PAGE 1
Registration No. 33-10992/811-4998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Post-Effective Amendment No. 10 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 / X /
Amendment No. 14 / X /
Fiscal Year Ended December 31, 1996
______________________________________
T. ROWE PRICE SPECTRUM FUND, INC.
____________________________________________________
(Exact Name of Registrant as Specified in Charter)
100 East Pratt Street, Baltimore, Maryland 21202
__________________________________________ __________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 410-547-2000
____________
Henry H. Hopkins
100 East Pratt Street
Baltimore, Maryland 21202
_________________________________________
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering January 29,
1997
____________
It is proposed that this filing will become effective (check
appropriate box):
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
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/X/ 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933*
______________________________________________
Pursuant to Section 24f-2 of the Investment Company Act of 1940,
the Registrant has registered an indefinite number of securities
under the Securities Act of 1933 and intends to file a 24f-2
Notice by February 28, 1997.
*Not applicable, as no securities are being registered by this
Post-Effective Amendment No. 10 to the Registration Statement.
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The Registration Statement of T. Rowe Price Spectrum Fund,
Inc. on Form N-1A (File Number 33-10992) is hereby amended under
the Securities Act of 1933 to update the Registrant's financial
statements, make other changes in the Registrant's Prospectus and
Statement of Additional Information, and to satisfy the annual
amendment requirements of Rule 8b-16 under the Investment Company
Act of 1940.
This Amendment consists of the following:
Cross Reference Sheet
Part A of Form N-1A, Revised Prospectus
Part B of Form N-1A, Statement of Additional Information
Part C of Form N-1A, Other Information
Accountants' Consent
PAGE 4 CROSS REFERENCE SHEET
N-1A Item No. Location
____________ _________
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary of Fund's Fees
and Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Transaction and Fund
Registrant Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management;
Understanding
Performance
Information;
Description of
Underlying Price
Funds; Investment
Policies and Practices
of Underlying Price
Funds
Item 5. Management of the Fund Transaction and Fund
Expenses; Fund,
Market, and Risk
Characteristics;
Organization and
Management; Management
Fee
Item 6. Capital Stock and Other Distributions and
Securities Taxes; Organization
and Management
Item 7. Purchase of Securities Being Pricing Shares and
Offered Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements; and
Account Requirements
and Transaction
Information; Opening a
New Account;
Purchasing Additional
Shares; Shareholder
Services
Item 8. Redemption or Repurchase Pricing Shares and
Receiving Sale
Proceeds; Transaction
Procedures and Special
Requirements;
Exchanging and
PAGE 5
Redeeming Shares;
Shareholder Services
Item 9. Pending Legal Proceedings +
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and +
History
Item 13. Investment Objectives and Investment Objectives
Policies and Policies; Risk
Factors; Investment
Program; Investment
Policies; Investment
Restrictions;
Investment Performance
Item 14. Management of the Registrant Management of Fund
Item 15. Control Persons and Principal Principal Holders of
Holders of Securities Securities
Item 16. Investment Advisory and Investment Management
Other Services Services; Custodian;
Independent
Accountants; Legal
Counsel
Item 17. Brokerage Allocation Portfolio
Transactions; Code of
Ethics
Item 18. Capital Stock and Other Dividends and
Securities Distributions; Capital
Stock
Item 19. Purchase, Redemption and Pricing of Securities;
Pricing of Securities Being Net Asset Value Per
Offered Share; Redemptions in
Kind; Federal and
State Registration of
Shares
Item 20. Tax Status Tax Status
Item 21. Underwriters Distributor for the
Fund
Item 22. Calculation of Yield Quotations +
of Money Market Funds
Item 23. Financial Statements Incorporated by
Reference from Annual
Report
___________________________________
+ Not applicable or negative answer
PAGE 6
PART C
Information required to be included in Part C is set forth under
the appropriate item, so numbered, in Part C to this Registration
Statement.
PAGE 7
The printed version of this prospectus appears in a dual column
format.
PAGE 8
Facts at a Glance
Investment Goals
Spectrum Income Fund seeks a high level of current income
consistent with moderate share price fluctuation.
Spectrum Growth Fund seeks long-term capital appreciation and
growth of income, with current income a secondary objective.
Spectrum International Fund seeks long-term capital
appreciation.
As with any mutual fund, there is no guarantee the funds will
achieve their goals.
Strategy
Each fund diversifies its assets within set limits among specific
underlying T. Rowe Price funds. Allocation decisions reflect
Spectrum fund managers' outlook for the relative valuations of
the underlying funds, and the various economies and financial
markets.
Spectrum Income Fund invests primarily in domestic bond funds and
also in a foreign bond fund, but may allocate up to 25% of assets
to a stock fund.
Spectrum Growth Fund invests primarily in domestic stock funds
and also in a foreign stock fund.
Spectrum International Fund invests primarily in international
stock and to a lesser extent bond funds.
Risk/Reward
Spectrum Income Fund: The potential for investors to achieve high
current income with modest share price appreciation through
diversification of assets.
Spectrum Growth Fund: The potential for investors to achieve
long-term capital appreciation and growth of income through
diversification.
Spectrum International Fund: The potential for investors to
achieve long-term capital appreciation through diversification
among international markets.
Investors in each fund should be prepared for share price
volatility and the possibility of losing money. Under normal
PAGE 9
conditions, Spectrum Income Fund will experience the least
volatility and Spectrum International Fund the most of all three
funds. Before investing, you should carefully consider the risks
explained in more detail in "Investment Policies and Practices."
Investor Profile
Spectrum Income Fund: Individuals seeking high current income
through diversification primarily among various bond funds.
Spectrum Growth Fund: Individuals seeking long-term capital
appreciation and growth of income through diversification among
different stock funds.
Spectrum International Fund: Individuals seeking long-term
capital appreciation through diversification among international
stock and bond funds and who can accept the risks of
international investing.
Investors in each fund should be prepared to accept the
possibility of share price declines. Appropriate for both
regular and tax-deferred accounts, such as IRAs.
Fees and Charges
100% no load. No fees or charges to buy or sell shares or to
reinvest dividends; no 12b-1 marketing fees; free telephone
exchange.
Investment Manager
Spectrum Income and Spectrum Growth Funds: T. Rowe Price
Associates, Inc. ("T. Rowe Price"), founded in 1937 by the late
Thomas Rowe Price, Jr., and its affiliates managed over $92
billion for over four million individual and institutional
investor accounts as of September 30, 1996.
Spectrum International Fund: Rowe Price-Fleming International,
Inc. ("Price-Fleming"), was founded in 1979 as a joint venture
between T. Rowe Price and Robert Fleming Holdings Ltd. Price-
Fleming managed over $27 billion in foreign stocks and bonds
through its offices in Baltimore, London, Tokyo, and Hong Kong as
of September 30, 1996.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION, OR
ANY STATE SECURITIES COMMISSION, PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
PAGE 10
T. Rowe Price
Spectrum Fund, Inc.
December __, 1996
Prospectus
This prospectus contains information you should know about the
fund before investing. Please keep it for future reference. A
Statement of Additional Information about the fund, dated
December __, 1996, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this
prospectus. To obtain a free copy, call 1-800-638-5660.
Contents
1 About the Funds
Transaction and Fund Expenses
Financial Highlights
Fund, Market, and Risk
Characteristics
2 About Your Account
Pricing Shares and Receiving Sale Proceeds
Distributions and Taxes
Transaction Procedures and Special Requirements
3 More About the Funds
Organization and Management
Understanding Performance Information
Special Risks and Considerations
Description of Underlying Price Funds
Spectrum Fund Investment Policies
Investment Policies and Practices of Underlying Price Funds
4 Investing With T. Rowe Price
Account Requirements and
Transaction Information
Opening a New Account
Purchasing Additional Shares
Exchanging and Redeeming
Shareholder Services
Discount Brokerage
Investment Information
1 About the Funds
Transaction and Fund Expenses
Like all T. Rowe Price funds, these funds are 100% no load.
These tables should help you understand the kinds of expenses you
will bear indirectly as a Spectrum Fund shareholder. The
Spectrum funds will indirectly bear their pro rata share of the
expenses of the underlying funds.
PAGE 11
In Table 1 below, "Shareholder Transaction Expenses," shows
that you pay no sales charges. All the money you invest in a
Spectrum fund goes to work for you. Shown below are all expenses
and fees the Spectrum Income and Spectrum Growth Funds incurred
during their fiscal year (expenses and fees for the Spectrum
International Fund are estimated). More information about these
expenses may be found below and under "Management Fees of
Underlying Funds" and in the Statement of Additional Information
under "Management Fee and Expenses."
Spectrum Spectrum Spectrum
Income Growth Interna
Fund Fund tional
Fund
Shareholder Transaction
Expenses
Sales charge "load" on
purchases None None None
Sales charge "load" on
reinvested dividends None None None
Redemption fees None None None
Exchange fees None None None
Annual Fund Expenses
Management fee None None None
Marketing (12b-1) fees None None None
Total other expenses
(shareholder servicing,
custodial, auditing, etc.) None None None
Total fund expenses None None None
Note: The funds charge a $5 fee for wire redemptions under
$5,000, subject to change without notice, and a $10 fee is
charged for small accounts when applicable (see "Small Account
Fee" under "Transaction Procedures and Special Requirements").
____________________________________________
Table 1
The Spectrum funds will operate at a zero expense level (see
"Expenses" for an explanation of the Special Servicing Agreements
under "Organization and Management"). However, the Spectrum
funds will indirectly bear their pro rata share of fees and
expenses incurred by the underlying funds and the investment
returns of the Spectrum funds will be net of the expenses of the
underlying funds. The following chart provides the expense
ratios for each of the underlying funds in which each Spectrum
fund will invest (based on information as of September 30, 1996).
Where applicable, expense ratios are restated to reflect current
fees.
PAGE 12
Expense Ratio
______________
Spectrum Income Fund
Prime Reserve Fund 0.67%
Equity Income Fund 0.82
Short-Term Bond Fund 0.74
International Bond Fund 0.88
GNMA Fund 0.76
High Yield Fund 0.85
New Income Fund 0.77
Spectrum Growth Fund
Prime Reserve Fund 0.67%
Equity Income Fund 0.82
Growth & Income Fund 0.83
International Stock Fund 0.88
New Era Fund 0.77
New Horizons Fund 0.91
Growth Stock Fund 0.78
Spectrum International Fund
International Stock Fund 0.88%
Emerging Markets Stock Fund 1.75(a)
International Discovery Fund 1.44
International Bond Fund 0.88
New Asia Fund 1.11
Japan Fund 1.32
European Stock Fund 1.12
Latin America Fund 1.66
Emerging Markets Bond Fund 1.25(b)
Prime Reserve Fund 0.67
(a) Price-Fleming agreed to waive management fees and bear
certain expenses in accordance with an expense limitation
agreement in effect through October 31, 1996. Effective October
31, 1996, Price-Fleming agreed to extend this expense limitation
through October 31, 1998. Had Price-Fleming not agreed to waive a
portion of its management fees, Emerging Markets Stock's total
expense ratio would have been 2.05%.
(b) Price-Fleming agreed to waive management fees and bear
certain expenses in accordance with an expense limitation
agreement in effect through December 31, 1996. Effective as of
December 31, 1996, Price-Fleming has agreed to extend this
expense limitation through December 31, 1998. Had Price-Fleming
not agreed to waive a portion of its management fees, Emerging
PAGE 13
Markets Bond's total expense ratio would have been 2.34%.
____________________________________________
Table 2
Based on the foregoing, the range of the average weighted expense
ratio is expected to be 0.75% to 0.82% for the Spectrum Income
Fund, 0.77% to 0.85% for the Spectrum Growth Fund, and 0.83% to
1.37% for the Spectrum International Fund. A range is provided
since the average assets invested in each of the underlying funds
will fluctuate.
o Hypothetical example: Using the midpoint of the above ranges,
the following example illustrates the expenses you would incur on
a $1,000 investment, assuming you invest $1,000, the fund returns
5% annually, expense ratios remain as listed previously, and you
close your account at the end of the time periods shown. Your
expenses would be:
The table at right is just an example; actual expenses can be
higher or lower than those shown.
Fund Spectrum Spectrum Spectrum
Income Growth International
1 year $8 $8 $9
3 years $25 $26 $28
5 years $44 $46 $49
10 years $98 $101 $83
____________________________________________
Table 3
Financial Highlights
The following table provides information about the Spectrum
Income and Spectrum Growth Funds' financial history. It is based
on a single share outstanding throughout each fiscal year (which
ends on the last day of December), and for the six months ended
June 30, 1996. The table is part of the Spectrum Income and Spec-
trum Growth Funds' audited and unaudited financial statements
which are included in T. Rowe Price Spectrum Fund's annual and
semiannual reports, respectively, which are incorporated by
reference into the Statement of Additional Information. This
document is available to shareholders upon request. The financial
statements in the annual report have been audited by Price
Waterhouse LLP, independent accountants, whose unqualified report
covers the periods shown. The financial statements in the
semiannual report are unaudited.
PAGE 14
Investment Activities Distributions
Net Real-
ized and
Net Unreal- Total
Asset ized Gain from Net
Value, Net (Loss) Invest- Net Real-
Year Begin- Invest- on ment Invest-lized Total
Ended, ning of ment Invest- Activi- ment Gain Distri-
December31Period Income ments ties Income(Loss) butions
______________________________________________________________
Income Fund
1991 9.77 0.82 1.03 1.85 (0.83) (0.06) (0.89)
1992 10.73 0.76 0.05 0.81 (0.76) (0.08) (0.84)
1993 10.70 0.69 0.60 1.29 (0.69) (0.19) (0.88)
1994 11.11 0.69 (0.90) (0.21) (0.69) (0.10) (0.79)
1995 10.11 0.72 1.16 1.88 (0.72) (0.03) (0.75)
1996c 11.24 0.35 (0.24) 0.11 (0.35) (0.01) (0.36)
End of Period
Ratio
of
Ratio Net
Total of Invest-
Net Return Expenses ment Port-
Asset (Includes to Income folio
Value, Re- Net Average to Aver- Turn-
Year Ended, End of invested Assets ($ Net age Net over
December 31 Period Dividends) Thousands) Assets Assets Rate
______________________________________________________________
Income Fund
1991 10.73 19.6% 147,859 0.00% 8.03% 18.8%
1992 10.70 7.8% 376,435 0.00% 7.10% 14.2%
1993 11.11 12.4% 587,931 0.00% 6.19% 14.4%
1994 10.11 (1.9%) 624,940 0.00% 6.48% 23.1%
1995 11.24 19.4% 986,701 0.00% 6.43% 20.2%
1996c 10.99 1.02% 1,195,135 0.00%b 6.40%a 21.0%a
PAGE 15
Investment Activities Distributions
Net Real-
ized and
Net Unreal- Total
Asset ized Gain from Net
Value, Net (Loss) Invest- Net Real-
Year Begin- Invest- on ment Invest-lized Total
Ended, ning of ment Invest- Activi- ment Gain Distri-
December31 Period Income ments ties Income(Loss) butions
______________________________________________________________
Growth Fund
1991 8.52 0.21 2.33 2.54 (0.21) (0.32) (0.53)
1992 10.53 0.20 0.56 0.76 (0.20) (0.55) (0.75)
1993 10.54 0.16 2.05 2.21 (0.16) (0.72) (0.88)
1994 11.87 0.17 (0.01) 0.16 (0.17) (0.73) (0.90)
1995 11.13 0.21 3.12 3.33 (0.21) (0.76) (0.97)
1996c 13.49 0.05 1.27 1.32 -- -- --
End of Period
Ratio
of
Ratio Net
Total of Invest-
Net Return Expenses ment Port-
Asset (Includes to Income folio
Value, Re- Net Average to Aver- Turn-
Year Ended, End of invested Assets ($ Net age Net over
December 31 Period Dividends) Thousands) Assets Assets Rate
______________________________________________________________
Growth Fund
1991 10.53 29.9% 148,661 0.00% 2.77% 14.6%
1992 10.54 7.2% 355,134 0.00% 2.15% 7.9%
1993 11.87 21.0% 584,876 0.00% 1.57% 7.0%
1994 11.13 1.4% 879,366 0.00% 1.60% 20.7%
1995 13.49 30.0% 1,358,344 0.00% 1.81% 7.4%
1996(c) 14.81 9.79% 1,803,765 0.00%d 0.74%a 1.7%a
a Annualized.
b The annualized weighted average expense ratio of the under-
lying funds was 0.79% for the six months ended June 30, 1996.
c Unaudited figures for the six months ended June 30, 1996.
d The annualized weighted average expense ratio of the
underlying funds was 0.83% for the six months ended June 30,
1996.
____________________________________________
PAGE 16
Table 4
Fund, Market, and Risk Characteristics: What to Expect
These funds should not be relied upon as a complete
investment program, nor be used for short-term trading
purposes.
To help you decide whether the funds are appropriate for you,
this section takes a closer look at their investment objec-
tives and approaches.
What are the Spectrum Funds' objectives?
The objective of Spectrum Income Fund is to provide a high
level of current income with moderate share price fluctuation.
The objective of Spectrum Growth Fund is to provide long-term
capital appreciation and growth of income, with current income
a secondary objective. The objective of Spectrum International
Fund is to provide long-term capital appreciation.
What are the Spectrum Funds' investment programs?
Spectrum Income Fund will allocate its assets among a
diversified group of seven underlying T. Rowe Price funds that
invest primarily in fixed income securities. Spectrum Growth
Fund will allocate its assets among a diversified group of
seven underlying T. Rowe Price funds that invest primarily in
stocks. Spectrum International Fund will allocate its assets
among a group of T. Rowe Price funds that invest primarily in
international stocks.
Each Spectrum Fund will diversify within set limits based on
the managers' outlook for the domestic and international econ-
omies, financial markets, and relative market valuations of
each underlying fund, and, in the case of Spectrum Interna-
tional Fund, additional factors inherent in international in-
vesting. The amounts allocated to each underlying fund will
vary within the ranges specified below. The Spectrum Funds
will not purchase shares of any underlying fund that would
result in the Spectrum Funds' owning more than 30% of an un-
derlying fund's outstanding voting shares.
For details about the funds' investment program and practices,
please see the "Investment Policies and Practices" section.
PAGE 17
Spectrum Investment Spectrum Investment
Income Range (% of Growth Range (% of
Fund Spectrum Fund Spectrum
Fund assets Fund assets
Short-Term Prime Reserve
Bond Fund 0-15% Fund 0-25%
GNMA Fund 5-20% Equity Income
Fund 5-20%
International Growth & Income
Bond Fund 5-20% Fund 5-20%
Equity Income International
Fund 10-25% Stock Fund 5-20%
High Yield New Era Fund 10-25%
Fund 10-25%
Prime Reserve New Horizons
Fund 5-30% Fund 10-25%
New Income Growth Stock
Fund 15-30% Fund 15-30%
Spectrum International Fund Investment Range (% of
Spectrum International
Fund Assets)
International Stock 35-65%
International Discovery 0-20%
Emerging Markets Stock 0-20%
Japan Fund 0-30%
New Asia 0-20%
European Stock 0-30%
Latin America 0-15%
International Bond 0-20%
Emerging Markets Bond 0-15%
Prime Reserve 0-25%
____________________________________________
Table 5
What are some of the Spectrum Funds' potential risks?
Each Spectrum fund's share price will fluctuate as the share
prices of the underlying funds rise or fall with changing
market conditions.
With Spectrum Income Fund, the risks are generally the same as
with many income funds:
For Spectrum Income, a rise in interest rates is an important
PAGE 18
source of risk.
o Interest rate or market risk: the decline in bond prices
that accompanies a rise in the overall level of interest
rates.
o Credit risk: the chance that holdings of the underlying
funds will have their credit ratings downgraded or will
default, potentially reducing the underlying fund's share
price and income level. This risk is even greater with high-
yield ("junk") bonds, whose issuers are more vulnerable to
business setbacks and to economic changes, such as a
recession, that may impair their ability to make timely
interest and principal payments.
o Prepayment risk: with mortgage-backed securities, there is a
chance that, when interest rates are falling, homeowners will
accelerate principal payments on mortgages, causing a loss to
investors in mortgage securities that were originally
purchased at a price above par.
o Currency risk: the risk that weak foreign currencies versus
the U.S. dollar could result in losses for U.S. investors.
Also, Spectrum Income Fund's maximum 25% exposure to the
Equity Income Fund subjects that portion of assets to the
risks associated with stocks (see below).
For Spectrum Growth, a decline in stock prices is an important
source of risk.
With Spectrum Growth Fund, the major risk is the same inherent
in all stock funds. Since economic growth has been punctuated
by declines, share prices of even the best-managed, most
profitable companies are subject to market risk. Swings in
investor psychology and significant trading by large
institutions can result in price declines. For this reason,
equity investors should have a long-term investment horizon
and be willing to wait out bear markets.
A significant portion of the total assets of each underlying
fund may also be exposed to the risks of foreign investing,
including currency risk, as previously defined. The economies,
markets, and political structures of some countries in which
the underlying funds can invest do not compare favorably with
the U.S. and other mature economies in terms of wealth and
stability. Therefore, investments in these countries will be
riskier and more subject to erratic and abrupt price
movements.
PAGE 19
With Spectrum International Fund, in addition to the risks
associated with stock investing, international investing has
other unique risks:
For Spectrum International, volatility of foreign currency
markets is an important source of risk.
o Currency risk: The risk that weakening foreign currencies
versus the U.S. dollar could result in losses for U.S.
investors. Transactions in foreign markets are conducted in
local currencies, so dollars are exchanged for foreign
currency when a security is bought or sold or a dividend is
paid. Likewise, share price quotations and total return
information reflect conversion into dollars. Fluctuations in
foreign exchange rates can significantly increase or decrease
the dollar value of a foreign investment, boosting or
offsetting its local market return. For example, if a French
security rose 10% in price during a year, but the U.S. dollar
gained 5% against the French franc during that time, the U.S.
investor's return would be reduced to 5%. This is because the
franc would "buy" fewer dollars at the end of the year than at
the beginning, or, conversely, a dollar would cost more
francs.
o Increased costs: It is more expensive for U.S. investors to
trade in foreign markets than in the U.S. Mutual funds offer a
very efficient way for individuals to invest abroad, but the
overall expense ratios of international funds are usually
somewhat higher than those of typical domestic funds.
o Political and economic factors: The economies, markets, and
political structures of a number of the countries in which the
underlying funds can invest do not compare favorably with the
U.S. and other mature economies in terms of wealth and
stability. Therefore, investments in these countries will be
riskier and subject to more erratic and abrupt price
movements. This is especially true for emerging markets.
However, even investments in countries with highly developed
economies are subject to risk.
Some economies are less developed, heavily dependent on
particular industries, and more vulnerable to the ebb and flow
of international trade, trade barriers, and other
protectionist or retaliatory measures. This makes investment
in such markets significantly riskier than in other countries.
Some countries are grappling with severe inflation and high
levels of national debt. Investments in countries that have
been moving away from central planning and state-owned
industries toward free markets should be regarded as
speculative.
PAGE 20
Certain areas have histories of instability and upheaval with
respect to their internal politics that could cause their
governments to act in a detrimental or hostile manner toward
private enterprise or foreign investment. Actions such as
nationalizing a company or industry, expropriating assets, or
imposing punitive taxes could have a severe effect on security
prices and impair an underlying fund's ability to repatriate
capital or income. Significant external risks, including war,
currently affect some countries. Governments in many emerging
market countries participate to a significant degree in their
economies and securities markets.
The funds' share prices will fluctuate; when you sell your
shares, you may lose money.
o Legal, regulatory, and operational: Certain countries lack
uniform accounting, auditing, and financial reporting
standards, have less governmental supervision of financial
markets than in the U.S., do not honor legal rights enjoyed in
the U.S., and have settlement practices, such as delays, which
could subject the underlying funds to risks of loss not
customary in the U.S. In addition, securities markets in some
countries have substantially lower trading volumes than U.S.
markets, resulting in less liquidity and more volatility than
experienced in the U.S.
o Pricing: Portfolio securities of the underlying funds may be
listed on foreign exchanges that are open on days when the
underlying funds do not compute their prices. As a result, the
underlying funds', and consequently the Spectrum International
Fund's, net asset value may be significantly affected by
trading on days when shareholders cannot make transactions.
o The above risks can be significantly magnified for
investments in emerging markets. Additionally, to the extent
the fund invests in International Bond Fund and Emerging
Markets Bond Fund, it will be subject to risks associated with
international fixed income investing. See the risks associated
with Spectrum Income Fund.
What are some of the Spectrum Funds' potential rewards?
The Spectrum funds offer a professionally managed
allocation of assets among a broad range of underlying funds.
By investing in a variety of underlying funds, each Spectrum
fund's performance could benefit from diversification.
For example, Spectrum Income Fund invests in funds holding
high-quality domestic and foreign bonds, high-yield bonds,
short- and long-term securities, and dividend-paying stocks.
PAGE 21
Spectrum Growth Fund invests in underlying funds holding
domestic and foreign stocks, small- and large-cap stocks, and
growth and value stocks. Moreover, the diversified nature of
the funds' investments could cushion declines in falling
markets.
Spectrum International Fund invests in stock and to a
lesser degree bond funds with investments in many different
foreign countries industrialized as well as emerging markets
and large and small companies.
The theory of diversification holds that investors can reduce
their overall risk by spreading assets among a variety of
investments. Each type of investment follows a cycle of its
own and responds differently to changes in the economy and the
marketplace. A decline in one investment can be balanced by
returns in other investments that are stable or rising.
Therefore, a major benefit of the Spectrum funds is the
potential for attractive long-term returns with reduced
volatility.
What are the characteristics of the underlying funds?
For a full description of the underlying funds, please see
"Description of Underlying Funds" in Section 3.
The major characteristics of the underlying T. Rowe Price
funds are as follows:
______________________________________________________________
Fixed Income Relative Fixed Objective/Program
Income Risk
Prime Reserve Fund Lowest Stable share price and
liquidity while
generating current
income
Short-Term Bond Fund Low High income
with limited share
price fluctuation
GNMA Fund Moderate High income consistent
with maximum credit
protection and
moderate share price
fluctuation
New Income Fund Moderate High income with
PAGE 22 moderate share price
fluctuation
High Yield Fund High High income and
capital appreciation
through investments in
high-yield
("junk") bonds
______________________________________________________________
Relative
Equity Equity Risk Objective/Program
Equity Income Fund Low Substantial
dividend income and
capital appreciation
Growth & Income Low Capital appreciation
and reasonable
dividend income
Growth Stock Fund Moderate Capital appreciation
and increasing income
through investments in
growth stocks
New Era Fund Moderate Capital appreciation
through investments in
natural resource
stocks
New Horizons Fund High Aggressive
capital appreciation
through investments in
small-company stocks
______________________________________________________________
Relative
International
International Risk Objective/Program
International Bond Moderate High income and
Fund(a) capital appreciation
through investments in
high-quality foreign
bonds
International Stock Moderate Capital appreciation
Fund through investments in
stocks of established
foreign companies
PAGE 23
International High Capital appreciation
Discovery through investments in
Fund small- and medium-
sized non-U.S.
companies
European Stock Fund High Capital appreciation
through investments
primarily in companies
domiciled in Europe
Emerging Markets Very High High current income
Bond Fund and capital
appreciation through
investments primarily
in high-yielding and
high-risk government
and corporate debt
securities of lesser
developed countries
PAGE 24
Japan Fund High Capital appreciation
through investments in
companies operating in
Japan
New Asia Fund High Capital appreciation
through investments in
companies operating in
Asia, excluding Japan
Emerging Markets Very High Capital appreciation
Stock Fund through investments in
companies in emerging
markets
Latin America Fund Very High Capital appreciation
through investments
primarily in companies
located in Latin
America
______________________________________________________________
(a) International Bond Fund is considered to have relatively
high risk in comparison to other funds in the Spectrum Income
portfolio, but a moderate risk relative to funds in which
Spectrum International Funds invests.
______________________________________________________________
Table 6
How can I decide if one of these funds is right for me?
Consider your investment goals, your time horizon for
achieving them, and your tolerance for risk. If you would like
a one-stop approach to broad diversification and can accept
the possibility of moderate share price declines in an effort
to achieve relatively high income, Spectrum Income Fund could
be an appropriate part of your overall investment strategy. If
you seek one-stop diversification and can accept the
possibility of greater share price declines in an effort to
achieve long-term capital appreciation, Spectrum Growth Fund
could be an appropriate part of your overall investment
strategy. If your goal is long-term capital appreciation with
a one-stop approach to diversification across the
international markets, and you can accept the possibility of
significant share price declines, Spectrum International Fund
could be an appropriate part of your overall investing
strategy.
For an IRA, retirement plan, or other long-term investment,
PAGE 25
the funds can offer investment programs that seek to combine
attractive returns with the benefits of broad diversification.
Is there additional information about the Spectrum Funds to
help me decide if they are appropriate for me?
Be sure to review "Special Risks and Considerations,"
"Description of Underlying funds," "Investment Policies of the
Spectrum Funds," and "Investment Policies and Practices of
Underlying funds" in Section 3 for further discussion of the
funds' policies.
2 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 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.
The share price (also called "net asset value" or NAV per
share) for the fund is calculated at 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.
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.
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
PAGE 26
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 ACH
transfer or bank wire. Proceeds sent by ACH transfer should be
credited the second day after the sale. ACH (Automated
Clearing House) is an automated method of initiating payments
from and receiving payments in your financial institution
account. ACH is a payment system supported by over 20,000
banks, savings banks, and credit unions, which electronically
exchanges the transactions primarily through the Federal
Reserve Banks. Proceeds sent by bank wire should be credited
to your account the next business day.
If for some reason we cannot accept your request to sell
shares, we will contact you.
Exception:
o Under certain circumstances and when deemed to be in
the funds' best interests, your proceeds may not be
sent for up to five business days after receiving your
sale or exchange request. If you were exchanging into
a bond or money fund, your new investment would not
begin to earn dividends until the sixth business day.
Useful Information on Distributions and Taxes
Dividends and Other Distributions
All net investment income and realized capital gains are
distributed to shareholders.
Dividend and capital gain distributions are reinvested in
additional fund shares in your account unless you select
another option on your New Account Form. The advantage of
reinvesting distributions arises from compounding; that is,
you receive income dividends and capital gain distributions on
a rising number of shares.
Distributions not reinvested are paid by check or
transmitted to your bank account via ACH. If the Post Office
cannot deliver your check, or if your check remains uncashed
for six months, the fund reserves the right to reinvest your
distribution check in your account at the NAV on the business
day of the reinvestment and to reinvest all subsequent
distributions in shares of the fund.
PAGE 27
Spectrum Income Fund dividends
o The fund declares income dividends daily at 4 p.m. ET to
shareholders of record at that time provided payment has been
received on the previous business day.
o The fund pays dividends on the first business day of each
month.
o Fund shares will earn dividends through the date of
redemption; also, shares redeemed on a Friday or prior to a
holiday will continue to earn dividends until the next
business day. Generally, if you redeem all of your shares at
any time during the month, you will also receive all dividends
earned through the date of redemption in the same check. When
you redeem only a portion of your shares, all dividends
accrued on those shares will be reinvested, or paid in cash,
on the next dividend payment date.
Spectrum Growth Fund dividends
o The fund declares and pays dividends (if any) annually.
o All or part of the fund's dividends will be eligible for the
70% deduction for dividends received by corporations.
Spectrum International Fund dividends
o The fund declares and pays dividends (if any) annually.
o 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 (all funds)
o A capital gain or loss is the difference between the
purchase and sale price of a security.
o If the fund has net capital gains for the year (after
subtracting any capital losses), they are usually declared and
paid in December to shareholders of record on a specified date
that month. If a second distribution is necessary, it is
usually declared and paid during the first quarter of the
following year.
Tax Information
You will be sent timely information for your tax filing needs.
PAGE 28
You need to be aware of the possible tax consequences when:
o You sell fund shares, including an exchange from one fund to
another.
o The fund makes a distribution to your account.
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
accounts opened new or by exchange in 1983 or later, we will
provide you with the gain or loss on the shares you sold
during the year, based on the "average cost" method. This
information is not reported to the IRS, and you do not have to
use it. You may calculate the cost basis using other methods
acceptable to the IRS, such as "specific identification."
To help you maintain accurate records, we send you a
confirmation immediately following each transaction (except
for systematic purchases and redemptions) you make and a year-
end statement detailing all your transactions in each fund
account during the year.
Taxes on fund distributions. The following summary does not
apply to retirement accounts, such as IRAs, which are tax-
deferred until you withdraw money from them.
Distributions are taxable whether reinvested in additional
shares or received in cash.
In January, you will be sent Form 1099-DIV indicating the tax
status of any dividend and capital gain distribution made to
you. This information will also be reported to the IRS. All
distributions made by the fund are taxable to you for the year
in which they were paid. The only exception is that
distributions declared during the last three months of the
year and paid in January are taxed as though they were paid by
December 31. You will be sent any additional information you
need to determine your taxes on fund distributions, such as
the portion of your dividend, if any, that may be exempt from
state income taxes.
Short-term capital gain distributions are taxable as ordinary
income and long-term gain distributions are taxable at the
PAGE 29
applicable long-term gain rate. The gain is long- or short-
term depending on how long the fund held the securities, not
how long you held shares in the fund. If you realize a loss on
the sale or exchange of fund shares held six months or less,
your short-term loss recognized is reclassified to long-term
to the extent of any long-term capital gain distribution
received.
Gains and losses from the sale of foreign currencies and the
foreign currency gain or loss resulting from the sale of a
foreign debt security can increase or decrease the fund's
ordinary income dividend. Net foreign currency losses may
result in the fund's dividend being classified as a return of
capital.
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.
Tax effect of buying shares before a capital gain or dividend
distribution. If you buy shares shortly before or on the
"record date"--the date that establishes you as the person to
receive the upcoming distribution--you will receive, in the
form of a taxable distribution, a portion of the money you
just invested. Therefore, you may also wish to find out 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. When these amounts are
eventually distributed, they are taxable.
Transaction Procedures and Special Requirements
Purchase Conditions
Following these procedures helps assure timely and accurate
transactions.
Nonpayment. If your payment is not received or you pay with a
check or ACH transfer that does not clear, your purchase will
be canceled. You will be responsible for any losses or
expenses incurred by the fund or transfer agent, and the fund
can redeem shares you own in this or another identically
registered T. Rowe Price fund as reimbursement. The fund and
its agents have the right to reject or cancel any purchase,
exchange, or redemption due to nonpayment.
U.S. dollars. All purchases must be paid for in U.S. dollars;
PAGE 30
checks must be drawn on U.S. banks.
Sale (Redemption) Conditions
10-day hold. If you sell shares that you just purchased and
paid for by check or ACH transfer, the fund will process your
redemption but will generally delay sending you the proceeds
for up to 10 calendar days to allow the check or transfer to
clear. If your redemption request was sent by mail or
mailgram, proceeds will be mailed no later than the seventh
calendar day following receipt unless the check or ACH
transfer has not cleared. If, during the clearing period, we
receive a check drawn against your bond or money market
account, it will be returned marked "uncollected." (The 10-day
hold does not apply to the following: purchases paid for by
bank wire; cashier's, certified, or treasurer's checks; or
automatic purchases through your paycheck.)
Telephone, Tele*AccessR, and personal computer
transactions. These exchange and redemption services are
established automatically when you sign the New Account Form
unless you check the box which states that you do not want
these services. The fund uses reasonable procedures (including
shareholder identity verification) to confirm that
instructions given by telephone are genuine and is not liable
for acting on these instructions. If these procedures are not
followed, it is the opinion of certain regulatory agencies
that the fund may be liable for any losses that may result
from acting on the instructions given. A confirmation is sent
promptly after the telephone transaction. All conversations
are recorded.
Redemptions over $250,000. Large sales can adversely affect a
portfolio manager's ability to implement a fund's investment
strategy by causing the premature sale of securities that
would otherwise be held. If, in any 90-day period, you redeem
(sell) more than $250,000, or your sale amounts to more than
1% of the fund's net assets, the fund has the right to delay
sending your proceeds for up to five business days after
receiving your request, or to pay the difference between the
redemption amount and the lesser of the two previously
mentioned figures with securities from the fund.
Excessive Trading
T. Rowe Price may bar excessive traders from purchasing
shares.
Frequent trades, involving either substantial fund assets or a
substantial portion of your account or accounts controlled by
PAGE 31
you, can disrupt management of the fund and raise its
expenses. We define "excessive trading" as exceeding one
purchase and sale involving the same fund within any 120-day
period.
For example, you are in fund A. You can move substantial
assets from fund A to fund B and, within the next 120 days,
sell your shares in fund B to return to fund A or move to fund
C.
If you exceed the number of trades described above, you may be
barred indefinitely from further purchases of T. Rowe Price
funds.
Three types of transactions are exempt from excessive trading
guidelines: 1) trades solely between money market funds; 2)
redemptions that are not part of exchanges; and 3) systematic
purchases or redemptions (see "Shareholder Services").
Keeping Your Account Open
Due to the relatively high cost to a fund of maintaining small
accounts, we ask you to maintain an account balance of at
least $1,000. If 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 aggregate T. Rowe Price mutual fund
investments total $25,000 or more. Accounts employing
automatic investing (e.g., payroll deduction, automatic
purchase from a bank account, etc.) are also exempt from the
charge. The fee will not apply to IRAs and other retirement
plan accounts. (A separate custodial fee may apply to IRAs and
other retirement plan accounts.)
Signature Guarantees
You may need to have your signature guaranteed in certain
situations, such as:
A signature guarantee is designed to protect you and the T.
Rowe Price funds from fraud by verifying your signature.
PAGE 32
o Written requests 1) to redeem over $100,000, or 2) to wire
redemption proceeds.
o Remitting redemption proceeds to any person, address, or
bank account not on record.
o Transferring redemption proceeds to a T. Rowe Price fund
account with a different registration (name/ownership) from
yours.
o Establishing certain services after the account is opened.
You can obtain a signature guarantee from most banks, savings
institutions, broker-dealers, and other guarantors acceptable
to T. Rowe Price. We cannot accept guarantees from notaries
public or organizations that do not provide reimbursement in
the case of fraud.
3 More About the Funds
Organization and Management
Shareholders benefit from T. Rowe Price's 59 years of
investment management experience.
How are the funds organized?
The T. Rowe Price Spectrum Fund, Inc. (Spectrum Fund) is a
Maryland corporation organized in 1987 and is registered with
the Commission under the 1940 Act as a nondiversified, open-
end investment company, commonly known as a "mutual fund."
Mutual funds pool money received from shareholders and invest
it to try to achieve specified objectives.
Currently, Spectrum Fund consists of three series, the
Spectrum Income Fund, the Spectrum Growth Fund, and the
Spectrum International Fund, (collectively referred to as "the
funds") each of which represents a separate class of shares
and has different objectives and investment policies. The
Spectrum Fund's Charter provides that the Board of Directors
may issue additional series of shares and/or additional
classes of shares for each series.
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.
PAGE 33
Each share and fractional share entitles the shareholder to:
o Receive a proportional interest in a fund's income and
capital gain distributions.
o Cast one vote per share on certain fund matters, including
the election of fund directors, changes in fundamental
policies, or approval of changes in the fund's management
contract.
Do T. Rowe Price funds have annual shareholder meetings?
The funds are not required to hold annual meetings and do
not intend to do so except when certain matters, such as a
change in a fund's fundamental policies, are to be decided. In
addition, shareholders representing at least 10% of all
eligible votes of a fund may call a special meeting if they
wish for the purpose of voting on the removal of any fund
director or trustee. If a meeting is held and you cannot
attend, you can vote by proxy. Before the meeting, the fund
will send you proxy materials that explain the issues to be
decided and include a voting card for you to mail back.
Who runs the funds?
All decisions regarding the purchase and sale of fund
investments are made by the funds' portfolio managers.
General Oversight. Spectrum Fund 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 funds' officers. The policy of
the funds is that a majority of the Board members will be
independent of T. Rowe Price and Price-Fleming and that none
of the independent directors will be directors of any
underlying fund. In exercising their responsibilities, the
Board, among other things, will refer to the Special Servicing
Agreements and policies and guidelines included in the
Exemptive Order ("Order") issued by the Securities and
Exchange Commission in connection with the operation of the
funds. The interested directors and the officers of Spectrum
Fund and T. Rowe Price and Price-Fleming also serve in similar
positions with most of the underlying funds. Thus, if the
interests of a Spectrum Fund and the underlying funds were
ever to become divergent, it is possible that a conflict of
interest could arise and affect how the interested directors
and officers fulfill their fiduciary duties to that fund and
the underlying funds. The directors of Spectrum Fund believe
they have structured each fund to avoid these concerns.
However, conceivably, a situation could occur where proper
PAGE 34
action for a Spectrum Fund could be adverse to the interests
of an underlying fund, or the reverse could occur. If such a
possibility arises, the directors and officers of the affected
funds and T. Rowe Price or Price-Fleming, as applicable, will
carefully analyze the situation and take all steps they
believe reasonable to minimize and, where possible, eliminate
the potential conflict. Moreover, limitations on aggregate
investments in the underlying funds and other restrictions
have been adopted by Spectrum Fund to minimize this
possibility, and close and continuous monitoring will be
exercised to avoid, insofar as possible, these concerns.
Spectrum Income and Spectrum Growth Funds Portfolio
Management. Spectrum Income and Spectrum Growth Funds have an
Investment Advisory Committee composed of the following
members: Peter Van Dyke, Chairman, Stephen W. Boesel, Edmund
M. Notzon, James S. Riepe, Charles P. Smith, and M. David
Testa. The committee chairman has day-to-day responsibility
for managing the Spectrum Income and Spectrum Growth Funds and
works with the committee in developing and executing these
funds investment programs. Mr. Van Dyke has been chairman of
the committee since 1990. He has been managing investments
since joining T. Rowe Price in 1985.
Spectrum International Fund Portfolio Management. Spectrum
International Fund has an Investment Advisory Committee
composed of the following members: John R. Ford, Chairman, M.
David Testa, Martin G. Wade, and David J.L. Warren. The
committee chairman has day-to-day responsibility for managing
this fund and works with the committee in developing and
executing the fund's investment program. Mr. Ford, joined
Prime-Fleming in 1982 and has 15 years of experience in
managing investments.
Management of the Underlying Funds.
T. Rowe Price serves as investment manager to all of the
underlying domestic funds. Price-Fleming serves as investment
manager to all of the underlying international funds. Each
manager is responsible for selection and management of the
underlying funds' portfolio investments. T. Rowe Price serves
as investment manager to a variety of individual and
institutional investors, including limited and real estate
partnerships and other mutual funds.
Price-Fleming was incorporated in Maryland in 1979 as a joint
venture between T. Rowe Price and Robert Fleming Holdings
Limited (Flemings). Flemings is a diversified investment
organization which participates in a global network of
PAGE 35
regional investment offices in New York, London, Zurich,
Geneva, Tokyo, Hong Kong, Manila, Kuala Lumpur, Seoul, Taipei,
Bombay, Jakarta, Singapore, Bangkok, and Johannesburg.
Flemings was incorporated in 1974 in the United Kingdom as
successor to the business founded by Robert Fleming in 1873.
T. Rowe Price, Flemings, and 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% of a
subsidiary of Flemings and 25% by Jardine Fleming Group
Limited (Jardine Fleming). (Half of Jardine Fleming is owned
by Flemings and half by Jardine Matheson Holdings Limited.)
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.
Marketing. T. Rowe Price Investment Services, Inc., a wholly
owned subsidiary of T. Rowe Price, distributes (sells) shares
of these and all other T. Rowe Price funds.
Shareholder Services. T. Rowe Price Services, Inc., another
wholly owned subsidiary, acts as the funds' transfer and
dividend disbursing agent and provides shareholder and
administrative services. 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.
How are fund expenses determined?
Each Spectrum Fund will operate at a zero expense ratio.
However, each fund will incur its pro rata share of the fees
and expenses of the underlying funds in which they invest. The
payment of each fund's operational expenses is subject to a
Special Servicing Agreement described below as well as certain
undertakings made by T. Rowe Price or Price-Fleming, under
their respective Investment Management Agreements with each
Spectrum Fund. Fund expenses include: shareholder servicing
fees and expenses; custodian and accounting fees and expenses;
legal and auditing fees; expenses of preparing and printing
prospectuses and shareholder reports; registration fees and
expenses; proxy and annual meeting expenses, if any; and
directors' fees and expenses.
Here is some information regarding the Special Servicing
Agreements.
One Special Servicing Agreement (Agreement) is between and
PAGE 36
among Spectrum Fund on behalf of Spectrum Income and Spectrum
Growth Funds, the underlying funds, and T. Rowe Price. A
second Special Servicing Agreement (Agreement) is between and
among Spectrum Fund, on behalf of Spectrum International, the
underlying funds, Price-Fleming, and T. Rowe Price.
Each Agreement provides that, if the Board of
Directors/Trustees of any underlying fund determines that such
underlying fund's share of the aggregate expenses of Spectrum
Fund is less than the estimated savings to the underlying fund
from the operation of Spectrum Fund, the underlying fund will
bear those expenses in proportion to the average daily value
of its shares owned by Spectrum Fund, provided further that no
underlying 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 funds and the resulting reduction
in shareholder servicing costs. Although such cost savings are
not certain, the estimated savings to the underlying 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.
Under the Investment Management Agreements with the funds, and
the Special Servicing Agreement, T. Rowe Price and Price-
Fleming, respectively, have agreed to bear any expenses of
Spectrum Fund which exceed the estimated savings to each of
the underlying funds. Thus, Spectrum Fund will operate at a
zero expense ratio. Of course, shareholders of each Spectrum
Fund will still indirectly bear their fair and proportionate
share of the cost of operating the underlying funds owned by
each Spectrum Fund.
Management Fee. T. Rowe Price will act as the investment
manager for the Spectrum Income Fund and the Spectrum Growth
Fund and Price-Fleming will act as investment manager for the
Spectrum International Fund. Neither will be paid a management
fee for performing such services. However, T. Rowe Price and
Price-Fleming receive management fees from managing the
underlying funds in which each fund invests.
The determination of how Spectrum Income Fund's and Spectrum
Growth Fund's assets will be invested in the underlying funds
will be made by T. Rowe Price or by Price-Fleming for the
Spectrum International Fund, pursuant to the investment
objectives and policies of each fund set forth in this
prospectus and procedures and guidelines established by the
Board of Directors for the Spectrum Fund. The Directors for
Spectrum Fund will periodically monitor the allocations made
PAGE 37
and the basis upon which such allocations were made or
maintained. Each fund, as a shareholder in any underlying
fund, will indirectly bear its proportionate share of any
investment management fees and other expenses paid by the
underlying funds.
Each underlying fund pays T. Rowe Price or Price-Fleming an
investment management fee consisting of two parts: an
"individual fund fee" (discussed below) and a "group fee."
The group fee, which reflects the benefits each underlying
fund derives from sharing the resources of the T. Rowe Price
investment management complex, is calculated daily based on
the combined net assets of all T. Rowe Price funds (except
Equity Index and the Spectrum Funds and any institutional or
private label mutual funds). The group fee schedule (shown
below) is graduated, declining as the asset total rises, so
shareholders benefit from the overall growth in mutual fund
assets.
0.480% First $1 billion 0.350% Next $2 billion
0.450% Next $1 billion 0.340% Next $5 billion
0.420% Next $1 billion 0.330% Next $10 billion
0.390% Next $1 billion 0.320% Next $10 billion
0.370% Next $1 billion 0.310% Next $16 billion
0.360% Next $2 billion 0.305% Thereafter
The underlying 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 above.
Based on the combined T. Rowe Price funds' assets of
approximately $60.3 billion at September 30, 1996, the group
fee was 0.33%.
The Individual Fund Fees and total management fees of the
underlying funds as of September 30, 1996 are as follows:
Individual Fee Total
as a % of Fund Management
Fund Net Assets Fee Paid
______________________________________________________________
International Bond 0.35% 0.68%
International Stock 0.35 0.68
New Horizons 0.35 0.68
High Yield 0.30 0.63
PAGE 38
Equity Income 0.25 0.58
Growth Stock 0.25 0.58
New Era 0.25 0.58
GNMA 0.15 0.48
Growth & Income 0.25 0.58
New Income 0.15 0.48
Short-Term Bond 0.10 0.43
Prime Reserve 0.05 0.38
Emerging Markets Bond 0.45 0.00(a)
International Discovery 0.75 1.08
Emerging Markets Stock 0.75 0.78(b)
Japan Fund 0.50 0.83
New Asia 0.50 0.83
European Stock 0.50 0.83
Latin America 0.75 1.08
______________________________________________________________
(a) Price-Fleming agreed to waive management fees and bear
certain expenses in accordance with an expense limitation
agreement in effect through December 31, 1996. Effective as of
December 31, 1996, Price-Fleming has agreed to extend this
fund's current expense limitation through December 31, 1998.
Had Price-Fleming not agreed to waive a portion of its
management fees, Emerging Markets Bond's total management fee
paid would have been 0.78%.
