PRICE T ROWE INTERNATIONAL FUNDS INC
485BPOS, 2000-02-18
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<PAGE>

                      Registration Nos. 002-65539/811-2958

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933          /X/

         Post-Effective Amendment No. 76                          /X/

                                     AND/OR

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940  /X/

         Amendment No. 60                                         /X/

                    T. ROWE PRICE INTERNATIONAL FUNDS, INC.
                    ---------------------------------------
                Exact Name of Registrant as Specified in Charter

                100 East Pratt Street, Baltimore, Maryland 21202
                ------------------------------------------------
                     Address of Principal Executive Offices

                                  410-345-2000
                                  ------------
               Registrant's Telephone Number, Including Area Code

                                Henry H. Hopkins
                100 East Pratt Street, Baltimore, Maryland 21202
                ------------------------------------------------
                     Name and Address of Agent for Service

           Approximate Date of Proposed Public Offering March 1, 2000
                                                        -------------

         It is proposed that this filing will become effective (check
         appropriate box):

/ /      Immediately upon filing pursuant to paragraph (b)
/X/      On March 1, 2000, pursuant to paragraph (b)
/ /      60 days after filing pursuant to paragraph (a)(1)
/ /      On (date), pursuant to paragraph (a)(1)
/ /      75 days after filing pursuant to paragraph (a)(2)
/ /      On (date) pursuant to paragraph (a)(2) of Rule 485

         If appropriate, check the following box:

/ /      This post-effective amendment designates a new effective date for a
         previously filed post-effective amendment.
<PAGE>


<PAGE>

PROSPECTUS
March 1, 2000
T. ROWE PRICE


International Funds--EquityPortfolios


 A choice of global, international, and regional stock funds for investors
 seeking long-term capital growth by diversifying beyond U.S. borders.
(T. ROWE PRICE RAM LOGO)
 The Securities and Exchange Commission has not approved or disapproved these
 securities or passed upon the adequacy of this prospectus. Any representation
 to the contrary is a criminal offense.
<PAGE>

T. Rowe Price International Funds, Inc.
  T. Rowe Price International Stock Fund
  T. Rowe Price International Growth & Income Fund
  T. Rowe Price Global Stock Fund
  T. Rowe Price International Discovery Fund
  T. Rowe Price Emerging Markets Stock Fund
  T. Rowe Price European Stock Fund
  T. Rowe Price Japan Fund
  T. Rowe Price Latin America Fund
  T. Rowe Price New Asia Fund
Prospectus

March 1, 2000


<TABLE>
<CAPTION>
<S>      <C>  <C>                                       <C>
              ABOUT THE FUNDS
1
              Objective, Strategy, Risks, and Expenses    1

              -----------------------------------------------
              Other Information About the Funds           1
                                                          3
              -----------------------------------------------


              ABOUT YOUR ACCOUNT
2
              Pricing Shares and Receiving                1
              Sale Proceeds                               5
              -----------------------------------------------
              Distributions and Taxes                     1
                                                          7
              -----------------------------------------------
              Transaction Procedures and                  2
              Special Requirements                        0
              -----------------------------------------------


              MORE ABOUT THE FUNDS
3
              Organization and Management                 2
                                                          3
              -----------------------------------------------
              Understanding Performance Information       2
                                                          6
              -----------------------------------------------
              Investment Policies and Practices           2
                                                          7
              -----------------------------------------------
              Financial Highlights                        3
                                                          3
              -----------------------------------------------


              INVESTING WITH T. ROWE PRICE
4
              Account Requirements                        3
              and Transaction Information                 7
              -----------------------------------------------
              Opening a New Account                       3
                                                          7
              -----------------------------------------------
              Purchasing Additional Shares               39

              -----------------------------------------------
              Exchanging and Redeeming                   39

              -----------------------------------------------
              Rights Reserved by the Funds                4
                                                          1
              -----------------------------------------------
              Information About Your                      4
               Services                                   2
              -----------------------------------------------
              T. Rowe Price                               4
               Brokerage                                  4
              -----------------------------------------------
              Investment Information                      4
                                                          5
              -----------------------------------------------
</TABLE>



 Rowe Price-Fleming International, Inc. ("Price-Fleming"), the investment
manager, was founded in 1979 as a joint venture between T. Rowe Price
Associates, Inc. and Robert Fleming Holdings, Ltd. As of December 31, 1999,
Price-Fleming managed $42.6 billion in foreign stocks and bonds through its
offices in Baltimore, London, Tokyo, Singapore, Hong Kong, Buenos Aires, and
Paris.
 Mutual fund shares are not deposits or obligations of, or guaranteed by, any
depository institution. Shares are not insured by the FDIC, Federal Reserve, or
any other government agency, and are subject to investment risks, including
possible loss of the principal amount invested.
<PAGE>

 ABOUT THE FUNDS

 OBJECTIVE, STRATEGY, RISKS, AND EXPENSES
 ----------------------------------------------------------
   To help you decide whether any of T. Rowe Price's international equity funds
   are appropriate for you, this section reviews each fund's investment
   objective, strategy, and potential risks.


 What are each fund's objectives and principal investment strategies?


 Worldwide funds:

   International Stock Fund
   Objective: The fund seeks long-term growth of capital through investments
   primarily in the common stocks of established, non-U.S. companies.

   Strategy: We expect to invest substantially all of the fund's assets outside
   the U.S. and to diversify broadly among developed and emerging countries
   throughout the world. Stock selection reflects a growth style. We may
   purchase the stocks of companies of any size, but our focus will typically be
   on large and, to a lesser extent, medium-sized companies.

     Growth Investing
     Selection of common stocks reflects a growth style. Price-Fleming employs
     in-depth fundamental research in an effort to identify companies capable of
     achieving and sustaining above-average, long-term earnings growth. We seek
     to purchase such stocks at reasonable prices in relation to present or
     anticipated earnings, cash flow, or book value, and valuation factors often
     influence our allocations among large-, mid-, or small-cap shares.

     While we invest with an awareness of the global economic backdrop and our
     outlook for individual countries, bottom-up stock selection is the focus of
     our decision-making. Country allocation is driven largely by stock
     selection, though we may limit investments in markets that appear to have
     poor overall prospects.

     In selecting stocks, we generally favor companies with one or more of the
     following characteristics:

     . leading market position;

     . attractive business niche;

     . strong franchise or natural monopoly;

     . technological leadership or proprietary advantages;

     . seasoned management;


     . earnings growth and cash flow sufficient to support growing dividends;
       and

     . healthy balance sheet with relatively low debt.
<PAGE>


T. ROWE PRICE
   International Growth & Income Fund

   Objective: The fund seeks long-term growth of capital and reasonable income
   through investments primarily in the common stocks of well-established,
   dividend-paying non-U.S. companies.

   Strategy: We expect to invest substantially all of the fund's assets outside
   the U.S. and to diversify broadly, primarily among the world's developed
   countries. The fund will invest primarily (at least 65% of total assets) in
   the stocks of dividend-paying large, well-established companies that have
   favorable prospects for capital appreciation, as determined by Price-Fleming.
   Investments in emerging markets will be modest and limited to more mature
   developing countries.

   In selecting common stocks, we combine proprietary quantitative analysis with
   bottom-up research and a global, regional, and country outlook. Our investing
   style reflects both a growth and a value orientation, although in general we
   place less emphasis on above-average earnings growth and more on "value"
   characteristics such as above-average dividend yields or below-average
   price/earnings or price/book value ratios. Valuation factors often influence
   our allocations among large-, mid-, or small-cap shares. Country allocation
   is driven largely by stock selection, though we may limit investments in
   markets that appear to have poor overall prospects.

   Global Stock Fund
   Objective: The fund seeks long-term growth of capital through investments
   primarily in the common stocks of established companies throughout the world,
   including the U.S.

   Strategy: We will diversify broadly by investing in a variety of industries
   in developed and, to a lesser extent, emerging markets. Normally, the fund
   will invest in at least five countries, one of which will be the U.S. The
   stock selection reflects a growth style. (See Growth Investing under
   International Stock Fund.) While we can purchase stocks without regard to a
   company's market capitalization (shares outstanding multiplied by share
   price), investments will generally be in large and, to a lesser extent,
   medium-sized companies. The percentage of assets invested in U.S. and foreign
   stocks will vary over time according to the manager's outlook.


   International Discovery Fund
   Objective: The fund seeks long-term growth of capital through investments
   primarily in the common stocks of rapidly growing, small to medium-sized
   companies outside the U.S.


   Strategy: We expect to invest substantially all of the fund's assets outside
   the U.S. and to diversify broadly among developed and emerging countries
   throughout the world. Stock selection reflects a growth style. (See Growth
   Investing under International Stock Fund.) The fund will emphasize small to
   medium-sized companies. Depending on conditions, the fund's portfolio should
   be composed of at least 10 countries and 100 different companies.
<PAGE>


ABOUT THE FUNDS
   Emerging Markets Stock Fund

   Objective: The fund seeks long-term growth of capital through investments
   primarily in the common stocks of companies located (or with primary
   operations) in emerging markets.

   Strategy: Normally, the fund expects to invest substantially all of its
   assets across emerging markets in Latin America, Asia, Europe, Africa, and
   the Middle East. Stock selection reflects a growth style. (See Growth
   Investing under International Stock Fund.) An emerging market includes any
   country defined as emerging or developing by the International Bank for
   Reconstruction and Development (World Bank), the International Finance
   Corporation, or the United Nations.

   Countries in which the fund may invest are listed below and others will be
   added as opportunities develop:


  . Asia: China, Hong Kong, Indonesia, India, Korea, Malaysia, Pakistan,
   Philippines, Singapore, Sri Lanka, Taiwan, Thailand, and Vietnam.

  . Latin America: Argentina, Belize, Brazil, Chile, Colombia, Mexico, Panama,
   Peru, and Venezuela.


  . Europe: Croatia, Czech Republic, Estonia, Greece, Hungary, Latvia,
   Lithuania, Poland, Romania, Russia, Slovakia, Slovenia, and Turkey.

  . Africa and the Middle East: Botswana, Egypt, Israel, Jordan, Mauritius,
   Morocco, Nigeria, South Africa, Tunisia, and Zimbabwe.


 Regional or country funds:

   European Stock Fund
   Objective: The fund seeks long-term growth of capital through investments
   primarily in the common stocks of European companies. Current income is a
   secondary objective.


   Strategy: Normally, at least five countries will be represented in the
   portfolio. The fund expects to invest substantially all of its assets in the
   countries listed below, as well as others as their markets develop:

  . Primary Emphasis: Austria, Denmark, Finland, France, Germany, Ireland,
   Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland,
   and United Kingdom.

  . Others: Belgium, Czech Republic, Greece, Hungary, Israel, Poland, and
   Turkey.

   Stock selection reflects a growth style. (See Growth Investing under
   International Stock Fund.) We also seek to take advantage of opportunities
   arising from such trends as privatization, the reduction of trade barriers,
   progress toward economic and monetary union, and the potential growth of the
   emerging economies of Eastern Europe.
<PAGE>


T. ROWE PRICE
   Japan Fund

   Objective: The fund seeks long-term growth of capital through investments in
   common stocks of companies located (or with primary operations) in Japan.

   Strategy: Normally, the fund expects to invest substantially all of its
   assets across a wide range of Japanese industries and companies. Stock
   selection reflects a growth style. (See Growth Investing under International
   Stock Fund.)

   Note: For special pricing and transaction information about the Japan Fund,
   please see Pricing Shares and Receiving Sale Proceeds in Section 2.

   Latin America Fund

   Objective: The fund seeks long-term growth of capital through investments
   primarily in the common stocks of companies located (or with primary
   operations) in Latin America.

   Strategy: Normally, we expect to invest substantially all of the fund's
   assets in Latin American companies. At least four countries should be
   represented at any time. Investments may be made in the countries below, as
   well as others as their markets develop:

  . Primary Emphasis: Mexico, Brazil, Chile, Argentina, Venezuela, and Peru.

  . Others: Belize, Colombia, Ecuador, and Guatemala.


   Stock selection reflects a growth style. (See Growth Investing under
   International Stock Fund.) We may make substantial investments (at times more
   than 25% of total assets) in the telephone companies of various Latin
   American countries. These utilities play a critical role in a country's
   economic development. The fund is registered as "nondiversified," meaning it
   may invest a greater portion of assets in a single company and own more of
   the company's voting securities than is permissible for a "diversified" fund.
   In some markets, such as Brazil, the fund may purchase preferred stock
   because of its liquidity advantage over common stock.

   New Asia Fund

   Objective: The fund seeks long-term growth of capital through investments in
   companies located (or with primary operations) in Asia (excluding Japan).

   Strategy: Normally, the fund expects to invest substantially all of its
   assets in the countries listed below, as well as others as their markets
   develop:

  . Primary Emphasis:  China, Hong Kong, Indonesia, India, Malaysia,
   Philippines, Singapore, South Korea, Taiwan, and Thailand.

  . Others:  Pakistan and Vietnam.

   Stock selection reflects a growth style. (See Growth Investing under
   International Stock Fund.)
<PAGE>


ABOUT THE FUNDS

<TABLE>
 Table 1  International Funds Comparison Guide
<CAPTION>
                                                                        Expected risk
                                 Geographic               Company        relative to
  Fund                              focus                 emphasis       one another
                                                                                       -----
 <S>                     <C>                          <C>               <C>            <S>

  International Stock             Worldwide                Large,         Moderate
                              (excluding U.S.)        well established
                         --------------------------------------------------------------
  International Growth            Worldwide                Large,         Moderate
  & Income                    (excluding U.S.)        well established
                         --------------------------------------------------------------
  Global Stock                    Worldwide                Large,           Lower
                              (including U.S.)        well established
                         --------------------------------------------------------------
  International                   Worldwide               Small to         Higher
  Discovery                   (excluding U.S.)          medium-sized
                         --------------------------------------------------------------
  Emerging Markets                Worldwide              All sizes         Highest
  Stock                       (excluding U.S.)
                         --------------------------------------------------------------
  European Stock                   Europe                All sizes        Moderate
                         (including Eastern Europe)
                         --------------------------------------------------------------
  Japan                             Japan                All sizes         Higher
                         --------------------------------------------------------------
  Latin America                 Latin America            All sizes         Highest
                         --------------------------------------------------------------
  New Asia               Far East and Pacific Basin      All sizes         Highest
                              (excluding Japan)
 -------------------------------------------------------------------------------------------
</TABLE>




   Normally, each fund (other than Latin America) invests primarily (at least
   65% of total assets) in common stocks. Normally, the Latin America Fund will
   invest at least 65% of its total assets in equity securities, with a majority
   in common stocks. To a lesser extent, the funds may also purchase other
   securities, including futures and options, in keeping with each fund's
   objectives.

   Each fund may sell securities for a variety of reasons, such as to secure
   gains, limit losses, or redeploy assets into more promising opportunities.


 What are the main risks of investing in the funds?

   As with all stock funds, each fund's share price can fall because of weakness
   in one or more of its primary equity markets, a particular industry, or
   specific holdings. Stock markets can decline for many reasons, including
   adverse political or economic developments, changes in investor psychology,
   or heavy institutional selling. The prospects for an industry or company may
   deteriorate because of a variety of factors, including disappointing earnings
   or changes in the competitive environment. In addition, our assessment of
   companies held in a fund may prove incorrect, resulting in losses or poor
   performance even in rising markets.

   The risk profile of the funds varies with the investment style they pursue,
   their geographic focus, and whether they invest in developed markets,
   emerging markets, or both. Even investments in countries with highly
   developed economies are subject to significant risks. For example, Japanese
   stocks were in a steep decline for much of the 1990s.

   Funds that invest overseas generally carry more risk than funds that invest
   strictly in U.S. assets. Some particular risks affecting these funds include
   the following:
<PAGE>


T. ROWE PRICE

  . Currency risk  This refers to a decline in the value of a foreign currency
   versus the U.S. dollar, which reduces the dollar value of securities
   denominated in that currency. The overall impact on a fund's holdings can be
   significant and long-lasting depending on the currencies represented in the
   portfolio, how each one appreciates or depreciates in relation to the U.S.
   dollar, and whether currency positions are hedged. Under normal conditions,
   the funds do not engage in extensive foreign currency hedging programs.
   Further, exchange rate movements are unpredictable and it is not possible to
   effectively hedge the currency risks of many developing countries.

  . Geographic risk (Japan and regional funds)  Funds that are less diversified
   across geographic regions, countries, industries, or individual companies are
   generally riskier than more diversified funds. Thus, for example, investors
   in the Japan Fund are fully exposed to that country's economic cycles, stock
   market valuations, and currency exchange rates, which could increase its
   risks compared with a more diversified fund. In addition, investors in Japan
   should be aware of specific problems, including tax laws that discourage
   consumer spending and dampen growth, deflation, a banking system burdened
   with bad loans, and the government's unsatisfactory progress on effecting
   credible solutions to these problems. And, there is additional risk with the
   nondiversified Latin America Fund, because it can invest more of its assets
   in a smaller number of companies and may invest significantly in telephone
   companies. The economies and financial markets of certain regions - such as
   Latin America and Asia -can be highly interdependent and may decline all at
   the same time.

  . Emerging market risk (Emerging Markets Stock, Latin America, New Asia; other
   funds to a lesser degree, except Japan)  Investments in emerging markets are
   subject to abrupt and severe price declines. The economic and political
   structures of developing nations, in most cases, do not compare favorably
   with the U.S. or other developed countries in terms of wealth and stability,
   and their financial markets often lack liquidity. These economies may rely
   heavily on particular industries and be more vulnerable to the ebb and flow
   of international trade, trade barriers, and other protectionist or
   retaliatory measures. Some countries have legacies of hyperinflation and
   currency devaluations, particularly Russia, many Latin American nations, and
   more recently, several Asian countries. Investments in countries or regions
   that have recently begun moving away from central planning and state-owned
   industries toward free markets should be regarded as speculative. While some
   countries have made progress in economic growth, liberalization, fiscal
   discipline, and political and social stability, there is no assurance these
   trends will continue. Some countries have histories of instability and
   upheaval that could cause their governments to act in a detrimental or
   hostile manner toward private enterprise or foreign investment. Significant
   external risks currently affect some emerging countries.

   Governments in many emerging market countries participate to a significant
   degree in their economies and securities markets. The volatility of emerging
   markets may be heightened by the actions of a few major investors. For
   example, substantial increases or decreases in cash flows of mutual funds
   investing in these
<PAGE>


ABOUT THE FUNDS
   markets could significantly affect local stock prices and, therefore, fund
   share prices. These factors make investing in such countries significantly
   riskier than in other countries and any one of them could cause a fund's
   share price to decline.


  . Other risks of foreign investing  Other risks result from the varying stages
   of economic and political development, the differing regulatory environments,
   trading days, and accounting standards, and higher transaction costs of
   non-U.S. markets. Investments outside the United States could be subject to
   actions such as capital or currency controls, nationalizing a company or
   industry, expropriating assets, or imposing punitive taxes which would have
   an adverse effect on the fund.

  . While certain countries have made progress in economic growth,
   liberalization, fiscal discipline, and political and social stability, there
   is no assurance these trends will continue.

  . Small and medium-sized company risk (International Discovery; others to a
   lesser degree)  To the extent each fund invests in small- and
   mid-capitalization stocks, it is likely to be more volatile than a fund that
   invests only in large companies. Small and medium-sized companies are
   generally riskier because they may have limited product lines, capital, and
   managerial resources. Their securities may trade less frequently and with
   greater price swings.

  . Futures/options risk  To the extent each fund uses futures and options, it
   is exposed to additional volatility and potential losses.

   As with any mutual fund, there can be no guarantee the funds will achieve
   their objectives.

  . Each fund's share price may decline, so when you sell your shares, you may
   lose money.


 How can I tell which fund is most appropriate for me?


   Consider your investment goals, your time horizon for achieving them, and
   your tolerance for the inherent risk of common stock and international
   investments. Your decision should take into account whether you have any
   other foreign stock investments. If not, you may wish to invest in a widely
   diversified fund to gain the broadest exposure to global opportunities. A
   diversified emerging markets fund may be an appropriate part of your
   portfolio if you are supplementing existing holdings primarily in developed
   foreign markets. If you seek to supplement a diversified portfolio with a
   concentrated investment, a regional or single-country fund may be
   appropriate.

   Each fund can be used in both regular and tax-deferred accounts, such as
   IRAs.

  . The fund or funds you select should not represent your complete investment
   program or be used for short-term trading purposes.
<PAGE>


T. ROWE PRICE
 How has each fund performed in the past?


   The bar charts showing calendar year returns and the average annual total
   return table indicate risk by illustrating how much returns can differ from
   one year to the next and over time. Fund past performance is no guarantee of
   future returns.

   The funds can also experience short-term performance swings, as shown by the
   best and worst calendar quarter returns during the years depicted in the
   charts.


<TABLE>
<CAPTION>
                                           Calendar Year Total Returns
       Fund         "90"    "91"   "92"    "93"   "94"    "95"    "96"    "97"    "98"     "99"
 ------------------------------------------------------------------------------------------------
 <S>               <C>     <C>    <C>     <C>    <C>     <C>     <C>     <C>     <C>     <C>
  International
  Stock             -8.89  15.87   -3.47  40.11   -0.76   11.39   15.99    2.70   16.14    34.60
  International
  Growth & Income      --     --      --     --      --      --      --      --      --    19.62
  Global Stock         --     --      --     --      --      --   20.01   13.23   22.50    28.76
  International
  Discovery        -12.84  11.69   -9.08  49.85   -7.63   -4.36   13.87   -5.67    6.12   155.03
  Emerging
  Markets Stock        --     --      --     --      --      --   11.82    1.23  -28.75    87.44
  European Stock       --   7.31   -5.56  27.24    4.06   21.86   25.87   17.01   25.82    19.70
  Japan                --     --  -13.40  20.61   15.09   -3.12  -10.99  -22.08    9.16   112.71
  Latin America        --     --      --     --  -15.92  -18.70   23.35   31.88  -35.43    59.38
  New Asia             --  19.32   11.24  78.76  -19.15    3.75   13.51  -37.13  -11.11    99.88
 ------------------------------------------------------------------------------------------------
</TABLE>


 International Stock Fund Quarter ended Total return

 Best quarter     12/31/9924.70%

 Worst quarter    9/30/90 -18.70%



 International Growth & Income Fund Quarter ended Total return

 Best quarter     12/31/9911.81%

 Worst quarter    3/31/99 1.18%



 Global Stock Fund Quarter ended Total return

 Best quarter     12/31/9821.36%

 Worst quarter    9/30/98 -12.83%



 International Discovery Fund Quarter ended Total return

 Best quarter     12/31/9957.19%

 Worst quarter    9/30/90 -21.98%



 Emerging Markets Stock Fund Quarter ended Total return

 Best quarter     12/31/9944.10%

 Worst quarter    9/30/98 -25.20%



 European Stock Fund      Quarter ended Total return

 Best quarter     12/31/9920.48%

 Worst quarter    9/30/98 -14.01%


<PAGE>


ABOUT THE FUNDS
 Japan Fund        Quarter ended Total return

 Best quarter     12/31/9825.17%

 Worst quarter    12/31/97-20.55%



 Latin America Fund       Quarter ended Total return

 Best quarter     12/31/9941.32%

 Worst quarter    9/30/98 -29.13%



 New Asia Fund     Quarter ended Total return

 Best quarter     12/31/9942.04%

 Worst quarter    12/31/97-27.05%


<TABLE>
 Table 2  Average Annual Total Returns
<CAPTION>
                                    Periods ended December 31, 1999
                                           Shorter of 10 years
                         1 year   5 years  or since inception    Inception date
 ------------------------
 <S>                     <C>      <C>      <C>                  <S>
  International Stock
  Fund                    34.60%  15.71%         11.38%              5/9/80
  MSCI EAFE Index         27.30   13.15           7.33
  Lipper International
  Funds Average           40.80   15.05          10.22

  International Growth
  & Income Fund           19.62%     --          20.91%             12/21/98
  MSCI EAFE Index         27.30      --             --

  Global Stock Fund       28.76%     --          20.97%             12/29/95
  MSCI World Index        25.34      --          19.98
  Lipper Global Funds
  Average                 35.97      --          20.13

  International
  Discovery Fund         155.03%  22.69%         13.04%             12/30/88
  MSCI EAFE Small-Cap
  Index                   17.67   -1.76             --
  Salomon Smith Barney
  Non-US Extended
  Market Index            23.52    7.22           3.50

  Emerging Markets
  Stock Fund              87.44%     --          10.80%             3/31/95
  MSCI Emerging Markets
  Free Index              66.41      --           4.98
  Lipper Emerging
  Markets Funds Average   70.77      --           7.29

  European Stock Fund     19.70%  22.00%         13.62%             2/28/90
  MSCI Europe Index       16.23   22.54          15.06
  Lipper European         24.42   20.88          11.76
  Region Funds Average
 -------------------------------------------------------------------------------
  Japan Fund             112.71%   9.30%          8.17%             12/30/91
  TSE First Section
  Index (TOPIX)           74.61    1.49           2.57
  TSE Second Section
  Index                  143.86    3.58           3.39
  Lipper Japanese Funds
  Average                120.51    9.48           3.74

  Latin America Fund      59.38%   6.36%          2.36%             12/29/93
  MSCI EMF Latin
  America Index           58.89    7.65           6.45
  Lipper Latin American
  Funds Average           60.21    5.18           1.79

  New Asia Fund           99.88%   5.64%         10.70%             9/28/90
  MSCI All Country Far
  East Free
  Ex-Japan Index          62.11    0.78          12.57
  Lipper Pacific
  Ex-Japan Funds          73.21    3.06           8.68
  Average
 -------------------------------------------------------------------------------
</TABLE>



<PAGE>


T. ROWE PRICE
 These figures include changes in principal value, reinvested dividends, and
 capital gain distributions, if any.


 What fees or expenses will I pay?


   The funds are 100% no load. The International Discovery, Latin America, and
   Emerging Markets Stock Funds impose a 2% redemption fee, payable to the
   funds, on shares purchased and held less than one year. There are no other
   fees or charges to buy or sell fund shares, reinvest dividends, or exchange
   into other T. Rowe Price funds. There are no 12b-1 fees. Like all mutual
   funds, each fund charges the following:

  . A management fee  The percent of fund assets paid to each fund's investment
   manager. Each fund's fee comprises a group fee, 0.32% as of December 31,
   1999, and an individual fund fee. The individual fund fees are as follows:
   International Stock, Global Stock, and International Growth & Income Funds,
   0.35%; European Stock, Japan, and New Asia Funds, 0.50%; International
   Discovery, Latin America, and Emerging Markets Stock Funds, 0.75%.

  . "Other" administrative expenses  Primarily the servicing of shareholder
   accounts, such as providing statements and reports, disbursing dividends, and
   providing custodial services.


<TABLE>
 Table 3  Fees and Expenses of the Funds
<CAPTION>                      Shareholder
                               fees (fees
                              paid directly
                                from your                  Annual fund operating expenses/b/
                               investment)           (expenses that are deducted from fund assets)

                                                                    Total annual    Fee waiver/
            Fund               Redemption    Management   Other    fund operating     expense       Net
                                 fees/a/        fee      expenses     expenses     reimbursement  expenses  -----
 -----------------------------
 <S>                          <C>            <C>         <C>       <C>             <C>            <C>       <S>

  International Stock              --          0.67%      0.18%        0.85%             --        0.85%
                              ------------------------------------------------------------------------------
  International                    --          0.67       2.77         3.44            2.19%       1.25
  Growth & Income
                              -----------------------------------------------------------------------------------
  Global Stock /c/                 --          0.67       0.73         1.40            0.20        1.20
                              ------------------------------------------------------------------------------
  International Discovery          2%/a/       1.07       0.35         1.42              --        1.42
                              ------------------------------------------------------------------------------
  Emerging Markets Stock /d/       2%/a/       1.07       0.69         1.76            0.01        1.75
                              ------------------------------------------------------------------------------
  European Stock                   --          0.82       0.23         1.05              --        1.05
                              ------------------------------------------------------------------------------
  Japan                            --          0.82       0.32         1.14              --        1.14
                              ------------------------------------------------------------------------------
  Latin America                    2%/a/       1.07       0.55         1.62              --        1.62
                              ------------------------------------------------------------------------------
  New Asia                         --          0.82       0.39         1.21              --        1.21
 ----------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>


ABOUT THE FUNDS
 /a/
   On shares purchased and held for less than one year (details under Contingent
   Redemption Fees in Pricing Shares and Receiving Sale Proceeds).


 /b/Price-Fleming is contractually obligated to waive its fees and bear any
   expenses to the extent such fees or expenses would cause the funds' ratios of
   expenses to average net assets to exceed the indicated percentage
   limitations. Fees waived or expenses paid or assumed are subject to
   reimbursement to Price-Fleming by each fund through the indicated
   reimbursement date, but no reimbursement will be made if it would result in a
   fund's expense ratio exceeding its specified limit. A summary of the funds'
   expense limitations and the periods for which they are effective is set forth
   below:
<TABLE>
<CAPTION>
      <S>                     <S>                <C>                       <S>                 <S>
               Fund           Limitation Period  Expense Ratio Limitation  Reimbursement Date

       International           12/1/98-10/31/00           1.25%                 10/31/02
       Growth & Income
                              -----------------------------------------------------------------
       Global Stock            11/1/99-10/31/01           1.20%                 10/31/03
                              -----------------------------------------------------------------
       Emerging Markets
       Stock                   11/1/99-10/31/01           1.75%                 10/31/03
</TABLE>



 /c/The Global Stock Fund previously operated under a 1.20% limitation that
   expired October 31, 1999. The reimbursement period for this limitation
   extends through October 31, 2001.

 /d/The Emerging Markets Stock Fund operated under a 1.75% expense ratio
   limitation that expired on October 31, 1998. Effective November 1, 1998,
   Price-Fleming agreed to extend the expense limitation for a period of one
   year through October 31, 1999. Fees waived or expenses assumed under these
   agreements are subject to reimbursement to Price-Fleming by the fund whenever
   the fund's expense ratio is below 1.75%. However, no reimbursement will be
   made after October 31, 2000 (for the first agreement); or after October 31,
   2001 (for the second agreement); or if it would result in the expense ratio
   exceeding 1.75%.


   Example.  The following table gives you a rough idea of how expense ratios
   may translate into dollars and helps you to compare the cost of investing in
   these funds with that of other funds. Although your actual costs may be
   higher or lower, the table shows how much you would pay if operating expenses
   remain the same, the expense limitations currently in place are not renewed
   (if applicable), you invest $10,000, you earn a 5% annual return, and you
   hold the investment for the following periods:
<TABLE>
<CAPTION>
  Fund                           1 year  3 years  5 years  10 years
 -------------------------------------------------------------------------
 <S>                             <C>     <C>      <C>      <C>       <S>
  International Stock             $ 87    $271    $  471    $1,049
                                 ------------------------------------
  International Growth & Income    127     633     1,397     3,413
                                 -----------------------------------------
  Global Stock                     122     403       727     1,644
                                 ------------------------------------
  International Discovery          145     449       776     1,702
                                 ------------------------------------
  Emerging Markets Stock           178     550       946     2,053
                                 ------------------------------------
  European Stock                   107     334       579     1,283
                                 ------------------------------------
  Japan                            116     362       628     1,386
                                 ------------------------------------
  Latin America                    165     511       881     1,922
                                 ------------------------------------
  New Asia                         123     384       665     1,466
 -------------------------------------------------------------------------
</TABLE>


<PAGE>


T. ROWE PRICE
 OTHER INFORMATION ABOUT THE FUNDS
 ----------------------------------------------------------

 What are some of the potential rewards of investing overseas through the funds?


   Investing abroad increases the opportunities available to you. Many foreign
   countries may have greater potential for economic growth than the U.S.
   Emerging market, regional, and single-country funds allow investors to seek
   potentially superior growth in the areas they view as most promising, but
   with commensurately higher risks. Foreign investments also provide effective
   diversification for an all-U.S. portfolio, since historically their returns
   have not moved in sync with U.S. stocks over long time periods. Investing a
   portion of your overall portfolio in foreign stock funds can enhance your
   diversification while providing the opportunity to boost long-term returns.



 How does the portfolio manager try to reduce risk?

   The principal tools we use to try to reduce risk are intensive research and
   diversification. Currency hedging techniques may be used from time to time.


  . Price-Fleming employs a team of experienced portfolio managers and analysts,
   with offices in London, Tokyo, Singapore, Hong Kong, Buenos Aires, Paris, and
   Baltimore. Portfolio managers keep close watch on individual investments as
   well as on political and economic trends in each country and region. Holdings
   are adjusted according to the manager's analysis and outlook.

  . Diversification significantly reduces, but does not eliminate, risk. The
   impact on each fund's share price from a drop in the price of a particular
   stock is reduced substantially by investing in a portfolio with dozens of
   different companies. Likewise, the impact of unfavorable developments in a
   particular country is reduced when investments are spread among many
   countries. Investors should pay close attention to how many countries a fund
   typically expects to invest in, particularly in regard to our regional funds
   and, of course, the single-country Japan Fund. However, the economies and
   financial markets of countries in a certain region may be influenced heavily
   by one another.

  . Though the funds don't normally engage in extensive currency hedging, fund
   managers can employ currency forwards and options to hedge the risk to the
   portfolio when foreign exchange movements are expected to be unfavorable for
<PAGE>


ABOUT THE FUNDS
   U.S. investors. In a general sense, these tools allow a manager to lock in a
   specified exchange rate for a stated period of time. (For more details,
   please see Foreign Currency Transactions under Investment Policies and
   Practices.) If the manager's forecast proves to be wrong, such a hedge may
   cause a loss. Also, it may be difficult or impractical to hedge currency risk
   in many emerging countries.


 What are the potential rewards of investing in small companies overseas?


   In general, small companies are more dynamic and can adapt more quickly than
   larger ones to changing economic and market conditions, which may help them
   increase their earnings faster. In addition, the movement of small-company
   shares is not perfectly correlated with the movements of large-cap stocks.
   Since many U.S.-based international funds focus on large or medium-sized
   foreign companies, adding a small-cap international fund could enhance the
   diversification of a portfolio while providing the opportunity to boost
   long-term returns.


 Is there other information I can review before making a decision?

   Investment Policies and Practices in Section 3 discusses various types of
   portfolio securities the funds may purchase as well as types of management
   practices the funds may use.

   You should also review the information in Section 2 that discusses contingent
   redemption fees for the International Discovery, Latin America, and Emerging
   Markets Stock Funds.
<PAGE>


T. ROWE PRICE
 PRICING SHARES AND RECEIVING SALE PROCEEDS
 ----------------------------------------------------------
   Here are some procedures you should know when investing in a T. Rowe Price
   fund.


 How and when shares are priced

   The share price (also called "net asset value" or NAV per share) for each
   fund, except the Japan Fund, is calculated at the close of the New York Stock
   Exchange, normally 4 p.m. ET, each day the New York Stock Exchange is open
   for business. The share price for the Japan Fund is calculated at the close
   of the New York Stock Exchange, normally 4 p.m. ET, each day the New York
   Stock Exchange and the Tokyo Stock Exchange are both 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. Current market values are used to price fund shares.


   Each fund's portfolio securities usually are valued on the basis of the most
   recent closing market prices at 4 p.m. ET when the funds calculate their
   NAVs. Most of the securities in which the funds invest, however, are traded
   in markets that close before that time. For securities primarily traded in
   the Far East, for example, the most recent closing prices may be as much as
   15 hours old at 4 p.m. Normally, developments that could affect the values of
   portfolio securities that occur between the close of the foreign market and 4
   p.m. ET will not be reflected in the funds' NAVs. However, if a fund
   determines that such developments are so significant that they will, in its
   judgment, clearly and materially affect the value of the fund's securities,
   the fund may adjust the previous closing prices to reflect what it believes
   to be the fair value of the securities as of 4:00 p.m. ET. The fund may fair
   value securities in other situations, for example, when a particular foreign
   market is closed but the fund is open.

  . The various ways you can buy, sell, and exchange shares are explained at the
   end of this prospectus and on the New Account Form. These procedures may
   differ for institutional and employer-sponsored retirement accounts.


 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.

   Fund shares may be purchased through various third-party intermediaries
   including banks, brokers, and investment advisers. Where authorized by a
   fund, orders will be priced at the NAV next computed after receipt by the
   intermediary.
<PAGE>

 ABOUT YOUR ACCOUNT
   Consult your intermediary to determine when your orders will be priced. The
   intermediary may charge a fee for its services.

   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.

   Japan Fund: Pricing and Transactions
   The fund will not process orders on any day when either the New York or Tokyo
   Stock Exchange is closed. Orders received on such days will be priced on the
   next day the fund computes its net asset value. As such, you may experience a
   delay in purchasing or redeeming fund shares. Exchanges: If you wish to
   exchange into the Japan Fund on a day the New York Stock Exchange is open but
   the Tokyo Stock Exchange is closed, the exchange out of the other T. Rowe
   Price fund will be processed on that day, but Japan Fund shares will not be
   purchased until the day the Japan Fund reopens. If you wish to exchange out
   of the Japan Fund on a day when the New York Stock Exchange is open but the
   Tokyo Stock Exchange is closed, the exchange will be delayed until the Japan
   Fund reopens.


   The Tokyo Stock Exchange is scheduled to be closed on the following weekdays:
   In 2000 - January 3; February 11; March 20; May 3, 4, 5; July 20; September
   15; October 10; and November 3 and 23. In 2001 -January 1, 2, 3, and 8;
   February 12; March 20; April 30; May 3 and 4; July 20; September 24; October
   8; November 23; and December 24 and 31. If the Tokyo Stock Exchange closes on
   dates not listed, the fund will not be priced on those dates.


 How you can receive the proceeds from a sale

  . When filling out the New Account Form, you may wish to give yourself the
   widest range of options for receiving proceeds from a sale.

   If your request is received 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 Automated Clearing House (ACH) transfer or bank wire.
   Proceeds sent by ACH transfer should be credited the second day after the
   sale. ACH is an automated method of initiating payments from, and receiving
   payments in, your financial institution account. The ACH system is supported
   by over 20,000 banks, savings banks, and credit unions. Proceeds sent by bank
   wire should be credited to your account the next business day.


  . Exception:  Under certain circumstances and when deemed to be in a fund's
   best interests, your proceeds may not be sent for up to seven calendar days
   after we receive your redemption request.
<PAGE>


ABOUT THE FUNDS
  . If for some reason we cannot accept your request to sell shares, we will
   contact you.

   Contingent Redemption Fee
   (Latin America, International Discovery, and Emerging Markets Stock Funds)
   These funds can experience substantial price fluctuations and are intended
   for long-term investors. Short-term "market timers" who engage in frequent
   purchases and redemptions can disrupt the funds' investment programs and
   create additional transaction costs that are borne by all shareholders. For
   these reasons, the funds assess a 2% fee on redemptions (including exchanges)
   of fund shares held for less than one year.

   Redemption fees are paid to each fund to help offset transaction costs and to
   protect the funds' long-term shareholders. Each fund will use the "first-in,
   first-out" (FIFO) method to determine the one-year holding period. Under this
   method, the date of the redemption or exchange will be compared with the
   earliest purchase date of shares held in the account. If this holding period
   is less than one year, the fee will be charged.


   The fee does not apply to any shares purchased through reinvested
   distributions (dividends and capital gains), shares held in retirement plans,
   such as 401(k), 403(b), 457, Keogh, profit sharing, SIMPLE IRA, SEP-IRA, and
   money purchase pension accounts, or to shares redeemed through designated
   systematic withdrawal plans. The fee does apply to shares held in other IRA
   accounts and to shares purchased through automatic investment plans
   (described under Shareholder Services). The fee may apply to shares in
   retirement plans held in broker omnibus accounts.

   In determining "one year," the funds will use the anniversary date of a
   transaction. Thus, shares purchased on March 1, 2000, for example, will be
   subject to the fee if they are redeemed on or prior to February 28, 2001. If
   they are redeemed on or after March 1, 2001, they will not be subject to the
   fee.


 USEFUL INFORMATION ON DISTRIBUTIONS AND TAXES
 ----------------------------------------------------------
  . All net investment income and realized capital gains are distributed to
   shareholders.


 Dividends and Other Distributions

   Dividend and capital gain distributions are reinvested in additional fund
   shares in your account unless you select another option on your New Account
   Form. The advantage of reinvesting distributions arises from compounding;
   that is, you receive income dividends and capital gain distributions on a
   rising number of shares.
<PAGE>


ABOUT THE FUNDS

   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, the fund reserves the right to
   reinvest your distribution check in your account at the NAV on the day of the
   reinvestment and to reinvest all subsequent distributions in shares of the
   fund. No interest will accrue on amounts represented by uncashed distribution
   or redemption checks.

   Income dividends
  . The funds declare and pay dividends (if any) annually.

  . The dividends of each fund (other than Global Stock Fund) will not be
   eligible for the 70% deduction for dividends received by corporations, if, as
   expected, none of the fund's income consists of dividends paid by U.S.
   corporations. The dividends of the Global Stock Fund will be eligible for the
   70% deduction for dividends received by corporations only to the extent the
   fund's income consists of dividends paid by U.S. corporations.

   Capital gains
  . A capital gain or loss is the difference between the purchase and sale price
   of a security.

  . If a fund has net capital gains for the year (after subtracting any capital
   losses), they are usually declared and paid in December to shareholders of
   record on a specified date that month.


 Tax Information

  . You will be sent timely information for your tax filing needs.

   You need to be aware of the possible tax consequences when:

  . You sell fund shares, including an exchange from one fund to another.

  . The fund makes a distribution to your account.

   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.


   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 most new accounts or those opened by
   exchange in 1984 or later, we will provide the gain or loss on the shares you
   sold during the year, based on the "average cost," single category 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."
<PAGE>


T. ROWE PRICE
   To help you maintain accurate records, we send you a confirmation immediately
   following each transaction you make (except for systematic purchases and
   redemptions) and a year-end statement detailing all your transactions in each
   fund account during the year.

   Taxes on fund distributions
  . The following summary does not apply to retirement accounts, such as IRAs,
   which are not subject to current tax.

   In January, you will be sent Form 1099-DIV indicating the tax status of any
   dividend and capital gain distributions made to you. This information will
   also be reported to the IRS. Distributions are generally taxable to you for
   the year in which they were paid. You will be sent any additional information
   you need to determine your taxes on fund distributions, such as the portion
   of your dividends, if any, that may be exempt from state income taxes.

   The tax treatment of a capital gain distribution is determined by how long
   the fund held the portfolio securities, not how long you held shares in the
   fund. Short-term (one year or less) capital gain distributions are taxable at
   the same rate as ordinary income and long-term gains on securities held more
   than 12 months are taxed at a maximum rate of 20%. However, if you realized a
   loss on the sale or exchange of fund shares that you held six months or less,
   your short-term loss will be reclassified to a long-term loss to the extent
   of any long-term capital gain distribution received during the period you
   held the shares.

   Distributions resulting from the sale of certain foreign currencies and debt
   securities, to the extent of foreign exchange gains, are taxed as ordinary
   income or loss. If the fund pays nonrefundable taxes to foreign governments
   during the year, the taxes will reduce the fund's dividends but will still be
   included in your taxable income. However, you may be able to claim an
   offsetting credit or deduction on your tax return for your portion of foreign
   taxes paid by the fund.

  . Distributions are taxable whether reinvested in additional shares or
   received in cash.

   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 a portion of the money you just invested in the form of a taxable
   distribution. Therefore, you may wish to find out a fund's record date before
   investing. Of course, a fund's share price may, at any time, reflect
   undistributed capital gains or income and unrealized appreciation, which may
   result in future taxable distributions.

   Note: For information on the tax consequences of hedging, please see
   Investment Policies and Practices.
<PAGE>


ABOUT THE FUNDS
 TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS
 ----------------------------------------------------------
  . Following these procedures helps assure timely and accurate transactions.


 Purchase Conditions

   Nonpayment
   If you pay with a check or ACH transfer that does not clear or if your
   payment is not timely received, your purchase will be canceled. You will be
   responsible for any losses or expenses incurred by each fund or transfer
   agent, and the fund can redeem shares you own in this or another identically
   registered T. Rowe Price fund as reimbursement. Each fund and its agents have
   the right to reject or cancel any purchase, exchange, or redemption due to
   nonpayment.

   U.S. dollars; type of check
   All purchases must be paid for in U.S. dollars; checks must be drawn on U.S.
   banks.


 Sale (Redemption) Conditions

   Holds on immediate redemptions: 10-day hold

   If you sell shares that you just purchased and paid for by check or ACH
   transfer, the funds 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. (The 10-day hold
   does not apply to purchases paid for by bank wire or automatic purchases
   through your paycheck.)

   Telephone, Tele*Access/(R)/, and personal computer transactions

   Exchange and redemption services through telephone and Tele*Access are
   established automatically when you sign the New Account Form unless you check
   the boxes that state you do not want these services. Personal computer
   transactions must be authorized separately. T. Rowe Price funds and their
   agents use reasonable procedures designed to verify the identity of the
   shareholder. If these procedures are followed, the funds and their agents are
   not liable for any losses that may occur from acting on unauthorized
   instructions. A confirmation is sent promptly after a transaction. Please
   review it carefully and contact T. Rowe Price immediately about any
   transaction you believe to be unauthorized. All telephone 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
<PAGE>


T. ROWE PRICE
   $250,000, or your sale amounts to more than 1% of fund net assets, the fund
   has the right 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. To deter such activity, we have adopted
   an excessive trading policy. If you violate our excessive trading policy, you
   may be barred indefinitely and without further notice from further purchases
   of T. Rowe Price funds.

  . Trades placed directly with T. Rowe Price  If you trade directly with T.
   Rowe Price, you can make one purchase and sale involving the same fund within
   any 120-day period. For example, if 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
   this limit, you are in violation of our excessive trading policy.

   Two types of transactions are exempt from this policy: 1) trades solely in
   money market funds (exchanges between a money fund and a nonmoney fund are
   not exempt); and 2) systematic purchases or redemptions (see Information
   About Your Services).

  . Trades placed through intermediaries  If you purchase fund shares through an
   intermediary including a broker, bank, investment adviser, or other third
   party and hold them for less than 60 calendar days, you are in violation of
   our excessive trading policy.


 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 your 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 funds' 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
<PAGE>


ABOUT THE FUNDS
   investor whose 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:

  . Written requests 1) to redeem over $100,000, or 2) to wire redemption
   proceeds.

  . Remitting redemption proceeds to any person, address, or bank account not on
   record.

  . Transferring redemption proceeds to a T. Rowe Price fund account with a
   different registration (name or ownership) from yours.

  . Establishing certain services after the account is opened.

   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>


T. ROWE PRICE
 ORGANIZATION AND MANAGEMENT
 ----------------------------------------------------------

 How are the funds organized?


   T. Rowe Price International Funds, Inc. (the "corporation"), currently
   consists of 12 series, each representing a separate class of shares and
   having different objectives and investment policies. The 12 series and the
   years in which each was established are as follows: International Stock Fund,
   1980; International Bond Fund, 1986; International Discovery Fund, 1988;
   European Stock Fund, New Asia Fund, Global Bond Fund, 1990; Japan Fund, 1991;
   Latin America Fund, 1993; Emerging Markets Bond Fund, 1994; Emerging Markets
   Stock Fund, Global Stock Fund, 1995, and International Growth & Income Fund,
   1998. (The bond funds are described in a separate prospectus.)


 What is meant by "shares"?

   As with all mutual funds, investors purchase shares when they put money in a
   fund. These shares are part of a fund's authorized capital stock, but share
   certificates are not issued.

   Each share and fractional share entitles the shareholder to:

  . Receive a proportional interest in a fund's income and capital gain
   distributions.

  . 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, to avoid unnecessary
   costs to fund shareholders, do not do so except when certain matters, such as
   a change in fundamental policies, must be decided. In addition, shareholders
   representing at least 10% of all eligible votes may call a special meeting,
   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 instructions on voting by mail
   or telephone, or on the Internet.


 Who runs the funds?

   General Oversight
   The corporation is governed by a Board of Directors that meets regularly to
   review the funds' investments, performance, expenses, and other business
   affairs. The Board elects the corporation's officers. The policy of the
   corporation is that the majority of Board members are independent of
   Price-Fleming.
<PAGE>

 MORE ABOUT THE FUNDS
  . All decisions regarding the purchase and sale of fund investments are made
   by Price-Fleming - specifically by each fund's Investment Advisory Group.

   Investment Manager
   Price-Fleming is responsible for selection and management of each fund's
   portfolio investments. Price-Fleming's U.S. office is located at 100 East
   Pratt Street, Baltimore, Maryland 21202. Price-Fleming also has offices in
   London, Tokyo, Singapore, Hong Kong, Buenos Aires, and Paris. Price-Fleming
   was incorporated in Maryland in 1979 as a joint venture between T. Rowe Price
   and Robert Fleming Holdings Limited (Flemings).


   T. Rowe Price, Flemings, and Jardine Fleming Group Limited (Jardine Fleming)
   are owners of Price-Fleming. The common stock of Price-Fleming is 50% owned
   by a wholly owned subsidiary of T. Rowe Price, 25% by a subsidiary of
   Flemings, and 25% by a subsidiary of Jardine Fleming. Jardine Fleming is
   owned by Flemings. T. Rowe Price has the right to elect a majority of the
   Board of Directors of Price-Fleming, and Flemings has the right to elect the
   remaining directors, one of whom will be nominated by Jardine Fleming.

  . Flemings is a diversified investment organization which participates in a
   global network of regional investment offices in New York, London, Zurich,
   Geneva, Tokyo, Hong Kong, Manila, Kuala Lumpur, Seoul, Taipei, Bombay,
   Jakarta, Singapore, Bangkok, and Johannesburg.

   Portfolio Management
   Each fund has an Investment Advisory Group that has day-to-day responsibility
   for managing the portfolio and developing and executing each fund's
   investment program. The members of each advisory group are listed below.

   International Stock Fund John R. Ford, James B.M. Seddon, Mark C.J.
   Bickford-Smith, and David J.L. Warren.


   International Growth & Income Fund Richard T. Whitney, John R. Ford, James
   B.M. Seddon, and Robert W. Smith.

   Global Stock Fund John R. Ford, James B.M. Seddon, Mark C.J. Bickford-Smith,
   Robert W. Smith, and David J.L. Warren.

   International Discovery Fund John R. Ford, Frances Dydasco, Mark J.T.
   Edwards, Ian J. Macdonald, and Justin Thomson.

   Emerging Markets Stock Fund John R. Ford, Christopher D. Alderson, Frances
   Dydasco, Mark J.T. Edwards, and Benedict R.F. Thomas.

   European Stock Fund John R. Ford, Robert A. Revel-Chion, and James B.M.
   Seddon.
<PAGE>


T. ROWE PRICE

   Japan Fund John R. Ford, Ian J. Macdonald, and David J.L. Warren.

   Latin America Fund John R. Ford, Benedict R.F. Thomas, and Gonzalo Pangaro.

   New Asia Fund John R. Ford, Frances Dydasco, and Mark J.T. Edwards.

   Christopher Alderson joined Price-Fleming in 1988 and has 14 years of
   experience with the Fleming Group in research and portfolio management. Mark
   Bickford-Smith joined Price-Fleming in 1995 and has 15 years of experience
   with the Fleming Group in research and financial analysis. Mark Edwards
   joined Price-Fleming in 1987 and has 18 years of experience in financial
   analysis. John Ford joined Price-Fleming in 1982 and has 20 years of
   experience with the Fleming Group in research and portfolio management. James
   Seddon joined Price-Fleming in 1987 and has 13 years of experience in
   portfolio management. Robert Smith joined Price-Fleming in 1996, has been
   with T. Rowe Price since 1992, and has 13 years of experience in financial
   analysis. Benedict Thomas joined Price-Fleming in 1988 and has 11 years of
   portfolio management experience. David Warren joined Price-Fleming in 1983
   and has 19 years of experience in equity research, fixed income research, and
   portfolio management. Frances Dydasco joined Price-Fleming in 1996 and has 11
   years of experience in research and financial analysis. Ian Macdonald joined
   Price-Fleming in 1998 and has 15 years of experience in equity research and
   portfolio management. Robert Revel-Chion joined Price-Fleming in 1998 and has
   11 years of experience in investment management (four years of which were
   within the Fleming Group). Justin Thomson joined Price-Fleming in 1998 and
   has eight years of experience in portfolio management. Richard Whitney joined
   Price-Fleming in 1998, has been with T. Rowe Price since 1985, and has 17
   years of experience in equity research and portfolio management. Gonzalo
   Pangaro joined Price-Fleming in 1998 and has nine years of experience in
   financial analysis and portfolio management.

   Portfolio Transactions

   Decisions with respect to the purchase and sale of a fund's portfolio
   securities on behalf of each fund are made by Price-Fleming. The
   corporation's Board of Directors has authorized Price-Fleming to utilize
   affiliates of Flemings and Jardine Fleming in the capacity of broker in
   connection with the execution of a fund's portfolio transactions if
   Price-Fleming believes that doing so would result in an economic advantage
   (in the form of lower execution costs or otherwise) to the fund.

   The Management Fee
   This fee has two parts - an "individual fund fee," which reflects a fund's
   particular characteristics, and a "group fee." The group fee, which is
   designed to reflect the benefits of the shared resources of the T. Rowe Price
   investment management complex, is calculated daily based on the combined net
   assets of all T. Rowe Price funds (except the Spectrum Funds, and any
   institutional, index, or private label
<PAGE>


ABOUT THE FUNDS
   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.


<TABLE>
   Group Fee Schedule
<CAPTION>
    <S>               <C>
     0.334%/a/         First $50 billion

     0.305%            Next $30 billion

     0.300%            Next $40 billion

     0.295%            Thereafter
    --------------------------------------
</TABLE>



   /a/     Represents a blended group fee rate containing various break points.


   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 T. Rowe Price funds described
   previously. Based on combined T. Rowe Price funds' assets of over $106
   billion at December 31, 1999, the group fee was 0.32%. The individual fund
   fees are as follows: International Stock, Global Stock, and International
   Growth & Income Funds, 0.35%; European Stock, Japan, and New Asia Funds,
   0.50%; International Discovery, Latin America, and Emerging Markets Stock
   Funds, 0.75%.

   Research and Administration

   Certain administrative support is provided by T. Rowe Price, which receives
   from Price-Fleming a fee of 0.15% of the market value of all assets in equity
   accounts, 0.15% of the market value of all assets in active fixed income
   accounts, and 0.035% of the market value of all assets in passive fixed
   income accounts under Price-Fleming's management. Price-Fleming has entered
   into research agreements with Fleming Investment Management Limited (FIM) and
   Jardine Fleming International Holdings Limited (JFIH). For services under the
   research agreements, FIM and JFIH each receive a fee of 0.075% of the market
   value of all assets in equity accounts under Price-Fleming's management. FIM
   and JFIH each receive a fee of 0.075% of the market value of all assets in
   active fixed income accounts and 0.0175% of such market value in passive
   fixed income accounts under Price-Fleming's management. In addition to the
   research provided under these agreements, Price-Fleming has access to the
   publicly available research materials produced by FIM and JFIH. FIM is a
   wholly owned subsidiary of Flemings. JFIH is a wholly owned subsidiary of
   Jardine Fleming.


 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 T. Rowe Price
   advertisements; and in the media.
<PAGE>


T. ROWE PRICE
 Total Return


   This tells you how much an investment 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. Therefore, total return numbers include
   the effect of compounding.

   Advertisements may include cumulative or 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 return of an investment for a specified period. A
   cumulative return does not indicate how much the value of the investment may
   have fluctuated during the period. For example, an investment could have a
   10-year positive cumulative return despite experiencing some negative years
   during that time.


 Average Annual Total Return

   This is always hypothetical and should not be confused with actual
   year-by-year results. It smooths out all the variations in annual performance
   to tell you what constant year-by-year return would have produced the
   investment's actual cumulative return. This gives you an idea of an
   investment's annual contribution to your portfolio, provided you held it for
   the entire period.


 INVESTMENT POLICIES AND PRACTICES
 ----------------------------------------------------------

   This section takes a detailed look at some of the types of fund portfolio
   securities and the various kinds of investment practices that may be used in
   day-to-day portfolio management. Fund investments are subject to further
   restrictions and risks described in the Statement of Additional Information.

   Shareholder approval is required to substantively change fund objectives 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. Fund
   investment restrictions and policies are adhered to at the time of
   investment. A later change in circumstances will not require the sale of an
   investment if it was proper at the time it was made.

   Fund holdings of certain kinds of investments cannot exceed maximum
   percentages of total assets, which are set forth in this prospectus. For
   instance, fund investments in hybrid instruments are limited to 10% of total
   assets. While these restrictions provide a useful level of detail about fund
   investments, investors
<PAGE>


ABOUT THE FUNDS
   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 hybrid
   instruments could have significantly more of an impact on a fund's share
   price than its weighting in the portfolio. The net effect of a particular
   investment depends on its volatility and the size of its overall return in
   relation to the performance of all other fund investments.


   Changes in fund holdings, fund performance, and the contribution of various
   investments are discussed in the shareholder reports sent to you.

  . Fund managers have considerable leeway in choosing investment strategies and
   selecting securities they believe will help achieve fund objectives.


 Types of Portfolio Securities


   In seeking to meet its investment objective, we may invest in any type of
   security or instrument (including certain potentially high-risk derivatives
   described in this section) whose investment characteristics are consistent
   with the fund's investment program. The following pages describe various
   types of fund portfolio securities and investment management practices.

   Fundamental policy With the exception of Latin America Fund, a fund will not
   purchase a security if, as a result, with respect to 75% of its total assets,
   more than 5% of the fund's total assets would be invested in securities of a
   single issuer or more than 10% of the outstanding voting securities of the
   issuer would be held by the fund.

   Nondiversified Status--Latin America Fund
   The fund is registered as a nondiversified mutual fund. This means that the
   fund may invest a greater portion of its assets in, and own a greater amount
   of the voting securities of, a single company than a diversified fund, which
   may subject the fund to greater risk with respect to its portfolio
   securities. However, because the fund intends to qualify as a "regulated
   investment company" under the Internal Revenue Code, it must invest so that,
   at the end of each calendar quarter, with respect to 50% of its total assets,
   not more than 5% of its assets are invested in the securities of a single
   issuer.


   Fund investments are primarily in common stocks (normally, at least 65% of
   total assets) and, to a lesser degree, other types of securities as described
   below.

   Common and Preferred Stocks

   Stocks represent shares of ownership in a company. Generally, preferred stock
   has a specified dividend and ranks after bonds and before common stocks in
   its claim on income for dividend payments and on assets should the company be
   liquidated. After other claims are satisfied, common stockholders participate
   in company profits on a pro-rata basis; profits may be paid out in dividends
   or reinvested in the company to help it grow. Increases and decreases in
   earnings are usually reflected in a company's stock price, so common stocks
   generally have
<PAGE>


T. ROWE PRICE
   the greatest appreciation and depreciation potential of all corporate
   securities. While most preferred stocks pay a dividend, preferred stock may
   be purchased where the issuer has omitted, or is in danger of omitting,
   payment of its dividend. Such investments would be made primarily for their
   capital appreciation potential.

   Convertible Securities and Warrants

   Investments may be made in debt or preferred equity securities convertible
   into, or exchangeable for, equity securities. Traditionally, convertible
   securities have paid dividends or interest at rates higher than common stocks
   but lower than nonconvertible securities. They generally participate in the
   appreciation or depreciation of the underlying stock into which they are
   convertible, but to a lesser degree. In recent years, convertibles have been
   developed which combine higher or lower current income with options and other
   features. Warrants are options to buy a stated number of shares of common
   stock at a specified price anytime during the life of the warrants
   (generally, two or more years).

   Fixed Income Securities

   The funds may invest in any type of investment-grade security. The Global
   Stock Fund may also invest up to 5% of its total assets in
   below-investment-grade bonds, commonly referred to as "junk" bonds. Such
   securities would be purchased in companies that meet the investment criteria
   for the fund. The price of a bond fluctuates with changes in interest rates,
   rising when interest rates fall and falling when interest rates rise. Junk
   bond prices can be more volatile and have a greater risk of default than
   investment-grade bonds.

   Hybrid Instruments

   These instruments (a type of potentially high-risk derivative) can combine
   the characteristics of securities, futures, and options. For example, the
   principal amount, redemption, or conversion terms of a security could be
   related to the market price of some commodity, currency, or securities index.
   Such securities may bear interest or pay dividends at below market or even
   relatively nominal rates. Under some conditions, the redemption value of such
   an investment could be zero.

  . Hybrids can have volatile prices and limited liquidity, and their use may
   not be successful.

   Operating policy  Fund investments in hybrid instruments are limited to 10%
   of total assets.

   Private Placements
   These securities are sold directly to a small number of investors, usually
   institutions. Unlike public offerings, such securities are not registered
   with the SEC. Although certain of these securities may be readily sold, for
   example, under Rule
<PAGE>


ABOUT THE FUNDS
   144A, others may be illiquid, and their sale may involve substantial delays
   and additional costs.


   Operating policy  Fund investments in illiquid securities are limited to 15%
   of net assets.


 Types of Investment Management Practices

   Reserve Position

   A certain portion of fund assets will be held in money market reserves. Fund
   reserve positions are expected to consist primarily of shares of one or more
   T. Rowe Price internal money market funds. Short-term, high-quality U.S. and
   foreign dollar-denominated money market securities, including repurchase
   agreements, may also be held. For temporary, defensive purposes, there is no
   limit on fund investments in money market reserves. The effect of taking such
   a position is that the fund may not achieve its investment objective. The
   reserve position provides flexibility in meeting redemptions, expenses, and
   the timing of new investments and can serve as a short-term defense during
   periods of unusual market volatility.

   Borrowing Money and Transferring Assets

   Fund borrowings may be made from banks and other T. Rowe Price funds as a
   temporary measure for emergency purposes, to facilitate redemption requests,
   or for other purposes consistent with fund policies as set forth in this
   prospectus. Such borrowings may be collateralized with fund assets, subject
   to restrictions.

   Fundamental policy  Borrowings may not exceed 33/1//\\/3/\\% of total fund
   assets.


   Operating policy  Fund transfers of portfolio securities as collateral will
   not be made except as necessary in connection with permissible borrowings or
   investments, and then such transfers may not exceed 33/1//\\/3/\\% of the
   fund's total assets. Fund purchases of additional securities will not be made
   when borrowings exceed 5% of total assets.

   Foreign Currency Transactions
   The funds will normally conduct their foreign currency exchange transactions
   either on a spot (i.e., cash) basis at the spot rate prevailing in the
   foreign currency exchange market, or through entering into forward contracts
   to purchase or sell foreign currencies. The funds will generally not enter
   into a forward contract with a term greater than one year.


   The funds will generally enter into forward foreign currency exchange
   contracts only under two circumstances. First, when a fund enters into a
   contract for the purchase or sale of a security denominated in a foreign
   currency, it may desire to "lock in" the U.S. dollar price of the security.
   Second, when Price-Fleming believes that the currency of a particular foreign
   country may move substantially against another currency, it may enter into a
   forward contract to sell or buy
<PAGE>


T. ROWE PRICE
   the former foreign currency (or another currency that acts as a proxy for
   that currency). The contract may approximate the value of some or all of the
   fund's portfolio securities denominated in such foreign currency. Under
   certain circumstances, a fund may commit a substantial portion or the entire
   value of its portfolio to the consummation of these contracts. Price-Fleming
   will consider the effect such a commitment to forward contracts would have on
   the investment program of the fund and the flexibility of the fund to
   purchase additional securities. Although forward contracts will be used
   primarily to protect the fund from adverse currency movements, they also
   involve the risk that anticipated currency movements will not be accurately
   predicted, and a fund's total return could be adversely affected as a result.


   There are some markets where it is not possible to engage in effective
   foreign currency hedging. This is generally true, for example, for the
   currencies of various emerging markets where the foreign exchange markets are
   not sufficiently developed to permit hedging activity to take place.

   Futures and Options

   Futures (a type of potentially high-risk derivative) are often used to manage
   or hedge risk because they enable the investor to buy or sell an asset in the
   future at an agreed-upon price. Options (another type of potentially
   high-risk derivative) give the investor the right (where the investor
   purchases the option), or the obligation (where the investor writes (sells)
   the option), to buy or sell an asset at a predetermined price in the future.
   Futures and options contracts may be bought or sold for any number of
   reasons, including: to manage fund exposure to changes in securities prices
   and foreign currencies; as an efficient means of adjusting fund overall
   exposure to certain markets; in an effort to enhance income; as a cash
   management tool; and to protect the value of portfolio securities. Call and
   put options may be purchased or sold on securities, financial indices, and
   foreign currencies.

   Futures contracts and options may not always be successful hedges; their
   prices can be highly volatile; using them could lower fund total return; and
   the potential loss from the use of futures can exceed a fund's initial
   investment in such contracts.

   Operating policies  Futures: Initial margin deposits and premiums on options
   used for nonhedging purposes will not exceed 5% of fund net asset value.
   Options on securities: The total market value of securities against which
   call or put options are written may not exceed 25% of its total assets. No
   more than 5% of fund total assets will be committed to premiums when
   purchasing call or put options.

   Tax Consequences of Hedging
   Under applicable tax law, the funds may be required to limit their gains from
   hedging in foreign currency forwards, futures, and options. Although the
   funds
<PAGE>


ABOUT THE FUNDS
   are expected to comply with such limits, the extent to which these limits
   apply is subject to tax regulations as yet unissued. Hedging may also result
   in the application of the mark-to-market and straddle provisions of the
   Internal Revenue Code. These provisions could result in an increase (or
   decrease) in the amount of taxable dividends paid by the funds and could
   affect whether dividends paid by the funds are classified as capital gains or
   ordinary income.

   Lending of Portfolio Securities

   Fund securities may be lent to broker-dealers, other institutions, or other
   persons to earn additional income. The principal risk is the potential
   insolvency of the broker-dealer or other borrower. In this event, the fund
   could experience delays in recovering its securities and possibly capital
   losses.

   Fundamental policy  The value of loaned securities may not exceed
   33/1//\\/3/\\% of total fund assets.

   Portfolio Turnover
   Turnover is an indication of frequency. The funds will not generally trade in
   securities for short-term profits, but when circumstances warrant, securities
   may be purchased and sold without regard to the length of time held. A high
   turnover rate may increase transaction costs and result in higher capital
   gain distributions by the funds. The funds' portfolio turnover rates for the
   previous three fiscal periods are shown in Table 4.




<TABLE>
 Table 4  Portfolio Turnover Rates
<CAPTION>
 <S>                             <C>         <C>         <C>         <S>
  Fund                             1999        1998        1997

  International Stock              17.6%       12.2%       15.8%
                                 ------------------------------------
  International Growth & Income    35.8/a/       --          --
                                 ------------------------------------
  Global Stock                     37.5        47.1        41.8
                                 -----------------------------------------
  International Discovery          98.2        34.2        72.7
                                 ------------------------------------
  Emerging Markets Stock           59.0        54.5        84.3
                                 ------------------------------------
  European Stock                   15.7        26.8        17.5
                                 ------------------------------------
  Japan                            58.8        66.9        32.3
                                 ------------------------------------
  Latin America                    43.2        19.0        32.7
                                 ------------------------------------
  New Asia                         69.9        68.1        41.8
 -------------------------------------------------------------------------
</TABLE>



 /a/      Annualized.


 European Stock, Japan, New Asia, Latin America, and Emerging Markets Stock
 Funds

   Location of Company
   In determining the domicile or nationality of a company, the funds would
   primarily consider the following factors: whether the company is organized
   under the laws of a particular country; or, whether the company derives a
   significant
<PAGE>


T. ROWE PRICE
   proportion (at least 50%) of its revenues or profits from goods produced or
   sold, investments made, or services performed in the country or has at least
   50% of its assets situated in that country.

   Each of these funds will invest at least 65% of its total assets in companies
   located (as defined above) in the respective countries or regions indicated.


 International Stock, International Discovery, International Growth & Income,
 and Global Stock Funds

   Each fund will invest at least 65% of its total assets in a manner which
   reflects its international or global character, respectively. In the case of
   the international funds, this requires that the funds invest in at least
   three countries outside of the U.S. For the global fund, this means that the
   fund must invest in at least three countries, one of which may include the
   U.S.


 FINANCIAL HIGHLIGHTS
 ----------------------------------------------------------
   Table 5, which provides information about each fund's financial history, is
   based on a single share outstanding throughout each fiscal year. Each fund's
   section of the table is part of the fund's financial statements, which are
   included in its annual report and are incorporated by reference into the
   Statement of Additional Information (available upon request). The total
   returns in the table represent the rate that an investor would have earned or
   lost on an investment in each fund (assuming reinvestment of all dividends
   and distributions). The financial statements in the annual report were
   audited by the funds' independent accountants, PricewaterhouseCoopers LLP.




<TABLE>
 Table 5  Financial Highlights
                                                                   Footnotes
are on page 36.
<CAPTION>
                           Income From Investment Operations                          Less Distributions
                                      Net gains or
            Net asset                   losses on                   Dividends
  Period     value,        Net         securities      Total from   (from net    Distributions
   ended    beginning   investment   (both realized    investment   investment   (from capital   Returns of       Total
   10/31    of period     income     and unrealized)   operations    income)        gains)        capital     distributions
 <S>       <C>         <C>          <C>               <C>          <C>          <C>             <C>          <C>             <S>
  International Stock
  1995       $12.84     $ 0.18          $(0.19)         $(0.01)      $(0.12)       $(0.62)           --           (0.74)
           ------------------------------------------------------------------------------------------------------------------
  1996        12.09       0.19            1.57            1.76        (0.18)        (0.20)           --           (0.38)
           ------------------------------------------------------------------------------------------------------------------
  1997        13.47       0.19            0.86            1.05        (0.18)        (0.20)           --           (0.38)
           ------------------------------------------------------------------------------------------------------------------
  1998        14.14       0.23            0.77            1.00        (0.20)        (0.55)           --           (0.75)
           ------------------------------------------------------------------------------------------------------------------
  1999        14.39       0.17            2.71            2.88        (0.22)        (0.35)           --           (0.57)
  International Growth & Income
  1999/h/    $10.00     $ 0.16/g/       $ 0.84          $ 1.00           --            --            --
 ---------------------------------------------------------------------------------------------------------------------------------
  Global Stock
  1996/d/    $10.00     $ 0.05/e/       $ 1.30          $ 1.35           --            --            --
           ------------------------------------------------------------------------------------------------------------------
  1997        11.35       0.06/e/         1.84            1.90       $(0.06)       $(0.18)           --          $(0.24)
           ------------------------------------------------------------------------------------------------------------------
  1998        13.01       0.09/e/         1.52            1.61        (0.06)        (0.53)           --           (0.59)
           -----------------------------------------------------------------------------------------------------------------------
  1999        14.03       0.05/e/         3.24            3.29        (0.10)        (0.45)           --           (0.55)
  International Discovery
  1995       $17.63     $ 0.10          $(2.38)         $(2.28)      $(0.06)       $(0.87)           --           (0.93)
           ------------------------------------------------------------------------------------------------------------------
  1996        14.43       0.07            1.59            1.66        (0.10)        (0.02)           --           (0.12)
           ------------------------------------------------------------------------------------------------------------------
  1997        15.97       0.02            0.25            0.27        (0.07)        (0.06)           --           (0.13)
           ------------------------------------------------------------------------------------------------------------------
  1998        16.11       0.05           (0.92)          (0.87)          --         (0.25)           --           (0.25)
           ------------------------------------------------------------------------------------------------------------------
  1999        14.99      (0.03)          12.09           12.06        (0.01)        (0.30)           --           (0.31)
  Emerging Markets Stock
  1995/b/    $10.00     $ 0.02/c/       $ 0.44          $ 0.46           --            --            --
           ------------------------------------------------------------------------------------------------------------------
  1996        10.48       0.02/c/         1.08            1.10       $(0.01)           --            --           (0.01)
           ------------------------------------------------------------------------------------------------------------------
  1997        11.59       0.02/c/        (0.23)          (0.21)       (0.04)       $(0.30)           --           (0.34)
           ------------------------------------------------------------------------------------------------------------------
  1998        11.08       0.05/c/        (3.06)          (3.01)          --         (0.15)           --           (0.15)
           ------------------------------------------------------------------------------------------------------------------
  1999         7.95      (0.01)/c/        3.18            3.17        (0.04)           --            --           (0.04)
  European Stock
  1995       $12.72     $ 0.20          $ 1.60          $ 1.80       $(0.12)       $(0.05)           --           (0.17)
           ------------------------------------------------------------------------------------------------------------------
  1996        14.35       0.25            2.79            3.04        (0.21)        (0.25)           --           (0.46)
           ------------------------------------------------------------------------------------------------------------------
  1997        16.93       0.25            3.12            3.37        (0.26)        (0.20)           --           (0.46)
           ------------------------------------------------------------------------------------------------------------------
  1998        19.84       0.28            3.52            3.80        (0.25)        (1.01)           --           (1.26)
           ------------------------------------------------------------------------------------------------------------------
  1999        22.38       0.23            2.14            2.37        (0.28)        (2.18)           --           (2.46)
  Japan
  1995       $11.64     $(0.04)         $(1.40)         $(1.44)          --        $(0.81)           --           (0.81)
           ------------------------------------------------------------------------------------------------------------------
  1996         9.39      (0.05)          (0.32)          (0.37)          --            --            --              --
           ------------------------------------------------------------------------------------------------------------------
  1997         9.02      (0.03)          (1.02)          (1.05)          --            --            --              --
           ------------------------------------------------------------------------------------------------------------------
  1998         7.97      (0.03)          (1.22)          (1.25)          --            --            --              --
           ------------------------------------------------------------------------------------------------------------------
  1999         6.72      (0.02)           6.92            6.90           --            --            --              --
  Latin America
  1995       $10.32     $ 0.05          $(3.92)         $(3.87)          --            --            --              --
           ------------------------------------------------------------------------------------------------------------------
  1996         6.49       0.10            1.60            1.70       $(0.06)           --            --
           ------------------------------------------------------------------------------------------------------------------
  1997         8.14       0.13            1.44            1.57        (0.11)       $(0.03)           --           (0.14)
           ------------------------------------------------------------------------------------------------------------------
  1998         9.60       0.16           (2.45)          (2.29)       (0.12)           --            --           (0.12)
           ------------------------------------------------------------------------------------------------------------------
  1999         7.22       0.09            0.86            0.95        (0.14)           --            --           (0.14)
 ---------------------------------------------------------------------------------------------------------------------------------
  New Asia
  1995       $10.07     $ 0.08          $(1.07)         $(0.99)      $(0.07)       $(0.89)           --           (0.96)
           ------------------------------------------------------------------------------------------------------------------
  1996         8.12       0.06            0.55            0.61        (0.09)           --            --           (0.09)
           ------------------------------------------------------------------------------------------------------------------
  1997         8.64       0.09           (2.71)          (2.62)       (0.06)        (0.01)           --           (0.07)
           ------------------------------------------------------------------------------------------------------------------
  1998         5.95       0.13           (1.07)          (0.94)       (0.08)           --            --           (0.08)
           ------------------------------------------------------------------------------------------------------------------
  1999         4.93       0.05            2.31            2.36        (0.09)           --            --           (0.09)
 ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>


ABOUT THE FUNDS
<PAGE>


T. ROWE PRICE



<TABLE>
  Table 5  Financial Highlights

<CAPTION>
                         Net Asset Value                                    Ratios/Supplemental Data
            Redemption                                                     Ratio of         Ratio of
  Period    fees added    Net asset                       Net assets,      expenses      net investment
   ended    to paid-in-   value, end                     end of period    to average       income to          Portfolio
   10/31      capital     of period    Total return/f/   (in thousands)   net assets   average net assets   turnover rate
 <S>       <C>           <C>          <C>               <C>              <C>          <C>                  <C>             <S>
  International Stock
  1995           --        $12.09           0.38%         $ 6,385,905      0.91%            1.56%              17.8%
           ----------------------------------------------------------------------------------------------------------------
  1996           --         13.47          14.87            8,775,736      0.88             1.58               11.6
           ----------------------------------------------------------------------------------------------------------------
  1997           --         14.14           7.90           10,005,170      0.85             1.33               15.8
           ----------------------------------------------------------------------------------------------------------------
  1998           --         14.39           7.48            9,537,129      0.85             1.50               12.2
           ----------------------------------------------------------------------------------------------------------------
  1999           --         16.70          20.67           10,615,338      0.85             1.05               17.6
  International Growth & Income
  1999           --        $11.00          10.00%/g/      $     9,776      1.25%/ag/        1.87%/ag/          35.8%/a/
  Global Stock
  1996/d/        --        $11.35          13.50%/e/      $    14,916      1.30%/ae/        0.88%/ae/          50.0%/a/
           ----------------------------------------------------------------------------------------------------------------
  1997           --         13.01         16.98/e/             32,020      1.30/e/         0.68/e/             41.8
           ----------------------------------------------------------------------------------------------------------------
  1998           --         14.03         12.89/e/             44,116      1.20/e/         0.76/e/             47.1
           ----------------------------------------------------------------------------------------------------------------
  1999           --         16.77         24.17/e/             73,837      1.20/e/         0.40/e/             37.5
  International Discovery
  1995        $0.01        $14.43         (13.06)%        $   325,374      1.50%            0.55%              43.5%
           ----------------------------------------------------------------------------------------------------------------
  1996           --         15.97          11.60              325,639      1.45             0.40               52.0
           ----------------------------------------------------------------------------------------------------------------
  1997           --         16.11           1.69              254,430      1.41             0.13               72.7
           ----------------------------------------------------------------------------------------------------------------
  1998           --         14.99          (5.40)             189,001      1.47             0.25               34.2
           ----------------------------------------------------------------------------------------------------------------
  1999         0.01         26.75          82.11              381,462      1.42            (0.17)              98.2
  Emerging Markets Stock
  1995/b/     $0.02        $10.48           4.80%/c/      $    14,399      1.75%/ac/        0.54%/ac/          28.8%/a/
           ----------------------------------------------------------------------------------------------------------------
  1996         0.02         11.59         10.69/c/             67,896      1.75/c/         0.44/c/             41.7
           ----------------------------------------------------------------------------------------------------------------
  1997         0.04         11.08          (1.60)/c/          119,285      1.75/c/         0.21/c/             84.3
           ----------------------------------------------------------------------------------------------------------------
  1998         0.03          7.95         (27.31)/c/           69,752      1.75/c/         0.46/c/             54.5
           ----------------------------------------------------------------------------------------------------------------
  1999           --         11.08         40.08/c/            108,418      1.75/c/         (0.14)/c/           59.0
 -------------------------------------------------------------------------------------------------------------------------------
  European Stock
  1995           --        $14.35          14.41%         $   490,573      1.20%            1.75%              17.2%
           ----------------------------------------------------------------------------------------------------------------
  1996           --         16.93          21.76              704,887      1.12             1.81               14.1
           ----------------------------------------------------------------------------------------------------------------
  1997           --         19.84          20.30              984,083      1.06             1.41               17.5
           ----------------------------------------------------------------------------------------------------------------
  1998           --         22.38          20.12            1,412,008      1.05             1.39               26.8
           ----------------------------------------------------------------------------------------------------------------
  1999           --         22.29          11.44            1,382,168      1.05             0.97               15.7
  Japan
  1995           --        $ 9.39         (12.87)%        $   181,383      1.50%           (0.48)%             62.4%
           ----------------------------------------------------------------------------------------------------------------
  1996           --          9.02          (3.94)             167,118      1.32            (0.48)              29.8
           ----------------------------------------------------------------------------------------------------------------
  1997           --          7.97         (11.64)             170,830      1.24            (0.39)              32.3
           ----------------------------------------------------------------------------------------------------------------
  1998           --          6.72         (15.68)             150,949      1.32            (0.37)              66.9
           ----------------------------------------------------------------------------------------------------------------
  1999           --         13.62         102.68              513,739      1.14            (0.27)              58.8
  Latin America
  1995        $0.04        $ 6.49         (37.11)%        $   148,600      1.82%            0.76%              18.9%
           ----------------------------------------------------------------------------------------------------------------
  1996         0.01          8.14          26.52              213,691      1.66             1.29               22.0
           ----------------------------------------------------------------------------------------------------------------
  1997         0.03          9.60          19.94              398,066      1.47             1.30               32.7
           ----------------------------------------------------------------------------------------------------------------
  1998         0.03          7.22         (23.93)             204,761      1.53             1.35               19.0
           ----------------------------------------------------------------------------------------------------------------
  1999           --          8.03          13.57              200,385      1.62             1.05               43.2
  New Asia
  1995           --        $ 8.12          (9.70)%        $ 1,908,893      1.15%            0.97%              63.7%
           ----------------------------------------------------------------------------------------------------------------
  1996           --          8.64           7.58            2,041,396      1.11             0.66               42.0
           ----------------------------------------------------------------------------------------------------------------
  1997           --          5.95         (30.61)             876,787      1.10             0.76               41.8
           ----------------------------------------------------------------------------------------------------------------
  1998           --          4.93         (15.97)             632,836      1.29             2.33               68.1
           ----------------------------------------------------------------------------------------------------------------
  1999           --          7.20          48.73              995,829      1.21             0.87               69.9
 --------------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>


ABOUT THE FUNDS

 /a/      Annualized.

