<PAGE>
Registration Nos. 033-10992/811-4998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Post-Effective Amendment No. 15 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 19 /X/
T. ROWE PRICE SPECTRUM FUND, INC.
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Exact Name of Registrant as Specified in Charter
100 East Pratt Street, Baltimore, Maryland 21202
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Address of Principal Executive Offices
410-345-2000
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Registrant's Telephone Number, Including Area Code
Henry H. Hopkins
100 East Pratt Street, Baltimore, Maryland 21202
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Name and Address of Agent for Service
Approximate Date of Proposed Public Offering May 1, 2000
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It is proposed that this filing will become effective (check
appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/X/ On May 1, 2000, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On (date), pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
PAGE 2
PROSPECTUS
May 1, 2000
T. ROWE PRICE
Spectrum Funds
Three broadly diversified growth, income, and international funds that invest
in other T. Rowe Price funds.
TROWEPRICELOGO
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
<PAGE>
T. Rowe Price Spectrum Fund, Inc.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
Prospectus
May 1, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ABOUT THE FUNDS
1
Objective, Strategy, Risks, and Expenses 1
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Other Information About the Funds 7
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ABOUT YOUR ACCOUNT
2
Pricing Shares and Receiving 8
Sale Proceeds
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Distributions and Taxes 9
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Transaction Procedures and 12
Special Requirements
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MORE ABOUT THE FUNDS
3
Organization and Management 15
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Understanding Performance Information 18
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Special Risks and Considerations 20
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Description of Underlying Funds 21
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Investment Policies of the Spectrum Funds 23
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Investment Policies and Practices of the 24
Underlying Funds
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Financial Highlights 24
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INVESTING WITH T. ROWE PRICE
4
Account Requirements 28
and Transaction Information
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Opening a New Account 28
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Purchasing Additional Shares 30
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Exchanging and Redeeming 30
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Rights Reserved by the Funds 32
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Information About Your
33
Services
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T. Rowe Price
35
Brokerage
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Investment Information 36
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</TABLE>
Founded in 1937 by the late Thomas Rowe Price, Jr., T. Rowe Price Associates,
Inc., and its affiliates managed $179.9 billion for more than eight million
individual and institutional investor accounts as of December 31, 1999.
Rowe Price-Fleming International, Inc. (Price-Fleming) was founded in 1979 as
a joint venture between T. Rowe Price Associates, Inc. and Robert Fleming
Holdings, Ltd. As of December 31, 1999, Price-Fleming managed $42.6 billion in
foreign stocks and bonds through its offices in Baltimore, London, Tokyo,
Singapore, Hong Kong, Buenos Aires, and Paris.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any
depository institution. Shares are not insured by the FDIC, Federal Reserve, or
any other government agency, and are subject to investment risks, including
possible loss of the principal amount invested.
<PAGE>
ABOUT THE FUNDS
OBJECTIVE, STRATEGY, RISKS, AND EXPENSES
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To help you decide whether these funds are appropriate for you, this section
reviews their major characteristics.
What is each fund's objective?
Spectrum Income Fund seeks a high level of current income 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.
What is each fund's principal investment strategy?
Each fund can diversify its assets widely among a set of T. Rowe Price mutual
funds representing specific market segments. Each Spectrum Fund seeks to
maintain broad exposure to several markets in an attempt to reduce the impact
of markets that are declining and to benefit from good performance in
particular market segments.
Spectrum Income may invest in five domestic bond funds, two international
bond funds, a money market fund, and one income-oriented stock fund.
Spectrum Growth may invest in seven domestic equity funds, one international
stock fund, and a money market fund.
Spectrum International may invest in four developed market equity funds,
three emerging markets equity funds, two international bond funds, and a
money market fund.
Within the ranges shown in the next table, managers decide how much of each
fund's assets to allocate to underlying fund investments based on their
outlook for, and on the relative valuations of, the underlying funds and the
various markets in which they invest.
Each fund may sell securities for a variety of reasons, such as to secure
gains, limit losses, or redeploy assets into more promising opportunities.
<PAGE>
T. ROWE PRICE 2
<TABLE>
Table 1 Asset Allocation Ranges for Underlying Funds
<CAPTION>
Spectrum Investment Spectrum Investment Spectrum Inv
Income Fund Range Growth Fund Range International Fund Ran
<S> <C> <S> <C> <S> <C>
Emerging Markets Bond 0 - 10% Blue Chip Growth 5 - 20% Emerging Markets Bond 0 - 1
Emerging Markets Stock 0 - 2
Equity Income 10 - 25 Equity Income 7.5 - 22.5
GNMA 5 - 20 Growth & Income 7.5 - 22.5 European Stock 0 - 3
High Yield 10 - 25 Growth Stock 5 - 20 International Bond 0 - 2
International Bond 5 - 20 International Stock 10 - 25 International Discovery 0 - 2
New Income 15 - 30 Mid-Cap Value 0 - 15 International Stock 35 - 6
Short-Term Bond 0 - 15 New Era 0 - 15 Japan 0 -30
Summit Cash Reserves 0 - 25 New Horizons 10 - 25 Latin America 0 -15
Summit Cash
U.S. Treasury Long-Term 0 - 15 Reserves 0 - 25 New Asia 0 -20
Summit Cash Reserves 0 -25
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</TABLE>
. For details about each fund's investment program, please see the Investment
Policies and Practices section.
What are the main risks of investing in the funds?
Each Spectrum Fund's broad diversification is designed to cushion severe
losses in any one investment sector and moderate the fund's overall price
swings. However, the funds' share prices will fluctuate as the prices of the
underlying funds rise or fall with changing market conditions. Spectrum
Income should experience lower price volatility than the equity-focused
funds, Spectrum Growth and Spectrum International. Each fund carries some
particular risk considerations:
Spectrum Income
This fund's share price will typically move in the opposite direction of U.S.
interest rates, so a rise in rates, or interest rate risk, represents the
most important source of risk. There is also exposure to credit risk:
corporate bond holdings in the underlying funds may have their credit ratings
downgraded or they may default. Such events could reduce the fund's share
price and income level. Credit risk for the fund increases to the extent it
invests in high-yield ("junk") bonds, primarily through the High Yield Fund.
The fund is exposed to the risks of international investing to the extent it
invests overseas, primarily through the International Bond Fund. For example,
weakening foreign currencies versus the U.S. dollar would typically reduce
returns from bonds denominated in other currencies. In addition, emerging
market bonds are subject to the special political and economic risks of these
newly industrialized countries. To the extent that Spectrum Income invests in
stocks through the Equity Income Fund, its share price would be hurt by stock
market declines.
<PAGE>
ABOUT THE FUNDS 3
Spectrum Growth
As with all equity funds, this fund's share price can fall because of
weakness in the broad market, a particular industry, or specific holdings.
The market as a whole can decline for many reasons, including adverse
political or economic developments here or abroad, changes in investor
psychology, or heavy institutional selling. The prospects for a particular
underlying fund or the industries or companies in which they invest may
deteriorate because of a variety of factors, including disappointing earnings
or changes in the competitive environment. In addition, our assessment of the
potential growth of underlying funds held by the fund may prove incorrect,
resulting in losses or poor performance even in a rising market.
In addition to the general stock market risks assumed by the funds held in
this portfolio, certain underlying holdings carry additional risks. The
fund's investments in small companies, primarily through the New Horizons
Fund, may experience greater price swings than its investments in funds
holding larger stocks. To the extent the fund invests in foreign securities,
primarily through the International Stock Fund, it is also subject to the
risk that it may lose value due to declining foreign currencies or adverse
political or economic events overseas.
. Equity investors should have a long-term investment horizon and be willing
to wait out bear markets.
Spectrum International
This fund is subject to the general stock and bond market risks noted
previously. Because it can only invest up to 35% of assets in foreign bond
funds, its performance will primarily be influenced by stock fund risks.
Funds that invest overseas generally carry more risk than funds that invest
strictly in U.S. assets. These risks include fluctuations in foreign exchange
rates that can significantly increase or decrease the dollar value of a
foreign investment, boosting or offsetting its local market return. For
example, weakening foreign currencies versus the U.S. dollar would typically
lower returns for U.S. investors. Investing in foreign markets may also
involve higher costs and lower liquidity. Government interference in capital
markets, such as capital or currency controls, nationalization of companies
or industries, expropriation of assets, or imposition of punitive taxes would
have an adverse effect on the fund.
To the extent that the fund has investments in emerging market countries,
primarily through the Emerging Markets Stock, Latin America, or New Asia
Funds, it will be more subject to abrupt and severe price declines. Many of
the economic and political structures of these countries do not compare
favorably with the U.S. in terms of wealth and stability, and their financial
markets lack liquidity. Therefore, investments in these countries are much
riskier than investments in mature markets.
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T. ROWE PRICE 4
As with any mutual fund, there can be no guarantee the funds will achieve
their objectives.
. Each fund's share price may decline, so when you sell your shares, you may
lose money.
How can I tell which fund is most appropriate for me?
Consider your investment goals, your time horizon for achieving them, and
your tolerance for 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 would like a one-stop approach to broad diversification and can accept
the possibility of share price declines in an effort to achieve long-term
capital appreciation and some current income, Spectrum Growth Fund could be
an appropriate part of your overall investment strategy.
If you would like a one-stop approach to broad international diversification
and can accept the possibility of significant share price declines in an
effort to achieve long-term capital appreciation, Spectrum International Fund
could be an appropriate part of your overall investment strategy.
The fund or funds you select should not represent your complete investment
program or be used for short-term trading purposes.
Each fund can be used in both regular and tax-deferred accounts, such as
IRAs.
How has each fund performed in the past?
The bar charts showing calendar year returns and the average annual total
return table indicate risk by illustrating how much returns can differ from
one year to the next and over time. Fund past performance is no guarantee of
future returns.
The funds can also experience short-term performance swings, as shown by the
best and worst calendar quarter returns during the years depicted in the
charts.
<TABLE>
<CAPTION>
Calendar Year Total Returns
Fund "90" "91" "92" "93" "94" "95" "96" "97" "98" "99"
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <S>
Spectrum
Income -- 19.64 7.84 12.36 -1.94 19.41 7.64 12.18 6.57 0.26
Spectrum
Growth -- 29.87 7.24 20.98 1.40 29.96 20.53 17.40 13.62 21.20
Spectrum -- -- -- -- -- -- -- 2.42 12.28 39.49
International
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</TABLE>
<PAGE>
ABOUT THE FUNDS 5
Spectrum Income Quarter ended Total return
Best quarter 3/31/95 6.56%
Worst quarter 3/31/94 -2.63%
Spectrum Growth Quarter ended Total return
Best quarter 12/31/9818.61%
Worst quarter 9/30/90 -16.50%
Spectrum International Quarter ended Total return
Best quarter 12/31/9825.04%
Worst quarter 9/30/98 -13.71%
<PAGE>
T. ROWE PRICE 6
<TABLE>
Table 2 Average Annual Total Returns
<CAPTION>
Periods ended December 31, 1999
Shorter of 10 years
1 year 5 years or since inception Inception date
------------------------
<S> <C> <C> <C> <S>
Spectrum Income Fund 0.26% 9.03% 8.90% 6/29/90
Salomon Smith Barney
Broad
Investment-Grade
Index -0.83 7.73 7.85
Lipper General Bond
Funds Average 0.66 8.50 8.22
Spectrum Growth Fund 21.20 20.42 15.36 6/29/90
S&P 500 Stock Index 21.04 28.56 18.86
Lipper Multi-Cap Core
Fund Index 20.79 23.07 15.97
Spectrum
International Fund 39.49 -- 17.06 12/31/96
Combined Index (90%
MSCI EAFE/ 10% J.P.
Morgan Non-U.S.
Dollar Government
Bond Index) 23.58 -- 14.76
Lipper International 40.80 -- 18.30
Funds Average
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</TABLE>
These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
What fees or expenses will I pay?
The funds are 100% no load. There are no fees or charges to buy or sell fund
shares, reinvest dividends, or exchange into other T. Rowe Price funds. There
are no 12b-1 fees. While the funds themselves impose no fees or charges, they
will indirectly bear their pro-rata share of the expenses of the underlying
funds. The following table provides a range of average weighted expense
ratios for each fund. A range is given instead of a single number because the
pro-rata share of expenses fluctuates along with changes in the average
assets in each of the underlying funds.
<TABLE>
Table 3 Range of Average Weighted Expense Ratios as of
December 31, 1999
<CAPTION>
<S> <C> <C>
Spectrum Income Spectrum Growth Spectrum International
0.
0.70 7
% to 0. 4% to 1.
0.66% to 0.84% 88% 1
7%
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</TABLE>
Example. The following table gives you a rough idea of how expense ratios
may translate into dollars and helps you to compare the cost of investing in
these funds with that of other funds. Although your actual costs may be
higher or lower, the following table uses the midpoints of the ranges to show
the expenses you would pay if operating expenses remain the same, you invest
$10,000, earn a 5% annual return, and hold the investment for the following
periods:
<PAGE>
ABOUT THE FUNDS 7
<TABLE>
<CAPTION>
Fund 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C> <S>
Spectrum Income $77 $240 $417 $ 930
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Spectrum Growth 81 252 439 978
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Spectrum International 98 306 531 1,178
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</TABLE>
OTHER INFORMATION ABOUT THE FUNDS
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What are the funds' potential rewards?
The Spectrum Funds offer a professionally managed allocation of assets among
a broad range of underlying funds. Because they invest in a variety of
underlying funds, each Spectrum Fund's performance could benefit from
diversification.
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.
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.
Spectrum Growth Fund invests in funds holding domestic and foreign stocks,
small- and large-cap stocks, and growth and value stocks.
Spectrum International Fund invests in stock and, to a lesser degree, bond
funds, which, in turn, have holdings in many different foreign countries,
industrialized as well as emerging markets, and in both large and small
companies.
What are the characteristics of the underlying Price funds?
For details, please see Description of Underlying Funds in Section 3.
Is there other information I can review before making a decision?
Be sure to read 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.
<PAGE>
ABOUT YOUR ACCOUNT
PRICING SHARES AND RECEIVING SALE PROCEEDS
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Here are some procedures you should know when investing in a T. Rowe Price
fund.
How and when shares are priced
The share price (also called "net asset value" or NAV per share) for the
funds is calculated at the close of the New York Stock Exchange, normally 4
p.m. ET, each day the New York Stock Exchange is open for business. To
calculate the NAV, the fund's assets are valued and totaled, liabilities are
subtracted, and the balance, called net assets, is divided by the number of
shares outstanding. Current market values are used to price fund shares.
. The various ways you can buy, sell, and exchange shares are explained at the
end of this prospectus and on the New Account Form. These procedures may
differ for institutional and employer-sponsored retirement accounts.
How your purchase, sale, or exchange price is determined
If we receive your request in correct form by 4 p.m. ET, your transaction
will be priced at that day's NAV. If we receive it after 4 p.m., it will be
priced at the next business day's NAV.
We cannot accept orders that request a particular day or price for your
transaction or any other special conditions.
Fund shares may be purchased through various third-party intermediaries
including banks, brokers, and investment advisers. Where authorized by a
fund, orders will be priced at the NAV next computed after receipt by the
intermediary. Consult your intermediary to determine when your orders will be
priced. The intermediary may charge a fee for its services.
Note: The time at which transactions and shares are priced and the time until
which orders are accepted may be changed in case of an emergency or if the
New York Stock Exchange closes at a time other than 4 p.m. ET.
How you can receive the proceeds from a sale
. When filling out the New Account Form, you may wish to give yourself the
widest range of options for receiving proceeds from a sale.
If your request is received by 4 p.m. ET in correct form, proceeds are
usually sent on the next business day. Proceeds can be sent to you by mail or
to your bank account by Automated Clearing House (ACH) transfer or bank wire.
ACH is an automated method of initiating payments from, and receiving
payments in, your financial institution account. The ACH system is supported
by over 20,000
<PAGE>
ABOUT THE FUNDS 9
banks, savings banks, and credit unions. Proceeds sent by ACH transfer should
be credited the second business day after the sale. Proceeds sent by bank
wire should be credited to your account the first business day after the
sale.
. Exception: Under certain circumstances and when deemed to be in a fund's
best interest, your proceeds may not be sent for up to seven calendar days
after we receive your redemption request.
. If for some reason we cannot accept your request to sell shares, we will
contact you.
USEFUL INFORMATION ON DISTRIBUTIONS AND TAXES
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. All net investment income and realized capital gains are distributed to
shareholders.
Dividends and Other Distributions
Dividend and capital gain distributions are reinvested in additional fund
shares in your account unless you select another option on your New Account
Form. The advantage of reinvesting distributions arises from compounding;
that is, you receive income dividends and capital gain distributions on a
rising number of shares.
Distributions not reinvested are paid by check or transmitted to your bank
account via ACH. If the Post Office cannot deliver your check, or if your
check remains uncashed for six months, the fund reserves the right to
reinvest your distribution check in your account at the NAV on the day of the
reinvestment and to reinvest all subsequent distributions in shares of the
fund. No interest will accrue on amounts represented by uncashed distribution
or redemption checks.
Spectrum Income Fund dividends
. 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.
. Dividends are ordinarily paid on the first business day of each month.
. 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.
<PAGE>
T. ROWE PRICE 10
. A portion of the fund's dividends may be eligible for the 70% deduction for
dividends received by corporations.
Spectrum Growth Fund dividends
. The fund declares and pays dividends (if any) annually.
. A portion of the fund's dividends may be eligible for the 70% deduction for
dividends received by corporations.
Spectrum International Fund dividends
. The fund declares and pays dividends (if any) annually.
. The dividends of the fund will not be eligible for the 70% deduction for
dividends received by corporations, if, as expected, none of the fund's
income consists of dividends paid by U.S. corporations.
Capital gains (all funds)
. A capital gain or loss is the difference between the purchase and sale price
of a security.
. If a fund has net capital gains for the year (after subtracting any capital
losses), they are usually declared and paid in December to shareholders of
record on a specified date that month.
Tax Information
. You will be sent timely information for your tax filing needs.
You need to be aware of the possible tax consequences when:
. You sell fund shares, including an exchange from one fund to another.
. The fund makes a distribution to your account.
Taxes on fund redemptions
When you sell shares in any fund, you may realize a gain or loss. An exchange
from one fund to another is still a sale for tax purposes.
In January, you will be sent Form 1099-B indicating the date and amount of
each sale you made in the fund during the prior year. This information will
also be reported to the IRS. For most new accounts or those opened by
exchange in 1984 or later, we will provide the gain or loss on the shares you
sold during the year, based on the "average cost," single category method.
This information is not reported to the IRS, and you do not have to use it.
You may calculate the cost basis using other methods acceptable to the IRS,
such as "specific identification."
To help you maintain accurate records, we send you a confirmation immediately
following each transaction you make (except for systematic purchases and
redemptions) and a year-end statement detailing all your transactions in each
fund account during the year.
<PAGE>
ABOUT THE FUNDS 11
Taxes on fund distributions
. The following summary does not apply to retirement accounts, such as IRAs,
which are not subject to current tax.
In January, you will be sent Form 1099-DIV indicating the tax status of any
dividend and capital gain distributions made to you. This information will
also be reported to the IRS. Distributions are generally taxable to you for
the year in which they were paid. You will be sent any additional information
you need to determine your taxes on fund distributions, such as the portion
of your dividends, if any, that may be exempt from state income taxes.
The tax treatment of a capital gain distribution is determined by how long
the fund held the portfolio securities, not how long you held shares in the
fund. Short-term (one year or less) capital gain distributions are taxable at
the same rate as ordinary income and long-term gains on securities held more
than 12 months are taxed at a maximum rate of 20%. However, if you realized a
loss on the sale or exchange of fund shares that you held six months or less,
your short-term loss will be reclassified to a long-term loss to the extent
of any long-term capital gain distribution received during the period you
held the shares.
You will not be able to claim a credit or deduction for any foreign taxes
paid by the underlying funds.
. Distributions are taxable whether reinvested in additional shares or
received in cash.
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 a portion of the money you just invested in the form of a taxable
distribution. Therefore, you may wish to find out a fund's record date before
investing. Of course, a fund's share price may, at any time, reflect
undistributed capital gains or income and unrealized appreciation, which may
result in future taxable distributions.
<PAGE>
T. ROWE PRICE 12
TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS
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. Following these procedures helps assure timely and accurate transactions.
Purchase Conditions
Nonpayment
If you pay with a check or ACH transfer that does not clear or if your
payment is not timely received, your purchase will be canceled. You will be
responsible for any losses or expenses incurred by each fund or transfer
agent, and the fund can redeem shares you own in this or another identically
registered T. Rowe Price account as reimbursement. Each fund and its agents
have the right to reject or cancel any purchase, exchange, or redemption due
to nonpayment.
U.S. dollars; type of check
All purchases must be paid for in U.S. dollars; checks must be drawn on U.S.
banks.
Sale (Redemption) Conditions
Holds on immediate redemptions: 10-day hold
If you sell shares that you just purchased and paid for by check or ACH
transfer, the funds will process your redemption but will generally delay
sending you the proceeds for up to 10 calendar days to allow the check or
transfer to clear. If your redemption request was sent by mail or mailgram,
proceeds will be mailed no later than the seventh calendar day following
receipt unless the check or ACH transfer has not cleared. (The 10-day hold
does not apply to purchases paid for by bank wire or automatic purchases
through your paycheck.)
Telephone, Tele*Access/(R)/, and personal computer transactions
Exchange and redemption services through telephone and Tele*Access are
established automatically when you sign the New Account Form unless you check
the boxes that state you do not want these services. Personal computer
transactions must be authorized separately. T. Rowe Price funds and their
agents use reasonable procedures to verify the identity of the shareholder.
If these procedures are followed, the funds and their agents are not liable
for any losses that may occur from acting on unauthorized instructions. A
confirmation is sent promptly after a transaction. Please review it carefully
and contact T. Rowe Price immediately about any transaction you believe to be
unauthorized. All telephone conversations are recorded.
Redemptions over $250,000
Large sales can adversely affect a portfolio manager's ability to implement a
fund's investment strategy by causing the premature sale of securities that
would otherwise be held. If, in any 90-day period, you redeem (sell) more
than
<PAGE>
ABOUT THE FUNDS 13
$250,000, or your sale amounts to more than 1% of fund net assets, the fund
has the right to pay the difference between the redemption amount and the
lesser of the two previously mentioned figures with securities from the fund.
Excessive Trading
. T. Rowe Price may bar excessive traders from purchasing shares.
Frequent trades in your account or accounts controlled by you can disrupt
management of a fund and raise its expenses. To deter such activity, the
funds have adopted an excessive trading policy. If you violate our excessive
trading policy, you may be barred indefinitely and without further notice
from further purchases of T. Rowe Price funds.
. Trades placed directly with T. Rowe Price If you trade directly with T.
Rowe Price, you can make one purchase and one sale involving the same fund
within any 120-day period. For example, if you are in fund A, you can move
assets from fund A to fund B and, within the next 120 days, sell your shares
in fund B to return to fund A or move to fund C. If you exceed this limit, or
if your trade activity involves market timing, you are in violation of our
excessive trading policy.
Two types of transactions are exempt from this policy: 1) trades solely in
money market funds (exchanges between a money fund and a nonmoney fund are
not exempt); and 2) systematic purchases or redemptions (see Information
About Your Services).
. Trades placed through intermediaries If you purchase fund shares through an
intermediary including a broker, bank, investment adviser, or other third
party, you can make one purchase and one sale involving the same fund within
any 120-day period. If you exceed this limit or if you hold fund shares for
less than 60 calendar days, you are in violation of our excessive trading
policy. Systematic purchases or redemptions are exempt from this policy.
Keeping Your Account Open
Due to the relatively high cost to a fund of maintaining small accounts, we
ask you to maintain an account balance of at least $1,000. If your balance is
below $1,000 for three months or longer, we have the right to close your
account after giving you 60 days in which to increase your balance.
Small Account Fee
Because of the disproportionately high costs of servicing accounts with low
balances, a $10 fee, paid to T. Rowe Price Services, the funds' transfer
agent, will automatically be deducted from nonretirement accounts with
balances falling below a minimum. 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
<PAGE>
T. ROWE PRICE 14
accounts, for which the minimum is $500. The fee will be waived for any
investor whose T. Rowe Price mutual fund accounts 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
does not apply to IRAs and other retirement plan accounts, but a separate
custodial fee may apply to such accounts.
Signature Guarantees
. A signature guarantee is designed to protect you and the T. Rowe Price funds
from fraud by verifying your signature.
You may need to have your signature guaranteed in certain situations, such
as:
. Written requests 1) to redeem over $100,000, or 2) to wire redemption
proceeds.
. Remitting redemption proceeds to any person, address, or bank account not on
record.
. Transferring redemption proceeds to a T. Rowe Price fund account with a
different registration (name or ownership) from yours.
. Establishing certain services after the account is opened.
You can obtain a signature guarantee from most banks, savings institutions,
broker-dealers, and other guarantors acceptable to T. Rowe Price. We cannot
accept guarantees from notaries public or organizations that do not provide
reimbursement in the case of fraud.
<PAGE>
MORE ABOUT THE FUNDS
ORGANIZATION AND MANAGEMENT
----------------------------------------------------------
How are the funds organized?
T. Rowe Price Spectrum Fund, Inc. (Spectrum) was incorporated in Maryland in
1987. 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 Income and Spectrum Growth Funds were established in
1990, and the Spectrum International Fund was established in 1996.
. Shareholders benefit from T. Rowe Price's 63 years of investment management
experience.
What is meant by "shares"?
As with all mutual funds, investors purchase shares when they put money in a
fund. These shares are part of a fund's authorized capital stock, but share
certificates are not issued.
Each share and fractional share entitles the shareholder to:
. Receive a proportional interest in a fund's income and capital gain
distributions.
. Cast one vote per share on certain fund matters, including the election of
fund directors, changes in fundamental policies, or approval of changes in
the fund's management contract.
Do T. Rowe Price funds have annual shareholder meetings?
The funds are not required to hold annual meetings and, to avoid unnecessary
costs to fund shareholders, do not do so except when certain matters, such as
a change in fundamental policies, must be decided. In addition, shareholders
representing at least 10% of all eligible votes may call a special meeting,
if they wish, for the purpose of voting on the removal of any fund director
or trustee. If a meeting is held and you cannot attend, you can vote by
proxy. Before the meeting, the fund will send you proxy materials that
explain the issues to be decided and include instructions on voting by mail
or telephone, or on the Internet.
<PAGE>
T. ROWE PRICE 16
Who runs the funds?
General Oversight
Spectrum is governed by a Board of Directors that meets regularly to review
the funds' investments, performance, expenses, and other business affairs.
The Board elects Spectrum officers. The policy of Spectrum is that a majority
of the Board members are independent of T. Rowe Price and Price-Fleming. 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 Spectrum
directors and officers and T. Rowe Price and Price-Fleming also serve in
similar positions with most of the underlying funds. Thus, if the interests
of one of the Spectrum Funds and the underlying funds were ever to diverge,
it is possible that a conflict of interest could arise and affect how the
directors and officers fulfill their fiduciary duties to that Spectrum Fund
and the underlying funds. The Spectrum directors believe they have structured
each of the Spectrum Funds to avoid these concerns. However, conceivably, a
situation could occur where proper action for one of the Spectrum Funds could
be adverse to the interests of an underlying fund, or the reverse. 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.
Portfolio Management: Spectrum Income and Spectrum Growth Funds
Spectrum Income and Spectrum Growth Funds have an Investment Advisory
Committee with the following members: Edmund M. Notzon, Chairman, Stephen W.
Boesel, John H. Laporte, William T. Reynolds, Brian C. Rogers, 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. Notzon has
been chairman of the committee since 1998. He has been managing investments
since joining T. Rowe Price in 1989.
Portfolio Management: Spectrum International Fund
Spectrum International has an Investment Advisory Committee with 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 has been chairman of the
committee since 1996. He joined Price-Fleming in 1982 and has been a
portfolio manager since 1984.
<PAGE>
ABOUT THE FUNDS 17
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 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 that participates in a global network of
regional investment offices in New York, London, Zurich, Geneva, Tokyo, Hong
Kong, Manila, Kuala Lumpur, Seoul, Taipei, Bombay, Jakarta, Singapore,
Bangkok, and Johannesburg. 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 Group Limited (Jardine Fleming)
are owners of Price-Fleming. The common stock of Price-Fleming is 50% owned
by a wholly owned subsidiary of T. Rowe Price, 25% by a subsidiary of
Flemings, and 25% by a subsidiary of Jardine Fleming. Jardine Fleming is
owned by Flemings. T. Rowe Price has the right to elect a majority of the
Board of Directors of Price-Fleming, and Flemings has the right to elect the
remaining directors, one of whom will be nominated by Jardine Fleming.
How are fund expenses determined?
Each of the Spectrum Funds 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 Spectrum Fund's
operational expenses is subject to a Special Servicing Agreement (described
below) as well as certain undertakings made by T. Rowe Price and
Price-Fleming under their respective Investment Management Agreements with
each of the Spectrum Funds. 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.
The Special Servicing Agreements provide that each underlying fund in which
one of the Spectrum Funds invests will bear a proportionate share of the
expenses of that Spectrum Fund if, and to the extent that, the underlying
fund's savings from the operation of the Spectrum Fund exceed these expenses.
<PAGE>
T. ROWE PRICE 18
Savings to the underlying funds 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 the
Spectrum Funds are expected to be sufficient to offset most, if not all, of
the expenses incurred by the Spectrum Funds.
Under the Investment Management Agreements with the Spectrum Funds, and the
Special Servicing Agreements, T. Rowe Price has agreed to bear any expenses
of the Spectrum Growth and Spectrum Income Funds and Price-Fleming has agreed
to bear any expenses of the Spectrum International Fund which exceed the
estimated savings to each of the underlying funds. Thus, the Spectrum Funds
will operate at a zero expense ratio. Of course, shareholders of the Spectrum
Funds will still indirectly bear their fair and proportionate share of the
cost of operating the underlying funds owned by each of the Spectrum Funds.
The Management Fee
T. Rowe Price is the investment manager for the Spectrum Income Fund and the
Spectrum Growth Fund, and Price-Fleming is investment manager for the
Spectrum International Fund. Neither will be paid a management fee for
performing investment management services. However, T. Rowe Price and
Price-Fleming receive management fees from managing the underlying funds. See
the underlying funds' Statements of Additional Information for specific fees.
T. Rowe Price will determine how Spectrum Income Fund's and Spectrum Growth
Fund's assets are invested and Price-Fleming will determine how the Spectrum
International Fund's assets will be invested consistent with the investment
objectives and policies of each fund described in this prospectus and
procedures and guidelines established by the Spectrum Board of Directors. The
Spectrum Directors will periodically monitor the allocations and the basis
upon which such allocations were made or maintained.
UNDERSTANDING PERFORMANCE INFORMATION
----------------------------------------------------------
This section should help you understand the terms used to describe fund
performance. You will come across them in shareholder reports you receive
from us; in our newsletter, The Price Report; in T. Rowe Price
advertisements; and in the media.
<PAGE>
ABOUT THE FUNDS 19
Total Return
This tells you how much an investment has changed in value over a given time
period. It reflects any net increase or decrease in the share price and
assumes that all dividends and capital gains (if any) paid during the period
were reinvested in additional shares. Therefore, total return numbers include
the effect of compounding.
Advertisements may include cumulative or average annual total return figures,
which may be compared with various indices, other performance measures, or
other mutual funds.
Cumulative Total Return
This is the actual return of an investment for a specified period. A
cumulative return does not indicate how much the value of the investment may
have fluctuated during the period. For example, an investment could have a
10-year positive cumulative return despite experiencing some negative years
during that time.
Average Annual Total Return
This is always hypothetical and should not be confused with actual
year-by-year results. It smooths out all the variations in annual performance
to tell you what constant year-by-year return would have produced the
investment's actual cumulative return. This gives you an idea of an
investment's annual contribution to your portfolio, provided you held it for
the entire period.
Yield (Spectrum Income Fund)
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 price at
the end of the 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 Securities and Exchange Commission) 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-also called the
standardized yield-may differ from the dividend yield.
<PAGE>
T. ROWE PRICE 20
SPECIAL RISKS AND CONSIDERATIONS
----------------------------------------------------------
Prospective investors should consider the following factors:
. The investments of each of the Spectrum Funds are concentrated in the
underlying funds, so each Spectrum Fund's investment performance is directly
related to the investment performance of these underlying funds.
. 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 of
less than 15 days, except when necessary to meet the Spectrum Funds'
shareholder redemption requests. As a result, these Spectrum 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.
. 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.
. For Spectrum International Fund, each underlying fund's portfolio securities
usually are valued on the basis of the most recent closing market prices at 4
p.m. ET when each fund calculates its NAV. Most of the securities in which
the underlying funds invest, however, are traded in markets that close before
that time. For securities primarily traded in the Far East, for example, the
most recent closing prices may be as much as 15 hours old at 4 p.m. Normally,
developments that could affect the values of portfolio securities that occur
between the close of the foreign market and 4 p.m. ET will not be reflected
in the funds' NAVs. However, if a fund determines that such developments are
so significant that they will clearly and materially affect the value of the
fund's securities, the fund may adjust the previous closing prices to reflect
fair value or use the next available opening market prices to value its
portfolio securities.
<PAGE>
ABOUT THE FUNDS 21
DESCRIPTION OF UNDERLYING FUNDS
----------------------------------------------------------
Table 4 gives a brief description of the principal investment programs of the
underlying funds. Additional investment practices are described under Special
Risks and Considerations, in the Statement of Additional Information, and in
the prospectuses for each of the underlying funds.
. For more information about an underlying fund, call: 1-800-638-5660
The major characteristics of the underlying T. Rowe Price funds are as
follows:
<TABLE>
Table 4 Description of Underlying Funds
<CAPTION>
<S> <C> <C>
Fixed Income Funds Objective/Program
Summit Cash Reserves Preservation of capital and liquidity and, consistent with these, the highest possible
current income.
Invests
in high-quality, U.S. dollar-denominated money market
securities of U.S. and foreign issuers
.
Managed to provide stable share price of $1.00.
-------------------------------------------------------------------------------------------
Short-Term Bond High
level of
i
ncome
consistent with minimal fluctuation in principal value and
liquidity.
Normally invests at least 65%
of
total
assets in short-term bonds, primarily
short- and intermediate-term
investment-grade
corporate, government, and
mortgage
-backed
securities. Securities purchased will be rated within the four
highest credit categories.The fund's
average effective maturity will not exceed three
years.
-------------------------------------------------------------------------------------------
GNMA High
current
income consistent with maximum credit protection and moderate share
price fluctuation
by
i
nvest
ing
exclusively in securities backed by the full faith and
credit of the U.S. government and instruments
linked to
these securities (this
guarantee does not apply to the fund's share price, which will fluctuate)
.
-------------------------------------------------------------------------------------------
New Income High
est level of
income
consistent with preservation of capital over time by investing
primarily in marketable debt securities
. Invests at least 80% of total assets in
income-
producing securities
,
including
U.S. government
and agency obligations, mortgage-
and asset-
backed securities,
corporate
bonds, foreign securities, collateralized
mortgage obligations (CMOs), and others, including, on occasion, equity
securities.
Weighted
a
verage maturity expected to be between 4 and 15 years.
-------------------------------------------------------------------------------------------
U.S. Treasury Long-Term HIgh
est
level of income
consistent with maximum credit protection. Invests at least
85% of its total assets in
U.S. Treasur
y securities, which are backed by the full faith
and credit of the federal government
, and other investments involving these
securities
.
-------------------------------------------------------------------------------------------
High Yield High
current
income and
, secondarily,
capital appreciation
.
Invests at least 80% of
total assets in diversified portfolio of
"junk"
bonds
, income-producing convertible
securities, and preferred stocks
.
Dollar-weighted
a
verage maturity expected to be in
the 8- to 12-year range.
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
T. ROWE PRICE 22
<TABLE>
<CAPTION>
<S> <C> <C>
Equity Funds Objective/Program
Equity Income Substantial dividend income and capital
appreciation through investments primarily in
the common stocks of established companies
paying above-average
dividends.
-------------------------------------------------
Growth & Income Capital appreciation and reasonable dividend
income through investments in growth stocks.
Invests principally in large-cap U.S.-based
companies.
-------------------------------------------------
Growth Stock Capital appreciation and increasing dividend
income through investments in growth stocks.
Invests principally in large-cap U.S.-based
companies.
-------------------------------------------------
New Era Capital appreciation primarily through
investments in U.S. and foreign natural
resource stocks whose earnings are expected to
grow faster than inflation.
-------------------------------------------------
Blue Chip Growth Capital appreciation through investments in
the common stocks of large and medium-sized
blue chip companies with potential for
above-average earnings growth. Current income
is a secondary objective.
-------------------------------------------------
Mid-Cap Value Capital appreciation through investments in
mid-size companies whose stocks appear
undervalued.
-------------------------------------------------
New Horizons Aggressive capital appreciation through
investments in small-company stocks. Invests
primarily in emerging growth companies, early
in their corporate life cycles.
-------------------------------------------------
International Funds Objective/Program
International Bond High income and capital appreciation through
investments primarily in high-quality foreign
bonds. May invest up to 20% of assets in
below-investment-grade, high-risk bonds,
including bonds in default or those with the
lowest rating. The fund has no maturity
restrictions on the overall portfolio or on
individual securities, but expects to maintain
an intermediate to long weighted average
maturity. The fund is normally heavily exposed
to fluctuations in foreign currencies.
-------------------------------------------------
International Stock Capital appreciation through investments
primarily in stocks of established foreign
companies.
-------------------------------------------------
International Capital appreciation through investments in
Discovery small and medium-sized non-U.S. companies.
-------------------------------------------------
European Stock Capital appreciation through investments
primarily in companies located in Europe.
-------------------------------------------------
Japan Capital appreciation through investments in
companies operating in Japan.
-------------------------------------------------
New Asia Capital appreciation through investments in
companies operating in Asia,
excluding Japan.
-------------------------------------------------
Emerging Markets Capital appreciation through investments in
Stock companies in emerging markets.
-------------------------------------------------
Latin America Capital appreciation through investments
primarily in companies located in Latin
America.
-------------------------------------------------
Emerging Markets Bond High current income and capital appreciation
through investments primarily in high-yielding
and high-risk government and corporate debt
securities of less-
developed countries.
------------------------------------------------------------------------------
</TABLE>
Table 4 Description of Underlying Funds
<PAGE>
ABOUT THE FUNDS 23
INVESTMENT POLICIES OF THE SPECTRUM FUNDS
----------------------------------------------------------
Each of the Spectrum Fund's investment policies and practices are subject to
further restrictions and risks which are described in the Statement of
Additional Information. Shareholders will be notified of any material change
in such investment programs. The funds will not make a material change in
their investment objectives or their fundamental policies without obtaining
shareholder approval.
Reserve Position
While the Spectrum Income Fund will remain primarily invested in bonds, 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
Summit Cash Reserves 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 of unusual volatility.
Diversification
Each of the Spectrum Funds is a "nondiversified" investment company for
purposes of the Investment Company Act of 1940 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 T.
Rowe Price International Bond Fund, Emerging Markets Bond Fund, and Latin
America Fund). Each 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 that each fund will invest substantially
all of its assets in investment companies that 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. The funds may borrow money from other T. Rowe Price funds.
Operating policies Each Spectrum Fund cannot (i) change the selection of the
underlying funds in which they can invest; or (ii) change the percentage
ranges which may be allocated to the underlying funds unless authorized to do
so by the Board of Directors. Shareholders will be informed of any such
changes.
<PAGE>
T. ROWE PRICE 24
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; or (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.
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; and (ii) maintain or modify the allocation of
each fund's assets among the underlying funds within the percentage limits
described earlier. A high turnover rate may increase transaction costs and
result in higher capital gain distributions by the fund. The funds' portfolio
turnover rates for the fiscal years ending December 31 are listed in the
tables in the Financial Highlights section.
