREOF, the parties have executed this Amendment
Agreement as of the day and year first above written.
THE CHASE MANHATTAN BANK, N.A.
By:
Alan P. Naughton
Vice President
EACH OF THE CUSTOMERS LISTED IN
ATTACHMENT A HERETO, SEPARATELY AND
INDIVIDUALLY
By:
Carmen F. Deyesu
Treasurer
PAGE 33
Attachment A
LIST OF CUSTOMERS
T. Rowe Price International Series, Inc. on behalf of the
T. Rowe Price International Stock Portfolio
T. Rowe Price Equity Series, Inc. on behalf of the
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price New America Growth Fund, Inc.
T. Rowe Price Income Series, Inc. on behalf of
T. Rowe Price Limited-Term Bond Portfolio
PAGE 34
Attachment B
Schedule A
Page 1 of 2
LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
GLOBAL CUSTODY AGREEMENT WITH
THE CHASE MANHATTAN BANK, N.A.
DATED JANUARY 3, 1993
APPLICABLE RIDERS TO
CUSTOMER GLOBAL CUSTODY AGREEMENT
I. INVESTMENT The Mutual Fund Rider is
COMPANIES/PORTFOLIOS applicable to all Customers
REGISTERED UNDER THE listed under Section I
INVESTMENT COMPANY ACT OF 1940 of this Schedule A.
PAGE 35
Equity Funds
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
Institutional International Funds, Inc. on behalf of:
Foreign Equity Fund
T. Rowe Price International Funds, Inc. on behalf of:
T. Rowe Price European Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price New Asia Fund
T. Rowe Price International Series, Inc., on behalf of:
T. Rowe Price International Stock Portfolio
T. Rowe Price Mid-Cap Growth Fund, Inc.
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price OTC Fund, Inc. on behalf of:
T. Rowe Price OTC Fund
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
CUNA Mutual Funds, Inc. on behalf of:
CUNA Mutual Cornerstone Fund
T. Rowe Price Equity Series, Inc. on behalf of:
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price New America Growth Fund, Inc.
Income Funds
T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Summit Funds, Inc. on behalf of:
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price International Funds, Inc. on behalf of:
T. Rowe Price Global Government Income Fund
T. Rowe Price International Bond Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Income Series, Inc. on behalf of:
T. Rowe Price Limited-Term Bond Portfolio
II. ACCOUNTS SUBJECT TO ERISA The ERISA Rider is
applicable to all Customers
T. Rowe Price Trust Company, under Section II of this
as Trustee for the Johnson Schedule A.
Matthey Salaried Employee
Savings Plan
PAGE 36
Common Trust Funds
T. Rowe Price Trust company,
as Trustee for the International
Common Trust Fund on behalf of
the Underlying Trusts:
Foreign Discovery Trust
Foreign Discovery Trust-Augment
Pacific Discovery Trust
European Discovery Trust
Japan Discovery Trust
Latin American Discovery Trust
New York City International Common Trust Fund
III. OTHER No Riders are applicable to
the Customer listed under
RPFI International Section III of this
Partners, L.P. Schedule A.
The Transfer Agency and Service Agreement between T. Rowe Price
Services, Inc. and T. Rowe Price Funds, dated January 1, 1994, as
amended, should be inserted here.
PAGE 1
TRANSFER AGENCY AND SERVICE AGREEMENT
between
T. ROWE PRICE SERVICES, INC.
and
EACH OF THE PARTIES INDICATED ON APPENDIX A
PAGE 2
TABLE OF CONTENTS
Page
Article A Terms of Appointment . . . . . . . . . . . . . .2
Article B Duties of Price Services . . . . . . . . . . . .3
1. Receipt of Orders/Payments. . . . . . . . .3
2. Written Redemptions . . . . . . . . . . . .4
3. Transfers . . . . . . . . . . . . . . . . .6
4. Confirmations . . . . . . . . . . . . . . .6
5. Issuance of Share Certificates. . . . . . .6
6. Returned Checks and ACH Debits. . . . . . 7
7. Redemptions of Shares under Ten Day Hold. 7
8. Dividends, Distributions and Other
Corporate Actions. . . . . . . . . . . . 9
9. Unclaimed Payments and Certificates . . .10
10. Books and Records . . . . . . . . . . . .10
11. Authorized Issued and Outstanding Shares.12
12. Tax Information . . . . . . . . . . . . .13
13. Information to be Furnished to the Fund .13
14. Correspondence. . . . . . . . . . . . . .13
15. Lost or Stolen Securities . . . . . . . .14
16. Telephone Services . . . . . . . . . . .14
17. Proxies . . . . . . . . . . . . . . . . .14
18. Form N-SAR. . . . . . . . . . . . . . . .15
19. Cooperation With Accountants. . . . . . .15
20. Blue Sky. . . . . . . . . . . . . . . . .15
21. Other Services. . . . . . . . . . . . . .15
22. Fees and Out-of-Pocket Expenses . . . . .15
Article C Representations and Warranties of the Price
Services. . . . . . . . . . . . . . . . . . .17
Article D Representations and Warranties of the Fund . .18
Article E Standard of Care/Indemnification . . . . . . .18
Article F Dual Interests . . . . . . . . . . . . . . . . 20
Article G Documentation. . . . . . . . . . . . . . . . . 20
Article H References to Price Services . . . . . . . . . 22
Article I Compliance with Governmental Rules and
Regulations . . . . . . . . . . . . . . . . . 22
Article J Ownership of Software and Related Material . . 22
PAGE 3
Article K Quality Service Standards. . . . . . . . . . . 23
Article L As of Transactions . . . . . . . . . . . . . . 23
Article M Term and Termination of Agreement. . . . . . . 26
Article N Notice . . . . . . . . . . . . . . . . . . . . 26
Article O Assignment . . . . . . . . . . . . . . . . . . 26
Article P Amendment/Interpretive Provisions. . . . . . . 26
Article Q Further Assurances . . . . . . . . . . . . . . 27
Article R Maryland Law to Apply. . . . . . . . . . . . . 27
Article S Merger of Agreement. . . . . . . . . . . . . . 27
Article T Counterparts . . . . . . . . . . . . . . . . . 27
Article U The Parties. . . . . . . . . . . . . . . . . . 27
Article V Directors, Trustees, Shareholders and Massachusetts
Business Trust . . . . . . . . . . . . . . . . 28
Article W Captions . . . . . . . . . . . . . . . . . . . 28
PAGE 4
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the first day of January, 1994, by and
between T. ROWE PRICE SERVICES, INC., a Maryland corporation
having its principal office and place of business at 100 East
Pratt Street, Baltimore, Maryland 21202 ("Price Services"), and
EACH FUND WHICH IS LISTED ON APPENDIX A (as such Appendix may be
amended from time to time) and which evidences its agreement to
be bound hereby by executing a copy of this Agreement (each such
Fund individually hereinafter referred to as "the Fund", whose
definition may be found in Article U);
WHEREAS, the Fund desires to appoint Price Services as its
transfer agent, dividend disbursing agent and agent in connection
with certain other activities, and Price Services desires to
accept such appointment;
WHEREAS, Price Services represents that it is registered
with the Securities and Exchange Commission as a Transfer Agent
under Section 17A of the Securities Exchange Act of 1934 ("'34
Act") and will notify each Fund promptly if such registration is
revoked or if any proceeding is commenced before the Securities
and Exchange Commission which may lead to such revocation;
WHEREAS, certain of the Funds are named investment options
under various tax-sheltered retirement plans including, but not
limited to, individual retirement accounts, simplified employee
pension plans, deferred compensation plans, 403(b) plans, and
profit sharing, thrift, and money purchase pension plans for
self-employed individuals and professional partnerships and
corporations, (collectively referred to as "Retirement Plans");
PAGE 5
WHEREAS, Price Services has the capability of providing
special services, on behalf of the Funds, for the accounts of
shareholders participating in these Retirement Plans ("Retirement
Accounts").
WHEREAS, Price Services may subcontract or jointly contract
with other parties, on behalf of the Funds, including, but not
limited to, DST, SRI, Moore Business Forms, Boston Financial Data
Services, Inc., and the 440 Financial Group, to perform certain
of the functions and services described herein including services
to Retirement Plans and Retirement Accounts. Price Services may
also enter into, on behalf of the Funds, certain banking
relationships to perform various banking services including, but
not limited to, check deposits, check disbursements, automated
clearing house transactions ("ACH") and wire transfers. Subject
to guidelines mutually agreed upon by the Funds and Price
Services, excess balances, if any, resulting from these banking
relationships will be invested and the income therefrom will be
used to offset fees which would otherwise be charged to the Funds
under this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
A. Terms of Appointment
Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints Price Services to
act, and Price Services agrees to act, as the Fund's transfer
agent, dividend disbursing agent and agent in connection with:
(1) the Fund's authorized and issued shares of its common stock
or shares of beneficial interest (all such stock and shares to be
PAGE 6
referred to as "Shares"); (2) any accumulation, open-account or
similar plans provided to the shareholders of the Fund
("Shareholders"), including, without limitation, any periodic
investment plan or periodic withdrawal program; and (3) certain
Retirement Plan and Retirement Accounts as agreed upon by the
parties.
The parties to the Agreement hereby acknowledge that from
time to time, Price Services and T. Rowe Price Trust Company may
enter into contracts ("Other Contracts") with employee benefit
plans and/or their sponsors for the provision of certain plan
participant services to Retirement Plans and Retirement Accounts.
Compensation paid to Price Services pursuant to this Agreement
is with respect to the services described herein and not with
respect to services provided under Other Contracts.
B. Duties of Price Services
Price Services agrees that it will perform the following
services:
1. Receipt of Orders/Payments
Receive for acceptance, orders/payments for the
purchase of Shares and promptly deliver payment and
appropriate documentation thereof to the authorized
custodian of the Fund (the "Custodian"). Upon receipt of
any check or other instrument drawn or endorsed to it as
agent for, or identified as being for the account of, the
Fund, Price Services will process the order as follows:
o Examine the check to determine if the check conforms to
the Funds' acceptance procedures (including certain
third-party check procedures). If the check conforms,
PAGE 7
Price Services will endorse the check and include the
date of receipt, will process the same for payment, and
deposit the net amount to the parties agreed upon
designated bank account prior to such deposit in the
Custodial account, and will notify the Fund and the
Custodian, respectively, of such deposits (such
notification to be given on a daily basis of the total
amount deposited to said accounts during the prior
business day);
o Open a new account, if necessary, and credit the
account of the investor with the number of Shares to be
purchased according to the price of the Fund's Shares
in effect for purchases made on that date, subject to
any instructions which the Fund may have given to Price
Services with respect to acceptance of orders for
Shares relating to payments so received by it;
o Maintain a record of all unpaid purchases and report
such information to the Fund daily;
o Process periodic payment orders, as authorized by
investors, in accordance with the payment procedures
for pre-authorized checking ("PAC") and ACH purchases
mutually agreed upon by both parties;
o Receive monies from Retirement Plans and determine the
proper allocation of such monies to the Retirement
Accounts based upon instructions received from
Retirement Plan participants or Retirement Plan
administrators ("Administrators"); and
PAGE 8
o Process telephone orders for purchases of Fund shares
from the Shareholder's bank account (via wire or ACH)
to the Fund in accordance with procedures mutually
agreed upon by both parties.
Upon receipt of funds through the Federal Reserve Wire
System that are designated for purchases in Funds which
declare dividends at 12:00 p.m. (or such time as set forth
in the Fund's current prospectus), Price Services shall
promptly notify the Fund and the Custodian of such deposit.
2. Redemptions
Receive for acceptance redemption requests, including
telephone redemptions and requests received from
Administrators for distributions to participants or their
designated beneficiaries or for payment of fees due the
Administrator or such other person, including Price
Services, and deliver the appropriate documentation
thereofto the Custodian. Price Services shall receive and
stamp with the date of receipt, all requests for redemptions
of Shares (including all certificates delivered to it for
redemption) and shall process said redemption requests as
follows, subject to the provisions of Section 7 hereof:
o Examine the redemption request and, for written
redemptions, the supporting documentation, to determine
that the request is in good order and all requirements
have been met;
o Notify the Fund on the next business day of the total
number of Shares presented and covered by all such
requests;
PAGE 9
o As set forth in the prospectus of the Fund, and in any
event, on or prior to the seventh (7th) calendar day
succeeding any such request for redemption, Price
Services shall, from funds available in the accounts
maintained by Price Services as agent for the Funds,
pay the applicable redemption price in accordance with
the current prospectus of the Fund, to the investor,
participant, beneficiary, Administrator or such other
person, as the case may be;
o If any request for redemption does not comply with the
Fund's requirements, Price Services shall promptly
notify the investor of such fact, together with the
reason therefore, and shall effect such redemption at
the price in effect at the time of receipt of all
appropriate documents;
o Make such withholdings as may be required under
applicable Federal and State tax law;
o In the event redemption proceeds for the payment of
fees are to be wired through the Federal Reserve Wire
System or by bank wire, Price Services shall cause such
proceeds to be wired in Federal funds to the bank
account designated; and
o Process periodic redemption orders as authorized by the
investor in accordance with the periodic withdrawal
procedures for Systematic Withdrawal Plan ("SWP") and
systematic ACH redemptions mutually agreed upon by both
parties.