 /b/For the period March 31, 1995 (commencement of operations) to October 31,
   1995.

 /c/
   Excludes expenses in excess of a 1.75% voluntary expense limitation in effect
   through October 31, 1999.

 /d/
   For the period December 29, 1995 (commencement of operations) to October 31,
   1996.

 /e/
   Excludes expenses in excess of a 1.30% voluntary expense limitation in effect
   through October 31, 1997, and a 1.20% voluntary expense limitation in effect
   through October 31, 1999.

 /f/Total return reflects the rate that an investor would have earned on an
   investment in the fund during each period, assuming reinvestment of all
   distributions.

 /g/
   Excludes expenses in excess of a 1.25% voluntary expense limitation in effect
   through October 31, 2000.



 /h/
   For the period December 21, 1998 (commencement of operations) to October 31,
   1999.
<PAGE>


T. ROWE PRICE
 ACCOUNT REQUIREMENTS AND TRANSACTION INFORMATION
 ----------------------------------------------------------
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.

Always verify your transactions by carefully reviewing the confirmation we send
you. Please report any discrepancies to Shareholder Services promptly.

Employer-Sponsored Retirement Plans and Institutional Accounts T. Rowe Price
Trust Company 1-800-492-7670
Transaction procedures in the following sections may not apply to
employer-sponsored retirement plans and institutional accounts. For procedures
regarding employer-sponsored retirement plans, please call T. Rowe Price Trust
Company or consult your plan administrator. For institutional account
procedures, please call your designated account manager or service
representative.


 OPENING A NEW ACCOUNT
 ----------------------------------------------------------
$2,500 minimum initial investment; $1,000 for retirement plans or 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.)

By Mail

Please make your check payable to T. Rowe Price Funds (otherwise it will be
returned) and send your check, together with the New Account Form, to the
appropriate address in the next paragraph. We do not accept third-party checks
to open new accounts, except for IRA Rollover checks that are properly endorsed.
In addition, the fund does not accept purchases made by credit card check.
<PAGE>

 INVESTING WITH T. ROWE PRICE
Mail via United States Postal Service
T. Rowe Price Account Services P.O. Box 17300 Baltimore, MD 21297-1300

Mail via private carriers/overnight services
T. Rowe Price Account Services Mailcode 17300 4515 Painters Mill Road Owings
Mills, MD 21117-4903

By Wire
Call Investor Services for an account number and give the following wire
information to your bank:

Receiving Bank:  PNC Bank, N.A. (Pittsburgh) Receiving Bank ABA#:  043000096
Beneficiary:  T. Rowe Price [fund name] Beneficiary Account:  1004397951
Originator to Beneficiary Information (OBI):  name of owner(s) and account
number


Complete a New Account Form and mail it to one of the appropriate addresses
listed previously.

Note: No services will be established and IRS penalty withholding may occur
until we receive a signed New Account Form. Also, retirement plan accounts and
IRAs cannot be opened by wire.

By Exchange
Call Shareholder Services or use Tele*Access or your personal computer (see
Automated Services under Information About Your 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. For limitations on exchanging, see
explanation of Excessive Trading under Transaction Procedures and Special
Requirements.

In Person
Drop off your New Account Form at any location listed on the back cover and
obtain a receipt.
<PAGE>


T. ROWE PRICE
 PURCHASING ADDITIONAL SHARES
 ----------------------------------------------------------
$100 minimum purchase; $50 minimum for retirement plans, Automatic Asset
Builder, and gifts or transfers to minors (UGMA/UTMA) accounts.

By ACH Transfer
Use Tele*Access or 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 listed in Opening a New
Account.

By Mail
 1. Make your check payable to T. Rowe Price Funds (otherwise it may be
   returned).

 2. Mail the check to us at the following address with either a fund
   reinvestment slip or a note indicating the fund you want to buy and your fund
   account number.

 3. Remember to provide your account number and the fund name on the memo line
   of your check.

Mail via United States Postal Service
T. Rowe Price Funds Account Services P.O. Box 17300 Baltimore, MD 21297-1300

/(For //mail via private carriers and overnight services//, see previous /
/section.)/

By Automatic Asset Builder
Fill out the Automatic Asset Builder section on the New Account or Shareholder
Services Form.


 EXCHANGING AND REDEEMING SHARES
 ----------------------------------------------------------
Exchange Service
You can move money from one account to an existing identically registered
account or open a new identically registered account. Remember, exchanges are
purchases and sales for tax purposes. (Exchanges into a state tax-free fund are
limited to investors living in states where the fund is registered.)

Redemptions
Redemption proceeds can be mailed to your account address, sent by ACH transfer
to your bank, or wired to your bank (provided your bank information is already
<PAGE>


ABOUT THE FUNDS
on file). For charges, see Electronic Transfers - By Wire under Information
About Your Services.


Some of the T. Rowe Price funds may impose a redemption fee of 0.5% to 2% on
shares held for less than six months, one year, or two years, as specified in
the prospectus. The fee is paid to the fund.

By Phone
Call Shareholder Services

If you find our phones busy during unusually volatile markets, please consider
placing your order by your personal computer or Tele*Access (if you have
previously authorized these services), mailgram, or express mail. For exchange
policies, please see Transaction Procedures and Special Requirements - Excessive
Trading.

By Mail

For each account involved, provide the account name, number, fund name, and
exchange or redemption amount. For exchanges, be sure to specify any fund you
are exchanging out of and the fund or funds you are exchanging into. T. Rowe
Price requires the signatures of all owners exactly as registered, and possibly
a signature guarantee (see Transaction Procedures and Special Requirements -
Signature Guarantees). Please use the appropriate address below:

Mail via United States Postal Service
for nonretirement and IRA accounts
T. Rowe Price Account Services P.O. Box 17302 Baltimore, MD 21297-1302

Mail via private carriers/overnight services
T. Rowe Price Account Services Mailcode 17302 4515 Painters Mill Road Owings
Mills, MD 21117-4903

For employer-sponsored retirement accounts
via U.S. Postal Service:
T. Rowe Price Trust Company P.O. Box 17479 Baltimore, MD 21297-1479
<PAGE>


T. ROWE PRICE
via private carriers and overnight services:

T. Rowe Price Trust Company Mailcode 17479 4515 Painters Mill Road Owings Mills,
MD 21117-4903

Redemptions from employer-sponsored retirement accounts must be in writing;
please call T. Rowe Price Trust Company or your plan administrator for
instructions. IRA distributions may be requested in writing or by telephone;
please call Shareholder Services to obtain an IRA Distribution Form or an IRA
Shareholder Services Form to authorize the telephone redemption service.


 RIGHTS RESERVED BY THE FUNDS
 ----------------------------------------------------------

Each fund and its agents reserve the following rights: (1) to waive or lower
investment minimums; (2) to accept initial purchases by telephone or mailgram;
(3) to refuse any purchase or exchange order; (4) to cancel or rescind any
purchase or exchange order (including, but not limited to, orders deemed to
result in excessive trading, market timing, fraud, or 5% ownership) 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; (5)
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; (6) to otherwise modify
the conditions of purchase and any services at any time; and (7) to act on
instructions believed to be genuine. These actions will be taken when, in the
sole discretion of management, they are deemed to be in the best interest of the
fund.

In an effort to protect each fund from the possible adverse effects of a
substantial redemption in a large account, as a matter of general policy, no
shareholder or group of shareholders controlled by the same person or group of
persons will knowingly be permitted to purchase in excess of 5% of the
outstanding shares of the fund, except upon approval of the fund's management.
<PAGE>


ABOUT THE FUNDS
 INFORMATION ABOUT YOUR SERVICES
 ----------------------------------------------------------
Shareholder Services 1-800-225-5132 Investor Services 1-800-638-5660
Many services are available to you as a T. Rowe Price shareholder; some you
receive automatically, and others you must authorize or request on the New
Account Form. By signing up for services on the New Account Form rather than
later on, you avoid having to complete a separate form and obtain a signature
guarantee. This section discusses some of the services currently offered. Our
Services Guide, which we mail to all new shareholders, contains detailed
descriptions of these and other services.

Note: Corporate and other institutional 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, institutions, and large and
small businesses: Traditional IRAs, Roth IRAs, SIMPLE IRAs, SEP-IRAs, Keoghs
(profit sharing, money purchase pension), 401(k)s, and 403(b)(7)s. For
information on IRAs, call Investor Services. For information on all other
retirement plans, including our no-load variable annuity, please call our Trust
Company at 1-800-492-7670.

Automated Services Tele*Access 1-800-638-2587 24 hours, 7 days
Tele*Access
24-hour service via a toll-free number enables you to (1) access information on
fund yields, prices, distributions, account balances, and your latest
transaction; (2) request checks, prospectuses, services forms, duplicate
statements, and tax forms; and (3) initiate purchase, redemption, and exchange
transactions in your accounts (see Electronic Transfers in this section).

Web Address www.troweprice.com
After authorizing this service, account transactions may also be conducted
through our Web site on the Internet. If you subscribe to America Online/(R)/,
you can access our Web site via keyword "T. Rowe Price" and conduct transactions
in your account.

Plan Account Line 1-800-401-3279
Plan Account Line
This 24-hour service is similar to Tele*Access but is designed specifically to
meet the needs of retirement plan investors.
<PAGE>


T. ROWE PRICE
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 back 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 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 or Emerging Markets Bond
Funds) 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 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.

Automatic Exchange
You can set up systematic investments from one fund account into another, such
as from a money fund into a stock fund.
<PAGE>


ABOUT THE FUNDS
 T. ROWE PRICE BROKERAGE
 ----------------------------------------------------------

To Open an Account 1-800-638-5660 For Existing Brokerage Investors
1-800-225-7720
Investments available through our brokerage service include  stocks, options,
bonds, and others  at commission savings over full-service brokers*. We also
provide a wide range of services, including:

Automated Telephone and Computer Services
You can enter stock and option orders, access quotes, and review account
information around the clock by phone with Tele-Trader or via the Internet with
Internet-Trader. Any trades entered through Tele-Trader save you an additional
10% on commissions. For stock trades entered through Internet-Trader, you will
pay a commission of $24.95 for up to 1,000 shares plus $.02 for each share over
1,000. Option trades entered through Internet-Trader save you 10% over our
standard commission schedule. All trades are subject to a $35 minimum commission
except stock trades placed through Internet-Trader.

Investor Information
A variety of informative reports, such as our Brokerage Insights series and S&P
Market Month newsletter, as well as access to on-line research tools can help
you better evaluate economic trends and investment opportunities.

Dividend Reinvestment Service

If you elect to participate in this service, the cash dividends from the
eligible securities held in your account will automatically be reinvested in
additional shares of the same securities free of charge. Dividend payments must
be $10.00 or greater to qualify for reinvestment. Most securities listed on
national securities exchanges or on Nasdaq are eligible for this service.

/*Services //v//ary //b//y //f//irm./

/T. Rowe Price// Brokerage is a division of //T. Rowe Price// Investment /
/Services, Inc., Member NASD/SIPC./
<PAGE>


T. ROWE PRICE
 INVESTMENT INFORMATION
 ----------------------------------------------------------
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety of
information in addition to account statements. Most of this information is also
available on our Web site at www.troweprice.com.

Shareholder Reports
Fund managers' reviews of their strategies and performance. If several members
of a household own the same fund, only one fund report is mailed to that
address. To receive additional copies, please call Shareholder Services or write
to us at P.O. Box 17630, Baltimore, Maryland 21297-1630.

The T. Rowe Price Report
A quarterly investment newsletter discussing markets and financial strategies.

Performance Update
A quarterly review of all T. Rowe Price fund results.

Insights
Educational reports on investment strategies and financial markets.

Investment Guides
Asset Mix Worksheet, College Planning Kit, Diversifying Overseas: A T. Rowe
Price Guide to International Investing, Managing Your Retirement Distribution,
Personal Strategy Planner, Retirees Financial Guide, Retirement Planning Kit,
and Tax Considerations for Investors.
<PAGE>


ABOUT THE FUNDS
<PAGE>


T. ROWE PRICE
<PAGE>


ABOUT THE FUNDS
<PAGE>


To help you achieve your financial goals, T. Rowe Price offers a wide range of
stock, bond, and money market investments, as well as convenient services and
informative reports.

A fund Statement of Additional Information has been filed with the Securities
and Exchange Commission and is incorporated by reference into this prospectus.
Further information about fund investments, including a review of market
conditions and the manager's recent strategies and their impact on performance,
is available in the annual and semiannual shareholder reports. To obtain free
Fund reports and Statements of Additional Information are also available from
the Securities and Exchange Commission by calling 1-800-SEC-0330 or by writing
the SEC's Public Reference Section, Washington, D.C. 20549-6009 (you will be
charged a duplicating fee); by visiting the SEC's public reference room; or by
consulting the SEC's Web site at www.sec.gov.

 900 17th Street, N.W. Farragut Square

 For retirement plan investors: The appropriate 800 number appears on your
 retirement account statement.

(LOGO)

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

C01-040 3/1/00

1940 Act File No. 811-2958


<PAGE>

PROSPECTUS
March 1, 2000
T. ROWE PRICE


International Stock Fund


 A stock fund seeking long-term capital growth through investments in non-U.S.
 companies.
(T. ROWE PRICE RAM LOGO)
 The Securities and Exchange Commission has not approved or disapproved these
 securities or passed upon the adequacy of this prospectus. Any representation
 to the contrary is a criminal offense.
<PAGE>

T. Rowe Price International Funds, Inc.
  T. Rowe Price International Stock Fund
Prospectus

March 1, 2000

<TABLE>
<CAPTION>
<S>      <C>  <C>                                       <C>
              ABOUT THE FUND
1
              Objective, Strategy, Risks, and Expenses    1

              -----------------------------------------------
              Other Information About the Fund            5

              -----------------------------------------------


              ABOUT YOUR ACCOUNT
2
              Pricing Shares and Receiving                7
              Sale Proceeds
              -----------------------------------------------
              Distributions and Taxes                     8

              -----------------------------------------------
              Transaction Procedures and                 11
              Special Requirements
              -----------------------------------------------


              MORE ABOUT THE FUND
3
              Organization and Management                14

              -----------------------------------------------
              Understanding Performance Information      17

              -----------------------------------------------
              Investment Policies and Practices          18

              -----------------------------------------------
              Financial Highlights                       22

              -----------------------------------------------


              INVESTING WITH T. ROWE PRICE
4
              Account Requirements                       24
              and Transaction Information
              -----------------------------------------------
              Opening a New Account                      24

              -----------------------------------------------
              Purchasing Additional Shares               26

              -----------------------------------------------
              Exchanging and Redeeming                   26

              -----------------------------------------------
              Rights Reserved by the Fund                28

              -----------------------------------------------
              Information About Your                     29
               Services
              -----------------------------------------------
              T. Rowe Price                              31
               Brokerage
              -----------------------------------------------
              Investment Information                     32

              -----------------------------------------------
</TABLE>



 Rowe Price-Fleming International, Inc. ("Price-Fleming"), the investment
manager, was founded in 1979 as a joint venture between T. Rowe Price
Associates, Inc. and Robert Fleming Holdings, Ltd. As of December 31, 1999,
Price-Fleming managed $42.6 billion in foreign stocks and bonds through its
offices in Baltimore, London, Tokyo, Singapore, Hong Kong, Buenos Aires, and
Paris.
 Mutual fund shares are not deposits or obligations of, or guaranteed by, any
depository institution. Shares are not insured by the FDIC, Federal Reserve, or
any other government agency, and are subject to investment risks, including
possible loss of the principal amount invested.
<PAGE>

 ABOUT THE FUND

 OBJECTIVE, STRATEGY, RISKS, AND EXPENSES
 ----------------------------------------------------------
   To help you decide whether this fund is appropriate for you, this section
   reviews its major characteristics.


 What is the fund's objective?

   The fund seeks long-term growth of capital through investments primarily in
   the common stocks of established, non-U.S. companies.


 What is the fund's principal investment strategy?


   We expect to invest substantially all of the fund's assets outside the U.S.
   and to diversify broadly among developed and emerging countries throughout
   the world. Stock selection reflects a growth style. We may purchase the
   stocks of companies of any size, but our focus will typically be on large
   and, to a lesser extent, medium-sized companies.

     Growth Investing
     Selection of common stocks reflects a growth style. Price-Fleming employs
     in-depth fundamental research in an effort to identify companies capable of
     achieving and sustaining above-average, long-term earnings growth. We seek
     to purchase such stocks at reasonable prices in relation to present or
     anticipated earnings, cash flow, or book value, and valuation factors often
     influence our allocations among large-, mid-, or small-cap shares.

     While we invest with an awareness of the global economic backdrop and our
     outlook for individual countries, bottom-up stock selection is the focus of
     our decision-making. Country allocation is driven largely by stock
     selection, though we may limit investments in markets that appear to have
     poor overall prospects.

     In selecting stocks, we generally favor companies with one or more of the
     following characteristics:

     . leading market position;

     . attractive business niche;

     . strong franchise or natural monopoly;

     . technological leadership or proprietary advantages;

     . seasoned management;


     . earnings growth and cash flow sufficient to support growing dividends;
       and

     . healthy balance sheet with relatively low debt.
<PAGE>

T. ROWE PRICE

   While the fund invests primarily in common stocks, to a lesser extent we may
   also purchase other securities, including futures and options, in keeping
   with the fund's objective.

   The fund may sell securities for a variety of reasons, such as to secure
   gains, limit losses, or redeploy assets into more promising opportunities.


 What are the main risks of investing in the fund?

   As with all stock funds, this fund's share price can fall because of weakness
   in one or more of its primary equity markets, a particular industry, or
   specific holdings. Stock markets can decline for many reasons, including
   adverse political or economic developments, changes in investor psychology,
   or heavy institutional selling. The prospects for an industry or company may
   deteriorate because of a variety of factors, including disappointing earnings
   or changes in the competitive environment. In addition, our assessment of
   companies held in the fund may prove incorrect, resulting in losses or poor
   performance even in rising markets.

   Even investments in countries with highly developed economies are subject to
   significant risks. For example, Japanese stocks were in a steep decline for
   much of the 1990s.

   Funds that invest overseas generally carry more risk than funds that invest
   strictly in U.S. assets. Some particular risks affecting this fund include
   the following:


  . Currency risk  This refers to a decline in the value of a foreign currency
   versus the U.S. dollar, which reduces the dollar value of securities
   denominated in that currency. The overall impact on a fund's holdings can be
   significant and long-lasting depending on the currencies represented in the
   portfolio, how each one appreciates or depreciates in relation to the U.S.
   dollar, and whether currency positions are hedged. Under normal conditions,
   the fund does not engage in extensive foreign currency hedging programs.
   Further, exchange rate movements are unpredictable and it is not possible to
   effectively hedge the currency risks of many developing countries.

  . Geographic risk  The economies and financial markets of certain regions-such
   as Latin America and Asia-can be highly interdependent and may decline all at
   the same time.

  . Emerging market risk  To the extent the fund invests in emerging markets, it
   is subject to greater risk than a fund investing only in developed markets.
   The economic and political structures of developing nations, in most cases,
   do not compare favorably with the U.S. or other developed countries in terms
   of wealth and stability, and their financial markets often lack liquidity.
   Fund performance will likely be negatively affected by portfolio exposure to
   nations in the midst of hyperinflation, currency devaluation, trade
   disagreements, sudden political upheaval, or interventionist government
   policies. Significant buying or selling
<PAGE>

ABOUT THE FUND
   actions by a few major investors may also heighten the volatility of emerging
   markets. These factors make investing in such countries significantly riskier
   than in other countries and any one of them could cause the fund's share
   price to decline.


  . Other risks of foreign investing  Other risks result from the varying stages
   of economic and political development, the differing regulatory environments,
   trading days, and accounting standards, and higher transaction costs of
   non-U.S. markets. Investments outside the United States could be subject to
   actions such as capital or currency controls, nationalizing a company or
   industry, expropriating assets, or imposing punitive taxes which would have
   an adverse effect on the fund.

  . While certain countries have made progress in economic growth,
   liberalization, fiscal discipline, and political and social stability, there
   is no assurance these trends will continue.

  . Futures/options risk  To the extent the fund uses futures and options, it is
   exposed to additional volatility and potential losses.

   As with any mutual fund, there can be no guarantee the fund will achieve its
   objective.

  . The fund's share price may decline, so when you sell your shares, you may
   lose money.


 How can I tell if the fund is appropriate for me?

   Consider your investment goals, your time horizon for achieving them, and
   your tolerance for the inherent risk of common stock and international
   investments. If you want to diversify your domestic stock portfolio by adding
   foreign investments, seek the long-term capital appreciation potential of
   growth stocks, and are comfortable with the risks that accompany foreign
   investments, the fund could be an appropriate part of your overall investment
   strategy.

   The fund can be used in both regular and tax-deferred accounts, such as IRAs.

  . The fund should not represent your complete investment program or be used
   for short-term trading purposes.


 How has the fund performed in the past?


   The bar chart showing calendar year returns and the average annual total
   return table indicate risk by illustrating how much returns can differ from
   one year to the next and over time. Fund past performance is no guarantee of
   future returns.

   The fund can also experience short-term performance swings, as shown by the
   best and worst calendar quarter returns during the years depicted in the
   chart.

<PAGE>

T. ROWE PRICE
<TABLE>
<CAPTION>
                      Calendar Year Total Returns
  "90"   "91"   "92"   "93"   "94"   "95"   "96"   "97"   "98"    "99"
 ----------------------------------------------------------------------
 <S>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>
 -8.89  15.87  -3.47  40.11  -0.76  11.39  15.99  2.70   16.14   34.60
 ----------------------------------------------------------------------
</TABLE>


          Quarter ended              Total return

 Best quarter                           12/31/99 24.70%

 Worst quarter                           9/30/90 -18.70%

<TABLE>
 Table 1  Average Annual Total Returns
<CAPTION>
                                         Periods ended December 31, 1999
                                          1 year    5 years    10 years/ /
 --------------------------------------------------------------------------
 <S>                                     <C>       <C>        <C>
  International Stock Fund                34.60%    15.71%       11.38%

  MSCI EAFE Index                         27.30     13.15         7.33
  Lipper International Funds Average/ /   40.80     15.05        10.22
 --------------------------------------------------------------------------
</TABLE>


 These figures include changes in principal value, reinvested dividends, and
 capital gain distributions, if any.


 What fees or expenses will I pay?


   The fund is 100% no load. There are no fees or charges to buy or sell fund
   shares, reinvest dividends, or exchange into other T. Rowe Price funds. There
   are no 12b-1 fees. Like all mutual funds, the fund charges the following:

  . A management fee  The percent of fund assets paid to the fund's investment
   manager. The fund's fee comprises a group fee, 0.32% as of December 31, 1999,
   and an individual fund fee of 0.35%.

  . "Other" administrative expenses  Primarily the servicing of shareholder
   accounts, such as providing statements and reports, disbursing dividends, and
   providing custodial services.
<PAGE>

ABOUT THE FUND
<TABLE>
 Table 2  Fees and Expenses of the Fund
<CAPTION>
                                               Annual fund operating expenses
                                        (expenses that are deducted from fund assets)
 -------------------------------------------------------------------------------------
 <S>                                   <C>
  Management fee                                           0.67%/ // /
  Other expenses                                           0.18%
  Total annual fund operating                              0.85%/ // /
  expenses
 -------------------------------------------------------------------------------------
</TABLE>



   Example.  The following table gives you a rough idea of how expense ratios
   may translate into dollars and helps you to compare the cost of investing in
   this fund with that of other funds. Although your actual costs may be higher
   or lower, the table shows how much you would pay if operating expenses remain
   the same, you invest $10,000, you earn a 5% annual return, and you hold the
   investment for the following periods:
<TABLE>
<CAPTION>
   1 year      3 years      5 years       10 years
 ----------------------------------------------------
 <S>         <C>          <C>          <C>
    $87         $271         $471          $1,049
 ----------------------------------------------------
</TABLE>




 OTHER INFORMATION ABOUT THE FUND
 ----------------------------------------------------------

 What are some of the potential rewards of investing overseas through the fund?


   Investing abroad increases the opportunities available to you. Many foreign
   countries may have greater potential for economic growth than the U.S.
   Foreign investments also provide effective diversification for an all-U.S.
   portfolio, since historically their returns have not moved in sync with U.S.
   stocks over long time periods. Investing a portion of your overall portfolio
   in foreign stock funds can enhance your diversification while providing the
   opportunity to boost long-term returns.


 How does the portfolio manager try to reduce risk?

   The principal tools we use to try to reduce risk are intensive research and
   diversification. Currency hedging techniques may be used from time to time.


  . Price-Fleming employs a team of experienced portfolio managers and analysts,
   with offices in London, Tokyo, Singapore, Hong Kong, Buenos Aires, Paris, and
   Baltimore. Portfolio managers keep close watch on individual investments as
   well as on political and economic trends in each country and region. Holdings
   are adjusted according to the manager's analysis and outlook.

  . Diversification significantly reduces, but does not eliminate, risk. The
   impact on the fund's share price from a drop in the price of a particular
   stock is reduced substantially by investing in a portfolio with dozens of
   different companies. Likewise, the impact of unfavorable developments in a
   particular country is reduced
<PAGE>

T. ROWE PRICE
   when investments are spread among many countries. However, the economies and
   financial markets of countries in a certain region may be influenced heavily
   by one another.

  . Though the fund doesn't normally engage in extensive currency hedging, fund
   managers can employ currency forwards and options to hedge the risk to the
   portfolio when foreign exchange movements are expected to be unfavorable for
   U.S. investors. In a general sense, these tools allow a manager to lock in a
   specified exchange rate for a stated period of time. (For more details,
   please see Foreign Currency Transactions under Investment Policies and
   Practices.) If the manager's forecast proves to be wrong, such a hedge may
   cause a loss. Also, it may be difficult or impractical to hedge currency risk
   in many emerging countries.


 Is there other information I can review before making a decision?

   Investment Policies and Practices in Section 3 discusses various types of
   portfolio securities the fund may purchase as well as types of management
   practices the fund may use.
<PAGE>

 ABOUT YOUR ACCOUNT
 PRICING SHARES AND RECEIVING SALE PROCEEDS
 ----------------------------------------------------------
   Here are some procedures you should know when investing in a T. Rowe Price
   fund.


 How and when shares are priced

   The share price (also called "net asset value" or NAV per share) for the fund
   is calculated at the close of the New York Stock Exchange, normally 4 p.m.
   ET, each day the New York Stock Exchange is open for business. To calculate
   the NAV, the fund's assets are valued and totaled, liabilities are
   subtracted, and the balance, called net assets, is divided by the number of
   shares outstanding. Current market values are used to price fund shares.


   The fund's portfolio securities usually are valued on the basis of the most
   recent closing market prices at 4 p.m. ET when the fund calculates its NAV.
   Most of the securities in which the fund invests, however, are traded in
   markets that close before that time. For securities primarily traded in the
   Far East, for example, the most recent closing prices may be as much as 15
   hours old at 4 p.m. Normally, developments that could affect the values of
   portfolio securities that occur between the close of the foreign market and 4
   p.m. ET will not be reflected in the fund's NAV. However, if the fund
   determines that such developments are so significant that they will, in its
   judgment, clearly and materially affect the value of the fund's securities,
   the fund may adjust the previous closing prices to reflect what it believes
   to be the fair value of the securities as of 4:00 p.m. ET. The fund may fair
   value securities in other situations, for example, when a particular foreign
   market is closed but the fund is open.

  . The various ways you can buy, sell, and exchange shares are explained at the
   end of this prospectus and on the New Account Form. These procedures may
   differ for institutional and employer-sponsored retirement accounts.


 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.

   Fund shares may be purchased through various third-party intermediaries
   including banks, brokers, and investment advisers. Where authorized by a
   fund, orders will be priced at the NAV next computed after receipt by the
   intermediary. Consult your intermediary to determine when your orders will be
   priced. The intermediary may charge a fee for its services.
<PAGE>

T. ROWE PRICE
   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

  . When filling out the New Account Form, you may wish to give yourself the
   widest range of options for receiving proceeds from a sale.

   If your request is received 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 Automated Clearing House (ACH) transfer or bank wire.
   Proceeds sent by ACH transfer should be credited the second day after the
   sale. ACH is an automated method of initiating payments from, and receiving
   payments in, your financial institution account. The ACH system is supported
   by over 20,000 banks, savings banks, and credit unions. Proceeds sent by bank
   wire should be credited to your account the next business day.


  . Exception:  Under certain circumstances and when deemed to be in a fund's
   best interests, your proceeds may not be sent for up to seven calendar days
   after we receive your redemption request.

  . If for some reason we cannot accept your request to sell shares, we will
   contact you.



 USEFUL INFORMATION ON DISTRIBUTIONS AND TAXES
 ----------------------------------------------------------
  . All net investment income and realized capital gains are distributed to
   shareholders.


 Dividends and Other Distributions

   Dividend and capital gain distributions are reinvested in additional fund
   shares in your account unless you select another option on your New Account
   Form. 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, the fund reserves the right to
   reinvest your distribution check in your account at the NAV on the day of the
   reinvestment and to reinvest all subsequent distributions in shares of the
   fund. No interest will accrue on amounts represented by uncashed distribution
   or redemption checks.
<PAGE>

ABOUT THE FUND
   Income dividends
  . The fund declares and pays dividends (if any) annually.

  . The dividends of the fund will not be eligible for the 70% deduction for
   dividends received by corporations, if, as expected, none of the fund's
   income consists of dividends paid by U.S. corporations.

   Capital gains
  . A capital gain or loss is the difference between the purchase and sale price
   of a security.

  . If a fund has net capital gains for the year (after subtracting any capital
   losses), they are usually declared and paid in December to shareholders of
   record on a specified date that month.


 Tax Information

  . You will be sent timely information for your tax filing needs.

   You need to be aware of the possible tax consequences when:

  . You sell fund shares, including an exchange from one fund to another.

  . The fund makes a distribution to your account.

   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.


   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 most new accounts or those opened by
   exchange in 1984 or later, we will provide the gain or loss on the shares you
   sold during the year, based on the "average cost," single category 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 you make (except for systematic purchases and
   redemptions) and a year-end statement detailing all your transactions in each
   fund account during the year.
<PAGE>

T. ROWE PRICE
   Taxes on fund distributions
  . The following summary does not apply to retirement accounts, such as IRAs,
   which are not subject to current tax.

   In January, you will be sent Form 1099-DIV indicating the tax status of any
   dividend and capital gain distributions made to you. This information will
   also be reported to the IRS. Distributions are generally taxable to you for
   the year in which they were paid. You will be sent any additional information
   you need to determine your taxes on fund distributions, such as the portion
   of your dividends, if any, that may be exempt from state income taxes.

   The tax treatment of a capital gain distribution is determined by how long
   the fund held the portfolio securities, not how long you held shares in the
   fund. Short-term (one year or less) capital gain distributions are taxable at
   the same rate as ordinary income and long-term gains on securities held more
   than 12 months are taxed at a maximum rate of 20%. However, if you realized a
   loss on the sale or exchange of fund shares that you held six months or less,
   your short-term loss will be reclassified to a long-term loss to the extent
   of any long-term capital gain distribution received during the period you
   held the shares.

   Distributions resulting from the sale of certain foreign currencies and debt
   securities, to the extent of foreign exchange gains, are taxed as ordinary
   income or loss. If the fund pays nonrefundable taxes to foreign governments
   during the year, the taxes will reduce the fund's dividends but will still be
   included in your taxable income. However, you may be able to claim an
   offsetting credit or deduction on your tax return for your portion of foreign
   taxes paid by the fund.

  . Distributions are taxable whether reinvested in additional shares or
   received in cash.

   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 a portion of the money you just invested in the form of a taxable
   distribution. Therefore, you may wish to find out a fund's record date before
   investing. Of course, a fund's share price may, at any time, reflect
   undistributed capital gains or income and unrealized appreciation, which may
   result in future taxable distributions.

   Note: For information on the tax consequences of hedging, please see
   Investment Policies and Practices.



 TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS
 ----------------------------------------------------------
  . Following these procedures helps assure timely and accurate transactions.
<PAGE>

ABOUT THE FUND
 Purchase Conditions

   Nonpayment
   If you pay with a check or ACH transfer that does not clear or if your
   payment is not timely received, 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; type of check
   All purchases must be paid for in U.S. dollars; checks must be drawn on U.S.
   banks.


 Sale (Redemption) Conditions

   Holds on immediate redemptions: 10-day hold

   If you sell shares that you just purchased and paid for by check or ACH
   transfer, the fund will process your redemption but will generally delay
   sending you the proceeds for up to 10 calendar days to allow the check or
   transfer to clear. If your redemption request was sent by mail or mailgram,
   proceeds will be mailed no later than the seventh calendar day following
   receipt unless the check or ACH transfer has not cleared. (The 10-day hold
   does not apply to purchases paid for by bank wire or automatic purchases
   through your paycheck.)

   Telephone, Tele*Access/(R)/, and personal computer transactions

   Exchange and redemption services through telephone and Tele*Access are
   established automatically when you sign the New Account Form unless you check
   the boxes that state you do not want these services. Personal computer
   transactions must be authorized separately. T. Rowe Price funds and their
   agents use reasonable procedures designed to verify the identity of the
   shareholder. If these procedures are followed, the funds and their agents are
   not liable for any losses that may occur from acting on unauthorized
   instructions. A confirmation is sent promptly after a transaction. Please
   review it carefully and contact T. Rowe Price immediately about any
   transaction you believe to be unauthorized. All telephone 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 fund net assets, the
   fund has the right to pay the difference between the redemption amount and
   the lesser of the two previously mentioned figures with securities from the
   fund.
<PAGE>

T. ROWE PRICE
 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. To deter such activity, we have adopted
   an excessive trading policy. If you violate our excessive trading policy, you
   may be barred indefinitely and without further notice from further purchases
   of T. Rowe Price funds.

  . Trades placed directly with T. Rowe Price  If you trade directly with T.
   Rowe Price, you can make one purchase and sale involving the same fund within
   any 120-day period. For example, if 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
   this limit, you are in violation of our excessive trading policy.

   Two types of transactions are exempt from this policy: 1) trades solely in
   money market funds (exchanges between a money fund and a nonmoney fund are
   not exempt); and 2) systematic purchases or redemptions (see Information
   About Your Services).


  . Trades placed through intermediaries  If you purchase fund shares through an
   intermediary including a broker, bank, investment adviser, or other third
   party and hold them for less than 60 calendar days, you are in violation of
   our excessive trading policy.


 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 your 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 T. Rowe Price mutual fund investments total
   $25,000 or more. Accounts employing automatic investing (e.g., payroll
   deduction, automatic
<PAGE>

ABOUT THE FUND
   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:

  . Written requests 1) to redeem over $100,000, or 2) to wire redemption
   proceeds.

  . Remitting redemption proceeds to any person, address, or bank account not on
   record.

  . Transferring redemption proceeds to a T. Rowe Price fund account with a
   different registration (name or ownership) from yours.

  . Establishing certain services after the account is opened.

   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>

 MORE ABOUT THE FUND
 ORGANIZATION AND MANAGEMENT
 ----------------------------------------------------------

 How is the fund organized?


   T. Rowe Price International Funds, Inc. (the "corporation"), currently
   consists of 12 series, each representing a separate class of shares and
   having different objectives and investment policies. The 12 series and the
   years in which each was established are as follows: International Stock Fund,
   1980; International Bond Fund, 1986; International Discovery Fund, 1988;
   European Stock Fund, New Asia Fund, Global Bond Fund, 1990; Japan Fund, 1991;
   Latin America Fund, 1993; Emerging Markets Bond Fund, 1994; Emerging Markets
   Stock Fund, Global Stock Fund, 1995, and International Growth & Income Fund,
   1998. (The bond/equity funds are described in a separate prospectus.)


 What is meant by "shares"?

   As with all mutual funds, investors purchase shares when they put money in a
   fund. These shares are part of a fund's authorized capital stock, but share
   certificates are not issued.

   Each share and fractional share entitles the shareholder to:

  . Receive a proportional interest in a fund's income and capital gain
   distributions.

  . 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, to avoid unnecessary
   costs to fund shareholders, do not do so except when certain matters, such as
   a change in fundamental policies, must be decided. In addition, shareholders
   representing at least 10% of all eligible votes may call a special meeting,
   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 instructions on voting by mail
   or telephone, or on the Internet.
<PAGE>

ABOUT THE FUND
 Who runs the fund?

   General Oversight
   The corporation is governed by a Board of Directors that meets regularly to
   review the fund investments, performance, expenses, and other business
   affairs. The Board elects the corporation's officers. The policy of the
   corporation is that the majority of Board members are independent of
   Price-Fleming.

  . All decisions regarding the purchase and sale of fund investments are made
   by Price-Fleming - specifically by the fund's Investment Advisory Group.

   Investment Manager
   Price-Fleming is responsible for selection and management of the fund's
   portfolio investments. Price-Fleming's U.S. office is located at 100 East
   Pratt Street, Baltimore, Maryland 21202. Price-Fleming also has offices in
   London, Tokyo, Singapore, Hong Kong, Buenos Aires, and Paris. Price-Fleming
   was incorporated in Maryland in 1979 as a joint venture between T. Rowe Price
   and Robert Fleming Holdings Limited (Flemings).


   T. Rowe Price, Flemings, and Jardine Fleming Group Limited (Jardine Fleming)
   are owners of Price-Fleming. The common stock of Price-Fleming is 50% owned
   by a wholly owned subsidiary of T. Rowe Price, 25% by a subsidiary of
   Flemings, and 25% by a subsidiary of Jardine Fleming. Jardine Fleming is
   owned by Flemings. T. Rowe Price has the right to elect a majority of the
   Board of Directors of Price-Fleming, and Flemings has the right to elect the
   remaining directors, one of whom will be nominated by Jardine Fleming.

  . Flemings is a diversified investment organization which participates in a
   global network of regional investment offices in New York, London, Zurich,
   Geneva, Tokyo, Hong Kong, Manila, Kuala Lumpur, Seoul, Taipei, Bombay,
   Jakarta, Singapore, Bangkok, and Johannesburg.

   Portfolio Management

   The fund has an Investment Advisory Group that has day-to-day responsibility
   for managing the portfolio and developing and executing the fund's investment
   program. The members of the advisory group are: John R. Ford, James B.M.
   Seddon, Mark C.J. Bickford-Smith, and David J.L. Warren.

   John Ford joined Price-Fleming in 1982 and has 20 years of experience with
   the Fleming Group in research and portfolio management. James Seddon joined
   Price-Fleming in 1987 and has 13 years of portfolio management experience.
   Mark Bickford-Smith joined Price-Fleming in 1995 and has 15 years of
   experience in equity research and portfolio management. David Warren joined
   Price-Fleming in 1983 and has 19 years of experience in equity research,
   fixed income research, and portfolio management.
<PAGE>

T. ROWE PRICE
   Portfolio Transactions

   Decisions with respect to the purchase and sale of the fund's portfolio
   securities on behalf of the fund are made by Price-Fleming. The corporation's
   Board of Directors has authorized Price-Fleming to utilize affiliates of
   Flemings and Jardine Fleming in the capacity of broker in connection with the
   execution of a fund's portfolio transactions if Price-Fleming believes that
   doing so would result in an economic advantage (in the form of lower
   execution costs or otherwise) to the fund.

   The Management Fee
   This fee has two parts - an "individual fund fee," which reflects a fund's
   particular characteristics, and a "group fee." The group fee, which is
   designed to reflect the benefits of the shared resources of the T. Rowe Price
   investment management complex, is calculated daily based on the combined net
   assets of all T. Rowe Price funds (except the Spectrum Funds, and any
   institutional, index, 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.


<TABLE>
   Group Fee Schedule
<CAPTION>
    <S>               <C>
     0.334%/a/         First $50 billion

     0.305%            Next $30 billion

     0.300%            Next $40 billion

     0.295%            Thereafter
    --------------------------------------
</TABLE>



   /a/     Represents a blended group fee rate containing various break points.


   The fund's portion of the group fee is determined by the ratio of its daily
   net assets to the daily net assets of all the T. Rowe Price funds described
   previously. Based on combined T. Rowe Price funds' assets of over $106
   billion at December 31, 1999, the group fee was 0.32%. The individual fund
   fee is 0.35%.

   Research and Administration

   Certain administrative support is provided by T. Rowe Price, which receives
   from Price-Fleming a fee of 0.15% of the market value of all assets in equity
   accounts, 0.15% of the market value of all assets in active fixed income
   accounts, and 0.035% of the market value of all assets in passive fixed
   income accounts under Price-Fleming's management. Price-Fleming has entered
   into research agreements with Fleming Investment Management Limited (FIM) and
   Jardine Fleming International Holdings Limited (JFIH). For services under the
   research agreements, FIM and JFIH each receive a fee of 0.075% of the market
   value of all assets in equity accounts under Price-Fleming's management. FIM
   and JFIH each receive a fee of 0.075% of the market value of all assets in
   active fixed income accounts and 0.0175% of such market value in passive
   fixed income accounts
<PAGE>


ABOUT THE FUND
   under Price-Fleming's management. In addition to the research provided under
   these agreements, Price-Fleming has access to the publicly available research
   materials produced by FIM and JFIH. FIM is a wholly owned subsidiary of
   Flemings. JFIH is a wholly owned subsidiary of Jardine Fleming.



 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 T. Rowe Price
   advertisements; and in the media.


 Total Return


   This tells you how much an investment 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. Therefore, total return numbers include
   the effect of compounding.

   Advertisements may include cumulative or 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 return of an investment for a specified period. A
   cumulative return does not indicate how much the value of the investment may
   have fluctuated during the period. For example, an investment could have a
   10-year positive cumulative return despite experiencing some negative years
   during that time.


 Average Annual Total Return

   This is always hypothetical and should not be confused with actual
   year-by-year results. It smooths out all the variations in annual performance
   to tell you what constant year-by-year return would have produced the
   investment's actual cumulative return. This gives you an idea of an
   investment's annual contribution to your portfolio, provided you held it for
   the entire period.
<PAGE>

T. ROWE PRICE
 INVESTMENT POLICIES AND PRACTICES
 ----------------------------------------------------------

   This section takes a detailed look at some of the types of fund portfolio
   securities and the various kinds of investment practices that may be used in
   day-to-day portfolio management. Fund investments are subject to further
   restrictions and risks described in the Statement of Additional Information.

   Shareholder approval is required to substantively change fund objectives and
   certain investment restrictions noted in the following section as
   "fundamental policies." The managers follow certain "operating policies,"
   which can be changed without shareholder approval. However, significant
   changes are discussed with shareholders in fund reports. Fund investment
   restrictions and policies are adhered to at the time of investment. A later
   change in circumstances will not require the sale of an investment if it was
   proper at the time it was made.

   Fund holdings of certain kinds of investments cannot exceed maximum
   percentages of total assets, which are set forth in this prospectus. For
   instance, fund investments in hybrid instruments are limited to 10% of total
   assets. While these restrictions provide a useful level of detail about fund
   investments, investors should not view them as an accurate gauge of the
   potential risk of such investments. For example, in a given period, a 5%
   investment in hybrid instruments 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 fund's other
   investments.


   Changes in fund holdings, fund performance, and the contribution of various
   investments are discussed in the shareholder reports sent to you.

  . Fund managers have considerable leeway in choosing investment strategies and
   selecting securities they believe will help achieve fund objectives.


 Types of Portfolio Securities


   In seeking to meet its investment objective, we may invest in any type of
   security or instrument (including certain potentially high-risk derivatives
   described in this section) whose investment characteristics are consistent
   with the fund's investment program. The following pages describe various
   types of fund portfolio securities and investment management practices.

   Fundamental policy  The fund will not purchase a security if, as a result,
   with respect to 75% of its total assets, more than 5% of its total assets
   would be invested in securities of a single issuer, or if more than 10% of
   the voting securities of the issuer would be held by the fund.
<PAGE>

ABOUT THE FUND

   Fund investments are primarily in common stocks (normally, at least 65% of
   total assets) and, to a lesser degree, other types of securities as described
   below.

   Common and Preferred Stocks

   Stocks represent shares of ownership in a company. Generally, preferred stock
   has a specified dividend and ranks after bonds and before common stocks in
   its claim on income for dividend payments and on assets should the company be
   liquidated. After other claims are satisfied, common stockholders participate
   in company profits on a pro-rata basis; profits may be paid out in dividends
   or reinvested in the company to help it grow. Increases and decreases in
   earnings are usually reflected in a company's stock price, so common stocks
   generally have the greatest appreciation and depreciation potential of all
   corporate securities. While most preferred stocks pay a dividend, preferred
   stock may be purchased where the issuer has omitted, or is in danger of
   omitting, payment of its dividend. Such investments would be made primarily
   for their capital appreciation potential.

   Convertible Securities and Warrants

   Investments may be made in debt or preferred equity securities convertible
   into, or exchangeable for, equity securities. Traditionally, convertible
   securities have paid dividends or interest at rates higher than common stocks
   but lower than nonconvertible securities. They generally participate in the
   appreciation or depreciation of the underlying stock into which they are
   convertible, but to a lesser degree. In recent years, convertibles have been
   developed which combine higher or lower current income with options and other
   features. Warrants are options to buy a stated number of shares of common
   stock at a specified price anytime during the life of the warrants
   (generally, two or more years).

   Fixed Income Securities

   From time to time, we may invest in investment-grade, fixed-income
   securities. These securities would be purchased in companies that meet fund
   investment criteria. The price of a bond fluctuates with changes in interest
   rates, generally rising when interest rates fall and falling when interest
   rates rise.

   Hybrid Instruments

   These instruments (a type of potentially high-risk derivative) can combine
   the characteristics of securities, futures, and options. For example, the
   principal amount, redemption, or conversion terms of a security could be
   related to the market price of some commodity, currency, or securities index.
   Such securities may bear interest or pay dividends at below market or even
   relatively nominal rates. Under some conditions, the redemption value of such
   an investment could be zero.

  . Hybrids can have volatile prices and limited liquidity, and their use may
   not be successful.
<PAGE>

T. ROWE PRICE

   Operating policy  Fund investments in hybrid instruments are limited to 10%
   of total assets.

   Private Placements
   These securities are sold directly to a small number of investors, usually
   institutions. Unlike public offerings, such securities are not registered
   with the SEC. Although certain of these securities may be readily sold, for
   example, under Rule 144A, others may be illiquid, and their sale may involve
   substantial delays and additional costs.


   Operating policy  Fund investments in illiquid securities are limited to 15%
   of net assets.


 Types of Investment Management Practices

   Reserve Position

   A certain portion of fund assets will be held in money market reserves. Fund
   reserve positions are expected to consist primarily of shares of one or more
   T. Rowe Price internal money market funds. Short-term, high-quality U.S. and
   foreign dollar-denominated money market securities, including repurchase
   agreements, may also be held. For temporary, defensive purposes, there is no
   limit on fund investments in money market reserves. The effect of taking such
   a position is that the fund may not achieve its investment objective. The
   reserve position provides flexibility in meeting redemptions, expenses, and
   the timing of new investments and can serve as a short-term defense during
   periods of unusual market volatility.

   Borrowing Money and Transferring Assets

   Fund borrowings may be made from banks and other T. Rowe Price funds as a
   temporary measure for emergency purposes, to facilitate redemption requests,
   or for other purposes consistent with fund policies as set forth in this
   prospectus. Such borrowings may be collateralized with fund assets, subject
   to restrictions.

   Fundamental policy  Borrowings may not exceed 33/1//\\/3/\\% of total fund
   assets.


   Operating policy  Fund transfers of portfolio securities as collateral will
   not be made except as necessary in connection with permissible borrowings or
   investments, and then such transfers may not exceed 33/1//\\/3/\\% of the
   fund's total assets. Fund purchases of additional securities will not be made
   when borrowings exceed 5% of total assets.

   Foreign Currency Transactions
   The fund will normally conduct its foreign currency exchange transactions
   either on a spot (i.e., cash) basis at the spot rate prevailing in the
   foreign currency exchange market, or through entering into forward contracts
   to purchase or sell foreign currencies. The fund will generally not enter
   into a forward contract with a term greater than one year.
<PAGE>

ABOUT THE FUND

   The fund will generally enter into forward foreign currency exchange
   contracts only under two circumstances. First, when the fund enters into a
   contract for the purchase or sale of a security denominated in a foreign
   currency, it may desire to "lock in" the U.S. dollar price of the security.
   Second, when Price-Fleming believes that the currency of a particular foreign
   country may move substantially against another currency, it may enter into a
   forward contract to sell or buy the former foreign currency (or another
   currency that acts as a proxy for that currency). The contract may
   approximate the value of some or all of the fund's portfolio securities
   denominated in such foreign currency. Under certain circumstances, the fund
   may commit a substantial portion or the entire value of its portfolio to the
   consummation of these contracts. Price-Fleming will consider the effect such
   a commitment to forward contracts would have on the investment program of the
   fund and the flexibility of the fund to purchase additional securities.
   Although forward contracts will be used primarily to protect the fund from
   adverse currency movements, they also involve the risk that anticipated
   currency movements will not be accurately predicted, and the fund's total
   return could be adversely affected as a result.

   There are some markets where it is not possible to engage in effective
   foreign currency hedging. This is generally true, for example, for the
   currencies of various emerging markets where the foreign exchange markets are
   not sufficiently developed to permit hedging activity to take place.

   Futures and Options

   Futures (a type of potentially high-risk derivative) are often used to manage
   or hedge risk because they enable the investor to buy or sell an asset in the
   future at an agreed-upon price. Options (another type of potentially
   high-risk derivative) give the investor the right (where the investor
   purchases the option), or the obligation (where the investor writes (sells)
   the option), to buy or sell an asset at a predetermined price in the future.
   Futures and options contracts may be bought or sold for any number of
   reasons, including: to manage fund exposure to changes in securities prices
   and foreign currencies; as an efficient means of adjusting fund overall
   exposure to certain markets; in an effort to enhance income; as a cash
   management tool; and to protect the value of portfolio securities. Call and
   put options may be purchased or sold on securities, financial indices, and
   foreign currencies.

   Futures contracts and options may not always be successful hedges; their
   prices can be highly volatile; using them could lower fund total return; and
   the potential loss from the use of futures can exceed a fund's initial
   investment in such contracts.

   Operating policies  Futures: Initial margin deposits and premiums on options
   used for nonhedging purposes will not exceed 5% of fund net asset value.
   Options on securities: The total market value of securities against which
   call or
<PAGE>


T. ROWE PRICE
   put options are written may not exceed 25% of its total assets. No more than
   5% of fund total assets will be committed to premiums when purchasing call or
   put options.

   Tax Consequences of Hedging
   Under applicable tax law, the fund may be required to limit its gains from
   hedging in foreign currency forwards, futures, and options. Although the fund
   is expected to comply with such limits, the extent to which these limits
   apply is subject to tax regulations as yet unissued. Hedging may also result
   in the application of the mark-to-market and straddle provisions of the
   Internal Revenue Code. These provisions could result in an increase (or
   decrease) in the amount of taxable dividends paid by the fund and could
   affect whether dividends paid by the fund are classified as capital gains or
   ordinary income.

   Lending of Portfolio Securities

   Fund securities may be lent to broker-dealers, other institutions, or other
   persons to earn additional income. The principal risk is the potential
   insolvency of the broker-dealer or other borrower. In this event, the fund
   could experience delays in recovering its securities and possibly capital
   losses.

   Fundamental policy  The value of loaned securities may not exceed
   33/1//\\/3/\\% of total fund assets.

   Portfolio Turnover

   Turnover is an indication of frequency. The fund will not generally trade in
   securities for short-term profits, but when circumstances warrant, securities
   may be purchased and sold without regard to the length of time held. A high
   turnover rate may increase transaction costs and result in higher capital
   gain distributions by the fund. The fund's portfolio turnover rates for the
   fiscal years ended October 31, 1999, 1998, and 1997 were 17.6%, 12.2%, and
   15.8%, respectively.



 FINANCIAL HIGHLIGHTS
 ----------------------------------------------------------
   Table 3, which provides information about the fund's financial history, is
   based on a single share outstanding throughout each fiscal year. The table is
   part of the fund's financial statements, which are included in its annual
   report and are incorporated by reference into the Statement of Additional
   Information (available upon request). The total returns in the table
   represent the rate that an investor would have earned or lost on an
   investment in the fund (assuming reinvestment of all dividends and
   distributions). The financial statements in the annual report were audited by
   the fund's independent accountants, PricewaterhouseCoopers LLP.
<PAGE>

ABOUT THE FUND

<TABLE>
 Table 3  Financial Highlights
<CAPTION>
                                      Year ended October 31
                            1995     1996     1997      1998     1999
 ------------------------------------------------------------------------------
 <S>                       <C>      <C>      <C>       <C>      <C>       <C>

  Net asset value,
  beginning of period      $12.84   $12.09   $ 13.47   $14.14   $ 14.39
  Income From Investment Operations
  Net investment income      0.18     0.19      0.19     0.23      0.17
                           -----------------------------------------------
  Net gains or losses on
  securities (both
  realized and              (0.19)    1.57      0.86     0.77      2.71
  unrealized)
                           -----------------------------------------------
  Total from investment
  operations                (0.01)    1.76      1.05     1.00      2.88
  Less Distributions
  Dividends (from net       (0.12)   (0.18)    (0.18)   (0.20)    (0.22)
  investment income)
                           -----------------------------------------------
  Distributions (from       (0.62)   (0.20)    (0.20)   (0.55)    (0.35)
  capital gains)
                           -----------------------------------------------
  Returns of capital           --       --        --       --        --
                           -----------------------------------------------
  Total distributions       (0.74)   (0.38)    (0.38)   (0.75)    (0.57)
                           -----------------------------------------------
  Net asset value, end     $12.09   $13.47   $ 14.14   $14.39   $ 16.70
  of period
                           -----------------------------------------------
  Total return/a/            0.38%   14.87%     7.90%    7.48%    20.67%
  Ratios/Supplemental Data
  Net assets, end of       $6,386   $8,776   $10,005   $9,537   $10,615
  period (in millions)
                           -----------------------------------------------
  Ratio of expenses to       0.91%    0.88%     0.85%    0.85%     0.85%
  average net assets
                           -----------------------------------------------
  Ratio of net income to     1.56%    1.58%     1.33%    1.50%     1.05%
  average net assets
                           -----------------------------------------------
  Portfolio turnover rate    17.8%    11.6%     15.8%    12.2%     17.6%
 ------------------------------------------------------------------------------
</TABLE>




 /a/Total return reflects the rate that an investor would have earned on an
   investment in the fund during each period, assuming reinvestment of all
   distributions.
<PAGE>

 INVESTING WITH T. ROWE PRICE
 ACCOUNT REQUIREMENTS AND TRANSACTION INFORMATION
 ----------------------------------------------------------
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.

Always verify your transactions by carefully reviewing the confirmation we send
you. Please report any discrepancies to Shareholder Services promptly.

Employer-Sponsored Retirement Plans and Institutional Accounts T. Rowe Price
Trust Company 1-800-492-7670
Transaction procedures in the following sections may not apply to
employer-sponsored retirement plans and institutional accounts. For procedures
regarding employer-sponsored retirement plans, please call T. Rowe Price Trust
Company or consult your plan administrator. For institutional account
procedures, please call your designated account manager or service
representative.



 OPENING A NEW ACCOUNT
 ----------------------------------------------------------
$2,500 minimum initial investment; $1,000 for retirement plans or 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.)

By Mail

Please make your check payable to T. Rowe Price Funds (otherwise it will be
returned) and send your check, together with the New Account Form, to the
appropriate address in the next paragraph. We do not accept third-party checks
to open new accounts, except for IRA Roll-
<PAGE>


ABOUT THE FUND
over checks that are properly endorsed. In addition, the fund does not accept
purchases made by credit card check.

Mail via United States Postal Service
T. Rowe Price Account Services P.O. Box 17300 Baltimore, MD 21297-1300

Mail via private carriers/overnight services
T. Rowe Price Account Services Mailcode 17300 4515 Painters Mill Road Owings
Mills, MD 21117-4903

By Wire
Call Investor Services for an account number and give the following wire
information to your bank:

Receiving Bank:  PNC Bank, N.A. (Pittsburgh) Receiving Bank ABA#:  043000096
Beneficiary:  T. Rowe Price [fund name] Beneficiary Account:  1004397951
Originator to Beneficiary Information (OBI):  name of owner(s) and account
number


Complete a New Account Form and mail it to one of the appropriate addresses
listed previously.

Note: No services will be established and IRS penalty withholding may occur
until we receive a signed New Account Form. Also, retirement plan accounts and
IRAs cannot be opened by wire.

By Exchange
Call Shareholder Services or use Tele*Access or your personal computer (see
Automated Services under Information About Your 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. For limitations on exchanging, see
explanation of Excessive Trading under Transaction Procedures and Special
Requirements.

In Person
Drop off your New Account Form at any location listed on the back cover and
obtain a receipt.
<PAGE>

T. ROWE PRICE
 PURCHASING ADDITIONAL SHARES
 ----------------------------------------------------------
$100 minimum purchase; $50 minimum for retirement plans, Automatic Asset
Builder, and gifts or transfers to minors (UGMA/UTMA) accounts.

By ACH Transfer
Use Tele*Access or 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 listed in Opening a New
Account.

By Mail
 1. Make your check payable to T. Rowe Price Funds (otherwise it may be
   returned).

 2. Mail the check to us at the following address with either a fund
   reinvestment slip or a note indicating the fund you want to buy and your fund
   account number.

 3. Remember to provide your account number and the fund name on the memo line
   of your check.

Mail via United States Postal Service
T. Rowe Price Funds Account Services P.O. Box 17300 Baltimore, MD 21297-1300

/(For //mail via private carriers and overnight services//, see previous /
/section.)/

By Automatic Asset Builder
Fill out the Automatic Asset Builder section on the New Account or Shareholder
Services Form.



 EXCHANGING AND REDEEMING SHARES
 ----------------------------------------------------------
Exchange Service
You can move money from one account to an existing identically registered
account or open a new identically registered account. Remember, exchanges are
purchases and sales for tax purposes. (Exchanges into a state tax-free fund are
limited to investors living in states where the fund is registered.)
<PAGE>

ABOUT THE FUND
Redemptions
Redemption proceeds can be mailed to your account address, sent by ACH transfer
to your bank, or wired to your bank (provided your bank information is already
on file). For charges, see Electronic Transfers - By Wire under Information
About Your Services.


Some of the T. Rowe Price funds may impose a redemption fee of 0.5% to 2% on
shares held for less than six months, one year, or two years, as specified in
the prospectus. The fee is paid to the fund.

By Phone
Call Shareholder Services

If you find our phones busy during unusually volatile markets, please consider
placing your order by your personal computer or Tele*Access (if you have
previously authorized these services), mailgram, or express mail. For exchange
policies, please see Transaction Procedures and Special Requirements - Excessive
Trading.

By Mail

For each account involved, provide the account name, number, fund name, and
exchange or redemption amount. For exchanges, be sure to specify any fund you
are exchanging out of and the fund or funds you are exchanging into. T. Rowe
Price requires the signatures of all owners exactly as registered, and possibly
a signature guarantee (see Transaction Procedures and Special Requirements -
Signature Guarantees). Please use the appropriate address below:

Mail via United States Postal Service
for nonretirement and IRA accounts
T. Rowe Price Account Services P.O. Box 17302 Baltimore, MD 21297-1302

Mail via private carriers/overnight services
T. Rowe Price Account Services Mailcode 17302 4515 Painters Mill Road Owings
Mills, MD 21117-4903

For employer-sponsored retirement accounts
via U.S. Postal Service:
T. Rowe Price Trust Company P.O. Box 17479 Baltimore, MD 21297-1479
<PAGE>

T. ROWE PRICE
via private carriers and overnight services:

T. Rowe Price Trust Company Mailcode 17479 4515 Painters Mill Road Owings Mills,
MD 21117-4903

Redemptions from employer-sponsored retirement accounts must be in writing;
please call T. Rowe Price Trust Company or your plan administrator for
instructions. IRA distributions may be requested in writing or by telephone;
please call Shareholder Services to obtain an IRA Distribution Form or an IRA
Shareholder Services Form to authorize the telephone redemption service.



 RIGHTS RESERVED BY THE FUND
 ----------------------------------------------------------

The fund and its agents reserve the following rights: (1) to waive or lower
investment minimums; (2) to accept initial purchases by telephone or mailgram;
(3) to refuse any purchase or exchange order; (4) to cancel or rescind any
purchase or exchange order (including, but not limited to, orders deemed to
result in excessive trading, market timing, fraud, or 5% ownership) 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; (5)
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; (6) to otherwise modify
the conditions of purchase and any services at any time; and (7) to act on
instructions believed to be genuine. These actions will be taken when, in the
sole discretion of management, they are deemed to be in the best interest of the
fund.

In an effort to protect the fund from the possible adverse effects of a
substantial redemption in a large account, as a matter of general policy, no
shareholder or group of shareholders controlled by the same person or group of
persons will knowingly be permitted to
<PAGE>

ABOUT THE FUND
purchase in excess of 5% of the outstanding shares of the fund, except upon
approval of the fund's management.



 INFORMATION ABOUT YOUR SERVICES
 ----------------------------------------------------------
Shareholder Services 1-800-225-5132 Investor Services 1-800-638-5660
Many services are available to you as a T. Rowe Price shareholder; some you
receive automatically, and others you must authorize or request on the New
Account Form. By signing up for services on the New Account Form rather than
later on, you avoid having to complete a separate form and obtain a signature
guarantee. This section discusses some of the services currently offered. Our
Services Guide, which we mail to all new shareholders, contains detailed
descriptions of these and other services.

Note: Corporate and other institutional 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, institutions, and large and
small businesses: Traditional IRAs, Roth IRAs, SIMPLE IRAs, SEP-IRAs, Keoghs
(profit sharing, money purchase pension), 401(k)s, and 403(b)(7)s. For
information on IRAs, call Investor Services. For information on all other
retirement plans, including our no-load variable annuity, please call our Trust
Company at 1-800-492-7670.

Automated Services Tele*Access 1-800-638-2587 24 hours, 7 days
Tele*Access
24-hour service via a toll-free number enables you to (1) access information on
fund yields, prices, distributions, account balances, and your latest
transaction; (2) request checks, prospectuses, services forms, duplicate
statements, and tax forms; and (3) initiate purchase, redemption, and exchange
transactions in your accounts (see Electronic Transfers in this section).
<PAGE>

T. ROWE PRICE
Web Address www.troweprice.com
After authorizing this service, account transactions may also be conducted
through our Web site on the Internet. If you subscribe to America Online/(R)/,
you can access our Web site via keyword "T. Rowe Price" and conduct transactions
in your account.

Plan Account Line 1-800-401-3279
Plan Account Line
This 24-hour service is similar to Tele*Access but is designed specifically to
meet the needs of retirement plan investors.

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 back 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 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 or Emerging Markets Bond
Funds) 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 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.
<PAGE>

ABOUT THE FUND
Automatic Exchange
You can set up systematic investments from one fund account into another, such
as from a money fund into a stock fund.


 T. ROWE PRICE BROKERAGE
 ----------------------------------------------------------

To Open an Account 1-800-638-5660 For Existing Brokerage Investors
1-800-225-7720
Investments available through our brokerage service include  stocks, options,
bonds, and others  at commission savings over full-service brokers*. We also
provide a wide range of services, including:

Automated Telephone and Computer Services
You can enter stock and option orders, access quotes, and review account
information around the clock by phone with Tele-Trader or via the Internet with
Internet-Trader. Any trades entered through Tele-Trader save you an additional
10% on commissions. For stock trades entered through Internet-Trader, you will
pay a commission of $24.95 for up to 1,000 shares plus $.02 for each share over
1,000. Option trades entered through Internet-Trader save you 10% over our
standard commission schedule. All trades are subject to a $35 minimum commission
except stock trades placed through Internet-Trader.

Investor Information
A variety of informative reports, such as our Brokerage Insights series and S&P
Market Month newsletter, as well as access to on-line research tools can help
you better evaluate economic trends and investment opportunities.

Dividend Reinvestment Service

If you elect to participate in this service, the cash dividends from the
eligible securities held in your account will automatically be reinvested in
additional shares of the same securities free of charge. Dividend payments must
be $10.00 or greater to qualify for reinvestment. Most securities listed on
national securities exchanges or on Nasdaq are eligible for this service.

/*Services //v//ary //b//y //f//irm./

/T. Rowe Price// Brokerage is a division of //T. Rowe Price// Investment /
/Services, Inc., Member NASD/SIPC./
<PAGE>

T. ROWE PRICE
 INVESTMENT INFORMATION
 ----------------------------------------------------------
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety of
information in addition to account statements. Most of this information is also
available on our Web site at www.troweprice.com.

Shareholder Reports
Fund managers' reviews of their strategies and performance. If several members
of a household own the same fund, only one fund report is mailed to that
address. To receive additional copies, please call Shareholder Services or write
to us at P.O. Box 17630, Baltimore, Maryland 21297-1630.

The T. Rowe Price Report
A quarterly investment newsletter discussing markets and financial strategies.

Performance Update
A quarterly review of all T. Rowe Price fund results.

Insights
Educational reports on investment strategies and financial markets.

Investment Guides
Asset Mix Worksheet, College Planning Kit, Diversifying Overseas: A T. Rowe
Price Guide to International Investing, Managing Your Retirement Distribution,
Personal Strategy Planner, Retirees Financial Guide, Retirement Planning Kit,
and Tax Considerations for Investors.
<PAGE>

ABOUT THE FUND
<PAGE>

To help you achieve your financial goals, T. Rowe Price offers a wide range of
stock, bond, and money market investments, as well as convenient services and
informative reports.
A fund Statement of Additional Information has been filed with the Securities
and Exchange Commission and is incorporated by reference into this prospectus.
Further information about fund investments, including a review of market
conditions and the manager's recent strategies and their impact on performance,
is available in the annual and semiannual shareholder reports. To obtain free
copies of any of these documents, or for shareholder inquiries, call
1-800-638-5660.

Fund reports and Statements of Additional Information are also available from
the Securities and Exchange Commission by calling 1-800-SEC-0330 or by writing
the SEC's Public Reference Section, Washington, D.C. 20549-6009 (you will be
charged a duplicating fee); by visiting the SEC's public reference room; or by
consulting the SEC's Web site at www.sec.gov.
Walk-in
Investor Centers
For directions, call 1-800-225-5132 or visit our Web site

Baltimore Area
Downtown
 101 East Lombard Street

Owings Mills
 Three Financial Center 4515 Painters Mill Rd.

Boston Area
 386 Washington Street Wellesley

Colorado Springs
 4410 ArrowsWest Drive

Los Angeles Area
 Warner Center 21800 Oxnard Street Suite 270 Woodland Hills

Tampa
 4200 West Cypress St. 10th Floor

Washington, D.C.
 900 17th Street, N.W. Farragut Square
 For Mutual Fund or T. Rowe Price Brokerage Information
 Investor Services
 1-800-638-5660

For Existing Accounts
 Shareholder Services
 1-800-225-5132

For Yields, Prices, Account Information, or to Conduct Transactions
 Tele*Access/(R)/
 24 hours, 7 days 1-800-638-2587

Internet Address
 www.troweprice.com

Plan Account Line
 For retirement plan investors: The appropriate 800 number appears on your
 retirement account statement.
(LOGO)
T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, MD 21202
F37-040 3/1/00
1940 Act File No. 811-2958


<PAGE>

  STATEMENT OF ADDITIONAL INFORMATION

   The date of this Statement of Additional Information is March 1, 2000.

         T. ROWE PRICE INTERNATIONAL FUNDS, INC.
              International Stock Fund
              International Discovery Fund
              International Growth & Income Fund
              European Stock Fund
              Japan Fund
              New Asia Fund
              Latin America Fund
              Emerging Markets Stock Fund
              Global Stock Fund
                                       and
         INSTITUTIONAL INTERNATIONAL FUNDS, INC.
              Foreign Equity Fund

______________________________________________________________________________

   Mailing Address: T. Rowe Price Investment Services, Inc. 100 East Pratt
   Street Baltimore, Maryland 21202 1-800-638-5660


   This Statement of Additional Information is not a prospectus but should be
   read in conjunction with the appropriate fund prospectus dated March 1, 2000,
   which may be obtained from T. Rowe Price Investment Services, Inc.
   ("Investment Services").

   Each fund's financial statements for the year ended October 31, 1999, and the
   report of independent accountants are included in each fund's Annual Report
   and incorporated by reference into this Statement of Additional Information.

   If you would like a prospectus or an annual or semiannual shareholder report
   for a fund of which you are not a shareholder, please call 1-800-638-5660. A
   prospectus with more complete information, including management fees and
   expenses, will be sent to you. Please read it carefully.

   C01-043 3/1/00
<PAGE>


<TABLE>
<CAPTION>
                              TABLE OF CONTENTS
                              -----------------
                                Page                                     Page
                                ----                                     ----
<S>                             <S>   <C>  <S>                           <S>
Capital Stock                     42       Investment Restrictions           20
- --------------------------------------     ------------------------------------
Code of Ethics                    30       Legal Counsel                     43
- --------------------------------------     ------------------------------------
Custodian                         30       Management of the Funds           23
- --------------------------------------     ------------------------------------
Distributor for the Funds         29       Net Asset Value Per Share         37
- --------------------------------------     ------------------------------------
Dividends and Distributions       38       Portfolio Management               9
                                           Practices
- --------------------------------------     ------------------------------------
Federal Registration of Shares    43       Portfolio Transactions            31
- --------------------------------------     ------------------------------------
Independent Accountants           43       Pricing of Securities             37
- --------------------------------------     ------------------------------------
Investment Management Services    26       Principal Holders of              26
                                           Securities
- --------------------------------------     ------------------------------------
Investment Objectives and          2       Risk Factors                       2
Policies
- --------------------------------------     ------------------------------------
Investment Performance            39       Services by Outside Parties       30
- --------------------------------------     ------------------------------------
Investment Program                 6       Tax Status                        38
- --------------------------------------     ------------------------------------
</TABLE>






 INVESTMENT OBJECTIVES AND POLICIES
 -------------------------------------------------------------------------------

   The following information supplements the discussion of each fund's
   investment objectives and policies discussed in each funds 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 each 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. References to the following are as indicated:


                  Investment Company Act of 1940 ("1940 Act")
                  Securities and Exchange Commission ("SEC")
                  T. Rowe Price Associates, Inc. ("T. Rowe Price")
                  Moody's Investors Service, Inc. ("Moody's")
                  Standard & Poor's Corporation ("S&P")
                  Internal Revenue Code of 1986 ("Code")

                  Rowe Price-Fleming International, Inc. ("Price-Fleming")

   Throughout this Statement of Additional Information, "the fund" is intended
   to refer to each fund listed on the cover page, unless otherwise indicated.



 RISK FACTORS
 -------------------------------------------------------------------------------
   All Funds


   The fund's investment manager, Price-Fleming, one of America's largest
   managers of no-load international mutual fund assets, regularly analyzes a
   broad range of international equity and fixed income markets in order to
   assess the degree or risk and level of return that can be expected from each
   market. Of course, there can be


<PAGE>


   no assurance that Price-Fleming's forecasts of expected return will be
   reflected in the actual returns achieved by the funds.

   Each fund's share price will fluctuate with market, economic and foreign
   exchange conditions, and your investment may be worth more or less when
   redeemed than when purchased. The funds should not be relied upon as a
   complete investment program, nor used to play short-term swings in the stock
   or foreign exchange markets. The funds are subject to risks unique to
   international investing. See discussion under "Risk Factors of Foreign
   Investing" below. Further, there is no assurance that the favorable trends
   discussed below will continue, and the funds cannot guarantee they will
   achieve their objectives.

   Risk Factors of Foreign Investing There are special risks in foreign
   investing. Certain of these risks are inherent in any international mutual
   fund while others relate more to the countries in which the fund will invest.
   Many of the risks are more pronounced for investments in developing or
   emerging market countries, such as many of the countries of Asia, Latin
   America, Eastern Europe, Russia, Africa, and the Middle East. Although there
   is no universally accepted definition, a developing country is generally
   considered to be a country which is in the initial stages of its
   industrialization cycle with a per capita gross national product of less than
   $8,000.


  . General Investors should understand that all investments have a risk factor.
   There can be no guarantee against loss resulting from an investment in the
   funds, and there can be no assurance that the funds' investment policies will
   be successful, or that its investment objectives will be attained. The funds
   are designed for individual and institutional investors seeking to diversify
   beyond the United States in actively researched and managed portfolios, and
   are intended for long-term investors who can accept the risks entailed when
   investing in foreign securities.

  . Political and Economic Factors Individual foreign economies of certain
   countries differ favorably or unfavorably from the United States' economy in
   such respects as growth of gross national product, rate of inflation, capital
   reinvestment, resource self-sufficiency and balance of payments position. The
   internal politics of certain foreign countries are not as stable as in the
   United States. For example, in 1991, the existing government in Thailand was
   overthrown in a military coup. In 1994-1995, the Mexican peso plunged in
   value setting off a severe crisis in the Mexican economy. Asia is still
   coming to terms with its own crisis and recessionary conditions sparked off
   by widespread currency weakness in late 1997. In 1998, there was substantial
   turmoil in markets throughout the world. In 1999, the democratically elected
   government of Pakistan was over thrown by a military coup. The Russian
   government also defaulted on all its domestic debt. In addition, significant
   external political risks currently affect some foreign countries. Both Taiwan
   and China still claim sovereignty of one another and there is a demilitarized
   border and hostile relations between North and South Korea.

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

  . Currency Fluctuations The fund invests in securities denominated in various
   currencies. Accordingly, a change in the value of any such currency against
   the U.S. dollar will result in a corresponding change in the U.S. dollar
   value of the fund's assets denominated in that currency. Such changes will
   also affect the fund's income. Generally, when a given currency appreciates
   against the dollar (the dollar weakens) the value of the fund's securities
   denominated in that currency will rise. When a given currency depreciates
   against the dollar (the dollar strengthens) the value of the fund's
   securities denominated in that currency would be expected to decline.

  . Investment and Repatriation of Restrictions Foreign investment in the
   securities markets of certain foreign countries is restricted or controlled
   in varying degrees. These restrictions limit at times and preclude investment
   in certain of such countries and increase the cost and expenses of the fund.
   Investments by foreign investors are subject to a variety of restrictions in
   many developing countries. These restrictions may take the


<PAGE>

   form of prior governmental approval, limits on the amount or type of
   securities held by foreigners, and limits on the types of companies in which
   foreigners may invest. Additional or different restrictions may be imposed at
   any time by these or other countries in which the funds invest. In addition,
   the repatriation of both investment income and capital from several foreign
   countries is restricted and controlled under certain regulations, including
   in some cases the need for certain government consents. For example, capital
   invested in Chile normally cannot be repatriated for one year. In 1998, the
   government of Malaysia imposed currency controls which effectively made it
   impossible for foreign investors to convert Malaysian ringgits to foreign
   currencies.


  . Market Characteristics It is contemplated that most foreign securities will
   be purchased in over-the-counter markets or on securities exchanges located
   in the countries in which the respective principal offices of the issuers of
   the various securities are located, if that is the best available market.
   Investments in certain markets may be made through American Depository
   Receipts ("ADRs") and Global Depository Receipts ("GDRs") traded in the
   United States or on foreign exchanges. Foreign securities markets are
   generally not as developed or efficient as, and more volatile than, those in
   the United States. While growing in volume, they usually have substantially
   less volume than U.S. markets and the fund's portfolio securities may be less
   liquid and subject to more rapid and erratic price movements than securities
   of comparable U.S. companies. Securities may trade at price/earnings
   multiples higher than comparable United States securities and such levels may
   not be sustainable. Commissions on foreign securities are generally higher
   than commissions on United States exchanges, and while there is an increasing
   number of overseas securities markets that have adopted a system of
   negotiated rates, a number are still subject to an established schedule of
   minimum commission rates. There is generally less government supervision and
   regulation of foreign securities exchanges, brokers, and listed companies
   than in the United States. Moreover, settlement practices for transactions in
   foreign markets may differ from those in United States markets. Such
   differences include delays beyond periods customary in the United States and
   practices, such as delivery of securities prior to receipt of payment, which
   increase the likelihood of a "failed settlement." Failed settlements can
   result in losses to the fund.

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

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

  . Taxes The dividends and interest payable on certain of the fund's foreign
   portfolio securities may be subject to foreign withholding taxes, thus
   reducing the net amount of income available for distribution to the fund's
   shareholders.

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

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


<PAGE>


  . Eastern Europe and Russia Changes occurring in Eastern Europe and Russia
   today could have long-term potential consequences. As restrictions fall, this
   could result in rising standards of living, lower manufacturing costs,
   growing consumer spending, and substantial economic growth. However,
   investment in most countries of Eastern Europe and Russia is highly
   speculative at this time. Political and economic reforms are too recent to
   establish a definite trend away from centrally planned economies and
   state-owned industries. The collapse of the ruble from its crawling peg
   exchange rate against the U.S. dollar has set back the path of reform for
   several years. In many of the countries of Eastern Europe and Russia, there
   is no stock exchange or formal market for securities. Such countries may also
   have government exchange controls, currencies with no recognizable market
   value relative to the established currencies of western market economies,
   little or no experience in trading in securities, no financial reporting
   standards, a lack of a banking and securities infrastructure to handle such
   trading, and a legal tradition which does not recognize rights in private
   property. In addition, these countries may have national policies which
   restrict investments in companies deemed sensitive to the country's national
   interest. Further, the governments in such countries may require governmental
   or quasi-governmental authorities to act as custodian of the fund's assets
   invested in such countries, and these authorities may not qualify as a
   foreign custodian under the 1940 Act and exemptive relief from such Act may
   be required. All of these considerations are among the factors which could
   cause significant risks and uncertainties to investment in Eastern Europe and
   Russia. The fund will only invest in a company located in, or a government
   of, Eastern Europe and Russia, if it believes the potential return justifies
   the risk.

  . Latin America

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

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


   Foreign Currency Certain Latin American countries may experience sudden and
   large adjustments in their currency which, in turn, can have a disruptive and
   negative effect on foreign investors. For example, in late 1994 the value of
   the Mexican peso lost more than one-third of its value relative to the
   dollar. In 1999, the Brazalian real lost 30% of its value against the U.S.
   dollar. Certain Latin American countries may impose restrictions on the free
   conversion of their currency into foreign currencies, including the U.S.
   dollar. There is no significant foreign exchange market for many currencies
   and it would, as a result, be difficult for the fund to engage in foreign
   currency transactions designed to protect the value of the fund's interests
   in securities denominated in such currencies.

