PAGE 1
Registration Nos. 002-67029/811-3055
Registration Nos. 002-87059/811-3872
Registration Nos. 033-49117/811-7051
Registration Nos. 002-57265/811-2684
Registration Nos. 002-94641/811-4163
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Post-Effective Amendment No. 30 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 / X /
Amendment No. 20 / 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. 23 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 / X /
Amendment No. 18 / 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. 6 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 / X /
Amendment No. 6 / X /
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND FUND, INC.
_____________________________________________________
(Exact name of Registrant as Specified in Charter)
PAGE 2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Post-Effective Amendment No. 41 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 / X /
Amendment No. 22 / X /
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
_________________________________________________
(Exact name of Registrant as Specified in Charter)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Post-Effective Amendment No. 18 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 / X /
Amendment No. 16 / X /
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
_____________________________________________________
(Exact name of Registrant as Specified in Charter)
Fiscal Years Ended February 29, 1996
______________________________________
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)
It is proposed that this filing will become effective (check
appropriate box):
/ / immediately upon filing pursuant to paragraph (b)
/X/ on July 1, 1996 pursuant to paragraph (b)
PAGE 3
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
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 30, 1997.
+Not applicable, as no securities are being registered by this
Post-Effective Amendment No. 30 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 30, 1997.
+Not applicable, as no securities are being registered by this
Post-Effective Amendment No. 23 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 30, 1997.
+Not applicable, as no securities are being registered by this
Post-Effective Amendment No. 6 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 30, 1997.
+Not applicable, as no securities are being registered by this
Post-Effective Amendment No. 41 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
PAGE 4
under the Securities Act of 1933 and intends to file a 24f-2
Notice by April 30, 1997.
+Not applicable, as no securities are being registered by this
Post-Effective Amendment No. 18 to the Registration Statement.
PAGE 5
CROSS REFERENCE SHEET
TAX-EXEMPT MONEY FUND
N-1A Item No. Location
_____________ ________
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Transaction and Fund
Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Transaction and
Registrant Fund Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management;
Understanding
Performance
Information;
Investment Policies
and Practices; Ratings
of Municipal Debt
Securities
Item 5. Management of the Fund Transaction and Fund
Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management
Item 6. Capital Stock and Other Distributions and
Securities Taxes; Organization
and Management
Item 7. Purchase of Securities Being Pricing Shares and
Offered Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements; Account
Requirements and
Transaction
Information;
Shareholder Services
Item 8. Redemption or Repurchase Pricing Shares and
Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements;
Exchanging and
Redeeming; Shareholder
Services
Item 9. Pending Legal Proceedings +
PART B
PAGE 6
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 Investment Objectives
Policies 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 Dividends; Capital
Securities Stock
Item 19. Purchase, Redemption and Pricing Ratings of Municipal
of Securities Being Offered Debt Securities;
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 7
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 and Fund
Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of
Registrant Transaction and Fund
Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management;
Understanding
Performance
Information;
Investment Policies
and Practices; Ratings
of Municipal Debt
Securities
Item 5. Management of the Fund Transaction and Fund
Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management
Item 6. Capital Stock and Other Distributions and
Securities Taxes; Organization
and Management
Item 7. Purchase of Securities Being Pricing Shares and
Offered Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements; Account
Requirements and
Transaction
Information;
Shareholder Services
Item 8. Redemption or Repurchase Pricing Shares and
Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements;
Exchanging and
Redeeming; Shareholder
Services
Item 9. Pending Legal Proceedings +
PAGE 8
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
Policies Investment 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
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Dividends; Capital
Securities Stock
Item 19. Purchase, Redemption and Pricing Ratings of Municipal
of Securities Being Offered Securities; 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 9
CROSS REFERENCE SHEET
TAX-FREE INCOME FUND
N-1A Item No. Location
_____________ _________
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Transaction and Fund
Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Transaction and
Registrant Fund Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management;
Understanding
Performance
Information;
Investment Policies
and Practices; Ratings
of Municipal Debt
Securities
Item 5. Management of the Fund Transaction and Fund
Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management
Item 6. Capital Stock and Other Distributions and
Securities Taxes; Organization
and Management
Item 7. Purchase of Securities Being Pricing Shares and
Offered Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements; Account
Requirements and
Transaction
Information;
Shareholder Services
Item 8. Redemption or Repurchase Pricing Shares;
Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements;
Exchanging and
Redeeming; Shareholder
Services
Item 9. Pending Legal Proceedings +
PART B
PAGE 10
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 Investment Objectives
Policies 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
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Dividends; Capital
Securities Stock
Item 19. Purchase, Redemption and Pricing Ratings of Municipal
of Securities Being Offered Debt Securities;
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 11
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 and Fund
Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Transaction and Fund
Registrant Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management;
Understanding
Performance
Information;
Investment Policies
and Practices; Ratings
of Municipal Debt
Securities; Asset
Composition
Item 5. Management of the Fund Transaction and Fund
Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management
Item 6. Capital Stock and Other Distributions and
Securities Taxes; Organization
and Management
Item 7. Purchase of Securities Being Pricing Shares and
Offered Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements; Account
Requirements and
Transaction
Information;
Shareholder Services
Item 8. Redemption or Repurchase Pricing Shares;
Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements;
Exchanging and
Redeeming; Shareholder
Services
Item 9. Pending Legal Proceedings +
PAGE 12
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
Policies Investment 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
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Dividends; Capital
Securities Stock
Item 19. Purchase, Redemption and Pricing Ratings of Municipal
of Securities Being Offered Debt Securities;
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 13
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 and Fund
Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Transaction and Fund
Registrant Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management;
Understanding
Performance
Information;
Investment Policies
and Practices; Ratings
of Municipal Debt
Securities; Asset
Composition
Item 5. Management of the Fund Transaction and Fund
Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management
Item 6. Capital Stock and Other Distributions and
Securities Taxes; Organization
and Management
Item 7. Purchase of Securities Being Pricing Shares and
Offered Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements; Account
Requirements and
Transaction
Information;
Shareholder Services
Item 8. Redemption or Repurchase Pricing Shares;
Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements;
Exchanging and
Redeeming; Shareholder
Services
Item 9. Pending Legal Proceedings +
PAGE 14
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 Investment Objective
Policies 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 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 Dividends; Capital
Securities Stock
Item 19. Purchase, Redemption and Pricing Ratings of Municipal
of Securities Being Offered Debt 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 15
Facts at a Glance
Investment Goals
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 goals.
Strategy and Risk/Reward
Tax-Exempt Money Fund, Inc.
Invests in high-quality, short-term municipal securities,
and its average maturity will not exceed 90 days.
Your investment in the fund is neither insured nor
guaranteed by the U.S. government, and there is no assurance
that the fund will be able to maintain a stable net asset
value of $1.00 per share.
Risk/Reward:
Lowest potential risk and reward.
Tax-Free Short-Intermediate Fund, Inc.
Invests primarily in investment-grade short- and
intermediate-term municipal bonds. Maturity range: 2-5
years.
Risk/Reward:
Moderate income level and share price fluctuation.
Tax-Free Insured Intermediate Bond Fund, Inc.
Invests primarily in intermediate-term municipal bonds
whose interest and principal payments are insured by private
insurance companies. Insurance does not apply to the fund's
share price, which will fluctuate. Maturity range: 5-10
years.
Risk/Reward:
Somewhat higher income and potential share price
fluctuations than the Short-Intermediate Fund. (See
discussion on insurance in the section entitled "Types of
Portfolio Securities.")
Tax-Free Income Fund, Inc.
Invests primarily in longer-term, investment-grade
municipal bonds. Maturity expected to exceed 15 years.
Risk/Reward:
Higher income and potential share price fluctuation than the
shorter-term funds.
Tax-Free High Yield Fund, Inc.
Can invest entirely in lower-quality, long-term municipal
bonds often called high yield or "junk" bonds. These bonds
represent greater default risk than higher rated bonds.
Before investing, you should carefully consider the greater
risks of junk bonds as explained in "Investment Policies and
Practices." Maturity: over 15 years.
Risk/Reward:
PAGE 16
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, such as IRAs.
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 managed over $82 billion for over $5.7 billion in
municipal bond assets, for over four million individual and
institutional investor accounts as of March 31, 1996.
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, OR ANY STATE SECURITIES COMMISSION, PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Contents
1
About the Funds
Transaction and Fund Expenses
Financial Highlights
Fund, Market, and Risk
Characteristics
2
About Your Account
Pricing Shares and Receiving Sale Proceeds
Distributions and Taxes
Transaction Procedures and Special Requirements
3
More About the Funds
Organization and Management
Understanding Performance Information
Investment Policies and Practices
4
Investing With T. Rowe Price
Account Requirements and Transaction Information
Opening a New Account
Purchasing Additional Shares
Exchanging and Redeeming
Shareholder Services
This prospectus contains information you should know
before investing. Please keep it for future reference. A
Statement of Additional Information about the funds, dated
July 1, 1996, has been filed with the Securities and
PAGE 17
Exchange Commission and is incorporated by reference in this
prospectus. To obtain a free copy, call 1-800-638-5660.
To Open an Account
Investor Services
1-800-638-5660
1-410-547-2308
For Existing Accounts
Shareholder Services
1-800-225-5132
1-410-625-6500
For Yields and Prices
Tele*AccessR
1-800-638-2587
1-410-625-7676
24 hours, 7 days
Internet Address
http://wwwtroweprice.com
Investor Centers
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
To help you achieve your financial goals, T. Rowe Price
offers a wide range of stock, bond, and money market
investments, as well as convenient services and timely,
informative reports.
Prospectus
T. Rowe Price Tax-Free Funds
T. Rowe Price
Tax-Free Funds
July 1, 1996
A family of municipal bond and money funds for investors
seeking income that is exempt from federal income taxes.
Invest With ConfidenceR
1
About the Funds
Transaction and Fund Expenses
PAGE 18
Like all T. Rowe Price funds, these funds are 100% no load.
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 Expenses,"
shows that you pay no sales charges. All the money you
invest in a fund goes to work for you, subject to the fees
explained below. "Annual Fund Expenses" shows how much it
will cost to operate each fund for a year, based on 1996
fiscal year expenses. These are costs you pay indirectly,
because they are deducted from each 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.
___________________________________________
Shareholder Transaction Expenses
Money Short- Insured
Inter- Inter-
mediate mediate
___________________________________________
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
___________________________________________
Sales charge None None
"load" on
purchases
___________________________________________
Sales charge None None
"load" on
reinvested
dividends
___________________________________________
Redemption None None
PAGE 19
fees
___________________________________________
Exchange None None
fees
___________________________________________
Annual Fund Expenses
Percentage of Fiscal 1996 Average Net Assets
Money Short- Insured
Inter- Inter-
mediate mediate
(After
Reduc-
tion)a
___________________________________________
Management
fee 0.44% 0.44% 0.31%a
___________________________________________
Marketing None None None
fees (12b-1)
___________________________________________
Total Other 0.12% 0.13% 0.34%
(shareholder
servicing,
custodial,
auditing,
etc.)
___________________________________________
Total fund
expenses 0.56% 0.57% 0.65%a
___________________________________________
Income High
Yield
___________________________________________
Management 0.49% 0.64%
fee
___________________________________________
Marketing None None
fees (12b-1)
___________________________________________
Total Other 0.10% 0.11%
(shareholder
servicing,
custodial,
auditing,
etc.)
___________________________________________
PAGE 20
Total fund
expenses 0.59% 0.75%
___________________________________________
a The Insured Intermediate Fund's management fee and its
total expense ratio would have been 0.39% and 0.73%,
respectively, had T. Rowe Price not agreed to reduce
management fees in accordance with the expense limitation
described below. From March 1, 1994, T. Rowe Price agreed
to waive its fees and bear any expenses through February 29,
1996, to the extent such fees and expenses would cause the
fund's ratio of expenses to average net assets to exceed
0.65%. Fees waived or expenses paid or assumed under this
agreement are subject to reimbursement to T. Rowe Price by
the fund when-ever the fund's expense ratio is below 0.65%.
However, no reimbursement will be made after February 28,
1998, or if it would result in the expense ratio exceeding
0.65%.
Note: The funds charge a $5 fee for wire redemptions under
$5,000, subject to change without notice, and a $10 fee is
charged for small accounts when applicable (see "Small
Account Fee" under "Transaction Procedures and Special
Requirements").
Table 1
The main types of expenses, which all mutual funds may
charge against fund assets, are:
o
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%.
o
"Other" administrative expenses:
primarily the servicing of shareholder accounts, such as
providing statements, reports, disbursing dividends as well
as custodial services. For the fiscal year ended February
29, 1996, 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
accounting services.
Transfer
Agent and
Shareholder Accounting
Fund Services Services
___________________________________________
PAGE 21
Money $407,000 $93,000
___________________________________________
Short-
Intermediate $250,000 $86,000
___________________________________________
Insured
Intermediate $93,000 $61,000
___________________________________________
Income $590,000 $110,000
___________________________________________
High Yield $504,000 $110,000
___________________________________________
Table 2
o
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 fund expenses, please see
"Organization and Management."
o
Hypothetical example:
The table at right is just an example; actual expenses can
be higher or lower than those shown.
Assume you invest $1,000, the fund returns 5% annually,
expense ratios remain as listed previously, and you close
your account at the end of the time periods shown. Your
expenses would be:
___________________________________________
1 3 5 10
Fund year years years years
___________________________________________
Money $6 $19 $33 $74
___________________________________________
Short-
Intermediate $6 $18 $32 $71
___________________________________________
Insured
Intermediate $7 $21 $36 $81
___________________________________________
Income $6 $19 $33 $74
___________________________________________
High Yield $8 $24 $42 $93
___________________________________________
Table 3
Financial Highlights
PAGE 22
The following table provides information about each
fund's financial history. It is based on a single share
outstanding throughout each fiscal year. The respective
table is part of each fund's financial statements which are
included in each fund's annual report and are incorporated
by reference into the Statement of Additional Information.
This document is available to shareholders upon request. The
financial statements in the annual report have been audited
by the funds' independent accountants whose respective
unqualified reports cover the periods shown.
Investment Activities Distributions
Net
Real-
ized
and
Unreal-
Net ized Total
Asset Net Gain From Net
Value, Invest- (Loss) Invest- Net Real- Total
Period Begin- ment on ment Invest- ized Dis-
Ended ning of Income Invest- Activi- ment Gain tribu-
Feb. 28 Period (Loss) ments ties Income (Loss) tions
____________________________________________________________
Money
1987 1.000 0.042 -- 0.042(0.042) -- (0.042)
1988d 1.000 0.044 -- 0.044(0.044) -- (0.044)
1989 1.000 0.050 -- 0.050(0.050) -- (0.050)
1990 1.000 0.057 -- 0.057(0.057) -- (0.057)
1991 1.000 0.051 -- 0.051(0.051) -- (0.051)
1992d 1.000 0.036 -- 0.036(0.036) -- (0.036)
1993 1.000 0.023 -- 0.023(0.023) -- (0.023)
1994 1.000 0.020 -- 0.020(0.020) -- (0.020)
1995 1.000 0.026 -- 0.026(0.026) -- (0.026)
1996d 1.000 0.033 -- 0.033(0.033) -- (0.033)
End of Period
Total Ratio Ratio
Net Return Net of of Net Port-
Asset (Includes Assets Expenses Investment folio
Period Value,Reinvest- ($ to Aver- Income Turn-
Ended End of ed Div- Thous- age Net to Average over
Feb. 28Period idends) ands) Assets Net Assets Rate
____________________________________________________________
1987 1.000 4.30%1,131,755 0.60% 4.23% --
1988d 1.000 4.47%1,247,256 0.60% 4.41% --
PAGE 23
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% --
1992d 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% --
1995 1.000 2.63% 687,022 0.58% 2.59% --
1996d 1.000 3.38% 679,143 0.56% 3.33% --
PAGE 24
Investment Activities Distributions
Net
Real-
ized
and
Unreal-
Net ized Total
Asset Net Gain From Net Net
Value, Invest- (Loss) Invest-Invest- Real- Total
Period Begin- ment on ment ment ized Dis-
Ended ning of Income Invest- Activi-Income Gain tribu-
Feb. 28 Period (Loss) ments ties (Loss) (Loss) tions
____________________________________________________________
Short-Intermediate
1987 5.20 0.29 0.13 0.42 (0.29) -- (0.29)
1988d 5.33 0.27 (0.16) 0.11 (0.27) $(0.02)(0.29)
1989 5.15 0.28 (0.12) 0.16 (0.28) -- (0.28)
1990 5.03 0.30 0.06 0.36 (0.30) -- (0.30)
1991 5.09 0.29 0.06 0.35 (0.29) -- (0.29)
1992d 5.15 0.28 0.07 0.35 (0.28) -- (0.28)
1993 5.22 0.24 0.14 0.38 (0.24) -- (0.24)
1994 5.36 0.22 (0.04) 0.18 (0.22) -- (0.22)
1995 5.32 0.22 (0.07) 0.15 (0.22) -- (0.22)
1996d 5.25 0.23 0.12 0.35 (0.23) -- (0.23)
End of Period
Total Ratio Ratio
Net Return Net of of Net Port-
Asset (Includes Assets Expenses Investment folio
Period Value, Reinvest- ($ to Aver- Income Turn-
Ended End of ed Div- Thous- age Net to Average over
Feb. 28Period idends) ands) Assets Net Assets Rate
____________________________________________________________
1987 5.33 8.41% 405,092 0.73% 5.60% 119.5%
1988d 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%
1992d 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%
1995 5.25 2.91% 454,084 0.59% 4.19% 93.1%
1996d 5.37 6.87% 445,228 0.57% 4.39% 69.9%
PAGE 25
Investment Activities Distributions
Net
Real-
ized
and
Unreal-
Net ized Total
Asset Net Gain From Net Net
Value, Invest- (Loss) Invest-Invest Real- Total
Period Begin- ment on ment ment ized Dis-
Ended ning of Income Invest- Activi-Income Gain tribu-
Feb. 28 Period (Loss) ments ties (Loss) (Loss) tions
____________________________________________________________
Insured Intermediate
1993a $10.00 $0.13b $0.55 $0.68$(0.13) -- $(0.13)
1994 10.55 0.48b 0.09 0.57 (0.48) $(0.06)(0.54)
1995 10.58 0.46b (0.20) 0.26 (0.46) (0.03)(0.49)
1996d 10.35 0.48b 0.49 0.97 (0.48) -- (0.48)
End of Period
Total Ratio Ratio
Net Return Net of of Net Port-
Asset (Includes Assets Expenses Investment folio
Period Value, Reinvest- ($ to Aver- Income Turn-
Ended End of ed Div- Thous- age Net to Average over
Feb. 28Period idends) ands) Assets Net Assets Rate
____________________________________________________________
1993a $10.55 6.81% $37,960 0.00%b 5.08%c 65.3%c
1994 10.58 5.49% 99,162c 0.33%b 4.45% 74.8%
1995 10.35 2.65% 83,517 0.65%b 4.53% 170.8%
1996d 10.84 9.57% 92,153 0.65%b 4.52% 63.8%
Investment Activities Distributions
Net
Real-
ized
and
Unreal-
Net ized Total
Asset Net Gain From Net Net
Value, Invest- (Loss) Invest-Invest- Real- Total
Period Begin- ment on ment ment ized Dis-
Ended ning of Income Invest- Activi-Income Gain tribu-
PAGE 26
Feb. 28 Period (Loss) ment ties (Loss) (Loss) tions
____________________________________________________________
Income
1987 9.73 0.68 0.54 1.22 (0.68) -- (0.68)
1988d 10.27 0.59 (0.92) (0.33)(0.59) $(0.54)(1.13)
1989 8.81 0.59 (0.24) 0.35 (0.59) -- (0.59)
1990 8.57 0.59 0.09 0.68 (0.59) -- (0.59)
1991 8.66 0.57 0.13 0.70 (0.57) -- (0.57)
1992d 8.79 0.57 0.30 0.87 (0.57) -- (0.57)
1993 9.09 0.56 0.75 1.31 (0.56) -- (0.56)
1994 9.84 0.54 -- 0.54 (0.54) (0.18)(0.72)
1995 9.66 0.53 (0.37) 0.16 (0.53) (0.04)(0.57)
1996d 9.25 0.52 0.41 0.93 (0.52) -- (0.52)
End of Period
Total Ratio Ratio
Net Return Net of of Net Port-
Asset (IncludesAssets Expenses Investment folio
Period Value, Reinvest- ($ to Aver- Income Turn-
Ended End of ed Div- Thous- age Net to Average over
Feb. 28Period idends) ands) Assets Net Assets Rate
____________________________________________________________
1987 10.27 13.07%1,558,795 0.61% 6.94% 236.6%
1988d 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%
1992d 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%
1995 9.25 1.90%1,328,675 0.59% 5.80% 49.3%
1996d 9.66 10.31%1,375,507 0.58% 5.49% 48.7%
Investment Activities Distributions
Net
Real-
ized
and
Unreal-
Net ized Total
Asset Net Gain From Net Net
Value, Invest- (Loss) Invest-Invest- Real- Total
Period Begin- ment on ment ment ized Dis-
Ended ning of Income Invest- Activi-Income Gain tribu-
PAGE 27
Feb. 28 Period (Loss) ments ties (Loss) (Loss) tions
____________________________________________________________
High Yield
1987 11.43 0.87 0.78 1.65 (0.87) -- (0.87)
1988d 12.21 0.83 (0.77) 0.06 (0.83) $(0.25)(1.08)
1989 11.19 0.83 0.06 0.89 (0.83) -- (0.83)
1990 11.25 0.84 0.20 1.04 (0.84) (0.06)(0.90)
1991 11.39 0.83 0.04 0.87 (0.83) (0.03)(0.86)
1992d 11.40 0.81 0.35 1.16 (0.81) (0.10)(0.91)
1993 11.65 0.78 0.78 1.56 (0.78) (0.10)(0.88)
1994 12.33 0.74 0.16 0.90 (0.74) (0.23)(0.97)
1995 12.26 0.73 (0.60) 0.13 (0.73) (0.04)(0.77)
1996d 11.62 0.72 0.48 1.20 (0.72) -- (0.72)
End of Period
Total Ratio Ratio
Net Return Net of of Net Port-
Asset (IncludesAssets Expenses Investment folio
Period Value, Reinvest- ($ to Aver- Income Turn-
Ended End of ed Div- Thous- age Net to Average over
Feb. 28Period idends) ands) Assets Net Assets Rate
____________________________________________________________
1987 12.21 15.04% 324,094 0.98% 7.45% 111.4%
1988d11.19 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%
1992d11.65 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%
1995 11.62 1.26% 873,546 0.79% 6.29% 59.6%
1996d12.10 10.62% 989,534 0.75% 6.07% 39.3%
____________________________________________________________
a For the period November 30, 1992 (commencement of
operations) to February 28, 1993.
b 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,
PAGE 28
through February 28, 1994, and a 0.65% voluntary expense
limitation in effect March 1, 1994, through February 29,
1996.
c Annualized.
d Year ended February 29.
Table 4
Fund, Market, and Risk Characteristics: What to Expect
To help you decide whether the funds are appropriate for
you, this section takes a closer look at their investment
objectives and approaches.
What are the funds' objectives and investment programs?
The fund or funds you select should not be relied upon as a
complete investment program, nor be used for short-term
trading purposes.
Tax-Exempt Money Fund.
The fund's objective is to seek preservation of capital,
liquidity, and consistent with this objective, the highest
current income exempt from federal income taxes. The fund's
yield will fluctuate in response to changes in the general
level of interest rates, but the share price is managed to
remain stable at $1.00. Although the fund has maintained a
constant share price since its inception, and fund managers
will make every effort to continue to meet this objective,
the price could drop below $1.00 under certain
circumstances, such as a major change in interest rates or
default on one or more fund holdings. Unlike a bank account
or certificate of deposit, your investment is not insured or
guaranteed by the U.S. government.
The fund purchases securities with maturities of 397 days
or less, and its dollar-weighted average maturity will not
exceed 90 days. All securities purchased by the fund will
generally have ratings in the two highest categories
established by nationally recognized rating agencies, or, if
unrated, will be of equivalent quality as determined by T.
Rowe Price analysts. The fund may retain a security that is
downgraded after purchase, but only in accordance with Rule
2a-7 under the Investment Company Act of 1940.
Tax-Free Short-Intermediate Fund.
For further details on the funds' investment programs,
risks, and fundamental policies, please see the section,
"Investment Policies and Practices."
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 four highest credit categories. The fund
will not purchase any bonds rated below investment grade
(e.g., BBB) by a national rating agency (or, if unrated, the
T. Rowe Price equivalent). Investment-grade securities
PAGE 29
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 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. Under normal market conditions, its dollar-
weighted average maturity will not exceed five years and is
expected to range between two and five years. As a result,
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.
Tax-Free Insured Intermediate Bond Fund.
The bond funds may retain a security whose credit quality
is downgraded after purchase.
The fund's objective is to seek a high level of income
exempt from federal income taxes and moderate price
fluctuation while minimizing credit risk by investing
primarily in insured municipal securities. The fund is
expected to maintain a dollar-weighted average maturity
between 5 and 10 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, believed
to be of comparable quality at the time of purchase.
Tax-Free Income Fund.
The fund's objective is to seek a high level of income
exempt from federal income taxes by investing primarily in
long-term, investment-grade municipal securities. The fund's
dollar-weighted average maturity is expected to exceed 15
years. As such, the fund is suitable for more aggressive
investors than the other 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 those that have
received the lowest rating or are not rated by a national
rating agency). However, no such purchase will be made if it
would cause the fund's investments in noninvestment-grade
bonds to exceed 5% of net assets.