(b) Price-Fleming agreed to waive management fees and bear
certain expenses in accordance with an expense limitation
agreement in effect through October 31, 1996. Effective
October 31, 1996, Price-Fleming agreed to extend this fund's
current expense limitation through October 31, 1998. Had
Price-Fleming not agreed to waive a portion of its management
fees, Emerging Markets Stock's total management fee paid would
have been 1.08%.
______________________________________________________________
Table 7
PAGE 39
The total combined management fee for each of the underlying
funds was an annual rate as shown above.
Understanding Performance Information
This section should help you understand the terms used to
describe fund performance. You will come across them in
shareholder reports you receive from us, in our newsletter,
The Price Report, in Insights articles, in T. Rowe Price
advertisements, and in the media.
Total Return
Total return is the most widely used performance measure.
Detailed performance information is included in the funds'
annual and semiannual shareholder reports, and in the
quarterly Performance Update, which are all available without
charge.
This tells you how much an investment in a fund has changed in
value over a given time period. It reflects any net increase
or decrease in the share price and assumes that all dividends
and capital gains (if any) paid during the period were
reinvested in additional shares. Including reinvested
distributions means that total return numbers include the
effect of compounding, i.e., you receive income and capital
gain distributions on a rising number of shares.
Advertisements for a fund may include cumulative or compound
average annual total return figures, which may be compared
with various indices, other performance measures, or other
mutual funds.
Cumulative Total Return
This is the actual rate of return on an investment for a
specified period. A cumulative return does not indicate how
much the value of the investment may have fluctuated between
the beginning and the end of the period specified.
Average Annual Total Return
This is always hypothetical. Working backward from the actual
cumulative return, it tells you what constant year-by-year
return would have produced the actual cumulative return. By
smoothing out all the variations in annual performance, it
gives you an idea of the investment's annual contribution to
your portfolio provided you held it for the entire period in
question.
Yield (Spectrum Income Fund)
PAGE 40
You will see frequent references to a fund's yield in our
reports, in advertisements, in media stories, and so on.
The current or "dividend" yield on a fund or any investment
tells you the relationship between the investment's current
level of annual income and its price on a particular day. The
dividend yield reflects the actual income paid to shareholders
for a given period, annualized, and divided by the average
price during the given period. For example, a fund providing
$5 of annual income per share and a price of $50 has a current
yield of 10%. Yields can be calculated for any time period.
The advertised or "SEC" yield is found by determining the net
income per share (as defined by the SEC) earned by a fund
during a 30-day base period and dividing this amount by the
per share price on the last day of the base period. The SEC
yield may differ from the dividend yield.
Special Risks and Considerations
Prospective investors should consider the following factors:
o The investments of each Spectrum fund are concentrated in
the underlying funds, so each fund's investment performance is
directly related to the investment performance of these
underlying funds.
o As a matter of fundamental policy, Spectrum Income and
Growth Funds must allocate their investments among the
underlying funds within certain ranges. As a result, they do
not have the same flexibility to invest as a mutual fund
without such constraints. Spectrum International Fund
allocates its assets among the underlying funds pursuant to an
operating policy which may be changed without shareholder
approval.
o As an operating policy, the Spectrum Income and Spectrum
Growth Funds will not redeem more than 1% of any underlying
fund's assets during any period less than 15 days, except when
necessary to meet the fund's shareholder redemption requests.
As a result, the funds may not be able to reallocate assets
among the underlying funds as efficiently and rapidly as would
be the case in the absence of this constraint. This limitation
does not apply to Spectrum International Fund.
o In addition to their principal investments, certain
underlying funds may: invest a portion or all of their assets
in foreign securities; enter into forward currency
transactions; lend their portfolio securities; enter into
stock index, interest rate, and currency futures contracts,
PAGE 41
and options on such contracts; engage in options transactions;
make short sales; purchase zero coupon bonds and payment-in-
kind bonds; and engage in various other investment practices.
o Events affecting the values of portfolio securities of
the underlying international funds that occur between the time
their prices are determined and the time such underlying
funds' net asset values are calculated will not be reflected
in the underlying international funds' net asset values unless
Price-Fleming, under the supervision of the underlying
international funds' Board of Directors determines that the
particular event should be taken into account in computing the
funds' net asset values.
Further information on these investment policies and practices
can be found under "Investment Policies of the Underlying
funds" and in the Statement of Additional Information as well
as in the prospectuses of each of the underlying funds.
o The officers, interested directors, and the investment
managers of the Spectrum Funds, presently serve as officers,
interested directors, and investment managers of the
underlying funds. Therefore, conflicts may arise as these
persons fulfill their fiduciary responsibilities to the
Spectrum Funds and the underlying funds.
o Spectrum Income Fund must invest at least 10% and can invest
as much as 25% of its assets in the T. Rowe Price High Yield
Fund. As a result, Spectrum Income Fund will be subject to
some of the risks resulting from high-yield investing.
o Each of the funds may invest in underlying funds which
invest in medium-grade bonds. If these bonds are downgraded,
the funds will consider whether to increase or decrease their
investment in the affected underlying fund.
o Spectrum Income Fund may invest in underlying funds which
concentrate their assets in certain industries. Under certain
unusual circumstances, this could result in the Spectrum
Income Fund being indirectly concentrated in these industries.
If this were to occur, the Spectrum Income Fund would consider
whether to maintain or change its investments in such
underlying funds.
o Spectrum Income Fund must invest at least 5% and can invest
as much as 20% of its assets in the International Bond Fund,
which invests primarily in foreign fixed income securities;
the Spectrum Growth Fund must invest at least 5% and can
invest as much as 20% of its assets in the International Stock
Fund, which invests primarily in foreign equity securities.
PAGE 42
These investments will subject the funds to risks associated
with investing in foreign securities.
o Spectrum International Fund's underlying funds can invest in
securities of emerging markets. Many emerging market countries
are experiencing substantial economic and political changes,
such as moving from one-party rule to a multi-party democracy,
from agrarian to industrialized economies, and from
nationalized to free market, privatized industries. Investors
should be prepared for the substantial price volatility that
can result from investing in emerging market countries.
Description of Underlying Funds
The following is a brief description of the principal
investment programs of the underlying funds. Additional
investment practices are described under "Special Risks and
Considerations," the Statement of Additional Information, and
in the prospectuses for each of the underlying funds.
Underlying Fund of each Spectrum Fund
o T. Rowe Price Prime Reserve Fund is a money market fund
which is managed to maintain a stable share price of $1.00.
This policy has been maintained since its inception; however,
the $1.00 price is neither insured by the U.S. government, nor
is its yield fixed. The fund invests at least 95% of its total
assets in prime money market instruments, that is, securities
receiving the highest credit rating. The dollar-weighted
average maturity of the fund will not exceed 90 days. Since
the fund is managed to maintain a constant share price, its
total return should be composed entirely of income.
Underlying Fund of both the Spectrum Income and Spectrum
Growth Funds
o T. Rowe Price Equity Income Fund's objective is to provide
substantial dividend income as well as long-term capital
appreciation through investments in common stocks of
established companies. Under normal circumstances, the fund
will invest at least 65% of total assets in the common stocks
of established companies paying above-average dividends. These
companies are expected to have favorable prospects for
dividend growth and capital appreciation, according to T. Rowe
Price.
Underlying Fund of both the Spectrum Growth and Spectrum
International Funds
PAGE 43
o T. Rowe Price International Stock Fund's objective is to
seek long-term growth of capital through investments primarily
in common stocks of established, non-U.S. companies. The fund
expects to invest substantially all of its assets outside the
U.S. and to diversify broadly among countries throughout the
world in developed, newly industrialized, and emerging
economies.
Underlying Fund of both the Spectrum Income and Spectrum
International Funds
o T. Rowe Price International Bond Fund's objective is to
provide high current income and capital appreciation by
investing in high-quality, nondollar-denominated government
and corporate bonds outside the U.S. The fund also seeks to
moderate price fluctuation by actively managing its maturity
structure and currency exposure. The fund will invest at least
65% of its assets in high-quality bonds, but may invest up to
20% of assets in below-investment-grade, high-risk bonds,
including bonds in default or those with the lowest rating.
Although the fund expects to maintain an intermediate to long
weighted average maturity, it has no maturity restrictions on
the overall portfolio or on individual securities. Normally,
the fund does not hedge its foreign currency exposure back to
the dollar, nor involve more than 50% of total assets in cross
hedging transactions. Therefore, changes in foreign interest
rates and currency exchange rates are likely to have a
significant impact on total return and the market value of
portfolio securities.
Spectrum Income Fund
Each of the underlying funds in the Spectrum Income Fund seeks
the highest level of income consistent with its individual
investment program.
o T. Rowe Price Short-Term Bond Fund's objective is to provide
a high level of income consistent with minimum fluctuation in
principal value and liquidity. The fund will invest in a
diversified portfolio of short- and intermediate-term
corporate, government, and mortgage debt securities. Under
normal circumstances, at least 65% of total assets will be
invested in short-term bonds. The fund's dollar-weighted
average effective maturity will not exceed three years.
Securities purchased by the fund will be rated within the four
highest credit categories.
o T. Rowe Price GNMA Fund's objective is to provide a high
level of current income consistent with maximum credit
PAGE 44
protection and moderate price fluctuation by investing
exclusively in securities backed by the full faith and credit
of the U.S. government and instruments involving these
securities. The fund invests primarily in mortgage-backed
securities issued and guaranteed by the Government National
Mortgage Association (GNMA). The GNMA guarantee does not apply
in any way to the price of GNMA securities or to the fund,
both of which will fluctuate with market conditions.
Mortgage-Backed Securities. Mortgage lenders pool individual
home mortgages with similar characteristics to back a
certificate or bond, which is then sold to investors. Interest
and principal payments generated by the underlying mortgages
are passed through to the investor. There is a risk of
homeowner prepayments; that is, when interest rates are
falling, homeowners may accelerate principal payments on the
mortgages that underlie the GNMA securities. Prepayments cause
a loss to investors, such as this fund, on mortgages that were
originally purchased at a premium (price above par).
o T. Rowe Price High Yield Fund has high current income and,
secondarily, capital appreciation as its objective. Under
normal conditions, the fund expects to invest at least 80% of
its total assets in a widely diversified portfolio of high-
yield bonds (so-called "junk" bonds) and income-producing
convertible securities and preferred stocks. The fund's longer
average maturity (expected to be in the 8- to 12-year range)
makes its price more sensitive to broad changes in interest
rate movements than shorter-term bond funds. The portfolio
manager buys defaulted bonds only if significant potential for
capital appreciation is expected.
Special Risks of High-Yield Investing. This fund is expected
to have greater price swings than are associated with most
bond funds emphasizing high-quality investments. The total
return and yield of lower-quality (high-yield/high-risk)
bonds, commonly referred to as "junk" bonds, can be expected
to fluctuate more than the total return and yield of higher-
quality bonds. Junk bonds are regarded as predominately
speculative with respect to the issuer's continuing ability to
meet principal and interest payments. Successful investment in
low- and lower-medium-quality bonds involves greater
investment risk and is highly dependent on T. Rowe Price's
credit analysis. A real or perceived economic downturn or
higher rates could cause a decline in high-yield bond prices
because such events could lessen the ability of issuers to
make principal and interest payments. In addition, the entire
junk bond market can experience sudden and sharp price swings
due to a variety of factors.
PAGE 45
The High Yield Fund imposes a redemption fee of 1% on all
redemptions (including exchanges) of shares held in the fund
for less than one year. The redemption fee is paid to the High
Yield Fund. Spectrum Fund is subject to this fee if it redeems
shares held in the High Yield Fund for less than one year.
For more information about an underlying fund, call:
1-800-638-5660
1-410-547-2308
o T. Rowe Price New Income Fund's objective is to provide the
highest level of income over time consistent with the
preservation of capital through investment primarily in
marketable debt securities. At least 80% of total assets will
be invested in income-producing, investment-grade instruments,
including (but not limited to) U.S. government and agency
obligations, mortgage-backed securities, corporate debt
securities, asset-backed securities, bank obligations, CMOs,
commercial paper, foreign securities, and others. There are no
maturity restrictions on securities purchased by the fund, but
the fund's dollar-weighted average maturity is generally
expected to be between 4 and 15 years.
SUMMARY OF PROGRAMS
Share
price Expected
Credit fluctuation average
Fund quality Yield (NAV) maturity
______________________________________________________________
Prime Reserve 2 highest Lowest Maintain $1.00 No more
possible (not guaranteed) than 90
days
______________________________________________________________
Short-Term Bond 4 highest Moderate Moderate Not greater
than
3 years
______________________________________________________________
GNMA Highest Moderate Moderate Varies,
possible 3-10 years
______________________________________________________________
New Income 4 highest High High No
restriction
______________________________________________________________
International primarily 4 High High Intermediate
Bond highest to long
(up to 20% below
4 highest)
______________________________________________________________
PAGE 46
High Yield BB or lower Highest Highest Normally
8-12 years
______________________________________________________________
Table 8
Spectrum Growth Fund
Each of the underlying funds in the Spectrum Growth Fund seeks
long-term growth of capital as its primary objective.
o T. Rowe Price Growth & Income Fund's objective is to provide
long-term capital growth, a reasonable level of current
income, and increasing future income through investments
primarily in dividend-paying stocks. The fund can focus on
companies whose earnings are expected by T. Rowe Price to grow
at an above-average rate and can support a growing dividend
payment as well as stocks that do not pay dividends currently
but offer prospects of appreciation and future income.
o T. Rowe Price New Era Fund's objective is to provide long-
term capital appreciation by investing primarily in common
stocks of companies that own or develop natural resources and
other basic commodities, and in the stocks of selected
nonresource growth companies. The fund's primary focus will be
on the common stocks of companies whose earnings and tangible
assets are expected to grow faster than inflation. The fund
will also invest in selected nonresource growth companies with
strong potential for earnings growth.
o T. Rowe Price New Horizons Fund's objective is to provide
long-term growth of capital by investing primarily in common
stocks of small, rapidly growing companies. The fund will
invest primarily in a diversified group of small, emerging
growth companies. It will seek to invest early in the
corporate life cycle, before a company becomes widely
recognized by the investment community. The fund may also
invest in companies that offer the possibility of accelerating
earnings growth because of rejuvenated management, new
products, or structural changes in the economy.
o T. Rowe Price Growth Stock Fund's objective is to provide
long-term growth of capital and, secondarily, increasing
dividend income by investing primarily in common stocks of
well-established growth companies. The fund will invest
primarily (at least 65% of total assets) in the common stocks
of a diversified group of growth companies. Though it is not
required, the companies in which the fund invests normally pay
dividends, which are generally expected to rise in future
years as earnings increase.
PAGE 47
Spectrum International Fund
Each of the underlying stock funds in the Spectrum
International Fund seeks long-term growth of capital.
o T. Rowe Price International Discovery Fund's objective is
long-term growth of capital through investments primarily in
common stocks of rapidly growing, small to medium-sized non-
U.S. companies. Such companies may be found in both developed
and emerging markets. Traditionally, they are more dynamic and
offer greater growth potential than larger companies, but they
are often overlooked or undervalued by investors. Smaller
companies are generally riskier than their larger counterparts
because they may have limited product lines, capital, and
managerial resources. Their securities may trade less
frequently and with greater price swings.
o T. Rowe Price European Stock Fund's objective is long-term
growth of capital through investments primarily in common
stocks of both large and small European companies. Current
income is a secondary objective. The fund seeks to take
advantage of opportunities arising from such trends as
privatization, the reduction of trade barriers, and the
potential growth of the emerging economies of Eastern Europe.
Normally, at least five countries will be represented in the
portfolio, and investments may be made in any of the countries
listed below, as well as others as their markets develop.
Primary Emphasis: France, Germany, Netherlands, Italy,
Spain, Sweden, Switzerland, United Kingdom.
Others: Austria, Belgium, Denmark, Finland, Ireland,
Luxembourg, Norway, Portugal, Czech Republic, Greece, Hungary,
Poland, Slovakia, Turkey, Russia.
o T. Rowe Price New Asia Fund's objective is long-term growth
of capital through investment in large and small companies
domiciled or with primary operations in Asia, excluding Japan.
The fund may also invest in Pacific Rim countries such as
Australia and New Zealand.
Countries in which the fund may invest include those in the
following list as well as others in the region, such as China
and Pakistan, as their markets become more accessible.
Investments will represent a minimum of five countries:
Australia, Hong Kong, Indonesia, India, Malaysia, New Zealand,
Philippines, Singapore, South Korea, Taiwan,and Thailand.
Economic growth in the Southeast Asian economies has
outstripped that in both Europe and Japan in recent years, and
PAGE 48
the region's rising prosperity has been reflected in periods
of strong investment returns.
o T. Rowe Price Japan Fund's objective is long-term growth of
capital through investments in common stocks of large and
small companies domiciled or with primary operations in Japan.
Assets will normally be invested across a wide range of
industries and companies (both small and large). While a
single-country fund may normally be considered more risky than
a multi-country fund, Japan has a highly developed and diverse
economy which accounts for approximately 17% of the world's
output.
Investors should be aware that the U.S. dollar has fallen in
value against the Japanese yen for many years, increasing
returns on Japanese investments for U.S. investors. There is
no assurance this currency trend will continue, and its
reversal would adversely affect the fund's total return.
o T. Rowe Price Emerging Markets Stock Fund's objective is
long-term growth of capital through investment primarily in
common stocks of large and small companies domiciled, or with
primary operations, in emerging markets. An emerging market
includes any country defined as emerging or developing by the
International Bank for Reconstruction and Development (World
Bank), International Finance Corporation, or the United
Nations. The fund's investments are expected to be diversified
geographically across emerging markets in Latin America, Asia,
Europe, Africa, and Mid East.
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,
Mauritius, Pakistan, Philippines, Singapore, Sri Lanka,
Taiwan, Thailand.
Latin America: Argentina, Belize, Brazil, Chile, Colombia,
Mexico, Peru, Venezuela.
Europe: Austria, Czech Republic, Estonia, Greece, Hungary,
Latvia, Lithuania, Poland, Portugal, Russia, Slovakia, Turkey,
Africa.
The Middle East:Botswana, Egypt, Israel, Jordan, Morocco,
Nigeria, South Africa, Tunisia, Zimbabwe.
Many emerging countries are experiencing substantial economic
and political restructurings, and their developing financial
markets offer the potential for significant capital
PAGE 49
appreciation. Many of these countries are moving from one-
party rule to a multi-party democracy; from agrarian to
industrialized economies; and from nationalized to free
market, privatized industries. These transitions are
proceeding smoothly in some markets but not in others. There
is no guarantee favorable trends will continue. Companies in
emerging markets that successfully navigate these changes
offer investors the prospect for earnings growth more rapid
than that typically generated by companies in more mature,
developed markets. Investors in this fund, however, should be
comfortable with the risks of international investing and be
prepared for substantial share price volatility.
o T. Rowe Price Latin America Fund's objective is long-term
growth of capital through investment primarily in common
stocks of companies domiciled, or with primary operations, in
Latin America. Initially the fund will focus on Mexico,
Brazil, Chile, Argentina, and Venezuela, and the portfolio is
normally expected to invest in at least four countries. Other
countries will be added as opportunities arise and conditions
permit.
The Latin America Fund is registered as "non-diversified."
This means 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.
The fund expects to 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, but their
stocks could be adversely affected if trends favoring
development were to be reversed.
The Latin American countries in general have less developed
economies than other regions in which Price-Fleming invests
and may continue to be subject to the effects of unpredictable
political and economic conditions. A number of countries have
legacies of political instability, hyperinflation, and
currency devaluations versus the dollar (which would adversely
affect returns to U.S. investors).
o T. Rowe Price Emerging Markets Bond Fund's objective is to
provide high income and capital appreciation. The fund invests
at least 65% (and potentially all) of its total assets in the
government and corporate debt securities of emerging nations.
Since these countries are less developed and their bonds carry
a greater risk of default, such bonds are typically below-
investment-grade and are considered junk bonds in the U.S.
PAGE 50
The fund may invest in the lowest-rated bonds, including those
in default. While these investments may offer significantly
greater total returns than higher-quality bonds of developed
foreign markets, they entail a higher degree of risk and are
subject to sharp price declines.
There are no maturity restrictions on the fund. Its weighted
average maturity normally ranges between 5 and 10 years, but
may vary substantially because of market conditions. Under
normal circumstances, most of the fund's total assets are
expected to be denominated in U.S. dollars, and the fund will
not usually hedge foreign currency holdings back to U.S.
dollar. Currency fluctuations can have a significant impact on
the value of the fund's holdings.
Note: The International Discovery, Emerging Markets Stock, and
Latin America Funds each impose a redemption fee of 2% on all
redemptions (including exchanges) of shares held in the funds
for less than one year. The redemption fee is paid to the
fund. Spectrum International Fund is subject to this fee if it
redeems shares held in one of these funds for less than one
year.
Investment Policies of the Spectrum Funds
Each Spectrum fund's investment policies and practices are
subject to further restrictions and risks which are described
in the Statement of Additional Information. The funds will not
make a material change in their investment objectives or their
fundamental policies without obtaining shareholder approval.
Shareholders will be notified of any material change in such
investment programs.
Cash Position.
Cash reserves provide flexibility and serve as a short-term
defense during periods of unusual market volatility.
While the Spectrum Income Fund will remain primarily
invested in bonds, and the Spectrum Growth Fund in stocks, and
the Spectrum International Fund in international stocks, each
fund can hold a certain portion of its assets in U.S. and
foreign dollar-denominated money market securities, including
repurchase agreements in the two highest rating categories,
maturing in one year or less. For temporary, defensive
purposes, a fund may invest without limitation in such
securities. Each fund may invest its cash reserves in the
Prime Reserve Fund. A reserve position provides flexibility in
meeting redemptions, expenses, and the timing of new
investments, and serves as a short-term defense during periods
PAGE 51
of unusual volatility.
Diversification. Spectrum Fund is a "nondiversified"
investment company for purposes of the 1940 Act because it
invests in the securities of a limited number of mutual funds.
However, the underlying funds themselves are diversified
investment companies (with the exception of the International
Bond, Emerging Markets, and Latin America Funds). Spectrum
Fund intends to qualify as a diversified investment company
for the purposes of Subchapter M of the Internal Revenue Code.
Fundamental Investment Policies. As a matter of fundamental
policy, each Spectrum fund will not: (i) invest more than 25%
of its respective total assets in any one industry, except for
investment companies which are members of the T. Rowe Price
family of funds; (ii) borrow money except temporarily to
facilitate redemption requests in amounts not exceeding 30% of
each fund's total assets valued at market; (iii) in any manner
transfer as collateral for indebtedness any securities owned
by each fund except in connection with permissible borrowings,
which in no event will exceed 30% of each fund's total assets
valued at market; additionally, as a fundamental policy,
Spectrum Income and Spectrum Growth Funds cannot (iv) change
the selection of the underlying funds in which they can
invest; or (v) change the percentage ranges which may be
allocated to the underlying funds. These last two restrictions
are operating policies for Spectrum International Fund and may
be changed by the Board of Directors.
Other Investment Restrictions. As a matter of operating
policy, each Spectrum fund will not, among other things: (i)
purchase additional securities when money borrowed exceeds 5%
of the fund's total assets; (ii) invest more than 10% of its
net assets in illiquid securities, provided that each fund
will not invest more than 5% of its net assets in restricted
securities (other than securities eligible for resale under
Rule 144A of the Securities Act of 1933); and (iii) redeem
securities from any underlying fund at a rate in excess of 1%
of the underlying fund's assets in any period of less than 15
days, except where necessary to meet shareholder redemption
requests. This last limitation does not apply to Spectrum
International Fund.
The Spectrum funds may not purchase shares of any underlying
fund if, as a result of such purchase, they would own more
than 30% of the outstanding voting securities of the
underlying fund. This is an operating policy and may be
changed by the Board of Directors. The ability to invest this
amount in the underlying funds could subject the funds to
greater risk due to the resulting concentration. However, each
PAGE 52
of the underlying funds invests in a broad portfolio, which
would tend to mitigate this risk to some degree.
If a Spectrum fund reaches a percentage investment limit with
any underlying fund, the Directors will have to determine
whether to increase the limit, stop sales of shares of that
fund, or take other suitable steps.
Portfolio Turnover. Each Spectrum fund's portfolio turnover is
expected to be low. The Spectrum funds will purchase or sell
securities to: (i) accommodate purchases and sales of each
fund's shares; (ii) change the percentages of each fund's
assets invested in each of the underlying funds in response to
market conditions; and (iii) maintain or modify the allocation
of each fund's assets among the underlying funds within the
percentage limits described earlier. During the Spectrum
International Fund's initial period of operations, its
portfolio turnover rate is not expected to exceed 50%. The
following chart sets forth the Spectrum Income and Spectrum
Growth Funds' portfolio turnover rates for the the period
ended June 30, 1996, and for the years ended December 31,
1995, December 31, 1994, December 31, 1993.
______________________________________________________________
1996 1995 1994 1993
Spectrum Income Fund21.0% 20.2% 23.1% 14.4%
Spectrum Growth Fund 1.7 7.4 20.7 7.0
______________________________________________________________
Table 8
Investment Policies and Practices of Underlying Funds
Fund managers have considerable leeway in choosing investment
strategies and selecting securities they believe will help the
funds achieve their objectives.
In pursuing their investment objectives and programs, each of
the underlying funds is permitted to engage in a wide range of
investment policies. Certain of these policies are described
in the following paragraphs and further information about the
underlying funds is contained in the Statement of Additional
Information as well as in the prospectuses of such funds.
Because each fund invests in the underlying funds,
shareholders of each fund will be affected by these investment
policies in direct proportion to the amount of assets each
fund allocates to the underlying funds pursuing such policies.
Lending of Portfolio Securities. Like other mutual funds, the
underlying funds may lend securities to broker-dealers, other
PAGE 53
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 underlying funds
could experience delays in recovering securities and possibly
capital losses.
Foreign Securities. (See also, "Fund, Market, and Risk
Characteristics" in Section 1 of this prospectus.) The
Spectrum funds will each invest in certain underlying funds
that invest all or a portion of their assets in foreign
securities. These investments in foreign securities include
nondollar-denominated securities traded outside of the U.S.
and dollar-denominated securities of foreign issuers. Such
investments increase a portfolio's diversification and may
enhance return, but they also involve some special risks such
as exposure to potentially adverse local, political, and
economic developments; nationalization and exchange controls;
potentially lower liquidity and high volatility; possible
problems arising from accounting, disclosure, settlement, and
regulatory practices that differ from U.S. standards; and the
chance that fluctuations in foreign exchange rates will
decrease the investment's value (favorable changes can
increase its value). To the extent the underlying funds invest
in developing countries, these risks are increased.
Managing Foreign Currency Risk. Foreign securities in which
the underlying funds invest are subject to currency risk, that
is, the risk that the U.S. dollar value of these securities
may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations.
Investors in foreign securities may "hedge" their exposure to
potentially unfavorable currency changes by purchasing a
contract to exchange one currency for another on some future
date at a specified exchange rate. In certain circumstances,
a "proxy currency" may be substituted for the currency in
which the investment is denominated, a strategy known as
"proxy hedging." An underlying fund may also use these
contracts to create a synthetic bond--issued by a U.S.
company, for example, but with the dollar component
transformed into a foreign currency. Although the underlying
funds will engage in foreign currency transactions primarily
to protect the fund's foreign securities from adverse currency
movements relative to the dollar, they involve the risk that
anticipated currency movements will not occur and a fund's
total return could be reduced.
There are certain markets where it is not possible to
engage in effective foreign currency hedging. This may be
true, for example for the currencies of various Latin American
countries and other emerging markets where the foreign
PAGE 54
exchange markets are not sufficiently developed to permit
hedging activity to take place.
Futures and Options.
Futures are used to manage risk; options give the investor the
option to buy or sell an asset at a predetermined price in the
future.
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, but not the obligation, to buy or
sell an asset at a predetermined price in the future. The
underlying funds may buy and sell futures and options
contracts for a number of reasons, including: to manage their
exposure to changes in interest rates, securities prices, and
foreign currencies; to efficiently adjust their overall
exposure to certain markets; to attempt to enhance income; to
protect the value of portfolio securities; and to adjust the
portfolios' duration.
The underlying funds may purchase, sell, or write call and put
options 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 the funds' total return; and the potential loss from the
use of futures can exceed the funds' initial investment in
such contracts.
4 Investing with T. Rowe Price
Account Requirements and Transaction Information
Always verify your transactions by carefully reviewing the
confirmation we send you. Please report any discrepancies to
Shareholder Services promptly.
Tax Identification Number
We must have your correct social security or corporate tax
identification number on a signed New Account Form or W-9
Form. Otherwise, federal law requires the funds to withhold a
percentage (currently 31%) of your dividends, capital gain
distributions, and redemptions, and may subject you to an IRS
fine. If this information is not received within 60 days after
your account is established, your account may be redeemed,
PAGE 55
priced at the NAV on the date of redemption.
T. Rowe Price Trust Company
1-800-492-7670
1-410-625-6585
Employer-Sponsored Retirement Plans and Institutional Accounts
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.)
Regular Mail
T. Rowe Price
Account Services
P.O. Box 17300
Baltimore, MD
21298-9353
Mailgram, Express,
Registered, or Certified
Mail
T. Rowe Price
Account Services
10090 Red Run Blvd.
Owings Mills, MD 21117
By Mail
Please make your check payable to T. Rowe Price Funds
(otherwise it will be returned) and send your check together
with the New Account Form to the address at left. We do not
accept third party checks, except for IRA Rollover checks that
are properly endorsed, to open new accounts.
By Wire
o Call Investor Services for an account number and give the
PAGE 56
following wire address to your bank:
Morgan Guaranty Trust Co. of New York
ABA# 021000238
T. Rowe Price [fund name]
AC-00153938
account name(s), and account number
o Complete a New Account Form and mail it to one of the
appropriate addresses listed on the previous page.
Note: No services will be established and IRS penalty
withholding may occur until a signed New Account Form is
received. Also, retirement plans cannot be opened by wire.
By Exchange
Call Shareholder Services or use Tele*Access or your
personal computer (see "Automated Services" under "Shareholder
Services"). The new account will have the same registration as
the account from which you are exchanging. Services for the
new account may be carried over by telephone request if
preauthorized on the existing account. (See explanation of
"Excessive Trading" under "Transaction Procedures.")
In Person
Drop off your New Account Form at any location listed on
the cover and obtain a receipt.
Purchasing Additional Shares: $100 minimum purchase; $50
minimum for retirement plans, Automatic Asset Builder and
gifts of transfers to minors(UGMA/UTMA) accounts
By ACH Transfer
Use Tele*Access, your personal computer, or call Investor
Services if you have established electronic transfers using
the ACH network.
By Wire
Call Shareholder Services or use the wire address in "Opening
a New Account."
Regular Mail
T. Rowe Price Funds
Account Services
P.O. Box 89000
Baltimore, MD
21289-1500
(For mailgrams,
express, registered,
or certified mail,
PAGE 57
see previous section.)
By Mail
o Make your check payable to T. Rowe Price Funds (otherwise it
may be returned).
o Mail the check to us at the address shown at left with
either a fund reinvestment slip or a note indicating the
fund you want to buy and your fund account number.
o Remember to provide your account number and the fund name on
your check.
By Automatic Asset Builder
Fill out the Automatic Asset Builder
section on the New Account or Shareholder Services Form.
Exchanging and Redeeming Shares
By Phone
Call Shareholder Services. If you find our phones busy
during unusually volatile markets, please consider placing
your order by your personal computer, Tele*Access (if you have
previously authorized telephone services), mailgram or express
mail. For exchange policies, please see "Transaction
Procedures and Special Requirements--Excessive Trading."
Redemption proceeds can be mailed to your account address,
sent by ACH transfer, or wired to your bank (provided your
bank information is already on file). For charges, see
"Electronic Transfers--By Wire" under "Shareholder Services".
For Mailgram,
Express, Registered,
or Certified mail,
see addresses under
"Opening a New Account."
By Mail
For each account involved, provide the account name, number,
fund name, and exchange or redemption amount. For exchanges,
be sure to indicate any fund you are exchanging out of and the
fund or funds you are exchanging into. Please mail to the
appropriate address below or as indicated at left. T. Rowe
Price requires the signatures of all owners exactly as
registered, and possibly a signature guarantee (see
"Transaction Procedures and Special Requirements--Signature
Guarantees").
PAGE 58
Regular Mail
For nonretirement For employer-sponsored
and IRA accounts: retirement accounts:
T. Rowe Price T. Rowe Price Trust
Account Services Company
P.O. Box 89000 P.O. Box 89000
Baltimore, MD Baltimore, MD
21289-0220 21289-0300
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 right to waive or lower
investment minimums; to accept initial purchases by telephone
or mailgram; to refuse any purchase order; to cancel or
rescind any purchase or exchange (for example, if an account
has been restricted due to excessive trading or fraud) upon
notice to the shareholder within five business days of the
trade or if the written confirmation has not been received by
the shareholder, whichever is sooner; to freeze any account
and suspend account services when notice has been received of
a dispute between the registered or beneficial account owners
or there is reason to believe a fraudulent transaction may
occur; to otherwise modify the conditions of purchase and any
services at any time; or to act on instructions believed to be
genuine.
Shareholder Services
1-800-225-5132
1-410-625-6500
Shareholder Services
Many services are available to you as a T. Rowe Price
shareholder; some you receive automatically and others you
must authorize on the New Account Form. By signing up for
services on the New Account Form rather than later, you avoid
having to complete a separate form and obtain a signature
guarantee. This section reviews some of the principal services
currently offered. Our Services Guide contains detailed
descriptions of these and other services.
If you are a new T. Rowe Price investor, you will receive a
PAGE 59
Services Guide with our Welcome Kit.
Investor Services
1-800-638-5660
1-410-547-2308
Note: Corporate and other entity accounts require an original
or certified resolution to establish services and to redeem by
mail. For more information, call Investor Services.
Retirement Plans
We offer a wide range of plans for individuals and
institutions, including large and small businesses: IRAs,
SEP-IRAs, Keoghs (profit sharing and money purchase pension),
401(k), and 403(b)(7). For information on IRAs, call Investor
Services. For information on all other retirement plans,
please call our Trust Company at 1-800-492-7670.
Exchange Service
You can move money from one account to an existing identically
registered account, or open a new identically registered
account. Remember, exchanges are purchases and sales for tax
purposes. (Exchanges into a state tax-free fund are limited to
investors living in states where the funds are registered.)
Some of the T. Rowe Price funds may impose a redemption fee of
.50% to 2%, payable to such funds, on shares held for less
than one year, or in some funds, six months.
Automated Services
Tele*Access
1-800-638-2587
Tele*Access. 24-hour service via toll-free number provides
information on fund yields and prices, dividends, account
balances, and your latest transaction, as well as the ability
to request prospectuses, account and tax forms, duplicate
statements, and checks, and to initiate purchase, redemption
and exchange orders in your accounts (see "Electronic
Transfers" below).
Personal Computer. 24-hour service via dial-up modem
provides the same information as Tele*Access, but on a
personal computer. Please call Investor Services for an
information guide.
Telephone and Walk-In Services
Buy, sell, or exchange shares by calling one of our service
PAGE 60
representatives or by visiting one of our investor center
locations whose addresses are listed on the cover.
Electronic Transfers
By ACH. With no charges to pay, you can initiate a purchase or
redemption for as little as $100 or as much as $100,000
between your bank account and fund account using the ACH
network. Enter instructions via Tele*Access or your personal
computer or call Shareholder Services.
By Wire. Electronic transfers can also be conducted via bank
wire. There is currently a $5 fee for wire redemptions under
$5,000, and your bank may charge for incoming or outgoing wire
transfers regardless of size.
Checkwriting (not available for equity funds, or the High
Yield Fund or Emerging Markets Bond Fund)
You may write an unlimited number of free checks on any money
market fund, and most bond funds, with a minimum of $500 per
check. Keep in mind, however that a check results in a
redemption; a check written on a bond fund will create a
taxable event which you and we must report to the IRS.
Automatic Investing ($50 minimum)
You can invest automatically in several different ways,
including:
Automatic Asset Builder. You instruct us to move $50 or more
from your bank account, or you can instruct your employer to
send all or a portion of your paycheck to the fund or funds
you designate.
Note: If you are moving money from your bank account, and if
the date you select for your transactions falls on a Sunday
or a Monday which is a holiday, your order will be priced on
the second business day following this date.
Automatic Exchange. You can set up systematic investments from
one fund account into another, such as from a money fund into
a stock fund.
Discount Brokerage
Discount Brokerage is a division of T. Rowe Price
Investment Services, Inc., Member NASD/SIPC.
This additional service gives you the opportunity to easily
consolidate all your investments with one company. Through
our discount brokerage, you can buy and sell individual
PAGE 61
securities--stocks, bonds, options, and others--at
considerable commission savings. We also provide a wide range
of services, including:
Automated telephone and on-line services - You can enter
trades, access quotes, and review account information 24
hours a day, seven days a week. Any trades executed through
these programs save you an additional 10% on commissions.
Note: Discount applies to our current commission schedule,
subject to our $35 minimum commission.
To open an account:
1-800-638-5660
For existing discount brokerage investors:
1-800-225-7720
Investor Information - A variety of informative reports,
such as our Brokerage Insights series, S&P Market Month
Newsletter, and optional Stock Reports can help you better
evaluate economic trends and investment opportunities.
Dividend Reinvestment Service - Virtually all stock held in
customer accounts are eligible for this service--free of
charge.
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.
Shareholder Reports. Fund managers' reviews of their
strategies and results. 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 100 East Pratt Street, Baltimore, MD 21202.
The T. Rowe Price Report. A quarterly investment newsletter
discussing markets and financial strategies.
Performance Update. 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,
PAGE 62
Personal Strategy Planner, Retirees Financial Guide, and
Retirement Planning Kit.
PAGE 63
To Open an Account
Investor Services
1-800-638-5660
1-410-547-2308
For Existing Accounts
Shareholder Services
1-800-225-5132
1-410-625-6500
For Yields and Prices
Tele*AccessR
1-800-638-2587
24 hours, 7 days
To Open a Discount Brokerage Account
1-800-638-5660
1-410-547-2308
Investor Centers
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
Internet Address
http://www.troweprice.com
To help you achieve your financial goals, T. Rowe Price offers
a wide range of stock, bond, and money market investments, as
well as convenient services and timely, informative reports.
Prospectus
PAGE 64
T. Rowe Price Spectrum Funds
T. Rowe Price
Spectrum Fund, Inc.
December __, 1996
Three broadly diversified funds composed of other T. Rowe
Price funds, one investing primarily in fixed income
securities, one in stocks, and one in international
securities.
Invest With ConfidenceR
PAGE 65
STATEMENT OF ADDITIONAL INFORMATION
T. ROWE PRICE SPECTRUM FUND, INC. ("Spectrum Fund")
Spectrum Income Fund ("Income Fund")
Spectrum Growth Fund ("Growth Fund")
Spectrum International Fund ("International Fund")
(the "Funds")
This Statement of Additional Information is not a
prospectus but should be read in conjunction with the Funds'
prospectus dated December __, 1996, which may be obtained from T.
Rowe Price Investment Services, Inc., 100 East Pratt Street,
Baltimore, Maryland 21202.
If you would like a prospectus 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.
The date of this Statement of Additional Information is
December __, 1996.
SAI-SPC 12/_/96
PAGE 66
TABLE OF CONTENTS
Page Page
Capital Stock . . . . . . . . Investment Restrictions . . .
Code of Ethics . . . . . . . Legal Counsel . . . . . . . .
Custodian . . . . . . . . . . Management of the Funds . . .
Distributor for the Funds . . Net Asset Value Per Share . .
Dividends . . . . . . . . . . Pricing of Securities . . . .
Federal and State Registration Principal Holders of . . . .
of Shares . . . . . . . . . Securities . . . . . . . .
Independent Accountants . . . Repurchase Agreements . . . .
Investment Management . . . . Special Considerations . . .
Services . . . . . . . . . Tax Status . . . . . . . . .
Investment Objectives . . . . Yield Information . . . . . .
and Policies . . . . . . .
Investment Performance . . .
Investment Policies . . . . .
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of
the Funds' investment objectives and policies discussed in the
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. The
operating policies of a Fund are subject to change by Spectrum
Fund's Board of Directors without shareholder approval. However,
shareholders will be notified of a material change in an
operating policy. The fundamental policies of a Fund 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.
Spectrum Fund
The following information supplements the discussion of
each Fund's investment objectives and policies discussed in the
prospectus.
The proliferation of mutual funds has left many
investors in search of a means of diversifying among a number of
mutual funds while obtaining professional management in
determining which funds to select, how much of their assets to
commit to each fund, and when to make the selections. In
response to this need, the Spectrum Fund has been created as a
means of providing a simple and effective means of structuring a
comprehensive mutual fund investment program. By selecting the
Spectrum Growth Fund, the Spectrum Income Fund, the Spectrum
PAGE 67
International Fund, or a combination of any of these, investors
may choose the investment objective appropriate for their long-
term investment goals. The Spectrum Funds will attempt to
achieve these goals by diversification in a selected group of
other T. Rowe Price Funds. Although the Spectrum Funds are not
asset allocation or market timing funds, each, over time, will
adjust the amount of its assets invested in the various other T.
Rowe Price Funds as economic, market and financial conditions
warrant.
InterFund Borrowing and Lending
Subject to approval by the Securities and Exchange
Commission, and certain state regulatory agencies, each Fund may
borrow funds from, and certain of the Underlying Price Funds may
make loans to and borrow funds from, other Price Funds. These
Funds have no current intention of engaging in these practices at
this time.
Repurchase Agreements
Each Fund may enter into repurchase agreements through
which investors (such as the Funds) purchases a security (the
"underlying security") from a well-established securities dealer
or a bank which 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 Standard & Poor's Corporation, P1 by Moody's
Investors Service, Inc., or the equivalent rating by T. Rowe
Price Associates, Inc. ("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. Neither Fund will enter into a repurchase agreement
which does not provide for payment within seven days if, as a
result, more than 10% of the value of its net assets would then
be invested in such repurchase agreements. The Funds will only
enter into a repurchase agreement where (i) the underlying
securities are of the type (excluding maturity limitations) which
each Fund's investment guidelines would allow it to purchase
directly (however, the underlying securities for the Prime
Reserve Fund will either be U.S. government securities or
securities which, at the time the repurchase agreement is entered
into, are rated in the highest rating category by public rating
agencies), (ii) 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 (iii) 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 bankruptcy
or other default of a seller of a repurchase agreement, the Funds
could experience both delays in liquidating the underlying
PAGE 68
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.
INVESTMENT POLICIES
The following is a description of the investment
objective and program for each of the Underlying Price Funds.
Spectrum Income Fund
T. Rowe Price Short-Term Bond Fund, Inc. seeks a high
level of income consistent with minimum fluctuation in principal
value and liquidity. The Fund will invest in a diversified
portfolio of short- and intermediate-term corporate, government,
and mortgage securities. The fund may also invest in other types
of securities such as bank obligations, collateralized mortgage-
obligations (CMOs), foreign securities, hybrids, and futures and
options. Under normal circumstances, at least 65% of the Fund's
total assets will be invested in short-term bonds. In this
regard, the dollar-weighted average effective maturity will not
exceed three years, and the Fund will not purchase any security
whose effective maturity, average life or tender date, measured
from the date of settlement, exceeds seven years. The Fund will
purchase securities rated within the four highest credit
categories by at least one established public rating agency (or,
if unrated, a T. Rowe Price equivalent). Short and intermediate-
term securities typically yield more than money market
securities, but less than longer term securities. Also, share
price fluctuations should be lower than a mutual fund investing
in longer term securities.
T. Rowe Price GNMA Fund seeks to provide high level of
current income consistent with maximum credit protection and
moderate price fluctuation by investing exclusively in securities
backed by the full faith and credit of the U.S. government and
instruments involving these securities. The fund invests
primarily in mortgage-backed securities issued and guaranteed by
the Government National Mortgage Association (GNMA), an agency of
the Department of Housing and Urban Development (HUD). The GNMA
guarantee does not apply in any way to the price of GNMA
securities or the fund, both of which will fluctuate with market
conditions. The fund can also purchase bills, notes and bonds
issued by the U.S. Treasury as well as related futures, other
agency securities backed by the full faith and credit of the U.S.
Government; and securities involving GNMAs, such as CMO's and
stripped certificates (securities that receive only the interest
or principal portion of the underlying mortgage payments).
PAGE 69
Mortgage-Backed Securities. Mortgage-backed securities
are securities representing an interest in a pool of mortgages.
The mortgages may be of a variety of types, including adjustable
rate, conventional 30-year fixed rate, graduated payment, and 15-
year. Principal and interest payments made on the mortgages in
the underlying mortgage pool are passed through to the fund.
This is in contrast to traditional bonds where principal is
normally paid back at maturity in a lump sum. Unscheduled
prepayments of principal shorten the securities' weighted average
life and may lower their total return. (When a mortgage in the
underlying mortgage pool is prepaid, an unscheduled principal
prepayment is passed through to the fund. This principal is
returned to the fund at par. As result, if a mortgage security
were trading at a premium, its total return would be lowered by
prepayments, and if a mortgage security were trading at a
discount, its total return would be increased by prepayments.)
The value of these securities also may change because of changes
in the market's perception of the creditworthiness of the federal
agency that issued them. In addition, the mortgage securities
market in general may be adversely affected by changes in
governmental regulation or tax policies. As a result the actual
or "effective" maturity of a mortgage-backed security is
virtually always shorter than its stated maturity.
T. Rowe Price High Yield Fund, Inc. has high current
income and, secondarily, capital appreciation as its objective.
Under normal conditions the fund expects to invest at least 80%
of its total assets in a widely diversified portfolio of high-
yield bonds (so-called "junk" bonds), and income producing
convertible securities and preferred stocks. The fund may also
invest in a variety of other securities, including foreign
securities, pay-in-kind bonds, private placements, bank loans,
hybrid instruments, futures and options. The fund's longer
average maturity (expected to be in the 8- to 12- year range),
makes its price more sensitive to broad changes in interest rate
movements than shorter-term bond funds. The portfolio manager
buys defaulted bonds only if significant potential for capital
appreciation is expected. In addition, the Fund may invest in
medium quality, investment grade securities, and, for temporary
defensive purposes, higher quality securities. The Fund may also
invest up to 20% of its net assets in non-U.S. dollar-denominated
fixed income securities.
Special Risks of Investing in Junk Bonds
The following special considerations are additional
risk factors associated with the Fund's investments in lower
rated debt securities.
PAGE 70
Youth and Growth of the Lower Rated Debt Securities
Market. The market for lower rated debt securities is relatively
new and its growth has paralleled a long economic expansion.
Past experience may not, therefore, provide an accurate
indication of future performance of this market, particularly
during periods of economic recession. An economic downturn or
increase in interest rates is likely to have a greater negative
effect on this market, the value of lower rated debt securities
in the Fund's portfolio, the Fund's net asset value and the
ability of the bonds' issuers to repay principal and interest,
meet projected business goals and obtain additional financing
than on higher rated securities. These circumstances also may
result in a higher incidence of defaults than with respect to
higher rated securities. An investment in this Fund is more
speculative than investment in shares of a fund which invests
only in higher rated debt securities.
Sensitivity to Interest Rate and Economic Changes.
Prices of lower rated debt securities may be more sensitive to
adverse economic changes or corporate developments than higher
rated investments. Debt securities with longer maturities, which
may have higher yields, may increase or decrease in value more
than debt securities with shorter maturities. Market prices of
lower rated debt securities structured as zero coupon or pay-in-
kind securities are affected to a greater extent by interest rate
changes and may be more volatile than securities which pay
interest periodically and in cash. Where it deems it appropriate
and in the best interests of Fund shareholders, the Fund may
incur additional expenses to seek recovery on a debt security on
which the issuer has defaulted and to pursue litigation to
protect the interests of security holders of its portfolio
companies.
Liquidity and Valuation. Because the market for lower
rated securities may be thinner and less active than for higher
rated securities, there may be market price volatility for these
securities and limited liquidity in the resale market. Nonrated
securities are usually not as attractive to as many buyers as
rated securities are, a factor which may make nonrated securities
less marketable. These factors may have the effect of limiting
the availability of the securities for purchase by the Fund and
may also limit the ability of the Fund to sell such securities at
their fair value either to meet redemption requests or in
response to changes in the economy or the financial markets.
Adverse publicity and investor perceptions, whether or not based
on fundamental analysis, may decrease the values and liquidity of
lower rated debt securities, especially in a thinly traded
market. To the extent the Fund owns or may acquire illiquid or
restricted lower rated securities, these securities may involve
special registration responsibilities, liabilities and costs, and
liquidity and valuation difficulties. Changes in values of debt
securities which the Fund owns will affect its net asset value
per share. If market quotations are not readily available for
PAGE 71
the Fund's lower rated or nonrated securities, these securities
will be valued by a method that the Fund's Board of Directors
believes accurately reflects fair value. Judgment plays a
greater role in valuing lower rated debt securities than with
respect to securities for which more external sources of
quotations and last sale information are available.
Congressional Action. New and proposed laws may have
an impact on the market for lower rated debt securities. T. Rowe
Price is unable at this time to predict what effect, if any, any
such legislation may have on the market for lower rated debt
securities.