PAGE 10
Procedures and requirements for effecting and accepting
redemption orders from investors by telephone, Tele*Access,
Mailgram, or written instructions shall be established by
mutual agreement between Price Services and the Fund
consistent with the Fund's current prospectus.
3. Transfers
Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions and
documentation and examine such instructions for conformance
with appropriate procedures and requirements. In this
regard, Price Services, upon receipt of a proper request for
transfer, including any transfer involving the surrender of
certificates of Shares, is authorized to transfer, on the
records of the Fund, Shares of the Fund, including
cancellation of surrendered certificates, if any, to credit
a like amount of Shares to the transferee and to
countersign, issue and deliver new certificates, if
requested, for those Funds issuing certificates.
4. Confirmations
Mail all confirmations and other enclosures requested
by the Fund to the shareholder, and in the case of
Retirement Accounts, to the Administrators, as may be
required by the Funds or by applicable Federal or state law.
5. Issuance of Share Certificates
o Those Funds which issue stock certificates shall supply
Price Services with a sufficient supply of blank stock
certificates and shall renew such supply upon request
of Price Services. Such blank stock certificates shall
PAGE 11
be properly signed, manually or facsimile, if
authorized by the Fund, and shall bear the seal or
facsimile thereof of the Fund; and notwithstanding the
death, resignation or removal of any officers of the
Fund authorized to sign certificates of stock, on
behalf of the Fund, Price Services may continue to
countersign certificates which bear the manual or
facsimile signature of such officer until otherwise
directed by the Fund.
o If an investor requests a share certificate of a Fund
which issues stock certificates (except shares in
Retirement Plans and Retirement Accounts which will be
non certificated), Price Services will countersign and
mail by first class mail, a share certificate to the
investor at his address as set forth on the transfer
books of the Fund, subject to any other instructions
for delivery of certificates which the Fund may give to
Price Services with respect to certificates
representing newly purchased Shares.
6. Returned Checks and ACH Debits
In order to minimize the risk of loss to the Fund by
reason of any check being returned unpaid, Price Services
will promptly identify and follow-up on any check or ACH
debit returned unpaid. For items returned, Price Services
may telephone the investor and/or redeposit the check or
debit for collection or cancel the purchase, as deemed
appropriate.
PAGE 12
7. Redemption of Shares under Ten Day Hold
o Uncollected Funds
Shares purchased by personal, corporate, or
governmental check, or by ACH will be considered
uncollected until the tenth calendar date following the
trade date of the trade ("Uncollected Funds");
o Good Funds
Share purchased by treasurer's, cashier, certified, or
official check, or by wire transfer will be considered
collected immediately ("Good Funds"). Absent
information to the contrary (i.e., notification from
the payee institution), Uncollected Funds will be
considered Good Funds on the tenth calendar day
following trade date.
o Redemption of Uncollected Funds
o Shareholders making telephone requests for
redemption of shares purchased with Uncollected
Funds will be given two options:
1. The Shareholder will be permitted to exchange
to a money market fund to preserve principal until
the funds are deemed Good Funds,
2. The redemption can be processed utilizing the
same procedures for written redemptions described
below.
o If a written redemption request is made for shares
where any portion of the payment for said shares
is in Uncollected Funds, and the request is in
good order, Price Services will promptly obtain
PAGE 13
the information relative to the payment necessary
to determine when the payment becomes Good Funds.
The redemption will be processed in accordance
with normal procedures, and the proceeds will be
held until confirmation that the payment is Good
Funds. On the seventh (7th) calendar day after
trade date, and each day thereafter until either
confirmation is received or the tenth (10th)
calendar day, Price Services will call the paying
institution to request confirmation that the check
or ACH in question has been paid. On the tenth
calendar day after trade date, the redemption
proceeds will be released, regardless of whether
confirmation has been received.
o Checkwriting Redemptions.
o Daily, all checkwriting redemptions $10,000 and
over reported as Uncollected Funds or insufficient
funds will be reviewed. An attempt will be made
to contact the shareholder to make good the funds
(through wire, exchange, transfer). Generally by
12:00 p.m. the same day, if the matter has not
been resolved, the redemption request will be
rejected and the check returned to the
Shareholder.
o All checkwriting redemptions under $10,000
reported as Uncollected or insufficient funds will
PAGE 14
be rejected and the check returned to the
Shareholder.
o Confirmations of Available Funds
The Fund expects that situations may develop whereby it
would be beneficial to determine if a person who has
placed an order for Shares has sufficient funds in his
or her checking account to cover the payment for the
Shares purchased. When this situation occurs, Price
Services may call the bank in question and request that
it confirm that sufficient funds to cover the purchase
are currently credited to the account in question.
Price Services will maintain written documentation or a
recording of each telephone call which is made under
the procedures outlined above. None of the above
procedures shall preclude Price Services from inquiring
as to the status of any check received by it in payment
for the Fund's Shares as Price Services may deem
appropriate or necessary to protect both the Fund and
Price Services. If a conflict arises between Section 2
and this Section 7, Section 7 will govern.
8. Dividends, Distributions and Other Corporate Actions
o The Fund will promptly inform Price Services of the
declaration of any dividend, distribution, stock split
or any other distributions of a similar kind on account
of its Capital Stock.
PAGE 15
o Price Services shall act as Dividend Disbursing Agent
for the Fund, and as such, shall prepare and make
income and capital gain payments to investors. As
Dividend Disbursing Agent, Price Services will on or
before the payment date of any such dividend or
distribution, notify the Custodian of the estimated
amount required to pay any portion of said dividend or
distribution which is payable in cash, and the Fund
agrees that on or before the payment date of such
distribution, it shall instruct the Custodian to make
available to Price Services sufficient funds for the
cash amount to be paid out. If an investor is entitled
to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits will be
made to his or her account.
9. Unclaimed Payments and Certificates
In accordance with procedures agreed upon by both
parties, report abandoned property to appropriate state and
governmental authorities of the Fund. Price Services shall,
90 days prior to the annual reporting of abandoned property
to each of the states, make reasonable attempts to locate
Shareholders for which (a) checks or share certificates have
been returned; (b) for which accounts have aged outstanding
checks; or (c) accounts with unissued shares that have been
coded with stop mail and meet the dormancy period guidelines
specified in the individual states. Price Services shall
PAGE 16
make reasonable attempts to contact shareholders for those
accounts which have significant aged outstanding checks.
10. Books and Records
Maintain records showing for each Shareholder's
account, Retirement Plan or Retirement Account, as the case
may be, the following:
o Names, address and tax identification number;
o Number of Shares held;
o Certain historical information regarding the
account of each Shareholder, including dividends
and distributions distributed in cash or invested
in Shares;
o Pertinent information regarding the establishment
and maintenance of Retirement Plans and Retirement
Accounts necessary to properly administer each
account;
o Information with respect to the source of
dividends and distributions allocated among income
(taxable and nontaxable income), realized short-
term gains and realized long-term gains;
o Any stop or restraining order placed against a
Shareholder's account;
o Information with respect to withholdings on
domestic and foreign accounts;
o Any instructions from a Shareholder including, all
forms furnished by the Fund and executed by a
PAGE 17
Shareholder with respect to (i) dividend or
distribution elections, and (ii) elections with
respect to payment options in connection with the
redemption of Shares;
o Any correspondence relating to the current
maintenance of a Shareholder's account;
o Certificate numbers and denominations for any
Shareholder holding certificates;
o Any information required in order for Price
Services to perform the calculations contemplated
under this Agreement.
Price Services shall maintain files and furnish
statistical and other information as required under this
Agreement and as may be agreed upon from time to time by
both parties or required by applicable law. However, Price
Services reserves the right to delete, change or add any
information to the files maintained; provided such
deletions, changes or additions do not contravene the terms
of this Agreement or applicable law and do not materially
reduce the level of services described in this Agreement.
Price Services shall also use its best efforts to obtain
additional statistical and other information as each Fund
may reasonably request for additional fees as may be agreed
to by both parties.
Any such records maintained pursuant to Rule 31a-1
under the Investment Company Act of 1940 ("the Act") will be
PAGE 18
preserved for the periods and maintained in a manner
prescribed in Rule 31a-2 thereunder. Disposition of such
records after such prescribed periods shall be as mutually
agreed upon by the Fund and Price Services. The retention
of such records, which may be inspected by the Fund at
reasonable times, shall be at the expense of the Fund. All
records maintained by Price Services in connection with the
performance of its duties under this Agreement will remain
the property of the Fund and, in the event of termination of
this Agreement, will be delivered to the Fund as of the date
of termination or at such other time as may be mutually
agreed upon.
All books, records, information and data pertaining to
the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of
this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except after
prior notification to and approval by the other party
hereto, which approval shall not be unreasonably withheld
and may not be withheld where Price Services or the Fund may
be exposed to civil or criminal contempt proceedings for
failure to comply; when requested to divulge such
information by duly constituted governmental authorities; or
after so requested by the other party hereto.
11. Authorized Issued and Outstanding Shares
Record the issuance of Shares of the Fund and maintain,
pursuant to Rule 17Ad-10(e) of the '34 Act, a record of the
total number of Shares of the Fund which are authorized,
PAGE 19
issued and outstanding, based upon data provided to it by
the Fund. Price Services shall also provide the Fund on a
regular basis the total number of Shares which are
authorized and issued and outstanding. Price Services shall
have no obligation, when recording the issuance of Shares,
to monitor the issuance of such Shares or to take cognizance
of any laws relating to the issuance or sale of such Shares.
12. Tax Information
Prepare and file with the Internal Revenue Service and
with other appropriate state agencies and, if required, mail
to investors, those returns for reporting dividends and
distributions paid as required to be so filed and mailed,
and shall withhold such sums required to be withheld under
applicable Federal and state income tax laws, rules, and
regulations. Additionally, Price Services will file and, as
applicable, mail to investors, any appropriate information
returns required to be filed in connection with Retirement
Plan processing, such as 1099R, 5498, as well as any other
appropriate forms that the Fund or Price Services may deem
necessary. The Fund and Price Services shall agree to
procedures to be followed with respect to Price Services'
responsibilities in connection with compliance with back-up
withholding and other tax laws.
13. Information to be Furnished to the Fund
Furnish to the Fund such information as may be agreed
upon between the Fund and Price Services including any
information that the Fund and Price Services agree is
necessary to the daily operations of the business.
PAGE 20
14. Correspondence
Promptly and fully answer correspondence from
shareholders and Administrators relating to Shareholder
Accounts, Retirement Accounts, transfer agent procedures,
and such other correspondence as may from time to time be
mutually agreed upon with the Funds. Unless otherwise
instructed, copies of all correspondence will be retained by
Price Services in accordance with applicable law and
procedures.
15. Lost or Stolen Securities
Pursuant to Rule 17f-1 of the '34 Act, report to the
Securities Information Center and/or the FBI or other
appropriate person on Form X-17-F-1A all lost, stolen,
missing or counterfeit securities. Provide any other
services relating to lost, stolen or missing securities as
may be mutually agreed upon by both parties.
16. Telephone Services
Maintain a Telephone Servicing Staff of representatives
("Representatives") sufficient to timely respond to all
telephonic inquiries reasonably foreseeable. The
Representatives will also effect telephone purchases,
redemptions, exchanges, and other transactions mutually
agreed upon by both parties, for those Shareholders who have
authorized telephone services. The Reprentatives shall
require each Shareholder effecting a telephone transaction
to properly identify themself before the transaction is
effected, in accordance with procedures agreed upon between
by both parties. Procedures for processing telephone
PAGE 21
transactions will be mutually agreed upon by both parties.
Price Services will also be responsible for providing
Tele*Access, PC*Access and such other Services as may be
offered by the Funds from time to time. Price Services will
maintain a special Shareholder Servicing staff to service
certain Shareholders with substantial relationships with the
Funds.
17. Proxies
Monitor the mailing of proxy cards and other material
supplied to it by the Fund in connection with Shareholder
meetings of the Fund and shall coordinate the receipt,
examination and tabulation of returned proxies and the
certification of the vote to the Fund.
18. Form N-SAR
Maintain such records, if any, as shall enable the Fund
to fulfill the requirements of Form N-SAR.
19. Cooperation With Accountants
Cooperate with each Fund's independent public
accountants and take all reasonable action in the
performance of its obligations under the Agreement to assure
that the necessary information is made available to such
accountants for the expression of their opinion without any
qualification as to the scope of their examination,
including, but not limited to, their opinion included in
each such Fund's annual report on Form N-SAR and annual
amendment to Form N-1A.
PAGE 22
20. Blue Sky
Provide to the Fund or its agent, on a daily, weekly,
monthly and quarterly basis, and for each state in which the
Fund's Shares are sold, sales reports and other materials
for blue sky compliance purposes as shall be agreed upon by
the parties.
21. Other Services
Provide such other services as may be mutually agreed
upon between Price Services and the Fund.