Tax-Free High Yield Fund.
PAGE 30
The combination of long maturity and lower credit quality
makes the High Yield Fund potentially the most risky as well
as potentially the most rewarding of the tax-free funds.
(See "High-Yield/High-Risk Investing.")
The fund's objective is to seek a high level of income
exempt from federal income tax by investing primarily in
long-term, low- to upper-medium-quality municipal
securities. This is the most aggressive of our bond funds
and should provide the 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" bonds. The
fund may also purchase bonds that 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, and 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
judgment may play a bigger role in valuing the fund's
securities. The fund's dollar-weighted average maturity is
expected to exceed 15 years.
What are the main risks of investing in municipal bond and
money market funds?
A more detailed discussion of these and other risk
considerations is contained in the funds' Statement of
Additional Information.
Since they are managed to maintain a $1.00 share price,
money market funds should have little risk of principal
loss. However, the potential for realizing a loss of
principal in a bond or money market fund could derive from:
o
Interest rate or market risk:
the decline in the prices of fixed income securities and
funds that may accompany a rise in the overall level of
interest rates (please see Table 5). A sharp and unexpected
rise in interest rates could cause a money fund's price to
drop below one dollar. However, the extremely short-term
securities held in money market portfolios--a means of
achieving an overall fund objective of principal safety--
reduces their potential for price fluctuation.
o
Credit risk:
the chance that any of a fund's holdings will have its
credit rating downgraded or will default (fail to make
scheduled interest and principal payments), potentially
PAGE 31
reducing a fund's income level and share price. Money funds
invest in very high-rated securities, thus reducing this
risk.
o
Political risk:
the chance that a significant restructuring of federal
income tax rates, or even serious discussion on the topic in
Congress, could cause municipal bond prices to fall. The
demand for municipal bonds is strongly influenced by the
value of tax-exempt income to investors. Broadly lower tax
rates could reduce the advantage of owning municipal bonds.
o
Geographical risk:
the chance of price declines resulting from developments in
a single state.
How does the portfolio manager try to reduce risk?
The yield of each fund will fluctuate with changing
market conditions and interest rate levels. The share price
of the bond funds will also fluctuate; when you sell your
shares, you may lose money.
Consistent with each fund's objective, the portfolio
manager actively seeks to reduce risk and increase total
return. Risk management tools include:
o
Diversification of assets to reduce the impact of a single
holding on the funds' net asset value.
o
Thorough credit research by our own analysts.
o
Adjustment of fund duration to try to reduce the negative
impact of rising interest rates or take advantage of the
benefits of falling rates.
What are derivatives and can the funds invest in them?
The term derivative is used to describe financial
instruments whose value is derived from an underlying
security (e.g., a stock or bond) or a market benchmark
(e.g., an interest rate index). Many types of investments
representing a wide range of potential risks and rewards
fall under the "derivatives" umbrella--from conventional
instruments such as callable bonds, futures, and options, to
more exotic investments such as stripped mortgage securities
and structured notes. While the term "derivative" has only
recently become widely known among the investing public,
derivatives have in fact been employed by investment
managers for many years.
Each fund will invest in derivatives only if the expected
risks and rewards are consistent with its objective,
policies, and overall risk profile as described in this
PAGE 23
prospectus. The money fund does not invest in high-risk,
highly leveraged derivatives. The bond funds limit their
use of derivatives to situations in which they may enable
the fund to accomplish the following: increase yield; hedge
against a decline in principal value; invest in eligible
asset classes with greater efficiency and lower cost than is
possible through direct investment; or adjust the fund's
duration.
The bond funds will not invest in any high-risk, highly
leveraged derivative instrument that is expected to cause
the price volatility of the portfolio to be meaningfully
different from that of 1) a five-year investment-grade bond
for the Short-Intermediate Fund; 2) an intermediate-term
investment-grade bond for the Insured Intermediate Bond
Fund; or, 3) a long-term investment-grade bond for both the
Income and High Yield Funds.
Who issues municipal securities?
Before choosing a fund, you may wish to review these
characteristics of municipal 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. Prices of municipals
may be affected by major changes in cash flows of money into
or out of municipal funds. For example, substantial and
sustained redemptions from municipal bond funds could result
in lower prices for these securities.
What is "tax-free" about municipal bonds and bond funds?
The regular income dividends you receive from the fund are
exempt from regular federal income taxes. In addition, your
state may not tax that portion of the fund's income earned
on the state's own obligations (if any). However, capital
gains distributed by the funds are taxable to you. (See
"Useful Information on Distributions and Taxes" for
details.)
Is interest income from municipal issues always exempt from
federal taxes?
Municipal securities are also called "tax-exempts" because
the interest income they provide is usually exempt from
federal income taxes.
No. For example, since 1986, income from so-called
"private activity" municipals has been subject to the
federal alternative minimum tax (AMT). For instance, some
bonds financing airports, stadiums, and student loan
programs fall into this category. Shareholders subject to
the AMT must include income derived from private activity
bonds in their AMT calculation. Relatively few taxpayers are
PAGE 33
required to pay the tax. Normally, the funds will not
purchase any security if, as a result, more than 20% of the
fund's income would be subject to the AMT. The funds will
report annually to shareholders the portion of income, if
any, subject to the AMT. (Please see "Distributions and
Taxes--Taxes on Fund Distributions.")
Why are yields on municipals usually below those on
otherwise comparable taxable securities?
Since the income provided by most municipals is exempt from
federal taxation, investors are willing to accept lower
yields on a municipal bond than on an otherwise similar (in
quality and maturity) taxable bond.
How can I tell if a tax-free or taxable fund is more
suitable for me?
The primary factor is your expected federal income tax rate.
The higher your tax bracket, the more likely tax-frees will
be appropriate. If the after-tax yield on a taxable bond or
money market security is less than a municipal fund's tax-
exempt yield, then your income will be higher in the
municipal fund. To find what a taxable fund would have to
yield to equal the tax-free yield on a municipal bond,
divide the municipal bond's yield by one minus your tax
rate.
What are the major differences between money market and bond
funds?
o
Price:
Bond funds have fluctuating share prices. Money market funds
are managed to maintain a stable share price.
o
Maturity:
Short- and intermediate-term bond funds have longer average
maturites (from 1 to 10 years) than money market funds (90
days or less). Longer-term bond funds have the longest
average maturities (10 years or more).
o
Income:
Short- and intermediate-term bond funds typically offer more
income than money market funds and less income than longer-
term bond funds.
Is a fund's yield fixed or will it vary?
You may want to review some fundamentals that apply to all
fixed income investments.
It will vary. The yield is calculated every day by dividing
a fund's net income per share, expressed at annual rates, by
the share price. Since both income and share price will
fluctuate, a fund's yield will also vary. (Although money
fund prices are stable, income is variable.)
Is a fund's "yield" the same thing as the "total return"?
PAGE 34
Not for bond funds. The total return reported for a fund is
the result of reinvested distributions (income and capital
gains) and the change in share price for a given time
period. Income is always a positive contributor to total
return and can enhance a rise in share price or serve as an
offset to a drop in share price. Since money funds are
managed to maintain a stable share price, their yield and
total return should be the same.
What is "credit quality" and how does it affect a fund's
yield?
Credit quality refers to a bond issuer's expected ability to
make all required interest and principal payments in a
timely manner. Because highly rated issuers represent less
risk, they can borrow at lower interest rates than less
creditworthy issuers. Therefore, a fund investing in high
credit-quality securities should have a lower yield than an
otherwise comparable fund investing in lower credit-quality
securities.
What is meant by a bond fund's "maturity"?
Every bond has a stated maturity date when the issuer
must repay the security's entire principal value to the
investor. However, many bonds are "callable," meaning their
principal can be repaid before their stated maturity dates
on (or after) specified call dates. Bonds are most likely to
be called when interest rates are falling, because the
issuer wants to refinance at a lower rate. In such an
environment, a bond's "effective maturity" is calculated
using its nearest call date.
A bond mutual fund has no maturity in the strict sense of
the word, but it does have an average maturity and an
average effective maturity. This number is an average of the
stated or effective maturities of the underlying bonds, with
each bond's maturity "weighted" by the percentage of fund
assets it represents. Funds that target effective maturities
would use the effective (rather than stated) maturities of
the underlying instruments when computing the average.
Targeting effective maturity provides additional flexibility
in portfolio management but, all else being equal, could
result in higher volatility than a fund targeting a stated
maturity or maturity range.
What is meant by a bond fund's "duration"?
Duration is a calculation that seeks to measure the price
sensitivity of a bond or a bond fund to changes in interest
rates. It measures bond price sensitivity to interest rate
changes more accurately than maturity because it takes into
account the time value of cash flows generated over the
bond's life. Future interest and principal payments are
discounted to reflect their present value and then are
multiplied by the number of years they will be received to
produce a value that is expressed in years, i.e., the
PAGE 35
duration. Effective duration takes into account call
features and sinking fund payments that may shorten a bond's
life.
Since duration can also be computed for bond funds, you can
estimate the effect of interest rates on a fund's share
price. Simply multiply the fund's duration (available for T.
Rowe Price bond funds in our shareholder reports) by an
expected change in interest rates. For example, the price of
a bond fund with a duration of five years would be expected
to fall approximately 5% if rates rose by one percentage
point.
How is a municipal's price affected by changes in interest
rates?
In general, the longer a bond's maturity, the greater the
price increase or decrease in response to a given change in
interest rates, as shown in the table at right.
When interest rates rise, a municipal's price usually falls,
and vice versa.
_____________________________________________________
How Interest Rates Affect Bond Prices
Bond
Mat- Price Per $1,000 of Municipal
urity Coupon Bond if Interest Rates:
Increase Decrease:
1% 2% 1% 2%
1 Year 3.65% $990 $981 $1,010 $1,020
5 Years 4.55 $957 $916 $1,045 $1,093
10 Years 5.05 $926 $858 $1,082 $1,171
20 Years 5.75 $891 $798 $1,128 $1,280
30 Years 5.80 $873 $769 $1,158 $1,356
_____________________________________________________
Table 5
Coupons reflect yields on AAA-rated municipals as of April
30, 1996. This is an illustration and does not represent
expected yields or share price changes of any T. Rowe Price
fund.
Do money market securities react to changes in interest
rates?
Yes. As interest rates change, the prices of some money
market securities fluctuate, but changes are usually small
because of their very short maturities. Investments are
typically held until maturity in a money fund to help it
maintain a $1.00 share price.
How can I decide which investments are most appropriate for
me?
PAGE 36
Review your own financial objectives, time horizon, and risk
tolerance. Use Table 6, which summarizes the funds' main
characteristics, to help choose a fund (or funds) for your
particular needs. For example, only the 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.
___________________________________________
Differences Among Funds
Fund Credit- Income Risk of
Quality Share-Price
Categories Fluctuation
___________________________________________
Money Two Low Stable
highest
___________________________________________
Short- Four Low to Low to
Inter- highest mod- mod-
mediate erate erate
___________________________________________
Insured Two Mod- Mod-
Inter- highest erate erate
mediate
___________________________________________
Income Predom- Mod- Greater
inantly erate
four
highest
___________________________________________
High Generally High Highest
Yield upper-
medium
to low
quality
___________________________________________
Expected
Average Maturity
___________________________________________
Money Not more than 90 days
___________________________________________
Short- 2 to 5 years
Inter-
mediate
___________________________________________
Insured 5 to 10 years
PAGE 37
Inter-
mediate
___________________________________________
Income 15+ years
___________________________________________
High 15+ years
Yield
___________________________________________
Table 6
Is there other information I need to review before making a
decision?
You should review "Investment Policies and Practices" in
Section 3, which discusses the following: Types of Portfolio
Securities (municipal securities, private activity bonds,
municipal lease obligations, municipal warrants, securities
with "puts" or other demand features, securities with credit
enhancements, synthetic or derivative securities, and
private placements); and Types of Management Practices (cash
position, when-issued securities and forwards, interest rate
futures, borrowing money and transferring assets, portfolio
turnover, sector concentration, high-yield/high-risk
investing, credit-quality considerations, and credit quality
and the High Yield Fund).
2
About Your Account
Pricing Shares and Receiving Sale Proceeds
Here are some procedures you should know when investing
in a T. Rowe Price tax-free fund.
How and when shares are priced
The various ways you can buy, sell, and exchange shares are
explained at the end of this prospectus and on the New
Account Form. These procedures may differ for institutional
accounts.
Bond and money funds.
The share price (also called "net asset value" or NAV per
share) for each fund is calculated at 4 p.m. ET each day the
New York Stock Exchange is open for business. To calculate
the NAV, a fund's assets are valued and totaled, liabilities
are subtracted, and the balance, called net assets, is
divided by the number of shares outstanding. Amortized cost
is used to value money fund securities.
How your purchase, sale, or exchange price is determined
If we receive your request in correct form by 4 p.m. ET,
your transaction will be priced at that day's NAV. If we
receive it after 4 p.m., it will be priced at the next
business day's NAV.
We cannot accept orders that request a particular day or
price for your transaction or any other special conditions.
PAGE 38
When filling out the New Account Form, you may wish to give
yourself the widest range of options for receiving proceeds
from a sale.
Note:
The time at which transactions and shares are priced and
the time until which orders are accepted may be changed in
case of an emergency or if the New York Stock Exchange
closes at a time other than 4 p.m. ET.
How you can receive the proceeds from a sale
If your request is received by 4 p.m. ET in correct form,
proceeds are usually sent on the next business day. Proceeds
can be sent to you by mail or to your bank account by ACH
transfer or bank wire. Proceeds sent by ACH transfer should
be credited the second day after the sale. ACH (Automated
Clearing House) is an automated method of initiating
payments from and receiving payments in your financial
institution account. ACH is a payment system supported by
over 20,000 banks, savings banks, and credit unions, which
electronically exchanges the transactions primarily through
the Federal Reserve Banks. Proceeds sent by bank wire should
be credited to your account the next business day.
If for some reason we cannot accept your request to sell
shares, we will contact you.
Exception:
o
Under certain circumstances and when deemed to be in the
fund's best interests, your proceeds may not be sent for up
to five business days after receiving your sale or exchange
request. If you were exchanging into a bond or money 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
All net investment income and realized capital gains are
distributed to shareholders.
Dividend and capital gain distributions are reinvested in
additional fund shares in your account unless you select
another option on your New Account Form. The advantage of
reinvesting distributions arises from compounding; that is,
you receive income dividends and capital gain distributions
on a rising number of shares.
Distributions not reinvested are paid by check or
transmitted to your bank account via ACH. If the Post
Office cannot deliver your check, or if your check remains
uncashed for six months, a fund reserves the right to
reinvest you distribution check in you account at the NAV on
the business day of the reinvestment and to reinvest all
subsequent distributions in shares of the fund.
Income dividends
PAGE 39
o
Bond funds declare income dividends daily at 4 p.m. ET to
shareholders of record at that time provided payment has
been received on the previous business day.
o
Money funds declare income dividends daily to
shareholders of record as of 12:00 noon ET on that day. Wire
purchase orders received before 12:00 noon ET receive the
dividend for that day. Other purchase orders receive the
dividend on the next business day after payment has been
received.
o
Bond and money funds pay dividends on the first business
day of each month.
o
Bond and money fund shares will earn dividends through the
date of redemption; also, shares redeemed on a Friday or
prior to a holiday will continue to earn dividends until the
next business day. Generally, if you redeem all of your
shares at any time during the month, you will also receive
all dividends earned through the date of redemption in the
same check. When you redeem only a portion of your shares,
all dividends accrued on those shares will be reinvested, or
paid in cash, on the next dividend payment date.
Capital gains
o
A capital gain or loss is the difference between the
purchase and sale price of a security.
o
If a fund has net capital gains for the year (after
subtracting any capital losses), they are usually declared
and paid in December to shareholders of record on a
specified date that month. If a second distribution is
necessary, it is usually declared and paid during the first
quarter of the following year.
Tax Information
You will be sent timely information for your tax filing
needs.
Although the regular monthly income dividends you receive
from the funds are expected to be exempt from federal income
taxes, you need to be aware of the possible tax consequences
when:
o
You sell fund shares, including an exchange from one fund to
another.
o
The fund makes a distribution to your account.
Due to 1993 tax legislation, a portion of the capital gains
realized on the sale of market discount bonds with
maturities beyond one year may be treated as ordinary income
PAGE 40
and cannot be offset by other capital losses. Therefore, to
the extent the fund invests in these securities, the
likelihood of a taxable gain distribution will be increased.
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 redemptions.
When you sell shares in any 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 reduced by the tax-exempt dividends received
on those shares.
In January, you will be sent Form 1099-B, indicating the
date and amount of each sale you made in the fund during the
prior year. This information will also be reported to the
IRS. For accounts opened new or by exchange in 1983 or
later, we will provide you with the gain or loss of the
shares you sold during the year, based on the "average cost"
method. This information is not 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 (except
for systematic purchases and redemptions) you make and a
year-end statement detailing all your transactions in each
fund account during the year.
Taxes on fund distributions.
Distributions are taxable whether reinvested in additional
shares or received in cash.
In January, the funds will send you Form 1099-DIV indicating
the tax status of any capital gain distribution made to you.
This information will also be reported to the IRS. All
capital gain distributions are taxable to you for the year
in which they are paid. The only exception is that dividends
declared during the last three months of the year and paid
in January are taxed as though they were paid by December
31. Dividends are expected to be tax-exempt.
Short-term capital gains are taxable as ordinary income and
long-term gains are taxable at the applicable long-term gain
rate. 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 you realize a loss on the sale or exchange
of fund shares held six months or less, your short-term loss
PAGE 41
recognized is reclassified to long-term to the extent of any
long-term capital gain distribution received.
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.
Tax effect of buying shares before a capital gain
distribution.
If you buy shares shortly before or on the "record date"--
the date that establishes you as the person to receive the
upcoming distribution--you will receive, in the form of a
taxable distribution, a portion of the money you just
invested. Therefore, you may also wish to find out the
fund's record date before investing. Of course, the fund's
share price may, at any time, reflect undistributed capital
gains or income and unrealized appreciation. When these
amounts are eventually distributed, they are taxable.
Note:
For shareholders who receive Social Security benefits, the
receipt of tax-exempt interest may increase the portion of
benefits that are subject to tax.
Transaction Procedures and Special Requirements
Purchase Conditions
Following these procedures helps assure timely and accurate
transactions.
Nonpayment.
If your payment is not received or you pay with a check or
ACH transfer that does not clear, your purchase will be
canceled. You will be responsible for any losses or expenses
incurred by the fund or transfer agent, and the fund can
redeem shares you own in this or another identically
registered T. Rowe Price 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, a 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 calendar day following receipt unless the check or
ACH transfer has not cleared. If during the clearing period,
PAGE 42
we receive a check drawn against your bond or money market
account, it will be returned marked "uncollected." (The 10-
day hold does not apply to the following: purchases paid for
by bank wire; cashier's, certified, or treasurer's checks;
or automatic purchases through your paycheck.)
Telephone, Tele*AccessR, and personal computer
transactions.
These exchange and redemption services are established
automatically when you sign the New Account Form unless you
check the box which states that you do not want these
services. Each fund uses reasonable procedures (including
shareholder identity verification) to confirm that
instructions given by telephone are genuine and is not
liable for acting on these instructions. If these
procedures are not followed, it is the opinion of certain
regulatory agencies that a fund may be liable for any losses
that may result from acting on the instructions given. A
confirmation is sent promptly after the telephone
transaction. All conversations are recorded.
Redemptions over $250,000.
Large sales can adversely affect a portfolio manager's
ability to implement a fund's investment strategy by causing
the premature sale of securities that would otherwise be
held. If, in any 90-day period, you redeem (sell) more than
$250,000, or your sale amounts to more than 1% of the fund's
net assets, 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 excessive traders from purchasing
shares.
Frequent trades, involving either substantial fund assets or
a substantial 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.
For example, you are in fund A. You can move substantial
assets from fund 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.
PAGE 43
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 to a fund of maintaining
small accounts, we ask you to maintain an account balance of
at least $1,000. If you balance is below $1,000 for three
months or longer, we have the right to close your account
after giving you 60 days in which to increase your balance.
Small Account Fee
Because of the disproportionately high costs of servicing
accounts with low balances, a $10 fee, paid to T. Rowe Price
Services, the fund's transfer agent, will automatically be
deducted from nonretirement accounts with balances falling
below a minimum level. The valuation of accounts and the
deduction are expected to take place during the last five
business days of September. The fee will be deducted from
accounts with balances below $2,000, except for UGMA/UTMA
accounts, for which the limit is $500. The fee will be
waived for any investor whose aggregate T. Rowe Price mutual
fund investments total $25,000 or more. Accounts employing
automatic investing (e.g., payroll deduction, automatic
purchase from a bank account, etc.) are also exempt from the
charge. The fee will not apply to IRAs and other retirement
plan accounts. (A separate custodial fee may apply to IRAs
and other retirement plan accounts.)
Signature Guarantees
A signature guarantee is designed to protect you and the T.
Rowe Price funds from fraud by verifying your signature.
You may need to have your signature guaranteed in certain
situations, such as:
o
Written requests 1) to redeem over $50,000, or 2) to wire
redemption proceeds.
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 (name/ownership) 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.
PAGE 44
3
More About the Funds
Organization and Management
How are the funds organized?
Shareholders benefit from T. Rowe Price's 59 years of
investment management experience.
The funds are "diversified, open-end investment companies,"
or mutual funds and were incorporated in Maryland as
follows: 1) Tax-Exempt Money Fund, 1980; 2) Tax-Free Short-
Intermediate Fund, 1983; 3) Tax-Free Insured Intermediate
Bond Fund, 1992; 4) Tax-Free Income Fund, 1976; and 5) Tax-
Free High Yield Fund, 1984. Mutual funds pool money received
from shareholders and invest it to try to achieve specified
objectives.
What is meant by "shares"?
As with all mutual funds, investors purchase shares when
they put money in a fund. These shares are part of a fund's
authorized capital stock, but share certificates are not
issued.
Each share and fractional share entitles the shareholder to:
o
Receive a proportional interest in the fund's income and
capital gain distributions.
o
Cast one vote per share on certain fund matters, including
the election of fund directors, changes in fundamental
policies, or approval of changes in the fund's management
contract.
Do T. Rowe Price funds have annual shareholder meetings?
The funds are not required to hold annual meetings and in
order to avoid unnecessary costs to fund shareholders, do
not intend to do so except when certain matters, such as a
change in a fund's fundamental policies, are to be decided.
In addition, shareholders representing at least 10% of all
eligible votes may call a special meeting if they wish for
the purpose of voting on the removal of any fund director or
trustee. If a meeting is held and you cannot attend, you can
vote by proxy. Before the meeting, the fund will send 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 the purchase and sale of fund
investments are made by T. Rowe Price--specifically by each
fund's portfolio manager.
General Oversight.
Each fund is governed by a Board of Directors that elects
the funds' officers and meets regularly to review the funds'
investments, performance, expenses, and other business
PAGE 45
affairs. The policy of each fund is that a majority of the
Board members will be independent of T. Rowe Price.
Portfolio Management.
Each fund has an Investment Advisory Committee whose
chairman has day-to-day responsibility for managing the fund
and works with the committee in developing and executing the
fund's investment program. The Investment Advisory
Committees are composed of the following members:
Tax-Exempt Money Fund.
Patrice L. Berchtenbreiter, Chairman, Paul W. Boltz,
Patricia S. Deford, Joseph K. Lynagh, Mary J. Miller,
William T. Reynolds, Theodore E. Robson, and Edward A.
Wiese. Ms. Berchtenbreiter has been chairman of the fund
since 1992. She joined T. Rowe Price in 1972 and has been
managing investments since 1987.
Tax-Free Short-Intermediate Fund.
Charles B. Hill, Chairman, Janet G. Albright, Paul W.
Boltz, Patricia S. Deford, Laura L. McAree, Mary J. Miller,
and William T. Reynolds. Mr. Hill was appointed chairman of
the fund's committee in 1996. He joined T. Rowe Price in
1991 and has been managing investments since 1986.
Tax-Free Insured Intermediate Bond Fund.
Charles B. Hill, Chairman, Janet G. Albright, Paul W.
Boltz, Patricia S. Deford, Konstantine B. Mallas, Laura L.
McAree, Mary J. Miller, and William T. Reynolds. Mr. Hill
was appointed chairman of the fund in 1996. He joined T.
Rowe Price in 1991 and has been managing investments since
1986.
Tax-Free Income Fund.
William T. Reynolds, Chairman, Paul W. Boltz, Patricia S.
Deford, Konstantine B. Mallas, Hugh D. McGuirk, Mary J.
Miller, and William F. Snider, Jr. Mr. Reynolds has been
chairman of the fund since 1990. He joined T. Rowe Price in
1981 and has been managing investments since 1978.
Tax-Free High Yield Fund.
C. Stephen Wolfe II, Chairman, A. Gene Caponi, Patricia
S. Deford, Charles O. Holland, Konstantine B. Mallas,
William T. Reynolds, and Alan P. Richman. Mr. Wolfe has been
chairman of the fund since 1994. He joined T. Rowe Price in
1985 and has been managing investments since 1991.
Marketing.
T. Rowe Price Investment Services, Inc., a wholly owned
subsidiary of T. Rowe Price, distributes (sells) shares of
these and all other T. Rowe Price funds.
Shareholder Services.
T. Rowe Price Services, Inc., another wholly owned
subsidiary, acts as the funds' transfer and dividend
disbursing agent and provides shareholder and administrative
services. The address for T. Rowe Price Investment Services,
PAGE 46
Inc. and T. Rowe Price Services, Inc. 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, each 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 and expenses.