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

  . Japan

   The Japan Fund's concentration of its investments in Japan means the fund
   will be more dependent on the investment considerations discussed above and
   may be more volatile than a fund which is broadly diversified geographically.
   To the extent any of the other funds also invest in Japan, such investments
   will be subject to these same factors. Additional factors relating to Japan
   include the following:

   Japan has experienced earthquakes and tidal waves of varying degrees of
   severity, and the risks of such phenomena, and damage resulting therefrom,
   continue to exist. Japan also has one of the world's highest population
   densities. A significant percentage of the total population of Japan is
   concentrated in the metropolitan areas of Tokyo, Osaka and Nagoya.


<PAGE>


   Economy The Japanese economy languished for much of the last decade. Lack of
   effective governmental action in the areas of tax reform to reduce high tax
   rates, banking regulation to address enormous amounts of bad debt, and
   economic reforms to attempt to stimulate spending are among the factors cited
   as possible causes of Japan's economic problems. The yen has had a history of
   unpredictable and volatile movements against the dollar; a weakening yen
   hurts U.S. investors holding yen denominated securities. Finally, the
   Japanese stock market has experienced wild swings in value and has often been
   considered significantly overvalued.

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

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

  . Asia (ex-Japan)

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

   Foreign Currency Certain Asian countries may have managed currencies which
   are maintained at artificial levels to the U.S. dollar rather than at levels
   determined by the market. This type of system can lead to sudden and large
   adjustments in the currency which, in turn, can have a disruptive and
   negative effect on foreign investors. For example, in 1997 the Thai baht lost
   46.75% of its value against the U.S. dollar. Certain Asian countries also may
   restrict the free conversion of their currency into foreign currencies,
   including the U.S. dollar. There is no significant foreign exchange market
   for certain currencies and it would, as a result, be difficult for the fund
   to engage in foreign currency transactions designed to protect the value of
   the fund's interests in securities denominated in such currencies.

   Debt A number of Asian companies are highly dependent on foreign loans for
   their operation. In 1997, several Asian countries were forced to negotiate
   loans from the International Monetary Fund ("IMF") and others that impose
   strict repayment term schedules and require significant economic and
   financial restructuring.



 INVESTMENT PROGRAM
 -------------------------------------------------------------------------------

                               Types of Securities

   Set forth below is additional information about certain of the investments
   described in each fund's prospectus.


                               Hybrid Instruments

   Hybrid Instruments (a type of potentially high-risk derivative) have been
   developed and combine the elements of futures contracts or options with those
   of debt, preferred equity, or a depository instrument (hereinafter "Hybrid
   Instruments"). Generally, a Hybrid Instrument will be a debt security,
   preferred stock, depository share, trust certificate, certificate of deposit,
   or other evidence of indebtedness on which a portion of or all interest
   payments, and/or the principal or stated amount payable at maturity,
   redemption, or retirement, is determined by reference to prices, changes in
   prices, or differences between prices, of securities, currencies,


<PAGE>

   intangibles, goods, articles, or commodities (collectively "Underlying
   Assets") or by another objective index, economic factor, or other measure,
   such as interest rates, currency exchange rates, commodity indices, and
   securities indices (collectively "Benchmarks"). Thus, Hybrid Instruments may
   take a variety of forms, including, but not limited to, debt instruments with
   interest or principal payments or redemption terms determined by reference to
   the value of a currency or commodity or securities index at a future point in
   time, preferred stock with dividend rates determined by reference to the
   value of a currency, or convertible securities with the conversion terms
   related to a particular commodity.

   Hybrid Instruments can be an efficient means of creating exposure to a
   particular market, or segment of a market, with the objective of enhancing
   total return. For example, a fund may wish to take advantage of expected
   declines in interest rates in several European countries, but avoid the
   transaction costs associated with buying and currency-hedging the foreign
   bond positions. One solution would be to purchase a U.S. dollar-denominated
   Hybrid Instrument whose redemption price is linked to the average three-year
   interest rate in a designated group of countries. The redemption price
   formula would provide for payoffs of greater than par if the average interest
   rate was lower than a specified level, and payoffs of less than par if rates
   were above the specified level. Furthermore, the fund could limit the
   downside risk of the security by establishing a minimum redemption price so
   that the principal paid at maturity could not be below a predetermined
   minimum level if interest rates were to rise significantly. The purpose of
   this arrangement, known as a structured security with an embedded put option,
   would be to give the fund the desired European bond exposure while avoiding
   currency risk, limiting downside market risk, and lowering transactions
   costs. Of course, there is no guarantee that the strategy will be successful,
   and the fund could lose money if, for example, interest rates do not move as
   anticipated or credit problems develop with the issuer of the Hybrid.

   The risks of investing in Hybrid Instruments reflect a combination of the
   risks of investing in securities, options, futures and currencies. Thus, an
   investment in a Hybrid Instrument may entail significant risks that are not
   associated with a similar investment in a traditional debt instrument that
   has a fixed principal amount, is denominated in U.S. dollars, or bears
   interest either at a fixed rate or a floating rate determined by reference to
   a common, nationally published benchmark. The risks of a particular Hybrid
   Instrument will, of course, depend upon the terms of the instrument, but may
   include, without limitation, the possibility of significant changes in the
   Benchmarks or the prices of Underlying Assets to which the instrument is
   linked. Such risks generally depend upon factors which are unrelated to the
   operations or credit quality of the issuer of the Hybrid Instrument and which
   may not be readily foreseen by the purchaser, such as economic and political
   events, the supply and demand for the Underlying Assets, and interest rate
   movements. In recent years, various Benchmarks and prices for Underlying
   Assets have been highly volatile, and such volatility may be expected in the
   future. Reference is also made to the discussion of futures, options, and
   forward contracts herein for a discussion of the risks associated with such
   investments.

   Hybrid Instruments are potentially more volatile and carry greater market
   risks than traditional debt instruments. Depending on the structure of the
   particular Hybrid Instrument, changes in a Benchmark may be magnified by the
   terms of the Hybrid Instrument and have an even more dramatic and substantial
   effect upon the value of the Hybrid Instrument. Also, the prices of the
   Hybrid Instrument and the Benchmark or Underlying Asset may not move in the
   same direction or at the same time.

   Hybrid Instruments may bear interest or pay preferred dividends at below
   market (or even relatively nominal) rates. Alternatively, Hybrid Instruments
   may bear interest at above market rates but bear an increased risk of
   principal loss (or gain). The latter scenario may result if "leverage" is
   used to structure the Hybrid Instrument. Leverage risk occurs when the Hybrid
   Instrument is structured so that a given change in a Benchmark or Underlying
   Asset is multiplied to produce a greater value change in the Hybrid
   Instrument, thereby magnifying the risk of loss as well as the potential for
   gain.

   Hybrid Instruments may also carry liquidity risk since the instruments are
   often "customized" to meet the portfolio needs of a particular investor, and
   therefore, the number of investors that are willing and able to buy such
   instruments in the secondary market may be smaller than that for more
   traditional debt securities. In addition, because the purchase and sale of
   Hybrid Instruments could take place in an over-the-counter market without the
   guarantee of a central clearing organization or in a transaction between the
   fund and the issuer of


<PAGE>

   the Hybrid Instrument, the creditworthiness of the counter party of issuer of
   the Hybrid Instrument would be an additional risk factor which the fund would
   have to consider and monitor. Hybrid Instruments also may not be subject to
   regulation of the Commodities Futures Trading Commission ("CFTC"), which
   generally regulates the trading of commodity futures by U.S. persons, the
   SEC, which regulates the offer and sale of securities by and to U.S. persons,
   or any other governmental regulatory authority.


                        Illiquid or Restricted Securities

   Restricted securities may be sold only in privately negotiated transactions
   or in a public offering with respect to which a registration statement is in
   effect under the Securities Act of 1933 (the "1933 Act"). Where registration
   is required, the fund may be obligated to pay all or part of the registration
   expenses, and a considerable period may elapse between the time of the
   decision to sell and the time the fund may be permitted to sell a security
   under an effective registration statement. If, during such a period, adverse
   market conditions were to develop, the fund might obtain a less favorable
   price than prevailed when it decided to sell. Restricted securities will be
   priced at fair value as determined in accordance with procedures prescribed
   by the fund's Board of Directors. If, through the appreciation of illiquid
   securities or the depreciation of liquid securities, the fund should be in a
   position where more than 15% of the value of its net assets is invested in
   illiquid assets, including restricted securities, the fund will take
   appropriate steps to protect liquidity.

   Notwithstanding the above, the fund may purchase securities which, while
   privately placed, are eligible for purchase and sale under Rule 144A under
   the 1933 Act. This rule permits certain qualified institutional buyers, such
   as the fund, to trade in privately placed securities even though such
   securities are not registered under the 1933 Act. Price-Fleming, under the
   supervision of the fund's Board of Directors, will consider whether
   securities purchased under Rule 144A are illiquid and thus subject to the
   fund's restriction of investing no more than 15% of its net assets in
   illiquid securities. A determination of whether a Rule 144A security is
   liquid or not is a question of fact. In making this determination,
   Price-Fleming will consider the trading markets for the specific security
   taking into account the unregistered nature of a Rule 144A security. In
   addition, Price-Fleming could consider the following: (1) frequency of trades
   and quotes; (2) number of dealers and potential purchases; (3) dealer
   undertakings to make a market; and (4) the nature of the security and of
   marketplace trades (e.g., the time needed to dispose of the security, the
   method of soliciting offers, and the mechanics of transfer). The liquidity of
   Rule 144A securities would be monitored and, if as a result of changed
   conditions it is determined that a Rule 144A security is no longer liquid,
   the fund's holdings of illiquid securities would be reviewed to determine
   what, if any, steps are required to assure that the fund does not invest more
   than 15% of its net assets in illiquid securities. Investing in Rule 144A
   securities could have the effect of increasing the amount of the fund's
   assets invested in illiquid securities if qualified institutional buyers are
   unwilling to purchase such securities.


                                    Warrants


   The fund may acquire warrants. Warrants can be highly volatile and have no
   voting rights, pay no dividends, and have no rights with respect to the
   assets of the corporation issuing them. Warrants basically are options to
   purchase securities at a specific price valid for a specific period of time.
   They do not represent ownership of the securities, but only the right to buy
   them. Warrants differ from call options in that warrants are issued by the
   issuer of the security which may be purchased on their exercise, whereas call
   options may be written or issued by anyone. The prices of warrants do not
   necessarily move parallel to the prices of the underlying securities.

   There are, of course, other types of securities that are, or may become
   available, which are similar to the foregoing and the funds may invest in
   these securities.


<PAGE>

 PORTFOLIO MANAGEMENT PRACTICES
 -------------------------------------------------------------------------------
   All Funds except Foreign Equity Fund


                         Lending of Portfolio Securities

   Securities loans are made to broker-dealers or institutional investors or
   other persons, pursuant to agreements requiring that the loans be
   continuously secured by collateral at least equal at all times to the value
   of the securities lent, marked to market on a daily basis. The collateral
   received will consist of cash, U.S. government securities, letters of credit
   or such other collateral as may be permitted under its investment program.
   While the securities are being lent, the fund will continue to receive the
   equivalent of the interest or dividends paid by the issuer on the securities,
   as well as interest on the investment of the collateral or a fee from the
   borrower. The fund has a right to call each loan and obtain the securities,
   within such period of time which coincides with the normal settlement period
   for purchases and sales of such securities in the respective markets. The
   fund will not have the right to vote on securities while they are being lent,
   but it will call a loan in anticipation of any important vote. The risks in
   lending portfolio securities, as with other extensions of secured credit,
   consist of possible delay in receiving additional collateral or in the
   recovery of the securities or possible loss of rights in the collateral
   should the borrower fail financially. Loans will only be made to firms deemed
   by Price-Fleming to be of good standing and will not be made unless, in the
   judgment of Price-Fleming, the consideration to be earned from such loans
   would justify the risk.

   All Funds


                         Interfund Borrowing and Lending

   The fund is a party to an exemptive order received from the SEC on December
   8, 1998, amended on November 23, 1999, that permits it to borrow money from
   and/or lend money to other funds in the T. Rowe Price complex ("Price
   Funds"). All loans are set at an interest rate between the rate charged on
   overnight repurchase agreements and short-term bank loans. All loans are
   subject to numerous conditions designed to ensure fair and equitable
   treatment of all participating funds. The program is subject to the oversight
   and periodic review of the Boards of Directors of the Price Funds.


                              Repurchase Agreements

   The fund may enter into a repurchase agreement through which an investor
   (such as the fund) purchases a security (known as the "underlying security")
   from a well-established securities dealer or a bank that is a member of the
   Federal Reserve System. Any such dealer or bank will be on T. Rowe Price's
   approved list and have a credit rating with respect to its short-term debt of
   at least A1 by S&P, P1 by Moody's, or the equivalent rating by T. Rowe Price.
   At that time, the bank or securities dealer agrees to repurchase the
   underlying security at the same price, plus specified interest. Repurchase
   agreements are generally for a short period of time, often less than a week.
   Repurchase agreements which do not provide for payment within seven days will
   be treated as illiquid securities. The fund will only enter into repurchase
   agreements where (1) the underlying securities are of the type (excluding
   maturity limitations) which the fund's investment guidelines would allow it
   to purchase directly, (2) the market value of the underlying security,
   including interest accrued, will be at all times equal to or exceed the value
   of the repurchase agreement, and (3) payment for the underlying security is
   made only upon physical delivery or evidence of book-entry transfer to the
   account of the custodian or a bank acting as agent. In the event of a
   bankruptcy or other default of a seller of a repurchase agreement, the fund
   could experience both delays in liquidating the underlying security and
   losses, including: (a) possible decline in the value of the underlying
   security during the period while the fund seeks to enforce its rights
   thereto; (b) possible subnormal levels of income and lack of access to income
   during this period; and (c) expenses of enforcing its rights.


                              Money Market Reserves

   It is expected that the fund will invest its cash reserves primarily in one
   or more money market funds established for the exclusive use of the T. Rowe
   Price family of mutual funds and other clients of T. Rowe Price and
   Price-Fleming. Currently, two such money market funds are in
   operation-Reserve Investment Fund ("RIF") and Government Reserve Investment
   Fund ("GRF"), each a series of the Reserve Investment Funds,


<PAGE>

   Inc. Additional series may be created in the future. These funds were created
   and operate under an Exemptive Order issued by the SEC (Investment Company
   Act Release No. IC-22770, July 29, 1997).

   Both funds must comply with the requirements of Rule 2a-7 under the 1940 Act
   governing money market funds. The RIF invests at least 95% of its total
   assets in prime money market instruments receiving the highest credit rating.
   The GRF invests primarily in a portfolio of U.S. government-backed
   securities, primarily U.S. Treasuries, and repurchase agreements thereon.

   The RIF and GRF provide a very efficient means of managing the cash reserves
   of the fund. While neither RIF or GRF pay an advisory fee to the Investment
   Manager, they will incur other expenses. However, the RIF and GRF are
   expected by T. Rowe Price to operate at very low expense ratios. The fund
   will only invest in RIF or GRF to the extent it is consistent with its
   objective and program.

   Neither fund is insured or guaranteed by the U.S. government, and there is no
   assurance they will maintain a stable net asset value of $1.00 per share.


                                     Options

   Options are a type of potentially high-risk derivative.


                          Writing Covered Call Options

   The fund may write (sell) American or European style "covered" call options
   and purchase options to close out options previously written by the fund. In
   writing covered call options, the fund expects to generate additional premium
   income which should serve to enhance the fund's total return and reduce the
   effect of any price decline of the security or currency involved in the
   option. Covered call options will generally be written on securities or
   currencies which, in Price-Fleming's opinion, are not expected to have any
   major price increases or moves in the near future but which, over the long
   term, are deemed to be attractive investments for the fund.


   A call option gives the holder (buyer) the "right to purchase", and the
   writer (seller) has the obligation to sell, a security or currency at a
   specified price (the exercise price) at expiration of the option (European
   style) or at any time until a certain date (the expiration date) (American
   style). So long as the obligation of the writer of a call option continues,
   he may be assigned an exercise notice by the broker-dealer through whom such
   option was sold, requiring him to deliver the underlying security or currency
   against payment of the exercise price. This obligation terminates upon the
   expiration of the call option, or such earlier time at which the writer
   effects a closing purchase transaction by repurchasing an option identical to
   that previously sold. To secure his obligation to deliver the underlying
   security or currency in the case of a call option, a writer is required to
   deposit in escrow the underlying security or currency or other assets in
   accordance with the rules of a clearing corporation.

   The fund generally will write only covered call options. This means that the
   fund will either own the security or currency subject to the option or an
   option to purchase the same underlying security or currency, having an
   exercise price equal to or less than the exercise price of the "covered"
   option. From time to time, the fund will write a call option that is not
   covered as indicated above but where the fund will establish and maintain
   with its custodian for the term of the option, an account consisting of cash,
   U.S. government securities, other liquid high-grade debt obligations, or
   other suitable cover as permitted by the SEC having a value equal to the
   fluctuating market value of the optioned securities or currencies. While such
   an option would be "covered" with sufficient collateral to satisfy SEC
   prohibitions on issuing senior securities, this type of strategy would expose
   the fund to the risks of writing uncovered options.

   Portfolio securities or currencies on which call options may be written will
   be purchased solely on the basis of investment considerations consistent with
   the fund's investment objective. The writing of covered call options is a
   conservative investment technique believed to involve relatively little risk
   (in contrast to the writing of naked or uncovered options, which the fund
   generally will not do), but capable of enhancing the fund's total return.
   When writing a covered call option, a fund, in return for the premium, gives
   up the opportunity for profit from a price increase in the underlying
   security or currency above the exercise price, but conversely retains the
   risk of loss should the price of the security or currency decline. Unlike one
   who owns securities or


<PAGE>


   currencies not subject to an option, the fund has no control over when it may
   be required to sell the underlying securities or currencies, since it may be
   assigned an exercise notice at any time prior to the expiration of its
   obligation as a writer. If a call option which the fund has written expires,
   the fund will realize a gain in the amount of the premium; however, such gain
   may be offset by a decline in the market value of the underlying security or
   currency during the option period. If the call option is exercised, the fund
   will realize a gain or loss from the sale of the underlying security or
   currency. The fund does not consider a security or currency covered by a call
   to be "pledged" as that term is used in the fund's policy which limits the
   pledging or mortgaging of its assets. If the fund writes an uncovered option
   as described above, it will bear the risk of having to purchase the security
   subject to the option at a price higher than the exercise price of the
   option. As the price of a security could appreciate substantially, the fund's
   loss could be significant.

   The premium received is the market value of an option. The premium the fund
   will receive from writing a call option will reflect, among other things, the
   current market price of the underlying security or currency, the relationship
   of the exercise price to such market price, the historical price volatility
   of the underlying security or currency, and the length of the option period.
   Once the decision to write a call option has been made, Price-Fleming, in
   determining whether a particular call option should be written on a
   particular security or currency, will consider the reasonableness of the
   anticipated premium and the likelihood that a liquid secondary market will
   exist for those options. The premium received by the fund for writing covered
   call options will be recorded as a liability of the fund. This liability will
   be adjusted daily to the option's current market value, which will be the
   latest sale price at the time at which the net asset value per share of the
   fund is computed (close of the New York Stock Exchange), or, in the absence
   of such sale, the latest asked price. The option will be terminated upon
   expiration of the option, the purchase of an identical option in a closing
   transaction, or delivery of the underlying security or currency upon the
   exercise of the option.

   Closing transactions will be effected in order to realize a profit on an
   outstanding call option, to prevent an underlying security or currency from
   being called, or, to permit the sale of the underlying security or currency.
   Furthermore, effecting a closing transaction will permit the fund to write
   another call option on the underlying security or currency with either a
   different exercise price or expiration date or both. If the fund desires to
   sell a particular security or currency from its portfolio on which it has
   written a call option, or purchased a put option, it will seek to effect a
   closing transaction prior to, or concurrently with, the sale of the security
   or currency. There is, of course, no assurance that the fund will be able to
   effect such closing transactions at favorable prices. If the fund cannot
   enter into such a transaction, it may be required to hold a security or
   currency that it might otherwise have sold. When the fund writes a covered
   call option, it runs the risk of not being able to participate in the
   appreciation of the underlying securities or currencies above the exercise
   price, as well as the risk of being required to hold on to securities or
   currencies that are depreciating in value. This could result in higher
   transaction costs. The fund will pay transaction costs in connection with the
   writing of options to close out previously written options. Such transaction
   costs are normally higher than those applicable to purchases and sales of
   portfolio securities.

   Call options written by the fund will normally have expiration dates of less
   than nine months from the date written. The exercise price of the options may
   be below, equal to, or above the current market values of the underlying
   securities or currencies at the time the options are written. From time to
   time, the fund may purchase an underlying security or currency for delivery
   in accordance with an exercise notice of a call option assigned to it, rather
   than delivering such security or currency from its portfolio. In such cases,
   additional costs may be incurred.

   The fund will realize a profit or loss from a closing purchase transaction if
   the cost of the transaction is less or more than the premium received from
   the writing of the option. Because increases in the market price of a call
   option will generally reflect increases in the market price of the underlying
   security or currency, any loss resulting from the repurchase of a call option
   is likely to be offset in whole or in part by appreciation of the underlying
   security or currency owned by the fund.

   The fund will not write a covered call option if, as a result, the aggregate
   market value of all portfolio securities or currencies covering written call
   or put options exceeds 25% of the market value of the fund's net assets. In


<PAGE>

   calculating the 25% limit, the fund will offset, against the value of assets
   covering written calls and puts, the value of purchased calls and puts on
   identical securities or currencies with identical maturity dates.


                           Writing Covered Put Options

   The fund may write American or European style covered put options and
   purchase options to close out options previously written by the fund. A put
   option gives the purchaser of the option the right to sell, and the writer
   (seller) has the obligation to buy, the underlying security or currency at
   the exercise price during the option period (American style) or at the
   expiration of the option (European style). So long as the obligation of the
   writer continues, he may be assigned an exercise notice by the broker-dealer
   through whom such option was sold, requiring him to make payment to the
   exercise price against delivery of the underlying security or currency. The
   operation of put options in other respects, including their related risks and
   rewards, is substantially identical to that of call options.

   The fund would write put options only on a covered basis, which means that
   the fund would maintain in a segregated account cash, U.S. government
   securities, other liquid high-grade debt obligations, or other suitable cover
   as determined by the SEC, in an amount not less than the exercise price or
   the fund will own an option to sell the underlying security or currency
   subject to the option having an exercise price equal to or greater than the
   exercise price of the "covered" option at all times while the put option is
   outstanding. (The rules of a clearing corporation currently require that such
   assets be deposited in escrow to secure payment of the exercise price.)

   The fund would generally write covered put options in circumstances where
   Price-Fleming wishes to purchase the underlying security or currency for the
   fund's portfolio at a price lower than the current market price of the
   security or currency. In such event the fund would write a put option at an
   exercise price which, reduced by the premium received on the option, reflects
   the lower price it is willing to pay. Since the fund would also receive
   interest on debt securities or currencies maintained to cover the exercise
   price of the option, this technique could be used to enhance current return
   during periods of market uncertainty. The risk in such a transaction would be
   that the market price of the underlying security or currency would decline
   below the exercise price less the premiums received. Such a decline could be
   substantial and result in a significant loss to the fund. In addition, the
   fund, because it does not own the specific securities or currencies which it
   may be required to purchase in exercise of the put, cannot benefit from
   appreciation, if any, with respect to such specific securities or currencies.

   The fund will not write a covered put option if, as a result, the aggregate
   market value of all portfolio securities or currencies covering put or call
   options exceeds 25% of the market value of the fund's net assets. In
   calculating the 25% limit, the fund will offset, against the value of assets
   covering written puts and calls, the value of purchased puts and calls on
   identical securities or currencies with identical maturity dates.


                             Purchasing Put Options

   The fund may purchase American or European style put options. As the holder
   of a put option, the fund has the right to sell the underlying security or
   currency at the exercise price at any time during the option period (American
   style) or at the expiration of the option (European style). The fund may
   enter into closing sale transactions with respect to such options, exercise
   them or permit them to expire. The fund may purchase put options for
   defensive purposes in order to protect against an anticipated decline in the
   value of its securities or currencies. An example of such use of put options
   is provided next.

   The fund may purchase a put option on an underlying security or currency (a
   "protective put") owned by the fund as a defensive technique in order to
   protect against an anticipated decline in the value of the security or
   currency. Such hedge protection is provided only during the life of the put
   option when the fund, as the holder of the put option, is able to sell the
   underlying security or currency at the put exercise price regardless of any
   decline in the underlying security's market price or currency's exchange
   value. For example, a put option may be purchased in order to protect
   unrealized appreciation of a security or currency where T. Rowe Price deems
   it desirable to continue to hold the security or currency because of tax
   considerations. The premium paid for the put option and any transaction costs
   would reduce any capital gain otherwise available for distribution when the
   security or currency is eventually sold.


<PAGE>

   The fund may also purchase put options at a time when the fund does not own
   the underlying security or currency. By purchasing put options on a security
   or currency it does not own, the fund seeks to benefit from a decline in the
   market price of the underlying security or currency. If the put option is not
   sold when it has remaining value, and if the market price of the underlying
   security or currency remains equal to or greater than the exercise price
   during the life of the put option, the fund will lose its entire investment
   in the put option. In order for the purchase of a put option to be
   profitable, the market price of the underlying security or currency must
   decline sufficiently below the exercise price to cover the premium and
   transaction costs, unless the put option is sold in a closing sale
   transaction.

   The fund will not commit more than 5% of its assets to premiums when
   purchasing put and call options. The premium paid by the fund when purchasing
   a put option will be recorded as an asset of the fund. This asset will be
   adjusted daily to the option's current market value, which will be the latest
   sale price at the time at which the net asset value per share of the fund is
   computed (close of New York Stock Exchange), or, in the absence of such sale,
   the latest bid price. This asset will be terminated upon expiration of the
   option, the selling (writing) of an identical option in a closing
   transaction, or the delivery of the underlying security or currency upon the
   exercise of the option.


                             Purchasing Call Options

   The fund may purchase American or European style call options. As the holder
   of a call option, the fund has the right to purchase the underlying security
   or currency at the exercise price at any time during the option period
   (American style) or at the expiration of the option (European style). The
   fund may enter into closing sale transactions with respect to such options,
   exercise them or permit them to expire. The fund may purchase call options
   for the purpose of increasing its current return or avoiding tax consequences
   which could reduce its current return. The fund may also purchase call
   options in order to acquire the underlying securities or currencies. Examples
   of such uses of call options are provided next.

   Call options may be purchased by the fund for the purpose of acquiring the
   underlying securities or currencies for its portfolio. Utilized in this
   fashion, the purchase of call options enables the fund to acquire the
   securities or currencies at the exercise price of the call option plus the
   premium paid. At times the net cost of acquiring securities or currencies in
   this manner may be less than the cost of acquiring the securities or
   currencies directly. This technique may also be useful to the fund in
   purchasing a large block of securities or currencies that would be more
   difficult to acquire by direct market purchases. So long as it holds such a
   call option rather than the underlying security or currency itself, the fund
   is partially protected from any unexpected decline in the market price of the
   underlying security or currency and in such event could allow the call option
   to expire, incurring a loss only to the extent of the premium paid for the
   option.

   The fund will not commit more than 5% of its assets to premiums when
   purchasing call and put options. The fund may also purchase call options on
   underlying securities or currencies it owns in order to protect unrealized
   gains on call options previously written by it. A call option would be
   purchased for this purpose where tax considerations make it inadvisable to
   realize such gains through a closing purchase transaction. Call options may
   also be purchased at times to avoid realizing losses.


                        Dealer (Over-the-Counter) Options

   The fund may engage in transactions involving dealer options. Certain risks
   are specific to dealer options. While the fund would look to a clearing
   corporation to exercise exchange-traded options, if the fund were to purchase
   a dealer option, it would rely on the dealer from whom it purchased the
   option to perform if the option were exercised. Failure by the dealer to do
   so would result in the loss of the premium paid by the fund as well as loss
   of the expected benefit of the transaction.

   Exchange-traded options generally have a continuous liquid market while
   dealer options have none. Consequently, the fund will generally be able to
   realize the value of a dealer option it has purchased only by exercising it
   or reselling it to the dealer who issued it. Similarly, when the fund writes
   a dealer option, it generally will be able to close out the option prior to
   its expiration only by entering into a closing purchase transaction with the
   dealer to which the fund originally wrote the option. While the fund will
   seek to enter into dealer options only with dealers who will agree to and
   which are expected to be capable of entering into


<PAGE>

   closing transactions with the fund, there can be no assurance that the fund
   will be able to liquidate a dealer option at a favorable price at any time
   prior to expiration. Until the fund, as a covered dealer call option writer,
   is able to effect a closing purchase transaction, it will not be able to
   liquidate securities (or other assets) or currencies used as cover until the
   option expires or is exercised. In the event of insolvency of the contra
   party, the fund may be unable to liquidate a dealer option. With respect to
   options written by the fund, the inability to enter into a closing
   transaction may result in material losses to the fund. For example, since the
   fund must maintain a secured position with respect to any call option on a
   security it writes, the fund may not sell the assets which it has segregated
   to secure the position while it is obligated under the option. This
   requirement may impair a fund's ability to sell portfolio securities or
   currencies at a time when such sale might be advantageous.

   The Staff of the SEC has taken the position that purchased dealer options and
   the assets used to secure the written dealer options are illiquid securities.
   The fund may treat the cover used for written Over-the-Counter ("OTC")
   options as liquid if the dealer agrees that the fund may repurchase the OTC
   option it has written for a maximum price to be calculated by a predetermined
   formula. In such cases, the OTC option would be considered illiquid only to
   the extent the maximum repurchase price under the formula exceeds the
   intrinsic value of the option.


                                Futures Contracts

   Futures contracts are a type of potentially high-risk derivative.

   Transactions in Futures

   The funds may enter into futures contracts including stock index, interest
   rate, and currency futures ("futures" or "futures contracts") for hedging,
   yield or return enhancement, and risk management purposes.

   Stock index futures contracts may be used to provide a hedge for a portion of
   the fund's portfolio, as a cash management tool, or as an efficient way for
   Price-Fleming to implement either an increase or decrease in portfolio market
   exposure in response to changing market conditions. The fund may purchase or
   sell futures contracts with respect to any stock index. Nevertheless, to
   hedge the fund's portfolio successfully, the fund must sell futures contacts
   with respect to indices or subindices whose movements will have a significant
   correlation with movements in the prices of the fund's portfolio securities.

   Interest rate or currency futures contracts may be used as a hedge against
   changes in prevailing levels of interest rates or currency exchange rates in
   order to establish more definitely the effective return on securities or
   currencies held or intended to be acquired by the fund. In this regard, the
   fund could sell interest rate or currency futures as an offset against the
   effect of expected increases in interest rates or currency exchange rates and
   purchase such futures as an offset against the effect of expected declines in
   interest rates or currency exchange rates.


   The fund will enter into futures contracts which are traded on national or
   foreign futures exchanges, and are standardized as to maturity date and
   underlying financial instrument. Futures exchanges and trading in the United
   States are regulated under the Commodity Exchange Act by the 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
   If the fund purchases or sells futures contracts or related options which do
   not qualify as bona fide hedging under applicable CFTC rules, the aggregate
   initial margin deposits and premium required to establish those positions
   cannot exceed 5% of the liquidation value of the 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 and foreign currency options traded on a commodities
   exchange will be considered "related options." This policy may be modified by
   the


<PAGE>

   Board of Directors without a shareholder vote and does not limit the
   percentage of the fund's assets at risk to 5%.

   In instances involving the purchase of futures contracts or the writing of
   call or put options thereon by the fund, an amount of cash, liquid assets, or
   other suitable cover as permitted by the SEC, equal to the market value of
   the futures contracts and options thereon (less any related margin deposits),
   will be identified by the fund to cover the position, or alternative cover
   (such as owning an offsetting position) will be employed. Assets used as
   cover or held in an identified account cannot be sold while the position in
   the corresponding option or future is open, unless they are replaced with
   similar assets. As a result, the commitment of a large portion of a fund's
   assets to cover or identified accounts could impede portfolio management or
   the fund's ability to meet redemption requests or other current obligations.

   If the CFTC or other regulatory authorities adopt different (including less
   stringent) or additional restrictions, the fund would comply with such new
   restrictions.

   Trading in Futures Contracts
   A futures contract provides for the future sale by one party and purchase by
   another party of a specified amount of a specific financial instrument (e.g.,
   units of a stock index) for a specified price, date, time and place
   designated at the time the contract is made. Brokerage fees are incurred when
   a futures contract is bought or sold and margin deposits must be maintained.
   Entering into a contract to buy is commonly referred to as buying or
   purchasing a contract or holding a long position. Entering into a contract to
   sell is commonly referred to as selling a contract or holding a short
   position.

   Unlike when the 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, or liquid assets known as "initial margin." The margin required for
   a particular futures contract is set by the exchange on which the contract is
   traded, and may be significantly modified from time to time by the exchange
   during the term of the contract. Futures contracts are customarily purchased
   and sold on margins that may range upward from less than 5% of the value of
   the contract being traded.

   If the price of an open futures contract changes (by increase in the case of
   a sale or by decrease in the case of a purchase) so that the loss on the
   futures contract reaches a point at which the margin on deposit does not
   satisfy margin requirements, the broker will require an increase in the
   margin. However, if the value of a position increases because of favorable
   price changes in the futures contract so that the margin deposit exceeds the
   required margin, the broker will pay the excess to the fund.

   These subsequent payments, called "variation margin," to and from the futures
   broker, are made on a daily basis as the price of the underlying assets
   fluctuate, making the long and short positions in the futures contract more
   or less valuable, a process known as "marking to market."

   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.

   Settlement of a stock index futures contract may or may not be in the
   underlying security. If not in the underlying security, then settlement will
   be made in cash, equivalent over time to the difference between the


<PAGE>

   contract price and the actual price of the underlying asset (as adjusted by a
   multiplier) at the time the stock index futures contract expires.


               Special Risks of Transactions in Futures Contracts

  . Volatility and Leverage The prices of futures contracts are volatile and are
   influenced, among other things, by actual and anticipated changes in the
   market and interest rates, which in turn are affected by fiscal and monetary
   policies and national and international political and economic events.

   Most United States futures exchanges limit the amount of fluctuation
   permitted in futures contract prices during a single trading day. The daily
   limit establishes the maximum amount that the price of a futures contract may
   vary either up or down from the previous day's settlement price at the end of
   a trading session. Once the daily limit has been reached in a particular type
   of futures contract, no trades may be made on that day at a price beyond that
   limit. The daily limit governs only price movement during a particular
   trading day and therefore does not limit potential losses, because the limit
   may prevent the liquidation of unfavorable positions. Futures contract prices
   have occasionally moved to the daily limit for several consecutive trading
   days with little or no trading, thereby preventing prompt liquidation of
   futures positions and subjecting some futures traders to substantial losses.

   Margin deposits required on futures trading are low. As a result, a
   relatively small price movement in a futures contract may result in immediate
   and substantial loss, as well as gain, to the investor. For example, if at
   the time of purchase, 10% of the value of the futures contract is deposited
   as margin, a subsequent 10% decrease in the value of the futures contract
   would result in a total loss of the margin deposit, before any deduction for
   the transaction costs, if the account were then closed out. A 15% decrease
   would result in a loss equal to 150% of the original margin deposit, if the
   contract were closed out. Thus, a purchase or sale of a futures contract may
   result in losses in excess of the amount invested in the futures contract.

  . Liquidity The fund may elect to close some or all of its futures positions
   at any time prior to their expiration. The fund would do so to reduce
   exposure represented by long futures positions or short futures positions.
   The fund may close its positions by taking opposite positions which would
   operate to terminate the fund's position in the futures contracts. Final
   determinations of variation margin would then be made, additional cash would
   be required to be paid by or released to the fund, and the fund would realize
   a loss or a gain.

   Futures contracts may be closed out only on the exchange or board of trade
   where the contracts were initially traded. Although the fund intends to
   purchase or sell futures contracts only on exchanges or boards of trade where
   there appears to be an active market, there is no assurance that a liquid
   market on an exchange or board of trade will exist for any particular
   contract at any particular time. In such event, it might not be possible to
   close a futures contract, and in the event of adverse price movements, the
   fund would continue to be required to make daily cash payments of variation
   margin. However, in the event futures contracts have been used to hedge the
   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 next, there is no guarantee that the
   price of the underlying instruments will, in fact, correlate with the price
   movements in the futures contract and thus provide an offset to losses on a
   futures contract.

  . Hedging Risk A decision 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. Price-Fleming 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 Price-Fleming's ability to correctly predict movements in the
   direction of the market. It is possible that, when the fund has sold futures


<PAGE>

   to hedge its portfolio against a decline in the market, the index, indices,
   or instruments underlying futures might advance and the value of the
   underlying instruments held in the 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, Price-Fleming believes that over time
   the value of the fund's portfolio will tend to move in the same direction as
   the market indices used to hedge the portfolio. It is also possible that, if
   the fund were to hedge against the possibility of a decline in the market
   (adversely affecting the underlying instruments held in its portfolio) and
   prices instead increased, the fund would lose part or all of the benefit of
   increased value of those underlying instruments that it has hedged, because
   it would have offsetting losses in its futures positions. In addition, in
   such situations, if the fund had insufficient cash, it might have to sell
   underlying instruments to meet daily variation margin requirements. Such
   sales of underlying instruments might be, but would not necessarily be, at
   increased prices (which would reflect the rising market). The fund might have
   to sell underlying instruments at a time when it would be disadvantageous to
   do so.

   In addition to the possibility that there might be an imperfect correlation,
   or no correlation at all, between price movements in the futures contracts
   and the portion of the portfolio being hedged, the price movements of futures
   contracts might not correlate perfectly with price movements in the
   underlying instruments due to certain market distortions. First, all
   participants in the futures market are subject to margin deposit and
   maintenance requirements. Rather than meeting additional margin deposit
   requirements, investors might close futures contracts through offsetting
   transactions, which could distort the normal relationship between the
   underlying instruments and futures markets. Second, the margin requirements
   in the futures market are less onerous than margin requirements in the
   securities markets and, as a result, the futures market might attract more
   speculators than the securities markets do. Increased participation by
   speculators in the futures market might also cause temporary price
   distortions. Due to the possibility of price distortion in the futures market
   and also because of imperfect correlation between price movements in the
   underlying instruments and movements in the prices of futures contracts, even
   a correct forecast of general market trends by Price-Fleming might not result
   in a successful hedging transaction over a very short time period.


                          Options on Futures Contracts

   The fund may purchase and sell options on the same types of futures in which
   it may invest.

   Options (another type of potentially high-risk derivative) on futures are
   similar to options on underlying instruments except that options on futures
   give the purchaser the right, in return for the premium paid, to assume a
   position in a futures contract (a long position if the option is a call and a
   short position if the option is a put), rather than to purchase or sell the
   futures contract, at a specified exercise price at any time during the period
   of the option. Upon exercise of the option, the delivery of the futures
   position by the writer of the option to the holder of the option will be
   accompanied by the delivery of the accumulated balance in the writer's
   futures margin account which represents the amount by which the market price
   of the futures contract, at exercise, exceeds (in the case of a call) or is
   less than (in the case of a put) the exercise price of the option on the
   futures contract. Purchasers of options who fail to exercise their options
   prior to the exercise date suffer a loss of the premium paid.

   As an alternative to writing or purchasing call and put options on stock
   index futures, the fund may write or purchase call and put options on
   financial indices. Such options would be used in a manner similar to the use
   of options on futures contracts. 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 funds and the other T. Rowe Price Funds in a fair and
   nondiscriminatory manner.


          Special Risks of Transactions in Options on Futures Contracts

   The risks described under "Special Risks in Transactions on Futures
   Contracts" are substantially the same as the risks of using options on
   futures. If the fund were to write an option on a futures contract, it would
   be required to deposit and maintain initial and variation margin in the same
   manner as a regular futures contract. In addition, where the fund seeks to
   close out an option position by writing or buying an offsetting option


<PAGE>

   covering the same index, underlying instrument or contract and having the
   same exercise price and expiration date, its ability to establish and close
   out positions on such options will be subject to the maintenance of a liquid
   secondary market. Reasons for the absence of a liquid secondary market on an
   exchange include the following: (1) there may be insufficient trading
   interest in certain options; (2) restrictions may be imposed by an exchange
   on opening transactions or closing transactions or both; (3) trading halts,
   suspensions or other restrictions may be imposed with respect to particular
   classes or series of options, or underlying instruments; (4) unusual or
   unforeseen circumstances may interrupt normal operations on an exchange; (5)
   the facilities of an exchange or a clearing corporation may not at all times
   be adequate to handle current trading volume; or (6) one or more exchanges
   could, for economic or other reasons, decide or be compelled at some future
   date to discontinue the trading of options (or a particular class or series
   of options), in which event the secondary market on that exchange (or in the
   class or series of options) would cease to 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.


                    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.


                           Foreign Futures and Options

   Participation in foreign futures and foreign options transactions involves
   the execution and clearing of trades on or subject to the rules of a foreign
   board of trade. Neither the National Futures Association nor any domestic
   exchange regulates activities of any foreign boards of trade, including the
   execution, delivery and clearing of transactions, or has the power to compel
   enforcement of the rules of a foreign board of trade or any applicable
   foreign law. This is true even if the exchange is formally linked to a
   domestic market so that a position taken on the market may be liquidated by a
   transaction on another market. Moreover, such laws or regulations will vary
   depending on the foreign country in which the foreign futures or foreign
   options transaction occurs. For these reasons, when the fund trades foreign
   futures or foreign options contracts, it may not be afforded certain of the
   protective measures provided by the Commodity Exchange Act, the CFTC's
   regulations and the rules of the National Futures Association and any
   domestic exchange, including the right to use reparations proceedings before
   the CFTC and arbitration proceedings provided by the National Futures
   Association or any domestic futures exchange. In particular, funds received
   from the fund for foreign futures or foreign options transactions may not be
   provided the same protections as funds received in respect of transactions on
   United States futures exchanges. In addition, the price of any foreign
   futures or foreign options contract and, therefore, the potential profit and
   loss thereon may be affected by any variance in the foreign exchange rate
   between the time the fund's order is placed and the time it is liquidated,
   offset or exercised.


                          Foreign Currency Transactions

   A forward foreign currency exchange contract involves an obligation to
   purchase or sell a specific currency at a future date, which may be any fixed
   number of days from the date of the contract agreed upon by the parties, at a
   price set at the time of the contract. These contracts are principally traded
   in the interbank market conducted directly between currency traders (usually
   large, commercial banks) and their customers. A forward contract generally
   has no deposit requirement, and no commissions are charged at any stage for
   trades.

   The fund may enter into forward contracts for a variety of purposes in
   connection with the management of the foreign securities portion of its
   portfolio. The fund's use of such contracts would include, but not be limited
   to, the following:

   First, when the fund enters into a contract for the purchase or sale of a
   security denominated in a foreign currency, it may desire to "lock in" the
   U.S. dollar price of the security. By entering into a forward contract for
   the purchase or sale, for a fixed amount of dollars, of the amount of foreign
   currency involved in the


<PAGE>

   underlying security transactions, the fund will be able to protect itself
   against a possible loss resulting from an adverse change in the relationship
   between the U.S. dollar and the subject foreign currency during the period
   between the date the security is purchased or sold and the date on which
   payment is made or received.

   Second, when Price-Fleming believes that one currency may experience a
   substantial movement against another currency, including the U.S. dollar, it
   may enter into a forward contract to sell or buy the amount of the former
   foreign currency, approximating the value of some or all of the fund's
   portfolio securities denominated in such foreign currency. Alternatively,
   where appropriate, the fund may hedge all or part of its foreign currency
   exposure through the use of a basket of currencies or a proxy currency where
   such currency or currencies act as an effective proxy for other currencies.
   In such a case, the fund may enter into a forward contract where the amount
   of the foreign currency to be sold exceeds the value of the securities
   denominated in such currency. The use of this basket hedging technique may be
   more efficient and economical than entering into separate forward contracts
   for each currency held in the fund. The precise matching of the forward
   contract amounts and the value of the securities involved will not generally
   be possible since the future value of such securities in foreign currencies
   will change as a consequence of market movements in the value of those
   securities between the date the forward contract is entered into and the date
   it matures. The projection of short-term currency market movement is
   extremely difficult, and the successful execution of a short-term hedging
   strategy is highly uncertain. Under normal circumstances, consideration of
   the prospect for currency parties will be incorporated into the longer term
   investment decisions made with regard to overall diversification strategies.
   However, Price-Fleming believes that it is important to have the flexibility
   to enter into such forward contracts when it determines that the best
   interests of the fund will be served.

   The fund may enter into forward contacts for any other purpose consistent
   with the fund's investment objective and program. However, the fund will not
   enter into a forward contract, or maintain exposure to any such contract(s),
   if the amount of foreign currency required to be delivered thereunder would
   exceed the fund's holdings of liquid, high-grade debt securities, currency
   available for cover of the forward contract(s) or other suitable cover as
   permitted by the SEC. In determining the amount to be delivered under a
   contract, the fund may net offsetting positions.

   At the maturity of a forward contract, the fund may sell the portfolio
   security and make delivery of the foreign currency, or it may retain the
   security and either extend the maturity of the forward contract (by "rolling"
   that contract forward) or may initiate a new forward contract.

   If the fund retains the portfolio security and engages in an offsetting
   transaction, the fund will incur a gain or a loss (as described below) to the
   extent that there has been movement in forward contract prices. If the fund
   engages in an offsetting transaction, it may subsequently enter into a new
   forward contract to sell the foreign currency. Should forward prices decline
   during the period between the fund's entering into a forward contract for the
   sale of a foreign currency and the date it enters into an offsetting contract
   for the purchase of the foreign currency, the fund will realize a gain to the
   extent the price of the currency it has agreed to sell exceeds the price of
   the currency it has agreed to purchase. Should forward prices increase, the
   fund will suffer a loss to the extent of the price of the currency it has
   agreed to purchase exceeds the price of the currency it has agreed to sell.

   The fund's dealing in forward foreign currency exchange contracts will
   generally be limited to the transactions described above. However, the fund
   reserves the right to enter into forward foreign currency contracts for
   different purposes and under different circumstances. Of course, the fund is
   not required to enter into forward contracts with regard to its foreign
   currency-denominated securities and will not do so unless deemed appropriate
   by Price-Fleming. It also should be realized that this method of hedging
   against a decline in the value of a currency does not eliminate fluctuations
   in the underlying prices of the securities. It simply establishes a rate of
   exchange at a future date. Additionally, although such contracts tend to
   minimize the risk of loss due to a decline in the value of the hedged
   currency, at the same time, they tend to limit any potential gain which might
   result from an increase in the value of that currency.


   Although the fund values its assets daily in terms of U.S. dollars, it does
   not intend to convert its holdings of foreign currencies into U.S. dollars on
   a daily basis. It will do so from time to time, and there are costs
   associated with currency conversion. Although foreign exchange dealers do not
   charge a fee for conversion,


<PAGE>


   they do realize a profit based on the difference (the "spread") between the
   prices at which they are buying and selling various currencies. Thus, a
   dealer may offer to sell a foreign currency to the fund at one rate, while
   offering a lesser rate of exchange should the fund desire to resell that
   currency to the dealer.


    Federal Tax Treatment of Options, Futures Contracts, and Forward Foreign
                               Exchange Contracts

   The fund may enter into certain options, futures, and forward foreign
   exchange contracts, including options and futures on currencies, which will
   be treated as Section 1256 contracts or straddles.

   Transactions that are considered Section 1256 contracts will be considered to
   have been closed at the end of the fund's fiscal year and any gains or losses
   will be recognized for tax purposes at that time. Such gains or losses from
   the normal closing or settlement of such transactions will be characterized
   as 60% long-term capital gain (taxable at a maximum rate of 20%) or loss and
   40% short-term capital gain or loss regardless of the holding period of the
   instrument (ordinary income or loss for foreign exchange contracts). The fund
   will be required to distribute net gains on such transactions to shareholders
   even though it may not have closed the transaction and received cash to pay
   such distributions.

   Options, futures and forward foreign exchange contracts, including options
   and futures on currencies, which offset a foreign dollar denominated bond or
   currency position may be considered straddles for tax purposes, in which case
   a loss on any position in a straddle will be subject to deferral to the
   extent of unrealized gain in an offsetting position. The holding period of
   the securities or currencies comprising the straddle will be deemed not to
   begin until the straddle is terminated. The holding period of the security
   offsetting an "in-the-money qualified covered call" option on an equity
   security will not include the period of time the option is outstanding.

   Losses on written covered calls and purchased puts on securities, excluding
   certain "qualified covered call" options on equity securities, may be
   long-term capital losses, if the security covering the option was held for
   more than 12 months prior to the writing of the option.

   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 or currencies. Tax regulations could be issued limiting the extent
   that net gain realized from option, futures or foreign forward exchange
   contracts on currencies is qualifying income for purposes of the 90%
   requirement.

   As a result of the "Taxpayer Relief Act of 1997," entering into certain
   options, futures contracts, or forward contracts may result in the
   "constructive sale" of offsetting stocks or debt securities of the fund.



 INVESTMENT RESTRICTIONS
 -------------------------------------------------------------------------------
   Fundamental policies may not be changed without the approval of the lesser of
   (1) 67% of the 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 the
   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, the fund. Calculation of the fund's total assets for
   compliance with any of the following fundamental or operating policies or any
   other investment restrictions set forth in the fund's prospectus or Statement
   of Additional Information will not include cash collateral held in connection
   with securities lending activities.


<PAGE>

                              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;

   (2) Commodities Purchase or sell physical commodities; except that it 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;

   All Funds except Foreign Equity Fund

   (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;


       Loans (Foreign Equity Fund) Make loans, although the fund may (i)
       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;

   All Funds except Latin America Fund

   (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 a 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);

   All Funds

   (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 securities of
       companies engaged in the real estate business);

   (8) Senior Securities Issue senior securities except in compliance with the
       1940 Act; or

   (9) 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 1933 Act in connection with the purchase and sale of its
       portfolio securities in the ordinary course of pursuing its investment
       program.


<PAGE>

                                      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 restriction (2), the fund does not consider
       currency contracts or hybrid investments 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. Industries are determined by reference to the
       classifications of industries set forth in the fund's semiannual and
       annual reports. It is the position of the Staff of the SEC that foreign
       governments are industries for purposes of this restriction.

       For purposes of investment restriction (4), the fund will consider the
       acquisition of a debt security to include the execution of a note or
       other evidence of an extension of credit with a term of more than nine
       months.


                               Operating Policies

   As a matter of operating policy, the fund may not:

   (1) Borrowing 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) 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 options would exceed 5% of the fund's net asset value;

   (4) Illiquid Securities Purchase illiquid securities if, as a result, more
       than 15% of its net assets would be invested in such securities;

   (5) Investment Companies  Purchase securities of open-end or closed-end
       investment companies except (i) in compliance with the 1940 Act; or (ii)
       securities of the Reserve Investment or Government Reserve Investment
       Funds;

   (6) 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;

   (7) 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;

   (8) Oil and Gas Programs Purchase participations or other direct interests
       in, or enter into leases with respect to oil, gas, or other mineral
       exploration or development programs if, as a result thereof, more than 5%
       of the value of the total assets of the fund would be invested in such
       programs;

   (9) 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;

   (10) Short Sales Effect short sales of securities; or

   (11) Warrants Invest in warrants if, as a result thereof, more than 10% of
       the value of the net assets of the fund would be invested in warrants.

   In addition to the restrictions described above, some foreign countries
   limit, or prohibit, all direct foreign investment in the securities of their
   companies. However, the governments of some countries have authorized the
   organization of investment funds to permit indirect foreign investment in
   such securities. For tax purposes, these funds may be known as Passive
   Foreign Investment Companies. Each fund is subject to


<PAGE>

   certain percentage limitations under the 1940 Act and certain states relating
   to the purchase of securities of investment companies, and may be subject to
   the limitation that no more than 10% of the value of the fund's total assets
   may be invested in such securities.



 MANAGEMENT OF THE FUNDS
 -------------------------------------------------------------------------------
   The officers and directors of the fund 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 fund's directors who are
   considered "interested persons" of T. Rowe Price as defined under Section
   2(a)(19) of the 1940 Act 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.


                           Independent Directors/(a)/

   ANTHONY W. DEERING, 1/28/45, Director, Chairman of the Board, President and
   Chief Operating Officer, The Rouse Company, real estate developers, Columbia,
   Maryland; Advisory Director, Kleinwort, Benson (North America) Corporation, a
   registered broker-dealer; Address: 10275 Little Patuxent Parkway, Columbia,
   Maryland 21044

   DONALD W. DICK, JR., 1/27/43, Principal, EuroCapital Advisors, LLC, an
   acquisition and management advisory firm; formerly (5/89-6/95) Principal,
   Overseas Partners, Inc., a financial investment firm; formerly  (6/65-3/89)
   Director and Vice President; Consumer Products Division, McCormick & Company,
   Inc., international food processors; Director, Waverly, Inc., Baltimore,
   Maryland; Address: 925 Cleveland Street, #177, Greenville, South Carolina
   29601


   PAUL M. WYTHES, 6/23/33, Founding Partner of Sutter Hill Ventures, a venture
   capital limited partnership, providing equity capital to young high
   technology companies throughout the United States; Director, Teltone
   Corporation and InterVentional Technologies Inc.; Address: 755 Page Mill
   Road, Suite A200, Palo Alto, California 94304-1005

  (a) Unless otherwise indicated, the Independent Directors have been at their
     respective companies for at least five years.


                            Inside Directors/Officers


  *  M. DAVID TESTA, 4/22/44, Chairman of the Board-Chairman of the Board and
   Director, Price-Fleming; Vice Chairman of the Board, Chief Investment
   Officer, and Managing Director, T. Rowe Price; Vice President and Director,
   T. Rowe Price Trust Company; Chartered Financial Analyst


  *  MARTIN G. WADE, 2/16/43, Director and President-Director, Chief Investment
   Officer, and Vice Chairman of the Board, Price-Fleming; Director, Fleming
   Holdings Limited; Director, Robert Fleming Asset Management; Address: 25
   Copthall Avenue, London, EC2R 7DR, England

  /a/ PETER B. ASKEW, 5/10/53, Executive Vice President-Executive Vice
   President, Price-Fleming


  /ab/ JOHN R. FORD, 11/25/57, Executive Vice President/Vice President-Executive
   Vice President, Price-Fleming; Chartered Financial Analyst


  /ab/ DAVID J.L. WARREN, 4/14/57, Executive Vice President/Vice
   President-Executive Vice President, Price-Fleming

  /a/ CHRISTOPHER D. ALDERSON, 3/29/62, Vice President-Vice President,
   Price-Fleming

   MARK C.J. BICKFORD-SMITH, 4/30/62, Vice President-Vice President and
   portfolio manager of Price-Fleming; formerly a Director and portfolio manager
   of Jardine Fleming Investment Management

  /a/ ROBERT P. CAMPBELL, 1/31/56, Vice President-Vice President, T. Rowe Price
   and Price-Fleming

  /a/ MICHAEL J. CONELIUS, 6/16/64, Vice President-Assistant Vice President, T.
   Rowe Price


<PAGE>

  /a/ FRANCES DYDASCO, 5/8/66, Vice President-Vice President and portfolio
   manager of Price-Fleming (Singapore); formerly (1994-1996) an Investment
   Manager at LGT Asset Management Ltd. (Hong Kong); and (1993-1994) with East
   Asia Hamon Asset (Hong Kong)

  /a/ MARK J.T. EDWARDS, 10/27/57, Vice President-Vice President, Price-Fleming


   HENRY H. HOPKINS, 12/23/42, Vice President-Vice President, Price-Fleming and
   T. Rowe Price Retirement Plan Services, Inc.; Director and 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



  /a/ IAN J. MACDONALD, 1/7/62, Vice President-Vice President, Price-Fleming;
   formerly (1992-1997) Senior Fund Manager at Mercury Asset Management (Japan)

   GEORGE A. MURNAGHAN, 5/1/56, Vice President-Managing Director, T. Rowe Price;
   Executive Vice President, Price-Fleming; Vice President, T. Rowe Price Trust
   Company and T. Rowe Price Investment Services, Inc.


  /a/ ROBERT A. REVEL-CHION, 3/9/65, Vice President-Vice President,
   Price-Fleming; formerly (1994-1997) portfolio manager, Jardine Fleming (Hong
   Kong), and (1987-1993) Assistant Investment Manager, Nestle Rewntree Pension
   Trust

   JAMES S. RIEPE, 6/25/43, Vice President-Vice Chairman of the Board, Managing
   Director, and Director, T. Rowe Price; Chairman of the Board, T. Rowe Price
   Investment Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price
   Retirement Plan Services, Inc.; Chairman of the Board, President, and Trust
   Officer, T. Rowe Price Trust Company; Director, Price-Fleming and General Re
   Corporation

  /a/ CHRISTOPHER ROTHERY, 5/26/63, Vice President-Vice President, Price-Fleming

  /b/ R. TODD RUPPERT, 5/7/56, Vice President-Managing Director, T. Rowe Price;
   Vice President, T. Rowe Price Trust Company and T. Rowe Price Retirement Plan
   Services, Inc.

   JAMES B.M. SEDDON, 6/17/64, Vice President-Vice President, Price-Fleming

  /a/ BENEDICT R.F. THOMAS, 8/27/64, Vice President-Vice President,
   Price-Fleming; Chartered Financial Analyst


  /a/ JUSTIN THOMSON, 1/14/68, Vice President-Vice President, Price-Fleming;
   (1998 to present) Small Cap Co-Ordinator, Price-Fleming; formerly (1991-1998)
   Portfolio Manager; G. T. Capital/Invesco

   WILLIAM F. WENDLER II, 3/14/62, Vice President-Vice President, T. Rowe Price,
   Price-Fleming, and T. Rowe Price Investment Services, Inc.


  /a/ RICHARD T. WHITNEY, 5/7/58, Vice President-Managing Director, T. Rowe
   Price; Vice President, Price-Fleming and T. Rowe Price Trust Company;
   Chartered Financial Analyst

   EDWARD A. WIESE, 4/12/59, Vice President-Vice President, T. Rowe Price,
   Price-Fleming, and T. Rowe Price Trust Company

   PATRICIA S. LIPPERT, 1/12/53, Secretary-Assistant Vice President, T. Rowe
   Price and T. Rowe Price Investment Services, Inc.

   CARMEN F. DEYESU, 8/1/41, Treasurer-Vice President, T. Rowe Price, T. Rowe
   Price Services, Inc., and T. Rowe Price Trust Company


   DAVID S. MIDDLETON, 1/18/56, Controller-Vice President, T. Rowe Price and T.
   Rowe Price Trust Company

  /a/ ANN B. CRANMER, 3/23/47, Assistant Vice President-Vice President,
   Price-Fleming

   ROGER L. FIERY III, 2/10/59, Assistant Vice President-Vice President,
   Price-Fleming and T. Rowe Price


<PAGE>

  /a/ LEAH P. HOLMES, 2/11/44, Assistant Vice President-Vice President,
   Price-Fleming; Assistant Vice President, T. Rowe Price

   INGRID I. VORDEMBERGE, 9/27/35, Assistant Vice President-Employee, T. Rowe
   Price

 (a) Messrs. Askew, Ford, and Warren are Executive Vice Presidents of the
   International Funds only. Messrs. Alderson, Campbell, Revel-Chion,
   Conelius, Dydasco, Edwards, Macdonald, Rothery, Seddon, Thomas, Thomson,
   and Whitney are Vice Presidents of the International Funds only. Mmes.
   Cranmer and Holmes are Assistant Vice Presidents of the International
   Funds only.

 (b) Messrs. Ford, Ruppert, and Warren are Vice Presidents of the Foreign Equity
   Fund.


                               Compensation Table

   The funds do not pay pension or retirement benefits to their officers or
   directors. Also, any director of a fund who is an officer or employee of T.
   Rowe Price or Price-Fleming does not receive any remuneration from the fund.

<TABLE>
<CAPTION>
Name of Person,                         Aggregate Compensation from                   Total Compensation from Fund and
Position                                Fund(a)                                       Fund Complex Paid to Directors(b)
- --------------------------------------  --------------------------------------------  ---------------------------------
- --------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                                           <C>
International Stock Fund
Anthony W. Deering, Director                                                  $5,286                             $81,000
Donald W. Dick, Director                                                       4,749                              81,000
Paul M. Wythes, Director                                                       4,749                              80,000
- --------------------------------------------------------------------------------------------------------------------------

International Discovery Fund
Anthony W. Deering, Director                                                  $1,760                             $81,000
Donald W. Dick, Director                                                       1,782                              81,000
Paul M. Wythes, Director                                                       1,782                              80,000
- --------------------------------------------------------------------------------------------------------------------------
International Growth & Income Fund
                                                                                   $
Anthony W. Deering, Director                                                   1,398                             $81,000
Donald W. Dick, Director                                                       1,390                              81,000
Paul M. Wythes, Director                                                       1,390                              80,000
- --------------------------------------------------------------------------------------------------------------------------
European Stock Fund
Anthony W. Deering, Director                                                  $2,194                             $81,000
Donald W. Dick, Director                                                       2,161                              81,000
Paul M. Wythes, Director                                                       2,161                              80,000
- --------------------------------------------------------------------------------------------------------------------------
Japan Fund
Anthony W. Deering, Director                                                  $1,798                             $81,000
Donald W. Dick, Director                                                       1,776                              81,000
Paul M. Wythes, Director                                                       1,776                              80,000
- --------------------------------------------------------------------------------------------------------------------------
New Asia Fund
Anthony W. Deering, Director                                                  $1,943                             $81,000
Donald W. Dick, Director                                                       1,945                              81,000
Paul M. Wythes, Director                                                       1,945                              80,000
- --------------------------------------------------------------------------------------------------------------------------
Latin America Fund
                                                                                   $
Anthony W. Deering, Director                                                   1,747                             $81,000
Donald W. Dick, Director                                                       1,776                              81,000
Paul M. Wythes, Director                                                       1,776                              80,000
- --------------------------------------------------------------------------------------------------------------------------
Emerging Markets Stock Fund
Anthony W. Deering, Director                                                  $1,704                             $81,000
Donald W. Dick, Director                                                       1,740                              81,000
Paul M. Wythes, Director                                                       1,740                              80,000
- --------------------------------------------------------------------------------------------------------------------------
Global Stock Fund
Anthony W. Deering, Director                                                  $1,740                             $81,000
Donald W. Dick, Director                                                       1,730                              81,000
Paul M. Wythes, Director                                                       1,730                              80,000
- --------------------------------------------------------------------------------------------------------------------------
Foreign Equity Fund
Anthony W. Deering, Director                                                  $2,851                             $81,000
Donald W. Dick, Director                                                       2,707                              81,000
Paul M. Wythes, Director                                                       2,707                              80,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>





<PAGE>

 (a) Amounts in this column are based on accrued compensation from November
   1, 1998 to October 31, 1999.


 (b) Amounts in this column are based on compensation received from January
   1, 1999, to December 31, 1999. The T. Rowe Price complex included 88 funds
   as of December 31, 1999.

   All Funds

   The fund's Executive Committee, consisting of the fund's interested
   directors, has been authorized by its respective Board of Directors to
   exercise all powers of the Board to manage the funds in the intervals between
   meetings of the Board, except the powers prohibited by statute from being
   delegated.



 PRINCIPAL HOLDERS OF SECURITIES
 -------------------------------------------------------------------------------
   As of the date of the prospectus, the officers and directors of the fund, as
   a group, owned less than 1% of the outstanding shares of the fund.


   As of January 29, 2000, the following shareholders beneficially owned more
   than 5% of the outstanding shares of the fund:

   International Stock, New Asia, Japan and European Stock Funds, respectively:
   Charles Schwab & Co. Inc., Reinvestment Account, Attn.: Mutual Fund Dept.,
   101 West Montgomery Street, San Francisco, California 94104-4122.

   International Stock: Pirateline & Co., T. Rowe Price Associates, Attn.: Fund
   Accounting Dept., 100 East Pratt Street, Baltimore, Maryland 21201-1009.

   Japan Fund: National-Financial Services for the Exclusive Benefit of our
   Customers, 200 Liberty, One Financial Center, 4th Floor, New York, New York
   10281-1003.

   Foreign Equity Fund: PACO, c/o Mutual Funds Unit #38615, P.O. Box 3577, Los
   Angeles, California 90051-1577.



 INVESTMENT MANAGEMENT SERVICES
 -------------------------------------------------------------------------------
   Services
   Under the Management Agreement, Price-Fleming provides the fund with
   discretionary investment services. Specifically, Price-Fleming is responsible
   for supervising and directing the investments of the fund in


<PAGE>

   accordance with the fund's investment objectives, program, and restrictions
   as provided in its prospectus and this Statement of Additional Information.
   Price-Fleming is also responsible for effecting all security transactions on
   behalf of the fund, including the negotiation of commissions and the
   allocation of principal business and portfolio brokerage. In addition to
   these services, Price-Fleming provides the fund with certain corporate
   administrative services, including: maintaining the fund's corporate
   existence and corporate records; registering and qualifying fund shares under
   federal laws; monitoring the financial, accounting, and administrative
   functions of the fund; maintaining liaison with the agents employed by the
   fund such as the fund's custodian and transfer agent; assisting the fund in
   the coordination of such agents' activities; and permitting Price-Fleming's
   employees to serve as officers, directors, and committee members of the fund
   without cost to the fund.

   The Management Agreement also provides that Price-Fleming, 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.

   Under the Management Agreement, Price-Fleming is permitted to utilize the
   services or facilities of others to provide it or the funds with statistical
   and other factual information, advice regarding economic factors and trends,
   advice as to occasional transactions in specific securities, and such other
   information, advice or assistance as Price-Fleming may deem necessary,
   appropriate, or convenient for the discharge of its obligations under the
   Management Agreement or otherwise helpful to the funds.


   Certain administrative support is provided by T. Rowe Price, which receives
   from Price-Fleming a fee of 0.15% of the market value of all assets in equity
   accounts, 0.15% of the market value of all assets in active fixed income
   accounts, and 0.035% of the market value of all assets in passive fixed
   income accounts under Price-Fleming's management. Price-Fleming has entered
   into research agreements with Fleming Investment Management Limited (FIM) and
   Jardine Fleming International Holdings Limited (JFIH). For services under the
   research agreements, FIM and JFIH each receive a fee of 0.075% of the market
   value of all assets in equity accounts under Price-Fleming's management. FIM
   and JFIH each receive a fee of 0.075% of the market value of all assets in
   active fixed income accounts and 0.0175% of such market value in passive
   fixed income accounts under Price-Fleming's management. In addition to the
   research provided under these agreements, Price-Fleming has access to the
   publicly available research materials produced by FIM and JFIH. FIM is a
   wholly owned subsidiary of Flemings. JFIH is a wholly owned subsidiary of
   Jardine Fleming.

   All Funds except Foreign Equity Fund

   Management Fee
   The fund pays Price-Fleming 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 Price-Fleming on the first business day of the
   next succeeding calendar month and is calculated as described next.

   The monthly Group Fee ("Monthly Group Fee") is the sum of the daily Group Fee
   accruals ("Daily Group Fee Accruals") for each month. The Daily Group Fee
   Accrual for any particular day is computed by multiplying the Price Funds'
   group fee accrual as determined below ("Daily Price Funds' Group Fee
   Accrual") by the ratio of the Price 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:

<TABLE>
   Price Funds' Annual Group Base Fee Rate for Each
                   Level of Assets
<CAPTION>
<S>                                             <C>     <C>               <C>     <C>               <C>     <C>
                                                0.480%  First $1 billion  0.360%  Next $2 billion   0.310%  Next $16 billion
                                                ------------------------------------------------------------------------------
                                                0.450%  Next $1 billion   0.350%  Next $2 billion   0.305%  Next $30 billion
                                                ------------------------------------------------------------------------------
                                                0.420%  Next $1 billion   0.340%  Next $5 billion   0.300%  Next $40 billion
                                                ------------------------------------------------------------------------------
                                                0.390%  Next $1 billion   0.330%  Next $10 billion  0.295%  Thereafter
                                                ------------------------------------------------------------------------------
                                                0.370%  Next $1 billion   0.320%  Next $10 billion
</TABLE>



<PAGE>

   For the purpose of calculating the Group Fee, the Price Funds include all the
   mutual funds distributed by Investment Services, (excluding the T. Rowe Price
   Spectrum Funds, and any institutional, index, or private label mutual funds).
   For the purpose of calculating the Daily Price Funds' Group Fee Accrual for
   any particular day, the net assets of each Price Fund are determined in
   accordance with the funds' prospectus as of the close of business on the
   previous business day on which the fund was open for business.

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

<TABLE>
<CAPTION>
<S>                                 <C>
International Stock Fund                    0.35%
International Discovery Fund                0.75
International Growth & Income Fund
European Stock Fund                         0.50
Japan Fund                                  0.50
New Asia Fund                               0.50
Latin America Fund                          0.75
Emerging Markets Stock Fund                 0.75
Global Stock Fund                           0.35
</TABLE>



   The following chart sets forth the total management fees if any, paid to
   Price-Fleming by the funds, during the last three years:

<TABLE>
<CAPTION>
                         Fund                                1999            1998             1997
                         ----                                ----            ----             ----
<S>                                                     <C>             <C>             <C>
International Stock                                      $67,463,000     $67,677,000      $67,678,000
International Discovery                                    2,637,000       2,476,000        3,313,000
International Growth & Income                                     --              --               --
European Stock                                            11,960,000      10,502,000        7,315,000
Japan                                                      2,345,000       1,261,000        1,444,000
New Asia                                                   6,444,000       5,779,000       15,273,000
Latin America                                              2,162,000       3,530,000        3,989,000
Emerging Markets Stock                                       962,000       1,092,000        1,402,000
Global Stock                                                 274,000          81,000            5,000
- --------------------------------------------------------------------------------------------------------
</TABLE>



   Foreign Equity Fund

   For its services to the fund under the Management Agreement, Price-Fleming is
   paid an annual fee, in monthly installments, based on the fund's average
   daily net assets at the rate of 0.70%. For the fiscal years 1999, 1998, and
   1997, Price-Fleming received from the fund management fees totaling
   $22,916,000, $23,624,000, and $20,250,000, respectively.

   Limitation on Fund Expenses
   The Management Agreement between each fund and Price-Fleming provides that
   each fund will bear all expenses of its operations not specifically assumed
   by Price-Fleming. Set forth in the prospectus are details of various expense
   limitations agreed to by Price-Fleming and the funds.

   T. Rowe Price Spectrum Fund, Inc.
   The funds are parties to Special Servicing Agreements ("Agreement") between
   and among T. Rowe Price Spectrum Fund, Inc. ("Spectrum Fund"), T. Rowe Price,
   Price-Fleming, and various other T. Rowe Price


<PAGE>

   funds which, along with the funds, are funds in which Spectrum Fund invests
   (collectively all such funds "Underlying Price Funds").

   The Agreement provides that, if the Board of Directors of any Underlying
   Price Fund determines that such Underlying Fund's share of the aggregate
   expenses of Spectrum Fund is less than the estimated savings to the
   Underlying Price Fund from the operation of Spectrum Fund, the Underlying
   Price Fund will bear those expenses in proportion to the average daily value
   of its shares owned by Spectrum Fund, provided further that no Underlying
   Price Fund will bear such expenses in excess of the estimated savings to it.
   Such savings are expected to result primarily from the elimination of
   numerous separate shareholder accounts which are or would have been invested
   directly in the Underlying Price Funds and the resulting reduction in
   shareholder servicing costs. Although such cost savings are not certain, the
   estimated savings to the Underlying Price Funds generated by the operation of
   Spectrum Fund are expected to be sufficient to offset most, if not all, of
   the expenses incurred by Spectrum Fund.


   Management Related Services
   As noted above, the Management Agreement spells out the expenses to be paid
   by the fund. In addition to the Management Fee, the fund pays for the
   following: shareholder service expenses; custodial, accounting, legal, and
   audit fees; costs of preparing and printing prospectuses and reports sent to
   shareholders; registration fees and expenses; proxy and annual meeting
   expenses (if any); and director fees and expenses.

   T. Rowe Price Services, Inc., a wholly owned subsidiary of T. Rowe Price,
   acts as the fund's transfer and dividend disbursing agent and provides
   shareholder and administrative services. Services for certain types of
   retirement plans are provided by T. Rowe Price Retirement Plan Services,
   Inc., also a wholly owned subsidiary. The address for each is 100 East Pratt
   St., Baltimore, MD 21202. Additionally, T. Rowe Price, under a separate
   agreement with the funds, provides accounting services to the funds.

   The funds paid the expenses shown in the following table for the fiscal year
   ended October 31, 1999, to T. Rowe Price and its affiliates.


<TABLE>
<CAPTION>
                                Transfer Agent and    Retirement     Accounting
            Fund               Shareholder Services  Subaccounting    Services
            ----               --------------------    Services       --------
                                                       --------
<S>                            <C>                   <C>            <C>
International Stock                 $6,347,000        $4,529,000      $164,000
International Discovery                400,000            24,000       132,000
International Growth & Income           25,000                --        97,000
European Stock                       1,709,000           115,000       111,000
Japan                                  436,000             7,000       108,000
New Asia                             1,735,000           138,000       122,000
Latin America                          595,000            43,000       117,000
Emerging Markets Stock                 260,000            19,000       106,000
Global Stock                           136,000            28,000       106,000
Foreign Equity                          32,000                --       111,000
</TABLE>






 DISTRIBUTOR FOR THE FUNDS
 -------------------------------------------------------------------------------
   Investment Services, a Maryland corporation formed in 1980 as a wholly owned
   subsidiary of T. Rowe Price, serves as the fund's distributor. 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 the fund's shares is continuous.


<PAGE>

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

   Investment Services serves as distributor to the fund pursuant to an
   Underwriting Agreement ("Underwriting Agreement"), which provides that the
   fund will pay all fees and expenses in connection with: necessary state
   filings; 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 Agreement provides that Investment Services will pay all
   fees and expenses in connection with: printing and distributing prospectuses
   and reports for use in offering and selling fund shares; preparing, setting
   in type, printing, and mailing all sales literature and advertising;
   Investment Services' federal and state registrations as a broker-dealer; and
   offering and selling shares, except for those fees and expenses specifically
   assumed by the fund. Investment Services' expenses are paid by T. Rowe Price.

   Investment Services acts as the agent of the fund in connection with the sale
   of its shares in the various states in which Investment Services is qualified
   as a broker-dealer. Under the Underwriting Agreement, Investment Services
   accepts orders for fund shares at net asset value. No sales charges are paid
   by investors or the fund.



 CUSTODIAN
 -------------------------------------------------------------------------------
   State Street Bank and Trust Company is the custodian for the fund's U.S.
   securities and cash, but it does not participate in the fund's investment
   decisions. Portfolio securities purchased in the U.S. are maintained in the
   custody of the Bank and may be entered into the Federal Reserve Book Entry
   System, or the security depository system of the Depository Trust
   Corporation. State Street Bank's main office is at 225 Franklin Street,
   Boston, Massachusetts 02110.

   The fund has entered into a Custodian Agreement with The Chase Manhattan
   Bank, N.A., London, pursuant to which portfolio securities which are
   purchased outside the United States are maintained in the custody of various
   foreign branches of The Chase Manhattan Bank and such other custodians,
   including foreign banks and foreign securities depositories as are approved
   in accordance with regulations under the 1940 Act. The address for The Chase
   Manhattan Bank, N.A., London is Woolgate House, Coleman Street, London, EC2P
   2HD, England.



 SERVICES BY OUTSIDE PARTIES
 -------------------------------------------------------------------------------
   The shares of some fund shareholders are held in omnibus accounts maintained
   by various third parties, including retirement plan sponsors, insurance
   companies, banks and broker dealers. The fund has adopted an administrative
   services program ("AFP") that authorizes the fund to make payments to these
   third parties. The payments are made for transfer agent, recordkeeping and
   other administrative services provided by, or on behalf of, the third parties
   with respect to such shareholders and the omnibus accounts.



 CODE OF ETHICS
 -------------------------------------------------------------------------------

   The fund's investment adviser (Price-Fleming) has a written Code of Ethics
   which requires all access persons 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 10 days after the end of
   the calendar quarter. Access persons 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; or
   the security is subject to internal trading restrictions. In addition, access
   persons are prohibited from profiting


<PAGE>


   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 Price-Fleming. Price-Fleming is also
   responsible for implementing these decisions, including the negotiation of
   commissions and the allocation of portfolio brokerage and principal business.


                      How Brokers and Dealers Are Selected

   Equity Securities

   In purchasing and selling equity securities, it is Price-Fleming's policy to
   obtain quality execution at the most favorable prices through responsible
   brokers and dealers and, at competitive commission rates where such rates are
   negotiable. However, under certain conditions, the fund may pay higher
   brokerage commissions in return for brokerage and research services. As a
   general practice, over-the-counter orders are executed with market-makers. In
   selecting among market-makers, Price-Fleming generally seeks to select those
   it believes to be actively and effectively trading the security being
   purchased or sold. In selecting broker-dealers to execute the fund's
   portfolio transactions, consideration is given to such factors as the price
   of the security, the rate of the commission, the size and difficulty of the
   order, the reliability, integrity, financial condition, general execution and
   operational capabilities of competing brokers and dealers, their expertise in
   particular markets and brokerage and research services provided by them. It
   is not the policy of Price-Fleming to seek the lowest available commission
   rate where it is believed that a broker or dealer charging a higher
   commission rate would offer greater reliability or provide better price or
   execution.

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

   Fixed Income Securities
   For fixed income securities, it is expected that purchases and sales will
   ordinarily be transacted with the issuer, the issuer's underwriter, or with a
   primary market maker acting as principal on a net basis, with no brokerage
   commission being paid by the fund. However, the price of the securities
   generally includes compensation which is not disclosed separately.
   Transactions placed through dealers who are serving as primary market makers
   reflect the spread between the bid and asked prices.


   With respect to equity and fixed income securities, Price-Fleming may effect
   principal transactions on behalf of the funds with a broker or dealer who
   furnishes brokerage and/or research services benefitting such clients,
   designate any such broker or dealer to receive selling concessions, discounts
   or other allowances, or otherwise deal with any such broker or dealer in
   connection with the acquisition of securities in underwritings. Price-Fleming
   may receive research services in connection with brokerage transactions,
   including designations in fixed price offerings.

   Price-Fleming may cause a fund to pay a broker-dealer who furnishes brokerage
   and/or research services a commission for executing a transaction that is in
   excess of the commission another broker-dealer would have


<PAGE>

   received for executing the transaction if it is determined that such
   commission is reasonable in relation to the value of the brokerage and/or
   research services which have been provided. In some cases, research services
   are generated by third parties but are provided to Price-Fleming by or
   through broker-dealers.


       Descriptions of Research Services Received From Brokers and Dealers


   Price-Fleming receives a wide range of research services from brokers and
   dealers covering investment opportunities throughout the world, including
   information on the economies, industries, groups of securities, individual
   companies, statistics, political developments, technical market action,
   pricing and appraisal services, and performance analyses of all the countries
   in which a fund's portfolio is likely to be invested. Price-Fleming cannot
   readily determine the extent to which commissions charged by brokers reflect
   the value of their research services, but brokers occasionally suggest a
   level of business they would like to receive in return for the brokerage and
   research services they provide. To the extent that research services of value
   are provided by brokers, Price-Fleming is relieved of expenses which it might
   otherwise bear. In some cases, research services are generated by third
   parties but are provided to Price-Fleming by or through brokers.