22. Fees and Out-of-Pocket Expenses
Each Fund shall pay to Price Services and/or its agents
for its Transfer Agent Services hereunder, fees computed as
set forth in Schedule A attached. Except as provided below,
Price Services will be responsible for all expenses relating
to the providing of Services. Each Fund, however, will
reimburse Price Services for the following out-of-pocket
expenses and charges incurred in providing Services:
o Postage. The cost of postage and freight for
mailing materials to Shareholders and Retirement
Plan participants, or their agents, including
overnight delivery, UPS and other express mail
services and special courier services required to
transport mail between Price Services locations
and mail processing vendors.
o Proxies. The cost to mail proxy cards and other
material supplied to it by the Fund and costs
related to the receipt, examination and tabulation
PAGE 23
of returned proxies and the certification of the
vote to the Fund.
o Communications
o Print. The printed forms used internally and
externally for documentation and processing
Shareholder and Retirement Plan participant,
or their agent's inquiries and requests;
paper and envelope supplies for letters,
notices, and other written communications
sent to Shareholders and Retirement Plan
participants, or their agents.
o Print & Mail House. The cost of internal
and third party printing and mail house
services, including printing of statements
and reports.
o Voice and Data. The cost of equipment
(including associated maintenance), supplies
and services used for communicating to and
from the Shareholders of the Fund and
Retirement Plan participants, or their
agents, the Fund's transfer agent, other Fund
offices, and other agents of either the Fund
or Price Services. These charges shall
include:
o telephone toll charges (both incoming
and outgoing, local, long distance and
mailgrams); and
PAGE 24
o data and telephone lines and associated
equipment such as modems, multiplexers,
and facsimile equipment.
o Record Retention. The cost of maintenance
and supplies used to maintain, microfilm,
copy, record, index, display, retrieve, and
store, in microfiche or microfilm form,
documents and records.
o Disaster Recovery. The cost of services,
equipment, facilities and other charges
necessary to provide disaster recovery for
any and all services listed in this
Agreement.
Out-of-pocket costs will be billed at cost to the
Funds. Allocation of monthly costs among the Funds will
generally be made based upon the number of Shareholder and
Retirement Accounts serviced by Price Services each month. Some
invoices for these costs will contain costs for both the Funds
and other funds serviced by Price Services. These costs will be
allocated based on a reasonable allocation mehodology. Where
possible, such as in the case of inbound and outbound WATS
charges, allocation will be made on the actual distribution or
usage.
C. Representations and Warranties of Price Services
Price Services represents and warrants to the Fund that:
1. It is a corporation duly organized and existing and in
good standing under the laws of Maryland;
PAGE 25
2. It is duly qualified to carry on its business in
Maryland and California;
3. It is empowered under applicable laws and by its
charter and by-laws to enter into and perform this
Agreement;
4. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
5. It is registered with the Securities and Exchange
Commission as a Transfer Agent pursuant to Section 17A of
the '34 Act; and
6. It has and will continue to have access to the
necessary facilities, equipment and personnel to perform its
duties and obligations under this Agreement.
D. Representations and Warranties of the Fund
The Fund represents and warrants to Price Services that:
1. It is a corporation or business trust duly organized
and existing and in good standing under the laws of Maryland
or Massachusetts, as the case may be;
2. It is empowered under applicable laws and by its
Articles of Incorporation or Declaration of Trust, as the
case may be, and By-Laws to enter into and perform this
Agreement;
3. All proceedings required by said Articles of
Incorporation or Declaration of Trust, as the case may be,
and By-Laws have been taken to authorize it to enter into
and perform this Agreement;
4. It is an investment company registered under the Act;
and
PAGE 26
5. A registration statement under the Securities Act of
1933 ("the '33 Act") is currently effective and will remain
effective, and appropriate state securities law filings have
been made and will continue to be made, with respect to all
Shares of the Fund being offered for sale.
E. Standard of Care/Indemnification
Notwithstanding anything to the contrary in this Agreement:
1. Price Services shall not be liable to any Fund for any
act or failure to act by it or its agents or subcontractors
on behalf of the Fund in carrying or attempting to carry out
the terms and provisions of this Agreement provided Price
Services has acted in good faith and without negligence or
willful misconduct and selected and monitored the
performance of its agents and subcontractors with reasonable
care.
2. The Fund shall indemnify and hold Price Services
harmless from and against all losses, costs, damages,
claims, actions and expenses, including reasonable expenses
for legal counsel, incurred by Price Services resulting
from: (i) any action or omission by Price Services or its
agents or subcontractors in the performance of their duties
hereunder; (ii) Price Services acting upon instructions
believed by it to have been executed by a duly authorized
officer of the Fund; or (iii) Price Services acting upon
information provided by the Fund in form and under policies
agreed to by Price Services and the Fund. Price Services
shall not be entitled to such indemnification in respect of
actions or omissions constituting negligence or willful
PAGE 27
misconduct of Price Services or where Price Services has not
exercised reasonable care in selecting or monitoring the
performance of its agents or subcontractors.
3. Except as provided in Article L of this Agreement,
Price Services shall indemnify and hold harmless the Fund
from all losses, costs, damages, claims, actions and
expenses, including reasonable expenses for legal counsel,
incurred by the Fund resulting from the negligence or
willful misconduct of Price Services or which result from
Price Services' failure to exercise reasonable care in
selecting or monitoring the performance of its agents or
subcontractors. The Fund shall not be entitled to such
indemnification in respect of actions or omissions
constituting negligence or willful misconduct of such Fund
or its agents or subcontractors; unless such negligence or
misconduct is attributable to Price Services.
4. In the event either party is unable to perform its
obligations under the terms of this Agreement because of
acts of God, strikes or other causes reasonably beyond its
control, such party shall not be liable to the other party
for any loss, cost, damage, claim, action or expense
resulting from such failure to perform or otherwise from
such causes.
5. In order that the indemnification provisions contained
in this Article E shall apply, upon the assertion of a claim
for which either party may be required to indemnify the
other, the party seeking indemnification shall promptly
notify the other party of such assertion, and shall keep the
PAGE 28
other party advised with respect to all developments
concerning such claim. The party who may be required to
indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim,
or to defend against said claim in its own name or in the
name of the other party. The party seeking indemnification
shall in no case confess any claim or make any compromise in
any case in which the other party may be required to
indemnify it except with the other party's prior written
consent.
6. Neither party to this Agreement shall be liable to the
other party for consequential damages under any provision of
this Agreement.
F. Dual Interests
It is understood that some person or persons may be
directors, officers, or shareholders of both the Funds and Price
Services (including Price Services's affiliates), and that the
existence of any such dual interest shall not affect the validity
of this Agreement or of any transactions hereunder except as
otherwise provided by a specific provision of applicable law.
G. Documentation
o As requested by Price Services, the Fund shall promptly
furnish to Price Services the following:
o A certified copy of the resolution of the
Directors/Trustees of the Fund authorizing the
appointment of Price Services and the execution
and delivery of this Agreement;
PAGE 29
o A copy of the Articles of Incorporation or
Declaration of Trust, as the case may be, and By-
Laws of the Fund and all amendments thereto;
o Specimens of all forms of outstanding and new
stock/share certificates in the forms approved by
the Board of Directors/Trustees of the Fund with a
certificate of the Secretary of the Fund as to
such approval;
o All account application forms and other documents
relating to Shareholders' accounts;
o An opinion of counsel for the Fund with respect to
the validity of the stock, the number of Shares
authorized, the status of redeemed Shares, and the
number of Shares with respect to which a
Registration Statement has been filed and is in
effect; and
o A copy of the Fund's current prospectus.
The delivery of any such document for the purpose of any
other agreement to which the Fund and Price Services are or were
parties shall be deemed to be delivery for the purposes of this
Agreement.
o As requested by Price Services, the Fund will also furnish
from time to time the following documents:
o Each resolution of the Board of Directors/Trustees of
the Fund authorizing the original issue of its Shares;
PAGE 30
o Each Registration Statement filed with the Securities
and Exchange Commission and amendments and orders
thereto in effect with respect to the sale of Shares
with respect to the Fund;
o A certified copy of each amendment to the Articles of
Incorporation or Declaration of Trust, and the By-Laws
of the Fund;
o Certified copies of each vote of the Board of
Directors/Trustees authorizing officers to give
instructions to the Transfer Agent;
o Specimens of all new certificates accompanied by the
Board of Directors/Trustees' resolutions approving such
forms;
o Such other documents or opinions which Price Services,
in its discretion, may reasonably deem necessary or
appropriate in the proper performance of its duties;
and
o Copies of new prospectuses issued.
Price Services hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to the Fund for
safekeeping of stock certificates, check forms and facsimile
signature imprinting devices, if any; and for the preparation or
use, and for keeping account of, such certificates, forms and
devices.
H. References to Price Services
Each Fund agrees not to circulate any printed matter which
contains any reference to Price Services without the prior
PAGE 31
approval of Price Services, excepting solely such printed matter
that merely identifies Price Services as agent of the Fund. The
Fund will submit printed matter requiring approval to Price
Services in draft form, allowing sufficient time for review by
Price Services and its legal counsel prior to any deadline for
printing.
I. Compliance With Governmental Rules and Regulations
Except as otherwise provided in the Agreement and except for
the accuracy of information furnished to the Fund by Price
Services, each Fund assumes full responsibility for the
preparation, contents and distribution of its prospectuses and
compliance with all applicable requirements of the Act, the '34
Act, the '33 Act, and any other laws, rules and regulations of
governmental authorities having jurisdiction over the Fund.
Price Services shall be responsible for complying with all laws,
rules and regulations of governmental authorities having
jurisdiction over transfer agents and their activities.
J. Ownership of Software and Related Material
All computer programs, magnetic tapes, written procedures
and similar items purchased and/or developed and used by Price
Services in performance of the Agreement shall be the property of
Price Services and will not become the property of the Fund.
K. Quality Service Standards
Price Services and the Fund may from time to time agree to
certain quality service standards, as well as incentives and
penalties with respect to Price Services' hereunder.
PAGE 32
L. As Of Transactions
For purposes of this Article L, the term "Transaction" shall
mean any single or "related transaction" (as defined below)
involving the purchase or redemption of Shares (including
exchanges) that is processed at a time other than the time of the
computation of the Fund's net asset value per Share next computed
after receipt of any such transaction order by Price Services.
If more than one Transaction ("Related Transaction") in the Fund
is caused by or occurs as a result of the same act or omission,
such transactions shall be aggregated with other transactions in
the Fund and be considered as one Transaction.
o Reporting
Price Services shall:
1. Utilize a system to identify all Transactions, and
shall compute the net effect of such Transactions upon
the Fund on a daily, monthly and rolling 365 day basis.
The monthly and rolling 365 day periods are hereafter
referred to as "Cumulative".
2. Supply to the Fund, from time to time as mutually
agreed upon, a report summarizing the Transactions and
the daily and Cumulative net effects of such
Transactions both in terms of aggregate dilution and
loss ("Dilution") or gain and negative dilution
("Gain") experienced by the Fund, and the impact such
Gain or Dilution has had upon the Fund's net asset
value per Share.
PAGE 33
3. With respect to any Transaction which causes
Dilution to the Fund of $25,000 or more, immediately
provide the Fund: (i) a report identifying the
Transaction and the Dilution resulting therefrom, (ii)
the reason such Transaction was processed as described
above, and (iii) the action that Price Services has or
intends to take to prevent the reoccurrence of such as
of processing ("Report").
o Liability
1. It will be the normal practice of the Funds not to
hold Price Services liable with respect to any
Transaction which causes Dilution to any single Fund of
less than $25,000. Price Services will, however,
closely monitor for each Fund the daily and Cumulative
Gain/Dilution which is caused by Transactions of less
than $25,000. When the Cumulative Dilution to any Fund
exceeds 3/10 of 1% per share, Price Services, in
consultation with counsel to the Fund, will make
appropriate inquiry to determine whether it should take
any remedial action. Price Services will report to the
Board of Directors/Trustees of the Fund ("Board") any
action it has taken.
2. Where a Transaction causes Dilution to a Fund of
$25,000 or more ("Significant Transaction"), Price
Services will review with counsel to the Fund the
Report and the circumstances surrounding the underlying
PAGE 34
Transaction to determine whether the Transaction was
caused by or occurred as a result of a negligent act or
omission by Price Services. If it is determined that
the Dilution is the result of a negligent action or
omission by Price Services, Price Services and outside
counsel for the Fund will negotiate settlement. All
such Significant Transactions will be reported to the
Board at its next meeting (unless the settlement fully
compensates the Fund for any Dilution). Any
Significant Transaction, however, causing Dilution in
excess of the lesser of $100,000 or a penny per Share
will be promptly reported to the Board. Settlement
will not be entered into with Price Services until
approved by the Board. The factors the Board would be
expected to consider in making any determination
regarding the settlement of a Significant Transaction
would include but not be limited to:
o Procedures and controls adopted by Price Services
to prevent "As Of" processing;
o Whether such procedures and controls were being
followed at the time of the Significant
Transaction;
o The absolute and relative volume of all
transactions processed by Price Services on the
day of the Significant Transaction;
PAGE 35
o The number of Transactions processed by Price
Services during prior relevant periods, and the
net Dilution/Gain as a result of all such
transactions to the Fund and to all other Price
Funds;
o The prior response of Price Services to
recommendations made by the Funds regarding
improvement to the Transfer Agent's "As Of"
Processing Procedures.