The Management Fee.
This fee has two parts--an "individual fund fee" (discussed
under "Transaction and Fund Expenses"), which reflects a
fund's particular investment management costs, and a "group
fee." The group fee, which is designed to reflect the
benefits of the shared resources of the T. Rowe Price
investment management complex, is calculated daily based on
the combined net assets of all T. Rowe Price funds (except
Equity Index and the Spectrum Funds and any institutional or
private label mutual funds). The group fee schedule (shown
below) is graduated, declining as the asset total rises, so
shareholders benefit from the overall growth in mutual fund
assets.
0.480% First $1 billion 0.350% Next $2 billion
0.450% Next $1 billion 0.340% Next $5 billion
0.420% Next $1 billion 0.330% Next $10 billion
0.390% Next $1 billion 0.320% Next $10 billion
0.370% Next $1 billion 0.310% Next $16 billion
0.360% Next $2 billion 0.305% Thereafter
Each 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 described previously. Based on combined
Price funds' assets of approximately $53.5 billion at March
31, 1996, the group fee was 0.33%.
Understanding Performance Information
This section should help you understand the terms used to
describe fund performance. You will come across them in
shareholder reports you receive from us, in our newsletter,
The Price Report, in Insights articles, in T. Rowe Price
advertisements, and in the media.
Total Return
Total return is the most widely used performance measure.
Detailed performance information is included in the fund's
annual and semiannual shareholder reports, and in the
quarterly Performance Update, which are all available
without charge.
PAGE 47
This tells you how much an investment in a fund has changed
in value over a given time period. It reflects any net
increase or decrease in the share price and assumes that all
dividends and capital gains (if any) paid during the period
were reinvested in additional shares. Including reinvested
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 produced 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.
Yield
You will see frequent references to a fund's yield in our
reports, in advertisements, in media stories, and so on.
The current or "dividend" yield on a fund or any investment
tells you the relationship between the investment's current
level of annual income and its price on a particular day.
The dividend yield reflects the actual income paid to
shareholders for a given period, annualized, and divided by
the average price during the given period. For example, a
fund providing $5 of annual income per share and a price of
$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 seven-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
PAGE 48
Fund managers have considerable leeway in choosing
investment strategies and selecting securities they believe
will help the funds achieve their objectives.
This section takes a detailed look at some of the types of
securities the funds may hold in their portfolios 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 substantively change a
fund's objective and certain investment restrictions noted
in the following section as "fundamental policies." The
managers also follow certain "operating policies" which can
be changed without shareholder approval. However,
significant changes are discussed with shareholders in fund
reports. Each fund adheres to applicable investment
restrictions and policies at the time it makes an
investment. A later change in circumstances will not require
the sale of an investment if it was proper at the time it
was made.
The funds' holdings of certain kinds of investments
cannot exceed maximum percentages of total assets, which are
set forth herein. For instance, the bond funds are not
permitted to invest more than 10% of total assets in
residual interest bonds. While these restrictions provide a
useful level of detail about the funds' investment programs,
investors should not view them as an accurate gauge of the
potential risk of such investments. For example, in a given
period, a 5% investment in residual interest bonds could
have significantly more of an impact on a fund's share price
than its weighting in the portfolio. The net effect of a
particular investment depends on its volatility and the size
of its overall return in relation to the performance of all
the funds' other investments.
Changes in the funds' holdings, the funds' performance, and
the contribution of various investments are discussed in the
shareholder reports sent to you.
Types of Portfolio Securities
In seeking to meet their investment objectives, the funds
may invest in any type of municipal security or instrument
(including certain potentially high-risk derivatives) whose
investment characteristics are consistent with the funds'
investment programs. The following pages describe the
principal types of portfolio securities and investment
management practices of the funds.
Fundamental policy:
PAGE 49
Each 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 a single
issuer or more than 10% of the outstanding voting securities
of the issuer would be held by a fund; provided that these
limitations do not apply to a fund's purchase of securities
issued or guaranteed by the U.S. government, its agencies,
or instrumentalities.
Operating policy (money fund only):
Effective October 3, 1996, or at such other time as required
by Rule 2a-7 under the Investment Company Act of 1940, the
money market fund will not purchase a security if, as a
result, more than 5% of its total assets would be invested
in securities of a single issuer, provided that this
limitation does not apply to purchases of U.S. government
securities or securities subject to certain types of
guarantees, and further provided that the fund may invest up
to 25% of its total assets in the first tier securities (as
by Rule 2a-7) a single issuer for a period of up to three
business days.
Municipal Securities.
In purchasing municipals, the funds rely on the opinion of
the issuer's bond counsel regarding the tax-exempt status of
the investment.
Each fund's assets are invested primarily in various tax-
free municipal debt securities. The issuers have a
contractual obligation to pay interest at a stated rate on
specific dates and to repay principal (the bond's face
value) on a specified date or dates. An issuer may have the
right to redeem or "call" a bond before maturity, and the
fund 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.
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 the 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:
PAGE 50
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 included under the 80% test does not include income
from securities subject to the alternative minimum tax.
Operating policy:
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 appropriations
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 for lease payments. In deciding whether
to purchase a lease obligation, the funds 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 funds may also purchase unrated lease
obligations.
Municipal Warrants (bond funds).
Municipal warrants are essentially call options on municipal
bonds. In exchange for a premium, they give the purchaser
the right, but not the obligation, to purchase a municipal
bond in the future. The funds might purchase a warrant to
lock in forward supply in an environment where the current
issuance of bonds is sharply reduced. Like options, warrants
may expire worthless and they may have reduced liquidity.
Operating policy:
Each bond fund will not invest more than 2% of its total
assets in municipal warrants.
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 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 funds would hold the longer-term security.
PAGE 51
Securities With Credit Enhancements.
o
Letters of Credit.
Letters of credit are issued by a third party, usually a
bank, to enhance liquidity and ensure repayment of principal
and any accrued interest if the underlying municipal
security should default.
o
Municipal Bond Insurance.
T. Rowe Price periodically reviews the credit quality of the
insurer.
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 the 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.
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 bond insurers have met their 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 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.
o
Standby Purchase Agreements.
A Standby Bond Purchase Agreement (SBPA) 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 that 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.
PAGE 52
These securities are created from existing municipal bonds:
o
Residual Interest Bonds (bond funds) (a potentially high-
risk derivative).
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 7 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 bond fund will not invest more than 10% of its total
assets in residual interest bonds.
o
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 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.
o
Embedded Interest Rate Swaps and Caps (bond funds).
Embedded interest rate swaps enhance yields, but also
increase interest rate risk.
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.
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.
PAGE 53
Both instruments may be volatile and of limited liquidity
and their use may adversely affect a fund's total return.
Operating policy:
Each bond fund will not invest more than 10% of its total
assets in embedded interest rate swaps and caps.
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:
The bond funds may not invest more than 15% (10% for the
money fund) of its net assets in illiquid securities,
including unmarketable private placements.
Types of Management Practices
Cash reserves provide flexibility and serve as a short-term
defense during periods of unusual market volatility.
Cash Position (bond funds).
Each fund will hold a certain portion of its assets in
short-term, tax-exempt money market securities maturing in
one year or less. The reserve position accomplishes the
following: provides flexibility in meeting redemptions,
expenses, and the 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. Each fund's cash reserve position will be
composed 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, typically 6 to 24 months. When buying
these securities, each fund will maintain 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).
PAGE 54
Futures (a type of potentially high-risk derivative) 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; to protect portfolio value; in an
effort to enhance income; and to adjust the portfolios'
duration. 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 a fund's total
return, and the potential loss from their use could exceed a
fund's initial exposure to 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 the bond funds' 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 purposes consistent with each 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 fund's total assets. A
fund may not purchase additional securities when borrowings
exceed 5% of total assets.
Portfolio Turnover (bond funds).
The funds' portfolio turnover rates for the previous
three fiscal years are shown in Table 7.
Each fund generally purchases securities with the intention
of holding them for investment; however, when market
conditions or other circumstances warrant, securities may be
purchased and sold without regard to the length of time
held. Due to the nature of each fund's investment program,
a fund's portfolio turnover rate may exceed 100%. Although
the funds do not expect to generate any taxable income, a
high turnover rate may increase transaction costs and may
effect taxes paid by shareholders to the extent short-term
gains are distributed.
Portfolio Turnover Rates
1994 1995 1996
Short-Intermediate 51.1% 93.1% 69.9%
Insured Intermediate 74.8% 170.8% 63.8%
PAGE 55
Income 71.2% 49.3% 48.7%
High Yield 59.3% 59.6% 39.3%
Table 7
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.
High-Yield/High-Risk Investing (High Yield Fund).
The total return and yield of lower-quality (high-
yield/high-risk) bonds, commonly referred to as "junk"
bonds, can be expected to fluctuate more than the total
return and yield of higher-quality bonds. Junk bonds (those
rated below BBB or in default) are regarded as predominantly
speculative with respect to the issuer's ability to meet
principal and interest payments. Successful investment in
lower-medium- and low-quality bonds involves greater
investment risk and is highly dependent on T. Rowe Price's
credit analysis. A real or perceived economic downturn or
rising interest rates could cause a decline in high-yield
bond prices, by lessening the ability of issuers to make
principal and interest payments. These bonds are often
thinly traded and can be more difficult to sell and value
accurately than high-quality bonds. Because objective
pricing data may be less available, judgment may play a
greater role in the valuation process.
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 8 shows the rating scale used by the major rating
agencies. T. Rowe Price considers publicly available
PAGE 56
ratings, but emphasizes its own credit analysis when
selecting investments.
Ratings of Municipal Debt Securities
Moody's Standard Fitch
Investors & Investors
Service, Poor's Service,
Inc. Corporation Inc. Definition
Long-Term Aaa AAA AAA Highest quality
Aa AA AA High quality
A A A Upper medium
grade
Baa BBB BBB Medium grade
Ba BB BB Speculative
B B B Highly
speculative
Caa CCC, CC CCC, CC Vulnerable to
default
Ca C C Default is
imminent
C D DDD, DD,D Probably in
default
Moody's S&P Fitch
Short-Term MIG1/VMIG1 SP1+ Very F-1+
Best quality strong quality Exceptionally
strong quality
SP1 Strong F-1 Very
grade strong quality
MIG2/VMIG2 SP2 F-2 Good
High quality Satisfactory credit
grade quality
MIG3/VMIG3 F-3 Fair
Favorable quality credit quality
MIG4/VMIG4
Adequate quality
SG SP3 F-S
Speculative Speculative Weak credit
quality grade quality
Commercial P-1 Superior A-1+ Extremely F-1+
Paper quality strong quality Exceptionally
strong quality
A-1 Strong F-1 Very
PAGE 57 quality strong quality
P-2 Strong A-2 F-2 Good
quality Satisfactory credit
quality quality
P-3 Acceptable A-3 Adequate F-3 Fair
quality quality credit quality
B Speculative F-S Weak
quality credit quality
C Doubtful
quality
Table 8
Explanation of Quality Ratings
Bond Rating Explanation
Moody's Aaa Highest quality, smallest degree of
Investors investment risk.
Services,
Inc. 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.
PAGE 58
Standard AAA Highest rating; extremely strong
& Poor's capacity to pay principal and
Corporation interest.
AA High quality; very strong capacity to
pay principal and interest.
A Strong capacity to pay principal and
interest; somewhat more suspectible 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 prinicpal and
interest than for higher-rated bonds.
BB,B
CCC,CC Predominantly speculative with respect
to the issuer's capacity to meet
required interest and principal
payments. BB-lowest degree of
speculation; CC-the highest degree of
speculation. Quality and protective
characteristics outweighedby large
uncertainties or major risk exposure
to adverse conditions.
D In default.
Fitch AAA Highest quality; obligor has
Investors exceptionally strong ability to pay
Services, interest and repay principal, which
Inc. 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
PAGE 59
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,
CCC CC,C Not investment grade; 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 is the least
speculative.C is the most speculative.
Table 9
Credit quality and the High Yield Fund.
In seeking its primary objective of high income, the Tax-
Free High Yield Fund invests a portion of its assets in
bonds rated below investment grade (BB or lower). Such bonds
are regarded as speculative with respect to the issuer's
ability to meet interest and principal payments.
For the fiscal year ended February 29, 1996, the Tax-Free
High Yield Fund's assets were invested in the credit
categories shown at right. Percentages are computed on a
dollar-weighted basis and are an average of 12 monthly
calculations.
Tax-Free High Yield Fund: Asset Composition
TRPA's
Assessment of
Standard & Percentage of Not Rated
Poor's Rating* Total Assets Securities
AAA 9.9% 2.4%
AA 12.4% 0.3%
A 9.5% 1.8%
BBB 25.7% 7.4%
BB 9.0% 13.6%
B -- 2.3%
CCC-D -- 0.1%(CC)
Not rated 27.9% --
Reserves 5.6% --
100.0% 27.9%
*Equivalent ratings by Moody's used in the absence of a S&P
rating.
Table 10
PAGE 60
PAGE 1
4 Investing with T. Rowe Price
Account Requirements and Transaction Information
Always verify your transactions by carefully reviewing the
confirmation we send you. Please report any discrepancies to
Shareholder Services promptly.
Tax Identification Number
We must have your correct social security or corporate tax
identification number on a signed New Account Form or W-9 Form.
Otherwise, federal law requires the funds to withhold a
percentage (currently 31%) of your dividends, capital gain
distributions, and redemptions, and may subject you to an IRS
fine. 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 shareholders who
have requested that their account be combined with someone
else's for financial reporting.
Institutional Accounts
Transaction procedures in the following sections may not apply to
institutional accounts. For institutional account procedures,
please call your designated account manager or service
representative.
Opening a New Account: $2,500 minimum initial investment; $1,000
for gifts or transfers to minors (UGMA/UTMA) accounts
Account Registration
If you own other T. Rowe Price funds, be sure to register any new
account just like your existing accounts so you can exchange
among them easily. (The name and account type would have to be
identical.)
Regular Mail
T. Rowe Price
Account Services
P.O. Box 17300
Baltimore, MD
21298-9353
Mailgram, Express,
Registered, or Certified
Mail
T. Rowe Price
Account Services
10090 Red Run Blvd.
PAGE 2
Owings Mills, MD 21117
By Mail
Please make your check payable to T. Rowe Price Funds
(otherwise it will be returned) and send your check together
with the New Account Form to the address at left. We do not
accept third party checks to open new accounts.
By Wire
o Call Investor Services for an account number and give the
following wire address to your bank:
Morgan Guaranty Trust Co. of New York
ABA# 021000238
T. Rowe Price [fund name]
AC-00153938
account name(s), and account number
o Complete a New Account Form and mail it to one of the
appropriate addresses listed on the previous page.
Note: No services will be established and IRS penalty
withholding may occur until a signed New Account Form is
received.
By Exchange
Call Shareholder Services or use Tele*Access or your personal
computer (see "Automated Services" under "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 your New Account Form at any of the locations listed on
the cover and obtain a receipt.
Purchasing Additional Shares: $100 minimum purchase; $50 minimum
for Automatic Asset Builder and gifts or transfers to minors
(UGMA/UTMA) accounts
By ACH Transfer
Use Tele*Access, your personal computer, or call Investor
Services if you have established electronic transfers using the
ACH network.
By Wire
Call Shareholder Services or use the wire address in "Opening a
New Account."
Regular Mail
T. Rowe Price Funds
PAGE 3
Account Services
P.O. Box 89000
Baltimore, MD
21289-1500
(For mailgrams,
express, registered,
or certified mail,
see previous section.)
By Mail
o Make your check payable to T. Rowe Price Funds (otherwise
it may be returned).
o Mail the check to us at the address shown at left with
either a fund reinvestment slip or a note indicating the
fund you want to buy and your fund account number.
o Remember to provide your account number and the fund name on
your check.
By Automatic Asset Builder
Fill out the Automatic Asset Builder
section on the New Account or Shareholder Services Form.
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
your personal computer, Tele*Access (if you have previously
authorized telephone services), mailgram or by express mail. 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 (provided your bank
information is already on file). For charges, see "Electronic
Transfers--By Wire" under "Shareholder Services".
By Mail
For each account involved, provide the account name, number, fund
name, and exchange or redemption amount. For exchanges, be sure
to indicate any fund you are exchanging out of and the fund or
funds you are exchanging into. Please mail to the appropriate
address below or as indicated at left. T. Rowe Price requires the
signatures of all owners exactly as registered, and possibly a
signature guarantee (see "Transaction Procedures and Special
Requirements--Signature Guarantees").
Mailgram, Express, Registered Regular Mail:
or Certified mail:
PAGE 4
T. Rowe Price T. Rowe Price
Account Services Account Services
10090 Red Run Boulevard P.O. Box 89000
Owings Mills, MD 21117 Baltimore, MD 21289-0220
Rights Reserved by the Fund
The fund and its agents reserve the right to waive or lower
investment minimums; to accept initial purchases by telephone or
mailgram; to cancel or rescind any purchase or exchange (for
example, if an account has been restricted due to excessive
trading or fraud) upon notice to the shareholder within five
business days of the trade or if the written confirmation has not
been received by the shareholder, whichever is sooner; to freeze
any account and suspend account services when notice has been
received of a dispute between the registered or beneficial
account owners or there is reason to believe a fraudulent
transaction may occur; to otherwise modify the conditions of
purchase and any services at any time; or to act on instructions
believed to be genuine.
Shareholder Services
1-800-225-5132
1-410-625-6500
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, 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.
Investor Services
1-800-638-5660
1-410-547-2308
Note: Corporate and other entity accounts require an original or
certified resolution to establish services and to redeem by mail.
For more information, call Investor Services.
Retirement Plans
We offer a wide range of plans for individuals and
institutions, including large and small businesses: IRAs,
SEP-IRAs, Keoghs (profit sharing and money purchase pension),
401(k), and 403(b)(7). For information on IRAs, call Investor
Services. For information on all other retirement plans, please
PAGE 5
call our Trust Company at 1-800-492-7670.
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% to 2%,
payable to such funds, on shares held for less than one year, or
in some funds, six months.
Automated Services
Tele*Access
1-800-638-2587
1-410-625-7676
Tele*Access. 24-hour service via toll-free number provides
information on fund yields and prices, dividends, account
balances, and your latest transaction, as well as the ability to
request prospectuses, account and tax forms, duplicate
statements, and checks, and to initiate purchase, redemption and
exchange orders in your accounts (see "Electronic Transfers"
below).
Personal Computer Access. 24-hour service via dial-up modem
provides the same information as Tele*Access, but on a personal
computer. Please call Investor Services to order.
Telephone and Walk-In Services
Buy, sell, or exchange shares by calling one of our service
representatives or by visiting one of our investor center
locations whose addresses are listed on the cover.
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 or your personal computer 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 incoming or outgoing wire
transfers regardless of size.
Checkwriting (not available for equity funds, or the High Yield
Fund or Emerging Markets Bond Fund)
You may write an unlimited number of free checks on any money
market fund, and most bond funds, with a minimum of $500 per
check. Keep in mind, however that a check results in a
redemption; a check written on a bond fund will create a taxable
PAGE 6
event which you and we must report to the IRS.
Automatic Investing ($50 minimum)
You can invest automatically in several different ways,
including:
Automatic Asset Builder. You instruct us to move $50 or more
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.
Note: If you are moving money from your bank account, and if
the date you select for your transactions falls on a Sunday or a
Monday which is a holiday, your order will be priced on the
second business day following this date.
Automatic Exchange. You can set up systematic investments from
one fund account into another, such as from a money fund into a
stock fund.
Discount Brokerage
Discount Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
This additional service gives you the opportunity to easily
consolidate all your investments with one company. Through our
discount brokerage, you can buy and sell individual securities--
stocks, bonds, options, and others--at considerable commission
savings. We also provide a wide range of services, including:
Automated telephone and on-line services - You can enter trades,
access quotes, and review account information 24 hours a day,
seven days a week. Any trades executed through these programs
save you an additional 10% on commissions.
Note: Discount applies to our current commission schedule,
subject to our $35 minimum commission.
To open an account:
1-800-638-5660
For existing discount brokerage investors:
1-800-225-7720
Investor Information - A variety of informative reports, such as
our Brokerage Insights series, S&P Market Month Newsletter, and
optional Stock Reports can help you better evaluate economic
trends and investment opportunities.
Dividend Reinvestment Service - Virtually all stock held in
customer accounts are eligible for this service--free of
charge.
PAGE 61
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, 1996, 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, 1996.
PAGE 62
TABLE OF CONTENTS
Page Page
Capital Stock . . . . . . Management of Funds . . . .
Code of Ethics . . . . . Municipal Securities . . .
Custodian . . . . . . . . Net Asset Value Per Share .
Determination of Maturity of Options . . . . . . . . . .
Money Market Securities Participation Interests . .
Distributor for Funds . . Portfolio Transactions . .
Dividends . . . . . . . . Pricing of Securities . . .
Federal and State Principal Holders of
Registration of Shares Securities . . . . . . .
Forwards . . . . . . . . Ratings of Commercial Paper
Futures Contracts . . . . Ratings of Municipal Debt
General Information Securities . . . . . . .
and History . . . . . . Ratings of Municipal Notes and
Independent Accountants . Variable Rate Securities
Investment Management Residual Interest Bonds . .
Services . . . . . . . Risk Factors . . . . . . .
Investment in Taxable Money Tax-Exempt vs. Taxable
Market Securities . . . Yields . . . . . . . . .
Investment Objectives Tax Status . . . . . . . .
and Policies . . . . . Variable and Floating Rate
Investment Performance . Securities . . . . . . .
Investment Programs . . . When-Issued Securities . .
Investment Restrictions . Yield Information . . . . .
Legal Counsel . . . . . .
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of
each Fund's investment objectives and policies discussed in 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 63 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. Proposed "Flat Tax" and "Valued Added Tax" proposals
PAGE 64
would also have the effect of eliminating the tax preference for
municipal securities. Some of the past proposals would have
applied to interest on municipal securities issued before the
date of enactment, which would have adversely affected their
value to a material degree. If such a proposal were enacted, the
availability of municipal securities for investment by the Funds
and the value of a Fund's portfolio would be affected and, in
such an event, a Fund would reevaluate its investment objectives
and policies.
Although the banks and securities dealers with which
the Funds will transact business will be banks and securities
dealers that T. Rowe Price believes to be financially sound,
there can be no assurance that they will be able to honor their
obligations to the Funds with respect to such securities.
After purchase by the Funds, a security may cease to be
rated or its rating may be reduced below the minimum required for
purchase by the Funds. 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. The Tax-Free Insured
Intermediate Fund must purchase such bonds. 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 total debt service, the
issuer is able to obtain a higher credit rating for the bond.
Once purchased, municipal bond insurance cannot be cancelled, and
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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.
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 short-term 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
PAGE 66
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 (subject to a 90 day maximum under Rule 2a-7): 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.
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
PAGE 67
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:
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
PAGE 68
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,
PAGE 69
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.
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
PAGE 70
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.
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
PAGE 71
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.
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
PAGE 72
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 (These are a type of high-
risk derivative) (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
PAGE 73
(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.
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
PAGE 74
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.
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
PAGE 75
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.
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
PAGE 76
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 provisions of Rule 2a-7 under the Investment Company Act of
1940.
PORTFOLIO MANAGEMENT PRACTICES
Futures Contracts (Bond Funds only)
Futures are a potentially high-risk derivative.
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.
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
PAGE 77
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.
PAGE 78
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 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
PAGE 79
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 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.
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,
PAGE 80
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.
PAGE 81
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 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
PAGE 82
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 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
PAGE 83
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. 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
PAGE 84
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
PAGE 85
whether, when and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or interest rate trends.
During periods when municipal securities market prices are
appreciating, the 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
PAGE 86
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 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.
PAGE 87 Options on Securities
Options are another type of potentially high-risk
derivative.
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 88
(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, including
limited partnership interests therein, 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 in 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 included under
PAGE 89
the 80% test doesn't include income from securities subject to
the alternative minimum tax (AMT); 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
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.
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 Fund) may invest
PAGE 90
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;
(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 tax-
free open-end money market 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, those officers and directors of the Fund,
and of its investment manager, who each own
PAGE 91
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
(14) Warrants. Invest in warrants if, as a result
thereof, more than 2% of the value of the net 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 net
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 and are
generally referred to as "gilt edge."
Aa - Bonds rated Aa are judged to be of high quality by all
PAGE 92
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 futures cannot be considered as well assured. Often the
protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and
bad times over the future. Uncertainty of position 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.
C - Lowest-rated; extremely poor prospects of ever attaining
investment standing.
Standard & Poor's Corporation
AAA - This is the highest rating assigned by Standard &
Poor's to a debt obligation and indicates an extremely strong
capacity to pay principal and interest.
AA - Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very
strong.
A - Bonds rated A have a strong capacity to pay principal
and interest, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions.
PAGE 93
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, C, 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.
D - In default.
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
PAGE 94
the issuer, and the current and prospective financial condition
and operating performance of the issuer.
RATINGS OF MUNICIPAL NOTES AND VARIABLE SECURITIES
Moody's Investors Services, Inc.
VMIG-1/MIG-1: the best quality. VMIG-2/MIG-2: high quality,
with margins of protection ample though not so large as in the
preceding group.
VMIG-3/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. VMIG-4/MIG-4: adequate
quality but there is specific risk.
Standard & Poor's Corporation
SP-1: very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation. SP-2:
satisfactory capacity to pay principal and interest.
SP-3: speculative capacity to pay principal and interest.