INVESTMENT POLICIES AND PRACTICES OF UNDERLYING FUNDS
----------------------------------------------------------
In pursuing their investment objectives and programs, each of the underlying
funds is permitted to engage in a wide range of investment practices. Further
information about the underlying funds is contained in their prospectuses and
Statements of Additional Information. Because each Spectrum Fund invests in
the underlying funds, shareholders of each fund will be affected by these
investment practices in direct proportion to the amount of assets each fund
allocates to the underlying funds pursuing such practices.
FINANCIAL HIGHLIGHTS
----------------------------------------------------------
Table 5, which provides information about each Spectrum Fund's financial
history, is based on a single share outstanding throughout each fiscal year.
Each fund's section of the table is part of the fund's financial statements,
which are included in its annual report and are incorporated by reference
into the Statement of Additional Information (available upon request). The
total returns in the table represent the rate that an investor would have
earned or lost on an investment in each fund (assuming reinvestment of all
dividends and distributions). The financial statements in the annual report
were audited by the funds' independent accountants, PricewaterhouseCoopers
LLP.
<PAGE>
ABOUT THE FUNDS 25
<TABLE>
Table 5 Financial Highlights
<CAPTION>
Year ended December 31
Spectrum Income Fund 1995 1996 1997 1998 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <S>
Net asset value, beginning
of period $ 10.11 $ 11.24 $ 11.20 $ 11.66 $ 11.50
Income From Investment Activities
Net investment income 0.72 0.71 0.71 0.72 0.67
----------------------------------------------------------------
Net gains or losses on securities 1.16 0.11 0.61 0.02 (0.64)
(both realized and unrealized)
----------------------------------------------------------------
Total from investment operations 1.88 0.82 1.32 0.74 0.03
Less Distributions
Dividends (from net investment (0.72) (0.71) (0.71) (0.72) (0.69)
income)
----------------------------------------------------------------
Distributions (from capital gains) (0.03) (0.15) (0.15) (0.18) (0.13)
----------------------------------------------------------------
Returns of capital -- -- -- -- --
----------------------------------------------------------------
Total distributions (0.75) (0.86) (0.86) (0.90) (0.82)
----------------------------------------------------------------
Net asset value, end of period $ 11.24 $ 11.20 $ 11.66 $ 11.50 $ 10.71
----------------------------------------------------------------
Total return 19.41% 7.64% 12.18% 6.57% 0.26%
Ratios/Supplemental Data
Net assets, end of period $986,701 $1,355,970 $2,022,227 $2,574,053 2,548,435
(in thousands)
----------------------------------------------------------------
Ratio of expenses to average net 0.00% 0.00% 0.00% 0.00% 0.00%/a/
assets
----------------------------------------------------------------
Ratio of net income to average net 6.43% 6.46% 6.21% 6.22% 5.95%
assets
----------------------------------------------------------------
Portfolio turnover rate 20.2% 17.6% 14.1% 12.8% 18.6%
----------------------------------------------------------------------------------------------------------
</TABLE>
/a/The annualized weighted average expense ratio of the underlying funds was
0.77% for the year ended December 31, 1999.
<PAGE>
T. ROWE PRICE 26
<TABLE>
Table 5 Financial Highlights (continued)
<CAPTION>
Year ended December 31
Spectrum Growth Fund 1995 1996 1997 1998 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <S>
Net asset value, beginning
of period $ 11.13 $ 13.49 $ 15.13 $ 15.93 $ 16.45
Income From Investment Operations
Net investment income 0.21 0.20 0.20 0.19 0.15
------------------------------------------------------------------
Net gains or losses on securities 3.12 2.57 2.40 1.88 3.19
(both realized and unrealized)
------------------------------------------------------------------
Total from investment operations 3.33 2.77 2.60 2.07 3.34
Less Distributions
Dividends (from net investment (0.21) (0.20) (0.20) (0.18) (0.17)
income)
------------------------------------------------------------------
Distributions (from capital gains) (0.76) (0.93) (1.60) (1.37) (1.91)
------------------------------------------------------------------
Returns of capital -- -- -- -- --
------------------------------------------------------------------
Total distributions (0.97) (1.13) (1.80) (1.55) (2.08)
------------------------------------------------------------------
Net asset value, end of period $ 13.49 $ 15.13 $ 15.93 $ 16.45 $ 17.71
------------------------------------------------------------------
Total return 29.96% 20.53% 17.40% 13.62% 21.20%
Ratios/Supplemental Data
Net assets, end of period $1,358,344 $2,104,094 $2,605,265 $2,768,241 $3,030,950
(in thousands)
------------------------------------------------------------------
Ratio of expenses to average net 0.00% 0.00% 0.00% 0.00% 0.00%/a/
assets
------------------------------------------------------------------
Ratio of net income to average net 1.81% 1.58% 1.26% 1.09% 0.85%
assets
------------------------------------------------------------------
Portfolio turnover rate 7.4% 2.9% 20.4% 17.9% 20.3%
------------------------------------------------------------------------------------------------------------
</TABLE>
/a/The annualized weighted average expense ratio of the underlying funds was
0.83% for the year ended December 31, 1999.
<PAGE>
ABOUT THE FUNDS 27
<TABLE>
Table 5 Financial Highlights (continued)
<CAPTION>
Year ended December 31
Spectrum International Fund ----- 1997 1998 1999
------------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <S>
Net asset value, beginning
of period $ 10.00 $ 9.74 $ 10.56
Income From Investment Operations
Net investment income 0.15 0.21 0.12
-------------------------------
Net gains or losses on
securities (both realized and 0.09/a/ 0.97 3.95
unrealized)
-------------------------------
Total from investment
operations 0.24 1.18 4.07
Less Distributions
Dividends (from net (0.15) (0.21) (0.13)
investment income)
-------------------------------
Distributions (from capital (0.35) (0.15) (0.97)
gains)
-------------------------------
Returns of capital -- -- --
-------------------------------
Total distributions (0.50) (0.36) (1.10)
-------------------------------
Net asset value, end of $ 9.74 $ 10.56 $ 13.53
period
-------------------------------
Total return 2.42% 12.28% 39.49%
Ratios/Supplemental Data
Net assets, end of period $51,050 $54,752 $82,846
(in thousands)
-------------------------------
Ratio of expenses to average 0.00% 0.00% 0.00%/b/
net assets
-------------------------------
Ratio of net income to 2.23% 1.94% 1.14%
average net assets
-------------------------------
Portfolio turnover rate 20.0% 31.7% 20.1%
------------------------------------------------------------------------------
</TABLE>
/a/The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout the
period. This amount is inconsistent with the fund's aggregate gains and
losses because of the timing of sales and redemptions of fund shares in
relation to fluctuating market values for the investment portfolio.
/b/The annualized weighted average expense ratio of the underlying funds was
0.89% for the year ended December 31, 1999.
<PAGE>
INVESTING WITH T. ROWE PRICE
ACCOUNT REQUIREMENTS AND TRANSACTION INFORMATION
----------------------------------------------------------
Tax Identification Number
We must have your correct Social Security or corporate tax identification number
on a signed New Account Form or W-9 Form. Otherwise, federal law requires the
funds to withhold a percentage (currently 31%) of your dividends, capital gain
distributions, and redemptions, and may subject you to an IRS fine. If this
information is not received within 60 days after your account is established,
your account may be redeemed, priced at the NAV on the date of redemption.
Always verify your transactions by carefully reviewing the confirmation we send
you. Please report any discrepancies to Shareholder Services promptly.
Employer-Sponsored Retirement Plans and Institutional Accounts T. Rowe Price
Trust Company 1-800-492-7670
Transaction procedures in the following sections may not apply to
employer-sponsored retirement plans and institutional accounts. For procedures
regarding employer-sponsored retirement plans, please call T. Rowe Price Trust
Company or consult your plan administrator. For institutional account
procedures, please call your designated account manager or service
representative.
OPENING A NEW ACCOUNT
----------------------------------------------------------
$2,500 minimum initial investment; $1,000 for retirement plans or gifts or
transfers to minors (UGMA/UTMA) accounts
Account Registration
If you own other T. Rowe Price funds, be sure to register any new account just
like your existing accounts so you can exchange among them easily. (The name and
account type would have to be identical.)
By Mail
Please make your check payable to T. Rowe Price Funds (otherwise it will be
returned) and send your check, together with the New Account Form, to the
appropriate address in the next paragraph. We do not accept third-party checks
to open new accounts, except for IRA Roll-
<PAGE>
ABOUT THE FUNDS 29
over checks that are properly endorsed. In addition, the fund does not accept
purchases made by credit card check.
Mail via U. S. Postal Service
T. Rowe Price Account Services P.O. Box 17300 Baltimore, MD 21297-1300
Mail via private carriers/overnight services
T. Rowe Price Account Services Mailcode 17300 4515 Painters Mill Road Owings
Mills, MD 21117-4903
By Wire
Call Investor Services for an account number and give the following wire
information to your bank:
Receiving Bank: PNC Bank, N.A. (Pittsburgh) Receiving Bank ABA#: 043000096
Beneficiary: T. Rowe Price [fund name] Beneficiary Account: 1004397951
Originator to Beneficiary Information (OBI): name of owner(s) and account
number
Complete a New Account Form and mail it to one of the appropriate addresses
listed previously.
Note: No services will be established and IRS penalty withholding may occur
until we receive a signed New Account Form. Also, retirement plan accounts and
IRAs cannot be opened by wire.
By Exchange
Call Shareholder Services or use Tele*Access or your personal computer (see
Automated Services under Information About Your Services). The new account will
have the same registration as the account from which you are exchanging.
Services for the new account may be carried over by telephone request if
preauthorized on the existing account. For limitations on exchanging, see
explanation of Excessive Trading under Transaction Procedures and Special
Requirements.
In Person
Drop off your New Account Form at any location listed on the back cover and
obtain a receipt.
<PAGE>
T. ROWE PRICE 30
PURCHASING ADDITIONAL SHARES
----------------------------------------------------------
$100 minimum purchase; $50 minimum for retirement plans, Automatic Asset
Builder, and gifts or transfers to minors (UGMA/UTMA) accounts
By ACH Transfer
Use Tele*Access or your personal computer or call Investor Services if you have
established electronic transfers using the ACH network.
By Wire
Call Shareholder Services or use the wire address listed in Opening a New
Account.
By Mail
1. Make your check payable to T. Rowe Price Funds (otherwise it may be
returned).
2. Mail the check to us at the following address with either a fund
reinvestment slip or a note indicating the fund you want to buy and your fund
account number.
3. Remember to provide your account number and the fund name on the memo line
of your check.
Mail via U. S. Postal Service
T. Rowe Price Funds Account Services P.O. Box 17300 Baltimore, MD 21297-1300
/(For //mail via private carriers and overnight services//, see previous /
/section.)/
By Automatic Asset Builder
Fill out the Automatic Asset Builder section on the New Account or Shareholder
Services Form.
EXCHANGING AND REDEEMING SHARES
----------------------------------------------------------
Exchange Service
You can move money from one account to an existing identically registered
account or open a new identically registered account. Remember, exchanges are
purchases and sales for tax purposes. (Exchanges into a state tax-free fund are
limited to investors living in states where the fund is registered.)
<PAGE>
ABOUT THE FUNDS 31
Redemptions
Redemption proceeds can be mailed to your account address, sent by ACH transfer
to your bank, or wired to your bank (provided your bank information is already
on file). For charges, see Electronic Transfers - By Wire under Information
About Your Services.
Some of the T. Rowe Price funds may impose a redemption fee of 0.5% to 2% on
shares held for less than six months, one year, or two years, as specified in
the prospectus. The fee is paid to the fund.
By Phone
Call Shareholder Services
If you find our phones busy during unusually volatile markets, please consider
placing your order by your personal computer or Tele*Access (if you have
previously authorized these services), mailgram, or express mail. For exchange
policies, please see Transaction Procedures and Special Requirements - Excessive
Trading.
By Mail
For each account involved, provide the account name, number, fund name, and
exchange or redemption amount. For exchanges, be sure to specify any fund you
are exchanging out of and the fund or funds you are exchanging into. T. Rowe
Price requires the signatures of all owners exactly as registered, and possibly
a signature guarantee (see Transaction Procedures and Special Requirements -
Signature Guarantees). Please use the appropriate address below:
For nonretirement and IRA accounts:
via U. S. Postal Service
T. Rowe Price Account Services P.O. Box 17302 Baltimore, MD 21297-1302
via private carriers/overnight services
T. Rowe Price Account Services Mailcode 17302 4515 Painters Mill Road Owings
Mills, MD 21117-4903
For employer-sponsored retirement accounts:
via U.S. Postal Service
T. Rowe Price Trust Company P.O. Box 17479 Baltimore, MD 21297-1479
<PAGE>
T. ROWE PRICE 32
via private carriers/overnight services
T. Rowe Price Trust Company Mailcode 17479 4515 Painters Mill Road Owings Mills,
MD 21117-4903
Requests for redemptions from employer-sponsored retirement accounts must be in
writing; please call T. Rowe Price Trust Company or your plan administrator for
instructions. IRA distributions may be requested in writing or by telephone;
please call Shareholder Services to obtain an IRA Distribution Form or an IRA
Shareholder Services Form to authorize the telephone redemption service.
RIGHTS RESERVED BY THE FUNDS
----------------------------------------------------------
Each fund and its agents reserve the following rights: (1) to waive or lower
investment minimums; (2) to accept initial purchases by telephone or mailgram;
(3) to refuse any purchase or exchange order; (4) to cancel or rescind any
purchase or exchange order (including, but not limited to, orders deemed to
result in excessive trading, market timing, fraud, or 5% ownership) upon notice
to the shareholder within five business days of the trade or if the written
confirmation has not been received by the shareholder, whichever is sooner; (5)
to freeze any account and suspend account services when notice has been received
of a dispute between the registered or beneficial account owners or there is
reason to believe a fraudulent transaction may occur; (6) to otherwise modify
the conditions of purchase and any services at any time; and (7) to act on
instructions believed to be genuine. These actions will be taken when, in the
sole discretion of management, they are deemed to be in the best interest of the
fund.
In an effort to protect each fund from the possible adverse effects of a
substantial redemption in a large account, as a matter of general policy, no
shareholder or group of shareholders controlled by the same person or group of
persons will knowingly be permitted to
<PAGE>
ABOUT THE FUNDS 33
purchase in excess of 5% of the outstanding shares of the fund, except upon
approval of the fund's management.
INFORMATION ABOUT YOUR SERVICES
----------------------------------------------------------
Shareholder Services 1-800-225-5132 Investor Services 1-800-638-5660
Many services are available to you as a T. Rowe Price shareholder; some you
receive automatically, and others you must authorize or request on the New
Account Form. By signing up for services on the New Account Form rather than
later on, you avoid having to complete a separate form and obtain a signature
guarantee. This section discusses some of the services currently offered. Our
Services Guide, which we mail to all new shareholders, contains detailed
descriptions of these and other services.
Note: Corporate and other institutional accounts require an original or
certified resolution to establish services and to redeem by mail. For more
information, call Investor Services.
Retirement Plans
We offer a wide range of plans for individuals, institutions, and large and
small businesses: Traditional IRAs, Roth IRAs, SIMPLE IRAs, SEP-IRAs, Keoghs
(profit sharing, money purchase pension), 401(k)s, and 403(b)(7)s. For
information on IRAs, call Investor Services. For information on all other
retirement plans or our no-load variable annuity, please call our Trust Company
at 1-800-492-7670.
Automated Services Tele*Access 1-800-638-2587 24 hours, 7 days
Tele*Access
24-hour service via a toll-free number enables you to (1) access information on
fund performance, prices, distributions, account balances, and your latest
transaction; (2) request checks, prospectuses, services forms, duplicate
statements, and tax forms; and (3) initiate purchase, redemption, and exchange
transactions in your accounts (see Electronic Transfers in this section).
<PAGE>
T. ROWE PRICE 34
Web Address www.troweprice.com
After authorizing this service, account transactions may also be conducted
through our Web site on the Internet. If you subscribe to America Online/(R)/,
you can access our Web site via keyword "T. Rowe Price" and conduct transactions
in your account.
Plan Account Line 1-800-401-3279
Plan Account Line
This 24-hour service is similar to Tele*Access but is designed specifically to
meet the needs of retirement plan investors.
Telephone and Walk-In Services
Buy, sell, or exchange shares by calling one of our service representatives or
by visiting one of our investor center locations whose addresses are listed on
the back cover.
Electronic Transfers
By ACH
With no charges to pay, you can initiate a purchase or redemption for as little
as $100 or as much as $100,000 between your bank account and fund account using
the ACH network. Enter instructions via Tele*Access or your personal computer,
or call Shareholder Services.
By Wire
Electronic transfers can be conducted via bank wire. There is currently a $5 fee
for wire redemptions under $5,000, and your bank may charge for incoming or
outgoing wire transfers regardless of size.
Checkwriting
(Not available for equity funds, or the High Yield or Emerging Markets Bond
Funds) You may write an unlimited number of free checks on any money market
fund, and most bond funds, with a minimum of $500 per check. Keep in mind,
however, that a check results in a redemption; a check written on a bond fund
will create a taxable event which you and we must report to the IRS.
Automatic Investing
($50 minimum) You can invest automatically in several different ways, including:
Automatic Asset Builder
You can instruct us to move $50 or more from your bank account, or you can
instruct your employer to send all or a portion of your paycheck to the fund or
funds you designate.
<PAGE>
ABOUT THE FUNDS 35
Automatic Exchange
You can set up systematic investments from one fund account into another, such
as from a money fund into a stock fund.
T. ROWE PRICE BROKERAGE
----------------------------------------------------------
To Open an Account 1-800-638-5660 For Existing Brokerage Customers
1-800-225-7720
Investments available through our brokerage service include stocks, options,
bonds, and others at commission savings over full-service brokers*. We also
provide a wide range of services, including:
Automated Telephone and Computer Services
You can enter stock and option orders, access quotes, and review account
information around the clock by phone with Tele-Trader or via the Internet with
Internet-Trader. Any trades entered through Tele-Trader save you an additional
10% on commissions. For stock trades entered through Internet-Trader, you will
pay a commission of $24.95 for up to 1,000 shares plus $.02 for each share over
1,000. Option trades entered through Internet-Trader save you 10% over our
standard commission schedule. All trades are subject to a $35 minimum commission
except stock trades placed through Internet-Trader.
Investor Information
A variety of informative reports, such as our Brokerage Insights series and S&P
Market Month newsletter, as well as access to on-line research tools can help
you better evaluate economic trends and investment opportunities.
Dividend Reinvestment Service
If you elect to participate in this service, the cash dividends from the
eligible securities held in your account will automatically be reinvested in
additional shares of the same securities free of charge. Dividend payments must
be $10.00 or greater to qualify for reinvestment. Most securities listed on
national securities exchanges or on Nasdaq are eligible for this service.
/*Services //v//ary //b//y //f//irm./
<PAGE>
T. ROWE PRICE 36
/T. Rowe Price// Brokerage is a division of //T. Rowe Price// Investment /
/Services, Inc., Member NASD/SIPC./
INVESTMENT INFORMATION
----------------------------------------------------------
To help shareholders monitor their investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety of
information in addition to account statements. Most of this information is also
available on our Web site at www.troweprice.com.
Shareholder Reports
Fund managers' reviews of their strategies and performance. If several members
of a household own the same fund, only one fund report is mailed to that
address. To receive additional copies, please call Shareholder Services or write
to us at P.O. Box 17630, Baltimore, Maryland 21297-1630.
The T. Rowe Price Report
A quarterly investment newsletter discussing markets and financial strategies.
Performance Update
A quarterly review of all T. Rowe Price fund results.
Insights
Educational reports on investment strategies and financial markets.
Investment Guides
Asset Mix Worksheet, College Planning Kit, Diversifying Overseas: A T. Rowe
Price Guide to International Investing, Managing Your Retirement Distribution,
Personal Strategy Planner, Retirees Financial Guide, Retirement Planning Kit,
and Tax Considerations for Investors.
<PAGE>
To help you achieve your financial goals, T. Rowe Price offers a wide range of
stock, bond, and money market investments, as well as convenient services and
informative reports.
A fund Statement of Additional Information has been filed with the Securities
and Exchange Commission and is incorporated by reference into this prospectus.
Further information about fund investments, including a review of market
conditions and the manager's recent strategies and their impact on performance,
is available in the annual and semiannual shareholder reports. To obtain free
copies of any of these documents, or for shareholder inquiries, call
1-800-638-5660.
Fund information and Statements of Additional Information are also available
from the Public Reference Room of the Securities and Exchange Commission. Infor-
mation on the operation of the Public Reference Room may be obtained by calling
the SEC at 1-202-942-8090. Fund reports and other fund information are available
on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. Copies
of this information may be obtained, after paying a duplicating fee, by
electronic request at [email protected], or by writing the Public Reference
Room, Washington D.C. 20549-0102.
Walk-in
Investor Centers
For directions, call 1-800-225-5132 or visit our Web site
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center 4515 Painters Mill Road
Boston Area
386 Washington Street Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center 21800 Oxnard Street Suite 270 Woodland Hills
Tampa
4200 West Cypress St. 10th Floor
Washington, D.C.
900 17th Street, N.W. Farragut Square
For Mutual Fund or T. Rowe Price Brokerage Information
Investor Services
1-800-638-5660
For Existing Accounts
Shareholder Services
1-800-225-5132
For Yields, Prices, Account Information, or to Conduct Transactions
Tele*Access/(R)/
24 hours, 7 days 1-800-638-2587
Internet Address
www.troweprice.com
Plan Account Line
For retirement plan investors: The appropriate 800 number appears on your
retirement account statement.
T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, MD 21202
C08-040 5/1/00
1940 Act File No. 811-4998
<PAGE>
T. ROWE PRICE 38
STATEMENT OF ADDITIONAL INFORMATION
The date of this Statement of Additional Information is May 1, 2000.
T. ROWE PRICE SPECTRUM FUND, INC. ("Spectrum Fund")
Spectrum Growth Fund ("Growth Fund")
Spectrum Income Fund ("Income Fund")
Spectrum International Fund ("International Fund")
-------------------------------------------------------------------------------
Mailing Address: T. Rowe Price Investment Services, Inc. 100 East Pratt
Street Baltimore, Maryland 21202 1-800-638-5660
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the appropriate fund prospectus dated May 1, 2000,
which may be obtained from T. Rowe Price Investment Services, Inc.
("Investment Services").
Each fund's financial statements for the year ended December 31, 1999, and
the report of independent accountants are included in each fund's Annual
Report and incorporated by reference into this Statement of Additional
Information.
If you would like a prospectus or an annual or semiannual shareholder report
for a fund of which you are not a shareholder, please call 1-800-638-5660. A
prospectus with more complete information, including management fees and
expenses, will be sent to you. Please read it carefully.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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Page Page
---- ----
<S> <C> <C> <C> <C>
Capital Stock Investment Restrictions
- ------------------------------ -----------------------------------------------
Code of Ethics Legal Counsel
- ------------------------------ -----------------------------------------------
Custodian Management of
the
Funds
- ------------------------------ -----------------------------------------------
Distributor for the Net Asset Value Per Share
Funds
- ------------------------------ -----------------------------------------------
Dividends and Pricing of Securities
Distributions
- ------------------------------ -----------------------------------------------
Federal Registration Principal Holders of Securities
of Shares
- ------------------------------ -----------------------------------------------
Independent S
Accountants harehol
der Services
by Outside Parties
- ------------------------------ -----------------------------------------------
Investment Management Special Considerations
Services
- ------------------------------ -----------------------------------------------
Investment Objectives Tax Status
and Policies
- ------------------------------ -----------------------------------------------
Investment Performance Yield Information
- ------------------------------ -----------------------------------------------
</TABLE>
INVESTMENT OBJECTIVES AND POLICIES
-------------------------------------------------------------------------------
The following information supplements the discussion of each fund's
investment objectives and policies discussed in the funds' prospectus.The
date of this Statement of Additional Information is May 1, 2000.
C08-043 5/1/00
<PAGE>
Throughout this Statement of Additional Information, "the fund" is intended
to refer to each fund listed on the cover page, unless otherwise indicated.
The fund will not make a material change in its investment objectives without
obtaining shareholder approval. Unless otherwise specified, the investment
programs and restrictions of the funds are not fundamental policies. The
fund's operating policies are subject to change by each Board of Directors
without shareholder approval. However, shareholders will be notified of a
material change in an operating policy. The fund's fundamental policies may
not be changed without the approval of at least a majority of the outstanding
shares of the fund or, if it is less, 67% of the shares represented at a
meeting of shareholders at which the holders of 50% or more of the shares are
represented. References to the following are as indicated:
Investment Company Act of 1940 ("1940 Act")
Securities and Exchange Commission ("SEC")
T. Rowe Price Associates, Inc. ("T. Rowe Price")
Moody's Investors Service, Inc. ("Moody's")
Standard & Poor's Corporation ("S&P")
Internal Revenue Code of 1986 ("Code")
Rowe Price-Fleming International, Inc. ("Price-Fleming")
Spectrum Fund
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, Spectrum
Income Fund, or Spectrum 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.
Described below are the underlying T. Rowe Price funds in which the Spectrum
Funds can invest.
Income Funds
T. Rowe Price Short-Term Bond Fund, Inc.
The fund seeks a high level of income consistent with minimal fluctuation in
principal value and liquidity.
The fund will invest in a diversified portfolio of short- and
intermediate-term corporate, government, and mortgage-backed 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 total assets
will be invested in short-term bonds. The fund's 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.
Securities purchased by the fund must be rated within the four highest credit
categories (AAA, AA, A, BBB) by a national rating agency (or, if unrated, the
T. Rowe Price equivalent). The investment-grade designation includes a range
of securities from the highest rated to medium quality. Securities in the BBB
category may be more susceptible to adverse economic conditions or changing
circumstances and securities at the lower end of the BBB category have
certain speculative characteristics.
T. Rowe Price GNMA Fund
The fund seeks high 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 linked to
these securities.
2
<PAGE>
We will invest primarily in mortgage-backed securities issued by the
Government National Mortgage Association (GNMA), an agency of the Department
of Housing and Urban Development. These securities represent "pools" of
mortgage loans that are either guaranteed by the Federal Housing
Administration or the Veterans Administration. Mortgage lenders pool
individual home mortgages to back a certificate or bond, which is then sold
to investors. Interest and principal payments from the underlying mortgages
are passed through to investors.
GNMA guarantees the timely payment of interest and principal on its
securities, a guarantee backed by the U.S. Treasury. The GNMA guarantee does
not apply to the price of GNMA securities or the fund's share price, both of
which will fluctuate with market conditions.
We can also buy bills, notes, and bonds issued by the U.S. Treasury, and
other instruments, including: related futures contracts; other agency
securities backed by the full faith and credit of the U.S. government; shares
of a T. Rowe Price Treasury money fund; and GNMA-related securities such as
collateralized mortgage obligations (CMOs) and "strips," which receive only
the interest or principal portion of the underlying mortgage payments. We may
also purchase new mortgage bonds in the forward market. The fund has no
limitation on its overall maturity.
In selecting securities, fund managers may weigh the characteristics of
various types of mortgage securities and examine yield relationships in the
context of their outlook for interest rates and the economy. For example, if
rates seem likely to fall, mortgage securities expected to have below-average
prepayment rates may be purchased and assets may also be allocated to
Treasury notes or bonds, which could appreciate in that environment.
. Mortgage-Backed Securities Mortgage-backed securities are securities
representing an interest in a pool of mortgages. Mortgage lenders pool
individual home mortgages to back a certificate or bond, which is then sold
to investors. The mortgages may be of a variety of types, including
adjustable rate, conventional 30-year and 15-year fixed rate and graduated
payment. Principal and interest payments generated by the underlying
mortgages are passed through to the investors. 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
a result, if a mortgage security were trading at a premium, its total return
would be lowered by prepayments, and if a mortgage security were trading at a
discount, its total return would be increased by prepayments.) The value of
these securities also may change because of changes in the market's
perception of the creditworthiness of the federal agency that issued them. In
addition, the mortgage securities market in general may be adversely affected
by changes in governmental regulation or tax policies.
T. Rowe Price New Income Fund, Inc.
The fund seeks the highest level of income consistent with the preservation
of capital over time by investing primarily in marketable debt securities.
We will invest at least 80% of the fund's total assets in income-producing
securities, which may include U.S. government and agency obligations,
mortgage- and asset-backed securities, corporate bonds, foreign securities,
collateralized mortgage obligations (CMOs), and others, including, on
occasion, equities.
All securities purchased by the fund must be rated investment grade (AAA, AA,
A, or BBB) by at least one major credit rating agency or, if unrated, must
have a T. Rowe Price equivalent rating. Up to 15% of total assets may be
invested in "split-rated securities," or those rated investment grade by at
least one rating agency, but below investment grade by others. However, none
of the fund's remaining assets can be invested in bonds rated below
investment grade by Standard & Poor's, Moody's, or Fitch IBCA, Inc.
U.S. Treasury Long-Term Fund
The fund's investment objective is the highest level of current income
consistent with maximum credit protection. It will invest at least 85% of
total assets in U.S. Treasury securities and investments involving these
securities. The remaining assets will be invested in other securities backed
by the full faith and credit of the
3
<PAGE>
U.S. government and investments involving these securities. The fund's
dollar-weighted average maturity is expected to vary between 15 and 20 years,
but may range from 10 to 30 years.
T. Rowe Price High Yield Fund, Inc.
The fund seeks high current income and, secondarily, capital appreciation.
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 dollar-weighted average maturity (expected to be in the
eight- to 12-year range) makes its price more sensitive to broad changes in
interest rate movements than shorter-term bond funds. However, interest
rates are not the only, or necessarily the dominant, influence on the fund's
price.
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.
. 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 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.
4
<PAGE>
. 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 Summit Cash Reserves Fund
The fund, which is managed to provide a stable share price of $1.00, invests
in high-quality, U.S. dollar-denominated money market securities of U.S. and
foreign issuers. The fund's average weighted maturity will not exceed 90
days, and its yield will fluctuate with changes in short-term interest rates.
In selecting securities, fund managers may examine the relationships among
yields on various types and maturities of money market securities in the
context of their outlook for interest rates. For example, commercial paper
often offers a yield advantage over Treasury bills. And if rates are expected
to fall, longer maturities, which typically have higher yields than shorter
maturities, may be purchased to try to preserve the fund's income level.
Conversely, shorter maturities may be favored if rates are expected to rise.
Equity Funds
T. Rowe Price Growth & Income Fund, Inc.
The fund seeks to provide long-term capital growth, a reasonable level of
current income, and increasing future income through investments primarily in
dividend-paying common stocks.
Our primary focus is on capital appreciation. We will use fundamental,
bottom-up research and both growth and value approaches in identifying stocks
we believe have good prospects for capital growth over time. Among the many
characteristics we look for are seasoned management, leadership positions in
growing industries, and strong financial fundamentals. In many instances, we
analyze free cash flow because it can allow a company to increase dividends,
repurchase shares, or make acquisitions. While investments may include
midsize companies, large-capitalization companies are expected to
predominate.
In selecting growth stocks, we generally look for companies with
above-average earnings growth and a lucrative niche in the economy that
allows them to sustain earnings momentum even during times of slow economic
growth. When applying a value analysis, we seek companies with good future
prospects whose current stock prices seem undervalued relative to general
market, the industry average, or the company's historical valuation based on
earnings, cash flow, book value, or dividends.
T. Rowe Price New Era Fund, Inc.
The fund seeks to provide long-term capital growth primarily through the
common stocks of companies that own or develop natural resources and other
basic commodities, and also through the stocks of selected nonresource growth
companies.
We normally invest about two-thirds of fund assets in the common stocks of
natural resource companies whose earnings and tangible assets could benefit
from accelerating inflation. We also invest in other growth companies with
strong potential for earnings growth that do not own or develop natural
resources. The relative percentages invested in resource and nonresource
companies can vary depending on economic and monetary conditions and our
outlook for inflation. The natural resource companies held by the fund
typically own, develop, refine, service, or transport resources including
energy, metals, forest products, real estate, and other basic commodities. In
selecting natural resource stocks, we look for companies whose products can
be produced and marketed profitably when both labor costs and prices are
rising. In the mining area, for example, we might look for a company with the
ability to expand production and maintain superior exploration programs and
production facilities.
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At least half of fund assets will be invested in U.S. securities, but up to
50% of total assets may be invested in foreign securities. We may also buy
other types of securities, including futures and options in keeping with the
fund's objective.
The fund is less diversified than most stock funds and could therefore
experience sharp price declines when conditions are unfavorable to its
sector. For instance, while the fund attempts to invest in companies that may
benefit from accelerating inflation, inflation has slowed considerably in
recent years. The rate of earnings growth of natural resource companies may
be irregular since these companies are strongly affected by natural forces,
global economic cycles, and international politics. For example, stock prices
of energy companies can fall sharply when oil prices fall. Real estate
companies are influenced by interest rates and other factors.
The fund's investments in foreign securities, or even in U.S. companies with
significant overseas investments, are also subject to the risk that some
holdings may lose value because of declining foreign currencies or adverse
political or economic events overseas. While currency risk may be somewhat
reduced because many commodities markets are dollar based, the fund's
exposure to foreign political and economic risk will be heightened by
investments in companies with operations in emerging markets.
To the extent the fund uses futures and options, it is exposed to additional
volatility and potential losses.
T. Rowe Price Growth Stock Fund, Inc.
The fund seeks to provide long-term capital growth and, secondarily,
increasing dividend income through investments in the common stocks of
well-established growth companies.
We will invest at least 65% of total assets in the common stocks of a
diversified group of growth companies. We mostly seek investments in
companies that have the ability to pay increasing dividends through strong
cash flow. We generally look for companies with an above-average rate of
earnings growth and a lucrative niche in the economy that gives them the
ability to sustain earnings momentum even during times of slow economic
growth. As growth investors, we believe that when a company increases its
earnings faster than both inflation and the overall economy, the market will
eventually reward it with a higher stock price.
T. Rowe Price New Horizons Fund, Inc.
The fund seeks long-term capital growth by investing primarily in common
stocks of small, rapidly growing companies.
We will invest primarily in a diversified group of small, emerging growth
companies, preferably 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. We will not necessarily sell a position in a company that has
grown beyond the developing stage if the company still fits the fund's other
investment criteria.
When choosing stocks, T. Rowe Price analysts look for small growth companies
that:
. have effective management;
. operate in fertile growth areas;
. demonstrate effective research, product development, and marketing;
. provide efficient service;
. possess pricing flexibility; and
. employ sound financial and accounting policies.
T. Rowe Price Mid-Cap Value Fund, Inc.
The fund seeks to provide long-term capital appreciation by investing
primarily in mid-size companies that appear to be undervalued.
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We will invest at least 65% of total assets in companies whose market
capitalization (number of shares outstanding multiplied by share price) falls
within the range of companies in the S&P MidCap 400 Index. However, the fund
will not automatically sell or cease to purchase stock of a company it
already owns just because the company's market capitalization grows or falls
outside this range.
We follow a value approach in selecting investments. Our in-house research
team seeks to identify companies whose stock prices do not appear to reflect
their underlying values.
T. Rowe Price Blue Chip Growth Fund, Inc.
The fund seeks to provide long-term capital growth. Income is a secondary
objective.
We will invest 65% of total assets in the common stocks of large and
medium-sized blue chip growth companies. These are firms that, in our view,
are well-established in their industries and have the potential for
above-average earnings. We focus on companies with leading market position,
seasoned management, and strong financial fundamentals. Our investment
approach reflects our belief that solid company fundamentals (with emphasis
on strong growth in earnings per share or operating cash flow) combined with
a positive industry outlook will ultimately reward investors with strong
investment performance. Some of the companies we target will have good
prospects for dividend growth.
T. Rowe Price Equity Income Fund
The fund seeks to provide substantial dividend income as well as long-term
growth of capital through investments in the common stocks of established
companies.
We will normally invest at least 65% of the fund's total assets in the common
stocks of well-established companies paying above-average dividends.
We typically employ a "value" approach in selecting investments. Our in-house
research team seeks companies that appear to be undervalued by various
measures and may be temporarily out of favor, but have good prospects for
capital appreciation and dividend growth.
While most assets will be invested in U.S. common stocks, other securities
may also be purchased, including foreign stocks, futures, and options, in
keeping with fund objectives.
International Funds
T. Rowe Price European Stock Fund
The fund seeks long-term growth of capital through investments primarily in
the common stocks of European companies. Current income is a secondary
objective.
Normally, at least five countries will be represented in the portfolio. The
fund expects to invest substantially all of its assets in the countries
listed below, as well as others as their markets develop:
. Primary Emphasis: Austria, Denmark, Finland, France, Germany, Ireland,
Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland,
and United Kingdom.
. Others: Belgium, Czech Republic, Greece, Hungary, Israel, Poland, and
Turkey.
T. Rowe Price New Asia Fund
The fund seeks long-term growth of capital through investments in companies
located (or with primary operations) in Asia (excluding Japan).
Normally, the fund expects to invest substantially all of its assets in the
countries listed next, as well as others as their markets develop:
. Primary Emphasis: China, Hong Kong, Indonesia, India, Malaysia, Philippines,
Singapore, South Korea, Taiwan, and Thailand.
. Others: Pakistan and Vietnam.
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T. Rowe Price Japan Fund
The fund seeks long-term growth of capital through investments in common
stocks of companies located (or with primary operations) in Japan.
Normally, the fund expects to invest substantially all of its assets across a
wide range of Japanese industries and companies. Stock selection reflects a
growth style.
T. Rowe Price Emerging Markets Stock Fund
The fund seeks long-term growth of capital through investments primarily in
the common stocks of companies located (or with primary operations) in
emerging markets.
Normally, the fund expects to invest substantially all of its assets across
emerging markets in Latin America, Asia, Europe, Africa, and the Middle East.
An emerging market includes any country defined as emerging or developing by
the International Bank for Reconstruction and Development (World Bank), the
International Finance Corporation, or the United Nations.
Countries in which the fund may invest are listed below and others will be
added as opportunities develop:
. Asia: China, Hong Kong, Indonesia, India, Korea, Malaysia, Pakistan,
Philippines, Singapore, Sri Lanka, Taiwan, Thailand, and Vietnam.
. Latin America: Argentina, Belize, Brazil, Chile, Colombia, Mexico, Panama,
Peru, and Venezuela.
. Europe: Croatia, Czech Republic, Estonia, Greece, Hungary, Latvia,
Lithuania, Poland, Romania, Russia, Slovakia, Slovenia, and Turkey.
. Africa and the Middle East: Botswana, Egypt, Israel, Jordan, Mauritius,
Morocco, Nigeria, South Africa, Tunisia, and Zimbabwe.
T. Rowe Price Latin America Fund
The fund seeks long-term growth of capital through investments primarily in
the common stocks of companies located (or with primary operations) in Latin
America.
Normally, we expect to invest substantially all of the fund's assets in Latin
American companies. At least four countries should be represented at any
time. Investments may be made in the countries below, as well as others as
their markets develop:
. Primary Emphasis: Mexico, Brazil, Chile, Argentina, Venezuela, and Peru.
. Others: Belize, Colombia, Ecuador, and Guatemala.
T. Rowe Price International Bond Fund
The fund seeks to provide high current income and capital appreciation by
investing primarily in high-quality, nondollar-denominated bonds outside the
U.S.
Price-Fleming, the Fund's investment manager, bases its investment decisions
on fundamental market factors, currency trends, and credit quality. The fund
generally invests in countries where the combination of fixed income returns
and currency exchange rates appears 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 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.
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T. Rowe Price Emerging Markets Bond Fund
The fund seeks to provide high income and capital appreciation.
We expect to invest at least 65% (and potentially all) of the fund's total
assets in the government or corporate debt securities of emerging nations.
Fund holdings may include the lowest-rated bonds, including those in default.
T. Rowe Price International Stock Fund
The fund seeks long-term growth of capital through investments primarily in
the common stocks of established, non-U.S. companies.