              Commissions to Brokers Who Furnish Research Services

   Certain brokers-dealers that provide quality execution services also furnish
   research services to Price-Fleming. Price-Fleming 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 its
   clients to pay a broker which furnishes brokerage or research services a
   higher commission than that which might be charged by another broker which
   does not furnish brokerage or research services, or which furnishes brokerage
   or research services deemed to be of lesser value, if such commission is
   deemed reasonable in relation to the brokerage and research services provided
   by the broker, viewed in terms of either that particular transaction or the
   overall responsibilities of the adviser with respect to the accounts as to
   which it exercises investment discretion. Accordingly, Price-Fleming may
   assess the reasonableness of commissions in light of the total brokerage and
   research services provided by each particular broker.


                                  Miscellaneous

   Research services furnished by brokers through which Price-Fleming effects
   securities transactions may be used in servicing all accounts managed by
   Price-Fleming. Conversely, research services received from brokers which
   execute transactions for a particular fund will not necessarily be used by
   Price-Fleming exclusively in connection with the management of that fund.


   Some of Price-Fleming's other clients have investment objectives and programs
   similar to those of the fund. Price-Fleming may 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 Price-Fleming's policy not to
   favor one client over another in making recommendations or in placing orders.
   Price-Fleming may follow the practice of grouping orders of various clients
   for execution which generally results in lower commission rates being
   attained. In certain cases, where the aggregate order is executed in a series
   of transactions at various prices on a given day, each participating client's
   proportionate share of such order reflects the average price paid or received
   with respect to the total order. Price-Fleming 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.

   None of the funds allocates 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.


                  Transactions With Related Brokers and Dealers


   As provided in the Investment Management Agreement between the fund and
   Price-Fleming, Price-Fleming is responsible not only for making decisions
   with respect to the purchase and sale of the fund's portfolio securities, but
   also for implementing these decisions, including the negotiation of
   commissions and the


<PAGE>


   allocation of portfolio brokerage and principal business. It is expected
   that, from time to time, Price-Fleming may place orders for the fund's
   portfolio transactions with broker-dealer affiliates of Robert Fleming
   Holdings Limited ("RF"), an affiliate of Price-Fleming. RF, through Copthall
   Overseas Limited, a wholly owned subsidiary, owns 25% of the common stock of
   Price-Fleming. Fifty percent of the common stock of Price-Fleming is owned by
   TRP Finance, Inc., a wholly owned subsidiary of T. Rowe Price, and the
   remaining 25% is owned by Jardine Fleming International Holdings Limited, a
   wholly owned subsidiary of Jardine Fleming Group Limited ("JF"). JF is owned
   by RF. The affiliates through whose trading desks such orders may be placed
   include Fleming Investment Management Limited ("FIM"). FIM is a wholly owned
   subsidiary of RF. These trading desks operate under strict instructions from
   the fund's portfolio manager as to quantity, price, and broker or dealer
   designated to execute the transactions. Neither RF, JF, nor their affiliates
   will receive any commission, fee, or other remuneration specifically for the
   use of their trading desks, although orders for a fund's portfolio
   transactions may be placed with affiliates of RF and JF who may receive a
   commission for the trade.

   The Board of Directors of the funds has authorized Price-Fleming to utilize
   certain affiliates of RF and JF in the capacity of broker in connection with
   the execution of each fund's portfolio transactions, provided that
   Price-Fleming believes that doing so will result in an economic advantage (in
   the form of lower execution costs or otherwise) being obtained for each fund.

   The above-referenced authorization was made in accordance with Section 17(e)
   of the 1940 Act and Rule 17e-1 thereunder which require the funds'
   independent Directors to approve the procedures under which brokerage
   allocation to affiliates is to be made and to monitor such allocations on a
   continuing basis. It is not expected that any portion of the commissions,
   fees, brokerage, or similar payments received by the affiliates of RF in such
   transactions will be recaptured by the funds.

   The following tables present information on affiliated brokers. Column 1
   represents the total dollar amount of brokerage commissions paid to the
   broker. The dollar amount of brokerage commissions paid for the two previous
   fiscal year ends are also listed as marked. The second column represents the
   percentage that the commissions paid to the affiliated broker represent the
   aggregate brokerage commissions paid by the fund. The third column shows the
   percentage that the dollar amount of transactions involving the payment of
   commissions effected through the affiliated broker represents the aggregate
   dollar amount of brokerage transactions.


   The following amounts and percentages were paid to JFS during the year 1999:


<TABLE>
<CAPTION>
                                                                            Total Brokerage  Percent of Brokerage  Percent of Dollar
                                   Fund                                     ---------------  --------------------  -----------------
                                   ----                                       Commissions    Commissions Paid to       Amount of
                                                                              -----------    -------------------       ---------
                                                                                              Affiliated Brokers     Transactions
                                                                                              ------------------     ------------
                                                                                                                       Involving
                                                                                                                       ---------
                                                                                                                      Affiliated
                                                                                                                      ----------
                                                                                                                        Brokers
                                                                                                                        -------
<S>                                                                         <C>              <C>                   <C>
International Stock                                                            $ 66,871               1%                  1%
International Discovery                                                          57,629               5                   5
International Growth & Income                                                        --              --                   --
European Stock                                                                    7,061               1                   1
Japan                                                                            64,341               9                   9
New Asia                                                                        332,889              10                   9
Foreign Equity                                                                   26,632               1                   1
Latin America                                                                        --              --                   --
Emerging Markets Stock                                                           17,452               5                   4
Global Stock                                                                        152               1                   1
</TABLE>






<PAGE>


   The following brokerage commission amounts were paid to JFS during the years
   1998 and 1997:

<TABLE>
<CAPTION>
         Fund                  1998                1997
         ----                  ----                ----
<S>                      <C>               <C>
International Stock          $38,393            $  228,000
International Discovery       48,484               180,995
European Stock                    --                    --
Japan                         25,876               127,117
New Asia                          --             1,051,831
Foreign Equity                31,284                70,010
Latin America                     --                    --
Emerging Markets Stock        17,268                69,648
Global Stock                      81                   206
</TABLE>






   The following amounts and percentages were paid to RF&Co during the year
   1999:

<TABLE>
<CAPTION>
                                                                        Total Brokerage  Percent of Brokerage    Percent of Dollar
                                 Fund                                   ---------------  --------------------    -----------------
                                 ----                                     Commissions    Commissions Paid to         Amount of
                                                                          -----------    -------------------         ---------
                                                                                          Affiliated Brokers       Transactions
                                                                                          ------------------       ------------
                                                                                                               Involving Affiliated
                                                                                                               --------------------
                                                                                                                      Brokers
                                                                                                                      -------
<S>                                                                     <C>              <C>                   <C>
International Stock                                                        $189,739               3%                     3%
International Discovery                                                       6,837               1                      1
International Growth & Income                                                    --              --                     --
European Stock                                                               47,198               5                      5
Japan                                                                            --              --                     --
New Asia                                                                         --              --                     --
Foreign Equity                                                               50,635               2                      2
Latin America                                                               112,032              27                     27
Emerging Markets Stock                                                       13,190               4                      4
Global Stock                                                                  1,565               1                      2
</TABLE>






   The following brokerage commission amounts were paid to RF&Co during the
   years 1998 and 1997:

<TABLE>
<CAPTION>
         Fund                  1998                1997
         ----                  ----                ----
<S>                      <C>                <C>
International Stock          $409,044            $317,208
International Discovery        17,219              22,867
European Stock                104,784              51,846
Japan                              --               6,478
New Asia                           --                  --
Foreign Equity                141,877              96,488
Latin America                 281,701              95,295
Emerging Markets Stock         38,476              27,548
Global Stock                      812                 402
</TABLE>






<PAGE>


   The following amounts and percentages were paid to Ord Minnett during the
   year 1999:

<TABLE>
<CAPTION>
                        Total Brokerage  Percent of Brokerage        Percent of Dollar
         Fund           ---------------  --------------------        -----------------
         ----             Commissions    Commissions Paid to       Amount of Transactions
                          -----------    -------------------       ----------------------
                                          Affiliated Brokers    Involving Affiliated Brokers
                                          ------------------    ----------------------------
<S>                     <C>              <C>                   <C>
International Stock         $16,789               1%                         1%
International
Discovery                     3,954               1                          1
International Growth &
Income                          165               1                          1
European Stock                   --               --                         --
Japan                            --               --                         --
New Asia                         --               --                         --
Foreign Equity                6,264               1                          1
Latin America                    --               --                         --
Emerging Markets Stock           --               --                         --
Global Stock                     56               1                          1
</TABLE>






   The following brokerage commission amounts were paid to Ord Minnett during
   the years 1998 and 1997:

<TABLE>
<CAPTION>
           Fund                   1998                1997
           ----                   ----                ----
<S>                         <C>                <C>
International Stock              $50,801             $43,327
International Discovery            3,441              17,775
European Stock                        --                 358
Japan                                 --                  --
New Asia                              --                  --
Foreign Equity                    23,040              14,063
Latin America                         --                  --
Emerging Markets Stock                --                  --
Global Stock                          72                 131
</TABLE>






   The following amounts and percentages were paid to Fleming Martin during the
   year 1999:

<TABLE>
<CAPTION>
                        Total Brokerage  Percent of Brokerage        Percent of Dollar
         Fund           ---------------  --------------------        -----------------
         ----             Commissions    Commissions Paid to       Amount of Transactions
                          -----------    -------------------       ----------------------
                                          Affiliated Brokers    Involving Affiliated Brokers
                                          ------------------    ----------------------------
<S>                     <C>              <C>                   <C>
International Stock             --                --                         --
International
Discovery                       --                --                         --
International Growth &
Income                          --                --                         --
European Stock                  --                --                         --
Japan                           --                --                         --
New Asia                        --                --                         --
Foreign Equity                  --                --                         --
Latin America                   --                --                         --
Emerging Markets Stock      $6,609                2%                         2%
Global Stock                    --                --                         --
</TABLE>





<PAGE>


   In accordance with the written procedures adopted pursuant to Rule 17e-1, the
   independent directors of each fund reviewed the 1999 transactions with
   affiliated brokers and determined that such transactions resulted in an
   economic advantage to the funds either in the form of lower execution costs
   or otherwise.


                                      Other


   The amounts shown below 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 1999, 1998, and 1997:

<TABLE>
<CAPTION>
            Fund                    1999            1998             1997
            ----                    ----            ----             ----
<S>                            <C>             <C>             <C>
International Stock              $6,541,536      $7,269,954       $9,102,292
International Discovery           1,114,250         465,793        1,526,634
International Growth & Income        45,662
European Stock                      943,554       1,752,000        1,016,985
Japan                               751,766         463,374          440,701
New Asia                          3,466,222       2,635,426        7,978,905
Latin America                       414,229         651,009          927,301
Emerging Markets Stock              346,455         323,787          780,941
Global Stock                        781,182          82,781           61,979
Foreign Equity                    2,551,877       2,524,406        3,506,559
</TABLE>






   The percentage of total portfolio transactions, 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
   for the fiscal year ended 1999, 1998, and 1997, are shown below:

<TABLE>
<CAPTION>
                               Fund                                      1999            1998             1997
                               ----                                      ----            ----             ----
<S>                                                                 <C>             <C>             <C>
International Stock                                                       96%            93%              94%
International Discovery                                                   94             85               83
International Growth & Income                                            100
European Stock                                                            94             94               95
Japan                                                                     91             94               70
New Asia                                                                  90             83               87
Latin America                                                             73             57               90
Emerging Markets Stock                                                    89             72               87
Global Stock                                                             100             99               99
Foreign Equity                                                            97             92               95
</TABLE>






   The portfolio turnover rate for each fund for the fiscal years ended 1999,
   1998, and 1997, was as follows:

<TABLE>
<CAPTION>
              Fund                     1999            1998             1997
              ----                     ----            ----             ----
<S>                                <C>             <C>             <C>
International Stock                     17.6%          12.2 %           15.8 %
International Discovery                 98.2           34.2             72.7
International Growth & Income          35.8/a/         --               --
European Stock                          15.7           26.8             17.5
Japan                                   58.8           66.9             32.3
New Asia                                69.9           68.1             41.8
Latin America                           43.2           19.0             32.7
Emerging Markets Stock                 59.0%           54.5%            84.3%
Global Stock                            37.5           47.1             41.8
Foreign Equity                          18.2           18.6             15.9
- -----------------------------------------------------------------------------------
</TABLE>





<PAGE>


  (a) From the commencement of operations December 21, 1998, to October 31,
     1999.



 PRICING OF SECURITIES
 -------------------------------------------------------------------------------
   Equity securities are valued at the last quoted sales price at the time the
   valuations are made. A security that is listed or traded on more than one
   exchange is valued at the quotation on the exchange determined to be the
   primary market for such security.

   Debt securities are generally traded in the over-the-counter market and are
   valued at a price deemed best to reflect fair value as quoted by dealers who
   make markets in these securities or by an independent pricing service.
   Short-term debt securities are valued at their amortized cost in local
   currency which, when combined with accrued interest, approximates fair value.

   For the purposes of determining the fund's net asset value per share, the
   U.S. dollar value of all assets and liabilities initially expressed in
   foreign currencies is determined by using the mean of the bid and offer
   prices of such currencies against U.S. dollars quoted by a major bank.

   Assets and liabilities for which the above valuation procedures are
   inappropriate or are deemed not to reflect fair value, are stated at fair
   value as determined in good faith by or under the supervision of the officers
   of the fund, as authorized by the Board of Directors.

   Trading in the portfolio securities of each fund may take place in various
   foreign markets on certain days (such as Saturday) when the funds are not
   open for business and do not calculate their net asset values. In addition,
   trading in a fund's portfolio securities may not occur on days when the fund
   is open.



 NET ASSET VALUE PER SHARE
 -------------------------------------------------------------------------------

   The purchase and redemption price of the fund's shares is equal to the fund's
   net asset value per share or share price. The fund determines its net asset
   value per share by subtracting its 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 the fund, other than the
   Japan 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
   per share of the Japan Fund is calculated as of the close of trading on the
   NYSE each day the NYSE and the Tokyo Stock Exchange ("TSE") are both open.
   The NYSE is closed on the following days: New Year's Day, Dr. Martin Luther
   King, Jr. Holiday, Presidents' Day, Good Friday, Memorial Day, Independence
   Day, Labor Day, Thanksgiving Day, and Christmas Day. The TSE is scheduled to
   be closed on the following weekdays in 2000: January 3; February 11; March
   20; May 3, 4, and 5; July 20; September 15; October 10; and November 3 and
   23, as well as the following weekdays in 2001: January 1, 2, 3, and 8;
   February 12; March 20; April 30; May 3 and 4; July 20; September 24; October
   8; November 23; and December 24 and 31. If the TSE closes on any additional
   or different dates, the Japan Fund will be closed on such dates.

   Determination of net asset value (and the offering, sale redemption and
   repurchase of shares) for the fund may be suspended at times (a) during which
   the NYSE is closed, other than customary weekend and holiday closings, or in
   the case of the Japan Fund, either the NYSE or TSE is closed, (b) during
   which trading on the NYSE is restricted, (c) during which an emergency exists
   as a result of which disposal by the fund of securities


<PAGE>

   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 SEC (or any succeeding
   governmental authority) shall govern as to whether the conditions prescribed
   in (b), (c), or (d) exist.



 DIVIDENDS AND DISTRIBUTIONS
 -------------------------------------------------------------------------------
   Unless you elect otherwise, dividends and 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 one day,
   although the exact timing is subject to change and can be as great as 10
   days.



 TAX STATUS
 -------------------------------------------------------------------------------
   The fund intends to qualify as a "regulated investment company" under
   Subchapter M of the Code.


   Dividends and distributions paid by the fund (other than Global Stock Fund)
   are not eligible for the dividends-received deduction for corporate
   shareholders, if as expected, none of the fund's income consists of dividends
   paid by United States corporations. Income dividends paid by the Global Stock
   Fund are eligible for the dividends-received deduction for corporate
   shareholders, only to the extent the Global Stock Fund's income consists of
   dividends paid by United States Corporations. Capital gain distributions paid
   from this fund are never eligible for this deduction. For tax purposes, it
   does not make any difference whether dividends and capital gain distributions
   are paid in cash or in additional shares. The fund must declare dividends by
   December 31 of each year equal to at least 98% of ordinary income (as of
   December 31) and capital gains (as of October 31) in order to avoid a federal
   excise tax and distribute within 12 months 100% of ordinary income and
   capital gains as of December 31 to avoid federal income tax.

   Foreign currency gains and losses, including the portion of gain or loss on
   the sale of debt securities attributable to foreign exchange rate
   fluctuation, are taxable as ordinary income. If the net effect of these
   transactions is a gain, the ordinary income dividend paid by the fund will be
   increased. If the result is a loss, the income dividend paid by the fund will
   be decreased, or to the extent such dividend has already been paid a portion
   may be classified as a return of capital. Adjustments, to reflect these gains
   and losses will be made at the end of the fund's taxable year.

   At the time of your purchase, the fund's net asset value may reflect
   undistributed income, 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
   either as dividends or capital gain distributions. For federal income tax
   purposes, the 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.

   Income received by the fund from sources within various foreign countries may
   be subject to foreign income taxes withheld at the source. Under the Code, if
   more than 50% of the value of the fund's total assets at the close of its
   taxable year comprise securities issued by foreign corporations or
   governments, the fund may file an election with the Internal Revenue Service
   to "pass through" to the fund's shareholders the amount of any foreign income
   taxes paid by the fund. Pursuant to this election, shareholders will be
   required to: (1) include in gross income, even though not actually received,
   their respective pro rata share of foreign taxes paid by the fund; (2) treat
   their pro rata share of foreign taxes as paid by them; and (3) either deduct
   their pro rata share of foreign taxes in computing their taxable income, or
   use it as a foreign tax credit against U.S. income taxes (but not both). No
   deduction for foreign taxes may be claimed by a shareholder who does not
   itemize deductions.


<PAGE>

   The fund intends to meet the requirements of the Code to "pass through" to
   its shareholders foreign income taxes paid, but there can be no assurance
   that a fund will be able to do so. Each shareholder will be notified within
   60 days after the close of each taxable year of the fund, if the fund will
   "pass through" foreign taxes paid for that year, and, if so, the amount of
   each shareholder's pro rata share (by country) of (1) the foreign taxes paid,
   and (2) the fund's gross income from foreign sources. Of course, shareholders
   who are not liable for federal income taxes, such as retirement plans
   qualified under Section 401 of the Code, will not be affected by any such
   "pass through" of foreign tax credits.

   If, in any taxable year, the fund should not qualify as a regulated
   investment company under the Code: (1) the fund would be taxed at normal
   corporate rates on the entire amount of its taxable income without deduction
   for dividends or other distributions to shareholders; (2) the fund's
   distributions to the extent made out of the fund's current or accumulated
   earnings and profits would be taxable to shareholders as ordinary dividends
   (regardless of whether they would otherwise have been considered capital gain
   dividends), and the fund may qualify for the 70% deduction for dividends
   received by corporations; and (3) foreign tax credits would not "pass
   through" to shareholders.


                        Taxation of Foreign Shareholders

   The Code provides that dividends from net income (which are deemed to include
   for this purpose each shareholder's pro rata share of foreign taxes paid by
   the fund--see discussion of "pass through" of the foreign tax credit to U.S.
   shareholders), will be subject to U.S. tax. For shareholders who are not
   engaged in a business in the U.S., this tax would be imposed at the rate of
   30% upon the gross amount of the dividends in the absence of a Tax Treaty
   providing for a reduced rate or exemption from U.S. taxation. Distributions
   of net long-term capital gains realized by the fund are not subject to tax
   unless the foreign shareholder is a nonresident alien individual who was
   physically present in the U.S. during the tax year for more than 182 days.


                      Passive Foreign Investment Companies

   The fund may purchase the securities of certain foreign investment funds or
   trusts called passive foreign investment companies. Such trusts have been the
   only or primary way to invest in certain countries. In addition to bearing
   their proportionate share of the trust's expenses (management fees and
   operating expenses), shareholders will also indirectly bear similar expenses
   of such trusts. Capital gains on the sale of such holdings are considered
   ordinary income regardless of how long the fund held its investment. In
   addition, the fund may be subject to corporate income tax and an interest
   charge on certain dividends and capital gains earned from these investments,
   regardless of whether such income and gains are distributed to shareholders.

   To avoid such tax and interest, the fund intends to treat these securities as
   sold on the last day of its fiscal year and recognize any gains for tax
   purposes at that time; deductions for losses are allowable only to the extent
   of any gains resulting from these deemed sales for prior taxable years. Such
   gains and losses will be treated as ordinary income. The fund will be
   required to distribute any resulting income even though it has not sold the
   security and received cash to pay such distributions.



 INVESTMENT PERFORMANCE
 -------------------------------------------------------------------------------

                            Total Return Performance

   The 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 gain 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


<PAGE>

   specified. The annual compound rate of return for the fund over any other
   period of time will vary from the average.


<TABLE>
<CAPTION>
                  Cumulative Performance Percentage Change
                            1 Yr.     5 Yrs.   10 Yrs.    % Since    Inception
                            -----     ------   -------    -------    ---------
                            Ended     Ended     Ended    Inception     Date
                            -----     -----     -----    ---------     ----
                           10/31/99  10/31/99  10/31/99  10/31/99
                           --------  --------  --------  --------
<S>                        <C>       <C>       <C>       <C>        <S>
S&P 500                     25.67%   217.79%   415.27%                  --
Dow Jones Industrial
Average                     26.97    204.17    426.58                   --
CPI                          2.56     12.51     33.92                   --
Lipper International
Funds                       25.53     58.85    152.13                   --

International Stock Fund    20.67     61.36    168.44    1,227.03%   05/09/80
International Discovery
Fund                        82.11     69.96    151.83      223.61    12/30/88
International Growth &
Income Fund                  8.27     --        --          10.0     12/21/98
European Stock Fund         11.44    124.34     --         200.41    02/28/90
Japan Fund                 102.68     26.39     --          59.90    12/30/91
Latin America Fund          13.57    -17.55     --         -14.92    12/29/93
New Asia Fund               48.73    -15.75     --          84.32    09/28/90
Emerging Markets Stock
Fund                        40.08     --        --          16.23    03/31/95
Global Stock Fund           24.17     --        --          86.12    12/29/95
Foreign Equity Fund         20.79     62.24    170.99      161.78    09/07/89
- -------------------------------------------------------------------------------
</TABLE>





<TABLE>
<CAPTION>
                   Average Annual Compound Rates of Return
                            1 Yr.     5 Yrs.   10 Yrs.    % Since    Inception
                            -----     ------   -------    -------    ---------
                            Ended     Ended     Ended    Inception     Date
                            -----     -----     -----    ---------     ----
                           10/31/99  10/31/99  10/31/99  10/31/99
                           --------  --------  --------  --------
<S>                        <C>       <C>       <C>       <C>        <S>
S&P 500                     25.67 %   26.02%    17.82%                  --
Dow Jones Industrial
Average                     26.97     24.92     18.07                   --
CPI                          2.56      2.39      2.96                   --
Lipper International
Funds                       25.53      9.50      9.42                   --

International Stock Fund    20.67     10.04     10.38     14.20%     05/09/80
International Discovery
Fund                        82.11     11.20      9.68     11.45      12/30/88
International Growth &
Income Fund                  8.27*    --        --        --         12/21/98
European Stock Fund         11.44     17.21     --        12.04      02/28/90
Japan Fund                 102.68      4.79     --         6.17      12/30/91
Latin America Fund          13.57     -3.79     --        -2.73      12/29/93
New Asia Fund               48.73     -3.37     --         6.96      09/28/90
Emerging Markets Stock
Fund                        40.08     --        --         3.33      03/31/95
Global Stock Fund           24.17     --        --        17.57      12/29/95
Foreign Equity Fund         20.79     10.16     10.48      9.95      09/07/89
- -------------------------------------------------------------------------------
</TABLE>





  *  For the period from fund's inception, 12/21/98, to 10/31/99.


<PAGE>

                         Outside Sources of Information

   From time to time, in reports and promotional literature: (1) the fund's
   total return performance, ranking, or any other measure of the fund's
   performance may be compared to any one or combination of the following: (a) a
   broad-based index; (b) other groups of mutual funds, including T. Rowe Price
   Funds, tracked by independent research firms ranking entities, or financial
   publications; (c) indices of securities comparable to those in which the fund
   invests; (2) the Consumer Price Index (or any other measure for inflation,
   government statistics, such as GNP may be used to illustrate investment
   attributes of the fund or the general economic, business, investment, or
   financial environment in which the fund operates; (3) various financial,
   economic and market statistics developed by brokers, dealers and other
   persons may be used to illustrate aspects of the fund's performance; (4) the
   effect of tax-deferred compounding on the fund's investment returns, or on
   returns in general in both qualified and nonqualified retirement plans or any
   other tax advantage product, may be illustrated by graphs, charts, etc.; and
   (5) the sectors or industries in which the fund invests may be compared to
   relevant indices or surveys in order to evaluate the fund's historical
   performance or current or potential value with respect to the particular
   industry or sector.


                               Other Publications

   From time to time, in newsletters and other publications issued by Investment
   Services, T. Rowe Price mutual fund portfolio managers may discuss economic,
   financial and political developments in the U.S. and abroad and how these
   conditions have affected or may affect securities prices or the fund;
   individual securities within the fund's portfolio; and their philosophy
   regarding the selection of individual stocks, including why specific stocks
   have been added, removed or excluded from the fund's portfolio.


                           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, which include, but are
   not limited to, 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 and/or Investment Services may be made available.


                       No-Load Versus Load and 12b-1 Funds

   Unlike the T. Rowe Price funds, many mutual funds charge sales fees to
   investors or use fund assets to finance distribution activities. These fees
   are in addition to the normal advisory fees and expenses charged by all
   mutual funds. There are several types of fees charged which vary in magnitude
   and which may often be used in combination. A sales charge (or "load") can be
   charged at the time the fund is purchased (front-end load) or at the time of
   redemption (back-end load). Front-end loads are charged on the total amount
   invested. Back-end loads or "redemption fees" are charged either on the
   amount originally invested or on the amount redeemed. 12b-1 plans allow for
   the payment of marketing and sales expenses from fund assets. These expenses
   are usually computed daily as a fixed percentage of assets.

   The fund is a no-load fund which imposes no sales charges or 12b-1 fees.
   No-load funds are generally sold directly to the public without the use of
   commissioned sales representatives. This means that 100% of your purchase is
   invested for you.


                               Redemptions in Kind

   In the unlikely event a shareholder were to receive an in kind redemption of
   portfolio securities of the fund, 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 objective and policies of the fund; (b) are acquired for
   investment and not for resale except in accordance with applicable law; (c)
   have a value that is readily ascertainable via listing on or trading in a
   recognized United States or international exchange or market; and (d) are not
   illiquid.


<PAGE>

 CAPITAL STOCK
 -------------------------------------------------------------------------------
   The T. Rowe Price International Funds, Inc. (the "International Corporation")
   is a Maryland corporation. The Institutional International Funds, Inc. (the
   "Institutional Corporation") was organized in 1989, as a Maryland
   corporation. Each Corporation is registered with the SEC under the 1940 Act
   as a diversified, open-end investment company, commonly known as a "mutual
   fund."

   Currently, the International Corporation consists of the following 12 series,
   each representing a separate class of shares and having different objectives
   and investment policies. The 12 series are as follows: International Stock
   Fund, International Bond Fund, International Discovery Fund, European Stock
   Fund, New Asia Fund, Global Bond Fund, Japan Fund, Latin America Fund,
   Emerging Markets Bond Fund, Emerging Markets Stock Fund, Global Stock Fund,
   and International Growth & Income Fund. Effective May 1, 1998, the T. Rowe
   Price Global Government Bond Fund changed its name to the T. Rowe Price
   Global Bond Fund. (The bond funds are described in a separate Statement of
   Additional Information.) Currently, the Institutional Corporation consists of
   one series, the Foreign Equity Fund. Each Charter also provides that the
   Board of Directors may issue additional series of shares.

   The 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.

   Each share of each series has equal voting rights with every other share of
   every other series, and all shares of all series vote as a single group
   except where a separate vote of any class or series is required by the 1940
   Act, the laws of the State of Maryland, the Corporation's Articles of
   Incorporation, the By-Laws of the Corporation, or as the Board of Directors
   may determine in its sole discretion. Where a separate vote is required with
   respect to one or more classes or series, then the shares of all other
   classes or series vote as a single class or series, provided that, as to any
   matter which does not affect the interest of a particular class or series,
   only the holders of shares of the one or more affected classes or series is
   entitled to vote. The preferences, rights, and other characteristics
   attaching to any series of shares, including the present series of capital
   stock, might be altered or eliminated, or the series might be combined with
   another series, by action approved by the vote of the holders of a majority
   of all the shares of all series entitled to be voted on the proposal, without
   any additional right to vote as a series by the holders of the capital stock
   or of another affected series.


   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 a
   director. As set forth in the By-Laws of the fund, a special meeting of
   shareholders of the 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. The fund, however, will
   otherwise assist


<PAGE>


   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
   1940 Act.



 FEDERAL REGISTRATION OF SHARES
 -------------------------------------------------------------------------------
   The fund's shares are registered for sale under the 1933 Act. Registration of
   the fund's shares is not required under any state law, but the fund is
   required to make certain filings with and pay fees to the states in order to
   sell its shares in the states.



 LEGAL COUNSEL
 -------------------------------------------------------------------------------

   Swidler Berlin Shereff Friedman, LLP, whose address is The Chrysler Building,
   405 Lexington Avenue, New York, New York 10174, is legal counsel to the fund.




 INDEPENDENT ACCOUNTANTS
 -------------------------------------------------------------------------------
   PricewaterhouseCoopers LLP, 250 West Pratt Street, 21st Floor, Baltimore,
   Maryland 21201, are the independent accountants to the funds.


   The financial statements of the funds for the year ended October 31, 1999,
   and the report of independent accountants are included in each fund's Annual
   Report for the year ended October 31, 1999. 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 year ended October 31, 1999, are incorporated into this
   Statement of Additional Information by reference:



<TABLE>
<CAPTION>
                          ANNUAL REPORT REFERENCES:

                                    INTERNATIONAL   INTERNATIONAL   EUROPEAN
                                    STOCK           DISCOVERY       STOCK
                                    -----           ---------       -----
<C>                                 <S>             <S>             <S>
Financial Highlights                      12              10            10
Portfolio of Investments, October
31, 1999                                13-24           11-18          11-17
Statement of Assets and
Liabilities, October 31, 1999             25              19            18
Statement of Operations, year
ended October 31, 1999                    26              20            19
Statement of Changes in Net
Assets, years ended
October 31, 1999 and October 31,
1998                                      27              21            20
Notes to Financial Statements,
October 31, 1999                        28-31           22-25          21-24
Report of Independent Accountants         32              26            25
</TABLE>






<PAGE>




<TABLE>
<CAPTION>
                                                   LATIN    NEW ASIA  JAPAN
                                                   AMERICA  --------  -----
                                                   -------
<C>                                                <S>      <S>       <S>
Financial Highlights                                 12        9         11
Portfolio of Investments, October 31, 1999          13-15    10-13      12-15
Statement of Assets and Liabilities, October 31,
1999                                                 16        14        16
Statement of Operations, year ended October 31,
1999                                                 17        15        17
Statement of Changes in Net Assets, years ended
October 31, 1999 and October 31, 1998                18        16        18
Notes to Financial Statements, October 31, 1999     19-22    17-20      19-22
Report of Independent Accountants                    23        21        23
</TABLE>







<TABLE>
<CAPTION>
                                                EMERGING       FOREIGN EQUITY
                                                MARKETS STOCK  --------------
                                                -------------
<C>                                             <S>            <C>
Financial Highlights                                  9              8
Portfolio of Investments, October 31, 1999          10-17           9-13
Statement of Assets and Liabilities, October
31, 1999                                             18              14
Statement of Operations, year ended October
31, 1999                                             19              15
Statement of Changes in Net Assets, years
ended
October 31, 1999 and October 31, 1998                20              16
Notes to Financial Statements, October 31,
1999                                                21-25          17-18
Report of Independent Accountants                    26              19
</TABLE>







<TABLE>
<CAPTION>
                                                      GLOBAL STOCK
                                                      ------------
<C>                                                   <S>
Financial Highlights                                        12
Statement of Net Assets, October 31, 1999                 13-27
Statement of Operations, year ended October 31, 1999        28
Statement of Changes in Net Assets, years ended
October 31, 1999 and October 31, 1998                       29
Notes to Financial Statements, October 31, 1999           30-33
Report of Independent Accountants                           34
</TABLE>







<TABLE>
<CAPTION>
                                                  INTERNATIONAL
                                                  GROWTH & INCOME
                                                  ---------------
<C>                                               <S>
Financial Highlights                                      11
Statement of Net Assets, October 31, 1999               12-20
Statement of Operations, December 21, 1998
(commencement of operations) to October 31, 1999          21
Statement of Changes in Net Assets,
December 21, 1998 (commencement of operations)
to October 31, 1999                                       22
Notes to Financial Statements, October 31, 1999         23-25
Report of Independent Accountants                         26
</TABLE>







<PAGE>


                                     PART C
                               OTHER INFORMATION

ITEM 23. EXHIBITS

(1)(a)   Articles of Amendment and Restatement of T. Rowe Price International
         Funds, Inc., dated February 16, 1990 (electronically filed with
         Amendment No. 42 dated February 28, 1994)

(1)(b)   Articles Supplementary of T. Rowe Price International Funds, Inc.,
         dated March 4, 1991

(1)(c)   Articles of Amendment of T. Rowe Price International Funds, Inc., dated
         May 1, 1991

(1)(d)   Articles Supplementary of T. Rowe Price International Funds, Inc.,
         dated October 18, 1991

(1)(e)   Articles Supplementary of T. Rowe Price International Funds, Inc.,
         dated May 4, 1992 (electronically filed with Amendment No. 44 dated
         December 22, 1994)

(1)(f)   Articles Supplementary of T. Rowe Price International Funds, Inc.,
         dated November 4, 1993 (electronically filed with Amendment No. 41
         dated December 16, 1993)

(1)(g)   Articles Supplementary of T. Rowe Price International Funds, Inc. dated
         February 18, 1994 (electronically filed with Amendment No. 42 dated
         February 28, 1994)

(1)(h)   Articles Supplementary of T. Rowe Price International Funds, Inc. dated
         November 2, 1994 (electronically filed with Amendment No. 44 dated
         December 22, 1994)

(1)(i)   Articles Supplementary of T. Rowe Price International Funds, Inc. dated
         January 25, 1995 (electronically filed with Amendment No. 49 dated
         March 22, 1995)

(1)(j)   Articles Supplementary of T. Rowe Price International Funds, Inc. dated
         October 11, 1995 (electronically filed with Amendment No. 50 dated
         October 12, 1995)

(1)(k)   Articles Supplementary of T. Rowe Price International Funds, Inc.
         deleting T. Rowe Price Short-Term Global Income Fund dated March 31,
         1997 (electronically filed with Amendment No. 54 dated April 23, 1997)

(1)(l)   Articles Supplementary of T. Rowe Price International Funds, Inc., on
         behalf of T. Rowe Price International Growth & Income Fund dated
         December 1, 1998
<PAGE>


         (electronically filed with Amendment No. 57 dated December 16, 1998)


(2)      By-Laws of Registrant, as amended to May 1, 1991, September 30, 1993,
         and July 21, 1999

(3)(a)   Specimen Stock Certificate for T. Rowe Price International Bond Fund
         (filed with Amendment No. 10)

(3)(b)   Specimen Stock Certificate for T. Rowe Price International Stock Fund
         (filed with Amendment No. 10)

(3)(c)   Specimen Stock Certificate for T. Rowe Price International Discovery
         Fund (filed with Amendment No. 14)

(3)(d)   Specimen Stock Certificate for T. Rowe Price European Stock Fund (filed
         with Amendment No. 18)

(3)(e)   Specimen Stock Certificate for T. Rowe Price New Asia Fund (filed with
         Amendment No. 21)

(3)(f)   Specimen Stock Certificate for T. Rowe Price Global Government Bond
         Fund (filed with Amendment No. 24)

(3)(g)   T. Rowe Price Japan, T. Rowe Price Short-Term Global Income, T. Rowe
         Price Latin America, T. Rowe Price Emerging Markets Bond, T. Rowe Price
         Emerging Markets Bond, T. Rowe Price Global Stock, and T. Rowe Price
         International Growth & Income Funds. See Article FIFTH, Capital Stock,
         Paragraphs (A)-(E) of the Articles of Amendment and Restatement
         electronically filed with Amendment No. 19, Article II, Shareholders,
         Sections 2.01-2.11 and Article VIII, Capital Stock, Sections 8.01-8.06
         of the Bylaws (filed with Amendment No. 19)

(4)(a)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price
         International Bond Fund, dated May 1, 1990 (electronically filed with
         Amendment No. 42 dated February 28, 1994)

(4)(b)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price
         International Stock Fund, dated May 1, 1990 (electronically filed with
         Amendment No. 42 dated February 28, 1994)

(4)(c)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price
         International Discovery Fund, dated May 1,
<PAGE>


         1991 (electronically filed with Amendment No. 42 dated February 28,
         1994)

(4)(d)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price European
         Stock Fund, dated May 1, 1990 (electronically filed with Amendment No.
         42 dated February 28, 1994)

(4)(e)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price New Asia
         Fund, dated May 1, 1991 (electronically filed with Amendment No. 42
         dated February 28, 1994)

(4)(f)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price Global
         Government Bond Fund, dated November 7, 1990 (electronically filed with
         Amendment No. 42 dated February 28, 1994)

(4)(g)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price Japan
         Fund, dated November 6, 1991 (electronically filed with Amendment No.
         42 dated February 28, 1994)

(4)(h)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price
         Short-Term Global Income Fund, dated April 23, 1992 (electronically
         filed with Amendment No. 42 dated February 28, 1994)

(4)(i)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price Latin
         America Fund, dated November 3, 1993 (electronically filed with
         Amendment No. 41 dated December 16, 1993)

(4)(j)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price Emerging
         Markets Bond Fund, dated November 2, 1994 (electronically filed with
         Amendment No. 44 dated December 22, 1994)

(4)(k)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price Emerging
         Markets Stock Fund, dated January 25, 1995 (electronically filed with
         Amendment No. 49 dated March 22, 1995)

<PAGE>


(4)(l)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price Global
         Stock Fund, dated November 1, 1995 (electronically filed with Amendment
         No. 51 dated December 20, 1995)

(4)(m)   Investment Management Agreement between Registrant and Rowe
         Price-Fleming International, Inc., on behalf of T. Rowe Price
         International Growth & Income Fund, dated November 4, 1998
         (electronically filed with Amendment No. 56 dated November 19, 1998)

(5)      Underwriting Agreement between Registrant and T. Rowe Price Investment
         Services, Inc., dated May 1, 1990 (electronically filed with Amendment
         No. 42 dated February 28, 1994)

(6)      Inapplicable

(7)      Custody Agreements


(7)(a)   Custodian Agreement between T. Rowe Price Funds and State Street Bank
         and Trust Company, dated January 28, 1998, as amended November 4, 1998
         and April 21, 1999

(7)(b)   Global Custody Agreement between The Chase Manhattan Bank, N.A., and T.
         Rowe Price Funds, dated January 3, 1994, as amended April 18, 1994,
         August 15, 1994, November 28, 1994, May 31, 1995, November 1, 1995,
         July 31, 1996, July 23, 1997, September 3, 1997, October 29, 1997, and
         December 15, 1998

(8)      Other Agreements


(8)(a)   Transfer Agency and Service Agreement between T. Rowe Price Services,
         Inc. and T. Rowe Price Funds, dated January 1, 1999, as amended April
         21, 1999


(8)(b)   Agreement between T. Rowe Price Associates, Inc. and T. Rowe Price
         Funds for Fund Accounting Services, dated January 1, 1999, as amended
         April 21, 1999


(8)(c)   Agreement between T. Rowe Price Retirement Plan Services, Inc. and the
         Taxable Funds, dated January 1, 1999

(9)      Opinion of Counsel

(10)     Consent of Independent Accountants

(11)     Inapplicable

<PAGE>


(12)     Inapplicable

(13)     Inapplicable

(14)     Financial Data Schedules

(15)     Inapplicable

(16)     Other Exhibits

         (a) Power of Attorney

         (b) Certificate of Vice President pursuant to Rule 306 of Regulation
         S-T.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

         None

ITEM 25. INDEMNIFICATION

         The Registrant maintains comprehensive Errors and Omissions and
Officers and Directors insurance policies written by the Evanston Insurance
Company and ICI Mutual. These policies provide coverage for T. Rowe Price
Associates, Inc. ("Manager"), and its subsidiaries and affiliates as listed in
Item 26 of this Registration Statement (with the exception of the T. Rowe Price
Associates Foundation, Inc.), and fifty other investment companies, all of which
are mutual funds in the T. Rowe Price family of funds. In addition to the
corporate insureds, the policies also cover the officers, directors, and
employees of the Manager, its subsidiaries, and affiliates. The premium is
allocated among the named corporate insureds in accordance with the provisions
of Rule 17d-1(d)(7) under the Investment Company Act of 1940.

GENERAL. The Charter of the Corporation provides that to the fullest extent
permitted by Maryland or federal law, no director or officer of the Corporation
shall be personally liable to the Corporation or the holders of Shares for money
damages and each director and officer shall be indemnified by the Corporation;
PROVIDED, HOWEVER, that nothing therein shall be deemed to protect any director
or officer of the Corporation against any liability to the Corporation of the
holders of Shares to which such director or officer 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 or her office.

         Article X, Section 10.01 of the Registrant's By-Laws provides as
follows:
<PAGE>



         SECTION 10.01. INDEMNIFICATION AND PAYMENT OF EXPENSES IN ADVANCE. The
Corporation shall indemnify any individual ("Indemnitee") who is a present or
former director, officer, employee, or agent of the Corporation, or who is or
has been serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise, who, by reason of his position was, is, or is threatened to be
made, a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative
(hereinafter collectively referred to as a "Proceeding") against any judgments,
penalties, fines, settlements, and reasonable expenses (including attorneys'
fees) incurred by such Indemnitee in connection with any Proceeding, to the
fullest extent that such indemnification may be lawful under applicable Maryland
law, as from time to time amended. The Corporation shall pay any reasonable
expenses so incurred by such Indemnitee in defending a Proceeding in advance of
the final disposition thereof to the fullest extent that such advance payment
may be lawful under applicable Maryland Law, as from time to time amended.
Subject to any applicable limitations and requirements set forth in the
Corporation's Articles of Incorporation and in these By-Laws, any payment of
indemnification or advance of expenses shall be made in accordance with the
procedures set forth in applicable Maryland law, as from time to time amended.

         Notwithstanding the foregoing, nothing herein shall protect or purport
to protect any Indemnitee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office
("Disabling Conduct").

         Anything in this Article X to the contrary notwithstanding, no
indemnification shall be made by the Corporation to any Indemnitee unless:

(a)      there is a final decision on the merits by a court or other body before
         whom the Proceeding was brought that the Indemnitee was not liable by
         reason of Disabling Conduct; or

(b)      in the absence of such a decision, there is a reasonable determination,
         based upon a review of the facts, that the Indemnitee was not liable by
         reason of Disabling Conduct, which determination shall be made by:

         (i) the vote of a majority of a quorum of directors who are neither
         "interested persons" of the Corporation, as
<PAGE>


         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 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
<PAGE>


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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER


M. DAVID TESTA, Chairman of the Board and Director of the Manager; is also
Vice-Chairman of the Board, Chief Investment Officer, Director, and Managing
Director of T. Rowe Price.


PETER B. ASKEW, Executive Vice President of the Manager.


PAUL T. BATEMAN, Director of the Manager. Mr. Bateman also serves as Director
and/or officer of other companies related to or affiliated with Robert Fleming
Holdings.


JOHN R. FORD, Chief Investment Officer and Executive Vice President of the
Manager.

D. WILLIAM J. GARRETT, Director of the Manager; is Group Chief Executive of
Robert Fleming Holdings Limited ("Robert Fleming Holdings"), a parent of the
Manager which is a United Kingdom holding company duly organized and existing
under the laws of the United Kingdom. Mr. Garrett also serves as Director and/or
officer of other companies related to or affiliated with Robert Fleming
Holdings; Director of Stone Investments (Number 4) Limited; Vice President of
SimCoGeF S.p.A.

P. JOHN MANSER, Director of the Manager; is Chairman of Robert Fleming Holdings.
Mr. Manser also serves as Director and/or officer of other companies related to
or affiliated with Robert Fleming Holdings; Chairman of Delancey Estates PIc;
Director of Capital Shopping Centres, Cancer Research Campaign, and Shaftesbury
PIc.

GEORGE A. MURNAGHAN, Executive Vice President of the Manager; is Managing
Director of T. Rowe Price.


JAMES S. RIEPE, Director of the Manager; is also Vice-Chairman of the Board,
Director, and Managing Director of T. Rowe Price.

<PAGE>


GEORGE A. ROCHE, Director of the Manager; is also Chairman of the Board,
President, and Managing Director of T. Rowe Price.


MARTIN G. WADE, Director and Chief Executive Officer of the Manager; is a
Director of Robert Fleming Holdings, and Robert Fleming Asset Management.


DAVID J.L. WARREN, President of the Manager.


With the exception of Christopher D. Alderson, Steven J. Banks, Mark C.J.
Bickford-Smith, Michael J. Conelius, Ann B. Cranmer, Julio A. Delgado, Frances
Dydasco, Mark J.T. Edwards, Carol A. Eve, Roger L. Fiery III, Abigail Fulton, R.
Aran Gordon, Pascal Hautcoeur, Todd J. Henry, Leah P. Holmes, Henry H. Hopkins,
Paul Kitney, Ian J. Macdonald, Nancy M. Morris, Thomas O. Murther, Gonzalo
Pangaro, Sally Patterson, Kathleen G. Polk, Robert Revel-Chion, Christopher
Rothery, James B.M. Seddon, Robert W. Smith, Benedict R.F. Thomas, Justin
Thomson, Christine To, William F. Wendler II, and Richard T. Whitney, all
officers of the Manager are officers and/or employees of Price Associates and
may also be officers and/or directors of one or more subsidiaries of Price
Associates and/or one or more of the registered investment companies for which
Price Associates or the Manager serves as investment adviser. Ms. Cranmer is a
Director of Fleming Investment Management Limited and Robert Fleming Management
Services.

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. The Manager is the general partner of this
partnership, and certain institutional investors, including advisory clients of
the Manager, are its limited partners.

See also "Management of Fund," in the Registrant's Statement of Additional
Information.

ITEM 27. PRINCIPAL UNDERWRITERS


(a)      The principal underwriter for the Registrant is Investment Services.
         Investment Services acts as the principal underwriter for eighty-eight
         mutual funds, including the following investment companies: 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.,
<PAGE>


         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 California Tax-Free Income Trust, T.
         Rowe Price State 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 Short-Term
         U.S. Government Fund, Inc., T. Rowe Price Mid-Cap Growth Fund, Inc., T.
         Rowe Price Small-Cap Stock Fund, Inc., T. Rowe Price Tax-Free
         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 Municipal Funds, Inc., T. Rowe Price Equity
         Series, Inc., 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., T. Rowe Price Health
         Sciences Fund, Inc., T. Rowe Price Mid-Cap Value Fund, Inc.,
         Institutional Equity Funds, Inc., T. Rowe Price Financial Services
         Fund, Inc., T. Rowe Price Diversified Small-Cap Growth Fund, Inc., T.
         Rowe Price Tax-Efficient Funds, Inc., Reserve Investment Funds, Inc.,
         T. Rowe Price Media & Telecommunications Fund, Inc., and T. Rowe Price
         Real Estate Fund, Inc. 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
         commissions 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.

<TABLE>
<CAPTION>
NAME                                                               POSITIONS AND                   POSITIONS AND
                                                                   OFFICES WITH                    OFFICES WITH
                                                                   UNDERWRITER                     REGISTRANT
<C>                                                                <S>                             <S>
James S. Riepe                                                     Chairman of the Board           Vice President
                                                                   and Director
Edward C. Bernard                                                  President and Director          None
Henry H. Hopkins                                                   Vice President and Director     Vice President
Charles E. Vieth                                                   Vice President and Director     None
Patricia M. Archer                                                 Vice President                  None
Steven J. Banks                                                    Vice President                  None
John T. Bielski                                                    Vice President                  None
Darrell N. Braman                                                  Vice President                  None
Ronae M. Brock                                                     Vice President                  None
Meredith C. Callanan                                               Vice President                  None
John H. Cammack                                                    Vice President                  None
Ann R. Campbell                                                    Vice President                  None
Christine M. Carolan                                               Vice President                  None
Joseph A. Carrier                                                  Vice President                  None
Laura H. Chasney                                                   Vice President                  None
Renee M. Christoff                                                 Vice President                  None
Christopher W. Dyer                                                Vice President                  None
Christine S. Fahlund                                               Vice President                  None
Forrest R. Foss                                                    Vice President                  None
Thomas A. Gannon                                                   Vice President                  None
Andrea G. Griffin                                                  Vice President                  None
Douglas E. Harrison                                                Vice President                  None
David J. Healy                                                     Vice President                  None
Joanne M. Healey                                                   Vice President                  None
Joseph P. Healy                                                    Vice President                  None
Walter J. Helmlinger                                               Vice President                  None
Valerie King                                                       Vice President                  None
- -Calloway
Eric G. Knauss                                                     Vice President                  None
Sharon R. Krieger                                                  Vice President                  None
Steven A. Larson                                                   Vice President                  None
Jeanette M. LeBlanc                                                Vice President                  None
Keith W. Lewis                                                     Vice President                  None
Gayle A. Lomax                                                     Vice President                  None
Sarah McCafferty                                                   Vice President                  None
Maurice A. Minerbi                                                 Vice President                  None
Mark J. Mitchell                                                   Vice President                  None
Nancy M. Morris                                                    Vice President                  None
George A. Murnaghan                                                Vice President                  None
Steven E. Norwitz                                                  Vice President                  None
Kathleen M. O'Brien                                                Vice President                  None
Barbara A. O'Connor                                                Vice President                  None
Wayne D. O'Melia                                                   Vice President                  None
David Oestr                                                        Vice President                  None
e
icher
Robert Petrow                                                      Vice President                  None
Pamela D. Preston                                                  Vice President                  None
George D. Riedel                                                   Vice President                  None
Lucy B. Robins                                                     Vice President                  None
John R. Rockwell                                                   Vice President                  None
Kenneth J. Rutherford                                              Vice President                  None
Alexander Savich                                                   Vice President                  None
Kristin E. Seeberger                                               Vice President                  None
Donna B. Singer                                                    Vice President                  None
Bruce D. Stewart                                                   Vice President                  None
William W. Strickland, Jr.                                         Vice President                  None
Jerome Tuccille                                                    Vice President                  None
Walter Wdowiak                                                     Vice President                  None
William F. Wendler II                                              Vice President                  None
Jane F. White                                                      Vice President                  None
Thomas R. Woolley                                                  Vice President                  None
Barbara A. O'Connor                                                Controller                      None
Theodore J. Zamerski III                                           Assistant Vice President and    None
                                                                   Assistant Controller
Matthew B. Alstead                                                 Assistant Vice President        None
Kimberly B. Andersen                                               Assistant Vice President        None
Richard J. Barna                                                   Assistant Vice President        None
Catherine L.Berkenkemper                                           Assistant Vice President        None
Edwin J. Brooks                                                    Assistant Vice President        None
III
Carl A. Cox                                                        Assistant Vice President        None
Charles R. Dicken                                                  Assistant Vice President        None
Cheryl L. Emory                                                    Assistant Vice President        None
John A. Galateria                                                  Assistant Vice President        None
Edward F. Giltenan                                                 Assistant Vice President        None
Jason L. Gounaris                                                  Assistant Vice President        None
Janelyn A. Healey                                                  Assistant Vice President        None
Sandra J. Kiefler                                                  Assistant Vice President        None
Suzanne M. Knoll                                                   Assistant Vice President        None
Patricia S.                                                        Assistant Vice President        Secretary
Lippert
Teresa M. Loeffert                                                 Assistant Vice President        None
C. Lillian Matthews                                                Assistant Vice President        None
Janice D. McCrory                                                  Assistant Vice President        None
Danielle N. Nicholson                                              Assistant Vice President        None
JeanneMarie B. Patella                                             Assistant Vice President        None
Kylelane Purcell                                                   Assistant Vice President        None
David A. Roscum                                                    Assistant Vice President        None
Matthew A. Scher                                                   Assistant Vice President        None
Carole H. Smith                                                    Assistant Vice President        None
John A. Stranovsky                                                 Assistant Vice President        None
Nolan L. North                                                     Assistant Treasurer             None
Barbara A. Van Horn                                                Assistant Secretary             None
</TABLE>

<PAGE>


(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 28. LOCATION OF ACCOUNTS AND RECORDS


         All accounts, books, and other documents required to be maintained by
the Registrant under Section 31(a) of the Investment Company Act of 1940 and the
rules thereunder will be maintained by the Registrant 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
4515 Painters Mill Road, Owings Mills, Maryland 21117. Custodian activities for
the Registrant are performed at State
<PAGE>


Street Bank and Trust Company's Service Center (State Street South), 1776
Heritage Drive, Quincy, Massachusetts 02171.

         Custody of Registrant's portfolio securities which are purchased
outside the United States is maintained by The Chase Manhattan Bank, N.A.,
London, in its foreign branches or with other U.S. banks. The Chase Manhattan
Bank, N.A., London, is located at Woolgate House, Coleman Street, London EC2P
2HD England.

ITEM 29. MANAGEMENT SERVICES

         Registrant is not a party to any management-related service contract,
other than as set forth in the Prospectus or Statement of Additional
Information.

ITEM 30. UNDERTAKINGS

(a)     Not applicable
<PAGE>


         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, duly authorized, in the City of Baltimore, State of Maryland, this
February 18, 2000.

         T. Rowe Price International Funds, Inc.

       /s/M. David Testa
By:    M. David Testa
       Chairman of the Board

         Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:

Signature                 Title                 Date
- ---------                 -----                 ----

/s/M. David Testa         Chairman of the Board February 18, 2000
M. David Testa           (Chief Executive Officer)

/s/Carmen F. Deyesu      Treasurer (Chief       February 18, 2000
Carmen F. Deyesu         Financial Officer)

/s/Martin G. Wade        President and          February 18, 2000
Martin G. Wade           Director

*                        Director               February 18, 2000
Anthony W. Deering

*                        Director               February 18, 2000
Donald W. Dick, Jr.

*                        Director               February 18, 2000
Paul M. Wythes

/s/Henry H. Hopkins      Attorney-In-Fact       February 18, 2000
Henry H. Hopkins



                                    BY-LAWS



                                       OF



                    T. ROWE PRICE INTERNATIONAL FUNDS, INC.



                                  AS AMENDED:


                                  MAY 1, 1991
                               SEPTEMBER 30, 1993
                                 JULY 21, 1999
<PAGE>


                               TABLE OF CONTENTS
                               -----------------


                                                                            PAGE
                                                                            ----

ARTICLE I.     NAME OF CORPORATION, LOCATION OF OFFICES AND
               SEAL                                          1

               1.01.Name                                     1
               1.02.Principal Office                         1
               1.03.Seal                                     1


ARTICLE II.    SHAREHOLDERS                                   1

               2.01.Annual Meetings                          1
               2.02.Special Meetings                         2
               2.03.Place of Meetings                        2
               2.04.Notice of Meetings                       2
               2.05.Voting - In General                      3
               2.06.Shareholders Entitled to Vote            3
               2.07.Voting - Proxies                         3
               2.08.Quorum                                   3
               2.09.Absence of Quorum                        3
               2.10.Stock Ledger and List of Shareholders    4
               2.11.Informal Action by Shareholders          4


ARTICLE III.   BOARD OF DIRECTORS                              4

               3.01.Number and Term of Office                4
               3.02.Qualification of Directors               5
               3.03.Election of Directors                    5
               3.04.Removal of Directors                     5
               3.05.Vacancies and Newly Created Directorships5
               3.06.General Powers                           5
               3.07.Power to Issue and Sell Stock            6
               3.08.Power to Declare Dividends               6
               3.09.Annual and Regular Meetings              6
               3.10.Special Meetings                         7
               3.11.Notice                                   7
               3.12.Waiver of Notice                         7
               3.13.Quorum and Voting                        7
               3.14.Conference Telephone                     7
<PAGE>


               3.15.Compensation                             7
               3.16.Action Without a Meeting                 7
               3.17.Director Emeritus                        8


ARTICLE IV.    EXECUTIVE COMMITTEE AND OTHER COMMITTEES        8

               4.01.How Constituted                          8
               4.02.Powers of the Executive Committee        8
               4.03.Other Committees of the Board of Directors8
               4.04.Proceedings, Quorum and Manner of Acting 8
               4.05.Other Committees                         9


ARTICLE V.     OFFICERS                                       9

               5.01.General                                  9
               5.02.Election, Term of Office and Qualifications9
               5.03.Resignation                              9
               5.04.Removal                                 10
               5.05.Vacancies and Newly Created Offices     10
               5.06.Chairman of the Board                   10
               5.07.President                               10
               5.08.Vice President                          10
               5.09.Treasurer and Assistant Treasurers      11
               5.10.Secretary and Assistant Secretaries     11
               5.11.Subordinate Officers                    11
               5.12.Remuneration                            11


ARTICLE VI.    CUSTODY OF SECURITIES AND CASH                  12

               6.01.Employment of a Custodian               12
               6.02.Central Certificate Service             12
               6.03.Cash Assets                             12
               6.04.Free Cash Accounts                      12
               6.05.Action Upon Termination of Custodian Agreement 13


ARTICLE VII.   EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES  13

               7.01.Execution of Instruments                13
               7.02.Voting of Securities                    13


<PAGE>


ARTICLE VIII.  CAPITAL STOCK                                   13

               8.01.Certificate of Stock                    13
               8.02.Transfer of Capital Stock               14
               8.03.Transfer Agents and Registrars          14
               8.04.Transfer Regulations                    14
               8.05.Fixing of Record Date                   15
               8.06.Lost, Stolen, or Destroyed Certificates 15


ARTICLE IX.    FISCAL YEAR, ACCOUNTANT                         15

               9.01.Fiscal Year                             15
               9.02.Accountant                              16


ARTICLE X.     INDEMNIFICATION AND INSURANCE                  17

               10.01.Indemnification and Payment of Expenses in Advance 17
               10.02.Insurance of Officers, Directors, Employees and Agents 18


ARTICLE XI.    AMENDMENTS                                     18

               11.01.                                  General 18
               11.02.                     By Shareholders Only 19


ARTICLE XII.   MISCELLANEOUS                                  19

               12.01Use of the Term "Annual Meeting"        19
<PAGE>


                    T. ROWE PRICE INTERNATIONAL FUNDS, INC.

                            (A Maryland Corporation)

                                    BY-LAWS


                                   ARTICLE I
                                   ---------


                              NAME OF CORPORATION,
                          LOCATION OF OFFICES AND SEAL
                          ----------------------------

     Section 1.01. NAME: The name of the Corporation is T. ROWE PRICE
                   ----
INTERNATIONAL FUNDS, INC.

     Section 1.02. PRINCIPAL OFFICE: The principal office of the Corporation in
                   ----------------
the State of Maryland shall be located in the City of Baltimore. The Corporation
may, in addition, establish and maintain such other offices and places of
business, within or outside the State of Maryland, as the Board of Directors may
from time to time determine. [ MGCL, Sections 2-103(4), 2-108(a)(1) ]<F1>

     Section 1.03. SEAL: The corporate seal of the Corporation shall be circular
                   ----
in form, and shall bear the name of the Corporation, the year of its
incorporation, and the words "Corporate Seal, Maryland." The form of the seal
shall be subject to alteration by the Board of Directors and the seal may be
used by causing it or a facsimile to be impressed or affixed or printed or
otherwise reproduced. In lieu of affixing the corporate seal to any document it
shall be sufficient to meet the requirements of any law, rule, or regulation
relating to a corporate seal to affix the word "(Seal)" adjacent to the
signature of the authorized officer of the Corporation. Any officer or Director
of the Corporation shall have authority to affix the corporate seal of the
Corporation to any document requiring the same. [ MGCL, Sections 1-304(b),
2-103(3) ]


                                   ARTICLE II
                                   ----------


                                  SHAREHOLDERS
                                  ------------

     Section 2.01. ANNUAL MEETINGS: The Corporation shall not be required to
                   ---------------
hold an annual meeting of its shareholders in any year unless the Investment
Company Act of 1940 requires an election of directors by shareholders. In the
event that the Corporation shall be so required to hold an annual meeting, such
meeting shall be held at a date and time set by the Board of Directors, which
date shall be no later than 120 days after the occurrence of the event requiring
the meeting. Any
- -------------------------
[FN]
<F1>  Bracketed citations are to the General Corporation Law of the State of
Maryland ("MGCL") or to the United States Investment Company Act of 1940, as
amended (the "Investment Company Act"), or to Rules of the United States
Securities and Exchange Commission thereunder ("SEC Rules"). The citations are
inserted for reference only and do not constitute a part of the By-Laws.</FN>
<PAGE>


shareholders' meeting held in accordance with the preceding sentence shall for
all purposes constitute the annual meeting of shareholders for the fiscal year
of the Corporation in which the meeting is held. At any such meeting, the
shareholders shall elect directors to hold the offices of any directors who have
held office for more than one year or who have been elected by the Board of
Directors to fill vacancies which result from any cause. Except as the Articles
of Incorporation or statute provides otherwise, Directors may transact any
business within the powers of the Corporation as may properly come before the
meeting. Any business of the Corporation may be transacted at the annual meeting
without being specially designated in the notice, except such business as is
specifically required by statute to be stated in the notice. [ MGCL, Section
2-501 ]

     Section 2.02. SPECIAL MEETINGS: Special meetings of the shareholders may be
                   ----------------
called at any time by the Chairman of the Board, the President, any Vice
President, or by the Board of Directors. Special meetings of the shareholders
shall be called by the Secretary on the written request of shareholders entitled
to cast at least ten (10) percent of all the votes entitled to be cast at such
meeting, provided that (a) such request shall state the purpose or purposes of
the meeting and the matters proposed to be acted on, and (b) the shareholders
requesting the meeting shall have paid to the Corporation the reasonably
estimated cost of preparing and mailing the notice thereof, which the Secretary
shall determine and specify to such shareholders. Unless requested by
shareholders entitled to cast a majority of all the votes entitled to be cast at
the meeting, a special meeting need not be called to consider any matter which
is substantially the same as a matter voted upon at any special meeting of the
shareholders held during the preceding twelve (12) months. [ MGCL, Section 2-502
]

     Section 2.03. PLACE OF MEETINGS: All shareholders' meetings shall be held
                   -----------------
at such place within the United States as may be fixed from time to time by the
Board of Directors. [ MGCL, Section 2-503 ]

     Section 2.04. NOTICE OF MEETINGS: Not less than ten (10) days, nor more
                   ------------------
than ninety (90) days before each shareholders' meeting, the Secretary or an
Assistant Secretary of the Corporation shall give to each shareholder entitled
to vote at the meeting, and each other shareholder entitled to notice of the
meeting, written notice stating (1) the time and place of the meeting, and (2)
the purpose or purposes of the meeting if the meeting is a special meeting or if
notice of the purpose is required by statute to be given. Such notice shall be
personally delivered to the shareholder, or left at his residence or usual place
of business, or mailed to him at this address or transmitted to the shareholder
by electronic mail to any electronic mail address of the shareholder or by any
other electronic means in all cases as such address appears on the records of
the Corporation. No notice of a shareholders' meeting need be given to any
shareholder who shall sign a written waiver of such notice, whether before or
after the meeting, which is filed with the records of shareholders' meetings, or
to any shareholder who is present at the meeting in person or by proxy. Notice
of adjournment of a shareholders' meeting to another time or place need not be
given if such time and place are announced at the meeting, unless the
adjournment is for more than one hundred twenty (120) days after the original
record date. [ MGCL, Sections 2-504, 2-511(d) ]

          (Section 2.04. Notice of Meetings, as amended July 21, 1999)
                         ------------------

     Section 2.05. VOTING - IN GENERAL: Except as otherwise specifically
                   -------------------
provided in the Articles of Incorporation or these By-Laws, or as required by
provisions of the Investment Company
<PAGE>


Act with respect to the vote of a series, if any, of the Corporation, at every
shareholders' meeting, each shareholder shall be entitled to one vote for each
share of stock of the Corporation validly issued and outstanding and held by
such shareholder, except that no shares held by the Corporation shall be
entitled to a vote. Fractional shares shall be entitled to fractional votes.
Except as otherwise specifically provided in the Articles of Incorporation, or
these By-Laws, or as required by provisions of the Investment Company Act, a
majority of all the votes cast at a meeting at which a quorum is present is
sufficient to approve any matter which properly comes before the meeting. The
vote upon any question shall be by ballot whenever requested by any person
entitled to vote, but, unless such a request is made, voting may be conducted in
any way approved by the meeting. [ MGCL, Sections 2-214(a)(i), 2-506(a)(2),
2-507(a), 2-509(b) ]

     Section 2.06. SHAREHOLDERS ENTITLED TO VOTE: If, pursuant to Section 8.05
                   -----------------------------
hereof, a record date has been fixed for the determination of shareholders
entitled to notice of or to vote at any shareholders' meeting, each shareholder
of the Corporation shall be entitled to vote in person or by proxy, each share
or fraction of a share of stock outstanding in his name on the books of the
Corporation on such record date. If no record date has been fixed for the
determination of shareholders, the record date for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at the close of business on the day on which notice of the meeting is mailed
or the 30th day before the meeting, whichever is the closer date to the meeting,
or, if notice is waived by all shareholders, at the close of business on the
tenth (10th) day next preceding the date of the meeting. [ MGCL, Sections 2-507,
2-511 ]

     Section 2.07. VOTING - PROXIES: A shareholder may authorize another person
                   ----------------
to act as proxy for the shareholder by: (i) signing a writing authorizing
another person to act as proxy, (ii) the shareholder's authorized agent signing
the writing or causing the shareholder's signature to be affixed to the writing
by any reasonable means, including facsimile signature; or (iii) transmitting,
or authorizing the transmission of, an authorization for the person to act as
proxy to the person authorized to act as proxy or any other person authorized to
receive the proxy authorization on behalf of the person authorized to act as the
proxy, including a proxy solicitation firm or proxy support service
organization. The authorization may be transmitted by a telegram, cablegram,
datagram, electronic mail, or any other electronic or telephonic means. A copy,
facsimile telecommunication, or other reliable reproduction of the writing or
transmission may be substituted for the original writing or transmission for any
purpose for which the original writing or transmission could be used. No proxy
shall be valid more than eleven (11) months after its date unless it provides
for a longer period. [ MGCL, Section 2-507(b) and (c) ]

           (Section 2.07. Voting - Proxies, as amended July 21, 1999)
                          ----------------

     Section 2.08. QUORUM: The presence at any shareholders' meeting, in person
                   ------
or by proxy, of shareholders entitled to cast a majority of the votes entitled
to be cast at the meeting shall constitute a quorum. [ MGCL, Section 2-506(a) ]

     Section 2.09. ABSENCE OF QUORUM: In the absence of a quorum, the holders of
                   -----------------
a majority of shares entitled to vote at the meeting and present thereat in
person or by proxy, or, if no shareholder entitled to vote is present in person
or by proxy, any officer present who is entitled to preside at or act as
Secretary of such meeting, may adjourn the meeting sine die or from time to
                                                   --------
time.
<PAGE>


Any business that might have been transacted at the meeting originally called
may be transacted at any such adjourned meeting at which a quorum is present.

     Section 2.10. STOCK LEDGER AND LIST OF SHAREHOLDERS: It shall be the duty
                   -------------------------------------
of the Secretary or Assistant Secretary of the Corporation to cause an original
or duplicate stock ledger to be maintained at the office of the Corporation's
transfer agent, containing the names and addresses of all shareholders and the
number of shares of each class held by each shareholder. Such stock ledger may
be in written form, or any other form capable of being converted into written
form within a reasonable time for visual inspection. Any one or more persons,
who together are and for at least six (6) months have been shareholders of
record of at least five percent (5%) of the outstanding capital stock of the
Corporation, may submit (unless the Corporation at the time of the request
maintains a duplicate stock ledger at its principal office) a written request to
any officer of the Corporation or its resident agent in Maryland for a list of
the shareholders of the Corporation. Within twenty (20) days after such a
request, there shall be prepared and filed at the Corporation's principal office
a list, verified under oath by an officer of the Corporation or by its stock
transfer agent or registrar, which sets forth the name and address of each
shareholder and the number of shares of each class which the shareholder holds.
[ MGCL, Sections 2-209, 2-513 ]

     Section 2.11. INFORMAL ACTION BY SHAREHOLDERS: Any action required or
                   -------------------------------
permitted to be taken at a meeting of shareholders may be taken without a
meeting if the following are filed with the records of shareholders' meetings:

          (a)
A unanimous written consent which sets forth the action and is signed by each
shareholder entitled to vote on the matter; and

          (b)
A written waiver of any right to dissent signed by each shareholder entitled to
notice of the meeting, but not entitled to vote at it.

     [ MGCL, Section 2-505 ]


                                  ARTICLE III
                                  -----------


                               BOARD OF DIRECTORS
                               ------------------

     Section 3.01. NUMBER AND TERM OF OFFICE: The Board of Directors shall
                   -------------------------
consist of one (1) Director, which number may be increased by a resolution of a
majority of the entire Board of Directors, provided that the number of Directors
shall not be more than fifteen (15) nor less than the lesser of (i) three (3) or
(ii) the number of shareholders of the Corporation. Each Director (whenever
elected) shall hold office until the next annual meeting of shareholders and
until his successor is elected and qualifies or until his earlier death,
resignation, or removal. [ MGCL, Sections 2-402, 2-404, 2-405 ]

     Section 3.02. QUALIFICATION OF DIRECTORS: No member of the Board of
                   --------------------------
Directors need be a shareholder of the Corporation, but at least one member of
the Board of Directors shall be a person who is not an interested person (as
such term is defined in the Investment Company Act) of the
<PAGE>


investment adviser of the Corporation, nor an officer or employee of the
Corporation. [ MGCL, Section 2-403; Investment Company Act, Section 10(d) ]

     Section 3.03. ELECTION OF DIRECTORS: Until the first annual meeting of
                   ---------------------
shareholders, or until successors are duly elected and qualified, the Board of
Directors shall consist of the persons named as such in the Articles of
Incorporation. Thereafter, except as otherwise provided in Sections 3.04 and
3.05 hereof, at each annual meeting, the shareholders shall elect Directors to
hold office until the next annual meeting and/or until their successors are
elected and qualify. In the event that Directors are not elected at an annual
shareholders' meeting, then Directors may be elected at a special shareholders'
meeting. Directors shall be elected by vote of the holders of a plurality of the
shares present in person or by proxy and entitled to vote. [ MGCL, Section 2-404
]

     Section 3.04. REMOVAL OF DIRECTORS: At any meeting of shareholders, duly
                   --------------------
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any Director or Directors from office, either with or without
cause, and may elect a successor or successors to fill any resulting vacancies
for the unexpired terms of removed Directors. [ MGCL, Sections 2-406, 2-407 ]

     Section 3.05. VACANCIES AND NEWLY CREATED DIRECTORSHIPS: If any vacancies
                   -----------------------------------------
occur in the Board of Directors by reason of resignation, removal or otherwise,
or if the authorized number of Directors is increased, the Directors then in
office shall continue to act, and such vacancies (if not previously filled by
the shareholders) may be filled by a majority of the Directors then in office,
whether or not sufficient to constitute a quorum, provided that, immediately
after filling such vacancy, at least two-thirds of the Directors then holding
office shall have been elected to such office by the shareholders of the
Corporation. In the event that at any time, other than the time preceding the
first meeting of shareholders, less than a majority of the Directors of the
Corporation holding office at that time were so elected by the shareholders, a
meeting of the shareholders shall be held promptly and in any event within sixty
(60) days for the purpose of electing Directors to fill any existing vacancies
in the Board of Directors unless the Securities and Exchange Commission shall by
order extend such period. Except as provided in Section 3.04 hereof, a Director
elected by the Board of Directors to fill a vacancy shall be elected to hold
office until the next annual meeting of shareholders or until his successor is
elected and qualifies. [ MGCL, Section 2-407; Investment Company Act, Section
16(a) ]

     Section 3.06. GENERAL POWERS:
                   --------------

          (a)
The property, business, and affairs of the Corporation shall be managed under
the direction of the Board of Directors which may exercise all the powers of the
Corporation except such as are by law, by the Articles of Incorporation, or by
these By-Laws conferred upon or reserved to the shareholders of the Corporation.
[ MGCL, Section 2-401 ]

          (b)
All acts done by any meeting of the Directors or by any person acting as a
Director, so long as his successor shall not have been duly elected or
appointed, shall, notwithstanding that it be afterwards discovered that there
was some defect in the election of the Directors or such person acting as a
Director or that they or any of them were disqualified, be as valid as if the
Directors or such person, as the case may be, had been duly elected and were or
was qualified to be Directors or a Director of the Corporation.
<PAGE>



     Section 3.07. POWER TO ISSUE AND SELL STOCK: The Board of Directors may
                   -----------------------------
from time to time authorize by resolution the issuance and sale of any of the
Corporation's authorized shares to such persons as the Board of Directors shall
deem advisable and such resolution shall set the minimum price or value of
consideration for the stock or a formula for its determination, and shall
include a fair description of any consideration other than money and a statement
of the actual value of such consideration as determined by the Board of
Directors or a statement that the Board of Directors has determined that the
actual value is or will be not less than a certain sum. [ MGCL, Section 2-203 ]

     Section 3.08. POWER TO DECLARE DIVIDENDS:
                   --------------------------

          (a)
The Board of Directors, from time to time as it may deem advisable, may declare
and the Corporation pay dividends, in cash, property, or shares of the
Corporation available for dividends out of any source available for dividends,
to the shareholders according to their respective rights and interests. [ MGCL,
Section 2-309 ]

          (b)
The Board of Directors shall cause to be accompanied by a written statement any
dividend payment wholly or partly from any source other than the Corporation's
accumulated undistributed net income (determined in accordance with good
accounting practice and the rules and regulations of the Securities and Exchange
Commission then in effect) not including profits or losses realized upon the
sale of securities or other properties. Such statement shall adequately disclose
the source or sources of such payment and the basis of calculation and shall be
otherwise in such form as the Securities and Exchange Commission may prescribe.
[ Investment Company Act, Section 19; SEC Rule 19a-1; MGCL, Section 2-309(c) ]

          (c)
Notwithstanding the above provisions of this Section 3.08, the Board of
Directors may at any time declare and distribute pro rata among the shareholders
a stock dividend out of the Corporation's authorized but unissued shares of
stock, including any shares previously purchased by the Corporation, provided
                                                                     --------
that such dividend shall not be distributed in shares of any class with respect
to any shares of a different class. The shares so distributed shall be issued at
the par value thereof, and there shall be transferred to stated capital, at the
time such dividend is paid, an amount of surplus equal to the aggregate par
value of the shares issued as a dividend and there may be transferred from
earned surplus to capital surplus such additional amount as the Board of
Directors may determine. [ MGCL, Section 2-309 ]

     Section 3.09. ANNUAL AND REGULAR MEETINGS: The annual meeting of the Board
                   ---------------------------
of Directors for choosing officers and transacting other proper business shall
be held after the annual shareholders' meeting at such time and place as may be
specified in the notice of such meeting of the Board of Directors or, in the
absence of such annual shareholders' meeting, at such time and place as the
Board of Directors may provide. The Board of Directors from time to time may
provide by resolution for the holding of regular meetings and fix their time and
place (within or outside the State of Maryland). [ MGCL, Section 2-409(a) ]

     Section 3.l0. SPECIAL MEETINGS: Special meetings of the Board of Directors
                   ----------------
shall be held whenever called by the Chairman of the Board, the President (or,
in the absence or disability of the President, by any Vice President), the
Treasurer, or two or more Directors, at the time and place
<PAGE>


(within or outside the State of Maryland) specified in the respective notices or
waivers of notice of such meetings.

     Section 3.11. NOTICE: Notice of annual, regular, and special meetings shall
                   ------
be in writing, stating the time and place, and shall be mailed to each Director
at his residence or regular place of business or caused to be delivered to him
personally or to be transmitted to him by telegraph, cable, or wireless at least
two (2) days before the day on which the meeting is to be held. Except as
otherwise required by the By-Laws or the Investment Company Act, such notice
need not include a statement of the business to be transacted at, or the purpose
of, the meeting. [ MGCL, Section 2-409(b) ]

     Section 3.12. WAIVER OF NOTICE: No notice of any meeting need be given to
                   ----------------
any Director who is present at the meeting or to any Director who signs a waiver
of the notice of the meeting (which waiver shall be filed with the records of
the meeting), whether before or after the meeting. [ MGCL, Section 2-409(c) ]

     Section 3.13. QUORUM AND VOTING: At all meetings of the Board of Directors
                   -----------------
the presence of one-third of the total number of Directors authorized, but not
less than two (2) Directors if there are at least two directors, shall
constitute a quorum. In the absence of a quorum, a majority of the Directors
present may adjourn the meeting, from time to time, until a quorum shall be
present. The action of a majority of the Directors present at a meeting at which
a quorum is present shall be the action of the Board of Directors unless the
concurrence of a greater proportion is required for such action by law, by the
Articles of Incorporation or by these By-Laws. [ MGCL, Section 2-408 ]

     Section 3.14. CONFERENCE TELEPHONE: Members of the Board of Directors or of
                   --------------------
any committee designated by the Board, may participate in a meeting of the Board
or of such committee by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time, and participation by such means shall constitute
presence in person at such meeting. [ MGCL, Section 2-409(d) ]

     Section 3.15. COMPENSATION: Each Director may receive such remuneration for
                   ------------
his services as shall be fixed from time to time by resolution of the Board of
Directors.

     Section 3.16. ACTION WITHOUT A MEETING: Any action required or permitted to
                   ------------------------
be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting if a unanimous written consent which sets forth the
action is signed by all members of the Board or of such committee and such
written consent is filed with the minutes of proceedings of the Board or
committee. [ MGCL, Section 2-408(c) ]

     Section 3.17. DIRECTOR EMERITUS: Upon the retirement of a Director of the
                   -----------------
Corporation, the Board of Directors may designate such retired Director as a
Director Emeritus. The position of Director Emeritus shall be honorary only and
shall not confer upon such Director Emeritus any responsibility, or voting
authority, whatsoever with respect to the Corporation. A Director Emeritus may,
but shall not be required to, attend the meetings of the Board of Directors and
receive materials normally provided Directors relating to the Corporation. The
Board of Directors may establish such compensation as it may deem appropriate
under the circumstances to be paid by the Corporation to a Director Emeritus.
<PAGE>




                                   ARTICLE IV
                                   ----------


                    EXECUTIVE COMMITTEE AND OTHER COMMITTEES
                    ----------------------------------------

     Section 4.01. HOW CONSTITUTED: By resolution adopted by the Board of
                   ---------------
Directors, the Board may appoint from among its members one or more committees,
including an Executive Committee, each consisting of at least two (2) Directors.
Each member of a committee shall hold office during the pleasure of the Board. [
MGCL, Section 2-411 ]

     Section 4.02. POWERS OF THE EXECUTIVE COMMITTEE: Unless otherwise provided
                   ---------------------------------
by resolution of the Board of Directors, the Executive Committee, in the
intervals between meetings of the Board of Directors, shall have and may
exercise all of the powers of the Board of Directors to manage the business and
affairs of the Corporation except the power to:

          (a)   Declare dividends or distributions on stock;

          (b)
Issue stock other than as provided in Section 2-411(b) of Corporations and
                                                          ------------ ---
Associations Article of the Annotated Code of Maryland;
- --------------------

          (c)

Recommend to the shareholders any action which requires shareholder approval;

          (d)   Amend the By-Laws; or

          (e)
Approve any merger or share exchange which does not require shareholder
approval.