Fitch Investors Service, Inc.
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-S: weak credit quality, having characteristics suggesting a
minimal degree of assurance for timely payment.
RATINGS OF COMMERCIAL PAPER
Moody's Investors Service, Inc.
P-1: Superior capacity for repayment. P-2: strong capacity for
repayment.
P-3: acceptable capacity for repayment of short-term promissory
obligations.
Standard & Poor's Corporation
PAGE 95
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, Inc.
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.
All Funds
Independent Directors/Trustees
ROBERT P. BLACK, Retired; formerly President, Federal Reserve
Bank of Richmond; Address: 10 Dahlgren Road, Richmond, Virginia
23233
CALVIN W. BURNETT, PH.D., President, Coppin State College;
Board of Directors, McDonogh School, Inc. and Provident Bank of
Maryland; Past 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
ANTHONY W. DEERING,Director, President and Chief Executive
Officer, The Rouse Company, real estate developers, Columbia,
PAGE 96
Maryland; Advisory Director, Kleinwort, Benson (North America)
Corporation, a registered broker-dealer; Address: 10275 Little
Patuxent Parkway, Columbia, Maryland 21044
F. PIERCE LINAWEAVER, President, F. Pierce Linaweaver &
Associates, Inc., Consulting Environmental & Civil Engineer(s);
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
JOHN G. SCHREIBER, President, Schreiber Investments, Inc., 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
Officers
JANET G. ALBRIGHT, Vice President--Vice President, T. Rowe Price
PATRICIA S. DEFORD, Vice President--Vice President, T. Rowe Price
CHARLES O. HOLLAND, Vice President--Vice President, T. Rowe Price
HENRY H. HOPKINS, Vice President--Vice President, Price-Fleming
and T. Rowe Price Retirement Plan Services, Inc.; Managing
Director, T. Rowe Price; Vice President and Director, T. Rowe
Price Investment Services, Inc., T. Rowe Price Services, Inc. and
T. Rowe Price Trust 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,
and T. Rowe Price Trust Company
PATRICIA S. BUTCHER, Assistant Secretary--Assistant Vice
President, T. Rowe Price and T. Rowe Price Investment Services,
Inc.
EDWARD T. SCHNEIDER, Assistant Vice President--Vice President,
T. Rowe Price
INGRID I. VORDEMBERGE, Assistant Vice President--Employee, T.
Rowe Price
Tax-Exempt Money Fund
*GEORGE J. COLLINS, Chairman of the Board--President, Chief
Executive Officer and Managing Director, T. Rowe Price; Director,
Price-Fleming, T. Rowe Price Retirement Plan Services, Inc. and
T. Rowe Price Trust Company; Chartered Investment Counselor
PAGE 97
*WILLIAM T. REYNOLDS, Director and Vice President--Managing
Director, T. Rowe Price
*JAMES S. RIEPE, Director and Vice President--Managing
Director, T. Rowe Price; Chairman of the Board, T. Rowe Price
Services, Inc., T. Rowe Price Retirement Plan Services, Inc., T.
Rowe Price Trust Company, and T. Rowe Price Investment Services,
Inc.; Director, Rhone-Poulenc Rorer, Inc.
PATRICE L. BERCHTENBREITER, President--Vice President, T. Rowe
Price
PAUL W. BOLTZ, Vice President--Vice President and Financial
Economist, T. Rowe Price
JOSEPH K. LYNAGH, Vice President--Assistant Vice President, T.
Rowe Price
MARY J. MILLER, Vice President--Managing Director, T. Rowe Price
THEODORE E. ROBSON, Vice President--Employee, T. Rowe Price
C. STEPHEN WOLFE, II, Vice President--Vice President, T. Rowe
Price
LAURA L. 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
Tax-Free Short-Intermediate Fund
*WILLIAM T. REYNOLDS, Chairman of the Board--Managing
Director, T. Rowe Price
*GEORGE J. COLLINS, Director--President, Chief Executive
Officer and Managing Director, T. Rowe Price; Director, Price-
Fleming, T. Rowe Price Retirement Plan Services, Inc. and T. Rowe
Price Trust Company; Chartered Investment Counselor
*MARY J. MILLER, President and Director--Managing Director, T.
Rowe Price
*JAMES S. RIEPE, Director and Vice President--Managing
Director, T. Rowe Price; Chairman of the Board, T. Rowe Price
Services, Inc., T. Rowe Price Retirement Plan Services, Inc., T.
Rowe Price Trust Company, and T. Rowe Price Investment Services,
Inc.; Director, Rhone-Poulenc Rorer, Inc.
CHARLES B. HILL, Executive Vice President--Assistant Vice
President, T. Rowe Price; formerly (9/86-11/91) managed municipal
bonds at Riggs National Bank, Washington, D.C.
PATRICE L. BERCHTENBREITER, Vice President--Vice President, T.
Rowe Price
KONSTANTINE B. MALLAS, Vice President-- Vice President, T.
Rowe Price
LAURA L. MCAREE, 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
HUGH D. MCGUIRK, Vice President--Vice President, T. Rowe
Price; (1991-1993) municipal underwriter, Alex. Brown & Sons,
Inc., Baltimore, Maryland
C. STEPHEN WOLFE, II, Vice President--Vice President, T. Rowe
Price
PAGE 98
Tax-Free Insured Intermediate Bond Fund
*GEORGE J. COLLINS, Director--President, Chief Executive
Officer and Managing Director, T. Rowe Price; Director, Price-
Fleming, T. Rowe Price Retirement Plan Services, Inc. and T. Rowe
Price Trust Company; Chartered Investment Counselor
*WILLIAM T. REYNOLDS, Director--Managing Director, T. Rowe
Price
*JAMES S. RIEPE, Director--Managing Director, T. Rowe Price;
Chairman of the Board, T. Rowe Price Services, Inc., T. Rowe
Price Retirement Plan Services, Inc., T. Rowe Price Trust
Company, and T. Rowe Price Investment Services, Inc.; Director,
Rhone-Poulenc Rorer, Inc.
MARY J. MILLER, President--Managing Director, T. Rowe
Price
CHARLES B. HILL, Executive Vice President--Assistant Vice
President, T. Rowe Price; formerly (9/86-11/91) managed municipal
bonds at Riggs National Bank, Washington, D.C.
KONSTANTINE B. MALLAS, Vice President--Assistant Vice President,
T. Rowe Price
HUGH D. MCGUIRK, Vice President--Vice President, T. Rowe
Price; formerly (1991-1993) municipal underwriter, Alex. Brown &
Sons, Inc., Baltimore, Maryland
LAURA L. MCAREE, 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
WILLIAM F. SNIDER, JR., Vice President--Vice President, T.
Rowe Price
Tax-Free Income Fund
*WILLIAM T. REYNOLDS, Chairman of the Board--Managing
Director, T. Rowe Price
*GEORGE J. COLLINS, Director--President, Chief Executive
Officer and Managing Director, T. Rowe Price; Director, Price-
Fleming, T. Rowe Price Retirement Plan Services, Inc. and T. Rowe
Price Trust Company; Chartered Investment Counselor
*JAMES S. RIEPE, Director and Vice President--Managing
Director, T. Rowe Price; Chairman of the Board, T. Rowe Price
Services, Inc., T. Rowe Price Retirement Plan Services, Inc., T.
Rowe Price Trust Company, and T. Rowe Price Investment Services,
Inc.; Director, Rhone-Poulenc Rorer, Inc.
MARY J. MILLER, President--Managing Director, T. Rowe
Price
PATRICE L. BERCHTENBREITER, Vice President--Vice President, T.
Rowe Price
A. GENE CAPONI, Vice President--Vice President and Analyst, 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.
PAGE 99
KONSTANTINE B. MALLAS, Vice President--Vice President, T. Rowe
Price
HUGH D. MCGUIRK, Vice President--Vice President, T. Rowe
Price; (1991-1993) municipal underwriter, Alex. Brown & Sons,
Inc., Baltimore, Maryland
WILLIAM F. SNIDER, JR., Vice President--Vice President, T.
Rowe Price
C. STEPHEN WOLFE, II, Vice President--Vice President, T. Rowe
Price
Tax-Free High Yield Fund
*WILLIAM T. REYNOLDS, Chairman of the Board--Managing Director,
T. Rowe Price
*GEORGE J. COLLINS, Director--President, Chief Executive
Officer and Managing Director, T. Rowe Price; Director, Price-
Fleming, T. Rowe Price Retirement Plan Services, Inc. and T. Rowe
Price Trust Company; Chartered Investment Counselor
*JAMES S. RIEPE, Director and Vice President--Managing
Director, T. Rowe Price; Chairman of the Board, T. Rowe Price
Services, Inc., T. Rowe Price Retirement Plan Services, Inc., T.
Rowe Price Trust Company, and T. Rowe Price Investment Services,
Inc.; Director, Rhone-Poulenc Rorer, Inc.
C. STEPHEN WOLFE, II, President--Vice President, T. Rowe Price
A. GENE CAPONI, Vice President--Vice President and Analyst, 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.
KONSTANTINE B. MALLAS, Vice President--Vice President, T. Rowe
Price
HUGH D. MCGUIRK, Vice President--Vice President, T. Rowe
Price; (1991-1993) municipal underwriter, Alex. Brown & Sons,
Inc., Baltimore, Maryland
MARY J. MILLER, Vice President--Managing Director, T. Rowe Price
WILLIAM F. SNIDER, JR., Vice President--Vice President, T.
Rowe Price
The Executive Committee of the Money, Income, High
Yield, and Insured Intermediate Bond Funds is comprised of
Messrs. Collins, Reynolds, and Riepe; and the Executive Committee
of the Short-Intermediate Fund, is comprised of Mrs. Miller and
Messrs. Collins, Reynolds, and Riepe. These Executive Committees
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.
PAGE 100
COMPENSATION TABLE
The Funds do not pay pension or retirement benefits to
its officers or directors/trustees. Also, any director/trustee
of a Fund who is an officer or employee of T. Rowe Price does not
receive any remuneration from a Fund.
_________________________________________________________________
Total Compensation
Aggregate from Fund and
Name of Compensation Fund Group
Person, from Paid to
Position Fund(a) Directors(b)
_________________________________________________________________
Tax-Exempt Money Fund
Robert P. Black 2,077 56,000
Director
Calvin W. Burnett 2,077 56,000
Director
Anthony W. Deering 2,077 68,250
Director
F. Pierce Linaweaver 2,077 56,000
Director
John Schreiber 2,077 56,000
Director
_________________________________________________________________
Tax-Free Short-Intermediate Fund
Robert P. Black 1,680 56,000
Director
Calvin W. Burnett 1,680 56,000
Director
Anthony W. Deering 1,680 68,250
Director
F. Pierce Linaweaver 1,680 56,000
Director
John G. Schreiber 1,680 56,000
Director
_________________________________________________________________
Tax-Free Insured Intermediate Bond Fund
PAGE 101
Robert P. Black 1,050 56,000
Director
Calvin W. Burnett 1,050 56,000
Director
Anthony W. Deering 1,050 68,250
Director
F. Pierce Linaweaver 1,050 56,000
Director
John Schreiber 1,050 56,000
Director
_________________________________________________________________
Tax-Free Income Fund
Robert P. Black 3,102 56,000
Director
Calvin W. Burnett 3,102 56,000
Director
Anthony W. Deering 3,102 68,250
Director
F. Pierce Linaweaver 3,102 56,000
Director
John G. Schreiber 3,102 56,000
Director
_________________________________________________________________
Tax-Free High Yield Fund
Robert P. Black 2,456 56,000
Director
Calvin W. Burnett 2,456 56,000
Director
Anthony W. Deering 2,456 68,250
Director
F. Pierce Linaweaver 2,456 56,000
Director
John G. Schreiber 2,456 56,000
Director
PAGE 102
a Amounts in this Column are for the period March 1, 1995
through February 29, 1996.
b Amounts in this column are for fiscal year 1996. The T. Rowe
Price Fund complex included 72 funds as of February 29,
1996.
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.
As of May 31, 1996, no shareholder beneficially owned more
than 5% of the outstanding shares of the Funds.
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.
The Management Agreements also provide 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
PAGE 103
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:
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% Next $16 billion
0.305% 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., T. Rowe Price Equity Index Fund, 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
PAGE 104
Fund was open for business.
The following chart sets forth the total management
fees, if any, paid to T. Rowe Price by the Funds, for each of the
last three fiscal years.
PAGE 105
Short- Insured
Inter- Inter- High
Money mediate mediate Income Yield
Year Fund Fund Bond Fund Fund Fund
____ _____ _________ ________ ________ ______
1996 $2,993,000 $1,975,000 $274,000 $6,613,000 $5,968,000
1995 $3,346,000 $2,171,000 $206,000 $6,547,000 $5,561,000
1994 $3,132,000 $2,256,000 $9,000 $7,362,000 $5,954,000
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
Pursuant to the present expense limitation, $69,000 of
management fees were not accrued by the fund for the year ended
February 29, 1996. Additionally, $140,000 of unaccrued fees and
expenses from the prior period are subject to reimbursement.
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.
PAGE 106
Investment Services is located at the same address as
the Funds and T. Rowe T. Rowe Price -- 100 East Pratt Street,
Baltimore, Maryland 21202.
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.
CODE OF ETHICS
The Fund's investment adviser (T. Rowe Price) has a
written Code of Ethics which requires all employees to obtain
prior clearance before engaging in personal securities
transactions. Transactions must be executed within three business
days of their clearance. In addition, all employees must report
their personal securities transactions within ten days of their
PAGE 107
execution. Employees will not be permitted to effect
transactions in a security: If there are pending client orders in
the security; the security has been purchased or sold by a client
within seven calendar days; the security is being considered for
purchase for a client; a change has occurred in T. Rowe Price's
rating of the security within seven calendar days prior to the
date of the proposed transaction; or the security is subject to
internal trading restrictions. In addition, employees are
prohibited from profiting from short-term trading (e.g.,
purchases and sales involving the same security within 60 days).
Any material violation of the Code of Ethics is reported to the
Board of the Fund. The Board also reviews the administration of
the Code of Ethics on an annual basis.
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 Funds.
How Brokers and Dealers are Selected
Fixed Income Securities
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
PAGE 108
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 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
PAGE 109
reduced T. Rowe Price's normal research activities, the expenses
of T. Rowe Price could be 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
PAGE 110
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 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
PAGE 111
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 29, 1996, February 28, 1995, and February 28,
1994:
1996 1995 1994
Tax-Exempt
Money Fund $3,101,344,000 $3,476,545,000$3,503,548,000
Tax-Free Short-
Intermediate Fund 1,184,341,000 1,879,637,000 1,368,139,000
Tax-Free Insured Inter-
mediate Bond Fund 249,376,000 490,025,000 383,604,000
Tax-Free Income Fund 2,558,129,000 2,465,423,000 3,905,016,000
Tax-Free High
Yield Fund 1,643,296,000 1,961,416,000 2,185,765,000
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 29, 1996, February 28, 1995, and
February 28, 1994:
1996 1995 1994
Tax-Exempt
Money Fund $3,084,964,000 $3,476,545,000$3,503,548,000
PAGE 112
Tax-Free Short-
Intermediate Fund 1,113,118,000 1,849,318,000 1,250,892,000
Tax-Free Insured Inter-
mediate Bond Fund 233,485,000 480,566,000 343,890,000
Tax-Free Income Fund 2,318,802,000 2,296,647,000 3,412,068,000
Tax-Free High
Yield Fund 1,501,879,000 1,855,103,000 1,944,568,000
The following amounts involved trades with brokers
acting as agents or underwriters for the fiscal years ended
February 29, 1996, February 28, 1995, and February 28, 1994:
1996 1995 1994
Tax-Exempt Money Fund $16,380,000 $0 $0
Tax-Free Short-
Intermediate Fund 71,223,000 30,319,000 117,247,000
Tax-Free Insured Inter-
mediate Bond Fund 15,891,000 9,459,000 39,714,000
Tax-Free Income Fund 239,327,000 168,776,000 492,947,000
Tax-Free High Yield Fund 141,417,000 106,313,000 241,196,000
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 29, 1996,
February 28, 1995, and February 28, 1994:
1996 1995 1994
Tax-Exempt Money Fund $70,000 $0 $0
Tax-Free Short-
Intermediate Fund 281,000 68,000 582,000
Tax-Free Insured Inter-
mediate Bond Fund 61,000 44,000 256,000
Tax-Free Income Fund 1,608,000 932,000 488,000
Tax-Free High Yield Fund 970,000 379,000 1,910,000
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 29, 1996, February 28, 1995, and
February 28, 1994:
1996 1995 1994
Tax-Free Short-Intermediate Fund 69.9% 93.1% 51.1%
Tax-Free Insured Intermediate
Bond Fund 63.8% 170.8% 74.8%
PAGE 113
Tax-Free Income Fund 48.7% 49.3% 71.2%
Tax-Free High Yield Fund 39.3% 59.6% 59.3%
PRICING OF SECURITIES
Fixed income securities are generally traded in the over-
the-counter market. With the exception of the Money Fund,
investments in securities are stated at fair market 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. Securities held by the Money Fund
are valued at amortized cost.
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 inappropriate or 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 using the amortized cost method
of valuation permitted by Rule 2a-7 under the Investment Company
Act of 1940. Under this method, securities are valued by
reference to the Fund's acquisition cost as adjusted for
amortization of premium or accumulation of discount rather than
by reference to their market value. Under Rule 2a-7:
(a)The Board of Directors must establish written
procedures reasonably designed, taking into account
current market conditions and the fund's investment
objectives, to stabilize the fund's net asset value per
share, as computed for the purpose of distribution,
redemption and repurchase, at a single value;
(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, and (iii) maintain a dollar-weighted average
portfolio maturity of 90 days or less;
PAGE 114
(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 under
the amortized cost method; and (ii) the Fund will
continue to use the amortized cost 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.
PAGE 115
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, 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 the Funds are not
eligible for the dividends-received deduction for corporate
PAGE 116
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 by its year-end
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 declare by December 31 98% of capital gains (as
of October 31) in order to avoid a federal excise tax and
distribute within 12 months 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 April 30, 1996, the books of each Fund
indicated that the Fund's aggregate net assets included:
Realized Unrealized
Capital Appreciation/
Gains/(Losses) Depreciation
________________ ___________________
Tax-Exempt Money Fund $(216,299) $ 0
Tax-Free Short-
Intermediate Fund (1,298,300) 5,282,791
Tax-Free Insured Inter-
mediate Bond Fund (677,733) 1,628,166
Tax-Free Income Fund (9,378,648) 50,717,923
Tax-Free High Yield Fund (13,517,641) 37,414,363
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 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 or tax-exempt 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.
PAGE 117
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.
The Money Fund's current yield was 2.91% and the compound
yield was 2.95% for the seven days ended February 29, 1996.
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
PAGE 118
expected reimbursements are deducted from the income to arrive at
net income, which is 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 February 29, 1996 was:
Tax-Free Short-Intermediate 3.51%
Tax-Free Insured Intermediate Bond 3.82%
Tax-Free Income 4.83%
Tax-Free High Yield 5.40%
The tax equivalent yields for these funds for the
same period were 5.09% (Short-Intermediate), 5.54% (Insured
Intermediate), 7.00% (Income), and 7.83% (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 4.88% (Short-Intermediate), 5.31% (Insured Intermediate),
6.71% (Income), and 7.50% (High Yield).
TAX-EXEMPT VS. TAXABLE YIELDS
From time to time, a Fund may also illustrate the
effect of tax equivalent yields using information such as that
set forth below:
_________________________________________________________________
Taxable Income (1995)*
Federal
Joint Return Single Return Tax Rates+
_________________________________________________________________
$40,101- $96,900 $24,001- $58,150 28.0%
96,901- 147,700 58,151- 121,300 31.0
147,701- 263,750 121,301- 263,750 36.0
263,751 and above 263,751 and above 39.6
_________________________________________________________________
A Tax-Exempt Yield Of:
3% 4% 5% 6% 7% 8% 9% 10%
Is Equivalent to a Taxable Yield of:
_________________________________________________________________
4.17 5.56 6.94 8.33 9.72 11.11 12.50 13.89
4.35 5.80 7.25 8.70 10.14 11.59 13.04 14.49
4.69 6.25 7.81 9.38 10.94 12.50 14.06 15.63
PAGE 119
4.97 6.62 8.28 9.93 11.59 13.25 14.90 16.56
* 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.
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
Since
1 Yr. 5 Yrs. 10 Yrs. Inception
Ended Ended Ended Ended
2/29/96 2/29/96 2/29/96 2/29/96
Short-Intermediate Fund 6.87 30.85 71.93 105.53%
12/23/83
Insured Intermediate
Bond Fund 9.57 26.72
11/30/92
Income Fund 10.31 50.08 100.54 293.20
10/26/76
High Yield Fund 10.62 51.70 125.26 179.86
3/01/85
Average Annual Compound Rates of Return
1 Yr. 5 Yrs. 10 Yrs. Since
Ended Ended Ended Inception
2/29/96 2/29/96 2/29/96 2/29/96
Short-Intermediate
Fund 6.87 5.52 5.57 6.09%
PAGE 120
12/23/83
Insured Intermediate
Bond Fund 9.57 7.57
11/30/92
Income Fund 10.31 8.46 7.21 7.34
10/26/76
High Yield Fund 10.62 8.69 8.46 9.81
3/01/85
All Funds
Outside Sources of Information
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;
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 Short Municipal Debt Avg. - an average of municipal
mutual funds that invest in municipal debt issues with dollar-
weighted average maturities of less than five years.
PAGE 121
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;
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.
Other Features and Benefits
The Fund is a member of the T. Rowe Price Family of Funds
and may help investors achieve various long-term investment
goals, such as investing money for retirement, saving for a down
payment on a home, or paying college costs. To explain how the
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 Associates, Inc.
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; 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; the Retirement Planning Kit (also available in a PC
version) includes a detailed workbook to determine how much money
you may need for retirement and suggests how you might invest to
achieve your objectives; and the Retirees Financial Guide which
includes a detailed workbook to determine how much money you can
afford to spend and still preserve your purchasing power and
suggests how you might invest to reach your goal; Tax
PAGE 122
Considerations for Investors discusses the tax advantages of
annuities and municipal bonds and how to access whether they are
suitable for your portfolio, reviews pros and cons of placing
assets in a gift to minors account and summarizes the benefits
and types of tax-deferred retirement plans currently available;
the Personal Strategy Planner simplifies investment decision
making by helping investors define personal financial goals,
established length of time the investor intends to invest,
determine risk "comfort zone" and select a diversified investment
mix; and the How to Choose a Bond Fund guide which discusses how
to choose an appropriate bond fund for your portfolio. From time
to time, other worksheets and guides may be made available as
well. Of course, an investment in the Fund cannot guarantee that
such goals will be met.
To assist investors in understanding the different returns
and risk characteristics of various investments, the
aforementioned guides will include presentation of historical
returns of various investments using published indices. An
example of this is shown below.
Historical Returns for Different Investments
Annualized returns for periods ended 12/31/95
50 years 20 years 10 years 5 years
Small-Company Stocks 13.8% 19.6% 11.9% 24.5%
Large-Company Stocks 11.9 14.6 14.8 16.6
Foreign Stocks N/A 15.1 13.9 9.7
Long-Term Corporate Bonds 5.7 10.5 11.2 12.1
Intermediate-Term U.S.
Gov't. Bonds 5.9 9.7 9.1 8.8
Treasury Bills 4.8 7.3 5.5 4.3
U.S. Inflation 4.4 5.2 3.5 2.8
Sources: Ibbotson Associates, Morgan Stanley. Foreign stocks
reflect performance of The Morgan Stanley Capital International
EAFE Index, which includes some 1,000 companies representing the
stock markets of Europe, Australia, New Zealand, and the Far
East. This chart is for illustrative purposes only and should
not be considered as performance for, or the annualized return
of, any T. Rowe Price Fund. Past performance does not guarantee
future results.
Also included will be various portfolios demonstrating how
these historical indices would have performed in various
PAGE 123
combinations over a specified time period in terms of return. An
example of this is shown below.
Performance of Retirement Portfolios*
Asset Mix Average Annualized Value
Returns 20 Years of
Ended 12/31/95 $10,000
Investment
After Period
________________ __________________ ____________
Nominal Real BestWorst
Portfolio Growth IncomeSafety ReturnReturn** YearYear
I. Low
Risk 40% 40% 20% 11.8% 6.5% 24.9% 0.1% $ 92,675
II. Moderate
Risk 60% 30% 10% 13.1% 7.9% 29.1% -1.8%$116,826
III. High
Risk 80% 20% 0% 14.3% 9.1% 33.4% -5.2%$145,611
Source: T. Rowe Price Associates; data supplied by Lehman
Brothers, Wilshire Associates and Ibbotson Associates.
* Based on actual performance for the 20 years ended 1995 of
stocks (85% Wilshire 5000 and 15% Europe, Australia, Far
East [EAFE] Index), bonds (Lehman Brothers Aggregate Bond
Index from 1976-95 and 30-day Treasury bills from January
1976 through December 1995. Past performance does not
guarantee future results. Figures include changes in
principal value and reinvested dividends and assume the same
asset mix is maintained each year. This exhibit is for
illustrative purposes only and is not representative of the
performance of any T. Rowe Price fund.
** Based on inflation rate of 5.2% for the 20-year period ended
12/31/95.
Insights
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,
PAGE 124
fixed income investing, investing in mortgage-backed securities,
as well as other topics and strategies.