Taxation. Special tax considerations are associated
with investing in lower rated debt securities structured as zero
coupon or pay-in-kind securities. The Fund accrues income on
these securities prior to the receipt of cash payments. The Fund
must distribute substantially all of its income to its
shareholders to qualify for pass-through treatment under the tax
laws and may, therefore, have to dispose of its portfolio
securities to satisfy distribution requirements.
T. Rowe Price New Income Fund, Inc. seeks the highest
level of income over time consistent with the preservation of
capital through investment primarily in marketable debt
securities. The Fund invests in long, intermediate and short-
term debt securities. The Fund has no maturity restrictions, but
the average portfolio maturity is generally expected to be
between four and 15 years although it may vary significantly. At
least 80% of the Fund's total assets will be invested in income-
producing, investment-grade instruments, including (but not
limited to) U.S. Government and agency obligations, mortgage-
backed securities, corporate debt securities, asset-backed
securities, bank obligations, CMO's, commercial paper, foreign
securities, and others. The Fund will purchase securities rated
investment grade by at least one of the established public rating
agencies (e.g., AAA, AA, A, or BBB by Standard & Poor's
Corporation (S&P) or Aaa, Aa, A, or Baa by Moody's investors
Services, Inc. (Moody's)) or, if unrated, are of equivalent
investment quality as determined by the Fund's investment
manager, T. Rowe Price. Debt securities within the top two
credit categories comprise what are generally known as high-grade
bonds. Medium-grade bonds (e.g., BBB by S&P) are more
susceptible to adverse economic conditions or changing
circumstances than higher grade bonds. The Fund may invest up to
5% of net assets in securities rated at the time of purchase
within T. Rowe Price top four credit categories without regard to
the public agency ratings. Without regard to quality, the Fund
may invest up to 25% of its total assets (not including cash) in
preferred and common stocks and convertible securities,
convertible into or which carry warrants for common stocks or
other equity securities. The Fund may also invest up to 20% of
PAGE 72
its net assets in non-U.S. dollar-denominated fixed income
securities.
Spectrum Growth Fund
T. Rowe Price Growth & Income Fund, Inc. seeks long-
term capital growth, a reasonable level of current income, and
increasing future income through investments primarily in
dividend-paying stocks with prospects for appreciation and
increasing dividends. The Fund's assets are invested primarily
in common stocks of companies whose earnings are expected by T.
Rowe Price to grow at a rate in excess of that of common stocks
in general and are adequate to support a growing dividend. To
further its objectives, the Fund may also purchase common stocks
which do not provide current income, but which offer prospects
for capital appreciation and future income. Relative value
(based on a company's asset value or projected earnings growth),
dividend yield, and potential for dividend and earnings growth
are the predominant considerations in evaluating prospective Fund
holdings.
In seeking to achieve its investment objective, the
Fund may invest in companies which are believed to be undervalued
or out of favor in the eyes of the investment community. An
undervalued company is generally one where (1) the stock/bond
price is low in relation to the general market, industry
standards or a company's historical record based on an evaluation
of various financial measures such as earnings, cash flow, book
value and dividends; or (2) potential value exists because of a)
a company's assets, such as real estate, which are carried on a
company's books at lower than market value, or b) intangibles,
such as franchise value, a dominant market share in the industry
or a well-known brand name.
Although the Fund will invest primarily in U.S. common
stocks, it may also purchase other types of securities, for
example, foreign securities (25% of total assets), convertible
securities and warrants, when considered consistent with the
Fund's investment objectives and program. The Fund may also
engage in a variety of investment management practices, such as
buying and selling futures and options. The Fund's investments
in convertible securities, preferred stocks and debt securities
are limited to 30% of the Fund's total assets. The Fund's
investments in non-investment grade debt securities are limited
to 10% of total assets.
T. Rowe Price New Era Fund, Inc. seeks long-term
capital appreciation by investing primarily in common stocks of
companies that own or develop natural resources and other basic
PAGE 73
commodities, as well as through investment in stocks of selected,
non-resource growth companies. Current income is not a factor in
the selection of stocks for investment by the Fund. The Fund
invests in a diversified group of companies whose earnings and/or
value of tangible assets are expected to grow faster than the
rate of inflation over the long term. T. Rowe Price believes the
most attractive opportunities which satisfy the Fund's objective
are in companies which own or develop natural resources and in
companies where management has the flexibility to adjust prices
or the ability to control operating costs. The percentage of the
Fund's assets invested in natural resource and related businesses
versus the percentage invested in non-resource companies may vary
greatly depending upon economic and monetary conditions and the
outlook for inflation. The earnings of natural resource
companies may be expected to follow irregular patterns, because
these companies are particularly influenced by the forces of
nature and international politics. Companies which own or
develop real estate might also be subject to irregular
fluctuations of earnings, because these companies are affected by
changes in the availability of money, interest rates, and other
factors.
Although the Fund will invest primarily in U.S. common
stocks, it may also purchase other types of securities, for
example, foreign securities (35% of total assets), convertible
securities and warrants, when considered consistent with the
Fund's investment objective and program. The Fund may also
engage in a variety of investment management practices, such as
buying and selling futures and options. The Fund's investments
in non-investment grade debt securities are limited to 10% of
total assets.
T. Rowe Price Growth Stock Fund, Inc. seeks long-term
growth of capital and increasing dividend income through
investment primarily in common stocks of well-established growth
companies. The fund will invest primarily in the common stocks
of a diversified group of growth companies. A growth company is
defined as one which: (1) has demonstrated historical growth of
earnings faster than the growth of inflation and the economy in
general; and (2) has indications of being able to continue this
growth pattern in the future. While current dividend income is
not a prerequisite in the selection of a growth company, the
companies in which the Fund will invest normally have a record of
paying dividends and are generally expected to increase the
amounts of such dividends in future years as earnings increase.
Although the Fund will invest primarily in U.S. common
stocks, it may also purchase other types of securities, for
example, foreign securities (30% of total assets), convertible
securities and warrants, when considered consistent with the
Fund's investment objectives and program. The Fund may also
engage in a variety of investment management practices, such as
buying and selling futures and options.
PAGE 74
T. Rowe Price New Horizons Fund, Inc. seeks long-term
growth of capital through investment primarily in common stocks
of small, rapidly growing companies. The fund will invest
primarily in a diversified group of small, emerging growth
companies. It seeks to invest early in the corporate life cycle
and before a company becomes widely-recognized by the investment
community. The Fund may also invest in companies which offer the
possibility of accelerating earnings growth because of
rejuvenated management, new products, or structural changes in
the economy. Current income is not a factor in the selection of
stocks.
Investors should realize that the very nature of
investing in small companies involves greater risk than is
customarily associated with more established companies. The Fund
is designed for long-term investors who are willing to accept
greater investment risks in search of substantial long-term
rewards. Small companies often have limited product lines,
markets, or financial resources, and they may be dependent upon a
small group of inexperienced managers. The securities of small
companies may have limited marketability and may be subject to
more abrupt or erratic market movements than securities of larger
companies or the market averages in general. However, small
companies may offer greater opportunities for capital
appreciation than larger, more established companies. In
addition, small companies are often overlooked by the investment
community. Therefore, these securities may be undervalued and
provide the potential for significant capital appreciation.
Although the Fund will invest primarily in U.S. common
stocks, it may also purchase other types of securities, for
example, foreign securities (10% of total assets), convertible
securities and warrants, when considered consistent with the
Fund's investment objective and program. The Fund may also
engage in a variety of investment management practices, such as
buying and selling futures and options.
Spectrum International Fund
International Discovery Fund. This fund's objective is
long-term growth of capital through investments primarily in
common stocks of rapidly growing, small to medium-sized non-U.S.
companies. Such companies may be found in both developed and
emerging markets. Traditionally, they are more dynamic and offer
greater growth potential than larger companies, but they are
often overlooked or undervalued by investors. Smaller companies
are generally riskier than their larger counterparts because they
may have limited product lines, capital, and managerial
resources. Their securities may trade less frequently and with
greater price swings.
PAGE 75
European Stock Fund. The fund's objective is long-term
growth of capital through investments primarily in common stocks
of both large and small European companies. Current income is a
secondary objective. The fund seeks to take advantage of
opportunities arising from such trends as privatization, the
reduction of trade barriers, and the potential growth of the
emerging economies of Eastern Europe. Normally, at least five
countries will be represented in the portfolio, and investments
may be made in any of the countries listed below, as well as
others as their markets develop.
Primary Emphasis: France, Germany, Netherlands, Italy,
Spain, Sweden, Switzerland, United Kingdom.
Others: Austria, Belgium, Denmark, Finland, Ireland, Luxembourg,
Norway, Portugal, Czech Republic, Greece, Hungary, Poland,
Slovakia, Turkey, Russia.
New Asia Fund. The fund's objective is long-term growth
of capital through investment in large and small companies
domiciled or with primary operations in Asia, excluding Japan.
The fund may also invest in Pacific Rim countries such as
Australia and New Zealand.
Countries in which the fund may invest include those in
the following list as well as others in the region, such as China
and Pakistan, as their markets become more accessible.
Investments will represent a minimum of five countries:
Australia, Hong Kong, Indonesia, India, Malaysia, New Zealand,
Philippines, Singapore, South Korea, Taiwan,and Thailand.
Economic growth in the Southeast Asian economies has
outstripped that in both Europe and Japan in recent years, and
the region's rising prosperity has been reflected in periods of
strong investment returns.
Japan Fund. This fund's objective is long-term growth
of capital through investments in common stocks of large and
small companies domiciled or with primary operations in Japan.
Assets will normally be invested across a wide range of
industries and companies (both small and large). While a
single-country fund may normally be considered more risky than a
multi-country fund, Japan has a highly developed and diverse
economy which accounts for approximately 17% of the world's
output.
Investors should be aware that the U.S. dollar has
fallen in value against the Japanese yen for many years,
increasing returns on Japanese investments for U.S. investors.
There is no assurance this currency trend will continue, and its
reversal would adversely affect the fund's total return.
Emerging Markets Stock Fund. The fund's objective is
long-term growth of capital through investment primarily in
PAGE 76
common stocks of large and small companies domiciled, or with
primary operations, in emerging markets. An emerging market
includes any country defined as emerging or developing by the
International Bank for Reconstruction and Development (World
Bank), International Finance Corporation, or the United Nations.
The fund's investments are expected to be diversified
geographically across emerging markets in Latin America, Asia,
Europe, Africa, and Mid East.
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,
Mauritius, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan,
Thailand.
Latin America: Argentina, Belize, Brazil, Chile, Colombia,
Mexico, Peru, Venezuela.
Europe: Austria, Czech Republic, Estonia, Greece, Hungary,
Latvia, Lithuania, Poland, Portugal, Russia, Slovakia, Turkey,
Africa.
The Middle East: Botswana, Egypt, Israel, Jordan, Morocco,
Nigeria, South Aftica, Tunisia, Zimbabwe.
Many emerging countries are experiencing substantial
economic and political restructurings, and their developing
financial markets offer the potential for significant capital
appreciation. Many of these countries are moving from one-party
rule to a multi-party democracy; from agrarian to industrialized
economies; and from nationalized to free market, privatized
industries. These transitions are proceeding smoothly in some
markets but not in others. There is no guarantee favorable trends
will continue. Companies in emerging markets that successfully
navigate these changes offer investors the prospect for earnings
growth more rapid than that typically generated by companies in
more mature, developed markets. Investors in this fund, however,
should be comfortable with the risks of international investing
and be prepared for substantial share price volatility.
Latin America Fund. The fund's objective is long-term
growth of capital through investment primarily in common stocks
of companies domiciled, or with primary operations, in Latin
America. Initially the fund will focus on Mexico, Brazil, Chile,
Argentina, and Venezuela, and the portfolio is normally expected
to invest in at least four countries. Other countries will be
added as opportunities arise and conditions permit.
The Latin America Fund is registered as
"non-diversified." This means 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.
PAGE 77
The fund expects to 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, but their
stocks could be adversely affected if trends favoring development
were to be reversed.
The Latin American countries in general have less
developed economies than other regions in which Price-Fleming
invests and may continue to be subject to the effects of
unpredictable political and economic conditions. A number of
countries have legacies of political instability, hyperinflation,
and currency devaluations versus the dollar (which would
adversely affect returns to U.S. investors).
Emerging Markets Bond Fund. The fund's objective is to
provide high income and capital appreciation. The fund invests at
least 65% (and potentially all) of its total assets in the
government and corporate debt securities of emerging nations.
Since these countries are less developed and their bonds carry a
greater risk of default, such bonds are typically
below-investment-grade and are considered junk bonds in the U.S.
The fund may invest in the lowest-rated bonds,
including those in default. While these investments may offer
significantly greater total returns than higher-quality bonds of
developed foreign markets, they entail a higher degree of risk
and are subject to sharp price declines.
There are no maturity restrictions on the fund. Its
weighted average maturity normally ranges between 5 and 10 years,
but may vary substantially because of market conditions. Under
normal circumstances, most of the fund's total assets are
expected to be denominated in U.S. dollars, and the fund will not
usually hedge foreign currency holdings back to U.S. dollar.
Currency fluctuations can have a significant impact on the value
of the fund's holdings.
Income, Growth, and International Funds
T. Rowe Price Prime Reserve Fund, Inc. is a money
market fund which maintain a stable share price of $1.00. This
policy has been maintained since its inception; however, the
$1.00 price is not guaranteed or insured by the U.S. government,
nor is its yield fixed. The Fund generally purchases securities
which mature in 13 months or less, although the Fund may purchase
U.S. government securities with a maturity of up to 25 months.
The dollar-weighted average maturity of the Fund will not exceed
90 days.
The objectives of the Fund are preservation of capital,
liquidity, and, consistent with these objectives, the highest
possible current income through investments primarily in high-
PAGE 78
quality money market securities. To achieve its objectives, the
Fund invests in a diversified portfolio of domestic and foreign
U.S. dollar-denominated money market securities rated within the
two highest credit categories assigned by established rating
agencies or, if not rated, of equivalent investment quality as
determined by the Fund's investment manager, T. Rowe Price.
The Fund will invest at least 95% of its total assets
in prime money market instruments--that is, securities which are
rated within the highest credit category assigned by at least two
established rating agencies (or one rating agency if the security
is rated by only one, or, if not rated, T. Rowe Price's
equivalent). A security is considered rated if the security
itself, the issuer, or a comparable security of the issuer is
rated. T. Rowe Price subjects all securities eligible for
investment to its own credit analysis and considers all Fund's
securities may have adjustable rates of interest with periodic
demand features.
Income and International Funds
T. Rowe Price International Bond Fund seeks a high
level of current income and capital appreciation by investing in
a diversified portfolio of high-quality nondollar-denominated,
government and corporate bonds outside the U.S. The Fund also
seeks to moderate price fluctuation by actively managing its
maturity structure and currency exposure.
The Fund will invest primarily (at least 65% of assets)
in debt securities that are considered high quality at the time
of purchase. The Fund may also invest up to 20% of its total
assets in below investment grade, high-risk ("junk") bonds,
including bonds in default or those which have received the
lowest rating.
Rowe Price-Fleming International, Inc. ("Price-
Fleming"), the Fund's investment manager, will base its
investment decisions on fundamental market attractiveness,
currency trends, local market factors and credit quality. The
Fund will generally invest in countries where the combination of
fixed income market returns and currency exchange rate movements
is attractive, or, if the currency trend is unfavorable, where
the currency risk can be minimized through hedging.
Although the fund expects to maintain an intermediate
to long weighted average maturity, it has no maturity
restrictions on the overall portfolio or on individual
securities. Normally, the fund does not hedge its foreign
currency exposure back to the dollar, nor involve more than 50%
of total assets in cross hedging transactions. Therefore, changes
in foreign interest rates and currency exchange rates are likely
to have a significant impact on total return and the market value
PAGE 79
of portfolio securities. Such changes provide greater
opportunities for capital gains and greater risks of capital
loss. Price-Fleming attempts to reduce these risks through
diversification among foreign securities and active management of
maturities and currency exposures.
The Fund will normally not hedge its foreign currency
exposure back to the dollar and will normally have no more than
50% of the value of its total assets involved in cross hedging
transactions. Therefore, its total return, and, in particular,
the principal value of its foreign-currency-denominated debt
securities, is likely to be significantly affected by changes in
foreign interest rate levels and foreign currency exchange rates.
These changes provide greater opportunity for capital gains as
well as greater risks of capital loss. Exchange rate movements
can be large and endure for extended periods of time. Price-
Fleming will attempt to reduce the risks associated with
investments in international fixed income securities through
portfolio diversification and active management of the Fund's
maturity structure and currency exposure.
Because Price-Fleming currently expects to invest a
large percentage of assets in foreign government securities in
order to maintain liquidity and to reduce credit risk, the Fund
has registered as a "non-diversified" investment company. The
Fund may, for temporary defensive purposes, invest, without
limitation, in U.S. dollar-denominated debt securities.
Income and Growth Funds
T. Rowe Price Equity Income Fund seeks to provide
substantial dividend income as well as long-term capital
appreciation by investing primarily in dividend-paying common
stocks of established companies. In pursuing its objective, the
Fund emphasizes companies with favorable prospects for increasing
dividend income, and secondarily, capital appreciation. Over
time, the income component (dividends and interest earned) of the
Fund's investments is expected to be a significant contributor to
the Fund's total return. The Fund's income yield is expected to
be significantly above that of the Standard & Poor's 500 Stock
Index.
PAGE 80
To achieve its objective, the Fund will, under normal
circumstances, invest at least 65% of its assets in income-
producing common stocks, whose prospectus for dividend growth and
capital appreciation are considered favorable by T. Rowe Price.
To enhance capital appreciation potential, the Fund also uses a
value-oriented approach, which means it invests in stocks it
believes are currently undervalued. The Fund's investments will
generally be made in companies which share some of the following
characteristics:
o established operating histories;
o above-average current dividend yields relative to
the S&P 500;
o low price/earnings ratios relative to the S&P 500;
o sound balance sheets and other financial
characteristics; and
o low stock price relative to company's underlying
value as measured by assets, earnings, cash flow or
business franchises.
The Fund may also invest its assets in fixed income
securities (corporate, government, and municipal bonds of various
maturities). The Fund would invest in municipal bonds when the
expected total return from such bonds appears to exceed the total
returns obtainable from corporate or government bonds of similar
credit quality. Interest earned on municipal bonds purchased by
the Fund will be taxable income to Fund shareholders. Although
the Fund will invest primarily in U.S. common stocks, it may also
purchase other types of securities, for example, foreign
securities (25% of total assets), convertible securities and
warrants, when considered consistent with the Fund's investment
objective and program. The Fund may also engage in a variety of
investment management practices, such as buying and selling
futures and options.
Growth and International Funds
T. Rowe Price International Stock Fund seeks long-term
growth of capital through investments primarily in common stocks
of established, non-U.S. companies.
The Fund intends to diversify investments broadly among
countries and to normally have at least three different countries
represented in the portfolio. The Fund may invest in countries
of the Far East and Europe as well as Africa, Australia, Canada,
and other areas (including newly industrialized and emerging
countries).
The Fund expects to invest substantially all of its
assets in common stocks. However, the Fund may also invest in a
variety of other equity related securities, such as preferred
stocks, warrants and convertible securities, as well as corporate
and governmental debt securities, when considered consistent with
PAGE 81
the Fund's investment objective and program. The Fund may also
engage in a variety of investment management practices, such as
buying and selling futures and options. The Fund's investments
in securities other than common stocks is, under normal market
conditions, limited to no more than 35% of total assets.
However, for temporary defensive purposes, the Fund may invest
all or a significant portion of its assets in U.S. government and
corporate debt obligations. The Fund will not purchase any debt
security which at the time of purchase is rated below investment
grade. This would not prevent the Fund from retaining a security
downgraded to below investment grade after purchase.
SPECIAL CONSIDERATIONS
Prospective investors should consider that certain
Underlying Price Funds (the "Price Funds") may engage in the
following:
(1) Foreign Currency Transactions. Enter into foreign
currency transactions. Since investments in
foreign companies will usually involve currencies
of foreign countries, and the International Bond
and International Stock Funds, as well as certain
other Price Funds, will hold funds in bank
deposits in foreign custodians during the
completion of investment programs, the value of
the assets of the Price Funds as measured in U.S.
dollars may be affected favorably or unfavorably
by changes in foreign currency exchange rates and
exchange control regulations, and these Price
Funds may incur costs in connection with
conversions between various currencies. The Price
Funds will generally conduct their foreign
currency exchange transactions either on a spot
(i.e., cash) basis at the prevailing rate in the
foreign currency exchange market, or through
entering into forward contracts to purchase or
sell foreign currencies. The Price Funds will
generally not enter into a forward contract with a
term of greater than one year. Although foreign
currency transactions will be used primarily to
protect the Price Funds from adverse currency
movements, they also involve the risk that
anticipated currency movements will not be
accurately predicted.
(2) Lending Portfolio Securities. Lend portfolio
securities for the purpose of realizing additional
income. The Price Funds may lend securities to
broker-dealers or institutional investors. Any
such loan will be continuously secured by
PAGE 82
collateral at least equal to the value of the
security loaned. Such lending could result in
delays in receiving additional collateral or in
the recovery of the securities or possible loss of
rights in the collateral should the borrower fail
financially.
(3) Futures Contracts and Options (types of
potentially high-risk derivatives). Enter into
interest rate, stock index or currency futures
contracts. Certain Price Funds may enter into
such contracts (or options thereon), or a
combination of such contracts, (1) as a hedge
against changes in prevailing levels of interest
rates, price movements or currency exchange rates
in the Price Funds' portfolios in order to
establish more definitely the effective return on
securities or currencies held or intended to be
acquired by such Price Funds; (2) as an efficient
means of adjusting the Price Funds' exposure to
the markets; or (3) to adjust the duration of the
Price Funds' portfolios. Initial margin deposits
and premiums on options used for non-hedging
purposes will not equal more than 5% of each Price
Fund's net asset value. Certain Price Funds may
also purchase and sell call and put options on
securities, currencies and financial and stock
indices. The aggregate market value of each
Fund's currencies or portfolio securities covering
call or put options will not exceed 25% of a
Fund's net assets. Futures contracts and options
can be highly volatile and could result in
reduction of a Price Fund's total return and a
Price Fund's attempt to use such investments for
hedging purposes may not be successful.
(4) High-Yield/High-Risk Securities. While investments
in high-yield, lower-quality securities offer the
opportunity for substantial income and capital
appreciation, there are significant risks
associated with such investments, including, (1)
greater credit risk -- companies and governments
issuing lower rated bonds are not as strong
financially as those with higher credit ratings
and their bonds are often viewed as speculative
investments. Such issuers are more vulnerable to
real or perceived business setbacks and to changes
in the economy, such as a recession, that might
impair their ability to make timely interest and
principal payments. Certain less developed
governments have in the past defaulted on payment
of interest and principal on debt they have
issued. As a result, your fund manager relies
PAGE 83
heavily on proprietary Price-Fleming research when
selecting these investments; (2) reduced market
liquidity -- high-yielding emerging market bonds
are generally less "liquid" than higher-quality
bonds issued by companies and governments in
developed countries. Consequently large purchases
or sales of certain high-yield, emerging market
debt issues may cause significant changes in their
prices. Because many of these bonds do not trade
frequently, when they do trade, their price may be
substantially higher or lower than had been
expected. A lack of liquidity also means that
judgment may play a bigger role when seeking to
establish the fair value of the securities; and
(3) other factors -- the major factor influencing
prices of high-quality bonds is changes in
interest rate levels; but this is only one of
several factors affecting prices of lower-quality
bonds. Because the credit quality of the issuer is
lower, such bonds are more sensitive to
developments affecting the issuer's underlying
fundamentals, such as changes in financial
condition, or a given country's economy in
general. In addition, the entire bond market in an
emerging market can experience sudden and sharp
price swings due to a variety of factors,
including changes in economic forecasts, stock
market activity, large or sustained sales by such
investors, a high-profile default, a political
upheaval of some kind or just a change in the
market's psychology. This type of volatility is
usually associated more with stocks than bonds,
but investors in lower-quality bonds should also
anticipate it. Since mutual funds can be a major
source of demand in certain markets, substantial
cash flows into and out of these funds can affect
high-yield bond prices. If, for example, a
significant number of funds were to sell bonds to
meet shareholder redemptions, both bond prices and
a fund's share price could fall more than
underlying fundamentals might justify.
Risk Factors of Foreign Investing
There are special risks when investing in the
underlying international funds. Some risks are inherent in any
international mutual fund while others relate more to the
countries in which the funds will invest. Many of the risks are
more pronounced for investments in developing or emerging
countries, such as many of the countries of Southeast Asia, Latin
America, Eastern Europe 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
PAGE 84
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 international
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 may 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 1992, there were two military coup attempts in
Venezuela and in 1992 the President of Brazil was impeached. In
1994-1995, the Mexican peso plunged in value setting off a severe
crisis in the Mexican economy. 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 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 international funds will
invest 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 funds' assets denominated in that currency.
Such changes will also affect the funds' income. Generally, when
a given currency appreciates against the dollar (the dollar
weakens) the value of the funds' securities denominated in that
currency will rise. When a given currency depreciates against
the dollar (the dollar strengthens) the value of the funds'
PAGE 85
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 may limit and at times preclude investment in
certain of such countries and may increase the cost and expenses
of the international funds. Investments by foreign investors are
subject to a variety of restrictions in many developing
countries. These restrictions may take the form of prior
governmental approval, limits on the amount or type of securities
held by foreigners, and limits on the types of companies in which
foreigners may invest. Additional or different restrictions may
be imposed at any time by these or other countries in which the
international 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.
Market Characteristics. It is contemplated that most
foreign securities, other than Latin American securities, will be
purchased in over-the-counter markets or on stock 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. Foreign stock markets are
generally not as developed or efficient as, and may be more
volatile than, those in the United States. While growing in
volume, they usually have substantially less volume than U.S.
markets and the international funds' portfolio securities may be
less liquid and subject to more rapid and erratic price movements
than securities of comparable U.S. companies. Equity securities
may trade at price/earnings multiples higher than comparable
United States securities and such levels may not be sustainable.
Fixed commissions on foreign stock exchanges are generally higher
than negotiated commissions on United States exchanges, although
the international funds will endeavor to achieve the most
favorable net results on their portfolio transactions. There is
generally less government supervision and regulation of foreign
stock 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 may 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
a fund.
PAGE 86
Investment Funds. The international funds may invest
in investment funds which have been authorized by the governments
of certain countries specifically to permit foreign investment in
securities of companies listed and traded on the stock exchanges
in these respective countries. The international funds'
investment in these funds is subject to the provisions of the
1940 Act. If the international funds invest in such investment
funds, the international funds' shareholders will bear not only
their proportionate share of the expenses of the international
funds (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 may be 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 international funds' foreign portfolio securities may be
subject to foreign withholding taxes, thus reducing the net
amount of income available for distribution to the international
funds' shareholders. A shareholder otherwise subject to United
States federal income taxes may, subject to certain limitations,
be entitled to claim a credit or deduction for U.S. federal
income tax purposes for his or her proportionate share of such
foreign taxes paid by the international funds. (See "Tax
Status," page __.)
Costs. Investors should understand that the expense
ratios of the international funds can be expected to be higher
than investment companies investing in domestic securities since
the cost of maintaining the custody of foreign securities and the
rate of advisory fees paid by the international funds are higher.
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. Some of the
smaller companies in which the international funds will invest
may be in major foreign markets; others may be leading companies
PAGE 87
in emerging countries outside the major foreign markets.
Securities analysts generally do not follow such securities,
which are seldom held outside of their respective countries and
which may have prospects for long-term investment returns
superior to the securities of well-established and well-known
companies. Direct investment in such securities may be difficult
for United States investors because, among other things,
information relating to such securities is often not readily
available. Of course, there are also risks associated with such
investments, and there is no assurance that such prospects will
be realized.
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 international funds,
political or social instability, or diplomatic developments which
could affect investments by U.S. persons in those countries.
International Stock, International Discovery, European Stock, and
Emerging Markets Stock Funds
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 the 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. 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 a fund's assets invested in
such countries and these authorities may not qualify as a foreign
custodian under the Investment Company Act of 1940 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. Each 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. To the extent
PAGE 88
any securities issued by companies in Eastern Europe and Russia
are considered illiquid, each fund will be required to include
such securities within its 15% restriction on investing in
illiquid securities.
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 invests 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.
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. Japan's principal
export markets are the U.S., Canada, the United Kingdom, the
Federal Republic of Germany, Australia, Korea, Taiwan, Hong Kong
and the People's Republic of China. The principal sources of its
imports are the U.S., Southeast Asia and the Middle East.
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., where the trade imbalance is the greatest.
It is possible trade sanctions or other protectionist measures
could impact Japan adversely in both the short term and long
term.
Latin America
The Latin America Fund's concentration of its
investments in Latin America means the fund will be more
PAGE 89
dependent on the investment considerations described above and
can be expected to be more volatile than a fund which is more
broadly diversified geographically. To the extent any of the
other funds also invests in Latin America, such investments will
be subject to these same factors. Additional factors relating to
Latin America include the following:
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
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 late
1994 the value of the Mexican peso lost more than one-third of
its value relative to the dollar. Certain Latin American
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.
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.
In addition to the investments described in the fund's
prospectus, the fund may invest in the following:
Types of Securities
PAGE 90
Hybrid Instruments
Hybrid Instruments (a type of potentially high risk
derivative) have recently been developed and combine the elements
of futures contracts or options with those of debt, preferred
equity or a depository instrument (hereinafter "Hybrid
Instruments"). Often these Hybrid Instruments are indexed to the
price of a commodity, particular currency, or a domestic or
foreign debt or equity securities index. 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.
The risks of investing in Hybrid Instruments reflect a
combination of the risks from investing in securities, options,
futures and currencies, including volatility and lack of
liquidity. Reference is made to the discussion of futures,
options, and forward contracts herein for a discussion of these
risks. Further, the prices of the Hybrid Instrument and the
related commodity or currency 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). In addition, because the purchase and sale of Hybrid
Instruments could take place in an over-the-counter market or in
a private transaction between the fund and the seller of the
Hybrid Instrument, the creditworthiness of the contra party to
the transaction would be a risk factor which the fund would have
to consider. 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
PAGE 91
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 are 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 (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 invest in warrants. Warrants are pure
speculation in that they 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 equity
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.
PAGE 92
There are, of course, other types of securities that
are, or may become available, which are similar to the foregoing
and the fund may invest in these securities.
FOR MORE INFORMATION ABOUT AN UNDERLYING PRICE FUND, CALL
1-800-638-5660 (1-410-547-2308).
INVESTMENT RESTRICTIONS
Fundamental policies of the Funds may not be changed
without the approval of the lesser of (1) 67% of the Funds'
shares present at a meeting of shareholders if the holders of
more than 50% of the outstanding shares are present in person or
by proxy or (2) more than 50% of the Funds' outstanding shares.
Other restrictions, in the form of operating policies, are
subject to change by Spectrum Fund's Board of Directors without
shareholder approval. Any investment restriction which involves
a maximum percentage of securities or assets shall not be
considered to be violated unless an excess over the percentage
occurs immediately after, and is caused by, an acquisition of
securities or assets of, or borrowings by, a Fund.
Fundamental Policies
As a matter of fundamental policy, each Fund may not:
(1) Borrowing. Borrow money, except each Fund may
borrow from banks or other Price Funds as a
temporary measure for extraordinary or emergency
purposes, and then only in amounts not exceeding
30% of its total assets valued at market. Each
Fund will not borrow in order to increase income
(leveraging), but only to facilitate redemption
requests which might otherwise require untimely
disposition of portfolio securities (see page __
of the prospectus). Interest paid on any such
borrowings will reduce net investment income;
(2) Commodities
(a) Commodities. Spectrum Growth and Spectrum
Income Funds may not purchase or sell commodities
or commodity or futures contracts.
(b) Commodities. Spectrum International may not
purchase or sell physical commodities; except that
it may enter into futures contracts and options
thereon.
PAGE 93
(3) Loans. Make loans, although the Funds may
purchase money market securities and enter into
repurchase agreements;
(4) Margin. Purchase securities on margin, except for
use of short-term credit necessary for clearance
of purchases of portfolio securities;
(5) Mortgaging. Mortgage, pledge, hypothecate or, in
any manner, transfer any security owned by the
Funds as security for indebtedness except as may
be necessary in connection with permissible
borrowings, in which event such mortgaging,
pledging, or hypothecating may not exceed 30% of
each Fund's total assets, valued at market;
(6) Real Estate. Purchase or sell real estate,
including limited partnership interests therein,
unless acquired as a result of ownership of
securities or other instruments (although each
Fund may purchase money market securities secured
by real estate or interests therein, or issued by
companies or investment trusts which invest in
real estate or interests therein);
(7) Senior Securities. Issue senior securities;
(8) Short Sales. Effect short sales of securities; or
(9) Underwriting. Underwrite securities issued by
other persons, except to the extent the Funds may
be deemed to be underwriters within the meaning of
the Securities Act of 1933 in connection with the
purchase and sale of their portfolio securities in
the ordinary course of pursuing their investment
programs.
Operating Policies
As a matter of operating policy, each Fund may not:
(1) Control of Portfolio Companies. Invest in
companies for the purpose of exercising management
or control;
(2) Illiquid Securities. Purchase illiquid securities
if, as a result, more than 15% of its net assets
would be invested in such securities provided that
each Fund will not invest more than 10% of its
total assets in restricted securities;
PAGE 94
(3) Oil and Gas Programs. Purchase participations or
other direct interests or enter into leases with
respect to, oil, gas, other mineral exploration or
development programs;
(4) Options. Invest in options;
(5) Ownership of Portfolio Securities by Officers and
Directors. Purchase or retain the securities of
any issuer if, to the knowledge of the Funds'
management, those officers and directors of
Spectrum Fund, and of its investment manager, who
each owns beneficially more than .5% of the
outstanding securities of such issuer, together
own beneficially more than 5% of such securities;
(6) Futures. Spectrum Income and Spectrum Growth Funds
may not invest in futures. Spectrum International
Fund, though it has no intention at this time of
investing in futures, reserves the right to do so
in the future.
(7) Forward Currency Contracts. None of the funds has
the intention of investing in forward currency
contracts at this time. However, they all reserve
the right to do so at some point in the future.
(8) Unseasoned Issuers. Purchase the securities of
any issuer (other than obligations issued or
guaranteed by the U.S. government or any foreign
government, their agencies or instrumentalities or
shares of Price mutual funds) if, as a result,
more than 5% of the value of each Fund's total
assets would be invested in the securities of
issuers which at the time of purchase had been in
operation for less than three years, including
predecessors and unconditional guarantors; or
(9) Warrants. Invest in warrants.
Pursuant to an Exemptive Order issued by the Securities
and Exchange Commission (Investment Company Act Release No. IC-
21425, October 18, 1995): (i) there is no limit on the amount
the Funds may own of the total outstanding voting securities of
registered investment companies which are members of the T. Rowe
Price family of funds, (ii) each Fund, in accordance with its
prospectus, may invest more than 5% of its assets in any one such
investment company, and (iii) each Fund may invest more than 10%
of its assets, collectively, in registered investment companies
which are members of the T. Rowe Price family of funds.
Because of their investment objectives and policies,
the Funds will each concentrate more than 25% of their assets in
PAGE 95
the mutual fund industry. In accordance with the Funds'
investment programs set forth in the prospectus, each of the
Funds may invest more than 25% of its assets in certain of the
Underlying Price Funds. However, each of the Underlying Price
Funds in which each Fund will invest (other than New Income Fund,
Short-Term Bond Fund, High Yield Fund, Latin America Fund and
International Bond Fund) will not concentrate more than 25% of
its total assets in any one industry. The Latin America Fund
expects to make substantial investments in the telephone
companies of various Latin American countries (at times more than
25% of total assets). The New Income Fund and Short-Term Bond
Fund will, under certain conditions, invest up to 50% of their
assets in any one of the following industries: gas, utility, gas
transmission utility, electric utility, telephone utility and
petroleum. The Short-Term Bond Fund, International Bond Fund and
High Yield Fund will each normally concentrate 25% or more of
their assets in the securities of the banking industry when their
position in issues maturing in one year or less equals 35% or
more of their total assets.
Redemptions in Kind
In the unlikely event a shareholder were to receive an
in kind redemption of portfolio securities of either Fund,
brokerage fees could be incurred by the shareholder in subsequent
sale of such securities.
Issuance of Fund Shares for Securities
Transactions involving issuance of a fund's shares for
securities or assets other than cash will be limited to (1) bona
fide reorganizations; (2) statutory mergers; or (3) other
acquisitions of portfolio securities that: (a) meet the
investment objectives and policies of the 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 market; and (d) are not illiquid.
MANAGEMENT OF THE FUNDS
The management of each Fund's business and affairs is
the responsibility of the Board of Directors for Spectrum Fund.
In exercising their responsibilities, the Board, among other
things, will refer to the Special Servicing Agreements and
policies and guidelines included in an Application for an
Exemptive Order (and accompanying Notice and Order issued by the
Commission). A majority of Spectrum Fund's directors will be
non-interested persons as defined in Section 2(a)(19) of the 1940
Act. However, the interested directors and the officers of
PAGE 96
Spectrum Fund, T. Rowe Price and Rowe Price-Fleming also serve in
similar positions with most of the Underlying Price Funds. Thus,
if the interests of a Fund and the Underlying Price Funds were
ever to become divergent, it is possible that a conflict of
interest could arise and affect how this latter group of persons
fulfill their fiduciary duties to that Fund and the Underlying
Price Funds. The directors of Spectrum Fund believe they have
structured each Fund to avoid these concerns. However,
conceivably, a situation could occur where proper action for
Spectrum Fund or the Growth Fund, Income Fund, or International
Fund separately, could be adverse to the interests of an
Underlying Price Fund, or the reverse could occur. If such a
possibility arises, the directors and officers of the affected
funds and T. Rowe Price will carefully analyze the situation and
take all steps they believe reasonable to minimize and, where
possible, eliminate the potential conflict. Moreover,
limitations on aggregate investments in the Underlying Price
Funds and other restrictions have been adopted by Spectrum Fund
to minimize this possibility, and close and continuous monitoring
will be exercised to avoid, insofar as possible, these concerns.
The officers and directors of Spectrum 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, Spectrum Fund's directors who are
considered "interested persons" of T. Rowe Price, Rowe Price-
Fleming, or the Fund as defined under Section 2(a)(19) of the
Investment Company Act of 1940 are noted with an asterisk (*).
Mr. Riepe is referred to as an inside director by virtue of his
directorship and employment by T. Rowe Price.
*JAMES S. RIEPE, Chairman of the Board--Managing Director, T.
Rowe Price; Chairman of the Board, T. Rowe Price Services, Inc.,
T. Rowe Price Trust Company and T Rowe Price Investment Services,
Inc.; Director, Rhone-Poulenc Rorer, Inc.
JEFFREY H. DONAHUE, Director--Senior Vice President and Chief
Financial Officer of The Rouse Company, a full-service real
estate and development company, Columbia, Maryland; Address:
10275 Little Patuxent Parkway, Columbia, Maryland 21044
A. MACDONOUGH PLANT, Director--Partner, law firm of Stewart,
Plant & Blumenthal; (formerly until 4/91) Partner, law firm of
Semmes, Bowen & Semmes, Baltimore, Maryland; Address: Suite 910,
7 Seven St. Paul Street, Baltimore, Maryland 21202
PETER VAN DYKE, President--Managing Director, T. Rowe Price; Vice
President, Price-Fleming and T. Rowe Price Trust Company
STEPHEN W. BOESEL, Vice President--Managing Director, T. Rowe
Price
GEORGE J. COLLINS, Vice President--President, President, Chief
Executive Officer, and Managing Director, T. Rowe Price;
Director, Price-Fleming, T. Rowe Price Trust Company and T. Rowe
PAGE 97
Price Retirement Plan Services, Inc.; Chartered Investment
Counselor
JOHN R. FORD, Vice President--Vice President, Price-Fleming
HENRY H. HOPKINS, Vice President--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; Vice President, Price-Fleming and T. Rowe Price
Retirement Plan Services, Inc.
GEORGE A. MURNAGHAN, Vice President--Vice President, Price-
Fleming, T. Rowe Price, T. Rowe Price Trust Company, and T. Rowe
Price Investment Services, Inc.
EDMUND M. NOTZON, Vice President--Vice President, T. Rowe Price
and T. Rowe Price Trust Company; formerly, (1972-1989) charter
member of the U.S. Senior Executive Service and Director,
Analysis and Evaluation Division in the Office of Water
Regulations and Standards of the U.S. Environmental Protection
Agency
WILLIAM T. REYNOLDS, Vice President--Managing Director, T. Rowe
Price; Chartered Financial Analyst
BRIAN C. ROGERS, Vice President--Managing Director, T. Rowe
Price; Chartered Financial Analyst
CHARLES P. SMITH, Vice President--Managing Director, T. Rowe
Price; Vice President, Price-Fleming
M. DAVID TESTA, Vice President--Managing Director, T. Rowe Price;
Director, Equity Division; Chairman of the Board, Price-Fleming;
Director and Vice President, T. Rowe Price Trust Company;
Chartered Financial Analyst
MARTIN G. WADE, Vice President--President and Director, Price-
Fleming; Director, Robert Fleming Holdings Limited
DAVID J. L. WARREN, Vice President--Vice President, Price-Fleming
LENORA V. HORNUNG, Secretary--Vice President, T. Rowe Price
PATRICIA S. BUTCHER, Assistant Secretary--Assistant Vice
President, T. Rowe Price and T. Rowe Price Investment Services,
Inc.
CARMEN F. DEYESU, Treasurer--Vice President, T. Rowe Price, T.
Rowe Price Services, Inc., and T. Rowe Price Trust Company
DAVID S. MIDDLETON, Controller--Vice President, T. Rowe Price,
and T. Rowe Price Trust Company
J. JEFFREY LANG, Assistant Vice President--Assistant Vice
President, T. Rowe Price
INGRID I. VORDEMBERGE, Assistant Vice President--Employee, T.
Rowe Price
JUDITH B. WARD, Assistant Vice President--Employee, T. Rowe Price
COMPENSATION TABLE
The Funds do not pay pension or retirement benefits to
its officers or directors. Also, any director of a Fund who is
an officer or employee of T. Rowe Price does not receive any
remuneration from the Funds.
_________________________________________________________________
Total Compensation
PAGE 98
from Fund and
Name of Aggregate Fund Complex
Person, Compensation Paid to
Position from Fund(a) Directors(b)
_________________________________________________________________
Spectrum Income
Jeffrey H. Donahue, $7,210 $30,011
Director
A. MacDonough Plant, 7,210 29,750
Director
Spectrum Growth
Jeffrey H. Donahue, 8,840 30,011
Director
A. MacDonough Plant, 8,840 29,750
Director
(a) Amounts in this column are for the fiscal year January 1,
1995 to December 31, 1995.
(b) Amounts in this column included three funds at December 31,
1995.
The Fund's Executive Committee, comprised of Mr. Riepe and
Mr. Plant, have been authorized by the Board of Directors to
exercise all powers of the Board to manage Spectrum Fund in the
intervals between meetings of the Board, except the powers
prohibited by statute from being delegated.
Spectrum Fund's officers will receive no remuneration from
the Fund, but are paid by T. Rowe Price and Rowe Price-Fleming.
Spectrum Fund's officers and interested directors presently serve
as officers or interested directors of most of the Underlying
Price Funds. The Underlying Price Funds pay their disinterested
directors a director's fee plus a proportionate share of travel
and other expenses incurred in attending Board meetings.
PRINCIPAL HOLDERS OF SECURITIES
As of the date of the prospectus, the officers and directors
of Spectrum Fund, as a group, owned less than 1% of the
outstanding shares of the Fund.
As of October 31, 1996, no stockholder benefically owned
more than 5% of the outstanding shares of either Spectrum Income
Fund or Spectrum Growth Fund.
PAGE 99
As of November 15, 1996, no stockholders owned shares of the
Spectrum International Fund.
INVESTMENT MANAGEMENT SERVICES
The business of Spectrum Fund will be conducted by its
officers, directors, and investment manager in accordance with
policies and guidelines set up by Spectrum Fund's directors which
were included in the Exemptive Order issued by the Securities and
Exchange Commission (Investment Company Act Release No. IC-21425,
October 18, 1995).
Each Fund will operate at a zero expense ratio. To
accomplish this, the payment of each Fund's operational expenses
is subject to the Special Servicing Agreements described below as
well as certain undertakings made by T. Rowe Price or Price-
Fleming, under their respective Investment Management Agreements
with each Spectrum Fund. Fund expenses include: shareholder
servicing fees and expenses; custodian and accounting fees and
expenses; legal and auditing fees; expenses of preparing and
printing prospectuses and shareholder reports; registration fees
and expenses; proxy and annual meeting expenses, if any; and
directors' fees and expenses.
Special Servicing Agreements. One Special Servicing
Agreement ("Agreement") is between and among Spectrum Fund on
behalf of Spectrum Income and Spectrum Growth Funds, the
underlying funds, and T. Rowe Price. A second Special Servicing
Agreement is between and among Spectrum Fund, on behalf of
Spectrum International, the underlying funds, Price-Fleming, and
T. Rowe Price.
The Agreement provides that, if the Board of
Directors/Trustees of any Underlying Price Fund determines that
such Underlying Price Fund's share of the aggregate expenses of
Spectrum Fund is less than the estimated savings to such
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.
The Special Servicing Agreement also gives authority to
Spectrum Fund to utilize the Price name so long as (1) the
PAGE 100
Special Servicing Agreement is in effect, and (2) the assets of
the Growth Fund and the Income Fund are invested pursuant to each
Fund's objectives and policies in shares of the various
Underlying Price Funds (except for such cash or cash items as the
directors may determine to maintain from time to time to meet
current expenses and redemptions). The Special Servicing
Agreement provides that the Funds will utilize assets deposited
with the custodian of each Fund from the sale of each Fund's
shares to promptly purchase shares of the specified Underlying
Price Funds, and will undertake redemption or exchange of such
shares of the Underlying Price Funds in the manner provided by
the objectives and policies of each Fund.
Under the Investment Management Agreements with the Funds,
and the Special Servicing Agreement, T. Rowe Price and Price-
Fleming, respectively, have agreed to bear any expenses of
Spectrum Fund which exceed the estimated savings to each of the
Underlying Price Funds. Of course, shareholders of each Spectrum
Fund will still indirectly bear their fair and proportionate
share of the cost of operating the Underlying Price Funds in
which the Spectrum Fund invests because, Spectrum Fund, as a
shareholder of the Underlying Price Funds, will bear its
proportionate share of any fees and expenses paid by the
Underlying Price Funds. Spectrum Fund, as a shareholder of the
selected Underlying Price Funds, will benefit only from cost-
sharing reductions in proportion to its interest in such
Underlying Price Funds.
Services
Under the Management Agreement with each Fund, T. Rowe Price
provides each Fund with discretionary investment services.
Specifically, T. Rowe Price is responsible for supervising and
directing the investments of each Fund in accordance with each
Fund's investment objectives, program, and restrictions as
provided in their prospectus and this Statement of Additional
Information. T. Rowe Price and Price-Fleming are also
responsible for effecting all security transactions on behalf of
each Fund, including the negotiation of commissions and the
allocation of principal business and portfolio brokerage.
However, it should be understood that the Funds will invest their
assets almost exclusively in the shares of the Underlying Price
Funds and such investments will be made without the payment of
any commission or other sales charges. In addition to these
services, T. Rowe Price and Price-Fleming provide each Fund with
certain corporate administrative services, including:
maintaining Spectrum Fund's corporate existence, corporate
records, and registering and qualifying each Fund's shares under
federal and state laws; monitoring the financial, accounting, and
administrative functions of each Fund; maintaining liaison with
the agents employed by each Fund such as the custodian and
transfer agent; assisting each Fund in the coordination of such
agents' activities; and permitting T. Rowe Price and Price-
PAGE 101
Fleming employees to serve as officers, directors, and committee
members of each Fund without cost to the Fund.
T. Rowe Price and Price-Fleming have agreed not to be paid a
management fee for performing their services. However, T. Rowe
Price and Price-Fleming will receive management fees from
managing the Underlying Price Funds in which Spectrum Fund
invests.
Each Fund's Management Agreement also provides that T. Rowe
Price or 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.
Each Fund's Management Agreement provides that the Fund will
bear all expenses of its operations not specifically assumed by
T. Rowe Price or Price-Fleming. However, T. Rowe Price will
reimburse the Fund for certain expenses which in any year exceed
the limits prescribed by any state in which the Fund's shares are
qualified for sale. Presently, the most restrictive expense
ratio limitation imposed by any state is 2.5% of the first $30
million of the Fund's average daily net assets, 2% of the next
$70 million of such assets, and 1.5% of net assets in excess of
$100 million. For the purpose of determining whether the Fund is
entitled to reimbursement, the expenses of the Fund are
calculated on a monthly basis. If the Fund is entitled to
reimbursement, that month's management fee will be reduced or
postponed with any adjustment made after the end of the year.