We expect to invest substantially all of the fund's assets outside the U.S.
and to diversify broadly among developed and emerging countries throughout
the world. Stock selection reflects a growth style. We may purchase the
stocks of companies of any size, but our focus will typically be on large
and, to a lesser extent, medium-sized companies.
T. Rowe Price International Discovery Fund
The fund seeks long-term growth of capital through investments primarily in
the common stocks of rapidly growing, small to medium-sized companies outside
the U.S.
We expect to invest substantially all of the fund's assets outside the U.S.
and to diversify broadly among developed and emerging countries throughout
the world. The fund will emphasize small to medium-sized companies. Depending
on conditions, the fund's portfolio should be composed of at least 10
countries and 100 different companies.
Risk Factors of Foreign Investing There are special risks in foreign
investing. Certain of these risks are inherent in any international mutual
fund while others relate more to the countries in which the fund will invest.
Many of the risks are more pronounced for investments in developing or
emerging market countries, such as many of the countries of Asia, Latin
America, Eastern Europe, Russia, Africa, and the Middle East. Although there
is no universally accepted definition, a developing country is generally
considered to be a country which is in the initial stages of its
industrialization cycle with a per capita gross national product of less than
$8,000.
. Political and Economic Factors Individual foreign economies of some
countries differ favorably or unfavorably from the United States' economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position. The
internal politics of some foreign countries are not as stable as in the
United States. For example, in 1991, the existing government in Thailand was
overthrown in a military coup. In 1994-1995, the Mexican peso plunged in
value setting off a severe crisis in the Mexican economy. Asia is still
coming to terms with its own crisis and recessionary conditions sparked off
by widespread currency weakness in late 1997. In 1998, there was substantial
turmoil in markets throughout the world. In 1999, the democratically elected
government of Pakistan was overthrown by a military coup. The Russian
government also defaulted on all its domestic debt. In addition, significant
external political risks currently affect some foreign countries. Both Taiwan
and China still claim sovereignty of one another and there is a demilitarized
border and hostile relations between North and South Korea.
Governments in some 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 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 fund's assets denominated in that currency.
Such changes will also affect the fund's income. Generally, when a given
currency appreciates against the dollar (the dollar weakens) the value of the
fund's securities denominated in that currency will rise. When a given
currency depreciates
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against the dollar (the dollar strengthens) the value of the fund's
securities denominated in that currency would be expected to decline.
. Investment and Repatriation Restrictions Foreign investment in the
securities markets of certain foreign countries is restricted or controlled
in varying degrees. These restrictions limit at times and preclude investment
in certain of such countries and increase the cost and expenses of the
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. In 1998, the government of Malaysia imposed
currency controls which effectively made it impossible for foreign investors
to convert Malaysian ringgits to foreign currencies.
. Market Characteristics It is contemplated that most foreign securities will
be purchased in over-the-counter markets or on securities exchanges located
in the countries in which the respective principal offices of the issuers of
the various securities are located, if that is the best available market.
Investments in certain markets may be made through American Depository
Receipts ("ADRs") and Global Depository Receipts ("GDRs") traded in the
United States or on foreign exchanges. Foreign securities markets are
generally not as developed or efficient as, and more volatile than, those in
the United States. While growing in volume, they usually have substantially
less volume than U.S. markets and the fund's portfolio securities may be less
liquid and subject to more rapid and erratic price movements than securities
of comparable U.S. companies. Securities may trade at price/earnings
multiples higher than comparable United States securities and such levels may
not be sustainable. Commissions on foreign securities are generally higher
than commissions on United States exchanges, and while there is an increasing
number of overseas securities markets that have adopted a system of
negotiated rates, a number are still subject to an established schedule of
minimum commission rates. There is generally less government supervision and
regulation of foreign securities exchanges, brokers, and listed companies
than in the United States. Moreover, settlement practices for transactions in
foreign markets may differ from those in United States markets. Such
differences include delays beyond periods customary in the United States and
practices, such as delivery of securities prior to receipt of payment, which
increase the likelihood of a "failed settlement." Failed settlements can
result in losses to the fund.
. Investment Funds The 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 fund's shareholders will bear not only their proportionate share of the
expenses of the fund (including operating expenses and the fees of the
investment manager), but also will bear indirectly similar expenses of the
underlying investment funds. In addition, the securities of these investment
funds may trade at a premium over their net asset value.
. Information and Supervision There is generally less publicly available
information about foreign companies comparable to reports and ratings that
are published about companies in the United States. Foreign companies are
also generally not subject to uniform accounting, auditing and financial
reporting standards, practices, and requirements comparable to those
applicable to United States companies. It also is often more difficult to
keep currently informed of corporate actions which affect the prices of
portfolio securities.
. Taxes The dividends and interest payable on certain of the international
funds' foreign portfolio securities may be subject to foreign withholding
taxes, thus reducing the net amount of income available for distribution to
the fund's shareholders.
. Other With respect to certain foreign countries, especially developing and
emerging ones, there is the possibility of adverse changes in investment or
exchange control regulations, expropriation or confiscatory
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taxation, limitations on the removal of funds or other assets of the funds,
political or social instability, or diplomatic developments which could
affect investments by U.S. persons in those countries.
. Small Companies Small companies may have less experienced management and
fewer management resources than larger firms. A smaller company may have
greater difficulty obtaining access to capital markets, and may pay more for
the capital it obtains. In addition, smaller companies are more likely to be
involved in fewer market segments, making them more vulnerable to any
downturn in a given segment. Some of these factors may also apply, to a
lesser extent, to medium size companies.
. Eastern Europe and Russia Changes occurring in Eastern Europe and Russia
today could have long-term potential consequences. As restrictions fall, this
could result in rising standards of living, lower manufacturing costs,
growing consumer spending, and substantial economic growth. However,
investment in most countries of Eastern Europe and Russia is highly
speculative at this time. Political and economic reforms are too recent to
establish a definite trend away from centrally planned economies and
state-owned industries. The collapse of the ruble from its crawling peg
exchange rate against the U.S. dollar has set back the path of reform for
several years. In many of the countries of Eastern Europe and Russia, there
is no stock exchange or formal market for securities. Such countries may also
have government exchange controls, currencies with no recognizable market
value relative to the established currencies of western market economies,
little or no experience in trading in securities, no financial reporting
standards, a lack of a banking and securities infrastructure to handle such
trading, and a legal tradition which does not recognize rights in private
property. In addition, these countries may have national policies which
restrict investments in companies deemed sensitive to the country's national
interest. Further, the governments in such countries may require governmental
or quasi-governmental authorities to act as custodian of the fund's assets
invested in such countries, and these authorities may not qualify as a
foreign custodian under the 1940 Act and exemptive relief from such Act may
be required. All of these considerations are among the factors which could
cause significant risks and uncertainties to investment in Eastern Europe and
Russia. The fund will only invest in a company located in, or a government
of, Eastern Europe and Russia, if it believes the potential return justifies
the risk.
. Latin America
Inflation Most Latin American countries have experienced, at one time or
another, severe and persistent levels of inflation, including, in some cases,
hyperinflation. This has, in turn, led to high interest rates, extreme
measures by governments to keep inflation in check, and a generally
debilitating effect on economic growth. Although inflation in many countries
has lessened, there is no guarantee it will remain at lower levels.
Political Instability The political history of certain Latin American
countries has been characterized by political uncertainty, intervention by
the military in civilian and economic spheres, and political corruption. Such
developments, if they were to reoccur, could reverse favorable trends toward
market and economic reform, privatization, and removal of trade barriers, and
result in significant disruption in securities markets.
Foreign Currency Certain Latin American countries may experience sudden and
large adjustments in their currency which, in turn, can have a disruptive and
negative effect on foreign investors. For example, in late 1994 the value of
the Mexican peso lost more than one-third of its value relative to the
dollar. In 1999, the Brazilian real lost 30% of its value against the U.S.
dollar. Certain Latin American countries may impose restrictions on the free
conversion of their currency into foreign currencies, including the U.S.
dollar. There is no significant foreign exchange market for many currencies
and it would, as a result, be difficult for the fund to engage in foreign
currency transactions designed to protect the value of the fund's interests
in securities denominated in such currencies.
Sovereign Debt A number of Latin American countries are among the largest
debtors of developing countries. There have been moratoria on, and
reschedulings of, repayment with respect to these debts. Such events can
restrict the flexibility of these debtor nations in the international markets
and result in the imposition of onerous conditions on their economies.
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. Japan
The Japan Fund's concentration of its investments in Japan means the fund
will be more dependent on the investment considerations discussed above and
may be more volatile than a fund which is broadly diversified geographically.
To the extent any of the other funds also invest in Japan, such investments
will be subject to these same factors. Additional factors relating to Japan
include the following:
Japan has experienced earthquakes and tidal waves of varying degrees of
severity, and the risks of such phenomena, and damage resulting therefrom,
continue to exist. Japan also has one of the world's highest population
densities. A significant percentage of the total population of Japan is
concentrated in the metropolitan areas of Tokyo, Osaka, and Nagoya.
Economy The Japanese economy languished for much of the last decade. Lack of
effective governmental action in the areas of tax reform to reduce high tax
rates, banking regulation to address enormous amounts of bad debt, and
economic reforms to attempt to stimulate spending are among the factors cited
as possible causes of Japan's economic problems. The yen has had a history of
unpredictable and volatile movements against the dollar; a weakening yen
hurts U.S. investors holding yen-denominated securities. Finally, the
Japanese stock market has experienced wild swings in value and has often been
considered significantly overvalued.
Energy Japan has historically depended on oil for most of its energy
requirements. Almost all of its oil is imported, the majority from the Middle
East. In the past, oil prices have had a major impact on the domestic
economy, but more recently Japan has worked to reduce its dependence on oil
by encouraging energy conservation and use of alternative fuels. In addition,
a restructuring of industry, with emphasis shifting from basic industries to
processing and assembly type industries, has contributed to the reduction of
oil consumption. However, there is no guarantee this favorable trend will
continue.
Foreign Trade Overseas trade is important to Japan's economy. Japan has few
natural resources and must export to pay for its imports of these basic
requirements. Because of the concentration of Japanese exports in highly
visible products such as automobiles, machine tools and semiconductors and
the large trade surpluses ensuing therefrom, Japan has had difficult
relations with its trading partners, particularly the U.S. It is possible
that trade sanctions or other protectionist measures could impact Japan
adversely in both the short term and long term.
. Asia (ex-Japan)
Political Instability The political history of some Asian countries has been
characterized by political uncertainty, intervention by the military in
civilian and economic spheres, and political corruption. Such developments,
if they continue to occur, could reverse favorable trends toward market and
economic reform, privatization and removal of trade barriers and result in
significant disruption in securities markets.
Foreign Currency Certain Asian countries may have managed currencies which
are maintained at artificial levels to the U.S. dollar rather than at levels
determined by the market. This type of system can lead to sudden and large
adjustments in the currency which, in turn, can have a disruptive and
negative effect on foreign investors. For example, in 1997 the Thai baht lost
46.75% of its value against the U.S. dollar. Certain Asian countries also may
restrict the free conversion of their currency into foreign currencies,
including the U.S. dollar. There is no significant foreign exchange market
for certain currencies and it would, as a result, be difficult for the fund
to engage in foreign currency transactions designed to protect the value of
the fund's interests in securities denominated in such currencies.
Debt A number of Asian companies are highly dependent on foreign loans for
their operation. In 1997, several Asian countries were forced to negotiate
loans from the International Monetary Fund ("IMF") and others that impose
strict repayment term schedules and require significant economic and
financial restructuring.
Interfund Borrowing and Lending
The fund is a party to an exemptive order received from the SEC on December
8, 1998, amended on November 23, 1999, that permits it to borrow money from
and/or lend money to other funds in the T. Rowe Price complex ("Price
Funds"). All loans are set at an interest rate between the rate charged on
overnight
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repurchase agreements and short-term bank loans. All loans are subject to
numerous conditions designed to ensure fair and equitable treatment of all
participating funds. The program is subject to the oversight and periodic
review of the Boards of Directors of the Price Funds.
SPECIAL CONSIDERATIONS
-------------------------------------------------------------------------------
Prospective investors should consider that certain underlying Price funds
(the "Price funds") may engage in the following:
Foreign Currency Transactions Enter into foreign currency transactions. Since
investments in foreign companies will usually involve currencies of foreign
countries, and the international 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.
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 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.
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.
FOR MORE INFORMATION ABOUT AN UNDERLYING PRICE FUND, CALL 1-800-638-5660
(1-410-345-2308).
INVESTMENT RESTRICTIONS
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Fundamental policies may not be changed without the approval of the lesser of
(1) 67% of the fund's shares present at a meeting of shareholders if the
holders of more than 50% of the outstanding shares are present in person or
by proxy or (2) more than 50% of a fund's outstanding shares. Other
restrictions in the form of operating policies are subject to change by the
fund's Board of Directors without shareholder approval. Any investment
restriction which involves a maximum percentage of securities or assets shall
not be considered to be violated unless an excess over the percentage occurs
immediately after, and is caused by, an acquisition of
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securities or assets of, or borrowings by, the fund. Calculation of the
fund's total assets for compliance with any of the following fundamental or
operating policies or any other investment restrictions set forth in the
fund's prospectus or Statement of Additional Information will not include
cash collateral held in connection with securities lending activities.
Fundamental Policies
As a matter of fundamental policy, the fund may not:
(1) Borrowing Borrow money, except the 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. The 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. Interest
paid on any such borrowings will reduce net investment income;
(2) Commodities (a) Spectrum Growth and Spectrum Income Funds may not
purchase or sell commodities or commodity or futures contracts;
(b)Spectrum International Fund may not purchase or sell physical
commodities; except that it may enter into futures contracts and options
thereon.
(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 that the fund may be deemed to be an underwriter within the
meaning of the 1933 Act in connection with the purchase and sale of its
portfolio securities in the ordinary course of pursuing its investment
program..
Operating Policies
As a matter of operating policy, the 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;
(3) Oil and Gas Programs Purchase participations or other direct interests
in, or enter into leases with respect to oil, gas, or other mineral
exploration or development programs if, as a result thereof, more than 5%
of the value of the total assets of the fund would be invested in such
programs;
(4) Options Invest in options;
14
<PAGE>
(5) 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;
(6) 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; or
(7) Warrants Invest in warrants.
Pursuant to an Exemptive Order issued by the SEC (Investment Company Act
Release No. IC-21425, October 18, 1995): (i) there is no limit on the amount
the fund 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 the prospectus, may invest more than 5% of
its assets in any one or more of the Price funds, 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 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, Short-Term Bond, High Yield,
Latin America, and International Bond Funds) 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
America countries (at times more than 25% of total assets). The New Income
and Short-Term Bond Funds 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, International Bond, and High Yield Funds 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.
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 Agreement 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
directors and the officers of Spectrum Fund, T. Rowe Price, and 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, Price-Fleming, or
the Fund as defined under Section 2(a)(19) of the 1940 Act are
15
<PAGE>
noted with an asterisk (*). Mr. Riepe is referred to as an inside director by
virtue of his directorship and employment by T. Rowe Price.
Independent Directors/(a)/
JEFFREY H. DONAHUE, 4/9/46, 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, 7/30/37, Partner, law firm of Stewart, Plant &
Blumenthal; (formerly until 4/91) Partner, law firm of Semmes, Bowen &
Semmes, Baltimore, Maryland; Address: Suite 910, Seven St. Paul Street,
Baltimore, Maryland 21202
(a) Unless otherwise indicated, the Independent Directors have been at their
respective companies for at least five years.
Inside Directors/Officers
* JAMES S. RIEPE, 6/25/43, Chairman of the Board-Vice Chairman of the Board,
Managing Director, and Director, T. Rowe Price; Chairman of the Board, T.
Rowe Price Investment Services, Inc., T. Rowe Price Services, Inc., and T.
Rowe Price Retirement Plan Services, Inc.; Chairman of the Board, President,
and Trust Officer, T. Rowe Price Trust Company; Director, Price-Fleming and
General Re Corporation
* M. DAVID TESTA, 4/22/44, Director and President-Chairman of the Board and
Director, Price-Fleming; Vice Chairman of the Board, Chief Investment
Officer, Director, and Managing Director, T. Rowe Price; Vice President and
Director, T. Rowe Price Trust Company; Chartered Financial Analyst
EDMUND M. NOTZON, 10/1/45, President-Managing Director, T. Rowe Price; Vice
President, T. Rowe Price Trust Company; Chartered Financial Analyst
STEPHEN W. BOESEL, 12/28/44, Vice President-Managing Director, T. Rowe Price;
Vice President, T. Rowe Price Trust Company and T. Rowe Price Retirement Plan
Services, Inc.
JOHN R. FORD, 11/25/57, Vice President-Executive Vice President,
Price-Fleming; Chartered Financial Analyst
HENRY H. HOPKINS, 12/23/42, Vice President-Vice President, Price-Fleming and
T. Rowe Price Retirement Plan Services, Inc.; Director and Managing Director,
T. Rowe Price; Vice President and Director, T. Rowe Price Investment
Services, Inc., T. Rowe Price Services, Inc. and T. Rowe Price Trust Company
GEORGE A. MURNAGHAN, 5/1/56, Vice President-Managing Director, T. Rowe Price;
Executive Vice President, Price-Fleming; Vice President, T. Rowe Price Trust
Company and T. Rowe Price Investment Services, Inc.
WILLIAM T. REYNOLDS, 5/26/48, Vice President-Director and Managing Director,
T. Rowe Price; Chartered Financial Analyst
BRIAN C. ROGERS, 6/27/55, Vice President-Director and Managing Director, T.
Rowe Price; Vice President, T. Rowe Price Trust Company; Chartered Financial
Analyst
M. DAVID TESTA, 4/22/44, Vice President-Chairman of the Board and Director,
Price-Fleming; Vice Chairman of the Board, Chief Investment Officer, and
Managing Director, T. Rowe Price; Vice President and Director, T. Rowe Price
Trust Company; Chartered Financial Analyst
MARTIN G. WADE, 2/16/43, Vice President-Director, Chief Investment Officer,
and Vice Chairman of the Board, Price-Fleming; Director, Fleming Holdings
Limited; Director, Robert Fleming Asset Management; Address: 25 Copthall
Avenue, London, EC2R 7DR, England
JUDITH B. WARD, 10/12/62, Vice President-Employee, T. Rowe Price
DAVID J.L. WARREN, 4/14/57, Vice President-Executive Vice President,
Price-Fleming
PATRICIA B. LIPPERT, 1/12/53, Secretary-Assistant Vice President, T. Rowe
Price and T. Rowe Price Investment Services, Inc.
16
<PAGE>
CARMEN F. DEYESU, 8/1/41, Treasurer-Vice President, T. Rowe Price, T. Rowe
Price Services, Inc., and T. Rowe Price Trust Company
DAVID S. MIDDLETON, 1/18/56, Controller-Vice President, T. Rowe Price and T.
Rowe Price Trust Company
JOSEPH A. CRUMBLING, 11/12/61, Assistant Vice President-Vice President, T.
Rowe Price and T. Rowe Price Trust Company
INGRID I. VORDEMBERGE, 9/27/35, Assistant Vice President-Employee, T. Rowe
Price
Compensation Table
The funds do not pay pension or retirement benefits to their independent
officers or directors. Also, any director of the funds who is an officer or
employee of T. Rowe Price or Price-Fleming does not receive any remuneration
from the funds.
<TABLE>
<CAPTION>
Name of Person, Aggregate Compensation from Total Compensation from Fund and
Position Fund(a) Fund Complex Paid to Directors(b)
- -------------------------------------- -------------------------------------------- ---------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<C> <S> <S>
Growth Fund
Jeffrey H. Donahue, Director $11,421 $25,007
A. MacDonough Plant, Director 11,421 25,007
- -------------------------------------------------------------------------------------------------------------------------
Income Fund
Jeffrey H. Donahue, Director $10,901 $25,007
A. MacDonough Plant, Director 10,901 25,007
- -------------------------------------------------------------------------------------------------------------------------
International Fund
Jeffrey H. Donahue, Director $2,686 $25,007
A. MacDonough Plant, Director 2,686 25,007
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Amounts in this column are based on accrued compensation for calendar
year 1999.
(b) Amounts in this column are based on compensation received from January
1, 1999 to December 31, 1999. The T. Rowe Price complex included 88 funds
as of December 31, 1999.
The fund's Executive Committee, consisting of the fund's interested
directors, has been authorized by its respective Board of Directors to
exercise all powers of the Board to manage the funds in the intervals between
meetings of the Board, except the powers prohibited by statute from being
delegated.
PRINCIPAL HOLDERS OF SECURITIES
-------------------------------------------------------------------------------
As of the date of the prospectus, the officers and directors of the fund, as
a group, owned less than 1% of the outstanding shares of the fund.
As of April 1, 2000, no shareholder beneficially owned more than 5% of the
outstanding shares of the Spectrum Growth Fund.
As of April 1, 2000, the following shareholder beneficially owned more than
5% of the outstanding shares of the Spectrum Income Fund: Manulife Financial
USA, 200 Bloor Street East, 7E Floor, Toronto, Ontario, Canada M4W 1E5.
As of April 1, 2000, the following shareholder beneficially owned more than
5% of the outstanding shares of the Spectrum International Fund: T. Rowe
Price Associates Foundation, Inc., 100 East Pratt Street, Baltimore, Maryland
21202-1009.
17
<PAGE>
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 SEC (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 a Special Servicing
Agreement described below as well as certain undertakings made by T. Rowe
Price, under its Investment Management Agreement with Spectrum Growth and
Spectrum Income Funds and Price-Fleming under its Investment Management
Agreement with Spectrum International 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 the 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 Fund, the underlying funds, Price-Fleming, and T. Rowe Price.
Each Agreement provides that, if the Board of Directors of any underlying
Price fund determines that such underlying fund's share of the aggregate
expenses of Spectrum Fund is less than the estimated savings to the
underlying Price fund from the operation of Spectrum Fund, the underlying
Price fund will bear those expenses in proportion to the average daily value
of its shares owned by Spectrum Fund, provided further that no underlying
Price fund will bear such expenses in excess of the estimated savings to it.
Such savings are expected to result primarily from the elimination of
numerous separate shareholder accounts which are or would have been invested
directly in the underlying Price funds and the resulting reduction in
shareholder servicing costs. Although such cost savings are not certain, the
estimated savings to the underlying Price funds generated by the operation of
Spectrum Fund are expected to be sufficient to offset most, if not all, of
the expenses incurred by Spectrum Fund.
Each Special Servicing Agreement also gives authority to Spectrum Fund to
utilize the Price name so long as (1) the Special Servicing Agreement is in
effect, and (2) the assets of the funds 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 Agreements provide 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, with respect to Spectrum Income and
Spectrum Growth, and Price-Fleming, with respect to Spectrum International,
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
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 or Price-Fleming
as the case may be, provides the fund with discretionary investment services.
Specifically, T. Rowe Price and Price-Fleming are responsible for supervising
and directing the investments of the fund in accordance with the fund's
investment objectives, program, and restrictions as provided in its
prospectus and this Statement of Additional Information. T. Rowe Price and
Price-Fleming are also responsible for effecting all security transactions on
18
<PAGE>
behalf of the fund, including the negotiation of commissions and the
allocation of principal business and portfolio brokerage. However, it should
be understood that the fund will invest its 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 the fund with certain
corporate administrative services, including: maintaining the fund's
corporate existence and corporate records; registering and qualifying fund
shares under federal laws; monitoring the financial, accounting, and
administrative functions of the fund; maintaining liaison with the agents
employed by the fund such as the fund's custodian and transfer agent;
assisting the fund in the coordination of such agents' activities; and
permitting T. Rowe Price's and Price-Fleming's employees to serve as
officers, directors, and committee members of the 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.
On April 11, 2000, T. Rowe Price Associates, Inc. ("T. Rowe Price") entered
into an agreement with Robert Fleming Holdings, Ltd. and other related
companies (collectively "Flemings") to purchase Flemings's 50% interest in
Rowe Price-Fleming International, Inc. ("RPFI"), the investment adviser to
the funds. As a result of the purchase, T. Rowe Price will own all of RPFI
and have the right to elect all of its directors. The transaction is subject
to the approval of several regulatory bodies outside the United States but,
barring any unexpected developments, should be finalized no later than
December 31, 2000. Because the transaction may be deemed to be a change in
control of RPFI that would result in the termination of the investment
management agreements between RPFI and the funds, we intend to seek the
approval of the boards of directors and shareholders of the funds of new
investment management agreements with RPFI. It is anticipated that any new
investment management agreements would be identical in all material respects
to the existing agreements with RPFI. We expect to hold shareholder meetings
to vote on the new agreements in the second half of this year. Research
agreements between RPFI and Flemings also will cease at the time the
transaction becomes final. At that time, the parties may enter into a
transition agreement under which research and other services will be provided
to RPFI by Flemings.
Management Fees of Underlying Price Funds
The underlying Price funds pay 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 next.
The monthly Group Fee ("Monthly Group Fee") is the sum of the daily Group Fee
accruals ("Daily Group Fee Accruals") for each month. The Daily Group Fee
Accrual for any particular day is computed by multiplying the Price funds'
group fee accrual as determined below ("Daily Price Funds' Group Fee
Accrual") by the ratio of the Price fund's net assets for that day to the sum
of the aggregate net assets of the Price funds for that day. The Daily Price
Funds' Group Fee Accrual for any particular day is calculated by multiplying
the fraction of one (1) over the number of calendar days in the year by the
annualized Daily Price Funds' Group Fee Accrual for that day as determined in
accordance with the following schedule:
<TABLE>
Price Funds' Annual Group Base Fee Rate for Each
Level of Assets
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
0.480% First $1 billion 0.360% Next $2 billion 0.310% Next $16 billion
------------------------------------------------------------------------------
0.450% Next $1 billion 0.350% Next $2 billion 0.305% Next $30 billion
------------------------------------------------------------------------------
0.420% Next $1 billion 0.340% Next $5 billion 0.300% Next $40 billion
------------------------------------------------------------------------------
0.390% Next $1 billion 0.330% Next $10 billion 0.295% Thereafter
------------------------------------------------------------------------------
0.370% Next $1 billion 0.320% Next $10 billion
</TABLE>
19
<PAGE>
For the purpose of calculating the Group Fee, the Price funds include all the
mutual funds distributed by Investment Services, (excluding the T. Rowe Price
Spectrum Funds, and any institutional, index, or private label mutual funds).
For the purpose of calculating the Daily Price Funds' Group Fee Accrual for
any particular day, the net assets of each Price Fund are determined in
accordance with the funds' prospectus as of the close of business on the
previous business day on which the fund was open for business.
The monthly Fund Fee ("Monthly Fund Fee") is the sum of the daily Fund Fee
accruals ("Daily Fund Fee Accruals") for each month. The Daily Fund Fee
Accrual for any particular day is computed by multiplying the fraction of one
(1) over the number of calendar days in the year by the individual Fund Fee
Rate and multiplying this product by the net assets of the fund for that day,
as determined in accordance with the fund's prospectus as of the close of
business on the previous business day on which the fund was open for
business. The individual fund fees and total management fees of the
underlying Price funds are listed in the following chart:
<TABLE>
<CAPTION>
Fund Individual Fee as a Percentage Total Management Fee Paid
---- ------------------------------ -------------------------
- ------------------------ of Fund Net Assets
------------------
-----------------------------------------------------------
<S> <C> <C>
Blue Chip Growth 0.30% 0.62%
Emerging Markets Bond 0.45 0.77
Emerging Markets Stock 0.75 1.07
Equity Income 0.25 0.57
European Stock 0.50 0.82
GNMA 0.15 0.47
Growth & Income 0.25 0.57
Growth Stock 0.25 0.57
High Yield 0.30 0.62
International Bond 0.35 0.67
International
Discovery 0.75 1.07
International Stock 0.35 0.67
Japan 0.50 0.82
Latin America 0.75 1.07
Mid-Cap Value 0.35 0.67
New Asia 0.50 0.82
New Era 0.25 0.57
New Horizons 0.35 0.67
New Income 0.15 0.47
Short-Term Bond 0.10 0.42
Summit Cash Reserves N/A 0.45
U.S. Treasury 0.05 0.37
Long-Term
- -----------------------------------------------------------------------------------
</TABLE>
Based on combined Price Funds' assets of over $106 billion at December 31,
1999, the Group Fee was 0.32%. The total combined management fee for each of
the underlying Price funds would have been an annual rate as shown above.
The portfolio turnover rates for each Fund for the years ended 1999, 1998,
and 1997, were as follows:
<TABLE>
<CAPTION>
Fund 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C>
Spectrum Growth 20.3% % %
Spectrum Income 18.6
Spectrum International
- --------------------------------------------------------------------------
</TABLE>
20
<PAGE>
DISTRIBUTOR FOR THE FUNDS
-------------------------------------------------------------------------------
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, Growth, and International Funds. Investment Services is
registered as a broker-dealer under the Securities Exchange Act of 1934 and
is a member of the National Association of Securities Dealers, Inc. The
offering of Spectrum Fund's shares is continuous.
Investment Services is located at the same address as the Spectrum Fund and
T. Rowe Price-100 East Pratt Street, Baltimore, Maryland 21202.
Investment Services serves as distributor to the Spectrum Fund, on behalf of
the Income, Growth, and International Funds, pursuant to an Underwriting
Agreement ("Underwriting Agreement"), which provides that the fund will pay
all fees and expenses in connection with: necessary state filings; preparing,
setting in type, printing, and mailing its prospectuses and reports to
shareholders; and issuing its shares, including expenses of confirming
purchase orders.
The Underwriting Agreement provides that Investment Services will pay all
fees and expenses in connection with: printing and distributing prospectuses
and reports for use in offering and selling fund shares; preparing, setting
in type, printing, and mailing all sales literature and advertising;
Investment Services' federal and state registrations as a broker-dealer; and
offering and selling shares for each fund, except for those fees and expenses
specifically assumed by the fund. Investment Services' expenses are paid by
T. Rowe Price.
Investment Services acts as the agent of the Spectrum Fund, on behalf of the
Income, Growth, and International Funds, in connection with the sale of the
shares for each fund in the various states 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
-------------------------------------------------------------------------------
The Underlying Funds of the Spectrum International Fund have entered into a
Custodian Agreement with The Chase Manhattan Bank, N.A., London, pursuant to
which portfolio securities which are purchased outside the United States are
maintained in the custody of various foreign branches of The Chase Manhattan
Bank and such other custodians, including foreign banks and foreign
securities depositories as are approved in accordance with regulations under
the 1940 Act. State Street Bank's main office is at 225 Franklin Street,
Boston, Massachusetts 02110. The address for The Chase Manhattan Bank, N.A.,
London is Woolgate House, Coleman Street, London, EC2P 2HD, England.
State Street Bank and Trust Company, under an agreement with Spectrum Fund,
on behalf of the Income, Growth, and International Funds, is the custodian
for the fund's U.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 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.
SERVICES BY OUTSIDE PARTIES
-------------------------------------------------------------------------------
The shares of some fund shareholders are held in omnibus accounts maintained
by various third parties, including retirement plan sponsors, insurance
companies, banks, and broker-dealers. The fund has adopted an administrative
fee payment ("AFP") program that authorizes the fund to make payments to
these third parties. The payments are made for transfer agent, recordkeeping,
and other administrative services provided by, or on behalf of, the third
parties with respect to such shareholders and the omnibus accounts. Under the
AFP program, the funds paid the amounts set forth below to various third
parties in 1999.
21
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Blue Chip Growth Fund $ 597,491.11
Dividend Growth Fund 17,614.87
Equity Income Fund 1,354,078.59
Emerging Markets Bond -
Emerging Markets Stock -
European Stock Fund 5,698.23
GNMA -
Growth & Income Fund 605,404.26
Growth Stock Fund 139,865.43
High Yield 31006.75
International Bond 266.12
International Discovery Fund 23,430.79
International Stock Fund 1,563,631.05
Japan -
Latin America Fund 25,952.64
New Asia Fund 36,371.44
New Era Fund 22,333.50
New Income -
New Horizons Fund 645,172.38
Short-Term Bond -
Summit Cash Reserves -
U.S. Treasury Long-Term -
- ----------------------------------------------------
</TABLE>
CODE OF ETHICS
-------------------------------------------------------------------------------
The fund's investment adviser (T. Rowe Price) has a written Code of Ethics
which requires all Access Persons to obtain prior clearance before engaging
in personal securities transactions. In addition, all Access Persons must
report their personal securities transactions within 10 days of their
execution. Access Persons will not be permitted to effect transactions in a
security: if there are pending client orders in the security; the security
has been purchased or sold by a client within seven calendar days; the
security is being considered for purchase for a client; a change has occurred
in T. Rowe Price's rating of the security within seven calendar days prior to
the date of the proposed transaction; or the security is subject to internal
trading restrictions. In addition, Access Persons are prohibited from
profiting from short-term trading (e.g., purchases and sales involving the
same security within 60 days). Any person becoming an Access Person must file
a statement of personal securities holdings within 10 days of this date. All
Access Persons are required to file an annual statement with respect to their
personal securities holdings. Any material violation of the Code of Ethics is
reported to the 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 closing net asset value per share of each underlying Price fund on the
day of valuation. Assets for which the valuation procedures are inappropriate
or are deemed not to reflect fair value are stated at fair value as
determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors. For the Growth Fund,
short-term money market investments are valued at amortized cost in local
currency which, when
22
<PAGE>
combined with accrued interest, approximates market value. For the
International Fund, short-term debt securities are valued at amortized cost,
which approximates fair 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. Also, 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 affected by trading on days when
shareholders cannot make transactions.
The Japan Fund, one of the underlying Price funds in which the Spectrum
International Fund can invest, is not open on certain days when the Spectrum
International Fund is open. On such days, securities of the Japan Fund held
by Spectrum International are valued in accordance with procedures adopted by
the Board of Directors. These procedures call for Spectrum International to
direct that the NAV for the Japan Fund be calculated in the same manner and
using the same system of procedures and controls as are used in the normal
daily calculation of the Japan Fund's NAV except that securities are valued
at the most recent yen-denominated closing prices in the Japanese market
(which may be one or more days previous to the valuation date of Spectrum
International).
NET ASSET VALUE PER SHARE
-------------------------------------------------------------------------------
The purchase and redemption price of the fund's shares is equal to the fund's
net asset value per share or share price. The fund determines its net asset
value per share by subtracting its liabilities (including accrued expenses
and dividends payable) from its total assets (the market value of the
securities the fund holds plus cash and other assets, including income
accrued but not yet received) and dividing the result by the total number of
shares outstanding. The net asset value per share of the fund is normally
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, Dr. Martin Luther King, Jr. Holiday, Presidents' Day,
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 the 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 the 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 SEC (or any succeeding governmental
authority) shall govern as to whether the conditions prescribed in (b), (c),
or (d) exist.
DIVIDENDS AND DISTRIBUTIONS
-------------------------------------------------------------------------------
Unless you elect otherwise, capital gain distributions, if any, will be
reinvested on the reinvestment date using the NAV per share of that date. The
reinvestment date may precede the payment date by one day, although the exact
timing is subject to change and can be as great as 10 days.
TAX STATUS
-------------------------------------------------------------------------------
The fund intends to qualify as a "regulated investment company" under
Subchapter M of the Code.
A portion of the dividends paid by certain the Growth and Income Funds may be
eligible for the dividends-received deduction applicable to corporate
shareholders. The dividends of the Spectrum International Fund
23
<PAGE>
will not be eligible for this deduction, if, as expected, none of the fund's
income consists of dividends paid by U.S. corporations. Long-term 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 to avoid a federal income tax.
At the time of your purchase, the fund's net asset value may reflect
undistributed income (Growth and International Funds), capital gains or net
unrealized appreciation of securities held by the fund. A subsequent
distribution to you of such amounts, although constituting a return of your
investment, would be taxable as a capital gain distribution. For federal
income tax purposes, the fund is permitted to carry forward its net realized
capital losses, if any, for eight years and realize net capital gains up to
the amount of such losses without being required to pay taxes on, or
distribute, such gains.
If, in any taxable year, the fund 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
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
-------------------------------------------------------------------------------
Spectrum Income Fund
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 SEC. 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.
If applicable, a taxable-equivalent yield is calculated by dividing this
yield by one minus the effective federal, state, and/or city or local income
tax rates. 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 December 31, 1999, was 6.69%.
24
<PAGE>
INVESTMENT PERFORMANCE
-------------------------------------------------------------------------------
Total Return Performance
The fund's calculation of total return performance includes the reinvestment
of all capital gain distributions and income dividends for the period or
periods indicated, without regard to tax consequences to a shareholder in the
fund. Total return is calculated as the percentage change between the
beginning value of a static account in the fund and the ending value of that
account measured by the then current net asset value, including all shares
acquired through reinvestment of income and capital gain dividends. The
results shown are historical and should not be considered indicative of the
future performance of the fund. Each average annual compound rate of return
is derived from the cumulative performance of the fund over the time period
specified. The annual compound rate of return for the fund over any other
period of time will vary from the average.
<TABLE>
<CAPTION>
Cumulative Performance Percentage Change
1 Yr. 5 Yrs. 10 Yrs. % Since Inception
----- ------ ------- ------- ---------
Ended Ended Ended Inception Date
- -------------------------- ----- ----- ----- --------- ----
12/31/99 12/31/99 12/31/99 12/31/99
-------- -------- -------- --------
-----------------------------------------------------
<S> <C> <C> <C> <C> <S>
Spectrum Growth Fund 21.20% 153.24% - 289.01% 06/29/90
Spectrum Income Fund 0.26 54.08 - 124.85 06/29/90
Spectrum International 39.49 - - 60.41 12/31/96
Fund
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Average Annual Compound Rates of Return
1 Yr. 5 Yrs. 10 Yrs. % Since Inception
----- ------ ------- ------- ---------
Ended Ended Ended Inception Date
- -------------------------- ----- ----- ----- --------- ----
12/31/99 12/31/99 12/31/98 12/31/99
-------- -------- -------- --------
-----------------------------------------------------
<S> <C> <C> <C> <C> <S>
Spectrum Growth Fund 21.20% 20.42% - 15.36% 06/29/90
Spectrum Income Fund 0.26 9.03 - 8.90 06/29/90
Spectrum International 39.49 - - 17.06 12/31/96
Fund
- -------------------------------------------------------------------------------
</TABLE>
Outside Sources of Information
From time to time, in reports and promotional literature: (1) the fund's
total return performance, ranking, or any other measure of the fund's
performance may be compared to any one or combination of the following: (a) a
broad-based index; (b) other groups of mutual funds, including T. Rowe Price
funds, tracked by independent research firms ranking entities, or financial
publications; (c) indices of securities comparable to those in which the fund
invests; (2) the Consumer Price Index (or any other measure for inflation,
government statistics, such as GNP may be used to illustrate investment
attributes of the fund or the general economic, business, investment, or
financial environment in which the fund operates; (3) various financial,
economic and market statistics developed by brokers, dealers and other
persons may be used to illustrate aspects of the fund's performance; (4) the
effect of tax-deferred compounding on the fund's investment returns, or on
returns in general in both qualified and nonqualified retirement plans or any
other tax advantage product, may be illustrated by graphs, charts, etc.; and
(5) the sectors or industries in which the fund invests may be compared to
relevant indices or surveys in order to evaluate the fund's historical
performance or current or potential value with respect to the particular
industry or sector.
Other Publications
From time to time, in newsletters and other publications issued by Investment
Services, T. Rowe Price mutual fund portfolio managers may discuss economic,
financial and political developments in the U.S. and abroad
25
<PAGE>
and how these conditions have affected or may affect securities prices or the
fund; individual securities within the fund's portfolio; and their philosophy
regarding the selection of individual stocks, including why specific stocks
have been added, removed or excluded from the fund's portfolio.
Other Features and Benefits
The fund is a member of the T. Rowe Price family of funds and may help
investors achieve various long-term investment goals, which include, but are
not limited to, investing money for retirement, saving for a down payment on
a home, or paying college costs. To explain how the fund could be used to
assist investors in planning for these goals and to illustrate basic
principles of investing, various worksheets and guides prepared by T. Rowe
Price and/or Investment Services may be made available.