Other Publications
From time to time, in newsletters and other publications
issued by T. Rowe Price Investment Services, Inc., reference may
be made to economic, financial and political developments in the
U.S. and abroad and their effect on securities prices. Such
discussions may take the form of commentary on these developments
by T. Rowe Price mutual fund portfolio managers and their views
and analysis on how such developments could affect investments in
mutual funds.
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.
Short-Intermediate, Insured Intermediate Bond, Income and High
Yield Funds
PAGE 125
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
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
PAGE 126
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. 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, LLP, whose address is
919 Third Avenue, New York, New York 10022, is legal counsel to
each of the Funds.
PAGE 127
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., 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 29, 1996 and the report of independent accountants
are included in each Fund's Annual Report on pages 1-12, pages 1-
11, and pages 1-18, 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 29, 1996, 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 29, 1996 1-7 1-12
Statement of Operations, year ended
February 29, 1996 8 13
Statement of Changes in Net Assets,
years ended February 29, 1996 and
February 28, 1995 9 14
Notes to Financial Statements,
February 29, 1996 10 15-16
Financial Highlights 11 17
Insured
Intermediate
Bond Fund
Annual Report Page
_________________
Report of Independent Accountants 11
Statement of Net Assets
February 29, 1996 1-5
Statement of Operations, year ended February 29, 1996 6
Statement of Changes in Net Assets, years ended
February 29, 1996 and February 28, 1995 7
Notes to Financial Statements, February 29, 1996 8-9
Financial Highlights, February 29, 1996 10
Short-Intermediate
Fund
Annual
Report Page
PAGE 128
__________________
Report of Independent Accountants 14
Portfolio of Investments,
February 29, 1996 1-7
Statement of Assets and Liabilities
February 29, 1996 8
Statement of Operations, year ended February 29, 1996 9
Statement of Changes in Net Assets, years ended
February 29, 1996 and February 28, 1995 10
Notes to Financial Statements,
February 29, 1996 11-12
Financial Highlights 13
PAGE 129
Income Fund
Annual
Report Page
_______________
Report of Independent Accountants 16
Statement of Net Assets,
February 29, 1996 1-11
Statement of Operations, year ended
February 29, 1996 12
Statement of Changes in Net Assets,
years ended February 29, 1996 and
February 28, 1995 13
Notes to Financial Statements,
February 29, 1996 13-15
Financial Highlights 15
Effective March 1, 1995, Coopers & Lybrand L.L.P. became the
independent accountants to the Short-Intermediate and Income
Funds.
PAGE 130
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 (electronically filed with Amendment No. 18
dated April 22, 1994)
(1)(a) Articles of Amendment dated January 1, 1981
(electronically filed with Amendment No. 18 dated
April 22, 1994)
(2) By-Laws of Registrant, as amended June 29, 1981,
January 21, 1988, April 20, 1990, July 1, 1991, and
July 20, 1993 (electronically filed with Amendment
No. 18 dated April 22, 1994)
(3) Inapplicable
(4) Specimen Stock Certificate (filed with Amendment No.
1)
(5) Investment Management Agreement between Registrant
and T. Rowe Price Associates, Inc. (electronically
filed with Amendment No. 18 dated April 22, 1994)
(6) Underwriting Agreement between Registrant and T.
Rowe Price Investment Services, Inc. (electronically
filed with Amendment No. 18 dated April 22, 1994)
(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,
PAGE 131
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, March 1, 1994, April 21, 1994, July
27, 1994, September 21, 1994, November 1, 1994, November 2, 1994,
January 25, 1995, September 20, 1995, October 11, 1995, December
11, 1995, and April 24, 1996.
(8)(b) Subcustodian Agreements between T. Rowe Price Tax-
Free Funds and Irving Trust Company and Morgan
Guaranty Trust Company (filed with Amendment No. 8)
(8)(c) Subcustodian Agreement between Irving Trust Company
and State Street Bank and Trust Company (filed with
Amendment No. 12)
(9)(a) Transfer Agency and Service Agreement between T.
Rowe Price Services, Inc. and T. Rowe Price Funds,
dated January 1, 1996, as amended April 24,
1996.
(9)(b) Agreement between T. Rowe Price Associates, Inc. and
T. Rowe Price Funds for Fund Accounting Services,
dated January 1, 1996, as amended April 24,
1996.
(10) Opinion of Counsel, dated June 17, 1996.
(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.
(17) Financial Data Schedule for the T. Rowe Price Tax-
Exempt Money Fund for the fiscal year ended February
29, 1996.
(18) Inapplicable
(19) Power of Attorney for T. Rowe Price Tax-Exempt Money
Fund, Inc.
PAGE 132
Item 25. Persons Controlled by or Under Common Control With
Registrant.
None.
Item 26. Number of Holders of Securities.
As of May 31, 1996, there were 17,496 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 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 forty-one 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, 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., T. Rowe Price Fixed Income Series, Inc., T. Rowe Price
Personal Strategy Funds, Inc., T. Rowe Price Value Fund, Inc., T.
Rowe Price Capital Opportunity Fund, Inc., T. Rowe Price
Corporate Income Fund, Inc., and T. Rowe Price Health Sciences
Fund, Inc. The Registrant and the forty-one investment companies
listed above, with the exception of Institutional International
Funds, Inc., will be collectively referred to as the Price Funds.
The investment manager for the Price Funds (excluding T. Rowe
PAGE 133
Price International Funds, Inc., T. Rowe Price International
Series, Inc., and Institutional International Funds, Inc.) is the
Manager. Price-Fleming is the 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 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 10.0l 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 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
PAGE 134
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:
(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
PAGE 135
(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.
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.
Price-Fleming was organized in 1979 to provide investment counsel
service with respect to foreign securities for institutional
investors in the United States. In addition to managing private
counsel client accounts, Price-Fleming also sponsors registered
investment companies which invest in foreign securities, serves
PAGE 136
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, individual
retirement accounts and common trust funds and as
trustee/investment agent for two trusts.
T. Rowe Price Threshold Fund Associates, Inc., a wholly-owned
subsidiary of the Manager, is a Maryland corporation organized in
1994 and serves as the general partner of T. Rowe Price Threshold
Fund III, L.P., a Delaware limited partnership established in
1994.
PAGE 137
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.
T. Rowe Price Threshold Fund III, L.P., a Delaware limited
partnership was organized in 1994 by the Manager, and invests in
private financings of small companies with high growth potential;
T. Rowe Price Threshold Fund Associates, Inc. is the General
Partner of this partnership.
RPFI International Partners, L.P., is a Delaware limited
partnership organized in 1985 for the purpose of investing in a
diversified group of small and medium-sized non-U.S. companies.
Price-Fleming is the general partner of this partnership, and
certain institutional investors, including advisory 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, 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 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
PAGE 138
Partner of T. Rowe Price Recovery Fund, L.P., a Delaware limited
partnership which invests in financially distressed companies.
T. Rowe Price (Canada), Inc. ("TRP Canada") 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 as a non-Canadian
Adviser under the Securities Act (Ontario). TRP Canada provides
certain services to the RPF International Bond Fund, a trust
(whose shares are sold in Canada), and Price-Fleming serves as
investment adviser to TRP Canada.
T. Rowe Price Insurance Agency, Inc., is a wholly-owned
subsidiary of T. Rowe Price Associates, Inc. organized in
Maryland in 1994 and licensed to do business in several states to
act primarily as an insurance agency in connection with the sale
of the Price Funds' variable annuity products.
TRP Management, Inc., is a Maryland corporation wholly-owned
by T. Rowe Price Associates, Inc. which was originally organized
in 1990 as T. Rowe Price Industrial Advantage Fund I Management,
Inc. In 1993, the name was changed to TRP Management, Inc. The
subsidiary, in conjunction with CUNA Mutual Insurance Society and
CUNA Service Group, Inc., established a Maryland limited
liability company known as CMC--T. Rowe Price Management LLC.
This company sponsored a family of no-load mutual funds available
to members of credit unions in the United States ("CUNA Funds").
The CUNA Funds received on order from the SEC which withdrew
their registration under the Investment Company Act of 1940.
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.
PAGE 139
TRP Suburban Second, Inc., a wholly-owned Maryland subsidiary
of T. Rowe Price Associates, Inc., was incorporated in 1995 to
primarily engage in the development and ownership of real
property located in Owings Mills, Maryland.
TRP Finance, Inc., a wholly-owned subsidiary of the Manager,
is a Delaware corporation organized in 1990 to manage certain
passive corporate investments and other intangible assets.
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., ("Strategic Partners"), a Delaware limited partnership
whose general partner is T. Rowe Price Strategic Partners
Associates, Inc., a Maryland corporation which is a wholly-owned
subsidiary of the Manager. Strategic Partners also serves as the
general partner of T. Rowe Price Strategic Partners Fund II,
L.P., a Delaware limited partnership established 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.
RICHARD L. MENSCHEL, Director of the Manager. Mr. Menschel is
a limited partner of The Goldman Sachs Group, L.P. Mr.
Menschel's address is 85 Broad Street, 2nd Floor, New York, New
York 10004.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is
the Tayloe Murphy Professor, The Darden Graduate School of
Business Administration, 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 and a Director of Hannaford Bros., Co., a food retailer.
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.
PAGE 140
Mr. Walsh's address is: 200 East 66th Street, Apt. A-1005, New
York, New York 10021.
ANNE MARIE WHITTEMORE, Director of the Manager. Mrs.
Whittemore is a partner of the law firm of McGuire, Woods, Battle
& Boothe and is a director of Owens & Minor, Inc.; USF&G
Corporation; and the James River Corporation. Mrs. Whittemore's
address is One James Center, Richmond, Virginia 23219.
With the exception of Messrs. Halbkat, Menschel, Rosenblum,
Strickland, Walsh, and Mrs. Whittemore, 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.
Carter O. Hoffman, who is a Managing Director of the Manager,
is also a Director of TRP Finance, Inc.
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.
George A. Murnaghan, Vice President of the Manager, Executive
Vice President of Price-Fleming.
Robert P. Campbell, Roger L. Fiery, III, Veena A. Kutler,
Heather R. Landon, Nancy M. Morris, Robert W. Smith, William F.
Wendler, II, and Edward A. Wiese, who are Vice Presidents of the
Manager, are Vice Presidents of Price-Fleming.
Michael J. Conelius, who is a Vice President of the Manager,
is a Vice President of Price-Fleming.
R. Aran Gordon, an employee of the Manager, is a Vice
President of Price-Fleming.
Kimberly A. Haker, an Assistant Vice President of the Manager,
is Assistant Vice President and Controller of Price-Fleming.
Todd J. Henry, an employee of the Manager, is a Vice President
of Price-Fleming.
PAGE 141
Kathleen G. Polk, an employee of the Manager, is a Vice
President 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.
(a) The principal underwriter for the Registrant is
Investment Services. Investment Services acts as the principal
underwriter for the other seventy-one 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.
(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 Chairman of the Board Vice President
and Director and Director
Edward C. Bernard President None
Henry Holt Hopkins Vice President and Vice President
Director
PAGE 142
Charles E. Vieth Vice President and None
Director
Mark E. Rayford Director None
Patricia M. Archer Vice President None
Joseph C. Bonasorte Vice President None
Darrell N. Braman 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
James W. Graves Vice President None
Andrea G. Griffin 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
James Link 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
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Kenneth J. Rutherford Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and None
Treasurer
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 S. Butcher Assistant Vice President Assistant
Secretary
Renee M. Christoff Assistant Vice President None
Cheryl L. Emory Assistant Vice President None
John A. Galateria Assistant Vice President None
Douglas E. Harrison Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Kathleen Hussey Assistant Vice President None
Keith J. Langrehr Assistant Vice President None
C. Lillian Matthews Assistant Vice President None
PAGE 143
Janice D. McCrory Assistant Vice President None
Sandra J. McHenry Assistant Vice President None
Mark J. Mitchell 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
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 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.
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 144
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all of the requirements
for effectiveness of this registration statement pursuant to Rule
485(b) under the Securities Act of 1933 and 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 18th day of June, 1996.
T. ROWE PRICE TAX-EXEMPT MONEY
FUND, INC.
/s/Patrice L. Berchtenbreiter
By: Patrice L. Berchtenbreiter
President
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/Patrice L. Berchtenbreiter President June 18, 1996
Patrice L. Berchtenbreiter
/s/George J. Collins Chairman of the Board June 18, 1996
George J. Collins (Cheif Financial Officer)
/s/Carmen F. Deyesu Treasurer June 18, 1996
Carmen F. Deyesu (Chief Financial Officer)
* Director June 18, 1996
Robert P. Black
* Director June 18, 1996
Calvin W. Burnett
* Director June 18, 1996
Anthony W. Deering
* Director June 18, 1996
F. Pierce Linaweaver
/s/William T. Reynolds Vice President and June 18, 1996
William T. Reynolds Director
/s/James S. Riepe Vice President and June 18, 1996
James S. Riepe Director
* Director June 18, 1996
John G. Schreiber
PAGE 145
*/s/Henry H. Hopkins, Attorney-In-Fact
Henry H. Hopkins, Attorney-In-Fact
PAGE 146 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 (electronically filed with Amendment
No. 17 dated April 22, 1994)
(2) By-Laws of Registrant, as amended January 28, 1988,
April 20, 1990, July 1, 1991, and July 20, 1993
(electronically filed with Amendment No. 17 dated
April 22, 1994)
(3) Inapplicable
(4) Specimen Stock Certificate (filed with Amendment No.
1)
(5) Investment Management Agreement between Registrant
and T. Rowe Price Associates, Inc. (electronically
filed with Amendment No. 17 dated June 9, 1995)
(6) Underwriting Agreement between Registrant and T.
Rowe Price Investment Services, Inc. (electronically
filed with Amendment No. 17 dated April 22, 1994)
(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, November 3, 1992,
December 16, 1992, December 21, 1992, January 28,
1993, April 22, 1993, September 16, 1993, November
3, 1993, March 1, 1994, April 21, 1994, July 27,
1994, September 21, 1994, November 1, 1994, November
PAGE 147
2, 1994, January 25, 1995, September 20, 1995, October 11, 1995,
December 11, 1995, and April 24, 1996
(8)(b) Subcustodian Agreements between T. Rowe Price Tax-
Free Funds and Irving Trust Company and Morgan
Guaranty Trust Company (filed with Amendment No. 4)
(8)(c) Subcustodian Agreement between Irving Trust Company
and State Street Bank and Trust Company (filed with
Amendment No. 11)
(9)(a) Transfer Agency and Service Agreement between T.
Rowe Price Services, Inc. and T. Rowe Price Funds,
dated January 1, 1996, as amended April 24,
1996.
(9)(b) Agreement between T. Rowe Price Associates, Inc. and
T. Rowe Price Funds for Fund Accounting Services,
dated January 1, 1996, as amended April 24,
1996.
(10) Opinion of Counsel, dated June 17, 1996.
(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.
(17) Financial Data Schedule for the T. Rowe Price Tax-
Free Short Intermediate Fund for the fiscal year
ended February 29, 1996.
(18) Inapplicable
(19) Power of Attorney for T. Rowe Price Tax-Free Short-
Intermediate Fund, Inc.
Item 25. Persons Controlled by or Under Common Control With
Registrant.
PAGE 148
None.
Item 26. Number of Holders of Securities.
As of May 31, 1996, there were 10,401 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 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 forty-one 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., T. Rowe Price Fixed
Income Series, Inc., T. Rowe Price Personal Strategy Funds, Inc.,
T. Rowe Price Value Fund, Inc., T. Rowe Price Capital Opportunity
Fund, Inc., T. Rowe Price Corporate Income Fund, Inc., and T.
Rowe Price Health Sciences Fund, Inc. The Registrant and the
forty-one investment companies listed above, with the exception
of Institutional International Funds, Inc., will be collectively
referred to as the Price Funds. The investment manager for the
Price Funds (excluding T. Rowe Price International Funds, Inc.,
T. Rowe Price International Series, Inc., and Institutional
International Funds, Inc.) is the Manager. Price-Fleming is the
PAGE 149
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 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 10.0l 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 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 150
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:
(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.
PAGE 151
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.
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.
Price-Fleming was organized in 1979 to provide investment counsel
service with respect to foreign securities for institutional
investors in the United States. In addition to managing private
counsel client accounts, Price-Fleming 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.
PAGE 152
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, individual
retirement accounts and common trust funds and as
trustee/investment agent for two trusts.
T. Rowe Price Threshold Fund Associates, Inc., a wholly-owned
subsidiary of the Manager, is a Maryland corporation organized in
1994 and serves as the general partner of T. Rowe Price Threshold
Fund III, L.P., a Delaware limited partnership established in
1994.
T. Rowe Price Threshold Fund II, L.P., a Delaware limited
partnership, was organized in 1986 by the Manager, and invests in
PAGE 153
private financings of small companies with high growth potential;
the Manager is the General Partner of the partnership.
T. Rowe Price Threshold Fund III, L.P., a Delaware limited
partnership was organized in 1994 by the Manager, and invests in
private financings of small companies with high growth potential;
T. Rowe Price Threshold Fund Associates, Inc. is the General
Partner of this partnership.
RPFI International Partners, L.P., is a Delaware limited
partnership organized in 1985 for the purpose of investing in a
diversified group of small and medium-sized non-U.S. companies.
Price-Fleming is the general partner of this partnership, and
certain institutional investors, including advisory 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, 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 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
PAGE 154
Partner of T. Rowe Price Recovery Fund, L.P., a Delaware limited
partnership which invests in financially distressed companies.
T. Rowe Price (Canada), Inc. ("TRP Canada") 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 as a non-Canadian
Adviser under the Securities Act (Ontario). TRP Canada provides
certain services to the RPF International Bond Fund, a trust
(whose shares are sold in Canada), and Price-Fleming serves as
investment adviser to TRP Canada.
T. Rowe Price Insurance Agency, Inc., is a wholly-owned
subsidiary of T. Rowe Price Associates, Inc. organized in
Maryland in 1994 and licensed to do business in several states to
act primarily as an insurance agency in connection with the sale
of the Price Funds' variable annuity products.
TRP Management, Inc., is a Maryland corporation wholly-owned
by T. Rowe Price Associates, Inc. which was originally organized
in 1990 as T. Rowe Price Industrial Advantage Fund I Management,
Inc. In 1993, the name was changed to TRP Management, Inc. The
subsidiary, in conjunction with CUNA Mutual Insurance Society and
CUNA Service Group, Inc., established a Maryland limited
liability company known as CMC--T. Rowe Price Management LLC.
This company sponsored a family of no-load mutual funds available
to members of credit unions in the United States ("CUNA Funds").
The CUNA Funds received on order from the SEC which withdrew
their registration under the Investment Company Act of 1940.
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.
PAGE 155
TRP Suburban Second, Inc., a wholly-owned Maryland subsidiary
of T. Rowe Price Associates, Inc., was incorporated in 1995 to
primarily engage in the development and ownership of real
property located in Owings Mills, Maryland.
TRP Finance, Inc., a wholly-owned subsidiary of the Manager,
is a Delaware corporation organized in 1990 to manage certain
passive corporate investments and other intangible assets.
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., ("Strategic Partners"), a Delaware limited partnership
whose general partner is T. Rowe Price Strategic Partners
Associates, Inc., a Maryland corporation which is a wholly-owned
subsidiary of the Manager. Strategic Partners also serves as the
general partner of T. Rowe Price Strategic Partners Fund II,
L.P., a Delaware limited partnership established 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.
RICHARD L. MENSCHEL, Director of the Manager. Mr. Menschel is
a limited partner of The Goldman Sachs Group, L.P. Mr.
Menschel's address is 85 Broad Street, 2nd Floor, New York, New
York 10004.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is
the Tayloe Murphy Professor, The Darden Graduate School of
Business Administration, 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 and a Director of Hannaford Bros., Co., a food retailer.
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.
PAGE 166
Mr. Walsh's address is: 200 East 66th Street, Apt. A-1005, New
York, New York 10021.
ANNE MARIE WHITTEMORE, Director of the Manager. Mrs.
Whittemore is a partner of the law firm of McGuire, Woods, Battle
& Boothe and is a director of Owens & Minor, Inc.; USF&G
Corporation; and the James River Corporation. Mrs. Whittemore's
address is One James Center, Richmond, Virginia 23219.
With the exception of Messrs. Halbkat, Menschel, Rosenblum,
Strickland, Walsh, and Mrs. Whittemore, 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.
Carter O. Hoffman, who is a Managing Director of the Manager,
is also a Director of TRP Finance, Inc.
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.
George A. Murnaghan, Vice President of the Manager, Executive
Vice President of Price-Fleming.
Robert P. Campbell, Roger L. Fiery, III, Veena A. Kutler,
Heather R. Landon, Nancy M. Morris, Robert W. Smith, William F.
Wendler, II, and Edward A. Wiese, who are Vice Presidents of the
Manager, are Vice Presidents of Price-Fleming.
Michael J. Conelius, who is a Vice President of the Manager,
is a Vice President of Price-Fleming.
R. Aran Gordon, an employee of the Manager, is a Vice
President of Price-Fleming.
Kimberly A. Haker, an Assistant Vice President of the Manager,
is Assistant Vice President and Controller of Price-Fleming.
Todd J. Henry, an employee of the Manager, is a Vice President
of Price-Fleming.
PAGE 157
Kathleen G. Polk, an employee of the Manager, is a Vice
President 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.
(a) The principal underwriter for the Registrant is
Investment Services. Investment Services acts as the principal
underwriter for the other seventy-one 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.
(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 Chairman of the Board Vice President
and Director and Director
Edward C. Bernard President None
Henry Holt Hopkins Vice President and Vice President
Director
Charles E. Vieth Vice President and None
PAGE 158
Director
Mark E. Rayford Director None
Patricia M. Archer Vice President None
Joseph C. Bonasorte Vice President None
Darrell N. Braman 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
James W. Graves Vice President None
Andrea G. Griffin 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
James Link 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
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Kenneth J. Rutherford Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and None
Treasurer
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 S. Butcher Assistant Vice President Assistant
Secretary
Renee M. Christoff Assistant Vice President None
Cheryl L. Emory Assistant Vice President None
John A. Galateria Assistant Vice President None
Douglas E. Harrison Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Kathleen Hussey 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
PAGE 159
Sandra J. McHenry Assistant Vice President None
Mark J. Mitchell 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
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 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 160
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all of the requirements
for effectiveness of this registration statement pursuant to Rule
485(b) under the Securities Act of 1933 and 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 18th day of June, 1996.
T. ROWE PRICE TAX-FREE SHORT-
INTERMEDIATE FUND, INC.
/s/Mary J. Miller
By: Mary J. Miller
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/Mary J. Miller President and Director June 18, 1996
Mary J. Miller
/s/William T. Reynolds Chairman of the Board June 18, 1996
William T. Reynolds
/s/Carmen F. Deyesu Treasurer June 18, 1996
Carmen F. Deyesu (Chief Financial Officer)
* Director June 18, 1996
Robert P. Black
* Director June 18, 1996
Calvin W. Burnett
/s/George J. Collins Director June 18, 1996
George J. Collins
* Director June 18, 1996
Anthony W. Deering
* Director June 18, 1996
F. Pierce Linaweaver
/s/James S. Riepe Vice President and June 18, 1996
James S. Riepe Director
* Director June 18, 1996
John G. Schreiber
PAGE 161
*/s/Henry H. Hopkins, Attorney-In-Fact
Henry H. Hopkins, Attorney-In-Fact
PAGE 162
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 (electronically filed with initial
Registration Statement on October 15, 1992)
(2) By-Laws of Registrant (electronically filed with
initial Registration Statement on October 15, 1992)
(3) Inapplicable
(4) See Article SIXTH, Capital Stock, Paragraph (b)(1)-
(10) of the Articles of Incorporation, Article II,
Shareholders, Sections 2.01-2.11 and Article VIII,
Capital Stock, Sections 8.01-8.05 of the By-laws
filed as exhibits to this Registration Statement.
(5) Investment Management Agreement between Registrant
and T. Rowe Price Associates, Inc., dated November
3, 1992 (electronically filed with Amendment No. 1
on November 25, 1992)
(6) Underwriting Agreement between Registrant and T.
Rowe Price Investment Services, Inc., dated November
3, 1992 (electronically filed with Amendment No. 1
on November 25, 1992)
(7) Inapplicable
(8) 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, November 3, 1992,
PAGE 163
December 16, 1992, December 21, 1992, January 28, 1993, April 22,
1993, September 16, 1993, November 3, 1993, March 1, 1994, April
21, 1994, July 27, 1994, September 21, 1994, November 1, 1994,
November 2, 1994, January 25, 1995, September 20, 1995, October
11, 1995, December 11, 1995, and April 24, 1996
(9)(a) Transfer Agency and Service Agreement between T.
Rowe Price Services, Inc. and T. Rowe Price Funds,
dated January 1, 1996, as amended April 24, 1996
(9)(b) Agreement between T. Rowe Price Associates, Inc. and
T. Rowe Price Funds for Fund Accounting Services,
dated January 1, 1996, as amended April 24, 1996
(10) Opinion of Counsel, dated June 17, 1996
(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.
(17) Financial Data Schedule for the T. Rowe Price
Insured Intermediate Bond Fund, Inc. for the fiscal
year ended February 29, 1996.
(18) Inapplicable
(19) Power of Attorney for T. Rowe Price Tax-Free Insured
Intermediate Bond Fund, Inc.
Item 25. Persons Controlled by or Under Common Control With
Registrant.
None.
Item 26. Number of Holders of Securities
As of May 31, 1996, there were 4,076 shareholders in the T.
Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
PAGE 164
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 forty-one 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., T. Rowe Price Fixed
Income Series, Inc., T. Rowe Price Personal Strategy Funds, Inc.,
T. Rowe Price Value Fund, Inc., T. Rowe Price Capital Opportunity
Fund, Inc., T. Rowe Price Corporate Income Fund, Inc., and T.
Rowe Price Health Sciences Fund, Inc. The Registrant and the
forty-one investment companies listed above, with the exception
of Institutional International Funds, Inc., will be collectively
referred to as the Price Funds. The investment manager for the
Price Funds (excluding T. Rowe Price International Funds, Inc.,
T. Rowe Price International Series, Inc., and Institutional
International Funds, Inc.) is the Manager. Price-Fleming is the
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 International Holdings
Limited. In addition to the corporate insureds, the policies
PAGE 165
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:
(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
PAGE 166
(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:
(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
PAGE 167
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 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.
Price-Fleming was organized in 1979 to provide investment counsel
service with respect to foreign securities for institutional
investors in the United States. In addition to managing private
counsel client accounts, Price-Fleming 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
PAGE 168
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, individual
retirement accounts and common trust funds and as
trustee/investment agent for two trusts.
T. Rowe Price Threshold Fund Associates, Inc., a wholly-owned
subsidiary of the Manager, is a Maryland corporation organized in
1994 and serves as the general partner of T. Rowe Price Threshold
Fund III, L.P., a Delaware limited partnership established in
1994.
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.
T. Rowe Price Threshold Fund III, L.P., a Delaware limited
partnership was organized in 1994 by the Manager, and invests in
private financings of small companies with high growth potential;
T. Rowe Price Threshold Fund Associates, Inc. is the General
Partner of this partnership.
PAGE 169
RPFI International Partners, L.P., is a Delaware limited
partnership organized in 1985 for the purpose of investing in a
diversified group of small and medium-sized non-U.S. companies.
Price-Fleming is the general partner of this partnership, and
certain institutional investors, including advisory 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, 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 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. ("TRP Canada") 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 as a non-Canadian
Adviser under the Securities Act (Ontario). TRP Canada provides
certain services to the RPF International Bond Fund, a trust
(whose shares are sold in Canada), and Price-Fleming serves as
investment adviser to TRP Canada.
PAGE 170
T. Rowe Price Insurance Agency, Inc., is a wholly-owned
subsidiary of T. Rowe Price Associates, Inc. organized in
Maryland in 1994 and licensed to do business in several states to
act primarily as an insurance agency in connection with the sale
of the Price Funds' variable annuity products.
TRP Management, Inc., is a Maryland corporation wholly-owned
by T. Rowe Price Associates, Inc. which was originally organized
in 1990 as T. Rowe Price Industrial Advantage Fund I Management,
Inc. In 1993, the name was changed to TRP Management, Inc. The
subsidiary, in conjunction with CUNA Mutual Insurance Society and
CUNA Service Group, Inc., established a Maryland limited
liability company known as CMC--T. Rowe Price Management LLC.
This company sponsored a family of no-load mutual funds available
to members of credit unions in the United States ("CUNA Funds").
The CUNA Funds received on order from the SEC which withdrew
their registration under the Investment Company Act of 1940.
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 Suburban Second, Inc., a wholly-owned Maryland subsidiary
of T. Rowe Price Associates, Inc., was incorporated in 1995 to
primarily engage in the development and ownership of real
property located in Owings Mills, Maryland.
TRP Finance, Inc., a wholly-owned subsidiary of the Manager,
is a Delaware corporation organized in 1990 to manage certain
passive corporate investments and other intangible assets.
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
PAGE 171
for expansion or undergoing a restructuring of ownership. The
general partner of the Fund is T. Rowe Price Strategic Partners,
L.P., ("Strategic Partners"), a Delaware limited partnership
whose general partner is T. Rowe Price Strategic Partners
Associates, Inc., a Maryland corporation which is a wholly-owned
subsidiary of the Manager. Strategic Partners also serves as the
general partner of T. Rowe Price Strategic Partners Fund II,
L.P., a Delaware limited partnership established 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.
RICHARD L. MENSCHEL, Director of the Manager. Mr. Menschel is
a limited partner of The Goldman Sachs Group, L.P. Mr.
Menschel's address is 85 Broad Street, 2nd Floor, New York, New
York 10004.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is
the Tayloe Murphy Professor, The Darden Graduate School of
Business Administration, 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 and a Director of Hannaford Bros., Co., a food retailer.
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.
Mr. Walsh's address is: 200 East 66th Street, Apt. A-1005, New
York, New York 10021.
ANNE MARIE WHITTEMORE, Director of the Manager. Mrs.
Whittemore is a partner of the law firm of McGuire, Woods, Battle
& Boothe and is a director of Owens & Minor, Inc.; USF&G
Corporation; and the James River Corporation. Mrs. Whittemore's
address is One James Center, Richmond, Virginia 23219.
With the exception of Messrs. Halbkat, Menschel, Rosenblum,
Strickland, Walsh, and Mrs. Whittemore, all of the directors of
the Manager are employees of the Manager.
PAGE 172
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.
Carter O. Hoffman, who is a Managing Director of the Manager,
is also a Director of TRP Finance, Inc.
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.
George A. Murnaghan, Vice President of the Manager, Executive
Vice President of Price-Fleming.
Robert P. Campbell, Roger L. Fiery, III, Veena A. Kutler,
Heather R. Landon, Nancy M. Morris, Robert W. Smith, William F.
Wendler, II, and Edward A. Wiese, who are Vice Presidents of the
Manager, are Vice Presidents of Price-Fleming.
Michael J. Conelius, who is a Vice President of the Manager,
is a Vice President of Price-Fleming.
R. Aran Gordon, an employee of the Manager, is a Vice
President of Price-Fleming.
Kimberly A. Haker, an Assistant Vice President of the Manager,
is Assistant Vice President and Controller of Price-Fleming.
Todd J. Henry, an employee of the Manager, is a Vice President
of Price-Fleming.
Kathleen G. Polk, an employee of the Manager, is a Vice
President 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.
PAGE 173
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.
(a) The principal underwriter for the Registrant is
Investment Services. Investment Services acts as the principal
underwriter for the other seventy-one 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.
(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 Chairman of the Board Vice President
and Director and Director
Edward C. Bernard President None
Henry Holt Hopkins Vice President and Vice President
Director
Charles E. Vieth Vice President and None
Director
Mark E. Rayford Director None
Patricia M. Archer Vice President None
Joseph C. Bonasorte Vice President None
Darrell N. Braman 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
James W. Graves Vice President None
Andrea G. Griffin Vice President None
David J. Healy Vice President None
PAGE 174
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
James Link 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
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Kenneth J. Rutherford Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and None
Treasurer
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 S. Butcher Assistant Vice President Assistant
Secretary
Renee M. Christoff Assistant Vice President None
Cheryl L. Emory Assistant Vice President None
John A. Galateria Assistant Vice President None
Douglas E. Harrison Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Kathleen Hussey 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
Mark J. Mitchell 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
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 175
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 176
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all of the requirements
for effectiveness of this registration statement pursuant to Rule
485(b) under the Securities Act of 1933 and 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 18th day of June, 1996.
T. ROWE PRICE TAX-FREE INSURED
INTERMEDIATE BOND FUND, INC.
/s/Mary J. Miller
By: Mary J. Miller
President
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/Mary J. Miller President June 18, 1996
Mary J. Miller
/s/Carmen F. Deyesu Treasurer June 18, 1996
Carmen F. Deyesu (Chief Financial Officer)
* Director June 18, 1996
Robert P. Black
* Director June 18, 1996
Calvin W. Burnett
/s/George J. Collins Director June 18, 1996
George J. Collins
* Director June 18, 1996
Anthony W. Deering
* Director June 18, 1996
F. Pierce Linaweaver
/s/William T. Reynolds Director June 18, 1996
William T. Reynolds
/s/James S. Riepe Director June 18, 1996
James S. Riepe
* Director June 18, 1996
John G. Schreiber
PAGE 177
*/s/Henry H. Hopkins, Attorney-In-Fact
Henry H. Hopkins, Attorney-In-Fact
PAGE 178
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, dated
September 24, 1976 (electronically filed with
Amendment No. 20 dated April 22, 1994)
(1)(a) Articles of Amendment, dated November 4, 1976
(electronically filed with Amendment No. 20 dated
April 22, 1994)
(1)(b) Article of Amendment dated May 1, 1981
(electronically filed with Amendment No. 20 dated
April 22, 1994)
(1)(c) Articles of Amendment dated July 1, 1983
(electronically filed with Amendment No. 20 dated
April 22, 1994)
(2) By-Laws of Registrant, 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, and July 20, 1993 (electronically
filed with Amendment No. 20 dated April 22, 1994)
(3) Inapplicable
(4) Specimen Stock Certificate (filed with Amendment No.
2)
(5) Investment Management Agreement between Registrant
and T. Rowe Price Associates, Inc. (electronically
filed with Amendment No. 20 dated April 22, 1994)
(6) Underwriting Agreement between Registrant and T.
Rowe Price Investment Services, Inc. (electronically
filed with Amendment No. 20 dated April 22, 1994)
PAGE 179
(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, November 3, 1992,
December 16, 1992, December 21, 1992, January 28,
1993, April 22, 1993, September 16, 1993, November
3, 1993, March 1, 1994, April 21, 1994, July 27,
1994, September 21, 1994, November 1, 1994, November
2, 1994, January 25, 1995, September 20, 1995,
October 11, 1995, December 11, 1995, and April 24,
1996
(8)(b) Subcustodian Agreements between T. Rowe Price Tax-
Free Funds and Irving Trust Company, and Morgan
Guaranty Trust Company (filed with Amendment No. 10)
(8)(c) Subcustodian Agreement between Irving Trust Company
and State Street Bank and Trust Company, dated
November 30, 1987 (filed with Amendment No. 19)
(9)(a) Transfer Agency and Service Agreement between T.
Rowe Price Services, Inc. and T. Rowe Price Funds,
dated January 1, 1996, as amended April 24, 1996
(9)(b) Agreement between T. Rowe Price Associates, Inc. and
T. Rowe Price Funds for Fund Accounting Services,
dated January 1, 1996, as amended April 24, 1996
(10) Opinion of Counsel, dated June 17, 1996
(11) Consent of Independent Accountants
(12) Inapplicable
(13) Inapplicable
(14) Inapplicable
(15) Inapplicable
(16) Total Return Performance
(17) Financial Data Schedule for the T. Rowe Price Tax-
Free Income Fund, Inc. for the fiscal year ended
February 29, 1996.
PAGE 180
(18) Inapplicable
(19) Power of Attorney for T. Rowe Price Tax-Free Income
Fund, Inc.
Item 25. Persons Controlled by or Under Common Control With
Registrant.
None.
Item 26. Number of Holders of Securities.
As of May 31, 1996, there were 28,712 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 forty-one 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 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., T. Rowe Price Fixed Income Series, Inc., T. Rowe Price
Personal Strategy Funds, Inc., T. Rowe Price Value Fund, Inc., T.
Rowe Price Capital Opportunity Fund, Inc., T. Rowe Price
Corporate Income Fund, Inc., and T. Rowe Price Health Sciences
PAGE 181
Fund, Inc. The Registrant and the forty-one investment companies
listed above, with the exception of Institutional International
Funds, Inc., will be collectively referred to as the Price Funds.
The investment manager for the Price Funds (excluding T. Rowe
Price International Funds, Inc., T. Rowe Price International
Series, Inc., and Institutional International Funds, Inc.) is the
Manager. Price-Fleming is the 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 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 10.0l 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 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.
PAGE 182
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 183
(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.
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.
PAGE 184
Price-Fleming was organized in 1979 to provide investment counsel
service with respect to foreign securities for institutional
investors in the United States. In addition to managing private
counsel client accounts, Price-Fleming 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, individual
retirement accounts and common trust funds and as
trustee/investment agent for two trusts.
PAGE 185
T. Rowe Price Threshold Fund Associates, Inc., a wholly-owned
subsidiary of the Manager, is a Maryland corporation organized in
1994 and serves as the general partner of T. Rowe Price Threshold
Fund III, L.P., a Delaware limited partnership established in
1994.
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.
T. Rowe Price Threshold Fund III, L.P., a Delaware limited
partnership was organized in 1994 by the Manager, and invests in
private financings of small companies with high growth potential;
T. Rowe Price Threshold Fund Associates, Inc. is the General
Partner of this partnership.
RPFI International Partners, L.P., is a Delaware limited
partnership organized in 1985 for the purpose of investing in a
diversified group of small and medium-sized non-U.S. companies.
Price-Fleming is the general partner of this partnership, and
certain institutional investors, including advisory 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, 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
PAGE 186
investment contracts, structured 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. ("TRP Canada") 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 as a non-Canadian
Adviser under the Securities Act (Ontario). TRP Canada provides
certain services to the RPF International Bond Fund, a trust
(whose shares are sold in Canada), and Price-Fleming serves as
investment adviser to TRP Canada.
T. Rowe Price Insurance Agency, Inc., is a wholly-owned
subsidiary of T. Rowe Price Associates, Inc. organized in
Maryland in 1994 and licensed to do business in several states to
act primarily as an insurance agency in connection with the sale
of the Price Funds' variable annuity products.
TRP Management, Inc., is a Maryland corporation wholly-owned
by T. Rowe Price Associates, Inc. which was originally organized
in 1990 as T. Rowe Price Industrial Advantage Fund I Management,
Inc. In 1993, the name was changed to TRP Management, Inc. The
subsidiary, in conjunction with CUNA Mutual Insurance Society and
CUNA Service Group, Inc., established a Maryland limited
liability company known as CMC--T. Rowe Price Management LLC.
This company sponsored a family of no-load mutual funds available
to members of credit unions in the United States ("CUNA Funds").
The CUNA Funds received on order from the SEC which withdrew
their registration under the Investment Company Act of 1940.
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
PAGE 187
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 Suburban Second, Inc., a wholly-owned Maryland subsidiary
of T. Rowe Price Associates, Inc., was incorporated in 1995 to
primarily engage in the development and ownership of real
property located in Owings Mills, Maryland.
TRP Finance, Inc., a wholly-owned subsidiary of the Manager,
is a Delaware corporation organized in 1990 to manage certain
passive corporate investments and other intangible assets.
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., ("Strategic Partners"), a Delaware limited partnership
whose general partner is T. Rowe Price Strategic Partners
Associates, Inc., a Maryland corporation which is a wholly-owned
subsidiary of the Manager. Strategic Partners also serves as the
general partner of T. Rowe Price Strategic Partners Fund II,
L.P., a Delaware limited partnership established 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.
RICHARD L. MENSCHEL, Director of the Manager. Mr. Menschel is
a limited partner of The Goldman Sachs Group, L.P. Mr.
Menschel's address is 85 Broad Street, 2nd Floor, New York, New
York 10004.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is
the Tayloe Murphy Professor, The Darden Graduate School of
Business Administration, 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 and a Director of Hannaford Bros., Co., a food retailer.
PAGE 188
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.
Mr. Walsh's address is: 200 East 66th Street, Apt. A-1005, New
York, New York 10021.
ANNE MARIE WHITTEMORE, Director of the Manager. Mrs.
Whittemore is a partner of the law firm of McGuire, Woods, Battle
& Boothe and is a director of Owens & Minor, Inc.; USF&G
Corporation; and the James River Corporation. Mrs. Whittemore's
address is One James Center, Richmond, Virginia 23219.
With the exception of Messrs. Halbkat, Menschel, Rosenblum,
Strickland, Walsh, and Mrs. Whittemore, 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.
Carter O. Hoffman, who is a Managing Director of the Manager,
is also a Director of TRP Finance, Inc.
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.
George A. Murnaghan, Vice President of the Manager, Executive
Vice President of Price-Fleming.
Robert P. Campbell, Roger L. Fiery, III, Veena A. Kutler,
Heather R. Landon, Nancy M. Morris, Robert W. Smith, William F.
Wendler, II, and Edward A. Wiese, who are Vice Presidents of the
Manager, are Vice Presidents of Price-Fleming.
Michael J. Conelius, who is a Vice President of the Manager,
is a Vice President of Price-Fleming.
R. Aran Gordon, an employee of the Manager, is a Vice
President of Price-Fleming.
Kimberly A. Haker, an Assistant Vice President of the Manager,
is Assistant Vice President and Controller of Price-Fleming.
PAGE 189
Todd J. Henry, an employee of the Manager, is a Vice President
of Price-Fleming.
Kathleen G. Polk, an employee of the Manager, is a Vice
President 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.
(a) The principal underwriter for the Registrant is
Investment Services. Investment Services acts as the principal
underwriter for the other seventy-one 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.
(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 Chairman of the Board Vice President
and Director and Director
PAGE 190
Edward C. Bernard President None
Henry Holt Hopkins Vice President and Vice President
Director
Charles E. Vieth Vice President and None
Director
Mark E. Rayford Director None
Patricia M. Archer Vice President None
Joseph C. Bonasorte Vice President None
Darrell N. Braman 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
James W. Graves Vice President None
Andrea G. Griffin 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
James Link 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
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Kenneth J. Rutherford Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and None
Treasurer
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 S. Butcher Assistant Vice President Assistant
Secretary
Renee M. Christoff Assistant Vice President None
Cheryl L. Emory Assistant Vice President None
John A. Galateria Assistant Vice President None
Douglas E. Harrison Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
PAGE 191
Kathleen Hussey 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
Mark J. Mitchell 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
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
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 192
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all of the requirements
for effectiveness of this registration statement pursuant to Rule
485(b) under the Securities Act of 1933 and 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 18th day of June, 1996.
T. ROWE PRICE TAX-FREE INCOME FUND,
INC.
/s/Mary J. Miller
By: Mary J. Miller
President
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/Mary J. Miller President June 18, 1996
Mary J. Miller (Chief Executive Officer)
/s/William T. Reynolds Chairman of the Board June 18, 1996
William T. Reynolds
/s/Carmen F. Deyesu Treasurer June 18, 1996
Carmen F. Deyesu (Chief Financial Officer)
* Director June 18, 1996
Robert P. Black
* Director June 18, 1996
Calvin W. Burnett
/s/George J. Collins Director June 18, 1996
George J. Collins
* Director June 18, 1996
Anthony W. Deering
* Director June 18, 1996
F. Pierce Linaweaver
/s/James S. Riepe Vice President and June 18, 1996
James S. Riepe Director
* Director June 18, 1996
John G. Schreiber
PAGE 193
*/s/Henry H. Hopkins, Attorney-In-Fact
Henry H. Hopkins, Attorney-In-Fact
PAGE 194
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 (electronically filed with
Amendment No. 14 dated April 22, 1994)
(2) By-Laws of Registrant, as amended January 21, 1988,
April 20, 1990, July 1, 1991, and July 20, 1993
(electronically filed with Amendment No. 14 dated
April 22, 1994)
(3) Inapplicable
(4) Specimen Stock Certificate (filed with Amendment No.
1)
(5) Investment Management Agreement between Registrant
and T. Rowe Price Associates, Inc. (electronically
filed with Amendment No. 14 dated April 22, 1994)
(6) Underwriting Agreement between Registrant and T.
Rowe Price Investment Services, Inc. (electronically
filed with Amendment No. 14 dated April 22, 1994)
(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, November 3, 1992,
December 16, 1992, December 21, 1992, January 28,
1993, April 22, 1993, September 16, 1993, November
3, 1993, March 1, 1994, April 21, 1994, July 27,
1994, September 21, 1994, November 1, 1994, November
PAGE 195
2, 1994, January 25, 1995, September 20, 1995, October 11, 1995,
December 11, 1995, and April 24, 1996
(8)(b) Subcustodian Agreements between T. Rowe Price Tax-
Free Funds and Irving Trust Company and Morgan
Guaranty Trust Company (filed with Amendment No. 7)
(8)(c) Subcustodian Agreement between Irving Trust Company
and State Street Bank and Trust Company, dated
November 30, 1987 (filed with Amendment No. 13)
(9)(a) Transfer Agency and Service Agreement between T.
Rowe Price Services, Inc. and T. Rowe Price Funds,
dated January 1, 1996, as amended April 24, 1996
(9)(b) Agreement between T. Rowe Price Associates, Inc. and
T. Rowe Price Funds for Fund Accounting Services,
dated January 1, 1996, as amended April 24, 1996
(10) Opinion of Counsel, dated June 17, 1996
(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.
(17) Financial Data Schedule for the T. Rowe Price High
Yield Fund for the fiscal year ended February 29,
1996.
(18) Inapplicable
(19) Power of Attorney for T. Rowe Price Tax-Free High
Yield Fund, Inc.
Item 25. Persons Controlled by or Under Common Control With
Registrant.
None.
PAGE 196
Item 26. Number of Holders of Securities.
As of May 31, 1995, there were 25,251 shareholders in the T.
Rowe Price Tax-Free High Yield 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 forty-one 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., T. Rowe Price Fixed Income Series, Inc., T. Rowe Price
Personal Strategy Funds, Inc., T. Rowe Price Value Fund, Inc., T.
Rowe Price Capital Opportunity Fund, Inc., T. Rowe Price
Corporate Income Fund, Inc., and T. Rowe Price Health Sciences
Fund, Inc. The Registrant and the forty-one investment companies
listed above, with the exception of Institutional International
Funds, Inc., will be collectively referred to as the Price Funds.
The investment manager for the Price Funds (excluding T. Rowe
Price International Funds, Inc., T. Rowe Price International
Series, Inc. and Institutional International Funds, Inc.) is the
Manager. Price-Fleming is the 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,
PAGE 197
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:
(a) there is a final decision on the merits by a court
or other body before whom the Proceeding was
PAGE 198
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:
(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
PAGE 199
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.
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.
Price-Fleming was organized in 1979 to provide investment counsel
service with respect to foreign securities for institutional
investors in the United States. In addition to managing private
counsel client accounts, Price-Fleming 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
PAGE 200
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, individual
retirement accounts and common trust funds and as
trustee/investment agent for two trusts.
T. Rowe Price Threshold Fund Associates, Inc., a wholly-owned
subsidiary of the Manager, is a Maryland corporation organized in
1994 and serves as the general partner of T. Rowe Price Threshold
Fund III, L.P., a Delaware limited partnership established in
1994.
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.
T. Rowe Price Threshold Fund III, L.P., a Delaware limited
partnership was organized in 1994 by the Manager, and invests in
private financings of small companies with high growth potential;
PAGE 201
T. Rowe Price Threshold Fund Associates, Inc. is the General
Partner of this partnership.
RPFI International Partners, L.P., is a Delaware limited
partnership organized in 1985 for the purpose of investing in a
diversified group of small and medium-sized non-U.S. companies.
Price-Fleming is the general partner of this partnership, and
certain institutional investors, including advisory 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, 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 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. ("TRP Canada") 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 as a non-Canadian
PAGE 202
Adviser under the Securities Act (Ontario). TRP Canada provides
certain services to the RPF International Bond Fund, a trust
(whose shares are sold in Canada), and Price-Fleming serves as
investment adviser to TRP Canada.
T. Rowe Price Insurance Agency, Inc., is a wholly-owned
subsidiary of T. Rowe Price Associates, Inc. organized in
Maryland in 1994 and licensed to do business in several states to
act primarily as an insurance agency in connection with the sale
of the Price Funds' variable annuity products.
TRP Management, Inc., is a Maryland corporation wholly-owned
by T. Rowe Price Associates, Inc. which was originally organized
in 1990 as T. Rowe Price Industrial Advantage Fund I Management,
Inc. In 1993, the name was changed to TRP Management, Inc. The
subsidiary, in conjunction with CUNA Mutual Insurance Society and
CUNA Service Group, Inc., established a Maryland limited
liability company known as CMC--T. Rowe Price Management LLC.
This company sponsored a family of no-load mutual funds available
to members of credit unions in the United States ("CUNA Funds").
The CUNA Funds received on order from the SEC which withdrew
their registration under the Investment Company Act of 1940.
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 Suburban Second, Inc., a wholly-owned Maryland subsidiary
of T. Rowe Price Associates, Inc., was incorporated in 1995 to
primarily engage in the development and ownership of real
property located in Owings Mills, Maryland.
TRP Finance, Inc., a wholly-owned subsidiary of the Manager,
is a Delaware corporation organized in 1990 to manage certain
passive corporate investments and other intangible assets.
PAGE 203
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., ("Strategic Partners"), a Delaware limited partnership
whose general partner is T. Rowe Price Strategic Partners
Associates, Inc., a Maryland corporation which is a wholly-owned
subsidiary of the Manager. Strategic Partners also serves as the
general partner of T. Rowe Price Strategic Partners Fund II,
L.P., a Delaware limited partnership established 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.
RICHARD L. MENSCHEL, Director of the Manager. Mr. Menschel is
a limited partner of The Goldman Sachs Group, L.P. Mr.
Menschel's address is 85 Broad Street, 2nd Floor, New York, New
York 10004.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is
the Tayloe Murphy Professor, The Darden Graduate School of
Business Administration, 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 and a Director of Hannaford Bros., Co., a food retailer.
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.
Mr. Walsh's address is: 200 East 66th Street, Apt. A-1005, New
York, New York 10021.
ANNE MARIE WHITTEMORE, Director of the Manager. Mrs.
Whittemore is a partner of the law firm of McGuire, Woods, Battle
& Boothe and is a director of Owens & Minor, Inc.; USF&G
Corporation; and the James River Corporation. Mrs. Whittemore's
address is One James Center, Richmond, Virginia 23219.
PAGE 204
With the exception of Messrs. Halbkat, Menschel, Rosenblum,
Strickland, Walsh, and Mrs. Whittemore, 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.