     [ MGCL, Section 2-411(a) ]

     Section 4.03. OTHER COMMITTEES OF THE BOARD OF DIRECTORS: To the extent
                   ------------------------------------------
provided by resolution of the Board, other committees shall have and may
exercise any of the powers that may lawfully be granted to the Executive
Committee. [ MGCL, Section 2-411(a) ]

     Section 4.04. PROCEEDINGS, QUORUM, AND MANNER OF ACTING: In the absence of
                   -----------------------------------------
appropriate resolution of the Board of Directors, each committee may adopt such
rules and regulations governing its proceedings, quorum and manner of acting as
it shall deem proper and desirable, provided that the quorum shall not be less
than two (2) Directors. In the absence of any member of any such committee, the
members thereof present at any meeting, whether or not they constitute a quorum,
may appoint a member of the Board of Directors to act in the place of such
absent member. [ MGCL, Section 2-411(c) ]

     Section 4.05. OTHER COMMITTEES: The Board of Directors may appoint other
                   ----------------
committees, each consisting of one or more persons who need not be Directors.
Each such committee shall have such powers and perform such duties as may be
assigned to it from time to time by the Board of
<PAGE>


Directors, but shall not exercise any power which may lawfully be exercised only
by the Board of Directors or a committee thereof.


                                   ARTICLE V
                                   ---------


                                    OFFICERS
                                    --------

     Section 5.01. GENERAL: The officers of the Corporation shall be a
                   -------
President, one or more Vice Presidents (one or more of whom may be designated
Executive Vice President), a Secretary, and a Treasurer, and may include one or
more Assistant Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be appointed in accordance
with the provisions of Section 5.11 hereof. The Board of Directors may elect,
but shall not be required to elect, a Chairman of the Board. [ MGCL, Section
2-412 ]

     Section 5.02. ELECTION, TERM OF OFFICE AND QUALIFICATIONS: The officers of
                   -------------------------------------------
the Corporation (except those appointed pursuant to Section 5.11 hereof) shall
be elected by the Board of Directors at its first meeting and thereafter at each
annual meeting of the Board. If any officer or officers are not elected at any
such meeting, such officer or officers may be elected at any subsequent regular
or special meeting of the Board. Except as provided in Sections 5.03, 5.04, and
5.05 hereof, each officer elected by the Board of Directors shall hold office
until the next annual meeting of the Board of Directors and until his successor
shall have been chosen and qualified. Any person may hold two or more offices of
the Corporation, except that neither the Chairman of the Board, nor the
President, may hold the office of Vice President, but no person shall execute,
acknowledge, or verify any instrument in more than one capacity if such
instrument is required by law, the Articles of Incorporation, or these By-Laws
to be executed, acknowledged, or verified by two or more officers. The Chairman
of the Board shall be selected from among the Directors of the Corporation and
may hold such office only so long as he continues to be a Director. No other
officer need be a Director. [ MGCL, Sections 2-412, 2-413 and 2-415 ]

     Section 5.03. RESIGNATION: Any officer may resign his office at any time by
                   -----------
delivering a written resignation to the Board of Directors, the President, the
Secretary, or any Assistant Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.

     Section 5.04. REMOVAL: Any officer may be removed from office by the Board
                   -------
of Directors whenever in the judgment of the Board of Directors the best
interests of the Corporation will be served thereby. [ MGCL, Section 2-413(c) ]

     Section 5.05 VACANCIES AND NEWLY CREATED OFFICES: If any vacancy shall
                  -----------------------------------
occur in any office by reason of death, resignation, removal, disqualification
or other cause, or if any new office shall be created, such vacancies or newly
created offices may be filled by the Board of Directors at any meeting or, in
the case of any office created pursuant to Section 5.11 hereof, by any officer
upon whom such power shall have been conferred by the Board of Directors. [
MGCL, Section 2-413(d) ]

     Section 5.06. CHAIRMAN OF THE BOARD: Unless otherwise provided by
                   ---------------------
resolution of the Board of Directors, the Chairman of the Board, if there be
such an officer, shall be the chief
<PAGE>


executive and operating officer of the Corporation, shall preside at all
shareholders' meetings, and at all meetings of the Board of Directors. He shall
be ex officio a member of all standing committees of the Board of Directors.
   ----------
Subject to the supervision of the Board of Directors, he shall have general
charge of the business, affairs, property, and operation of the Corporation and
its officers, employees, and agents. He may sign (unless the President or a Vice
President shall have signed) certificates representing stock of the Corporation
authorized for issuance by the Board of Directors and shall have such other
powers and perform such other duties as may be assigned to him from time to time
by the Board of Directors.

     Section 5.07. PRESIDENT: Unless otherwise provided by resolution of the
                   ---------
Board of Directors, the President shall, at the request of or in the absence or
disability of the Chairman of the Board, or if no Chairman of the Board has been
chosen, he shall preside at all shareholders' meetings and at all meetings of
the Board of Directors and shall in general exercise the powers and perform the
duties of the Chairman of the Board. He may sign (unless the Chairman or a Vice
President shall have signed) certificates representing stock of the Corporation
authorized for issuance by the Board of Directors. Except as the Board of
Directors may otherwise order, he may sign in the name and on behalf of the
Corporation all deeds, bonds, contracts, or agreements. He shall exercise such
other powers and perform such other duties as from time to time may be assigned
to him by the Board of Directors.

     Section 5.08. VICE PRESIDENT: The Board of Directors shall, from time to
                   --------------
time, designate and elect one or more Vice Presidents (one or more of whom may
be designated Executive Vice President) who shall have such powers and perform
such duties as from time to time may be assigned to them by the Board of
Directors or the President. At the request or in the absence or disability of
the President, the Vice President (or, if there are two or more Vice Presidents,
the Vice President in order of seniority of tenure in such office or in such
other order as the Board of Directors may determine) may perform all the duties
of the President and, when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. Any Vice President may sign
(unless the Chairman, the President, or another Vice President shall have
signed) certificates representing stock of the Corporation authorized for
issuance by the Board of Directors.

     Section 5.09. TREASURER AND ASSISTANT TREASURERS: The Treasurer shall be
                   ----------------------------------
the principal financial and accounting officer of the Corporation and shall have
general charge of the finances and books of account of the Corporation. Except
as otherwise provided by the Board of Directors, he shall have general
supervision of the funds and property of the Corporation and of the performance
by the custodian of its duties with respect thereto. He may countersign (unless
an Assistant Treasurer or Secretary or Assistant Secretary shall have
countersigned) certificates representing stock of the Corporation authorized for
issuance by the Board of Directors. He shall render to the Board of Directors,
whenever directed by the Board, an account of the financial condition of the
Corporation and of all his transactions as Treasurer; and as soon as possible
after the close of each fiscal year he shall make and submit to the Board of
Directors a like report for such fiscal year. He shall cause to be prepared
annually a full and correct statement of the affairs of the Corporation,
including a balance sheet and a financial statement of operations for the
preceding fiscal year, which shall be submitted at the annual meeting of
shareholders and filed within twenty (20) days thereafter at the principal
office of the Corporation. He shall perform all the acts incidental to the
office of the Treasurer, subject to the control of the Board of Directors. Any
Assistant Treasurer may perform
<PAGE>


such duties of the Treasurer as the Treasurer or the Board of Directors may
assign, and, in the absence of the Treasurer, he may perform all the duties of
the Treasurer.

     Section 5.10. SECRETARY AND ASSISTANT SECRETARIES: The Secretary shall
                   -----------------------------------
attend to the giving and serving of all notices of the Corporation and shall
record all proceedings of the meetings of the shareholders and Directors in one
or more books to be kept for that purpose. He shall keep in safe custody the
seal of the Corporation and shall have charge of the records of the Corporation,
including the stock books and such other books and papers as the Board of
Directors may direct and such books, reports, certificates and other documents
required by law to be kept, all of which shall at all reasonable times be open
to inspection by any Director. He shall countersign (unless the Treasurer, an
Assistant Treasurer or an Assistant Secretary shall have countersigned)
certificates representing stock of the Corporation authorized for issuance by
the Board of Directors. He shall perform such other duties as appertain to his
office or as may be required by the Board of Directors. Any Assistant Secretary
may perform such duties of the Secretary as the Secretary or the Board of
Directors may assign, and, in the absence of the Secretary, he may perform all
the duties of the Secretary.

     Section 5.11. SUBORDINATE OFFICERS: The Board of Directors from time to
                   --------------------
time may appoint such other officers or agents as it may deem advisable, each of
whom shall have such title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The Board of
Directors from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities, and duties. [ MGCL, Section
2-412(b) ]

     Section 5.12. REMUNERATION: The salaries or other compensation of the
                   ------------
officers of the Corporation shall be fixed from time to time by resolution of
the Board of Directors, except that the Board of Directors may by resolution
delegate to any person or group of persons the power to fix the salaries or
other compensation of any subordinate officers or agents appointed in accordance
with the provisions of Section 5.11 hereof.


                                   ARTICLE VI
                                   ----------


                         CUSTODY OF SECURITIES AND CASH
                         ------------------------------

     Section 6.01. EMPLOYMENT OF A CUSTODIAN: The Corporation shall place and at
                   -------------------------
all times maintain in the custody of a Custodian (including any sub-custodian
for the Custodian) all funds, securities, and similar investments owned by the
Corporation. The Custodian shall be a bank having an aggregate capital, surplus,
and undivided profits of not less than $10,000,000. Subject to such rules,
regulations, and orders as the Securities and Exchange Commission may adopt as
necessary or appropriate for the protection of investors, the Corporation's
Custodian may deposit all or a part of the securities owned by the Corporation
in a sub-custodian or sub-custodians situated within or without the United
States. The Custodian shall be appointed and its remuneration fixed by the Board
of Directors. [ Investment Company Act, Section 17(f) ]

<PAGE>


     Section 6.02. CENTRAL CERTIFICATE SERVICE: Subject to such rules,
                   ---------------------------
regulations, and orders as the Securities and Exchange Commission may adopt as
necessary or appropriate for the protection of investors, the Corporation's
Custodian may deposit all or any part of the securities owned by the Corporation
in a system for the central handling of securities established by a national
securities exchange or national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, pursuant to which system all securities of
any particular class or series of any issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of such securities. [ Investment Company Act, Section
17(f) ]

     Section 6.03. CASH ASSETS: The cash proceeds from the sale of securities
                   -----------
and similar investments and other cash assets of the Corporation shall be kept
in the custody of a bank or banks appointed pursuant to Section 6.01 hereof, or
in accordance with such rules and regulations or orders as the Securities and
Exchange Commission may from time to time prescribe for the protection of
investors, except that the Corporation may maintain a checking account or
accounts in a bank or banks, each having an aggregate capital, surplus, and
undivided profits of not less than $10,000,000, provided that the balance of
                                                --------
such account or the aggregate balances of such accounts shall at no time exceed
the amount of the fidelity bond, maintained pursuant to the requirements of the
Investment Company Act and rules and regulations thereunder, covering the
officers or employees authorized to draw on such account or accounts. [
Investment Company Act, Section 17(f) ]

     Section 6.04. FREE CASH ACCOUNTS: The Corporation may, upon resolution of
                   ------------------
its Board of Directors, maintain a petty cash account free of the foregoing
requirements of this Article VI in an amount not to exceed $500, provided that
                                                                 --------
such account is operated under the imprest system and is maintained subject to
adequate controls approved by the Board of Directors over disbursements and
reimbursements including, but not limited to, fidelity bond coverage for persons
having access to such funds. [ Investment Company Act, Rule 17f-3 ]

     Section 6.05. ACTION UPON TERMINATION OF CUSTODIAN AGREEMENT: Upon
                   ----------------------------------------------
resignation of a custodian of the Corporation or inability of a custodian to
continue to serve, the Board of Directors shall promptly appoint a successor
custodian, but in the event that no successor custodian can be found who has the
required qualifications and is willing to serve, the Board of Directors shall
call as promptly as possible a special meeting of the shareholders to determine
whether the Corporation shall function without a custodian or shall be
liquidated. If so directed by vote of the holders of a majority of the
outstanding shares of stock of the Corporation, the custodian shall deliver and
pay over all property of the Corporation held by it as specified in such vote.


                                  ARTICLE VII
                                  -----------


                 EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
                 ----------------------------------------------

     Section 7.01. EXECUTION OF INSTRUMENTS: All deeds, documents, transfers,
                   ------------------------
contracts, agreements, requisitions or orders, promissory notes, assignments,
endorsements, checks and drafts for the payment of money by the Corporation, and
other instruments requiring execution by the Corporation shall be signed by the
Chairman, the President, a Vice President, or the Treasurer, or as
<PAGE>


the Board of Directors may otherwise, from time to time, authorize. Any such
authorization may be general or confined to specific instances.

     Section 7.02. VOTING OF SECURITIES: Unless otherwise ordered by the Board
                   --------------------
of Directors, the Chairman, the President, or any Vice President shall have full
power and authority on behalf of the Corporation to attend and to act and to
vote, or in the name of the Corporation to execute proxies to vote, at any
meeting of shareholders of any company in which the Corporation may hold stock.
At any such meeting such officer shall possess and may exercise (in person or by
proxy) any and all rights, powers, and privileges incident to the ownership of
such stock. The Board of Directors may by resolution from time to time confer
like powers upon any other person or persons. [ MGCL, Section 2-509 ]


                                  ARTICLE VIII
                                  ------------


                                 CAPITAL STOCK
                                 -------------

     Section 8.01. CERTIFICATE OF STOCK:
                   --------------------

          (a)
Certificates of stock of the Corporation shall be in the form approved by the
Board of Directors. Except in the case of shares of the New Asia Fund Series and
the International Discovery Fund Series, where no stock certificates shall be
issued for shares purchased or otherwise acquired after May 1, 1991, a
shareholder, upon written request shall be entitled to have a certificate,
signed in the name of the Corporation by the Chairman or the President, or any
Vice President and countersigned by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, certifying the number and kind of
shares owned by him in the Corporation. Such certificate may be sealed with the
corporate seal of the Corporation. Such signatures may be either manual or
facsimile signatures and the seal may be either facsimile or any other form of
seal. The Corporation reserves the right to require the surrender of outstanding
certificates representing shares of the New Asia Fund Series and the
International Discovery Fund Series, if the Board of Directors so determines. [
MGCL, Sections 2-210(a)(c), 2-212 ]

        (Section 8.01.(a) Certificate of Stock, as amended May 1, 1991)
                          --------------------

          (b)
In case any officer, transfer agent, or registrar who shall have signed any such
certificate, or whose facsimile signature has been placed thereon, shall cease
to be such an officer, transfer agent or registrar (because of death,
resignation or otherwise) before such certificate is issued, such certificate
may be issued and delivered by the Corporation with the same effect as if he
were such officer, transfer agent, or registrar at the date of issue. [ MGCL,
Section 2-212(c) ]

          (c)
The number of each certificate issued, the name of the person owning the shares
represented thereby, the number and class of such shares, and the date of
issuance shall be entered upon the stock books of the Corporation at the time of
issuance.

          (d)
Every certificate exchanged, surrendered for redemption, or otherwise returned
to the Corporation shall be marked "Cancelled" with the date of cancellation.
<PAGE>


     Section 8.02. TRANSFER OF CAPITAL STOCK:
                   -------------------------

          (a)
Shares of stock of the Corporation shall be transferable only upon the books of
the Corporation kept for such purpose and, if one or more certificates
representing such shares have been issued, upon surrender to the Corporation or
its transfer agent or agents of such certificate or certificates duly endorsed,
or accompanied by appropriate evidence of assignment, transfer, succession, or
authority to transfer.

          (b)
The Corporation shall be entitled to treat the holder of record of any share of
stock as the absolute owner thereof for all purposes, and accordingly shall not
be bound to recognize any legal, equitable, or other claim or interest in such
share on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise expressly provided by the statutes of
the State of Maryland.

     Section 8.03. TRANSFER AGENTS AND REGISTRARS: The Board of Directors may,
                   ------------------------------
from time to time, appoint or remove transfer agents and registrars of transfers
of shares of stock of the Corporation, and it may appoint the same person as
both transfer agent and registrar. Upon any such appointment being made all
certificates representing shares of capital stock thereafter issued shall be
countersigned by one of such transfer agents or by one of such registrars of
transfers and shall not be valid unless so countersigned.

     Section 8.04. TRANSFER REGULATIONS: The shares of stock of the Corporation
                   --------------------
may be freely transferred, and the Board of Directors may, from time to time,
adopt lawful rules and regulations with reference to the method of transfer of
the shares of stock of the Corporation.

     Section 8.05. FIXING OF RECORD DATE: The Board of Directors may fix in
                   ---------------------
advance a date as a record date for the determination of the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion, or exchange of stock, or for any other proper purpose, provided that
                                                                   --------
such record date shall be a date not more than sixty (60) days nor, in the case
of a meeting of shareholders, less than ten (10) days prior to the date on which
the particular action, requiring such determination of shareholders, is to be
taken. In such case, only such shareholders as shall be shareholders of record
on the record date so fixed shall be entitled to such notice of, and to vote at,
such meeting or adjournment, or to give such consent, or to receive payment of
such dividend or other distribution, or to receive such allotment of rights, or
to exercise such rights, or to take other action, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
any such record date. A meeting of shareholders convened on the date for which
it was called may be adjourned from time to time without notice to a date not
more than one hundred twenty (120) days after the original record date. [ MGCL,
Section 2-511 ]

     Section 8.06. LOST, STOLEN OR DESTROYED CERTIFICATES: Before issuing a new
                   --------------------------------------
certificate for stock of the Corporation alleged to have been lost, stolen, or
destroyed the Board of Directors, or any officer authorized by the Board, may,
in its discretion, require the owner of the lost, stolen, or destroyed
certificate (or his legal representative) to give the Corporation a bond or
other indemnity, in such form and in such amount as the Board or any such
officer may direct and with
<PAGE>


such surety or sureties as may be satisfactory to the Board or any such officer,
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction of any such
certificate or the issuance of such new certificate. The issuance of a new
certificate under such circumstances shall not constitute an overissue of the
shares represented thereby. If a certificate representing shares of the New Asia
Fund or International Discovery Fund Series is alleged to have been lost, stolen
or destroyed, no new certificate will be issued. Instead, subject to
satisfaction of the bonding or other indemnity provisions set forth in this
Section 8.06, ownership of the shares formerly represented by the lost, stolen
or destroyed certificate shall be recorded on the books of the Corporation or
its agent. [ MGCL, Section 2-213 ]

 (Section 8.06. Lost, Stolen or Destroyed Certificates, as amended May 1, 1991)
                --------------------------------------


                                   ARTICLE IX
                                   ----------


                            FISCAL YEAR, ACCOUNTANT
                            -----------------------

     Section 9.01. FISCAL YEAR: The fiscal year of the T. Rowe Price
                   -----------
International Stock Fund, T. Rowe Price International Growth & Income Fund, T.
Rowe Price Global Stock Fund, T. Rowe Price International Discovery Fund, T.
Rowe Price Emerging Markets Stock Fund, T. Rowe Price European Stock Fund, T.
Rowe Price Japan Fund, T. Rowe Price Latin America Fund, T. Rowe Price New Asia
Fund, and any future international equity series of the Corporation shall be the
twelve (12) calendar months beginning on the 1st day of November in each year
and ending on the last day of the following October, and the fiscal year of the
T. Rowe Price Global Bond Fund, T. Rowe Price International Bond Fund, T. Rowe
Price Emerging Markets Bond Fund, and any future international income series of
the Corporation shall be the twelve (12) calendar months beginning on the 1st
day of January in each year and ending on the last day of the following
December, or such other period of twelve (12) calendar months as the Board of
Directors may by resolution prescribe.

           (Section 9.01. Fiscal Year, as amended September 30, 1993)
                          -----------

     Section 9.02. ACCOUNTANT:
                   ----------

          (a)
The Corporation shall employ an independent public accountant or firm of
independent public accountants for each series of the Corporation to examine the
accounts of the Corporation with respect to such series and to sign and certify
financial statements filed by the Corporation with respect to such series. The
certificates and reports of the accountant(s) shall be addressed both to the
Board of Directors and to the shareholders. The Corporation may employ a
different accountant with respect to each series.

          (b)
A majority of the members of the Board of Directors who are not interested
persons (as such term is defined in the Investment Company Act) of the
Corporation shall select the accountant for each series, by vote cast in person,
at any meeting held before the first annual shareholder's meeting, and
thereafter shall select the accountant for such series annually, by vote cast in
person, at a meeting held within thirty (30) days before or after the beginning
of the fiscal year of
<PAGE>


the Corporation, within thirty (30) days before the annual shareholders' meeting
for such series in that year, or within such other period of time as may be
allowed under the Investment Company Act of 1940. Such selection shall be
submitted for ratification or rejection at the next succeeding annual
shareholders' meeting for such series. If such meeting shall reject such
selection, the accountant for such series shall be selected by a majority vote
of the outstanding voting securities of such series of the Corporation, either
at the meeting at which the rejection occurred or at a subsequent meeting of
shareholders for such series called for the purpose.

          (c)
Any vacancy occurring between annual meetings, due to the resignation or
termination of the accountant of a series, may be filled by the vote of a
majority of those members of the Board of Directors who are not interested
persons (as so defined) of the Corporation, cast in person at a meeting called
for the purpose of voting on such action.

          (d)
The employment of the accountant of a series shall be conditioned upon the right
of such series of the Corporation by a vote of a majority of the outstanding
voting securities of such series at any meeting called for the purpose to
terminate such employment forthwith without any penalty. [ Investment Company
Act, Section 32(a) ]


                                   ARTICLE X
                                   ---------


                         INDEMNIFICATION AND INSURANCE
                         -----------------------------

     Section 10.01. INDEMNIFICATION AND PAYMENT OF EXPENSES IN ADVANCE: The
                    --------------------------------------------------
Corporation shall indemnify any individual ("Indemnitee") who is a present or
former director, officer, employee, or agent of the Corporation, or who is or
has been serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, who, by reason of his position was, is, or is threatened to be
made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative
(hereinafter collectively referred to as a "Proceeding") against any 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 Maryland law. 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 Maryland law.
Subject to any applicable limitations and requirements set forth in the
Corporation's Articles of Incorporation and in these By-Laws, any payment of
indemnification or advance of expenses shall be made in accordance with the
procedures set forth in Maryland law.

     Notwithstanding the foregoing, nothing herein shall protect or purport to
protect any Indemnitee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office
("Disabling Conduct").

     Anything in this Article X to the contrary notwithstanding, no
indemnification shall be made by the Corporation to any Indemnitee unless:
<PAGE>



          (a)
there is a final decision on the merits by a court or other body before whom the
Proceeding was brought that the Indemnitee was not liable by reason of Disabling
Conduct; or

          (b)
in the absence of such a decision, there is a reasonable determination, based
upon a review of the facts, that the Indemnitee was not liable by reason of
Disabling Conduct, which determination shall be made by:

               (i)
the vote of a majority of a quorum of directors who are neither "interested
persons" of the Corporation as defined in Section 2(a)(19) of the Investment
Company Act, nor parties to the Proceeding; or

               (ii)  an independent legal counsel in a written opinion.

     Anything in this Article X to the contrary notwithstanding, any advance of
expenses by the Corporation to any Indemnitee shall be made only upon the
undertaking by such Indemnitee to repay the advance unless it is ultimately
determined that such Indemnitee is entitled to indemnification as above
provided, and only if one of the following conditions is met:

          (a)   the Indemnitee provides a security for his undertaking; or

          (b)
the Corporation shall be insured against losses arising by reason of any lawful
advances; or

          (c)
there is a determination, based on a review of readily available facts, that
there is reason to believe that the Indemnitee will ultimately be found entitled
to indemnification, which determination shall be made by:

               (i)
a majority of a quorum of directors who are neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of the Investment Company Act, nor
parties to the Proceeding; or

               (ii)  an independent legal counsel in a written opinion.

     Section 10.02. INSURANCE OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS: To
                    ------------------------------------------------------
the fullest extent permitted by applicable Maryland law and by Section 17(h) of
the Investment Company Act, as from time to time amended, the Corporation may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the Corporation, or who is or was
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise, against any liability asserted against him and incurred by him in or
arising out of his position, whether or not the Corporation would have the power
to indemnify him against such liability. [ MGCL, Section 2-418(k) ]


<PAGE>


                                   ARTICLE XI
                                   ----------


                                   AMENDMENTS
                                   ----------

     Section 11.01. GENERAL: Except as provided in Section 11.02 hereof, all
                    -------
By-Laws of the Corporation, whether adopted by the Board of Directors or the
shareholders, shall be subject to amendment, alteration, or repeal, and new
By-Laws may be made, by the affirmative vote of a majority of either:

          (a)
the holders of record of the outstanding shares of stock of the Corporation
entitled to vote, at any annual or special meeting the notice or waiver of
notice of which shall have specified or summarized the proposed amendment,
alteration, repeal, or new By-Law; or

          (b)
the Directors present at any regular or special meeting at which a quorum is
present if the notice or waiver of notice thereof or material sent to the
Directors in connection therewith on or prior to the last date for the giving of
such notice under these By-Laws shall have specified or summarized the proposed
amendment, alteration, repeal, or new By-Law.

     Section 11.02. BY SHAREHOLDERS ONLY:
                    --------------------

          (a)
No amendment of any section of these By-Laws shall be made except by the
shareholders of the Corporation if the shareholders shall have provided in the
By-Laws that such section may not be amended, altered, or repealed except by the
shareholders.

          (b)
From and after the issue of any shares of the Capital Stock of the Corporation,
no amendment of this Article XI shall be made except by the shareholders of the
Corporation.


                                  ARTICLE XII
                                  -----------


                                 MISCELLANEOUS
                                 -------------

     Section 12.01. USE OF THE TERM "ANNUAL MEETING:" The use of the term
                    ---------------------------------
"annual meeting" in these By-Laws shall not be construed as implying a
requirement that a shareholder meeting be held annually.


 The Custodian Agreement dated January 28, 1998, as amended, between State
Street Bank and Trust Company and T. Rowe Price Funds.

<PAGE>

                              CUSTODIAN AGREEMENT


     THIS AGREEMENT is made as of January 28, 1998 by and between each entity
set forth on Appendix A hereto (as such Appendix A may be amended from time to
time) which executes a copy of this Agreement (each referred to herein as the
"FUND"), and State Street Bank and Trust Company, a Massachusetts trust company
with its principal place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "CUSTODIAN").

                                  WITNESSETH:

     WHEREAS, each Fund desires to retain the Custodian to act as custodian of
certain of the assets of the Fund, and the Custodian is willing to provide such
services to each Fund, upon the terms and conditions hereinafter set forth; and

     WHEREAS, except as otherwise set forth herein, this Agreement is intended
to supersede that certain custodian contract among the parties hereto dated
September 28, 1987, as amended; and

     WHEREAS, the Funds have retained CHASE MANHATTAN BANK, N.A. to act as the
Funds' custodian with respect to the assets of each such Fund to be held outside
of the United States of America (except as otherwise set forth in this
Agreement) pursuant to a written custodian agreement (the "FOREIGN CUSTODIAN
AGREEMENT"),

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, each of the parties hereto agrees as follows:

SECTION 1.  EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT.

     Each Fund hereby employs the Custodian as the custodian of certain of its
assets, including those securities it desires to be held within the United
States of America ("DOMESTIC SECURITIES") and those securities it desires to be
held outside the United States of America (the "UNITED STATES") which are (i)
not held on the Funds' behalf by CHASE MANHATTAN BANK, N.A. pursuant to the
Foreign Custodian Agreement and (ii) described with greater particularity in
Section 3 hereof (such securities shall be referred to herein as "FOREIGN
SECURITIES").  Each Fund agrees to deliver to the Custodian all domestic
securities, foreign securities and cash owned by it from time to time, and all
payments of income, payments of principal or capital distributions received by
it with respect to

<PAGE>

securities held by it hereunder, and the cash consideration received by it for
such new or treasury shares of capital stock of each Fund as may be issued or
sold from time to time ("SHARES").  The Custodian shall not be responsible for
any property of any Fund held or received by such Fund (i) not delivered to the
Custodian, or (ii) held in the custody of CHASE MANHATTAN BANK N.A.

     The Custodian is authorized to employ one or more sub-custodians located
within the United States, provided that the Custodian shall have obtained the
written acknowledgment of the Fund with respect to such employment.  The
Custodian is authorized to employ sub-custodians located outside the United
States as noted on Schedule A attached hereto (as such Schedule A may be amended
from time to time).  The Custodian shall have no more or less responsibility or
liability to any Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian and
shall not release any sub-custodian from any responsibility or liability unless
so agreed in writing by the Custodian and the applicable Fund.  With the
exception of State Street Bank and Trust Company (London branch), the Custodian
shall not be liable for losses arising from the bankruptcy, insolvency or
receivership of any sub-custodian located outside the United States.

SECTION 2.  DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUNDS HELD
            BY THE CUSTODIAN IN THE UNITED STATES.

     SECTION 2.1
HOLDING SECURITIES.  The Custodian shall hold and physically segregate for the
account of each Fund all 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 2.9 in a clearing agency
which acts as a securities depository or in a book-entry system authorized by
the United States Department of the Treasury and certain federal agencies (each,
a "U.S. 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 (the "DIRECT PAPER
SYSTEM") pursuant to Section 2.10.

     SECTION 2.2
DELIVERY OF INVESTMENTS.  The Custodian shall release and deliver domestic
investments owned by a Fund held by the Custodian or in a U.S. Securities System
account of the Custodian or in the Custodian's Direct Paper System account
("DIRECT PAPER SYSTEM ACCOUNT") only upon receipt of Proper Instructions, which
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

may be continuing instructions when agreed to by the parties, and only in the
following cases:

     1)Upon sale of such investments for the account of the Fund and
            receipt of payment therefor;

     2)Upon the receipt of payment in connection with any repurchase
            agreement related to such investments entered into by the Fund;

     3)
            In the case of a sale effected through a U.S. Securities System, in
            accordance with the provisions of Section 2.9 hereof;

     4)
            To the depository agent in connection with tender or other similar
            offers for portfolio investments of the Fund;

     5)
            To the issuer thereof or its agent when such investments 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)
            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 2.8 or into the name or nominee name of any
            sub-custodian appointed pursuant to Section 1; or for exchange for a
            different number of bonds, certificates or other evidence
            representing the same aggregate face amount or number of units;
            provided that, in any such case, the new securities are to be
            delivered to the Custodian;

     7)
            Upon the sale of such investments for the account of the Fund, to
            the broker or its clearing agent, against a receipt, for examination
            in accordance with usual "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 investments
            prior to receiving payment for such investments except as may arise
            from the Custodian's own negligence or willful misconduct;


<PAGE>

     8)For exchange or conversion pursuant to any plan of merger,
            consolidation, recapitalization, reorganization or readjustment of
            the investments of the issuer of such investments, or pursuant to
            provisions for conversion contained in such investments, or pursuant
            to any deposit agreement; provided that, in any such case, the new
            investments and cash, if any, are to be delivered to the Custodian;

     9)In the case of warrants, rights or similar investments, the
            surrender thereof in the exercise of such warrants, rights or
            similar investments or the surrender of interim receipts or
            temporary investments for definitive investments; provided that, in
            any such case, the new investments and cash, if any, are to be
            delivered to the Custodian or against a receipt;

     10)
            For delivery in connection with any loans of investments made on
            behalf of the Fund, but only against receipt of adequate collateral
            as agreed upon from time to time by the Fund or its duly-appointed
            agent (which may be in the form of cash or obligations issued by the
            United States government, its agencies or instrumentalities, or such
            other property as the Fund may agree), 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 investments owned by the Fund prior
            to the receipt of such collateral in the absence of the Custodian's
            negligence or willful misconduct;

     11)
            For delivery as security in connection with any borrowing 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 and delivered for
            that purpose;

     12)
            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"),
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

            relating to compliance with the rules of The Options Clearing
            Corporation, the rules of any registered national securities
            exchange or of any similar organization or organizations, or under
            the Investment Company Act of 1940, as amended from time to time
            (the "1940 ACT"), regarding escrow or other arrangements in
            connection with transactions by the Fund;

     13)
            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, or any similar organization or organizations,
            or under the 1940 Act, regarding account deposits in connection with
            transactions by the Fund;

     14)
            Upon receipt of instructions from the transfer agent for the Fund
            (the "TRANSFER AGENT"), 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, statement of additional information or other offering
            documents (all, as amended, supplemented or revised from time to
            time, the "PROSPECTUS"), in satisfaction of requests by holders of
            Shares for repurchase or redemption; and

     15)
            For any other purpose, but only upon receipt of Proper Instructions
            specifying (a) the investments to be delivered, (b) setting forth
            the purpose for which such delivery is to be made, and (c) naming
            the person or persons to whom delivery of such investments shall be
            made.

     SECTION 2.3
REGISTRATION OF INVESTMENTS.  Domestic investments 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 2.8 or in the
name or nominee name of any sub-custodian appointed pursuant to Section 1.  All
securities accepted by the Custodian on behalf of the Fund under the terms of

<PAGE>

this Agreement shall be in good deliverable form.  If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund of relevant corporate actions including,
without limitation, pendency of calls, maturities, tender or exchange offers.

     SECTION 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 Agreement, 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 1940 Act.  Monies held by the Custodian for the Fund may be deposited
by the Custodian to its credit as custodian in the banking department of the
Custodian or in such other banks or trust companies as it may in its discretion
deem necessary or desirable in the performance of its duties hereunder;
provided, however, that every such bank or trust company shall be qualified to
act as a custodian under the 1940 Act, 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 or the board of
trustees of the applicable Fund (as appropriate and in each case, the "BOARD").
 Such funds shall be deposited by the Custodian in its capacity as custodian and
shall be withdrawable by the Custodian only in that capacity.

     SECTION 2.5
COLLECTION OF INCOME.  Subject to the provisions of Section 2.3, the Custodian
shall collect on a timely basis all income and other payments with respect to
United States registered investments held hereunder to which the Fund shall be
entitled either by law or pursuant to custom in the investments business, and
shall collect on a timely basis all income and other payments with respect to
United States bearer investments if, on the date of payment by the issuer, such
investments are held by the Custodian or its agent thereof and shall credit such
income, 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, collect interest when due on investments held hereunder, and receive
and collect all stock dividends, rights and other items of like nature as and
when they become due and payable.  With respect to income due the Fund on United
States investments of the Fund loaned (pursuant to the provisions of Section 2.2
(10))
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

in accordance with a separate agreement between the Fund and the Custodian in
its capacity as lending agent, collection thereof shall be in accordance with
the terms of such agreement.  Except as otherwise set forth in the immediately
preceding sentence, income due the Fund on United States investments of the Fund
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.

     SECTION 2.6
PAYMENT OF FUND MONIES.  Upon receipt of Proper Instructions, which may be
continuing instructions when agreed to by the parties, the Custodian shall, from
monies of the Fund held by the Custodian, pay out such monies in the following
cases only:

     1)Upon the purchase of domestic investments, options, futures
            contracts or options on futures contracts for the account of the
            Fund but only (a) against the delivery of such investments, 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 1940 Act to act as a custodian and has been
            designated by the Custodian as its agent for this purpose in
            accordance with Section 2.8) registered in the name of the Fund or
            in the name of a nominee of the Custodian referred to in Section 2.3
            hereof or in proper form for transfer; (b) in the case of a purchase
            effected through a U.S. Securities System, in accordance with the
            conditions set forth in Section 2.9 hereof; (c) in the case of a
            purchase involving the Direct Paper System, in accordance with the
            conditions set forth in Section 2.10 hereof; or (d) for transfer to
            a time deposit account of the Fund in any bank, whether domestic or
            foreign, such transfer may be effected prior to receipt of a
            confirmation from a broker and/or the applicable bank pursuant to
            Proper Instructions;

     2)
            In connection with conversion, exchange or surrender of investments
            owned by the Fund as set forth in Section 2.2 hereof;


<PAGE>

     3)
            For the redemption or repurchase of Shares as set forth in Section 4
            hereof;

     4)
            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 fees, accounting fees,
            transfer agent fees, 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)      For the payment of any dividends declared by the Board;

     6)For payment of the amount of dividends received in respect of
            investments sold short;

     7)
            For repayment of a loan upon redelivery of pledged securities and
            upon surrender of the note(s), if any, evidencing the loan; or

     8)
            In connection with any repurchase agreement entered into by the Fund
            with respect to which the collateral is held by the Custodian, the
            Custodian shall act as the Fund's "securities intermediary"( as that
            term is defined in Part 5 of Article 8 of the Massachusetts Uniform
            Commercial Code, as amended), and, as securities intermediary, the
            Custodian shall take the following steps on behalf of the Fund: (a)
            provide the Fund with notification of the receipt of the purchased
            securities, and (b), by book-entry identify on the books of the
            Custodian as belonging to the Fund uncertificated securities
            registered in the name of the Fund and held in the Custodian's
            account at the Federal Reserve Bank.  In connection with any
            repurchase agreement entered into by the Fund with respect to which
            the collateral is not held by the Custodian, the Custodian shall (a)
            provide the Fund with such notification as it may receive with
            respect to such collateral, and (b), by book-entry or otherwise,
            identify as belonging to the Fund securities as shown in the
            Custodian's account on the books of the entity appointed by the Fund
            to hold such collateral.

     9)
            For any other purpose, but only upon receipt of Proper Instructions
            specifying (a) the amount of such payment,
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

            (b) setting forth the purpose for which such payment is to be made,
            and (c) naming the person or persons to whom such payment is to be
            made.

     SECTION 2.7
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.

     SECTION 2.8
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 1940 Act to act as a custodian, as its agent to carry
out such of the provisions of this Section 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any such agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.

     SECTION 2.9
DEPOSIT OF INVESTMENTS IN U.S. SECURITIES SYSTEMS.  The Custodian may deposit
and/or maintain domestic investments owned by the Fund in a U.S. Securities
System in accordance with applicable Federal Reserve Board and United States
Securities and Exchange Commission ("SEC") rules and regulations, if any,
subject to the following provisions:

     1)
            The Custodian may keep domestic investments of the Fund in a U.S.
            Securities System provided that such investments are represented in
            an account of the Custodian in the U.S. Securities System
            ("ACCOUNT") which shall not include any assets of the Custodian
            other than assets held as a fiduciary, custodian or otherwise for
            customers;

     2)
            The records of the Custodian with respect to domestic investments of
            the Fund which are maintained in a U.S. Securities System shall
            identify by book-entry those investments belonging to the Fund;

     3)
            The Custodian shall pay for domestic investments purchased for the
            account of the Fund upon (i) receipt of advice from the U.S.
            Securities System that such investments have been transferred to the
            Account, and

<PAGE>

            (ii) the making of an entry on the records of the Custodian to
            reflect such payment and transfer for the account of the Fund.  The
            Custodian shall transfer domestic investments sold for the account
            of the Fund upon (i) receipt of advice from the U.S. Securities
            System that payment for such investments 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 U.S. Securities System of
            transfers of domestic investments 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. Upon 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 U.S. Securities System for
            the account of the Fund;

     4)
            The Custodian shall provide the Fund with any report obtained by the
            Custodian on the U.S. Securities System's accounting system,
            internal accounting control and procedures for safeguarding domestic
            investments deposited in the U.S. Securities System;

     5)
            The Custodian shall have received from the Fund the initial or
            annual certificate, as the case may be, described in Section 10
            hereof; and

     6)
            Anything to the contrary in this Agreement notwithstanding, the
            Custodian shall be liable to the Fund for any loss or damage to the
            Fund resulting from use of the U.S. Securities System by reason of
            any negligence, misfeasance or misconduct of the Custodian or any of
            its agents or of any of its or their employees, or from failure of
            the Custodian or any such agent to enforce effectively such rights
            as it may have against the U.S. Securities System.  At the election
            of the Fund, the Fund shall be entitled to be subrogated to the
            rights of the Custodian with respect to any claim against the U.S.
            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
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<PAGE>

            the Fund has not been made whole for any such loss, expense or
            damage.

     SECTION 2.10
FUND ASSETS HELD IN THE DIRECT PAPER SYSTEM.  The Custodian may deposit and/or
maintain investments owned by the Fund in the Direct Paper System subject to the
following provisions:

     1)
            No transaction relating to investments in the Direct Paper System
            will be effected in the absence of Proper Instructions;

     2)
            The Custodian may keep investments of the Fund in the Direct Paper
            System only if such investments are represented in the Direct Paper
            System Account, which account 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 investments of the Fund
            which are maintained in the Direct Paper System shall identify by
            book-entry those investments belonging to the Fund;

     4)
            The Custodian shall pay for investments 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 investments to the account
            of the Fund.  The Custodian shall transfer investments 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 Direct Paper System
            for the account of the Fund; and

     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.

     SECTION 2.11
SEGREGATED ACCOUNT.  The Custodian shall, upon receipt of Proper Instructions,
establish and maintain a segregated

<PAGE>

account or accounts for and on behalf of the Fund, into which account or
accounts may be transferred cash and/or investments, including investments
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 investments 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 1940 Act Release No. 10666, or any other procedures
subsequently required under the 1940 Act relating to the maintenance of
segregated accounts by registered investment companies, and (iv) for other
purposes, but only, in the case of clause (iv) upon receipt of Proper
Instructions specifying (a) the investments to be delivered, (b) setting forth
the purpose for which such delivery is to be made, and (c) naming the person or
persons to whom delivery of such investments shall be made.

     SECTION 2.12
OWNERSHIP CERTIFICATES FOR TAX PURPOSES.  The Custodian shall execute ownership
and other certificates and affidavits for all United States federal and state
tax purposes in connection with receipt of income or other payments with respect
to domestic investments of the Fund held by it hereunder and in connection with
transfers of such investments.

     SECTION 2.13
PROXIES.  The Custodian shall, with respect to the domestic investments held
hereunder, cause to be promptly executed by the registered holder of such
investments, if the investments are registered otherwise than in the name of the
Fund or a nominee of the Fund, 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 received by the Custodian and all
notices received relating to such investments.

     SECTION 2.14
COMMUNICATIONS RELATING TO FUND INVESTMENTS.  Subject to the provisions of
Section 2.3, the Custodian shall transmit promptly to the Fund all written
information (including, without limitation, pendency of calls and maturities of
domestic investments and expirations of rights in connection therewith and
notices of
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<PAGE>

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 in connection
with the domestic investments being held for the Fund pursuant to this
Agreement.  With respect to tender or exchange offers, the Custodian shall
transmit to the Fund all written information received by the Custodian, any
agent appointed pursuant to Section 2.8 hereof, or any sub-custodian appointed
pursuant to Section 1 hereof, from issuers of the domestic investments 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 at least two (2) New York Stock Exchange business
days 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) such notice.
 Where the Fund provides the Custodian with less than two (2) New York Stock
Exchange business days notice of its desired action, 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 agree to alternative procedures with
respect to such two (2) New York Stock Exchange business days notice period on a
selective and individual basis.

     SECTION 2.15
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 investments, futures contracts and
options on futures contracts, including domestic investments deposited and/or
maintained in a U.S. Securities System, relating to the services provided by the
Custodian under this Agreement.  Such reports shall be of sufficient scope and
detail, as may reasonably be required by the Fund, to provide reasonable
assurance that any material inadequacies would be disclosed by such examination,
and if there are no such inadequacies the reports shall so state.

SECTION 3.  DUTIES OF THE CUSTODIAN WITH RESPECT TO CERTAIN PROPERTY OF THE
            FUNDS HELD OUTSIDE OF THE UNITED STATES

     SECTION 3.1
DEFINITIONS. The following capitalized terms shall have the respective following
meanings:

"FOREIGN SECURITIES SYSTEM" means a clearing agency or a securities depository
listed on Schedule A hereto.

<PAGE>


"FOREIGN SUB-CUSTODIAN" means a foreign banking institution set forth on
Schedule A hereto.

     SECTION 3.2
HOLDING SECURITIES.  The Custodian shall identify on its books as belonging to
the Funds the foreign securities held by each Foreign Sub-Custodian or Foreign
Securities System.  The Custodian may hold foreign securities for all of its
customers, including the Funds, with any Foreign Sub-Custodian in an account
that is identified as belonging to the Custodian for the benefit of its
customers, provided however, that (i) the records of the Custodian with respect
to foreign securities of the Funds which are maintained in such account shall
identify those securities as belonging to the Funds and (ii) the Custodian shall
require that securities so held by the Foreign Sub-Custodian be held separately
from any assets of such Foreign Sub-Custodian or of other customers of such
Foreign Sub-Custodian.

     SECTION 3.3
FOREIGN SECURITIES SYSTEMS.  Foreign securities shall be maintained in a Foreign
Securities System in a designated country only through arrangements implemented
by the Foreign Sub-Custodian in such country pursuant to the terms of this
Agreement.

     SECTION 3.4  TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.

     3.4.1.
Delivery of Foreign Securities.  The Custodian or a Foreign Sub-Custodian shall
- -------- -- ------- -----------
release and deliver foreign securities of the Funds held by such Foreign
Sub-Custodian, or in a Foreign Securities System account, only upon receipt of
Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:

     (i)
            upon the sale of such foreign securities for the Funds in accordance
            with reasonable market practice in the country where such foreign
            securities are held or traded, including, without limitation: (A)
            delivery against expectation of receiving later payment; or (B) in
            the case of a sale effected through a Foreign Securities System in
            accordance with the rules governing the operation of the Foreign
            Securities System;

     (ii)
            in connection with any repurchase agreement related to foreign
            securities;

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<PAGE>

     (iii)
            to the depository agent in connection with tender or other similar
            offers for foreign securities of the Funds;

     (iv)
            to the issuer thereof or its agent when such foreign securities are
            called, redeemed, retired or otherwise become payable;

     (v)
            to the issuer thereof, or its agent, for transfer into the name of
            the Custodian (or the name of the respective Foreign Sub-Custodian
            or of any nominee of  the Custodian or such Foreign Sub-Custodian)
            or for exchange for a different number of bonds, certificates or
            other evidence representing the same aggregate face amount or number
            of units;

     (vi)
            to brokers, clearing banks or other clearing agents for examination
            or trade execution in accordance with market custom; provided that
            in any such case the Foreign Sub-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 Foreign Sub-Custodian's own negligence
            or willful misconduct;

     (vii)for exchange or conversion pursuant to any plan of merger,
            consolidation, recapitalization, reorganization 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;

     (viii)
            in the case of warrants, rights or similar foreign 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;

     (ix)
            or delivery as security in connection with any borrowing by the
            Funds requiring a pledge of assets by the Funds;

     (x)in connection with trading in options and futures contracts,
            including delivery as original margin and variation margin;


<PAGE>

     (xi)    in connection with the lending of foreign securities; and

     (xii)
            for any other proper purpose, but only upon receipt of Proper
            Instructions specifying the foreign securities to be delivered,
            setting forth the purpose for which such delivery is to be made,
            declaring such purpose to be a proper Fund purpose, and naming the
            person or persons to whom delivery of such securities shall be made.

     3.4.2.
Payment of Fund Monies.  Upon receipt of Proper Instructions, which may be
- ------- -- ---- -------
continuing instructions when deemed appropriate by the parties, the Custodian
shall pay out, or direct the respective Foreign Sub-Custodian or the respective
Foreign Securities System to pay out, monies of a Fund in the following cases
only:

     (i)upon the purchase of foreign securities for the Fund, unless
            otherwise directed by Proper Instructions, by (A) delivering money
            to the seller thereof or to a dealer therefor (or an agent for such
            seller or dealer) against expectation of receiving later delivery of
            such foreign securities; or (B) in the case of a purchase effected
            through a Foreign Securities System, in accordance with the rules
            governing the operation of such Foreign Securities System;

     (ii)
            in connection with the conversion, exchange or surrender of foreign
            securities of the Fund;

     (iii)
            for the payment of any expense or liability of the Fund, including
            but not limited to the following payments:  interest, taxes,
            investment advisory fees, transfer agency fees, fees under this
            Agreement, legal fees, accounting fees, and other operating
            expenses;

     (iv)
            for the purchase or sale of foreign exchange or foreign exchange
            contracts for the Fund, including transactions executed with or
            through the Custodian or its Foreign Sub-Custodians;

     (v)in connection with trading in options and futures contracts,
            including delivery as original margin and variation margin;

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<PAGE>

     (vii)
            in connection with the borrowing or lending of foreign securities;
            and

     (viii)
            for any other proper Fund purpose, but only upon receipt of Proper
            Instructions 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 Fund purpose, and naming the person or
            persons to whom such payment is to be made.

     3.4.3.
Market Conditions.  Notwithstanding any provision of this Agreement to the
- ------ -----------
contrary, settlement and payment for foreign securities received for the account
of the Funds and delivery of foreign securities maintained for the account of
the Funds may be effected in accordance with the customary established
securities trading or processing practices and procedures in the country or
market in which the transaction occurs, including, without limitation,
delivering foreign securities to the purchaser thereof or to a dealer therefor
(or an agent for such purchaser or dealer) with the expectation of receiving
later payment for such foreign securities from such purchaser or dealer.

     SECTION 3.5
REGISTRATION OF FOREIGN SECURITIES.  The foreign securities maintained in the
custody of a Foreign Custodian (other than bearer securities) shall be
registered in the name of the applicable Fund or in the name of the Custodian or
in the name of any Foreign Sub-Custodian or in the name of any nominee of the
foregoing, and the Fund agrees to hold any such nominee harmless from any
liability as a holder of record of such foreign securities.  The Custodian or a
Foreign Sub-Custodian shall not be obligated to accept securities on behalf of a
Fund under the terms of this Agreement unless the form of such securities and
the manner in which they are delivered are in accordance with reasonable market
practice.

     SECTION 3.6
BANK ACCOUNTS.  A bank account or bank accounts opened and maintained outside
the United States on behalf of a Fund with a Foreign Sub-Custodian shall be
subject only to draft or order by the Custodian or such Foreign Sub-Custodian,
acting pursuant to the terms of this Agreement to hold cash received by or from
or for the account of the Fund.

     SECTION 3.7
COLLECTION OF INCOME.  The Custodian shall use reasonable commercial efforts to
collect all income and other payments with respect to the foreign securities
held hereunder to which the Funds shall be entitled and shall credit such
income, as

<PAGE>

collected, to the applicable Fund. In the event that extraordinary measures are
required to collect such income, the Fund and the Custodian shall consult as to
such measures and as to the compensation and expenses of the Custodian relating
to such measures.

     SECTION 3.8
PROXIES.  With respect to the foreign securities held under this Section 3, the
Custodian will use reasonable commercial efforts to facilitate the exercise of
voting and other shareholder proxy rights, subject always to the laws,
regulations and practical constraints that may exist in the country where such
securities are issued.  The Fund acknowledges that local conditions, including
lack of regulation, onerous procedural obligations, lack of notice and other
factors may have the effect of severely limiting the ability of the Fund to
exercise shareholder rights.

     SECTION 3.9
COMMUNICATIONS RELATING TO FOREIGN SECURITIES.  The Custodian shall transmit
promptly to the Fund written information (including, without limitation,
pendency of calls and maturities of foreign securities and expirations of rights
in connection therewith) received by the Custodian in connection with the
foreign securities being held for the account of the Fund.  With respect to
tender or exchange offers, the Custodian shall transmit promptly to the Fund
written information so received by the Custodian in connection with the foreign
securities whose tender or exchange is sought or from the party (or its agents)
making the tender or exchange offer.

     SECTION 3.10
LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN SECURITIES SYSTEMS.  Each
agreement pursuant to which the Custodian employs as a Foreign Sub-Custodian
shall, to the extent possible, require the Foreign Sub-Custodian to exercise
reasonable care in the performance of its duties and, to the extent possible, to
indemnify, and hold harmless, the Custodian from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with the
Foreign Sub-Custodian's performance of such obligations.  At the Fund's
election, the Funds shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a Foreign Sub-Custodian as a
consequence of any such loss, damage, cost, expense, liability or claim if and
to the extent that the Funds have not been made whole for any such loss, damage,
cost, expense, liability or claim.

     SECTION 3.11
TAX LAW.   The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as custodian
of the Funds by
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

the tax law of the United States or of any state or political subdivision
thereof.  It shall be the responsibility of the Fund to notify the Custodian of
the obligations imposed on the Fund or the Custodian as custodian of the Funds
by the tax law of countries set forth on Schedule A hereto, including
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting.  The sole
responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of countries for which the Fund has provided such
information.


SECTION 4. PAYMENTS FOR REPURCHASES OR REDEMPTIONS AND SALES OF SHARES.

     From such funds as may be available for the purpose, the Custodian shall,
upon receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares which have delivered to the Transfer Agent a
request for redemption or repurchase of their Shares.  In connection with the
redemption or repurchase of Shares, the Custodian is authorized upon receipt of,
and in accordance with, instructions from the Transfer Agent to wire funds to or
through a commercial bank designated by the redeeming shareholders.  In
connection with the redemption or repurchase of Shares, 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 written procedures and controls as may be
mutually agreed upon from time to time between the Fund and the Custodian.

     The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent and deposit to the account of the Fund such payments as are
received by the distributor or the Transfer Agent, as the case may be, for
Shares issued or sold from time to time.  The Custodian will notify the Fund and
the Transfer Agent of any payments for Shares received by it from time to time.


SECTION 5. 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
entity or entities appointed by the Board to keep the books of account of the
Fund and/or compute the net asset value per Share of the outstanding Shares or,
if directed in writing

<PAGE>

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 (i)
calculate daily the net income of the Fund as described in the Prospectus and
shall advise the Fund and the Transfer Agent daily of the total amounts of such
net income, and/ or (ii) 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 described from time to time in the Prospectus.

SECTION 6. PROPER INSTRUCTIONS.

     "Proper Instructions," as such term is used throughout this Agreement,
means either (i) a writing, including a facsimile transmission, signed by one or
more persons as set forth on, and in accordance with, an "Authorized Persons
List," as such term is defined herein (each such instruction a "Written Proper
Instruction"), (ii) a "Client Originated Electronic Financial Instruction," as
such term is defined in the Data Access Services Addendum hereto, given in
accordance with the terms of such Addendum, or (iii) instructions received by
the Custodian from a third party in accordance with any three-party agreement
which requires a segregated asset account in accordance with Section 2.11.

     Each Written Proper Instruction shall set forth a brief description of the
type of transaction involved (choosing from among the types of transactions set
forth on the Authorized Persons List), including a specific statement of the
purpose for which such action is requested, and any modification to a Written
Proper Instruction must itself be a Written Proper Instruction and subject to
all the provisions herein relating to Written Proper Instructions.  The Fund
will provide the Custodian with an "Authorized Persons List," which list shall
set forth (a) the names of the individuals (each an "Authorized Person") who are
authorized by the Board to give Written Proper Instructions with respect to the
transactions described therein, and (b) the number of Authorized Persons whose
signature or approval, as the case may be, is necessary for the Custodian to be
able to act in accordance with such Written Proper Instructions with respect to
a particular type of transaction.  The Custodian may accept oral instructions or
instructions delivered via electronic mail as Proper Instructions if the
Custodian reasonably believes such instructions to have been given by an
Authorized Person or Persons (as appropriate to the type of transaction);
provided, however, that in no event will instructions delivered orally or via
electronic mail be considered Proper
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

Instructions with respect to transactions involving the movement of cash,
securities or other assets of a Fund.  The Custodian shall be entitled to rely
upon instructions given in accordance with an Authorized Persons List until it
actually receives written notice from the Board of the applicable Fund to the
contrary.


SECTION 7. EVIDENCE OF AUTHORITY.

     Subject to Section 9 hereof, 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.  The Custodian may receive
and accept a copy of a vote of the Board, certified by the secretary or an
assistant secretary of the applicable 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 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.

SECTION 8. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY.

     The Custodian may in its discretion and without express authority from the
Fund:

     1)
          make payments to itself or others for minor expenses of handling
          investments or other similar items relating to its duties under this
          Agreement, provided that all such payments shall be accounted for to
          the Fund;

     2)   surrender investments in temporary form for investments in definitive
          form;

     3)   endorse for collection, in the name of the Fund, checks, drafts and
          other negotiable instruments; and

     4)   in general, attend to all non-discretionary details in connection with
          the sale, exchange, substitution, purchase, transfer and other
          dealings with the investments and property of the Fund except as
          otherwise directed by the Board.

SECTION 9. RESPONSIBILITY OF CUSTODIAN.


<PAGE>

     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 Agreement 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,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement.  Notwithstanding anything to the
contrary herein, the Custodian shall be held to the exercise of reasonable care
in carrying out the provisions of this Agreement, and it 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 by the Custodian to indemnify or hold
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 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.  The Fund shall
have the option to defend the Custodian against any claim which may be the
subject of a claim for indemnification hereunder, and in the event that the Fund
so elects, it will notify the Custodian thereof and, thereupon, (i) the Fund
shall take over complete defense of the claim and (ii) the Custodian shall
initiate no further legal or other expenses with respect to such claim.  The
Custodian shall in no case confess any claim or make any compromise with respect
to any claim for which it will seek indemnity from the Fund 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 Agreement 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 other such counsel as agreed to by the parties)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. The Custodian shall be entitled to rely
upon, and shall have no duty of inquiry with respect to, the accuracy of any
representation or warranty given to it by the Fund or any duly-authorized
employee or agent thereof, and shall be without liability for any action
reasonably taken or omitted by it in reliance thereon.  Regardless of whether
assets held pursuant to this Agreement are maintained in the custody of a
foreign banking institution, a foreign securities depository, or a branch or
affiliate of a U.S. bank, the Custodian shall not be liable for any loss,
damage, cost, expense, liability
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

     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 Agreement 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,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement.  Notwithstanding anything to the
contrary herein, the Custodian shall be held to the exercise of reasonable care
in carrying out the provisions of this Agreement, and it 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 by the Custodian to indemnify or hold
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 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.  The Fund shall
have the option to defend the Custodian against any claim which may be the
subject of a claim for indemnification hereunder, and in the event that the Fund
so elects, it will notify the Custodian thereof and, thereupon, (i) the Fund
shall take over complete defense of the claim and (ii) the Custodian shall
initiate no further legal or other expenses with respect to such claim.  The
Custodian shall in no case confess any claim or make any compromise with respect
to any claim for which it will seek indemnity from the Fund 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 Agreement 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 other such counsel as agreed to by the parties)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. The Custodian shall be entitled to rely
upon, and shall have no duty of inquiry with respect to, the accuracy of any
representation or warranty given to it by the Fund or any duly-authorized
employee or agent thereof, and shall be without liability for any action
reasonably taken or omitted by it in reliance thereon.  Regardless of whether
assets held pursuant to this Agreement are maintained in the custody of a
foreign banking institution, a foreign securities depository, or a branch or
affiliate of a U.S. bank, the Custodian shall not be liable for any loss,
damage, cost, expense, liability

<PAGE>

     If the Fund requires the Custodian to take any action with respect to
investments, which action involves the payment of money or which action may, in
the reasonable 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 Custodian, or any of its affiliates, subsidiaries or agents,
advances cash or investments to the Fund for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement), 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 Agreement, 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
assets to the extent necessary to obtain reimbursement, provided that the
Custodian gives the Fund reasonable notice to repay such cash or securities
advanced, and provided further that such notice requirement shall not preclude
the Custodian's right to assert and execute on such lien.

     Except as may arise from the Custodian's own negligence or willful
misconduct, or the negligence or willful misconduct of a subcustodian or agent
appointed by the Custodian, the Fund agrees to indemnify and hold the Custodian
harmless from and against any and all costs, expenses, losses, damages, charges,
reasonable counsel fees, payments and liabilities which may be asserted against
the Custodian (i) acting in accordance with any Proper Instruction, or (ii) for
any acts or omissions of CHASE MANHATTAN BANK N.A.

     Notwithstanding any provision herein to the contrary, to the extent the
Custodian is found to be liable hereunder for any loss, liability, claim,
expense or damage, the Custodian shall be liable only for such loss, liability,
claim, expense or damage which was reasonably foreseeable.

L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

SECTION 10.    EFFECTIVE PERIOD, TERMINATION AND AMENDMENT.

     This Agreement shall become effective as of the date 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 thirty (30) days after the date of such delivery or mailing in the
case of a termination by the Fund, and not sooner than one hundred eighty (180)
days after the date of such delivery or mailing in the case of termination by
the Custodian; provided, however that the Custodian shall not act under Section
2.9 hereof in the absence of receipt of an initial certificate of a Fund's
secretary, or an assistant secretary thereof, that the Board has approved the
initial use of a particular U.S. Securities System, as required by the 1940 Act
or any applicable Rule thereunder, and that the Custodian shall not act under
Section 2.10 hereof in the absence of receipt of an initial certificate of a
Fund's secretary, or an assistant secretary thereof, that the Board has approved
the initial use of the Direct Paper System; provided further, however, that the
Fund shall not amend or terminate this Agreement in contravention of any
applicable federal or state regulations, or any provision of the Fund's articles
of incorporation, agreement of trust, by-laws and/or registration statement (as
applicable, the "GOVERNING DOCUMENTS"); and further provided that the Fund may
at any time by action of its Board (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the United States 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 Agreement, 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 reasonable 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, such approval not to be unreasonably withheld.


<PAGE>

SECTION 11.    SUCCESSOR CUSTODIAN.

     If a successor custodian shall be appointed by the Board, the Custodian
shall, upon termination, deliver to such successor custodian at the offices of
the Custodian, duly endorsed and in the form for transfer, all investments and
other properties then held by it hereunder, and shall transfer to an account of
the successor custodian all of the Fund's investments held in a Securities
System.  If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a copy of a vote of the Board, certified by the
secretary or an assistant secretary of the applicable Fund, deliver at the
offices of the Custodian and transfer such investments, 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 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 1940 Act, doing
business in Boston, Massachusetts, or New York, New York, of its own selection
and having an aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $100,000,000, all property held by the
Custodian under this Agreement and to transfer to an account of such successor
custodian all of the Fund's investments held in any Securities System;
thereafter, such bank or trust company shall be the successor of the Custodian
under this Agreement.

     In the event that any property held pursuant to this Agreement remains 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 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 property, and the provisions of this Agreement relating to
the duties and obligations of the Custodian shall remain in full force and
effect.

SECTION 12.    GENERAL.

     SECTION 12.1
COMPENSATION OF CUSTODIAN.  The Custodian shall be entitled to compensation for
its services and reimbursement of its expenses as Custodian as agreed upon from
time to time between the Fund and the Custodian.

L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

     SECTION 12.2
MASSACHUSETTS LAW TO APPLY.  This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.

     SECTION 12.3
RECORDS.  The Custodian shall create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund under the 1940 Act, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder.  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 by duly authorized officers, employees or
agents of the Fund and employees and agents of the SEC.  The Custodian shall, at
the Fund's request, supply the Fund with a tabulation of investments owned by
the Fund and held by the Custodian hereunder, and shall, when requested to do so
by an officer of the Fund,  and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers in such
tabulations.

     SECTION 12.4
OPINION OF FUND'S INDEPENDENT ACCOUNTANT.  The Custodian shall take all
reasonable action as the Fund may from time to time request to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund's
Form N-1A, the preparation of the Fund's Form N-SAR, the preparation of any
other annual reports to the SEC with respect to the Fund, and with respect to
any other requirements of the SEC.

     SECTION 12.5
INTERPRETIVE AND ADDITIONAL PROVISIONS.  In connection with the operation of
this Agreement, the Custodian and the Fund may from time to time agree 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 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. No interpretive
or additional provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Agreement.

     SECTION 12.6
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 and  embezzlement, covering each officer and employee of

<PAGE>

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, upon request, furnish to the Fund a copy of each such bond and each
amendment thereto.

     SECTION 12.7
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.

     SECTION 12.8
EXEMPTION FROM LIEN.  Except as set forth in Section 9 hereof, the securities
and other assets held by the Custodian hereunder shall not be subject to lien or
charge of any kind in favor of the Custodian or any person claiming through the
Custodian.  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.

     SECTION 12.9
ASSIGNMENT.  This Agreement may not be assigned by either party without the
written consent of the other, except that either party may assign its rights and
obligations hereunder to a party controlling, controlled by, or under common
control with such party.

     SECTION 12.10 PRIOR AGREEMENTS.  Without derogating the rights established
thereunder prior to the date of this Agreement, this Agreement supersedes and
terminates, as of the date hereof, all prior agreements between the Fund and the
Custodian relating to the custody of Fund assets.

     SECTION 12.11 COUNTERPARTS.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all such
counterparts taken together shall constitute but one and the same Agreement.
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<PAGE>


     SECTION 12.12 NOTICES.  Any notice, instruction or other instrument
required to be given hereunder may be delivered in person to the offices of the
parties as set forth herein during normal business hours or delivered prepaid
registered mail or by telex, cable or telecopy to the parties at the following
addresses or such other addresses as may be notified by any party from time to
time.

  To any Fund:       c/o T. ROWE PRICE ASSOCIATES, INC.
                     100 East Pratt Street
                     Baltimore, Maryland 21202
                     Attention:  Carmen Deyesu
                     Telephone:  410-345-6658
                     Telecopy:  410-685-8827/8830

  To the Custodian: STATE STREET BANK AND TRUST COMPANY
                     1776 Heritage Drive
                     North Quincy, Massachusetts 02171, U.S.A.
                     Attention: Carol C. Ayotte
                     Telephone:  617-985-6894
                     Telecopy:  617-537-6321

     Such notice, instruction or other instrument shall be deemed to have been
served in the case of a registered letter at the expiration of five business
days after posting, in the case of cable twenty-four hours after dispatch and,
in the case of telex, immediately on dispatch and if delivered outside normal
business hours it shall be deemed to have been received at the next time after
delivery when normal business hours commence and in the case of cable, telex or
telecopy on the business day after the receipt thereof.  Evidence that the
notice was properly addressed, stamped and put into the post shall be conclusive
evidence of posting.

     SECTION 12.13 ENTIRE AGREEMENT.  This Agreement (including all schedules,
appendices, exhibits and attachments hereto) constitutes the entire Agreement
between the parties with respect to the subject matter hereof.

     SECTION 12.14 HEADINGS NOT CONTROLLING.  Headings used in this Agreement
are for reference purposes only and shall not be deemed a part of this
Agreement.

     SECTION 12.15 SURVIVAL.  All provisions regarding indemnification,
confidentiality, warranty, liability and limits thereon shall survive following
the expiration or termination of this Agreement.

<PAGE>


     SECTION 12.16 SEVERABILITY.  In the event any provision of this Agreement
is held illegal, void or unenforceable, the balance shall remain in effect.

     SECTION 12.17 THE PARTIES.  All references herein to the "Fund" are to each
of the funds listed on Appendix A hereto individually, as if this Agreement 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 appropriate.  Any reference in this Agreement to "the parties"
shall mean the Custodian and such other individual Fund as to which the matter
pertains.  Each Fund hereby represents and warranties that (i) it has the
requisite power and authority under applicable laws and its Governing Documents
to enter into and perform this Agreement, (ii) all requisite proceedings have
been taken to authorize it to enter into and perform this Agreement, and (iii)
its entrance into this Agreement shall not cause a material breach or be in
material conflict with any other agreement or obligation of the Fund or any law
or regulation applicable to it.

     SECTION 12.18 DIRECTORS AND TRUSTEES.  It is understood and is expressly
stipulated that neither the holders of Shares nor any member of the Board be
personally liable hereunder.  Whenever reference is made herein to an action
required to be taken by the Board, such action may also be taken by the Board's
executive committee.

     SECTION 12.19 MASSACHUSETTS BUSINESS TRUST.  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 of such trust, as the same may be
amended from time to time (the "DECLARATION OF TRUST").  It is expressly agreed
that the obligations of any such Fund hereunder shall not be binding upon any of
the trustees, shareholders, nominees, officers, agents or employees of the Fund
personally, but bind only the trust property of the Fund as set forth in the
applicable Declaration of Trust.  In the case of each Fund which is a
Massachusetts business trust (in each case, a "TRUST"), the execution and
delivery of this Agreement on behalf of the Trust has been authorized by the
trustees, and signed by an authorized officer, of the Trust, in each case acting
in such capacity and not individually, and neither such authorization by the
trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them
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<PAGE>

individually, but shall bind only the trust property of the Trust as provided in
its Declaration of Trust.

     SECTION 12.20 REPRODUCTION OF DOCUMENTS.  This Agreement and all schedules,
exhibits, attachments and amendments hereto may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process.  The parties hereto all/each agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

     SECTION 12.21 SHAREHOLDER COMMUNICATIONS ELECTION.  SEC Rule 14b-2 requires
banks which hold securities for the account of customers to respond to requests
by issuers of securities for the names, addresses and holdings of beneficial
owners of securities of that issuer held by the bank unless the beneficial owner
has expressly objected to disclosure of this information.  In order to comply
with the rule, the Custodian needs the Fund to indicate whether it authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose securities the Fund owns.  If the Fund tells the
Custodian "no", the Custodian will not provide this information to requesting
companies.  If the Fund tells the Custodian "yes" or does not check either "yes"
or "no" below, the Custodian is required by the rule to treat the Fund as
consenting to disclosure of this information for all securities owned by the
Fund or any funds or accounts established by the Fund.  For the Fund's
protection, the Rule prohibits the requesting company from using the Fund's name
and address for any purpose other than corporate communications.  Please
indicate below whether the Fund consents or objects by checking one of the
alternatives below.

     YES [  ]
               The Custodian is authorized to release the Fund's name, address,
               and share positions.

     NO  [X]
               The Custodian is not authorized to release the Fund's name,
               address, and share positions.

<PAGE>

              DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT

     Addendum to the Custodian Agreement (as defined below) between each fund
listed on Appendix A to the Custodian Agreement, as such Appendix A is amended
from time to time (each such fund listed on Appendix A shall be individually
referred to herein as the "FUND"), and State Street Bank and Trust Company
("STATE STREET").

                                    PREAMBLE

     WHEREAS, State Street has been appointed as custodian of certain assets of
the Fund pursuant to a certain Custodian Agreement (the "CUSTODIAN AGREEMENT")
dated as of January 28, 1998, and amended thereafter from time to time;

     WHEREAS, State Street has developed and utilizes proprietary accounting and
other systems, including State Street's proprietary Multicurrency HORIZON/R/
Accounting System, in its role as custodian of the Fund, and maintains certain
Fund-related data ("FUND DATA") in databases under the control and ownership of
State Street (the "DATA ACCESS SERVICES"); and

     WHEREAS, State Street makes available to the Fund (and certain of the
Fund's agents as set forth herein) certain Data Access Services solely for the
benefit of the Fund, and intends to provide additional services, consistent with
the terms and conditions of this Addendum.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the parties
agree as follows:


1.   SYSTEM AND DATA ACCESS SERVICES

     a.
System.  Subject to the terms and conditions of this Addendum and solely for the
- ------
purpose of providing access to Fund Data as set forth herein, State Street
hereby agrees to provide the Fund, or certain third parties approved by State
Street that serve as the Fund's investment advisors, investment managers or fund
accountants (the "FUND ACCOUNTANTS") or as the Fund's independent auditors (the
"AUDITOR"), with access to State Street's Multicurrency HORIZON/R/ Accounting
System and the other information systems described in Attachment A
(collectively, the "SYSTEM") on a remote basis solely on the computer hardware,
system software and telecommunication links described in Attachment B (the
"DESIGNATED
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

CONFIGURATION") or on any designated substitute or back-up equipment
configuration consented to in writing by State Street, such consent not to be
unreasonably withheld.

     b.
Data Access Services.  State Street agrees to make available to the Fund the
- ---- ------ --------
Data Access Services subject to the terms and conditions of this Addendum and
such data access operating standards and procedures as may be issued by State
Street from time to time.  The Fund shall be able to access the System to (i)
originate electronic instructions to State Street in order to (a) effect the
transfer or movement of cash or securities held under custody by State Street or
(b) transmit accounting or other information (the transactions described in
(i)(a) and (i)(b) above are referred to herein as "CLIENT ORIGINATED ELECTRONIC
FINANCIAL INSTRUCTIONS"), and (ii) access data for the purpose of reporting and
analysis, which shall all be deemed to be Data Access Services for purposes of
this Addendum.

     c.
Additional Services.  State Street may from time to time agree to make available
- ---------- --------
to the Fund additional Systems that are not described in the attachments to this
Addendum.  In the absence of any other written agreement concerning such
additional systems, the term "SYSTEM" shall include, and this Addendum shall
govern, the Fund's access to and use of any additional System made available by
State Street and/or accessed by the Fund.

2.   NO USE OF THIRD PARTY SYSTEMS-LEVEL SOFTWARE

     State Street and the Fund acknowledge that in connection with the Data
Access Services provided under this Addendum, the Fund will have access, through
the Data Access Services, to Fund Data and to functions of State Street's
proprietary systems; provided, however that in no event will the Fund have
direct access to any third party systems-level software that retrieves data for,
stores data from, or otherwise supports the System.

3.   LIMITATION ON SCOPE OF USE

     a.
Designated Equipment; Designated Locations.  The System and the Data Access
- ---------- ---------- ---------- ---------
Services shall be used and accessed solely on and through the Designated
Configuration at the offices of the Fund or the Fund Accountants in Baltimore,
Maryland or Owings Mills, Maryland ("DESIGNATED LOCATIONS").

     b.
Designated Configuration; Trained Personnel.   State Street and the Fund shall
- ---------- -------------- ------- ---------
be responsible for supplying, installing

<PAGE>

and maintaining the Designated Configuration at the Designated Locations.  State
Street and the Fund agree that each will engage or retain the services of
trained personnel to enable both parties to perform their respective obligations
under this Addendum.  State Street agrees to use commercially reasonable efforts
to maintain the System so that it remains serviceable, provided, however, that
State Street does not guarantee or assure uninterrupted remote access use of the
System.

     c.
Scope of Use.  The Fund will use the System and the Data Access Services only
- ----- -- ---
for the processing of securities transactions, the keeping of books of account
for the Fund and accessing data for purposes of reporting and analysis.  The
Fund shall not, and shall cause its employees and agents not to (i) permit any
unauthorized third party to use the System or the Data Access Services, (ii)
sell, rent, license or otherwise use the System or the Data Access Services in
the operation of a service bureau or for any purpose other than as expressly
authorized under this Addendum, (iii) use the System or the Data Access Services
for any fund, trust or other investment vehicle), other than as set forth
herein, without the prior written consent of State Street, (iv) allow access to
the System or the Data Access Services through terminals or any other computer
or telecommunications facilities located outside the Designated Locations, (v)
allow or cause any information (other than portfolio holdings, valuations of
portfolio holdings, and other information reasonably necessary for the
management or distribution of the assets of the Fund) transmitted from State
Street's databases, including data from third party sources, available through
use of the System or the Data Access Services to be redistributed or
retransmitted to another computer, terminal or other device for other than use
for or on behalf of the Fund or (vi) modify the System in any way, including
without limitation developing any software for or attaching any devices or
computer programs to any equipment, system, software or database which forms a
part of or is resident on the Designated Configuration.

     d.
Other Locations.  Except in the event of an emergency or of a planned System
- ----- ---------
shutdown, the Fund's access to services performed by the System or to Data
Access Services at the Designated Locations may be transferred to a different
location only upon the prior written consent of State Street.  In the event of
an emergency or System shutdown, the Fund may use any back-up site included in
the Designated Configuration or any other back-up site agreed to by State
Street, which agreement will not be unreasonably withheld.  The Fund may secure
from State Street the right to access the System or the Data Access Services
through computer and telecommunications
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

facilities or devices complying with the Designated Configuration at additional
locations only upon the prior written consent of State Street and on terms to be
mutually agreed upon by the parties.

     e.
Title.  Title and all ownership and proprietary rights to the System, including
- -----
any enhancements or modifications thereto, whether or not made by State Street,
are and shall remain with State Street.

     f.
No Modification.  Without the prior written consent of State Street, the Fund
- -- ------------
shall not modify, enhance or otherwise create derivative works based upon the
System, nor shall the Fund reverse engineer, decompile or otherwise attempt to
secure the source code for all or any part of the System.

     g.
Security Procedures.  The Fund shall comply with data access operating standards
- -------- ----------
and procedures and with user identification or other password control
requirements and other security procedures as may be issued from time to time by
State Street for use of the System on a remote basis and to access the Data
Access Services.  The Fund shall have access only to the Fund Data and
authorized transactions agreed upon from time to time by State Street and, upon
notice from State Street, the Fund shall discontinue remote use of the System
and access to Data Access Services for any security reasons cited by State
Street; provided, that, in such event, State Street shall, for a period not less
than 180 days (or such other shorter period specified by the Fund) after such
discontinuance, assume responsibility to provide accounting services under the
terms of the Custodian Agreement.

     h.
Inspections.  State Street shall have the right to inspect the use of the System
- -----------
and the Data Access Services by the Fund, the Fund Accountants and the Auditor
to ensure compliance with this Addendum.  The on-site inspections shall be upon
prior written notice to Fund, the Fund Accountants and the Auditor and at
reasonably convenient times and frequencies so as not to result in an
unreasonable disruption of the Fund's or the Fund Accountants' or the Auditor
respective businesses.

4.   PROPRIETARY INFORMATION

     a.
Proprietary Information.  The Fund acknowledges and State Street represents that
- ----------- -----------
the System and the databases, computer programs, screen formats, report formats,
interactive design techniques, documentation and other information made
available to the Fund by State Street as part of the Data Access Services and

<PAGE>

through the use of the System constitute copyrighted, trade secret, or other
proprietary information of substantial value to State Street.  Any and all such
information provided by State Street to the Fund shall be deemed proprietary and
confidential information of State Street (hereinafter "PROPRIETARY
INFORMATION").  The Fund agrees that it will hold such Proprietary Information
in the strictest confidence and secure and protect it in a manner consistent
with its own procedures for the protection of its own confidential information
and to take appropriate action by instruction or agreement with its employees or
agents who are permitted access to the Proprietary Information to satisfy its
obligations hereunder.  The Fund further acknowledges that State Street shall
not be required to provide the Fund Accountants or the Auditor with access to
the System unless it has first received from the Fund Accountants and the
Auditor an undertaking with respect to State Street's Proprietary Information in
the form of Attachment C and/or Attachment C-1 to this Addendum.  The Fund shall
use all commercially reasonable efforts to assist State Street in identifying
and preventing any unauthorized use, copying or disclosure of the Proprietary
Information or any portions thereof or any of the logic, formats or designs
contained therein.

     b.
Cooperation.  Without limitation of the foregoing, the Fund shall advise State
- -----------
Street immediately in the event the Fund learns or has reason to believe that
any person to whom the Fund has given access to the Proprietary Information, or
any portion thereof, has violated or intends to violate the terms of this
Addendum, and the Fund will, at its reasonable expense, cooperate with State
Street in seeking injunctive or other equitable relief in the name of the Fund
or State Street against any such person.

     c.
Injunctive Relief.  The Fund acknowledges that the disclosure of any Proprietary
- ---------- ------
Information, or of any information which at law or equity ought to remain
confidential, will immediately give rise to continuing irreparable injury to
State Street inadequately compensable in damages at law.  In addition, State
Street shall be entitled to obtain immediate injunctive relief against the
breach or threatened breach of any of the foregoing undertakings, in addition to
any other legal remedies which may be available.

     d.
Survival.  The provisions of this Section 4 shall survive the termination of
- --------
this Addendum.