No-Load Versus Load and 12b-1 Funds
Many mutual funds charge sales fees to investors or use fund assets to
finance distribution activities. These fees are in addition to the normal
advisory fees and expenses charged by all mutual funds. There are several
types of fees charged which vary in magnitude and which may often be used in
combination. A sales charge (or "load") can be charged at the time the fund
is purchased (front-end load) or at the time of redemption (back-end load).
Front-end loads are charged on the total amount invested. Back-end loads or
"redemption fees" are charged either on the amount originally invested or on
the amount redeemed. 12b-1 plans allow for the payment of marketing and sales
expenses from fund assets. These expenses are usually computed daily as a
fixed percentage of assets.
The T. Rowe Price funds, including the Advisor Class, are considered to be
"no-load" funds. They impose no front-end or back-end sales loads. However,
the Advisor Class does charge 12b-1 fees. Under applicable National
Association of Securities Dealers Regulation, Inc. ("NASDR") regulations,
mutual funds that have no front-end or deferred sales charges and whose total
asset-based charges for sales-related expenses and/or service fees (as
defined by NASDR) do not exceed 0.25% of average net assets per year may be
referred to as no-load funds.
Redemptions in Kind
The fund has filed a notice of election under Rule 18f-1 of the 1940 Act.
This permits the fund to effect redemptions in kind as set forth in its
prospectus.
In the unlikely event a shareholder were to receive an in kind redemption of
portfolio securities of the fund, it would be the responsibility of the
shareholder to dispose of the securities. The shareholder would be at risk
that the value of the securities would decline prior to their sale, that it
would be difficult to sell the securities and that brokerage fees could be
incurred.
Issuance of Fund Shares for Securities
Transactions involving issuance of fund shares for securities or assets other
than cash will be limited to (1) bona fide reorganizations; (2) statutory
mergers; or (3) other acquisitions of portfolio securities that: (a) meet the
investment objective and policies of the fund; (b) are acquired for
investment and not for resale except in accordance with applicable law; (c)
have a value that is readily ascertainable via listing on or trading in a
recognized United States or international exchange or market; and (d) are not
illiquid.
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.
26
<PAGE>
The fund's Charter authorizes the Board of Directors to classify and
reclassify any and all shares which are then unissued, including unissued
shares of capital stock into any number of classes or series, each class or
series consisting of such number of shares and having such designations, such
powers, preferences, rights, qualifications, limitations, and restrictions,
as shall be determined by the Board subject to the 1940 Act and other
applicable law. The shares of any such additional classes or series might
therefore differ from the shares of the present class and series of capital
stock and from each other as to preferences, conversions or other rights,
voting powers, restrictions, limitations as to dividends, qualifications or
terms or conditions of redemption, subject to applicable law, and might thus
be superior or inferior to the capital stock or to other classes or series in
various characteristics. The Board of Directors may increase or decrease the
aggregate number of shares of stock or the number of shares of stock of any
class or series that the fund has authorized to issue without shareholder
approval.
Except to the extent that the Fund's Board of Directors might provide by
resolution that holders of shares of a particular class are entitled to vote
as a class on specified matters presented for a vote of the holders of all
shares entitled to vote on such matters, there would be no right of class
vote unless and to the extent that such a right might be construed to exist
under Maryland law. The Charter contains no provision entitling the holders
of the present class of capital stock to a vote as a class on any matter.
Accordingly, the preferences, rights, and other characteristics attaching to
any class of shares, including the present class of capital stock, might be
altered or eliminated, or the class might be combined with another class or
classes, by action approved by the vote of the holders of a majority of all
the shares of all classes entitled to be voted on the proposal, without any
additional right to vote as a class by the holders of the capital stock or of
another affected class or classes.
Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares held) and will vote in the election of
or removal of directors (to the extent hereinafter provided) and on other
matters submitted to the vote of shareholders. There will normally be no
meetings of shareholders for the purpose of electing directors unless and
until such time as less than a majority of the directors holding office have
been elected by shareholders, at which time the directors then in office will
call a shareholders' meeting for the election of directors. Except as set
forth above, the directors shall continue to hold office and may appoint
successor directors. Voting rights are not cumulative, so that the holders of
more than 50% of the shares voting in the election of directors can, if they
choose to do so, elect all the directors of the fund, in which event the
holders of the remaining shares will be unable to elect any person as a
director. As set forth in the By-Laws of the Fund, a special meeting of
shareholders of the Fund shall be called by the Secretary of the Fund on the
written request of shareholders entitled to cast at least 10% of all the
votes of the Fund entitled to be cast at such meeting. Shareholders
requesting such a meeting must pay to the Fund the reasonably estimated costs
of preparing and mailing the notice of the meeting. The Fund, however, will
otherwise assist the shareholders seeking to hold the special meeting in
communicating to the other shareholders of the Fund to the extent required by
Section 16(c) of the 1940 Act.
FEDERAL REGISTRATION OF SHARES
-------------------------------------------------------------------------------
The fund's shares are registered for sale under the 1933 Act. Registration of
the fund's shares is not required under any state law, but the fund is
required to make certain filings with and pay fees to the states in order to
sell its shares in the states.
LEGAL COUNSEL
-------------------------------------------------------------------------------
Swidler Berlin Shereff Friedman, LLP, whose address is The Chrysler Building,
405 Lexington Avenue, New York, New York 10174, is legal counsel to the fund.
27
<PAGE>
INDEPENDENT ACCOUNTANTS
-------------------------------------------------------------------------------
PricewaterhouseCoopers LLP, 250 West Pratt Street, 21st Floor, Baltimore,
Maryland 21201, are the independent accountants to the funds.
The financial statements of the funds for the year ended December 31, 1999,
and the report of independent accountants are included in each fund's Annual
Report for the year ended December 31, 1999. A copy of each Annual Report
accompanies this Statement of Additional Information. The following financial
statements and the report of independent accountants appearing in each Annual
Report for the year ended December 31, 1999, are incorporated into this
Statement of Additional Information by reference:
<TABLE>
<CAPTION>
ANNUAL REPORT REFERENCES:
SPECTRUM SPECTRUM
GROWTH INCOME
------ ------
<S> <C> <C>
Report of Independent Accountants 29 29
Statement of Net Assets, December 31, 1999 19 20
Statement of Operations, year ended December 31, 1999 22 22
Statement of Changes in Net Assets, years ended
December 31, 1999 and December 31, 1998 23 24
Notes to Financial Statements, December 31, 1999 26-28 26-28
Financial Highlights 16 17
</TABLE>
<TABLE>
<CAPTION>
SPECTRUM
INTERNATIONAL
-------------
<S> <C>
Report of Independent Accountants 29
Statement of Net Assets, December 31, 1999 21
Statement of Operations, year ended December 31, 1999 22
Statement of Changes in Net Assets, years ended December
31, 1999 and December 31, 1996 (commencement of
operations) through December 31, 1998 25
Notes to Financial Statements, December 31, 1999 26-28
Financial Highlights 18
</TABLE>
- ----
28
<PAGE>
PAGE 3
PART C
OTHER INFORMATION
ITEM 23. 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
(electronically filed with Amendment No. 14 dated November 15, 1996)
(2) By-Laws of Registrant, as amended July 21, 1999
(3) Specimen Stock Certificate (filed with Amendment No. 5)
(4)(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)
(4)(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)
(4)(c) Investment Management Agreement between the Registrant on behalf of the
Spectrum International Fund and Rowe Price-Fleming International, Inc.,
dated November 12, 1996 (electronically filed with Amendment No. 14
dated November 15, 1996)
(5) 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)
(6) Inapplicable
(7) Custody Agreements
<PAGE>
PAGE 4
(7)(a) Custodian Agreement between T. Rowe Price Funds and State Street Bank
and Trust Company, dated January 28, 1998, as amended November 4, 1998,
April 21, 1999, February 9, 2000, and April 19, 2000
(8) Other Agreements
(8)(a) Transfer Agency and Service Agreement between T. Rowe Price Services,
Inc. and T. Rowe Price Funds, dated January 1, 2000, as amended
February 9, 2000, and April 19, 2000
(8)(b) Agreement between T. Rowe Price Associates, Inc. and T. Rowe Price
Funds for Fund Accounting Services, dated January 1, 2000, as amended
February 9, 2000, and April 19, 2000
(8)(c) Agreement between T. Rowe Price Retirement Plan Services, Inc. and the
Taxable Funds, dated January 1, 2000, as amended February 9, 2000, and
April 19, 2000
(8)(d) Special Servicing Agreement between T. Rowe Price Funds, T. Rowe Price
Services, Inc. and Registrant, dated June 12, 1990 (filed with
Amendment No. 11), as amended August 18, 1997
(8)(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 (electronically filed with
Amendment No. 14 dated November 15, 1996), as amended August 18, 1997
(8)(f) Special Servicing Agreement between T. Rowe Price Funds, T. Rowe Price
Services, Inc., and Registrant, dated January 1, 1998 (electronically
filed with Amendment No. 17, dated April 30, 1998)
(8)(g) Special Servicing Agreement between T. Rowe Price Funds, Rowe
Price-Fleming International, Inc., T. Rowe Price Associates, Inc., and
Registrant, dated January 1, 1998 (electronically filed with Amendment
No. 17, dated April 30, 1998)
(9) Opinion of Counsel
(10) Consent of Independent Accountants
(11) Inapplicable
(12) Inapplicable
<PAGE>
PAGE 5
(13) Inapplicable
(14) Inapplicable
(15)(a) Code of Ethics, March 1, 2000 - T. Rowe Price Associates, Inc.
(15)(b) Code of Ethics, dated March 1, 2000 - RPFI
(16) Inapplicable
(17) Financial Data Schedules
(18) Other Exhibits
(a) Power of Attorney
(b)Certificate of Vice President pursuant to Rule 306 of Regulation
S-T.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 25. INDEMNIFICATION
The Registrant maintains comprehensive Errors and Omissions and
Officers and Directors insurance policies written by the Evanston Insurance
Company and ICI Mutual. These policies provide coverage for T. Rowe Price
Associates, Inc. ("Manager"), and its subsidiaries and affiliates as listed in
Item 26 of this Registration Statement (with the exception of the T. Rowe Price
Associates Foundation, Inc.), and all other investment companies in the T. Rowe
Price family of mutual funds. In addition to the corporate insureds, the
policies also cover the officers, directors, and employees of the Manager, its
subsidiaries, and affiliates. The premium is allocated among the named corporate
insureds in accordance with the provisions of Rule 17d-1(d)(7) under the
Investment Company Act of 1940.
GENERAL. The Charter of the Corporation provides that to the fullest extent
permitted by Maryland or federal law, no director or officer of the Corporation
shall be personally liable to the Corporation or the holders of Shares for money
damages and each director and officer shall be indemnified by the Corporation;
PROVIDED, HOWEVER, that nothing therein shall be deemed to protect any director
or officer of the Corporation against any liability to the Corporation of the
holders of Shares to which such director or officer would otherwise be subject
by reason of willful
<PAGE>
PAGE 6
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
Article X, Section 10.01 of the Registrant's By-Laws provides as
follows:
SECTION 10.01. INDEMNIFICATION AND PAYMENT OF EXPENSES IN ADVANCE. The
Corporation shall indemnify any individual ("Indemnitee") who is a present or
former director, officer, employee, or agent of the Corporation, or who is or
has been serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise, who, by reason of his position was, is, or is threatened to be
made, a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative
(hereinafter collectively referred to as a "Proceeding") against any judgments,
penalties, fines, settlements, and reasonable expenses (including attorneys'
fees) incurred by such Indemnitee in connection with any Proceeding, to the
fullest extent that such indemnification may be lawful under applicable Maryland
law, as from time to time amended. The Corporation shall pay any reasonable
expenses so incurred by such Indemnitee in defending a Proceeding in advance of
the final disposition thereof to the fullest extent that such advance payment
may be lawful under applicable Maryland Law, as from time to time amended.
Subject to any applicable limitations and requirements set forth in the
Corporation's Articles of Incorporation and in these By-Laws, any payment of
indemnification or advance of expenses shall be made in accordance with the
procedures set forth in applicable Maryland law, as from time to time amended.
Notwithstanding the foregoing, nothing herein shall protect or purport
to protect any Indemnitee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office
("Disabling Conduct").
Anything in this Article X to the contrary notwithstanding, no
indemnification shall be made by the Corporation to any Indemnitee unless:
(a) there is a final decision on the merits by a court or other body before
whom the Proceeding was brought that the Indemnitee was not liable by
reason of Disabling Conduct; or
(b) in the absence of such a decision, there is a reasonable determination,
based upon a review of the facts, that the
<PAGE>
PAGE 7
Indemnitee was not liable by reason of Disabling Conduct, which
determination shall be made by:
(i) the vote of a majority of a quorum of directors who are neither
"interested persons" of the Corporation, as defined in Section 2(a)(19)
of the Investment Company Act of 1940, nor parties to the Proceeding;
or
(ii) an independent legal counsel in a written opinion.
Anything in this Article X to the contrary notwithstanding, any advance
of expenses by the Corporation to any Indemnitee shall be made only upon the
undertaking by such Indemnitee to repay the advance unless it is ultimately
determined that such Indemnitee is entitled to indemnification as above
provided, and only if one of the following conditions is met:
(a) the Indemnitee provides a security for his undertaking; or
(b) the Corporation shall be insured against losses arising by reason of
any lawful advances; or
(c) there is a determination, based on a review of readily available facts,
that there is reason to believe that the Indemnitee will ultimately be
found entitled to indemnification, which determination shall be made
by:
(i) a majority of a quorum of directors who are neither "interested
persons" of the Corporation as defined in Section 2(a)(19) of the
Investment Company Act of 1940, nor parties to the Proceeding; or
(ii) an independent legal counsel in a written opinion.
Section 10.02 of the Registrant's By-Laws provides as follows:
SECTION 10.02. INSURANCE OF OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS.
To the fullest extent permitted by applicable Maryland law and by Section 17(h)
of the Investment Company Act of 1940, as from time to time amended, the
Corporation may purchase and maintain insurance 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.
<PAGE>
PAGE 8
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 26. 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 incorporated in
Maryland 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, was incorporated in Maryland in 1980 for
the specific purpose of acting as principal underwriter and distributor for the
Investment Companies which Manager sponsors and serves as investment adviser
(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 brokerage service.
TRP Distribution, Inc., a wholly owned subsidiary of Investment
Services, was incorporated in Maryland in 1991. It was organized for, and
engages in, the sale of certain investment related products prepared by
Investment Services and T. Rowe Price Retirement Plan Services.
<PAGE>
PAGE 9
T. Rowe Price Associates Foundation, Inc. (the "FOUNDATION"), was
incorporated in 1981 (and is not a subsidiary of the Manager). The Foundation's
overall objective emphasizes various community needs by giving to a broad range
of educational, civic, cultural, and health-related institutions. The Foundation
has a very generous matching gift program whereby employee gifts designated to
qualifying institutions are matched according to established guidelines.
T. Rowe Price Services, Inc. ("PRICE SERVICES"), a wholly owned
subsidiary of the Manager, was incorporated in Maryland in 1982 and is
registered as a transfer agent under the Securities Exchange Act of 1934. Price
Services provides transfer agent, dividend disbursing, and certain other
services, including shareholder services, to the Price Funds.
T. Rowe Price Retirement Plan Services, Inc. ("RPS"), a wholly owned
subsidiary of the Manager, was incorporated in Maryland in 1991 and is
registered as a transfer agent under the Securities Exchange Act of 1934. RPS
provides administrative, recordkeeping, and subaccounting services to
administrators of employee benefit plans.
T. Rowe Price Trust Company ("TRUST COMPANY"), a wholly owned
subsidiary of the Manager, is a Maryland-chartered limited-service trust
company, organized in 1983 for the purpose of providing fiduciary services. The
Trust Company serves as trustee and/or custodian for certain qualified employee
benefit plans, individual retirement accounts, and common trust funds and as
trustee/investment agent for one trust and other retirement plans.
T. Rowe Price Investment Technologies, Inc. was incorporated in
Maryland in 1996. A wholly owned subsidiary of the Manager, it owns the
technology rights, hardware, and software of the Manager and affiliated
companies and provides technology services to them.
TRPH Corporation, a wholly owned subsidiary of the Manager, was
organized in 1997 to acquire an interest in a UK-based corporate finance
advisory firm.
T. Rowe Price Threshold Fund Associates, Inc., a wholly owned
subsidiary of the Manager, was incorporated in Maryland in 1994 and serves as
the general partner of T. Rowe Price Threshold Fund III, L.P., a Delaware
limited 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; the Manager is the General Partner of the
partnership.
<PAGE>
PAGE 10
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 Stable Asset Management, Inc. ("STABLE ASSET
MANAGEMENT"), was incorporated in Maryland in 1988 as a wholly owned subsidiary
of the Manager. Stable Asset Management is registered as an investment adviser
under the Investment Advisers Act of 1940, and 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 issued by insurance companies and banks, as well
as 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 General Partner of T. Rowe Price Recovery Fund, L.P., a Delaware
limited partnership which invests in financially distressed companies.
T. Rowe Price Recovery Fund II Associates, L.L.C., is a Maryland
limited liability company organized in 1996. Wholly owned by the Manager and the
Trust Company, it serves as General Partner of T. Rowe Price Recovery Fund II,
L.P., a Delaware limited partnership which also 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 as
well as with the Ontario Securities Commission to provide advisory services to
individual and institutional clients residing in Canada.
T. Rowe Price Insurance Agency, Inc., is a wholly owned subsidiary of
the Manager, organized in Maryland in 1994 and licensed to do business in
several states to act primarily as a distributor of proprietary variable annuity
products.
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.
TRP Suburban, Inc., is a Maryland corporation organized in 1990 as a
wholly owned subsidiary of the Manager. It entered into agreements with McDonogh
School and CMANE-McDonogh-Rowe
<PAGE>
PAGE 11
Limited Partnership to construct an office building in Owings Mills, Maryland,
which currently 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 II, L.P. ("STRATEGIC PARTNERS
FUNDS") is a Delaware limited partnership organized in 1992, 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 T. Rowe Price
Strategic Partners Fund II, L.P. is T. Rowe Price Strategic Partners II, L.P., a
Delaware limited partnership whose general partner is T. Rowe Price Strategic
Partners Associates, Inc.
T. Rowe Fleming Asset Management Limited ("T. ROWE FLEMING"), an
English corporation, is an investment adviser under the Investment Advisers Act
of 1940. T. Rowe Fleming will provide investment management services to Japanese
investment trusts and other institutional investors in Japan pursuant to one or
more delegation agreements entered into between Daiwa SB Investments, Ltd. and
T. Rowe Fleming. T. Rowe Fleming is a corporate joint venture owned 50% by T.
Rowe Price and 50% by Robert Fleming Asset Management Limited, a wholly-owned
subsidiary of Robert Fleming Holdings Limited. Formerly known as Fleming
International Asset Management Limited ("FIAM"), the company changed its name to
T. Rowe Fleming Asset Management Limited on June 8, 1999, following the
formation of the joint venture.
Listed below are the directors, executive officers and managing
directors of the Manager who have other substantial businesses, professions,
vocations, or employment aside from that of Director of the Manager:
DIRECTORS
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.
DONALD B. HEBB, JR., Director of the Manager. Mr. Hebb is the managing general
partner of ABS Capital Partners. Mr. Hebb's
<PAGE>
PAGE 12
address is One South Street, 25th Floor, Baltimore, Maryland 21202.
RICHARD L. MENSCHEL, Director of the Manager. Mr. Menschel is a limited partner
of The Goldman Sachs Group, L.P., an investment banking firm. Mr. Menschel's
address is: 85 Broad Street, 2nd Floor, New York, New York 10004.
ROBERT L. STRICKLAND, Director of the Manager. Mr. Strickland retired as
Chairman of Lowe's Companies, Inc., a retailer of specialty home supplies, as of
January 31, 1998 and continues to serve as a Director. He is a Director of
Hannaford Bros., Co., a food retailer. Mr. Strickland's address is: 2000 W.
First Street, Suite 604, Winston-Salem, North Carolina 27104.
PHILIP C. WALSH, Director of the Manager. Mr. Walsh is a retired mining industry
executive. Mr. Walsh's address is: Pleasant Valley, Peapack, New Jersey 07977.
ANNE MARIE WHITTEMORE, Director of the Manager. Mrs. Whittemore is a partner of
the law firm of McGuire, Woods, Battle & Boothe L.L.P. and a Director of Owens &
Minor, Inc.; Fort James Corporation; and Albemarle Corporation. Mrs.
Whittemore's address is: One James Center, Richmond, Virginia 23219.
With the exception of Messrs. Halbkat, Hebb, Menschel, Strickland, Walsh, and
Mrs. Whittemore, all of the following directors of the Manager are employees of
the Manager.
EDWARD C. BERNARD, Director and Managing Director of the Manager; Director and
President of T. Rowe Price Insurance Agency, Inc. and T. Rowe Price Investment
Services, Inc.; Director of T. Rowe Price Services, Inc.; Vice President of TRP
Distribution, Inc.
HENRY H. HOPKINS, Director and Managing Director of the Manager; Director of T.
Rowe Price Insurance Agency, Inc.; Vice President and Director of T. Rowe Price
(Canada), Inc., T. Rowe Price Investment Services, Inc., T. Rowe Price Services,
Inc., T. Rowe Price Threshold Fund Associates, Inc., T. Rowe Price Trust
Company, TRP Distribution, Inc., and TRPH Corporation; Director of T. Rowe Price
Insurance Agency, Inc.; Vice President of Price-Fleming, T. Rowe Price Real
Estate Group, Inc., T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price
Stable Asset Management, Inc., and T. Rowe Price Strategic Partners Associates,
Inc.
JAMES A.C. KENNEDY, Director and Managing Director of the Manager; President and
Director of T. Rowe Price Strategic Partners Associates, Inc.; Director and Vice
President of T. Rowe Price Threshold Fund Associates, Inc.
<PAGE>
PAGE 13
JOHN H. LAPORTE, JR., Director and Managing Director of the Manager.
WILLIAM T. REYNOLDS, Director and Managing Director of the Manager; Chairman of
the Board of T. Rowe Price Stable Asset Management, Inc.; Director of TRP
Finance, Inc.
JAMES S. RIEPE, Vice-Chairman of the Board, Director, and Managing Director of
the Manager; Chairman of the Board and President of T. Rowe Price Trust Company;
Chairman of the Board of T. Rowe Price (Canada), Inc., T. Rowe Price Investment
Services, Inc., T. Rowe Price Investment Technologies, Inc., T. Rowe Price
Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Director of
Price-Fleming, T. Rowe Price Insurance Agency, Inc., and TRPH Corporation;
Director and President of TRP Distribution, Inc., TRP Suburban Second, Inc., and
TRP Suburban, Inc.; and Director and Vice President of T. Rowe Price Stable
Asset Management, Inc.
GEORGE A. ROCHE, Chairman of the Board, President, and Managing Director of the
Manager; Chairman of the Board of TRP Finance, Inc.; Director of Price-Fleming,
T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Strategic
Partners, Inc., and Director and Vice President of T. Rowe Price Threshold Fund
Associates, Inc., TRP Suburban Second, Inc., and TRP Suburban, Inc.
BRIAN C. ROGERS, Director and Managing Director of the Manager; Vice President
of T. Rowe Price Trust Company.
M. DAVID TESTA, Vice-Chairman of the Board, Director, Chief Investment Officer,
and Managing Director of the Manager; Chairman of the Board of Price-Fleming;
President and Director of T. Rowe Price (Canada), Inc.; Director and Vice
President of T. Rowe Price Trust Company; and Director of TRPH Corporation.
MARTIN G. WADE, Director of the Manager; Director, Chief Executive Officer, and
Vice Chairman of the Board of Price-Fleming; Director of Fleming Holdings
Limited and Robert Fleming Asset Management.
ADDITIONAL EXECUTIVE OFFICERS
MICHAEL A. GOFF, Managing Director of the Manager; Director and the President of
T. Rowe Price Investment Technologies, Inc.
CHARLES E. VIETH, Managing Director of the Manager; Director and President of T.
Rowe Price Retirement Plan Services, Inc.; Director and Vice President of T.
Rowe Price Investment Services, Inc. and T. Rowe Price Services, Inc.; Vice
President of T. Rowe Price (Canada), Inc., T. Rowe Price Trust Company, and TRP
Distribution, Inc.
<PAGE>
PAGE 14
ADDITIONAL MANAGING DIRECTORS
PRESTON G. ATHEY, Managing Director of the Manager.
BRIAN W.H. BERGHUIS, Managing Director of the Manager.
STEPHEN W. BOESEL, Managing Director of the Manager; Vice President of T. Rowe
Price Trust Company.
JOHN H. CAMMACK, Managing Director of the Manager; Vice President of T. Rowe
Price Investment Services, Inc. and T. Rowe Price Trust Company.
GREGORY A. McCRICKARD, Managing Director of the Manager; Vice President of T.
Rowe Price Trust Company.
MARY J. MILLER, Managing Director of the Manager.
CHARLES A. MORRIS, Managing Director of the Manager.
NANCY M. MORRIS, Managing Director of the Manager; Vice President of
Price-Fleming, T. Rowe Price Investment Services, Inc., and T. Rowe Price Stable
Asset Management, Inc.; Director and Vice President of T. Rowe Price Savings
Bank and T. Rowe Price Trust Company.
GEORGE A. MURNAGHAN, Managing Director of the Manager; Executive Vice President
of Price-Fleming; Vice President of T. Rowe Price Investment Services, Inc. and
T. Rowe Price Trust Company.
MARIA NALYWAYKO, Managing Director of the Manager.
EDMUND M. NOTZON III, Managing Director of the Manager; Vice President of T.
Rowe Price Trust Company.
WAYNE D. O'MELIA, Managing Director of the Manager; Director and President of T.
Rowe Price Services, Inc.; Vice President of T. Rowe Price Trust Company.
LARRY J. PUGLIA, Managing Director of the Manager; Vice President of T. Rowe
Price (Canada), Inc.
JOHN R. ROCKWELL, Managing Director of the Manager; Director and Senior Vice
President of T. Rowe Price Retirement Plan Services, Inc.; Director and Vice
President of T. Rowe Price Stable Asset Management, Inc. and T. Rowe Price Trust
Company; Vice President of T. Rowe Price Investment Services, Inc.
R. TODD RUPPERT, Managing Director of the Manager; President and Director of
TRPH Corporation; Vice President of T. Rowe Price Retirement Plan Services, Inc.
and T. Rowe Price Trust Company.
<PAGE>
PAGE 15
ROBERT W. SMITH, Managing Director of the Manager; Vice President of
Price-Fleming.
WILLIAM J. STROMBERG, Managing Director of the Manager.
MARK J. VASELKIV, Managing Director of the Manager; Vice President of T. Rowe
Price Recovery Fund Associates, Inc. and T. Rowe Price Recovery Fund II
Associates, L.L.C.
RICHARD T. WHITNEY, Managing Director of the Manager; Vice President of
Price-Fleming and T. Rowe Price Trust Company.
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 27. PRINCIPAL UNDERWRITERS
(a) The principal underwriter for the Registrant is Investment Services.
Investment Services acts as the principal underwriter for eighty-eight
mutual funds, including the following investment companies: T. Rowe
Price Growth Stock Fund, Inc., T. Rowe Price New Horizons Fund, Inc.,
T. Rowe Price New Era Fund, Inc., T. Rowe Price New Income Fund, Inc.,
T. Rowe Price Prime Reserve Fund, Inc., T. Rowe Price Tax-Free Income
Fund, Inc., T. Rowe Price Tax-Exempt Money Fund, Inc., T. Rowe Price
International Funds, Inc., T. Rowe Price Growth & Income Fund, Inc., T.
Rowe Price Tax-Free Short-Intermediate Fund, Inc., T. Rowe Price
Short-Term Bond Fund, Inc., T. Rowe Price High Yield Fund, Inc., T.
Rowe Price Tax-Free High Yield Fund, Inc., T. Rowe Price New America
Growth Fund, T. Rowe Price Equity Income Fund, T. Rowe Price GNMA Fund,
T. Rowe Price Capital Appreciation Fund, T. Rowe Price California
Tax-Free Income Trust, T. Rowe Price State Tax-Free Income Trust, T.
Rowe Price Science & Technology Fund, Inc., T. Rowe Price Small-Cap
Value Fund, Inc., Institutional International Funds, Inc., T. Rowe
Price U.S. Treasury Funds, Inc., T. Rowe Price Index Trust, Inc., T.
Rowe Price Spectrum Fund, Inc., T. Rowe Price Balanced Fund, Inc., T.
Rowe Price Short-Term U.S. Government Fund, Inc., T. Rowe Price Mid-Cap
Growth Fund, Inc., T. Rowe Price Small-Cap Stock Fund, Inc., T. Rowe
Price Tax-Free Intermediate Bond Fund, Inc., T. Rowe Price Dividend
Growth Fund, Inc., T. Rowe Price Blue Chip Growth Fund, Inc., T. Rowe
Price Summit Funds, Inc., T. Rowe Price Summit Municipal Funds,
<PAGE>
PAGE 16
Inc., T. Rowe Price Equity Series, Inc., T. Rowe Price International
Series, Inc., T. Rowe Price Fixed Income Series, Inc., T. Rowe Price
Personal Strategy Funds, Inc., T. Rowe Price Value Fund, Inc., T. Rowe
Price Capital Opportunity Fund, Inc., T. Rowe Price Corporate Income
Fund, Inc., T. Rowe Price Health Sciences Fund, Inc., T. Rowe Price
Mid-Cap Value Fund, Inc., Institutional Equity Funds, Inc., T. Rowe
Price Financial Services Fund, Inc., T. Rowe Price Diversified
Small-Cap Growth Fund, Inc., T. Rowe Price Tax-Efficient Funds, Inc.,
Reserve Investment Funds, Inc., T. Rowe Price Media &
Telecommunications Fund, Inc., and T. Rowe Price Real Estate Fund, Inc.
Investment Services is a wholly owned subsidiary of the Manager, is
registered as a broker-dealer under the Securities Exchange Act of 1934
and is a member of the National Association of Securities Dealers, Inc.
Investment Services has been formed for the limited purpose of
distributing the shares of the Price Funds and will not engage in the
general securities business. Since the Price Funds are sold on a
no-load basis, Investment Services will not receive any commissions or
other compensation for acting as principal underwriter.
(b) The address of each of the directors and officers of Investment
Services listed below is 100 East Pratt Street, Baltimore, Maryland
21202.
<TABLE>
<CAPTION>
NAME POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
UNDERWRITER REGISTRANT
<C> <S> <S>
James S. Riepe Chairman of the Board Chairman of the
and Director Board
Edward C. Bernard President and Director None
Henry H. Hopkins Vice President and Director Vice President
Charles E. Vieth Vice President and Director None
Patricia M. Archer Vice President None
Steven J. Banks Vice President None
John T. Bielski Vice President None
Darrell N. Braman Vice President None
Ronae M. Brock Vice President None
Meredith C. Callanan Vice President None
John H. Cammack Vice President None
Ann R. Campbell Vice President None
Christine M. Carolan Vice President None
Joseph A. Carrier Vice President None
Laura H. Chasney Vice President None
Renee M. Christoff Vice President None
Christopher W. Dyer Vice President None
Christine S. Fahlund Vice President None
Forrest R. Foss Vice President None
Thomas A. Gannon Vice President None
Andrea G. Griffin Vice President None
Douglas E. Harrison Vice President None
David J. Healy Vice President None
Joanne M. Healey Vice President None
Joseph P. Healy Vice President None
Walter J. Helmlinger Vice President None
Valerie King Vice President None
- -Calloway
Eric G. Knauss Vice President None
Sharon R. Krieger Vice President None
Steven A. Larson Vice President None
Jeanette M. LeBlanc Vice President None
Keith W. Lewis Vice President None
Gayle A. Lomax Vice President None
Sarah McCafferty Vice President None
Maurice A. Minerbi Vice President None
Mark J. Mitchell Vice President None
Nancy M. Morris Vice President None
George A. Murnaghan Vice President None
Steven E. Norwitz Vice President None
Kathleen M. O'Brien Vice President None
Barbara A. O'Connor Vice President None
Wayne D. O'Melia Vice President None
David Oestr Vice President None
e
icher
Robert Petrow Vice President None
Pamela D. Preston Vice President None
George D. Riedel Vice President None
Lucy B. Robins Vice President None
John R. Rockwell Vice President None
Kenneth J. Rutherford Vice President None
Alexander Savich Vice President None
Kristin E. Seeberger Vice President None
Donna B. Singer Vice President None
Bruce D. Stewart Vice President None
William W. Strickland, Jr. Vice President None
Jerome Tuccille Vice President None
Walter Wdowiak Vice President None
William F. Wendler II Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Barbara A. O'Connor Controller None
Theodore J. Zamerski III Assistant Vice President and None
Assistant Controller
Matthew B. Alsted Assistant Vice President None
Kimberly B. Andersen Assistant Vice President None
Richard J. Barna Assistant Vice President None
Catherine L.Berkenkemper Assistant Vice President None
Edwin J. Brooks Assistant Vice President None
III
Carl A. Cox Assistant Vice President None
Charles R. Dicken Assistant Vice President None
Cheryl L. Emory Assistant Vice President None
John A. Galateria Assistant Vice President None
Edward F. Giltenan Assistant Vice President None
Jason L. Gounaris Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Sandra J. Kiefler Assistant Vice President None
Suzanne M. Knoll Assistant Vice President None
Patricia Assistant Vice President Secretary
B
.
Lippert
Teresa M. Loeffert Assistant Vice President None
C. Lillian Matthews Assistant Vice President None
Janice D. McCrory Assistant Vice President None
Danielle N. Nicholson Assistant Vice President None
JeanneMarie B. Patella Assistant Vice President None
Kylelane Purcell Assistant Vice President None
David A. Roscum Assistant Vice President None
Matthew A. Scher Assistant Vice President None
Carole H. Smith Assistant Vice President None
John A. Stranovsky Assistant Vice President None
Nolan L. North Assistant Treasurer None
Barbara A. Van Horn Secretary None
</TABLE>
<PAGE>
PAGE 17
<PAGE>
PAGE 18
(c) Not applicable. Investment Services will not receive any compensation
with respect to its activities as underwriter for the Price Funds since
the Price Funds are sold on a no-load basis.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books, and other documents required to be maintained by
the Registrant under Section 31(a) of the Investment Company Act of 1940 and the
rules thereunder will be maintained by the Registrant at its offices at 100 East
Pratt Street, Baltimore, Maryland 21202. Transfer, dividend disbursing, and
shareholder service activities are performed by T. Rowe Price Services, Inc., at
4515 Painters Mill Road, Owings Mills, Maryland 21117. Custodian activities for
the Registrant are performed at State Street Bank and Trust Company's Service
Center (State Street South), 1776 Heritage Drive, Quincy, Massachusetts 02171.
ITEM 29. MANAGEMENT SERVICES
Registrant is not a party to any management-related service contract,
other than as set forth in the Prospectus or Statement of Additional
Information.
ITEM 30. UNDERTAKINGS
(a) Not applicable
<PAGE>
PAGE 19
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Baltimore, State of Maryland, this
April 28, 2000.
T. Rowe Price Spectrum Fund, Inc.
/s/James S. Riepe
By: 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 Chairman of the Board April 28, 2000
James S. Riepe (Chief Executive Officer)
/s/Joseph A. Carrier Treasurer (Chief April 28, 2000
Joseph A. Carrier Financial Officer)
/s/Donald W. Dick, Jr.
Donald W. Dick, Jr. Director April 28, 2000
* Director April 28, 2000
David K. Fagin
* Director April 28, 2000
Hanne M. Merriman
/s/James S. Riepe Director April 28, 2000
James S. Riepe
/s/M. David Testa Director and April 28, 2000
M. David Testa Vice President
* Director April 28, 2000
Hubert D. Vos
* Director April 28, 2000
Paul M. Wythes
<PAGE>
PAGE 20
*Henry H. Hopkins Attorney-In-Fact April 28, 2000
<PAGE>
PAGE 22
BY-LAWS
OF
T. ROWE PRICE SPECTRUM FUND, INC.
AS AMENDED:
JULY 1, 1991
JULY 21, 1999
<PAGE>
PAGE 23
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I. NAME OF CORPORATION, LOCATION OF OFFICES AND
SEAL 1
1.01.Name 1
1.02.Principal Office 1
1.03.Seal 1
ARTICLE II. SHAREHOLDERS 1
2.01.Annual Meetings 1
2.02.Special Meetings 2
2.03.Place of Meetings 2
2.04.Notice of Meetings 2
2.05.Voting - In General 3
2.06.Shareholders Entitled to Vote 3
2.07.Voting - Proxies 3
2.08.Quorum 3
2.09.Absence of Quorum 3
2.10.Stock Ledger and List of Shareholders 4
2.11.Informal Action by Shareholders 4
ARTICLE III. BOARD OF DIRECTORS 4
3.01.Number and Term of Office 4
3.02.Qualification of Directors 4
3.03.Election of Directors 5
3.04.Removal of Directors 5
3.05.Vacancies and Newly Created Directorships5
3.06.General Powers 5
3.07.Power to Issue and Sell Stock 6
3.08.Power to Declare Dividends 6
3.09.Annual and Regular Meetings 6
3.10.Special Meetings 6
3.11.Notice 7
3.12.Waiver of Notice 7
3.13.Quorum and Voting 7
3.14.Conference Telephone 7
3.15.Compensation 7
3.16.Action Without a Meeting 7
3.17.Director Emeritus 7
<PAGE>
PAGE 24
ARTICLE IV. EXECUTIVE COMMITTEE AND OTHER COMMITTEES 8
4.01.How Constituted 8
4.02.Powers of the Executive Committee 8
4.03.Other Committees of the Board of Directors8
4.04.Proceedings, Quorum and Manner of Acting 8
4.05.Other Committees 9
ARTICLE V. OFFICERS 9
5.01.General 9
5.02.Election, Term of Office and Qualifications9
5.03.Resignation 9
5.04.Removal 9
5.05.Vacancies and Newly Created Offices 9
5.06.Chairman of the Board 10
5.07.President 10
5.08.Vice President 10
5.09.Treasurer and Assistant Treasurers 10
5.10.Secretary and Assistant Secretaries 11
5.11.Subordinate Officers 11
5.12.Remuneration 11
ARTICLE VI. CUSTODY OF SECURITIES AND CASH 11
6.01.Employment of a Custodian 11
6.02.Central Certificate Service 12
6.03.Cash Assets 12
6.04.Free Cash Accounts 12
6.05.Action Upon Termination of Custodian Agreement 12
ARTICLE VII. EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES 13
7.01.Execution of Instruments 13
7.02.Voting of Securities 13
ARTICLE VIII. CAPITAL STOCK 13
8.01.Certificate of Stock 13
8.02.Transfer of Capital Stock 13
8.03.Transfer Agents and Registrars 14
8.04.Transfer Regulations 14
8.05.Fixing of Record Date 14
<PAGE>
PAGE 25
8.06.Lost, Stolen, or Destroyed Certificates 14
ARTICLE IX. FISCAL YEAR, ACCOUNTANT 15
9.01.Fiscal Year 15
9.02.Accountant 15
ARTICLE X. INDEMNIFICATION AND INSURANCE 16
10.01.Indemnification and Payment of Expenses in Advance 16
10.02.Insurance of Officers, Directors, Employees and Agents 17
ARTICLE XI. AMENDMENTS 18
11.01. General 18
11.02. By Shareholders Only 18
ARTICLE XII. MISCELLANEOUS 18
12.01Use of the Term "Annual Meeting" 18
<PAGE>
PAGE 26
T. ROWE PRICE SPECTRUM FUND, INC.
(A Maryland Corporation)
BY-LAWS
ARTICLE I
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NAME OF CORPORATION,
LOCATION OF OFFICES AND SEAL
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Section 1.01. NAME: The name of the Corporation is T. ROWE PRICE SPECTRUM
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FUND, INC.