Carter O. Hoffman, who is a Managing Director of the Manager,
is also a Director of TRP Finance, Inc.
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.
George A. Murnaghan, Vice President of the Manager, Executive
Vice President of Price-Fleming.
Robert P. Campbell, Roger L. Fiery, III, Veena A. Kutler,
Heather R. Landon, Nancy M. Morris, Robert W. Smith, William F.
Wendler, II, and Edward A. Wiese, who are Vice Presidents of the
Manager, are Vice Presidents of Price-Fleming.
Michael J. Conelius, who is a Vice President of the Manager,
is a Vice President of Price-Fleming.
R. Aran Gordon, an employee of the Manager, is a Vice
President of Price-Fleming.
Kimberly A. Haker, an Assistant Vice President of the Manager,
is Assistant Vice President and Controller of Price-Fleming.
Todd J. Henry, an employee of the Manager, is a Vice President
of Price-Fleming.
Kathleen G. Polk, an employee of the Manager, is a Vice
President 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.
PAGE 205
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.
(a) The principal underwriter for the Registrant is
Investment Services. Investment Services acts as the principal
underwriter for the other seventy-one 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.
(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 Chairman of the Board Vice President
and Director and Director
Edward C. Bernard President None
Henry Holt Hopkins Vice President and Vice President
Director
Charles E. Vieth Vice President and None
Director
Mark E. Rayford Director None
Patricia M. Archer Vice President None
Joseph C. Bonasorte Vice President None
Darrell N. Braman 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
PAGE 206
James W. Graves Vice President None
Andrea G. Griffin 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
James Link 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
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Kenneth J. Rutherford Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and None
Treasurer
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 S. Butcher Assistant Vice President Assistant
Secretary
Renee M. Christoff Assistant Vice President None
Cheryl L. Emory Assistant Vice President None
John A. Galateria Assistant Vice President None
Douglas E. Harrison Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Kathleen Hussey 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
Mark J. Mitchell 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
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
PAGE 207
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 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 High Yield 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 High Yield 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 208
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all of the requirements
for effectiveness of this registration statement pursuant to Rule
485(b) under the Securities Act of 1933 and 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 18th day of June, 1996.
T. ROWE PRICE TAX-FREE HIGH YIELD
FUND, INC.
/s/C. Stephen Wolfe II
By: C. Stephen Wolfe II
President
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/C. Stephen Wolfe II President June 18, 1996
C. Stephen Wolfe II (Cheif Executive Officer)
/s/William T. Reynolds Chairman of the Board June 18, 1996
William T. Reynolds
/s/Carmen F. Deyesu Treasurer June 18, 1996
Carmen F. Deyesu (Chief Financial Officer)
* Director June 18, 1996
Robert P. Black
* Director June 18, 1996
Calvin W. Burnett
/s/George J. Collins Director June 18, 1996
George J. Collins
* Director June 18, 1996
Anthony W. Deering
* Director June 18, 1996
F. Pierce Linaweaver
/s/James S. Riepe Vice President and June 18, 1996
James S. Riepe Director
* Director June 18, 1996
John G. Schreiber
PAGE 209
*/s/Henry H. Hopkins, Attorney-In-Fact
Henry H. Hopkins, Attorney-In-Fact
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 Income . . . . . . . . . . . . . . . . . . . 22
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
PAGE 31
(SIGNATURES CONTINUED)
T. ROWE PRICE NEW INCOME FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
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
PAGE 32
(SIGNATURES CONTINUED)
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
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
PAGE 33
(SIGNATURES CONTINUED)
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
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 expressly 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.
PAGE 67
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.
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.
PAGE 68
/s/Henry H. Hopkins
_________________________________
By:Henry H. Hopkins, Vice President
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.
PAGE 70
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
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.
PAGE 71
/s/Henry H. Hopkins
__________________________________
By:Henry H. Hopkins, Vice President
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.
PAGE 73
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.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
PAGE 74
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
/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.
PAGE 76
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.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
PAGE 77
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE 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 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.
PAGE 79
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
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 80
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE 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.
PAGE 82
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.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
PAGE 83
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 INTERMEDIATE 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.
PAGE 85
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 86
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
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.
/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 INTERMEDIATE 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 INTERMEDIATE 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 INTERMEDIATE 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 INTERMEDIATE 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:
PAGE 101
AMENDMENT NO. 28 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, March 1, 1994, and April 21, 1994, between State Street
Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of July 27,
1994, by adding thereto the T. Rowe Price Personal Strategy
Balanced Fund, T. Rowe Price Personal Strategy Growth Fund, and
T. Rowe Price Personal Strategy Income Fund, three separate
series of the T. Rowe Price Personal Strategy Funds, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Personal Strategy 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
Agreements, dated July 27, 1994, between the Funds and T. Rowe
Price Associates, Inc. (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 102
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 103
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 INTERMEDIATE 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 104
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
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
/s/Henry H. Hopkins
________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
________________________________________
By:
PAGE 105
AMENDMENT NO. 29 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, March 1, 1994, and April 21, 1994, between State Street
Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of July 27,
1994, by adding thereto the T. Rowe Price Personal Strategy
Balanced Strategy Balanced Portfolio, a separate series of the T.
Rowe Price Equity Series, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Personal Strategy Balanced
Portfolio, a separate series of the T. Rowe Price Equity 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 July
27, 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.
PAGE 106
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 107
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 INTERMEDIATE 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 Personal Strategy Balanced
Portfolio
PAGE 108
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
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
/s/Henry H. Hopkins
________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
________________________________________
By:
PAGE 109
AMENDMENT NO. 30 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, March 1, 1994, April 21, 1994, and July 27, 1994 between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
September 21, 1994, by adding thereto the T. Rowe Price Value
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 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 110
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 111
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 INTERMEDIATE 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 Personal Strategy Balanced
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
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
PAGE 112
T. ROWE PRICE VALUE FUND, INC.
/s/Henry H. Hopkins
________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
________________________________________
By:Carol C. Ayotte, Vice President
PAGE 113
AMENDMENT NO. 31 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, March 1, 1994, April 21, 1994, July 27, 1994, and September
21, 1994 between State Street Bank and Trust Company and each of
the Parties listed on Appendix A thereto is hereby further
amended, as of November 1, 1994, by adding thereto the T. Rowe
Price Virginia Short-Term Tax-Free Bond Fund, a 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 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.
PAGE 114
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
Virginia Short-Term 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
PAGE 115
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 INTERMEDIATE 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 Personal Strategy Balanced
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
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
PAGE 116
T. ROWE PRICE VALUE FUND, INC.
/s/Henry H. Hopkins
________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
________________________________________
By:Carol C. Ayotte, Vice President
PAGE 117
AMENDMENT NO. 32 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, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, and November 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 November 2, 1994, by adding thereto
the T. Rowe Price Capital Opportunity Fund, Inc. and the T. Rowe
Price Emerging Markets 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 Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
PAGE 118
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
Virginia Short-Term 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
PAGE 119
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 INTERMEDIATE 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 Personal Strategy Balanced
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
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
PAGE 120
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
/s/Henry H. Hopkins
________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
________________________________________
By:Carol C. Ayotte, Vice President
PAGE 121
AMENDMENT NO. 33 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, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, and November 2, 1994 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,
1995, by adding thereto the T. Rowe Price Emerging Markets Stock
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 Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
PAGE 122
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
Virginia Short-Term 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
PAGE 123
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 INTERMEDIATE 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 Personal Strategy Balanced
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
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
PAGE 124
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
PAGE 125
AMENDMENT NO. 34 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, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, November 2, 1994, and January 25, 1995,
between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of September 20, 1995, by adding thereto the T. Rowe Price
Corporate Income 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 Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
PAGE 126
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
Virginia Short-Term 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
PAGE 127
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM 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 INTERMEDIATE 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 Personal Strategy Balanced
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
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
PAGE 128
T. ROWE PRICE CORPORATE INCOME FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
PAGE 129
AMENDMENT NO. 35 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, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, November 2, 1994, January 25, 1995,
September 20, 1995, and October 11, 1995, between State Street
Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of November 1,
1995, by adding thereto the T. Rowe Price Global Stock 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 Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
PAGE 130
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
Virginia Short-Term 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
PAGE 131
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., now known as T. ROWE PRICE SHORT-
TERM 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 INTERMEDIATE 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 Personal Strategy Balanced
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
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
PAGE 132
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
PAGE 133
AMENDMENT NO. 36 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, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, November 2, 1994, January 25, 1995,
September 20, 1995, October 11, 1995, and November 1, 1995,
between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of December 11, 1995, by adding thereto the T. Rowe Price
Health Sciences 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 Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
PAGE 134
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
Virginia Short-Term 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
PAGE 135
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., now known as T. ROWE PRICE SHORT-
TERM 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 INTERMEDIATE 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 Personal Strategy Balanced
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
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
PAGE 136
T. ROWE PRICE VALUE FUND, INC.
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
PAGE 137
AMENDMENT NO. 37 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, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, November 2, 1994, January 25, 1995,
September 20, 1995, October 11, 1995, November 1, 1995, and
December 11, 1995, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of April 24, 1996, by adding thereto the T.
Rowe Price Mid-Cap Value Fund, Inc. and Mid-Cap Equity Growth
Fund, a separate series of the Institutional Domestic Equity
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 Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
PAGE 138
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
Virginia Short-Term 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 139
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., now known as T. ROWE PRICE SHORT-
TERM 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 INTERMEDIATE 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 Personal Strategy Balanced
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 140
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
The Transfer Agency and Service Agreement between T. Rowe
Price Services, Inc. and T. Rowe Price Funds, dated January 1,
1996, as amended April 24, 1996.
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 . . . . . . . . . . . 2
1. Receipt of Orders/Payments . . . . . . . . 3
2. Written Redemptions . . . . . . . . . . . 4
3. Transfers . . . . . . . . . . . . . . . . 5
4. Confirmations . . . . . . . . . . . . . . 6
5. Returned Checks and ACH Debits . . . . . . 6
6. Redemptions of Shares under Ten Day Hold . 6
7. Dividends, Distributions and Other
Corporate Actions . . . . . . . . . . . . 8
8. Unclaimed Payments and Certificates . . . 9
9. Books and Records . . . . . . . . . . . . 9
10. Authorized Issued and Outstanding Shares 11
11. Tax Information . . . . . . . . . . . . 11
12. Information to be Furnished to the Fund 12
13. Correspondence . . . . . . . . . . . . . 12
14. Lost or Stolen Securities . . . . . . . 12
15. Telephone Services . . . . . . . . . . . 12
16. Proxies . . . . . . . . . . . . . . . . 13
17. Form N-SAR . . . . . . . . . . . . . . . 13
18. Cooperation With Accountants . . . . . . 13
19. Blue Sky . . . . . . . . . . . . . . . . 13
20. Other Services . . . . . . . . . . . . . 14
21. Fees and Out-of-Pocket Expenses . . . . 14
Article C Representations and Warranties of the Price
Services . . . . . . . . . . . . . . . . . . 15
Article D Representations and Warranties of the Fund . 16
Article E Standard of Care/Indemnification . . . . . . 17
Article F Dual Interests . . . . . . . . . . . . . . . 19
Article G Documentation . . . . . . . . . . . . . . . . 19
Article H References to Price Services . . . . . . . . 20
Article I Compliance with Governmental Rules and
Regulations . . . . . . . . . . . . . . . . . 21
Article J Ownership of Software and Related Material . 21
PAGE 3
Article K Quality Service Standards . . . . . . . . . . 21
Article L As of Transactions . . . . . . . . . . . . . 21
Article M Term and Termination of Agreement . . . . . . 24
Article N Notice . . . . . . . . . . . . . . . . . . . 25
Article O Assignment . . . . . . . . . . . . . . . . . 25
Article P Amendment/Interpretive Provisions . . . . . . 25
Article Q Further Assurances . . . . . . . . . . . . . 25
Article R Maryland Law to Apply . . . . . . . . . . . . 26
Article S Merger of Agreement . . . . . . . . . . . . . 26
Article T Counterparts . . . . . . . . . . . . . . . . 26
Article U The Parties . . . . . . . . . . . . . . . . . 26
Article V Directors, Trustees, Shareholders and
Massachusetts Business Trust . . . . . . . . 26
Article W Captions . . . . . . . . . . . . . . . . . . 27
PAGE 4
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the first day of January, 1996, 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
PAGE 5
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");
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 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:
PAGE 6
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
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.
PAGE 7
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,
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);
PAGE 8
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
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.
PAGE 9
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 thereof
to 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;
PAGE 10
o Notify the Fund on the next business day of the total
number of Shares presented and covered by all such
requests;
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 tax laws;
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
PAGE 11
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.
Procedures and requirements for effecting and accepting
redemption orders from investors by telephone, Tele*Access,
computer, 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
PAGE 12
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. 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. Price Services and the Funds will establish
procedures for the collection of money owed the Fund from
investors who have caused losses due to these returned
items.
6. Redemption of Shares under Ten Day Hold
o Uncollected Funds
Shares purchased by personal, corporate, or
governmental check, or by ACH will be considered
PAGE 13
uncollected until the tenth calendar date following the
trade date of the trade ("Uncollected Funds");
o Good Funds
Shares 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 payment is 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
PAGE 14
good order, Price Services will promptly obtain
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
PAGE 15
rejected and the check returned to the
Shareholder.
o All checkwriting redemptions under $10,000
reported as Uncollected or insufficient funds will
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
PAGE 16
Price Services. If a conflict arises between Section 2
and this Section 7, Section 7 will govern.
7. 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.
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 about 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.
PAGE 17
8. 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
make reasonable attempts to contact shareholders for those
accounts which have significant aged outstanding checks and
those checks meet a specified dollar threshold.
9. 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
PAGE 18
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
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;
PAGE 19
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
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
PAGE 20
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.
PAGE 21
10. 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,
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.
11. 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 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
PAGE 22
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.
12. 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.
13. 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.
14. 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
PAGE 23
services relating to lost, stolen or missing securities as
may be mutually agreed upon by both parties.
15. 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 Representatives shall
require each Shareholder effecting a telephone transaction
to properly identify himself/herself before the transaction
is effected, in accordance with procedures agreed upon
between by both parties. Procedures for processing
telephone 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.
PAGE 24
16. 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.
17. Form N-SAR
Maintain such records, if any, as shall enable the Fund
to fulfill the requirements of Form N-SAR.
18. 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.
19. 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
PAGE 25
for blue sky compliance purposes as shall be agreed upon by
the parties.
20. Other Services
Provide such other services as may be mutually agreed
upon between Price Services and the Fund.
21. 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 26
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
PAGE 27
or Price Services. These charges shall
include:
o telephone toll charges (both incoming
and outgoing, local, long distance and
mailgrams); and
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
PAGE 28
and other funds serviced by Price Services. These costs will be
allocated based on a reasonable allocation methodology. 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;
2. It is duly qualified to carry on its business in
Maryland, California and Florida;
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.
PAGE 29
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
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:
PAGE 30
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
misconduct of Price Services or where Price Services has not
PAGE 31
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 determining Price Services' liability, an isolated
error or omission will normally not be deemed to constitute
negligence when it is determined that:
o Price Services had in place "appropriate procedures".
o the employee(s) responsible for the error or omission
had been reasonably trained and were being
appropriately monitored; and
PAGE 32
o the error or omission did not result from wanton or
reckless conduct on the part of the employee(s).
It is understood that Price Services is not obligated to
have in place separate procedures to prevent each and every
conceivable type of error or omission. The term
"appropriate procedures" shall mean procedures reasonably
designed to prevent and detect errors and omissions. In
determining the reasonableness of such procedures, weight
will be given to such factors as are appropriate, including
the prior occurrence of any similar errors or omissions when
such procedures were in place and transfer agent industry
standards in place at the time of the occurrence.
5. 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.
6. 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
PAGE 33
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.
7. 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.
PAGE 34
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;
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 As applicable, 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
PAGE 35
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;
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 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
PAGE 36
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
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
PAGE 37
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.
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,
PAGE 38
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.
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
PAGE 39
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
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
PAGE 40
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 41
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.
3. In determining Price Services' liability with respect
to a Significant Transaction, an isolated error or
omission will normally not be deemed to constitute
negligence when it is determined that:
o Price Services had in place "appropriate
procedures".
o the employee(s) responsible for the error or
omission had been reasonably trained and were
being appropriately monitored; and
o the error or omission did not result from wanton
or reckless conduct on the part of the
employee(s).
It is understood that Price Services is not obligated
to have in place separate procedures to prevent each
PAGE 42
and every conceivable type of error or omission. The
term "appropriate procedures" shall mean procedures
reasonably designed to prevent and detect errors and
omissions. In determining the reasonableness of such
procedures, weight will be given to such factors as are
appropriate, including the prior occurrence of any
similar errors or omissions when such procedures were
in place and transfer agent industry standards in place
at the time of the occurrence.
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.
PAGE 43
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
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
PAGE 44
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.
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
PAGE 45
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
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
PAGE 46
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.
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: ______________________ T. ROWE PRICE SERVICES, INC.
ATTEST:
/s/Mark E. Rayford
___________________________ BY: _________________________
Mark E. Rayford
PAGE 47
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 CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
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 Personal Strategy Balanced 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 HEALTH SCIENCES 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 48
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 Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock 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 OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
PAGE 49
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
Virginia Short-Term 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-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.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 50
T. ROWE PRICE VALUE FUND, INC.
DATED: ______________________
ATTEST:
/s/Carmen F. Deyesu
_________________________ BY: __________________________
Carmen F. Deyesu
PAGE 51
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 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 Capital Opportunity Fund, Inc.
T. Rowe Price Corporate Income Fund, Inc.
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
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 Personal Strategy Balanced Portfolio
T. Rowe Price Fixed Income Series, Inc. on behalf of the
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 Health Sciences 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
PAGE 52
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 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 Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Series, Inc. on behalf of the
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 Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Personal Strategy Funds, Inc.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price OTC Fund, Inc. on behalf of the
T. Rowe Price OTC Fund
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Short-Term U.S. Government Fund, Inc.
PAGE 53
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
Virginia Short-Term 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 Value Fund, Inc.
T. Rowe Price Summit Funds, Inc. on behalf of the
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. on behalf of the
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
PAGE 54
SCHEDULE A - FEE SCHEDULE
The following fees for services provided by T. Rowe Price
Services, Inc. (TRPS) and vendors will be billed by TRPS for
1996:
I. T. Rowe Price Services Maintenance and Transaction Charges -
Billable Monthly
A. Retail Individual
Retail Individual Account Fee - $14.50 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.
Transaction Fees
1. New Account Fees (billed for all new accounts
setup in excess of 15,000/month)
$2.00 for every account opened, including
fiduciary accounts, excluding those opened by exchange.
2. Non-Automated Transactions (billed for all
transactions in excess of 300,000/month)
a. $1.00 for each non-automated transaction and
maintenance item processed for the Fund Group
as a whole during a month in excess of
300,000. 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 55
d. NOTE: The transaction count should not
include correction of transactions
caused by non-shareholder errors.
3. Telephone Fee (billed for all calls in excess of
110,000/month)
Billed at the rate of $5.00 per call for
shareholder servicing calls received in excess of
110,000 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.
4. Tele*Access
Base fee, per month for all calls is $100,000.
5. Correspondence (for all correspondence in excess
of 10,000/month)
$5.00 billed for each shareholder correspondence
request completed in writing or by phone in excess
of 10,000 a month. Allocated to the Funds based
on accounts serviced.
6. Telephone Transaction Fee (billed for all
telephone transactions in excess of 30,000/month)
Each price dependent transaction initiated through
the Telephone Services Group in excess of 30,000 a
month will be charged $1.00.
B. Retail Retirement Participants - $41.00 for each
Participant serviced.
The Per Participant Annual Fee will be billed monthly
at a rate of 1/12 of the annual fee for each
Participant serviced during the month.
C. Financial Institutions Accounts - $27.00 for each
Equity, Bond, and Money Market Account serviced.
PAGE 56
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.
II. Vendor Fees
A. DST
1. Annual Open Account Fee
a. $1.82 for each Equity Fund account serviced.
b. $4.33 for each Bond Fund account serviced.
c. $4.33 for each Money Market Fund account
serviced.
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 $1.48. 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 $7,422.00 will be charged at a
monthly rate of $618.50. 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.
PAGE 57
5. Bank Account Reconciliation System (Comp/Recon)
Annual charge of $120,000 payable at a rate of
$10,000 per month.
6. TRAC 2000
Century 401(k) plans are charged $5.00 per
eligible employee per year. The ComDisco plan is
charged $4.00 per eligible employee per year.
$7.00 is the maximum fee per participant.
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. $.24 will be billed per call connected to the
VRU. This service will be discontinued
during 1996.
8. Contingent Deferred Sales Charge.
Billed to each Fund utilizing this service at an
annual rate of $1.03 per open account.
9. Asset Allocation
The rate of $1.80 per reallocation group will be
charged for each reallocation.
B. State Street Bank
1. Checkwriting Fees
$.61 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.
PAGE 58
2. ACH Transactions
$.06 for each ACH transaction processed by the
Bank and submitted to the ACH network.
3. Change of Address
$.0625 for each notice printed, addressed, and
mailed. Includes subfile established or changed.
4. Wire Order Invoices - $.07 each.
5. Dividend & Daily Spac Master Forms - $.1225 each.
6. On-Request Work Orders - $25.00 each.
7. Internal Book Transfers
$1.14 billed for money movement between TRP DDA's
at the Bank. Money is transferred by debit and
credit memos.
8. Wire Fees
$4.24 for each incoming, manual, internal bank
transfer and outgoing transmission wire.
9. Paid checks
$.20 for each paid check processed.
10. PAC Checks
$.0475 billed for eah PAC check printed and mailed
in bulk to TRP.
11. Nightly Audits
$.0325 per page for the audit of the DST nightly
update.
12. Research
DDA Research copies $1.09 each.
PAGE 59
Research for BFDS records will be billed at $3.00
per request for CAMR and other purchase items.
Other research is billed at $7.20 per request.
There will be no charge for items that were
processed via IMAGE that TRP cannot locate on
film. Transcripts are not covered under this
schedule.
13. VAX Computer Usage
Billed at the rate of $8,709.56 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.
14. Abandoned Property
Services based on the following fee schedule:
a. Administrative charge $125/Fund
b. Processing charges $1.00/account
c. Due Diligence Mailings $1.35/account
d. Labor will be charged based on the number of
hours required.
e. Lost shareholder recovery $2.25/account
initial attempt
$5.00/s/o
any s/o located
15. NSCC Settlement
Settlement redemption $11.98
Settlement purchase $ 5.45
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
PAGE 60
Batch File Transfer (BFT)
Transmission $15.00
(capped at 10 per month) each
Outgoing Wires
Straight-through (Repetitive or Freetype)
80% of total volume $3.25
Book Transfer (IBT) $1.50
Repair (Freeform) $7.00
Zero Balance Transfer $1.00
Incoming Wires
Fed or CHIPS $3.25
Book (IBT) $1.50
D. Bank of Boston
1. Controlled Disbursement Fees
Annual Account Maintenance $300.00
per
account
Annual Prior Day Balance Reporting Detail
Transmission $600.00
per
account
Annual Batch File Transfer (BFT)
Service $120 per
account
BFT Transmission $.003 each
Same Day Match Pay (Dividend & Redemption Checks)
CD Full Recon/Daily Match Fixed $120.00
per
account
CD Full Recon/Daily Match Items $.025 per
item
Checks Paid $.036 per
item
PAGE 61
Check Truncation
Fixed $120.00
per
account
Items $.011 per
item
Stops
On-line $7.00
Photos of Checks $4.00 per
item
Incoming Wires $5.00 per
item
On-Line Inquiry Report Terminal $3.50 per
item
2. 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.
E. First National Bank of Maryland
1. Internal Fund Transfer $6.00
2. Returned Items $2.50
3. Deposit Items
Charge varies 1
4. Deposit Tickets $0.50
5. Return/redeposit items $3.00
6. Deposit Corrections $4.50
7. Check copy $9.00
8. First Facts
CDA Repetitive Wire $3.95
System Reports/Per Module $27.00
Per Report Previous Day $1.80
Per Report Current Day $3.60
9. Account maintenance $12.25
10. Debit item $0.54
11. Credit transaction $0.54
____________________
1Charge varies by District, $ .0267 to $ .1167
PAGE 62
12. Foreign Deposit Check amount $1,000-$4,999
$7.50
$5,000-19,999
$15.00
over $20,000
$20.00
13. ACH Debit $0.117
14. Tax Deposits $0.90
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
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 ______________________ TITLE ________________________
DATE ______________________ DATE _________________________
PAGE 63
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,
1996, between T. Rowe Price Services, Inc. and each of the
Parties listed on Appendix A thereto is hereby amended, as of
April 24, 1996, by adding thereto the T. Rowe Price Mid-Cap Value
Fund, Inc. and Mid-Cap Equity Growth Fund, a separate series of
the Institutional Domestic Equity Funds, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM 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 CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
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 Personal Strategy Balanced
Portfolio
PAGE 64
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 HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth 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 Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 65
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 OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE 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
Virginia Short-Term 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
PAGE 66
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
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
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
______________________ ______________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary
Attest: T. ROWE PRICE SERVICES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
______________________ ______________________________
Barbara A. Van Horn, 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, 1996, as amended April 24, 1996.