L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

5.   LIMITATION ON LIABILITY

     a.
Standard of Care and Limitation on Amount and Time for Bringing Action.  State
- -------- -- ---- --- ---------- -- ------ --- ---- --- -------- ------
Street shall be held to a standard of reasonable care with respect to all of its
duties and obligations under this Addendum.  The Fund agrees that any liability
of State Street to the Fund or any third party arising with respect to the
System or State Street's provision of Data Access Services under this Data
Access Services Addendum shall be limited to the amount paid by the Fund for the
preceding 24 months for such services.  The foregoing limitation shall relate
solely to State Street's provision of the Data Access Services pursuant to this
Addendum and is not intended to limit State Street's responsibility to perform
in accordance with the Custodian Agreement, including its duty to act in
accordance with Proper Instructions.  In no event shall State Street be liable
to the Fund or any other party pursuant to this Addendum for any special,
indirect, punitive or consequential damages even if advised of the possibility
of such damages.  No action, regardless of form, arising out of the terms of
this Addendum may be brought by the Fund more than two years after the Fund has
knowledge that the cause of action has arisen.

     b.
Limited Warranties.  NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING,
- ------- ----------
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE MADE BY STATE STREET.

     c.
Third-Party Data.  Organizations from which State Street may obtain certain data
- ----------- ----
included in the System or the Data Access Services are solely responsible for
the contents of such data, and State Street shall have no liability for claims
arising out of the contents of such third-party data, including, but not limited
to, the accuracy thereof.

     d.
Regulatory Requirements.  As between State Street and the Fund, the Fund shall
- ---------- ------------
be solely responsible for the accuracy of any accounting statements or reports
produced using the Data Access Services and the System and the conformity
thereof with any requirements of law.

     e.
Force Majeure.  Neither party shall be liable for any costs or damages due to
- ----- -------
delay or nonperformance under this Data Access Services Addendum arising out of
any cause or event beyond such party's control, including, without limitation,
cessation of services hereunder or any damages resulting therefrom to the other
party as a result of work stoppage, power or other mechanical

<PAGE>

failure, computer virus, natural disaster, governmental action, or communication
disruption.

6.   INDEMNIFICATION

     The Fund agrees to indemnify and hold State Street harmless from any loss,
damage or expense including reasonable attorney's fees, (a "loss") suffered by
State Street arising from (i) the negligence or willful misconduct in the use by
the Fund of the Data Access Services or the System, including any loss incurred
by State Street resulting from a security breach at the Designated Locations or
committed by the Fund's employees or agents or the Fund Accountants or the and
Auditor, and (ii) any loss resulting from incorrect Client Originated Electronic
Financial Instructions.  State Street shall be entitled to rely on the validity
and authenticity of Client Originated Electronic Financial Instructions without
undertaking any further inquiry as long as such instruction is undertaken in
conformity with security procedures established by State Street from time to
time.

7.   FEES

     Fees and charges for the use of the System and the Data Access Services and
related payment terms shall be as set forth in the custody fee schedule in
effect from time to time between the parties (the "FEE SCHEDULE").  Any tariffs,
duties or taxes imposed or levied by any government or governmental agency by
reason of the transactions contemplated by this Addendum, including, without
limitation, federal, state and local taxes, use, value added and personal
property taxes (other than income, franchise or similar taxes which may be
imposed or assessed against State Street) shall be borne by the Fund.  Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.

8.   TRAINING, IMPLEMENTATION AND CONVERSION

     a.
Training.  State Street agrees to provide training, at a designated State Street
- --------
training facility or at the Designated Locations, to the Fund's personnel in
connection with the use of the System on the Designated Configuration.  The Fund
agrees that it will set aside, during regular business hours or at other times
agreed upon by both parties, sufficient time to enable all operators of the
System and the Data Access Services, designated by the Fund, to receive the
training offered by State Street pursuant to this Addendum.
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>


     b.
Installation and Conversion.  State Street and the Fund shall be responsible for
- ------------ --- ----------
the technical installation and conversion ("INSTALLATION AND CONVERSION") of the
Designated Configuration.  The Fund shall have the following responsibilities in
connection with Installation and Conversion of the System:

     (i)
          The Fund shall be solely responsible for the timely acquisition and
          maintenance of the hardware and software that attach to the Designated
          Configuration  in order to use the Data Access Services at the
          Designated Locations, and

     (ii)
          State Street and the Fund each agree that they will assign qualified
          personnel to actively participate during the Installation and
          Conversion phase of the System implementation to enable both parties
          to perform their respective obligations under this Addendum.

9.   SUPPORT

     During the term of this Addendum, State Street agrees to provide the
support services set out in Attachment D to this Addendum.

10.  TERM

     a.
Term.  This Addendum shall become effective on the date of its execution by
- ----
State Street and shall remain in full force and effect until terminated as
herein provided.

     b.
Termination.  Either party may terminate this Addendum (i)  for any reason by
- -----------
giving the other party at least one-hundred and eighty (180) days' prior written
notice in the case of notice of termination by State Street to the Fund or
thirty (30) days' notice in the case of notice from the Fund to State Street of
termination; or (ii) immediately for failure of the other party to comply with
any material term and condition of the Addendum by giving the other party
written notice of termination.  In the event the Fund shall cease doing
business, shall become subject to proceedings under the bankruptcy laws (other
than a petition for reorganization or similar proceeding) or shall be
adjudicated bankrupt, this Addendum and the rights granted hereunder shall, at
the option of State Street, immediately terminate with notice to the Fund.  This
Addendum shall in any event terminate as to any Fund within ninety (90) days
after the termination of the Custodian Agreement.

<PAGE>


     c.
Termination of the Right to Use.  Upon termination of this Addendum for any
- ----------- -- --- ----- -- ---
reason, any right to use the System and access to the Data Access Services shall
terminate and the Fund shall immediately cease use of the System and the Data
Access Services.  Immediately upon termination of this Addendum for any reason,
the Fund shall return to State Street all copies of documentation and other
Proprietary Information in its possession; provided, however, that in the event
that either party terminates this Addendum or the Custodian Agreement for any
reason other than the Fund's breach, State Street shall provide the Data Access
Services for a period of time and at a price to be agreed upon in writing by the
parties.

11.  MISCELLANEOUS

     a.Year 2000.  State Street will take all steps necessary to ensure that its
       ---- ----
products (and those of its third-party suppliers) reflect the available state of
the art technology to offer products that are Year 2000 compliant, including,
but not limited to, century recognition of dates, calculations that correctly
compute same century and multi-century formulas and date values, and interface
values that reflect the date issues arising between now and the next one-hundred
years.  If any changes are required, State Street will make the changes to its
products at no cost to the Fund and in a commercially reasonable time frame and
will require third-party suppliers to do likewise.

     b.
Assignment; Successors.  This Addendum and the rights and obligations of the
- ----------- ----------
Fund and State Street hereunder shall not be assigned by either party without
the prior written consent of the other party, except that State Street may
assign this Addendum to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by, or under common control with
State Street.

     c.
Survival.  All provisions regarding indemnification, warranty, liability and
- --------
limits thereon, and confidentiality and/or protection of proprietary rights and
trade secrets shall survive the termination of this Addendum.

     d.
Entire Agreement.  This Addendum and the attachments hereto constitute the
- ------ ---------
entire understanding of the parties hereto with respect to the Data Access
Services and the use of the System and supersedes any and all prior or
contemporaneous representations or agreements, whether oral or written, between
the parties as such may relate to the Data Access Services or the System, and
cannot
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

be modified or altered except in a writing duly executed by the parties.  This
Addendum is not intended to supersede or modify the duties and liabilities of
the parties hereto under the Custodian Agreement or any other agreement between
the parties hereto except to the extent that any such agreement specifically
refers to the Data Access Services or the System.  No single waiver or any right
hereunder shall be deemed to be a continuing waiver.

     e.   Severability.
          ------------
If any provision or provisions of this Addendum shall be held to be invalid,
unlawful, or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired.

     f.
Governing Law.  This Addendum shall be interpreted and construed in accordance
- --------- ---
with the internal laws of The Commonwealth of Massachusetts without regard to
the conflict of laws provisions thereof.

<PAGE>

                                  ATTACHMENT A

                   MULTICURRENCY HORIZON/R/ ACCOUNTING SYSTEM
                           SYSTEM PRODUCT DESCRIPTION


I.     The Multicurrency HORIZON/R/ Accounting System is designed to provide lot
level portfolio and general ledger accounting for SEC and ERISA type
requirements and includes the following services: 1) recording of general ledger
entries; 2) calculation of daily income and expense; 3) reconciliation of daily
activity with the trial balance, and 4) appropriate automated feeding mechanisms
to (i) domestic and international settlement systems, (ii) daily, weekly and
monthly evaluation services, (iii) portfolio performance and analytic services,
(iv) customer's internal computing systems and (v) various State Street provided
information services products.

II.    GlobalQuest/R/ GlobalQuest/R/ is designed to provide customer access to
the following information maintained on The Multicurrency HORIZON/R/ Accounting
System:  1) cash transactions and balances; 2) purchases and sales; 3) income
receivables; 4) tax refund; 5) daily priced positions; 6) open trades; 7)
settlement status; 8) foreign exchange transactions; 9) trade history; and 10)
daily, weekly and monthly evaluation services.

III.   HORIZON/R/  Gateway.  HORIZON/R/ Gateway provides customers with the
ability to (i) generate reports using information maintained  on the
Multicurrency HORIZON/R/ Accounting System which may be viewed or printed at the
customer's location;  (ii)  extract and download data from the Multicurrency
HORIZONR Accounting System; and (iii) access previous day and historical data.
 The following information which may be accessed for these purposes:  1)
holdings;  2) holdings pricing;  3) transactions,  4) open trades;  5) income;
 6) general ledger and  7) cash.

IV.    State Street Interchange.  State Street Interchange is an open
       ------------------------
information delivery  architecture wherein proprietary communication products,
data formats and workstation tools are replaced by industry standards and is
designed to enable the connection of State Street's network to customer
networks, thereby facilitating the sharing of information.
                                  ATTACHMENT C

                                  UNDERTAKING
                               (FUND ACCOUNTANTS)

L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

     The undersigned understands that in the course of its employment as Fund
Accountant to each fund listed on Appendix A (as amended from time to time) to
that certain Custodian Agreement dated as of January 28, 1998 (the "FUND"), it
will have access to State Street Bank and Trust Company's Multicurrency HORIZON
Accounting System and other information systems (collectively, the "SYSTEM").

     The undersigned acknowledges that the System and the databases, computer
programs, screen formats, report formats, interactive design techniques,
documentation, and other information made available to the Undersigned by State
Street Bank and Trust Company ("STATE STREET") as part of the Data Access
Services provided to the Fund and through the use of the System constitute
copyrighted, trade secret, or other proprietary information of substantial value
to State Street.  Any and all such information provided by State Street to the
Undersigned shall be deemed proprietary and confidential information of State
Street (hereinafter "PROPRIETARY INFORMATION").  The undersigned agrees that it
will hold such Proprietary Information in confidence and secure and protect it
in a manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder.

     The undersigned will not attempt to intercept data, gain access to data in
transmission, or attempt entry into any system or files for which it is not
authorized.  It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.

     Upon notice by State Street for any reason, any right to use the System and
access to the Data Access Services shall terminate and the Undersigned shall
immediately cease use of the System and the Data Access Services.  Immediately
upon notice by State Street for any reason, the undersigned shall return to
State Street all copies of documentation and other Proprietary Information in
its possession.

<PAGE>

                                    [The Fund Accountants]


                         By:       ______________________________

                         Title:    ______________________________

                         Date:     ______________________________

L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

                                 ATTACHMENT C-1

                                  UNDERTAKING
                                   (AUDITOR)

     The undersigned understands that in the course of its employment as Auditor
to each fund listed on Appendix A (as amended from time to time) to that certain
Custodian Agreement dated as of January 28, 1998 (the "FUND") it will have
access to State Street Bank and Trust Company's Multicurrency HORIZON Accounting
System and other information systems (collectively, the "SYSTEM").

     The undersigned acknowledges that the System and the databases, computer
programs, screen formats, report formats, interactive design techniques,
documentation, and other information made available to the Undersigned by State
Street Bank and Trust Company ("STATE STREET") as part of the Data Access
Services provided to the Fund and through the use of the System constitute
copyrighted, trade secret, or other proprietary information of substantial value
to State Street.  Any and all such information provided by State Street to the
Undersigned shall be deemed proprietary and confidential information of State
Street (hereinafter "PROPRIETARY INFORMATION").  The undersigned agrees that it
will hold such Proprietary Information in confidence and secure and protect it
in a manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder.

     The undersigned will not attempt to intercept data, gain access to data in
transmission, or attempt entry into any system or files for which it is not
authorized.  It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.

     Upon notice by State Street for any reason, any right to use the System and
access to the Data Access Services shall terminate and the Undersigned shall
immediately cease use of the System and the Data Access Services.  Immediately
upon notice by State Street for any reason, the undersigned shall return to
State Street all copies of documentation and other Proprietary Information in
its possession.


<PAGE>

                                    [The Auditor]

                         By:       ______________________________

                         Title:    ______________________________

                         Date:     ______________________________
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

                                  ATTACHMENT D

                                    SUPPORT

     During the term of this Addendum, State Street agrees to provide the
following on-going support services:

     a.
Telephone Support.  The Fund Designated Persons may contact State Street's
HORIZON/R/ Help Desk and Fund Assistance Center between the hours of 8 a.m. and
6 p.m. (Eastern time) on all business days for the purpose of obtaining answers
to questions about the use of the System, or to report apparent problems with
the System.  From time to time, the Fund shall provide to State Street a list of
persons who shall be permitted to contact State Street for assistance (such
persons being referred to as the "FUND DESIGNATED PERSONS").

     b.
Technical Support.  State Street will provide technical support to assist the
- --------- -------
Fund in using the System and the Data Access Services.  The total amount of
technical support provided by State Street shall not exceed 10 resource days per
year.  State Street shall provide such additional technical support as is
expressly set forth in the fee schedule in effect from time to time between the
parties (the "FEE SCHEDULE").  Technical support, including during installation
and testing, is subject to the fees and other terms set forth in the Fee
Schedule.

     c.  Maintenance Support.  State Street shall use commercially reasonable
         -------------------
efforts to correct system functions that do not work according to the System
Product Description as set forth on Attachment A in priority order in the next
scheduled delivery release or otherwise as soon as is practicable.

     d.
System Enhancements.  State Street will provide to the Fund any enhancements to
- ------ ------------
the System developed by State Street and made a part of the System; provided
that State Street offer the Fund reasonable training on the enhancement.
 Charges for system enhancements shall be as provided in the Fee Schedule.
 State Street retains the right to charge for related systems or products that
may be developed and separately made available for use other than through the
System.

     e.
Custom Modifications.  In the event the Fund desires custom modifications in
- ------ -------------
connection with its use of the System, the Fund shall make a written request to
State Street providing specifications for the desired modification.  Any custom

<PAGE>

modifications may be undertaken by State Street in its sole discretion in
accordance with the Fee Schedule.

     f.
Limitation on Support.  State Street shall have no obligation to support the
- ---------- -- -------
Fund's use of the System:  (1)  for use on any computer equipment or
telecommunication facilities which does not conform to the Designated
Configuration or (ii) in the event the Fund has modified the System in breach of
this Addendum.

     In WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by its duly authorized representative as
of the date and year first written above.

               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 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.
               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
L:\Trpprod\Edg\Agmts.edg\98Custod.fm
<PAGE>

                  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 500 Fund
                 T. Rowe Price Extended Equity Market Index Fund
                  T. Rowe Price Total Equity Market Index Fund
               T. ROWE PRICE SPECTRUM FUND, INC.
                  Spectrum Growth Fund
                  Spectrum Income Fund
                  Spectrum International Fund
               T. ROWE PRICE BALANCED FUND, INC.
               T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
               T. ROWE PRICE MID-CAP GROWTH 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 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

<PAGE>

               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 Mid-Cap 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
                  T. Rowe Price Prime Reserve 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.
               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
               T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
               T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
               T. ROWE PRICE REAL ESTATE FUND, INC.
               T. ROWE PRICE SMALL CAP STOCK FUND, INC.
                  T. Rowe Price Small Cap Stock Fund
               T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
               T. ROWE PRICE TAX EFFICIENT BALANCED FUND, INC.
               RESERVE INVESTMENT FUNDS, INC.
                  Government Reserve Investment Fund
                  Reserve Investment Fund


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<PAGE>

SIGNATURE ATTESTED TO:                         EXECUTED ON BEHALF OF EACH FUND:

      /s/Suzanne E. Fraunhoffer                /s/Carmen Deyesu
By:   _____________________                By:____________________
Name:  Suzanne E. Fraunhoffer               Name: Carmen Deyesu
Title: Legal Assistant                      Title: Treasurer for
                                            each of the foregoing

SIGNATURE ATTESTED TO:
STATE STREET BANK AND TRUST COMPANY

      /s/Glenn Ciotti                          /s/Ronald E. Logue
By:   _____________________                By:____________________
Name:  Glenn Ciotti                         Name: Ronald E. Logue
Title: VP & Assoc. Counsel                  Title: Executive Vice
                                           President

<PAGE>

                                   SCHEDULE A


COUNTRY          SUBCUSTODIAN            CENTRAL DEPOSITORY

United Kingdom   State Street Bank      None;
                 and Trust Company      The Bank of England,
                                        The Central Gilts Office (CGO);
                                        The Central Moneymarkets Office (CMO)

Euroclear (The Euroclear System)/ State Street London Limited

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<PAGE>

                                   APPENDIX A

               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 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.
               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

<PAGE>

               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 500 Fund
                 T. Rowe Price Extended Equity Market Index Fund
                  T. Rowe Price Total Equity Market Index Fund
               T. ROWE PRICE SPECTRUM FUND, INC.
                  Spectrum Growth Fund
                  Spectrum Income Fund
                  Spectrum International Fund
               T. ROWE PRICE BALANCED FUND, INC.
               T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
               T. ROWE PRICE MID-CAP GROWTH 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 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 Mid-Cap Growth Portfolio
               T. ROWE PRICE INTERNATIONAL SERIES, INC.
                  T. Rowe Price International Stock Portfolio
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<PAGE>

               T. ROWE PRICE FIXED INCOME SERIES, INC.
                  T. Rowe Price Limited-Term Bond Portfolio
                  T. Rowe Price Prime Reserve 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.
               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
               T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
               T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
               T. ROWE PRICE REAL ESTATE FUND, INC.
               T. ROWE PRICE SMALL CAP STOCK FUND, INC.
                  T. Rowe Price Small Cap Stock Fund
               T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
               T. ROWE PRICE TAX EFFICIENT BALANCED FUND, INC.
               RESERVE INVESTMENT FUNDS, INC.
                  Government Reserve Investment Fund
                  Reserve Investment Fund

<PAGE>

                                AMENDMENT NO. 1
                         TO CUSTODIAN CONTRACT BETWEEN
                    STATE STREET BANK AND TRUST COMPANY AND
                            THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is hereby further
amended, as of November 4, 1998, by adding thereto T. Rowe Price International
Funds, Inc., on behalf of T. Rowe Price International Growth & Income Fund.

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 DIVERSIFIED SMALL-CAP GROWTH 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 Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.
     T. Rowe Price Limited-Term Bond Portfolio
     T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GNMA FUND
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<PAGE>


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 500 Fund
     T. Rowe Price Extended Equity Market Index Fund
     T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.
     Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.
     Foreign Equity Fund

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 Bond Fund
     T. Rowe Price Japan 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 Growth & Income Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.
     T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

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.

<PAGE>


T. ROWE PRICE NEW HORIZONS FUNDS, 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 REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.
     Reserve Investment Fund
     Government Reserve Investment 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.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.
     Spectrum Growth Fund
     Spectrum Income Fund
     Spectrum International 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 Intermediate Tax-Free Fund
     Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT BALANCED FUND, INC.

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
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<PAGE>


T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE 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 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 VALUE FUND, INC.


                /s/Henry H. Hopkins
          By:  _____________________________________
                Henry H. Hopkins, Vice President


          STATE STREET BANK AND TRUST COMPANY

                /s/Stephen F. Brown
          By:  _____________________________________
                Stephen F. Brown, Vice President


<PAGE>

                                AMENDMENT NO. 2
                         TO CUSTODIAN CONTRACT BETWEEN
                    STATE STREET BANK AND TRUST COMPANY AND
                            THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, as amended November 4, 1998 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, 1999, by adding thereto T.
Rowe Price Tax-Efficient Funds, Inc., on behalf of T. Rowe Price Tax-Efficient
Balanced Fund and T. Rowe Price Tax-Efficient Growth Fund.

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 DIVERSIFIED SMALL-CAP GROWTH 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 Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.
     T. Rowe Price Limited-Term Bond Portfolio
     T. Rowe Price Prime Reserve Portfolio
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<PAGE>

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 500 Fund
     T. Rowe Price Extended Equity Market Index Fund
     T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.
     Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.
     Foreign Equity Fund

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 Bond Fund
     T. Rowe Price Japan 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 Growth & Income Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.
     T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND


<PAGE>

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, 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 REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.
     Reserve Investment Fund
     Government Reserve Investment 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.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.
     Spectrum Growth Fund
     Spectrum Income Fund
     Spectrum International 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 Intermediate Tax-Free Fund
     Georgia Tax-Free Bond Fund

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<PAGE>

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
    T. Rowe Price Tax-Efficient Balanced Fund
    T. Rowe Price Tax-Efficient Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE 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 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 VALUE FUND, INC.


          /s/   Henry H. Hopkins
          By:  _____________________________________
                Henry H. Hopkins, Vice President


          STATE STREET BANK AND TRUST COMPANY

          /s/   Ronald E. Logue
          By:  _____________________________________
                Ronald E. Logue, Vice Chairman

 The Global Custody Agreement dated January 3, 1994, as amended, between
The Chase Manhattan Bank, N.A. and T. Rowe Price Funds.

<PAGE>

                              GLOBAL CUSTODY AGREEMENT



   This AGREEMENT is effective January 3, 1994, and is between THE CHASE
MANHATTAN BANK, N.A. (the "Bank") and EACH OF THE ENTITIES LISTED ON SCHEDULE A
HERETO, Individually and Separately (each individually, the "Customer").


1. CUSTOMER ACCOUNTS.

   The Bank agrees to establish and maintain the following accounts
    ("Accounts"):

   (a)
      A custody account in the name of the Customer  ("Custody Account") for any
      and all stocks, shares, bonds, debentures, notes, mortgages or other
      obligations for the payment of money, bullion, coin and any certificates,
      receipts, warrants or other instruments representing rights to receive,
      purchase or subscribe for the same or evidencing or representing any other
      rights or interests therein and other similar property whether
      certificated or uncertificated as may be received by the Bank or its
      Subcustodian (as defined in Section 3) for the account of the Customer
      ("Securities"); and

   (b)
      A deposit account in the name of the Customer ("Deposit Account") for any
      and all cash in any currency received by the Bank or its Subcustodian for
      the account of the Customer, which cash shall not be subject to withdrawal
      by draft or check.

   The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts.  The Bank may deliver securities of the
same class in place of those deposited in the Custody Account.

   Upon written agreement between the Bank and the Customer, additional Accounts
may be established and separately accounted for as additional Accounts under the
terms of this Agreement.


2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS.

   Unless Instructions specifically require another location acceptable to the
Bank:

   (a)
      Securities will be held in the country or other jurisdiction in which the
      principal trading market for such Securities is located, where such
      Securities are to be presented for payment or where such Securities are
      acquired; and

   (b)
      Cash will be credited to an account in a country or other jurisdiction in
      which such cash may be legally deposited or is the legal currency for the
      payment of public or private debts.

   Cash may be held pursuant to Instructions in either interest or non-interest
bearing accounts as may be available for the particular currency.  To the extent
Instructions are issued and the Bank can comply with such Instructions, the Bank
is authorized to maintain cash balances on deposit for the Customer with itself
or one of its affiliates at such reasonable rates of interest as may from time
to time be paid on such accounts, or in non-interest bearing accounts as the
Customer may direct, if acceptable to the Bank.

   If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by the Bank and the Customer.


3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.

   The Bank may act under this Agreement through the subcustodians listed in
Schedule B of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians").  The Customer authorizes the Bank to hold Assets
in the Accounts in accounts which the Bank has established with one or more of
its branches or Subcustodians.  The Bank and Subcustodians are authorized to
hold any of the Securities in their account with any securities depository in
which they participate.

   The Bank reserves the right to add new, replace or remove Subcustodians.  The
Customer will be given reasonable notice by the Bank of any amendment to
Schedule B.  Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.


4. USE OF SUBCUSTODIAN.

   (a) The Bank will identify such Assets on its books as belonging to the
      Customer.

   (b) A Subcustodian will hold such Assets together with assets belonging to
      other customers of the Bank in accounts identified on such Subcustodian's
      books as special custody accounts for the exclusive benefit of customers
      of the Bank.

   (c) Any Assets in the Accounts held by a Subcustodian will be subject only to
      the instructions of the Bank or its agent.  Any Securities held in a
      securities depository for the account of a Subcustodian will be subject
      only to the instructions of such Subcustodian.

   (d) Any agreement the Bank enters into with a Subcustodian for holding its
      customer's assets shall provide that such assets will not be subject to
      any right, charge, security interest, lien or claim of any kind in favor
      of such Subcustodian or its creditors except for a claim for payment for
      safe custody or administration, and that the beneficial ownership of such
      assets will be freely transferable without the payment of money or value
      other than for safe custody or administration.


<PAGE>

      The foregoing shall not apply to the extent of any special agreement or
      arrangement made by the Customer with any particular Subcustodian.


5. DEPOSIT ACCOUNT TRANSACTIONS.

   (a) The Bank or its Subcustodians will make payments from the Deposit Account
      upon receipt of Instructions which include all information required by the
      Bank.

   (b) In the event that any payment to be made under this Section 5 exceeds the
      funds available in the Deposit Account, the Bank, in its discretion, may
      advance the Customer such excess amount which shall be deemed a loan
      payable on demand, bearing interest at the rate customarily charged by the
      Bank on similar loans.

   (c) If the Bank credits the Deposit Account on a payable date, or at any time
      prior to actual collection and reconciliation to the Deposit Account, with
      interest, dividends, redemptions or any other amount due, the Customer
      will promptly return any such amount upon oral or written notification:
      (i) that such amount has not been received in the ordinary course of
      business or (ii) that such amount was incorrectly credited.  If the
      Customer does not promptly return any amount upon such notification, the
      Bank shall be entitled, upon oral or written notification to the Customer,
      to reverse such credit by debiting the Deposit Account for the amount
      previously credited.  The Bank or its Subcustodian shall have no duty or
      obligation to institute legal proceedings, file a claim or a proof of
      claim in any insolvency proceeding or take any other action with respect
      to the collection of such amount, but may act for the Customer upon
      Instructions after consultation with the Customer.


6. CUSTODY ACCOUNT TRANSACTIONS.

   (a) Securities will be transferred, exchanged or delivered by the Bank or its
      Subcustodian upon receipt by the Bank of Instructions which include all
      information required by the Bank.  Settlement and payment for Securities
      received for, and delivery of Securities out of, the Custody Account may
      be made in accordance with the customary or established securities trading
      or securities processing practices and procedures in the jurisdiction or
      market in which the transaction occurs, including, without limitation,
      delivery of Securities to a purchaser, dealer or their agents against a
      receipt with the expectation of receiving later payment and free delivery.
       Delivery of Securities out of the Custody Account may also be made in any
      manner specifically required by Instructions acceptable to the Bank.

   (b) The Bank, in its discretion, may credit or debit the Accounts on a
      contractual settlement date with cash or Securities with respect to any
      sale, exchange or purchase of Securities.  Otherwise, such transactions
      will be credited or debited to the Accounts on the date cash or Securities
      are actually received by the Bank and reconciled to the Account.

      (i) The Bank may reverse credits or debits made to the Accounts in its
         discretion if the related transaction fails to settle within a
         reasonable period, determined by the Bank in its discretion, after the
         contractual settlement date for the related transaction.

      (ii)
         If any Securities delivered pursuant to this Section 6 are returned by
         the recipient thereof, the Bank may reverse the credits and debits of
         the particular transaction at any time.


7. ACTIONS OF THE BANK.

   The Bank shall follow Instructions received regarding assets held in the
Accounts.  However, until it receives Instructions to the contrary, the Bank
will:

   (a) Present for payment any Securities which are called, redeemed or retired
      or otherwise become payable and all coupons and other income items which
      call for payment upon presentation, to the extent that the Bank or
      Subcustodian is actually aware of such opportunities.

   (b) Execute in the name of the Customer such ownership and other certificates
      as may be required to obtain payments in respect of Securities.

   (c) Exchange interim receipts or temporary Securities for definitive
      Securities.

   (d) Appoint brokers and agents for any transaction involving the Securities,
      including, without limitation, affiliates of the Bank or any Subcustodian.

   (e) Issue statements to the Customer, at times mutually agreed upon,
      identifying the Assets in the Accounts.

   The Bank will send the Customer an advice or notification of any transfers of
Assets to or from the Accounts.  Such statements, advices or notifications shall
indicate the identity of the entity having custody of the Assets.  Unless the
Customer sends the Bank a written exception or objection to any Bank statement
within ninety (90) days of receipt, the Customer shall be deemed to have
approved such statement.  The Bank shall, to the extent permitted by law, be
released, relieved and discharged with respect to all matters set forth in such
statement or reasonably implied therefrom as though it had been settled by the
decree of a court of competent jurisdiction in an action where the Customer and
all persons having or claiming an interest in the Customer or the Customer's
Accounts were parties if: (a) the Customer has failed to provide a written
exception or objection to any Bank statement within ninety (90) days of receipt
and where the Customer's failure to so provide a written exception or objection
within such ninety (90) day period has limited the Bank's (i) access to the
records, materials and other information required to investigate the Customer's
exception or objection, and (ii) ability to recover from third parties any
amounts for which the Bank may become liable in connection with such exception
or objection, or (b) where the Customer has otherwise explicitly approved any
such statement.


<PAGE>

   All collections of funds or other property paid or distributed in respect of
Securities in the Custody Account shall be made at the risk of the Customer.
 The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment, redemption
or other transaction regarding Securities in the Custody Account in respect of
which the Bank has agreed to take any action under this Agreement.


8. CORPORATE ACTIONS; PROXIES.

   Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase plans
and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.

   When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received which
bears an expiration date, the Bank will endeavor to obtain Instructions from the
Customer or its Authorized Person, but if Instructions are not received in time
for the Bank to take timely action, or actual notice of such Corporate Action
was received too late to seek Instructions, the Bank is authorized to sell such
rights entitlement or fractional interest and to credit the Deposit Account with
the proceeds or take any other action it deems, in good faith, to be appropriate
in which case it shall be held harmless for any such action.

   The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing.  Such
proxies shall be executed in the appropriate nominee name relating to Securities
in the Custody Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and where bearer
Securities are involved, proxies will be delivered in accordance with
Instructions.


9. NOMINEES.

   Securities which are ordinarily held in registered form may be registered in
a nominee name of the Bank, Subcustodian or securities depository, as the case
may be.  The Bank may without notice to the Customer cause any such Securities
to cease to be registered in the name of any such nominee and to be registered
in the name of the Customer.  In the event that any Securities registered in a
nominee name are called for partial redemption by the issuer, the Bank may allot
the called portion to the respective beneficial holders of such class of
security pro rata or in any other manner that is fair, equitable and
practicable.  The Customer agrees to hold the Bank, Subcustodians, and their
respective nominees harmless from any liability arising directly or indirectly
from their status as a mere record holder of Securities in the Custody Account.


10. AUTHORIZED PERSONS.

   As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer under
this Agreement.  Such persons shall continue to be Authorized Persons until such
time as the Bank receives Instructions from the Customer or its designated agent
that any such employee or agent is no longer an Authorized Person.


11. INSTRUCTIONS.

   The term "Instructions" means instructions of any Authorized Person received
by the Bank, via telephone, telex, TWX, facsimile transmission, bank wire or
other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
 Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.

   Any Instructions delivered to the Bank by telephone shall promptly thereafter
be confirmed in writing by an Authorized Person (which confirmation may bear the
facsimile signature of such Person), but the Customer will hold the Bank
harmless for the failure of an Authorized Person to send such confirmation in
writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time.  The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account.  The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.


12. STANDARD OF CARE; LIABILITIES.

   (a) The Bank shall be responsible for the performance of only such duties as
      are set forth in this Agreement or expressly contained in Instructions
      which are consistent with the provisions of this Agreement.
       Notwithstanding anything to the contrary in this Agreement:

      (i) The Bank will use reasonable care with respect to its obligations
         under this Agreement and the safekeeping of Assets.  The Bank shall be
         liable to the Customer for any loss which shall occur as the result of
         the failure of a Subcustodian to exercise reasonable care with respect
         to the safekeeping of such Assets to the same extent that the Bank
         would be liable to the Customer if the Bank were holding such Assets in
         New York.  In the event of any loss to the Customer by reason of the
         failure of the Bank or its Subcustodian to utilize reasonable care, the
         Bank shall be liable to the Customer only to the extent of the
         Customer's direct damages, and shall in no event be liable for any
         special or consequential damages.


<PAGE>

      (ii)
         The Bank will not be responsible for any act, omission, default or for
         the solvency of any broker or agent which it or a Subcustodian appoints
         unless such appointment was made negligently or in bad faith or for any
         loss due to the negligent act of such broker or agent except to the
         extent that such broker or agent (other than a Subcustodian) performs
         in a negligent manner which is the cause of the loss to the Customer
         and the Bank failed to exercise reasonable care in monitoring such
         broker's or agent's performance where Customer has requested and Bank
         has agreed to accept such monitoring responsibility.

      (iii)
         The Bank shall be indemnified by, and without liability to the Customer
         for any action taken or omitted by the Bank whether pursuant to
         Instructions or otherwise within the scope of this Agreement if such
         act or omission was in good faith, without negligence.  In performing
         its obligations under this Agreement, the Bank may rely on the
         genuineness of any document which it believes in good faith to have
         been validly executed.

      (iv)The Customer agrees to pay for and hold the Bank harmless from any
         liability or loss resulting from the imposition or assessment of any
         taxes or other governmental charges, and any related expenses with
         respect to income from or Assets in the Accounts, except to the extent
         that the Bank has failed to exercise reasonable care in performing any
         obligations which the Bank may have agreed to assume (in addition to
         those stated in this Agreement) with respect to taxes and such failure
         by the Bank is the direct cause of such imposition or assessment of
         such taxes, charges or expenses.

      (v) The Bank shall be entitled to rely, and may act, upon the advice of
         counsel (who may be counsel for the Customer) on all legal matters and
         shall be without liability for any action reasonably taken or omitted
         pursuant to such advice; provided, that the Bank gives (to the extent
         practicable) prior notice to Customer of Bank's intention to so seek
         advice of counsel and an opportunity for consultation with Customer on
         the proposed contact with counsel.

      (vi)
         The Bank represents and warrants that it currently maintain a banker's
         blanket bond which provides standard fidelity and non-negligent loss
         coverage with respect to the Securities and Cash which may be held by
         Subcustodians pursuant to this Agreement.  The Bank agrees that if at
         any time it for any reason discontinues such coverage, it shall
         immediately give sixty (60) days' prior written notice to the Customer.
          The Bank need not maintain any insurance for the benefit of the
         Customer.

      (vii)
         Without limiting the foregoing, the Bank shall not be liable for any
         loss which results from:  (1) the general risk of investing, or (2)
         investing or holding Assets in a particular country including, but not
         limited to, losses resulting from nationalization, expropriation or
         other governmental actions; regulation of the banking or securities
         industry; currency restrictions, devaluations or fluctuations; and
         market conditions which prevent the orderly execution of securities
         transactions or affect the value of Assets.

      (viii)
         Neither party shall be liable to the other for any loss due to forces
         beyond their control including, but not limited to strikes or work
         stoppages, acts of war or terrorism, insurrection, revolution, nuclear
         fusion, fission or radiation, or acts of God.

   (b) Consistent with and without limiting the first paragraph of this Section
      12, it is specifically acknowledged that the Bank shall have no duty or
      responsibility to:

      (i) question Instructions or make any suggestions to the Customer or an
         Authorized Person regarding such Instructions;

      (ii)
         supervise or make recommendations with respect to investments or the
         retention of Securities;

      (iii)
         advise the Customer or an Authorized Person regarding any default in
         the payment of principal or income of any security other than as
         provided in Section 5(c) of this Agreement;

      (iv)
         evaluate or report to the Customer or an Authorized Person regarding
         the financial condition of any broker, agent (other than a
         Subcustodian) or other party to which Securities are delivered or
         payments are made pursuant to this Agreement;

      (v) review or reconcile trade confirmations received from brokers.  The
         Customer or its Authorized Persons (as defined in Section 10) issuing
         Instructions shall bear any responsibility to review such confirmations
         against Instructions issued to and statements issued by the Bank.

   (c) The Customer authorizes the Bank to act under this Agreement
      notwithstanding that the Bank or any of its divisions or affiliates may
      have a material interest in a transaction, or circumstances are such that
      the Bank may have a potential conflict of duty or interest including the
      fact that the Bank or any of its affiliates may provide brokerage services
      to other customers, act as financial advisor to the issuer of Securities,
      act as a lender to the issuer of Securities, act in the same transaction
      as agent for more than one customer, have a material interest in the issue
      of Securities, or earn profits from any of the activities listed herein.


13. FEES AND EXPENSES.


<PAGE>

   The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
reasonable legal fees. The Bank shall have a lien on and is authorized to charge
any Accounts of the Customer for any amount owing to the Bank under any
provision of this Agreement upon notice to the Customer.


14. MISCELLANEOUS.

   (a) Foreign Exchange Transactions. Pursuant to Instructions, which may be
       ------------------------------
      standing Instructions, to facilitate the administration of the Customer's
      trading and investment activity, the Bank is authorized to enter into spot
      or forward foreign exchange contracts with the Customer or an Authorized
      Person for the Customer and may also provide foreign exchange through its
      subsidiaries or Subcustodians. The Bank may establish rules or limitations
      concerning any foreign exchange facility made available. In all cases
      where the Bank, its subsidiaries, affiliates or Subcustodians enter into a
      foreign exchange contract related to Accounts, the terms and conditions of
      the then current foreign exchange contract of the Bank, its subsidiary,
      affiliate or Subcustodian and, to the extent not inconsistent, this
      Agreement shall apply to such transaction.

   (b) Certification of Residency, etc. The Customer certifies that it is a
       --------------------------------
      resident of the United States and agrees to notify the Bank of any changes
      in residency. The Bank may rely upon this certification or the
      certification of such other facts as may be required to administer the
      Bank's obligations under this Agreement. The Customer will indemnify the
      Bank against all losses, liability, claims or demands arising directly or
      indirectly from any such certifications.

   (c) Access to Records. The Bank shall allow the Customer's independent public
       ------------------
      accountants, officers and advisers reasonable access to the records of the
      Bank relating to the Assets as is required in connection with their
      examination of books and records pertaining to the Customer's affairs.
      Subject to restrictions under applicable law, the Bank shall also obtain
      an undertaking to permit the Customer's independent public accountants
      reasonable access to the records of any Subcustodian which has physical
      possession of any Assets as may be required in connection with the
      examination of the Customer's books and records.

   (d) Governing Law; Successors and Assigns. This Agreement shall be governed
       --------------------------------------
      by the laws of the State of New York and shall not be assignable by either
      party, but shall bind the successors in interest of the Customer and the
      Bank.

   (e) Entire Agreement; Applicable Riders. Customer represents that the Assets
       ------------------------------------
      deposited in the Accounts are (Check one):

        X <F1>  Employee Benefit Plan or other assets subject to the Employee
       -- ----
      Retirement Income Security Act of 1974, as amended ("ERISA");

        X /2/  Mutual Fund assets subject to certain Securities and Exchange
       --
      Commission ("SEC") rules and regulations;

         X /3/  Neither of the above.
        --

      With respect to each Customer, this Agreement consists exclusively of this
      document together with Schedules A, B, Exhibits I - _______ and the
      following Rider(s) to the extent indicated on Schedule A hereto opposite
      the name of the Customer under the column headed "Applicable Riders to
      Agreement":

        X   ERISA
        - -

        X   MUTUAL FUND
        - -

            SPECIAL TERMS AND CONDITIONS
        ---

   There are no other provisions of this Agreement and this Agreement supersedes
any other agreements, whether written or oral, between the parties.  Any
amendment to this Agreement must be in writing, executed by both parties.

   (f) Severability.  In the event that one or more provisions of this Agreement
       -------------
      are held invalid, illegal or enforceable in any respect on the basis of
      any particular circumstances or in any jurisdiction, the validity,
      legality and enforceability of such provision or provisions under other
      circumstances or in other jurisdictions and of the remaining provisions
      will not in any way be affected or impaired.

   (g) Waiver.  Except as otherwise provided in this Agreement, no failure or
       -------
      delay on the part of either party in exercising any power or right under
      this Agreement operates as a waiver, nor does any single or partial
      exercise of any power or right preclude any other or further exercise, or
      the exercise of any other power or right. No waiver by a party of any
      provision of this Agreement, or waiver of any breach or default, is
      effective unless in writing and signed by the party against whom the
      waiver is to be enforced.

   (h) Notices. All notices under this Agreement shall be effective when
       --------
      actually received. Any notices or other


 -------------------------

<F1>
     With respect to each Customer listed on Schedule A hereto under the heading
     "ERISA Trusts."

    2.
     With respect to each Customer listed on Schedule A hereto under the heading
     "Investment Companies/Portfolios Registered Under the Investment Company
     Act of 1940."

    3.
     With respect to certain of the Customers listed on Schedule A hereto under
     the heading "Separate Accounts" as indicated on Schedule A.
<PAGE>

   (h) Notices. All notices under this Agreement shall be effective when
       --------
      actually received. Any notices or other


<PAGE>


                              EACH OF THE CUSTOMERS, INDIVIDUALLY AND SEPARATELY
                              LISTED ON SECTION III OF SCHEDULE A HERETO

                                 By:

                              /s/Alvin M. Younger


                              Alvin M. Younger


                              Treasurer


                                 THE CHASE MANHATTAN BANK, N.A.

                                 By:
                              /s/Alan Naughton


                              Alan Naughton


                              Vice President


<PAGE>


                                                                      Schedule A
                                                                     Page 1 of 2


                LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                         THE CHASE MANHATTAN BANK, N.A.
                             DATED JANUARY 3, 1994


                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS         The Mutual Fund Rider is
   REGISTERED UNDER THE INVESTMENT         applicable to all Customers
   COMPANY ACT OF 1940                     listed under Section I of
                                            this Schedule A.

   Equity Funds
   ------------

   T. Rowe Price Balanced Fund, Inc.
   T. Rowe Price Blue Chip Growth Fund, Inc.
   T. Rowe Price Capital Appreciation Fund
   T. Rowe Price Dividend Growth Fund, Inc.
   T. Rowe Price Equity Income Fund
   T. Rowe Price Growth & Income Fund, Inc.
   T. Rowe Price Growth Stock Fund, Inc.
   Institutional International Funds, Inc. on behalf of:
      Foreign Equity Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price European Stock Fund
      T. Rowe Price International Discovery Fund
      T. Rowe Price International Stock Fund
      T. Rowe Price Japan Fund
      T. Rowe Price Latin America Fund
      T. Rowe Price New Asia Fund
   T. Rowe Price Mid-Cap Growth Fund, Inc.
   T. Rowe Price New Era Fund, Inc.
   T. Rowe Price New Horizons Fund, Inc.
   T. Rowe Price OTC Fund, Inc. on behalf of:
      T. Rowe Price OTC Fund
   T. Rowe Price Science & Technology Fund, Inc.
   T. Rowe Price Small Cap Value Fund, Inc.
   CUNA Mutual Funds, Inc. on behalf of:
      CUNA Mutual Cornerstone Fund




<PAGE>


                                                                      Schedule A
                                                                     Page 2 of 2

                                           APPLICABLE RIDERS TO
   CUSTOMER                                GLOBAL CUSTODY AGREEMENT
   --------                                ------------------------

   Income Funds
   ------------

   T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
   T. Rowe Price High Yield Fund, Inc.
   T. Rowe Price New Income Fund, Inc.
   T. Rowe Price Short-Term Bond Fund, Inc.
   T. Rowe Price Summit Funds, Inc. on behalf of:
      T. Rowe Price Summit Limited-Term Bond Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Global Government Bond Fund
      T. Rowe Price International Bond Fund
      T. Rowe Price Short-Term Global Income Fund

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA              The ERISA Rider is applicable
                                            to all Customers Under
                                            Section II of this
                                            Schedule A.
   T. Rowe Price Trust Company as Trustee for the
      Johnson Matthey Salaried

      Common Trust Funds
      ------ ----- -----

      T. Rowe Price Trust Company, as Trustee
      for the International Common Trust Fund
      on behalf of the Underlying Trusts:
        Foreign Discovery Trust
        Foreign Discovery Trust-Augment
        Pacific Discovery Trust
        European Discovery Trust
        Japan Discovery Trust
        Latin American Discovery Trust

      New York City International Common Trust Fund

III. OTHER                                  No Riders are applicable
                                            to the Customer listed
     RPFI International Partners, L.P.      under Section III of
                                            this Schedule A.


<PAGE>

                    ERISA RIDER TO GLOBAL CUSTODY AGREEMENT
                   BETWEEN THE CHASE MANHATTAN BANK, N.A. AND
                EACH OF THE ENTITIES LISTED ON SCHEDULE A HERETO
                           EFFECTIVE  JANUARY 3, 1994


   Customer represents that the Assets being placed in the Bank's custody are
subject to ERISA.  It is understood that in connection therewith the Bank is a
service provider and not a fiduciary of the plan and trust to which the assets
are related.  The Bank shall not be considered a party to the underlying plan
and trust and the Customer hereby assumes all responsibility to assure that
Instructions issued under this Agreement are in compliance with such plan and
trust and ERISA.

   This Agreement will be interpreted as being in compliance with the Department
of Labor Regulations Section 2550.404b-1 concerning the maintenance of indicia
of ownership of plan assets outside of the jurisdiction of the district courts
of the United States.

   The following modifications are made to the Agreement:

   Section 3.  Subcustodians and Securities Depositories.
               ------------------------------------------

   Add the following language to the end of Section 3:

   As used in this Agreement, the term Subcustodian and the term securities
depositories include a branch of the Bank, a branch of a qualified U.S. bank, an
eligible foreign custodian, or an eligible foreign securities depository, where
such terms shall mean:

   (a) "qualified U.S. bank" shall mean a U.S. bank as described in paragraph
      (a)(2)(ii)(A)(1) of the Department of Labor Regulations Section
      2550.404b-1;

   (b) "eligible foreign custodian" shall mean a banking institution
      incorporated or organized under the laws of a country other than the
      United States which is supervised or regulated by that country's
      government or an agency thereof or other regulatory authority in the
      foreign jurisdiction having authority over banks; and

   (c) "eligible foreign securities depository" shall mean a securities
      depository or clearing agency, incorporated or organized under the laws of
      a country other than the United States, which is supervised or regulated
      by that country's government or an agency thereof or other regulatory
      authority in the foreign jurisdiction having authority over such
      depositories or clearing agencies and which is described in paragraph
      (c)(2) of the Department of Labor Regulations Section 2550.404b-1.

   Section 4.  Use of Subcustodian.
               --------------------

   Subsection (d) of this section is modified by deleting the last sentence.

   Section 5.  Deposit Account Payments.
               -------------------------

   Subsection (b) is amended to read as follows:

   (b)  In the event that any payment made under this Section 5 exceeds the
      funds available in the Deposit Account, such discretionary advance shall
      be deemed a service provided by the Bank under this Agreement for which it
      is entitled to recover its costs as may be determined by the Bank in good
      faith.

   Section 10.  Authorized Persons.
                ------------------

   Add the following paragraph at the end of Section 10:

   Customer represents that: a) Instructions will only be issued by or for a
fiduciary pursuant to Department of Labor Regulation Section 404b-1 (a)(2)(i)
and b) if Instructions are to be issued by an investment manager, such entity
will meet the requirements of Section 3(38) of ERISA and will have been
designated by the Customer to manage assets held in the Customer Accounts
("Investment Manager"). An Investment Manager may designate certain of its
employees to act as Authorized Persons under this Agreement.

   Section 14(a).  Foreign Exchange Transactions.
                   ------------------------------

   Add the following paragraph at the end of Subsection 14(a):

   Instructions to execute foreign exchange transactions with the Bank, its
subsidiaries, affiliates or Subcustodians will include (1) the time period in
which the transaction must be completed; (2) the location i.e., Chase New York,
                                                          ----
Chase London, etc. or the Subcustodian with whom the contract is to be executed
and (3) such additional information and guidelines as may be deemed necessary;
and, if the Instruction is a standing Instruction, a provision allowing such
Instruction to be overridden by specific contrary Instructions.


<PAGE>

                 MUTUAL FUND RIDER TO GLOBAL CUSTODY AGREEMENT
                   BETWEEN THE CHASE MANHATTAN BANK, N.A. AND
                EACH OF THE ENTITIES LISTED ON SCHEDULE A HERETO
                           EFFECTIVE JANUARY 3, 1994


   Customer represents that the Assets being placed in the Bank's custody are
subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.

   Except to the extent that the Bank has specifically agreed to comply with a
condition of a rule, regulation, interpretation promulgated by or under the
authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.

   The following modifications are made to the Agreement:

   Section 3.  Subcustodians and Securities Depositories.
               ------------------------------------------

   Add the following language to the end of Section 3:

   The terms Subcustodian and securities depositories as used in this Agreement
shall mean a branch of a qualified U.S. bank, an eligible foreign custodian or
an eligible foreign securities depository, which are further defined as follows:

   (a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in Rule
      17f-5 under the Investment Company Act of 1940;

   (b) "eligible foreign custodian" shall mean (i) a banking institution or
      trust company incorporated or organized under the laws of a country other
      than the United States that is regulated as such by that country's
      government or an agency thereof and that has shareholders' equity in
      excess of $200 million in U.S. currency (or a foreign currency equivalent
      thereof), (ii) a majority owned direct or indirect subsidiary of a
      qualified U.S. bank or bank holding company that is incorporated or
      organized under the laws of a country other than the United States and
      that has shareholders' equity in excess of $100 million in U.S. currency
      (or a foreign currency equivalent thereof)(iii) a banking institution or
      trust company incorporated or organized under the laws of a country other
      than the United States or a majority owned direct or indirect subsidiary
      of a qualified U.S. bank or bank holding company that is incorporated or
      organized under the laws of a country other than the United States which
      has such other qualifications as shall be specified in Instructions and
      approved by the Bank; or (iv) any other entity that shall have been so
      qualified by exemptive order, rule or other appropriate action of the SEC;
      and

   (c) "eligible foreign securities depository" shall mean a securities
      depository or clearing agency, incorporated or organized under the laws of
      a country other than the United States, which operates (i) the central
      system for handling securities or equivalent book-entries in that country,
      or (ii) a transnational system for the central handling of securities or
      equivalent book-entries.

   The Customer represents that its Board of Directors has approved each of the
Subcustodians listed in Schedule B to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as Exhibits I through     of Schedule B, and further represents that its Board
                      ----
has determined that the use of each Subcustodian and the terms of each
subcustody agreement are consistent with the best interests of the Fund(s) and
its (their) shareholders.  The Bank will supply the Customer with any amendment
to Schedule B for approval.  As requested by the Bank, the Customer will supply
the Bank with certified copies of its Board of Directors resolution(s) with
respect to the foregoing prior to placing Assets with any Subcustodian so
approved.

   Section 11.  Instructions.
                -------------

   Add the following language to the end of Section 11:

   Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below.  Instructions must specify the purpose for which any transaction is to be
made and Customer shall be solely responsible to assure that Instructions are in
accord with any limitations or restrictions applicable to the Customer by law or
as may be set forth in its prospectus.

   (a) In connection with the purchase or sale of Securities at prices as
      confirmed by Instructions;

   (b) When Securities are called, redeemed or retired, or otherwise become
      payable;

   (c) In exchange for or upon conversion into other securities alone or other
      securities and cash pursuant to any plan or merger, consolidation,
      reorganization, recapitalization or readjustment;

   (d) Upon conversion of Securities pursuant to their terms into other
      securities;

   (e) Upon exercise of subscription, purchase or other similar rights
      represented by Securities;


<PAGE>

   (f) For the payment of interest, taxes, management or supervisory fees,
      distributions or operating expenses;

   (g) In connection with any borrowings by the Customer requiring a pledge of
      Securities, but only against receipt of amounts borrowed;

   (h) In connection with any loans, but only against receipt of adequate
      collateral as specified in Instructions which shall reflect any
      restrictions applicable to the Customer;

   (i) For the purpose of redeeming shares of the capital stock of the Customer
      and the delivery to, or the crediting to the account of, the Bank, its
      Subcustodian or the Customer's transfer agent, such shares to be purchased
      or redeemed;

   (j) For the purpose of redeeming in kind shares of the Customer against
      delivery to the Bank, its Subcustodian or the Customer's transfer agent of
      such shares to be so redeemed;

   (k) For delivery in accordance with the provisions of any agreement among the
      Customer, the Bank and a broker-dealer registered under the Securities
      Exchange Act of 1934 (the "Exchange Act") and a member of The National
      Association of Securities Dealers, Inc. ("NASD"), relating to compliance
      with the rules of The Options Clearing Corporation and of any registered
      national securities exchange, or of any similar organization or
      organizations, regarding escrow or other arrangements in connection with
      transactions by the Customer;

   (l) For release of Securities to designated brokers under covered call
      options, provided, however, that such Securities shall be released only
      upon payment to the Bank of monies for the premium due and a receipt for
      the Securities which are to be held in escrow.  Upon exercise of the
      option, or at expiration, the Bank will receive from brokers the
      Securities previously deposited.  The Bank will act strictly in accordance
      with Instructions in the delivery of Securities to be held in escrow and
      will have no responsibility or liability for any such Securities which are
      not returned promptly when due other than to make proper request for such
      return;

   (m) For spot or forward foreign exchange transactions to facilitate security
      trading, receipt of income from Securities or related transactions;

   (n) For other proper purposes as may be specified in Instructions issued by
      an officer of the Customer which shall include a statement of the purpose
      for which the delivery or payment is to be made, the amount of the payment
      or specific Securities to be delivered, the name of the person or persons
      to whom delivery or payment is to be made, and a certification that the
      purpose is a proper purpose under the instruments governing the Customer;
      and

   o) Upon the termination of this Agreement as set forth in Section 14(i).

   Section 12.  Standard of Care; Liabilities.
                ------------------------------

   Add the following subsection (c) to Section 12:

   (c) The Bank hereby warrants to the Customer that in its opinion, after due
      inquiry, the established procedures to be followed by each of its
      branches, each branch of a qualified U.S. bank, each eligible foreign
      custodian and each eligible foreign securities depository holding the
      Customer's Securities pursuant to this Agreement afford protection for
      such Securities at least equal to that afforded by the Bank's established
      procedures with respect to similar securities held by the Bank and its
      securities depositories in New York.

   Section 14.  Access to Records.
                ------------------

   Add the following language to the end of Section 14(c):

   Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement.  The
Bank shall endeavor to obtain and furnish the Customer with such similar reports
as it may reasonably request with respect to each Subcustodian and securities
depository holding the Customer's assets.



                              GLOBAL CUSTODY AGREEMENT



                              WITH
                                   -----------------------------------



                              DATE
                                   -----------------------------------




<PAGE>

                       SPECIAL TERMS AND CONDITIONS RIDER
                       ----------------------------------
   January, 1994

B



                           SUB-CUSTODIANS EMPLOYED BY
                           --------------------------
             THE CHASE MANHATTAN BANK, N.A. LONDON, GLOBAL CUSTODY
             -----------------------------------------------------


COUNTRY      SUB-CUSTODIAN                CORRESPONDENT BANK

ARGENTINA    The Chase Manhattan Bank,    The Chase Manhattan
             N.A., Main Branch            Bank, N.A.
             25 De Mayo 130/140           Buenos Aires
             Buenos Aires
             ARGENTINA

AUSTRALIA    The Chase Manhattan Bank,    The Chase Manhattan Bank
             Australia Limited            Australia Limited Sydney
             36th Floor
             World Trade Centre
             Jamison Street
             Sydney
             New South Wales 2000
             AUSTRALIA


AUSTRIA      Creditanstalt - Bankvereln   Credit Lyonnais Vienna
             Schottengasse 6
             A - 1011, Vienna
             AUSTRIA

BANGLADESH    Standard Chartered Bank     Standard Chartered Bank
             18-20 Motijheel C.A.        Dhaka
             Box 536,
             Dhaka-1000
             BANGLADESH

BELGIUM       Generale Bank               Credit Lyonnais Bank
             3 Montagne Du Parc          Brussels
             1000 Bruxelles
             BELGIUM

BOTSWANA     Standard Chartered Bank      Standard Chartered Bank
             Botswana Ltd.                Botswana Ltd.
             4th Floor Commerce House    Gabarone
             The Mall
             Gaborone
             BOTSWANA

BRAZIL       Banco Chase Manhattan, S.A.  Banco Chase Manhattan
             Chase Manhattan Center       S.A., Sao Paolo


<PAGE>

             Rua Verbo Divino, 1400
             Sao Paulo, SP 04719-002
             BRAZIL

CANADA       The Royal Bank of Canada     Toronto Dominion Bank
             Royal Bank Plaza            Toronto
             Toronto
             Ontario  M5J 2J5
             CANADA


             Canada Trust                 Toronto Dominion Bank
             Canada Trust Tower          Toronto
             BCE Place
             161 Bay at Front
             Toronto
             Ontario M5J 2T2
             CANADA

CHILE        The Chase Manhattan Bank,    The Chase Manhattan
             N.A., Agustinas 1235         Bank, N.A., Santiago
             Casilla 9192
             Santiago
             CHILE

COLOMBIA     Cititrust Colombia S.A.      Cititrust Colombia S.A.
              Sociedad Fiduciaria        Sociedad Fiduciaria
             Av. Jimenez No 8-89          Santafe de Bogota
             Santafe de Bogota, DC
             COLOMBIA

CZECH        Ceskoslovenska Obchodni     Ceskoslovenska
REPUBLIC     Banka, A.S.; Na Prikoope 14  Obchodni Banka, A.S.
             115 20 Praha 1              Praha
             CZECH REPUBLIC

DENMARK       Den Danske Bank             Den Danske Bak
             2 Holmens Kanala DK 1091    Copenhagen
             Copenhagen
             DENMARK

EUROBONDS     Cedel S.A.                  A/c No. 17817
             67 Blvd Grande Duchesse      ECU:Lloyds Bank PLC
             Charlotte LUXEMBOURG         International Banking
                                         Dividion
             A/c Chase Manhattan Bank,   London
             N.A. London                  For all other
                                          currencies: see
                                          relevant country


<PAGE>


EURO CDS      First Chicago Clearing Centre ECU:Lloyds Bank PLC
             27 Leadenhall Street         Banking Division London
             London EC3A 1AA              For all other
             UK                           currencies: see
                                          relevant country

FINLAND      Kansallis-Osake-Pankki      Kanasallis-Osake-Pankki
             Aleksanterinkatu 42
             00100 Helsinki 10
             FINLAND

FRANCE        Banque Paribas              Societe Generale Paris
             Ref 256
             BP 141
             3, Rue D'Antin
             75078 Paris
             Cedex 02
             FRANCE

GERMANY       Chase Bank A.G.             Chase Bank A.G.
             Alexanderstrasse 59         Frankfurt
             Postfach 90 01 09
             60441 Frankfurt/Main
             GERMANY

GREECE        National Bank of Greece S.A. National Bank of Greece
             38 Stadiou Street            S.A. Athens
             Athens                       A/c Chase Manhattan
             GREECE                       Bank, N.A., London
                                         A/c No. 040/7/921578-68

HONG KONG     The Chase Manhattan Bank,NA The Chase Manhattan
             40/F One Exchange Square     Bank, N.A., Hong Kong
             8, Connaught Place
             Central, Hong Kong
             HONG KONG

HUNGARY       Citibank Budapest Rt.       Citibank Budapest Rt.
             Vaci Utca 19-21             Budapest
             1052 Budapest V
             HUNGARY

INDIA         The Hongkong and Shanghai   The Hongkong and
             Banking Corporation Limited  Shanghai Banking
             52/60 Mahatma Gandhi Road    Corporation Limited,
             Bombay 400 001              Bombay
             INDIA



<PAGE>

INDONESIA    The Hongkong and Shanghai    The Chase Manhattan
             Banking Corporation Limited  Bank, N.A., Jakarta
             World Trade Center
             J1. Jend Sudirman Kav. 29-31
             Jakarta 10023
             INDONESIA

IRELAND       Bank of Ireland             Allied Irish Bank Dublin
             International Financial Services Centre
             1 Hargourmaster Place
             Dublin 1
             IRELAND

ISRAEL        Bank Leumi Le-Israel B.M.   Bank Leumi Le-Israel
             19 Herzi Street              B.M., Tel Aviv
             65136 Tel Aviv
             ISRAEL

ITALY         The Chase Manhattan Bank,   The Chase Manhattan
             N.A., Piazza Meda 1          Bank, N.A., Milan
             20121 Milan
             ITALY

JAPAN         The Chase Manhattan Bank,   The Chase Manhattan
             N.A.,1-3 Marunouchi 1-Chome  Bank, N.A., Tokyo
             Chiyoda-Ku
             Tokyo 100
             JAPAN

JORDAN        Arab Bank Limited           Arab Bank Limited
             P.O. Box 950544-5           Amman
             Amman
             Shmeisani
             JORDAN

LUXEMBOURG   Banque Generale du Luxembourg Banque Generale du
             S.A., 27 Avenue Monterey     Luxembourg S.A.
             LUXEMBOURG                  Luxembourg

MALAYSIA      The Chase Manhattan Bank,   The Chase Manhattan
             N.A., Pernas International   Bank, N.A., Kuala Lumpur
             Jalan Sultan Ismail
             50250, Kuala Lumpur
             MALAYSIA

MEXICO       The Chase Manhattan Bank,    No correspondent Bank
             N.A., Hamburgo 213, Piso 7  (Equities)
             06660 Mexico D.F.
             MEXICO


<PAGE>


(Government  Banco Nacional de Mexico,    Banque Commerciale du
Bonds)       Avenida Juarez No.           Maroc
             104-11 Piso                 Casablanca
             06040 Mexico D.F.
             MEXICO

NETHERLANDS   ABN AMRO N.V.               Credit Lyonnais
             Securities Centre            Bank Nederland N.V.
             P.O. Box 3200               Rotterdam
             4800 De Breda
             NETHERLANDS

NEW ZEALAND  National Nominees Limited    National Bank of New Zealand
             Level 2 BNZ Tower           Wellington
             125 Queen Street
             Auckland
             NEW ZEALAND

NORWAY        Den Norske Bank             Den Norske Bank
             Kirkegaten 21               Oslo
             Oslo 1
             NORWAY

PAKISTAN      Citibank N.A.               Citibank N.A.
             State Life Building No.1    Karachi
             I.I. Chundrigar Road
             Karachi
             PAKISTAN


PERU         Citibank, N.A.               Citibank N.A. Lima
             Camino Real 457
             CC Torre Real - 5th Floor
             San Isidro, Lima 27
             PERU

PHILIPPINES   The Hongkong and Shanghai   The Hongkong and Shaghai
             Banking Corporation Limited  Banking Corporation
             Hong Kong Bank Centre 3/F    Limited, Manila
             San Miguel Avenue
             Ortigas Commercial Centre
             Pasig Metro Manila
             PHILIPPINES


POLAND        Bank Polska Kasa Opieki     Bank Potska Kasa Opieki
             S.A., 6/12 Nowy Swiat Str    S.A., Warsaw
             00-920 Warsaw


<PAGE>

             POLAND

PORTUGAL     Banco Espirito Santo &       Banco Pinto &
             Comercial de Lisboa          Sotto Mayor
             Servico de Gestaode Titulos  Avenida Fontes
             R. Mouzinho da Silvelra,     Pereira de Melo
             36 r/c, 1200 Lisbon          1000 Lisbon
             PORTUGAL


SHANGHAI      The Hongkong and Shanghai   The Chase Manhattan
(CHINA)      Banking Corporation Limited  Bank, N.A.,Hong Kong
             Shanghai Branch
             Corporate Banking Centre
             Unit 504, 5/F Shanghai Centre
             1376 Hanjing Xi Lu
             Shanghai
             THE PEOPLE'S REPUBLIC OF CHINA

SCHENZHEN    The Hongkong and Shanghai    The Chase Manhattan
(CHINA)      Banking Corporation Limited  Bank, N.A., Hong Kong
             1st Floor
             Central Plaza Hotel
             No. 1 Chun Feng Lu
             Shenzhen
             THE PEOPLE'S REPUBLIC OF CHINA

SINGAPORE     The Chase Manhattan Bank,   The Chase Manhattan
             N.A.                         Bank, N.A.
             Shell Tower                 Singapore
             50 Raffles Place
             Singapore 0104
             SINGAPORE

SOUTH KOREA   The Hongkong & Shanghai     The Hongkong & Shanghai
             Banking Corporation Limited  Banking Corporation
             6/F Kyobo Building           Limited, Seoul
             #1 Chongro, 1-ka Chongro-Ku,
             Seoul
             SOUGH KOREA

SPAIN         The Chase Manhattan Bank,   Banco Zaragozano, S.A.
             N.A.,Calle Peonias 2        Madrid
             7th Floor
             La Piovera
             28042 Madrid
             SPAIN

URUGUAY      The First National Bank      The First National Bank


<PAGE>

             of Boston                    of Boston
             Zabala 1463                 Montevideo
             Montevideo
             URUGUAY


U.S.A        The Chase Manhattan Bank,    The Chase Manhattan
             N.A.                         Bank, N.A.
             1 Chase Manhattan Plaza      New York
             New York
             NY 10081
             U.S.A.

VENEZUELA     Citibank N.A.               Citibank N.A.
             Carmelitas a Altagracia     Caracas
             Edificio Citibank
             Caracas 1010
             VENEZUELA


<PAGE>

                              AMENDMENT AGREEMENT

     AMENDMENT AGREEMENT, dated as of April 18, 1994 (the "AMENDMENT AGREEMENT")
to the Global Custody Agreement, effective January 3, 1994 (the "CUSTODY
AGREEMENT") by and between each of the Entities listed in Attachment A hereto,
separately and individually (each such entity referred to hereinafter as the
"CUSTOMER") and THE CHASE MANHATTAN BANK, N.A. (the "BANK").  Terms defined in
the Custody Agreement are used herein as therein defined.

     WITNESSETH:

     WHEREAS, the Customer wishes to appoint the Bank as its global custodian
and the bank wishes to accept such appointment pursuant to the terms of the
Custody Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Amendment.  Section I of Schedule A of the Custody Agreement ("SCHEDULE
        ---------
A") shall be amended to add each Customer listed in Attachment A hereto.  The
revised Schedule A incorporating these changes in the form attached hereto as
Attachment B shall supersede the existing Schedule A in its entirety.

     2. Agreement.  The Customer agrees to be bound in all respects by all the
        ---------
terms and conditions of the Custody Agreement and shall be fully liable
thereunder as a "Customer" as defined in the Custody Agreement.

     3. Confirmation of Agreement.  Except as amended hereby, the Custody
        -------------------------
Agreement is in full force and effect and as so amended is hereby ratified,
approved and confirmed by the Customer and the Bank in all respects.







<PAGE>

     4. Governing Law.  This Amendment Agreement shall be construed in
        -------------
accordance with and governed by the law of the State of New York without regard
to its conflict of law principles.

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the day and year first above written.


                           THE CHASE MANHATTAN BANK, N.A.


                           By:   /s/Alan P. Naughton
                                 Alan P. Naughton
                                 Vice President

                           EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO,
                           SEPARATELY AND INDIVIDUALLY


                           By:   /s/Carmen F. Deyesu
                                 Carmen F. Deyesu
                                Treasurer


<PAGE>

                                                                    Attachment A
                               LIST OF CUSTOMERS

T. Rowe Price International Series, Inc. on behalf of the
     T. Rowe Price International Stock Portfolio

T. Rowe Price Equity Series, Inc. on behalf of the
     T. Rowe Price Equity Income Portfolio
     T. Rowe Price New America Growth Portfolio

T. Rowe Price New America Growth Fund, Inc.

T. Rowe Price Income Series, Inc. on behalf of
     T. Rowe Price Limited-Term Bond Portfolio


<PAGE>

 Attachment B                                                         Schedule A
                                                                     Page 1 of 2
                LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                         THE CHASE MANHATTAN BANK, N.A.
                             DATED JANUARY 3, 1993

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS         The Mutual Fund Rider is
   REGISTERED UNDER THE INVESTMENT         applicable to all Customers
   COMPANY ACT OF 1940                     listed under Section I of
                                            this Schedule A.
   Equity Funds
   ------------

   T. Rowe Price Balanced Fund, Inc.
   T. Rowe Price Blue Chip Growth Fund, Inc.
   T. Rowe Price Capital Appreciation Fund
   T. Rowe Price Dividend Growth Fund, Inc.
   T. Rowe Price Equity Income Fund
   T. Rowe Price Growth & Income Fund, Inc.
   T. Rowe Price Growth Stock Fund, Inc.
   Institutional International Funds, Inc. on behalf of:
      Foreign Equity Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price European Stock Fund
      T. Rowe Price International Discovery Fund
      T. Rowe Price International Stock Fund
      T. Rowe Price Japan Fund
      T. Rowe Price Latin America Fund
      T. Rowe Price New Asia Fund
   T. Rowe Price International Series, Inc., on behalf of:
      T. Rowe Price International Stock Portfolio
   T. Rowe Price Mid-Cap Growth Fund, Inc.
   T. Rowe Price New Era Fund, Inc.
   T. Rowe Price New Horizons Fund, Inc.
   T. Rowe Price OTC Fund, Inc. on behalf of:
      T. Rowe Price OTC Fund
   T. Rowe Price Science & Technology Fund, Inc.
   T. Rowe Price Small-Cap Value Fund, Inc.
   CUNA Mutual Funds, Inc. on behalf of:
      CUNA Mutual Cornerstone Fund
   T. Rowe Price Equity Series, Inc. on behalf of:
      T. Rowe Price Equity Income Portfolio
      T. Rowe Price New America Growth Portfolio
   T. Rowe Price New America Growth Fund, Inc.


<PAGE>

 Attachment B                                                         Schedule A
                                                                     Page 2 of 2

                                            APPLICABLE RIDERS TO
   CUSTOMER                                GLOBAL CUSTODY
   --------                                --------------
                                             AGREEMENT
                                            ----------

   Income Funds
   ------------
   T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
   T. Rowe Price High Yield Fund, Inc.
   T. Rowe Price New Income Fund, Inc.
   T. Rowe Price Short-Term Bond Fund, Inc.
   T. Rowe Price Summit Funds, Inc. on behalf of:
      T. Rowe Price Summit Limited-Term Bond Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Global Government Income Fund
      T. Rowe Price International Bond Fund
      T. Rowe Price Short-Term Global Income Fund
   T. Rowe Price Income Series, Inc. on behalf of:
      T. Rowe Price Limited-Term Bond Portfolio

II. ACCOUNTS SUBJECT TO ERISA              The ERISA Rider is applicable
                                            to all Customers Under
                                            Section II of this
                                            Schedule A.
   T. Rowe Price Trust Company as Trustee for the
      Johnson Matthey Salaried
      Savings Plan

   Common Trust Funds
   ------------------

   T. Rowe Price Trust Company,
   as Trustee for the International
   Common Trust Fund on behalf of
   the Underlying Trusts:
      Foreign Discovery Trust
      Foreign Discovery Trust-Augment
      Pacific Discovery Trust
      European Discovery Trust
      Japan Discovery Trust
      Latin American Discovery Trust
   New York City International Common Trust Fund

III. OTHER                                 No Riders are applicable to
                                            the Customer listed under
   RPFI International                      Section III of this
     Partners, L.P.                        Schedule A.



<PAGE>

                              AMENDMENT AGREEMENT




     AMENDMENT AGREEMENT, dated as of August 15, 1994 (the "AMENDMENT
AGREEMENT") to the Global Custody Agreement, effective January 3, 1994, as
amended (the "CUSTODY AGREEMENT") by and between each of the Entities listed in
Attachment A hereto, separately and individually (each such entity referred to
hereinafter as the "CUSTOMER") and THE CHASE MANHATTAN BANK, N.A. (the "BANK").
 Terms defined in the Custody Agreement are used herein as therein defined.

     WITNESSETH:

     WHEREAS, the Customer wishes to appoint the Bank as its global custodian
and the Bank wishes to accept such appointment pursuant to the terms of the
Custody Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Amendment.  Section I of Schedule A of the Custody Agreement ("SCHEDULE
        ---------
A") shall be amended to add each Customer listed in Attachment A hereto.  The
revised Schedule A incorporating these changes in the form attached hereto as
Attachment B shall supersede the existing Schedule A in its entirety.

     2. Agreement.  The Customer agrees to be bound in all respects by all the
        ---------
terms and conditions of the Custody Agreement and shall be fully liable
thereunder as a "Customer" as defined in the Custody Agreement.

     3. Confirmation of Agreement.  Except as amended hereby, the Custody
        -------------------------
Agreement is in full force and effect and as so amended is hereby ratified,
approved and confirmed by the Customer and the Bank in all respects.






<PAGE>


     4. Governing Law.  This Amendment Agreement shall be construed in
        -------------
accordance with and governed by the law of the State of New York without regard
to its conflict of law principles.

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the day and year first above written.

                           THE CHASE MANHATTAN BANK, N.A.


                           By:   /s/Alan P. Naughton
                                 Alan P. Naughton
                                 Vice President

                           EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO,
                           SEPARATELY AND INDIVIDUALLY


                           By:   /s/Carmen F. Deyesu
                                 Carmen F. Deyesu
                                Treasurer


<PAGE>

                                                                    Attachment A






                               LIST OF CUSTOMERS




T. Rowe Price Equity Series, Inc. on behalf of the
     T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Personal Strategy Funds, Inc. on behalf of
     T. Rowe Price Personal Strategy Balanced Fund
     T. Rowe Price Personal Strategy Growth Fund
     T. Rowe Price Personal Strategy Income Fund


<PAGE>

 Attachment B                                                         Schedule A
                                                                     Page 1 of 2


                LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                         THE CHASE MANHATTAN BANK, N.A.
                             DATED JANUARY 3, 1993

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS         The Mutual Fund Rider is
   REGISTERED UNDER THE INVESTMENT         applicable to all Customers
   COMPANY ACT OF 1940                     listed under Section I of
                                            this Schedule A.

   Equity Funds
   ------------

   T. Rowe Price Balanced Fund, Inc.
   T. Rowe Price Blue Chip Growth Fund, Inc.
   T. Rowe Price Capital Appreciation Fund
   T. Rowe Price Dividend Growth Fund, Inc.
   T. Rowe Price Equity Income Fund
   T. Rowe Price Growth & Income Fund, Inc.
   T. Rowe Price Growth Stock Fund, Inc.
   Institutional International Funds, Inc. on behalf of:
      Foreign Equity Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price European Stock Fund
      T. Rowe Price International Discovery Fund
      T. Rowe Price International Stock Fund
      T. Rowe Price Japan Fund
      T. Rowe Price Latin America Fund
      T. Rowe Price New Asia Fund
   T. Rowe Price International Series, Inc., on behalf of:
      T. Rowe Price International Stock Portfolio
   T. Rowe Price Mid-Cap Growth Fund, Inc.
   T. Rowe Price New Era Fund, Inc.
   T. Rowe Price New Horizons Fund, Inc.
   T. Rowe Price OTC Fund, Inc. on behalf of:
      T. Rowe Price OTC Fund
   T. Rowe Price Science & Technology Fund, Inc.
   T. Rowe Price Small-Cap Value Fund, Inc.
   CUNA Mutual Funds, Inc. on behalf of:
      CUNA Mutual Cornerstone Fund
   T. Rowe Price Equity Series, Inc. on behalf of:
      T. Rowe Price Equity Income Portfolio


<PAGE>

      T. Rowe Price New America Growth Portfolio
      T. Rowe Price Personal Strategy Balanced Portfolio
   T. Rowe Price New America Growth Fund, Inc.


<PAGE>

 Attachment B                                                         Schedule A
                                                                     Page 2 of 3

                                            APPLICABLE RIDERS TO
   CUSTOMER                                GLOBAL CUSTODY
   --------                                --------------
                                             AGREEMENT
                                            ----------

   Income Funds
   ------------

   T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
   T. Rowe Price High Yield Fund, Inc.
   T. Rowe Price New Income Fund, Inc.
   T. Rowe Price Short-Term Bond Fund, Inc.
   T. Rowe Price Summit Funds, Inc. on behalf of:
      T. Rowe Price Summit Limited-Term Bond Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Global Government Income Fund
      T. Rowe Price International Bond Fund
      T. Rowe Price Short-Term Global Income Fund
   T. Rowe Price Income Series, Inc. on behalf of:
      T. Rowe Price Limited-Term Bond Portfolio
   T. Rowe Price Personal Strategy Funds, Inc. on behalf of:
      T. Rowe Price Personal Strategy Balanced Fund
      T. Rowe Price Personal Strategy Growth Fund
      T. Rowe Price Personal Strategy Income Fund

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA              The ERISA Rider is applicable
                                            to all Customers Under
                                            Section II of this
                                            Schedule A.
   T. Rowe Price Trust Company as Trustee for the
      Johnson Matthey Salaried
      Savings Plan

   Common Trust Funds
   ------------------

   T. Rowe Price Trust company,
   as Trustee for the International
   Common Trust Fund on behalf of
   the Underlying Trusts:

      Foreign Discovery Trust
      Foreign Discovery Trust-Augment
      Pacific Discovery Trust


<PAGE>

      European Discovery Trust
      Japan Discovery Trust
      Latin American Discovery Trust

   New York City International Common Trust Fund

III. OTHER                                 No Riders are applicable to
                                            the Customer listed under
   RPFI International                      Section III of this
     Partners, L.P.                         Schedule A.


<PAGE>

                              AMENDMENT AGREEMENT

     AMENDMENT AGREEMENT, dated as of November 28, 1994 (the "Amendment
Agreement") to the Global Custody Agreement, effective January 3, 1994, as
amended (the "Custody Agreement") by and between each of the Entities listed in
Attachment A hereto, separately and individually (each such entity referred to
hereinafter as the "Customer") and THE CHASE MANHATTAN BANK, N.A. (the "Bank").
 Terms defined in the Custody Agreement are used herein as therein defined.

     WITNESSETH:

     WHEREAS, the Customer wishes to appoint the Bank as its global custodian
and the Bank wishes to accept such appointment pursuant to the terms of the
Custody Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Amendment.  Section I of Schedule A of the Custody Agreement ("Schedule
A") shall be amended to add each Customer listed in Attachment A hereto.  The
revised Schedule A incorporating these changes in the form attached hereto as
Attachment B shall supersede the existing Schedule A in its entirety.

     2. Agreement.  The Customer agrees to be bound in all respects by all the
terms and conditions of the Custody Agreement and shall be fully liable
thereunder as a "Customer" as defined in the Custody Agreement.

     3. Confirmation of Agreement.  Except as amended hereby, the Custody
Agreement is in full force and effect and as so amended is hereby ratified,
approved and confirmed by the Customer and the Bank in all respects.







<PAGE>

     4. Governing Law.  This Amendment Agreement shall be construed in
accordance with and governed by the law of the State of New York without regard
to its conflict of law principles.

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the day and year first above written.
                           THE CHASE MANHATTAN BANK, N.A.
                                /s/Alan P. Naughton
                           By   :_________________________________
                                       Alan P. Naughton
                                 Vice President

                           EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO,
                           SEPARATELY AND INDIVIDUALLY
                                 /s/Carmen F. Deyesu
                           By:   _________________________________
                                 Carmen F. Deyesu
                                Treasurer


<PAGE>

                                                                    Attachment A
                               LIST OF CUSTOMERS

T. Rowe Price Value Fund, Inc.
T. Rowe Price Capital Opportunity Fund, Inc.
T. Rowe Price International Funds, Inc. on behalf of:
     T. Rowe Price Emerging Markets Bond Fund


<PAGE>

   Attachment B                                                       Schedule A
                                                                     Page 1 of 2

                LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                         THE CHASE MANHATTAN BANK, N.A.
                             DATED JANUARY 3, 1993

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS         The Mutual Fund Rider is
   REGISTERED UNDER THE INVESTMENT         applicable to all Customers
   COMPANY ACT OF 1940                     listed under Section I of
                                            this Schedule A.