M. Term and Termination of Agreement
o This Agreement shall run for a period of one (1) year from
the date first written above and will be renewed from year
to year thereafter unless terminated by either party as
provided hereunder.
o This Agreement may be terminated by the Fund upon one
hundred twenty (120) days' written notice to Price Services;
and by Price Services, upon three hundred sixty-five (365)
days' writing notice to the Fund.
o Upon termination hereof, the Fund shall pay to Price
Services such compensation as may be due as of the date of
such termination, and shall likewise reimburse for out-of-
pocket expenses related to its services hereunder.
N. Notice
Any notice as required by this Agreement shall be
sufficiently given (i) when sent to an authorized person of the
other party at the address of such party set forth above or at
PAGE 36
such other address as such party may from time to time specify in
writing to the other party; or (ii) as otherwise agreed upon by
appropriate officers of the parties hereto.
O. Assignment
Neither this Agreement nor any rights or obligations
hereunder may be assigned either voluntarily or involuntarily, by
operation of law or otherwise, by either party without the prior
written consent of the other party, provided this shall not
preclude Price Services from employing such agents and
subcontractors as it deems appropriate to carry out its
obligations set forth hereunder.
P. Amendment/Interpretive Provisions
The parties by mutual written agreement may amend this
Agreement at any time. In addition, in connection with the
operation of this Agreement, Price Services and the Fund may
agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions are to
be signed by all parties and annexed hereto, but no such
provision shall contravene any applicable Federal or state law or
regulation and no such interpretive or additional provision shall
be deemed to be an amendment of this Agreement.
Q. Further Assurances
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the
purposes hereof.
PAGE 37
R. Maryland Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of Maryland.
S. Merger of Agreement
This Agreement, including the attached Appendices and
Schedules supersedes any prior agreement with respect to the
subject hereof, whether oral or written.
T. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instruments.
U. The Parties
All references herein to "the Fund" are to each of the Funds
listed on Appendix A individually, as if this Agreement were
between such individual Fund and Price Services. In the case of
a series Fund or trust, all references to "the Fund" are to the
individual series or portfolio of such Fund or trust, or to such
Fund or trust on behalf of the individual series or portfolio, as
appropriate. The "Fund" also includes any T. Rowe Price Funds
which may be established after the execution of this Agreement.
Any reference in this Agreement to "the parties" shall mean Price
Services and such other individual Fund as to which the matter
pertains.
V. Directors, Trustees and Shareholders and Massachusetts
Business Trust
It is understood and is expressly stipulated that neither
the holders of Shares in the Fund nor any Directors or Trustees
PAGE 38
of the Fund shall be personally liable hereunder. With respect to
any Fund which is a party to this Agreement and which is
organized as a Massachusetts business trust, the term "Fund"
means and refers to the trustees from time to time serving under
the applicable trust agreement (Declaration of Trust) of such
Trust as the same may be amended from time to time. It is
expressly agreed that the obligations of any such Trust hereunder
shall not be binding upon any of the trustees, shareholders,
nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Trust, as provided in the
Declaration of Trust of the Trust. The execution and delivery of
this Agreement has been authorized by the trustees and signed by
an authorized officer of the Trust, acting as such, and neither
such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any
of them, but shall bind only the trust property of the Trust as
provided in its Declaration of Trust.
W. Captions
The captions in the Agreement are included for convenience
of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
PAGE 39
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under
their seals by and through their duly authorized officers.
DATED: 2/18/94 T. ROWE PRICE SERVICES, INC.
ATTEST:
/s/Barbara A. VanHorn /s/Mark E. Rayford
____________________ BY:___________________________
Barbara A. VanHorn Mark E. Rayford
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE DIVIDEND GROWTH FUND, INC
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
PAGE 40
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Money Fund
Virginia Tax-Free Money Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
PAGE 41
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
Summit Municipal Money Market Fund
Summit Municipal Intermediate Fund
Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND,INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
DATED: 2/16/94
ATTEST:
/s/Lenora V. Hornung /s/Carmen F. Deyesu
_________________________ BY:__________________________
Lenora V. Hornung Carmen F. Deyesu
PAGE 42
APPENDIX A
The following Funds are parties to this Agreement, and have so
indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price California Tax-Free Income Trust on behalf of the
California Tax-Free Bond Fund and
California Tax-Free Money Fund
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Index Trust, Inc. on behalf of the
T. Rowe Price Equity Index Fund
T. Rowe Price Institutional International Funds, Inc. on behalf
of the
Foreign Equity Fund
T. Rowe Price International Funds, Inc. on behalf of the
T. Rowe Price International Bond Fund and
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. Rowe Price Latin America Fund
T. Rowe Price Mid-Cap Growth Fund
PAGE 43
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price OTC Fund, Inc.
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
T. Rowe Price Spectrum Fund, Inc. on behalf of the
Spectrum Growth Fund
Spectrum Income Fund
T. Rowe Price State Tax-Free Income Trust on behalf of the
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
T. Rowe Price U.S. Treasury Funds, Inc. on behalf of the
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. Rowe Price Summit Funds, Inc. on behalf of the
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
PAGE 44
T. Rowe Price Summit Municipal Funds, Inc. on behalf of the
Summit Municipal Money Market Fund
Summit Municipal Intermediate Fund
Summit Municipal Income Fund
PAGE 45
SCHEDULE A - FEE SCHEDULE
Effective January 1, 1994 to December 31, 1994,
For the account of:
THE T. ROWE PRICE FUNDS
EQUITY FUNDS
T. Rowe Price New American Growth Fund
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Era Fund, Inc.
T. Rowe Price International Stock Fund
T. Rowe Price Equity Income Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Small Capital Value Fund, Inc.
T. Rowe Price International Discovery Fund
Foreign Equity Fund
T. Rowe Price Equity Index Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Spectrum Growth Fund
T.Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Mid-Cap Growth Fund, Inc.
T. Rowe Price Over-the-Counter Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
BOND FUNDS
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price New Jersey Tax-Free Bond Fund
T. Rowe Price Virginia Tax-Free Bond Fund
T. Rowe Price Short Term Bond Fund, Inc.
T. Rowe Price Tax-Free Short Intermediate Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
T. Rowe Price GNMA Fund
T. Rowe Price New York Tax-Free Bond Fund
T. Rowe Price California Tax-Free Bond Fund
T. Rowe Price International Bond Fund
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
T. Rowe Price Maryland Tax-Free Bond Fund
T. Rowe Price U.S. Treasury Intermediate Fund
T. Rowe Price U.S. Treasury Long-Term Fund
T. Rowe Price Global Government Bond Fund
PAGE 46
T. Rowe Price Spectrum Income Fund
T. Rowe Price Short-term Global Bond Fund
T. Rowe Price Tax-Free Insured Intermediate Fund, Inc.
T. Rowe Price Georgia Tax-Free Bond Fund
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
Money Market Funds
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price U.S. Treasury Money Fund
T. Rowe Price New York Tax-Free Money Fund
T. Rowe Price California Tax-Free Money Fund
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Municipal Money Market Fund
PAGE 47
The following fees for services provided by T. Rowe Price
Services, Inc. (TRPS) and vendors will be billed by TRPS for
1994:
I. T. Rowe Price Services Maintenance and Transaction Charges -
Billable Monthly
A. Base Fee
1. Per Fund - Beginning January 1, 1994, chargeable at
the rate of $1,000 per month to each Fund shown on the previous
page. The fee is waived for new Funds for the first 6 months
after effective date.
2. Monthly - $5,987,000 payable in twelve monthly
installments of $498,917.
B. Per Account Annual Fee - $3.63 for each Equity, Bond, and
Money Market Account serviced.
The Per Account Annual Fee will be billed monthly at a rate
of 1/12 of the annual fee for each Fund account serviced during
the month. Accounts serviced is defined as all open accounts at
month end plus accounts which closed during the month.
C. Transaction Fees
1. New Account Fees
a. $3.00 for every account opened, including fiduciary
accounts, excluding those opened by exchange and those
established as described in (b) below.
b. A fee of $1.00 will be assessed for accounts
established within the model and list functions programs and
under the agreement that the registrant's name will be quality
controlled subsequent to its establishment.
2. Non-Automated Transactions
a. $1.05 for each non-automated transaction and
maintenance item processed for the Fund Group as a whole during a
month. The non-automated transaction count will include all
manually processed price dependent and maintenance transactions.
Also, the number of new account setups will be excluded from the
number of non-automated transactions.
b. Fee to be charged to the Funds based on each Fund's
number of total non-automated transactions and maintenance.
c. Fee to be billed monthly for that month.
PAGE 48
d. NOTE: The transaction count should not include
correction of transactions caused by non-shareholder
errors.
D. Telephone Fee
Billed at the rate of $5.20 per call for shareholder
servicing calls received in excess of 34,000 calls per
month. Calls received in Retail Services are allocated to
the Funds based on accounts serviced and calls received in
Telephone Services are allocated based on actual calls
received.
E. Items Scanned
$.29 will be billed for each document page scanned. It will
be allocated based on the number of items indexed to each
Fund.
F. Tele*Access
Base fee, per month for all calls is $39,000.
G. Institutional Electronic Interface
Maximum fee calculated is 10 basis points or less per Fund.
10 basis points < $500 million
8 basis points > $500 million < $1 billion
5 basis points > $1 billion < $2 billion
3 basis points > $2 billion
H. Correspondence
$4.20 billed for each shareholder correspondence request
completed in writing or by phone. Allocated to the Funds
based on accounts serviced.
I. Telephone Transaction Fee
Each price dependent transaction initiated through the
Telephone Services Group will be charged $.50.
II. Vendor Fees
A. DST
1. Annual Open Account Fee
a. $1.77 for each Equity Fund account serviced.
b. $4.20 for each Bond Fund account serviced.
c. $4.20 for each Money Market Fund account serviced.
PAGE 49
The Open Account Fee will be billed monthly at a rate of
1/12 of the annual fee for each Fund account serviced during
the month.
2. Closed Account Fee (Annualized)
Payable at an annual rate of $1.44. The Closed Account
Fee will be billed monthly at a rate of 1/12 of the
annual rate and will be charged in the month following
the month during which such account is closed and shall
cease to be charged in the month following the Purge
Date.
3. Fiduciary Sub-Accounting
Payable at the rate of $1.00 per month for each fiduciary
account. Fiduciary accounts closed during the prior year
will not be included as billable items.
4. Annual Base Fee Per Fund
Annual Fee of $7,205.88 will be charged at a monthly rate
of $600.49. The fee is waived for the first six (6)
months after a new Fund is effective. The definition of
new Fund excludes Funds created by mergers, purchases, or
reorganizations.
5. Bank Account Reconciliation System (Comp/Recon)
Annual charge of $120,000 payable at a rate of $10,000
per month.
6. TRAC 2000 - $7.00 per participant, per year
7. Voice Response Unit
a. $500 Set-up Fee will be charged for each investment
company unit.
b. $2,500 Maintenance Fee will be billed each month.
c. $.50 will be billed per call connected to the VRU.
8. Contingent Deferred Sales Charge.
Billed to each Fund utilizing this service at an annual
rate of $1.03 per open account.
B. State Street Bank
1. NSCC Settlements
PAGE 50
a. $11.30 for net redemptions
b. $ 5.14 per net purchases
2. Checkwriting Fees
$.565 for each checkwriting item processed (i.e. those
resulting in either redemptions or returned as non-
processable). This includes signature card maintenance
and verification, manual or special processing of checks,
stop payment processing, settlement functions, and
postage and mailing expenses to return canceled checks to
shareholders.
3. Stop Payments - Redemption/Distribution Accounts
$15.00 for each manual stop payment placed on a
redemption or distribution check.
4. ACH Transactions
$.06 for each ACH transaction processed by the Bank and
submitted to the ACH network.
5. Internal Book Transfers
$1.08 billed for money movement between TRP DDA's at the
Bank. Money is transferred by debit and credit memos.
6. Wire Fees
$4.00 for each incoming, manual, and internal bank
transfer wire; $3.75 for each outgoing transmission wire.
7. Paid checks
$.18 for each paid check processed.
8. DDA Research
$1.03 per request.
9. Special Handling
$2,917 billed per month for the special handling of
checks at Marina Bay.
10. Nightly Audits
$.0285 per page for the audit of the DST nightly update.
PAGE 51
11. VAX Computer Usage
Billed at the rate of $8,318 per month which covers both:
a. System Fee - for use of sub-systems such as capital
stock interface, PDPS, Direct Deposit, etc.
b. Communication Fee - charge for the line, modems, and
statistical multiplexers.
12. Abandoned Property
Services based on the following fee schedule:
a. Administrative charge $125/Fund
b. Processing charges $1.00/account
c. Due Diligence Mailings $1.50/account
d. Labor will be charged based on the number of hours
required.