Section 1.02. PRINCIPAL OFFICE: The principal office of the Corporation in
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the State of Maryland shall be located in the City of Baltimore. The Corporation
may, in addition, establish and maintain such other offices and places of
business, within or outside the State of Maryland, as the Board of Directors may
from time to time determine. [ MGCL, Sections 2-103(4), 2-108(a)(1) ]<F1>
Section 1.03. SEAL: The corporate seal of the Corporation shall be circular
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in form, and shall bear the name of the Corporation, the year of its
incorporation, and the words "Corporate Seal, Maryland." The form of the seal
shall be subject to alteration by the Board of Directors and the seal may be
used by causing it or a facsimile to be impressed or affixed or printed or
otherwise reproduced. In lieu of affixing the corporate seal to any document it
shall be sufficient to meet the requirements of any law, rule, or regulation
relating to a corporate seal to affix the word "(Seal)" adjacent to the
signature of the authorized officer of the Corporation. Any officer or Director
of the Corporation shall have authority to affix the corporate seal of the
Corporation to any document requiring the same. [ MGCL, Sections 1-304(b),
2-103(3) ]
ARTICLE II
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SHAREHOLDERS
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Section 2.01. ANNUAL MEETINGS: The Corporation shall not be required to
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hold an annual meeting of its shareholders in any year unless the Investment
Company Act of 1940 requires an election of directors by shareholders. In the
event that the Corporation shall be so required to hold an annual meeting, such
meeting shall be held at a date and time set by the Board of Directors, which
date shall be no later than 120 days after the occurrence of the event requiring
the meeting. Any
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[FN]
<F1> Bracketed citations are to the General Corporation Law of the State of
Maryland ("MGCL") or to the United States Investment Company Act of 1940, as
amended (the "Investment Company Act"), or to Rules of the United States
Securities and Exchange Commission thereunder ("SEC Rules"). The citations are
inserted for reference only and do not constitute a part of the By-Laws.</FN>
<PAGE>
PAGE 27
shareholders' meeting held in accordance with the preceding sentence shall for
all purposes constitute the annual meeting of shareholders for the fiscal year
of the Corporation in which the meeting is held. At any such meeting, the
shareholders shall elect directors to hold the offices of any directors who have
held office for more than one year or who have been elected by the Board of
Directors to fill vacancies which result from any cause. Except as the Articles
of Incorporation or statute provides otherwise, Directors may transact any
business within the powers of the Corporation as may properly come before the
meeting. Any business of the Corporation may be transacted at the annual meeting
without being specially designated in the notice, except such business as is
specifically required by statute to be stated in the notice. [ MGCL, Section
2-501 ]
Section 2.02. SPECIAL MEETINGS: Special meetings of the shareholders may be
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called at any time by the Chairman of the Board, the President, any Vice
President, or by the Board of Directors. Special meetings of the shareholders
shall be called by the Secretary on the written request of shareholders entitled
to cast at least ten (10) percent of all the votes entitled to be cast at such
meeting, provided that (a) such request shall state the purpose or purposes of
the meeting and the matters proposed to be acted on, and (b) the shareholders
requesting the meeting shall have paid to the Corporation the reasonably
estimated cost of preparing and mailing the notice thereof, which the Secretary
shall determine and specify to such shareholders. Unless requested by
shareholders entitled to cast a majority of all the votes entitled to be cast at
the meeting, a special meeting need not be called to consider any matter which
is substantially the same as a matter voted upon at any special meeting of the
shareholders held during the preceding twelve (12) months. [ MGCL, Section 2-502
]
Section 2.03. PLACE OF MEETINGS: All shareholders' meetings shall be held
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at such place within the United States as may be fixed from time to time by the
Board of Directors. [ MGCL, Section 2-503 ]
Section 2.04. NOTICE OF MEETINGS: Not less than ten (10) days, nor more
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than ninety (90) days before each shareholders' meeting, the Secretary or an
Assistant Secretary of the Corporation shall give to each shareholder entitled
to vote at the meeting, and each other shareholder entitled to notice of the
meeting, written notice stating (1) the time and place of the meeting, and (2)
the purpose or purposes of the meeting if the meeting is a special meeting or if
notice of the purpose is required by statute to be given. Such notice shall be
personally delivered to the shareholder, or left at his residence or usual place
of business, or mailed to him at this address or transmitted to the shareholder
by electronic mail to any electronic mail address of the shareholder or by any
other electronic means in all cases as such address appears on the records of
the Corporation. No notice of a shareholders' meeting need be given to any
shareholder who shall sign a written waiver of such notice, whether before or
after the meeting, which is filed with the records of shareholders' meetings, or
to any shareholder who is present at the meeting in person or by proxy. Notice
of adjournment of a shareholders' meeting to another time or place need not be
given if such time and place are announced at the meeting, unless the
adjournment is for more than one hundred twenty (120) days after the original
record date. [ MGCL, Sections 2-504, 2-511(d) ]
(Section 2.04. Notice of Meetings, as amended July 21, 1999)
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Section 2.05. VOTING - IN GENERAL: Except as otherwise specifically
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provided in the Articles of Incorporation or these By-Laws, or as required by
provisions of the Investment Company
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PAGE 28
Act with respect to the vote of a series, if any, of the Corporation, at every
shareholders' meeting, each shareholder shall be entitled to one vote for each
share of stock of the Corporation validly issued and outstanding and held by
such shareholder, except that no shares held by the Corporation shall be
entitled to a vote. Fractional shares shall be entitled to fractional votes.
Except as otherwise specifically provided in the Articles of Incorporation, or
these By-Laws, or as required by provisions of the Investment Company Act, a
majority of all the votes cast at a meeting at which a quorum is present is
sufficient to approve any matter which properly comes before the meeting. The
vote upon any question shall be by ballot whenever requested by any person
entitled to vote, but, unless such a request is made, voting may be conducted in
any way approved by the meeting. [ MGCL, Sections 2-214(a)(i), 2-506(a)(2),
2-507(a), 2-509(b) ]
Section 2.06. SHAREHOLDERS ENTITLED TO VOTE: If, pursuant to Section 8.05
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hereof, a record date has been fixed for the determination of shareholders
entitled to notice of or to vote at any shareholders' meeting, each shareholder
of the Corporation shall be entitled to vote in person or by proxy, each share
or fraction of a share of stock outstanding in his name on the books of the
Corporation on such record date. If no record date has been fixed for the
determination of shareholders, the record date for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at the close of business on the day on which notice of the meeting is mailed
or the 30th day before the meeting, whichever is the closer date to the meeting,
or, if notice is waived by all shareholders, at the close of business on the
tenth (10th) day next preceding the date of the meeting. [ MGCL, Sections 2-507,
2-511 ]
Section 2.07. VOTING - PROXIES: A shareholder may authorize another person
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to act as proxy for the shareholder by: (i) signing a writing authorizing
another person to act as proxy, (ii) the shareholder's authorized agent signing
the writing or causing the shareholder's signature to be affixed to the writing
by any reasonable means, including facsimile signature, or (iii) transmitting,
or authorizing the transmission of, an authorization for the person to act as
proxy to the person authorized to act as proxy or any other person authorized to
receive the proxy authorization on behalf of the person authorized to act as the
proxy, including a proxy solicitation firm or proxy support service
organization. The authorization may be transmitted by a telegram, cablegram,
datagram, electronic mail, or any other electronic or telephonic means. A copy,
facsimile telecommunication, or other reliable reproduction of the writing or
transmission may be substituted for the original writing or transmission for any
purpose for which the original writing or transmission could be used. No proxy
shall be valid more than eleven (11) months after its date unless it provides
for a longer period. [ MGCL, Section 2-507(b) and (c) ]
(Section 2.07. Voting - Proxies, as amended July 21, 1999)
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Section 2.08. QUORUM: The presence at any shareholders' meeting, in person
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or by proxy, of shareholders entitled to cast a majority of the votes entitled
to be cast at the meeting shall constitute a quorum. [ MGCL, Section 2-506(a) ]
Section 2.09. ABSENCE OF QUORUM: In the absence of a quorum, the holders of
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a majority of shares entitled to vote at the meeting and present thereat in
person or by proxy, or, if no shareholder entitled to vote is present in person
or by proxy, any officer present who is entitled to preside at or act as
Secretary of such meeting, may adjourn the meeting sine die or from time to
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time.
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Any business that might have been transacted at the meeting originally called
may be transacted at any such adjourned meeting at which a quorum is present.
Section 2.10. STOCK LEDGER AND LIST OF SHAREHOLDERS: It shall be the duty
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of the Secretary or Assistant Secretary of the Corporation to cause an original
or duplicate stock ledger to be maintained at the office of the Corporation's
transfer agent, containing the names and addresses of all shareholders and the
number of shares of each class held by each shareholder. Such stock ledger may
be in written form, or any other form capable of being converted into written
form within a reasonable time for visual inspection. Any one or more persons,
who together are and for at least six (6) months have been shareholders of
record of at least five percent (5%) of the outstanding capital stock of the
Corporation, may submit (unless the Corporation at the time of the request
maintains a duplicate stock ledger at its principal office) a written request to
any officer of the Corporation or its resident agent in Maryland for a list of
the shareholders of the Corporation. Within twenty (20) days after such a
request, there shall be prepared and filed at the Corporation's principal office
a list, verified under oath by an officer of the Corporation or by its stock
transfer agent or registrar, which sets forth the name and address of each
shareholder and the number of shares of each class which the shareholder holds.
[ MGCL, Sections 2-209, 2-513 ]
Section 2.11. INFORMAL ACTION BY SHAREHOLDERS: Any action required or
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permitted to be taken at a meeting of shareholders may be taken without a
meeting if the following are filed with the records of shareholders' meetings:
(a)
A unanimous written consent which sets forth the action and is signed by each
shareholder entitled to vote on the matter; and
(b)
A written waiver of any right to dissent signed by each shareholder entitled to
notice of the meeting, but not entitled to vote at it. [ MGCL, Section 2-505 ]
ARTICLE III
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BOARD OF DIRECTORS
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Section 3.01. NUMBER AND TERM OF OFFICE: The Board of Directors shall
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consist of one (1) Director, which number may be increased by a resolution of a
majority of the entire Board of Directors, provided that the number of Directors
shall not be more than fifteen (15) nor less than the lesser of (i) three (3) or
(ii) the number of shareholders of the Corporation. Each Director (whenever
elected) shall hold office until the next annual meeting of shareholders and
until his successor is elected and qualifies or until his earlier death,
resignation, or removal. [ MGCL, Sections 2-402, 2-404, 2-405 ]
Section 3.02. QUALIFICATION OF DIRECTORS: No member of the Board of
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Directors need be a shareholder of the Corporation, but at least one member of
the Board of Directors shall be a person who is not an interested person (as
such term is defined in the Investment Company Act) of the investment adviser of
the Corporation, nor an officer or employee of the Corporation. [ MGCL, Section
2-403; Investment Company Act, Section 10(d) ]
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PAGE 30
Section 3.03. ELECTION OF DIRECTORS: Until the first annual meeting of
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shareholders, or until successors are duly elected and qualified, the Board of
Directors shall consist of the persons named as such in the Articles of
Incorporation. Thereafter, except as otherwise provided in Sections 3.04 and
3.05 hereof, at each annual meeting, the shareholders shall elect Directors to
hold office until the next annual meeting and/or until their successors are
elected and qualify. In the event that Directors are not elected at an annual
shareholders' meeting, then Directors may be elected at a special shareholders'
meeting. Directors shall be elected by vote of the holders of a plurality of the
shares present in person or by proxy and entitled to vote. [ MGCL, Section 2-404
]
Section 3.04. REMOVAL OF DIRECTORS: At any meeting of shareholders, duly
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called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any Director or Directors from office, either with or without
cause, and may elect a successor or successors to fill any resulting vacancies
for the unexpired terms of removed Directors. [ MGCL, Sections 2-406, 2-407 ]
Section 3.05. VACANCIES AND NEWLY CREATED DIRECTORSHIPS: If any vacancies
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occur in the Board of Directors by reason of resignation, removal or otherwise,
or if the authorized number of Directors is increased, the Directors then in
office shall continue to act, and such vacancies (if not previously filled by
the shareholders) may be filled by a majority of the Directors then in office,
whether or not sufficient to constitute a quorum, provided that, immediately
after filling such vacancy, at least two-thirds of the Directors then holding
office shall have been elected to such office by the shareholders of the
Corporation. In the event that at any time, other than the time preceding the
first meeting of shareholders, less than a majority of the Directors of the
Corporation holding office at that time were so elected by the shareholders, a
meeting of the shareholders shall be held promptly and in any event within sixty
(60) days for the purpose of electing Directors to fill any existing vacancies
in the Board of Directors unless the Securities and Exchange Commission shall by
order extend such period. Except as provided in Section 3.04 hereof, a Director
elected by the Board of Directors to fill a vacancy shall be elected to hold
office until the next annual meeting of shareholders or until his successor is
elected and qualifies. [ MGCL, Section 2-407; Investment Company Act, Section
16(a) ]
Section 3.06. GENERAL POWERS:
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(a)
The property, business, and affairs of the Corporation shall be managed under
the direction of the Board of Directors which may exercise all the powers of the
Corporation except such as are by law, by the Articles of Incorporation, or by
these By-Laws conferred upon or reserved to the shareholders of the Corporation.
[ MGCL, Section 2-401 ]
(b)
All acts done by any meeting of the Directors or by any person acting as a
Director, so long as his successor shall not have been duly elected or
appointed, shall, notwithstanding that it be afterwards discovered that there
was some defect in the election of the Directors or such person acting as a
Director or that they or any of them were disqualified, be as valid as if the
Directors or such person, as the case may be, had been duly elected and were or
was qualified to be Directors or a Director of the Corporation.
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Section 3.07. POWER TO ISSUE AND SELL STOCK: The Board of Directors may
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from time to time authorize by resolution the issuance and sale of any of the
Corporation's authorized shares to such persons as the Board of Directors shall
deem advisable and such resolution shall set the minimum price or value of
consideration for the stock or a formula for its determination, and shall
include a fair description of any consideration other than money and a statement
of the actual value of such consideration as determined by the Board of
Directors or a statement that the Board of Directors has determined that the
actual value is or will be not less than a certain sum. [ MGCL, Section 2-203 ]
Section 3.08. POWER TO DECLARE DIVIDENDS:
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(a)
The Board of Directors, from time to time as it may deem advisable, may declare
and the Corporation pay dividends, in cash, property, or shares of the
Corporation available for dividends out of any source available for dividends,
to the shareholders according to their respective rights and interests. [ MGCL,
Section 2-309 ]
(b)
The Board of Directors shall cause to be accompanied by a written statement any
dividend payment wholly or partly from any source other than the Corporation's
accumulated undistributed net income (determined in accordance with good
accounting practice and the rules and regulations of the Securities and Exchange
Commission then in effect) not including profits or losses realized upon the
sale of securities or other properties. Such statement shall adequately disclose
the source or sources of such payment and the basis of calculation and shall be
otherwise in such form as the Securities and Exchange Commission may prescribe.
[ Investment Company Act, Section 19; SEC Rule 19a-1; MGCL, Section 2-309(c) ]
(c)
Notwithstanding the above provisions of this Section 3.08, the Board of
Directors may at any time declare and distribute pro rata among the shareholders
a stock dividend out of the Corporation's authorized but unissued shares of
stock, including any shares previously purchased by the Corporation, provided
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that such dividend shall not be distributed in shares of any class with respect
to any shares of a different class. The shares so distributed shall be issued at
the par value thereof, and there shall be transferred to stated capital, at the
time such dividend is paid, an amount of surplus equal to the aggregate par
value of the shares issued as a dividend and there may be transferred from
earned surplus to capital surplus such additional amount as the Board of
Directors may determine. [ MGCL, Section 2-309 ]
Section 3.09. ANNUAL AND REGULAR MEETINGS: The annual meeting of the Board
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of Directors for choosing officers and transacting other proper business shall
be held immediately after the annual shareholders' meeting at such place as may
be specified in the notice of such meeting of the Board of Directors or, in the
absence of such annual shareholders' meeting, at such time and place as the
Board of Directors may provide. The Board of Directors from time to time may
provide by resolution for the holding of regular meetings and fix their time and
place (within or outside the State of Maryland). [ MGCL, Section 2-409(a) ]
Section 3.10. SPECIAL MEETINGS: Special meetings of the Board of Directors
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shall be held whenever called by the Chairman of the Board, the President (or,
in the absence or disability of the President, by any Vice President), the
Treasurer, or two or more Directors, at the time and place
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PAGE 32
(within or outside the State of Maryland) specified in the respective notices or
waivers of notice of such meetings.
Section 3.11. NOTICE: Notice of annual, regular, and special meetings shall
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be in writing, stating the time and place, and shall be mailed to each Director
at his residence or regular place of business or caused to be delivered to him
personally or to be transmitted to him by telegraph, cable, or wireless at least
two (2) days before the day on which the meeting is to be held. Except as
otherwise required by the By-Laws or the Investment Company Act, such notice
need not include a statement of the business to be transacted at, or the purpose
of, the meeting. [ MGCL, Section 2-409(b) ]
Section 3.12. WAIVER OF NOTICE: No notice of any meeting need be given to
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any Director who is present at the meeting or to any Director who signs a waiver
of the notice of the meeting (which waiver shall be filed with the records of
the meeting), whether before or after the meeting. [ MGCL, Section 2-409(c) ]
Section 3.13. QUORUM AND VOTING: At all meetings of the Board of Directors
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the presence of one-third of the total number of Directors authorized, but not
less than two (2) Directors if there are at least two directors, shall
constitute a quorum. In the absence of a quorum, a majority of the Directors
present may adjourn the meeting, from time to time, until a quorum shall be
present. The action of a majority of the Directors present at a meeting at which
a quorum is present shall be the action of the Board of Directors unless the
concurrence of a greater proportion is required for such action by law, by the
Articles of Incorporation or by these By-Laws. [ MGCL, Section 2-408 ]
Section 3.14. CONFERENCE TELEPHONE: Members of the Board of Directors or of
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any committee designated by the Board, may participate in a meeting of the Board
or of such committee by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time, and participation by such means shall constitute
presence in person at such meeting. [ MGCL, Section 2-409(d) ]
Section 3.15. COMPENSATION: Each Director may receive such remuneration for
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his services as shall be fixed from time to time by resolution of the Board of
Directors.
Section 3.16. ACTION WITHOUT A MEETING: Any action required or permitted to
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be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting if a unanimous written consent which sets forth the
action is signed by all members of the Board or of such committee and such
written consent is filed with the minutes of proceedings of the Board or
committee. [ MGCL, Section 2-408(c) ]
Section 3.17. DIRECTOR EMERITUS: Upon the retirement of a Director of the
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Corporation, the Board of Directors may designate such retired Director as a
Director Emeritus. The position of Director Emeritus shall be honorary only and
shall not confer upon such Director Emeritus any responsibility, or voting
authority, whatsoever with respect to the Corporation. A Director Emeritus may,
but shall not be required to, attend the meetings of the Board of Directors and
receive materials normally provided Directors relating to the Corporation. The
Board of Directors may establish such compensation as it may deem appropriate
under the circumstances to be paid by the Corporation to a Director Emeritus.
<PAGE>
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ARTICLE IV
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EXECUTIVE COMMITTEE AND OTHER COMMITTEES
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Section 4.01. HOW CONSTITUTED: By resolution adopted by the Board of
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Directors, the Board may appoint from among its members one or more committees,
including an Executive Committee, each consisting of at least two (2) Directors.
Each member of a committee shall hold office during the pleasure of the Board. [
MGCL, Section 2-411 ]
Section 4.02. POWERS OF THE EXECUTIVE COMMITTEE: Unless otherwise provided
---------------------------------
by resolution of the Board of Directors, the Executive Committee, in the
intervals between meetings of the Board of Directors, shall have and may
exercise all of the powers of the Board of Directors to manage the business and
affairs of the Corporation except the power to:
(a) Declare dividends or distributions on stock;
(b)
Issue stock other than as provided in Section 2-411(b) of Corporations and
------------ ---
Associations Article of the Annotated Code of Maryland;
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(c)
Recommend to the shareholders any action which requires shareholder approval;
(d) Amend the By-Laws; or
(e)
Approve any merger or share exchange which does not require shareholder
approval.
[ MGCL, Section 2-411(a) ]
Section 4.03. OTHER COMMITTEES OF THE BOARD OF DIRECTORS: To the extent
------------------------------------------
provided by resolution of the Board, other committees shall have and may
exercise any of the powers that may lawfully be granted to the Executive
Committee. [ MGCL, Section 2-411(a) ]
Section 4.04. PROCEEDINGS, QUORUM, AND MANNER OF ACTING: In the absence of
-----------------------------------------
appropriate resolution of the Board of Directors, each committee may adopt such
rules and regulations governing its proceedings, quorum and manner of acting as
it shall deem proper and desirable, provided that the quorum shall not be less
than two (2) Directors. In the absence of any member of any such committee, the
members thereof present at any meeting, whether or not they constitute a quorum,
may appoint a member of the Board of Directors to act in the place of such
absent member. [ MGCL, Section 2-411(c) ]
Section 4.05. OTHER COMMITTEES: The Board of Directors may appoint other
----------------
committees, each consisting of one or more persons who need not be Directors.
Each such committee shall have such powers and perform such duties as may be
assigned to it from time to time by the Board of
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PAGE 34
Directors, but shall not exercise any power which may lawfully be exercised only
by the Board of Directors or a committee thereof.
ARTICLE V
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OFFICERS
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Section 5.01. GENERAL: The officers of the Corporation shall be a
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President, one or more Vice Presidents (one or more of whom may be designated
Executive Vice President), a Secretary, and a Treasurer, and may include one or
more Assistant Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be appointed in accordance
with the provisions of Section 5.11 hereof. The Board of Directors may elect,
but shall not be required to elect, a Chairman of the Board. [ MGCL, Section
2-412 ]
Section 5.02. ELECTION, TERM OF OFFICE AND QUALIFICATIONS: The officers of
-------------------------------------------
the Corporation (except those appointed pursuant to Section 5.11 hereof) shall
be elected by the Board of Directors at its first meeting and thereafter at each
annual meeting of the Board. If any officer or officers are not elected at any
such meeting, such officer or officers may be elected at any subsequent regular
or special meeting of the Board. Except as provided in Sections 5.03, 5.04, and
5.05 hereof, each officer elected by the Board of Directors shall hold office
until the next annual meeting of the Board of Directors and until his successor
shall have been chosen and qualified. Any person may hold two or more offices of
the Corporation, except that neither the Chairman of the Board, nor the
President, may hold the office of Vice President, but no person shall execute,
acknowledge, or verify any instrument in more than one capacity if such
instrument is required by law, the Articles of Incorporation, or these By-Laws
to be executed, acknowledged, or verified by two or more officers. The Chairman
of the Board shall be selected from among the Directors of the Corporation and
may hold such office only so long as he continues to be a Director. No other
officer need be a Director. [ MGCL, Sections 2-412, 2-413 and 2-415 ]
Section 5.03. RESIGNATION: Any officer may resign his office at any time by
-----------
delivering a written resignation to the Board of Directors, the President, the
Secretary, or any Assistant Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 5.04. REMOVAL: Any officer may be removed from office by the Board
-------
of Directors whenever in the judgment of the Board of Directors the best
interests of the Corporation will be served thereby. [ MGCL, Section 2-413(c) ]
Section 5.05 VACANCIES AND NEWLY CREATED OFFICES: If any vacancy shall
-----------------------------------
occur in any office by reason of death, resignation, removal, disqualification
or other cause, or if any new office shall be created, such vacancies or newly
created offices may be filled by the Board of Directors at any meeting or, in
the case of any office created pursuant to Section 5.11 hereof, by any officer
upon whom such power shall have been conferred by the Board of Directors. [
MGCL, Section 2-413(d) ]
Section 5.06. CHAIRMAN OF THE BOARD: Unless otherwise provided by
---------------------
resolution of the Board of Directors, the Chairman of the Board, if there be
such an officer, shall be the chief
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PAGE 35
executive and operating officer of the Corporation, shall preside at all
shareholders' meetings, and at all meetings of the Board of Directors. He shall
be ex officio a member of all standing committees of the Board of Directors.
----------
Subject to the supervision of the Board of Directors, he shall have general
charge of the business, affairs, property, and operation of the Corporation and
its officers, employees, and agents. He may sign (unless the President or a Vice
President shall have signed) certificates representing stock of the Corporation
authorized for issuance by the Board of Directors and shall have such other
powers and perform such other duties as may be assigned to him from time to time
by the Board of Directors.
Section 5.07. PRESIDENT: Unless otherwise provided by resolution of the
---------
Board of Directors, the President shall, at the request of or in the absence or
disability of the Chairman of the Board, or if no Chairman of the Board has been
chosen, he shall preside at all shareholders' meetings and at all meetings of
the Board of Directors and shall in general exercise the powers and perform the
duties of the Chairman of the Board. He may sign (unless the Chairman or a Vice
President shall have signed) certificates representing stock of the Corporation
authorized for issuance by the Board of Directors. Except as the Board of
Directors may otherwise order, he may sign in the name and on behalf of the
Corporation all deeds, bonds, contracts, or agreements. He shall exercise such
other powers and perform such other duties as from time to time may be assigned
to him by the Board of Directors.
Section 5.08. VICE PRESIDENT: The Board of Directors shall, from time to
--------------
time, designate and elect one or more Vice Presidents (one or more of whom may
be designated Executive Vice President) who shall have such powers and perform
such duties as from time to time may be assigned to them by the Board of
Directors or the President. At the request or in the absence or disability of
the President, the Vice President (or, if there are two or more Vice Presidents,
the Vice President in order of seniority of tenure in such office or in such
other order as the Board of Directors may determine) may perform all the duties
of the President and, when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. Any Vice President may sign
(unless the Chairman, the President, or another Vice President shall have
signed) certificates representing stock of the Corporation authorized for
issuance by the Board of Directors.
Section 5.09. TREASURER AND ASSISTANT TREASURERS: The Treasurer shall be
----------------------------------
the principal financial and accounting officer of the Corporation and shall have
general charge of the finances and books of account of the Corporation. Except
as otherwise provided by the Board of Directors, he shall have general
supervision of the funds and property of the Corporation and of the performance
by the custodian of its duties with respect thereto. He may countersign (unless
an Assistant Treasurer or Secretary or Assistant Secretary shall have
countersigned) certificates representing stock of the Corporation authorized for
issuance by the Board of Directors. He shall render to the Board of Directors,
whenever directed by the Board, an account of the financial condition of the
Corporation and of all his transactions as Treasurer; and as soon as possible
after the close of each fiscal year he shall make and submit to the Board of
Directors a like report for such fiscal year. He shall cause to be prepared
annually a full and correct statement of the affairs of the Corporation,
including a balance sheet and a financial statement of operations for the
preceding fiscal year, which shall be submitted at the annual meeting of
shareholders and filed within twenty (20) days thereafter at the principal
office of the Corporation. He shall perform all the acts incidental to the
office of the Treasurer, subject to the control of the Board of Directors. Any
Assistant Treasurer may perform
<PAGE>
PAGE 36
such duties of the Treasurer as the Treasurer or the Board of Directors may
assign, and, in the absence of the Treasurer, he may perform all the duties of
the Treasurer.
Section 5.10. SECRETARY AND ASSISTANT SECRETARIES: The Secretary shall
-----------------------------------
attend to the giving and serving of all notices of the Corporation and shall
record all proceedings of the meetings of the shareholders and Directors in one
or more books to be kept for that purpose. He shall keep in safe custody the
seal of the Corporation and shall have charge of the records of the Corporation,
including the stock books and such other books and papers as the Board of
Directors may direct and such books, reports, certificates and other documents
required by law to be kept, all of which shall at all reasonable times be open
to inspection by any Director. He shall countersign (unless the Treasurer, an
Assistant Treasurer or an Assistant Secretary shall have countersigned)
certificates representing stock of the Corporation authorized for issuance by
the Board of Directors. He shall perform such other duties as appertain to his
office or as may be required by the Board of Directors. Any Assistant Secretary
may perform such duties of the Secretary as the Secretary or the Board of
Directors may assign, and, in the absence of the Secretary, he may perform all
the duties of the Secretary.
Section 5.11. SUBORDINATE OFFICERS: The Board of Directors from time to
--------------------
time may appoint such other officers or agents as it may deem advisable, each of
whom shall have such title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The Board of
Directors from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities, and duties. [ MGCL, Section
2-412(b) ]
Section 5.12. REMUNERATION: The salaries or other compensation of the
------------
officers of the Corporation shall be fixed from time to time by resolution of
the Board of Directors, except that the Board of Directors may by resolution
delegate to any person or group of persons the power to fix the salaries or
other compensation of any subordinate officers or agents appointed in accordance
with the provisions of Section 5.11 hereof.
ARTICLE VI
----------
CUSTODY OF SECURITIES AND CASH
------------------------------
Section 6.01. EMPLOYMENT OF A CUSTODIAN: The Corporation shall place and at
-------------------------
all times maintain in the custody of a Custodian (including any sub-custodian
for the Custodian) all funds, securities, and similar investments owned by the
Corporation. The Custodian shall be a bank having an aggregate capital, surplus,
and undivided profits of not less than $10,000,000. Subject to such rules,
regulations, and orders as the Securities and Exchange Commission may adopt as
necessary or appropriate for the protection of investors, the Corporation's
Custodian may deposit all or a part of the securities owned by the Corporation
in a sub-custodian or sub-custodians situated within or without the United
States. The Custodian shall be appointed and its remuneration fixed by the Board
of Directors. [ Investment Company Act, Section 17(f) ]
<PAGE>
PAGE 37
Section 6.02. CENTRAL CERTIFICATE SERVICE: Subject to such rules,
---------------------------
regulations, and orders as the Securities and Exchange Commission may adopt as
necessary or appropriate for the protection of investors, the Corporation's
Custodian may deposit all or any part of the securities owned by the Corporation
in a system for the central handling of securities established by a national
securities exchange or national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, pursuant to which system all securities of
any particular class or series of any issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of such securities. [ Investment Company Act, Section
17(f) ]
Section 6.03. CASH ASSETS: The cash proceeds from the sale of securities
-----------
and similar investments and other cash assets of the Corporation shall be kept
in the custody of a bank or banks appointed pursuant to Section 6.01 hereof, or
in accordance with such rules and regulations or orders as the Securities and
Exchange Commission may from time to time prescribe for the protection of
investors, except that the Corporation may maintain a checking account or
accounts in a bank or banks, each having an aggregate capital, surplus, and
undivided profits of not less than $10,000,000, provided that the balance of
--------
such account or the aggregate balances of such accounts shall at no time exceed
the amount of the fidelity bond, maintained pursuant to the requirements of the
Investment Company Act and rules and regulations thereunder, covering the
officers or employees authorized to draw on such account or accounts. [
Investment Company Act, Section 17(f) ]
Section 6.04. FREE CASH ACCOUNTS: The Corporation may, upon resolution of
------------------
its Board of Directors, maintain a petty cash account free of the foregoing
requirements of this Article VI in an amount not to exceed $500, provided that
--------
such account is operated under the imprest system and is maintained subject to
adequate controls approved by the Board of Directors over disbursements and
reimbursements including, but not limited to, fidelity bond coverage for persons
having access to such funds. [ Investment Company Act, Rule 17f-3 ]
Section 6.05. ACTION UPON TERMINATION OF CUSTODIAN AGREEMENT: Upon
----------------------------------------------
resignation of a custodian of the Corporation or inability of a custodian to
continue to serve, the Board of Directors shall promptly appoint a successor
custodian, but in the event that no successor custodian can be found who has the
required qualifications and is willing to serve, the Board of Directors shall
call as promptly as possible a special meeting of the shareholders to determine
whether the Corporation shall function without a custodian or shall be
liquidated. If so directed by vote of the holders of a majority of the
outstanding shares of stock of the Corporation, the custodian shall deliver and
pay over all property of the Corporation held by it as specified in such vote.
<PAGE>
PAGE 38
ARTICLE VII
-----------
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
----------------------------------------------
Section 7.01. EXECUTION OF INSTRUMENTS: All deeds, documents, transfers,
------------------------
contracts, agreements, requisitions or orders, promissory notes, assignments,
endorsements, checks and drafts for the payment of money by the Corporation, and
other instruments requiring execution by the Corporation shall be signed by the
Chairman, the President, a Vice President, or the Treasurer, or as the Board of
Directors may otherwise, from time to time, authorize. Any such authorization
may be general or confined to specific instances.
Section 7.02. VOTING OF SECURITIES: Unless otherwise ordered by the Board
--------------------
of Directors, the Chairman, the President, or any Vice President shall have full
power and authority on behalf of the Corporation to attend and to act and to
vote, or in the name of the Corporation to execute proxies to vote, at any
meeting of shareholders of any company in which the Corporation may hold stock.
At any such meeting such officer shall possess and may exercise (in person or by
proxy) any and all rights, powers, and privileges incident to the ownership of
such stock. The Board of Directors may by resolution from time to time confer
like powers upon any other person or persons. [ MGCL, Section 2-509 ]
ARTICLE VIII
------------
CAPITAL STOCK
-------------
Section 8.01. CERTIFICATE OF STOCK:
--------------------
(a)
Certificates certifying the ownership of shares will not be issued for shares
purchased or otherwise acquired after July 1, 1991. The ownership of shares,
full or fractional, shall be recorded on the books of the Corporation or its
agent. The record books of the Corporation as kept by the Corporation or its
agent, as the case may be, shall be conclusive as to the number of shares held
from time to time by each shareholder. The Corporation reserves the right to
require the surrender of outstanding certificates if the Board of Directors so
determines. [ MGCL, Section 2-210(c) ]
(b)
Every certificate exchanged, surrendered for redemption or otherwise returned to
the Corporation shall be marked "Cancelled" with the date of cancellation.
(Section 8.01. Certificate of Stock, as amended July 1, 1991)
--------------------
Section 8.02. TRANSFER OF CAPITAL STOCK:
-------------------------
(a)
Shares of stock of the Corporation shall be transferable only upon the books of
the Corporation kept for such purpose and, if one or more certificates
representing such shares have been issued, upon surrender to the Corporation or
its transfer agent or agents of such certificate
<PAGE>
PAGE 39
or certificates duly endorsed, or accompanied by appropriate evidence of
assignment, transfer, succession, or authority to transfer.
(b)
The Corporation shall be entitled to treat the holder of record of any share of
stock as the absolute owner thereof for all purposes, and accordingly shall not
be bound to recognize any legal, equitable, or other claim or interest in such
share on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise expressly provided by the statutes of
the State of Maryland.
Section 8.03. TRANSFER AGENTS AND REGISTRARS: The Board of Directors may,
------------------------------
from time to time, appoint or remove transfer agents and registrars of transfers
of shares of stock of the Corporation, and it may appoint the same person as
both transfer agent and registrar.
(Section 8.03. Transfer Agents and Registrars, as amended July 1, 1991)
------------------------------
Section 8.04. TRANSFER REGULATIONS: The shares of stock of the Corporation
--------------------
may be freely transferred, and the Board of Directors may, from time to time,
adopt lawful rules and regulations with reference to the method of transfer of
the shares of stock of the Corporation.
Section 8.05. FIXING OF RECORD DATE: The Board of Directors may fix in
---------------------
advance a date as a record date for the determination of the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion, or exchange of stock, or for any other proper purpose, provided that
--------
such record date shall be a date not more than sixty (60) days nor, in the case
of a meeting of shareholders, less than ten (10) days prior to the date on which
the particular action, requiring such determination of shareholders, is to be
taken. In such case, only such shareholders as shall be shareholders of record
on the record date so fixed shall be entitled to such notice of, and to vote at,
such meeting or adjournment, or to give such consent, or to receive payment of
such dividend or other distribution, or to receive such allotment of rights, or
to exercise such rights, or to take other action, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
any such record date. A meeting of shareholders convened on the date for which
it was called may be adjourned from time to time without notice to a date not
more than one hundred twenty (120) days after the original record date. [ MGCL,
Section 2-511 ]
Section 8.06. LOST, STOLEN OR DESTROYED CERTIFICATES: If a certificate for
--------------------------------------
stock of the Corporation is alleged to have been lost, stolen or destroyed, no
new certificate will be issued. Instead, ownership of the shares formerly
represented by the lost, stolen or destroyed certificate shall be recorded on
the books of the Corporation or its agent, in accordance with the provisions of
Section 8.01 of the By-Laws. Before recording ownership of such shares, the
Board of Directors, or any officer authorized by the Board, may, in its
discretion, require the owner of the lost, stolen, or destroyed certificate (or
his legal representative) to give the Corporation a bond or other indemnity, in
such form and in such amount as the Board or any such officer may direct and
with such surety or sureties as may be satisfactory to the Board of any such
officer, sufficient to indemnify the Corporation against any claim that may be
made against it on account of the alleged loss, theft, or destruction of any
such certificate. [ MGCL, Section 2-213 ]
<PAGE>
PAGE 40
(Section 8.06. Lost, Stolen or Destroyed Certificates, as amended July 1, 1991)
--------------------------------------
ARTICLE IX
----------
FISCAL YEAR, ACCOUNTANT
-----------------------
Section 9.01. FISCAL YEAR: The fiscal year of the Corporation shall be the
-----------
twelve (12) calendar months beginning on the 1st day of January in each year and
ending on the last day of the following December, or such other period of twelve
(12) calendar months as the Board of Directors may by resolution prescribe.
Section 9.02. ACCOUNTANT:
----------
(a)
The Corporation shall employ an independent public accountant or firm of
independent public accountants for each series of the Corporation to examine the
accounts of the Corporation with respect to such series and to sign and certify
financial statements filed by the Corporation with respect to such series. The
certificates and reports of the accountant(s) shall be addressed both to the
Board of Directors and to the shareholders. The Corporation may employ a
different accountant with respect to each series.
(b)
A majority of the members of the Board of Directors who are not interested
persons (as such term is defined in the Investment Company Act) of the
Corporation shall select the accountant for each series, by vote cast in person,
at any meeting held before the first annual shareholder's meeting, and
thereafter shall select the accountant for such series annually, by vote cast in
person, at a meeting held within thirty (30) days before or after the beginning
of the fiscal year of the Corporation, within thirty (30) days before the annual
shareholders' meeting for such series in that year, or within such other period
of time as may be allowed under the Investment Company Act of 1940. Such
selection shall be submitted for ratification or rejection at the next
succeeding annual shareholders' meeting for such series. If such meeting shall
reject such selection, the accountant for such series shall be selected by a
majority vote of the outstanding voting securities of such series of the
Corporation, either at the meeting at which the rejection occurred or at a
subsequent meeting of shareholders for such series called for the purpose.
(c)
Any vacancy occurring between annual meetings, due to the resignation or
termination of the accountant of a series, may be filled by the vote of a
majority of those members of the Board of Directors who are not interested
persons (as so defined) of the Corporation, cast in person at a meeting called
for the purpose of voting on such action.
(d)
The employment of the accountant of a series shall be conditioned upon the right
of such series of the Corporation by a vote of a majority of the outstanding
voting securities of such series at any meeting called for the purpose to
terminate such employment forthwith without any penalty. [ Investment Company
Act, Section 32(a) ]
ARTICLE X
---------
<PAGE>
PAGE 41
INDEMNIFICATION AND INSURANCE
-----------------------------
Section 10.01. INDEMNIFICATION AND PAYMENT OF EXPENSES IN ADVANCE: The
--------------------------------------------------
Corporation shall indemnify any individual ("Indemnitee") who is a present or
former director, officer, employee, or agent of the Corporation, or who is or
has been serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, who, by reason of his position was, is, or is threatened to be
made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative
(hereinafter collectively referred to as a "Proceeding") against any judgments,
penalties, fines, settlements, and reasonable expenses (including attorneys'
fees) incurred by such Indemnitee in connection with any Proceeding, to the
fullest extent that such indemnification may be lawful under Maryland law. The
Corporation shall pay any reasonable expenses so incurred by such Indemnitee in
defending a Proceeding in advance of the final disposition thereof to the
fullest extent that such advance payment may be lawful under Maryland law.