Management Fees of Underlying Price Funds
Each Underlying Price Fund pays T. Rowe Price or 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 T. Rowe Price or Price-Fleming
on the first business day of the next succeeding calendar month
and is calculated as described below.
The monthly Group Fee ("Monthly Group Fee") is the sum of
the daily Group Fee accruals ("Daily Group Fee Accruals") for
each month. The Daily Group Fee Accrual for any particular day
is computed by multiplying the Price Funds' group fee accrual as
determined below ("Daily Price Funds' Group Fee Accrual") by the
ratio of the Fund's net assets for that day to the sum of the
aggregate net assets of the Price Funds for that day. The Daily
Price Funds' Group Fee Accrual for any particular day is
calculated by multiplying the fraction of one (1) over the number
of calendar days in the year by the annualized Daily Price Funds'
Group Fee Accrual for that day as determined in accordance with
the following schedule:
PAGE 102
Price Funds'
Annual Group Base Fee
Rate for Each Level of Assets
_________________________________
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
0.330% Next $10 billion
0.320% Next $10 billion
0.310% Next $16 billion
0.305% Thereafter
The Individual Fund Fees and total management fees of
the Underlying Price Funds are as follows:
Individual Fee Total
as a % of Fund Management
Fund Net Assets Fee Paid
______________________________________________________________
International Bond 0.35% 0.68%
International Stock 0.35 0.68
New Horizons 0.35 0.68
High Yield 0.30 0.63
Equity Income 0.25 0.58
Growth Stock 0.25 0.58
New Era 0.25 0.58
GNMA 0.15 0.48
Growth & Income 0.25 0.58
New Income 0.15 0.48
Short-Term Bond 0.10 0.43
Prime Reserve 0.05 0.38
Emerging Markets Bond 0.45 0.00(a)
International Discovery 0.75 1.08
Emerging Markets Stock 0.75 0.78(b)
PAGE 103
Japan Fund 0.50 0.83
New Asia 0.50 0.83
European Stock 0.50 0.83
Latin America 0.75 1.08
_________________________________________________________________
(a) Price-Fleming agreed to waive management fees and bear
certain expenses in accordance with an expense limitation
agreement in effect through December 31, 1996. Effective as of
December 31, 1996, Price-Fleming has agreed to extend this fund's
current expense limitation through December 31, 1998. Had Price-
Fleming not agreed to waive a portion of its management fees,
Emerging Markets Bond's total management fee paid would have been
0.78%.
(b) Price-Fleming agreed to waive management fees and bear
certain expenses in accordance with an expense limitation
agreement in effect through October 31, 1996. Effective October
31, 1996, Price-Fleming agreed to extend this fund's current
expense limitation through October 31, 1998. Had Price-Fleming
not agreed to waive a portion of its management fees, Emerging
Markets Stock's total management fee paid would have been 1.08%.
Based on combined Price Funds' assets of approximately
$60.3 billion at September 30, 1996, the Group Fee was 0.33%.
The total combined management fee for each of the Underlying
Price Funds would have been an annual rate as shown above.
For the purpose of calculating the Group Fee, the
Price Funds include all the mutual funds distributed by T. Rowe
Price Investment Services, Inc. (excluding the Spectrum Fund,
Equity Index Fund, and any institutional 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 Fund's
prospectus as of the close of business on the previous business
day on which the Fund was open for business.
The monthly Fund Fee for each Underlying Price Fund
("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 for each Fund 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.
DISTRIBUTOR FOR THE FUNDS
PAGE 104
T. Rowe Price Investment Services, Inc. ("Investment
Services"), a Maryland corporation formed in 1980 as a wholly-
owned subsidiary of T. Rowe Price, serves as Spectrum Fund's
distributor, on behalf of the Income and Growth Fund. 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 Spectrum Fund's
shares is continuous.
Investment Services is located at the same address as
Spectrum Fund and T. Rowe Price -- 100 East Pratt Street,
Baltimore, Maryland 21202.
Investment Services serves as distributor to Spectrum
Fund, on behalf of the Income and Growth Fund, pursuant to an
Underwriting Agreement ("Underwriting Agreement"), which provides
for each Fund to pay its fees and expenses in connection with
registering and qualifying its shares under the various state
"blue sky" laws; preparing, setting in type, printing, and
mailing its prospectuses and reports to shareholders; and issuing
its shares, including expenses of confirming purchase orders.
However, all such fees and expenses are subject to the Special
Servicing Agreement.
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 shares for each Fund; preparing, setting in
type, printing, and mailing all sales literature and advertising;
Investment Services' federal and state registrations as a
broker-dealer; and offering and selling shares for each Fund,
except for those fees and expenses specifically assumed by the
Funds. Investment Services' expenses are paid by T. Rowe Price.
Investment Services acts as the agent of Spectrum
Fund, on behalf of the Income and Growth Fund, in connection with
the sale of the shares for each Fund in all states in which the
shares are qualified and in which Investment Services is
qualified as a broker-dealer. Under the Underwriting Agreement,
Investment Services accepts orders for each Fund's shares at net
asset value. No sales charges are paid by investors or the Fund.
CUSTODIAN
State Street Bank and Trust Company (the "Bank"), under an
agreement with Spectrum Fund, on behalf of the Income, Growth,
and International Funds, serves as custodian for each fund's
securities and cash, but it does not participate in the funds'
investment decisions. The Bank maintains shares of the Spectrum
Funds in the book entry system of such funds' transfer agent, T.
Rowe Price Services. The domestic underlying funds' portfolio
PAGE 105
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 underlying funds of the
Spectrum International Fund have entered into a Custodian
Agreement with The Chase Manhattan Bank, London, pursuant to
which portfolio securities 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 in accordance with regulations under the Investment
Company Act of 1940. The address for The Chase Manhattan Bank,
London is Woolgate House, Coleman Street, London, EC2P 2HD,
England.
CODE OF ETHICS
The Fund's investment adviser (T. Rowe Price) has a
written Code of Ethics which requires all employees to obtain
prior clearance before engaging in personal securities
transactions. Transactions must be executed within three business
days of their clearance. In addition, all employees must report
their personal securities transactions within ten days of their
execution. Employees will not be permitted to effect
transactions in a security: If there are pending client orders in
the security; the security has been purchased or sold by a client
within seven calendar days; the security is being considered for
purchase for a client; a change has occurred in T. Rowe Price's
rating of the security within seven calendar days prior to the
date of the proposed transaction; or the security is subject to
internal trading restrictions. In addition, employees are
prohibited from profiting from short-term trading (e.g.,
purchases and sales involving the same security within 60 days).
Any material violation of the Code of Ethics is reported to the
Board of the Fund. The Board also reviews the administration of
the Code of Ethics on an annual basis.
PRICING OF SECURITIES
The securities of the Underlying Price Funds held by
each Fund are valued at the net asset value of each Underlying
Price Fund. For the Growth Fund, short-term money market
investments are valued at cost which, when combined with accrued
interest receivable, approximates market value. For the Income
Fund, securities with less than one year to maturity are stated
at fair value which is determined by using a matrix system that
establishes a value for each security based on money market
yields. For the International Fund, portfolio securities of the
underlying funds may be listed on foreign exchanges that can open
on days when the underlying funds do not compute their prices. As
a result, the underlying funds' and consequently the Spectrum
International Fund's net asset value may be significantly
PAGE 106
affected by trading on days when shareholders cannot make
transactions.
NET ASSET VALUE PER SHARE
The purchase and redemption price of each Fund's
shares is equal to its net asset value per share or share price.
Each 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 each Fund holds plus cash and other assets, including
income accrued but not yet received) and dividing the result by
the total number of shares outstanding. The net asset value per
share of each Fund is calculated as of the close of trading on
the New York Stock Exchange ("NYSE") every day the NYSE is open
for trading. The NYSE is closed on the following days: New
Year's Day, Washington's Birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Determination of net asset value (and the offering,
sale, redemption and repurchase of shares) for a Fund may be
suspended at times (a) during which the NYSE is closed, other
than customary weekend and holiday closings, (b) during which
trading on the NYSE is restricted (c) during which an emergency
exists as a result of which disposal by a Fund of securities
owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net
assets, or (d) during which a governmental body having
jurisdiction over the Fund may by order permit such a suspension
for the protection of the Fund's shareholders; provided that
applicable rules and regulations of the Securities and Exchange
Commission (or any succeeding governmental authority) shall
govern as to whether the conditions prescribed in (b), (c) or (d)
exist.
DIVIDENDS
Unless you elect otherwise, capital gain
distributions, if any, will be reinvested on the reinvestment
date using the NAV per share of that date. The reinvestment date
normally precedes the payment date by about 10 days although the
exact timing is subject to change.
TAX STATUS
Each Fund intends to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended ("Code").
PAGE 107
A portion of dividends paid by the Growth and Income
Funds may be eligible for the dividends-received deduction for
corporate shareholders. The dividends of the Spectrum
International Fund will not be eligible for this deduction, if,
as expected, none of the fund's income consists of dividends paid
by U.S. corporations. Capital gain distributions paid from these
Funds are never eligible for the dividends-received deduction.
For tax purposes, it does not make any difference whether
dividends and capital gain distributions are paid in cash or in
additional shares. Each Fund must declare dividends 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 in order
to avoid a federal income tax.
At the time of your purchase, each Fund's net asset
value may reflect undistributed income (Growth Fund only),
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, each Fund is permitted to carry
forward its net realized capital losses, if any, for eight years
and realize net capital gains up to the amount of such losses
without being required to pay taxes on, or distribute such gains.
On September 30, 1996, the books of the Income Fund indicated
that the Fund's aggregate net assets included net realized
capital gains of $1,841,623.99 and unrealized appreciation of
$35,386,909.87. On September 30, 1996, the books of the Growth
Fund indicated that the Fund's aggregate net assets included
undistributed net investment income of $9,884,303.85, net
realized capital gains of $8,059,284.33, and unrealized
appreciation of $399,193,289.04.
If, in any taxable year, any of the Funds should not
qualify as a regulated investment company under the Code:
(i) the Fund would be taxed at normal corporate rates on the
entire amount of its taxable income, if any, without deduction
for dividends or other distributions to shareholders, and
(ii) 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, for Spectrum Income and Spectrum Growth Funds,
would qualify for the 70% deduction for dividends received by
corporations. However, for Spectrum International Fund, the
dividends 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.
Taxation of Foreign Shareholders
PAGE 108
The Code provides that dividends from net income 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.
YIELD INFORMATION
Income Fund
From time to time, the Income Fund may advertise a
yield figure calculated in the following manner:
An income factor is calculated for each security in
the portfolio based upon the security's market value at the
beginning of the period and yield as determined in conformity
with regulations of the Securities and Exchange Commission. The
income factors are then totaled for all securities in the
portfolio. Next, expenses of the Fund for the period, net of
expected reimbursements, are deducted from the income to arrive
at net income, which is then converted to a per-share amount by
dividing net income by the average number of shares outstanding
during the period. The net income per share is divided by the
net asset value on the last day of the period to produce a
monthly yield which is then annualized. Quoted yield factors are
for comparison purposes only, and are not intended to indicate
future performance or forecast the dividend per share of the
Fund.
The yield of the Fund calculated under the above-
described method for the month ended September 30, 1996, was
6.44%.
INVESTMENT PERFORMANCE
Total Return Performance
Each Fund's calculation of total return performance
includes the reinvestment of all capital gain distributions and
income dividends for the period or periods indicated, without
regard to tax consequences to a shareholder in the Fund. Total
return is calculated as the percentage change between the
beginning value of a static account in the Fund and the ending
value of that account measured by the then current net asset
value, including all shares acquired through reinvestment of
income and capital gains dividends. The results shown are
historical and should not be considered indicative of the future
PAGE 109
performance of the Fund. Each average annual compound rate of
return is derived from the cumulative performance of the Fund
over the time period specified. The annual compound rate of
return of the Fund over any other period of time will vary from
the average.
Spectrum Income Fund
Cumulative Performance Percentage Change
1 Year 3 Years 5 Years Since Inception
Ended Ended Ended (6/29/90) to
9/30/96+ 9/30/96 9/30/96 9/30/96++
_________ ________ ________________________
Spectrum Income Fund 8.16% 23.74% 54.90% 81.03%
90-day Treasury Bill 5.22 15.34 23.47 33.57
Lehman Brothers
Govt./Corp. Bond Index4.50 14.55 44.56 68.49
Lipper General Bond 7.00 18.21 56.52 83.70
CPI 3.00 8.75 15.01 21.48
Average Annual Compound Rates of Return
1 Year 3 Years 5 Years Since Inception
Ended Ended Ended (6/29/90) to
9/30/96+ 9/30/96 9/30/96 9/30/96++
_________ ________ ________________________
Spectrum Income Fund 8.16% 7.36% 9.15% 9.95%
90-day Treasury Bill 5.22 4.87 4.31 4.73
Lehman Brothers
Govt./Corp. Bond Index4.50 4.63 7.65 8.69
Lipper General Bond 7.00 5.71 9.33 10.16
CPI 3.00 2.84 2.84 3.16
+ If you invested $1,000 at September 30, 1995, the total
return on 9/30/96 would be $8,081.60 ($1,000 x 8.16%).
++ Assumes purchase of one share of the Income Fund at the
inception price of $10.00 on 6/29/90.
PAGE 110
Spectrum Growth Fund
Cumulative Performance Percentage Change
1 Year 3 Years 5 Years Since Inception
Ended Ended Ended (6/29/90) to
9/30/96+ 9/30/96 9/30/96 9/30/96++
_________ ________ ________________________
Spectrum Growth Fund 19.61% 59.84% 106.51% 127.31%
S & P 500 20.34 61.89 103.15 129.84
Lipper Growth and Income
Fund Index 17.09 49.57 94.67 118.30
Wilshire 5000 18.92 57.43 103.80 131.96
CPI 3.00 8.75 15.01 21.48
Average Annual Compound Rates of Return
1 Year 3 Years 5 Years Since Inception
Ended Ended Ended (6/29/90) to
9/30/96+ 9/30/96 9/30/96 9/30/96++
_________ ________ ________________________
Spectrum Growth Fund 19.61% 16.92% 15.61% 4.04%
S & P 500 20.34 17.42 15.23 14.24
Lipper Growth and Income
Fund Index 17.09 14.36 14.25 13.30
Wilshire 5000 18.92 16.33 15.30 14.41
CPI 3.00 2.84 2.84 3.16
+ If you invested $1,000 at September 30, 1995, the total
return on 9/30/96 would be $1,196.10 ($1,000 x 19.61%).
++ Assumes purchase of one share of the Growth Fund at the
inception price of $10.00 on 6/29/90. Over this time, stock
prices in general have risen.
Outside Sources of Information
From time to time, in reports and promotional
literature: (1) the Fund's total return performance or P/E ratio
may be compared to any one or combination of the following: (i)
the Standard & Poor's 500 Stock Index and Dow Jones Industrial
Average so that you may compare the Fund's results with those of
a group of unmanaged securities widely regarded by investors as
representative of the stock market in general; (ii) other groups
of mutual funds, including T. Rowe Price Funds tracked by: (A)
Lipper Analytical Services, a widely used independent research
firm which rates mutual funds by overall performance, investment
objective, and assets; (B) Morningstar, Inc. another widely used
independent research firm which ranks mutual funds; or (C) other
financial or business publications, such as Business Week, Money
Magazine, Forbes and Barron's, which provide similar information;
(iii) indices of stocks comparable to those in which the Fund
PAGE 111
invests; (2) the Consumer Price Index (measure for inflation) may
be used to assess the real rate of return from an investment in
the Fund; (3) other government statistics such as GNP, and net
import and export figures derived from governmental publications,
e.g. The Survey of Current Business, may be used to illustrate
investment attributes of the Fund or the general economic,
business, investment, or financial environment in which the Fund
operates; (4) various financial, economic and market statistics
developed by brokers, dealers and other persons may be used to
illustrate aspects of the Fund's performance; (5) the effect of
tax-deferred compounding on the Fund's investment returns, or on
returns in general, may be illustrated by graphs, charts, etc.
where such graphs or charts would compare, at various points in
time, the return from an investment in the Fund (or returns in
general) on a tax-deferred basis (assuming reinvestment of
capital gains and dividends and assuming one or more tax rates)
with the return on a taxable basis; and (6) the sectors or
industries in which the Fund invests may be compared to relevant
indices or surveys (e.g. S&P Industry Surveys) in order to
evaluate the Fund's historical performance or current or
potential value with respect to the particular industry or
sector. The Income Fund may also compare its performance or
yield to a variety of fixed income investments (e.g., repos, CDs,
Treasury bills) and other measures of performance set forth in
financial publications maintained by persons such as the Donoghue
Organization, Merrill Lynch, Pierce Fenner & Smith, Inc., Salomon
Brothers, Inc. etc. In connection with (5) above, information
derived from the following chart may be used:
IRA Versus Taxable Return
Assuming 9% annual rate of return, $2,000 annual contribution and
28% tax bracket.
Year Taxable Tax Deferred
10 $ 28,700 $ 33,100
15 51,400 64,000
20 82,500 111,500
25 125,100 184,600
30 183,300 297,200
IRAs
An IRA is a long-term investment whose objective is
to accumulate personal savings for retirement. Due to the long-
term nature of the investment, even slight differences in
performance will result in significantly different assets at
retirement. Mutual funds, with their diversity of choice, can be
used for IRA investments. Generally, individuals may need to
adjust their underlying IRA investments as their time to
retirement and tolerance for risk changes.
PAGE 112
Other Features and Benefits
The Fund is a member of the T. Rowe Price Family of
Funds and may help investors achieve various long-term investment
goals, such as investing money for retirement, saving for a down
payment on a home, or paying college costs. To explain how the
Fund could be used to assist investors in planning for these
goals and to illustrate basic principles of investing, various
worksheets and guides prepared by T. Rowe Price Associates, Inc.
and/or T. Rowe Price Investment Services, Inc. may be made
available. These currently include: the Asset Mix Worksheet
which is designed to show shareholders how to reduce their
investment risk by developing a diversified investment plan; the
College Planning Guide which discusses various aspects of
financial planning to meet college expenses and assists parents
in projecting the costs of a college education for their
children; the Retirement Planning Kit (also available in a PC
version) includes a detailed workbook to determine how much money
you may need for retirement and suggests how you might invest to
achieve your objectives; and the Retirees Financial Guide which
includes a detailed workbook to determine how much money you can
afford to spend and still preserve your purchasing power and
suggests how you might invest to reach your goal; Tax
Considerations for Investors discusses the tax advantages of
annuities and municipal bonds and how to assess whether they are
suitable for your portfolio, reviews pros and cons of placing
assets in a gift to minors account, and summarizes the benefits
and types; Personal Strategy Planner simplifies investment
decision-making by helping investors define personal financial
goals, establish length of time the investor intends to invest,
determine risk "comfort zone" and select diversified investment
mix; and the How to Choose a Bond Fund guide which discusses how
to choose an appropriate bond fund for your portfolio. From time
to time, other worksheets and guides may be made available as
well. Of course, an investment in the Fund cannot guarantee that
such goals will be met.
To assist investors in understanding the different
returns and risk characteristics of various investments, the
aforementioned guides will include presentation of historical
returns of various investments using published indices. An
example of this is shown below.
Historical Returns for Different Investments
Annualized returns for periods ended 12/31/95
50 years 20 years 10 years 5 years
Small-Company Stocks 13.8% 19.6% 11.9% 24.5%
Large-Company Stocks 11.9 14.6 14.8 16.6
PAGE 113
Foreign Stocks N/A 15.1 13.9 9.7
Long-Term Corporate Bonds 5.7 10.5 11.2 12.1
Intermediate-Term U.S.
Gov't. Bonds 5.9 9.7 9.1 8.8
Treasury Bills 4.8 7.3 5.5 4.3
U.S. Inflation 4.4 5.2 3.5 2.8
Sources: Ibbotson Associates, Morgan Stanley. Foreign stocks
reflect performance of The Morgan Stanley Capital International
EAFE Index, which includes some 1,000 companies representing the
stock markets of Europe, Australia, New Zealand, and the Far
East. This chart is for illustrative purposes only and should
not be considered as performance for, or the annualized return
of, any T. Rowe Price Fund. Past performance does not guarantee
future results.
Also included will be various portfolios demonstrating how
these historical indices would have performed in various
combinations over a specified time period in terms of return. An
example of this is shown below.
PAGE 114
Performance of Retirement Portfolios*
Asset Mix Average Annualized Value
Returns 20 Years of
Ended 12/31/95 $10,000
Investment
After Period
________________________________________ ____________
Nominal Real Best Worst
PortfolioGrowth Income Safety Return Return** Year Year
I. Low
Risk 40% 40% 20% 11.8% 6.5% 24.9% 0.1%$ 92,675
II. Moderate
Risk 60% 30% 10% 13.1% 7.9% 29.1%-1.8%$116,826
III. High
Risk 80% 20% 0% 14.3 9.1% 33.4%-5.2%$145,611
Source: T. Rowe Price Associates; data supplied by Lehman
Brothers, Wilshire Associates, and Ibbotson Associates.
* Based on actual performance for the 20 years ended 1995 of
stocks (85% Wilshire 5000 and 15% Europe, Australia, Far East
[EAFE] Index), bonds (Lehman Brothers Aggregate Bond Index
from 1976-94 and Lehman Brothers Government/Corporate Bond
Index from 1975), and 30-day Treasury bills from January 1976
through December 1995. Past performance does not guarantee
future results. Figures include changes in principal value
and reinvested dividends and assume the same asset mix is
maintained each year. This exhibit is for illustrative
purposes only and is not representative of the performance of
any T. Rowe Price fund.
** Based on inflation rate of 5.2% for the 20-year period ended
12/31/95.
Insights
From time to time, Insights, a T. Rowe Price publication of
reports on specific investment topics and strategies, may be
included in the Fund's fulfillment kit. Such reports may include
information concerning: calculating taxable gains and losses on
mutual fund transactions, coping with stock market volatility,
benefiting from dollar cost averaging, understanding
international markets, investing in high-yield "junk" bonds,
growth stock investing, conservative stock investing, value
investing, investing in small companies, tax-free investing,
fixed income investing, investing in mortgage-backed securities,
as well as other topics and strategies.
PAGE 115
Other Publications
From time to time, in newsletters and other publications
issued by T. Rowe Price Investment Services, Inc., reference may
be made to economic, financial and political developments in the
U.S. and abroad and their effect on securities prices. Such
discussions may take the form of commentary on these developments
by T. Rowe Price mutual fund portfolio managers and their views
and analysis on how such developments could affect investments in
mutual funds.
CAPITAL STOCK
The Articles of Incorporation of Spectrum Fund
currently establish three series (i.e., the Income Fund, the
Growth Fund, and the International Fund), each of which
represents a separate class of the Corporation's shares and has
different objectives and investment policies. The Articles of
Incorporation also provide that the Board of Directors may issue
additional series of shares. Each share of each Fund represents
an equal proportionate share in that Fund, with each other share,
and is entitled to such dividends and distributions of income
belonging to that Fund as are declared by the Directors. In the
event of the liquidation of a Fund, each share is entitled to a
pro rata share of the net assets of that Fund.
The Funds' 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, conversion 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 Funds have 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 Investment Company Act of
1940, the laws of the State of Maryland, the Funds' Articles of
Incorporation, the By-Laws of the Corporation, or as the Board of
PAGE 116
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 Funds, in which event the holders of the remaining shares
will be unable to elect any person as a director. As set forth
in the By-Laws of the Corporation, a special meeting of
shareholders of the Corporation shall be called by the Secretary
of the Corporation on the written request of shareholders
entitled to cast at least 10% of all the votes of the
Corporation, entitled to be cast at such meeting. Shareholders
requesting such a meeting must pay to the Corporation the
reasonably estimated costs of preparing and mailing the notice of
the meeting. The Corporation, however, will otherwise assist the
shareholders seeking to hold the special meeting in communicating
to the other shareholders of the Corporation to the extent
required by Section 16(c) of the 1940 Act.
FEDERAL AND STATE REGISTRATION OF SHARES
The Funds' shares are registered for sale under the
Securities Act of 1933 and the Funds or their shares are
registered under the laws of all states which require
registration, as well as the District of Columbia and Puerto
Rico.
PAGE 117
LEGAL COUNSEL
Shereff, Friedman, Hoffman & Goodman, LLP, whose
address is 919 Third Avenue, New York, New York 10022, is legal
counsel to the Funds.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 7 St. Paul Street, Suite 1700,
Baltimore, Maryland 21202, are independent accountants to the
Funds. The financial statements of each fund for the year ended
December 31, 1995, and the report of independent accountants are
included in the Funds' Annual Report for the year ended December
31, 1995. The financial statements for the period ended June 30,
1996 are included in the Funds' unaudited semiannual report. A
copy of the annual and semiannual reports accompany this
Statement of Additional Information. The following financial
statements and the report of independent accountants appearing in
the Annual Report for the year ended December 31, 1995, is
incorporated into this Statement of Additional Information by
reference. The semiannual report for the period ended June 30,
1996, are also incorporated into this Statement of Additional
Information by reference:
Annual
Report Page
_____________
Report of Independent Accountants 14
Statement of Net Assets, December 31, 1995 8
Statement of Operations, year ended
December 31, 1995 9
Statement of Changes in Net Assets, years ended
December 31, 1995 and December 31, 1994 10
Notes to Financial Statements,
December 31, 1995 11
Financial Highlights 12-13
Semiannual
Report Page
_____________
Statement of Net Assets, June 30, 1996 (unaudited)11-12
Statement of Operations, six months ended
June 30, 1996 (unaudited) 13
Statement of Changes in Net Assets,
year ended December 31, 1995 and
six months ended June 30, 1996 (unaudited) 14
Notes to Financial Statements, June 30, 1996
(unaudited) 15-16
PAGE 118
Financial Highlights (unaudited) 9-10
PAGE 119
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements: Spectrum Income Fund and Spectrum
Growth Fund.
The Condensed Financial Information (Financial Highlights
Table) is included in Part A of the Registration Statement.
Statement of Net Assets, Statement of Operations, and
Statement of Changes in Net Assets are included in the
Annual Report to Shareholders, the pertinent portions of
which are incorporated by reference in Part B of the
Registration Statement.
Financial Statements: Spectrum International Fund
Inapplicable.
(b) Exhibits.
(1)(a) Amended Articles of Incorporation of Registrant,
dated July 24, 1987, as amended October 16, 1987
(electronically filed with Amendment No. 11 dated
April 14, 1994)
(1)(b) Articles of Amendment of Registrant, dated July 1,
1991 (electronically filed with Amendment No. 11
dated April 14, 1994)
(1)(c) Articles Supplementary of Registrant, dated July 7,
1993 (electronically filed with Amendment No. 11
dated April 14, 1994)
(1)(d) Articles Supplementary of Registrant, dated November
12, 1996
(2) By-Laws of Registrant, as amended July 1, 1991
(electronically filed with Amendment No. 11 dated
April 14, 1994)
(3) Inapplicable
(4) Specimen Stock Certificate (filed with Amendment No.
5)
(5)(a) Investment Management Agreement between the
Registrant on behalf of the Spectrum Income Fund and
T. Rowe Price Associates, Inc., dated July 1, 1991
(electronically filed with Amendment No. 11 dated
April 14, 1994)
PAGE 120
(5)(b) Investment Management Agreement between the
Registrant on behalf of the Spectrum Growth Fund and
T. Rowe Price Associates, Inc., dated July 1, 1991
(electronically filed with Amendment No. 11 dated
April 14, 1994)
(5)(c) Investment Management Agreement between the
Registrant on behalf of the Spectrum International
Fund and Rowe Price-Fleming International, Inc.,
dated November 12, 1996
(6) Underwriting Agreement between the Registrant and T.
Rowe Price Investment Services, Inc., dated June 12,
1990 (electronically filed with Amendment No. 11
dated April 14, 1994)
(7) Inapplicable
(8) Custodian Agreement between T. Rowe Price Funds and
State Street Bank and Trust Company, dated September
28, 1987, as amended to June 24, 1988, October 19,
1988, February 22, 1989, July 19, 1989, September
15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990,
July 18, 1990, October 15, 1990, February 13, 1991,
March 6, 1991, September 12, 1991, November 6, 1991,
April 23, 1992, September 2, 1992, November 3, 1992,
December 16, 1992, December 21, 1992, January 28,
1993, April 22, 1993, and September 16, 1993,
November 3, 1993, March 1, 1994, April 21, 1994,
July 27, 1994, September 21, 1994, November 1, 1994,
November 2, 1994, January 25, 1995, September 20,
1995, October 11, 1995, November 1, 1995, December
11, 1995, April 24, 1996, August 2, 1996, and
November 12, 1996
(9)(a) Transfer Agency and Service Agreement between T.
Rowe Price Services, Inc. and T. Rowe Price Funds,
dated January 1, 1996, as amended April 24, 1996,
August 2, 1996, and November 12, 1996
(9)(b) Special Servicing Agreement between T. Rowe Price
Funds, T. Rowe Price Services, Inc. and Registrant,
dated June 12, 1990 (filed with Amendment No. 11)
(9)(c) Agreement between T. Rowe Price Associates, Inc. and
T. Rowe Price Funds for Fund Accounting Services,
dated January 1, 1996, as amended April 24, 1996,
August 2, 1996, and November 12, 1996
(9)(d) Agreement between T. Rowe Price Retirement Plan
Services, Inc. and the Taxable Funds, dated January
1,
PAGE 121
1996, as amended April 24, 1996, August 2, 1996, and
November 12, 1996
(9)(e) Special Servicing Agreement between T. Rowe Price
Funds, Rowe Price-Fleming International, Inc., T.
Rowe Price Associates, Inc. and Registrant, dated
November 12, 1996
(10) Inapplicable
(11) Consent of Independent Accountants
(12) Inapplicable
(13) Inapplicable
(14) Inapplicable
(15) Inapplicable
(16) Inapplicable
(17) Financial Data Schedule for T. Rowe Price Spectrum
Fund, Inc. as of June 30, 1996
(18) Inapplicable
(19) Power of Attorney for T. Rowe Price Spectrum Fund,
Inc.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
As of October 31, 1996, there were 47,444 shareholders in
the Spectrum Income Fund.
As of October 31, 1996, there were 90,398 shareholders in
the Spectrum Growth Fund.
As of November 15, 1996, there were 0 shareholders in the
Spectrum International Fund.
Item 27. Indemnification.
The Registrant maintains comprehensive Errors and Omissions and
Officers and Directors insurance policies written by the Evanston
Insurance Company, The Chubb Group and ICI Mutual. These
policies provide coverage for the named insureds, which include
T. Rowe Price Associates, Inc. ("Manager"), Rowe Price-Fleming
PAGE 122
International, Inc. ("Price-Fleming"), T. Rowe Price Investment
Services, Inc., T. Rowe Price Services, Inc., T. Rowe Price Trust
Company, T. Rowe Price Stable Asset Management, Inc., RPF
International Bond Fund and forty-four other investment
companies, namely, T. Rowe Price Growth Stock Fund, Inc., T. Rowe
Price New Horizons Fund, Inc., T. Rowe Price New Era Fund, Inc.,
T. Rowe Price New Income Fund, Inc., T. Rowe Price Prime Reserve
Fund, Inc., T. Rowe Price Tax-Free Income Fund, Inc., T. Rowe
Price Tax-Exempt Money Fund, Inc., T. Rowe Price International
Funds, Inc., T. Rowe Price Growth & Income Fund, Inc., T. Rowe
Price Tax-Free Short-Intermediate Fund, Inc., T. Rowe Price
Short-Term Bond Fund, Inc., T. Rowe Price High Yield Fund, Inc.,
T. Rowe Price Tax-Free High Yield Fund, Inc., T. Rowe Price New
America Growth Fund, T. Rowe Price Equity Income Fund, T. Rowe
Price GNMA Fund, T. Rowe Price Capital Appreciation Fund, T. Rowe
Price State Tax-Free Income Trust, T. Rowe Price California
Tax-Free Income Trust, T. Rowe Price Science & Technology Fund,
Inc., T. Rowe Price Small-Cap Value Fund, Inc., Institutional
International Funds, Inc., T. Rowe Price U.S. Treasury Funds,
Inc., T. Rowe Price Index Trust, Inc., T. Rowe Price Balanced
Fund, Inc., T. Rowe Price Short-Term U.S. Government Fund, Inc.,
T. Rowe Price Mid-Cap Growth Fund, Inc., T. Rowe Price OTC Fund,
Inc., T. Rowe Price 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 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., T. Rowe Price Institutional
Equity Funds, Inc., and T. Rowe Price Financial Services Fund,
Inc. The Registrant and the forty-four investment companies
listed above, with the exception of Institutional International
Funds, Inc., will be collectively referred to as the Price Funds.
The investment manager for the Price Funds, is the Manager.
Price-Fleming is the manager to T. Rowe Price International
Funds, Inc., T. Rowe Price International Series, Inc. and
Institutional International Funds, Inc. and is 50% owned by TRP
Finance, Inc., a wholly-owned subsidiary of the Manager, 25%
owned by Copthall Overseas Limited, a wholly-owned subsidiary of
Robert Fleming Holdings Limited, and 25% owned by Jardine Fleming
Holdings Limited. In addition to the corporate insureds, the
policies also cover the officers, directors, and employees of
each of the named insureds. The premium is allocated among the
named corporate insureds in accordance with the provisions of
Rule 17d-1(d)(7) under the Investment Company Act of 1940.
Article X, Section 10.01 of the Registrant's By-Laws
provides as follows:
Section 10.01. Indemnification and Payment of Expenses
in Advance: The Corporation shall indemnify any individual
PAGE 123
("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:
(a) there is a final decision on the merits by a court
or other body before whom the Proceeding was
brought that the Indemnitee was not liable by
reason of Disabling Conduct; or
(b) in the absence of such a decision, there is a
reasonable determination, based upon a review of
the facts, that the Indemnitee was not liable by
reason of Disabling Conduct, which determination
shall be made by:
(i) the vote of a majority of a quorum of
directors who are neither "interested
persons" of the Corporation as defined in
Section 2(a)(19) of the Investment Company
Act of 1940, nor parties to the Proceeding;
or
(ii) an independent legal counsel in a written
opinion.
PAGE 124
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, as from time to time amended, the
Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, or
agent of the Corporation, or who is or was serving at the
request of the Corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against any liability asserted
against him and incurred by him in or arising out of his
position, whether or not the Corporation would have the
power to indemnify him against such liability.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such
PAGE 125
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection
with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
Item 28. Business and Other Connections of Investment Manager.
Rowe Price-Fleming International, Inc. ("Price-Fleming"), a
Maryland corporation, is a corporate joint venture 50% owned by
TRP Finance, Inc., a wholly-owned subsidiary of the Manager.
Price-Fleming was organized in 1979 to provide investment counsel
service with respect to foreign securities for institutional
investors in the United States. In addition to managing private
counsel client accounts, Price-Fleming also sponsors registered
investment companies which invest in foreign securities, serves
as general partner of RPFI International Partners, Limited
Partnership, and provides investment advice to the T. Rowe Price
Trust Company, trustee of the International Common Trust Fund.
T. Rowe Price Investment Services, Inc. ("Investment Services"),
a wholly-owned subsidiary of the Manager, is a Maryland
corporation organized in 1980 for the purpose of acting as the
principal underwriter and distributor for the Price Funds.
Investment Services is registered as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. In 1984, Investment
Services expanded its activities to include a discount brokerage
service.
TRP Distribution, Inc., a wholly-owned subsidiary of Investment
Services, is a Maryland corporation organized in 1991. It was
organized for and engages in the sale of certain investment
related products prepared by Investment Services.
T. Rowe Price Associates Foundation, Inc., was organized in 1981
for the purpose of making charitable contributions to religious,
charitable, scientific, literary and educational organizations.
The Foundation (which is not a subsidiary of the Manager) is
funded solely by contributions from the Manager and income from
investments.
T. Rowe Price Services, Inc. ("Price Services"), a wholly-owned
subsidiary of the Manager, is a Maryland corporation organized in
1982 and is registered as a transfer agent under the Securities
Exchange Act of 1934. Price Services provides transfer agent,
PAGE 126
dividend disbursing, and certain other services, including
shareholder services, to the Price Funds.
T. Rowe Price Retirement Plan Services, Inc. ("RPS"), a
wholly-owned subsidiary of the Manager, was incorporated in
Maryland in 1991 and is registered as a transfer agent under the
Securities Exchange Act of 1934. RPS provides administrative,
recordkeeping, and subaccounting services to administrators of
employee benefit plans.
T. Rowe Price Trust Company ("Trust Company"), a wholly-owned
subsidiary of the Manager, is a Maryland-chartered limited
purpose trust company, organized in 1983 for the purpose of
providing fiduciary services. The Trust Company serves as
trustee/custodian for employee benefit plans, individual
retirement accounts and common trust funds and as
trustee/investment agent for two trusts.
T. Rowe Price Threshold Fund Associates, Inc., a wholly-owned
subsidiary of the Manager, is a Maryland corporation organized in
1994 and serves as the general partner of T. Rowe Price Threshold
Fund III, L.P., a Delaware limited partnership established in
1994.
T. Rowe Price Threshold Fund II, L.P., a Delaware limited
partnership, was organized in 1986 by the Manager, and invests in
private financings of small companies with high growth potential;
the Manager is the General Partner of the partnership.
T. Rowe Price Threshold Fund III, L.P., a Delaware limited
partnership was organized in 1994 by the Manager, and invests in
private financings of small companies with high growth potential;
T. Rowe Price Threshold Fund Associates, Inc. is the General
Partner of this partnership.
RPFI International Partners, L.P., is a Delaware limited
partnership organized in 1985 for the purpose of investing in a
diversified group of small and medium-sized non-U.S. companies.
Price-Fleming is the general partner of this partnership, and
certain institutional investors, including advisory clients of
Price-Fleming, are its limited partners.
T. Rowe Price Real Estate Group, Inc. ("Real Estate Group"), is a
Maryland corporation and a wholly-owned subsidiary of the Manager
established in 1986 to provide real estate services.
Subsidiaries of Real Estate Group are: T. Rowe Price Realty
Income Fund I Management, Inc., a Maryland corporation (General
Partner of T. Rowe Price Realty Income Fund I, A No-Load Limited
Partnership), T. Rowe Price Realty Income Fund II Management,
Inc., a Maryland corporation (General Partner of T. Rowe Price
Realty Income Fund II, America's Sales-Commission-Free Real
Estate Limited Partnership), T. Rowe Price Realty Income Fund III
Management, Inc., a Maryland corporation (General Partner of T.
Rowe Price
PAGE 127
Realty Income Fund III, America's Sales-Commission-Free Real
Estate Limited Partnership, and T. Rowe Price Realty Income Fund
IV Management, Inc., a Maryland corporation (General Partner of
T. Rowe Price Realty Income Fund IV, America's
Sales-Commission-Free Real Estate Limited Partnership). Real
Estate Group serves as investment manager to T. Rowe Price
Renaissance Fund, Ltd., A Sales-Commission-Free Real Estate
Investment, established in 1989 as a Maryland corporation which
qualifies as a REIT.
T. Rowe Price Stable Asset Management, Inc. ("Stable Asset
Management") is a Maryland corporation organized in 1988 as a
wholly-owned subsidiary of the Manager. Stable Asset Management,
which is registered as an investment adviser under the Investment
Advisers Act of 1940, specializes in the management of investment
portfolios which seek stable and consistent investment returns
through the use of guaranteed investment contracts, bank
investment contracts, structured investment contracts, and
short-term fixed-income securities.
T. Rowe Price Recovery Fund Associates, Inc., a Maryland
corporation, is a wholly-owned subsidiary of the Manager
organized in 1988 for the purpose of serving as the General
Partner of T. Rowe Price Recovery Fund, L.P., a Delaware limited
partnership which invests in financially distressed companies.
T. Rowe Price (Canada), Inc. ("TRP Canada") is a Maryland
corporation organized in 1988 as a wholly-owned subsidiary of the
Manager. This entity is registered as an investment adviser
under the Investment Advisers Act of 1940, and as a non-Canadian
Adviser under the Securities Act (Ontario). TRP Canada provides
certain services to the RPF International Bond Fund, a trust
(whose shares are sold in Canada), and Price-Fleming serves as
investment adviser to TRP Canada.
T. Rowe Price Insurance Agency, Inc., is a wholly-owned
subsidiary of T. Rowe Price Associates, Inc. organized in
Maryland in 1994 and licensed to do business in several states to
act primarily as an insurance agency in connection with the sale
of the Price Funds' variable annuity products.
TRP Management, Inc., is a Maryland corporation wholly-owned by
T. Rowe Price Associates, Inc. which was originally organized in
1990 as T. Rowe Price Industrial Advantage Fund I Management,
Inc. In 1993, the name was changed to TRP Management, Inc. The
subsidiary, in conjunction with CUNA Mutual Insurance Society and
CUNA Service Group, Inc., established a Maryland limited
liability company known as CMC--T. Rowe Price Management LLC.
This company sponsored a family of no-load mutual funds available
to members of credit unions in the United States ("CUNA Funds").
The CUNA Funds have filed an application with the SEC to withdraw
registration under the Investment Company Act of 1940.
PAGE 128
Since 1983, the Manager has organized several distinct Maryland
limited partnerships, which are informally called the Pratt
Street Ventures partnerships, for the purpose of acquiring
interests in growth-oriented businesses.
Tower Venture, Inc., a wholly-owned subsidiary of the Manager, is
a Maryland corporation organized in 1989 for the purpose of
serving as a general partner of 100 East Pratt St., L.P., a
Maryland limited partnership whose limited partners also include
the Manager. The purpose of the partnership is to further
develop and improve the property at 100 East Pratt Street, the
site of the Manager's headquarters, through the construction of
additional office, retail and parking space.
TRP Suburban, Inc. is a Maryland corporation organized in 1990 as
a wholly-owned subsidiary of the Manager. TRP Suburban has
entered into agreements with McDonogh School and
CMANE-McDonogh-Rowe Limited Partnership to construct an office
building in Owings Mills, Maryland, which houses the Manager's
transfer agent, plan administrative services, retirement plan
services and operations support functions.
TRP Suburban Second, Inc., a wholly-owned Maryland subsidiary of
T. Rowe Price Associates, Inc., was incorporated in 1995 to
primarily engage in the development and ownership of real
property located in Owings Mills, Maryland.
TRP Finance, Inc., a wholly-owned subsidiary of the Manager, is a
Delaware corporation organized in 1990 to manage certain passive
corporate investments and other intangible assets.
T. Rowe Price Strategic Partners Fund, L.P. is a Delaware limited
partnership organized in 1990 for the purpose of investing in
small public and private companies seeking capital for expansion
or undergoing a restructuring of ownership. The general partner
of the Fund is T. Rowe Price Strategic Partners, L.P.,
("Strategic Partners"), a Delaware limited partnership whose
general partner is T. Rowe Price Strategic Partners Associates,
Inc., a Maryland corporation which is a wholly-owned subsidiary
of the Manager. Strategic Partners also serves as the general
partner of T. Rowe Price Strategic Partners Fund II, L.P., a
Delaware limited partnership established in 1992.
Listed below are the directors of the Manager who have other
substantial businesses, professions, vocations, or employment
aside from that of Director of the Manager:
JAMES E. HALBKAT, JR., Director of the Manager. Mr. Halbkat is
President of U.S. Monitor Corporation, a provider of public
response systems. Mr. Halbkat's address is: P.O. Box 23109,
Hilton Head Island, South Carolina 29925.
PAGE 129
RICHARD L. MENSCHEL, Director of the Manager. Mr. Menschel is a
limited partner of The Goldman Sachs Group, L.P. Mr. Menschel's
address is 85 Broad Street, 2nd Floor, New York, New York 10004.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is the
Tayloe Murphy Professor, The Darden Graduate School of Business
Administration, University of Virginia, and a director of:
Chesapeake Corporation, a manufacturer of paper products, Cadmus
Communications Corp., a provider of printing and communication
services; Comdial Corporation, a manufacturer of telephone
systems for businesses; and Cone Mills Corporation, a textiles
producer. Mr. Rosenblum's address is: P.O. Box 6550,
Charlottesville, Virginia 22906.
ROBERT L. STRICKLAND, Director of the Manager. Mr. Strickland is
Chairman of Lowe's Companies, Inc., a retailer of specialty home
supplies and a Director of Hannaford Bros., Co., a food retailer.
Mr. Strickland's address is 604 Two Piedmont Plaza Building,
Winston-Salem, North Carolina 27104.
PHILIP C. WALSH, Director of the Manager. Mr. Walsh is a
Consultant to Cyprus Amax Minerals Company, Englewood, Colorado.
Mr. Walsh's address is: 200 East 66th Street, Apt. A-1005, New
York, New York 10021.
ANNE MARIE WHITTEMORE, Director of the Manager. Mrs. Whittemore
is a partner of the law firm of McGuire, Woods, Battle & Boothe
and is a director of Owens & Minor, Inc.; USF&G Corporation; and
the James River Corporation. Mrs. Whittemore's address is One
James Center, Richmond, Virginia 23219.
With the exception of Messrs. Halbkat, Menschel, Rosenblum,
Strickland, Walsh, and Mrs. Whittemore, all of the directors of
the Manager are employees of the Manager.
George J. Collins, who is Chief Executive Officer, President, and
a Managing Director of the Manager, is a Director of
Price-Fleming.
George A. Roche, who is Chief Financial Officer and a Managing
Director of the Manager, is a Vice President and a Director of
Price-Fleming.
Carter O. Hoffman, who is a Managing Director of the Manager, is
also a Director of TRP Finance, Inc.
M. David Testa, who is a Managing Director of the Manager, is
Chairman of the Board of Price-Fleming.
Henry H. Hopkins, Charles P. Smith, and Peter Van Dyke, who are
Managing Directors of the Manager, are Vice Presidents of
Price-Fleming.
PAGE 130
Robert P. Campbell, Roger L. Fiery, III, Robert C. Howe, Veena A.
Kutler, Heather R. Landon, Nancy M. Morris, George A. Murnaghan,
Robert W. Smith, William F. Wendler, II, and Edward A. Wiese, who
are Vice Presidents of the Manager, are Vice Presidents of
Price-Fleming.
Michael J. Conelius, who is an Assistant Vice President of the
Manager, is a Vice President of Price-Fleming.
R. Aran Gordon, an employee of the Manager, is a Vice President
of Price-Fleming.
Kimberly A. Haker, an employee of the Manager, is Assistant Vice
President and Controller of Price-Fleming.
Todd J. Henry, an employee of the Manager, is an Assistant Vice
President of Price-Fleming.
Kathleen G. Polk, an employee of the Manager, is an Assistant
Vice President of Price-Fleming.
Alvin M. Younger, Jr., who is a Managing Director and the
Secretary and Treasurer of the Manager, is Secretary and
Treasurer of Price-Fleming.
Nolan L. North, who is a Vice President and Assistant Treasurer
of the Manager, is Assistant Treasurer of Price-Fleming.
Leah P. Holmes, who is an Assistant Vice President of the
Manager, is a Vice President of Price-Fleming.
Barbara A. Van Horn, who is Assistant Secretary of the Manager,
is Assistant Secretary of Price-Fleming.
Certain directors and officers of the Manager are also officers
and/or directors of one or more of the Price Funds and/or one or
more of the affiliated entities listed herein.
See also "Management of Fund," in Registrant's Statement of
Additional Information.
Item 29. Principal Underwriters.
(a) The principal underwriter for T. Rowe Price Spectrum
Funds, Inc. is Investment Services. Investment
Services acts as the principal underwriter for the
other seventy-three Price Funds. Investment Services is
a wholly-owned subsidiary of the Manager is registered
as a broker-dealer under the Securities Exchange Act of
1934 and is a member of the National Association of
Securities Dealers, Inc. Investment Services has been
formed for the limited purpose of distributing the
shares of the
PAGE 131
Price Funds and will not engage in the general
securities business. Since the Price Funds are sold on
a no-load basis, Investment Services will not receive
any commission or other compensation for acting as
principal underwriter.
(b) The address of each of the directors and officers of
Investment Services listed below is 100 East Pratt
Street, Baltimore, Maryland 21202.