Equity Funds
   T. Rowe Price Balanced Fund, Inc.
   T. Rowe Price Blue Chip Growth Fund, Inc.
   T. Rowe Price Capital Appreciation Fund
   T. Rowe Price Capital Opportunity Fund, Inc.
   T. Rowe Price Dividend Growth Fund, Inc.
   T. Rowe Price Equity Income Fund
   T. Rowe Price Growth & Income Fund, Inc.
   T. Rowe Price Growth Stock Fund, Inc.
   Institutional International Funds, Inc. on behalf of:
      Foreign Equity Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price European Stock Fund
      T. Rowe Price International Discovery Fund
      T. Rowe Price International Stock Fund
      T. Rowe Price Japan Fund
      T. Rowe Price Latin America Fund
      T. Rowe Price New Asia Fund
   T. Rowe Price International Series, Inc., on behalf of:
      T. Rowe Price International Stock Portfolio
   T. Rowe Price Mid-Cap Growth Fund, Inc.
   T. Rowe Price New Era Fund, Inc.
   T. Rowe Price New Horizons Fund, Inc.
   T. Rowe Price OTC Fund, Inc. on behalf of:
      T. Rowe Price OTC Fund
   T. Rowe Price Science & Technology Fund, Inc.
   T. Rowe Price Small-Cap Value Fund, Inc.
   CUNA Mutual Funds, Inc. on behalf of:
      CUNA Mutual Cornerstone Fund
   T. Rowe Price Equity Series, Inc. on behalf of:
      T. Rowe Price Equity Income Portfolio


<PAGE>

      T. Rowe Price New America Growth Portfolio
      T. Rowe Price Personal Strategy Balanced Portfolio
   T. Rowe Price New America Growth Fund, Inc.
   T. Rowe Price Value Fund, Inc.


<PAGE>

 Attachment B                                                         Schedule A
                                                                     Page 2 of 2

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

Income Funds
   T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
   T. Rowe Price High Yield Fund, Inc.
   T. Rowe Price New Income Fund, Inc.
   T. Rowe Price Short-Term Bond Fund, Inc.
   T. Rowe Price Summit Funds, Inc. on behalf of:
      T. Rowe Price Summit Limited-Term Bond Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Global Government Income Fund
      T. Rowe Price International Bond Fund
      T. Rowe Price Short-Term Global Income Fund
      T. Rowe Price Emerging Markets Bond Fund
   T. Rowe Price Income Series, Inc. on behalf of:
      T. Rowe Price Limited-Term Bond Portfolio
   T. Rowe Price Personal Strategy Funds, Inc. on behalf of:
      T. Rowe Price Personal Strategy Balanced Fund
      T. Rowe Price Personal Strategy Growth Fund
      T. Rowe Price Personal Strategy Income Fund

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA              The ERISA Rider is applicable
                                            to all Customers Under
                                            Section II of this
                                            Schedule A.
   T. Rowe Price Trust Company as Trustee for the
      Johnson Matthey Salaried
      Savings Plan
   Common Trust Funds
   T. Rowe Price Trust company,
   as Trustee for the International
   Common Trust Fund on behalf of
   the Underlying Trusts:
      Foreign Discovery Trust
      Foreign Discovery Trust-Augment
      Pacific Discovery Trust
      European Discovery Trust
      Japan Discovery Trust
      Latin American Discovery Trust


<PAGE>

   New York City International Common Trust Fund

III. OTHER                                 No Riders are applicable to
                                           the Customer listed under
   RPFI International                      Section III of this
     Partners, L.P.                        Schedule A.



<PAGE>

                              AMENDMENT AGREEMENT

     AMENDMENT AGREEMENT, dated as of May 31, 1995 (the "Amendment Agreement")
to the Global Custody Agreement, effective January 3, 1994, as amended (the
"Custody Agreement") by and between each of the Entities listed in Attachment A
hereto, separately and individually (each such entity referred to hereinafter as
the "Customer") and THE CHASE MANHATTAN BANK, N.A. (the "Bank").  Terms defined
in the Custody Agreement are used herein as therein defined.

     WITNESSETH:

     WHEREAS, the Customer wishes to appoint the Bank as its global custodian
and the Bank wishes to accept such appointment pursuant to the terms of the
Custody Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Amendment.  Section I of Schedule A of the Custody Agreement ("Schedule
A") shall be amended to add and delete certain Customers as specified in
Attachment A hereto.  The revised Schedule A incorporating these changes in the
form attached hereto as Attachment B shall supersede the existing Schedule A in
its entirety.

     2. Agreement.  The Customer agrees to be bound in all respects by all the
terms and conditions of the Custody Agreement and shall be fully liable
thereunder as a "Customer" as defined in the Custody Agreement.

     3. Confirmation of Agreement.  Except as amended hereby, the Custody
Agreement is in full force and effect and as so amended is hereby ratified,
approved and confirmed by the Customer and the Bank in all respects.

     4. Governing Law.  This Amendment Agreement shall be construed in
accordance with and governed by the law of the State of New York without regard
to its conflict of law principles.

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the


<PAGE>

day and year first above written.

                           THE CHASE MANHATTAN BANK, N.A.

                                /s/Alan P. Naughton
                           By:  _________________________________
                                       Alan P. Naughton
                                 Vice President

                           EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO,
                           SEPARATELY AND INDIVIDUALLY

                                 /s/Carmen F. Deyesu
                           By:   _________________________________
                                Carmen F. Deyesu
                                Treasurer



<PAGE>

                                                                    Attachment A
                               LIST OF CUSTOMERS
Add the following Fund:
T. Rowe Price International Funds, Inc. on behalf of:
  T. Rowe Price Emerging Markets Stock Fund
Delete the following Fund:
CUNA Mutual Funds, Inc. on behalf of:
  CUNA Mutual Cornerstone Fund



<PAGE>

  Attachment B                                                        Schedule A
                                                                     Page 1 of 2

                LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                         THE CHASE MANHATTAN BANK, N.A.
                             DATED JANUARY 3, 1993

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS         The Mutual Fund Rider is
   REGISTERED UNDER THE INVESTMENT         applicable to all Customers
   COMPANY ACT OF 1940                     listed under Section I of
                                            this Schedule A.

Equity Funds
   T. Rowe Price Balanced Fund, Inc.
   T. Rowe Price Blue Chip Growth Fund, Inc.
   T. Rowe Price Capital Appreciation Fund
   T. Rowe Price Capital Opportunity Fund, Inc.
   T. Rowe Price Dividend Growth Fund, Inc.
   T. Rowe Price Equity Income Fund
   T. Rowe Price Growth & Income Fund, Inc.
   T. Rowe Price Growth Stock Fund, Inc.
   Institutional International Funds, Inc. on behalf of:
      Foreign Equity Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price European Stock Fund
      T. Rowe Price International Discovery Fund
      T. Rowe Price International Stock Fund
      T. Rowe Price Japan Fund
      T. Rowe Price Latin America Fund
      T. Rowe Price New Asia Fund
      T. Rowe Price Emerging Markets Stock Fund
   T. Rowe Price International Series, Inc., on behalf of:
      T. Rowe Price International Stock Portfolio
   T. Rowe Price Mid-Cap Growth Fund, Inc.
   T. Rowe Price New Era Fund, Inc.
   T. Rowe Price New Horizons Fund, Inc.
   T. Rowe Price OTC Fund, Inc. on behalf of:
      T. Rowe Price OTC Fund
   T. Rowe Price Science & Technology Fund, Inc.
   T. Rowe Price Small-Cap Value Fund, Inc.
   T. Rowe Price Equity Series, Inc. on behalf of:
      T. Rowe Price Equity Income Portfolio
      T. Rowe Price New America Growth Portfolio


<PAGE>

      T. Rowe Price Personal Strategy Balanced Portfolio
   T. Rowe Price New America Growth Fund, Inc.
   T. Rowe Price Value Fund, Inc.



<PAGE>

  Attachment B                                                        Schedule A
                                                                     Page 2 of 2
Income Funds
   T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
   T. Rowe Price High Yield Fund, Inc.
   T. Rowe Price New Income Fund, Inc.
   T. Rowe Price Short-Term Bond Fund, Inc.
   T. Rowe Price Summit Funds, Inc. on behalf of:
      T. Rowe Price Summit Limited-Term Bond Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Global Government Income Fund
      T. Rowe Price International Bond Fund
      T. Rowe Price Short-Term Global Income Fund
      T. Rowe Price Emerging Markets Bond Fund
   T. Rowe Price Income Series, Inc. on behalf of:
      T. Rowe Price Limited-Term Bond Portfolio
   T. Rowe Price Personal Strategy Funds, Inc. on behalf of:
      T. Rowe Price Personal Strategy Balanced Fund
      T. Rowe Price Personal Strategy Growth Fund
      T. Rowe Price Personal Strategy Income Fund

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA              The ERISA Rider is applicable
                                            to all Customers Under
                                            Section II of this
                                            Schedule A.
   T. Rowe Price Trust Company as Trustee for the
      Johnson Matthey Salaried
      Savings Plan
   Common Trust Funds
   T. Rowe Price Trust company,
   as Trustee for the International
   Common Trust Fund on behalf of
   the Underlying Trusts:
      Foreign Discovery Trust
      Foreign Discovery Trust-Augment
      Pacific Discovery Trust
      European Discovery Trust
      Japan Discovery Trust
      Latin American Discovery Trust

   New York City International Common Trust Fund

III. OTHER                                 No Riders are applicable to
                                            the Customer listed under


<PAGE>

   RPFI International                      Section III of this
     Partners, L.P.                        Schedule A.


<PAGE>

                              AMENDMENT AGREEMENT

     AMENDMENT AGREEMENT, dated as of November 1, 1995 (the "Amendment
Agreement") to the Global Custody Agreement, effective January 3, 1994, as
amended (the "Custody Agreement") by and between each of the Entities listed in
Attachment A hereto, separately and individually (each such entity referred to
hereinafter as the "Customer") and THE CHASE MANHATTAN BANK, N.A. (the "Bank").
 Terms defined in the Custody Agreement are used herein as therein defined.

     WITNESSETH:

     WHEREAS, the Customer wishes to appoint the Bank as its global custodian
and the Bank wishes to accept such appointment pursuant to the terms of the
Custody Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Amendment.  Section I of Schedule A of the Custody Agreement ("Schedule
A") shall be amended to add and delete certain Customers as specified in
Attachment A hereto.  The revised Schedule A incorporating these changes in the
form attached hereto as Attachment B shall supersede the existing Schedule A in
its entirety.

     2. Agreement.  The Customer agrees to be bound in all respects by all the
terms and conditions of the Custody Agreement and shall be fully liable
thereunder as a "Customer" as defined in the Custody Agreement.

     3. Confirmation of Agreement.  Except as amended hereby, the Custody
Agreement is in full force and effect and as so amended is hereby ratified,
approved and confirmed by the Customer and the Bank in all respects.

     4. Governing Law.  This Amendment Agreement shall be construed in
accordance with and governed by the law of the State of New York without regard
to its conflict of law principles.




<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the day and year first above written.

                           THE CHASE MANHATTAN BANK, N.A.

                                /s/Alan R. Naughton
                           By:  _________________________________
                                       Alan R. Naughton
                                 Vice President

                           EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO,
                           SEPARATELY AND INDIVIDUALLY

                                 /s/Carmen F. Deyesu
                           By:   _________________________________
                                 Carmen F. Deyesu
                                Treasurer



<PAGE>

                                                                    Attachment A
     LIST OF CUSTOMERS
Add the following Funds:
T. Rowe Price International Funds, Inc. on behalf of:
  T. Rowe Price Global Stock Fund
T. Rowe Price Corporate Income Fund, Inc.
T. Rowe Price Health & Life Sciences Fund, Inc.



<PAGE>

  Attachment B                                                        Schedule A
                                                                     Page 1 of 2

                LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                         THE CHASE MANHATTAN BANK, N.A.
                             DATED JANUARY 3, 1993

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS         The Mutual Fund Rider is
   REGISTERED UNDER THE INVESTMENT         applicable to all Customers
   COMPANY ACT OF 1940                     listed under Section I of
                                            this Schedule A.

   Equity Funds
   T. Rowe Price Balanced Fund, Inc.
   T. Rowe Price Blue Chip Growth Fund, Inc.
   T. Rowe Price Capital Appreciation Fund
   T. Rowe Price Capital Opportunity Fund, Inc.
   T. Rowe Price Dividend Growth Fund, Inc.
   T. Rowe Price Equity Income Fund
   T. Rowe Price Growth & Income Fund, Inc.
   T. Rowe Price Growth Stock Fund, Inc.
   Institutional International Funds, Inc. on behalf of:
      Foreign Equity Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price European Stock Fund
      T. Rowe Price International Discovery Fund
      T. Rowe Price International Stock Fund
      T. Rowe Price Japan Fund
      T. Rowe Price Latin America Fund
      T. Rowe Price New Asia Fund
      T. Rowe Price Emerging Markets Stock Fund
      T. Rowe Price Global Stock Fund
   T. Rowe Price International Series, Inc., on behalf of:
      T. Rowe Price International Stock Portfolio
   T. Rowe Price Mid-Cap Growth Fund, Inc.
   T. Rowe Price New Era Fund, Inc.
   T. Rowe Price New Horizons Fund, Inc.
   T. Rowe Price OTC Fund, Inc. on behalf of:
      T. Rowe Price OTC Fund
   T. Rowe Price Science & Technology Fund, Inc.
   T. Rowe Price Small-Cap Value Fund, Inc.
   T. Rowe Price Equity Series, Inc. on behalf of:
      T. Rowe Price Equity Income Portfolio


<PAGE>

      T. Rowe Price New America Growth Portfolio
      T. Rowe Price Personal Strategy Balanced Portfolio
   T. Rowe Price New America Growth Fund, Inc.
   T. Rowe Price Value Fund, Inc.
   T. Rowe Price Health & Life Sciences Fund, Inc.
 Attachment B                                                         Schedule A
                                                                     Page 1 of 2

   Income Funds

   T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
   T. Rowe Price High Yield Fund, Inc.
   T. Rowe Price New Income Fund, Inc.
   T. Rowe Price Short-Term Bond Fund, Inc.
   T. Rowe Price Summit Funds, Inc. on behalf of:
      T. Rowe Price Summit Limited-Term Bond Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Global Government Income Fund
      T. Rowe Price International Bond Fund
      T. Rowe Price Short-Term Global Income Fund
      T. Rowe Price Emerging Markets Bond Fund
   T. Rowe Price Income Series, Inc. on behalf of:
      T. Rowe Price Limited-Term Bond Portfolio
   T. Rowe Price Personal Strategy Funds, Inc. on behalf of:
      T. Rowe Price Personal Strategy Balanced Fund
      T. Rowe Price Personal Strategy Growth Fund
      T. Rowe Price Personal Strategy Income Fund
   T. Rowe Price Corporate Income Fund, Inc.

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA              The ERISA Rider is applicable
                                            to all Customers Under
                                            Section II of this
                                            Schedule A.
   T. Rowe Price Trust Company as Trustee for the
      Johnson Matthey Salaried
      Savings Plan
   Common Trust Funds
   T. Rowe Price Trust Company,
   as Trustee for the International
   Common Trust Fund on behalf of
   the Underlying Trusts:
      Foreign Discovery Trust
      Foreign Discovery Trust-Augment
      Pacific Discovery Trust


<PAGE>

      European Discovery Trust
      Japan Discovery Trust
      Latin American Discovery Trust
   New York City International Common Trust Fund

III. OTHER                                 No Riders are applicable to
                                            the Customer listed under
   RPFI International                      Section III of this
     Partners, L.P.                        Schedule A.



<PAGE>

                              AMENDMENT AGREEMENT

     The Global Custody Agreement of January 3, 1994, as amended April 18, 1994,
August 15, 1994, November 28, 1994, May 31, 1995, and November 1, 1995 (the
"Custody Agreement"), by and between each of the Entities listed in Attachment A
hereto, separately and individually (each such entity referred to hereinafter as
the "Customer") and The Chase Manhattan Bank, N.A., which contracts have been
assumed by operation of law by THE CHASE MANHATTAN BANK (the "Bank") is hereby
further amended, as of July 31, 1996 (the "Amendment Agreement"). Terms defined
in the Custody Agreement are used herein as therein defined.

     WITNESSETH:

     WHEREAS, the Customer wishes to appoint the Bank as its global custodian
and the Bank wishes to accept such appointment pursuant to the terms of the
Custody Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Amendment.  Section I of Schedule A of the Custody Agreement ("Schedule
A") shall be amended to add and delete certain Customers as specified in
Attachment A hereto.  The revised Schedule A incorporating these changes in the
form attached hereto as Attachment B shall supersede the existing Schedule A in
its entirety.

     2. Agreement.  The Customer agrees to be bound in all respects by all the
terms and conditions of the Custody Agreement and shall be fully liable
thereunder as a "Customer" as defined in the Custody Agreement.

     3. Confirmation of Agreement.  Except as amended hereby, the Custody
Agreement is in full force and effect and as so amended is hereby ratified,
approved and confirmed by the Customer and the Bank in all respects.

     4. Governing Law.  This Amendment Agreement shall be construed in
accordance with and governed by the law of the State of New York without regard
to its conflict of law principles.



<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the day and year first above written.

                               THE CHASE MANHATTAN BANK
                              /s/Caroline Willson
                              By:_________________________________
                               Caroline Willson Vice President

                              EACH OF THE CUSTOMERS LISTED IN
                               ATTACHMENT A HERETO, SEPARATELY AND
                                INDIVIDUALLY
                               /s/Carmen F. Deyesu
                              By:________________________________
                               Carmen F. Deyesu
                              Treasurer


<PAGE>

                                                                    Attachment A

                               LIST OF CUSTOMERS

Add the following Funds:
T. Rowe Price Equity Series, Inc. on behalf of:
     T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price Financial Services Fund, Inc.
Institutional Equity Funds, Inc. on behalf of:
     Mid-Cap Equity Growth Fund
T. Rowe Price Mid-Cap Value Fund, Inc.
T. Rowe Price Trust Company, as Trustee for the
     International Common Trust Fund on behalf of:
     Emerging Markets Equity Trust


<PAGE>

  Attachment B                                                        Schedule A
                                                                     Page 1 of 2

                LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                         THE CHASE MANHATTAN BANK, N.A.
                             DATED JANUARY 3, 1994

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS         The Mutual Fund Rider is
   REGISTERED UNDER THE INVESTMENT         applicable to all Customers
   COMPANY ACT OF 1940                     listed under Section I of
                                            this Schedule A.

   Equity Funds
   T. Rowe Price Balanced Fund, Inc.
   T. Rowe Price Blue Chip Growth Fund, Inc.
   T. Rowe Price Capital Appreciation Fund
   T. Rowe Price Capital Opportunity Fund, Inc.
   T. Rowe Price Dividend Growth Fund, Inc.
   T. Rowe Price Equity Income Fund
   T. Rowe Price Equity Series, Inc. on behalf of:
      T. Rowe Price Equity Income Portfolio
      T. Rowe Price Mid-Cap Growth Portfolio
      T. Rowe Price New America Growth Portfolio
      T. Rowe Price Personal Strategy Balanced Portfolio
   T. Rowe Price Financial Services Fund, Inc.
   T. Rowe Price Growth & Income Fund, Inc.
   T. Rowe Price Growth Stock Fund, Inc.
   T. Rowe Price Health Sciences Fund, Inc.
   Institutional Equity Funds, Inc. on behalf of:
      Mid-Cap Equity Growth Fund
   Institutional International Funds, Inc. on behalf of:
      Foreign Equity Fund
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Emerging Markets Stock Fund
      T. Rowe Price European Stock Fund
      T. Rowe Price Global Stock Fund
      T. Rowe Price International Discovery Fund
      T. Rowe Price International Stock Fund
      T. Rowe Price Japan Fund
      T. Rowe Price Latin America Fund
      T. Rowe Price New Asia Fund
   T. Rowe Price International Series, Inc., on behalf of:
      T. Rowe Price International Stock Portfolio


<PAGE>

   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 OTC Fund, Inc. on behalf of:
      T. Rowe Price OTC Fund
   T. Rowe Price Science & Technology Fund, Inc.
   T. Rowe Price Small-Cap Value Fund, Inc.
   T. Rowe Price Value Fund, Inc.

   Income Funds
   T. Rowe Price Corporate Income Fund, Inc.
   T. Rowe Price High Yield Fund, Inc.
   T. Rowe Price Income Series, Inc. on behalf of:
      T. Rowe Price Limited-Term Bond Portfolio
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Emerging Markets Bond Fund
      T. Rowe Price Global Government Bond Fund
      T. Rowe Price International Bond Fund
      T. Rowe Price Short-Term Global Income Fund
   T. Rowe Price New Income Fund, Inc.
   T. Rowe Price Personal Strategy Funds, Inc. on behalf of:
      T. Rowe Price Personal Strategy Balanced Fund
      T. Rowe Price Personal Strategy Growth Fund
      T. Rowe Price Personal Strategy Income Fund
   T. Rowe Price Short-Term Bond Fund, Inc.
   T. Rowe Price Short-Term U.S. Government Fund, Inc.
   T. Rowe Price Summit Funds, Inc. on behalf of:
      T. Rowe Price Summit Limited-Term Bond Fund

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA              The ERISA Rider is applicable
                                            to all Customers Under
                                            Section II of this
                                            Schedule A.
   T. Rowe Price Trust Company as Trustee for the
      Johnson Matthey Salaried
      Savings Plan
   Common Trust Funds
   T. Rowe Price Trust Company,
   as Trustee for the International
   Common Trust Fund on behalf of
   the Underlying Trusts:
      Emerging Markets Equity Trust
      European Discovery Trust


<PAGE>

      Foreign Discovery Trust
      Foreign Discovery Trust-Augment
      Japan Discovery Trust
      Latin America Discovery Trust
      Pacific Discovery Trust
      New York City International Common Trust Fund

III. OTHER                                 No Riders are applicable to the
Customer
                                            listed under
   RPFI International                      Section III of this
     Partners, L.P.                        Schedule A.



<PAGE>

     AMENDMENT, dated July 17, 1997 to the January 3, 1994 Custody Agreement
("Agreement"), as amended July 31, 1996 ("Amendment Agreement"), by and between
each of the Entities listed in Attachment B of the Amendment Agreement,
separately and individually (each such entity hereinafter referred to as the
"Customer"), and The Chase Manhattan Bank, N.A. whose obligations have since
been adopted by The Chase Manhattan Bank ("Bank"), having a place of business at
One Chase Manhattan Plaza, New York, N.Y. 10081

     It is hereby agreed as follows:

     Section 1. Except as modified hereby, the Agreement is confirmed in all
respects. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement.

     Section 2. The Agreement is amended as follows by adding the following as
new ' 15:

     (a)  "CMBI" shall mean Chase Manhattan Bank International, an indirect
wholly-owned subsidiary of Bank, located in Moscow, Russia, and any nominee
companies appointed by it.

     (b)  "International Financial Institution" shall mean any bank in the top
1,000 (together with their affiliated companies) as measured by "Tier 1" capital
or any broker/dealer in the top 100 as measured by capital.

     (c)  "Negligence" shall mean the failure to exercise "Reasonable Care".

     (d)  "No-Action Letter" shall mean the response of the Securities and
Exchange Commission's Office of Chief Counsel of Investment Management, dated
April 18, 1995, in respect of the Templeton Russia Fund, Inc. (SEC Ref. No.
95-151-CC, File No. 811-8788) providing  "no-action" relief under '17(f) of the
Investment Company Act of 1940, as amended, and SEC Rule 17-f5 thereunder, in
connection with custody of such Templeton Russia Fund, Inc.'s investments in
Russian Securities.

     (e)  "Reasonable Care" shall mean the use of reasonable custodial practices
under the applicable circumstances as measured by the custodial practices then
prevailing in Russia of


<PAGE>

International Financial Institutions acting as custodians for their
institutional investor clients in Russia.

     (f)  "Registrar Company" shall mean any entity providing share registration
services to an issuer of Russian Securities.

     (g)  "Registrar Contact" shall mean a contract between CMBI and a Registrar
Company (and as the same may be amended from time to time) containing, inter
alia, the contractual provisions described at paragraphs (a)-(e) on pps. 5-6 of
the No-Action Letter.

     (h)  "Russian Security" shall mean a Security issued by a Russian issuer.

     (i)  "Share Extract" shall mean: (i) an extract of its share registration
books issued by a Registrar Company indicating an investor's ownership of a
security; and (ii) a form prepared by CMBI or its agent in those cases where a
Registrar Company in unwilling to issue a Share Extract.

     Section 3. Section 6(a) of the Agreement is amended by adding the following
at the end thereof: "With respect to Russia, payment for Russian Securities
shall not be made prior to the issuance of the Share Extract relating to such
Russian Security. Delivery of Russian Securities may be made in accordance with
the customary or established securities trading or securities processing
practices and procedures in Russia. Delivery of Russian Securities may also be
made in any manner specifically required by Instructions acceptable to the Bank.
Customer shall promptly supply such transaction and settlement information as
may be requested by Bank or CMBI in connection with particular transactions."

     Section 4. Section 8 of the Agreement is amended by adding a new paragraph
to the end thereof as follows: "It is understood and agreed that Bank need only
use its reasonable efforts with respect to performing the functions described in
this '8 with respect to Russian Securities."
     Section 5. Section 12(a)(i) of the Agreement is amended with respect to
Russian custody by deleting the phrase "reasonable care" wherever it appears and
substituting, in lieu thereof, the phrase "Reasonable Care."

     Section 6. Section 12(a)(i) of the Agreement is further amended with
respect to Russian


<PAGE>

custody by inserting the following at the end of the first sentence thereof:
"provided that, with respect to Russian Securities, Bank's responsibilities
shall be limited to safekeeping of relevant Share Extracts."

     Section 7. Section 12(a)(i) of the Agreement is further amended with
respect to Russian custody by inserting the following after the second sentence
thereof: "In connection with the foregoing, neither Bank nor CMBI shall assume
responsibility for, and neither shall be liable for, any action or inaction of
any Registrar Company and no Registrar Company shall be, or shall be deemed to
be, Bank, CMBI, a Subcustodian, a securities depository or the employee, agent
or personnel of any of the foregoing. To the extent that CMBI employs agents to
perform any of the functions to be performed by Bank or CMBI with respect to
Russian Securities, neither Bank nor CMBI shall be responsible for any act,
omission, default or for the solvency of any such agent unless the appointment
of such agent was made with Negligence or in bad faith, or for any loss due to
the negligent act of such agent except to the extent that such agent performs in
a negligent manner which is the cause of the loss to the Customer and the Bank
or CMBI failed to exercise reasonable care in monitoring such agent's
performance where Customer has requested and Bank has agreed to accept such
monitoring responsibility and except that where Bank or CMBI uses (i) an
affiliated nominee or (ii) an agent to perform the share registration or share
confirmation functions described in paragraphs (a)-(e) on pps. 5-6 of the
No-Action Letter, and, to the extent applicable to CMBI, the share registration
functions described on pps. 2-3 of the No-Action Letter, Bank and CMBI shall be
liable to Customer as if CMBI were responsible for performing such services
itself."

     Section 8. Section 12(a)(ii) is amended with respect to Russian custody by
deleting the word "negligently" and substituting, in lieu thereof, the word
"Negligently."

     Section 9. Section 12(a)(iii) is amended with respect to Russian custody by
deleting the word "negligence" and substituting, in lieu thereof, the word
"Negligence."

     Section 10. Add a new Section 16 to the Agreement as follows:

     (a) Bank will advise Customer (and will update such advice from time to
time as changes occur) of those Registrar Companies with which CMBI has entered
into a Registrar Contract. Bank shall cause CMBI both to monitor each Registrar
Company and to promptly advise Customer when


<PAGE>

CMBI has actual knowledge of the occurrence of any one or more of the events
described in paragraphs (i)-(v) on pps. 8-9 of the No-Action Letter with respect
to a Registrar Company that serves in that capacity for any issuer the shares of
which are held by Customer.

     (b) Where Customer is considering investing in the Russian Securities of an
issuer as to which CMBI does not have a Registrar Company, Customer may request
that Bank ask that CMBI both consider whether it would be willing to attempt to
enter into such a Registrar Contract and to advise Customer of its willingness
to do so. Where CMBI has agreed to make such an attempt, Bank will advise
Customer of the occurrence of any one or more or the events described in
paragraphs (i)-(iv) on pps. 8-9 of the No-Action Letter of which CMBI has actual
knowledge.

     (c) Where Customer is considering investing in the Russian Securities of an
issuer as to which CMBI has a Registrar Contract with the issuer's Registrar
Company, Customer may advise Bank of its interest in investing in such issuer
and, in such event, Bank will advise Customer of the occurrence of any one or
more of the events described in paragraphs (i)-(v) on pps. 8-9 of the No-Action
Letter of which CMBI has actual knowledge.

     Section 11. Add a new Section 17 to the Agreement as follows: "Customer
shall pay for and hold Bank and CMBI harmless from any liability or loss
resulting from the imposition or assessment of any taxes (including, but not
limited to, state, stamp and other duties) or other governmental charges, and
any related expenses with respect to income on Russian Securities."

     Section 12. Add a new Section 18 to the Agreement as follows: "Customer
acknowledges and agrees that CMBI may not be able, in given cases and despite
its reasonable efforts, to obtain a Share Extract from a Registrar Company and
CMBI shall not be liable in any such even including with respect to any losses
resulting from such failure."

     Section 13. Add a new Section 19 to the Agreement as follows: "Customer
acknowledges that it has received, reviewed and understands that Chase market
report for Russia, including, but not limited to, the risks described therein."

     Section 14. Add a new Section 20 to the Agreement as follows: "Subject to
the cooperation of a Registrar Company, for at least the first two years
following CMBI's first use of a Registrar


<PAGE>

Company, Bank shall cause CMBI to conduct share confirmations on at least a
quarterly basis, although thereafter confirmations may be conducted on a less
frequent basis if Customer's Board of Directors, in consultation with CMBI,
determines it to be appropriate."

     Section 15. Add a new Section 21 to the Agreement as follows: "Bank shall
cause CMBI to prepare for distribution to Customer's Board of Directors a
quarterly report identifying: (i) any concerns it has regarding the Russian
share registration system that should be brought to the attention of the Board
of Directors; and (ii) the steps CMBI has taken during the reporting period to
ensure that Customer's interests continue to be appropriately recorded."

     Section 16. Add a new Section 22 to the Agreement as follows: "Except as
provided in new '16(b), the services to be provided by Bank hereunder will be
provided only in relation to Russian Securities for which CMBI has entered into
a Registrar Contract with the relevant Registrar Company."
                              *********************
     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.

for EACH CUSTOMER                           THE CHASE MANHATTAN
                                           BANK
separately and individually

/s/Henry H. Hopkins                         /s/Helen C. Bairsto
Henry H. Hopkins                            Helen C. Bairsto
Vice President                              Vice President



<PAGE>

                              AMENDMENT AGREEMENT

     The Global Custody Agreement of January 3, 1994, as amended April 18, 1994,
August 15, 1994, November 28, 1994, May 31, 1995, November 1, 1995, and July 31,
1996 (the "Custody Agreement"), by and between each of the Entities listed in
Attachment A hereto, separately and individually (each such entity referred to
hereinafter as the "Customer") and The Chase Manhattan Bank, N.A., which
contracts have been assumed by operation of law by THE CHASE MANHATTAN BANK (the
"Bank") is hereby further amended, as of July 23, 1997 (the "Amendment
Agreement"). Terms defined in the Custody Agreement are used herein as therein
defined.

     WITNESSETH:

     WHEREAS, the Customer wishes to appoint the Bank as its global custodian
and the Bank wishes to accept such appointment pursuant to the terms of the
Custody Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Amendment. Section 1 of Schedule A of the Custody Agreement ("Schedule
A") shall be amended to add certain Customers as specified in Attachment A
hereto. The revised Schedule A incorporating these changes in the form attached
hereto as Attachment B shall supersede the existing Schedule A in its entirety.

     2. Agreement. The Customer agrees to be bound in all respects by all the
terms and conditions of the Custody Agreement and shall be fully liable
thereunder as a "Customer" as defined in the Custody Agreement.

     3. Confirmation of Agreement. Except as amended hereby, the Custody
Agreement is in full force and effect and as so amended is hereby ratified,
approved and confirmed by the Customer and the Bank in all respects.

     4. Governing Law: This Amendment Agreement shall be construed in accordance
with and governed by the law of the State of New York without regard to its
conflict of law principles.


<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the
day and year first above written.

                           THE CHASE MANHATTAN BANK

                           By:   /S/Caroline Willson
                                 Caroline Willson
                                 Vice President

                           EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO,
                           SEPARATELY AND INDIVIDUALLY

                           By:   /s/Carmen F. Deyesu
                                 Carmen F. Deyesu
                                Treasurer



<PAGE>


                                                                    Attachment A
     LIST OF CUSTOMERS
Add the following Funds:
T. Rowe Price Diversified Small-Cap Growth Fund, Inc.
T. Rowe Price Media & Telecommunications Fund, Inc.
T. Rowe Price Tax-Efficient Balanced Fund, Inc.
Change the name of the following Fund:
T. Rowe Price OTC Fund, Inc., on behalf of:
     T. Rowe Price OTC Fund
Effective May 1, 1997, the fund name changed to:
     T. Rowe Price Small-Cap Stock Fund, Inc.
Delete the following Fund:
T. Rowe Price International Funds, Inc., on behalf of:
     T. Rowe Price Short-Term Global Income Fund



<PAGE>


                                                                    Attachment B
                                                                      Schedule A
                                                                     Page 1 of 3
                LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                            THE CHASE MANHATTAN BANK
                             DATED JANUARY 3, 1994

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS         The Mutual Fund Rider is
   REGISTERED UNDER THE INVESTMENT         applicable to all Customers
   COMPANY ACT OF 1940                     listed under Section I of
                                            this Schedule A.

   Equity Funds
   T. Rowe Price Balanced Fund, Inc.
   T. Rowe Price Blue Chip Growth Fund, Inc.
   T. Rowe Price Capital Appreciation Fund
   T. Rowe Price Capital Opportunity Fund, Inc.
   T. Rowe Price Diversified Small-Cap Growth Fund, Inc.
   T. Rowe Price Dividend Growth Fund, Inc.
   T. Rowe Price Equity Income Fund
   T. Rowe Price Equity Series, Inc. on behalf of:
      T. Rowe Price Equity Income Portfolio
      T. Rowe Price Mid-Cap Growth Portfolio
      T. Rowe Price New America Growth Portfolio
      T. Rowe Price Personal Strategy Balanced Portfolio
   T. Rowe Price Financial Services Fund, Inc.
   T. Rowe Price Growth & Income Fund, Inc.
   T. Rowe Price Growth Stock Fund, Inc.
   T. Rowe Price Health Sciences Fund, Inc.
   Institutional Equity Funds, Inc. on behalf of:
      Mid-Cap Equity Growth Fund
   Institutional International Funds, Inc. on behalf of:
      Foreign Equity Fund
   T. Rowe Price International Funds, Inc. on behalf of:
     T. Rowe Price Emerging Markets Stock Fund
      T. Rowe Price European Stock Fund
      T. Rowe Price Global Stock Fund
      T. Rowe Price International Discovery Fund
      T. Rowe Price International Stock Fund
      T. Rowe Price Japan Fund
      T. Rowe Price Latin America Fund
      T. Rowe Price New Asia Fund
 PAGE 69


<PAGE>


  Attachment B
                                                                      Schedule A
                                                                     Page 2 of 3

                                            APPLICABLE RIDERS TO
   CUSTOMER                                GLOBAL CUSTODY AGREEMENT
   T. Rowe Price International Series, Inc. on behalf of:
      T. Rowe Price International Stock Portfolio
   T. Rowe Price Media & Telecommunications Fund, Inc.
   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 Science & Technology Fund, Inc.
   T. Rowe Price Small-Cap Stock Fund, Inc.
   T. Rowe Price Small-Cap Value Fund, Inc.
   T. Rowe Price Value Fund, Inc.

   Income Funds
   T. Rowe Price Corporate Income Fund, Inc.
   T. Rowe Price High Yield Fund, Inc.
   T. Rowe Price Income Series, Inc. on behalf of:
      T. Rowe Price Limited-Term Bond Portfolio
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Emerging Markets Bond Fund
      T. Rowe Price Global Government Bond Fund
      T. Rowe Price International Bond Fund
   T. Rowe Price New Income Fund, Inc.
   T. Rowe Price Personal Strategy Funds, Inc. on behalf of:
      T. Rowe Price Personal Strategy Balanced Fund
      T. Rowe Price Personal Strategy Growth Fund
      T. Rowe Price Personal Strategy Income Fund
   T. Rowe Price Short-Term Bond Fund, Inc.
   T. Rowe Price Short-Term U.S. Government Fund, Inc.
   T. Rowe Price Summit Funds, Inc. on behalf of:
      T. Rowe Price Summit Limited-Term Bond Fund
   T. Rowe Price Tax-Efficient Balanced Fund, Inc.



<PAGE>


  Attachment B
                                                                      Schedule A
                                                                     Page 3 of 3

                                            APPLICABLE RIDERS TO
                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA              The ERISA Rider is applicable
                                            to all Customers Under
                                            Section II of this
                                            Schedule A.
   T. Rowe Price Trust Company as Trustee for the
      Johnson Matthey Salaried
      Savings Plan

   Common Trust Funds
   T. Rowe Price Trust Company, as Trustee for the
   International Common Trust Fund on behalf of the Underlying Trusts:
      Emerging Markets Equity Trust
      European Discovery Trust
      Foreign Discovery Trust
      Foreign Discovery Trust - Augment
      Japan Discovery Trust
      Latin America Discovery Trust
      Pacific Discovery Trust
      New York City International Common Trust Fund

III. OTHER
     RPFI International Partners, L.P.     No Riders are applicable to the
Customer listed under                       Section III of this Schedule A.


<PAGE>

      AMENDMENT, dated July 23, 1997, to the Custody Agreement ("Agreement"),
dated January 3, 1994, between The Chase Manhattan Bank (as successor to The
Chase Manhattan Bank, N.A.), having an office at 270 Park Avenue, New York, NY
10017-2070 and certain T. Rowe Price funds.

     It is agreed as follows:

     1. The third line of '8 of the Agreement is deleted and the following is
inserted, in lieu thereof:

            Bank shall provide proxy voting services in accordance with the
            terms of the proxy voting services rider ("Proxy Rider") annexed
            hereto as Exhibit 1. Proxy voting services may be provided by Bank
            or, in whole or in part, by one or more third parties appointed by
            Bank (which may be Affiliates of Bank).

     2. Except as modified hereby, the Agreement is confirmed in all respects.

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
EACH OF THE CUSTOMERS, INDIVIDUALLY         THE CHASE MANHATTAN
AND SEPARATELY LISTED ON SECTION 1 OF      BANK
SCHEDULE A HERETO

By:/s/Henry H. Hopkins                     By:/s/Helen C. Bairsto
Henry H. Hopkins                            Helen C. Bairsto
Vice President                             Vice President

EACH OF THE CUSTOMERS, INDIVIDUALLY AND
SEPARATELY LISTED ON SECTION 2 OF
SCHEDULE A HERETO

By:/s/Nancy M. Morris
Nancy M. Morris
Vice President



<PAGE>

                                                                       Exhibit 1
                           GLOBAL PROXY SERVICE RIDER
                          TO GLOBAL CUSTODY AGREEMENT
                                    BETWEEN
                            THE CHASE MANHATTAN BANK
                                      AND
                          CERTAIN T. ROWE PRICE FUNDS
                            DATED 3RD JANUARY, 1994

1.   Global Proxy Services ("Proxy Services") shall be provided for the
countries listed in the procedures and guidelines ("Procedures") furnished to
the Customer, as the same may be amended by Bank from time to time on prior
notice to Customer. The Procedures are incorporated by reference herein and form
a part of this Rider.

2.   Proxy Services shall consist of those elements as set forth in the
Procedures, and shall include (a) notifications ("Notifications") by Bank to
Customer of the dates of pending shareholder meetings, resolutions to be voted
upon and the return dates as may be received by Bank or provided to Bank by its
Subcustodians or third parties, and (b) voting by Bank of proxies based on
Customer directions. Original proxy materials or copies thereof shall not be
provided. Notifications shall generally be in English and, where necessary,
shall be summarized and translated from such non-English materials as have been
made available to Bank or its Subcustodian. In this respect Bank=s only
obligation is to provide information from sources it believes to be reliable
and/or to provide materials summarized and/or translated in good faith. Bank
reserves the right to provide Notifications, or parts thereof, in the language
received. Upon reasonable advance request by Customer, backup information
relative to Notifications, such as annual reports, explanatory material
concerning resolutions, management recommendations or other material relevant to
the exercise of proxy voting rights shall be provided as available, but without
translation.

3.   While Bank shall attempt to provide accurate and complete Notifications,
whether or not translated, Bank shall not be liable for any losses or other
consequences that may result from reliance by Customer upon Notifications where
Bank prepared the same in good faith.

4.   Notwithstanding the fact that Bank may act in a fiduciary capacity with
respect to Customer under other agreements or otherwise under the Agreement, in
performing Proxy Services



<PAGE>

     Bank shall be acting solely as the agent of Customer, and shall not
exercise any discretion with regard to such Proxy Services.

5.   Proxy voting may be precluded or restricted in a variety of circumstances,
including, without limitation, where the relevant Securities are: (I) on loan;
(ii) at registrar for registration or reregistration; (iii) the subject of a
conversion or other corporate action; (iv) not held in a name subject to the
control of Bank or its Subcustodian or are otherwise held in a manner which
precludes voting; (v) not capable of being voted on account of local market
regulations or practices or restrictions by the issuer; or (vi) held in a margin
or collateral account.

6.   Customer acknowledges that in certain countries Bank may be unable to vote
individual proxies but shall only be able to vote proxies on a net basis (e.g.,
a net yes or no vote given the voting instructions received from all customers).

7.   Customer shall not make any use of the information provided hereunder,
except in connection with the funds or plans covered hereby, and shall in no
event sell, license, give or otherwise make the information provided hereunder
available, to any third party, and shall not directly or indirectly compete with
Bank or diminish the market for Proxy Services by provision of such information,
in whole or in part, for compensation or otherwise, to any third party.

8.   The names of Authorized Persons for Proxy Services shall be furnished to
Bank in accordance with '10 of the Agreement. Proxy Services fees shall be as
separately agreed.



<PAGE>

                                   SCHEDULE A
SECTION 1
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Capital Opportunity Fund, Inc.
T. Rowe Price Corporate Income Fund, Inc.
T. Rowe Price Diversified Small-Cap Growth Fund, Inc.
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price Equity Series, Inc. on behalf of:
       T. Rowe Price Mid-Cap Growth Portfolio
       T. Rowe Price New America Growth Portfolio
       T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Financial Services Fund, Inc.
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 Income Series, Inc. on behalf of:
       T. Rowe Price Limited Term Bond Portfolio
Institutional Equity Funds, Inc. on behalf of:
       Mid-Cap Equity Growth Fund
T. Rowe Price Media & Telecommunications Fund, Inc.
T. Rowe Price Mid-Cap Growth Fund, Inc.
T. Rowe Price Mid-Cap Value Fund, Inc.
T. Rowe Price New America Growth Fund, Inc.
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. on behalf of:
       T. Rowe Price Personal Strategy Balanced Fund
       T. Rowe Price Personal Strategy Growth Fund
       T. Rowe Price Personal Strategy Income 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.
T. Rowe Price Small-Cap Stock Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
T. Rowe Price Summit Funds, Inc. on behalf of:
       T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Tax-Efficient Balanced Fund, Inc.
T. Rowe Price Value Fund, Inc.

SECTION 2
NYC International Common Trust Fund



<PAGE>

     AMENDMENT, dated October 29, 1997, to the Custody Agreement ("Agreement"),
dated January 3, 1994, between The Chase Manhattan Bank (as successor to The
Chase Manhattan Bank, N.A.), having an office at 270 Park Avenue, New York, NY
10017-2070 and certain T. Rowe Price funds.

     It is agreed as follows:

     1. The third line of '8 of the Agreement is deleted and the following is
inserted, in lieu thereof:

            Bank shall provide proxy voting services in accordance with the
            terms of the proxy voting services rider ("Proxy Rider") annexed
            hereto as Exhibit 1. Proxy voting services may be provided by Bank
            or, in whole or in part, by one or more third parties appointed by
            Bank (which may be Affiliates of Bank).

     2. Except as modified hereby, the Agreement is confirmed in all respects.

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.

EACH OF THE CUSTOMERS, INDIVIDUALLY         THE CHASE MANHATTAN
AND SEPARATELY LISTED ON SECTION 1 OF      BANK
SCHEDULE A HERETO

By:/s/Henry H. Hopkins                     By:/s/Helen C. Bairsto
Henry H. Hopkins                            Helen C. Bairsto
Vice President                             Vice President

EACH OF THE CUSTOMERS, INDIVIDUALLY AND
SEPARATELY LISTED ON SECTION 2 OF
SCHEDULE A HERETO

By:/s/Nancy M. Morris
Nancy M. Morris
Vice President
                           GLOBAL PROXY SERVICE RIDER
                          TO GLOBAL CUSTODY AGREEMENT
                                    BETWEEN
                            THE CHASE MANHATTAN BANK
                                      AND
                          CERTAIN T. ROWE PRICE FUNDS


<PAGE>

                            DATED 3RD JANUARY, 1994

1.   Global Proxy Services ("Proxy Services") shall be provided for the
countries listed in the procedures and guidelines ("Procedures") furnished to
the Customer, as the same may be amended by Bank from time to time on prior
notice to Customer. The Procedures are incorporated by reference herein and form
a part of this Rider.

2.   Proxy Services shall consist of those elements as set forth in the
Procedures, and shall include (a) notifications ("Notifications") by Bank to
Customer of the dates of pending shareholder meetings, resolutions to be voted
upon and the return dates as may be received by Bank or provided to Bank by its
Subcustodians or third parties, and (b) voting by Bank of proxies based on
Customer directions. Original proxy materials or copies thereof shall not be
provided. Notifications shall generally be in English and, where necessary,
shall be summarized and translated from such non-English materials as have been
made available to Bank or its Subcustodian. In this respect Bank=s only
obligation is to provide information from sources it believes to be reliable
and/or to provide materials summarized and/or translated in good faith. Bank
reserves the right to provide Notifications, or parts thereof, in the language
received. Upon reasonable advance request by Customer, backup information
relative to Notifications, such as annual reports, explanatory material
concerning resolutions, management recommendations or other material relevant to
the exercise of proxy voting rights shall be provided as available, but without
translation.

3.   While Bank shall attempt to provide accurate and complete Notifications,
whether or not translated, Bank shall not be liable for any losses or other
consequences that may result from reliance by Customer upon Notifications where
Bank prepared the same in good faith.

4.   Notwithstanding the fact that Bank may act in a fiduciary capacity with
respect to Customer under other agreements or otherwise under the Agreement, in
performing Proxy Services

     Bank shall be acting solely as the agent of Customer, and shall not
exercise any discretion with regard to such Proxy Services.

5.   Proxy voting may be precluded or restricted in a variety of circumstances,
including, without limitation, where the relevant Securities are: (I) on loan;
(ii) at registrar for registration or


<PAGE>

reregistration; (iii) the subject of a conversion or other corporate action;
(iv) not held in a name subject to the control of Bank or its Subcustodian or
are otherwise held in a manner which precludes voting; (v) not capable of being
voted on account of local market regulations or practices or restrictions by the
issuer; or (vi) held in a margin or collateral account.

6.   Customer acknowledges that in certain countries Bank may be unable to vote
individual proxies but shall only be able to vote proxies on a net basis (e.g.,
a net yes or no vote given the voting instructions received from all customers).

7.   Customer shall not make any use of the information provided hereunder,
except in connection with the funds or plans covered hereby, and shall in no
event sell, license, give or otherwise make the information provided hereunder
available, to any third party, and shall not directly or indirectly compete with
Bank or diminish the market for Proxy Services by provision of such information,
in whole or in part, for compensation or otherwise, to any third party.

8.   The names of Authorized Persons for Proxy Services shall be furnished to
Bank in accordance with '10 of the Agreement. Proxy Services fees shall be as
separately agreed.



<PAGE>

                                   SCHEDULE A
SECTION 1
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Capital Opportunity Fund, Inc.
T. Rowe Price Corporate Income Fund, Inc.
T. Rowe Price Diversified Small-Cap Growth Fund, Inc.
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price Equity Series, Inc. on behalf of:
       T. Rowe Price Mid-Cap Growth Portfolio
       T. Rowe Price New America Growth Portfolio
       T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Financial Services Fund, Inc.
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 Income Series, Inc. on behalf of:
       T. Rowe Price Limited Term Bond Portfolio
Institutional Equity Funds, Inc. on behalf of:
       Mid-Cap Equity Growth Fund
T. Rowe Price Media & Telecommunications Fund, Inc.
T. Rowe Price Mid-Cap Growth Fund, Inc.
T. Rowe Price Mid-Cap Value Fund, Inc.
T. Rowe Price New America Growth Fund, Inc.
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. on behalf of:
       T. Rowe Price Personal Strategy Balanced Fund
       T. Rowe Price Personal Strategy Growth Fund
       T. Rowe Price Personal Strategy Income Fund
T. Rowe Price Real Estate 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 Stock Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
T. Rowe Price Summit Funds, Inc. on behalf of:
       T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Tax-Efficient Balanced Fund, Inc.
T. Rowe Price Value Fund, Inc.

SECTION 2
NYC International Common Trust Fund


<PAGE>

                              AMENDMENT AGREEMENT

     The Global Custody Agreement of January 3, 1994, as amended April 18, 1994,
August 15, 1994, November 28, 1994, May 31, 1995, November 1, 1995, July 31,
1996, and July 23, 1997 (the "Custody Agreement"), by and between each of the
Entities listed in Attachment A hereto, separately and individually (each such
entity referred to hereinafter as the "Customer") and The Chase Manhattan Bank,
N.A., which contracts have been assumed by operation of law by THE CHASE
MANHATTAN BANK (the "Bank") is hereby further amended, as of October 29, 1997
(the "Amendment Agreement"). Terms defined in the Custody Agreement are used
herein as therein defined.

     WITNESSETH:

     WHEREAS, the Customer wishes to appoint the Bank as its global custodian
and the Bank wishes to accept such appointment pursuant to the terms of the
Custody Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Amendment. Section 1 of Schedule A of the Custody Agreement ("Schedule
A") shall be amended to add certain Customers as specified in Attachment A
hereto. The revised Schedule A incorporating these changes in the form attached
hereto as Attachment B shall supersede the existing Schedule A in its entirety.

     2. Agreement. The Customer agrees to be bound in all respects by all the
terms and conditions of the Custody Agreement and shall be fully liable
thereunder as a "Customer" as defined in the Custody Agreement.

     3. Confirmation of Agreement. Except as amended hereby, the Custody
Agreement is in full force and effect and as so amended is hereby ratified,
approved and confirmed by the Customer and the Bank in all respects.

     4. Governing Law: This Amendment Agreement shall be construed in
accordance with and governed by the law of the State of New York without regard
to its conflict


<PAGE>

of law principles.

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the day and year first above written.

                           THE CHASE MANHATTAN BANK

                           By:   /s/Helen C. Bairsto
                                 Helen C. Bairsto
                                 Vice President

                           EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO,
                           SEPARATELY AND INDIVIDUALLY

                           By:   /s/Carmen F. Deyesu
                                 Carmen F. Deyesu
                                Treasurer



<PAGE>


                                                                    Attachment A
                               LIST OF CUSTOMERS
Add the following Fund:
T. Rowe Price Real Estate Fund, Inc.



<PAGE>


                                                                    Attachment B
                                                                      Schedule A
                                                                     Page 1 of 3
                LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                            THE CHASE MANHATTAN BANK
                             DATED JANUARY 3, 1994

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS         The Mutual Fund Rider is
   REGISTERED UNDER THE INVESTMENT         applicable to all Customers
   COMPANY ACT OF 1940                     listed under Section I of
                                            this Schedule A.

   Equity Funds
   T. Rowe Price Balanced Fund, Inc.
   T. Rowe Price Blue Chip Growth Fund, Inc.
   T. Rowe Price Capital Appreciation Fund
   T. Rowe Price Capital Opportunity Fund, Inc.
   T. Rowe Price Diversified Small-Cap Growth Fund, Inc.
   T. Rowe Price Dividend Growth Fund, Inc.
   T. Rowe Price Equity Income Fund
   T. Rowe Price Equity Series, Inc. on behalf of:
      T. Rowe Price Equity Income Portfolio
      T. Rowe Price Mid-Cap Growth Portfolio
      T. Rowe Price New America Growth Portfolio
      T. Rowe Price Personal Strategy Balanced Portfolio
   T. Rowe Price Financial Services Fund, Inc.
   T. Rowe Price Growth & Income Fund, Inc.
   T. Rowe Price Growth Stock Fund, Inc.
   T. Rowe Price Health Sciences Fund, Inc.
   Institutional Equity Funds, Inc. on behalf of:
      Mid-Cap Equity Growth Fund
   Institutional International Funds, Inc. on behalf of:
      Foreign Equity Fund
   T. Rowe Price International Funds, Inc. on behalf of:
     T. Rowe Price Emerging Markets Stock Fund
      T. Rowe Price European Stock Fund
      T. Rowe Price Global Stock Fund
      T. Rowe Price International Discovery Fund
      T. Rowe Price International Stock Fund
      T. Rowe Price Japan Fund
      T. Rowe Price Latin America Fund
      T. Rowe Price New Asia Fund


<PAGE>


  Attachment B
  Schedule A
                                                                     Page 2 of 3

                                            APPLICABLE RIDERS TO
CUSTOMER                                   GLOBAL CUSTODY
                                           AGREEMENT

   T. Rowe Price International Series, Inc. on behalf of:
      T. Rowe Price International Stock Portfolio
   T. Rowe Price Media & Telecommunications Fund, Inc.
   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 Real Estate Fund, Inc.
   T. Rowe Price Science & Technology Fund, Inc.
   T. Rowe Price Small-Cap Stock Fund, Inc.
   T. Rowe Price Small-Cap Value Fund, Inc.
   T. Rowe Price Value Fund, Inc.

   Income Funds
   T. Rowe Price Corporate Income Fund, Inc.
   T. Rowe Price High Yield Fund, Inc.
   T. Rowe Price Income Series, Inc. on behalf of:
      T. Rowe Price Limited-Term Bond Portfolio
   T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Emerging Markets Bond Fund
      T. Rowe Price Global Government Bond Fund
      T. Rowe Price International Bond Fund
   T. Rowe Price New Income Fund, Inc.
   T. Rowe Price Personal Strategy Funds, Inc. on behalf of:
      T. Rowe Price Personal Strategy Balanced Fund
      T. Rowe Price Personal Strategy Growth Fund
      T. Rowe Price Personal Strategy Income Fund
   T. Rowe Price Short-Term Bond Fund, Inc.
   T. Rowe Price Short-Term U.S. Government Fund, Inc.
   T. Rowe Price Summit Funds, Inc. on behalf of:
      T. Rowe Price Summit Limited-Term Bond Fund
   T. Rowe Price Tax-Efficient Balanced Fund, Inc.


<PAGE>


  Attachment B
                                                                      Schedule A
                                                                     Page 3 of 3

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA              The ERISA Rider is applicable
                                            to all Customers Under
                                            Section II of this
                                            Schedule A.
   T. Rowe Price Trust Company as Trustee for the
      Johnson Matthey Salaried
      Employee Savings Plan
   Common Trust Funds
   T. Rowe Price Trust Company, as Trustee for the
      International Common Trust Fund on behalf of the Underlying Trusts:
      Emerging Markets Equity Trust
      European Discovery Trust
      Foreign Discovery Trust
      Foreign Discovery Trust - Augment
      Japan Discovery Trust
      Latin America Discovery Trust
      Pacific Discovery Trust

      New York City International Common Trust Fund

III. OTHER
     RPFI International Partners, L.P.      No Riders are
                                            applicable to the
                                            Customer listed under
                                            Section III of this
                                            Schedule A.



<PAGE>

                             AMENDMENT AGREEMENT TO
                          RUSSIAN RIDER TO THE GLOBAL
                               CUSTODY AGREEMENT
     AMENDMENT to Attachment B of Global Custody Agreement dated January 3,
1994, as amended July 23, 1997, is hereby further amended as of September 3,
1997.
     NOW, THEREFORE, the parties hereto agree as follows:

     1. Amendment. Amend Attachment B to consist of the following funds when
pertaining to the Russian Rider dated July 17, 1997:

    Institutional International Funds, Inc., on behalf of:
      Foreign Equity Fund
    T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Emerging Markets Bond Fund
      T. Rowe Price Emerging Markets Stock Fund
      T. Rowe Price European Stock Fund
      T. Rowe Price Global Government Bond Fund
      T. Rowe Price Global Stock Fund
      T. Rowe Price International Bond Fund
      T. Rowe Price International Discovery Fund
      T. Rowe Price International Stock Fund
      T. Rowe Price Japan Fund
      T. Rowe Price Latin America Fund
      T. Rowe Price New Asia Fund

    T. Rowe Price International Series, Inc. on behalf of:
      T. Rowe Price International Stock Portfolio

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the day and year first above written.

THE CHASE MANHATTAN BANK      EACH OF THE PARTIES LISTED ABOVE

By: /s/Helen C. Bairsto       By:/s/Henry H. Hopkins
  Helen C. Bairsto             Henry H. Hopkins
  Vice President               Vice President


<PAGE>

                              AMENDMENT AGREEMENT

     The Global Custody Agreement of January 3, 1994, as amended April 18, 1994,
August 15, 1994, November 28, 1994, May 31, 1995, November 1, 1995, July 31,
1996, July 23, 1997, September 3, 1997, and October 29, 1997 (the "Custody
Agreement"), by and between each of the Entities listed in Schedule A, as
amended thereto, severally and not jointly (each such entity referred to
hereinafter as the "Customer") and The Chase Manhattan Bank, N.A., which
contracts have been assumed by operation of law by THE CHASE MANHATTAN BANK (the
"Bank") is hereby further amended, as of December 15, 1998 (the "Amendment
Agreement"). Terms defined in the Custody Agreement are used herein as therein
defined.

                                  WITNESSETH:

     WHEREAS, the Customer wishes to appoint the Bank as its global custodian
and the Bank wishes to accept such appointment pursuant to the terms of the
Custody Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Amendment. Sections 1 and 3 of Schedule A of the Custody Agreement
        ----------
("Schedule A") shall be amended to add or change certain Customers as specified
in Attachment A hereto. The revised Schedule A incorporating these changes in
the form attached shall supersede the existing Schedule A in its entirety.

     2. Agreement. The Customer agrees to be bound in all respects by all the
        ----------
terms and conditions of the Custody Agreement and shall be fully liable
thereunder as a "Customer" as defined in the Custody Agreement.

     3. Confirmation of Agreement. Except as amended hereby, the Custody
        --------------------------
Agreement is in full force and effect and as so amended is hereby ratified,
approved and confirmed by the Customer and the Bank in all respects.






<PAGE>

     4. Governing Law. This Amendment Agreement shall be construed in accordance
        --------------
with and governed by the law of the State of New York without regard to its
conflict of law principles.

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the day and year first above written.
                           THE CHASE MANHATTAN BANK


                                 /s/Joseph M. Rondinelli
                           By:  _____________________________________
                                 Joseph M. Rondinelli
                                 Vice President



                           EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO,
                           SEVERALLY AND NOT JOINTLY


                                 /s/Henry H. Hopkins
                           By:  _____________________________________
                                 Henry H. Hopkins
                                 Vice President


<PAGE>

                                                                    Attachment A



                               LIST OF CUSTOMERS

Change the name of the following Fund:
- --------------------------------------
     T. Rowe Price Global Government Bond Fund
Effective May 1, 1998, the fund name changed to:
     T. Rowe Price Global Bond Fund

Add the following Fund:
- -----------------------
T. Rowe Price International Funds, Inc. on behalf of:
     T.  Rowe Price International Growth & Income Fund

Add the following Funds to the Russian Rider:
- ---------------------------------------------
T. Rowe Price International Funds, Inc. on behalf of:
     T.  Rowe Price International Growth & Income Fund

RPFI International Partners, L.P.




<PAGE>

                                                          Schedule A Page 1 of 3

            LIST OF CUSTOMERS, SEVERALLY AND NOT JOINTLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                            THE CHASE MANHATTAN BANK
                             DATED JANUARY 3, 1994

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS         The Mutual Fund Rider is
   REGISTERED UNDER THE INVESTMENT         applicable to all Customers
   COMPANY ACT OF 1940                     listed under Section I of
                                            this Schedule A.

   Equity Funds
   ------------

   T. Rowe Price Balanced Fund, Inc.       Global Proxy Service Rider
   T. Rowe Price Blue Chip Growth Fund, Inc. Global Proxy Service Rider
   T. Rowe Price Capital Appreciation Fund Global Proxy Service Rider
   T. Rowe Price Capital Opportunity Fund, Inc. Global Proxy Service Rider
   T. Rowe Price Diversified Small-Cap Growth Fund, Inc. Global Proxy Service
Rider
   T. Rowe Price Dividend Growth Fund, Inc. Global Proxy Service Rider
   T. Rowe Price Equity Income Fund        Global Proxy Service Rider
   T. Rowe Price Equity Series, Inc. on behalf of:
     T. Rowe Price Equity Income Portfolio
     T. Rowe Price Mid-Cap Growth Portfolio Global Proxy Service Rider
     T. Rowe Price New America Growth Portfolio Global Proxy Service Rider
     T. Rowe Price Personal Strategy Balanced Portfolio Global Proxy Service
Rider
   T. Rowe Price Financial Services Fund, Inc. Global Proxy Service Rider
   T. Rowe Price Growth & Income Fund, Inc. Global Proxy Service Rider
   T. Rowe Price Growth Stock Fund, Inc.   Global Proxy Service Rider
   T. Rowe Price Health Sciences Fund, Inc. Global Proxy Service Rider
   Institutional Equity Funds, Inc. on behalf of:
     Mid-Cap Equity Growth Fund             Global Proxy Service Rider
   Institutional International Funds, Inc. on behalf of:
     Foreign Equity Fund                    Russian Rider
   T. Rowe Price International Funds, Inc. on behalf of:
     T. Rowe Price Emerging Markets Stock Fund Russian Rider
     T. Rowe Price European Stock Fund      Russian Rider
     T. Rowe Price Global Stock Fund        Russian Rider
     T. Rowe Price International Discovery Fund Russian Rider
     T. Rowe Price International Growth & Income Fund Russian Rider
     T. Rowe Price International Stock Fund Russian Rider
     T. Rowe Price Japan Fund              Russian Rider
     T. Rowe Price Latin America Fund       Russian Rider
     T.  Rowe Price New Asia Fund          Russian Rider


<PAGE>

                                                          Schedule A Page 2 of 3

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

   T. Rowe Price International Series, Inc. on behalf of:
     T. Rowe Price International Stock Portfolio Russian Rider
   T. Rowe Price Media & Telecommunications Fund, Inc. Global Proxy Service
Rider
   T. Rowe Price Mid-Cap Growth Fund, Inc. Global Proxy Service Rider
   T. Rowe Price Mid-Cap Value Fund, Inc.  Global Proxy Service Rider
   T. Rowe Price New America Growth Fund   Global Proxy Service Rider
   T. Rowe Price New Era Fund, Inc.        Global Proxy Service Rider
   T. Rowe Price New Horizons Fund, Inc.   Global Proxy Service Rider
   T. Rowe Price Real Estate Fund, Inc.    Global Proxy Service Rider
   T. Rowe Price Science & Technology Fund, Inc. Global Proxy Service Rider
   T. Rowe Price Small-Cap Stock Fund, Inc. Global Proxy Service Rider
   T. Rowe Price Small-Cap Value Fund, Inc. Global Proxy Service Rider
   T. Rowe Price Value Fund, Inc.          Global Proxy Service Rider

   Income Funds
   ------------

   T. Rowe Price Corporate Income Fund, Inc. Global Proxy Service Rider
   T. Rowe Price High Yield Fund, Inc.     Global Proxy Service Rider
   T. Rowe Price Income Series, Inc. on behalf of:
     T. Rowe Price Limited-Term Bond Portfolio Global Proxy Service Rider
   T. Rowe Price International Funds, Inc. on behalf of:
     T. Rowe Price Emerging Markets Bond Fund Russian Rider
     T. Rowe Price Global Bond Fund        Russian Rider
     T. Rowe Price International Bond Fund  Russian Rider
   T. Rowe Price New Income Fund, Inc.     Global Proxy Service Rider
   T. Rowe Price Personal Strategy Funds, Inc. on behalf of:
     T. Rowe Price Personal Strategy Balanced Fund Global Proxy Service Rider
     T. Rowe Price Personal Strategy Growth Fund Global Proxy Service Rider
     T. Rowe Price Personal Strategy Income Fund Global Proxy Service Rider
   T. Rowe Price Short-Term Bond Fund, Inc. Global Proxy Service Rider
   T. Rowe Price Short-Term U.S. Government Fund, Inc. Global Proxy Service
Rider
   T. Rowe Price Summit Funds, Inc. on behalf of:
     T. Rowe Price Summit Limited-Term Bond Fund Global Proxy Service Rider
   T. Rowe Price Tax-Efficient Balanced Fund, Inc. Global Proxy Service Rider


<PAGE>

                                                          Schedule A Page 3 of 3

                                            APPLICABLE RIDERS TO
CUSTOMER                                    GLOBAL CUSTODY
                                           AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA              The ERISA Rider is applicable
                                            to all Customers Under
                                            Section II of this
                                            Schedule A.

   T. Rowe Price Trust  Company, as Trustee for the
   Johnson Matthey Salaried Employee Savings Plan

   Common Trust Funds
   ------------------

   T. Rowe Price Trust Company, as Trustee for the International
   Common Trust Fund on behalf of the Underlying Trusts:
     Emerging Markets Equity Trust
     European Discovery Trust
     Foreign Discovery Trust
     Foreign Discovery Trust - Augment
     Japan Discovery Trust
     Latin America Discovery Trust
     Pacific Discovery Trust

   New York City International Common Trust Fund Global Proxy Service Rider

III. OTHER

   RPFI International Partners, L.P.        Russian Rider



<PAGE>

                              AMENDMENT AGREEMENT


The Global Custody Agreement of January 3, 1994, as amended April 18, 1994,
August 15, 1994, November 28, 1994, May 31, 1995, November 1, 1995, July 31,
1996, July 23, 1997, September 3, 1997, October 29, 1997 and December 15, 1998
(the "Custody Agreement") by and between each of the Entities listed in Schedule
A, as amended thereto, severally and not jointly (each such entity referred to
hereinafter as the "Customer") and The Chase Manhattan Bank, N.A., whose
contracts have been assumed by THE CHASE MANHATTAN BANK (the "Bank") is hereby
further amended, as of October 6, 1999 (the "Amendment Agreement"). Terms
defined in the Custody Agreement are used herein as therein defined.

                                  WITNESSETH:

     WHEREAS, the Customer wishes to appoint the Bank as its global custodian
and the Bank wishes to accept such appointment pursuant to the terms of the
Custody Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1.Amendment.  Sections I, II and III of Schedule A of the Custody Agreement
       ----------
("Schedule A") shall be amended to add or change certain Customers as specified
in Attachment A hereto. The revised Schedule A incorporating these changes in
the form attached shall supersede the existing Schedule A in its entirety.

     2.
Agreement. The Customer and Bank agree to be bound in all respects by all the
- ----------
terms and conditions of the Custody Agreement and shall be fully liable and
responsible thereunder as a "Customer" and "Bank," respectively, as defined in
the Custody Agreement.

     3.
Confirmation of Agreement.  Except as amended hereby, the Custody Agreement is
- ------------ -- ---------
in full force and effect and as so amended is hereby ratified, approved and
confirmed by the Customer and the Bank in all respects.


<PAGE>

     4.
Governing Law:  This Amendment Agreement shall be construed in accordance with
- --------- ----
and governed by the law of the State of New York without regard to its conflict
of law principles.

     IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as
of the day and year first above written.

                              THE CHASE MANHATTAN BANK

                              By: ____________________________________
                                   Joseph M. Rondinelli
                                   Vice President


                              EACH OF THE CUSTOMERS LISTED IN
                              ATTACHMENT A HERETO, SEVERALLY
                              AND NOT JOINTLY


                              By: ____________________________________
                                   Henry H. Hopkins
                                   Vice President


<PAGE>

                                                                 ATTACHMENT A
                                                                 PAGE 1 OF 2


                               LIST OF CUSTOMERS


Change the name of the following Fund:
- -------------------------------------

     T. Rowe Price Tax-Efficient Balanced Fund, Inc.

Effective May 27, 1999, the fund name changed to:

     T. Rowe Price Tax-Efficient Funds, Inc., on behalf of
        T. Rowe Price Tax-Efficient Balanced Fund

Add the following Fund:
- -----------------------

T. Rowe Price Tax-Efficient Funds, Inc., on behalf of:
     T. Rowe Price Tax-Efficient Growth Fund

Add the following Trusts:
- ------------------------

T. Rowe Price Trust Company, as Trustee for the International
Common Trust Fund, on behalf of the Underlying Trusts:
     Foreign Discovery Trust - B
     International Small-Cap Trust

Delete the following Trust:
- --------------------------

New York City International Common Trust Fund

Add the following Funds/Trusts/Limited Partnerships to the Global Proxy Service
- -------------------------------------------------------------------------------
Rider:
- -----

T. Rowe Price Equity Series, Inc.
     T. Rowe Price Equity Income Portfolio

T. Rowe Price Tax-Efficient Funds, Inc., on behalf of
     T. Rowe Price Tax-Efficient Growth Fund

Institutional International Funds, Inc., on behalf of
     Foreign Equity Fund



<PAGE>

                                                      ATTACHMENT A
                                                       PAGE 2 OF 2

T. Rowe Price International Funds, Inc., on behalf of
     T. Rowe Price Emerging Markets Stock Fund
     T. Rowe Price Emerging Markets Bond Fund
     T. Rowe Price European Stock Fund
     T. Rowe Price Global Bond Fund
     T. Rowe Price Global Stock Fund
     T. Rowe Price International Bond Fund
     T. Rowe Price International Discovery Fund
     T. Rowe Price International Growth & Income Fund
     T. Rowe Price International Stock Fund
     T. Rowe Price Japan Fund
     T. Rowe Price Latin America Fund
     T. Rowe Price New Asia Fund

T. Rowe Price International Series, Inc., on behalf of
     T. Rowe Price International Stock Portfolio

T. Rowe Price Trust Company, as Trustee for the International
Common Trust Fund on behalf of the Underlying Trusts:
     Emerging Markets Equity Trust
     European Discovery Trust
     Foreign Discovery Trust
     Foreign Discovery Trust - Augment
     Foreign Discovery Trust - B
     International Small-Cap Trust
     Japan Discovery Trust
     Latin America Discovery Trust
     Pacific Discovery Trust

RPFI International Partners, L.P.




<PAGE>


                                                                 SCHEDULE A
                                                                 PAGE 1 OF 3


            LIST OF CUSTOMERS, SEVERALLY AND NOT JOINTLY PARTIES TO
                         GLOBAL CUSTODY AGREEMENT WITH
                            THE CHASE MANHATTAN BANK
                             DATED JANUARY 3, 1994


                                       APPLICABLE RIDERS TO
CUSTOMER                                      GLOBAL CUSTODY AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS       The Mutual Fund Rider is applicable to
  REGISTERED UNDER THE INVESTMENT        all Customers listed under Section I of
  COMPANY ACT OF 1940                    this Schedule A.

  Equity Funds
  ------------

  T. Rowe Price Balanced Fund, Inc.      Global Proxy Service Rider
  T. Rowe Price Blue Chip Growth Fund, Inc.        Global Proxy Service Rider
  T. Rowe Price Capital Appreciation Fund          Global Proxy Service Rider
  T. Rowe Price Capital Opportunity Fund, Inc.
Global Proxy Service Rider
  T. Rowe Price Diversified Small-Cap Growth Fund, Inc.

Global Proxy Service Rider
  T. Rowe Price Dividend Growth Fund, Inc.         Global Proxy Service Rider
  T. Rowe Price Equity Income Fund       Global Proxy Service Rider
  T. Rowe Price Equity Series, Inc. on behalf of:
      T. Rowe Price Equity Income Portfolio   Global Proxy Service Rider
      T. Rowe Price Mid-Cap Growth Portfolio  Global Proxy Service Rider
      T. Rowe Price New America Growth Portfolio   Global Proxy Service Rider
      T. Rowe Price Personal Strategy Balanced Portfolio

Global Proxy Service Rider
  T. Rowe Price Financial Services Fund, Inc.      Global Proxy Service Rider
  T. Rowe Price Growth & Income Fund, Inc.         Global Proxy Service Rider
  T. Rowe Price Growth Stock Fund, Inc.       Global Proxy Service Rider
  T. Rowe Price Health Sciences Fund, Inc.         Global Proxy Service Rider
  Institutional Equity Funds, Inc. on behalf of:
      Mid-Cap Equity Growth Fund       Global Proxy Service Rider
  Institutional International Funds, Inc. on behalf of:
      Foreign Equity Fund              Global Proxy Service and Russian Rider
  T. Rowe Price International Funds, Inc. on behalf of:
      T. Rowe Price Emerging Markets Stock Fund

Global Proxy Service and Russian Rider
     T. Rowe Price European Stock Fund Global Proxy Service and Russian Rider
     T. Rowe Price Global Stock Fund   Global Proxy Service and Russian Rider
     T. Rowe Price International Discovery Fund

Global Proxy Service and Russian Rider
     T. Rowe Price International Growth & Income Fund

Global Proxy Service and Russian Rider
     T. Rowe Price International Stock Fund

Global Proxy Service and Russian Rider
     T. Rowe Price Japan Fund          Global Proxy Service and Russian Rider
     T. Rowe Price Latin America Fund  Global Proxy Service and Russian Rider
     T. Rowe Price New Asia Fund       Global Proxy Service and Russian Rider


<PAGE>

                                                                 SCHEDULE A
                                                                 PAGE 2 OF 3

                                       APPLICABLE RIDERS TO
CUSTOMER                                      GLOBAL CUSTODY AGREEMENT

  T. Rowe Price International Series, Inc. on behalf of:
     T. Rowe Price International Stock Portfolio

Global Proxy Service and Russian Rider
  T. Rowe Price Media & Telecommunications Fund, Inc.

Global Proxy Service Rider
  T. Rowe Price Mid-Cap Growth Fund, Inc.          Global Proxy Service Rider
  T. Rowe Price Mid-Cap Value Fund, Inc.      Global Proxy Service Rider
  T. Rowe Price New America Growth Fund       Global Proxy Service Rider
  T. Rowe Price New Era Fund, Inc.       Global Proxy Service Rider
  T. Rowe Price New Horizons Fund, Inc.       Global Proxy Service Rider
  T. Rowe Price Real Estate Fund, Inc.   Global Proxy Service Rider
  T. Rowe Price Science & Technology Fund, Inc.
Global Proxy Service Rider
  T. Rowe Price Small-Cap Stock Fund, Inc.         Global Proxy Service Rider
  T. Rowe Price Small-Cap Value Fund, Inc.         Global Proxy Service Rider
  T. Rowe Price Value Fund, Inc.         Global Proxy Service Rider


  Income Funds
  ------------

  T. Rowe Price Corporate Income Fund, Inc.        Global Proxy Service Rider
  T. Rowe Price High Yield Fund, Inc.    Global Proxy Service Rider
  T. Rowe Price Income Series, Inc. on behalf of:
      T. Rowe Price Limited-Term Bond Portfolio    Global Proxy Service Rider
  T. Rowe Price International Funds, Inc. on behalf of:
     T. Rowe Price Emerging Markets Bond Fund

Global Proxy Service and Russian Rider
     T. Rowe Price Global Bond Fund    Global Proxy Service and Russian Rider
     T. Rowe Price International Bond Fund
Global Proxy Service and Russian Rider
  T. Rowe Price New Income Fund, Inc.    Global Proxy Service Rider
  T. Rowe Price Personal Strategy Funds, Inc. on behalf of:
      T. Rowe Price Personal Strategy Balanced Fund
Global Proxy Service Rider
      T. Rowe Price Personal Strategy Growth Fund  Global Proxy Service Rider
      T. Rowe Price Personal Strategy Income Fund  Global Proxy Service Rider
  T. Rowe Price Short-Term Bond Fund, Inc.         Global Proxy Service Rider
  T. Rowe Price Short-Term U.S. Government Fund, Inc.

Global Proxy Service Rider
  T. Rowe Price Summit Funds, Inc. on behalf of:
     T. Rowe Price Summit Limited-Term Bond Fund   Global Proxy Service Rider
  T. Rowe Price Tax-Efficient Funds, Inc. on behalf of:
     T. Rowe Price Tax-Efficient Balanced Fund     Global Proxy Service Rider
     T. Rowe Price Tax-Efficient Growth Fund  Global Proxy Service Rider


<PAGE>


                                                                 SCHEDULE A
                                                                 PAGE 3 OF 3

                                       APPLICABLE RIDERS TO
CUSTOMER                                      GLOBAL CUSTODY AGREEMENT


II.  ACCOUNTS SUBJECT TO ERISA           The ERISA Rider is applicable to all
                                       Customers under Section II of this
                                       Schedule A.
  T. Rowe Price Trust Company, as Trustee for the
  Johnson Matthey Salaried Employee Savings Plan

  Common Trust Funds
  ------------------

  T. Rowe Price Trust Company, as Trustee for the International
  Common Trust Fund on behalf of the Underlying Trusts:
     Emerging Markets Equity Trust     Global Proxy Service Rider
     European Discovery Trust          Global Proxy Service Rider
     Foreign Discovery Trust           Global Proxy Service Rider
     Foreign Discovery Trust - Augment Global Proxy Service Rider
     Foreign Discovery Trust - B       Global Proxy Service Rider
     International Small-Cap Trust     Global Proxy Service Rider
     Japan Discovery Trust             Global Proxy Service Rider
     Latin America Discovery Trust     Global Proxy Service Rider
     Pacific Discovery Trust           Global Proxy Service Rider


III. OTHER

     RPFI International Partners, L.P. Global Proxy Service and Russian Rider




 The Transfer Agency and Service Agreement between T. Rowe Price Services,
Inc. and T. Rowe Price Funds, dated January 1, 1999, as amended.