Subject to any applicable limitations and requirements set forth in the
Corporation's Articles of Incorporation and in these By-Laws, any payment of
indemnification or advance of expenses shall be made in accordance with the
procedures set forth in Maryland law.
Notwithstanding the foregoing, nothing herein shall protect or purport to
protect any Indemnitee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office
("Disabling Conduct").
Anything in this Article X to the contrary notwithstanding, no
indemnification shall be made by the Corporation to any Indemnitee unless:
(a)
there is a final decision on the merits by a court or other body before whom the
Proceeding was brought that the Indemnitee was not liable by reason of Disabling
Conduct; or
(b)
in the absence of such a decision, there is a reasonable determination, based
upon a review of the facts, that the Indemnitee was not liable by reason of
Disabling Conduct, which determination shall be made by:
(i)
the vote of a majority of a quorum of directors who are neither "interested
persons" of the Corporation as defined in Section 2(a)(19) of the Investment
Company Act, nor parties to the Proceeding; or
(ii) an independent legal counsel in a written opinion.
Anything in this Article X to the contrary notwithstanding, any advance of
expenses by the Corporation to any Indemnitee shall be made only upon the
undertaking by such Indemnitee to repay the advance unless it is ultimately
determined that such Indemnitee is entitled to indemnification as above
provided, and only if one of the following conditions is met:
(a) the Indemnitee provides a security for his undertaking; or
<PAGE>
PAGE 42
(b)
the Corporation shall be insured against losses arising by reason of any lawful
advances; or
(c)
there is a determination, based on a review of readily available facts, that
there is reason to believe that the Indemnitee will ultimately be found entitled
to indemnification, which determination shall be made by:
(i)
a majority of a quorum of directors who are neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of the Investment Company Act, nor
parties to the Proceeding; or
(ii) an independent legal counsel in a written opinion.
Section 10.02. INSURANCE OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS: To
------------------------------------------------------
the fullest extent permitted by applicable Maryland law and by Section 17(h) of
the Investment Company Act, as from time to time amended, the Corporation may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the Corporation, or who is or was
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise, against any liability asserted against him and incurred by him in or
arising out of his position, whether or not the Corporation would have the power
to indemnify him against such liability. [ MGCL, Section 2-418(k) ]
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
PAGE 43
ARTICLE XI
----------
AMENDMENTS
----------
Section 11.01. GENERAL: Except as provided in Section 11.02 hereof, all
-------
By-Laws of the Corporation, whether adopted by the Board of Directors or the
shareholders, shall be subject to amendment, alteration, or repeal, and new
By-Laws may be made, by the affirmative vote of a majority of either:
(a)
the holders of record of the outstanding shares of stock of the Corporation
entitled to vote, at any annual or special meeting the notice or waiver of
notice of which shall have specified or summarized the proposed amendment,
alteration, repeal, or new By-Law; or
(b)
the Directors present at any regular or special meeting at which a quorum is
present if the notice or waiver of notice thereof or material sent to the
Directors in connection therewith on or prior to the last date for the giving of
such notice under these By-Laws shall have specified or summarized the proposed
amendment, alteration, repeal, or new By-Law.
Section 11.02. BY SHAREHOLDERS ONLY:
--------------------
(a)
No amendment of any section of these By-Laws shall be made except by the
shareholders of the Corporation if the shareholders shall have provided in the
By-Laws that such section may not be amended, altered, or repealed except by the
shareholders.
(b)
From and after the issue of any shares of the Capital Stock of the Corporation,
no amendment of this Article XI shall be made except by the shareholders of the
Corporation.
ARTICLE XII
-----------
MISCELLANEOUS
-------------
Section 12.01. USE OF THE TERM "ANNUAL MEETING:" The use of the term
---------------------------------
"annual meeting" in these By-Laws shall not be construed as implying a
requirement that a shareholder meeting be held annually.
The Custodian Agreement dated January 28, 1998, as amended, between State
Street Bank and Trust Company and T. Rowe Price Funds.
<PAGE>
CUSTODIAN AGREEMENT
THIS AGREEMENT is made as of January 28, 1998 by and between each entity
set forth on Appendix A hereto (as such Appendix A may be amended from time to
time) which executes a copy of this Agreement (each referred to herein as the
"FUND"), and State Street Bank and Trust Company, a Massachusetts trust company
with its principal place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "CUSTODIAN").
WITNESSETH:
WHEREAS, each Fund desires to retain the Custodian to act as custodian of
certain of the assets of the Fund, and the Custodian is willing to provide such
services to each Fund, upon the terms and conditions hereinafter set forth; and
WHEREAS, except as otherwise set forth herein, this Agreement is intended
to supersede that certain custodian contract among the parties hereto dated
September 28, 1987, as amended; and
WHEREAS, the Funds have retained CHASE MANHATTAN BANK, N.A. to act as the
Funds' custodian with respect to the assets of each such Fund to be held outside
of the United States of America (except as otherwise set forth in this
Agreement) pursuant to a written custodian agreement (the "FOREIGN CUSTODIAN
AGREEMENT"),
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, each of the parties hereto agrees as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT.
Each Fund hereby employs the Custodian as the custodian of certain of its
assets, including those securities it desires to be held within the United
States of America ("DOMESTIC SECURITIES") and those securities it desires to be
held outside the United States of America (the "UNITED STATES") which are (i)
not held on the Funds' behalf by CHASE MANHATTAN BANK, N.A. pursuant to the
Foreign Custodian Agreement and (ii) described with greater particularity in
Section 3 hereof (such securities shall be referred to herein as "FOREIGN
SECURITIES"). Each Fund agrees to deliver to the Custodian all domestic
securities, foreign securities and cash owned by it from time to time, and all
payments of income, payments of principal or capital distributions received by
it with respect to
<PAGE>
securities held by it hereunder, and the cash consideration received by it for
such new or treasury shares of capital stock of each Fund as may be issued or
sold from time to time ("SHARES"). The Custodian shall not be responsible for
any property of any Fund held or received by such Fund (i) not delivered to the
Custodian, or (ii) held in the custody of CHASE MANHATTAN BANK N.A.
The Custodian is authorized to employ one or more sub-custodians located
within the United States, provided that the Custodian shall have obtained the
written acknowledgment of the Fund with respect to such employment. The
Custodian is authorized to employ sub-custodians located outside the United
States as noted on Schedule A attached hereto (as such Schedule A may be amended
from time to time). The Custodian shall have no more or less responsibility or
liability to any Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian and
shall not release any sub-custodian from any responsibility or liability unless
so agreed in writing by the Custodian and the applicable Fund. With the
exception of State Street Bank and Trust Company (London branch), the Custodian
shall not be liable for losses arising from the bankruptcy, insolvency or
receivership of any sub-custodian located outside the United States.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUNDS HELD
BY THE CUSTODIAN IN THE UNITED STATES.
SECTION 2.1
HOLDING SECURITIES. The Custodian shall hold and physically segregate for the
account of each Fund all non-cash property to be held by it in the United
States, including all domestic securities owned by the Fund other than (a)
securities which are maintained pursuant to Section 2.9 in a clearing agency
which acts as a securities depository or in a book-entry system authorized by
the United States Department of the Treasury and certain federal agencies (each,
a "U.S. SECURITIES SYSTEM") and (b) commercial paper of an issuer for which the
Custodian acts as issuing and paying agent ("DIRECT PAPER") which is deposited
and/or maintained in the Direct Paper system of the Custodian (the "DIRECT PAPER
SYSTEM") pursuant to Section 2.10.
SECTION 2.2
DELIVERY OF INVESTMENTS. The Custodian shall release and deliver domestic
investments owned by a Fund held by the Custodian or in a U.S. Securities System
account of the Custodian or in the Custodian's Direct Paper System account
("DIRECT PAPER SYSTEM ACCOUNT") only upon receipt of Proper Instructions, which
<PAGE>
may be continuing instructions when agreed to by the parties, and only in the
following cases:
1)Upon sale of such investments for the account of the Fund and
receipt of payment therefor;
2)Upon the receipt of payment in connection with any repurchase
agreement related to such investments entered into by the Fund;
3)
In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.9 hereof;
4)
To the depository agent in connection with tender or other similar
offers for portfolio investments of the Fund;
5)
To the issuer thereof or its agent when such investments are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6)
To the issuer thereof, or its agent, for transfer into the name of
the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.8 or into the name or nominee name of any
sub-custodian appointed pursuant to Section 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
7)
Upon the sale of such investments for the account of the Fund, to
the broker or its clearing agent, against a receipt, for examination
in accordance with usual "street delivery" custom; provided that in
any such case the Custodian shall have no responsibility or
liability for any loss arising from the delivery of such investments
prior to receiving payment for such investments except as may arise
from the Custodian's own negligence or willful misconduct;
<PAGE>
8)For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the investments of the issuer of such investments, or pursuant to
provisions for conversion contained in such investments, or pursuant
to any deposit agreement; provided that, in any such case, the new
investments and cash, if any, are to be delivered to the Custodian;
9)In the case of warrants, rights or similar investments, the
surrender thereof in the exercise of such warrants, rights or
similar investments or the surrender of interim receipts or
temporary investments for definitive investments; provided that, in
any such case, the new investments and cash, if any, are to be
delivered to the Custodian or against a receipt;
10)
For delivery in connection with any loans of investments made on
behalf of the Fund, but only against receipt of adequate collateral
as agreed upon from time to time by the Fund or its duly-appointed
agent (which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities, or such
other property as the Fund may agree), except that in connection
with any loans for which collateral is to be credited to the
Custodian's account in the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian will not be held liable or
responsible for the delivery of investments owned by the Fund prior
to the receipt of such collateral in the absence of the Custodian's
negligence or willful misconduct;
11)
For delivery as security in connection with any borrowing by the
Fund requiring a pledge of assets by the Fund, but only against
receipt of amounts borrowed, except where additional collateral is
required to secure a borrowing already made, subject to Proper
Instructions, further securities may be released and delivered for
that purpose;
12)
For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "EXCHANGE ACT") and a
member of The National Association of Securities Dealers, Inc.
("NASD"),
<PAGE>
relating to compliance with the rules of The Options Clearing
Corporation, the rules of any registered national securities
exchange or of any similar organization or organizations, or under
the Investment Company Act of 1940, as amended from time to time
(the "1940 ACT"), regarding escrow or other arrangements in
connection with transactions by the Fund;
13)
For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or
any Contract Market, or any similar organization or organizations,
or under the 1940 Act, regarding account deposits in connection with
transactions by the Fund;
14)
Upon receipt of instructions from the transfer agent for the Fund
(the "TRANSFER AGENT"), for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind, as
may be described from time to time in the Fund's currently effective
prospectus, statement of additional information or other offering
documents (all, as amended, supplemented or revised from time to
time, the "PROSPECTUS"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15)
For any other purpose, but only upon receipt of Proper Instructions
specifying (a) the investments to be delivered, (b) setting forth
the purpose for which such delivery is to be made, and (c) naming
the person or persons to whom delivery of such investments shall be
made.
SECTION 2.3
REGISTRATION OF INVESTMENTS. Domestic investments held by the Custodian (other
than bearer securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Custodian which nominee
shall be assigned exclusively to the Fund, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with other registered
investment companies having the same investment adviser as the Fund, or in the
name or nominee name of any agent appointed pursuant to Section 2.8 or in the
name or nominee name of any sub-custodian appointed pursuant to Section 1. All
securities accepted by the Custodian on behalf of the Fund under the terms of
<PAGE>
this Agreement shall be in good deliverable form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund of relevant corporate actions including,
without limitation, pendency of calls, maturities, tender or exchange offers.
SECTION 2.4
BANK ACCOUNTS. The Custodian shall open and maintain a separate bank account or
accounts in the United States in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Agreement, and shall
hold in such account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Fund, other than cash maintained
by the Fund in a bank account established and used in accordance with Rule 17f-3
under the 1940 Act. Monies held by the Custodian for the Fund may be deposited
by the Custodian to its credit as custodian in the banking department of the
Custodian or in such other banks or trust companies as it may in its discretion
deem necessary or desirable in the performance of its duties hereunder;
provided, however, that every such bank or trust company shall be qualified to
act as a custodian under the 1940 Act, and that each such bank or trust company
and the funds to be deposited with each such bank or trust company shall be
approved by vote of a majority of the board of directors or the board of
trustees of the applicable Fund (as appropriate and in each case, the "BOARD").
Such funds shall be deposited by the Custodian in its capacity as custodian and
shall be withdrawable by the Custodian only in that capacity.
SECTION 2.5
COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the Custodian
shall collect on a timely basis all income and other payments with respect to
United States registered investments held hereunder to which the Fund shall be
entitled either by law or pursuant to custom in the investments business, and
shall collect on a timely basis all income and other payments with respect to
United States bearer investments if, on the date of payment by the issuer, such
investments are held by the Custodian or its agent thereof and shall credit such
income, as collected, to the Fund's custodian account. Without limiting the
generality of the foregoing, the Custodian shall detach and present for payment
all coupons and other income items requiring presentation as and when they
become due, collect interest when due on investments held hereunder, and receive
and collect all stock dividends, rights and other items of like nature as and
when they become due and payable. With respect to income due the Fund on United
States investments of the Fund loaned (pursuant to the provisions of Section 2.2
(10))
<PAGE>
in accordance with a separate agreement between the Fund and the Custodian in
its capacity as lending agent, collection thereof shall be in accordance with
the terms of such agreement. Except as otherwise set forth in the immediately
preceding sentence, income due the Fund on United States investments of the Fund
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund; the Custodian will have no duty or responsibility in
connection therewith other than to provide the Fund with such information or
data as may be necessary to assist the Fund in arranging for the timely delivery
to the Custodian of the income to which the Fund is properly entitled.
SECTION 2.6
PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which may be
continuing instructions when agreed to by the parties, the Custodian shall, from
monies of the Fund held by the Custodian, pay out such monies in the following
cases only:
1)Upon the purchase of domestic investments, options, futures
contracts or options on futures contracts for the account of the
Fund but only (a) against the delivery of such investments, or
evidence of title to such options, futures contracts or options on
futures contracts, to the Custodian (or any bank, banking firm or
trust company doing business in the United States or abroad which is
qualified under the 1940 Act to act as a custodian and has been
designated by the Custodian as its agent for this purpose in
accordance with Section 2.8) registered in the name of the Fund or
in the name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.9 hereof; (c) in the case of a
purchase involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.10 hereof; or (d) for transfer to
a time deposit account of the Fund in any bank, whether domestic or
foreign, such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions;
2)
In connection with conversion, exchange or surrender of investments
owned by the Fund as set forth in Section 2.2 hereof;
<PAGE>
3)
For the redemption or repurchase of Shares as set forth in Section 4
hereof;
4)
For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account
of the Fund: interest, taxes, management fees, accounting fees,
transfer agent fees, legal fees, and operating expenses of the Fund
(whether or not such expenses are to be in whole or part capitalized
or treated as deferred expenses);
5) For the payment of any dividends declared by the Board;
6)For payment of the amount of dividends received in respect of
investments sold short;
7)
For repayment of a loan upon redelivery of pledged securities and
upon surrender of the note(s), if any, evidencing the loan; or
8)
In connection with any repurchase agreement entered into by the Fund
with respect to which the collateral is held by the Custodian, the
Custodian shall act as the Fund's "securities intermediary"( as that
term is defined in Part 5 of Article 8 of the Massachusetts Uniform
Commercial Code, as amended), and, as securities intermediary, the
Custodian shall take the following steps on behalf of the Fund: (a)
provide the Fund with notification of the receipt of the purchased
securities, and (b), by book-entry identify on the books of the
Custodian as belonging to the Fund uncertificated securities
registered in the name of the Fund and held in the Custodian's
account at the Federal Reserve Bank. In connection with any
repurchase agreement entered into by the Fund with respect to which
the collateral is not held by the Custodian, the Custodian shall (a)
provide the Fund with such notification as it may receive with
respect to such collateral, and (b), by book-entry or otherwise,
identify as belonging to the Fund securities as shown in the
Custodian's account on the books of the entity appointed by the Fund
to hold such collateral.
9)
For any other purpose, but only upon receipt of Proper Instructions
specifying (a) the amount of such payment,
<PAGE>
(b) setting forth the purpose for which such payment is to be made,
and (c) naming the person or persons to whom such payment is to be
made.
SECTION 2.7
LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. In any
and every case where payment for purchase of domestic securities for the
account of the Fund is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from the
Fund to so pay in advance, the Custodian shall be absolutely liable to the Fund
for such securities to the same extent as if the securities had been received by
the Custodian.
SECTION 2.8
APPOINTMENT OF AGENTS. The Custodian may at any time or times in its discretion
appoint (and may at any time remove) any other bank or trust company, which is
itself qualified under the 1940 Act to act as a custodian, as its agent to carry
out such of the provisions of this Section 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any such agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
SECTION 2.9
DEPOSIT OF INVESTMENTS IN U.S. SECURITIES SYSTEMS. The Custodian may deposit
and/or maintain domestic investments owned by the Fund in a U.S. Securities
System in accordance with applicable Federal Reserve Board and United States
Securities and Exchange Commission ("SEC") rules and regulations, if any,
subject to the following provisions:
1)
The Custodian may keep domestic investments of the Fund in a U.S.
Securities System provided that such investments are represented in
an account of the Custodian in the U.S. Securities System
("ACCOUNT") which shall not include any assets of the Custodian
other than assets held as a fiduciary, custodian or otherwise for
customers;
2)
The records of the Custodian with respect to domestic investments of
the Fund which are maintained in a U.S. Securities System shall
identify by book-entry those investments belonging to the Fund;
3)
The Custodian shall pay for domestic investments purchased for the
account of the Fund upon (i) receipt of advice from the U.S.
Securities System that such investments have been transferred to the
Account, and
<PAGE>
(ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Fund. The
Custodian shall transfer domestic investments sold for the account
of the Fund upon (i) receipt of advice from the U.S. Securities
System that payment for such investments has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of
the Fund. Copies of all advices from the U.S. Securities System of
transfers of domestic investments for the account of the Fund shall
identify the Fund, be maintained for the Fund by the Custodian and
be provided to the Fund at its request. Upon request, the Custodian
shall furnish the Fund confirmation of each transfer to or from the
account of the Fund in the form of a written advice or notice and
shall furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in the U.S. Securities System for
the account of the Fund;
4)
The Custodian shall provide the Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system,
internal accounting control and procedures for safeguarding domestic
investments deposited in the U.S. Securities System;
5)
The Custodian shall have received from the Fund the initial or
annual certificate, as the case may be, described in Section 10
hereof; and
6)
Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the U.S. Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any of
its agents or of any of its or their employees, or from failure of
the Custodian or any such agent to enforce effectively such rights
as it may have against the U.S. Securities System. At the election
of the Fund, the Fund shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim against the U.S.
Securities System or any other person which the Custodian may have
as a consequence of any such loss, expense or damage if and to the
extent that
<PAGE>
the Fund has not been made whole for any such loss, expense or
damage.
SECTION 2.10
FUND ASSETS HELD IN THE DIRECT PAPER SYSTEM. The Custodian may deposit and/or
maintain investments owned by the Fund in the Direct Paper System subject to the
following provisions:
1)
No transaction relating to investments in the Direct Paper System
will be effected in the absence of Proper Instructions;
2)
The Custodian may keep investments of the Fund in the Direct Paper
System only if such investments are represented in the Direct Paper
System Account, which account shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
3)
The records of the Custodian with respect to investments of the Fund
which are maintained in the Direct Paper System shall identify by
book-entry those investments belonging to the Fund;
4)
The Custodian shall pay for investments purchased for the account of
the Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of investments to the account
of the Fund. The Custodian shall transfer investments sold for the
account of the Fund upon the making of an entry on the records of
the Custodian to reflect such transfer and receipt of payment for
the account of the Fund;
5)
The Custodian shall furnish the Fund confirmation of each transfer
to or from the account of the Fund, in the form of a written advice
or notice, of Direct Paper on the next business day following such
transfer and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transaction in the Direct Paper System
for the account of the Fund; and
6)
The Custodian shall provide the Fund with any report on its system
of internal accounting control as the Fund may reasonably request
from time to time.
SECTION 2.11
SEGREGATED ACCOUNT. The Custodian shall, upon receipt of Proper Instructions,
establish and maintain a segregated
<PAGE>
account or accounts for and on behalf of the Fund, into which account or
accounts may be transferred cash and/or investments, including investments
maintained in an account by the Custodian pursuant to Section 2.10 hereof, (i)
in accordance with the provisions of any agreement among the Fund, the Custodian
and a broker-dealer registered under the Exchange Act and a member of the NASD
(or any futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund, (ii) for purposes of segregating cash
or government investments in connection with options purchased, sold or written
by the Fund or commodity futures contracts or options thereon purchased or sold
by the Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by 1940 Act Release No. 10666, or any other procedures
subsequently required under the 1940 Act relating to the maintenance of
segregated accounts by registered investment companies, and (iv) for other
purposes, but only, in the case of clause (iv) upon receipt of Proper
Instructions specifying (a) the investments to be delivered, (b) setting forth
the purpose for which such delivery is to be made, and (c) naming the person or
persons to whom delivery of such investments shall be made.
SECTION 2.12
OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute ownership
and other certificates and affidavits for all United States federal and state
tax purposes in connection with receipt of income or other payments with respect
to domestic investments of the Fund held by it hereunder and in connection with
transfers of such investments.
SECTION 2.13
PROXIES. The Custodian shall, with respect to the domestic investments held
hereunder, cause to be promptly executed by the registered holder of such
investments, if the investments are registered otherwise than in the name of the
Fund or a nominee of the Fund, all proxies without indication of the manner in
which such proxies are to be voted, and shall promptly deliver to the Fund such
proxies, all proxy soliciting materials received by the Custodian and all
notices received relating to such investments.
SECTION 2.14
COMMUNICATIONS RELATING TO FUND INVESTMENTS. Subject to the provisions of
Section 2.3, the Custodian shall transmit promptly to the Fund all written
information (including, without limitation, pendency of calls and maturities of
domestic investments and expirations of rights in connection therewith and
notices of
<PAGE>
exercise of call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the Custodian in connection
with the domestic investments being held for the Fund pursuant to this
Agreement. With respect to tender or exchange offers, the Custodian shall
transmit to the Fund all written information received by the Custodian, any
agent appointed pursuant to Section 2.8 hereof, or any sub-custodian appointed
pursuant to Section 1 hereof, from issuers of the domestic investments whose
tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Fund desires to take action with respect to
any tender offer, exchange offer or any other similar transaction, the Fund
shall notify the Custodian at least two (2) New York Stock Exchange business
days prior to the time such action must be taken under the terms of the tender,
exchange offer or other similar transaction, and it will be the responsibility
of the Custodian to timely transmit to the appropriate person(s) such notice.
Where the Fund provides the Custodian with less than two (2) New York Stock
Exchange business days notice of its desired action, the Custodian shall use its
best efforts to timely transmit the Fund's notice to the appropriate person. It
is expressly noted that the parties may agree to alternative procedures with
respect to such two (2) New York Stock Exchange business days notice period on a
selective and individual basis.
SECTION 2.15
REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. The Custodian shall provide
the Fund, at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding investments, futures contracts and
options on futures contracts, including domestic investments deposited and/or
maintained in a U.S. Securities System, relating to the services provided by the
Custodian under this Agreement. Such reports shall be of sufficient scope and
detail, as may reasonably be required by the Fund, to provide reasonable
assurance that any material inadequacies would be disclosed by such examination,
and if there are no such inadequacies the reports shall so state.
SECTION 3. DUTIES OF THE CUSTODIAN WITH RESPECT TO CERTAIN PROPERTY OF THE
FUNDS HELD OUTSIDE OF THE UNITED STATES
SECTION 3.1
DEFINITIONS. The following capitalized terms shall have the respective following
meanings:
"FOREIGN SECURITIES SYSTEM" means a clearing agency or a securities depository
listed on Schedule A hereto.
<PAGE>
"FOREIGN SUB-CUSTODIAN" means a foreign banking institution set forth on
Schedule A hereto.
SECTION 3.2
HOLDING SECURITIES. The Custodian shall identify on its books as belonging to
the Funds the foreign securities held by each Foreign Sub-Custodian or Foreign
Securities System. The Custodian may hold foreign securities for all of its
customers, including the Funds, with any Foreign Sub-Custodian in an account
that is identified as belonging to the Custodian for the benefit of its
customers, provided however, that (i) the records of the Custodian with respect
to foreign securities of the Funds which are maintained in such account shall
identify those securities as belonging to the Funds and (ii) the Custodian shall
require that securities so held by the Foreign Sub-Custodian be held separately
from any assets of such Foreign Sub-Custodian or of other customers of such
Foreign Sub-Custodian.
SECTION 3.3
FOREIGN SECURITIES SYSTEMS. Foreign securities shall be maintained in a Foreign
Securities System in a designated country only through arrangements implemented
by the Foreign Sub-Custodian in such country pursuant to the terms of this
Agreement.
SECTION 3.4 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
3.4.1.
Delivery of Foreign Securities. The Custodian or a Foreign Sub-Custodian shall
- -------- -- ------- -----------
release and deliver foreign securities of the Funds held by such Foreign
Sub-Custodian, or in a Foreign Securities System account, only upon receipt of
Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(i)
upon the sale of such foreign securities for the Funds in accordance
with reasonable market practice in the country where such foreign
securities are held or traded, including, without limitation: (A)
delivery against expectation of receiving later payment; or (B) in
the case of a sale effected through a Foreign Securities System in
accordance with the rules governing the operation of the Foreign
Securities System;
(ii)
in connection with any repurchase agreement related to foreign
securities;
<PAGE>
(iii)
to the depository agent in connection with tender or other similar
offers for foreign securities of the Funds;
(iv)
to the issuer thereof or its agent when such foreign securities are
called, redeemed, retired or otherwise become payable;
(v)
to the issuer thereof, or its agent, for transfer into the name of
the Custodian (or the name of the respective Foreign Sub-Custodian
or of any nominee of the Custodian or such Foreign Sub-Custodian)
or for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or number
of units;
(vi)
to brokers, clearing banks or other clearing agents for examination
or trade execution in accordance with market custom; provided that
in any such case the Foreign Sub-Custodian shall have no
responsibility or liability for any loss arising from the delivery
of such securities prior to receiving payment for such securities
except as may arise from the Foreign Sub-Custodian's own negligence
or willful misconduct;
(vii)for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement;
(viii)
in the case of warrants, rights or similar foreign securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or temporary
securities for definitive securities;
(ix)
or delivery as security in connection with any borrowing by the
Funds requiring a pledge of assets by the Funds;
(x)in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
<PAGE>
(xi) in connection with the lending of foreign securities; and
(xii)
for any other proper purpose, but only upon receipt of Proper
Instructions specifying the foreign securities to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper Fund purpose, and naming the
person or persons to whom delivery of such securities shall be made.
3.4.2.
Payment of Fund Monies. Upon receipt of Proper Instructions, which may be
- ------- -- ---- -------
continuing instructions when deemed appropriate by the parties, the Custodian
shall pay out, or direct the respective Foreign Sub-Custodian or the respective
Foreign Securities System to pay out, monies of a Fund in the following cases
only:
(i)upon the purchase of foreign securities for the Fund, unless
otherwise directed by Proper Instructions, by (A) delivering money
to the seller thereof or to a dealer therefor (or an agent for such
seller or dealer) against expectation of receiving later delivery of
such foreign securities; or (B) in the case of a purchase effected
through a Foreign Securities System, in accordance with the rules
governing the operation of such Foreign Securities System;
(ii)
in connection with the conversion, exchange or surrender of foreign
securities of the Fund;
(iii)
for the payment of any expense or liability of the Fund, including
but not limited to the following payments: interest, taxes,
investment advisory fees, transfer agency fees, fees under this
Agreement, legal fees, accounting fees, and other operating
expenses;
(iv)
for the purchase or sale of foreign exchange or foreign exchange
contracts for the Fund, including transactions executed with or
through the Custodian or its Foreign Sub-Custodians;
(v)in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
<PAGE>
(vii)
in connection with the borrowing or lending of foreign securities;
and
(viii)
for any other proper Fund purpose, but only upon receipt of Proper
Instructions specifying the amount of such payment, setting forth
the purpose for which such payment is to be made, declaring such
purpose to be a proper Fund purpose, and naming the person or
persons to whom such payment is to be made.
3.4.3.
Market Conditions. Notwithstanding any provision of this Agreement to the
- ------ -----------
contrary, settlement and payment for foreign securities received for the account
of the Funds and delivery of foreign securities maintained for the account of
the Funds may be effected in accordance with the customary established
securities trading or processing practices and procedures in the country or
market in which the transaction occurs, including, without limitation,
delivering foreign securities to the purchaser thereof or to a dealer therefor
(or an agent for such purchaser or dealer) with the expectation of receiving
later payment for such foreign securities from such purchaser or dealer.
SECTION 3.5
REGISTRATION OF FOREIGN SECURITIES. The foreign securities maintained in the
custody of a Foreign Custodian (other than bearer securities) shall be
registered in the name of the applicable Fund or in the name of the Custodian or
in the name of any Foreign Sub-Custodian or in the name of any nominee of the
foregoing, and the Fund agrees to hold any such nominee harmless from any
liability as a holder of record of such foreign securities. The Custodian or a
Foreign Sub-Custodian shall not be obligated to accept securities on behalf of a
Fund under the terms of this Agreement unless the form of such securities and
the manner in which they are delivered are in accordance with reasonable market
practice.
SECTION 3.6
BANK ACCOUNTS. A bank account or bank accounts opened and maintained outside
the United States on behalf of a Fund with a Foreign Sub-Custodian shall be
subject only to draft or order by the Custodian or such Foreign Sub-Custodian,
acting pursuant to the terms of this Agreement to hold cash received by or from
or for the account of the Fund.
SECTION 3.7
COLLECTION OF INCOME. The Custodian shall use reasonable commercial efforts to
collect all income and other payments with respect to the foreign securities
held hereunder to which the Funds shall be entitled and shall credit such
income, as
<PAGE>
collected, to the applicable Fund. In the event that extraordinary measures are
required to collect such income, the Fund and the Custodian shall consult as to
such measures and as to the compensation and expenses of the Custodian relating
to such measures.
SECTION 3.8
PROXIES. With respect to the foreign securities held under this Section 3, the
Custodian will use reasonable commercial efforts to facilitate the exercise of
voting and other shareholder proxy rights, subject always to the laws,
regulations and practical constraints that may exist in the country where such
securities are issued. The Fund acknowledges that local conditions, including
lack of regulation, onerous procedural obligations, lack of notice and other
factors may have the effect of severely limiting the ability of the Fund to
exercise shareholder rights.
SECTION 3.9
COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The Custodian shall transmit
promptly to the Fund written information (including, without limitation,
pendency of calls and maturities of foreign securities and expirations of rights
in connection therewith) received by the Custodian in connection with the
foreign securities being held for the account of the Fund. With respect to
tender or exchange offers, the Custodian shall transmit promptly to the Fund
written information so received by the Custodian in connection with the foreign
securities whose tender or exchange is sought or from the party (or its agents)
making the tender or exchange offer.
SECTION 3.10
LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN SECURITIES SYSTEMS. Each
agreement pursuant to which the Custodian employs as a Foreign Sub-Custodian
shall, to the extent possible, require the Foreign Sub-Custodian to exercise
reasonable care in the performance of its duties and, to the extent possible, to
indemnify, and hold harmless, the Custodian from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with the
Foreign Sub-Custodian's performance of such obligations. At the Fund's
election, the Funds shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a Foreign Sub-Custodian as a
consequence of any such loss, damage, cost, expense, liability or claim if and
to the extent that the Funds have not been made whole for any such loss, damage,
cost, expense, liability or claim.
SECTION 3.11
TAX LAW. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as custodian
of the Funds by
<PAGE>
the tax law of the United States or of any state or political subdivision
thereof. It shall be the responsibility of the Fund to notify the Custodian of
the obligations imposed on the Fund or the Custodian as custodian of the Funds
by the tax law of countries set forth on Schedule A hereto, including
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of countries for which the Fund has provided such
information.
SECTION 4. PAYMENTS FOR REPURCHASES OR REDEMPTIONS AND SALES OF SHARES.
From such funds as may be available for the purpose, the Custodian shall,
upon receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares which have delivered to the Transfer Agent a
request for redemption or repurchase of their Shares. In connection with the
redemption or repurchase of Shares, the Custodian is authorized upon receipt of,
and in accordance with, instructions from the Transfer Agent to wire funds to or
through a commercial bank designated by the redeeming shareholders. In
connection with the redemption or repurchase of Shares, the Custodian shall
honor checks drawn on the Custodian by a holder of Shares, which checks have
been furnished by the Fund to the holder of Shares, when presented to the
Custodian in accordance with such written procedures and controls as may be
mutually agreed upon from time to time between the Fund and the Custodian.
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent and deposit to the account of the Fund such payments as are
received by the distributor or the Transfer Agent, as the case may be, for
Shares issued or sold from time to time. The Custodian will notify the Fund and
the Transfer Agent of any payments for Shares received by it from time to time.
SECTION 5. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME.
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board to keep the books of account of the
Fund and/or compute the net asset value per Share of the outstanding Shares or,
if directed in writing
<PAGE>
to do so by the Fund, shall itself keep such books of account and/ or compute
such net asset value per Share. If so directed, the Custodian shall also (i)
calculate daily the net income of the Fund as described in the Prospectus and
shall advise the Fund and the Transfer Agent daily of the total amounts of such
net income, and/ or (ii) advise the Transfer Agent periodically of the division
of such net income among its various components. The calculations of the net
asset value per share and the daily income of the Fund shall be made at the time
or times described from time to time in the Prospectus.
SECTION 6. PROPER INSTRUCTIONS.
"Proper Instructions," as such term is used throughout this Agreement,
means either (i) a writing, including a facsimile transmission, signed by one or
more persons as set forth on, and in accordance with, an "Authorized Persons
List," as such term is defined herein (each such instruction a "Written Proper
Instruction"), (ii) a "Client Originated Electronic Financial Instruction," as
such term is defined in the Data Access Services Addendum hereto, given in
accordance with the terms of such Addendum, or (iii) instructions received by
the Custodian from a third party in accordance with any three-party agreement
which requires a segregated asset account in accordance with Section 2.11.
Each Written Proper Instruction shall set forth a brief description of the
type of transaction involved (choosing from among the types of transactions set
forth on the Authorized Persons List), including a specific statement of the
purpose for which such action is requested, and any modification to a Written
Proper Instruction must itself be a Written Proper Instruction and subject to
all the provisions herein relating to Written Proper Instructions. The Fund
will provide the Custodian with an "Authorized Persons List," which list shall
set forth (a) the names of the individuals (each an "Authorized Person") who are
authorized by the Board to give Written Proper Instructions with respect to the
transactions described therein, and (b) the number of Authorized Persons whose
signature or approval, as the case may be, is necessary for the Custodian to be
able to act in accordance with such Written Proper Instructions with respect to
a particular type of transaction. The Custodian may accept oral instructions or
instructions delivered via electronic mail as Proper Instructions if the
Custodian reasonably believes such instructions to have been given by an
Authorized Person or Persons (as appropriate to the type of transaction);
provided, however, that in no event will instructions delivered orally or via
electronic mail be considered Proper
<PAGE>
Instructions with respect to transactions involving the movement of cash,
securities or other assets of a Fund. The Custodian shall be entitled to rely
upon instructions given in accordance with an Authorized Persons List until it
actually receives written notice from the Board of the applicable Fund to the
contrary.
SECTION 7. EVIDENCE OF AUTHORITY.
Subject to Section 9 hereof, the Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or other instrument
or paper reasonably and in good faith believed by it to be genuine and to have
been properly executed by or on behalf of the Fund. The Custodian may receive
and accept a copy of a vote of the Board, certified by the secretary or an
assistant secretary of the applicable Fund, as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board described in such vote, and such
vote may be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.
SECTION 8. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY.
The Custodian may in its discretion and without express authority from the
Fund:
1)
make payments to itself or others for minor expenses of handling
investments or other similar items relating to its duties under this
Agreement, provided that all such payments shall be accounted for to
the Fund;
2) surrender investments in temporary form for investments in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the investments and property of the Fund except as
otherwise directed by the Board.
SECTION 9. RESPONSIBILITY OF CUSTODIAN.
<PAGE>
The Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. Notwithstanding anything to the
contrary herein, the Custodian shall be held to the exercise of reasonable care
in carrying out the provisions of this Agreement, and it shall be kept
indemnified by and shall be without liability to the Fund for any action taken
or omitted by it in good faith without negligence. In order for the
indemnification provision contained in this Section to apply, it is understood
that if in any case the Fund may be asked by the Custodian to indemnify or hold
the Custodian harmless, the Fund shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Custodian will use reasonable care to identify, and notify
the Fund promptly concerning, any situation which presents or appears likely to
present the probability of such a claim for indemnification. The Fund shall
have the option to defend the Custodian against any claim which may be the
subject of a claim for indemnification hereunder, and in the event that the Fund
so elects, it will notify the Custodian thereof and, thereupon, (i) the Fund
shall take over complete defense of the claim and (ii) the Custodian shall
initiate no further legal or other expenses with respect to such claim. The
Custodian shall in no case confess any claim or make any compromise with respect
to any claim for which it will seek indemnity from the Fund except with the
Fund's prior written consent. Nothing herein shall be construed to limit any
right or cause of action on the part of the Custodian under this Agreement which
is independent of any right or cause of action on the part of the Fund. The
Custodian shall be entitled to rely on and may act upon advice of counsel (who
may be counsel for the Fund or other such counsel as agreed to by the parties)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. The Custodian shall be entitled to rely
upon, and shall have no duty of inquiry with respect to, the accuracy of any
representation or warranty given to it by the Fund or any duly-authorized
employee or agent thereof, and shall be without liability for any action
reasonably taken or omitted by it in reliance thereon. Regardless of whether
assets held pursuant to this Agreement are maintained in the custody of a
foreign banking institution, a foreign securities depository, or a branch or
affiliate of a U.S. bank, the Custodian shall not be liable for any loss,
damage, cost, expense, liability
<PAGE>
The Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. Notwithstanding anything to the
contrary herein, the Custodian shall be held to the exercise of reasonable care
in carrying out the provisions of this Agreement, and it shall be kept
indemnified by and shall be without liability to the Fund for any action taken
or omitted by it in good faith without negligence. In order for the
indemnification provision contained in this Section to apply, it is understood
that if in any case the Fund may be asked by the Custodian to indemnify or hold
the Custodian harmless, the Fund shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Custodian will use reasonable care to identify, and notify
the Fund promptly concerning, any situation which presents or appears likely to
present the probability of such a claim for indemnification. The Fund shall
have the option to defend the Custodian against any claim which may be the
subject of a claim for indemnification hereunder, and in the event that the Fund
so elects, it will notify the Custodian thereof and, thereupon, (i) the Fund
shall take over complete defense of the claim and (ii) the Custodian shall
initiate no further legal or other expenses with respect to such claim. The
Custodian shall in no case confess any claim or make any compromise with respect
to any claim for which it will seek indemnity from the Fund except with the
Fund's prior written consent. Nothing herein shall be construed to limit any
right or cause of action on the part of the Custodian under this Agreement which
is independent of any right or cause of action on the part of the Fund. The
Custodian shall be entitled to rely on and may act upon advice of counsel (who
may be counsel for the Fund or other such counsel as agreed to by the parties)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. The Custodian shall be entitled to rely
upon, and shall have no duty of inquiry with respect to, the accuracy of any
representation or warranty given to it by the Fund or any duly-authorized
employee or agent thereof, and shall be without liability for any action
reasonably taken or omitted by it in reliance thereon. Regardless of whether
assets held pursuant to this Agreement are maintained in the custody of a
foreign banking institution, a foreign securities depository, or a branch or
affiliate of a U.S. bank, the Custodian shall not be liable for any loss,
damage, cost, expense, liability
<PAGE>
If the Fund requires the Custodian to take any action with respect to
investments, which action involves the payment of money or which action may, in
the reasonable opinion of the Custodian, result in the Custodian or its nominee
assigned to the Fund being liable for the payment of money or incurring
liability of some other form, the Fund, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Custodian, or any of its affiliates, subsidiaries or agents,
advances cash or investments to the Fund for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement), or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor, and should the Fund fail to repay the Custodian promptly the
Custodian shall be entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement, provided that the
Custodian gives the Fund reasonable notice to repay such cash or securities
advanced, and provided further that such notice requirement shall not preclude
the Custodian's right to assert and execute on such lien.