Positions and
Name and Principal Positions and Offices Offices With
Business Address With Underwriter Registrant
__________________ ______________________ ______________
James Sellers Riepe Chairman of the Board Vice President
and President and Director
Edward C. Bernard President None
Henry Holt Hopkins Vice President and Vice President
Director
Charles E. Vieth Vice President and None
Director
Patricia M. Archer Vice President None
Joseph C. Bonasorte Vice President None
Meredith C. Callanan Vice President None
Laura H. Chasney Vice President None
Victoria C. Collins Vice President None
Christopher W. Dyer Vice President None
Forrest R. Foss Vice President None
Andrea G. Griffin Vice President None
David J. Healy Vice President None
Joseph P. Healy Vice President None
Walter J. Helmlinger Vice President None
Eric G. Knauss Vice President None
Douglas G. Kremer Vice President None
Sharon Renae Krieger Vice President None
Keith Wayne Lewis Vice President None
James Link Vice President None
David L. Lyons Vice President None
Sarah McCafferty Vice President None
Maurice Albert Minerbi Vice President None
Nancy M. Morris Vice President None
George A. Murnaghan Vice President None
Steven Ellis Norwitz Vice President None
Kathleen M. O'Brien Vice President None
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
Kenneth J. Rutherford Vice President None
Monica R. Tucker Vice President None
William F. Wendler, II Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
PAGE 132
Alvin M. Younger, Jr. Secretary and None
Treasurer
Mark S. Finn Controller None
Richard J. Barna Assistant Vice
President None
Catherine L. Berkenkemper Assistant Vice
President None
Ronae M. Brock Assistant Vice
President None
Patricia S. Butcher Assistant Vice Assistant
President Secretary
Renee M. Christoff Assistant Vice
President None
Cheryl L. Emory Assistant Vice
President None
John A. Galateria Assistant Vice
President None
Douglas E. Harrison Assistant Vice
President None
Janelyn A. Healey Assistant Vice
President None
Kathleen Hussey Assistant Vice
President None
Sandra J. Kiefler Assistant Vice
President None
C. Lillian Matthews Assistant Vice
President None
Janice D. McCrory Assistant Vice
President None
JeanneMarie B. Patella Assistant Vice
President None
Kristin E. Seeberger Assistant Vice
President None
Arthur J. Silber Assistant Vice
President None
Nolan L. North Assistant Treasurer None
Barbara A. VanHorn Assistant Secretary None
(c) Not applicable. Investment Services will not receive
any compensation with respect to its activities as underwriter
for the Price Funds since the Price Funds are sold on a no-load
basis.
Item 30. Location of Accounts and Records.
All accounts, books, and other documents required to be
maintained by T. Rowe Price Spectrum Fund, Inc. under
Section 31(a) of the Investment Company Act of 1940 and the
rules thereunder will be maintained by T. Rowe Price
Spectrum Fund, Inc. at its offices at 100 East Pratt Street,
Baltimore, Maryland 21202. Transfer, dividend disbursing,
and shareholder service activities are performed by T. Rowe
Price Services, Inc. at 100 Each Pratt Street, Baltimore,
Maryland 21202.
PAGE 133
Custodian activities for T. Rowe Price Spectrum Fund, Inc. are
performed at State Street Bank and Trust Company's Service Center
(State Street South), 1776 Heritage Drive, Quincy, Massachusetts
02171.
Item 31. Management Services.
Registrant is not a party to any management-related service
contract, other than as set forth in the Prospectus.
Item 32. Undertakings.
(a) Inapplicable
(b) The Spectrum International Fund will file, within four
to six months from the effective date of its
registration statement, a post-effective amendment
using financial statements which need not be certified.
(c) If requested to do so by the holders of at least 10% of
all votes entitled to be cast, the Registrant will call
a meeting of shareholders for the purpose of voting on
the question of removal of a director or directors and
will assist in communications with other shareholders
to the extent required by Section 16(c).
(d) Each series of the Registrant agrees to furnish, upon
request and without charge, a copy of its latest Annual
Report to each person to whom a prospectus is
delivered.
PAGE 134
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Baltimore, State of Maryland, this
15th day of November, 1996.
T. ROWE PRICE SPECTRUM FUND, INC.
/s/James S. Riepe
James S. Riepe
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/James S. Riepe
James S. Riepe Chairman of the Board, November 15, 1996
(Chief Executive Officer)
/s/Carmen F. Deyesu
Carmen F. Deyesu Treasurer November 15, 1996
(Chief Financial Officer)
*
Jeffrey H. Donahue Director November 15, 1996
*
A. MacDonough Plant Director November 15, 1996
*/s/Henry H. Hopkins, Attorney-In-Fact
Henry H. Hopkins, Attorney-In-Fact
PAGE 1
T. ROWE PRICE SPECTRUM FUND, INC.
ARTICLES SUPPLEMENTARY
T. Rowe Price Spectrum Fund, Inc., a Maryland
corporation, having its principal office in Baltimore City,
Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the
Board of Directors of the Corporation by Article Fifth of the
Charter of the Corporation, the Board of Directors has duly
classified a number of shares of its unissued common stock
(determined in accordance with the SECOND paragraph below) into a
new series of common stock to be designated the Spectrum
International Fund.
SECOND: After giving effect to the foregoing
classification, the Board of Directors has heretofore duly
divided and classified an aggregate of 1,000,000,000 shares of
the unissued Common Stock of the Corporation into the following
series on the dates indicated in the parentheses following the
names of the respective series: Spectrum Growth Fund (October
16, 1987), Spectrum Income Fund (October 16, 1987), Spectrum
Balanced Fund (July 7, 1993), and Spectrum International Fund
(November 12, 1996). Each such series shall consist, until
further changed, of the lesser of (x) 1,000,000,000 shares or (y)
the number of shares that could be issued by issuing all of the
shares of any series currently or hereafter classified less the
total number of shares then issued and outstanding in all of such
series. All shares of each series have the powers, preferences,
other special rights, qualifications, restrictions, and
limitations set forth in the Charter. The Board of Directors
also has provided for the issuance of the shares of each such
series.
THIRD: The stock has been classified by the Board of
Directors under authority contained in the Charter.
FOURTH: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940.
FIFTH: The aggregate authorized capital stock and par
value thereof has not been changed by this amendment.
PAGE 2
IN WITNESS WHEREOF, T. Rowe Price Spectrum Fund, Inc.
has caused these Articles to be signed in its name and on its
behalf by its Vice President and witnessed by its Assistant
Secretary on November 12, 1996.
ATTEST: T. ROWE PRICE SPECTRUM FUND,
INC.
/s/Patricia S. Butcher By:/s/Henry H. Hopkins
Patricia S. Butcher Henry H. Hopkins
Assistant Secretary Vice President
THE UNDERSIGNED, Vice President of T. Rowe Price
Spectrum Fund, Inc., who executed on behalf of the Corporation
Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation
the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts
set forth herein with respect to the authorization and approval
thereof are true in all material respects under the penalties of
perjury.
/s/Henry H. Hopkins
Henry H. Hopkins
Vice President
PAGE 1
INVESTMENT MANAGEMENT AGREEMENT
Between
T. ROWE PRICE SPECTRUM FUND, INC.
and
ROWE PRICE-FLEMING INTERNATIONAL, INC.
INVESTMENT MANAGEMENT AGREEMENT, made as of the 12th
day of November, 1996, by and between T. ROWE PRICE SPECTRUM
FUND, INC., a Maryland corporation (hereinafter called the
"Corporation"), and ROWE PRICE-FLEMING INTERNATIONAL, INC., a
corporation organized and existing under the laws of the State of
Maryland (hereinafter called the "Manager").
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in business as an
open-end management investment company and is registered as such
under the federal Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Corporation is authorized to issue shares
of capital stock ("Shares") in the Spectrum International Fund
(the "Fund"), a separate series of the Corporation whose Shares
represent interests in a separate portfolio of securities and
other assets ("Fund Shares"); and
WHEREAS, the Manager is engaged principally in the
business of rendering investment supervisory services and is
registered as an investment adviser under the federal Investment
Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires the Manager to render
investment supervisory services to the Fund in the manner and on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Duties and Responsibilities of Manager.
A. Investment Management Services. The Manager
shall act as investment manager and shall supervise and direct
the
PAGE 2
investments of the Fund in accordance with the Fund's investment
objectives, program and restrictions as provided in the
Corporation's prospectus, on behalf of the Fund, as amended from
time to time, and such other limitations as the Fund may impose
by notice in writing to the Manager. The Manager shall obtain
and evaluate such information relating to the economy,
industries, businesses, securities markets and securities as it
may deem necessary or useful in the discharge of its obligations
hereunder and shall formulate and implement a continuing program
for the management of the assets and resources of the Fund in a
manner consistent with its investment objectives. In furtherance
of this duty, the Manager, as agent and attorney-in-fact with
respect to the Corporation, is authorized, in its discretion and
without prior consultation with the Corporation, to:
(i) buy, sell, exchange, convert, and otherwise
trade in any stocks, bonds, and other
securities or assets; and
(ii) place orders and negotiate the commissions (if
any) for the execution of transactions in
securities with or through such brokers,
dealers, underwriters or issuers as the Manager
may select.
B. Financial, Accounting, and Administrative
Services. The Manager shall maintain the existence and records
of the Corporation; maintain the registrations and qualifications
of Fund shares under federal and state law; monitor the
financial, accounting, and administrative functions of the Fund;
maintain liaison with the various agents employed for the benefit
of the Fund by the Corporation (including the Corporation's
transfer agent, custodian, independent accountants and legal
counsel) and assist in the coordination of their activities on
behalf of the Fund.
C. Reports to Fund. The Manager shall furnish to or
place at the disposal of the Corporation or Fund, as appropriate,
such information, reports, evaluations, analyses and opinions as
the Fund may, at any time or from time to time, reasonably
request or as the Manager may deem helpful.
D. Reports and Other Communications to Fund
Shareholders. The Manager shall assist in developing all general
shareholder communications, including regular shareholder
reports.
E. Fund Personnel. The Manager agrees to permit
individuals who are officers or employees of the Manager to serve
(if duly elected or appointed) as officers, directors, members of
any committee of directors, members of any advisory board, or
members of any other committee of the Corporation or Fund,
without remuneration from or other cost to the Fund or the
Corporation.
PAGE 3
F. Personnel, Office Space, and Facilities of
Manager. The Manager at its own expense shall furnish or provide
and pay the cost of such office space, office equipment, office
personnel, and office services as the Manager requires in the
performance of its investment advisory and other obligations
under this Agreement.
2. Allocation of Expenses.
A. Expenses Paid by Manager.
(1) Salaries and Fees of Officers. The Manager
shall pay all salaries, expenses, and fees of the
officers and directors of the Corporation or Fund who
are affiliated with the Manager.
(2) Assumption of Expenses by Manager. The
payment or assumption by the Manager of any expense
of the Corporation or Fund, as appropriate, that the
Manager is not required by this Agreement to pay or
assume shall not obligate the Manager to pay or
assume the same or any similar expense on any
subsequent occasion.
B. Expenses of Fund. All expenses of the
organization, operations, and business of the Corporation or
Fund, as appropriate, not specifically assumed or agreed to be
paid by the Manager as provided in paragraph 2.A. above, will be
paid in accordance with paragraph 2.D. of this Agreement. Such
expenses include the following:
(1) Custody and Accounting Services. All
expenses of the transfer, receipt, safekeeping,
servicing and accounting for the cash, securities,
and other property of the Fund, including all charges
of depositories, custodians, and other agents, if
any;
(2) Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts,
including all charges of the Fund's transfer,
shareholder recordkeeping, dividend disbursing,
redemption, and other agents, if any;
(3) Shareholder Communications. All expenses of
preparing, setting in type, printing, and
distributing reports and other communications to
shareholders;
(4) Shareholder Meetings. All expenses
incidental to holding meetings of shareholders,
including the printing of notices and proxy material,
and proxy solicitation therefor;
(5) Prospectuses. All expenses of preparing,
setting in type, and printing of annual or more
PAGE 4
frequent revisions of the prospectus and of mailing
them to shareholders;
(6) Pricing. All expenses of computing the
Fund's net asset value per share, including the cost
of any equipment or services used for obtaining price
quotations;
(7) Communication Equipment. All charges for
equipment or services used for communication between
the Manager or the Corporation or the Fund and the
custodian, transfer agent or any other agent selected
by the Corporation or Fund;
(8) Legal and Accounting Fees and Expenses. All
charges for services and expenses of the
Corporation's legal counsel and independent auditors,
for the benefit of the Fund;
(9) Directors' Fees and Expenses. All
compensation of directors, other than those
affiliated with the Manager, and all expenses
incurred in connection with their service;
(10) Federal Registration Fees. All fees and
expenses of registering and maintaining the
registration of the Corporation under the Act and the
registration of Fund Shares under the Securities Act
of 1933, as amended (the "'33 Act"), including all
fees and expenses incurred in connection with the
preparation, setting in type, printing, and filing of
any registration statement and prospectus under the
'33 Act or the Act, and any amendments or supplements
that may be made from time to time;
(11) State Registration Fees. All fees and
expenses of qualifying and maintaining qualification
of the Corporation or Fund, as appropriate, and of
Fund Shares for sale under securities laws of various
states or jurisdictions, and of registration and
qualification of the Corporation or Fund, as
appropriate, under all other laws applicable to the
Corporation or Fund, as appropriate, or its business
activities (including registering the Corporation as
a broker-dealer, or any officer of the Corporation or
any person as agent or salesman of the Corporation in
any state);
(12) Issue and Redemption of Fund Shares. All
expenses incurred in connection with the issue,
redemption, and transfer of Fund Shares, including
the expense of confirming all Fund Share
transactions, and of preparing and transmitting the
Fund's stock certificates;
PAGE 5
(13) Bonding and Insurance. All expenses of
bond, liability, and other insurance coverage
required by law or deemed advisable by the board of
directors;
(14) Brokerage Commissions. All brokers'
commissions and other charges incident to the
purchase, sale, or lending of the Fund's portfolio
securities;
(15) Taxes. All taxes or governmental fees
payable by or with respect of the Corporation or
Fund, as appropriate, to federal, state, or other
governmental agencies, domestic or foreign, including
stamp or other transfer taxes;
(16) Trade Association Fees. All fees, dues, and
other expenses incurred in connection with the
Corporation's or Fund's, as appropriate, membership
in any trade association or other investment
organization; and
(17) Nonrecurring and Extraordinary Expenses.
Such nonrecurring expenses as may arise, including
the costs of actions, suits, or proceedings to which
the Corporation or Fund, as appropriate, is a party
and the expenses the Corporation or Fund, as
appropriate, may incur as a result of its legal
obligation to provide indemnification to its
officers, directors, and agents.
C. Expense Limitation. To the extent that the
aggregate expenses of every character incurred by the Fund in any
fiscal year, excluding interest, taxes, brokerage, and other
expenditures which are capitalized in accordance with generally
accepted accounting principles and extraordinary expenses, shall
exceed the limit ("State Expense Limit") prescribed by any state
in which the Fund's shares are qualified for sale, such excess
amount shall be the liability of the Manager to pay in the manner
specified below. To determine the Manager's liability for the
Fund's expenses, the expenses of the Fund shall be annualized
monthly as of the last day of the month. If the annualized
expenses for any month exceed the State Expense Limit, the
Manager shall remit to the Fund the amount in excess of such
Limit; provided, however, that an adjustment shall be made on or
before the last day of the first month of the next succeeding
fiscal year if the aggregate expenses for the fiscal year do not
exceed the State Expense Limit.
D. Payment of Spectrum Fund Expenses. The parties
hereto acknowledge that, pursuant to a Special Servicing
Agreement entered into between and among the Corporation, the
Manager, various funds in which the Corporation may invest (the
"Underlying Price Funds") and T. Rowe Price Services, Inc., if
the Board of
PAGE 6
Directors/Trustees of any Underlying Price Fund determines that
the aggregate expenses of the Corporation are less than the
estimated savings to the Underlying Price Fund from the operation
of the Corporation, the Underlying Price Fund will bear those
expenses in proportion to the average daily value of its shares
owned by the Corporation, provided further that no Underlying
Price Fund will bear such expenses in excess of the estimated
savings to it ("Excess Expenses"). However, as part of the
consideration for the Fund entering into this Agreement, the
Manager hereby agrees that it will bear any such Excess Expense.
3. Management Fee. The Fund shall not pay the
Manager a fee for the services rendered hereunder.
4. Brokerage. Subject to the approval of the board
of directors, the Manager, in carrying out its duties under
Paragraph 1.A., may cause the Corporation, with respect to the
Fund, to pay a broker-dealer which furnishes brokerage or
research services [as such services are defined under Section
28(e) of the Securities Exchange Act of 1934, as amended (the
"'34 Act")], a higher commission than that which might be charged
by another broker-dealer which does not furnish brokerage or
research services or which furnishes brokerage or research
services deemed to be of lesser value, if such commission is
deemed reasonable in relation to the brokerage and research
services provided by the broker-dealer, viewed in terms of either
that particular transaction or the overall responsibilities of
the Manager with respect to the accounts as to which it exercises
investment discretion (as such term is defined under Section
3(a)(35) of the '34 Act).
5. Manager's Use of the Services of Others. The
Manager may (at its cost except as contemplated by Paragraph 4 of
this Agreement) employ, retain or otherwise avail itself of the
services or facilities of other persons or organizations for the
purpose of providing the Manager or the Corporation or Fund, as
appropriate, with such statistical and other factual information,
such advice regarding economic factors and trends, such advice as
to occasional transactions in specific securities or such other
information, advice or assistance as the Manager may deem
necessary, appropriate or convenient for the discharge of its
obligations hereunder or otherwise helpful to the Corporation or
Fund, as appropriate, or in the discharge of Manager's overall
responsibilities with respect to the other accounts which it
serves as investment manager.
6. Ownership of Records. All records required to be
maintained and preserved by the Corporation or Fund pursuant to
the provisions of rules or regulations of the Securities and
Exchange Commission under Section 31(a) of the Act and maintained
and preserved by the Manager on behalf of the Corporation or
Fund, as appropriate, are the property of the Corporation or
Fund, as appropriate, and will be surrendered by the Manager
promptly on request by the Corporation or Fund, as appropriate.
PAGE 7
7. Reports to Manager. The Corporation or Fund, as
appropriate, shall furnish or otherwise make available to the
Manager such prospectuses, financial statements, proxy
statements, reports, and other information relating to the
business and affairs of the Corporation or Fund, as appropriate,
as the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this
Agreement.
8. Services to Other Clients. Nothing herein
contained shall limit the freedom of the Manager or any
affiliated person of the Manager to render investment supervisory
and corporate administrative services to other investment
companies, to act as investment manager or investment counselor
to other persons, firms or corporations, or to engage in other
business activities; but so long as this Agreement or any
extension, renewal or amendment hereof shall remain in effect or
until the Manager shall otherwise consent, the Manager shall be
the only investment manager to the Fund.
9. Limitation of Liability of Manager. Neither the
Manager nor any of its officers, directors, or employees, nor any
person performing executive, administrative, trading, or other
functions for the Corporation or Fund (at the direction or
request of the Manager) or the Manager in connection with the
Manager's discharge of its obligations undertaken or reasonably
assumed with respect to this Agreement, shall be liable for any
error of judgment or mistake of law or for any loss suffered by
the Corporation or Fund in connection with the matters to which
this Agreement relates, except for loss resulting from willful
misfeasance, bad faith, or gross negligence in the performance of
its or his duties on behalf of the Corporation or Fund or from
reckless disregard by the Manager or any such person of the
duties of the Manager under this Agreement.
10. Use of Manager's Name. The Corporation or Fund
may use the name "T. Rowe Price Spectrum Fund, Inc." or any other
name derived from the name "T. Rowe Price" only for so long as
this Agreement or any extension, renewal or amendment hereof
remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of the
Manager as investment manager. At such time as this Agreement or
any extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, the Corporation or Fund
will (by corporate action, if necessary) cease to use any name
derived from the name "T. Rowe Price," any name similar thereto
or any other name indicating that it is advised by or otherwise
connected with the Manager, or with any organization which shall
have succeeded to the Manager's business as investment manager.
11. Term of Agreement. The term of this Agreement
shall begin on the date first above written, and unless sooner
terminated as hereinafter provided, this Agreement shall remain
in effect
PAGE 8
through April 30, 1998. Thereafter, this Agreement shall continue
in effect from year to year, with respect to the Fund, subject to
the termination provisions and all other terms and conditions
hereof, so long as: (a) such continuation shall be specifically
approved at least annually by the board of directors of the
Corporation or by vote of a majority of the outstanding voting
securities of the Fund and, concurrently with such approval by
the board of directors or prior to such approval by the holders
of the outstanding voting securities of the Fund, as the case may
be, by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the
directors of the Corporation, with respect to the Fund, who are
not parties to this Agreement or interested persons of any such
party; and (b) the Manager shall not have notified the
Corporation, in writing, at least 60 days prior to April 30, 1998
or prior to April 30th of any year thereafter, that it does not
desire such continuation. The Manager shall furnish to the
Corporation, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement
or any extension, renewal or amendment hereof.
12. Amendment and Assignment of Agreement. This
Agreement may not be amended or assigned without the affirmative
vote of a majority of the outstanding voting securities of the
Fund, and this Agreement shall automatically and immediately
terminate in the event of its assignment.
13. Termination of Agreement. This Agreement may be
terminated by either party hereto, without the payment of any
penalty, upon 60 days' prior notice in writing to the other
party; provided, that in the case of termination by the
Corporation, with respect to the Fund, such action shall have
been authorized by resolution of a majority of the directors who
are not parties to this Agreement or interested persons of any
such party, or by vote of a majority of the outstanding voting
securities of the Fund.
14. Miscellaneous.
A. Captions. The captions in this Agreement are
included for convenience of reference only and in no way define
or delineate any of the provisions hereof or otherwise affect
their construction or effect.
B. Interpretation. Nothing herein contained shall
be deemed to require the Corporation to take any action contrary
to its Articles of Incorporation or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the board of
directors of the Corporation of its responsibility for and
control of the conduct of the affairs of the Fund.
C. Definitions. Any question of interpretation of
any term or provision of this Agreement having a counterpart in
or
PAGE 9
otherwise derived from a term or provision of the Act shall be
resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested person," "assignment," and "affiliated person," as
used in Paragraphs 2, 7, 10, 11, and 12 hereof, shall have the
meanings assigned to them by Section 2(a) of the Act. In
addition, where the effect of a requirement of the Act reflected
in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized and their respective seals to be hereunto
affixed, as of the day and year first above written.
Attest: T. ROWE PRICE SPECTRUM FUND, INC.
/S/PATRICIA S. BUTCHER By: /S/JAMES S. RIEPE
Patricia S. Butcher James S. Riepe
Assistant Secretary Chairman of the Board
Attest: ROWE PRICE-FLEMING INTERNATIONAL,
INC.
/S/BARBARA A. VAN HORN By: /S/M. DAVID TESTA
Barbara A. Van Horn M. David Testa
Assistant Secretary Chairman of the Board
The Custodian Agreement dated September 28, 1987, as
amended, between State Street Bank and Trust Company and T. Rowe
Price Funds should be inserted here.
CUSTODIAN CONTRACT
Between
STATE STREET BANK AND TRUST COMPANY
and
EACH OF THE PARTIES INDICATED
ON APPENDIX A
DATED: SEPTEMBER 28, 1987
FRF 07/87
PAGE 2
TABLE OF CONTENTS
1. Employment of Custodian and Property to be Held By It1
2. Duties of the Custodian with Respect to Property of the Fund
Held by the Custodian in the United States. . . 2
2.1 Holding Securities . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . 2
1) Sale . . . . . . . . . . . . . . . . . . 2
2) Repurchase Agreement . . . . . . . . . . 2
3) Securities System . . . . . . . . . . . . 3
4) Tender Offer . . . . . . . . . . . . . . 3
5) Redemption by Issuer . . . . . . . . . . 3
6) Transfer to Issuer, Nominee, Exchange . . 3
7) Sale to Broker . . . . . . . . . . . . . 3
8) Exchange or Conversion . . . . . . . . . 4
9) Warrants, Rights . . . . . . . . . . . . 4
10) Loans of Securities . . . . . . . . . . . 4
11) Borrowings . . . . . . . . . . . . . . . 4
12) Options . . . . . . . . . . . . . . . . . 5
13) Futures . . . . . . . . . . . . . . . . . 5
14) In-Kind Distributions . . . . . . . . . . 5
15) Miscellaneous . . . . . . . . . . . . . . 5
16) Type of Payment . . . . . . . . . . . . . 6
2.3 Registration of Securities . . . . . . . . . 6
2.4 Bank Accounts . . . . . . . . . . . . . . . . 7
2.5 Sale of Shares and Availability of Federal Funds7
2.6 Collection of Income, Dividends . . . . . . . 7
2.7 Payment of Fund Monies . . . . . . . . . . . 8
1) Purchases . . . . . . . . . . . . . . . . 8
2) Exchanges . . . . . . . . . . . . . . . . 9
3) Redemptions . . . . . . . . . . . . . . . 9
4) Expense and Liability . . . . . . . . . . 9
5) Dividends . . . . . . . . . . . . . . . . 9
6) Short Sale Dividend . . . . . . . . . . . 10
7) Loan . . . . . . . . . . . . . . . . . . 10
8) Miscellaneous . . . . . . . . . . . . . . 10
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased . . . . . . . . . . . 10
2.9 Appointment of Agents . . . . . . . . . . . . 10
2.10 Deposit of Securities in Securities System . 10
1) Account of Custodian . . . . . . . . . . 11
2) Records . . . . . . . . . . . . . . . . . 11
3) Payment of Fund Monies, Delivery of
Securities . . . . . . . . . . . . . . 11
4) Reports . . . . . . . . . . . . . . . . . 12
5) Annual Certificate . . . . . . . . . . . 12
6) Indemnification . . . . . . . . . . . . . 12
2.11 Fund Assets Held in the Custodian's Direct Paper
System . . . . . . . . . . . . . . . . . . 13
2.12 Segregated Account . . . . . . . . . . . . . 14
PAGE 3
2.13 Ownership Certificates for Tax Purposes . . . 15
2.14 Proxies . . . . . . . . . . . . . . . . . . . 15
2.15 Communications Relating to Fund Portfolio
Securities . . . . . . . . . . . . . . . . 15
2.16 Reports to Fund by Independent Public
Accountants . . . . . . . . . . . . . . . . 16
3. Duties of the Custodian with Respect to Property
of the Fund Held Outside of the United States . 16
3.1 Appointment of Foreign Sub-Custodians . . . . 16
3.2 Assets to be Held . . . . . . . . . . . . . . 17
3.3 Foreign Securities Depositories . . . . . . . 17
3.4 Segregation of Securities . . . . . . . . . . 17
3.5 Access of Independent Accountants of the Fund 17
3.6 Reports by Custodian . . . . . . . . . . . . 18
3.7 Transactions in Foreign Assets of the Fund . 18
3.8 Responsibility of Custodian, Sub-Custodian and
Fund . . . . . . . . . . . . . . . . . . . 18
3.9 Monitoring Responsibilities . . . . . . . . . 19
3.10 Branches of U.S. Banks . . . . . . . . . . . 19
4. Payments for Repurchases or Redemptions and Sales of
Shares of the Fund . . . . . . . . . . . . . . . 19
5. Proper Instructions . . . . . . . . . . . . . . . 20
6. Actions Permitted Without Express Authority . . . 21
7. Evidence of Authority, Reliance on Documents . . . 21
8. Duties of Custodian with Respect to the Books of
Account and Calculations of Net Asset Value and
Net Income . . . . . . . . . . . . . . . . . . . 22
9. Records, Inventory . . . . . . . . . . . . . . . . 22
10. Opinion of Fund's Independent Accountant . . . . . 23
11. Compensation of Custodian . . . . . . . . . . . . 23
12. Responsibility of Custodian . . . . . . . . . . . 23
13. Effective Period, Termination and Amendment . . . 25
14. Successor Custodian . . . . . . . . . . . . . . . 26
15. Interpretive and Additional Provisions . . . . . . 28
16. Notice . . . . . . . . . . . . . . . . . . . . . . 28
17. Bond . . . . . . . . . . . . . . . . . . . . . . . 28
18. Confidentiality . . . . . . . . . . . . . . . . . 29
19. Exemption from Liens . . . . . . . . . . . . . . . 29
20. Massachusetts Law to Apply . . . . . . . . . . . . 29
21. Prior Contracts . . . . . . . . . . . . . . . . . 29
22. The Parties . . . . . . . . . . . . . . . . . . . 30
23. Governing Documents . . . . . . . . . . . . . . . 30
24. Subcustodian Agreement . . . . . . . . . . . . . . 30
25. Directors and Trustees . . . . . . . . . . . . . . 30
26. Massachusetts Business Trust . . . . . . . . . . . 30
27. Successors of Parties . . . . . . . . . . . . . . 31
PAGE 4
CUSTODIAN CONTRACT
This Contract by and between State Street Bank and Trust
Company, a Massachusetts trust company, having its principal
place of business at 225 Franklin Street, Boston, Massachusetts,
02110 (hereinafter called the "Custodian"), and each fund which
is listed on Appendix A (as such Appendix may be amended from
time to time) and which evidences its agreement to be bound
hereby by executing a copy of this Contract (each such fund
individually hereinafter called the "Fund," whose definition may
be found in Section 22),
WITNESSETH: That in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto agree as
follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of
its assets, including securities it desires to be held in places
within the United States ("domestic securities") and securities
it desires to be held outside the United States ("foreign
securities") pursuant to the Governing Documents of the Fund.
The Fund agrees to deliver to the Custodian all securities and
cash now or hereafter owned or acquired by it, and all payments
of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for
such new or treasury shares of capital stock ("Shares") of the
Fund as may be issued or sold from time to time. The Custodian
shall not be responsible for any property of the Fund held or
received by the Fund and not delivered to the Custodian.
With respect to domestic securities, upon receipt of "Proper
Instructions" (within the meaning of Article 5), the Custodian
shall from time to time employ one or more sub-custodians located
in the United States, but only in accordance with an applicable
vote by the Board of Directors/Trustees of the Fund, and provided
that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of
any sub-custodian so employed than any such sub-custodian has to
the Custodian, and further provided that the Custodian shall not
release the sub-custodian from any responsibility or liability
unless mutually agreed upon by the parties in writing. With
respect to foreign securities and other assets of the Fund held
outside the United States, the Custodian shall employ Chase
Manhattan Bank, N.A., as a sub-custodian for the Fund in
accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of the Fund all
PAGE 5
non-cash property, to be held by it in the United States,
including all domestic securities owned by the Fund, other
than (a) securities which are maintained pursuant to Section
2.10 in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S.
Department of the Treasury, collectively referred to herein
as "Securities System," and (b) commercial paper of an
issuer for which the Custodian acts as issuing and paying
agent ("Direct Paper") which is deposited and/or maintained
in the Direct Paper System of the Custodian pursuant to
Section 2.11.
2.2 Delivery of Securities. The Custodian shall release
and deliver domestic securities owned by the Fund held by
the Custodian or in a Securities System account of the
Custodian or in the Custodian's Direct Paper book entry
system account ("Direct Paper System Account") only upon
receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by mutual agreement of
the parties, and only in the following cases:
1) Sale. Upon sale of such securities for the
account of the Fund and receipt of payment
therefor;
2) Repurchase Agreement. Upon the receipt of payment
in connection with any repurchase agreement
related to such securities entered into by the
Fund;
3) Securities System. In the case of a sale effected
through a Securities System, in accordance with
the provisions of Section 2.10 hereof;
4) Tender Offer. To the depository agent or other
receiving agent in connection with tender or other
similar offers for portfolio securities of the
Fund;
5) Redemption by Issuer. To the issuer thereof or
its agent when such securities are called,
redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) Transfer to Issuer, Nominee. Exchange. To the
issuer thereof, or its agent, for transfer into
the name of the Fund or into the name of any
nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or
nominee name of any sub-custodian appointed
pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other
evidence representing the same aggregate face
amount or number of units and bearing the same
interest rate, maturity date and call provisions,
PAGE 6
if any; provided that, in any such case, the new
securities are to be delivered to the Custodian;
7) Sale to Broker or Dealer. Upon the sale of such
securities for the account of the Fund, to the
broker or its clearing agent or dealer, against a
receipt, for examination in accordance with
"street delivery" custom; provided that in any
such case, the Custodian shall have no
responsibility or liability for any loss arising
from the delivery of such securities prior to
receiving payment for such securities except as
may arise from the Custodian's failure to act in
accordance with its duties as set forth in
Section 12.
8) Exchange or Conversion. For exchange or
conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization,
split-up of shares, change of par value or
readjustment of the securities of the issuer of
such securities, or pursuant to provisions for
conversion contained in such securities, or
pursuant to any deposit agreement provided that,
in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;
9) Warrants, Rights. In the case of warrants, rights
or similar securities, the surrender thereof in
the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or
temporary securities for definitive securities;
provided that, in any such case, the new
securities and cash, if any, are to be delivered
to the Custodian;
10) Loans of Securities. For delivery in connection
with any loans of securities made by the Fund, but
only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and
the Fund, which may be in the form of cash,
obligations issued by the United States
government, its agencies or instrumentalities, or
such other property as mutually agreed by the
parties, except that in connection with any loans
for which collateral is to be credited to the
Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury,
the Custodian will not be held liable or
responsible for the delivery of securities owned
by the Fund prior to the receipt of such
collateral, unless the Custodian fails to act in
accordance with its duties set forth in
Article 12;
PAGE 7
11) Borrowings. For delivery as security in
connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only
against receipt of amounts borrowed, except where
additional collateral is required to secure a
borrowing already made, subject to Proper
Instructions, further securities may be released
for that purpose;
12) Options. For delivery in accordance with the
provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing
Corporation, any registered national securities
exchange, any similar organization or
organizations, or the Investment Company Act of
1940, regarding escrow or other arrangements in
connection with transactions by the Fund;
13) Futures. For delivery in accordance with the
provisions of any agreement among the Fund, the
Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act,
relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any
Contract Market, any similar organization or
organizations, or the Investment Company Act of
1940, regarding account deposits in connection
with transactions by the Fund;
14) In-Kind Distributions. Upon receipt of
instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in
connection with distributions in kind, as may be
described from time to time in the Fund's
currently effective prospectus and statement of
additional information ("prospectus"), in
satisfaction of requests by holders of Shares for
repurchase or redemption;
15) Miscellaneous. For any other proper corporate
purpose, but only upon receipt of, in addition to
Proper Instructions, a certified copy of a
resolution of the Board of Directors/Trustees or
of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities to
be delivered, setting forth the purpose for which
such delivery is to be made, declaring such
PAGE 8
purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of
such securities shall be made; and
16) Type of Payment. In any or all of the above
cases, payments to the Fund shall be made in cash,
by a certified check upon or a treasurer's or
cashier's check of a bank, by effective bank wire
transfer through the Federal Reserve Wire System
or, if appropriate, outside of the Federal Reserve
Wire System and subsequent credit to the Fund's
Custodian account, or, in case of delivery through
a stock clearing company, by book-entry credit by
the stock clearing company in accordance with the
then current street custom, or such other form of
payment as may be mutually agreed by the parties,
in all such cases collected funds to be promptly
credited to the Fund.
2.3 Registration of Securities. Domestic securities held
by the Custodian (other than bearer securities) shall be
registered in the name of the Fund or in the name of any
nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless
the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered
investment companies having the same investment adviser as
the Fund, or in the name or nominee name of any agent
appointed pursuant to Section 2.9 or in the name or nominee
name of any sub-custodian appointed pursuant to Article 1.
All securities accepted by the Custodian on behalf of the
Fund under the terms of this Contract shall be in "street
name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the United States in
the name of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the
provisions hereof all cash received by it from or for the
account of the Fund, other than cash maintained by the Fund
in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for the Fund may be deposited for the
Fund's credit in the Banking Department of the Custodian or
in such other banks or trust companies as the Custodian may
in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the
funds to be deposited with each such bank or trust company
shall be approved by vote of a majority of the Board of
Directors/Trustees of the Fund. Such funds shall be
PAGE 9
deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that
capacity.
2.5 Sale of Shares and Availability of Federal Funds. Upon
mutual agreement between the Fund and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions,
make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for
Shares of the Fund which are deposited into the Fund's
account.
2.6 Collection of Income, Dividends. The Custodian shall
collect on a timely basis all income and other payments with
respect to United States registered securities held
hereunder to which the Fund shall be entitled either by law
or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to United States bearer securities if, on the date
of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income
or other payments, as collected, to the Fund's custodian
account. Without limiting the generality of the foregoing,
the Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on
securities held hereunder. The Custodian will also receive
and collect all stock dividends, rights and other items of
like nature as and when they become due or payable. Income
due the Fund on United States securities loaned pursuant to
the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty
or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Fund is
properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper
Instructions,
which may be continuing instructions when deemed appropriate
by mutual agreement of the parties, the Custodian shall pay
out monies of the Fund in the following cases only:
1) Purchases. Upon the purchase of domestic
securities, options, futures contracts or options
on futures contracts for the account of the Fund
but only (a) against the delivery of such
securities, or evidence of title to such options,
futures contracts or options on futures contracts,
to the Custodian (or any bank, banking firm or
trust company doing business in the United States
or abroad which is qualified under the Investment
PAGE 10
Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian
as its agent for this purpose in accordance with
Section 2.9 hereof) registered in the name of the
Fund or in the name of a nominee of the Fund or of
the Custodian referred to in Section 2.3 hereof or
in other proper form for transfer; (b) in the case
of a purchase effected through a Securities
System, in accordance with the conditions set
forth in Section 2.10 hereof or (c) in the case of
a purchase involving the Direct Paper System, in
accordance with the conditions set forth in
Section 2.11; or (d) in the case of repurchase
agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer
which is a member of NASD, (i) against delivery of
the securities either in certificate form or
through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities
or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the
Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Fund. All coupon bonds
accepted by the Custodian shall have the coupons
attached or shall be accompanied by a check
payable on coupon payable date for the interest
due on such date.
2) Exchanges. In connection with conversion,
exchange or surrender of securities owned by the
Fund as set forth in Section 2.2 hereof;
3) Redemptions. For the redemption or repurchase of
Shares issued by the Fund as set forth in Article
4 hereof;
4) Expense and Liability. For the payment of any
expense or liability incurred by the Fund,
including but not limited to the following
payments for the account of the Fund: interest,
taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund
whether or not such expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) Dividends. For the payment of any dividends or
other distributions to shareholders declared
pursuant to the Governing Documents of the Fund;
6) Short Sale Dividend. For payment of the amount of
dividends received in respect of securities sold
short;
7) Loan. For repayment of a loan upon redelivery of
pledged securities and upon surrender of the
PAGE 11
note(s), if any, evidencing the loan;
8) Miscellaneous. For any other proper purpose, but
only upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of
the Board of Directors/Trustees or of the
Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary
or an Assistant Secretary, specifying the amount
of such payment, setting forth the purpose for
which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be
made.
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased. In any and every case where payment
for purchase of domestic securities for the account of the
Fund is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been
received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time
or times in its discretion appoint (and may at any time
remove) any other bank or trust company, which is itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out
such of the provisions of this Article 2 as the Custodian
may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of
its responsibilities or liabilities hereunder.
2.10 Deposit of Securities in Securities Systems. The
Custodian may deposit and/or maintain domestic securities
owned by the Fund in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal
agencies, collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and
regulations, if any, and subject to the following
provisions:
1) Account of Custodian. The Custodian may keep
domestic securities of the Fund in a Securities
System provided that such securities are
represented in an account ("Account") of the
Custodian in the Securities System which shall not
include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise
PAGE 12
for customers;
2) Records. The records of the Custodian, with
respect to domestic securities of the Fund which
are maintained in a Securities System, shall
identify by book-entry those securities belonging
to the Fund;
3) Payment of Fund Monies, Delivery of Securities.
Subject to Section 2.7, the Custodian shall pay
for domestic securities purchased for the account
of the Fund upon (i) receipt of advice from the
Securities System that such securities have been
transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to
reflect such payment and transfer for the account
of the Fund. Subject to Section 2.2, the
Custodian shall transfer domestic securities sold
for the account of the Fund upon (i) receipt of
advice from the Securities System that payment for
such securities has been transferred to the
Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies
of all advices from the Securities System of
transfers of domestic securities for the account
of the Fund shall identify the Fund, be maintained
for the Fund by the Custodian and be provided to
the Fund at its request. The Custodian shall
furnish the Fund confirmation of each transfer to
or from the account of the Fund in the form of a
written advice or notice and shall furnish to the
Fund copies of daily transaction sheets reflecting
each day's transactions in the Securities System
for the account of the Fund;
4) Reports. The Custodian shall provide the Fund
with any report obtained by the Custodian on the
Securities System's accounting system, internal
accounting control and procedures for safeguarding
domestic securities deposited in the Securities
System, and further agrees to provide the Fund
with copies of any documentation it has relating
to its arrangements with the Securities Systems as
set forth in this Agreement or as otherwise
required by the Securities and Exchange
Commission;
5) Annual Certificate. The Custodian shall have
received the initial or annual certificate, as the
case may be, required by Article 13 hereof;
6) Indemnification. Anything to the contrary in this
Contract notwithstanding, the Custodian shall be
liable to the Fund for any loss or expense,
PAGE 13
including reasonable attorneys fees, or damage to
the Fund resulting from use of the Securities
System by reason of any failure by the Custodian
or any of its agents or of any of its or their
employees or agents or from failure of the
Custodian or any such agent to enforce effectively
such rights as it may have against the Securities
System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the
Custodian with respect to any claim against the
Securities System or any other person which the
Custodian may have as a consequence of any such
loss, expense or damage if and to the extent that
the Fund has not been made whole for any such
loss, expense or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper
System. The Custodian may deposit and/or maintain
securities owned by the Fund in the Direct Paper System of
the Custodian subject to the following provisions:
1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in
the Direct Paper System only if such securities
are represented in an account ("Account") of the
Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to
securities of the Fund which are maintained in the
Direct Paper System shall identify by book-entry
those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased
for the account of the Fund upon the making of an
entry on the records of the Custodian to reflect
such payment and transfer of securities to the
account of the Fund. The Custodian shall transfer
securities sold for the account of the Fund upon
the making of an entry on the records of the
Custodian to reflect such transfer and receipt of
payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation
of each transfer to or from the account of the
Fund, in the form of a written advice or notice,
of Direct Paper on the next business day following
such transfer and shall furnish to the Fund copies
of daily transaction sheets reflecting each day's
transaction in the Securities System for the
account of the Fund;
PAGE 14
6) The Custodian shall provide the Fund with any
report on its system of internal accounting
control as the Fund may reasonably request from
time to time;
2.12 Segregated Account. The Custodian shall, upon receipt
of Proper Instructions, which may be of a continuing nature
where deemed appropriate by mutual agreement of the parties,
establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts
may be transferred cash and/or securities, including
securities maintained in an account by the Custodian
pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund, the Custodian
and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization
or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund, (ii) for purposes
of segregating cash or government securities in connection
with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or
sold by the Fund, (iii) for the purposes of compliance by
the Fund with the procedures required by Investment Company
Act Release No. 10666, or any subsequent release, rule or
policy, of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt
of, in addition to Proper Instructions, a certified copy of
a resolution of the Board of Directors/Trustees or of the
Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate
purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it and in
connection with transfers of such securities.
2.14 Proxies. If the securities are registered other than
in the name of the Fund or a nominee of the Fund, the
Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the
PAGE 15
registered holder of such securities, all proxies, without
indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Fund such proxies,
all proxy soliciting materials and all notices relating to
such securities.
2.15 Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to the Fund all
written information (including, without limitation, pendency
of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund and the
maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the domestic
securities being held for the Fund by the Custodian, an
agent appointed under Section 2.9, or sub-custodian
appointed under Section 1. With respect to tender or
exchange offers, the Custodian shall transmit promptly to
the Fund all written information received by the Custodian,
an agent appointed under Section 2.9, or sub-custodian
appointed under Section 1 from issuers of the domestic
securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer.
If the Fund desires to take action with respect to any
tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian of such
desired action at least 72 hours (excluding holidays and
weekends) prior to the time such action must be taken under
the terms of the tender, exchange offer, or other similar
transaction, and it will be the responsibility of the
Custodian to timely transmit to the appropriate person(s)
the Fund's notice. Where the Fund does not notify the
Custodian of its desired action within the aforesaid 72 hour
period, the Custodian shall use its best efforts to timely
transmit the Fund's notice to the appropriate person.
2.16 Reports to Fund by Independent Public Accountants. The
Custodian shall provide the Fund, at such times as the Fund
may reasonably require, with reports by independent public
accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including
domestic securities deposited and/or maintained in a
Securities System, relating to the services provided by the
Custodian under this Contract; such reports shall be of
sufficient scope and in sufficient detail, as may reasonably
be required by the Fund to provide reasonable assurance that
any material inadequacies existing or arising since the
prior examination would be disclosed by such examination.
The reports must describe any material inadequacies
disclosed and, if there are no such inadequacies, the
reports shall so state.
PAGE 16
3. Duties of the Custodian with Respect to Property of the Fund
Held Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Custodian
is authorized and instructed to employ Chase Manhattan Bank,
N.A, ("Chase") as sub-custodian for the Fund's securities,
cash and other assets maintained outside of the United
States ("foreign assets") all as described in the
Subcustodian Agreement between the Custodian and Chase.
Upon receipt of "Proper Instructions", together with a
certified resolution of the Fund's Board of
Directors/Trustees, the Custodian and the Fund may agree to
designate additional proper institutions and foreign
securities depositories to act as sub-custodians of the
Fund's foreign assets. Upon receipt of Proper Instructions
from the Fund, the Custodian shall cease the employment of
any one or more of such sub-custodians for maintaining
custody of the Fund's foreign assets.
3.2 Assets to be Held. The Custodian shall limit the
foreign assets maintained in the custody of foreign sub-
custodians to foreign assets specified under the terms of
the Subcustodian Agreement between the Custodian and Chase.
3.3 Foreign Securities Depositories. Except as may
otherwise be agreed upon in writing by the Custodian and the
Fund, foreign assets of the Fund shall be maintained in
foreign securities depositories only through arrangements
implemented by the banking institutions serving as sub-
custodians pursuant to the terms hereof.
3.4 Segregation of Securities. The Custodian shall
identify on its books as belonging to the Fund, the foreign
assets of the Fund held by Chase and by each foreign sub-
custodian.
3.5 Access of Independent Accountants of the Fund. Upon
request of the Fund, the Custodian will use its best efforts
(subject to applicable law) to arrange for the independent
accountants, officers or other representatives of the Fund
or the Custodian to be afforded access to the books and
records of Chase and any banking or other institution
employed as a sub-custodian for the Fund by Chase or the
Custodian insofar as such books and records relate to the
performance of Chase or such banking or other institution
under any agreement with the Custodian or Chase. Upon
request of the Fund, the Custodian shall furnish to the Fund
such reports (or portions thereof) of Chase's external
auditors as are available to the Custodian and which relate
directly to Chase's system of internal accounting controls
applicable to Chase's duties as a subcustodian or which
relate to the internal accounting controls of any
subcustodian employed by Chase with respect to foreign
assets of the Fund.
PAGE 17
3.6 Reports by Custodian. The Custodian will supply to the
Fund from time to time, as mutually agreed upon, statements
in respect of the foreign assets of the Fund held pursuant
to the terms of the Subcustodian Agreement between the
Custodian and Chase, including but not limited, to an
identification of entities having possession of the Fund's
foreign assets and advices or notifications of any transfers
of foreign assets to or from each custodial account
maintained by any sub-custodian on behalf of the Fund
indicating, as to foreign assets acquired for the Fund, the
identity of the entity having physical possession of such
foreign assets.
3.7 Transactions in Foreign Assets of the Fund. All
transactions with respect to the Fund's foreign assets shall
be in accordance with, and subject to, the provisions of the
Subcustodian Agreement between Chase and the Custodian.
3.8 Responsibility of Custodian, Sub-Custodian, and Fund.
Notwithstanding anything to the contrary in this Custodian
Contract, the Custodian shall not be liable to the Fund for
any loss, damage, cost, expense, liability or claim arising
out of or in connection with the maintenance of custody of
the Fund's foreign assets by Chase or by any other banking
institution or securities depository employed pursuant to
the terms of any Subcustodian Agreement between Chase and
the Custodian, except that the Custodian shall be liable for
any such loss, damage, cost, expense, liability or claim to
the extent provided in the Subcustodian Agreement between
Chase and the Custodian or attributable to the failure of
the Custodian to exercise the standard of care set forth in
Article 12 hereof in the performance of its duties under
this Contract or such Subcustodian Agreement. At the
election of the Fund, the Fund shall be entitled to be
subrogated to the rights of the Custodian under the
Subcustodian Agreement with respect to any claims arising
thereunder against Chase or any other banking institution or
securities depository employed by Chase if and to the extent
that the Fund has not been made whole therefor. As between
the Fund and the Custodian, the Fund shall be solely
responsible to assure that the maintenance of foreign
securities and cash pursuant to the terms of the
Subcustodian Agreement complies with all applicable rules,
regulations, interpretations and orders of the Securities
and Exchange Commission, and the Custodian assumes no
responsibility and makes no representations as to such
compliance.
3.9 Monitoring Responsibilities. With respect to the
Fund's foreign assets, the Custodian shall furnish annually
to the Fund, during the month of June, information
concerning the sub-custodians employed by the Custodian.
PAGE 18
Such information shall be similar in kind and scope to that
furnished to the Fund in connection with the initial
approval of this Contract. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian
learns of a material adverse change in the financial
condition of a sub-custodian.
3.10 Branches of U.S. Banks. Except as otherwise set forth
in this Contract, the provisions of this Article 3 shall not
apply where the custody of the Fund's assets is maintained
in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment
Company Act of 1940 which meets the qualification set forth
in Section 26(a) of said Act. The appointment of any such
branch as a sub-custodian shall be governed by Section 1 of
this Contract.