13. Account maintenance $16.00 per account per month
14. Reporting (SSCAN) for selected accounts - $50.00 per
account per month
15. FDIC Passthrough - charged at prevailing FDIC rates
C. J.P. Morgan Bank
1. Wire Transfer Fees
Annual Account Maintenance $250.00
Annual MORCOM/CASH
First Account $5,000.00
Subsequent Accounts $3,000.00
Batch File Transfer (BFT)
Transmission $15.00 each
(capped at 10 per month)
BFT Per Outgoing Wire
Peak (8 a.m. and 8 p.m.) $0.064
Off Peak (8 p.m. and 8 a.m.) $0.032
Outgoing Wires
Straight-through (Repetive or Freetype)
80% of total volume $3.25
Book Transfer (IBT) $1.50
Repair (Freeform) $7.00
Zero Balance Transfer $1.00
PAGE 52
Incoming Wires
Fed or CHIPS $3.25
Book (IBT) $1.50
FDIC Passthrough - charged at prevailing FDIC rates
2. Controlled Disbursement Fees
Annual Account Maintenance
(capped at 6 accounts) $760.00 per
account
Annual MORCOM Next Day $1,385.00
per account
Annual MORCOM Check $715.00 per
account
Batch File Transfer (BFT)
Transmission (capped at 10 per month) $15.00 each
Same Day Match Pay (Dividend & Redemption Checks)
DCD Match $2,500.00
per account
TRPS Matches .005 per
item
Checks Paid
Up to 500,000 items $0.051
Up to 750,000 items $0.042
Up to 1,000,000 items $0.035
Stops
On-line $3.00
Returned Checks $3.00 per
item
3. The bank may charge interest at a rate in excess of normal
borrowing rates if the TRPS balance is overdrawn or is in a
negative collected balance status.
D. Fleet Bank of Massachusetts
1. Demand Deposit Services
a. Monthly Account Maintenance $13.00/
14.00 in
May
PAGE 53
b. Deposit Ticket $.85
c. Deposited Item Fee (all inclusive) $.054
d. Return of a Deposited Item
Redeposit Fee per deposit $1.00
Per redeposited item $.50
Returned item $3.00
2. Treasury Master System
a. Previous Day Balance Reporting
Monthly module charge $60.00
Per Account $10.00
b. Previous Day Detail
Monthly module charge $70.00
Per Transaction $.10
c. Current Day Detail
Monthly module charge $70.00
Per Transaction $.10
d. Depository Transfer
Monthly module charge $75.00
Per Transfer $.25
e. Money Movers per transfer $.50
f. Wire Transfer no addt'l
charge-
normal wire
fees only
3. Wire Transfer
a. Outgoing Repetitive Wire
Placed prior to 1:00 pm $9.00
Placed after 1:00 pm $10.00
b. Outgoing Non-Repetitive Wire
Placed prior to 1:00 pm $12.00
Placed after 1:00 pm $13.00
c. Incoming Wire $6.00
4. The bank may charge interest at a rate in excess of
normal borrowing rates if the TRPS balance is overdrawn
or is in a negative collected balance status.
5. FDIC Passthrough - charged at prevailing FDIC rates.
E. First National Bank of Maryland
1. Internal Fund Transfer $5.40
2. Returned Items $2.70
PAGE 54
3. Deposit Items Charge
varies
4. Deposit Tickets $.45
5. Return/redeposit items $2.25
6. Deposit Corrections $4.50
7. Check copy $9.00
8. First Facts
CDA Repetitive Wire $4.05
System Reports/Per Module $27.00
Per Report Previous Day $1.80
Per Report Current Day $3.60
9. Account maintenance $11.25
10. Debit item $.54
11. Credit transaction $.54
12. Foreign Deposit $4.50
13. ACH Debit $.117
14. Tax Deposits $.90
15. Film - Monthly $121.50
16. TRPS may be charged interest when TRPS's balance at FNB
is in a negative collected balance status. TRPS may
also receive balance credits on a positive investable
balance
17. FDIC Passthrough charged at prevailing FDIC rates
III. New Funds
Funds added during the term of this contract may have their
Maintenance and Transaction charges and other charges (Section
I) waived for a period of time, as agreed to by TRPS and Fund
Directors, following the establishment of the Fund. Out-of-
pocket expenses will be billed to the Fund from the Fund's
inception.
IN WITNESS WHEREOF, T.Rowe Price Funds and T.Rowe Price Services,
Inc. have agreed upon this fee schedule to be executed in their
names and on their behalf through their duly authorized officers:
T. ROWE PRICE FUNDS T. ROWE PRICE SERVICES, INC.
/s/Carmen F. Deyesu /s/Mark E. Rayford
NAME ____________________ NAME ________________________
Carmen F. Deyesu Mark E. Rayford
TITLE Treasurer TITLE President
DATE 2/16/94 DATE 2/18/94
PAGE 55
AMENDMENT NO. 1
TRANSFER AGENCY AND SERVICE AGREEMENT
Between
T. ROWE PRICE SERVICES, INC.
And
THE T. ROWE PRICE FUNDS
The Transfer Agency and Service Agreement of January 1,
1994, between T. Rowe Price Services, Inc. and each of the
Parties listed on Appendix A thereto is hereby amended, as of
March 1, 1994, by adding thereto the T. Rowe Price Equity Series,
Inc. and T. Rowe Price International Series, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Equity Series, Inc. and T. Rowe
Price International Series, Inc. (collectively referred to as the
"Funds") shall not be responsible for paying any of the fees or
expenses set forth herein but that, in accordance with the
Investment Management Agreements, dated March 1, 1994, between
the Funds and T. Rowe Price Associates, Inc. and Rowe Price-
Fleming International, Inc. (collectively referred to as "T. Rowe
Price"), the Funds will require T. Rowe Price to pay all such
fees and expenses.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE DIVIDEND GROWTH FUND, INC
PAGE 56
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
PAGE 57
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Money Fund
Virginia Tax-Free Money Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND,INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
Attest:
/s/Lenora V. Hornung /s/Carmen F. Deyesu
______________________ ______________________________
Lenora V. Hornung, By: Carmen F. Deyesu
Secretary
PAGE 58
Attest: T. ROWE PRICE SERVICES, INC.
/s/Barbara A. VanHorn /s/Henry H. Hopkins
______________________ ______________________________
Barbara A. VanHorn, By: Henry H. Hopkins,
Assistant Secretary Vice President
PAGE 59
AMENDMENT NO. 2
TRANSFER AGENCY AND SERVICE AGREEMENT
Between
T. ROWE PRICE SERVICES, INC.
And
THE T. ROWE PRICE FUNDS
The Transfer Agency and Service Agreement of January 1,
1994, as amended March 1, 1994, between T. Rowe Price Services,
Inc. and each of the Parties listed on Appendix A thereto is
hereby further amended, as of April 21, 1994, by adding thereto
the T. Rowe Price Fixed Income Series, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Fixed Income Series, Inc.
(referred to as the "Fund") shall not be responsible for paying
any of the fees or expenses set forth herein but that, in
accordance with the Investment Management Agreement, dated April
21, 1994, between the Fund and T. Rowe Price Associates, Inc.
(referred to as "T. Rowe Price"), the Fund will require T. Rowe
Price to pay all such fees and expenses.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE DIVIDEND GROWTH FUND, INC
T. ROWE PRICE EQUITY INCOME FUND
PAGE 60
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
PAGE 61
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Money Fund
Virginia Tax-Free Money Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND,INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
Attest:
/s/Lenora V. Hornung /s/Carmen F. Deyesu
______________________ ______________________________
Lenora V. Hornung, By: Carmen F. Deyesu
Secretary
PAGE 62
Attest: T. ROWE PRICE SERVICES, INC.
/s/Barbara A. VanHorn /s/Henry H. Hopkins
______________________ ______________________________
Barbara A. VanHorn, By: Henry H. Hopkins,
Assistant Secretary Vice President
The Agreement between T. Rowe Price Associates, Inc. and T. Rowe
Price Funds for Fund Accounting Services, dated January 1, 1994,
as amended, should be inserted here.
PAGE 1
AGREEMENT
between
T. ROWE PRICE ASSOCIATES, INC.
and
THE T. ROWE PRICE FUNDS
for
FUND ACCOUNTING SERVICES
PAGE 2
TABLE OF CONTENTS
Page
Article A Terms of Appointment/Duties of Price Associates .1
Article B Fees and Out-of-Pocket Expenses . . . . . . . . .2
Article C Representations and Warranties of Price Associates3
Article D Representations and Warranties of the Fund. . . .3
Article E Ownership of Software and Related Material. . . .3
Article F Quality Service Standards . . . . . . . . . . . .4
Article G Standard of Care/Indemnification. . . . . . . . .4
Article H Dual Interests. . . . . . . . . . . . . . . . . .5
Article I Documentation . . . . . . . . . . . . . . . . . .5
Article J Recordkeeping/Confidentiality . . . . . . . . . .5
Article K Compliance with Governmental Rules and Regulations6
Article L Terms and Termination of Agreement. . . . . . . .6
Article M Notice. . . . . . . . . . . . . . . . . . . . . . 6
Article N Assignment. . . . . . . . . . . . . . . . . . . . 7
Article O Amendment/Interpretive Provisions . . . . . . . .7
Article P Further Assurances. . . . . . . . . . . . . . . .7
Article Q Maryland Law to Apply . . . . . . . . . . . . . .7
Article R Merger of Agreement . . . . . . . . . . . . . . .7
Article S Counterparts. . . . . . . . . . . . . . . . . . .8
Article T The Parties . . . . . . . . . . . . . . . . . . . 8
Article U Directors, Trustee and Shareholders and Massachusetts
Business Trust. . . . . . . . . . . . . . . . . .8
PAGE 3
Article V Captions. . . . . . . . . . . . . . . . . . . . . 9
PAGE 4
AGREEMENT made as of the first day of January, 1994, by and
between T. ROWE PRICE ASSOCIATES, INC., a Maryland corporation
having its principal office and place of business at 100 East
Pratt Street, Baltimore, Maryland 21202 ("Price Associates"), and
each Fund which is listed on Appendix A (as such Appendix may be
amended from time to time) and which evidences its agreement to
be bound hereby by executing a copy of this Agreement (each such
Fund individually hereinafter referred to as "the Fund", whose
definition may be found in Article T);
WHEREAS, Price Associates has the capability of providing the
Funds with certain accounting services ("Accounting Services");
WHEREAS, the Fund desires to appoint Price Associates to
provide these Accounting Services and Price Associates desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
A. Terms of Appointment/Duties of Price Associates
Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints Price Associates
to provide, and Price Associates agrees to provide, the following
Accounting Services:
a. Maintain for each Fund a daily trial balance, a general
ledger, subsidiary records and capital stock accounts;
PAGE 5
b. Maintain for each Fund an investment ledger, including
amortized bond and foreign dollar denominated costs where
applicable;
c. Maintain for each Fund all records relating to the Fund's
income and expenses;
d. Provide for the daily valuation of each Fund's portfolio
securities and the computation of each Fund's daily net
asset value per share. Such daily valuations shall be
made in accordance with the valuation policies established
by each of the Fund's Board of Directors including, but
not limited to, the utilization of such pricing valuation
sources and/or pricing services as determined by the
Boards. Price Associates shall have no liability for any
losses or damages incurred by the Fund as a result of
erroneous portfolio security evaluations provided by such
designated sources and/or pricing services; provided that,
Price Associates reasonably believes the prices are
accurate, has adhered to its normal verification control
procedures, and has otherwise met the standard of care as
set forth in Article G of this Agreement;
e. Provide daily cash flow and transaction status information
to each Fund's adviser;
f. Prepare for each Fund such financial information that is
reasonably necessary for shareholder reports, reports to
PAGE 6
the Board of Directors and to the officers of the Fund,
and reports to the Securities and Exchange Commission and
the Internal Revenue Service and other Federal and state
regulatory agencies;
g. Provide each Fund with such advice that may be reasonably
necessary to properly account for all financial
transactions and to maintain the Fund's accounting
procedures and records so as to insure compliance with
generally accepted accounting and tax practices and rules;
h. Maintain for each Fund all records that may be reasonably
required in connection with the audit performed by each
Fund's independent accountant, the Securities and Exchange
Commission, the Internal Revenue Service or such other
Federal or state regulatory agencies; and
i. Cooperate with each Fund's independent public accountants
and take all reasonable action in the performance of its
obligations under the Agreement to assure that the
necessary information is made available to such
accountants for the expression of their opinion without
any qualification as to the scope of their examination
including, but not limited to, their opinion included in
each such Fund's annual report on Form N-SAR and annual
amendment to Form N-1A.
B. Fees and Out-of-Pocket Expenses
Each Fund shall pay to Price Associates for its Accounting
Services hereunder, fees as set forth in the Schedule attached
hereto. In addition, each Fund will reimburse Price Associates
PAGE 7
for out-of-pocket expenses such as postage, printed forms, voice
and data transmissions, record retention, disaster recovery,
third party vendors, equipment leases and other similar items as
may be agreed upon between Price Associates and the Fund. Some
invoices will contain costs for both the Funds and other funds
services by Price Associates. In these cases, a reasonable
allocation methodogy will be used to allocate these costs to the
Funds.