Except as may arise from the Custodian's own negligence or willful
misconduct, or the negligence or willful misconduct of a subcustodian or agent
appointed by the Custodian, the Fund agrees to indemnify and hold the Custodian
harmless from and against any and all costs, expenses, losses, damages, charges,
reasonable counsel fees, payments and liabilities which may be asserted against
the Custodian (i) acting in accordance with any Proper Instruction, or (ii) for
any acts or omissions of CHASE MANHATTAN BANK N.A.
Notwithstanding any provision herein to the contrary, to the extent the
Custodian is found to be liable hereunder for any loss, liability, claim,
expense or damage, the Custodian shall be liable only for such loss, liability,
claim, expense or damage which was reasonably foreseeable.
<PAGE>
SECTION 10. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT.
This Agreement shall become effective as of the date of its execution,
shall continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the parties hereto,
and may be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take effect not
sooner than thirty (30) days after the date of such delivery or mailing in the
case of a termination by the Fund, and not sooner than one hundred eighty (180)
days after the date of such delivery or mailing in the case of termination by
the Custodian; provided, however that the Custodian shall not act under Section
2.9 hereof in the absence of receipt of an initial certificate of a Fund's
secretary, or an assistant secretary thereof, that the Board has approved the
initial use of a particular U.S. Securities System, as required by the 1940 Act
or any applicable Rule thereunder, and that the Custodian shall not act under
Section 2.10 hereof in the absence of receipt of an initial certificate of a
Fund's secretary, or an assistant secretary thereof, that the Board has approved
the initial use of the Direct Paper System; provided further, however, that the
Fund shall not amend or terminate this Agreement in contravention of any
applicable federal or state regulations, or any provision of the Fund's articles
of incorporation, agreement of trust, by-laws and/or registration statement (as
applicable, the "GOVERNING DOCUMENTS"); and further provided that the Fund may
at any time by action of its Board (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the United States Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Agreement, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its reasonable costs, expenses and disbursements,
provided that the Custodian shall not incur any costs, expenses or disbursements
specifically in connection with such termination unless it has received prior
approval from the Fund, such approval not to be unreasonably withheld.
<PAGE>
SECTION 11. SUCCESSOR CUSTODIAN.
If a successor custodian shall be appointed by the Board, the Custodian
shall, upon termination, deliver to such successor custodian at the offices of
the Custodian, duly endorsed and in the form for transfer, all investments and
other properties then held by it hereunder, and shall transfer to an account of
the successor custodian all of the Fund's investments held in a Securities
System. If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a copy of a vote of the Board, certified by the
secretary or an assistant secretary of the applicable Fund, deliver at the
offices of the Custodian and transfer such investments, funds and other
properties in accordance with such vote. In the event that no written order
designating a successor custodian or certified copy of a vote of the Board shall
have been delivered to the Custodian on or before the date when such termination
shall become effective, then the Custodian shall have the right to deliver to a
bank or trust company, which is a "bank" as defined in the 1940 Act, doing
business in Boston, Massachusetts, or New York, New York, of its own selection
and having an aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $100,000,000, all property held by the
Custodian under this Agreement and to transfer to an account of such successor
custodian all of the Fund's investments held in any Securities System;
thereafter, such bank or trust company shall be the successor of the Custodian
under this Agreement.
In the event that any property held pursuant to this Agreement remains in
the possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such property, and the provisions of this Agreement relating to
the duties and obligations of the Custodian shall remain in full force and
effect.
SECTION 12. GENERAL.
SECTION 12.1
COMPENSATION OF CUSTODIAN. The Custodian shall be entitled to compensation for
its services and reimbursement of its expenses as Custodian as agreed upon from
time to time between the Fund and the Custodian.
<PAGE>
SECTION 12.2
MASSACHUSETTS LAW TO APPLY. This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.
SECTION 12.3
RECORDS. The Custodian shall create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund under the 1940 Act, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the
property of the Fund and shall at all times during the regular business hours of
the Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the SEC. The Custodian shall, at
the Fund's request, supply the Fund with a tabulation of investments owned by
the Fund and held by the Custodian hereunder, and shall, when requested to do so
by an officer of the Fund, and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers in such
tabulations.
SECTION 12.4
OPINION OF FUND'S INDEPENDENT ACCOUNTANT. The Custodian shall take all
reasonable action as the Fund may from time to time request to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund's
Form N-1A, the preparation of the Fund's Form N-SAR, the preparation of any
other annual reports to the SEC with respect to the Fund, and with respect to
any other requirements of the SEC.
SECTION 12.5
INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with the operation of
this Agreement, the Custodian and the Fund may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Agreement as
may in their joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Governing Documents. No interpretive
or additional provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Agreement.
SECTION 12.6
BOND. The Custodian shall at all times maintain a bond in such form and amount
as is acceptable to the Fund, which shall be issued by a reputable fidelity
insurance company authorized to do business in the place where such bond is
issued, against larceny and embezzlement, covering each officer and employee of
<PAGE>
the Custodian who may, singly or jointly with others, have access to securities
or funds of the Fund, either directly or through authority to receive and carry
out any certificate instruction, order request, note or other instrument
required or permitted by this Agreement. The Custodian agrees that it shall not
cancel, terminate or modify such bond insofar as it adversely affects the Fund
except after written notice given to the Fund not less than 10 days prior to the
effective date of such cancellation, termination or modification. The Custodian
shall, upon request, furnish to the Fund a copy of each such bond and each
amendment thereto.
SECTION 12.7
CONFIDENTIALITY. The Custodian agrees to treat all records and other
information relative to the Fund and its prior, present or future shareholders
as confidential, and the Custodian, on behalf of itself and its employees,
agrees to keep confidential all such information except, after prior
notification to and approval in writing by the Fund, which approval shall not be
unreasonably withheld and may not be withheld where the Custodian may be exposed
to civil or criminal contempt proceedings for failure to comply when requested
to divulge such information by duly constituted authorities, or when so
requested by the Fund.
SECTION 12.8
EXEMPTION FROM LIEN. Except as set forth in Section 9 hereof, the securities
and other assets held by the Custodian hereunder shall not be subject to lien or
charge of any kind in favor of the Custodian or any person claiming through the
Custodian. Nothing herein shall be deemed to deprive the Custodian of its right
to invoke any and all remedies available at law or equity to collect amounts due
it under this Agreement.
SECTION 12.9
ASSIGNMENT. This Agreement may not be assigned by either party without the
written consent of the other, except that either party may assign its rights and
obligations hereunder to a party controlling, controlled by, or under common
control with such party.
SECTION 12.10 PRIOR AGREEMENTS. Without derogating the rights established
thereunder prior to the date of this Agreement, this Agreement supersedes and
terminates, as of the date hereof, all prior agreements between the Fund and the
Custodian relating to the custody of Fund assets.
SECTION 12.11 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all such
counterparts taken together shall constitute but one and the same Agreement.
<PAGE>
SECTION 12.12 NOTICES. Any notice, instruction or other instrument
required to be given hereunder may be delivered in person to the offices of the
parties as set forth herein during normal business hours or delivered prepaid
registered mail or by telex, cable or telecopy to the parties at the following
addresses or such other addresses as may be notified by any party from time to
time.
To any Fund: c/o T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Carmen Deyesu
Telephone: 410-345-6658
Telecopy: 410-685-8827/8830
To the Custodian: STATE STREET BANK AND TRUST COMPANY
1776 Heritage Drive
North Quincy, Massachusetts 02171, U.S.A.
Attention: Carol C. Ayotte
Telephone: 617-985-6894
Telecopy: 617-537-6321
Such notice, instruction or other instrument shall be deemed to have been
served in the case of a registered letter at the expiration of five business
days after posting, in the case of cable twenty-four hours after dispatch and,
in the case of telex, immediately on dispatch and if delivered outside normal
business hours it shall be deemed to have been received at the next time after
delivery when normal business hours commence and in the case of cable, telex or
telecopy on the business day after the receipt thereof. Evidence that the
notice was properly addressed, stamped and put into the post shall be conclusive
evidence of posting.
SECTION 12.13 ENTIRE AGREEMENT. This Agreement (including all schedules,
appendices, exhibits and attachments hereto) constitutes the entire Agreement
between the parties with respect to the subject matter hereof.
SECTION 12.14 HEADINGS NOT CONTROLLING. Headings used in this Agreement
are for reference purposes only and shall not be deemed a part of this
Agreement.
SECTION 12.15 SURVIVAL. All provisions regarding indemnification,
confidentiality, warranty, liability and limits thereon shall survive following
the expiration or termination of this Agreement.
<PAGE>
SECTION 12.16 SEVERABILITY. In the event any provision of this Agreement
is held illegal, void or unenforceable, the balance shall remain in effect.
SECTION 12.17 THE PARTIES. All references herein to the "Fund" are to each
of the funds listed on Appendix A hereto individually, as if this Agreement were
between such individual Fund and the Custodian. In the case of a series fund or
trust, all references to the "Fund" are to the individual series or portfolio of
such fund or trust, or to such fund or trust on behalf of the individual series
or portfolio, as appropriate. Any reference in this Agreement to "the parties"
shall mean the Custodian and such other individual Fund as to which the matter
pertains. Each Fund hereby represents and warranties that (i) it has the
requisite power and authority under applicable laws and its Governing Documents
to enter into and perform this Agreement, (ii) all requisite proceedings have
been taken to authorize it to enter into and perform this Agreement, and (iii)
its entrance into this Agreement shall not cause a material breach or be in
material conflict with any other agreement or obligation of the Fund or any law
or regulation applicable to it.
SECTION 12.18 DIRECTORS AND TRUSTEES. It is understood and is expressly
stipulated that neither the holders of Shares nor any member of the Board be
personally liable hereunder. Whenever reference is made herein to an action
required to be taken by the Board, such action may also be taken by the Board's
executive committee.
SECTION 12.19 MASSACHUSETTS BUSINESS TRUST. With respect to any Fund which
is a party to this Agreement and which is organized as a Massachusetts business
trust, the term "Fund" means and refers to the trustees from time to time
serving under the applicable trust agreement of such trust, as the same may be
amended from time to time (the "DECLARATION OF TRUST"). It is expressly agreed
that the obligations of any such Fund hereunder shall not be binding upon any of
the trustees, shareholders, nominees, officers, agents or employees of the Fund
personally, but bind only the trust property of the Fund as set forth in the
applicable Declaration of Trust. In the case of each Fund which is a
Massachusetts business trust (in each case, a "TRUST"), the execution and
delivery of this Agreement on behalf of the Trust has been authorized by the
trustees, and signed by an authorized officer, of the Trust, in each case acting
in such capacity and not individually, and neither such authorization by the
trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them
<PAGE>
individually, but shall bind only the trust property of the Trust as provided in
its Declaration of Trust.
SECTION 12.20 REPRODUCTION OF DOCUMENTS. This Agreement and all schedules,
exhibits, attachments and amendments hereto may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties hereto all/each agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 12.21 SHAREHOLDER COMMUNICATIONS ELECTION. SEC Rule 14b-2 requires
banks which hold securities for the account of customers to respond to requests
by issuers of securities for the names, addresses and holdings of beneficial
owners of securities of that issuer held by the bank unless the beneficial owner
has expressly objected to disclosure of this information. In order to comply
with the rule, the Custodian needs the Fund to indicate whether it authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose securities the Fund owns. If the Fund tells the
Custodian "no", the Custodian will not provide this information to requesting
companies. If the Fund tells the Custodian "yes" or does not check either "yes"
or "no" below, the Custodian is required by the rule to treat the Fund as
consenting to disclosure of this information for all securities owned by the
Fund or any funds or accounts established by the Fund. For the Fund's
protection, the Rule prohibits the requesting company from using the Fund's name
and address for any purpose other than corporate communications. Please
indicate below whether the Fund consents or objects by checking one of the
alternatives below.
YES [ ]
The Custodian is authorized to release the Fund's name, address,
and share positions.
NO [X]
The Custodian is not authorized to release the Fund's name,
address, and share positions.
<PAGE>
DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
Addendum to the Custodian Agreement (as defined below) between each fund
listed on Appendix A to the Custodian Agreement, as such Appendix A is amended
from time to time (each such fund listed on Appendix A shall be individually
referred to herein as the "FUND"), and State Street Bank and Trust Company
("STATE STREET").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain assets of
the Fund pursuant to a certain Custodian Agreement (the "CUSTODIAN AGREEMENT")
dated as of January 28, 1998, and amended thereafter from time to time;
WHEREAS, State Street has developed and utilizes proprietary accounting and
other systems, including State Street's proprietary Multicurrency HORIZON/R/
Accounting System, in its role as custodian of the Fund, and maintains certain
Fund-related data ("FUND DATA") in databases under the control and ownership of
State Street (the "DATA ACCESS SERVICES"); and
WHEREAS, State Street makes available to the Fund (and certain of the
Fund's agents as set forth herein) certain Data Access Services solely for the
benefit of the Fund, and intends to provide additional services, consistent with
the terms and conditions of this Addendum.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the parties
agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
a.
System. Subject to the terms and conditions of this Addendum and solely for the
- ------
purpose of providing access to Fund Data as set forth herein, State Street
hereby agrees to provide the Fund, or certain third parties approved by State
Street that serve as the Fund's investment advisors, investment managers or fund
accountants (the "FUND ACCOUNTANTS") or as the Fund's independent auditors (the
"AUDITOR"), with access to State Street's Multicurrency HORIZON/R/ Accounting
System and the other information systems described in Attachment A
(collectively, the "SYSTEM") on a remote basis solely on the computer hardware,
system software and telecommunication links described in Attachment B (the
"DESIGNATED
<PAGE>
CONFIGURATION") or on any designated substitute or back-up equipment
configuration consented to in writing by State Street, such consent not to be
unreasonably withheld.
b.
Data Access Services. State Street agrees to make available to the Fund the
- ---- ------ --------
Data Access Services subject to the terms and conditions of this Addendum and
such data access operating standards and procedures as may be issued by State
Street from time to time. The Fund shall be able to access the System to (i)
originate electronic instructions to State Street in order to (a) effect the
transfer or movement of cash or securities held under custody by State Street or
(b) transmit accounting or other information (the transactions described in
(i)(a) and (i)(b) above are referred to herein as "CLIENT ORIGINATED ELECTRONIC
FINANCIAL INSTRUCTIONS"), and (ii) access data for the purpose of reporting and
analysis, which shall all be deemed to be Data Access Services for purposes of
this Addendum.
c.
Additional Services. State Street may from time to time agree to make available
- ---------- --------
to the Fund additional Systems that are not described in the attachments to this
Addendum. In the absence of any other written agreement concerning such
additional systems, the term "SYSTEM" shall include, and this Addendum shall
govern, the Fund's access to and use of any additional System made available by
State Street and/or accessed by the Fund.
2. NO USE OF THIRD PARTY SYSTEMS-LEVEL SOFTWARE
State Street and the Fund acknowledge that in connection with the Data
Access Services provided under this Addendum, the Fund will have access, through
the Data Access Services, to Fund Data and to functions of State Street's
proprietary systems; provided, however that in no event will the Fund have
direct access to any third party systems-level software that retrieves data for,
stores data from, or otherwise supports the System.
3. LIMITATION ON SCOPE OF USE
a.
Designated Equipment; Designated Locations. The System and the Data Access
- ---------- ---------- ---------- ---------
Services shall be used and accessed solely on and through the Designated
Configuration at the offices of the Fund or the Fund Accountants in Baltimore,
Maryland or Owings Mills, Maryland ("DESIGNATED LOCATIONS").
b.
Designated Configuration; Trained Personnel. State Street and the Fund shall
- ---------- -------------- ------- ---------
be responsible for supplying, installing
<PAGE>
and maintaining the Designated Configuration at the Designated Locations. State
Street and the Fund agree that each will engage or retain the services of
trained personnel to enable both parties to perform their respective obligations
under this Addendum. State Street agrees to use commercially reasonable efforts
to maintain the System so that it remains serviceable, provided, however, that
State Street does not guarantee or assure uninterrupted remote access use of the
System.
c.
Scope of Use. The Fund will use the System and the Data Access Services only
- ----- -- ---
for the processing of securities transactions, the keeping of books of account
for the Fund and accessing data for purposes of reporting and analysis. The
Fund shall not, and shall cause its employees and agents not to (i) permit any
unauthorized third party to use the System or the Data Access Services, (ii)
sell, rent, license or otherwise use the System or the Data Access Services in
the operation of a service bureau or for any purpose other than as expressly
authorized under this Addendum, (iii) use the System or the Data Access Services
for any fund, trust or other investment vehicle), other than as set forth
herein, without the prior written consent of State Street, (iv) allow access to
the System or the Data Access Services through terminals or any other computer
or telecommunications facilities located outside the Designated Locations, (v)
allow or cause any information (other than portfolio holdings, valuations of
portfolio holdings, and other information reasonably necessary for the
management or distribution of the assets of the Fund) transmitted from State
Street's databases, including data from third party sources, available through
use of the System or the Data Access Services to be redistributed or
retransmitted to another computer, terminal or other device for other than use
for or on behalf of the Fund or (vi) modify the System in any way, including
without limitation developing any software for or attaching any devices or
computer programs to any equipment, system, software or database which forms a
part of or is resident on the Designated Configuration.
d.
Other Locations. Except in the event of an emergency or of a planned System
- ----- ---------
shutdown, the Fund's access to services performed by the System or to Data
Access Services at the Designated Locations may be transferred to a different
location only upon the prior written consent of State Street. In the event of
an emergency or System shutdown, the Fund may use any back-up site included in
the Designated Configuration or any other back-up site agreed to by State
Street, which agreement will not be unreasonably withheld. The Fund may secure
from State Street the right to access the System or the Data Access Services
through computer and telecommunications
<PAGE>
facilities or devices complying with the Designated Configuration at additional
locations only upon the prior written consent of State Street and on terms to be
mutually agreed upon by the parties.
e.
Title. Title and all ownership and proprietary rights to the System, including
- -----
any enhancements or modifications thereto, whether or not made by State Street,
are and shall remain with State Street.
f.
No Modification. Without the prior written consent of State Street, the Fund
- -- ------------
shall not modify, enhance or otherwise create derivative works based upon the
System, nor shall the Fund reverse engineer, decompile or otherwise attempt to
secure the source code for all or any part of the System.
g.
Security Procedures. The Fund shall comply with data access operating standards
- -------- ----------
and procedures and with user identification or other password control
requirements and other security procedures as may be issued from time to time by
State Street for use of the System on a remote basis and to access the Data
Access Services. The Fund shall have access only to the Fund Data and
authorized transactions agreed upon from time to time by State Street and, upon
notice from State Street, the Fund shall discontinue remote use of the System
and access to Data Access Services for any security reasons cited by State
Street; provided, that, in such event, State Street shall, for a period not less
than 180 days (or such other shorter period specified by the Fund) after such
discontinuance, assume responsibility to provide accounting services under the
terms of the Custodian Agreement.
h.
Inspections. State Street shall have the right to inspect the use of the System
- -----------
and the Data Access Services by the Fund, the Fund Accountants and the Auditor
to ensure compliance with this Addendum. The on-site inspections shall be upon
prior written notice to Fund, the Fund Accountants and the Auditor and at
reasonably convenient times and frequencies so as not to result in an
unreasonable disruption of the Fund's or the Fund Accountants' or the Auditor
respective businesses.
4. PROPRIETARY INFORMATION
a.
Proprietary Information. The Fund acknowledges and State Street represents that
- ----------- -----------
the System and the databases, computer programs, screen formats, report formats,
interactive design techniques, documentation and other information made
available to the Fund by State Street as part of the Data Access Services and
<PAGE>
through the use of the System constitute copyrighted, trade secret, or other
proprietary information of substantial value to State Street. Any and all such
information provided by State Street to the Fund shall be deemed proprietary and
confidential information of State Street (hereinafter "PROPRIETARY
INFORMATION"). The Fund agrees that it will hold such Proprietary Information
in the strictest confidence and secure and protect it in a manner consistent
with its own procedures for the protection of its own confidential information
and to take appropriate action by instruction or agreement with its employees or
agents who are permitted access to the Proprietary Information to satisfy its
obligations hereunder. The Fund further acknowledges that State Street shall
not be required to provide the Fund Accountants or the Auditor with access to
the System unless it has first received from the Fund Accountants and the
Auditor an undertaking with respect to State Street's Proprietary Information in
the form of Attachment C and/or Attachment C-1 to this Addendum. The Fund shall
use all commercially reasonable efforts to assist State Street in identifying
and preventing any unauthorized use, copying or disclosure of the Proprietary
Information or any portions thereof or any of the logic, formats or designs
contained therein.
b.
Cooperation. Without limitation of the foregoing, the Fund shall advise State
- -----------
Street immediately in the event the Fund learns or has reason to believe that
any person to whom the Fund has given access to the Proprietary Information, or
any portion thereof, has violated or intends to violate the terms of this
Addendum, and the Fund will, at its reasonable expense, cooperate with State
Street in seeking injunctive or other equitable relief in the name of the Fund
or State Street against any such person.
c.
Injunctive Relief. The Fund acknowledges that the disclosure of any Proprietary
- ---------- ------
Information, or of any information which at law or equity ought to remain
confidential, will immediately give rise to continuing irreparable injury to
State Street inadequately compensable in damages at law. In addition, State
Street shall be entitled to obtain immediate injunctive relief against the
breach or threatened breach of any of the foregoing undertakings, in addition to
any other legal remedies which may be available.
d.
Survival. The provisions of this Section 4 shall survive the termination of
- --------
this Addendum.
<PAGE>
5. LIMITATION ON LIABILITY
a.
Standard of Care and Limitation on Amount and Time for Bringing Action. State
- -------- -- ---- --- ---------- -- ------ --- ---- --- -------- ------
Street shall be held to a standard of reasonable care with respect to all of its
duties and obligations under this Addendum. The Fund agrees that any liability
of State Street to the Fund or any third party arising with respect to the
System or State Street's provision of Data Access Services under this Data
Access Services Addendum shall be limited to the amount paid by the Fund for the
preceding 24 months for such services. The foregoing limitation shall relate
solely to State Street's provision of the Data Access Services pursuant to this
Addendum and is not intended to limit State Street's responsibility to perform
in accordance with the Custodian Agreement, including its duty to act in
accordance with Proper Instructions. In no event shall State Street be liable
to the Fund or any other party pursuant to this Addendum for any special,
indirect, punitive or consequential damages even if advised of the possibility
of such damages. No action, regardless of form, arising out of the terms of
this Addendum may be brought by the Fund more than two years after the Fund has
knowledge that the cause of action has arisen.
b.
Limited Warranties. NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING,
- ------- ----------
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE MADE BY STATE STREET.
c.
Third-Party Data. Organizations from which State Street may obtain certain data
- ----------- ----
included in the System or the Data Access Services are solely responsible for
the contents of such data, and State Street shall have no liability for claims
arising out of the contents of such third-party data, including, but not limited
to, the accuracy thereof.
d.
Regulatory Requirements. As between State Street and the Fund, the Fund shall
- ---------- ------------
be solely responsible for the accuracy of any accounting statements or reports
produced using the Data Access Services and the System and the conformity
thereof with any requirements of law.
e.
Force Majeure. Neither party shall be liable for any costs or damages due to
- ----- -------
delay or nonperformance under this Data Access Services Addendum arising out of
any cause or event beyond such party's control, including, without limitation,
cessation of services hereunder or any damages resulting therefrom to the other
party as a result of work stoppage, power or other mechanical
<PAGE>
failure, computer virus, natural disaster, governmental action, or communication
disruption.
6. INDEMNIFICATION
The Fund agrees to indemnify and hold State Street harmless from any loss,
damage or expense including reasonable attorney's fees, (a "loss") suffered by
State Street arising from (i) the negligence or willful misconduct in the use by
the Fund of the Data Access Services or the System, including any loss incurred
by State Street resulting from a security breach at the Designated Locations or
committed by the Fund's employees or agents or the Fund Accountants or the and
Auditor, and (ii) any loss resulting from incorrect Client Originated Electronic
Financial Instructions. State Street shall be entitled to rely on the validity
and authenticity of Client Originated Electronic Financial Instructions without
undertaking any further inquiry as long as such instruction is undertaken in
conformity with security procedures established by State Street from time to
time.
7. FEES
Fees and charges for the use of the System and the Data Access Services and
related payment terms shall be as set forth in the custody fee schedule in
effect from time to time between the parties (the "FEE SCHEDULE"). Any tariffs,
duties or taxes imposed or levied by any government or governmental agency by
reason of the transactions contemplated by this Addendum, including, without
limitation, federal, state and local taxes, use, value added and personal
property taxes (other than income, franchise or similar taxes which may be
imposed or assessed against State Street) shall be borne by the Fund. Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.
8. TRAINING, IMPLEMENTATION AND CONVERSION
a.
Training. State Street agrees to provide training, at a designated State Street
- --------
training facility or at the Designated Locations, to the Fund's personnel in
connection with the use of the System on the Designated Configuration. The Fund
agrees that it will set aside, during regular business hours or at other times
agreed upon by both parties, sufficient time to enable all operators of the
System and the Data Access Services, designated by the Fund, to receive the
training offered by State Street pursuant to this Addendum.
<PAGE>
b.
Installation and Conversion. State Street and the Fund shall be responsible for
- ------------ --- ----------
the technical installation and conversion ("INSTALLATION AND CONVERSION") of the
Designated Configuration. The Fund shall have the following responsibilities in
connection with Installation and Conversion of the System:
(i)
The Fund shall be solely responsible for the timely acquisition and
maintenance of the hardware and software that attach to the Designated
Configuration in order to use the Data Access Services at the
Designated Locations, and
(ii)
State Street and the Fund each agree that they will assign qualified
personnel to actively participate during the Installation and
Conversion phase of the System implementation to enable both parties
to perform their respective obligations under this Addendum.
9. SUPPORT
During the term of this Addendum, State Street agrees to provide the
support services set out in Attachment D to this Addendum.
10. TERM
a.
Term. This Addendum shall become effective on the date of its execution by
- ----
State Street and shall remain in full force and effect until terminated as
herein provided.
b.
Termination. Either party may terminate this Addendum (i) for any reason by
- -----------
giving the other party at least one-hundred and eighty (180) days' prior written
notice in the case of notice of termination by State Street to the Fund or
thirty (30) days' notice in the case of notice from the Fund to State Street of
termination; or (ii) immediately for failure of the other party to comply with
any material term and condition of the Addendum by giving the other party
written notice of termination. In the event the Fund shall cease doing
business, shall become subject to proceedings under the bankruptcy laws (other
than a petition for reorganization or similar proceeding) or shall be
adjudicated bankrupt, this Addendum and the rights granted hereunder shall, at
the option of State Street, immediately terminate with notice to the Fund. This
Addendum shall in any event terminate as to any Fund within ninety (90) days
after the termination of the Custodian Agreement.
<PAGE>
c.
Termination of the Right to Use. Upon termination of this Addendum for any
- ----------- -- --- ----- -- ---
reason, any right to use the System and access to the Data Access Services shall
terminate and the Fund shall immediately cease use of the System and the Data
Access Services. Immediately upon termination of this Addendum for any reason,
the Fund shall return to State Street all copies of documentation and other
Proprietary Information in its possession; provided, however, that in the event
that either party terminates this Addendum or the Custodian Agreement for any
reason other than the Fund's breach, State Street shall provide the Data Access
Services for a period of time and at a price to be agreed upon in writing by the
parties.
11. MISCELLANEOUS
a.Year 2000. State Street will take all steps necessary to ensure that its
---- ----
products (and those of its third-party suppliers) reflect the available state of
the art technology to offer products that are Year 2000 compliant, including,
but not limited to, century recognition of dates, calculations that correctly
compute same century and multi-century formulas and date values, and interface
values that reflect the date issues arising between now and the next one-hundred
years. If any changes are required, State Street will make the changes to its
products at no cost to the Fund and in a commercially reasonable time frame and
will require third-party suppliers to do likewise.
b.
Assignment; Successors. This Addendum and the rights and obligations of the
- ----------- ----------
Fund and State Street hereunder shall not be assigned by either party without
the prior written consent of the other party, except that State Street may
assign this Addendum to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by, or under common control with
State Street.
c.
Survival. All provisions regarding indemnification, warranty, liability and
- --------
limits thereon, and confidentiality and/or protection of proprietary rights and
trade secrets shall survive the termination of this Addendum.
d.
Entire Agreement. This Addendum and the attachments hereto constitute the
- ------ ---------
entire understanding of the parties hereto with respect to the Data Access
Services and the use of the System and supersedes any and all prior or
contemporaneous representations or agreements, whether oral or written, between
the parties as such may relate to the Data Access Services or the System, and
cannot
<PAGE>
be modified or altered except in a writing duly executed by the parties. This
Addendum is not intended to supersede or modify the duties and liabilities of
the parties hereto under the Custodian Agreement or any other agreement between
the parties hereto except to the extent that any such agreement specifically
refers to the Data Access Services or the System. No single waiver or any right
hereunder shall be deemed to be a continuing waiver.
e. Severability.
------------
If any provision or provisions of this Addendum shall be held to be invalid,
unlawful, or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired.
f.
Governing Law. This Addendum shall be interpreted and construed in accordance
- --------- ---
with the internal laws of The Commonwealth of Massachusetts without regard to
the conflict of laws provisions thereof.
<PAGE>
ATTACHMENT A
MULTICURRENCY HORIZON/R/ ACCOUNTING SYSTEM
SYSTEM PRODUCT DESCRIPTION
I. The Multicurrency HORIZON/R/ Accounting System is designed to provide lot
level portfolio and general ledger accounting for SEC and ERISA type
requirements and includes the following services: 1) recording of general ledger
entries; 2) calculation of daily income and expense; 3) reconciliation of daily
activity with the trial balance, and 4) appropriate automated feeding mechanisms
to (i) domestic and international settlement systems, (ii) daily, weekly and
monthly evaluation services, (iii) portfolio performance and analytic services,
(iv) customer's internal computing systems and (v) various State Street provided
information services products.
II. GlobalQuest/R/ GlobalQuest/R/ is designed to provide customer access to
the following information maintained on The Multicurrency HORIZON/R/ Accounting
System: 1) cash transactions and balances; 2) purchases and sales; 3) income
receivables; 4) tax refund; 5) daily priced positions; 6) open trades; 7)
settlement status; 8) foreign exchange transactions; 9) trade history; and 10)
daily, weekly and monthly evaluation services.
III. HORIZON/R/ Gateway. HORIZON/R/ Gateway provides customers with the
ability to (i) generate reports using information maintained on the
Multicurrency HORIZON/R/ Accounting System which may be viewed or printed at the
customer's location; (ii) extract and download data from the Multicurrency
HORIZONR Accounting System; and (iii) access previous day and historical data.
The following information which may be accessed for these purposes: 1)
holdings; 2) holdings pricing; 3) transactions, 4) open trades; 5) income;
6) general ledger and 7) cash.
IV. State Street Interchange. State Street Interchange is an open
------------------------
information delivery architecture wherein proprietary communication products,
data formats and workstation tools are replaced by industry standards and is
designed to enable the connection of State Street's network to customer
networks, thereby facilitating the sharing of information.
ATTACHMENT C
UNDERTAKING
(FUND ACCOUNTANTS)
<PAGE>
The undersigned understands that in the course of its employment as Fund
Accountant to each fund listed on Appendix A (as amended from time to time) to
that certain Custodian Agreement dated as of January 28, 1998 (the "FUND"), it
will have access to State Street Bank and Trust Company's Multicurrency HORIZON
Accounting System and other information systems (collectively, the "SYSTEM").
The undersigned acknowledges that the System and the databases, computer
programs, screen formats, report formats, interactive design techniques,
documentation, and other information made available to the Undersigned by State
Street Bank and Trust Company ("STATE STREET") as part of the Data Access
Services provided to the Fund and through the use of the System constitute
copyrighted, trade secret, or other proprietary information of substantial value
to State Street. Any and all such information provided by State Street to the
Undersigned shall be deemed proprietary and confidential information of State
Street (hereinafter "PROPRIETARY INFORMATION"). The undersigned agrees that it
will hold such Proprietary Information in confidence and secure and protect it
in a manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder.
The undersigned will not attempt to intercept data, gain access to data in
transmission, or attempt entry into any system or files for which it is not
authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the System and
access to the Data Access Services shall terminate and the Undersigned shall
immediately cease use of the System and the Data Access Services. Immediately
upon notice by State Street for any reason, the undersigned shall return to
State Street all copies of documentation and other Proprietary Information in
its possession.
<PAGE>
[The Fund Accountants]
By: ______________________________
Title: ______________________________
Date: ______________________________
<PAGE>
ATTACHMENT C-1
UNDERTAKING
(AUDITOR)
The undersigned understands that in the course of its employment as Auditor
to each fund listed on Appendix A (as amended from time to time) to that certain
Custodian Agreement dated as of January 28, 1998 (the "FUND") it will have
access to State Street Bank and Trust Company's Multicurrency HORIZON Accounting
System and other information systems (collectively, the "SYSTEM").
The undersigned acknowledges that the System and the databases, computer
programs, screen formats, report formats, interactive design techniques,
documentation, and other information made available to the Undersigned by State
Street Bank and Trust Company ("STATE STREET") as part of the Data Access
Services provided to the Fund and through the use of the System constitute
copyrighted, trade secret, or other proprietary information of substantial value
to State Street. Any and all such information provided by State Street to the
Undersigned shall be deemed proprietary and confidential information of State
Street (hereinafter "PROPRIETARY INFORMATION"). The undersigned agrees that it
will hold such Proprietary Information in confidence and secure and protect it
in a manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder.
The undersigned will not attempt to intercept data, gain access to data in
transmission, or attempt entry into any system or files for which it is not
authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the System and
access to the Data Access Services shall terminate and the Undersigned shall
immediately cease use of the System and the Data Access Services. Immediately
upon notice by State Street for any reason, the undersigned shall return to
State Street all copies of documentation and other Proprietary Information in
its possession.
<PAGE>
[The Auditor]
By: ______________________________
Title: ______________________________
Date: ______________________________
<PAGE>
ATTACHMENT D
SUPPORT
During the term of this Addendum, State Street agrees to provide the
following on-going support services:
a.
Telephone Support. The Fund Designated Persons may contact State Street's
HORIZON/R/ Help Desk and Fund Assistance Center between the hours of 8 a.m. and
6 p.m. (Eastern time) on all business days for the purpose of obtaining answers
to questions about the use of the System, or to report apparent problems with
the System. From time to time, the Fund shall provide to State Street a list of
persons who shall be permitted to contact State Street for assistance (such
persons being referred to as the "FUND DESIGNATED PERSONS").
b.
Technical Support. State Street will provide technical support to assist the
- --------- -------
Fund in using the System and the Data Access Services. The total amount of
technical support provided by State Street shall not exceed 10 resource days per
year. State Street shall provide such additional technical support as is
expressly set forth in the fee schedule in effect from time to time between the
parties (the "FEE SCHEDULE"). Technical support, including during installation
and testing, is subject to the fees and other terms set forth in the Fee
Schedule.
c. Maintenance Support. State Street shall use commercially reasonable
-------------------
efforts to correct system functions that do not work according to the System
Product Description as set forth on Attachment A in priority order in the next
scheduled delivery release or otherwise as soon as is practicable.
d.
System Enhancements. State Street will provide to the Fund any enhancements to
- ------ ------------
the System developed by State Street and made a part of the System; provided
that State Street offer the Fund reasonable training on the enhancement.
Charges for system enhancements shall be as provided in the Fee Schedule.
State Street retains the right to charge for related systems or products that
may be developed and separately made available for use other than through the
System.
e.
Custom Modifications. In the event the Fund desires custom modifications in
- ------ -------------
connection with its use of the System, the Fund shall make a written request to
State Street providing specifications for the desired modification. Any custom
<PAGE>
modifications may be undertaken by State Street in its sole discretion in
accordance with the Fee Schedule.
f.
Limitation on Support. State Street shall have no obligation to support the
- ---------- -- -------
Fund's use of the System: (1) for use on any computer equipment or
telecommunication facilities which does not conform to the Designated
Configuration or (ii) in the event the Fund has modified the System in breach of
this Addendum.
In WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by its duly authorized representative as
of the date and year first written above.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
<PAGE>
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
<PAGE>
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
T. ROWE PRICE SMALL CAP STOCK FUND, INC.
T. Rowe Price Small Cap Stock Fund
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE TAX EFFICIENT BALANCED FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Government Reserve Investment Fund
Reserve Investment Fund
<PAGE>
SIGNATURE ATTESTED TO: EXECUTED ON BEHALF OF EACH FUND:
/s/Suzanne E. Fraunhoffer /s/Carmen Deyesu
By: _____________________ By:____________________
Name: Suzanne E. Fraunhoffer Name: Carmen Deyesu
Title: Legal Assistant Title: Treasurer for
each of the foregoing
SIGNATURE ATTESTED TO:
STATE STREET BANK AND TRUST COMPANY
/s/Glenn Ciotti /s/Ronald E. Logue
By: _____________________ By:____________________
Name: Glenn Ciotti Name: Ronald E. Logue
Title: VP & Assoc. Counsel Title: Executive Vice
President
<PAGE>
SCHEDULE A
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
United Kingdom State Street Bank None;
and Trust Company The Bank of England,
The Central Gilts Office (CGO);
The Central Moneymarkets Office (CMO)
Euroclear (The Euroclear System)/ State Street London Limited
<PAGE>
APPENDIX A
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
<PAGE>
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
<PAGE>
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE VALUE FUND, INC.
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
INSTITUTIONAL DOMESTIC EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
T. ROWE PRICE SMALL CAP STOCK FUND, INC.
T. Rowe Price Small Cap Stock Fund
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE TAX EFFICIENT BALANCED FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Government Reserve Investment Fund
Reserve Investment Fund
<PAGE>
AMENDMENT NO. 1
TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
The Custodian Contract of January 28, 1998, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is hereby further
amended, as of November 4, 1998, by adding thereto T. Rowe Price International
Funds, Inc., on behalf of T. Rowe Price International Growth & Income Fund.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE GNMA FUND
<PAGE>
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
<PAGE>
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EFFICIENT BALANCED FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
<PAGE>
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE VALUE FUND, INC.
/s/Henry H. Hopkins
By: _____________________________________
Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Stephen F. Brown
By: _____________________________________
Stephen F. Brown, Vice President
<PAGE>
AMENDMENT NO. 2
TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
The Custodian Contract of January 28, 1998, as amended November 4, 1998 between
State Street Bank and Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of April 21, 1999, by adding thereto T.