4. Payments for Repurchases or Redemptions and Sales of Shares
of the Fund
From such funds as may be available for the purpose but
subject to the limitations of the Governing Documents of the Fund
and any applicable votes of the Board of Directors/Trustees of
the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of the
Fund, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholder. In connection with
the redemption or repurchase of Shares of the Fund, the Custodian
shall honor checks drawn on the Custodian by a holder of Shares,
which checks have been furnished by the Fund to the holder of
Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to
time between the Fund and the Custodian.
The Custodian shall receive from the distributor for the
Fund's Shares or from the Transfer Agent of the Fund and deposit
as received into the Fund's account such payments as are received
for Shares of the Fund issued or sold from time to time by the
Fund. The Custodian will provide timely notification to the Fund
and the Transfer Agent of any receipt by it of payments for
Shares of the Fund.
5. Proper Instructions
Proper Instructions as used herein means a writing signed or
initialled by one or more person or persons as the Board of
Directors/Trustees shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the
purpose for which such action is requested, or shall be a blanket
instruction authorizing specific transactions of a repeated or
PAGE 19
routine nature. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all
oral instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the
authorization by the Board of Directors/Trustees of the Fund
accompanied by a detailed description of procedures approved by
the Board of Directors/Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or
electronic devices provided that the Board of Directors/Trustees
and the Custodian are satisfied that such procedures afford
adequate safeguards for the Fund's assets.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express
authority from the Fund:
1) make payments to itself or others for minor
expenses of handling securities or other similar
items relating to its duties under this Contract,
provided that all such payments shall be accounted
for to the Fund;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments on
the same day as received; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange,
substitution, purchase, transfer and other
dealings with the securities and property of the
Fund except as otherwise directed by the Board of
Directors/Trustees of the Fund.
7. Evidence of Authority, Reliance on Documents
The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other
instrument or paper reasonably and in good faith believed by it
to be genuine and to have been properly executed by or on behalf
of the Fund in accordance with Article 5 hereof. The Custodian
may receive and accept a certified copy of a vote of the Board of
Directors/Trustees of the Fund as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or
(b) of any determination or of any action by the Board of
Directors/Trustees pursuant to the Governing Documents of the
Fund as described in such vote, and such vote may be considered
as in full force and effect until receipt by the Custodian of
written notice to the contrary. So long as and to the extent
that it is in the exercise of the standard of care set forth in
Article 12 hereof, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of
title thereto received by it or delivered by it pursuant to this
PAGE 20
Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party
or parties.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the person or persons appointed by the Board of
Directors/Trustees of the Fund to keep the books of account of
the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do
so by the Fund, shall itself keep such books of account and/or
compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Fund
as described in the Fund's currently effective prospectus and
shall advise the Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various
components. The calculations of the net asset value per share
and the daily income of the Fund shall be made at the time or
times and in the manner described from time to time in the Fund's
currently effective prospectus.
9. Records, Inventory
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the
Fund. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the
Custodian be open for inspection and audit by duly authorized
officers, employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission, and, in the
event of termination of this Agreement, will be delivered in
accordance with Section 14 hereof. The Custodian shall, at the
Fund's request, supply the Fund with a tabulation of securities
owned by the Fund and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall
be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations. The Custodian shall
conduct a periodic inventory of all securities and other property
subject to this Agreement and provide to the Fund a periodic
reconciliation of the vaulted position of the Fund to the
appraised position of the Fund. The Custodian will promptly
report to the Fund the results of the reconciliation, indicating
any shortages or discrepancies uncovered thereby, and take
appropriate action to remedy any such shortages or discrepancies.
PAGE 21
10. Opinion of Fund's Independent Accountant
The Custodian shall cooperate with the Fund's independent
public accountants in connection with the annual and other audits
of the books and records of the Fund and take all reasonable
action, as the Fund may from time to time request, to provide
from year to year the necessary information to such accountants
for the expression of their opinion without any qualification as
to the scope of their examination, including but not limited to,
any opinion in connection with the preparation of the Fund's Form
N-lA, and Form N-SAR or other annual reports to the Securities
and Exchange Commission and with respect to any other
requirements of such Commission.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation
for its services and expenses as Custodian, as agreed upon from
time to time between the Fund and the Custodian.
12. Responsibility of Custodian
Notwithstanding anything to the contrary in this Agreement,
the Custodian shall be held to the exercise of reasonable care in
carrying out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence.
In order for the indemnification provision contained in this
Section to apply, it is understood that if in any case the Fund
may be asked to indemnify or save the Custodian harmless, the
Fund shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further
understood that the Custodian will use all reasonable care to
identify and notify the Fund promptly concerning any situation
which presents or appears likely to present the probability of
such a claim for indemnification against the Fund. The Fund,
shall have the option to defend the Custodian against any claim
which may be the subject of this indemnification, and in the
event that the Fund so elects, it will so notify the Custodian,
and thereupon the Fund shall take over complete defense of the
claim and the Custodian shall in such situation initiate no
further legal or other expenses for which it shall seek
indemnification under this Section. The Custodian shall in no
case confess any claim or make any compromise in any case in
which the Fund will be asked to indemnify the Custodian except
with the Fund's prior written consent. Nothing herein shall be
construed to limit any right or cause of action on the part of
the Custodian under this Contract which is independent of any
right or cause of action on the part of the Fund. The Custodian
shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Fund or such other counsel as may be
agreed to by the parties) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to
such advice. Notwithstanding the foregoing, the responsibility
PAGE 22
of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate Agreement entered into
between the Custodian and the Fund.
If the Fund requires the Custodian to take any action with
respect to securities, which action involves the payment of money
or which action may, in the opinion of the Custodian, result in
the Custodian or its nominee assigned to the Fund being liable
for the payment of money or incurring liability of some other
form, the Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or
securities for any purpose or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the
account of the Fund shall be security therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the Fund's
assets to the extent necessary to obtain reimbursement, provided
that the Custodian gives the Fund reasonable notice to repay such
cash or securities advanced, however, such notice shall not
preclude the Custodian's right to assert any lien under this
provision.
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage
prepaid to the other party, such termination to take effect not
sooner than sixty (60) days after the date of such delivery or
mailing in the case of a termination by the Fund, and not sooner
than 180 days after the date of such delivery or mailing in the
case of a termination by the Custodian; provided, however that
the Custodian shall not act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Directors/Trustees of
the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary
or an Assistant Secretary that the Board of Directors/Trustees
has reviewed the use by the Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company
Act of 1940, as amended and that the Custodian shall not act
under Section 2.11 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the
Board of Directors/Trustees has approved the initial use of the
Direct Paper System and the receipt of an annual certificate of
PAGE 23
the Secretary or an Assistant Secretary that the Board of
Directors/Trustees has reviewed the use by the Fund of the Direct
Paper System; provided further, however, that the Fund shall not
amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the
Governing Documents of the Fund, and further provided, that the
Fund may at any time by action of its Board of Directors/Trustees
(i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event
at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements, provided that the Custodian
shall not incur any costs, expenses or disbursements specifically
in connection with such termination unless it has received prior
approval from the Fund, which approval shall not be unreasonably
withheld.
14. Successor Custodian
If a successor custodian shall be appointed by the Board of
Directors/Trustees of the Fund, the Custodian shall, upon
termination, deliver to such successor custodian at the office of
the Custodian, duly endorsed and in the form for transfer, all
securities, funds and other properties then held by it hereunder
and shall transfer to an account of the successor custodian all
of the Fund's securities held in a Securities System. The
Custodian shall also use its best efforts to assure that the
successor custodian will continue any subcustodian agreement
entered into by the Custodian and any subcustodian on behalf of
the Fund.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Directors/Trustees of the Fund, deliver
at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of
Directors/Trustees shall have been delivered to the Custodian on
or before the date when such termination shall become effective,
then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the Investment
Company Act of 1940, doing business in Boston, Massachusetts, of
its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not
PAGE 24
less than $25,000,000, all securities, funds and other properties
held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this
Contract and to transfer to an account of such successor
custodian all of the Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of the vote referred to or of the Board of
Directors/Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this
Contract relating to the duties and obligations of the Custodian
shall remain in full force and effect. If while this Contract is
in force the Fund shall be liquidated pursuant to law, the
Custodian shall distribute, either in cash or (if the Fund so
orders) in the portfolio securities and other assets of the Fund,
pro rata among the holders of shares of the Fund as certified by
the Transfer Agent, the property of the Fund which remains after
paying or satisfying all expenses and liabilities of the Fund.
Section 12 hereof shall survive any termination of this Contract.
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with
the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Governing Documents of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
16. Notice
Any notice shall be sufficiently given when sent by
registered or certified mail, or by such other means as the
parties shall agree, to the other party at the address of such
party set forth above or at such other address as such party may
from time to time specify in writing to the other party.
17. Bond
The Custodian shall, at all times, maintain a bond in such
form and amount as is acceptable to the Fund which shall be
issued by a reputable fidelity insurance company authorized to do
business in the place where such bond is issued against larceny
PAGE 25
and embezzlement, covering each officer and employee of the
Custodian who may, singly or jointly with others, have access to
securities or funds of the Fund, either directly or through
authority to receive and carry out any certificate instruction,
order request, note or other instrument required or permitted by
this Agreement. The Custodian agrees that it shall not cancel,
terminate or modify such bond insofar as it adversely affects the
Fund except after written notice given to the Fund not less than
10 days prior to the effective date of such cancellation,
termination or modification. The Custodian shall furnish to the
Fund a copy of each such bond and each amendment thereto.
18. Confidentiality
The Custodian agrees to treat all records and other
information relative to the Fund and its prior, present or future
shareholders as confidential, and the Custodian, on behalf of
itself and its employees, agrees to keep confidential all such
information except, after prior notification to and approval in
writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Custodian may be
exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
19. Exemption from Liens
The securities and other assets held by the Custodian for
the Fund shall be subject to no lien or charge of any kind in
favor of the Custodian or any person claiming through the
Custodian, but nothing herein shall be deemed to deprive the
Custodian of its right to invoke any and all remedies available
at law or equity to collect amounts due it under this Agreement.
Neither the Custodian nor any sub-custodian appointed pursuant to
Section 1 hereof shall have any power or authority to assign,
hypothecate, pledge or otherwise dispose of any securities held
by it for the Fund, except upon the direction of the Fund, duly
given as herein provided, and only for the account of the Fund.
20. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth
of Massachusetts.
21. Prior Contracts
Without derogating any of the rights established by such
contracts, this Contract supersedes and terminates, as of the
date hereof, all prior contracts between the Fund and the
Custodian relating to the custody of the Fund's assets.
22. The Parties
All references herein to "the Fund" are to each of the funds
listed on Appendix A individually, as if this Contract were
between such individual fund and the Custodian. In the case of a
series fund or trust, all references to "the Fund" are to the
individual series or portfolio of such fund or trust, or to such
fund or trust on behalf of the individual series or portfolio, as
PAGE 26
appropriate. Any reference in this Contract to "the parties"
shall mean the Custodian and such other individual Fund as to
which the matter pertains.
23. Governing Documents.
The term "Governing Documents" means the Articles of
Incorporation, Agreement of Trust, By-Laws and Registration
Statement filed under the Securities Act of 1933, as amended from
time to time.
24. Subcustodian Agreement.
Reference to the "Subcustodian Agreement" between the
Custodian and Chase shall mean any such agreement which shall be
in effect from time to time between Chase and the Custodian with
respect to foreign assets of the Fund.
25. Directors and Trustees.
It is understood and is expressly stipulated that neither
the holders of shares in the Fund nor any Directors or Trustees
of the Fund shall be personally liable hereunder.
26. Massachusetts Business Trust
With respect to any Fund which is a party to this Contract
and which is organized as a Massachusetts business trust, the
term Fund means and refers to the trustees from time to time
serving under the applicable trust agreement (Declaration of
Trust) of such Trust as the same may be amended from time to
time. It is expressly agreed that the obligations of any such
Trust hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the trust property of the Trust,
as provided in the Declaration of Trust of the Trust. The
execution and delivery of this Contract has been authorized by
the trustees and signed by an authorized officer of the Trust,
acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed
to have been made by any of them but shall bind only the trust
property of the Trust as provided in its Declaration of Trust.
27. Successors of Parties.
This Contract shall be binding on and shall inure to the
benefit of the Fund and the Custodian and their respective
successors.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the dates indicated below.
DATED: September 28, 1987
__________________
PAGE 27
STATE STREET BANK AND TRUST
COMPANY
ATTEST:
/s/Kathleen M. Kubit By/s/Charles Cassidy
_____________________ _________________________________
Assistant Secretary Vice President
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Stock Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
PAGE 28
(SIGNATURES CONTINUED)
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
New York Tax-Free Money Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
New York Tax-Free Bond Fund
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
DATED: September 28, 1987
___________________
ATTEST:
/s/Nancy J. Wortman By/s/Carmen F. Deyesu
____________________________ __________________________________
PAGE 29
Appendix A
The following Funds are parties to this Agreement and have
so indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price California Tax-Free Income Trust on behalf of
the
California Tax-Free Bond Fund and
California Tax-Free Money Fund
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Equity Income Fund
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Institutional Trust on behalf of the
Tax-Exempt Reserve Portfolio
T. Rowe Price International Trust on behalf of the
T. Rowe Price International Bond Fund and
T. Rowe Price International Stock Fund
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price State Tax-Free Income Trust on behalf of the
Maryland Tax-Free Bond Fund,
New York Tax-Free Bond Fund and
New York Tax-Free Money Fund
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
T. Rowe Price U.S. Treasury Money Fund, Inc.
PAGE 30
AMENDMENT NO. 1 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
THIS AGREEMENT, made as of this 24th day of June, 1988, by
and between: T. Rowe Price Growth Stock Fund, Inc., T. Rowe Price
New Horizons Fund, Inc., T. Rowe Price New Era Fund, Inc., T.
Rowe Price New Income Fund, Inc., T. Rowe Price Prime Reserve
Fund, Inc., T. Rowe Price International Trust, T. Rowe Price U.S.
Treasury Money Fund, Inc., T. Rowe Price Growth & Income Fund,
Inc., T. Rowe Price Tax-Exempt Money Fund, Inc., T. Rowe Price
Tax-Free Income Fund, Inc., T. Rowe Price Tax-Free Short-
Intermediate Fund, Inc., T. Rowe Price Short-Term Bond Fund,
Inc., T. Rowe Price High Yield Fund, Inc., T. Rowe Price Tax-Free
High Yield Fund, Inc., T. Rowe Price New America Growth Fund, T.
Rowe Price Equity Income Fund, T. Rowe Price GNMA Fund, T. Rowe
Price Capital Appreciation Fund, T. Rowe Price Institutional
Trust, T. Rowe Price State Tax-Free Income Trust, T. Rowe Price
California Tax-Free Income Trust, T. Rowe Price Science &
Technology Fund, Inc., (hereinafter together called the "Funds"
and individually "Fund") and State Street Bank and Trust Company,
a Massachusetts trust,
W I T N E S S E T H:
It is mutually agreed that the Custodian Contract made by
the parties on the 28th day of September, 1987, is hereby amended
by adding thereto the T. Rowe Price Small-Cap Value Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW HORIZONS FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW ERA FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
PAGE 31
(SIGNATURES CONTINUED)
T. ROWE PRICE NEW INCOME FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE PRIME RESERVE FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE INTERNATIONAL TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
/s/Henry H.Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE GROWTH & INCOME FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
PAGE 32
(SIGNATURES CONTINUED)
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE HIGH YIELD FUND, INC.
/s/ Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW AMERICA GROWTH FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE EQUITY INCOME FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE GNMA FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE CAPITAL APPRECIATION FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE INSTITUTIONAL TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
PAGE 33
(SIGNATURES CONTINUED)
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/William Blackwell
______________________________________________
By:
PAGE 34
AMENDMENT NO. 2 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, between State Street Bank and Trust Company and
each of the Parties listed on Appendix A thereto is hereby
further amended, as of October 19, 1988, by adding thereto the T.
Rowe Price International Discovery Fund, Inc., a separate series
of T. Rowe Price International Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
PAGE 35
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Guy R. Sturgeon
______________________________________________
By:
PAGE 36
AMENDMENT NO. 3 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988 and October 19, 1988, between State Street Bank and
Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of February 22, 1989, by
adding thereto the T. Rowe Price International Equity Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
PAGE 37
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/K. Donelson
______________________________________________
By:
PAGE 38
AMENDMENT NO. 4 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988 and February 22, 1989, between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
July 19, 1989, by adding thereto the Institutional International
Funds, Inc., on behalf of the Foreign Equity Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
PAGE 39
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 40
AMENDMENT NO. 5 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, and July 19,
1989 between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of September 15, 1989, by adding thereto the T. Rowe Price
U.S. Treasury Funds, Inc., on behalf of the U.S. Treasury
Intermediate Fund and the U.S. Treasury Long-Term Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
PAGE 41
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
/s/Henry H. Hopkins
____________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
____________________________________
By:
PAGE 42
AMENDMENT NO. 6 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19, 1989
and September 15, 1989, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is
hereby further amended, as of December 15, 1989, by restating
Section 2.15 as follows:
2.15 Communications Relating to Fund Portfolio Securities. The
Custodian shall transmit promptly to the Fund all written
information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put
options written by the Fund and the maturity of futures contracts
purchased or sold by the Fund) received by the Custodian from
issuers of the domestic securities being held for the Fund by the
Custodian, an agent appointed under Section 2.9, or sub-custodian
appointed under Section 1. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund all
written information received by the Custodian, an agent appointed
under Section 2.9, or sub-custodian appointed under Section 1
from issuers of the domestic securities whose tender or exchange
is sought and from the party (or his agents) making the tender or
exchange offer. If the Fund desires to take action with respect
to any tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian of such desired
action at least 48 hours (excluding holidays and weekends) prior
to the time such action must be taken under the terms of the
tender, exchange offer, or other similar transaction, and it will
be the responsibility of the Custodian to timely transmit to the
appropriate person(s) the Fund's notice. Where the Fund does not
notify the custodian of its desired action within the aforesaid
48 hour period, the Custodian shall use its best efforts to
timely transmit the Fund's notice to the appropriate person. It
is expressly noted that the parties may negotiate and agree to
alternative procedures with respect to such 48 hour notice period
on a selective and individual basis.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
PAGE 43
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
PAGE 44
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U. S. TREASURY FUNDS, INC.
U. S. Treasury Intermediate Fund
U. S. Treasury Long-Term Fund
/s/Carmen F. Deyesu
_________________________________________
By: Carmen F. Deyesu,
Treasurer
STATE STREET BANK AND TRUST COMPANY
/s/ E. D. Hawkes, Jr.
_________________________________________
By: E. D. Hawkes, Jr.
Vice President
PAGE 45
Amendment No. 7 filed on Form SE January 25, 1990 with
International Trust (CIK 313212) Post Effective Amendment No. 17.
PAGE 46
AMENDMENT NO. 8 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, and December 20,
1989, between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of January 25, 1990, by adding thereto the T. Rowe Price
European Stock Fund, a separate series of T. Rowe Price
International Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 47
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
/s/Henry H. Hopkins
_________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_________________________________________
By:
PAGE 48
AMENDMENT NO. 9 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
and January 25, 1990 between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of February 21, 1990, by adding thereto the
T. Rowe Price Index Trust, Inc., on behalf of the T. Rowe Price
Equity Index Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 49
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
/s/Henry H. Hopkins
_____________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________
By:
PAGE 50
AMENDMENT NO. 10 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, between State Street Bank
and Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of June 12, 1990, by adding
thereto the T. Rowe Price Spectrum Fund, Inc., on behalf of the
Spectrum Growth Fund and the Spectrum Income Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 51
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
_____________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________
By:
PAGE 52
AMENDMENT NO. 11 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, and June 12, 1990 between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
July 18, 1990, by adding thereto the T. Rowe Price New Asia Fund,
a separate series of the T. Rowe Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
PAGE 53
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
_____________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Guy R. Sturgeon
______________________________________
By: Guy R. Sturgeon
PAGE 54
AMENDMENT NO. 12 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, and July 18,
1990 between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of October 15, 1990, by adding thereto the T. Rowe Price
Global Government Bond Fund, a separate series of the T. Rowe
Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 55
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
_____________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Guy R. Sturgeon
______________________________________
By:
PAGE 56
AMENDMENT NO. 13 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, and October 15, 1990, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is
hereby further amended, as of February 13, 1991, by adding
thereto the Virginia Tax-Free Bond Fund and New Jersey Tax-Free
Bond Fund, two separate series of the T. Rowe Price State Tax-
Free Income Trust
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
PAGE 57
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
_____________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Guy Sturgeon
______________________________________
By: Vice President
PAGE 58
AMENDMENT NO. 14 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, and February 13, 1991, between State
Street Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of March 6,
1991, by adding thereto the T. Rowe Price Balanced Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 59
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
/s/Henry H. Hopkins
_____________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________
By:
PAGE 60
AMENDMENT NO. 15 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, and March 6, 1991,
between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of September 12, 1991, by adding thereto the T. Rowe Price
Adjustable Rate U.S. Government Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 61
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S.
GOVERNMENT FUND, INC.
/s/Henry H. Hopkins
_____________________________________
By: Henry H. Hopkins, Vice President
PAGE 62
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________
By:
PAGE 63
AMENDMENT NO. 16 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991 and
September 12, 1991, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of November 6, 1991, by adding thereto the T.
Rowe Price Japan Fund, a separate series of the T. Rowe Price
International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
PAGE 64
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S.
GOVERNMENT FUND, INC.
PAGE 65
/s/Henry H. Hopkins
_____________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________
By:
PAGE 66
AMENDMENT NO. 17 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991 and November 6, 1991, between State Street
Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of April 23,
1992, by adding thereto the T. Rowe Price Mid-Cap Growth Fund,
Inc. and T. Rowe Price Short-Term Global Income Fund, a separate
series of the T. Rowe Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 67
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
PAGE 68
/s/Henry H. Hopkins
_________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
____________________________________
By:
PAGE 69
AMENDMENT NO. 18 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, and April 23, 1992, between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
September 2, 1992, by adding thereto the T. Rowe Price OTC Fund,
a series of the T. Rowe Price OTC Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
PAGE 70
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
PAGE 71
/s/Henry H. Hopkins
__________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
__________________________________
By:
PAGE 72
AMENDMENT NO. 19 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, and
September 2, 1992, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of November 3, 1992, by adding thereto the T.
Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 73
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
PAGE 74
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
/s/Henry H. Hopkins
_________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_________________________________________
By:
PAGE 75
AMENDMENT NO. 20 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, and November 3, 1992, between State Street Bank and
Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of December 16, 1992, by
adding thereto the T. Rowe Price Dividend Growth Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 76
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
PAGE 77
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
/s/Henry H. Hopkins
_________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_________________________________________
By:
PAGE 78
AMENDMENT NO. 21 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, and December 16, 1992, between State
Street Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of December 21,
1992, by adding thereto the Maryland Short-Term Tax-Free Bond
Fund, an additional series to the T. Rowe Price State Tax-Free
Income Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
PAGE 79
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
PAGE 80
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
/s/Henry H. Hopkins
_________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_________________________________________
By:
PAGE 81
AMENDMENT NO. 22 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, and December 21,
1992, between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of January 28, 1993, by adding thereto the Georgia Tax-Free
Bond Fund and the Florida Insured Intermediate Tax-Free Fund,
additional series to the T. Rowe Price State Tax-Free Income
Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
PAGE 82
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
PAGE 83
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
/s/Henry H. Hopkins
_________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_________________________________________
By:
PAGE 84
AMENDMENT NO. 23 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
and January 28, 1993, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of April 22, 1993, by adding thereto the T.
Rowe Price Blue Chip Growth Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 85
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
PAGE 86
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
/s/Henry H. Hopkins
_________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
__________________________________________
By:
PAGE 87
AMENDMENT NO. 24 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, between State Street Bank and
Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of September 16, 1993, by
adding thereto the T. Rowe Price Summit Funds, Inc. and T. Rowe
Price Summit Municipal Funds, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Summit Funds, Inc. and T. Rowe
Price Summit Municipal Funds, Inc. (collectively referred to as
the "Funds") shall not be responsible for paying any of the fees
or expenses set forth herein but that, in accordance with the
Investment Management Agreement, dated September 16, 1993,
between the Funds and T. Rowe Price Associates, Inc. ("T. Rowe
Price"), the Funds will require T. Rowe Price to pay all such
fees and expenses.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
PAGE 88
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 89
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
/s/Henry H. Hopkins
________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
________________________________________
By:
PAGE 90
AMENDMENT NO. 25 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, and September 16, 1993, between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
November 3, 1993, by adding thereto the T. Rowe Price Latin
America Fund, a separate series of the T. Rowe Price
International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
PAGE 91
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
PAGE 92
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
/s/Henry H. Hopkins
________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
________________________________________
By:
PAGE 93
AMENDMENT NO. 26 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, and
November 3, 1993, between State Street Bank and Trust Company and
each of the Parties listed on Appendix A thereto is hereby
further amended, as of March 1, 1994, by adding thereto the T.
Rowe Price Equity Income Portfolio and T. Rowe Price New America
Growth Portfolio, two separate series of the T. Rowe Price Equity
Series, Inc. and T. Rowe Price International Stock Portfolio, a
separate series of the T. Rowe Price International Series, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Equity Series, Inc. and T. Rowe
Price International Series, Inc. (collectively referred to as the
"Funds") shall not be responsible for paying any of the fees or
expenses set forth herein but that, in accordance with the
Investment Management Agreements, dated March 1, 1994, between
the Funds and T. Rowe Price Associates, Inc. and Rowe Price-
Fleming International, Inc. (collectively referred to as "T. Rowe
Price"), the Funds will require T. Rowe Price to pay all such
fees and expenses.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
PAGE 94
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
PAGE 95
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
PAGE 96
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
/s/Henry H. Hopkins
________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
________________________________________
By:
PAGE 97
AMENDMENT NO. 27 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, and March 1, 1994, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is
hereby further amended, as of April 21, 1994, by adding thereto
the T. Rowe Price Limited-Term Bond Portfolio, a separate series
of the T. Rowe Price Fixed Income Series, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Fixed Income Series, Inc.
(referred to as the "Fund") shall not be responsible for paying
any of the fees or expenses set forth herein but that, in
accordance with the Investment Management Agreement, dated April
21, 1994, between the Fund and T. Rowe Price Associates, Inc.
(referred to as "T. Rowe Price"), the Fund will require T. Rowe
Price to pay all such fees and expenses.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
PAGE 98
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 99
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
PAGE 100
/s/Henry H. Hopkins
________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
________________________________________
By:
PAGE 101
AMENDMENT NO. 28 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, and April 21, 1994, between State Street
Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of July 27,
1994, by adding thereto the T. Rowe Price Personal Strategy
Balanced Fund, T. Rowe Price Personal Strategy Growth Fund, and
T. Rowe Price Personal Strategy Income Fund, three separate
series of the T. Rowe Price Personal Strategy Funds, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Personal Strategy Funds, Inc.
(collectively referred to as the "Funds") shall not be
responsible for paying any of the fees or expenses set forth
herein but that, in accordance with the Investment Management
Agreements, dated July 27, 1994, between the Funds and T. Rowe
Price Associates, Inc. (referred to as "T. Rowe Price"), the
Funds will require T. Rowe Price to pay all such fees and
expenses.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
PAGE 102
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
PAGE 103
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
PAGE 104
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
/s/Henry H. Hopkins
________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
________________________________________
By:
PAGE 105
AMENDMENT NO. 29 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, and April 21, 1994, between State Street
Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of July 27,
1994, by adding thereto the T. Rowe Price Personal Strategy
Balanced Strategy Balanced Portfolio, a separate series of the T.
Rowe Price Equity Series, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Personal Strategy Balanced
Portfolio, a separate series of the T. Rowe Price Equity Series,
Inc. (referred to as the "Fund) shall not be responsible for
paying any of the fees or expenses set forth herein but that, in
accordance with the Investment Management Agreement, dated July
27, 1994, between the Fund and T. Rowe Price Associates, Inc.
(referred to as "T. Rowe Price"), the Fund will require T. Rowe
Price to pay all such fees and expenses.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
PAGE 106
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
PAGE 107
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
PAGE 108
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
/s/Henry H. Hopkins
________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
________________________________________
By:
PAGE 109
AMENDMENT NO. 30 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, April 21, 1994, and July 27, 1994 between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
September 21, 1994, by adding thereto the T. Rowe Price Value
Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
PAGE 110
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
PAGE 111
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
PAGE 112
T. ROWE PRICE VALUE FUND, INC.
/s/Henry H. Hopkins
________________________________________
By:Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
________________________________________
By:Carol C. Ayotte, Vice President
PAGE 113
AMENDMENT NO. 31 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, April 21, 1994, July 27, 1994, and September
21, 1994 between State Street Bank and Trust Company and each of
the Parties listed on Appendix A thereto is hereby further
amended, as of November 1, 1994, by adding thereto the T. Rowe
Price Virginia Short-Term Tax-Free Bond Fund, a separate series
of the T. Rowe Price State Tax-Free Income Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
PAGE 114
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
PAGE 115
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
PAGE 116
T. ROWE PRICE VALUE FUND, INC.
/s/Henry H. Hopkins
________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
________________________________________
By:Carol C. Ayotte, Vice President
PAGE 117
AMENDMENT NO. 32 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, and November 1, 1994 between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is
hereby further amended, as of November 2, 1994, by adding thereto
the T. Rowe Price Capital Opportunity Fund, Inc. and the T. Rowe
Price Emerging Markets Bond Fund, a separate series of the T.
Rowe Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
PAGE 118
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
PAGE 119
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
PAGE 120
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
/s/Henry H. Hopkins
________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
________________________________________
By:Carol C. Ayotte, Vice President
PAGE 121
AMENDMENT NO. 33 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, and November 2, 1994 between State Street
Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of January 25,
1995, by adding thereto the T. Rowe Price Emerging Markets Stock
Fund, a separate series of the T. Rowe Price International Funds,
Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
PAGE 122
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
PAGE 123
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
PAGE 124
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
PAGE 125
AMENDMENT NO. 34 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, November 2, 1994, and January 25, 1995,
between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of September 20, 1995, by adding thereto the T. Rowe Price
Corporate Income Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
PAGE 126
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
PAGE 127
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
PAGE 128
T. ROWE PRICE CORPORATE INCOME FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
PAGE 129
AMENDMENT NO. 35 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, November 2, 1994, January 25, 1995,
September 20, 1995, and October 11, 1995, between State Street
Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of November 1,
1995, by adding thereto the T. Rowe Price Global Stock Fund, a
separate series of the T. Rowe Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
PAGE 130
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
PAGE 131
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
PAGE 132
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
PAGE 133
AMENDMENT NO. 36 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, November 2, 1994, January 25, 1995,
September 20, 1995, October 11, 1995, and November 1, 1995,
between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of December 11, 1995, by adding thereto the T. Rowe Price
Health Sciences Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
PAGE 134
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
PAGE 135
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
PAGE 136
T. ROWE PRICE VALUE FUND, INC.
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
PAGE 137
AMENDMENT NO. 37 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, November 2, 1994, January 25, 1995,
September 20, 1995, October 11, 1995, November 1, 1995, and
December 11, 1995, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of April 24, 1996, by adding thereto the T.
Rowe Price Mid-Cap Value Fund, Inc. and Mid-Cap Equity Growth
Fund, a separate series of the Institutional Domestic Equity
Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
PAGE 138
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 139
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
PAGE 140
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
PAGE 141
AMENDMENT NO. 38 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, November 2, 1994, January 25, 1995,
September 20, 1995, October 11, 1995, November 1, 1995, December
11, 1995, and April 24, 1996, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is
hereby further amended, as of August 2, 1996, by adding thereto
the T. Rowe Price Financial Services Fund, Inc., Mid-Cap Growth
Portfolio, a separate series of the T. Rowe Price Equity Series,
Inc. and Prime Reserve Portfolio, a separate series of the T.
Rowe Price Fixed Income Series, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
PAGE 142
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 143
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
PAGE 144
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 FINANCIAL SERVICES FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
PAGE 145
AMENDMENT NO. 39 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, September 16, 1993, November 3,
1993, March 1, 1994, April 21, 1994, July 27, 1994, September 21,
1994, November 1, 1994, November 2, 1994, January 25, 1995,
September 20, 1995, October 11, 1995, November 1, 1995, December
11, 1995, April 24, 1996, and August 2, 1996, between State
Street Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of November 12,
1996, by adding thereto the T. Rowe Price Spectrum International
Fund, a separate series of the T. Rowe Price Spectrum Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
PAGE 146
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
T. Rowe Price Maryland Tax-Free Bond Fund
T. Rowe Price Maryland Short-Term Tax-Free
Bond Fund
T. Rowe Price New York Tax-Free Bond Fund
T. Rowe Price New York Tax-Free Money Fund
T. Rowe Price Virginia Tax-Free Bond Fund
T. Rowe Price Virginia Short-Term Tax-Free
Bond Fund
T. Rowe Price New Jersey Tax-Free Bond Fund
T. Rowe Price Georgia Tax-Free Bond Fund
T. Rowe Price Florida Insured Intermediate
Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
T. Rowe Price California Tax-Free Bond Fund
T. Rowe Price 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
PAGE 147
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
T. Rowe Price U.S. Treasury Intermediate Fund
T. Rowe Price U.S. Treasury Long-Term Fund
T. Rowe Price U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
T. Rowe Price Spectrum Growth Fund
T. Rowe Price Spectrum Income Fund
T. Rowe Price Spectrum International Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
PAGE 148
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 FINANCIAL SERVICES FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Carol C. Ayotte
_____________________________________________
By: Carol C. Ayotte, Vice President
The Transfer Agency and Service Agreement between T. Rowe
Price Services, Inc. and T. Rowe Price Funds, dated January 1,
1996.
PAGE 1
TRANSFER AGENCY AND SERVICE AGREEMENT
between
T. ROWE PRICE SERVICES, INC.
and
EACH OF THE PARTIES INDICATED ON APPENDIX A
PAGE 2
TABLE OF CONTENTS
Page
Article A Terms of Appointment . . . . . . . . . . . . . 2
Article B Duties of Price Services . . . . . . . . . . . 2
1. Receipt of Orders/Payments . . . . . . . . 3
2. Written Redemptions . . . . . . . . . . . 4
3. Transfers . . . . . . . . . . . . . . . . 5
4. Confirmations . . . . . . . . . . . . . . 6
5. Returned Checks and ACH Debits . . . . . . 6
6. Redemptions of Shares under Ten Day Hold . 6
7. Dividends, Distributions and Other
Corporate Actions . . . . . . . . . . . . 8
8. Unclaimed Payments and Certificates . . . 9
9. Books and Records . . . . . . . . . . . . 9
10. Authorized Issued and Outstanding Shares 11
11. Tax Information . . . . . . . . . . . . 11
12. Information to be Furnished to the Fund 12
13. Correspondence . . . . . . . . . . . . . 12
14. Lost or Stolen Securities . . . . . . . 12
15. Telephone Services . . . . . . . . . . . 12
16. Proxies . . . . . . . . . . . . . . . . 13
17. Form N-SAR . . . . . . . . . . . . . . . 13
18. Cooperation With Accountants . . . . . . 13
19. Blue Sky . . . . . . . . . . . . . . . . 13
20. Other Services . . . . . . . . . . . . . 14
21. Fees and Out-of-Pocket Expenses . . . . 14
Article C Representations and Warranties of the Price
Services . . . . . . . . . . . . . . . . . . 15
Article D Representations and Warranties of the Fund . 16
Article E Standard of Care/Indemnification . . . . . . 17
Article F Dual Interests . . . . . . . . . . . . . . . 19
Article G Documentation . . . . . . . . . . . . . . . . 19
Article H References to Price Services . . . . . . . . 20
Article I Compliance with Governmental Rules and
Regulations . . . . . . . . . . . . . . . . . 21
Article J Ownership of Software and Related Material . 21
PAGE 3
Article K Quality Service Standards . . . . . . . . . . 21
Article L As of Transactions . . . . . . . . . . . . . 21
Article M Term and Termination of Agreement . . . . . . 24
Article N Notice . . . . . . . . . . . . . . . . . . . 25
Article O Assignment . . . . . . . . . . . . . . . . . 25
Article P Amendment/Interpretive Provisions . . . . . . 25
Article Q Further Assurances . . . . . . . . . . . . . 25
Article R Maryland Law to Apply . . . . . . . . . . . . 26
Article S Merger of Agreement . . . . . . . . . . . . . 26
Article T Counterparts . . . . . . . . . . . . . . . . 26
Article U The Parties . . . . . . . . . . . . . . . . . 26
Article V Directors, Trustees, Shareholders and
Massachusetts Business Trust . . . . . . . . 26
Article W Captions . . . . . . . . . . . . . . . . . . 27
PAGE 4
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the first day of January, 1996, by and
between T. ROWE PRICE SERVICES, INC., a Maryland corporation
having its principal office and place of business at 100 East
Pratt Street, Baltimore, Maryland 21202 ("Price Services"), and
EACH FUND WHICH IS LISTED ON APPENDIX A (as such Appendix may be
amended from time to time) and which evidences its agreement to
be bound hereby by executing a copy of this Agreement (each such
Fund individually hereinafter referred to as "the Fund", whose
definition may be found in Article U);
WHEREAS, the Fund desires to appoint Price Services as its
transfer agent, dividend disbursing agent and agent in connection
with certain other activities, and Price Services desires to
accept such appointment;
WHEREAS, Price Services represents that it is registered
with the Securities and Exchange Commission as a Transfer Agent
under Section 17A of the Securities Exchange Act of 1934 ("'34
Act") and will notify each Fund promptly if such registration is
revoked or if any proceeding is commenced before the Securities
and Exchange Commission which may lead to such revocation;
WHEREAS, certain of the Funds are named investment options
under various tax-sheltered retirement plans including, but not
limited to, individual retirement accounts, simplified employee
PAGE 5
pension plans, deferred compensation plans, 403(b) plans, and
profit sharing, thrift, and money purchase pension plans for
self-employed individuals and professional partnerships and
corporations, (collectively referred to as "Retirement Plans");
WHEREAS, Price Services has the capability of providing
special services, on behalf of the Funds, for the accounts of
shareholders participating in these Retirement Plans ("Retirement
Accounts").
WHEREAS, Price Services may subcontract or jointly contract
with other parties, on behalf of the Funds to perform certain of
the functions and services described herein including services to
Retirement Plans and Retirement Accounts. Price Services may
also enter into, on behalf of the Funds, certain banking
relationships to perform various banking services including, but
not limited to, check deposits, check disbursements, automated
clearing house transactions ("ACH") and wire transfers. Subject
to guidelines mutually agreed upon by the Funds and Price
Services, excess balances, if any, resulting from these banking
relationships will be invested and the income therefrom will be
used to offset fees which would otherwise be charged to the Funds
under this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
PAGE 6
A. Terms of Appointment
Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints Price Services to
act, and Price Services agrees to act, as the Fund's transfer
agent, dividend disbursing agent and agent in connection with:
(1) the Fund's authorized and issued shares of its common stock
or shares of beneficial interest (all such stock and shares to be
referred to as "Shares"); (2) any accumulation, open-account or
similar plans provided to the shareholders of the Fund
("Shareholders"), including, without limitation, any periodic
investment plan or periodic withdrawal program; and (3) certain
Retirement Plan and Retirement Accounts as agreed upon by the
parties.
The parties to the Agreement hereby acknowledge that from
time to time, Price Services and T. Rowe Price Trust Company may
enter into contracts ("Other Contracts") with employee benefit
plans and/or their sponsors for the provision of certain plan
participant services to Retirement Plans and Retirement Accounts.
Compensation paid to Price Services pursuant to this Agreement
is with respect to the services described herein and not with
respect to services provided under Other Contracts.
PAGE 7
B. Duties of Price Services
Price Services agrees that it will perform the following
services:
1. Receipt of Orders/Payments
Receive for acceptance, orders/payments for the
purchase of Shares and promptly deliver payment and
appropriate documentation thereof to the authorized
custodian of the Fund (the "Custodian"). Upon receipt of
any check or other instrument drawn or endorsed to it as
agent for, or identified as being for the account of, the
Fund, Price Services will process the order as follows:
o Examine the check to determine if the check conforms to
the Funds' acceptance procedures (including certain
third-party check procedures). If the check conforms,
Price Services will endorse the check and include the
date of receipt, will process the same for payment, and
deposit the net amount to the parties agreed upon
designated bank account prior to such deposit in the
Custodial account, and will notify the Fund and the
Custodian, respectively, of such deposits (such
notification to be given on a daily basis of the total
amount deposited to said accounts during the prior
business day);
PAGE 8
o Open a new account, if necessary, and credit the
account of the investor with the number of Shares to be
purchased according to the price of the Fund's Shares
in effect for purchases made on that date, subject to
any instructions which the Fund may have given to Price
Services with respect to acceptance of orders for
Shares relating to payments so received by it;
o Maintain a record of all unpaid purchases and report
such information to the Fund daily;
o Process periodic payment orders, as authorized by
investors, in accordance with the payment procedures
for pre-authorized checking ("PAC") and ACH purchases
mutually agreed upon by both parties;
o Receive monies from Retirement Plans and determine the
proper allocation of such monies to the Retirement
Accounts based upon instructions received from
Retirement Plan participants or Retirement Plan
administrators ("Administrators"); and
o Process telephone orders for purchases of Fund shares
from the Shareholder's bank account (via wire or ACH)
to the Fund in accordance with procedures mutually
agreed upon by both parties.
PAGE 9
Upon receipt of funds through the Federal Reserve Wire
System that are designated for purchases in Funds which declare
dividends at 12:00 p.m. (or such time as set forth in the Fund's
current prospectus), Price Services shall promptly notify the
Fund and the Custodian of such deposit.
2. Redemptions
Receive for acceptance redemption requests, including
telephone redemptions and requests received from
Administrators for distributions to participants or their
designated beneficiaries or for payment of fees due the
Administrator or such other person, including Price
Services, and deliver the appropriate documentation thereof
to the Custodian. Price Services shall receive and stamp
with the date of receipt, all requests for redemptions of
Shares (including all certificates delivered to it for
redemption) and shall process said redemption requests as
follows, subject to the provisions of Section 7 hereof:
o Examine the redemption request and, for written
redemptions, the supporting documentation, to determine
that the request is in good order and all requirements
have been met;
PAGE 10
o Notify the Fund on the next business day of the total
number of Shares presented and covered by all such
requests;
o As set forth in the prospectus of the Fund, and in any
event, on or prior to the seventh (7th) calendar day
succeeding any such request for redemption, Price
Services shall, from funds available in the accounts
maintained by Price Services as agent for the Funds,
pay the applicable redemption price in accordance with
the current prospectus of the Fund, to the investor,
participant, beneficiary, Administrator or such other
person, as the case may be;
o If any request for redemption does not comply with the
Fund's requirements, Price Services shall promptly
notify the investor of such fact, together with the
reason therefore, and shall effect such redemption at
the price in effect at the time of receipt of all
appropriate documents;
o Make such withholdings as may be required under
applicable Federal tax laws;
o In the event redemption proceeds for the payment of
fees are to be wired through the Federal Reserve Wire
System or by bank wire, Price Services shall cause such
PAGE 11
proceeds to be wired in Federal funds to the bank
account designated; and
o Process periodic redemption orders as authorized by the
investor in accordance with the periodic withdrawal
procedures for Systematic Withdrawal Plan ("SWP") and
systematic ACH redemptions mutually agreed upon by both
parties.
Procedures and requirements for effecting and accepting
redemption orders from investors by telephone, Tele*Access,
computer, Mailgram, or written instructions shall be
established by mutual agreement between Price Services and
the Fund consistent with the Fund's current prospectus.
3. Transfers
Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions and
documentation and examine such instructions for conformance
with appropriate procedures and requirements. In this
regard, Price Services, upon receipt of a proper request for
transfer, including any transfer involving the surrender of
certificates of Shares, is authorized to transfer, on the
records of the Fund, Shares of the Fund, including
cancellation of surrendered certificates, if any, to credit
a like amount of Shares to the transferee and to
PAGE 12
countersign, issue and deliver new certificates, if
requested, for those Funds issuing certificates.
4. Confirmations
Mail all confirmations and other enclosures requested
by the Fund to the shareholder, and in the case of
Retirement Accounts, to the Administrators, as may be
required by the Funds or by applicable Federal or state law.
5. Returned Checks and ACH Debits
In order to minimize the risk of loss to the Fund by
reason of any check being returned unpaid, Price Services
will promptly identify and follow-up on any check or ACH
debit returned unpaid. For items returned, Price Services
may telephone the investor and/or redeposit the check or
debit for collection or cancel the purchase, as deemed
appropriate. Price Services and the Funds will establish
procedures for the collection of money owed the Fund from
investors who have caused losses due to these returned
items.
6. Redemption of Shares under Ten Day Hold
o Uncollected Funds
Shares purchased by personal, corporate, or
governmental check, or by ACH will be considered
PAGE 13
uncollected until the tenth calendar date following the
trade date of the trade ("Uncollected Funds");
o Good Funds
Shares purchased by treasurer's, cashier, certified, or
official check, or by wire transfer will be considered
collected immediately ("Good Funds"). Absent
information to the contrary (i.e., notification from
the payee institution), Uncollected Funds will be
considered Good Funds on the tenth calendar day
following trade date.
o Redemption of Uncollected Funds
o Shareholders making telephone requests for
redemption of shares purchased with Uncollected
Funds will be given two options:
1. The Shareholder will be permitted to exchange
to a money market fund to preserve principal until
the payment is deemed Good Funds,
2. The redemption can be processed utilizing the
same procedures for written redemptions described
below.
o If a written redemption request is made for shares
where any portion of the payment for said shares
is in Uncollected Funds, and the request is in
PAGE 14
good order, Price Services will promptly obtain
the information relative to the payment necessary
to determine when the payment becomes Good Funds.
The redemption will be processed in accordance
with normal procedures, and the proceeds will be
held until confirmation that the payment is Good
Funds. On the seventh (7th) calendar day after
trade date, and each day thereafter until either
confirmation is received or the tenth (10th)
calendar day, Price Services will call the paying
institution to request confirmation that the check
or ACH in question has been paid. On the tenth
calendar day after trade date, the redemption
proceeds will be released, regardless of whether
confirmation has been received.
o Checkwriting Redemptions.
o Daily, all checkwriting redemptions $10,000 and
over reported as Uncollected Funds or insufficient
funds will be reviewed. An attempt will be made
to contact the shareholder to make good the funds
(through wire, exchange, transfer). Generally by
12:00 p.m. the same day, if the matter has not
been resolved, the redemption request will be
PAGE 15
rejected and the check returned to the
Shareholder.
o All checkwriting redemptions under $10,000
reported as Uncollected or insufficient funds will
be rejected and the check returned to the
Shareholder.
o Confirmations of Available Funds
The Fund expects that situations may develop whereby it
would be beneficial to determine if a person who has
placed an order for Shares has sufficient funds in his
or her checking account to cover the payment for the
Shares purchased. When this situation occurs, Price
Services may call the bank in question and request that
it confirm that sufficient funds to cover the purchase
are currently credited to the account in question.
Price Services will maintain written documentation or a
recording of each telephone call which is made under
the procedures outlined above. None of the above
procedures shall preclude Price Services from inquiring
as to the status of any check received by it in payment
for the Fund's Shares as Price Services may deem
appropriate or necessary to protect both the Fund and
PAGE 16
Price Services. If a conflict arises between Section 2
and this Section 7, Section 7 will govern.
7. Dividends, Distributions and Other Corporate Actions
o The Fund will promptly inform Price Services of the
declaration of any dividend, distribution, stock split
or any other distributions of a similar kind on account
of its Capital Stock.
o Price Services shall act as Dividend Disbursing Agent
for the Fund, and as such, shall prepare and make
income and capital gain payments to investors. As
Dividend Disbursing Agent, Price Services will on or
before the payment date of any such dividend or
distribution, notify the Custodian of the estimated
amount required to pay any portion of said dividend or
distribution which is payable in cash, and the Fund
agrees that on or about the payment date of such
distribution, it shall instruct the Custodian to make
available to Price Services sufficient funds for the
cash amount to be paid out. If an investor is entitled
to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits will be
made to his or her account.
PAGE 17
8. Unclaimed Payments and Certificates
In accordance with procedures agreed upon by both
parties, report abandoned property to appropriate state and
governmental authorities of the Fund. Price Services shall,
90 days prior to the annual reporting of abandoned property
to each of the states, make reasonable attempts to locate
Shareholders for which (a) checks or share certificates have
been returned; (b) for which accounts have aged outstanding
checks; or (c) accounts with unissued shares that have been
coded with stop mail and meet the dormancy period guidelines
specified in the individual states. Price Services shall
make reasonable attempts to contact shareholders for those
accounts which have significant aged outstanding checks and
those checks meet a specified dollar threshold.