C. Representations and Warrantees of Price Associates
Price Associates represents and warrants to the Fund that:
1. It is a corporation duly organized and existing in good
standing under the laws of Maryland.
2. It is duly qualified to carry on its business in Maryland.
3. It is empowered under applicable laws and by its charter
and By-Laws to enter into and perform this Agreement.
4. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
5. It has, and will continue to have, access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
D. Representations and Warrantees of the Fund
The Fund represents and warrants to Price Associates that:
1. It is a corporation or business trust, as the case may be,
duly organized and existing and in good standing under the laws
of Maryland or Massachusetts, as the case may be.
PAGE 8
2. It is empowered under applicable laws and by its Articles
of Incorporation or Declaration of Trust, as the case may be, and
By-Laws have been taken to authorize it to enter into and perform
this Agreement.
3. All proceedings required by said Articles of Incorporation
or Declaration of Trust, as the case may be, and By-Laws have
been taken to authorize it to enter into and perform this
Agreement.
E. Ownership of Software and Related Material
All computer programs, magnetic tapes, written procedures,
and similar items purchased and/or developed and used by Price
Associates in performance of the Agreement shall be the property
of Price Associates and will not become the property of the
Funds.
F. Quality Service Standards
Price Associates and the Fund may, from time to time, agree
to certain quality service standards, with respect to Price
Associates' services hereunder.
G. Standard of Care/Indemnification
Notwithstanding anything to the contrary in this Agreement:
1. Price Associates shall not be liable to any Fund for any
act or failure to act by it or its agents or subcontractors on
behalf of the Fund in carrying or attempting to carry out the
terms and provisions of the Agreement provided Price Associates
has acted in good faith and without negligence or willful
misconduct and selected and monitored the performance of its
agents and subcontractors with reasonable care.
PAGE 9
2. The Fund shall indemnify and hold Price Associates
harmless from and against all losses, costs, damages, claims,
actions, and expenses, including reasonable expenses for legal
counsel, incurred by Price Associates resulting from: (i) any
action or omission by Price Associates or its agents or
subcontractors in the performance of their duties hereunder; (ii)
Price Associates acting upon instructions believed by it to have
been executed by a duly authorized officer of the Fund; or (iii)
Price Associates acting upon information provided by the Fund in
form and under policies agreed to by Price Associates and the
Fund. Price Associates shall not be entitled to such
indemnification in respect of actions or omissions constituting
negligence or willful misconduct of Price Associates or where
Price Associates has not exercised reasonable care in selecting
or monitoring the performance of its agents or subcontractors.
3. Price Associates shall indemnify and hold harmless the
Fund from all losses, costs, damages, claims, actions and
expenses, including reasonable expenses for legal counsel,
incurred by the Fund resulting from the negligence or willful
misconduct of Price Associates or which result from Price
Associates' failure to exercise reasonable care in selecting or
monitoring the performance of its agents or subcontractors. The
Fund shall not be entitled to such indemnification with respect
to actions or omissions constituting negligence or willful
misconduct of such Fund or its agents or subcontractors; unless
such negligence or misconduct is attributable to Price
Associates.
PAGE 10
4. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of
God, strikes or other causes reasonably beyond its control, such
party shall not be liable to the other party for any loss, cost,
damage, claim, action or expense resulting from such failure to
perform or otherwise from such causes.
5. In order that the indemnification provisions contained in
this Article F shall apply, upon the assertion of a claim for
which either party may be required to indemnify the other, the
party seeking indemnification shall promptly notify the other
party of such assertion, and shall keep the other party advised
with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense
of such claim, or to defend against said claim in its own name or
in the name of the other party. The party seeking
indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required
to indemnify it except with the other party's prior written
consent.
6. Neither party to this Agreement shall be liable to the
other party for consequential damages under any provision of this
Agreement.
H. Dual Interests
It is understood that some person or persons may be
directors, officers, or shareholders of both the Fund and Price
PAGE 11
Associates (including Price Associates' affiliates), and that the
existence of any such dual interest shall not affect the validity
of this Agreement or of any transactions hereunder except as
otherwise provided by a specific provision of applicable law.
I. Documentation
As requested by Price Associates, the Fund shall promptly
furnish to Price Associates such documents as it may reasonably
request and as are necessary for Price Associates to carry out
its responsibilities hereunder.
J. Recordkeeping/Confidentiality
1. Price Associates shall keep records relating to the
services to be performed hereunder, in the form and manner as it
may deem advisable, provided that Price Associates shall keep all
records in such form and in such manner as required by applicable
law, including the
Investment Company Act of 1940 ("the Act") and the Securities
Exchange Act of 1934 ("the '34 Act").
2. Price Associates and the Fund agree that all books,
records, information and data pertaining to the business of the
other party which are exchanged or received pursuant to the
negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other
person, except: (a) after prior notification to and approval in
writing by the other party hereto, which approval shall not be
unreasonably withheld and may not be withheld where Price
Associates or Fund may be exposed to civil or criminal contempt
proceedings for failure to comply; (b) when requested to divulge
PAGE 12
such information by duly constituted governmental authorities; or
(c) after so requested by the other party hereto.
K. Compliance With Governmental Rules and Regulations
Except as otherwise provided in the Agreement and except for
the accuracy of information furnished to the Funds by Price
Associates, each Fund assumes full responsibility for the
preparation, contents and distribution of its prospectuses, and
for complying with all applicable requirements of the Act, the
'34 Act, the Securities Act of 1933 (the "33 Act"), and any laws,
rules and regulations of governmental authorities having
jurisdiction over the Funds.
L. Term and Termination of Agreement
1. This Agreement shall run for a period of one (1) year from
the date first written above and will be renewed from year to
year thereafter unless terminated by either party as provided
hereunder.
2. This Agreement may be terminated by the Fund upon sixty
(60) days' written notice to Price Associates; and by Price
Associates, upon three hundred sixty-five (365) days' writing
notice to the Fund.
3. Upon termination hereof, the Fund shall pay to Price
Associates such compensation as may be due as of the date of such
termination, and shall likewise reimburse for out-of-pocket
expenses related to its services hereunder.
M. Notice
Any notice as required by this Agreement shall be
sufficiently given (i) when sent to an authorized person of the
PAGE 13
other party at the address of such party set forth above or at
such other address as such party may from time to time specify in
writing to the other party; or (ii) as otherwise agreed upon by
appropriate officers of the parties hereto.
N. Assignment
Neither this Agreement nor any rights or obligations
hereunder may be assigned either voluntarily or involuntarily, by
operation of law or otherwise, by either party without the prior
written consent of the other party, provided this shall not
preclude Price Associates from employing such agents and
subcontractors as it deems appropriate to carry out its
obligations set forth hereunder.
O. Amendment/Interpretive Provisions
The parties by mutual written agreement may amend this
Agreement at any time. In addition, in connection with the
operation of this Agreement, Price Associates and the Fund may
agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions are to
be signed by all parties and annexed hereto, but no such
provision shall contravene any applicable Federal or state law or
regulation and no such interpretive or additional provision shall
be deemed to be an amendment of this Agreement.
PAGE 14
P. Further Assurances
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the
purposes hereof.
Q. Maryland Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of Maryland.
R. Merger of Agreement
This Agreement, including the attached Appendices and
Schedules supersedes any prior agreement with respect to the
subject hereof, whether oral or written.
S. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instruments.
T. The Parties
All references herein to "the Fund" are to each of the Funds
listed on Appendix A individually, as if this Agreement were
between such individual Fund and Price Associates. In the case
of a series Fund or trust, all references to "the Fund" are to
the individual series or portfolio of such Fund or trust, or to
such Fund or trust on behalf of the individual series or
portfolio, as appropriate. The "Fund" also includes any T. Rowe
Price Funds which may be established after the execution of this
PAGE 15
Agreement. Any reference in this Agreement to "the parties"
shall mean Price Associates and such other individual Fund as to
which the matter pertains.
U. Directors, Trustees and Shareholders and Massachusetts
Business Trust
It is understood and is expressly stipulated that neither the
holders of shares in the Fund nor any Directors or Trustees of
the Fund shall be personally liable hereunder.
With respect to any Fund which is a party to this Agreement
and which is organized as a Massachusetts business trust, the
term "Fund" means and refers to the trustees from time to time
serving under the applicable trust agreement (Declaration of
Trust) of such Trust as the same may be amended from time to
time. It is expressly agreed that the obligations of any such
Trust hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the trust property of the Trust,
as provided in the Declaration of Trust of the Trust. The
execution and delivery of this Agreement has been authorized by
the trustees and signed by an authorized officer of the Trust,
acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed
to have been made by any of them, but shall bind only the trust
property of the Trust as provided in its Declaration of Trust.
PAGE 16
V. Captions
The captions in the Agreement are included for convenience of
reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under
their seals by and through their duly authorized officers.
DATED: 2/22/94 T. ROWE PRICE ASSOCIATES, INC.
ATTEST:
/s/Barbara A. VanHorn /s/Alvin M. Younger
_________________________ BY:___________________________
Barbara A. VanHorn Managing Director
PAGE 17
T. ROWE PRICE ADJUSTABLE RATE U.S.
GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND,
INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE MID-CAP GROWTH FUND
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
PAGE 18
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND,
INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND,
INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE TAX-FREE INSURED
INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 19
T. ROWE PRICE SUMMIT FUNDS, INC.
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
Summit Municipal Money Market Fund
Summit Municipal Intermediate Fund
Summit Municipal Income Fund
DATED: 2/16/94
ATTEST:
/s/Lenora V. Hornung /s/Carmen F. Deyesu
_________________________ BY:______________________________
Lenora V. Hornung Carmen F. Deyesu
PAGE 20
APPENDIX A
The following Funds are parties to this Agreement, and have so
indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price Adjustable Rate U.S.
Government Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price California Tax-Free Income
Trust on behalf of the
California Tax-Free Bond Fund and
California Tax-Free Money Fund
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Index Trust, Inc. on behalf
of the T. Rowe Price Equity Index Fund
T. Rowe Price Institutional International
Funds, Inc. on behalf of the
Foreign Equity Fund
T. Rowe Price International Equity Fund,
Inc.
PAGE 21
T. Rowe Price International Funds, Inc.
on behalf of the
T. Rowe Price International Bond Fund and
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery
Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. Rowe Price Latin American Fund
T. Rowe Price Mid-Cap Growth Fund
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price OTC Fund, Inc.
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Science & Technology Fund,
Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
T. Rowe Price Spectrum Fund, Inc. on
behalf of the
Spectrum Growth Fund
Spectrum Income Fund
T. Rowe Price State Tax-Free Income Trust
on behalf of the
Maryland Tax-Free Bond Fund,
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund and
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free
Bond Fund
Georgia Tax-Free Bond Fund
PAGE 22
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free Insured
Intermediate Bond Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund,
Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate
Fund, Inc.
T. Rowe Price U.S. Treasury Funds, Inc.
on behalf of the
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. Rowe Price Summit Funds, Inc. on
behalf of the
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
T. Rowe Price Summit Municipal Funds,
Inc. on behalf of
Summit Municipal Money Market Fund
Summit Municipal Intermediate Fund
Summit Municipal Income Fund
PAGE 23
FUND ACCOUNTING SERVICES
1994 FEE SCHEDULE
A. Fee Structure
1. Base Fee
Domestic Funds $60,000 each
International Funds $100,000 each
Spectrum Funds $35,000 each
Per Fund fee for basic recordkeeping
and financial reporting
2. Individual Fund Fee
Total fees reflecting special $ 883,000
characteristics of each Fund
3. Stock Lending Fee
Allocated to each Fund based $ 75,000
on ratio of net earnings from
stock loans
4. Additional Funds
Domestic Funds $60,000 each
International Funds $100,000 each
Spectrum Funds $35,000 each
B. Total Cost Per Fund
Growth Stock Fund $ 114,000
New Horizons Fund 95,000
Equity Income Fund 85,000
New Era Fund 72,000
International Stock Fund 115,000
Growth & Income Fund 85,000
New America Growth Fund 70,000
Capital Appreciation Fund 85,000
Small-Cap Value Fund 60,000
Foreign Equity Fund 105,000
International Discovery Fund 125,000
Science & Technology Fund 60,000
High Yield Fund 165,000
Tax-Free Income Fund 110,000
New Income Fund 100,000
Tax-Free High Yield Fund 110,000
European Stock Fund 100,000
Equity Index Fund 60,000
PAGE 24
New Asia Fund 110,000
Spectrum Growth Fund 35,000
GNMA Fund 120,000
International Bond Fund 125,000
Balanced Fund 90,000
Maryland Bond Fund 81,000
Tax-Free Short Intermediate Fund 85,000
Short-Term Bond Fund 120,000
California Bond Fund 72,000
New York Bond Fund 72,000
U.S. Treasury Short-Intermediate Fund 60,000
U.S. Treasury Long-Term Bond Fund 60,000
Spectrum Income Fund 35,000
Prime Reserve Fund 85,000
Tax-Exempt Money Fund 93,000
U.S. Treasury Money Fund 60,000
California Money Fund 67,000
New York Money Fund 67,000
Adjustable Rate Government Fund 110,000
Virginia Bond Fund 60,000
New Jersey Bond Fund 60,000
Global Government Bond Fund 100,000
OTC Fund 85,000
Japan Fund 100,000
Mid-Cap Growth Fund 60,000
Short-Term Global Fund 100,000
Maryland Short-Term Tax-Free Bond Fund 60,000
Florida Insured Intermediate Tax-Free Fund 60,000
Georgia Tax-Free Bond Fund 60,000
Tax-Free Insured Intermediate Bond Fund 60,000
Blue Chip Growth Fund 60,000
Dividend Growth Fund 65,000
Latin America Fund 100,000
Summit Cash Reserve Fund 60,000
Summit Limited-Term Bond Fund 60,000
Summit GNMA Fund 60,000
Summit Municipal Money Market Fund 60,000
Summit Municipal Intermediate Fund 60,000
Summit Municipal Income Fund 60,000
IN WITNESS WHEREOF, T. Rowe Price Funds and T. Rowe Price
Associates, Inc. have agreed upon this fee schedule to be
executed in their names and on their behalf through their duly
authorized officers:
T. ROWE PRICE FUNDS T. ROWE PRICE ASSOCIATES, INC.
/s/Carmen F. Deyesu /s/Alvin M. Younger
Name_________________________ Name__________________________
Carmen F. Deyesu Alvin M. Younger
Title Treasurer Title Treasurer and Managing
Director
Date 2/16/94 Date 2/16/94
PAGE 25
AMENDMENT NO. 1
AGREEMENT
between
T. ROWE PRICE ASSOCIATES, INC.
and
THE T. ROWE PRICE FUNDS
for
FUND ACCOUNTING SERVICES
The Agreement for Fund Accounting Services of January 1,
1994, between T. Rowe Price Associates, Inc. and each of the
Parties listed on Appendix A thereto is hereby amended, as of
March 1, 1994, by adding thereto the T. Rowe Price Equity Series,
Inc. and T. Rowe Price International Series, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Equity Series, Inc. and T. Rowe
Price International Series, Inc. (collectively referred to as the
"Funds") shall not be responsible for paying any of the fees or
expenses set forth herein but that, in accordance with the
Investment Management AgreementS, dated March 1, 1994, between
the Funds and T. Rowe Price Associates, Inc. and Rowe Price-
Fleming International, Inc. (collectively referred to as "T. Rowe
Price"), the Funds will require T. Rowe Price to pay all such
fees and expenses.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
PAGE 26
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
PAGE 27
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 28
Attest:
/s/Lenora V. Hornung /s/Carmen F. Deyesu
________________________ ___________________________________
Lenora V. Hornung, By: Carmen F. Deyesu
Secretary
Attest: T. ROWE PRICE SERVICES, INC.
/s/Barbara A. VanHorn /s/Henry H. Hopkins
________________________ ___________________________________
Barbara A. VanHorn, By: Henry H. Hopkins, Vice President
Assistant Secretary
PAGE 29
AMENDMENT NO. 2
AGREEMENT
between
T. ROWE PRICE ASSOCIATES, INC.
and
THE T. ROWE PRICE FUNDS
for
FUND ACCOUNTING SERVICES
The Agreement for Fund Accounting Services of January 1,
1994, as amended March 1, 1994, between T. Rowe Price Associates,
Inc. and each of the Parties listed on Appendix A thereto is
hereby further amended, as of April 21, 1994, by adding thereto
the T. Rowe Price Fixed Income Series, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Fixed Income Series, Inc.
(referred to as the "Fund") shall not be responsible for paying
any of the fees or expenses set forth herein but that, in
accordance with the Investment Management Agreement, dated April
21, 1994, between the Fund and T. Rowe Price Associates, Inc.
(referred to as "T. Rowe Price"), the Fund will require T. Rowe
Price to pay all such fees and expenses.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
PAGE 30
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
PAGE 31
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 32
Attest:
/s/Lenora V. Hornung /s/Carmen F. Deyesu
________________________ ___________________________________
Lenora V. Hornung, By: Carmen F. Deyesu
Secretary
Attest: T. ROWE PRICE SERVICES, INC.
/s/Barbara A. VanHorn /s/Henry H. Hopkins
________________________ ___________________________________
Barbara A. VanHorn, By: Henry H. Hopkins, Vice President
Assistant Secretary
<PAGE>
PAGE 1
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of the
T. Rowe Price Tax-Exempt Money Fund, Inc.:
We consent to the incorporation by reference in Post-
Effective Amendment No. 26 to the Registration Statement of the
T. Rowe Price Tax-Exempt Money Fund, Inc. on Form N-1A (File No.
2-67029) of our report dated March 17, 1994, on our audit of the
financial statements and financial highlights of the Fund, which
report is included in the Annual Report to Shareholders for the
year ended February 28, 1994 which is incorporated by reference
in the Registration Statement. We also consent to the reference
to our Firm under the captions "Financial Highlights" in the
Prospectus and "Independent Accountants" in the Statement of
Additional Information.
/s/Coopers & Lybrand
COOPERS & LYBRAND
Baltimore, Maryland
April 22, 1994
<PAGE>
PAGE 2
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of the
T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.:
We consent to the incorporation by reference in Post-
Effective Amendment No. 3 to the Registration Statement of the T.
Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc. on Form
N-1A (File No. 33-49117) of our report dated March 17, 1994, on
our audit of the financial statements and financial highlights of
the Fund, which report is included in the Annual Report to
Shareholders for the year ended February 28, 1994 which is
incorporated by reference in the Registration Statement. We also
consent to the reference to our Firm under the captions
"Financial Highlights" in the Prospectus and "Independent
Accountants" in the Statement of Additional Information.
/s/Coopers & Lybrand
COOPERS & LYBRAND
Baltimore, Maryland
April 22, 1994
<PAGE>
PAGE 3
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of the
T. Rowe Price Tax-Free High Yield Fund, Inc.:
We consent to the incorporation by reference in Post-
Effective Amendment No. 15 to the Registration Statement of the
T. Rowe Price Tax-Free High Yield Fund, Inc. on Form N-1A (File
No. 2-94641) of our report dated March 17, 1994, on our audit of
the financial statements and financial highlights of the Fund,
which report is included in the Annual Report to Shareholders for
the year ended February 28, 1994 which is incorporated by
reference in the Registration Statement. We also consent to the
reference to our Firm under the captions "Financial Highlights"
in the Prospectus and "Independent Accountants" in the Statement
of Additional Information.
/s/Coopers & Lybrand
COOPERS & LYBRAND
Baltimore, Maryland
April 22, 1994
<PAGE>
PAGE 4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information constituting
parts of this Post-Effective Amendment No. 19 to the Registration
Statement on Form N-1A (the "Registration Statement") of our
report dated March 17, 1994, relating to the financial statements
and selected per share data and ratios appearing in the February
28, 1994 Annual Report to Shareholders of the T. Rowe Price Tax-
Free Short-Intermediate Fund, Inc., which is also incorporated by
reference into the Registration Statement. We also consent to
the reference to us under the heading "Financial Highlights" in
the Prospectus and under the heading "Independent Accountants" in
the Statement of Additional Information.
/s/Price Waterhouse
PRICE WATERHOUSE
Baltimore, Maryland
April 22, 1994
<PAGE>
PAGE 5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information constituting
parts of this Post-Effective Amendment No. 36 to the Registration
Statement on Form N-1A (the "Registration Statement") of our
report dated March 17, 1994, relating to the financial statements
and selected per share data and ratios appearing in the February
28, 1994 Annual Report to Shareholders of the T. Rowe Price Tax-
Free Income Fund, Inc., which is also incorporated by reference
into the Registration Statement. We also consent to the
reference to us under the heading "Financial Highlights" in the
Prospectus and under the heading "Independent Accountants" in the
Statement of Additional Information.
/s/Price Waterhouse
PRICE WATERHOUSE
Baltimore, Maryland
April 22, 1994
<PAGE>
PAGE 1
(16) TOTAL RETURN PERFORMANCE
The cumulative total return performance of the Fund is measured
by using an index of adjusted net asset values that reflect both
the assumed investment of one share on the inception date of the
Fund and the inclusion of shares received from the reinvestment
of all Fund capital gains and income dividends, during the Fund's
history.
As an example, the following index assumes an investment of 1
share of the T. Rowe Price Tax-Free income Fund on October 26,
1976, its inception. Each quarter thereafter, and, beginning with
5/31/83, each month, the dividends and capital gains per share
were accumulated on the shares held and were reinvested in
additional fund shares reported net asset value of the Fund at
the time of the reinvestment. These valuation points comprise the
performance index.
<PAGE>
PAGE 2
Distri-
butions Reinvest-Cumulat-
Per Share ment tive Reported Index Valu-
(Inc. & Share Price Share N.A.V. Total ation
Cap. Gains)Holding Per ShareHolding Per Share Value Date
__________ _______ ________________ _________ _____ _____
INCEPTION
l.000000000 X $l0.00 = $ 10.00000
10/26/76
12/31/76 $0.087201 X 1.00000000 / 10.20 = 0.00854909
1.00854909 X 10.20 = 10.28720
12/31/76
03/31/77 $0.141770 X 1.00854909 / 10.17 = 0.01405919
1.02260828 X 10.17 = 10.39992
03/31/77
06/30/77 $0.134200 X 1.02260828 / 10.32 = 0.01329786
1.03590615 X 10.32 = 10.69055
06/30/77
09/30/77 $0.136943 X 1.03590615 / 10.42 = 0.01361418
1.04952034 X 10.42 = 10.93600
09/30/77
12/31/77 $0.129788 X 1.04952034 / 10.28 = 0.01325051
1.06277086 X 10.28 = 10.92528
12/31/77
01/04/78 $0.003900 x 1.062770860) / 10.28 = 0.00040319
(cap. gains)
1.06317045 X 10.28 = 10.92942
01/04/78
02/28/78 $0.090337 X 1.06317405 / 10.31 = 0.00931566
(2 mo.'s accrued
income)
1.072489712 X 10.31 = 11.05736
02/28/78
03/31/78 $0.135801 X 1.06317405 / 10.28 = 0.01404479
1.07721884 X 10.28 = 11.07380
03/31/78
06/30/78 $0.134642 X 1.07721884 / 9.77 = 0.01484537
1.09206422 x 9.77 = 10.66946
06/30/78
09/30/78 $0.128576 X 1.09206422 / 9.83 = 0.01428416
1.10634838 x 9.g3 = 10.87540
09/30/78
12/31/78 $o;126~~7 X 1.10634838 / 9.54 = 0.01465128
1.12099966 x 9.54 = 10.69433
12/31/78
03/31/79 $0.129052 X 1.12099966 / 9.64 = 0.01500694
1.13600661 X 9.64 = 10.95110
03/31/79
06/30/79 $0.127811 X 1.13600661 / 9.71 0.01495307
1.15095968 X 9.71 = 11.17581
06/30/79
09/30/79 $0.127988 X 1.15095968 / 9.56 = 0.01540894
1.16636863 X 9.56 = 11.15048
09/30/79
12/31/79 $0.149078 X 1.16636863 / 9.20 = 0.01889997
1.18526861 X 9.20 = 10.90447
12/31/79
03/31/80 $0.150892 X 1.18526861 / 8.48 = 0.02109046
1.20635908 X 8.48 = 10.22992
03/31/80
PAGE 3
Distri-
butions Reinvest-Cumulat-
Per Share ment tive Reported Index Valu-
(Inc. & Share Price Share N.A.V. Total ation
Cap. Gains)Holding Per ShareHolding Per Share Value Date
__________ _______ ________________ _________ _____ _____
INCEPTION