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
Associates . . . . . . . . . . . . . . . . . . 3
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
Regulations . . . . . . . . . . . . . . . . . . 6
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
PAGE 3
Article U Directors, Trustee and Shareholders and
Massachusetts Business Trust . . . . . . . . . 8
Article V Captions . . . . . . . . . . . . . . . . . . . 9
PAGE 4
AGREEMENT made as of the first day of January, 1996, 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;
WHEREAS, the Board of Directors of the Fund has authorized
the Fund to utilize various pricing services for the purpose of
providing to Price Associates securities prices for the
calculation of the Fund's net asset value.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
PAGE 5
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;
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,
PAGE 6
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
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
PAGE 7
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
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 methodology 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.
PAGE 8
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.
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
PAGE 9
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.
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)
PAGE 10
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. 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.
PAGE 11
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
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.
PAGE 12
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
such information by duly constituted governmental authorities; or
(c) after so requested by the other party hereto.
PAGE 13
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.
PAGE 14
M. 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
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
PAGE 15
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.
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.
PAGE 16
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
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
PAGE 17
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.
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.
PAGE 18
DATED: ______________________ T. ROWE PRICE ASSOCIATES, INC.
ATTEST:
/s/Barbara A. Van Horn /s/Alvin M. Younger, Jr.
______________________________ BY: __________________________
Barbara A. Van Horn, Managing Director
Assistant Secretary
PAGE 19
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 CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
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 personal Strategy Balanced
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 HEALTH SCIENCES 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 20
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 Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock 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. on behalf of the:
T. Rowe Price OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND,
INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
PAGE 21
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
Virginia Short-Term 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
T. ROWE PRICE SUMMIT FUNDS, INC.on behalf of
the:
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. on
behalf of the:
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
PAGE 22
DATED: ______________________ T. ROWE PRICE FUNDS
ATTEST:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
______________________________ BY: ___________________________
Patricia S. Butcher, Carmen F. Deyesu
Assistant Secretary
PAGE 23
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 Capital Opportunity Fund, Inc.
T. Rowe Price Corporate Income Fund, Inc.
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
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 Personal Strategy Balanced
Portfolio
T. Rowe Price Fixed Income Series, Inc. on
behalf of the:
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 Health Sciences Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
PAGE 24
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.
T. Rowe Price International Funds, Inc. on
behalf of the:
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 Income
Fund
T. Rowe Price Latin American Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock 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. on behalf of
the:
T. Rowe Price OTC Fund
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 Short-Term U.S. Government
Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
PAGE 25
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
Virginia Short-Term Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Bond
Fund
Georgia Tax-Free Bond Fund
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
PAGE 26
T. Rowe Price Summit Municipal Funds, Inc. on
behalf of the:
Summit Municipal Money Market Fund
Summit Municipal Intermediate Fund
Summit Municipal Income Fund
T. Rowe Price Value Fund, Inc.
PAGE 27
FUND ACCOUNTING SERVICES FEE SCHEDULE
Between
T. ROWE PRICE ASSOCIATES, INC.
And
THE T. ROWE PRICE FUNDS
January 1, 1996 to December 31, 1996
PAGE 28
FUND ACCOUNTING SERVICES
1996 FEE SCHEDULE
A.Fee Structure
1. Base Fee
Domestic Funds $60,000 each
International Funds $100,000 each
Spectrum Funds $45,000 each
Per Fund fee for basic recordkeeping
and financial reporting
2. Individual Fund Fee
Total fees reflecting special $ 968,000
characteristics of each Fund
3. Stock Lending Fee
Flat fee reflecting $ 75,000
monitoring of Security Lending Program
4. Additional Funds
Domestic Funds $60,000 each
International Funds $100,000 each
Spectrum Funds $45,000 each
B. Total Cost Per Fund
Growth Stock Fund $ 104,000
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 70,000
PAGE 29
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
New Asia Fund 110,000
Spectrum Growth Fund 45,000
GNMA Fund 120,000
International Bond Fund 125,000
Balanced Fund 90,000
Maryland Bond Fund 81,000
Tax-Free Short Intermediate Fund 90,000
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 45,000
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
Short-Term U.S. Government Fund 100,000
Virginia Bond Fund 65,000
New Jersey Bond Fund 65,000
Global Government Bond Fund 100,000
OTC Fund 85,000
Japan Fund 100,000
Mid-Cap Growth Fund 60,000
Short-Term Global Fund 110,000
Maryland Short-Term Tax-Free Bond Fund 65,000
Florida Insured Intermediate Tax-Free Fund 65,000
Georgia Tax-Free Bond Fund 65,000
Tax-Free Insured Intermediate Bond Fund 65,000
Blue Chip Growth Fund 60,000
Dividend Growth Fund 65,000
Latin America Fund 110,000
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
PAGE 30
International Stock Portfolio 100,000
Personal Strategy Income Fund 70,000
Equity Income Portfolio 60,000
Personal Strategy Balanced Fund 70,000
New America Growth Portfolio 60,000
Personal Strategy Growth Fund 70,000
Limited-Term Bond Portfolio 60,000
Value Fund 60,000
Virginia Short-Term Tax Free Bond Fund 60,000
Capital Opportunity Fund 60,000
Emerging Markets Bond Fund 100,000
Personal Strategy Balanced Portfolio 60,000
Corporate Income Fund 70,000
Global Stock Fund 100,000
Heath Sciences 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 _________________________ Date ______________________
PAGE 31
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,
1996, between T. Rowe Price Associates, Inc. and each of the
Parties listed on Appendix A thereto is hereby amended, as of
April 24, 1996, by adding thereto the T. Rowe Price Mid-Cap Value
Fund, Inc. and Mid-Cap Equity Growth Fund, a separate series of
the Institutional Domestic Equity Funds, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM 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 CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
PAGE 32
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
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 HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth 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 Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
PAGE 33
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
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 OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE 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
Virginia Short-Term Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
PAGE 34
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
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
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
________________________ ___________________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary
Attest: T. ROWE PRICE ASSOCIATES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
________________________ ___________________________________
Barbara A. Van Horn, By: Henry H. Hopkins,
Assistant Secretary Managing Director
PAGE 1
June 17, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: T. Rowe Price Tax-Exempt Money Fund, Inc.
(File Nos.: 002-67029/811-3055)
Commissioners:
We are counsel to the above-referenced registrant which
proposes to file, pursuant to paragraph (b) of Rule 485 (the
"Rule"), Post-Effective Amendment No. 30 (the "Amendment") to its
registration statement under the Securities Act of 1933, as
amended.
Pursuant to paragraph (b)(4) of the Rule, we represent that
the Amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b) of the
Rule.
Sincerely,
/s/Shereff, Friedman, Hoffman &
Goodman, LLP
Shereff, Friedman, Hoffman & Goodman,
LLP
PAGE 2
June 17, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
(File Nos.: 002-87059/811-3872)
Commissioners:
We are counsel to the above-referenced registrant which
proposes to file, pursuant to paragraph (b) of Rule 485 (the
"Rule"), Post-Effective Amendment No. 23 (the "Amendment") to its
registration statement under the Securities Act of 1933, as
amended.
Pursuant to paragraph (b)(4) of the Rule, we represent that
the Amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b) of the
Rule.
Sincerely,
/s/Shereff, Friedman, Hoffman &
Goodman, LLP
Shereff, Friedman, Hoffman & Goodman,
LLP
PAGE 3
June 17, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: T. Rowe Price Tax-Free Income Fund, Inc.
(File Nos.: 002-57265/811-2684)
Commissioners:
We are counsel to the above-referenced registrant which
proposes to file, pursuant to paragraph (b) of Rule 485 (the
"Rule"), Post-Effective Amendment No. 41 (the "Amendment") to its
registration statement under the Securities Act of 1933, as
amended.
Pursuant to paragraph (b)(4) of the Rule, we represent that
the Amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b) of the
Rule.
Sincerely,
/s/Shereff, Friedman, Hoffman &
Goodman, LLP
Shereff, Friedman, Hoffman & Goodman,
LLP
PAGE 4
June 17, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: T. Rowe Price Tax-Free Insured
Intermediate Bond Fund, Inc
(File Nos.: 033-49117/811-7051)
Commissioners:
We are counsel to the above-referenced registrant which
proposes to file, pursuant to paragraph (b) of Rule 485 (the
"Rule"), Post-Effective Amendment No. 6 (the "Amendment") to its
registration statement under the Securities Act of 1933, as
amended.
Pursuant to paragraph (b)(4) of the Rule, we represent that
the Amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b) of the
Rule.
Sincerely,
/s/Shereff, Friedman, Hoffman &
Goodman, LLP
Shereff, Friedman, Hoffman & Goodman,
LLP
PAGE 5
June 17, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: T. Rowe Price Tax-Free High Yield Fund, Inc.
(File Nos.: 002-94641/811-4163)
Commissioners:
We are counsel to the above-referenced registrant which
proposes to file, pursuant to paragraph (b) of Rule 485 (the
"Rule"), Post-Effective Amendment No. 18 (the "Amendment") to its
registration statement under the Securities Act of 1933, as
amended.
Pursuant to paragraph (b)(4) of the Rule, we represent that
the Amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b) of the
Rule.
Sincerely,
/s/Shereff, Friedman, Hoffman &
Goodman, LLP
Shereff, Friedman, Hoffman & Goodman,
LLP
PAGE 1
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
T. Rowe Price Tax-Exempt Money Fund, Inc.
We consent to the incorporation by reference in Post-
Effective Amendment No. 30 to the Registration Statement of the
T. Rowe Price Tax-Exempt Money Fund, Inc. (the"Fund") on Form N-
1A (File No. 2-67029) of our report dated March 19, 1996, 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 29, 1996, 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 L.L.P.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
June 17, 1996
PAGE 2
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
We consent to the incorporation by reference in Post-
Effective Amendment No. 6 to the Registration Statement of T.
Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc. (the
"Fund") on Form N-1A (File No. 33-49117) of our report dated
March 19, 1996, 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 29,
1996, 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 L.L.P.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
June 17, 1996
PAGE 3
CONSENT OF INDEPENDENT ACCOUNTANTS
To 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. 18 to the Registration Statement of T.
Rowe Price Tax-Free High Yield Fund, Inc. (the "Fund") on Form N-
1A (File No. 02-94641) of our report dated March 19, 1996, 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 29, 1996, which is
incorporated by reference in the Registration Statement. We also
consent to the reference to our Firm under the captions
"Financial Highlights" int he Prospectus and "Independent
Accountants" in the Statement of Additional Information.
/s/Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
June 17, 1996
PAGE 4
CONSENT OF INDEPENDENT ACCOUNTANTS
To Board of Directors of
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
We consent to the incorporation by reference in Post-
Effective Amendment No. 18 to the Registration Statement of T.
Rowe Price Tax-Free Short-Intermediate Fund, Inc. (the "Fund") on
Form N-1A (File No. 02-87059) of our report dated March 19, 1996,
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 29, 1996, 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 L.L.P.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
June 17, 1996
PAGE 5
CONSENT OF INDEPENDENT ACCOUNTANTS
To Board of Directors of
T. Rowe Price Tax-Free Income Fund, Inc.
We consent to the incorporation by reference in Post-
Effective Amendment No. 41 to the Registration Statement of T.
Rowe Price Tax-Free Income Fund, Inc. (the "Fund") on Form N-1A
(File No. 02-57265) of our report dated March 19, 1996, 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 29, 1996, 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 L.L.P.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
June 17, 1996
PAGE 6
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information constituting
parts of this Post-Effective Amendment No. 23 to the Registration
Statement on Form N-1A ("the Registration Statement") of our
report dated March 17, 1995, relating to the financial statements
and selected per share data and ratios appearing in the February
28, 1995 Annual Report to Shareholders of the T. Rowe Price Tax-
Free Short-Intermediate Fund, Inc. We also consent to the
references 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 LLP
PRICE WATERHOUSE LLP
Baltimore, Maryland
June 17, 1996
PAGE 7
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
T. Rowe Price Tax-Free Income Fund, Inc.
We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information constituting
parts of this Post-Effective Amendment No. 41 to the Registration
Statement on Form N-1A ("the Registration Statement") of our
report dated March 17, 1995, relating to the financial statements
and selected per share data and ratios appearing in the February
28, 1995 Annual Report to Shareholders of the T. Rowe Price Tax-
Free Income Fund, Inc. We also consent to the references 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 LLP
PRICE WATERHOUSE LLP
Baltimore, Maryland
June 17, 1996
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<FISCAL-YEAR-END> FEB-29-1996
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Page 1
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
POWER OF ATTORNEY
RESOLVED, that the Corporation and each of its directors do
hereby constitute and authorize, William T. Reynolds, Joel H.
Goldberg, and Henry H. Hopkins, and each of them individually,
their true and lawful attorneys and agents to take any and all
action and execute any and all instruments which said attorneys
and agents may deem necessary or advisable to enable the
Corporation to comply with the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
any rules, regulations, orders or other requirements of the
United States Securities and Exchange Commission thereunder, in
connection with the registration under the Securities Act of
1933, as amended, of shares of the Corporation, to be offered by
the Corporation, and the registration of the Corporation under
the Investment Company Act of 1940, as amended, including
specifically, but without limitation of the foregoing, power and
authority to sign the name of the Corporation on its behalf, and
to sign the names of each of such directors and officers on his
behalf as such director or officer to any amendment or supplement
(including Post-Effective Amendments) to the Registration
Statement on Form N-1A of the Corporation filed with the
Securities and Exchange Commission under the Securities Act of
1933, as amended, and the Registration Statement on Form N-1A of
the Corporation under the Investment Company Act of 1940, as
amended, and to any instruments or documents filed or to be filed
as a part of or in connection with such Registration Statement.
IN WITNESS WHEREOF, the Corporation has caused these
presents to be signed by its Chairman of the Board and the same
attested by its Secretary, each thereunto duly authorized by its
Board of Directors, and each of the undersigned has hereunto set
his hand and seal as of the day set opposite his name.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
/s/George J. Collins
By:________________________________________
George J. Collins, Chairman of the Board
April 23, 1996
Attest:
/s/Lenora V. Hornung
_____________________________
Lenora V. Hornung, Secretary
(Signatures Continued)
/s/George J. Collins Chairman of the Board
________________________Principal Executive Officer) April 23, 1996
George J. Collins
/s/Carmen F. Deyesu Treasurer
_________________________(Principal Financial Officer)April 23, 1996
Carmen F. Deyesu
/s/Patrice L. Berchtenbreiter
_________________________ President April 23, 1996
Patrice L. Berchtenbreiter
/s/Robert P. Black
_________________________ Director April 23, 1996
Robert P. Black
/s/Calvin W. Burnett
_________________________ Director April 23, 1996
Calvin W. Burnett
/s/Anthony W. Deering
_________________________ Director April 23, 1996
Anthony W. Deering
/s/F. Pierce Linaweaver
_________________________ Director April 23, 1996
F. Pierce Linaweaver
/s/William T. Reynolds
_________________________Vice President and Director April 23, 1996
William T. Reynolds
/s/James S. Riepe
_________________________ Vice President and DirectorApril 23, 1996
James S. Riepe
/s/John G. Schreiber
_________________________ Director April 23, 1996
John G. Schreiber
Page 1
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
POWER OF ATTORNEY
RESOLVED, that the Corporation and each of its directors do
hereby constitute and authorize, William T. Reynolds, Joel H.
Goldberg, and Henry H. Hopkins, and each of them individually,
their true and lawful attorneys and agents to take any and all
action and execute any and all instruments which said attorneys
and agents may deem necessary or advisable to enable the
Corporation to comply with the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
any rules, regulations, orders or other requirements of the
United States Securities and Exchange Commission thereunder, in
connection with the registration under the Securities Act of
1933, as amended, of shares of the Corporation, to be offered by
the Corporation, and the registration of the Corporation under
the Investment Company Act of 1940, as amended, including
specifically, but without limitation of the foregoing, power and
authority to sign the name of the Corporation on its behalf, and
to sign the names of each of such directors and officers on his
behalf as such director or officer to any amendment or supplement
(including Post-Effective Amendments) to the Registration
Statement on Form N-1A of the Corporation filed with the
Securities and Exchange Commission under the Securities Act of
1933, as amended, and the Registration Statement on Form N-1A of
the Corporation under the Investment Company Act of 1940, as
amended, and to any instruments or documents filed or to be filed
as a part of or in connection with such Registration Statement.
IN WITNESS WHEREOF, the Corporation has caused these presents
to be signed by its President and the same attested by its
Secretary, each thereunto duly authorized by its Board of
Directors, and each of the undersigned has hereunto set his hand
and seal as of the day set opposite his name.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
/s/William T. Reynolds
By:____________________________________
William T. Reynolds, Chairman of the Board
April 23, 1996
Attest:
/s/Lenora V. Hornung
_____________________________
Lenora V. Hornung, Secretary
(Signatures Continued)
PAGE 2
/s/William T. Reynolds Chairman of the Board
____________________(Principal Executive Officer) April 23, 1996
William T. Reynolds
/s/Carmen F. Deyesu Treasurer
____________________(Principal Financial Officer) April 23, 1996
Carmen F. Deyesu
/s/Robert P. Black
____________________ Director April 23, 1996
Robert P. Black
/s/Calvin W. Burnett
____________________ Director April 23, 1996
Calvin W. Burnett
/s/George J. Collins
____________________ Director April 23, 1996
George J. Collins
/s/Anthony W. Deering
____________________ Director April 23, 1996
Anthony W. Deering
/s/F. Pierce Linaweaver
____________________ Director April 23, 1996
F. Pierce Linaweaver
/s/Mary J. Miller
____________________ President and Director April 23, 1996
Mary J. Miller
/s/James S. Riepe
____________________Vice President and Director April 23, 1996
James S. Riepe
/s/John G. Schreiber
____________________ Director April 23, 1996
John G. Schreiber
Page 1
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
POWER OF ATTORNEY
RESOLVED, that the Corporation and each of its directors do
hereby constitute and authorize, William T. Reynolds, Joel H.
Goldberg, and Henry H. Hopkins, and each of them individually,
their true and lawful attorneys and agents to take any and all
action and execute any and all instruments which said attorneys
and agents may deem necessary or advisable to enable the
Corporation to comply with the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
any rules, regulations, orders or other requirements of the
United States Securities and Exchange Commission thereunder, in
connection with the registration under the Securities Act of
1933, as amended, of shares of the Corporation, to be offered by
the Corporation, and the registration of the Corporation under
the Investment Company Act of 1940, as amended, including
specifically, but without limitation of the foregoing, power and
authority to sign the name of the Corporation on its behalf, and
to sign the names of each of such directors and officers on his
behalf as such director or officer to any amendment or supplement
(including Post-Effective Amendments) to the Registration
Statement on Form N-1A of the Corporation filed with the
Securities and Exchange Commission under the Securities Act of
1933, as amended, and the Registration Statement on Form N-1A of
the Corporation under the Investment Company Act of 1940, as
amended, and to any instruments or documents filed or to be filed
as a part of or in connection with such Registration Statement.
IN WITNESS WHEREOF, the Corporation has caused these
presents to be signed by its Chairman of the Board and the same
attested by its Secretary, each thereunto duly authorized by its
Board of Directors, and each of the undersigned has hereunto set
his hand and seal as of the day set opposite his name.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
/s/William T. Reynolds
By:_____________________________________
William T. Reynolds, Chairman of the Board
April 23, 1996
Attest:
/s/Lenora V. Hornung
_____________________________
Lenora V. Hornung, Secretary
(Signatures Continued)
PAGE 2
/s/William T. Reynolds Chairman of the Board
______________________(Principal Executive Officer) April 23, 1996
William T. Reynolds
/s/Carmen F. Deyesu Treasurer
______________________(Principal Financial Officer) April 23, 1996
Carmen F. Deyesu
/s/Mary J. Miller
______________________ President April 23, 1996
Mary J. Miller
/s/Robert P. Black
______________________ Director April 23, 1996
Robert P. Black
/s/Calvin W. Burnett
______________________ Director April 23, 1996
Calvin W. Burnett
/s/George J. Collins
______________________ Director April 23, 1996
George J. Collins
/s/Anthony W. Deering
______________________ Director April 23, 1996
Anthony W. Deering
/s/F. Pierce Linaweaver
______________________ Director April 23, 1996
F. Pierce Linaweaver
/s/James S. Riepe
______________________Vice President and Director April 23, 1996
James S. Riepe
/s/John G. Schreiber
______________________ Director April 23, 1996
John G. Schreiber
Page 1
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
POWER OF ATTORNEY
RESOLVED, that the Corporation and each of its directors do
hereby constitute and authorize, William T. Reynolds, Joel H.
Goldberg, and Henry H. Hopkins, and each of them individually,
their true and lawful attorneys and agents to take any and all
action and execute any and all instruments which said attorneys
and agents may deem necessary or advisable to enable the
Corporation to comply with the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
any rules, regulations, orders or other requirements of the
United States Securities and Exchange Commission thereunder, in
connection with the registration under the Securities Act of
1933, as amended, of shares of the Corporation, to be offered by
the Corporation, and the registration of the Corporation under
the Investment Company Act of 1940, as amended, including
specifically, but without limitation of the foregoing, power and
authority to sign the name of the Corporation on its behalf, and
to sign the names of each of such directors and officers on his
behalf as such director or officer to any amendment or supplement
(including Post-Effective Amendments) to the Registration
Statement on Form N-1A of the Corporation filed with the
Securities and Exchange Commission under the Securities Act of
1933, as amended, and the Registration Statement on Form N-1A of
the Corporation under the Investment Company Act of 1940, as
amended, and to any instruments or documents filed or to be filed
as a part of or in connection with such Registration Statement.
IN WITNESS WHEREOF, the Corporation has caused these
presents to be signed by its Chairman of the Board and the same
attested by its Secretary, each thereunto duly authorized by its
Board of Directors, and each of the undersigned has hereunto set
his hand and seal as of the day set opposite his name.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
/s/William T. Reynolds
By:______________________________________
William T. Reynolds, Chairman of the Board
April 23, 1996
Attest:
/s/Lenora V. Hornung
_____________________________
Lenora V. Hornung, Secretary
(Signatures Continued)
PAGE 2
/s/William T. Reynolds Chairman of the Board
_________________________(Principal Executive Officer)April 23, 1996
William T. Reynolds
/s/Carmen F. Deyesu Treasurer
________________________(Principal Financial Officer)April 23, 1996
Carmen F. Deyesu
/s/Mary J. Miller
________________________ President April 23, 1996
Mary J. Miller
/s/Robert P. Black
________________________ Director April 23, 1996
Robert P. Black
/s/Calvin W. Burnett
________________________ Director April 23, 1996
Calvin W. Burnett
/s/George J. Collins
________________________ Director April 23, 1996
George J. Collins
/s/Anthony W. Deering
________________________ Director April 23, 1996
Anthony W. Deering
/s/F. Pierce Linaweaver
________________________ Director April 23, 1996
F. Pierce Linaweaver
/s/James S. Riepe
________________________Vice President and Director April 23, 1996
James S. Riepe
/s/John G. Schreiber
________________________ Director April 23, 1996
John G. Schreiber
Page 1
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
POWER OF ATTORNEY
RESOLVED, that the Corporation and each of its directors do
hereby constitute and authorize, William T. Reynolds, Joel H.
Goldberg, and Henry H. Hopkins, and each of them individually,
their true and lawful attorneys and agents to take any and all
action and execute any and all instruments which said attorneys
and agents may deem necessary or advisable to enable the
Corporation to comply with the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
any rules, regulations, orders or other requirements of the
United States Securities and Exchange Commission thereunder, in
connection with the registration under the Securities Act of
1933, as amended, of shares of the Corporation, to be offered by
the Corporation, and the registration of the Corporation under
the Investment Company Act of 1940, as amended, including
specifically, but without limitation of the foregoing, power and
authority to sign the name of the Corporation on its behalf, and
to sign the names of each of such directors and officers on his
behalf as such director or officer to any amendment or supplement
(including Post-Effective Amendments) to the Registration
Statement on Form N-1A of the Corporation filed with the
Securities and Exchange Commission under the Securities Act of
1933, as amended, and the Registration Statement on Form N-1A of
the Corporation under the Investment Company Act of 1940, as
amended, and to any instruments or documents filed or to be filed
as a part of or in connection with such Registration Statement.
IN WITNESS WHEREOF, the Corporation has caused these
presents to be signed by its Chairman of the Board and the same
attested by its Secretary, each thereunto duly authorized by its
Board of Directors, and each of the undersigned has hereunto set
his hand and seal as of the day set opposite his name.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
/s/William T. Reynolds
By:________________________________________
William T. Reynolds, Chairman of the Board
April 23, 1996
Attest:
/s/Lenora V. Hornung
_____________________________
Lenora V. Hornung, Secretary
(Signatures Continued)
PAGE 2
/s/William T. Reynolds
_____________________ Chairman of the Board April 23, 1996
William T. Reynolds (Principal Executive Officer)
/s/Carmen F. Deyesu Treasurer
_____________________(Principal Financial Officer) April 23, 1996
Carmen F. Deyesu
/s/C. Stephen Wolfe, II
_____________________ President April 23, 1996
C. Stephen Wolfe II
/s/Robert P. Black
_____________________ Director April 23, 1996
Robert P. Black
/s/Calvin W. Burnett
_____________________ Director April 23, 1996
Calvin W. Burnett
/s/George J. Collins
_____________________ Director April 23, 1996
George J. Collins
/s/Anthony W. Deering
_____________________ Director April 23, 1996
Anthony W. Deering
/s/F. Pierce Linaweaver
_____________________ Director April 23, 1996
F. Pierce Linaweaver
/s/James S. Riepe
_____________________ Vice President and Director April 23, 1996
James S. Riepe
/s/John G. Schreiber
_____________________ Director April 23, 1996
John G. Schreiber