9. Books and Records
Maintain records showing for each Shareholder's
account, Retirement Plan or Retirement Account, as the case
may be, the following:
o Names, address and tax identification number;
o Number of Shares held;
o Certain historical information regarding the
account of each Shareholder, including dividends
PAGE 18
and distributions distributed in cash or invested
in Shares;
o Pertinent information regarding the establishment
and maintenance of Retirement Plans and Retirement
Accounts necessary to properly administer each
account;
o Information with respect to the source of
dividends and distributions allocated among income
(taxable and nontaxable income), realized short-
term gains and realized long-term gains;
o Any stop or restraining order placed against a
Shareholder's account;
o Information with respect to withholdings on
domestic and foreign accounts;
o Any instructions from a Shareholder including, all
forms furnished by the Fund and executed by a
Shareholder with respect to (i) dividend or
distribution elections, and (ii) elections with
respect to payment options in connection with the
redemption of Shares;
o Any correspondence relating to the current
maintenance of a Shareholder's account;
PAGE 19
o Certificate numbers and denominations for any
Shareholder holding certificates;
o Any information required in order for Price
Services to perform the calculations contemplated
under this Agreement.
Price Services shall maintain files and furnish
statistical and other information as required under this
Agreement and as may be agreed upon from time to time by
both parties or required by applicable law. However, Price
Services reserves the right to delete, change or add any
information to the files maintained; provided such
deletions, changes or additions do not contravene the terms
of this Agreement or applicable law and do not materially
reduce the level of services described in this Agreement.
Price Services shall also use its best efforts to obtain
additional statistical and other information as each Fund
may reasonably request for additional fees as may be agreed
to by both parties.
Any such records maintained pursuant to Rule 31a-1
under the Investment Company Act of 1940 ("the Act") will be
preserved for the periods and maintained in a manner
prescribed in Rule 31a-2 thereunder. Disposition of such
records after such prescribed periods shall be as mutually
PAGE 20
agreed upon by the Fund and Price Services. The retention
of such records, which may be inspected by the Fund at
reasonable times, shall be at the expense of the Fund. All
records maintained by Price Services in connection with the
performance of its duties under this Agreement will remain
the property of the Fund and, in the event of termination of
this Agreement, will be delivered to the Fund as of the date
of termination or at such other time as may be mutually
agreed upon.
All books, records, information and data pertaining to
the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of
this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except after
prior notification to and approval by the other party
hereto, which approval shall not be unreasonably withheld
and may not be withheld where Price Services or the Fund may
be exposed to civil or criminal contempt proceedings for
failure to comply; when requested to divulge such
information by duly constituted governmental authorities; or
after so requested by the other party hereto.
PAGE 21
10. Authorized Issued and Outstanding Shares
Record the issuance of Shares of the Fund and maintain,
pursuant to Rule 17Ad-10(e) of the '34 Act, a record of the
total number of Shares of the Fund which are authorized,
issued and outstanding, based upon data provided to it by
the Fund. Price Services shall also provide the Fund on a
regular basis the total number of Shares which are
authorized and issued and outstanding. Price Services shall
have no obligation, when recording the issuance of Shares,
to monitor the issuance of such Shares or to take cognizance
of any laws relating to the issuance or sale of such Shares.
11. Tax Information
Prepare and file with the Internal Revenue Service and
with other appropriate state agencies and, if required, mail
to investors, those returns for reporting dividends and
distributions paid as required to be so filed and mailed,
and shall withhold such sums required to be withheld under
applicable Federal income tax laws, rules, and regulations.
Additionally, Price Services will file and, as applicable,
mail to investors, any appropriate information returns
required to be filed in connection with Retirement Plan
processing, such as 1099R, 5498, as well as any other
appropriate forms that the Fund or Price Services may deem
PAGE 22
necessary. The Fund and Price Services shall agree to
procedures to be followed with respect to Price Services'
responsibilities in connection with compliance with back-up
withholding and other tax laws.
12. Information to be Furnished to the Fund
Furnish to the Fund such information as may be agreed
upon between the Fund and Price Services including any
information that the Fund and Price Services agree is
necessary to the daily operations of the business.
13. Correspondence
Promptly and fully answer correspondence from
shareholders and Administrators relating to Shareholder
Accounts, Retirement Accounts, transfer agent procedures,
and such other correspondence as may from time to time be
mutually agreed upon with the Funds. Unless otherwise
instructed, copies of all correspondence will be retained by
Price Services in accordance with applicable law and
procedures.
14. Lost or Stolen Securities
Pursuant to Rule 17f-1 of the '34 Act, report to the
Securities Information Center and/or the FBI or other
appropriate person on Form X-17-F-1A all lost, stolen,
missing or counterfeit securities. Provide any other
PAGE 23
services relating to lost, stolen or missing securities as
may be mutually agreed upon by both parties.
15. Telephone Services
Maintain a Telephone Servicing Staff of representatives
("Representatives") sufficient to timely respond to all
telephonic inquiries reasonably foreseeable. The
Representatives will also effect telephone purchases,
redemptions, exchanges, and other transactions mutually
agreed upon by both parties, for those Shareholders who have
authorized telephone services. The Representatives shall
require each Shareholder effecting a telephone transaction
to properly identify himself/herself before the transaction
is effected, in accordance with procedures agreed upon
between by both parties. Procedures for processing
telephone transactions will be mutually agreed upon by both
parties. Price Services will also be responsible for
providing Tele*Access, PC*Access and such other Services as
may be offered by the Funds from time to time. Price
Services will maintain a special Shareholder Servicing staff
to service certain Shareholders with substantial
relationships with the Funds.
PAGE 24
16. Proxies
Monitor the mailing of proxy cards and other material
supplied to it by the Fund in connection with Shareholder
meetings of the Fund and shall coordinate the receipt,
examination and tabulation of returned proxies and the
certification of the vote to the Fund.
17. Form N-SAR
Maintain such records, if any, as shall enable the Fund
to fulfill the requirements of Form N-SAR.
18. Cooperation With Accountants
Cooperate with each Fund's independent public
accountants and take all reasonable action in the
performance of its obligations under the Agreement to assure
that the necessary information is made available to such
accountants for the expression of their opinion without any
qualification as to the scope of their examination,
including, but not limited to, their opinion included in
each such Fund's annual report on Form N-SAR and annual
amendment to Form N-1A.
19. Blue Sky
Provide to the Fund or its agent, on a daily, weekly,
monthly and quarterly basis, and for each state in which the
Fund's Shares are sold, sales reports and other materials
PAGE 25
for blue sky compliance purposes as shall be agreed upon by
the parties.
20. Other Services
Provide such other services as may be mutually agreed
upon between Price Services and the Fund.
21. Fees and Out-of-Pocket Expenses
Each Fund shall pay to Price Services and/or its agents
for its Transfer Agent Services hereunder, fees computed as
set forth in Schedule A attached. Except as provided below,
Price Services will be responsible for all expenses relating
to the providing of Services. Each Fund, however, will
reimburse Price Services for the following out-of-pocket
expenses and charges incurred in providing Services:
o Postage. The cost of postage and freight for
mailing materials to Shareholders and Retirement
Plan participants, or their agents, including
overnight delivery, UPS and other express mail
services and special courier services required to
transport mail between Price Services locations
and mail processing vendors.
o Proxies. The cost to mail proxy cards and other
material supplied to it by the Fund and costs
related to the receipt, examination and tabulation
PAGE 26
of returned proxies and the certification of the
vote to the Fund.
o Communications
o Print. The printed forms used internally and
externally for documentation and processing
Shareholder and Retirement Plan participant,
or their agent's inquiries and requests;
paper and envelope supplies for letters,
notices, and other written communications
sent to Shareholders and Retirement Plan
participants, or their agents.
o Print & Mail House. The cost of internal
and third party printing and mail house
services, including printing of statements
and reports.
o Voice and Data. The cost of equipment
(including associated maintenance), supplies
and services used for communicating to and
from the Shareholders of the Fund and
Retirement Plan participants, or their
agents, the Fund's transfer agent, other Fund
offices, and other agents of either the Fund
PAGE 27
or Price Services. These charges shall
include:
o telephone toll charges (both incoming
and outgoing, local, long distance and
mailgrams); and
o data and telephone lines and associated
equipment such as modems, multiplexers,
and facsimile equipment.
o Record Retention. The cost of maintenance
and supplies used to maintain, microfilm,
copy, record, index, display, retrieve, and
store, in microfiche or microfilm form,
documents and records.
o Disaster Recovery. The cost of services,
equipment, facilities and other charges
necessary to provide disaster recovery for
any and all services listed in this
Agreement.
Out-of-pocket costs will be billed at cost to the
Funds. Allocation of monthly costs among the Funds will
generally be made based upon the number of Shareholder and
Retirement Accounts serviced by Price Services each month. Some
invoices for these costs will contain costs for both the Funds
PAGE 28
and other funds serviced by Price Services. These costs will be
allocated based on a reasonable allocation methodology. Where
possible, such as in the case of inbound and outbound WATS
charges, allocation will be made on the actual distribution or
usage.
C. Representations and Warranties of Price Services
Price Services represents and warrants to the Fund that:
1. It is a corporation duly organized and existing and in
good standing under the laws of Maryland;
2. It is duly qualified to carry on its business in
Maryland, California and Florida;
3. It is empowered under applicable laws and by its
charter and by-laws to enter into and perform this
Agreement;
4. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
5. It is registered with the Securities and Exchange
Commission as a Transfer Agent pursuant to Section 17A of
the '34 Act; and
6. It has and will continue to have access to the
necessary facilities, equipment and personnel to perform its
duties and obligations under this Agreement.
PAGE 29
D. Representations and Warranties of the Fund
The Fund represents and warrants to Price Services that:
1. It is a corporation or business trust duly organized
and existing and in good standing under the laws of Maryland
or Massachusetts, as the case may be;
2. It is empowered under applicable laws and by its
Articles of Incorporation or Declaration of Trust, as the
case may be, and By-Laws to enter into and perform this
Agreement;
3. All proceedings required by said Articles of
Incorporation or Declaration of Trust, as the case may be,
and By-Laws have been taken to authorize it to enter into
and perform this Agreement;
4. It is an investment company registered under the Act;
and
5. A registration statement under the Securities Act of
1933 ("the '33 Act") is currently effective and will remain
effective, and appropriate state securities law filings have
been made and will continue to be made, with respect to all
Shares of the Fund being offered for sale.
E. Standard of Care/Indemnification
Notwithstanding anything to the contrary in this Agreement:
PAGE 30
1. Price Services shall not be liable to any Fund for any
act or failure to act by it or its agents or subcontractors
on behalf of the Fund in carrying or attempting to carry out
the terms and provisions of this Agreement provided Price
Services has acted in good faith and without negligence or
willful misconduct and selected and monitored the
performance of its agents and subcontractors with reasonable
care.
2. The Fund shall indemnify and hold Price Services
harmless from and against all losses, costs, damages,
claims, actions and expenses, including reasonable expenses
for legal counsel, incurred by Price Services resulting
from: (i) any action or omission by Price Services or its
agents or subcontractors in the performance of their duties
hereunder; (ii) Price Services acting upon instructions
believed by it to have been executed by a duly authorized
officer of the Fund; or (iii) Price Services acting upon
information provided by the Fund in form and under policies
agreed to by Price Services and the Fund. Price Services
shall not be entitled to such indemnification in respect of
actions or omissions constituting negligence or willful
misconduct of Price Services or where Price Services has not
PAGE 31
exercised reasonable care in selecting or monitoring the
performance of its agents or subcontractors.
3. Except as provided in Article L of this Agreement,
Price Services shall indemnify and hold harmless the Fund
from all losses, costs, damages, claims, actions and
expenses, including reasonable expenses for legal counsel,
incurred by the Fund resulting from the negligence or
willful misconduct of Price Services or which result from
Price Services' failure to exercise reasonable care in
selecting or monitoring the performance of its agents or
subcontractors. The Fund shall not be entitled to such
indemnification in respect of actions or omissions
constituting negligence or willful misconduct of such Fund
or its agents or subcontractors; unless such negligence or
misconduct is attributable to Price Services.
4. In determining Price Services' liability, an isolated
error or omission will normally not be deemed to constitute
negligence when it is determined that:
o Price Services had in place "appropriate procedures".
o the employee(s) responsible for the error or omission
had been reasonably trained and were being
appropriately monitored; and
PAGE 32
o the error or omission did not result from wanton or
reckless conduct on the part of the employee(s).
It is understood that Price Services is not obligated to
have in place separate procedures to prevent each and every
conceivable type of error or omission. The term
"appropriate procedures" shall mean procedures reasonably
designed to prevent and detect errors and omissions. In
determining the reasonableness of such procedures, weight
will be given to such factors as are appropriate, including
the prior occurrence of any similar errors or omissions when
such procedures were in place and transfer agent industry
standards in place at the time of the occurrence.
5. In the event either party is unable to perform its
obligations under the terms of this Agreement because of
acts of God, strikes or other causes reasonably beyond its
control, such party shall not be liable to the other party
for any loss, cost, damage, claim, action or expense
resulting from such failure to perform or otherwise from
such causes.
6. In order that the indemnification provisions contained
in this Article E shall apply, upon the assertion of a claim
for which either party may be required to indemnify the
other, the party seeking indemnification shall promptly
PAGE 33
notify the other party of such assertion, and shall keep the
other party advised with respect to all developments
concerning such claim. The party who may be required to
indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim,
or to defend against said claim in its own name or in the
name of the other party. The party seeking indemnification
shall in no case confess any claim or make any compromise in
any case in which the other party may be required to
indemnify it except with the other party's prior written
consent.
7. Neither party to this Agreement shall be liable to the
other party for consequential damages under any provision of
this Agreement.
F. Dual Interests
It is understood that some person or persons may be
directors, officers, or shareholders of both the Funds and Price
Services (including Price Services's affiliates), and that the
existence of any such dual interest shall not affect the validity
of this Agreement or of any transactions hereunder except as
otherwise provided by a specific provision of applicable law.
PAGE 34
G. Documentation
o As requested by Price Services, the Fund shall promptly
furnish to Price Services the following:
o A certified copy of the resolution of the
Directors/Trustees of the Fund authorizing the
appointment of Price Services and the execution and
delivery of this Agreement;
o A copy of the Articles of Incorporation or
Declaration of Trust, as the case may be, and By-
Laws of the Fund and all amendments thereto;
o As applicable, specimens of all forms of outstanding
and new stock/share certificates in the forms
approved by the Board of Directors/Trustees of the
Fund with a certificate of the Secretary of the Fund
as to such approval;
o All account application forms and other documents
relating to Shareholders' accounts;
o An opinion of counsel for the Fund with respect to
the validity of the stock, the number of Shares
authorized, the status of redeemed Shares, and the
number of Shares with respect to which a
Registration Statement has been filed and is in
effect; and
PAGE 35
o A copy of the Fund's current prospectus.
The delivery of any such document for the purpose of any
other agreement to which the Fund and Price Services are or were
parties shall be deemed to be delivery for the purposes of this
Agreement.
o As requested by Price Services, the Fund will also furnish
from time to time the following documents:
o Each resolution of the Board of Directors/Trustees of
the Fund authorizing the original issue of its Shares;
o Each Registration Statement filed with the Securities
and Exchange Commission and amendments and orders
thereto in effect with respect to the sale of Shares
with respect to the Fund;
o A certified copy of each amendment to the Articles of
Incorporation or Declaration of Trust, and the By-Laws
of the Fund;
o Certified copies of each vote of the Board of
Directors/Trustees authorizing officers to give
instructions to the Transfer Agent;
o Such other documents or opinions which Price Services,
in its discretion, may reasonably deem necessary or
appropriate in the proper performance of its duties;
and
PAGE 36
o Copies of new prospectuses issued.
Price Services hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to the Fund for
safekeeping of stock certificates, check forms and facsimile
signature imprinting devices, if any; and for the preparation or
use, and for keeping account of, such certificates, forms and
devices.
H. References to Price Services
Each Fund agrees not to circulate any printed matter which
contains any reference to Price Services without the prior
approval of Price Services, excepting solely such printed matter
that merely identifies Price Services as agent of the Fund. The
Fund will submit printed matter requiring approval to Price
Services in draft form, allowing sufficient time for review by
Price Services and its legal counsel prior to any deadline for
printing.
I. Compliance With Governmental Rules and Regulations
Except as otherwise provided in the Agreement and except for
the accuracy of information furnished to the Fund by Price
Services, each Fund assumes full responsibility for the
preparation, contents and distribution of its prospectuses and
compliance with all applicable requirements of the Act, the '34
Act, the '33 Act, and any other laws, rules and regulations of
PAGE 37
governmental authorities having jurisdiction over the Fund.
Price Services shall be responsible for complying with all laws,
rules and regulations of governmental authorities having
jurisdiction over transfer agents and their activities.
J. Ownership of Software and Related Material
All computer programs, magnetic tapes, written procedures
and similar items purchased and/or developed and used by Price
Services in performance of the Agreement shall be the property of
Price Services and will not become the property of the Fund.
K. Quality Service Standards
Price Services and the Fund may from time to time agree to
certain quality service standards, as well as incentives and
penalties with respect to Price Services' hereunder.
L. As Of Transactions
For purposes of this Article L, the term "Transaction" shall
mean any single or "related transaction" (as defined below)
involving the purchase or redemption of Shares (including
exchanges) that is processed at a time other than the time of the
computation of the Fund's net asset value per Share next computed
after receipt of any such transaction order by Price Services.
If more than one Transaction ("Related Transaction") in the Fund
is caused by or occurs as a result of the same act or omission,
PAGE 38
such transactions shall be aggregated with other transactions in
the Fund and be considered as one Transaction.
o Reporting
Price Services shall:
1. Utilize a system to identify all Transactions, and
shall compute the net effect of such Transactions upon
the Fund on a daily, monthly and rolling 365 day basis.
The monthly and rolling 365 day periods are hereafter
referred to as "Cumulative".
2. Supply to the Fund, from time to time as mutually
agreed upon, a report summarizing the Transactions and
the daily and Cumulative net effects of such
Transactions both in terms of aggregate dilution and
loss ("Dilution") or gain and negative dilution
("Gain") experienced by the Fund, and the impact such
Gain or Dilution has had upon the Fund's net asset
value per Share.
3. With respect to any Transaction which causes
Dilution to the Fund of $25,000 or more, immediately
provide the Fund: (i) a report identifying the
Transaction and the Dilution resulting therefrom, (ii)
the reason such Transaction was processed as described
above, and (iii) the action that Price Services has or
PAGE 39
intends to take to prevent the reoccurrence of such as
of processing ("Report").
o Liability
1. It will be the normal practice of the Funds not to
hold Price Services liable with respect to any
Transaction which causes Dilution to any single Fund of
less than $25,000. Price Services will, however,
closely monitor for each Fund the daily and Cumulative
Gain/Dilution which is caused by Transactions of less
than $25,000. When the Cumulative Dilution to any Fund
exceeds 3/10 of 1% per share, Price Services, in
consultation with counsel to the Fund, will make
appropriate inquiry to determine whether it should take
any remedial action. Price Services will report to the
Board of Directors/Trustees of the Fund ("Board") any
action it has taken.
2. Where a Transaction causes Dilution to a Fund of
$25,000 or more ("Significant Transaction"), Price
Services will review with counsel to the Fund the
Report and the circumstances surrounding the underlying
Transaction to determine whether the Transaction was
caused by or occurred as a result of a negligent act or
omission by Price Services. If it is determined that
PAGE 40
the Dilution is the result of a negligent action or
omission by Price Services, Price Services and outside
counsel for the Fund will negotiate settlement. All
such Significant Transactions will be reported to the
Board at its next meeting (unless the settlement fully
compensates the Fund for any Dilution). Any
Significant Transaction, however, causing Dilution in
excess of the lesser of $100,000 or a penny per Share
will be promptly reported to the Board. Settlement
will not be entered into with Price Services until
approved by the Board. The factors the Board would be
expected to consider in making any determination
regarding the settlement of a Significant Transaction
would include but not be limited to:
o Procedures and controls adopted by Price Services
to prevent "As Of" processing;
o Whether such procedures and controls were being
followed at the time of the Significant
Transaction;
o The absolute and relative volume of all
transactions processed by Price Services on the
day of the Significant Transaction;
PAGE 41
o The number of Transactions processed by Price
Services during prior relevant periods, and the
net Dilution/Gain as a result of all such
transactions to the Fund and to all other Price
Funds;
o The prior response of Price Services to
recommendations made by the Funds regarding
improvement to the Transfer Agent's "As Of"
Processing Procedures.
3. In determining Price Services' liability with respect
to a Significant Transaction, an isolated error or
omission will normally not be deemed to constitute
negligence when it is determined that:
o Price Services had in place "appropriate
procedures".
o the employee(s) responsible for the error or
omission had been reasonably trained and were
being appropriately monitored; and
o the error or omission did not result from wanton
or reckless conduct on the part of the
employee(s).
It is understood that Price Services is not obligated
to have in place separate procedures to prevent each
PAGE 42
and every conceivable type of error or omission. The
term "appropriate procedures" shall mean procedures
reasonably designed to prevent and detect errors and
omissions. In determining the reasonableness of such
procedures, weight will be given to such factors as are
appropriate, including the prior occurrence of any
similar errors or omissions when such procedures were
in place and transfer agent industry standards in place
at the time of the occurrence.
M. Term and Termination of Agreement
o This Agreement shall run for a period of one (1) year from
the date first written above and will be renewed from year
to year thereafter unless terminated by either party as
provided hereunder.
o This Agreement may be terminated by the Fund upon one
hundred twenty (120) days' written notice to Price Services;
and by Price Services, upon three hundred sixty-five (365)
days' writing notice to the Fund.
o Upon termination hereof, the Fund shall pay to Price
Services such compensation as may be due as of the date of
such termination, and shall likewise reimburse for out-of-
pocket expenses related to its services hereunder.
PAGE 43
N. Notice
Any notice as required by this Agreement shall be
sufficiently given (i) when sent to an authorized person of the
other party at the address of such party set forth above or at
such other address as such party may from time to time specify in
writing to the other party; or (ii) as otherwise agreed upon by
appropriate officers of the parties hereto.
O. Assignment
Neither this Agreement nor any rights or obligations
hereunder may be assigned either voluntarily or involuntarily, by
operation of law or otherwise, by either party without the prior
written consent of the other party, provided this shall not
preclude Price Services from employing such agents and
subcontractors as it deems appropriate to carry out its
obligations set forth hereunder.
P. Amendment/Interpretive Provisions
The parties by mutual written agreement may amend this
Agreement at any time. In addition, in connection with the
operation of this Agreement, Price Services and the Fund may
agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions are to
PAGE 44
be signed by all parties and annexed hereto, but no such
provision shall contravene any applicable Federal or state law or
regulation and no such interpretive or additional provision shall
be deemed to be an amendment of this Agreement.
Q. Further Assurances
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the
purposes hereof.
R. Maryland Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of Maryland.
S. Merger of Agreement
This Agreement, including the attached Appendices and
Schedules supersedes any prior agreement with respect to the
subject hereof, whether oral or written.
T. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instruments.
U. The Parties
All references herein to "the Fund" are to each of the Funds
listed on Appendix A individually, as if this Agreement were
PAGE 45
between such individual Fund and Price Services. In the case of
a series Fund or trust, all references to "the Fund" are to the
individual series or portfolio of such Fund or trust, or to such
Fund or trust on behalf of the individual series or portfolio, as
appropriate. The "Fund" also includes any T. Rowe Price Funds
which may be established after the execution of this Agreement.
Any reference in this Agreement to "the parties" shall mean Price
Services and such other individual Fund as to which the matter
pertains.
V. Directors, Trustees and Shareholders and Massachusetts
Business Trust
It is understood and is expressly stipulated that neither
the holders of Shares in the Fund nor any Directors or Trustees
of the Fund shall be personally liable hereunder. With respect to
any Fund which is a party to this Agreement and which is
organized as a Massachusetts business trust, the term "Fund"
means and refers to the trustees from time to time serving under
the applicable trust agreement (Declaration of Trust) of such
Trust as the same may be amended from time to time. It is
expressly agreed that the obligations of any such Trust hereunder
shall not be binding upon any of the trustees, shareholders,
nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Trust, as provided in the
PAGE 46
Declaration of Trust of the Trust. The execution and delivery of
this Agreement has been authorized by the trustees and signed by
an authorized officer of the Trust, acting as such, and neither
such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any
of them, but shall bind only the trust property of the Trust as
provided in its Declaration of Trust.
W. Captions
The captions in the Agreement are included for convenience
of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under
their seals by and through their duly authorized officers.
DATED: ______________________ T. ROWE PRICE SERVICES, INC.
ATTEST:
/s/Mark E. Rayford
___________________________ BY: _________________________
Mark E. Rayford
PAGE 47
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
PAGE 48
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
PAGE 49
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 50
T. ROWE PRICE VALUE FUND, INC.
DATED: ______________________
ATTEST:
/s/Carmen F. Deyesu
_________________________ BY: __________________________
Carmen F. Deyesu
PAGE 51
APPENDIX A
The following Funds are parties to this Agreement, and have so
indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price Blue Chip Growth Fund, Inc.
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price California Tax-Free Income Trust on behalf of the
California Tax-Free Bond Fund and
California Tax-Free Money Fund
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Capital Opportunity Fund, Inc.
T. Rowe Price Corporate Income Fund, Inc.
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price Equity Series, Inc. on behalf of the
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Fixed Income Series, Inc. on behalf of the
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price Health Sciences Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Index Trust, Inc. on behalf of the
T. Rowe Price Equity Index Fund
PAGE 52
T. Rowe Price Institutional International Funds, Inc. on behalf
of the
Foreign Equity Fund
T. Rowe Price International Funds, Inc. on behalf of the
T. Rowe Price International Bond Fund and
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Series, Inc. on behalf of the
T. Rowe Price International Stock Portfolio
T. Rowe Price Mid-Cap Growth Fund
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Personal Strategy Funds, Inc.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price OTC Fund, Inc. on behalf of the
T. Rowe Price OTC Fund
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Short-Term U.S. Government Fund, Inc.
PAGE 53
T. Rowe Price Small-Cap Value Fund, Inc.
T. Rowe Price Spectrum Fund, Inc. on behalf of the
Spectrum Growth Fund
Spectrum Income Fund
T. Rowe Price State Tax-Free Income Trust on behalf of the
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
T. Rowe Price U.S. Treasury Funds, Inc. on behalf of the
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. Rowe Price Value Fund, Inc.
T. Rowe Price Summit Funds, Inc. on behalf of the
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. Rowe Price Summit Municipal Funds, Inc. on behalf of the
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
PAGE 54
SCHEDULE A - FEE SCHEDULE
The following fees for services provided by T. Rowe Price
Services, Inc. (TRPS) and vendors will be billed by TRPS for
1996:
I. T. Rowe Price Services Maintenance and Transaction Charges -
Billable Monthly
A. Retail Individual
Retail Individual Account Fee - $14.50 for each Equity,
Bond, and Money Market Account serviced.
The Per Account Annual Fee will be billed monthly
at a rate of 1/12 of the annual fee for each Fund
account serviced during the month. Accounts
serviced is defined as all open accounts at month
end plus accounts which closed during the month.
Transaction Fees
1. New Account Fees (billed for all new accounts
setup in excess of 15,000/month)
$2.00 for every account opened, including
fiduciary accounts, excluding those opened by exchange.
2. Non-Automated Transactions (billed for all
transactions in excess of 300,000/month)
a. $1.00 for each non-automated transaction and
maintenance item processed for the Fund Group
as a whole during a month in excess of
300,000. The non-automated transaction count
will include all manually processed price
dependent and maintenance transactions.
Also, the number of new account setups will
be excluded from the number of non-automated
transactions.
b. Fee to be charged to the Funds based on each
Fund's number of total non-automated
transactions and maintenance.
c. Fee to be billed monthly for that month.
PAGE 55
d. NOTE: The transaction count should not
include correction of transactions
caused by non-shareholder errors.
3. Telephone Fee (billed for all calls in excess of
110,000/month)
Billed at the rate of $5.00 per call for
shareholder servicing calls received in excess of
110,000 calls per month. Calls received in Retail
Services are allocated to the Funds based on
accounts serviced and calls received in Telephone
Services are allocated based on actual calls
received.
4. Tele*Access
Base fee, per month for all calls is $100,000.
5. Correspondence (for all correspondence in excess
of 10,000/month)
$5.00 billed for each shareholder correspondence
request completed in writing or by phone in excess
of 10,000 a month. Allocated to the Funds based
on accounts serviced.
6. Telephone Transaction Fee (billed for all
telephone transactions in excess of 30,000/month)
Each price dependent transaction initiated through
the Telephone Services Group in excess of 30,000 a
month will be charged $1.00.
B. Retail Retirement Participants - $41.00 for each
Participant serviced.
The Per Participant Annual Fee will be billed monthly
at a rate of 1/12 of the annual fee for each
Participant serviced during the month.
C. Financial Institutions Accounts - $27.00 for each
Equity, Bond, and Money Market Account serviced.
PAGE 56
The Per Account Annual Fee will be billed monthly at a
rate of 1/12 of the annual fee for each Fund account
serviced during the month. Accounts serviced is defined
as all open accounts at month end plus accounts which
closed during the month.
II. Vendor Fees
A. DST
1. Annual Open Account Fee
a. $1.82 for each Equity Fund account serviced.
b. $4.33 for each Bond Fund account serviced.
c. $4.33 for each Money Market Fund account
serviced.
The Open Account Fee will be billed monthly at a
rate of 1/12 of the annual fee for each Fund account serviced
during the month.
2. Closed Account Fee (Annualized)
Payable at an annual rate of $1.48. The Closed
Account Fee will be billed monthly at a rate of
1/12 of the annual rate and will be charged in the
month following the month during which such
account is closed and shall cease to be charged in
the month following the Purge Date.
3. Fiduciary Sub-Accounting
Payable at the rate of $1.00 per month for each
fiduciary account. Fiduciary accounts closed
during the prior year will not be included as
billable items.
4. Annual Base Fee Per Fund
Annual Fee of $7,422.00 will be charged at a
monthly rate of $618.50. The fee is waived for
the first six (6) months after a new Fund is
effective. The definition of new Fund excludes
Funds created by mergers, purchases, or
reorganizations.
PAGE 57
5. Bank Account Reconciliation System (Comp/Recon)
Annual charge of $120,000 payable at a rate of
$10,000 per month.
6. TRAC 2000
Century 401(k) plans are charged $5.00 per
eligible employee per year. The ComDisco plan is
charged $4.00 per eligible employee per year.
$7.00 is the maximum fee per participant.
7. Voice Response Unit
a. $500 Set-up Fee will be charged for each
investment company unit.
b. $2,500 Maintenance Fee will be billed each
month.
c. $.24 will be billed per call connected to the
VRU. This service will be discontinued
during 1996.
8. Contingent Deferred Sales Charge.
Billed to each Fund utilizing this service at an
annual rate of $1.03 per open account.
9. Asset Allocation
The rate of $1.80 per reallocation group will be
charged for each reallocation.
B. State Street Bank
1. Checkwriting Fees
$.61 for each checkwriting item processed (i.e.
those resulting in either redemptions or returned
as non-processable). This includes signature card
maintenance and verification, manual or special
processing of checks, stop payment processing,
settlement functions, and postage and mailing
expenses to return canceled checks to
shareholders.
PAGE 58
2. ACH Transactions
$.06 for each ACH transaction processed by the
Bank and submitted to the ACH network.
3. Change of Address
$.0625 for each notice printed, addressed, and
mailed. Includes subfile established or changed.
4. Wire Order Invoices - $.07 each.
5. Dividend & Daily Spac Master Forms - $.1225 each.
6. On-Request Work Orders - $25.00 each.
7. Internal Book Transfers
$1.14 billed for money movement between TRP DDA's
at the Bank. Money is transferred by debit and
credit memos.
8. Wire Fees
$4.24 for each incoming, manual, internal bank
transfer and outgoing transmission wire.
9. Paid checks
$.20 for each paid check processed.
10. PAC Checks
$.0475 billed for eah PAC check printed and mailed
in bulk to TRP.
11. Nightly Audits
$.0325 per page for the audit of the DST nightly
update.
12. Research
DDA Research copies $1.09 each.
PAGE 59
Research for BFDS records will be billed at $3.00
per request for CAMR and other purchase items.
Other research is billed at $7.20 per request.
There will be no charge for items that were
processed via IMAGE that TRP cannot locate on
film. Transcripts are not covered under this
schedule.
13. VAX Computer Usage
Billed at the rate of $8,709.56 per month which
covers both:
a. System Fee - for use of sub-systems such as
capital stock interface, PDPS, Direct
Deposit, etc.
b. Communication Fee - charge for the line,
modems, and statistical multiplexers.
14. Abandoned Property
Services based on the following fee schedule:
a. Administrative charge $125/Fund
b. Processing charges $1.00/account
c. Due Diligence Mailings $1.35/account
d. Labor will be charged based on the number of
hours required.
e. Lost shareholder recovery $2.25/account
initial attempt
$5.00/s/o
any s/o located
15. NSCC Settlement
Settlement redemption $11.98
Settlement purchase $ 5.45
C. J.P. Morgan Bank
1. Wire Transfer Fees
Annual Account Maintenance $250.00
Annual MORCOM/CASH
First Account $5,000.00
Subsequent Accounts $3,000.00
PAGE 60
Batch File Transfer (BFT)
Transmission $15.00
(capped at 10 per month) each
Outgoing Wires
Straight-through (Repetitive or Freetype)
80% of total volume $3.25
Book Transfer (IBT) $1.50
Repair (Freeform) $7.00
Zero Balance Transfer $1.00
Incoming Wires
Fed or CHIPS $3.25
Book (IBT) $1.50
D. Bank of Boston
1. Controlled Disbursement Fees
Annual Account Maintenance $300.00
per
account
Annual Prior Day Balance Reporting Detail
Transmission $600.00
per
account
Annual Batch File Transfer (BFT)
Service $120 per
account
BFT Transmission $.003 each
Same Day Match Pay (Dividend & Redemption Checks)
CD Full Recon/Daily Match Fixed $120.00
per
account
CD Full Recon/Daily Match Items $.025 per
item
Checks Paid $.036 per
item
PAGE 61
Check Truncation
Fixed $120.00
per
account
Items $.011 per
item
Stops
On-line $7.00
Photos of Checks $4.00 per
item
Incoming Wires $5.00 per
item
On-Line Inquiry Report Terminal $3.50 per
item
2. The bank may charge interest at a rate in excess
of normal borrowing rates if the TRPS balance is
overdrawn or is in a negative collected balance
status.
E. First National Bank of Maryland
1. Internal Fund Transfer $6.00
2. Returned Items $2.50
3. Deposit Items
Charge varies 1
4. Deposit Tickets $0.50
5. Return/redeposit items $3.00
6. Deposit Corrections $4.50
7. Check copy $9.00
8. First Facts
CDA Repetitive Wire $3.95
System Reports/Per Module $27.00
Per Report Previous Day $1.80
Per Report Current Day $3.60
9. Account maintenance $12.25
10. Debit item $0.54
11. Credit transaction $0.54
____________________
1Charge varies by District, $ .0267 to $ .1167
PAGE 62
12. Foreign Deposit Check amount $1,000-$4,999
$7.50
$5,000-19,999
$15.00
over $20,000
$20.00
13. ACH Debit $0.117
14. Tax Deposits $0.90
15. Film - Monthly $121.50
16. TRPS may be charged interest when TRPS's
balance at FNB is in a negative collected
balance status. TRPS may also receive
balance credits on a positive investable balance
III. New Funds
Funds added during the term of this contract may have their
Maintenance and Transaction charges and other charges
(Section I) waived for a period of time, as agreed to by
TRPS and Fund Directors, following the establishment of the
Fund. Out-of-pocket expenses will be billed to the Fund
from the Fund's inception.
IN WITNESS WHEREOF, T.Rowe Price Funds and T.Rowe Price Services,
Inc. have agreed upon this fee schedule to be executed in their
names and on their behalf through their duly authorized officers:
T. ROWE PRICE FUNDS T. ROWE PRICE SERVICES, INC.
/s/Carmen F. Deyesu /s/Mark E. Rayford
NAME _______________________ NAME _________________________
Carmen F. Deyesu Mark E. Rayford
TITLE ______________________ TITLE ________________________
DATE ______________________ DATE _________________________
PAGE 63
AMENDMENT NO. 1
TRANSFER AGENCY AND SERVICE AGREEMENT
Between
T. ROWE PRICE SERVICES, INC.
And
THE T. ROWE PRICE FUNDS
The Transfer Agency and Service Agreement of January 1,
1996, between T. Rowe Price Services, Inc. and each of the
Parties listed on Appendix A thereto is hereby amended, as of
April 24, 1996, by adding thereto the T. Rowe Price Mid-Cap Value
Fund, Inc. and Mid-Cap Equity Growth Fund, a separate series of
the Institutional Domestic Equity Funds, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
PAGE 64
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 65
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
PAGE 66
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
______________________ ______________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary
Attest: T. ROWE PRICE SERVICES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
______________________ ______________________________
Barbara A. Van Horn, By: Henry H. Hopkins,
Assistant Secretary Vice President
PAGE 67
AMENDMENT NO. 2
TRANSFER AGENCY AND SERVICE AGREEMENT
Between
T. ROWE PRICE SERVICES, INC.
And
THE T. ROWE PRICE FUNDS
The Transfer Agency and Service Agreement of January 1,
1996, as amended April 24, 1996, between T. Rowe Price Services,
Inc. and each of the Parties listed on Appendix A thereto is
hereby further amended, as of August 2, 1996, by adding thereto
the T. Rowe Price Financial Services Fund, Inc., Mid-Cap Growth
Portfolio, a separate series of the T. Rowe Price Equity Series,
Inc. and Prime Reserve Portfolio, a separate series of the T.
Rowe Price Fixed Income Series, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
PAGE 68
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price Personal Strategy Balanced
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.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
PAGE 69
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
PAGE 70
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
______________________ ______________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary
Attest: T. ROWE PRICE SERVICES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
______________________ ______________________________
Barbara A. Van Horn, By: Henry H. Hopkins,
Assistant Secretary Vice President
PAGE 71
AMENDMENT NO. 3
TRANSFER AGENCY AND SERVICE AGREEMENT
Between
T. ROWE PRICE SERVICES, INC.
And
THE T. ROWE PRICE FUNDS
The Transfer Agency and Service Agreement of January 1,
1996, as amended April 24, 1996 and August 2, 1996, between T.
Rowe Price Services, Inc. and each of the Parties listed on
Appendix A thereto is hereby further amended, as of November 12,
1996, by adding thereto the T. Rowe Price Spectrum International
Fund, a separate series of the T. Rowe Price Spectrum Fund, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
T. Rowe Price California Tax-Free Bond Fund
T. Rowe Price California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
PAGE 72
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price Personal Strategy Balanced
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.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
PAGE 73
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
T. Rowe Price Spectrum Growth Fund
T. Rowe Price Spectrum Income Fund
T. Rowe Price Spectrum International Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
T. Rowe Price Maryland Tax-Free Bond Fund
T. Rowe Price Maryland Short-Term Tax-Free
Bond Fund
T. Rowe Price New York Tax-Free Bond Fund
T. Rowe Price New York Tax-Free Money Fund
T. Rowe Price New Jersey Tax-Free Bond Fund
T. Rowe Price Virginia Tax-Free Bond Fund
T. Rowe Price Virginia Short-Term Tax-Free
Bond Fund
T. Rowe Price Florida Insured Intermediate
Tax-
PAGE 74
Free Fund
T. Rowe Price Georgia Tax-Free Bond Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
T. Rowe Price U.S. Treasury Intermediate Fund
T. Rowe Price U.S. Treasury Long-Term Fund
T. Rowe Price U.S. Treasury Money Fund
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
______________________ ______________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary
Attest: T. ROWE PRICE SERVICES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
______________________ ______________________________
Barbara A. Van Horn, By: Henry H. Hopkins,
Assistant Secretary Vice President
The Agreement between T. Rowe Price Associates, Inc. and
T. Rowe Price Funds for Fund Accounting Services, dated January
1, 1996.
PAGE 1
AGREEMENT
between
T. ROWE PRICE ASSOCIATES, INC.
and
THE T. ROWE PRICE FUNDS
for
FUND ACCOUNTING SERVICES
PAGE 2
TABLE OF CONTENTS
Page
Article A Terms of Appointment/Duties of Price
Associates . . . . . . . . . . . . . . . . . . 1
Article B Fees and Out-of-Pocket Expenses . . . . . . . . 2
Article C Representations and Warranties of Price
Associates . . . . . . . . . . . . . . . . . . 3
Article D Representations and Warranties of the Fund . . 3
Article E Ownership of Software and Related Material . . 3
Article F Quality Service Standards . . . . . . . . . . . 4
Article G Standard of Care/Indemnification . . . . . . . 4
Article H Dual Interests . . . . . . . . . . . . . . . . 5
Article I Documentation . . . . . . . . . . . . . . . . . 5
Article J Recordkeeping/Confidentiality . . . . . . . . . 5
Article K Compliance with Governmental Rules and
Regulations . . . . . . . . . . . . . . . . . . 6
Article L Terms and Termination of Agreement . . . . . . 6
Article M Notice . . . . . . . . . . . . . . . . . . . . 6
Article N Assignment . . . . . . . . . . . . . . . . . . 7
Article O Amendment/Interpretive Provisions . . . . . . . 7
Article P Further Assurances . . . . . . . . . . . . . . 7
Article Q Maryland Law to Apply . . . . . . . . . . . . . 7
Article R Merger of Agreement . . . . . . . . . . . . . . 7
Article S Counterparts . . . . . . . . . . . . . . . . . 8
Article T The Parties . . . . . . . . . . . . . . . . . . 8
PAGE 3
Article U Directors, Trustee and Shareholders and
Massachusetts Business Trust . . . . . . . . . 8
Article V Captions . . . . . . . . . . . . . . . . . . . 9
PAGE 4
AGREEMENT made as of the first day of January, 1996, by and
between T. ROWE PRICE ASSOCIATES, INC., a Maryland corporation
having its principal office and place of business at 100 East
Pratt Street, Baltimore, Maryland 21202 ("Price Associates"), and
each Fund which is listed on Appendix A (as such Appendix may be
amended from time to time) and which evidences its agreement to
be bound hereby by executing a copy of this Agreement (each such
Fund individually hereinafter referred to as "the Fund", whose
definition may be found in Article T);
WHEREAS, Price Associates has the capability of providing the
Funds with certain accounting services ("Accounting Services");
WHEREAS, the Fund desires to appoint Price Associates to
provide these Accounting Services and Price Associates desires to
accept such appointment;
WHEREAS, the Board of Directors of the Fund has authorized
the Fund to utilize various pricing services for the purpose of
providing to Price Associates securities prices for the
calculation of the Fund's net asset value.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
PAGE 5
A. Terms of Appointment/Duties of Price Associates
Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints Price Associates
to provide, and Price Associates agrees to provide, the following
Accounting Services:
a. Maintain for each Fund a daily trial balance, a general
ledger, subsidiary records and capital stock accounts;
b. Maintain for each Fund an investment ledger, including
amortized bond and foreign dollar denominated costs where
applicable;
c. Maintain for each Fund all records relating to the Fund's
income and expenses;
d. Provide for the daily valuation of each Fund's portfolio
securities and the computation of each Fund's daily net
asset value per share. Such daily valuations shall be
made in accordance with the valuation policies established
by each of the Fund's Board of Directors including, but
not limited to, the utilization of such pricing valuation
sources and/or pricing services as determined by the
Boards. Price Associates shall have no liability for any
losses or damages incurred by the Fund as a result of
erroneous portfolio security evaluations provided by such
designated sources and/or pricing services; provided that,
PAGE 6
Price Associates reasonably believes the prices are
accurate, has adhered to its normal verification control
procedures, and has otherwise met the standard of care as
set forth in Article G of this Agreement;
e. Provide daily cash flow and transaction status information
to each Fund's adviser;
f. Prepare for each Fund such financial information that is
reasonably necessary for shareholder reports, reports to
the Board of Directors and to the officers of the Fund,
and reports to the Securities and Exchange Commission and
the Internal Revenue Service and other Federal and state
regulatory agencies;
g. Provide each Fund with such advice that may be reasonably
necessary to properly account for all financial
transactions and to maintain the Fund's accounting
procedures and records so as to insure compliance with
generally accepted accounting and tax practices and rules;
h. Maintain for each Fund all records that may be reasonably
required in connection with the audit performed by each
Fund's independent accountant, the Securities and Exchange
Commission, the Internal Revenue Service or such other
Federal or state regulatory agencies; and
i. Cooperate with each Fund's independent public accountants
and take all reasonable action in the performance of its
PAGE 7
obligations under the Agreement to assure that the
necessary information is made available to such
accountants for the expression of their opinion without
any qualification as to the scope of their examination
including, but not limited to, their opinion included in
each such Fund's annual report on Form N-SAR and annual
amendment to Form N-1A.
B. Fees and Out-of-Pocket Expenses
Each Fund shall pay to Price Associates for its Accounting
Services hereunder, fees as set forth in the Schedule attached
hereto. In addition, each Fund will reimburse Price Associates
for out-of-pocket expenses such as postage, printed forms, voice
and data transmissions, record retention, disaster recovery,
third party vendors, equipment leases and other similar items as
may be agreed upon between Price Associates and the Fund. Some
invoices will contain costs for both the Funds and other funds
services by Price Associates. In these cases, a reasonable
allocation methodology will be used to allocate these costs to
the Funds.
C. Representations and Warrantees of Price Associates
Price Associates represents and warrants to the Fund that:
1. It is a corporation duly organized and existing in good
standing under the laws of Maryland.
2. It is duly qualified to carry on its business in Maryland.
PAGE 8
3. It is empowered under applicable laws and by its charter
and By-Laws to enter into and perform this Agreement.
4. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
5. It has, and will continue to have, access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
D. Representations and Warrantees of the Fund
The Fund represents and warrants to Price Associates that:
1. It is a corporation or business trust, as the case may be,
duly organized and existing and in good standing under the laws
of Maryland or Massachusetts, as the case may be.
2. It is empowered under applicable laws and by its Articles
of Incorporation or Declaration of Trust, as the case may be, and
By-Laws have been taken to authorize it to enter into and perform
this Agreement.
3. All proceedings required by said Articles of Incorporation
or Declaration of Trust, as the case may be, and By-Laws have
been taken to authorize it to enter into and perform this
Agreement.
E. Ownership of Software and Related Material
All computer programs, magnetic tapes, written procedures,
and similar items purchased and/or developed and used by Price
Associates in performance of the Agreement shall be the property
PAGE 9
of Price Associates and will not become the property of the
Funds.
F. Quality Service Standards
Price Associates and the Fund may, from time to time, agree
to certain quality service standards, with respect to Price
Associates' services hereunder.
G. Standard of Care/Indemnification
Notwithstanding anything to the contrary in this Agreement:
1. Price Associates shall not be liable to any Fund for any
act or failure to act by it or its agents or subcontractors on
behalf of the Fund in carrying or attempting to carry out the
terms and provisions of the Agreement provided Price Associates
has acted in good faith and without negligence or willful
misconduct and selected and monitored the performance of its
agents and subcontractors with reasonable care.
2. The Fund shall indemnify and hold Price Associates
harmless from and against all losses, costs, damages, claims,
actions, and expenses, including reasonable expenses for legal
counsel, incurred by Price Associates resulting from: (i) any
action or omission by Price Associates or its agents or
subcontractors in the performance of their duties hereunder; (ii)
Price Associates acting upon instructions believed by it to have
been executed by a duly authorized officer of the Fund; or (iii)
PAGE 10
Price Associates acting upon information provided by the Fund in
form and under policies agreed to by Price Associates and the
Fund. Price Associates shall not be entitled to such
indemnification in respect of actions or omissions constituting
negligence or willful misconduct of Price Associates or where
Price Associates has not exercised reasonable care in selecting
or monitoring the performance of its agents or subcontractors.
3. Price Associates shall indemnify and hold harmless the
Fund from all losses, costs, damages, claims, actions and
expenses, including reasonable expenses for legal counsel,
incurred by the Fund resulting from the negligence or willful
misconduct of Price Associates or which result from Price
Associates' failure to exercise reasonable care in selecting or
monitoring the performance of its agents or subcontractors. The
Fund shall not be entitled to such indemnification with respect
to actions or omissions constituting negligence or willful
misconduct of such Fund or its agents or subcontractors; unless
such negligence or misconduct is attributable to Price
Associates. 4. In the event either party is unable to
perform its obligations under the terms of this Agreement because
of acts of God, strikes or other causes reasonably beyond its
control, such party shall not be liable to the other party for
any loss, cost, damage, claim, action or expense resulting from
such failure to perform or otherwise from such causes.
PAGE 11
5. In order that the indemnification provisions contained in
this Article F shall apply, upon the assertion of a claim for
which either party may be required to indemnify the other, the
party seeking indemnification shall promptly notify the other
party of such assertion, and shall keep the other party advised
with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense
of such claim, or to defend against said claim in its own name or
in the name of the other party. The party seeking
indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required
to indemnify it except with the other party's prior written
consent.
6. Neither party to this Agreement shall be liable to the
other party for consequential damages under any provision of this
Agreement.