06/30/80 $0.166762 X 1.20635908 / 8.98 = 0.022402)5
1.288761646 X 8.98 = 11.03427
06/30/80
09/30/80 $0.175028 X 1.22876164 / 8.46 = 0.02542173
1.25418337 X 8.46 = 10.61039
09/30/80
12/31/80 $0.182038 X 1.25418337 / 8.06 = 0.02832623
1.28250961 X 8.06 = 10.33702
12/31/80
03/31/81 $0.180890 X 1.28250961 / 8.02 = 0.02892676
1.31143637 X 8.02 = 10.51771
03/31/81
06/30/81 $0.179880 X 1.31143637 7.80 = 0.03024378
1.34168015 X 7.80 = 10.46510
06/30/81
09/30/81 $0.180186 X 1.34168015 / 7.21 = 0.03353001
1.37521017 X 7.21 =
9.91526509/30/81
12/31/81 $0.188208 X 1.37521017 / 7.26 = 0.03565086
1.41086104 X 7.26 = 10.24285
12/31/81
03/31/82 $0.194864 X 1.41086104 / 7.25 = 0.03792088
1.44878193 X 7.25 = 10.50366
03/31/82
06/30/82 $0.199933 X 1.44878193 / 7.34 = 0.03946314
1.488245085 x 7.34 = 10.92371
06/30/82
09/30/82 $0.203166 X 1.48824508 / 8.13 = 0.03719076
1.56113854 X 8.58 = 13.39456
12/31/82
02/28/83 $0.129282 X 1.56113854 / 8.85 = 0.02280544
(2 mo.'s accrued
income)
03/31/83 $0.199387 X 1.56113854 / 8.96 = 0.03474004
1.59587859 X 8.96 = 14.29907
03/31/83
05131/83 $0.119441 X 1.59587859 1 8.96 = 0.02127374
1.61715233 X 8.96 = 14.48968
05/31/83
06/30/83 $0.057440 X 1.61715233 / 8.80 = 0.01055553
1.62770786 X 8.80 = 14.32382
06/30/83
07/31/83 $0.055509 X 1.62770786 / 8.72 = 0.01036158
1.63806944 X 8.72 = 14.28396
07/31/83
08/31/83 $0.057482 X 1.63806944 / 8.56 = 0.01099999
1.64906944 X 8.56 = 14.11603
08131183
09/30/83 $0.061003 X 1.64906944 / 8.66 = 0.01161645
1.66068589 X 8.66 = 14.38153
09/30/83
10/31/83 $0.056891 X 1.66068589 / 8.45 = 0.01118086
1.67186676 X 8.45 = 14.12727
10/31/83
PAGE 4
Distri-
butions Reinvest-Cumulat-
Per Share ment tive Reported Index Valu-
(Inc. & Share Price Share N.A.V. Total ation
Cap. Gains)Holding Per ShareHolding Per Share Value Date
__________ _______ ________________ _________ _____ _____
INCEPTION
11/30/83 $0.059514 X 1.67186676 / 8.40 = 0.01184518
1.68371194 X 8.40 = 14.14318
11/30/83
12/31/83 $0.063500 X 1.68371194 / 8.45 = 0.01265284
1.69636478 X 8.45 = 14.33428
12/31/83
01/31/84 $0.056635 X 1.69636478 / 8.58 = 0.01119751
1.70756229 X 8.58 = 14.65088
01/31/84
02/28/84 $0.060692 X 1.70756229 / 8.48 = 0.01222131
1.71978361 X 8.48 = 14.58376
02/28/84
03/31/84 $0.057552 X 1.71978361 / 8.44 = 0.01172731
1.73151092 X 8.44 = 14.61395
03/31/84
04/30/84 0.050956 X 1.73151092 / 8.40 = 0.01050375
1.74201468 X 8.40 = 14.63292
04/30/84
05/31/84 0.052913 X 1.74201468 / 8.17 = 0.01128219
1.75329688 X 8.17 = 14.32443
05/31/84
06/30/84 0.048811 X 1.75329688 / 8.20 = 0.01043675
1.76373363 x 8.20 = 14.46261
06/30/84
07/31/84 0.049290 X 1.76373363 / 8.30 = 0.01047414
1.77420778 X 8.30 = 14.72592
07/31/84
08/31/84 0.058213 X 1.77420778 / 8.32 = 0.01241378
1.78662157 X 8.32 = 14.86469
08/31/84
09/30/84 0.050264 X 1.78662157 / 8.27 = 0.01085900
1.79748057 X 8.27 = 14.86516
09/30184
10/31/84 0.054260 X 1.79748057 / 8.32 = 0.01172267
1.80929325 X 8.32 = 15.05257
10/31/84
11/30/84 0.061414 X 1.80920325 / 8.33 : 0.01333862
1.82254187 X 8.33 = 15.18177
11/30/84
12/31/84 0.057044 X 1.82254187 / 8.37 = 0.01242124
1.83496312 X 8.37 = 15.35864
12/31/84
01/31/85 0.056182 X 1.83496312 / 8.55 = 0.01205753
1.84702065 X 8.55 = 15.79202
01/31/85
02/28/85 0.057403 X 1.84702065 / 8.41 = 0.01260714
1.85962780 X 8.41 = 15.63946
02/28/85
03/31/85 0.057499 X 1.85962780 / 8.40 = 0.01272958
1.87235739 X 8.40 = 15.72780
03/31/85
04/30/85 0.058496 X 1.87235739 / 8.53 = 0.01284009
1.88519748 X 8.53 = 16.08073
04/30/85
PAGE 5
Distri-
butions Reinvest-Cumulat-
Per Share ment tive Reported Index Valu-
(Inc. & Share Price Share N.A.V. Total ation
Cap. Gains)Holding Per ShareHolding Per Share Value Date
__________ _______ ________________ _________ _____ _____
INCEPTION
05/31/85 0.064514 X 1.88519748 / 8.75 = 0.01389962
1.89909710 X 8.75 = 16.61709
05/31/85
06/30/85 0.056886 X 1.89909710 / 8.75 = 0.1234673
1.91144383 X 8.75 = 16.72513
06/30/85
07/31/85 0.058574 X 1.91144383 / 8.73 = 0.01282506
1.92426890 X 8.73 = 16.79886
07/31/85
08/31/85 0.061813 X 1.92426890 / 8.66 = 0.01373518
1.93800408 X 8.66 = 16.78311
08/31/85
09/30/85 0.051543 X 1.93800408 / 8.55 = 0.01168310
1.94968719 X 8.55 = 16.66982
09/30/85
10/31/85 0.054723 X 1.94968719 / 8.70 = 0.01226356
1.96195075 X 8.70 = 17.06897
10/31/85
11/30/85 0.058875 X 1.96195075 / 8.88 = 0.01300799
1.97495875 X 8.88 = 17.53763
11/30/85
12/31/85 0.061770 X 1.97495875 / 9..03 = 0.01350990
1.98846865 X 9.03 = 17.95587
12/31/85
01/31/86 0.065927 X 1.98846865 / 9.39 = 0.01396112
2.00242977 x 9.39 = 18.80281
01/31/86
02/28/86 0.061561 ~ 2.00242977 / 9.73 = 0.01266940
2.01509918 x 9.73 = 19.60691
02/28/86
03/31/86 0.056208 X 2.01509918 / 9.78 = 0.01158128
2.02668047 X 9.78 = 19.82093
03/31/86
04/30/86 0.060279 X 2.02668047 / 9.67 = 0.01263368
2.03931416 X 9.67 = 19.72016
04/30/86
05/31/86 0.058655 X 2.03931416 / 9.44 = 0.01267128
2.05198544 x 9.44 = 19.37074
05/31/86
06/30/86 0.053730 X 2.05198544 / 9.49 = 0.01161786
2.06360331 x 9.49 = 19.58359
06/30/86
07/31/86 0.057301 X 2.06360331 / 9.44 = 0.01252632
2.07612963 X 9.44 = 19.59866
07/31/86
08/31/86 0.062093 X 2.07612963 / 9.97 = 0.01293013
2.08905976 x 9.97 = 20.82792
08/31/86
09/30/86 0.056955 X 2.08905976 / 9.80 = 0.01214107
2.10120083 X 9.80 = 20.59176
09/30/86
10/31/86 0.059392 X 2.10120083 / 9.95 = 0.01254216
2.11374300 x 9.95 = 21.03174
10/31/86
PAGE 6
Distri-
butions Reinvest-Cumulat-
Per Share ment tive Reported Index Valu-
(Inc. & Share Price Share N.A.V. Total ation
Cap. Gains)Holding Per ShareHolding Per Share Value Date
__________ _______ ________________ _________ _____ _____
INCEPTION
11/30/86 0.049686 X 2.11374300 / 10.10 = 0.01039844
2.12414145 X 10.10 = 21.45382
11/31/86
12/31/86 0.057489 X 2.12414145 / 10.07 = 0.01212673
2.13626818 X 10.07 = 21.51222
12/31/86
01/31/87 0.054424 X 2.13626818 / 10.28 = 0.01130985
2.14757804 X 10.28 = 22.07710
01/31/87
02/28/87 0.052893 X 2.14757804 / 10.27 = 0.01106058
2.15863863 X 10.27 = 22.16921
02/28/87
03/09/87 0.540000 X 2.15863863 / 9.76 = 0.11943287
(cap. gains)
2.27807151 X 9.76 = 22.23397
03/09/87
03/31/87 0.050592 X 2.27807151 / 9.60 = 0.01200532
2.29007683 X 9.60 = 21.98473
03.31/87
04/30/87 0.052602 X 2.29007683 / 8.82 = 0.01365778
2.30373461 X 8.82 = 20.31893
04/30/87
05/31/87 0.050966 X 2.30373461 / 8.68 = 0.01352683
2.31726145 X 8.68 = 20.11382
05/31/87
06/30/87 0.044632 X 2.31726145 / 8.81 = 0.01173941
2.32900087 X 8.81 = 20.51849
06/30/87
07/31/87 0.048412 X 2.32900087 / 8.88 = 0.01269717
2.34169805 X 8.88 = 20.79427
07/31/87
08/31/87 0.044812 X 2.34169805 / 8.83 = 0.01188416
2.35358221 X 8.83 = 20.78213
08/31/87
09/30/87 0.048825 X 2.35358221 / 8.44 = 0.015~1537
2.367197s8 X 8.44 = 19.97914
09/30/87
10/31/87 0.046309 X 2.36719758 / 8.36 = 0.01311262
2.38031021 X 8.36 = 19.89939
10/31/87
11/30/87 0.046812 X 2.38031021 / 8.50 = 0.01310914
2.39341935 X 8.50 = 20.34406
11/30/87
12/31/87 0.056639 X 2.39341935 / 8.55 = 0.01585511
2.40927446 X 8.55 = 20.59929
12/31/87
01/31/88 0.047573 X 2.40927446 / 8.77 = 0.01306930
2.42234376 X 8.77 = 21.24395
01/31/88
02/29/88 0.052212 X 2.42234376 / 8.81 = 0.01435593
2.43669970 X 8.81 = 21.46732
02/29/88
<PAGE>
PAGE 7
Cumulative performance for any investment period is
calculated as the percentage difference between a beginning
index value and an ending index value. The ten year performance
from 2/28/78 to 2/29/88 for the New Income Fund would be
calculated as:
(21.46732) - 1) X 100 = +94.15%
___________
(11.05736)
The five year performance from 2/28/83 to 2/29/88 would be
calculated as:
(21.46732) - 1) X 100 = +53.14%
___________
(14.01790)
The one year performance from 2/28/87 to 2/29/88 would be
calculated as:
(21.46732) - 1) X 100 = 3.17%
___________
(22.16921)
The since inception performance from 10/26/76 to 2/29/88
would be calculated as:
(21.46732 - 1 X 100 = 114.67%
__________
(10.00000
Average annual compound rates of return are calculated for
specific periods of the Fund's history. Each return is the
cumulative total return performance expressed as a constant rate
of growth for each year involved. For example: the T. Rowe Price
Tax-Free Income Fund averaged a +6.85% compound annual growth
rate for ten years to achieve the 94.15% cumulative total return
performance for the period ended February 29, 1988.
This can be illustrated with a $1,000 hypothetical
investment made in the Tax-Free Income Fund on February 28, 1978
and completely redeemed ten years later on February 29, 1988. All
fund income and capital gains were reinvested at the reinvestment
price during the period. There are no loads or fees charged to
shareholders. Previously, it was determined (by using the total
return performance index for the Tax-Free Income Fund) that the
fund appreciated 94.15% for this ten year period. This represents
an increase of $941.50 for a $1,000 investment or a total
redemption value of
$1,941.50.
To determine the average annual rate required to achieve
these results the following compounding formula is used to solve
for T.
P(1 + T)n = ERV
WHERE P = a hypothetical initial payment of $1,000
T = average annual total return
n : number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the investment period.
<PAGE>
PAGE 8
The ten year average annual return from 2/28/78 to 2/29/88
would be calculated as:
$1000 (1 + T)10 = $1,941.50
T (1,941.502)l/10 1
( 1,000)
T =1.0685- l
T =0.0685 or 6.85%
Similarly, a $1,000 hypothetical total return investment
made in the T. Rowe Price Tax-Free Income Fund on February 28,
1983 would have appreciated 53.14% and have an ending redeemable
value of $1,531.40 on February 29, 1988.
The five year average annual return from 2/28/83 to 2/29/88
would be calculated as:
$1000(1 + T)5 = $1,531.40
T 1,531.40) 1/5 1
_______
( 1,000)
T =1.0889- 1
T =0.0889 or 8.89%
And finally, a $1,000 hypothetical total return investment
made in the T. Rowe Price Tax-Free Inocme Fund at inception of
October 26, 1976 would have apprecaited 114.67% and have an
ending redeemable value of #$2,146.70 on February 29, 1988.
The 11.4 year average annual return from 10/26/76 to 2/29/88
would be calculated as:
$1000(1 + T)11.4 = $2,146.70
T 2146.70)1 1
_______
( 1,000 )
T = 1.0696- 1
T =0.0696 or 6.96%
l:\trpprod\edg\perform.tf
<PAGE>