<PAGE>


                     TRANSFER AGENCY AND SERVICE AGREEMENT

                                    between

                          T. ROWE PRICE SERVICES, INC.

                                      and

                            THE T. ROWE PRICE FUNDS


<PAGE>


                               TABLE OF CONTENTS

                                                          PAGE
                                                          ----

Article A                            Terms of Appointment 2
Article B                        Duties of Price Services 3
       1.  Receipt of Orders/Payments                   3
       2.  Redemptions                                  5
       3.  Transfers                                    6
       4.  Confirmations                                7
       5.  Returned Checks and ACH Debits               7
       6.  Redemption of Shares under Ten Day Hold      7
       7.  Dividends, Distributions and Other Corporate Actions 9
       8.  Unclaimed Payments and Certificates         10
       9.  Books and Records                           10
       10. Authorized Issued and Outstanding Shares    12
       11. Tax Information                             13
       12. Information to be Furnished to the Fund     13
       13. Correspondence                              13
       14. Lost or Stolen Securities                   14
       15. Telephone Services                          14
       16. Collection of Shareholder Fees              14
       17. Form N-SAR                                  14
       18. Cooperation With Accountants                15
       19. Blue Sky                                    15
       20.  Banking Services for the PLUS Classes       15
       21. Other Services                              17
Article C                 Fees and Out-of-Pocket Expenses 17
       1.  Fees and Out-of-Pocket Expenses - All Funds 17
       2.  Fees and Out-of-Pocket Expenses - PLUS Classes of Shares 19
Article DRepresentations and Warranties of the Price Services 19
Article E      Representations and Warranties of the Fund 20
Article F                Standard of Care/Indemnification 20
Article G                                  Dual Interests 23
Article H                                   Documentation 23
Article I                    References to Price Services 24
Article JCompliance with Governmental Rules and Regulations 25
Article K      Ownership of Software and Related Material 25
Article L                       Quality Service Standards 25
Article M                              As of Transactions 25

<PAGE>


Article N               Term and Termination of Agreement 28
Article O                                          Notice 29
Article P                                      Assignment 29
Article Q               Amendment/Interpretive Provisions 29
Article R                              Further Assurances 29
Article S                           Maryland Law to Apply 29
Article T                             Merger of Agreement 30
Article U                                    Counterparts 30
Article V                                     The Parties 30
Article WDirectors, Trustees, Shareholders and Massachusetts Business Trust 30
Article X                                        Captions 31

<PAGE>


                     TRANSFER AGENCY AND SERVICE AGREEMENT
     AGREEMENT made as of the first day of January, 1999, 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 V);
     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, Price Services has the capability of providing shareholder
services on behalf of the Funds for the accounts of shareholders in the Funds,
including banks and brokers on behalf of underlying clients;
     WHEREAS, Price Services has the capability of providing special banking
services, including debit card and unlimited check writing services ("BANKING
SERVICES") for the T. Rowe Price Prime Reserve Fund - PLUS Class of Shares and
T. Rowe Price Tax-Exempt Money Fund - PLUS Class of Shares ("PLUS CLASSES");

<PAGE>


     WHEREAS, certain of the Funds are named investment options under various
tax-sheltered retirement plans including, but not limited to, individual
retirement accounts, Sep-IRA's, SIMPLE 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 also 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;
     WHEREAS, 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.
     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
A.   TERMS OF APPOINTMENT
     --------------------
     Subject to the terms and conditions set forth in this Agreement, the Fund
hereby employs and appoints Price Services to act, and Price Services agrees to
act, as the Fund's transfer agent, dividend disbursing agent and agent in
connection with: (1) the Fund's authorized and issued shares of its common stock
or shares of beneficial interest (all such stock and shares to be referred to as
"SHARES"); (2) any dividend reinvestment or other services provided to the
shareholders of the Fund

<PAGE>


("SHAREHOLDERS"), including, without limitation, any periodic investment plan or
periodic withdrawal program; and (3) certain Retirement Plan and Retirement
Accounts as agreed upon by the parties.
     The parties to the Agreement hereby acknowledge that from time to time,
Price Services and T. Rowe Price Trust Company may enter into contracts ("OTHER
CONTRACTS") with employee benefit plans and/or their sponsors for the provision
of certain plan participant services to Retirement Plans and Retirement
Accounts.   Compensation paid to Price Services pursuant to this Agreement is
with respect to the services described herein and not with respect to services
provided under Other Contracts.
B. DUTIES OF PRICE SERVICES
   ------------------------
     Price Services agrees that it will perform the following services:
     1.    RECEIPT OF ORDERS/PAYMENTS
           ------- -- ---------------
     Receive for acceptance, orders/payments for the purchase of Shares and
promptly deliver payment and appropriate documentation thereof to the authorized
custodian of the Fund (the "CUSTODIAN"). Upon receipt of any check or other
instrument drawn or endorsed to it as agent for, or identified as being for the
account of, the Fund, Price Services will process the order as follows:
     .
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>


     .
Subject to guidelines mutually agreed upon by the Funds and Price Services,
excess balances, if any, resulting from deposit in these designated bank
accounts will be invested and the income therefrom will be used to offset fees
which would otherwise be charged to the Funds under this Agreement;
     .
Ensure that any documentation received from Shareholder is in "good order" and
all appropriate documentation is received to establish an account.
     .
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;
     .
Maintain a record of all unpaid purchases and report such information to the
Fund daily;
     .
Process periodic payment orders, as authorized by investors, in accordance with
the payment procedures mutually agreed upon by both parties;
     .
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");
 .    Process orders received from recordkeepers and banks and brokers for
omnibus accounts in accordance with internal policies and procedures established
in executed agency agreements and other agreements negotiated with banks and
brokers; and
 .    Process telephone orders for purchases of Fund shares from the
Shareholder's bank account (via wire or ACH) to the Fund in accordance with
procedures mutually agreed upon by both parties.
     Upon receipt of funds through the Federal Reserve Wire System that are
designated

<PAGE>


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 6 hereof:
     .
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;
     .
Notify the Fund on the next business day of the total number of Shares presented
and covered by all such requests;
     .For those Funds that impose redemption fees, calculate the fee owed on the
redemption in accordance with the guidelines established between the Fund and
Price Services;
     .
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;
     .
Instruct custodian to wire redemption proceeds to a designated bank account of
Price Services. Subject to guidelines mutually agreed upon by the Funds and
Price Services, excess

<PAGE>


balances, if any, resulting from deposit in these bank

accounts will be invested and the income therefrom will be used to offset fees
which would otherwise be charged to the Funds under this Agreement;
     .
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;
     .

Make such withholdings as may be required under applicable Federal tax laws;
     .
In the event redemption proceeds for the payment of fees are to be wired through
the Federal Reserve Wire System or via ACH, Price Services shall cause such
proceeds to be wired in Federal funds or via ACH to the bank account designated
by Shareholder; and
     .
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, 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

<PAGE>


certificates, if any, to credit a like amount of Shares to the transferee.
     4.   CONFIRMATIONS
          -------------
     Mail all confirmations and statements as well as 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 A HOLD
           ---------- -- ------ ----- - ----
     .
UNCOLLECTED FUNDS. Shares purchased by personal, corporate, or governmental
check, or by ACH will be considered uncollected until the tenth calendar date
(the seventh business date for PLUS Classes) (following the trade date of the
trade ("UNCOLLECTED FUNDS");
     .
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 (the seventh business day for the PLUS Classes) following trade
date.
     .  REDEMPTION OF UNCOLLECTED FUNDS
       .

Shareholders making telephone requests for redemption of shares purchased with

<PAGE>


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.
          .
If a written redemption request is made for shares where any portion of the
payment for said shares is in Uncollected Funds, and the request is in good
order, Price Services will promptly obtain 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 (the seventh
business day for the PLUS Classes), 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 (the seventh business day for the PLUS Classes)
after trade date, the redemption proceeds will be released, regardless of
whether confirmation has been received.
     .    CHECKWRITING REDEMPTIONS.
         .
Daily, all checkwriting redemptions $10,000 and over reported as Uncollected
Funds or insufficient funds will be reviewed. An attempt will be made to contact
the shareholder to make good the funds (through wire, exchange, transfer).
Generally by 12:00 p.m. the same day, if the matter

has not been resolved, the redemption request will be rejected and the check
returned to the Shareholder.

<PAGE>


          .All checkwriting redemptions under $10,000 reported as Uncollected or
insufficient funds will be rejected and the check returned to the Shareholder.
The Funds and Services may agree to contact shareholders presenting checks under
$10,000 reported as insufficient to obtain alternative instructions for payment.
     .
CONFIRMATIONS OF AVAILABLE FUNDS. The Fund expects that situations may develop
whereby it would be beneficial to determine if a person who has placed an order
for Shares has sufficient funds in his or her checking account to cover the
payment for the Shares purchased. When this situation occurs, Price Services may
call the bank in question and request that it confirm that sufficient funds to
cover the purchase are currently credited to the account in question. Price
Services will maintain written documentation or a recording of each telephone
call which is made under the procedures outlined above. None of the above
procedures shall preclude Price Services from inquiring as to the status of any
check received by it in payment for the Fund's Shares as Price Services may deem
appropriate or necessary to protect both the Fund and Price Services. If a
conflict arises between Section 2 and this Section 6, Section 6 will govern.
     7.   DIVIDENDS, DISTRIBUTIONS AND OTHER CORPORATE ACTIONS
          ---------- ------------- --- ----- --------- -------
     .
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.
     .
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,

<PAGE>


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.
     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, tax forms, statements or confirms have been returned; (b) for which
accounts have aged outstanding checks; or (c) accounts with share balances 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. Price Services shall
also comply with applicable securities regulation with respect to searching for
lost shareholders.
     9.    BOOKS AND RECORDS
           ----- --- -------
     Maintain records showing for each Shareholder's account, Retirement Plan or
Retirement Account, as the case may be, the following:
          .  Names, address and tax identification number;
          .  Number of Shares held;

          .
Certain historical information regarding the account of each Shareholder,
including dividends and distributions distributed in cash or invested in Shares;

<PAGE>


          .
Pertinent information regarding the establishment and maintenance of Retirement
Plans and Retirement Accounts necessary to properly administer each account;
          .
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;
          .
Any stop or restraining order placed against a Shareholder's account;
          .

Information with respect to withholdings on domestic and foreign accounts;
          .
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;
          .
Any correspondence relating to the current maintenance of a Shareholder's
account;
          .

Certificate numbers and denominations for any Shareholder holding certificates;
          .
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

<PAGE>


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 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.
     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

<PAGE>


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 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.

<PAGE>


     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 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, On-Line 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.
     16.  COLLECTION OF SHAREHOLDER FEES
          ---------- -- ----------- ----

Calculate and notify shareholders of any fees owed the Fund, its affiliates or
its agents. Such fees include the small account fee IRA custodial fee and wire
fee.
     17.  FORM N-SAR
          ---- -----
     Maintain such records, if any, as shall enable the Fund to fulfill the
requirements of Form N-SAR.

<PAGE>


     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 for blue sky compliance purposes as shall be agreed upon by the
parties.
     20.   BANKING SERVICES FOR THE PLUS CLASSES
           ------- -------- --- --- ---- -------
         .
DETERMINE SHAREHOLDER ELIGIBILITY FOR BANKING SERVICES. Pursuant to mutually
agreed upon procedures, Price Services shall determine shareholder eligibility
for Banking Services offered by the PLUS Classes. Such procedures include, but
are not limited to, for existing shareholders, review of account history
(identification of any previously returned investment checks or ACH
transactions, redemptions of uncollected funds, etc.) and for new investors,
review of credit bureau and suspicious activity fraud reports.
     .CARD ISSUANCE. Once a shareholder is approved for Banking Services, Price
Services shall transmit new card orders to the debit card processing bank which
will produce and mail new cards and PIN numbers to PLUS Classes' shareholders.
For existing shareholders, Price Services shall also cause the bank to reissue
cards prior to expiration date.
     .
TRANSMISSION OF DATA TO AND FROM BANK. On a daily basis, Price Services shall
receive

<PAGE>


information from the debit card processing bank. In this regard, Price Services
shall, after card transaction information is received from the debit card
processing bank, process all debit card transaction detail against each
shareholder's PLUS Class collected account balance. On each business day, Price
Services shall cause information regarding the available limit of each PLUS
Class shareholder account to be transmitted to the debit card processing bank by
a time designated by the bank.
     .
REDEMPTION ORDERS RECEIVED FOR PLUS CLASS ACCOUNTS. Representatives shall follow
mutually agreed upon procedures to ensure that the shareholder's PLUS Class
collected account balance is reviewed and decremented with authorized debit card
transactions before processing any mutual fund redemption or exchange
transactions.
     .
DISPUTED DEBIT CARD TRANSACTIONS/FRAUD. Price Services shall receive information
from PLUS Class shareholders regarding disputed debit card transactions and
forward this information to the bank who will investigate the reported disputed
transaction. Price Services will follow procedures developed between it and the
bank for resolving such disputes and for provisionally crediting the
shareholder's account. Price Services shall also assist in the monitoring of
shareholder activity for fraud.
     21.   OTHER SERVICES
           ----- --------
     Provide such other services as may be mutually agreed upon between Price
Services and the Fund.
C.    FEES AND OUT-OF-POCKET EXPENSES
      -------------------------------
1.   FEES AND OUT-OF-POCKET EXPENSES - ALL FUNDS.
     --------------------------------------------
     Each Fund shall pay to Price Services and/or its agents for its Transfer
Agent Services

<PAGE>


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:
          .
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.
          .
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 of returned
proxies and the certification of the vote to the Fund.
          . COMMUNICATIONS
            .
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.
            .
PRINT & MAIL HOUSE.   The cost of internal and third party printing and mail
house services, including printing of statements and reports.
            .
VOICE AND DATA. The cost of equipment (including associated maintenance),
supplies and services used for communicating with and servicing Shareholders of
the Fund and Retirement Plan participants, or their agents, and other Fund
offices or other agents of either the Fund or Price Services. These charges
shall include:

<PAGE>


               .
telephone toll charges (both incoming and outgoing, local, long distance and
mailgrams); and
               .
data and telephone expenses to communicate with shareholders and transfer
shareholders between T. Rowe Price facilities.
               .
Production support, service enhancements and custom reporting for the
shareholder mainframe recordkeeping system.
            .
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.
            .
DISASTER RECOVERY. The cost of services, equipment, facilities and other charges
necessary to provide disaster recovery for any and all services listed in this
Agreement.
     Out-of-pocket costs will be billed at cost to the Funds. Allocation of
monthly costs among the Funds will generally be made based upon the number of
Shareholder and Retirement Accounts serviced by Price Services each month. Some
invoices for these costs will contain costs for both the Funds and other funds
serviced by Price Services. These costs will be allocated based on a reasonable
allocation methodology.   Where possible, such as in the case of inbound and
outbound WATS charges, allocation will be made on the actual distribution or
usage.
2.   FEES AND OUT-OF-POCKET EXPENSES - PLUS CLASSES OF SHARES
     --------------------------------------------------------
     Notwithstanding anything to the contrary in Section 21, the fees and
out-of-pocket expenses set forth in Section C(1) above with respect to the PLUS
Classes shall be charged as follows:
 .    All out-of-pocket expenses described in Section C(1) above shall be charged
to the Class in the same manner as if the Class was its own Price Fund. In
addition, each PLUS Class shall pay the following out-of-pocket expenses charged
by the debit card processing bank:

<PAGE>


 .    Plastic stock and labels for the debit cards;
 .    User tapes and automated voice response unit used to assist shareholders
whose cards have been lost or stolen;
 .    Ad hoc reports prepared by the bank; and
 .    Checkbooks.
D.   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.
E.   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

<PAGE>


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.
F.   STANDARD OF CARE/INDEMNIFICATION
     --------------------------------
     Notwithstanding anything to the contrary in this Agreement:
1.   Price Services shall not be liable to any Fund for any act or failure to
act by it or its agents or subcontractors on behalf of the Fund in carrying or
attempting to carry out the terms and provisions of this Agreement provided
Price Services has acted in good faith and without negligence or willful
misconduct and selected and monitored the performance of its agents and
subcontractors with reasonable care.
2.   The Fund shall indemnify and hold Price Services harmless from and against
all losses, costs, damages, claims, actions and expenses, including reasonable
expenses for legal counsel, incurred by Price Services resulting from: (i) any
action or omission by Price Services or its agents or subcontractors in the
performance of their duties hereunder; (ii) Price Services acting upon
instructions believed by it to have been executed by a duly authorized officer
of the Fund; or (iii) Price Services acting upon information provided by the
Fund in form and under policies agreed to by Price Services and the Fund. Price
Services shall not be entitled to such indemnification in respect of actions or
omissions constituting negligence or willful misconduct of Price Services or
where

<PAGE>


Price Services has not exercised reasonable care in selecting or monitoring the
performance of its agents or subcontractors.
3.   Except as provided in Article M 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:
     .  Price Services had in place "appropriate procedures;"
     .the employee(s) responsible for the error or omission had been reasonably
trained and were being appropriately monitored; and
     .
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

<PAGE>


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 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.
G.   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.
H.   DOCUMENTATION
     -------------

<PAGE>


     .As requested by Price Services, the Fund shall promptly furnish to Price
Services the following:
       .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;
       .
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;
       .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;
       .
All account application forms and other documents relating to Shareholders'
accounts;
       .
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
       .   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.
     .
As requested by Price Services, the Fund will also furnish from time to time the
following documents:
     .
Each resolution of the Board of Directors/Trustees of the Fund authorizing the
original issue of its Shares;
     .
Each Registration Statement filed with the Securities and Exchange Commission
and

<PAGE>


amendments and orders thereto in effect with respect to the sale of Shares with
respect to the Fund;
     .A certified copy of each amendment to the Articles of Incorporation or
Declaration of Trust, and the By-Laws of the Fund;
     .
Certified copies of each vote of the Board of Directors/Trustees authorizing
officers to give instructions to the Transfer Agent;
     .
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
     . 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.
I.   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.

<PAGE>


J.   COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS
     --------------------------------------------------
     Except as otherwise provided in the Agreement and except for the accuracy
of information furnished to the Fund by Price Services, each Fund assumes full
responsibility for the preparation, contents and distribution of its
prospectuses and compliance with all applicable requirements of the Act, the '34
Act, the '33 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction over the Fund. Price Services shall be
responsible for complying with all laws, rules and regulations of governmental
authorities having jurisdiction over transfer agents and their activities.
K.   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.
L.   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.
M.   AS OF TRANSACTIONS
     ------------------
     For purposes of this Article M, 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 due to an
act or omission of Price Services. "AS OF PROCESSING" refers to the processing
of these Transactions. If more than one Transaction ("RELATED TRANSACTION") in
the Fund is caused by or

<PAGE>


occurs as a result of the same act or omission, such transactions shall be
aggregated with other transactions in the Fund and be considered as one
Transaction.
     .  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 $100,000 or
more, immediately provide the Fund: (i) a report identifying the Transaction and
the Dilution resulting therefrom, (ii) the reason such Transaction was processed
as described above, and (iii) the action that Price Services has or intends to
take to prevent the reoccurrence of such as of processing ("REPORT").
     . 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

<PAGE>


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 greater than $25,000 ("SIGNIFICANT
TRANSACTION"), but less than $100,000, Price Services will review with Counsel
to the Fund 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 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 Audit Committee at its
annual 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 and resolved at the next scheduled Board Meeting. Settlement for
Significant Transactions causing Dilution of $100,000 or more will not be
entered into until approved by the Board. The factors to consider in making any
determination regarding the settlement of a Significant Transaction would
include but not be limited to:
       .

Procedures and controls adopted by Price Services to prevent As Of Processing;
       .
Whether such procedures and controls were being followed at the time of the
Significant Transaction;
       .
The absolute and relative volume of all transactions processed by Price Services
on the day of the Significant Transaction;
       .

The number of Transactions processed by Price Services during prior relevant

<PAGE>


periods, and the net Dilution/Gain as a result of all such Transactions to the
Fund and to all other Price Funds;
       .
The prior response of Price Services to recommendations made by the Funds
regarding improvement to Price Services' 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:
       .  Price Services had in place "appropriate procedures".
       .
the employee(s) responsible for the error or omission had been reasonably
trained and were being appropriately monitored; and
       .
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.
N.   TERM AND TERMINATION OF AGREEMENT
     ---------------------------------
 . 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.
 . This Agreement may be terminated by the Fund upon one hundred twenty (120)
days' written

<PAGE>


notice to Price Services; and by Price Services, upon three hundred sixty-five
(365) days' writing notice to the Fund.
 . 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.
O.   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.
P.   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.
Q.   AMENDMENT/INTERPRETIVE PROVISIONS
     ---------------------------------
     The parties by mutual written agreement may amend this Agreement at any
time. In addition, in connection with the operation of this Agreement, Price
Services and the Fund may agree from time to time on such provisions
interpretive of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement. Any
such interpretive or additional provisions are to be signed by all parties and
annexed hereto,

<PAGE>


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.
R.   FURTHER ASSURANCES
     ------------------
     Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
S.   MARYLAND LAW TO APPLY
     ---------------------
     This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of Maryland.
T.   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.
U.   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.
V.   THE PARTIES
     -----------
     All references herein to "the Fund" are to each of the Funds listed on
Appendix A individually, as if this Agreement were between such individual Fund
and Price Services. In the case of a series Fund or trust, all references to
"the Fund" are to the individual series or portfolio of such Fund or trust, or
to such Fund or trust on behalf of the individual series or portfolio, as
appropriate. The "Fund" also includes any T. Rowe Price Funds which may be
established after the execution of this Agreement. Any reference in this
Agreement to "the parties" shall mean Price Services and such other individual
Fund as to which the matter pertains.

<PAGE>


W.   DIRECTORS, TRUSTEES AND SHAREHOLDERS AND MASSACHUSETTS BUSINESS TRUST
     ---------------------------------------------------------------------
     It is understood and is expressly stipulated that neither the holders of
Shares in the Fund nor any Directors or Trustees of the Fund shall be personally
liable hereunder.
      With respect to any Fund which is a party to this Agreement and which is
organized as a Massachusetts business trust, the term "Fund" means and refers to
the trustees from time to time serving under the applicable trust agreement
(Declaration of Trust) of such Trust as the same may be amended from time to
time. It is expressly agreed that the obligations of any such Trust hereunder
shall not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust, as provided in the Declaration of Trust of the Trust. The
execution and delivery of this Agreement has been authorized by the trustees and
signed by an authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them, but shall bind only the trust
property of the Trust as provided in its Declaration of Trust.
X.   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.
T. ROWE PRICE SERVICES, INC.         T. ROWE PRICE FUNDS

   /s/Wayne D. O'Melia             /s/Carmen F. Deyesu
BY: __________________________ BY: ___________________________
    --------------------------     ---------------------------

DATED: 3/24/99                     DATED: 3/26/99

<PAGE>


                                   APPENDIX A

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 DIVERSIFIED SMALL-CAP GROWTH 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 Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

<PAGE>



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 500 Fund
T. Rowe Price Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund

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 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 Growth & Income Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

<PAGE>



T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, 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 Prime Reserve Fund-PLUS Class

T. ROWE PRICE REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment 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.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund


<PAGE>


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-EFFICIENT BALANCED FUND, INC.

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. Rowe Price Tax-Exempt Money Fund - PLUS Class

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 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

T. ROWE PRICE VALUE FUND, INC.

<PAGE>


                                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, 1999, between T. Rowe
Price Services, Inc., and each of the Parties listed on Appendix A thereto is
hereby amended, as of April 21, 1999, by adding thereto T. Rowe Price
Tax-Efficient Funds, Inc., on behalf of T. Rowe Price Tax-Efficient Balanced
Fund and T. Rowe Price Tax-Efficient Growth Fund.

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 DIVERSIFIED SMALL-CAP GROWTH 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 Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

<PAGE>


T. ROWE PRICE FIXED INCOME SERIES, INC.
     T. Rowe Price Limited-Term Bond Portfolio
     T. Rowe Price Prime Reserve 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 500 Fund
     T. Rowe Price Extended Equity Market Index Fund
     T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.
     Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.
     Foreign Equity Fund

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 Bond Fund
     T. Rowe Price Japan 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 Growth & Income Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.
     T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.


<PAGE>


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 FUNDS, 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 Prime Reserve Fund--PLUS Class

T. ROWE PRICE REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.
     Reserve Investment Fund
     Government Reserve Investment 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.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.
     Spectrum Growth Fund
     Spectrum Income Fund
     Spectrum International Fund


<PAGE>


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 Intermediate Tax-Free Fund
     Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
     T. Rowe Price Tax-Efficient Balanced Fund
     T. Rowe Price Tax-Efficient Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
     T. Rowe Price Tax-Exempt Money Fund--PLUS Class

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE 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 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


<PAGE>


T. ROWE PRICE VALUE FUND, INC.

Attest:

/s/Patricia S. Lippert        /s/   Carmen F. Deyesu

______________________        ______________________________
Patricia S. Lippert           By:   Carmen F. Deyesu
Secretary                          Treasurer


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, 1999, as amended.

<PAGE>


                                    AGREEMENT
                                    BETWEEN
                         T. ROWE PRICE ASSOCIATES, INC.
                                      AND
                            THE T. ROWE PRICE FUNDS
                                      FOR
                            FUND ACCOUNTING SERVICES

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                               TABLE OF CONTENTS
                                                      Page

Article A Terms of Appointment/Duties of Price Associates 1

Article B                 Fees and Out-of-Pocket Expenses 3

Article CRepresentations and Warranties of Price Associates 3

Article D      Representations and Warranties of the Fund 4

Article E      Ownership of Software and Related Material 4

Article F                       Quality Service Standards 4

Article G                Standard of Care/Indemnification 4

Article H                                  Dual Interests 7

Article I                                   Documentation 7

Article J                   Recordkeeping/Confidentiality 7

Article KCompliance with Governmental Rules and Regulations 8

Article L              Terms and Termination of Agreement 8

Article M                                          Notice 8

Article N                                      Assignment 9

Article O               Amendment/Interpretive Provisions 9

Article P                              Further Assurances 9

Article Q                           Maryland Law to Apply 9

Article R                             Merger of Agreement 10

Article S                                    Counterparts 10

Article T                                     The Parties 10


<PAGE>


Article UDirectors, Trustee and Shareholders and Massachusetts Business Trust 10

Article V                                        Captions 11

<PAGE>


AGREEMENT made as of the first day of January, 1999, 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:
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:
1.   Maintain for each Fund a daily trial balance, a general ledger, subsidiary
records and capital stock accounts;
2.   Maintain for each Fund an investment ledger, including amortized bond and
foreign dollar denominated costs where applicable;
3.   Maintain for each Fund all records relating to the Fund's income and
expenses;

<PAGE>


4.   Provide for the daily valuation of each Fund's portfolio securities and the
computation of each Fund's daily net asset value per share ("NAV"). Such daily
valuations shall be made in accordance with the valuation policies established
by each of the Fund's Board of Directors including, but not limited to, the
utilization of such pricing valuation sources and/or pricing services as
determined by the Boards.
Price Associates shall have no liability for any losses or damages incurred by
the Fund as a result of erroneous portfolio security evaluations provided by
such designated sources and/or pricing services; provided that, Price Associates
reasonably believes the prices are accurate, has adhered to its normal
verification control procedures, and has otherwise met the standard of care as
set forth in Article G of this Agreement;
5.   Provide daily cash flow and transaction status information to each Fund's
adviser;
6.   Authorize the payment of Fund expenses, either through instruction of
custodial bank or utilization of custodian's automated transfer system;
7.   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, reports to the Securities and Exchange Commission, the
Internal Revenue Service and other Federal and state regulatory agencies;
8.   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;
9.   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

<PAGE>


10.  Cooperate with each Fund's independent public accountants and take all
reasonable action in the performance of its obligations under the Agreement to
assure that the necessary information is made available to such accountants for
the expression of their opinion without any qualification as to the scope of
their examination including, but not limited to, their opinion included in each
such Fund's annual report on Form N-SAR and annual amendment to Form N-1A.
B.   FEES AND OUT-OF-POCKET EXPENSES
     -------------------------------
Each Fund shall pay to Price Associates for its Accounting Services hereunder,
fees as set forth in the Schedule attached hereto. In addition, each Fund will
reimburse Price Associates 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 serviced 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.
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.

<PAGE>


D.   REPRESENTATIONS AND WARRANTIES 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 this
Agreement shall be the property of Price Associates and will not become the
property of the Funds.
F.   QUALITY SERVICE STANDARDS
     -------------------------
Price Associates and the Fund may, from time to time, agree to certain quality
service standards, with respect to Price Associates' services hereunder.
G.   STANDARD OF CARE/INDEMNIFICATION
     --------------------------------
Notwithstanding anything to the contrary in this Agreement:
1.   Where a pricing error results in loss or dilution to a Fund of less than
$10,000, the determination of liability for the error will be made by Price
Associates. Where a pricing error results in loss or dilution to a Fund of
$10,000 or more but less than $100,000, liability for the error will be resolved
through negotiations between Fund Counsel and Price Associates. Where a pricing
error results in loss or dilution to a Fund of the lesser of 1/2 of 1% of NAV or
$100,000 or more, the error will be promptly reported to the Board of Directors
of the Fund (unless the Fund is fully

<PAGE>


compensated for the loss or dilution), provided that final settlement with
respect to such errors will not be made until approved by the Board of Directors
of the Fund. A summary of all pricing errors and their effect on the Funds will
be reported to the Funds? Audit Committee on an annual basis. In determining the
liability of Price Associates for a pricing error, an error or omission will not
be deemed to constitute negligence when it is determined that:
o    Price Associates had in place "appropriate procedures and an adequate
system of internal controls;"
o    the employee responsible for the error or omission had been reasonably
trained and was being appropriately monitored; and
o    the error or omission did not result from wanton or reckless conduct on the
part of the employee.
It is understood that Price Associates is not obligated to have in place
separate procedures to prevent each and every conceivable type of error or
omission. The term "appropriate procedures and adequate system of internal
controls" shall mean procedures and controls reasonably designed to prevent and
detect errors and omissions. In determining the reasonableness of such
procedures and controls, weight will be given to such factors as are
appropriate, including the prior occurrence of any similar errors or omissions,
when such procedures and controls were in place and fund accounting industry
standards in place at the time of the error.
2.   The Fund shall indemnify and hold Price Associates harmless from and
against all losses, costs, damages, claims, actions, and expenses, including
reasonable expenses for legal counsel, incurred by Price Associates resulting
from: (i) any action or omission by Price Associates or its agents or
subcontractors in the performance of their duties hereunder; (ii) Price
Associates acting upon instructions believed by it to have been executed by a
duly authorized officer of the Fund; or (iii) Price Associates acting upon
information provided by the Fund in form and under policies

<PAGE>


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.
5.   In order that the indemnification provisions contained in this Article G
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.

<PAGE>


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.
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>


K.   COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS
     --------------------------------------------------
Except as otherwise provided in the Agreement and except for the accuracy of
information furnished to the Funds by Price Associates, each Fund assumes full
responsibility for the preparation, contents and distribution of its
prospectuses, and for complying with all applicable requirements of the Act, the
'34 Act, the Securities Act of 1933 (the "33 ACT"), and any laws, rules and
regulations of governmental authorities having jurisdiction over the Funds.
L.   TERM AND TERMINATION OF AGREEMENT
     ---------------------------------
1.   This Agreement shall run for a period of one (1) year from the date first
written above and will be renewed from year to year thereafter unless terminated
by either party as provided hereunder.
2.   This Agreement may be terminated by the Fund upon sixty (60) days' written
notice to Price Associates; and by Price Associates, upon three hundred
sixty-five (365) days' writing notice to the Fund.
3.   Upon termination hereof, the Fund shall pay to Price Associates such
compensation as may be due as of the date of such termination, and shall
likewise reimburse for out-of-pocket expenses related to its services hereunder.
M.   NOTICE
     ------
Any notice as required by this Agreement shall be sufficiently given (i) when
sent to an authorized person of the 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

<PAGE>


of the other party, provided this shall not preclude Price Associates from
employing such agents and subcontractors as it deems appropriate to carry out
its obligations set forth hereunder.
O.   AMENDMENT/INTERPRETIVE PROVISIONS
     ---------------------------------
The parties by mutual written agreement may amend this Agreement at any time. In
addition, in connection with the operation of this Agreement, Price Associates
and the Fund may agree from time to time on such provisions interpretive of or
in addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions are to be signed by all parties and annexed hereto, but no
such provision shall contravene any applicable Federal or state law or
regulation and no such interpretive or additional provision shall be deemed to
be an amendment of this Agreement.
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 Appendix and Schedule 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>


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 expressly agreed that the obligations of any such Trust hereunder
shall not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust, as provided in the Declaration of Trust of the Trust. The
execution and delivery of this Agreement has been authorized by the trustees and
signed by an authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them, but shall bind only the trust
property of the Trust as provided in its Declaration of Trust.

<PAGE>


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.

T. ROWE PRICE ASSOCIATES, INC.   T. ROWE PRICE FUNDS

   /s/Alvin Younger, Jr.              /s/Carmen F. Deyesu
BY: ____________________________

BY:
    -------------------------------------------------------------

DATED: 3/25/99                   DATED: 3/26/99
       -------                          -------

<PAGE>


                                   APPENDIX A
                                   ----------

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 DIVERSIFIED SMALL-CAP GROWTH 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 Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve 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.

<PAGE>


T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund

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 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 Growth & Income Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

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 FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

<PAGE>



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 Prime Reserve Fund-PLUS Class

T. ROWE PRICE REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment 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.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International 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-EFFICIENT BALANCED FUND, INC.


<PAGE>


T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. Rowe Price Tax-Exempt Money Fund - PLUS Class

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 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

T. ROWE PRICE VALUE FUND, INC.

<PAGE>


                                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, 1999, between T. Rowe
Price Associates, Inc. and each of the Parties listed on Appendix A thereto is
hereby amended, as of April 21, 1999, by adding thereto T. Rowe Price
Tax-Efficient Funds, Inc., on behalf of T. Rowe Price Tax-Efficient Balanced
Fund and T. Rowe Price Tax-Efficient Growth Fund.

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 DIVERSIFIED SMALL-CAP GROWTH 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 Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.


<PAGE>


T. ROWE PRICE FIXED INCOME SERIES, INC.
    T. Rowe Price Limited-Term Bond Portfolio
    T. Rowe Price Prime Reserve 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 500 Fund
    T. Rowe Price Extended Equity Market Index Fund
    T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.
    Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.
    Foreign Equity Fund

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 Bond Fund
    T. Rowe Price Japan 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 Growth & Income Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.
    T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

<PAGE>


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 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 REAL ESTATE FUND, INC.
    T. Rowe Price Prime Reserve Fund--PLUS Class

RESERVE INVESTMENT FUNDS, INC.
    Reserve Investment Fund
    Government Reserve Investment 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.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.
    Spectrum Growth Fund
    Spectrum Income Fund
    Spectrum International 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 Intermediate Tax-Free Fund
    Georgia Tax-Free Bond Fund

<PAGE>


T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
    T. Rowe Price Tax-Efficient Balanced Fund
    T. Rowe Price Tax-Efficient Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
    T. Rowe Price Tax-Exempt Money Fund--PLUS Class

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE 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 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 VALUE FUND, INC.

Attest:

/s/Patricia S. Lippert        /s/  Carmen F. Deyesu

________________________          ______________________________
Patricia S. Lippert           By:  Carmen F. Deyesu
Secretary                         Treasurer

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

 The Agreement between T. Rowe Price Retirement Plan Services, Inc. and
the Taxable Funds, dated January 1, 1999.

<PAGE>

                                    AGREEMENT

                                    BETWEEN

                  T. ROWE PRICE RETIREMENT PLAN SERVICES, INC.

                                      AND

                              T. ROWE PRICE FUNDS


<PAGE>


                               TABLE OF CONTENTS
                               -----------------

                                                             PAGE
                                                             ----

Article A                               Terms of Appointment 2

Article B                                      Duties of RPS 2
1.     Contributions - Retirement Plans and Retirement Accounts 2
2.     Retirement Plans - Redemptions to Cover Distributions3
3.     Other Provisions                                    4
4.     Exchanges                                           5
5.     Books and Records                                   5
6.     Tax Information                                     6
7.     Other Information to be Furnished to the Funds      6
8.     Telephone                                           6
9.     Correspondence                                      6
10.    Prospectuses/Confirmation Statements                7
11.    Proxies                                             7
12.    Form N-SAR                                          7
13.    Withholding                                         7

Article C                     Fee and Out-of-Pocket Expenses 7
1.     Postage                                             8
2.     Proxies                                             8
3.     Communications                                      8
4.     Record Retention                                    9
5.     Disaster Recovery                                   9

Article D              Representations and Warranties of RPS 9

Article E         Representations and Warranties of the Fund 10

Article F                   Standard of Care/Indemnification 10

Article G                                     Dual Interests 13

Article H                                      Documentation 13

Article I                      Recordkeeping/Confidentiality 14

Article J         Ownership of Software and Related Material 15

<PAGE>


Article K                                 As of Transactions 15
1.     Reporting                                          15
2.     Liability                                          16

Article L                  Term and Termination of Agreement 18

Article M                                             Notice 19

Article N                                         Assignment 19

Article O                  Amendment/Interpretive Provisions 19

Article P                                 Further Assurances 20

Article Q                              Maryland Law to Apply 20

Article R                                Merger of Agreement 20

Article S                                       Counterparts 20

Article T                                        The Parties 20

Article UDirectors, Trustees and Shareholders and Massachusetts Business Trust
21

Article V                                           Captions 21

<PAGE>

   AGREEMENT, made as of the first day of January, 1999, by and between T. ROWE
PRICE RETIREMENT PLAN SERVICES, INC., a Maryland corporation having its
principal office and place of business at 100 East Pratt Street, Baltimore,
Maryland 21202 ("RPS"), 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 Fund hereinafter
referred to as "THE FUND") whose definition may be found in Article T;
   WHEREAS, the Funds are named investment options under various tax-sheltered
plans, including, but not limited to, state and local government deferred
compensation plans, 403(b) plans, and profit sharing, thrift, 401(k) and money
purchase pension plans for self-employed individuals, professional partnerships
and corporations (collectively referred to as "RETIREMENT PLANS"); and the Fund
has determined that such investments of Retirement Plans in the Funds are in the
best long-term interest of the Funds;
   WHEREAS, RPS has the capability of providing special services, on behalf of
the Fund, for the accounts of individuals ("PARTICIPANTS") participating in
these Retirement Plans ("RETIREMENT ACCOUNTS");
   WHEREAS, RPS 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 (THE "'34 ACT");
   WHEREAS, RPS may subcontract or jointly contract with other parties on behalf
of the Funds to perform certain of the functions described herein, RPS may also
enter into, on behalf of the Funds, certain banking relationships to perform
various banking services, including, but not limited to, check deposits,
disbursements, automatic clearing house transactions ("ACH") and wire transfers.
Subject to guidelines mutually agreed upon by the Funds and RPS, excess
balances, if

<PAGE>

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;
   WHEREAS, the Fund desires to contract with RPS to provide the functions and
services described herein in connection with the Retirement Plans and Retirement
Accounts;
   NOW THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
A.  TERMS OF APPOINTMENT
    --------------------
Subject to the terms and conditions set forth in this Agreement, the Fund hereby
employs and appoints RPS to perform the services and functions described herein
in connection with certain Retirement Plan and Retirement Accounts as agreed
upon by the parties.
B.  DUTIES OF RPS
    -------------
RPS agrees that it will perform the following services:
1.  CONTRIBUTIONS - RETIREMENT PLANS AND RETIREMENT ACCOUNTS
    --------------------------------------------------------
After RPS has received monies from Retirement Plans and has determined the
proper allocation of such monies to the Retirement Accounts of Participants
based upon instructions received from Participants, Retirement Plans or their
designees, or Retirement Plan Administrator(s) ("ADMINISTRATOR(S)"), RPS will,
as a responsibility under the Agreement:
a.  In the case of a new Participant, establish and maintain a Retirement
Account for such Participant;
b.  Compute the number of shares of each Fund to which the Participant is
entitled in accordance with the price per share of such Fund as calculated and
provided by the Fund for orders received at that time and date, and purchase the
appropriate shares in each such Retirement Account;

<PAGE>

c.  Calculate the aggregate of all purchases in the Retirement Accounts and
transmit the net purchase order to T. Rowe Price Services, Inc. ("SERVICES") or
directly to the Fund, as the case may be, for purchase into an omnibus account
established in each Fund registered in RPS' or its affiliates' name as agent for
Retirement Plans or in the individual Retirement Plan's name ("OMNIBUS
ACCOUNT"); and
d.  Transmit to Services, by wire, at a time mutually agreed upon by both
parties, the aggregate money allocated to coincide with the purchase order.
2.  RETIREMENT PLANS - REDEMPTIONS TO COVER DISTRIBUTIONS.
    -----------------------------------------------------
After RPS has received instructions from the Administrator regarding
distributions to be made to Participants or their designated beneficiaries from
Funds designated as investment options under the Retirement Plan, RPS will, as a
responsibility under the Agreement:
a.  Compute the number of shares to be redeemed from each such Retirement
Account for such distributions in accordance with the price per share of such
Fund as calculated and provided by the Fund for orders received in good order at
that time and date.
b.  After such computation, calculate the aggregate amount of all redemptions in
the Retirement Accounts.
c.  Transmit any net redemption order to Services or directly to the Fund, as
the case may be, for the Omnibus Account of each Fund. Services will wire
proceeds to RPS to coincide with the redemption order for each Omnibus Account.
RPS will Distribute to Participants or their designated beneficiaries the amount
to be disbursed.
d.  After RPS has received instructions from the Administrator regarding
disbursements to be made regarding the payment of fees due the Administrator, or
other persons including RPS, RPS will, as a responsibility under this Agreement:

<PAGE>

i.  Compute the number of shares to be redeemed from each Retirement Account to
pay for such disbursements and the total number of all shares to be redeemed in
accordance with the price per share for orders received in good order at that
time and date, of such Fund as calculated and provided by the Fund;
ii. Inform Services, or the Funds directly, as the case may be, of the necessary
Shares to be redeemed from the Omnibus Account of the Funds to cover such
disbursements; and
iii. Mail or wire to the Administrator or such other person as designated by the
Administrator the amount to be disbursed.
3.  OTHER PROVISIONS
    ----------------
a.  If any instruction tendered by an Administrator to purchase or redeem shares
in a Retirement Account is not satisfactory to RPS, RPS shall promptly notify
the Administrator of such fact together with the reason therefore;
b.  The authority of RPS to perform its responsibilities under Paragraph B(2)
with respect to each Fund shall be suspended upon RPS's receipt of notification
from such Fund of the suspension of the determination of the Fund's net asset
value per share and shall remain suspended until RPS receives proper
notification from the Fund; and
c.  The Fund will promptly inform RPS of the declaration of any dividend or
distribution on account of the capital stock of any Fund so that RPS may
properly credit income and capital gain payments to each Retirement Account.
4.  EXCHANGES
    ---------
Effect exchanges of shares of the Funds in the Retirement Accounts upon receipt
of appropriate instructions from the Administrator and/or Participant in
accordance with the price per share of the Funds as calculated and provided by
the Fund for orders received in good order at that time and

<PAGE>

date. Calculate and transmit a net purchase and redemption order to Services or
the Fund, as the case may be, for the Omnibus Account of each Fund. RPS will
transmit by wire the aggregate monies allocated to each Fund to Services to
coincide with any net purchase order or instruct Services to wire to it monies
from each Funds Omnibus Account to coincide with any net redemption order.
5.  BOOKS AND RECORDS
    -----------------
RPS shall maintain records showing for each Retirement Plan or Retirement
Account, the following:
a.  Names, addresses and tax identification numbers, when provided;
b.  Number of shares held of each Fund;
c.  Historical information regarding the account of each Participant and/or
Retirement Plan, including dividends and capital gain distributions invested in
shares;
d.  Any instructions from a Participant or Administrator, including all forms
executed by a Participant with respect to elections with respect to payment
options in connection with the redemption of shares or distribution elections,
if applicable; and
e.  Any information required in order for RPS to perform the calculations
contemplated under this Agreement.
Any such records maintained pursuant to Rule 31a-1 under the Investment Company
Act of 1940 ("THE ACT") will be preserved for the periods prescribed in Rule
31a-2 thereunder. Disposition of such records after such prescribed periods
shall be as mutually agreed upon from time to time by RPS and the Funds. The
retention of such records, which may be inspected by the Fund at reasonable
times, shall be at the expense of the Funds. All records maintained by RPS in
connection with the performance of its duties under this Agreement will remain
the property of the Funds and, in the

<PAGE>

event of termination of this Agreement, will be delivered to the Fund as of the
date of termination of this agreement or at such other time as may be mutually
agreed upon.
6.  TAX INFORMATION
    ---------------
RPS shall also prepare and file with appropriate federal agencies, such
information returns and reports as required by applicable Federal statutes
relating to redemptions effected in Retirement Accounts which constitute
reportable distributions. RPS will also prepare and submit to Participants, such
reports containing information as is required by applicable Federal law.
7.  OTHER INFORMATION TO BE FURNISHED TO THE FUNDS
    ----------------------------------------------
RPS will furnish to the Fund, such information, including Participant lists and
statistical information as may be agreed upon from time to time between RPS and
the Fund. Permission of the Administrator may also be required.
8.  TELEPHONE
    ---------
RPS will promptly respond to any telephone calls from Administrators and/or
Participants relating to the Retirement Accounts and/or questions pertaining to
the Funds.
9.  CORRESPONDENCE
    --------------
RPS will promptly and fully answer correspondence from Administrators and
Participants relating to Retirement Accounts and transfer agent procedures, and
such other correspondence as may from time to time be mutually agreed upon with
the Funds. Copies of all correspondence will be retained by RPS in accordance
with applicable law.
10. PROSPECTUSES/CONFIRMATION STATEMENTS
    ------------------------------------
RPS will be responsible for mailing all confirmations and statements relating to
transactions in the Funds, prospectuses, semi-annual and annual reports of the
Funds and other enclosures and mailings, as may be requested by the Funds or
required by applicable Federal law.

<PAGE>

11. PROXIES
    -------
As requested by the Funds, RPS shall assist in the mailing of proxy cards and
other material required to be mailed by the Fund in connection with shareholder
meetings of the Fund and shall assist in the receipt, examination and tabulation
of returned proxies and the certification of the vote to the Fund.
12. FORM N-SAR
    ----------
RPS shall maintain such records, if any, as shall enable the Fund to fulfill the
requirements of Form N-SAR.
13. WITHHOLDING
    -----------
The Fund and RPS shall agree to procedures to be followed with respect to RPS's
responsibilities in connection with compliance for federal withholding on
distributions to Participants from Retirement Accounts.
C.  FEES AND OUT-OF-POCKET EXPENSES
    -------------------------------
Each Fund shall pay to RPS for its services hereunder fees computed as set forth
in the Fee Schedule attached hereto. Except as provided below, RPS will be
responsible for all expenses relating to the providing of services. Each Fund,
however, will reimburse RPS for the following out-of-pocket expenses and charges
incurred in providing services:
1.  Postage. The cost of postage and freight for mailing materials, including
    --------
confirmations and statements as well as Fund prospectuses and Fund shareholder
reports, to Participants, or their agents, including overnight delivery, UPS and
other express mail services and special courier services required to transport
mail between RPS locations and mail processing vendors.

<PAGE>

2.  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 of
returned proxies and the certification of the vote to the Fund.
3.  Communications
    --------------
a.  Print. The printed forms used internally and externally for documentation
    -----
and processing Participant, or their agent's, inquiries and requests; paper and
envelope supplies for letters, notices, and other written communications sent to
Administrators and Participants, or their agents.
b.  Print & Mail House. The cost of internal and third party printing and mail
    ------------------
house services, including printing of statements and reports.
c.  Voice and Data. The cost of equipment (including associated maintenance),
    --------------
supplies and services used for communicating with the Participants or their
Administrator, the Fund's transfer agent, other Fund offices, and other agents
of either the Fund or RPS. 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.
4.  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.
5.  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.
D.  REPRESENTATIONS AND WARRANTIES OF RPS
    -------------------------------------
RPS represents and warrants to the Fund that:

<PAGE>

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.
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.
6.  It is registered with the Securities and Exchange Commission as a Transfer
Agent pursuant to Section 17A of the '34 Act.
E.  REPRESENTATIONS AND WARRANTIES OF THE FUND
    ------------------------------------------
The Fund represents and warrants to RPS 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.
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 filing have been made and will continue to be made, with respect to all
shares of the Fund being offered for sale.

<PAGE>

F.  STANDARD OF CARE/INDEMNIFICATION
    --------------------------------
Notwithstanding anything to the contrary in this Agreement:
1.  RPS shall not be liable to the 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 RPS 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 RPS harmless from and against all losses,
costs, damages, claims, actions and expenses, including reasonable expenses for
legal counsel, incurred by RPS resulting from: (i) any action or omission by RPS
or its agents or subcontractors in the performance of their duties hereunder;
(ii) RPS acting upon instructions reasonably believed by it to have been
executed by a duly authorized officer of the Fund; or (iii) RPS acting upon
information provided by the Fund in form and under policies agreed to by RPS and
the Fund. RPS shall not be entitled to such indemnification in respect of
actions or omissions constituting negligence or willful misconduct of RPS or
where RPS has not exercised reasonable care in selecting or monitoring the
performance of its agents or subcontractors.
3.  Except as provided in Article K of this Agreement, RPS 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 negligence or willful misconduct of RPS or which result from RPS'
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 RPS.

<PAGE>

4.  In determining RPS' liability, an isolated error or omission will normally
not be deemed to constitute negligence when it is determined that:
o   RPS had in place "appropriate procedures;"
o   the employees 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 employees.
It is understood that RPS 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, claims, actions or expense resulting from such
failure to perform or otherwise from such causes.
6.  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

<PAGE>

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.
G.  DUAL INTERESTS
    --------------
It is understood that some person or persons may be directors, officers, or
shareholders of both RPS and the Fund 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.
H.  DOCUMENTATION
    -------------
1.  As requested by RPS, the Fund shall promptly furnish to RPS the following:
a.  copy of the resolution of the Directors/Trustees of the Fund authorizing the
appointment of RPS and the execution and delivery of this Agreement;
b.  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;
c.  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
d.  A copy of the Fund's current and new prospectuses and shareholder reports
issued by the Fund.

<PAGE>

The delivery of any such document to either party hereto for the purpose of any
other agreement to which the Fund and RPS are or were parties shall be deemed to
be delivery for the purposes of this Agreement.
2.  As requested by RPS, the Fund will also furnish to RPS from time to time the
following documents:
a.  Each resolution of the Board of Directors/Trustees of the Fund authorizing
the original issue of its shares;
b.  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;
c.  A certified copy of each amendment to the Articles of Incorporation or
Declaration of Trust, and the By-Laws of the Fund;
d.  Certified copies of each vote of the Board of Directors/Trustees authorizing
officers to give instructions to the Fund; and
e.  Such other documents or opinions which RPS, in its discretion, may
reasonably deem necessary or appropriate in the proper performance of its duties
under this Agreement.
3.  RPS hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of check forms and facsimile
signature imprinting devices, if any, and for the preparation or use, and for
keeping account of, such forms and devices.
I.  RECORDKEEPING/CONFIDENTIALITY
    -----------------------------
1.  RPS shall keep records relating to the services to be performed hereunder,
in the form and manner as it may deem advisable, provided that RPS shall keep
all records in such form and in such manner as required by applicable law,
including the Act and the '34 Act.

<PAGE>

2.  RPS 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 RPS or the 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; (c) after so requested
by the other party hereto; or (d) by the Administrator. The permission of the
Administrator may be required before disclosure is made to the Funds.
J.  OWNERSHIP OF SOFTWARE AND RELATED MATERIAL
    ------------------------------------------
All computer programs, magnetic tapes, written procedures and similar items
purchased and/or developed and used by RPS in performance of the Agreement shall
be the property of RPS and will not become the property of the Fund.
K.  AS OF TRANSACTIONS
    ------------------
For purposes of this Article K, the term "TRANSACTION" shall mean any single or
"related transaction" (as defined below) involving the purchase or redemption of
shares (including exchanges) 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 RPS due to an act or omission of RPS. "AS OF
PROCESSING" refers to the processing of these Transactions. If more than one
Transaction ("RELATED TRANSACTION") in the Fund is caused by or occurs as a
result of the same act or omission, such transactions shall be aggregated with
other transactions in the Fund and be considered as one Transaction.

<PAGE>

1.  REPORTING
RPS shall:
a.  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 hereinafter referred to
as "CUMULATIVE."
b.  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.
c.  With respect to any Transaction which causes Dilution to the Fund of
$100,000 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 RPS has
or intends to take to prevent the reoccurrence of such as of processing
("REPORT").
2.  LIABILITY
a.  It will be the normal practice of the Fund not to hold RPS liable with
respect to any Transaction which causes Dilution to any single Fund of less than
$25,000. RPS 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, RPS, in
consultation with counsel to the Fund, will make appropriate inquiry to
determine whether it should take any remedial action. RPS will report to the
Board of Directors/Trustees of the Fund ("BOARD"), as appropriate, any action it
has taken.
b.  Where a Transaction causes Dilution to a Fund greater than $25,000
("SIGNIFICANT TRANSACTION") but less than $100,000, RPS will review with Counsel
to the Fund the circumstances

<PAGE>

surrounding the underlying Significant Transaction to determine whether the
Significant Transaction was caused by or occurred as a result of a negligent act
or omission by RPS. If it is determined that the Dilution is the result of a
negligent action or omission by RPS, RPS and outside counsel for the Fund will
negotiate settlement. All such Significant Transactions will be reported to the
Audit Committee at its annual 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 and resolved at the next scheduled Board Meeting.
- --------
Settlement for Significant Transactions causing Dilution of $100,000 or more
will not be entered into until approved by the Board. The factors to consider in
making any determination regarding the settlement of a Significant Transaction
would include but not be limited to:
i.  Procedures and controls adopted by RPS to prevent As Of Processing;
ii. Whether such procedures and controls were being followed at the time of the
Significant Transaction;
iii. The absolute and relative volume of all transactions processed by RPS on
the day of the Significant Transaction;
iv. The number of Transactions processed by RPS during prior relevant periods,
and the net Dilution/Gain as a result of all such Significant Transactions to
the Fund and to all other Funds; and
v.  The prior response of RPS to recommendations made by the Funds regarding
improvement to RPS's As Of Processing procedures.
c.  In determining RPS' 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   RPS had in place "appropriate procedures".

<PAGE>

o   the employees 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 employees.
It is understood that RPS 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.
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 Funds upon one hundred twenty (120)
days' prior written notice to RPS; and by RPS, upon three hundred sixty-five
(365) days' prior written notice to the Fund.
3.  Upon termination hereof, the Fund shall pay to RPS such compensation as may
be due as of the date of such termination, and shall likewise reimburse for
out-of-pocket expenses related to its services hereunder.
M.  NOTICE
    ------
Any notice as required by this Agreement shall be sufficiently given (i) when
sent to an authorized person of the other party at the address of such party set
forth above or at such other address as such

<PAGE>

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.
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, RPS and the Fund
may agree from time to time on such provisions interpretive of or in addition to
the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions are to be signed by all parties and annexed hereto, but no such
provision shall contravene any applicable federal or state law or regulation and
no such interpretive or additional provision shall be deemed to be an amendment
of this Agreement.
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 Schedule supersede any prior agreement
with respect to the subject hereof, whether oral or written.

<PAGE>

S.  COUNTERPARTS
    ------------
This Agreement may be executed by the parties hereto in any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
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 RPS.
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. Any reference
in this Agreement to "the parties" shall mean RPS and such other individual Fund
as to which the matter pertains. The "Fund" also includes any T. Rowe Price Fund
which may be established after the date of this Agreement.
Any reference in this Agreement to "the parties" shall mean the Funds and RPS.
U.  DIRECTORS, TRUSTEES AND SHAREHOLDERS AND MASSACHUSETTS BUSINESS TRUST
    ---------------------------------------------------------------------
It is understood and is expressly stipulated that neither the holders of shares
in the Fund nor any Directors or Trustees of the Fund shall be personally liable
hereunder. With respect to any Fund which is a party to this Agreement and which
is organized as a Massachusetts business trust, the term "Fund" means and refers
to the trustees from time to time serving under the applicable trust agreement
(Declaration of Trust) of such Trust as the same may be amended from time to
time. It is expressly agreed that the obligations of any such Trust hereunder
shall not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust, as provided in the Declaration of Trust of the Trust. The
execution and delivery of this Agreement has been authorized by the Trustees and
signed by an authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees nor

<PAGE>

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.
T. ROWE PRICE RETIREMENT PLAN    T. ROWE PRICE FUNDS
SERVICES, INC.

  /s/Charles E. Vieth                /s/Carmen F. Deyesu
BY:                                                       BY:
    ------------------------------------------------------

- ----------------------------------------------------------
  Charles E. Vieth                   Carmen F. Deyesu

DATED: 3/25/99                       DATED: 3/26/99
       -------                              -------


<PAGE>

                                   APPENDIX A
                                   ----------

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

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 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund


<PAGE>

T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Growth & Income 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 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 MEDIA & TELECOMMUNICATIONS FUND, INC.

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 FUNDS, 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 REAL ESTATE 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 STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

<PAGE>


T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International 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 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 VALUE FUND, INC.




                     February 15, 2000

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re:  T. Rowe Price International Funds, Inc. (the "Registrant")
       T. Rowe Price Emerging Markets Stock Fund
       T. Rowe Price European Stock Fund
       T. Rowe Price Global Stock Fund
       T. Rowe Price International Stock Fund
       T. Rowe Price International Discovery Fund
       T. Rowe Price Growth & Income Fund
       T. Rowe Price Japan Fund
       T. Rowe Price Latin America Fund
       T. Rowe Price New Asia Fund
     File Nos.: 002-65539/811-2958

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.
76 (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.

                     Very truly yours,

                     /s/Swidler Berlin Shereff Friedman, LLP
                     Swidler Berlin Shereff Friedman, LLP



                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 76 to the registration statement on Form N-1A (the "Registration
Statement") of our reports dated November 17, 1999, relating to the financial
statements and financial highlights appearing in the October 31, 1999 Annual
Reports to Shareholders of International Stock Fund, International Discovery
Fund, International Growth & Income Fund, European Stock Fund, Japan Fund, New
Asia Fund, Latin America Fund, Emerging Markets Stock Fund, and Global Stock
Fund comprising T. Rowe Price International Funds, Inc., which are incorporated
by reference into the Registration Statement. 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/PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP

Baltimore, Maryland
February 15, 2000


<TABLE> <S> <C>


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   <NUMBER> 3
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<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          OCT-31-1999
<PERIOD-END>                               OCT-31-1999
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<INVESTMENTS-AT-VALUE>                         380,213
<RECEIVABLES>                                   34,132
<ASSETS-OTHER>                                     240
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                 414,585
<PAYABLE-FOR-SECURITIES>                           447
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                       32,676
<TOTAL-LIABILITIES>                             33,123
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                       230,691
<SHARES-COMMON-STOCK>                           14,262
<SHARES-COMMON-PRIOR>                            12605
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                        107,515
<OVERDISTRIBUTION-GAINS>                       107,515
<ACCUM-APPREC-OR-DEPREC>                       230,691
<NET-ASSETS>                                   381,462
<DIVIDEND-INCOME>                                2,246
<INTEREST-INCOME>                                  844
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                   3,508
<NET-INVESTMENT-INCOME>                          (418)
<REALIZED-GAINS-CURRENT>                        43,912
<APPREC-INCREASE-CURRENT>                      107,803
<NET-CHANGE-FROM-OPS>                          151,297
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                        (123)
<DISTRIBUTIONS-OF-GAINS>                       (3,675)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                          6,469
<NUMBER-OF-SHARES-REDEEMED>                    (5,049)
<SHARES-REINVESTED>                                237
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<ACCUMULATED-NII-PRIOR>                            124
<ACCUMULATED-GAINS-PRIOR>                          124
<OVERDISTRIB-NII-PRIOR>                          3,433

<OVERDIST-NET-GAINS-PRIOR>                       3,433
<GROSS-ADVISORY-FEES>                            2,637
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                  3,508
<AVERAGE-NET-ASSETS>                           247,036
<PER-SHARE-NAV-BEGIN>                            14.99
<PER-SHARE-NII>                                 (0.03)
<PER-SHARE-GAIN-APPREC>                          12.09
<PER-SHARE-DIVIDEND>                            (0.01)
<PER-SHARE-DISTRIBUTIONS>                        (0.3)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              26.75
<EXPENSE-RATIO>                                   1.42



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<NAME> T. ROWE PRICE INTERNATIONAL FUNDS, INC.
<SERIES>
   <NUMBER> 1
   <NAME> T. ROWE PRICE INTERNATIONAL STOCK FUND

<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          OCT-31-1999
<PERIOD-END>                               OCT-31-1999
<INVESTMENTS-AT-COST>                        7,389,044
<INVESTMENTS-AT-VALUE>                      10,545,577
<RECEIVABLES>                                1,481,396
<ASSETS-OTHER>                                  11,325
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                              12,038,298
<PAYABLE-FOR-SECURITIES>                        50,504
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                    1,382,456
<TOTAL-LIABILITIES>                          1,422,960
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                     6,841,778
<SHARES-COMMON-STOCK>                          635,464
<SHARES-COMMON-PRIOR>                           662871
<ACCUMULATED-NII-CURRENT>                       79,588
<OVERDISTRIBUTION-NII>                          79,588
<ACCUMULATED-NET-GAINS>                        538,063
<OVERDISTRIBUTION-GAINS>                       538,063
<ACCUM-APPREC-OR-DEPREC>                     3,155,909
<NET-ASSETS>                                10,615,338
<DIVIDEND-INCOME>                              173,933
<INTEREST-INCOME>                               17,724
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                  85,771
<NET-INVESTMENT-INCOME>                        105,886
<REALIZED-GAINS-CURRENT>                       589,813
<APPREC-INCREASE-CURRENT>                    1,201,410
<NET-CHANGE-FROM-OPS>                        1,897,109
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                    (144,745)
<DISTRIBUTIONS-OF-GAINS>                     (230,270)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                        168,506
<NUMBER-OF-SHARES-REDEEMED>                  (220,433)
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<ACCUMULATED-NII-PRIOR>                        144,968
<ACCUMULATED-GAINS-PRIOR>                      144,968
<OVERDISTRIB-NII-PRIOR>                        151,999



<OVERDIST-NET-GAINS-PRIOR>                     151,999
<GROSS-ADVISORY-FEES>                           67,463
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                 85,776
<AVERAGE-NET-ASSETS>                        10,071,059
<PER-SHARE-NAV-BEGIN>                            14.39
<PER-SHARE-NII>                                   0.17
<PER-SHARE-GAIN-APPREC>                           2.71
<PER-SHARE-DIVIDEND>                            (0.22)
<PER-SHARE-DISTRIBUTIONS>                       (0.35)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                               16.7
<EXPENSE-RATIO>                                   0.85




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<CIK> 0000313212
<NAME> T. ROWE PRICE INTERNATIONAL FUNDS, INC.
<SERIES>
   <NUMBER> 4
   <NAME> T. ROWE PRICE EUROPEAN STOCK FUND

<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          OCT-31-1999
<PERIOD-END>                               OCT-31-1999
<INVESTMENTS-AT-COST>                        1,029,378
<INVESTMENTS-AT-VALUE>                       1,370,286
<RECEIVABLES>                                  183,396
<ASSETS-OTHER>                                      54
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                               1,553,736
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      171,569
<TOTAL-LIABILITIES>                            171,569
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                       921,068
<SHARES-COMMON-STOCK>                           62,005
<SHARES-COMMON-PRIOR>                            63080
<ACCUMULATED-NII-CURRENT>                        8,524
<OVERDISTRIBUTION-NII>                           8,524
<ACCUMULATED-NET-GAINS>                        111,702
<OVERDISTRIBUTION-GAINS>                       111,702
<ACCUM-APPREC-OR-DEPREC>                       340,874
<NET-ASSETS>                                 1,382,168
<DIVIDEND-INCOME>                               27,018
<INTEREST-INCOME>                                2,302
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                  15,244
<NET-INVESTMENT-INCOME>                         14,076
<REALIZED-GAINS-CURRENT>                       115,710
<APPREC-INCREASE-CURRENT>                       24,512
<NET-CHANGE-FROM-OPS>                          154,298
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                     (17,725)
<DISTRIBUTIONS-OF-GAINS>                     (138,004)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                         23,161
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<SHARES-REINVESTED>                              7,202
<NET-CHANGE-IN-ASSETS>                        (29,840)
<ACCUMULATED-NII-PRIOR>                         17,705
<ACCUMULATED-GAINS-PRIOR>                       17,705
<OVERDISTRIB-NII-PRIOR>                        128,464



<OVERDIST-NET-GAINS-PRIOR>                     128,464
<GROSS-ADVISORY-FEES>                           11,960
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                 15,245
<AVERAGE-NET-ASSETS>                         1,458,134
<PER-SHARE-NAV-BEGIN>                            22.38
<PER-SHARE-NII>                                   0.23
<PER-SHARE-GAIN-APPREC>                           2.14
<PER-SHARE-DIVIDEND>                            (0.28)
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<SERIES>
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<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          OCT-31-1999
<PERIOD-END>                               OCT-31-1999
<INVESTMENTS-AT-COST>                          739,065
<INVESTMENTS-AT-VALUE>                         974,240
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<TOTAL-ASSETS>                               1,082,312
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<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                       73,431
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<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                     1,117,850
<SHARES-COMMON-STOCK>                          138,231
<SHARES-COMMON-PRIOR>                           128437
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<ACCUMULATED-NET-GAINS>                      (357,034)
<OVERDISTRIBUTION-GAINS>                     (357,034)
<ACCUM-APPREC-OR-DEPREC>                       230,130
<NET-ASSETS>                                   995,829
<DIVIDEND-INCOME>                               13,911
<INTEREST-INCOME>                                2,450
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                   9,514
<NET-INVESTMENT-INCOME>                          6,847
<REALIZED-GAINS-CURRENT>                        17,705
<APPREC-INCREASE-CURRENT>                      285,186
<NET-CHANGE-FROM-OPS>                          309,738
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                     (11,370)
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                        150,881
<NUMBER-OF-SHARES-REDEEMED>                  (143,305)
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<ACCUMULATED-NII-PRIOR>                          10470
<ACCUMULATED-GAINS-PRIOR>                        10470
<OVERDISTRIB-NII-PRIOR>                       (375867)


<OVERDIST-NET-GAINS-PRIOR>                    (375867)
<GROSS-ADVISORY-FEES>                            6,444
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                  9,514
<AVERAGE-NET-ASSETS>                           786,947
<PER-SHARE-NAV-BEGIN>                             4.93
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<CIK> 0000313212
<NAME> T. ROWE PRICE INTERNATIONAL FUDNS, INC.
<SERIES>
   <NUMBER> 7
   <NAME> T. ROWE PRICE JAPAN FUND

<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          OCT-31-1999
<PERIOD-END>                               OCT-31-1999
<INVESTMENTS-AT-COST>                          369,934
<INVESTMENTS-AT-VALUE>                         510,357
<RECEIVABLES>                                   71,674
<ASSETS-OTHER>                                      69
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                 582,100
<PAYABLE-FOR-SECURITIES>                         1,834
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                       66,526
<TOTAL-LIABILITIES>                             68,360
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                       378,177
<SHARES-COMMON-STOCK>                           37,712
<SHARES-COMMON-PRIOR>                            22474
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                        (4,866)
<OVERDISTRIBUTION-GAINS>                       (4,866)
<ACCUM-APPREC-OR-DEPREC>                       140,428
<NET-ASSETS>                                   513,739
<DIVIDEND-INCOME>                                1,383
<INTEREST-INCOME>                                1,133
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                   3,279
<NET-INVESTMENT-INCOME>                          (762)
<REALIZED-GAINS-CURRENT>                        43,843
<APPREC-INCREASE-CURRENT>                      161,407
<NET-CHANGE-FROM-OPS>                          204,488
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                         42,892
<NUMBER-OF-SHARES-REDEEMED>                     27,654
<SHARES-REINVESTED>                                  0
<NET-CHANGE-IN-ASSETS>                         362,790
<ACCUMULATED-NII-PRIOR>                              0
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                       (47,947)



<OVERDIST-NET-GAINS-PRIOR>                    (47,947)
<GROSS-ADVISORY-FEES>                            2,345
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                  3,279
<AVERAGE-NET-ASSETS>                           287,210
<PER-SHARE-NAV-BEGIN>                             6.27
<PER-SHARE-NII>                                 (0.02)
<PER-SHARE-GAIN-APPREC>                           6.92
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              13.62
<EXPENSE-RATIO>                                   1.14



</TABLE>

<TABLE> <S> <C>


<ARTICLE> 6
<CIK> 0000313212
<NAME> T. ROWE PRICE INTERNATIONAL FUNDS, INC.
<SERIES>
   <NUMBER> 9
   <NAME> T. ROWE PRICE LATIN AMERICA FUND

<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          OCT-31-1999
<PERIOD-END>                               OCT-31-1999
<INVESTMENTS-AT-COST>                          220,048
<INVESTMENTS-AT-VALUE>                         199,389
<RECEIVABLES>                                   28,598
<ASSETS-OTHER>                                   2,515
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                 230,502
<PAYABLE-FOR-SECURITIES>                         2,761
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                       27,356
<TOTAL-LIABILITIES>                             30,117
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                       268,716
<SHARES-COMMON-STOCK>                           24,952
<SHARES-COMMON-PRIOR>                           28,354
<ACCUMULATED-NII-CURRENT>                          789
<OVERDISTRIBUTION-NII>                             789
<ACCUMULATED-NET-GAINS>                       (48,426)
<OVERDISTRIBUTION-GAINS>                      (48,426)
<ACCUM-APPREC-OR-DEPREC>                      (20,694)
<NET-ASSETS>                                   200,385
<DIVIDEND-INCOME>                                4,897
<INTEREST-INCOME>                                  490
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                   3,275
<NET-INVESTMENT-INCOME>                          2,112
<REALIZED-GAINS-CURRENT>                      (35,160)
<APPREC-INCREASE-CURRENT>                       54,790
<NET-CHANGE-FROM-OPS>                           21,742
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                      (3,788)
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                         14,781
<NUMBER-OF-SHARES-REDEEMED>                   (18,729)
<SHARES-REINVESTED>                                546
<NET-CHANGE-IN-ASSETS>                         (4,376)
<ACCUMULATED-NII-PRIOR>                          3,698
<ACCUMULATED-GAINS-PRIOR>                        3,698
<OVERDISTRIB-NII-PRIOR>                       (14,499)



<OVERDIST-NET-GAINS-PRIOR>                    (14,499)
<GROSS-ADVISORY-FEES>                            2,162
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                  3,276
<AVERAGE-NET-ASSETS>                           202,052
<PER-SHARE-NAV-BEGIN>                             7.22
<PER-SHARE-NII>                                   0.09
<PER-SHARE-GAIN-APPREC>                           0.86
<PER-SHARE-DIVIDEND>                            (0.14)
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                               8.03
<EXPENSE-RATIO>                                   1.62



</TABLE>

<TABLE> <S> <C>


<ARTICLE> 6
<CIK> 0000313212
<NAME> T. ROWE PRICE INTERNATIONAL FUNDS, INC.
<SERIES>
   <NUMBER> 10
   <NAME> T. ROWE PRICE EMERGING MARKETS STOCK FUND

<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          OCT-31-1999
<PERIOD-END>                               OCT-31-1999
<INVESTMENTS-AT-COST>                           98,021
<INVESTMENTS-AT-VALUE>                         107,535
<RECEIVABLES>                                    7,005
<ASSETS-OTHER>                                   2,595
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                 117,135
<PAYABLE-FOR-SECURITIES>                         2,273
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                        6,444
<TOTAL-LIABILITIES>                              8,717
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                       122,616
<SHARES-COMMON-STOCK>                            9,785
<SHARES-COMMON-PRIOR>                            8,772
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                       (23,240)
<OVERDISTRIBUTION-GAINS>                      (23,240)
<ACCUM-APPREC-OR-DEPREC>                         9,042
<NET-ASSETS>                                   108,418
<DIVIDEND-INCOME>                                1,245
<INTEREST-INCOME>                                  186
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                   1,555
<NET-INVESTMENT-INCOME>                          (124)
<REALIZED-GAINS-CURRENT>                         (592)
<APPREC-INCREASE-CURRENT>                       29,048
<NET-CHANGE-FROM-OPS>                           28,332
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                        (352)
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                          4,500
<NUMBER-OF-SHARES-REDEEMED>                    (3,529)
<SHARES-REINVESTED>                                 42
<NET-CHANGE-IN-ASSETS>                          38,666
<ACCUMULATED-NII-PRIOR>                            308
<ACCUMULATED-GAINS-PRIOR>                          308
<OVERDISTRIB-NII-PRIOR>                       (23,079)



<OVERDIST-NET-GAINS-PRIOR>                    (23,079)
<GROSS-ADVISORY-FEES>                              962
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                  1,555
<AVERAGE-NET-ASSETS>                            89,128
<PER-SHARE-NAV-BEGIN>                             7.95
<PER-SHARE-NII>                                 (0.01)
<PER-SHARE-GAIN-APPREC>                           3.18
<PER-SHARE-DIVIDEND>                            (0.04)
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              11.08
<EXPENSE-RATIO>                                   1.75



</TABLE>

<TABLE> <S> <C>


<ARTICLE> 6
<CIK> 0000313212
<NAME> T. ROWE PRICE INTERNATIONAL FUNDS, INC.
<SERIES>
   <NUMBER> 12
   <NAME> T. ROWE PRICE GLOBAL STOCK FUND

<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          OCT-31-1999
<PERIOD-END>                               OCT-31-1999
<INVESTMENTS-AT-COST>                           59,292
<INVESTMENTS-AT-VALUE>                          73,230
<RECEIVABLES>                                    2,021
<ASSETS-OTHER>                                      37
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                  75,288
<PAYABLE-FOR-SECURITIES>                           473
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                          978
<TOTAL-LIABILITIES>                              1,451
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                        57,567
<SHARES-COMMON-STOCK>                            4,404
<SHARES-COMMON-PRIOR>                             3144
<ACCUMULATED-NII-CURRENT>                          246
<OVERDISTRIBUTION-NII>                             246
<ACCUMULATED-NET-GAINS>                          2,186
<OVERDISTRIBUTION-GAINS>                         2,186
<ACCUM-APPREC-OR-DEPREC>                        13,938
<NET-ASSETS>                                    73,837
<DIVIDEND-INCOME>                                  743
<INTEREST-INCOME>                                  197
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                     707
<NET-INVESTMENT-INCOME>                            233
<REALIZED-GAINS-CURRENT>                         2,327
<APPREC-INCREASE-CURRENT>                        9,348
<NET-CHANGE-FROM-OPS>                           11,908
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                        (317)
<DISTRIBUTIONS-OF-GAINS>                       (1,428)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                          2,373
<NUMBER-OF-SHARES-REDEEMED>                    (1,233)
<SHARES-REINVESTED>                                120
<NET-CHANGE-IN-ASSETS>                          29,721
<ACCUMULATED-NII-PRIOR>                            330
<ACCUMULATED-GAINS-PRIOR>                          330
<OVERDISTRIB-NII-PRIOR>                          1,287



<OVERDIST-NET-GAINS-PRIOR>                       1,287
<GROSS-ADVISORY-FEES>                              274
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                    707
<AVERAGE-NET-ASSETS>                            58,959
<PER-SHARE-NAV-BEGIN>                            14.03
<PER-SHARE-NII>                                   0.05
<PER-SHARE-GAIN-APPREC>                           3.24
<PER-SHARE-DIVIDEND>                             (0.1)
<PER-SHARE-DISTRIBUTIONS>                       (0.45)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              16.77
<EXPENSE-RATIO>                                    1.2



</TABLE>

<TABLE> <S> <C>


<ARTICLE> 6
<CIK> 0000313212
<NAME> T. ROWE PRICE INTERNATIONAL FUNDS, INC.
<SERIES>
   <NUMBER> 13
   <NAME> T. ROWE PRICE INTERNATIONAL GROWTH & INCOME FUND

<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          OCT-31-1999
<PERIOD-END>                               OCT-31-1999
<INVESTMENTS-AT-COST>                            9,198
<INVESTMENTS-AT-VALUE>                           9,641
<RECEIVABLES>                                      123
<ASSETS-OTHER>                                      42
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                   9,806
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                           30
<TOTAL-LIABILITIES>                                 30
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                         8,962
<SHARES-COMMON-STOCK>                              889
<SHARES-COMMON-PRIOR>                              913
<ACCUMULATED-NII-CURRENT>                          172
<OVERDISTRIBUTION-NII>                             172
<ACCUMULATED-NET-GAINS>                            199
<OVERDISTRIBUTION-GAINS>                           199
<ACCUM-APPREC-OR-DEPREC>                           443
<NET-ASSETS>                                     9,776
<DIVIDEND-INCOME>                                  200
<INTEREST-INCOME>                                   30
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                      92
<NET-INVESTMENT-INCOME>                            138
<REALIZED-GAINS-CURRENT>                           199
<APPREC-INCREASE-CURRENT>                          443
<NET-CHANGE-FROM-OPS>                              780
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                          1,331
<NUMBER-OF-SHARES-REDEEMED>                      (442)
<SHARES-REINVESTED>                                  0
<NET-CHANGE-IN-ASSETS>                           9,776
<ACCUMULATED-NII-PRIOR>                             52
<ACCUMULATED-GAINS-PRIOR>                           52
<OVERDISTRIB-NII-PRIOR>                             95



<OVERDIST-NET-GAINS-PRIOR>                          95
<GROSS-ADVISORY-FEES>                                0
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                     92
<AVERAGE-NET-ASSETS>                             8,592
<PER-SHARE-NAV-BEGIN>                               10
<PER-SHARE-NII>                                   0.16
<PER-SHARE-GAIN-APPREC>                           0.84
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                                 11
<EXPENSE-RATIO>                                   1.25



</TABLE>

                    T. ROWE PRICE INTERNATIONAL FUNDS, INC.
             (on behalf of T. Rowe Price Emerging Markets Bond Fund
                   T. Rowe Price Emerging Markets Stock Fund
                       T. Rowe Price European Stock Fund
                         T. Rowe Price Global Bond Fund
                        T. Rowe Price Global Stock Fund
                     T. Rowe Price International Bond Fund
                   T. Rowe Price International Discovery Fund
                T. Rowe Price International Growth & Income Fund
                     T. Rowe Price International Stock Fund
                            T. Rowe Price Japan Fund
                        T. Rowe Price Latin America Fund
                          T. Rowe Price New Asia Fund)
                    INSTITUTIONAL INTERNATIONAL FUNDS, INC.
                       (on behalf of Foreign Equity Fund)
                    T. ROWE PRICE INTERNATIONAL SERIES, INC.
           (on behalf of T. Rowe Price International Stock Portfolio)

                               POWER OF ATTORNEY

     RESOLVED, that each of the above listed Corporations (collectively the
"Corporations" and individually the "Corporation") and each of its directors do
hereby constitute and authorize, M. David Testa, 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 Corporations have caused these presents to be
signed and the same attested by their Secretary, each thereunto duly authorized
by their Board of Directors, and each of the undersigned has hereunto set his
hand and seal as of the day set opposite his name.


                                       /s/M. David Testa
                                    By:____________________________________
                                       M. David Testa, Chairman of the Board
April 21, 1999

Attest:

/s/Patricia S. Lippert
______________________________
Patricia S. Lippert, Secretary
                             (Signatures Continued)


<PAGE>


/s/M. David Testa
____________________________        Chairman of the Board April 21, 1999
M. David Testa                      (Principal Executive Officer)

/s/Martin G. Wade
____________________________        President and Director April 21, 1999
Martin G. Wade

/s/Carmen F. Deyesu
____________________________        Treasurer (Principal Financial Officer)
April 21, 1999
Carmen F. Deyesu

/s/Anthony W. Deering
____________________________        Director      April 21, 1999
Anthony W. Deering

/s/Donald W. Dick, Jr.
____________________________        Director      April 21, 1999
Donald W. Dick, Jr.

Paul M. Wythes
____________________________        Director      April 21, 1999
Paul M. Wythes



                         CERTIFICATE OF VICE PRESIDENT
                    T. ROWE PRICE INTERNATIONAL FUNDS, INC.
              On Behalf of T. Rowe Price International Stock Fund
                     Pursuant to Rule 306 of Regulation S-T


         I, the undersigned, Henry H. Hopkins, Vice President of T. Rowe Price
International Stock Fund (the "Fund"), a separate series of T. Rowe Price
International Funds, Inc. (the "Corporation"), do hereby certify that the
prospectus for the Fund has been translated into the Spanish language. The
Spanish version of the prospectus constitutes a full and complete representation
of the English version which has been filed as a part of this Registration
Statement. A copy of the Spanish version will be available for inspection upon
request.

         WITNESS my hand and the seal of the Fund this February 18, 2000.

              T. Rowe Price International Funds, Inc. on behalf of
              T. Rowe Price International Stock Fund

(Seal)        /s/Henry H. Hopkins
              Henry H. Hopkins, Vice President



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