H. Dual Interests
It is understood that some person or persons may be
directors, officers, or shareholders of both the Fund and Price
Associates (including Price Associates' affiliates), and that the
existence of any such dual interest shall not affect the validity
of this Agreement or of any transactions hereunder except as
otherwise provided by a specific provision of applicable law.
PAGE 12
I. Documentation
As requested by Price Associates, the Fund shall promptly
furnish to Price Associates such documents as it may reasonably
request and as are necessary for Price Associates to carry out
its responsibilities hereunder.
J. Recordkeeping/Confidentiality
1. Price Associates shall keep records relating to the
services to be performed hereunder, in the form and manner as it
may deem advisable, provided that Price Associates shall keep all
records in such form and in such manner as required by applicable
law, including the Investment Company Act of 1940 ("the Act") and
the Securities Exchange Act of 1934 ("the '34 Act").
2. Price Associates and the Fund agree that all books,
records, information and data pertaining to the business of the
other party which are exchanged or received pursuant to the
negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other
person, except: (a) after prior notification to and approval in
writing by the other party hereto, which approval shall not be
unreasonably withheld and may not be withheld where Price
Associates or Fund may be exposed to civil or criminal contempt
proceedings for failure to comply; (b) when requested to divulge
such information by duly constituted governmental authorities; or
(c) after so requested by the other party hereto.
PAGE 13
K. Compliance With Governmental Rules and Regulations
Except as otherwise provided in the Agreement and except for
the accuracy of information furnished to the Funds by Price
Associates, each Fund assumes full responsibility for the
preparation, contents and distribution of its prospectuses, and
for complying with all applicable requirements of the Act, the
'34 Act, the Securities Act of 1933 (the "33 Act"), and any laws,
rules and regulations of governmental authorities having
jurisdiction over the Funds.
L. Term and Termination of Agreement
1. This Agreement shall run for a period of one (1) year from
the date first written above and will be renewed from year to
year thereafter unless terminated by either party as provided
hereunder.
2. This Agreement may be terminated by the Fund upon sixty
(60) days' written notice to Price Associates; and by Price
Associates, upon three hundred sixty-five (365) days' writing
notice to the Fund.
3. Upon termination hereof, the Fund shall pay to Price
Associates such compensation as may be due as of the date of such
termination, and shall likewise reimburse for out-of-pocket
expenses related to its services hereunder.
PAGE 14
M. Notice
Any notice as required by this Agreement shall be
sufficiently given (i) when sent to an authorized person of the
other party at the address of such party set forth above or at
such other address as such party may from time to time specify in
writing to the other party; or (ii) as otherwise agreed upon by
appropriate officers of the parties hereto.
N. Assignment
Neither this Agreement nor any rights or obligations
hereunder may be assigned either voluntarily or involuntarily, by
operation of law or otherwise, by either party without the prior
written consent of the other party, provided this shall not
preclude Price Associates from employing such agents and
subcontractors as it deems appropriate to carry out its
obligations set forth hereunder.
O. Amendment/Interpretive Provisions
The parties by mutual written agreement may amend this
Agreement at any time. In addition, in connection with the
operation of this Agreement, Price Associates and the Fund may
agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor of this
PAGE 15
Agreement. Any such interpretive or additional provisions are to
be signed by all parties and annexed hereto, but no such
provision shall contravene any applicable Federal or state law or
regulation and no such interpretive or additional provision shall
be deemed to be an amendment of this Agreement.
P. Further Assurances
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the
purposes hereof.
Q. Maryland Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of Maryland.
R. Merger of Agreement
This Agreement, including the attached Appendices and
Schedules supersedes any prior agreement with respect to the
subject hereof, whether oral or written.
S. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instruments.
PAGE 16
T. The Parties
All references herein to "the Fund" are to each of the Funds
listed on Appendix A individually, as if this Agreement were
between such individual Fund and Price Associates. In the case
of a series Fund or trust, all references to "the Fund" are to
the individual series or portfolio of such Fund or trust, or to
such Fund or trust on behalf of the individual series or
portfolio, as appropriate. The "Fund" also includes any T. Rowe
Price Funds which may be established after the execution of this
Agreement. Any reference in this Agreement to "the parties"
shall mean Price Associates and such other individual Fund as to
which the matter pertains.
U. Directors, Trustees and Shareholders and Massachusetts
Business Trust
It is understood and is expressly stipulated that neither the
holders of shares in the Fund nor any Directors or Trustees of
the Fund shall be personally liable hereunder. With respect to
any Fund which is a party to this Agreement and which is
organized as a Massachusetts business trust, the term "Fund"
means and refers to the trustees from time to time serving under
the applicable trust agreement (Declaration of Trust) of such
Trust as the same may be amended from time to time. It is
PAGE 17
expressly agreed that the obligations of any such Trust hereunder
shall not be binding upon any of the trustees, shareholders,
nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Trust, as provided in the
Declaration of Trust of the Trust. The execution and delivery of
this Agreement has been authorized by the trustees and signed by
an authorized officer of the Trust, acting as such, and neither
such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any
of them, but shall bind only the trust property of the Trust as
provided in its Declaration of Trust.
V. Captions
The captions in the Agreement are included for convenience of
reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under
their seals by and through their duly authorized officers.
PAGE 18
DATED: ______________________ T. ROWE PRICE ASSOCIATES, INC.
ATTEST:
/s/Barbara A. Van Horn /s/Alvin M. Younger, Jr.
______________________________ BY: __________________________
Barbara A. Van Horn, Managing Director
Assistant Secretary
PAGE 19
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price personal Strategy Balanced
Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
PAGE 20
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC. on behalf of the:
T. Rowe Price OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND,
INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
PAGE 21
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC.on behalf of
the:
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC. on
behalf of the:
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
PAGE 22
DATED: ______________________ T. ROWE PRICE FUNDS
ATTEST:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
______________________________ BY: ___________________________
Patricia S. Butcher, Carmen F. Deyesu
Assistant Secretary
PAGE 23
APPENDIX A
The following Funds are parties to this Agreement, and have so
indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price Adjustable Rate U.S. Government
Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price California Tax-Free Income
Trust on behalf of the
California Tax-Free Bond Fund and
California Tax-Free Money Fund
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Capital Opportunity Fund, Inc.
T. Rowe Price Corporate Income Fund, Inc.
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price Equity Series, Inc. on behalf
of the:
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. Rowe Price Fixed Income Series, Inc. on
behalf of the:
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price Health Sciences Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
PAGE 24
T. Rowe Price Index Trust, Inc. on behalf of
the:
T. Rowe Price Equity Index Fund
T. Rowe Price Institutional International
Funds, Inc. on behalf of the:
Foreign Equity Fund
T. Rowe Price International Equity Fund, Inc.
T. Rowe Price International Funds, Inc. on
behalf of the:
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income
Fund
T. Rowe Price Latin American Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price Mid-Cap Growth Fund
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price OTC Fund, Inc. on behalf of
the:
T. Rowe Price OTC Fund
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Short-Term U.S. Government
Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
PAGE 25
T. Rowe Price Spectrum Fund, Inc. on behalf
of the:
Spectrum Growth Fund
Spectrum Income Fund
T. Rowe Price State Tax-Free Income Trust on
behalf of the:
Maryland Tax-Free Bond Fund,
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund and
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Bond
Fund
Georgia Tax-Free Bond Fund
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free Insured Intermediate
Bond Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate
Fund, Inc.
T. Rowe Price U.S. Treasury Funds, Inc. on
behalf of the:
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. Rowe Price Summit Funds, Inc. on behalf of
the:
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
PAGE 26
T. Rowe Price Summit Municipal Funds, Inc. on
behalf of the:
Summit Municipal Money Market Fund
Summit Municipal Intermediate Fund
Summit Municipal Income Fund
T. Rowe Price Value Fund, Inc.
PAGE 27
FUND ACCOUNTING SERVICES FEE SCHEDULE
Between
T. ROWE PRICE ASSOCIATES, INC.
And
THE T. ROWE PRICE FUNDS
January 1, 1996 to December 31, 1996
PAGE 28
FUND ACCOUNTING SERVICES
1996 FEE SCHEDULE
A.Fee Structure
1. Base Fee
Domestic Funds $60,000 each
International Funds $100,000 each
Spectrum Funds $45,000 each
Per Fund fee for basic recordkeeping
and financial reporting
2. Individual Fund Fee
Total fees reflecting special $ 968,000
characteristics of each Fund
3. Stock Lending Fee
Flat fee reflecting $ 75,000
monitoring of Security Lending Program
4. Additional Funds
Domestic Funds $60,000 each
International Funds $100,000 each
Spectrum Funds $45,000 each
B. Total Cost Per Fund
Growth Stock Fund $ 104,000
New Horizons Fund 95,000
Equity Income Fund 85,000
New Era Fund 72,000
International Stock Fund 115,000
Growth & Income Fund 85,000
New America Growth Fund 70,000
Capital Appreciation Fund 85,000
Small-Cap Value Fund 60,000
Foreign Equity Fund 105,000
International Discovery Fund 125,000
Science & Technology Fund 70,000
PAGE 29
High Yield Fund 165,000
Tax-Free Income Fund 110,000
New Income Fund 100,000
Tax-Free High Yield Fund 110,000
European Stock Fund 100,000
Equity Index Fund 60,000
New Asia Fund 110,000
Spectrum Growth Fund 45,000
GNMA Fund 120,000
International Bond Fund 125,000
Balanced Fund 90,000
Maryland Bond Fund 81,000
Tax-Free Short Intermediate Fund 90,000
Short-Term Bond Fund 120,000
California Bond Fund 72,000
New York Bond Fund 72,000
U.S. Treasury Short-Intermediate Fund 60,000
U.S. Treasury Long-Term Bond Fund 60,000
Spectrum Income Fund 45,000
Prime Reserve Fund 85,000
Tax-Exempt Money Fund 93,000
U.S. Treasury Money Fund 60,000
California Money Fund 67,000
New York Money Fund 67,000
Short-Term U.S. Government Fund 100,000
Virginia Bond Fund 65,000
New Jersey Bond Fund 65,000
Global Government Bond Fund 100,000
OTC Fund 85,000
Japan Fund 100,000
Mid-Cap Growth Fund 60,000
Short-Term Global Fund 110,000
Maryland Short-Term Tax-Free Bond Fund 65,000
Florida Insured Intermediate Tax-Free Fund 65,000
Georgia Tax-Free Bond Fund 65,000
Tax-Free Insured Intermediate Bond Fund 65,000
Blue Chip Growth Fund 60,000
Dividend Growth Fund 65,000
Latin America Fund 110,000
Summit Cash Reserve Fund 60,000
Summit Limited-Term Bond Fund 60,000
Summit GNMA Fund 60,000
Summit Municipal Money Market Fund 60,000
Summit Municipal Intermediate Fund 60,000
Summit Municipal Income Fund 60,000
PAGE 30
International Stock Portfolio 100,000
Personal Strategy Income Fund 70,000
Equity Income Portfolio 60,000
Personal Strategy Balanced Fund 70,000
New America Growth Portfolio 60,000
Personal Strategy Growth Fund 70,000
Limited-Term Bond Portfolio 60,000
Value Fund 60,000
Virginia Short-Term Tax Free Bond Fund 60,000
Capital Opportunity Fund 60,000
Emerging Markets Bond Fund 100,000
Personal Strategy Balanced Portfolio 60,000
Corporate Income Fund 70,000
Global Stock Fund 100,000
Heath Sciences Fund 60,000
IN WITNESS WHEREOF, T. Rowe Price Funds and T. Rowe Price
Associates, Inc. have agreed upon this fee schedule to be
executed in their names and on their behalf through their duly
authorized officers:
T. ROWE PRICE FUNDS T. ROWE PRICE ASSOCIATES, INC.
/s/Carmen F. Deyesu /s/Alvin M. Younger
Name _________________________ Name ______________________
Carmen F. Deyesu Alvin M. Younger
Title Treasurer Title Treasurer and Managing
Director
Date _________________________ Date ______________________
PAGE 31
AMENDMENT NO. 1
AGREEMENT
between
T. ROWE PRICE ASSOCIATES, INC.
and
THE T. ROWE PRICE FUNDS
for
FUND ACCOUNTING SERVICES
The Agreement for Fund Accounting Services of January 1,
1996, between T. Rowe Price Associates, Inc. and each of the
Parties listed on Appendix A thereto is hereby amended, as of
April 24, 1996, by adding thereto the T. Rowe Price Mid-Cap Value
Fund, Inc. and Mid-Cap Equity Growth Fund, a separate series of
the Institutional Domestic Equity Funds, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
PAGE 32
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
PAGE 33
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
PAGE 34
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
________________________ ___________________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary
Attest: T. ROWE PRICE ASSOCIATES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
________________________ ___________________________________
Barbara A. Van Horn, By: Henry H. Hopkins,
Assistant Secretary Managing Director
PAGE 35
AMENDMENT NO. 2
AGREEMENT
between
T. ROWE PRICE ASSOCIATES, INC.
and
THE T. ROWE PRICE FUNDS
for
FUND ACCOUNTING SERVICES
The Agreement for Fund Accounting Services of January 1,
1996, as amended April 24, 1996, between T. Rowe Price
Associates, Inc. and each of the Parties listed on Appendix A
thereto is hereby further amended, as of August 2, 1996, by
adding thereto the T. Rowe Price Financial Services, Inc., Mid-
Cap Growth Portfolio, a separate series of the T. Rowe Price
Equity Series, Inc. and Prime Reserve Portfolio, a separate
series of the T. Rowe Price Fixed Income Series, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
PAGE 36
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 Mid-Cap Growth Portfolio
T. Rowe Price Personal Strategy Balanced
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.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
PAGE 37
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
PAGE 38
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 39
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
________________________ ___________________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary
Attest: T. ROWE PRICE ASSOCIATES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
________________________ ___________________________________
Barbara A. Van Horn, By: Henry H. Hopkins,
Assistant Secretary Managing Director
PAGE 40
AMENDMENT NO. 3
AGREEMENT
between
T. ROWE PRICE ASSOCIATES, INC.
and
THE T. ROWE PRICE FUNDS
for
FUND ACCOUNTING SERVICES
The Agreement for Fund Accounting Services of January 1,
1996, as amended April 24, 1996 and August 2, 1996, between T.
Rowe Price Associates, Inc. and each of the Parties listed on
Appendix A thereto is hereby further amended, as of November 12,
1996, by adding thereto the T. Rowe Price Spectrum International
Fund, a separate series of the T. Rowe Price Spectrum Fund, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
T. Rowe Price California Tax-Free Bond Fund
T. Rowe Price California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
PAGE 41
T. Rowe Price New America Growth Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price Personal Strategy Balanced
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.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
PAGE 42
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
T. Rowe Price Spectrum Growth Fund
T. Rowe Price Spectrum Income Fund
T. Rowe Price Spectrum International Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
T. Rowe Price Maryland Tax-Free Bond Fund
T. Rowe Price Maryland Short-Term Tax-Free
Bond Fund
T. Rowe Price New York Tax-Free Bond Fund
T. Rowe Price New York Tax-Free Money Fund
T. Rowe Price New Jersey Tax-Free Bond Fund
T. Rowe Price Virginia Tax-Free Bond Fund
T. Rowe Price Virginia Short-Term Tax-Free
Bond Fund
T. Rowe Price Florida Insured Intermediate
Tax-Free Fund
T. Rowe Price Georgia Tax-Free Bond Fund
PAGE 43
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE
BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
T. Rowe Price U.S. Treasury Intermediate Fund
T. Rowe Price U.S. Treasury Long-Term Fund
T. Rowe Price U.S. Treasury Money Fund
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
________________________ ___________________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary
Attest: T. ROWE PRICE ASSOCIATES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
________________________ ___________________________________
Barbara A. Van Horn, By: Henry H. Hopkins,
Assistant Secretary Managing Director
The Agreement between T. Rowe Price Retirement Plan
Services, Inc. and the Taxable Funds, dated January 1, 1996.
PAGE 1
AGREEMENT
between
T. ROWE PRICE RETIREMENT PLAN SERVICES, INC.
and
EACH OF THE PARTIES INDICATED ON APPENDIX A
PAGE 2
TABLE OF CONTENTS
Page
Article A Terms of Appointment . . . . . . . . . . . . . . 2
Article B Duties of RPS . . . . . . . . . . . . . . . . . 2
1. Purchases - Retirement Plans and Retirement
Accounts . . . . . . . . . . . . . . . . . 2
2. Retirement Plans - Redemptions to Cover
Distributions . . . . . . . . . . . . . . . 3
3. Exchanges . . . . . . . . . . . . . . . . . 4
4. Shares held by Retirement Accounts . . . . 4
5. Books and Records . . . . . . . . . . . . . 4
6. Tax Information . . . . . . . . . . . . . . 5
7. Other Information to be furnished to the
Funds . . . . . . . . . . . . . . . . . . . 6
8. Correspondence . . . . . . . . . . . . . . 6
9. Mailings/Confirmation Statements . . . . . 6
10. Proxies . . . . . . . . . . . . . . . . . . 6
11. Form N-SAR . . . . . . . . . . . . . . . . 6
12. Backup Withholding . . . . . . . . . . . . 6
Article C Fee and Out-of-Pocket Expenses . . . . . . . . . 7
1. Postage . . . . . . . . . . . . . . . . . . 7
2. Proxies . . . . . . . . . . . . . . . . . . 7
3. Communications . . . . . . . . . . . . . . 7
4. Record Retention . . . . . . . . . . . . . 8
5. Disaster Recovery . . . . . . . . . . . . . 8
Article D Representations and Warranties of RPS . . . . . 8
Article E Representations and Warranties of the Fund . . . 8
Article F Standard of Care/Indemnification . . . . . . . . 9
Article G Dual Interests . . . . . . . . . . . . . . . . 11
Article H Documentation . . . . . . . . . . . . . . . . 11
Article I Recordkeeping/Confidentiality . . . . . . . . 13
Article J Ownership of Software and Related Material . . 13
PAGE 3
Article K As of Transactions . . . . . . . . . . . . . . 13
1. Reporting . . . . . . . . . . . . . . . . 14
2. Liability . . . . . . . . . . . . . . . . 14
Article L Term and Termination of Agreement . . . . . . 16
Article M Notice . . . . . . . . . . . . . . . . . . 17
Article N Assignment . . . . . . . . . . . . . . . . . . 17
Article O Amendment/Interpretive Provisions . . . . . . 17
Article P Further Assurances . . . . . . . . . . . . . . 17
Article Q Maryland Law to Apply . . . . . . . . . . . . 18
Article R Merger of Agreement . . . . . . . . . . . . . 18
Article S Counterparts . . . . . . . . . . . . . . . . . 18
Article T The Parties . . . . . . . . . . . . . . . . . 18
Article U Directors, Trustees and Shareholders and
Massachusetts Business Trust . . . . . . . . . 18
Article V Captions . . . . . . . . . . . . . . . . . . . 19
PAGE 4
AGREEMENT, made as of the first day of January, 1996, 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
deferred compensation plans, 403(b) plans, and profit sharing,
thrift, 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 ("Retirement
Accounts") of shareholders participating in these Retirement
Plans;
WHEREAS, RPS represents that it is registered with the
Securities and Exchange Commission as a Transfer Agent under
PAGE 5
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 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 the foregoing
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
PAGE 6
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. Purchases - 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 or Retirement Plan participants
("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. Transmit by check or wire the aggregate money
allocated to each Fund to the Fund's custodian;
b. In the case of a new Participant, establish and
maintain a Retirement Account for such Participant;
and
c. Compute the number of shares of each Fund to which
the Participant is entitled according to the price of
such Fund shares as provided by such Fund for
purchases made at that time and date, and credit each
such Account with the number of shares of the Fund so
purchased.
PAGE 7
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 amount due for shares to be redeemed from
each Retirement Account or compute the number of
shares to be redeemed from each such Retirement
Account for such distributions and the total number
of all shares of each Fund to be redeemed in
accordance with the price per share at that time and
date of such Fund as calculated and provided by the
Fund. After such computation, inform the Fund of the
amount necessary to be redeemed. Distribute to
Participants or their designated beneficiaries the
amount to be disbursed.
b. 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 8
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 at that time and date, of such Fund as
calculated and provided by the Fund;
ii. Effect the necessary redemption from the Fund's
custodian to cover such disbursements; and
iii. Mail to the Administrator or such other person as
designated by the Administrator the amount to be
disbursed.
c. Other Provisions
i. If any instruction tendered by an Administrator to
redeem shares in a Retirement Account is not
satisfactory to RPS, RPS shall promptly notify the
Administrator of such fact together with the
reason therefor;
ii. The authority of RPS to perform its
responsibilities under Paragraph B(2) with respect
to each Fund shall be suspended upon receipt of
notification by such Fund of the suspension of the
determination of the Fund's net asset value per
PAGE 9
share and shall remain suspended until proper
notification; and
iii. 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.
3. Exchanges
Effect exchanges of shares of the Funds upon receipt of
appropriate instructions from the Administrator and/or
Participant.
4. Shares held by Retirement Accounts will be
Noncertificate Shares
RPS will have neither responsibility nor authority to
issue stock certificates evidencing ownership of Fund shares
held by Participants. All shares held in Retirement Accounts
maintained by RPS shall be noncertificated shares.
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;
PAGE 10
c. Historical information regarding the account of each
Participant and/or Retirement Plan, including
dividends and distributions invested in shares;
d. Pertinent information regarding the establishment and
maintenance of Retirement Plans and Retirement
Accounts necessary to properly administer each
account.
e. Any instructions from a Participant or Administrator
including, all forms furnished by the Fund and
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
f. 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
PAGE 11
RPS in connection with the performance of its duties under
this Agreement will remain the property of the Funds 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.
6. Tax Information
RPS shall also prepare and file with appropriate federal
and state agencies, such information returns and reports as
required by applicable Federal and State 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 and State law.
7. Other Information to be furnished to the Funds
RPS will furnish to the Fund, such information, including
shareholder lists and statistical information as may be
agreed upon from time to time between RPS and the Fund.
8. Correspondence
RPS will promptly and fully answer correspondence from
Administrators and in some cases, Participants, relating to
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,
PAGE 12
copies of all correspondence will be retained by RPS in
accordance with applicable law.
9. Mailings/Confirmation Statements
RPS will be responsible for mailing all confirmations and
other enclosures and mailings, as requested by the
Administrators and as may be required of the Funds by
applicable Federal or state law.
10. Proxies
RPS shall monitor the mailing of proxy cards and other
material supplied to it by the Fund in connection with
shareholder meetings of the Fund and shall coordinate the
receipt, examination and tabulation of returned proxies and
the certification of the vote to the Fund.
11. Form N-SAR
RPS shall maintain such records, if any, as shall enable
the Fund to fulfill the requirements of Form N-SAR.
12. 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 for Participants.
PAGE 13
C. Fees and Out-of-Pocket Expenses
Each Fund shall pay to RPS for its services hereunder fees
computed as set forth in the 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 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.
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.
PAGE 14
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 to and from the Participants, or
their agents, 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.
PAGE 15
D. Representations and Warranties of RPS
RPS 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.
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
PAGE 16
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.
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
PAGE 17
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
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
PAGE 18
constituting negligence or willful misconduct of such Fund or
its agents or subcontractors; unless such negligence or
misconduct is attributable to RPS.
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.
PAGE 19
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 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 20
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. A certified 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. 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
PAGE 21
certificate of the Secretary of the Fund as to such
approval;
d. All account application forms and other documents
relating to shareholders' accounts;
e. 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
f. 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 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 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
PAGE 22
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;
e. Specimens of all new certificates accompanied by
the Board of Directors/Trustees' resolutions
approving such forms;
f. Such other documents or opinions which RPS, in its
discretion, may reasonably deem necessary or
appropriate in the proper performance of its
duties; and
g. Copies of new prospectuses issued.
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.
PAGE 23
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.
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; or (c) after so
requested by the other party hereto.
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
PAGE 24
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) that are 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. 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.
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
PAGE 25
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 $25,000 or more,
immediately provide the Fund: (i) a report
identifying the Transaction and the Dilution
resulting therefrom, (ii) the reason such
Transaction was processed as described above, and
(iii) the action that 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
PAGE 26
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 of
$25,000 or more ("Significant Transaction"), RPS
will review with counsel to the Fund, the Report
and the circumstances surrounding the underlying
Transaction to determine whether the Transaction
was caused by or occurred as a result of a
negligent act or omission by 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, as appropriate, will
negotiate settlement. All such Significant
Transactions will be reported to the Board at its
next meeting (unless the settlement fully
compensates the Fund for any Dilution). Any
Significant Transaction, however, causing Dilution
in excess of the lesser of $100,000 or a penny per
share will be promptly reported to the Board.
PAGE 27
Settlement will not be entered into with RPS until
approved by the Board. The factors the Board or
the Funds would be expected 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
transactions to the Fund and to all other Price
Funds; and
v. The prior response of RPS to recommendations
made by the Funds regarding improvement to the
Transfer Agent's As Of Processing Procedures.
PAGE 28
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".
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
PAGE 29
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' written notice to RPS; and by
RPS, upon three hundred sixty-five (365) days' writing
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 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
PAGE 30
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 31
S. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instruments.
T. The Parties
All references herein to "the Fund" are to each of the Funds
listed on Appendix A individually, as if this Agreement were
between such individual Fund and 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
PAGE 32
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.
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.
PAGE 33
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 DATED: _______________________
SERVICES, INC.
ATTEST:
/s/Charles E. Vieth
By: ________________________ ________________________
Charles E. Vieth
PAGE 34
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 DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
PAGE 35
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND,
INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE VALUE 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
PAGE 36
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
DATED: ______________________
ATTEST:
/s/Carmen F. Deyesu
______________________________ BY: __________________________
Carmen F. Deyesu
PAGE 37
APPENDIX A
The following Funds are parties to this Agreement, and have so
indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price 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 Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price Health Sciences Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Index Trust, Inc. on behalf of the
T. Rowe Price Equity Index Fund
T. Rowe Price Institutional International Funds, Inc. on
behalf of the
Foreign Equity Fund
PAGE 38
T. Rowe Price International Funds, Inc. on behalf of the
T. Rowe Price International Bond Fund and
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price Mid-Cap Growth Fund, Inc.
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price OTC Fund, Inc. on behalf of the
T. Rowe Price OTC Fund
T. Rowe Price Personal Strategy Funds, Inc. on behalf of
the
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Short-Term U.S. Government Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
T. Rowe Price Spectrum Fund, Inc. on behalf of the
Spectrum Growth Fund
Spectrum Income Fund
PAGE 39
T. Rowe Price Value Fund, Inc.
T. Rowe Price U.S. Treasury Funds, Inc. on behalf of the
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. Rowe Price Summit Funds, Inc.
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 40
T. ROWE PRICE RETIREMENT PLAN SERVICES, INC.
FEE SCHEDULE
Fees for transfer agent services performed for retirement plan
accounts serviced by T. Rowe Price Retirement Plan Services, Inc.
("RPS").
Effective January 1, 1996 to December 31, 1996.
A. Base Fee
A monthly base fee of $750,000 ($9,000,000 per year)
allocated pro rata by account.
B. Per Participant Fee
A monthly per participant fee of $3.583 for each active
(non-zero balance) participant being serviced at the end of
the month. This fee will be allocated among the Funds based
on the relative percentage of T. Rowe Price assets at the
end of the month.
C. Per Transaction Fee
A fee for each Account transaction will be charged at the
rate of $.15 per transaction, except for dividend
transactions.
D. Institutional Support Group (ISG) Telephone Call
A fee of $5.50 per ISG telephone call will be charged to the
Fund (s) involved in the telephone call.
E. New Participant Fee
A one-time new participant fee of $3.50 will be charged each
time a participant is added to the records.
F. Perks Fee
Fees for PERKS plans will be $10 per account, maximum $40
per participant, capped at 25 basis points.
PAGE 41
G. Billing Procedures
RPS will render a monthly invoice which shall include: the
number of participants in existence at month-end and the
Fund's pro rata share; the assets by Fund at month-end; the
number of transactions recorded during the month for each
Fund; and the number of new participants added during the
month and the Fund's pro rata share. RPS will render a
separate invoice for out-of-pocket expenses for which RPS is
entitled to reimbursement under the Agreement and the Fund's
pro rata share.
H. New Funds
Funds added during the term of this Agreement may have their
Maintenance and Transaction charges waived for a period of
time agreed upon between RPS and the Funds following the
establishment of the Fund. Out-of-pocket expenses will be
billed to the Fund from the Fund's inception.
IN WITNESS WHEREOF, T. Rowe Price Funds and T. Rowe Price
Retirement Plan Services, Inc. have agreed upon this fee schedule
to be executed in their names and on their behalf through their
duly authorized officers:
T. ROWE PRICE FUNDS T. ROWE PRICE RETIREMENT PLAN
SERVICES, INC.
Name /s/Carmen F. Deyesu Name /s/Charles E. Vieth
Title Treasurer Title President
Date __________________________ Date _______________________
PAGE 42
AMENDMENT NO. 1
AGREEMENT
between
T. ROWE PRICE RETIREMENT PLAN SERVICES, INC.
and
EACH OF THE PARTIES INDICATED ON APPENDIX A
The Retirement Plan Services Contract of January 1, 1996,
between T. Rowe Price Retirement Plan Services, Inc. and each of
the Parties listed on Appendix A thereto is hereby amended, as of
April 24, 1996, by adding thereto the T. Rowe Price Mid-Cap Value
Fund, Inc. and Mid-Cap Equity Growth Fund, a separate series of
the Institutional Domestic Equity Funds, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 43
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global 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 MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
PAGE 44
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income 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 U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
_____________________ _________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary
Attest: T. ROWE PRICE RETIREMENT PLAN
SERVICES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
_____________________ ____________________________
Barbara A. Van Horn, By: Henry H. Hopkins,
Assistant Secretary Vice President
PAGE 45
AMENDMENT NO. 2
AGREEMENT
between
T. ROWE PRICE RETIREMENT PLAN SERVICES, INC.
and
EACH OF THE PARTIES INDICATED ON APPENDIX A
The Retirement Plan Services Contract of January 1, 1996, as
amended April 24, 1996, between T. Rowe Price Retirement Plan
Services, Inc. and each of the Parties listed on Appendix A
thereto is hereby amended, as of August 2, 1996, by adding
thereto the T. Rowe Price Financial Services Fund, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE 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 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.
PAGE 46
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global 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 MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
PAGE 47
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income 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 U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
_____________________ _________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary Treasurer
Attest: T. ROWE PRICE RETIREMENT PLAN
SERVICES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
_____________________ ____________________________
Barbara A. Van Horn, By: Henry H. Hopkins,
Assistant Secretary Vice President
PAGE 48
AMENDMENT NO. 3
AGREEMENT
between
T. ROWE PRICE RETIREMENT PLAN SERVICES, INC.
and
EACH OF THE PARTIES INDICATED ON APPENDIX A
The Retirement Plan Services Contract of January 1, 1996, as
amended April 24, 1996 and August 2, 1996, between T. Rowe Price
Retirement Plan Services, Inc. and each of the Parties listed on
Appendix A thereto is hereby amended, as of November 12, 1996, by
adding thereto the T. Rowe Price Spectrum International Fund, a
separate series of the T. Rowe Price Spectrum Fund, Inc.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC., now known as T. ROWE PRICE SHORT-
TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE 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 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.
PAGE 49
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global 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 MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
PAGE 50
T. ROWE PRICE SPECTRUM FUND, INC.
T. Rowe Price Spectrum Growth Fund
T. Rowe Price Spectrum Income Fund
T. Rowe Price Spectrum International 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 U.S. TREASURY FUNDS, INC.
T. Rowe Price U.S. Treasury Intermediate Fund
T. Rowe Price U.S. Treasury Long-Term Fund
T. Rowe Price U.S. Treasury Money Fund
T. ROWE PRICE VALUE FUND, INC.
Attest:
/s/Patricia S. Butcher /s/Carmen F. Deyesu
_____________________ _________________________
Patricia S. Butcher, By: Carmen F. Deyesu
Assistant Secretary Treasurer
Attest: T. ROWE PRICE RETIREMENT PLAN
SERVICES, INC.
/s/Barbara A. Van Horn /s/Henry H. Hopkins
_____________________ ____________________________
Barbara A. Van Horn, By: Henry H. Hopkins,
Assistant Secretary Vice President
PAGE 1
SPECIAL SERVICING AGREEMENT
THIS SPECIAL SERVICING AGREEMENT ("Agreement"), made as of
this 12th day of November, 1996, by and between T. ROWE PRICE
SPECTRUM FUND, INC. ("Spectrum Fund"), on behalf of its separate
series, T. ROWE PRICE SPECTRUM INTERNATIONAL FUND ("Spectrum
International"), EACH FUND LISTED ON APPENDIX A attached hereto
(as such Appendix A may be amended from time to time) and which
evidences their agreement to be bound separately and individually
hereby by executing a copy of this Agreement (such funds
hereinafter called the "Underlying Funds"), T. ROWE PRICE
ASSOCIATES, INC. ("Price Associates") and ROWE PRICE-FLEMING
INTERNATIONAL, INC. ("Price-Fleming").
W I T N E S S E T H:
WHEREAS, Spectrum International and each of the Underlying
Funds are registered as open-end, management investment companies
under the Investment Company Act of 1940, as amended ("the Act").
WHEREAS, Spectrum International, the Underlying Funds, and
certain other funds (the "Other Funds") sponsored and advised by
Price-Fleming or Price Associates have entered into an agreement
("Transfer Agency Agreement") dated January 1, 1996, as amended,
with T. Rowe Price Services, Inc. ("Price Services") for the
provision of various transfer agency services in return for such
compensation as is set forth therein;
WHEREAS, Spectrum International, the Underlying Funds, and
the Other Funds have entered into an agreement ("RPS Agreement")
dated January 1, 1996, as amended, with T. Rowe Price Retirement
Plan Services, Inc. ("Retirement Plan Services") under which
Retirement Plan Services is to furnish or contract to furnish to
Spectrum International, the Underlying Funds, and the Other Funds
various participant account, record keeping, and services for
retirement plans in return for such compensation as is set forth
therein;
WHEREAS, Spectrum International, the Underlying Funds, and
the Other Funds have entered into an agreement ("Fund Accounting
Agreement") dated January 1, 1996, as amended, with Price
Associates for the provision of various accounting services in
return for such compensation as is set forth therein;
WHEREAS, Spectrum International, the Underlying Funds, and
the Other Funds have entered into an agreement ("Custodian
Agreement") dated September 28, 1987, as amended, with State
Street Bank and
PAGE 2
Trust Company ("State Street") under which State Street is to
furnish to Spectrum International, the Underlying Funds and the
Other Funds various custodial services in return for such
compensation as is set forth in the Custodian Agreement;
WHEREAS, Spectrum International has entered into an
Investment Management Agreement with Price-Fleming dated November
12, 1996 for the provision of investment management services, and
under such Agreement, Price-Fleming will be responsible for the
payment of various Spectrum International expenses, including
expenses of Spectrum International's organization, operations,
and business not paid for by the Underlying Funds pursuant to
this Agreement;
WHEREAS, Spectrum International will provide a means by
which the Underlying Funds can consolidate shareholder accounts
in the Underlying Funds;
WHEREAS, such shareholder account consolidation can reduce
the fees of the Underlying Funds due Price Services and
Retirement Plan Services under the Transfer Agency Agreement and
RPS Agreement, respectively (such reduction in expenses
hereinafter referred to as "Savings");
WHEREAS, Spectrum International will invest its assets
exclusively in the Underlying Funds, except for cash needed for
expenses, redemptions, or temporary defensive purposes; and
WHEREAS, the Board of Directors of each of the Underlying
Funds has determined it is reasonable to expect the aggregate
expenses as described below of Spectrum International to be less
than the estimated Savings to each of the Underlying Funds from
the operation of Spectrum International; and such determination
by the Board of Directors is based on the following factors,
among others as they apply to each Underlying Fund:
a. The amount of assets invested in each
Underlying Fund by Spectrum
International;
b. The average and median account sizes for
the Underlying Funds and Spectrum
International;
c. The rate at which Variable Expenses
(i.e., expenses for transfer agency
services, prospectuses, shareholder
reports and proxies) and Fixed Expenses
(i.e., expenses for accounting,
custodial, auditing and legal services,
state registration, filing, and directors
fees and organization and various
miscellaneous
PAGE 3
expenses) are incurred by Spectrum
International and the Underlying Funds;
d. The relationship between Variable and
Fixed Expenses in the Underlying Funds
and Spectrum International;
e. The source of monies flowing to Spectrum
International, and in particular:
(i) The extent to which investors
in Spectrum International
would have purchased one or
more of the Underlying Funds;
(ii) The extent to which an
investment in Spectrum
International represents a
consolidation of or reduction
in the rate of increase in
the number of accounts in the
Underlying Funds; and
(iii) The extent to which accounts
in Spectrum International
represent exchanges from the
Underlying Funds or new
investments.
NOW, THEREFORE, in consideration of the promises and mutual
covenants spelled out herein, it is agreed between and among the
parties hereto as follows:
1. SPECTRUM INTERNATIONAL EXPENSES
In accordance with the Fund Accounting Agreement, Price
Associates will calculate the amounts of Spectrum
International expenses, as set forth in Spectrum
International's Investment Management Agreement
("Expenses"), due itself, State Street, and other persons
under the Transfer Agency, RPS, Fund Accounting,
Custodian, and Investment Management Agreements referred
to above, as well as any other amounts due other persons
as a result of Spectrum International operations.
However, under unusual circumstances, the parties may
agree to exclude certain amounts from Expenses.
2. UNDERLYING FUNDS' PAYMENT OF EXPENSES
Subject to Paragraph 3, each of the Underlying Funds will
PAGE 4
bear such Expenses in proportion to the average daily
value of its shares owned by each Portfolio of Spectrum
International, provided further that no Underlying Fund
will bear such Expenses in excess of the estimated
Savings to it ("Excess Expense").
3. PAYMENT BY PRICE-FLEMING
In accordance with Spectrum International's Investment
Management Agreement, Price-Fleming agrees that it will
bear any Excess Expense described in Paragraph 2. Payment
by Price-Fleming of any such Excess Expense will be made
to the appropriate Underlying Fund no later than 30 days
after the close of the Underlying Fund's fiscal year.
4. USE OF PRICE NAME
Spectrum International may utilize the "T. Rowe Price"
name so long as this Agreement remains in effect and the
assets of Spectrum International are invested solely in
shares of the Underlying Funds (except for such cash or
cash items as may be maintained from time to time to meet
current expenses and redemptions).
5. SPECTRUM INTERNATIONAL INVESTMENT IN UNDERLYING FUNDS
Spectrum International will utilize assets deposited with
the custodian of Spectrum International, State Street,
from the sale of Spectrum International shares, to
promptly purchase shares of the Underlying Funds, and
will undertake redemption or exchange of such shares of
the Underlying Funds in the manner provided by the
objectives and policies of Spectrum International.
6. OPINION OF COUNSEL
At any time any of the parties hereto may consult legal
counsel in respect of any matter arising in connection
with this Agreement, and no such party shall be liable
for any action taken or omitted by it in good faith in
accordance with such instructions or with the advice or
opinion of such legal counsel.
7. LIABILITIES
No party hereto shall be liable to any other party hereto
for any action taken or thing done by it or its agents or
contractors in carrying out the terms and provisions of
this Agreement provided such party has acted in good
faith and without negligence or willful misconduct and
selected its agents and contractors with reasonable care.
8. TERM OF AGREEMENT; AMENDMENT; RENEWAL
The term of this Agreement shall begin on November 12,
1996, and unless sooner terminated as herein provided,
the Agreement shall remain in effect through April 30,
1998.
PAGE 5
Thereafter, this Agreement shall continue from year to
year if such continuation is specifically approved at
least annually by the Board of Directors of each
Underlying Fund
and Spectrum International, including a majority of the
independent Directors of each such Fund. In determining
whether to renew this Agreement, the Directors of the
Underlying Funds may request, and Price Associates will
furnish, such information relevant to determining the
past and future relationship between the Savings and
Expenses. The Agreement may be modified or amended from
time to time by mutual agreement between the parties
hereto. Upon termination hereof, each party hereto will
make appropriate arrangements to satisfy its obligations
hereunder. This Agreement may be amended in the future to
include as additional Fund parties to the Agreement other
investment companies for which Price-Fleming or Price
Associates serves as investment manager.
9. ASSIGNMENT
This Agreement shall not be assigned or transferred,
either voluntarily or involuntarily, by operation of law
or otherwise, without the prior written consent of the
Underlying Funds and Spectrum International. The
Agreement shall automatically and immediately terminate
in the event of its assignment without the prior written
consent of such Funds.
10. NOTICE
Any notice under this Agreement shall be in writing,
addressed and delivered or sent by registered or
certified mail, postage prepaid, to the other party at
such address as such other party may designate for the
receipt of such notices. Until further notice to the
other parties, it is agreed that for this purpose the
address of all parties to this Agreement is 100 East
Pratt Street, Baltimore, Maryland 21202, Attention:
Secretary.
11. INTERPRETATIVE PROVISIONS
In connection with the operation of this Agreement, the
parties may agree from time to time on such provisions
interpretative 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 interpretative or additional provisions are to be
signed by all parties and annexed hereto, but no such
provisions shall contravene any applicable Federal or
state law or regulation and no such interpretative or
additional provision shall be deemed to be an amendment
of the Agreement.
12. STATE LAW
PAGE 6
This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of
Maryland.
13. 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.
14. UNDERLYING FUNDS
Each of the Funds listed in Appendix A agree to be bound,
separately and individually, to the terms and conditions
of this Agreement. Under no circumstances will any
Underlying Fund be liable for any obligation of any other
Underlying Fund.
IN WITNESS WHEREOF, the parties have caused the
Agreement to be executed as of the day and year first above
written.
ATTEST: T. ROWE PRICE ASSOCIATES, INC.
/S/BARBARA VAN HORN By:/S/HENRY H. HOPKINS
Barbara Van Horn, Henry H. Hopkins, Managing
Director
Assistant Secretary
EACH OF THE FUNDS LISTED IN
APPENDIX A HERETO, SEPARATELY
AND INDIVIDUALLY
/S/PATRICIA S. BUTCHER By:/S/HENRY H. HOPKINS
Patricia S. Butcher, Henry H. Hopkins, Vice President
Assistant Secretary
T. ROWE PRICE SPECTRUM FUND, INC.
on behalf of T. ROWE PRICE SPECTRUM
INTERNATIONAL FUND
/S/PATRICIA S. BUTCHER By:/S/JAMES S. RIEPE
Patricia S. Butcher, James S. Riepe, Chairman of the
Assistant Secretary Board
PAGE 7
ROWE PRICE-FLEMING
INTERNATIONAL, INC.
/S/BARBARA VAN HORN By:/S/M.DAVID TESTA
Barbara Van Horn, M. David Testa, Chairman of the
Assistant Secretary Board
PAGE 8
APPENDIX A
T. ROWE PRICE INTERNATIONAL FUNDS, INC. on behalf
of the
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 Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price International Bond Fund
T. Rowe Price Emerging Markets Bond Fund
and
T. ROWE PRICE PRIME RESERVE FUND, INC.
PAGE 1
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. 10 to the Registration
Statement on Form N-1A (the "Registration Statement") of our
report dated January 18, 1996, relating to the financial
statements and financial highlights appearing in the December 31,
1995 Annual Report to Shareholders of T. Rowe Price Spectrum
Fund, Inc. (comprised of Spectrum Growth Fund and Spectrum Income
Fund). We also consent to the references to us under the heading
"Financial Highlights" in the Prospectus, and under the heading
"Independent Accountants" in the Statement of Additional
Information.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
Baltimore, Maryland
November 15, 1996
[ARTICLE] 6
[CIK] 0000808303
[NAME] T. ROWE PRICE SPECTRUM FUND, INC.
[SERIES]
[NUMBER] 02
[NAME] SPECTRUM GROWTH FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] JUN-30-1996
[INVESTMENTS-AT-COST] 1469832
[INVESTMENTS-AT-VALUE] 1806604
[RECEIVABLES] 2879
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1809483
[PAYABLE-FOR-SECURITIES] 2132
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3586
[TOTAL-LIABILITIES] 5718
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1453567
[SHARES-COMMON-STOCK] 121790
[SHARES-COMMON-PRIOR] 100687
[ACCUMULATED-NII-CURRENT] 6383
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 7043
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 336772
[NET-ASSETS] 1803765
[DIVIDEND-INCOME] 5903
[INTEREST-INCOME] 48
[OTHER-INCOME] 0
[EXPENSES-NET] 0
[NET-INVESTMENT-INCOME] 5951
[REALIZED-GAINS-CURRENT] 4902
[APPREC-INCREASE-CURRENT] 133320
[NET-CHANGE-FROM-OPS] 144173
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 29121
[NUMBER-OF-SHARES-REDEEMED] 8018
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 445421
[ACCUMULATED-NII-PRIOR] 432
[ACCUMULATED-GAINS-PRIOR] 2141
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 0
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 0
[AVERAGE-NET-ASSETS] 1601551
[PER-SHARE-NAV-BEGIN] 13.49
[PER-SHARE-NII] .05
[PER-SHARE-GAIN-APPREC] 1.27
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 14.81
[EXPENSE-RATIO] 0
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0000808303
[NAME] T. ROWE PRICE SPECTRUM FUND, INC.
[SERIES]
[NUMBER] 01
[NAME] SPECTRUM INCOME FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] JUN-30-1996
[INVESTMENTS-AT-COST] 1180310
[INVESTMENTS-AT-VALUE] 1201745
[RECEIVABLES] 7357
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1209102
[PAYABLE-FOR-SECURITIES] 5493
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 8474
[TOTAL-LIABILITIES] 13967
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1171844
[SHARES-COMMON-STOCK] 108718
[SHARES-COMMON-PRIOR] 87615
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 1856
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 21435
[NET-ASSETS] 1195135
[DIVIDEND-INCOME] 3019
[INTEREST-INCOME] 33754
[OTHER-INCOME] 0
[EXPENSES-NET] 0
[NET-INVESTMENT-INCOME] 36773
[REALIZED-GAINS-CURRENT] 1670
[APPREC-INCREASE-CURRENT] (26792)
[NET-CHANGE-FROM-OPS] 11651
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 36773
[DISTRIBUTIONS-OF-GAINS] 993
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 35342
[NUMBER-OF-SHARES-REDEEMED] 17501
[SHARES-REINVESTED] 3117
[NET-CHANGE-IN-ASSETS] 208434
[ACCUMULATED-NII-PRIOR] 1179
[ACCUMULATED-GAINS-PRIOR] 48227
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 0
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 0
[AVERAGE-NET-ASSETS] 1155225
[PER-SHARE-NAV-BEGIN] 11.24
[PER-SHARE-NII] .35
[PER-SHARE-GAIN-APPREC] (.24)
[PER-SHARE-DIVIDEND] .35
[PER-SHARE-DISTRIBUTIONS] .01
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.99
[EXPENSE-RATIO] 0
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
PAGE 1 T. ROWE PRICE SPECTRUM FUND, INC.
POWER OF ATTORNEY
RESOLVED, that the Corporation and each of its directors do
hereby constitute and authorize, James S. Riepe, Joel H.
Goldberg, and Henry H. Hopkins, and each of them individually,
their true and lawful attorneys and agents to take any and all
action and execute any and all instruments which said attorneys
and agents may deem necessary or advisable to enable the
Corporation to comply with the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
any rules, regulations, orders or other requirements of the
United States Securities and Exchange Commission thereunder, in
connection with the registration under the Securities Act of
1933, as amended, of shares of the Corporation, to be offered by
the Corporation, and the registration of the Corporation under
the Investment Company Act of 1940, as amended, including
specifically, but without limitation of the foregoing, power and
authority to sign the name of the Corporation on its behalf, and
to sign the names of each of such directors and officers on his
behalf as such director or officer to any amendment or supplement
(including Post-Effective Amendments) to the Registration
Statement on Form N-1A of the Corporation filed with the
Securities and Exchange Commission under the Securities Act of
1933, as amended, and the Registration Statement on Form N-1A of
the Corporation under the Investment Company Act of 1940, as
amended, and to any instruments or documents filed or to be filed
as a part of or in connection with such Registration Statement.
IN WITNESS WHEREOF, the Corporation has caused these
presents to be signed by its Chairman of the Board and the same
attested by its Secretary, each thereunto duly authorized by its
Board of Directors, and each of the undersigned has hereunto set
his hand and seal as of the day set opposite his name.
T. ROWE PRICE SPECTRUM FUND, INC.
By /s/James S. Riepe
James S. Riepe, Chairman of the Board
April 30, 1996
Attest:
/s/Lenora V. Hornung, Secretary
Lenora V. Hornung, Secretary
PAGE 2
(Signatures Continued)
/s/James S. Riepe Chairman of the Board
James S. Riepe (Principal Executive Officer) April 30, 1996
/s/Carmen F. Deyesu Treasurer (Principal
Carmen F. Deyesu Financial Officer) April 30, 1996
/s/Jeffrey H. Donahue
Jeffrey H. Donahue Director April 30, 1996
/s/A. MacDonough Plant
A. MacDonough Plant Director April 30, 1996