Rowe Price Tax-Efficient Funds, Inc., on behalf of T. Rowe Price Tax-Efficient
Balanced Fund and T. Rowe Price Tax-Efficient Growth Fund.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
<PAGE>
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
<PAGE>
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
<PAGE>
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. Rowe Price Tax-Efficient Balanced Fund
T. Rowe Price Tax-Efficient Growth Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE VALUE FUND, INC.
/s/ Henry H. Hopkins
By: _____________________________________
Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Ronald E. Logue
By: _____________________________________
Ronald E. Logue, Vice Chairman
<PAGE>
AMENDMENT NO. 3
TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
The Custodian Contract of January 28, 1998, as amended November 4, 1998 and
April 21, 1999 between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended, as of February
9, 2000, by adding thereto Institutional Equity Funds, Inc., on behalf of
Institutional Large-Cap Value Fund and Institutional Small-Cap Stock Fund.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
<PAGE>
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Institutional Large-Cap Value Fund
Institutional Small-Cap Stock Fund
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
<PAGE>
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. Rowe Price Tax-Efficient Balanced Fund
T. Rowe Price Tax-Efficient Growth Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE VALUE FUND, INC.
/s/ Henry H. Hopkins
By: _____________________________________
Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Ronald E. Logue
By: _____________________________________
Ronald E. Logue, Vice Chairman
<PAGE>
AMENDMENT NO. 4
TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
The Custodian Contract of January 28, 1998, as amended November 4, 1998, April
21, 1999, and February 9, 2000 between State Street Bank and Trust Company and
each of the Parties listed on Appendix A thereto is hereby further amended, as
of April 19, 2000, by adding thereto Institutional Equity Funds, Inc., on behalf
of T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price Emerging
Europe & Mediterranean Fund.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
<PAGE>
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Institutional Large-Cap Value Fund
Institutional Small-Cap Stock Fund
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. Rowe Price Emerging Europe & Mediterranean Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
<PAGE>
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
<PAGE>
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. Rowe Price Tax-Efficient Balanced Fund
T. Rowe Price Tax-Efficient Growth Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
<PAGE>
T. ROWE PRICE VALUE FUND, INC.
/s/ Henry H. Hopkins
By: _____________________________________
Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Ronald E. Logue
By: _____________________________________
Ronald E. Logue, Vice Chairman
The Transfer Agency and Service Agreement between T. Rowe Price Services,
Inc. and T. Rowe Price Funds, dated January 1, 2000, as amended.
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
T. ROWE PRICE SERVICES, INC.
AND
THE T. ROWE PRICE FUNDS
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
Article A Terms of Appointment............................ 2
Article B Duties of Price Services........................ 3
1. Receipt of Orders/Payments................3
2. Redemptions...............................5
3. Transfers.................................6
4. Confirmations.............................7
5. Returned Checks and ACH Debits............7
6. Redemption of Shares under a Hold.........7
7. Dividends, Distributions and Other Corporate Actions 9
8. Unclaimed Payments and Certificates......10
9. Books and Records........................10
10. Authorized Issued and Outstanding Shares.12
11. Tax Information..........................13
12. Information to be Furnished to the Fund..13
13. Correspondence...........................13
14. Lost or Stolen Securities................14
15. Telephone/Computer Services..............14
16. Collection of Shareholder Fees...........14
17. Form N-SAR...............................14
18. Cooperation With Accountants.............15
19. Blue Sky.................................15
20. Banking Services for the PLUS Classes ...15
21. Other Services...........................17
Article C Fees and Out-of-Pocket Expenses................. 17
1. Fees and Out-of-Pocket Expenses - All Funds17
2. Fees and Out-of-Pocket Expenses - PLUS Classes of Shares 19
Article D Representations and Warranties of the Price Services 19
Article E Representations and Warranties of the Fund...... 20
Article F Standard of Care/Indemnification................ 20
Article G Dual Interests................................23
Article H Documentation.................................23
Article I References to Price Services..................24
Article J Compliance with Governmental Rules and Regulations24
<PAGE>
Article K Ownership of Software and Related Material....25
Article L Quality Service Standards.....................25
Article M As of Transactions............................25
Article N Term and Termination of Agreement.............28
Article O Notice........................................28
Article P Assignment....................................29
Article Q Amendment/Interpretive Provisions.............29
Article R Further Assurances............................29
Article S Maryland Law to Apply........................29
Article T Merger of Agreement...........................29
Article U Counterparts..................................29
Article V The Parties...................................30
Article W Directors, Trustees, Shareholders and Massachusetts Business Trust
30
Article X Captions......................................31
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the first day of January, 2000, by and between T. ROWE
PRICE SERVICES, INC., a Maryland corporation having its principal office and
place of business at 100 East Pratt Street, Baltimore, Maryland 21202 ("PRICE
SERVICES"), and EACH FUND WHICH IS LISTED ON APPENDIX A (as such Appendix may be
amended from time to time) and which evidences its agreement to be bound hereby
by executing a copy of this Agreement (each such Fund individually hereinafter
referred to as "THE FUND", whose definition may be found in Article V);
WHEREAS, the Fund desires to appoint Price Services as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and Price Services desires to accept such appointment;
WHEREAS, Price Services represents that it is registered with the
Securities and Exchange Commission as a Transfer Agent under Section 17A of the
Securities Exchange Act of 1934 ("'34 ACT") and will notify each Fund promptly
if such registration is revoked or if any proceeding is commenced before the
Securities and Exchange Commission which may lead to such revocation;
WHEREAS, Price Services has the capability of providing shareholder
services on behalf of the Funds for the accounts of shareholders in the Funds,
including banks and brokers on behalf of underlying clients;
WHEREAS, Price Services has the capability of providing special banking
services, including debit card and unlimited check writing services ("BANKING
SERVICES") for the T. Rowe Price Prime Reserve Fund - PLUS Class of Shares and
T. Rowe Price Tax-Exempt Money Fund - PLUS Class of Shares ("PLUS CLASSES");
<PAGE>
WHEREAS, certain of the Funds are named investment options under various
tax-sheltered retirement plans including, but not limited to, individual
retirement accounts, Sep-IRA's, SIMPLE plans, deferred compensation plans,
403(b) plans, and profit sharing, thrift, and money purchase pension plans for
self-employed individuals and professional partnerships and corporations,
(collectively referred to as "RETIREMENT PLANS");
WHEREAS, Price Services also has the capability of providing special
services, on behalf of the Funds, for the accounts of shareholders participating
in these Retirement Plans ("RETIREMENT ACCOUNTS").
WHEREAS, Price Services may subcontract or jointly contract with other
parties, on behalf of the Funds to perform certain of the functions and services
described herein including services to Retirement Plans and Retirement Accounts;
WHEREAS, Price Services may also enter into, on behalf of the Funds,
certain banking relationships to perform various banking services including, but
not limited to, check deposits, check disbursements, automated clearing house
transactions ("ACH") and wire transfers.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
A. TERMS OF APPOINTMENT
--------------------
Subject to the terms and conditions set forth in this Agreement, the Fund
hereby employs and appoints Price Services to act, and Price Services agrees to
act, as the Fund's transfer agent, dividend disbursing agent and agent in
connection with: (1) the Fund's authorized and issued shares of its common
stock or shares of beneficial interest (all such stock and shares to be referred
to as "SHARES"); (2) any dividend reinvestment or other services provided to the
shareholders of the Fund ("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.
<PAGE>
The parties to the Agreement hereby acknowledge that from time to time,
Price Services and T. Rowe Price Trust Company may enter into contracts ("OTHER
CONTRACTS") with employee benefit plans and/or their sponsors for the provision
of certain plan participant services to Retirement Plans and Retirement
Accounts. Compensation paid to Price Services pursuant to this Agreement is
with respect to the services described herein and not with respect to services
provided under Other Contracts.
B. DUTIES OF PRICE SERVICES
------------------------
Price Services agrees that it will perform the following services:
1. RECEIPT OF ORDERS/PAYMENTS
------- -- ---------------
Receive for acceptance, orders/payments for the purchase of Shares and
promptly deliver payment and appropriate documentation thereof to the
authorized custodian of the Fund (the "CUSTODIAN"). Upon receipt of any
check or other instrument drawn or endorsed to it as agent for, or
identified as being for the account of, the Fund, Price Services will
process the order as follows:
o Examine the check to determine if the check conforms to the Funds'
acceptance procedures (including certain third-party check procedures). If
the check conforms, Price Services will endorse the check and include the
date of receipt, will process the same for payment, and deposit the net
amount to the parties agreed upon designated bank account prior to such
deposit in the Custodial account, and will notify the Fund and the
Custodian, respectively, of such deposits (such notification to be given on
a daily basis of the total amount deposited to said accounts during the
prior business day);
o Subject to guidelines mutually agreed upon by the Funds and Price
Services, excess balances, if any, resulting from deposit in these
designated bank accounts will be invested
<PAGE>
and the income therefrom will be used to offset fees which would otherwise
be charged to the Funds under this Agreement;
o Ensure that any documentation received from Shareholder is in "good
order" and all appropriate documentation is received to establish an
account.
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;
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 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");
o Process orders received from recordkeepers and banks and brokers for
omnibus accounts in accordance with internal policies and procedures
established in executed agency agreements and other agreements negotiated
with banks and brokers; and
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>
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 6 hereof:
o Examine the redemption request and, for written redemptions, the
supporting documentation, to determine that the request is in good order
and all requirements have been met;
o Notify the Fund on the next business day of the total number of Shares
presented and covered by all such requests;
o For those Funds that impose redemption fees, calculate the fee owed on
the redemption in accordance with the guidelines established between the
Fund and Price Services;
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
<PAGE>
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 Instruct custodian to wire redemption proceeds to a designated bank
account of Price Services. Subject to guidelines mutually agreed upon by
the Funds and Price Services, excess balances, if any, resulting from
deposit in these bank accounts will be invested and the income therefrom
will be used to offset fees which would otherwise be charged to the Funds
under this Agreement;
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 via ACH, Price Services shall
cause such proceeds to be wired in Federal funds or via ACH to the bank
account designated by Shareholder; and
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, or written instructions
shall be established by mutual agreement between Price Services and the
Fund consistent with the Fund's current prospectus.
<PAGE>
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.
4. CONFIRMATIONS
-------------
Mail all confirmations and statements as well as other enclosures requested
by the Fund to the shareholder, and in the case of Retirement Accounts, to
the Administrators, as may be required by the Funds or by applicable
Federal or state law.
5. RETURNED CHECKS AND ACH DEBITS
-------- ------ --- --- ------
In order to minimize the risk of loss to the Fund by reason of any check
being returned unpaid, Price Services will promptly identify and follow-up
on any check or ACH debit returned unpaid. For items returned, Price
Services may telephone the investor and/or redeposit the check or debit for
collection or cancel the purchase, as deemed appropriate. Price Services
and the Funds will establish procedures for the collection of money owed
the Fund from investors who have caused losses due to these returned items.
6. REDEMPTION OF SHARES UNDER A HOLD
---------- -- ------ ----- - ----
O
UNCOLLECTED FUNDS. Shares purchased by personal, corporate, governmental check,
cashier's, treasurer's, certified or official checks or by ACH will be
considered uncollected until the tenth calendar date (the seventh business date
for PLUS Classes) following the trade date of the trade ("UNCOLLECTED FUNDS");
<PAGE>
O
GOOD FUNDS. Shares purchased by wire transfer or automatically through a
shareholder's paycheck will be considered collected immediately ("GOOD FUNDS").
Absent information to the contrary (i.e., notification from the payee
institution), Uncollected Funds will be considered Good Funds on the tenth
calendar day (the seventh business day for the PLUS Classes) following trade
date.
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 good
order, Price Services will promptly obtain the information relative to the
payment necessary to determine when the payment becomes Good Funds. The
redemption will be processed in accordance with normal procedures, and the
proceeds will be held until confirmation that the payment is Good Funds. On
the seventh (7th) calendar day after trade date, and each day thereafter until
either confirmation is received or the tenth (10th) calendar day (the seventh
business day for the PLUS Classes), Price Services will call the paying
institution to request confirmation that the check or ACH in question has been
paid. On the tenth calendar day (the seventh business day for the PLUS
Classes) after trade date, the redemption proceeds will be released,
regardless of whether confirmation has been received.
O CHECKWRITING REDEMPTIONS.
<PAGE>
o
Daily, all checkwriting redemptions $10,000 and over reported as Uncollected
Funds or insufficient funds will be reviewed. An attempt will be made to
contact the shareholder to make good the funds (through wire, exchange,
transfer). Generally by 12:00 p.m. the same day, if the matter has not been
resolved, the redemption request will be rejected and the check returned to
the Shareholder.
oAll checkwriting redemptions under $10,000 reported as Uncollected or
insufficient funds will be rejected and the check returned to the Shareholder.
The Funds and Services may agree to contact shareholders presenting checks
under $10,000 reported as insufficient to obtain alternative instructions for
payment.
O
CONFIRMATIONS OF AVAILABLE FUNDS. The Fund expects that situations may develop
whereby it would be beneficial to determine if a person who has placed an
order for Shares has sufficient funds in his or her checking account to cover
the payment for the Shares purchased. When this situation occurs, Price
Services may call the bank in question and request that it confirm that
sufficient funds to cover the purchase are currently credited to the account
in question. Price Services will maintain written documentation or a
recording of each telephone call which is made under the procedures outlined
above. None of the above procedures shall preclude Price Services from
inquiring as to the status of any check received by it in payment for the
Fund's Shares as Price Services may deem appropriate or necessary to protect
both the Fund and Price Services. If a conflict arises between Section 2 and
this Section 6, Section 6 will govern.
7. DIVIDENDS, DISTRIBUTIONS AND OTHER CORPORATE ACTIONS
---------- ------------- --- ----- --------- -------
o
The Fund will promptly inform Price Services of the declaration of any
<PAGE>
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.
8. UNCLAIMED PAYMENTS AND CERTIFICATES
--------- -------- --- ------------
In accordance with procedures agreed upon by both parties, report
abandoned property to appropriate state and governmental authorities
of the Fund. Price Services shall, 90 days prior to the annual
reporting of abandoned property to each of the states, make reasonable
attempts to locate Shareholders for which (a) checks, tax forms,
statements or confirms have been returned; (b) for which accounts have
aged outstanding checks; or (c) accounts with share balances that have
been coded with stop mail and meet the dormancy period guidelines
specified in the individual states. Price Services shall make
reasonable attempts to contact shareholders for those accounts which
have significant aged outstanding checks and those checks meet a
specified dollar threshold. Price Services shall also com-
<PAGE>
ply with applicable securities regulation with respect to searching
for lost shareholders.
9. BOOKS AND RECORDS
----- --- -------
Maintain records showing for each Shareholder's account, Retirement
Plan or Retirement Account, as the case may be, the following:
o Names, address and tax identification number;
o Number of Shares held;
o Certain historical information regarding the account of each
Shareholder, including dividends and distributions distributed in cash
or invested in Shares;
o Pertinent information regarding the establishment and maintenance
of Retirement Plans and Retirement Accounts necessary to properly
administer each account;
o Information with respect to the source of dividends and
distributions allocated among income (taxable and nontaxable income),
realized short-term gains and realized long-term gains;
o Any stop or restraining order placed against a Shareholder's
account;
o Information with respect to withholdings on domestic and foreign
accounts;
o Any instructions from a Shareholder including, all forms furnished
by the Fund and executed by a 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>
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 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
<PAGE>
out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except after prior notification
to and approval by the other party hereto, which approval shall not be
unreasonably withheld and may not be withheld where Price Services or the
Fund may be exposed to civil or criminal contempt proceedings for failure
to comply; when requested to divulge such information by duly constituted
governmental authorities; or after so requested by the other party hereto.
10. AUTHORIZED ISSUED AND OUTSTANDING SHARES
---------- ------ --- ----------- ------
Record the issuance of Shares of the Fund and maintain, pursuant to Rule
17Ad-10(e) of the '34 Act, a record of the total number of Shares of the
Fund which are authorized, issued and outstanding, based upon data provided
to it by the Fund. Price Services shall also provide the Fund on a regular
basis the total number of Shares which are authorized and issued and
outstanding. Price Services shall have no obligation, when recording the
issuance of Shares, to monitor the issuance of such Shares or to take
cognizance of any laws relating to the issuance or sale of such Shares.
11. TAX INFORMATION
--- -----------
Prepare and file with the Internal Revenue Service and with other
appropriate state agencies and, if required, mail to investors, those
returns for reporting dividends and distributions paid as required to be so
filed and mailed, and shall withhold such sums required to be withheld
under applicable Federal income tax laws, rules, and regulations.
Additionally, Price Services will file and, as applicable, mail to
investors, any appropriate information returns required to be filed in
connection with Retirement Plan processing, such as 1099R, 5498, as well
as any other appropriate forms that the Fund or Price Services may deem
necessary. The Fund and Price Services shall agree to procedures to be
followed with respect to Price Services' responsibilities in connection
with compliance with back-up withholding and other tax laws.
<PAGE>
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
services relating to lost, stolen or missing securities as may be mutually
agreed upon by both parties.
15. TELEPHONE/COMPUTER 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
<PAGE>
Services will also be responsible for providing Tele*Access, On-Line Access
and such other Services as may be offered by the Funds from time to time.
Price Services will maintain a special Shareholder Servicing staff to
service certain Shareholders with substantial relationships with the Funds.
16. COLLECTION OF SHAREHOLDER FEES
---------- -- ----------- ----
Calculate and notify shareholders of any fees owed the Fund, its affiliates
or its agents. Such fees include the small account fee IRA custodial fee
and wire fee.
17. FORM N-SAR
---- -----
Maintain such records, if any, as shall enable the Fund to fulfill the
requirements of Form N-SAR.
18. COOPERATION WITH ACCOUNTANTS
----------- ---- -----------
Cooperate with each Fund's independent public accountants and take all
reasonable action in the performance of its obligations under the Agreement
to assure that the necessary information is made available to such
accountants for the expression of their opinion without any qualification
as to the scope of their examination, including, but not limited to, their
opinion included in each such Fund's annual report on Form N-SAR and annual
amendment to Form N-1A.
19. BLUE SKY
---- ---
Provide to the Fund or its agent, on a daily, weekly, monthly and quarterly
basis, and for each state in which the Fund's Shares are sold, sales
reports and other materials for blue sky compliance purposes as shall be
agreed upon by the parties.
20. BANKING SERVICES FOR THE PLUS CLASSES
------- -------- --- --- ---- -------
O
DETERMINE SHAREHOLDER ELIGIBILITY FOR BANKING SERVICES. Pursuant to
mutually agreed upon procedures, Price Services shall determine
shareholder eligibility for Banking Services offered
<PAGE>
by the PLUS Classes. Such procedures include, but are not limited to, for
existing shareholders, review of account history (identification of any
previously returned investment checks or ACH transactions, redemptions of
uncollected funds, etc.) and for new investors, review of credit bureau and
suspicious activity fraud reports.
O
CARD ISSUANCE. Once a shareholder is approved for Banking Services, Price
Services shall transmit new card orders to the debit card processing bank
which will produce and mail new cards and PIN numbers to PLUS Classes'
shareholders. For existing shareholders, Price Services shall also cause
the bank to reissue cards prior to expiration date.
O
TRANSMISSION OF DATA TO AND FROM BANK. On a daily basis, Price Services
shall receive information from the debit card processing bank. In this
regard, Price Services shall, after card transaction information is
received from the debit card processing bank, process all debit card
transaction detail against each shareholder's PLUS Class collected account
balance. On each business day, Price Services shall cause information
regarding the available limit of each PLUS Class shareholder account to be
transmitted to the debit card processing bank by a time designated by the
bank.
O
REDEMPTION ORDERS RECEIVED FOR PLUS CLASS ACCOUNTS. Representatives shall
follow mutually agreed upon procedures to ensure that the shareholder's
PLUS Class collected account balance is reviewed and decremented with
authorized debit card transactions before processing any mutual fund
redemption or exchange transactions.
O
DISPUTED DEBIT CARD TRANSACTIONS/FRAUD. Price Services shall receive
information from PLUS Class shareholders regarding disputed debit card
transactions and forward this information to the bank who will investigate
the reported disputed transaction. Price Services will follow procedures
developed between it and the bank for resolving such disputes and for
provisionally crediting the shareholder's account. Price Services shall
also assist in the monitoring of shareholder activity for fraud.
<PAGE>
21. OTHER SERVICES
----- --------
Provide such other services as may be mutually agreed upon
between Price
Services and the Fund.
C. FEES AND OUT-OF-POCKET EXPENSES
-------------------------------
1. FEES AND OUT-OF-POCKET EXPENSES - ALL FUNDS.
---- --- ------------- -------- - --- ------
Each Fund shall pay to Price Services and/or its agents for its Transfer
Agent Services 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:
OPOSTAGE. 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 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.
<PAGE>
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 with and servicing
Shareholders of the Fund and Retirement Plan participants, or their agents,
and other Fund offices or other agents of either the Fund or Price
Services. These charges shall include:
o
telephone toll charges (both incoming and outgoing, local, long distance
and mailgrams); and
o
data and telephone expenses to communicate with shareholders and transfer
shareholders between T. Rowe Price facilities.
oProduction support, service enhancements and custom reporting for the
shareholder mainframe recordkeeping system.
O
RECORD RETENTION. The cost of maintenance and supplies used to maintain,
microfilm, copy, record, index, display, retrieve, and store, in optical
disc, microfiche or microfilm form, documents and records.
O
DISASTER RECOVERY. The cost of services, equipment, facilities and other
charges necessary to provide disaster recovery for any and all services
listed in this Agreement.
Out-of-pocket costs will be billed at cost to the Funds. Allocation of
monthly costs among the Funds will generally be made based upon the number
of Shareholder and Retirement Accounts serviced by Price Services each
month. Some invoices for these costs will contain costs for both the Funds
and other funds serviced by Price Ser-
<PAGE>
vices. These costs will be allocated based on a reasonable allocation
methodology. Where possible, such as in the case of inbound and outbound
WATS charges, allocation will be made on the actual distribution or usage.
2. FEES AND OUT-OF-POCKET EXPENSES - PLUS CLASSES OF SHARES
---- --- ------------- -------- - ---- ------- -- ------
Notwithstanding anything to the contrary in Section 21, the fees and
out-of-pocket expenses set forth in Section C(1) above with respect to the
PLUS Classes shall be charged as follows:
o
All out-of-pocket expenses described in Section C(1) above shall be charged
to the Class in the same manner as if the Class was its own Price Fund. In
addition, each PLUS Class shall pay the following out-of-pocket expenses
charged by the debit card processing bank:
o Plastic stock and labels for the debit cards;
o
User tapes and automated voice response unit used to assist shareholders
whose cards have been lost or stolen;
o Ad hoc reports prepared by the bank; and
o Checkbooks.
D. REPRESENTATIONS AND WARRANTIES OF PRICE SERVICES
------------------------------------------------
Price Services represents and warrants to the Fund that:
1.
It is a corporation duly organized and existing and in good standing under
the laws of Maryland;
2.
It is duly qualified to carry on its business in Maryland, Colorado 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;
<PAGE>
5.
It is registered with the Securities and Exchange Commission as a Transfer
Agent pursuant to Section 17A of the '34 Act; and
6. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
E. REPRESENTATIONS AND WARRANTIES OF THE FUND
------------------------------------------
The Fund represents and warrants to Price Services that:
1.
It is a corporation or business trust duly organized and existing and in
good standing under the laws of Maryland or Massachusetts, as the case may
be;
2.
It is empowered under applicable laws and by its Articles of Incorporation
or Declaration of Trust, as the case may be, and By-Laws to enter into and
perform this Agreement;
3.
All proceedings required by said Articles of Incorporation or Declaration
of Trust, as the case may be, and By-Laws have been taken to authorize it
to enter into and perform this Agreement;
4. It is an investment company registered under the Act; and
5.
A registration statement under the Securities Act of 1933 ("THE '33 ACT")
is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with
respect to all Shares of the Fund being offered for sale.
F. STANDARD OF CARE/INDEMNIFICATION
--------------------------------
Notwithstanding anything to the contrary in this Agreement:
1.
Price Services shall not be liable to any Fund for any act or failure to
act by it or its agents or subcontractors on behalf of the Fund in carrying
or attempting to carry out the terms and provisions of this Agreement
provided Price Services has acted in good faith
<PAGE>
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
exercised reasonable care in selecting or monitoring the performance of its
agents or subcontractors.
3.
Except as provided in Article M of this Agreement, Price Services shall
indemnify and hold harmless the Fund from all losses, costs, damages,
claims, actions and expenses, including reasonable expenses for legal
counsel, incurred by the Fund resulting from the negligence or willful
misconduct of Price Services or which result from Price Services' failure
to exercise reasonable care in selecting or monitoring the performance of
its agents or subcontractors. The Fund shall not be entitled to such
indemnification in respect of actions or omissions constituting negligence
or willful misconduct of such Fund or its agents or subcontractors; unless
such negligence or misconduct is attributable to Price Services.
4.
In determining Price Services' liability, an isolated error or omission
will normally not be deemed to constitute negligence when it is determined
that:
<PAGE>
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 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 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
<PAGE>
indemnification shall in no case confess any claim or make any compromise
in any case in which the other party may be required to indemnify it except
with the other party's prior written consent.
7. Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
G. DUAL INTERESTS
--------------
It is understood that some person or persons may be directors, officers, or
shareholders of both the Funds and Price Services (including Price Services'
affiliates), and that the existence of any such dual interest shall not affect
the validity of this Agreement or of any transactions hereunder except as
otherwise provided by a specific provision of applicable law.
H. DOCUMENTATION
-------------
As requested by Price Services, the Fund shall promptly furnish to Price
Services the following:
oA 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;
oAs 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;
<PAGE>
o
An opinion of counsel for the Fund with respect to the validity of the stock,
the number of Shares authorized, the status of redeemed Shares, and the number
of Shares with respect to which a Registration Statement has been filed and is
in effect; and
o A copy of the Fund's current prospectus.
The delivery of any such document for the purpose of any other agreement to
which the Fund and Price Services are or were parties shall be deemed to be
delivery for the purposes of this Agreement.
o
As requested by Price Services, the Fund will also furnish from time to time the
following documents:
o
Each resolution of the Board of Directors/Trustees of the Fund authorizing the
original issue of its Shares;
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;
oA 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
o Copies of new prospectuses issued.
<PAGE>
Price Services hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
I. REFERENCES TO PRICE SERVICES
----------------------------
Each Fund agrees not to circulate any printed matter which contains any
reference to Price Services without the prior approval of Price Services,
excepting solely such printed matter that merely identifies Price Services as
agent of the Fund. The Fund will submit printed matter requiring approval to
Price Services in draft form, allowing sufficient time for review by Price
Services and its legal counsel prior to any deadline for printing.
J. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS
--------------------------------------------------
Except as otherwise provided in the Agreement and except for the accuracy
of information furnished to the Fund by Price Services, each Fund assumes full
responsibility for the preparation, contents and distribution of its
prospectuses and compliance with all applicable requirements of the Act, the '34
Act, the '33 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction over the Fund. Price Services shall be
responsible for complying with all laws, rules and regulations of governmental
authorities having jurisdiction over transfer agents and their activities.
K. OWNERSHIP OF SOFTWARE AND RELATED MATERIAL
------------------------------------------
All computer programs, magnetic tapes, written procedures and similar items
purchased and/or developed and used by Price Services in performance of the
Agreement shall be the property of Price Services and will not become the
property of the Fund.
<PAGE>
L. QUALITY SERVICE STANDARDS
-------------------------
Price Services and the Fund may from time to time agree to certain quality
service standards, as well as incentives and penalties with respect to Price
Services' hereunder.
M. AS OF TRANSACTIONS
------------------
For purposes of this Article M, the term "TRANSACTION" shall mean any
single or "related transaction" (as defined below) involving the purchase or
redemption of Shares (including exchanges) that is processed at a time other
than the time of the computation of the Fund's net asset value per Share next
computed after receipt of any such transaction order by Price Services due to an
act or omission of Price Services. "AS OF PROCESSING" refers to the processing
of these Transactions. If more than one Transaction ("RELATED TRANSACTION") in
the Fund is caused by or occurs as a result of the same act or omission, such
transactions shall be aggregated with other transactions in the Fund and be
considered as one Transaction.
O REPORTING
Price Services shall:
1.
Utilize a system to identify all Transactions, and shall compute the
net effect of such Transactions upon the Fund on a daily, monthly and
rolling 365 day basis. The monthly and rolling 365 day periods are
hereafter referred to as "CUMULATIVE".
2.
Supply to the Fund, from time to time as mutually agreed upon, a
report summarizing the Transactions and the daily and Cumulative net
effects of such Transactions both in terms of aggregate dilution and
loss ("DILUTION") or gain and negative dilution ("GAIN") experienced
by the Fund, and the impact such Gain or Dilution has had upon the
Fund's net asset value per Share.
<PAGE>
3.
With respect to any Transaction which causes Dilution to the Fund of
$100,000 or more, immediately provide the Fund: (i) a report
identifying the Transaction and the Dilution resulting therefrom, (ii)
the reason such Transaction was processed as described above, and
(iii) the action that Price Services has or intends to take to prevent
the reoccurrence of such as of processing ("REPORT").
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 greater than $25,000
("SIGNIFICANT TRANSACTION"), but less than $100,000, Price Services
will review with Counsel to the Fund the circumstances surrounding the
underlying Transaction to determine whether the Transaction was caused
by or occurred as a result of a negligent act or omission by Price
Services. If it is determined that the Dilution is the result of a
negligent action or omission by Price Services, Price Services and
outside counsel for the Fund will negotiate settlement. Significant
Transactions greater than $25,000 will be reported to the Audit
Committee at its annual meeting (unless the
<PAGE>
settlement fully compensates the Fund for any Dilution). Any
Significant Transaction, however, causing Dilution in excess of the
lesser of $100,000 or a penny per share will be promptly reported to
--------
the Board and resolved at the next scheduled Board Meeting. Settlement
for Significant Transactions causing Dilution of $100,000 or more will
not be entered into until approved by the Board. The factors to
consider in making any determination regarding the settlement of a
Significant Transaction would include but not be limited to:
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;
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 Price Services' As Of Processing
procedures.
3.
In determining Price Services' liability with respect to a Significant
Transaction, an isolated error or omission will normally not be deemed
to constitute negligence when it is determined that:
o Price Services had in place "appropriate procedures".
<PAGE>
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 and every conceivable type of
error or omission. The term "appropriate procedures" shall mean
procedures reasonably designed to prevent and detect errors and
omissions. In determining the reasonableness of such procedures,
weight will be given to such factors as are appropriate, including the
prior occurrence of any similar errors or omissions when such
procedures were in place and transfer agent industry standards in
place at the time of the occurrence.
N. TERM AND TERMINATION OF AGREEMENT
---------------------------------
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>
O. NOTICE
------
Any notice as required by this Agreement shall be sufficiently given (i)
when sent to an authorized person of the other party at the address of such
party set forth above or at such other address as such party may from time to
time specify in writing to the other party; or (ii) as otherwise agreed upon by
appropriate officers of the parties hereto.
P. ASSIGNMENT
----------
Neither this Agreement nor any rights or obligations hereunder may be
assigned either voluntarily or involuntarily, by operation of law or otherwise,
by either party without the prior written consent of the other party, provided
this shall not preclude Price Services from employing such agents and
subcontractors as it deems appropriate to carry out its obligations set forth
hereunder.
Q. AMENDMENT/INTERPRETIVE PROVISIONS
---------------------------------
The parties by mutual written agreement may amend this Agreement at any
time. In addition, in connection with the operation of this Agreement, Price
Services and the Fund may agree from time to time on such provisions
interpretive of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement. Any
such interpretive or additional provisions are to be signed by all parties and
annexed hereto, but no such provision shall contravene any applicable Federal or
state law or regulation and no such interpretive or additional provision shall
be deemed to be an amendment of this Agreement.
R. FURTHER ASSURANCES
------------------
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
<PAGE>
S. MARYLAND LAW TO APPLY
---------------------
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of Maryland.
T. MERGER OF AGREEMENT
-------------------
This Agreement, including the attached Appendices and Schedules supersedes
any prior agreement with respect to the subject hereof, whether oral or written.
U. COUNTERPARTS
------------
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instruments.
V. THE PARTIES
-----------
All references herein to "the Fund" are to each of the Funds listed on
Appendix A individually, as if this Agreement were between such individual Fund
and Price Services. In the case of a series Fund or trust, all references to
"the Fund" are to the individual series or portfolio of such Fund or trust, or
to such Fund or trust on behalf of the individual series or portfolio, as
appropriate. The "Fund" also includes any T. Rowe Price Funds which may be
established after the execution of this Agreement. Any reference in this
Agreement to "the parties" shall mean Price Services and such other individual
Fund as to which the matter pertains.
W. DIRECTORS, TRUSTEES AND SHAREHOLDERS AND MASSACHUSETTS BUSINESS TRUST
---------------------------------------------------------------------
It is understood and is expressly stipulated that neither the holders of
Shares in the Fund nor any Directors or Trustees of the Fund shall be personally
liable hereunder.
With respect to any Fund which is a party to this Agreement and which is
organized as a Massachusetts business trust, the term "Fund" means and refers to
the trustees from time to time serving under the applicable trust agreement
(Declaration of Trust) of such Trust as the same may be amended from time to
time. It is expressly agreed that the obligations of any such Trust here-
<PAGE>
under shall not be binding upon any of the trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust, as provided in the Declaration of Trust of the Trust.
The execution and delivery of this Agreement has been authorized by the
trustees and signed by an authorized officer of the Trust, acting as such, and
neither such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them, but shall bind
only the trust property of the Trust as provided in its Declaration of Trust.
X. CAPTIONS
--------
The captions in the Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers.
T. ROWE PRICE SERVICES, INC. T. ROWE PRICE FUNDS
/s/Wayne D. O'Melia /s/Carmen F. Deyesu
BY: ______________________________
BY:
--------------------------------------------------------------
Wayne D. O'Melia Carmen F. Deyesu
DATED:____________________________
DATED:____________________________
<PAGE>
APPENDIX A
----------
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
<PAGE>
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. Rowe Price Prime Reserve Fund-PLUS Class
T. ROWE PRICE REAL ESTATE FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. Rowe Price Tax-Efficient Balance Fund
T. Rowe Price Tax-Efficient Growth Fund
<PAGE>
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. Rowe Price Tax-Exempt Money Fund-PLUS Class
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC. on behalf of the:
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC. on behalf of the:
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE VALUE FUND, INC.
<PAGE>
AMENDMENT NO. 1
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
T. ROWE PRICE SERVICES, INC.
AND
THE T. ROWE PRICE FUNDS
The Transfer Agency and Service Agreement of January 1, 2000, between T. Rowe
Price Services, Inc., and each of the Parties listed on Appendix A thereto is
hereby amended, as of February 9, 2000, by adding thereto Institutional Equity
Funds, Inc., on behalf of Institutional Large-Cap Value Fund and Institutional
Small-Cap Stock Fund; T. Rowe Price Blue Chip Growth Fund, Inc., on behalf of T.
Rowe Price Blue Chip Growth Fund-Advisor Class; T. Rowe Price Equity Income
Fund, on behalf of T. Rowe Price Equity Income Fund -Advisor Class; T. Rowe
Price High Yield Fund, Inc., on behalf of T. Rowe Price High Yield Fund-Advisor
Class; T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price
International Bond Fund-Advisor Class and T. Rowe Price International Stock
Fund-Advisor Class; T. Rowe Price Mid-Cap Growth Fund, Inc., on behalf of T.
Rowe Price Mid-Cap Growth Fund-Advisor Class; T. Rowe Price Science & Technology
Fund, Inc., on behalf of T. Rowe Price Science & Technology Fund-Advisor Class;
T. Rowe Price Small-Cap Stock Fund, Inc., on behalf of T. Rowe Price Small-Cap
Stock Fund-Advisor Class; T. Rowe Price Small-Cap Value Fund, Inc., on behalf of
T. Rowe Price Small-Cap Value Fund-Advisor Class and T. Rowe Price Value Fund,
Inc., on behalf of T. Rowe Price Value Fund-Advisor Class.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. Rowe Price Blue Chip Growth Fund-Advisor Class
<PAGE>
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. Rowe Price Equity Income Fund-Advisor Class
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. Rowe Price High Yield Fund-Advisor Class
<PAGE>
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Institutional Large-Cap Value Fund
Institutional Small-Cap Stock Fund
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Bond Fund-Advisor Class
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Stock Fund-Advisor Class
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. Rowe Price Mid-Cap Growth Fund-Advisor Class
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
<PAGE>
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. Rowe Price Prime Reserve Fund-PLUS Class
T. ROWE PRICE REAL ESTATE FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. Rowe Price Science & Technology Fund-Advisor Class
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. Rowe Price Small-Cap Stock Fund-Advisor Class
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. Rowe Price Small-Cap Value Fund-Advisor Class
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
<PAGE>
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. Rowe Price Tax-Efficient Balanced Fund
T. Rowe Price Tax-Efficient Growth Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. Rowe Price Tax-Exempt Money Fund-PLUS Class
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC. 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>
T. ROWE PRICE VALUE FUND, INC.
T. Rowe Price Value Fund-Advisor Class
Attest:
/s/Patricia B. Lippert /s/ Carmen F. Deyesu
______________________ ______________________________
Patricia B. Lippert By: Carmen F. Deyesu
Secretary Treasurer
Attest: T. ROWE PRICE SERVICES, INC.
/s/Barbara A. Van Horn /s/ Henry H. Hopkins
______________________ ______________________________
Barbara A. Van Horn By: Henry H. Hopkins
Secretary Vice President
<PAGE>
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, 2000, as amended
February 9, 2000 between T. Rowe Price Services, Inc., and each of the Parties
listed on Appendix A thereto is hereby amended, as of April 19, 2000, by adding
thereto T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price
Emerging Europe & Mediterranean Fund.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. Rowe Price Blue Chip Growth Fund-Advisor Class
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. Rowe Price Equity Income Fund-Advisor Class
<PAGE>
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE 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 High Yield Fund-Advisor Class
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Institutional Large-Cap Value Fund
Institutional Small-Cap Stock Fund
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
<PAGE>
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Bond Fund-Advisor Class
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Stock Fund-Advisor Class
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. Rowe Price Emerging Europe & Mediterranean Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. Rowe Price Mid-Cap Growth Fund-Advisor Class
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. Rowe Price Prime Reserve Fund-PLUS Class
<PAGE>
T. ROWE PRICE REAL ESTATE FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. Rowe Price Science & Technology Fund-Advisor Class
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. Rowe Price Small-Cap Stock Fund-Advisor Class
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. Rowe Price Small-Cap Value Fund-Advisor Class
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. Rowe Price Tax-Efficient Balanced Fund
T. Rowe Price Tax-Efficient Growth Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. Rowe Price Tax-Exempt Money Fund-PLUS Class
<PAGE>
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC. on behalf of the:
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC. on behalf of the:
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE VALUE FUND, INC.
T. Rowe Price Value Fund-Advisor Class
Attest:
/s/Patricia B. Lippert /s/Joseph A. Carrier
________________________ ___________________________
Patricia B. Lippert By: Joseph A. Carrier
Secretary Treasurer
Attest: T. ROWE PRICE SERVICES, INC.
/s/Barbara A. Van Horn /s/ Henry H. Hopkins
________________________ ___________________________
Barbara A. Van Horn By: Henry H. Hopkins
Secretary Vice President
The Agreement between T. Rowe Price Associates, Inc. and T. Rowe Price
Funds for Fund Accounting Services, dated January 1, 2000, as amended.
<PAGE>
AGREEMENT
BETWEEN
T. ROWE PRICE ASSOCIATES, INC.
AND
THE T. ROWE PRICE FUNDS
FOR
FUND ACCOUNTING SERVICES
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
Article A.....Terms of Appointment/Duties of Price Associates 1
Article B.....................Fees and Out-of-Pocket Expenses 3
Article C..Representations and Warranties of Price Associates 3
Article D..........Representations and Warranties of the Fund 4
Article E..........Ownership of Software and Related Material 4
Article F...........................Quality Service Standards 4
Article G....................Standard of Care/Indemnification 4
Article H......................................Dual Interests 7
Article I.......................................Documentation 7
Article J.......................Recordkeeping/Confidentiality 7
Article K..Compliance with Governmental Rules and Regulations 8
Article L..................Terms and Termination of Agreement 8
Article M..............................................Notice 8
Article N..........................................Assignment 9
Article O...................Amendment/Interpretive Provisions 9
Article P..................................Further Assurances 9
Article Q...............................Maryland Law to Apply 9
Article R.................................Merger of Agreement 10
Article S........................................Counterparts 10
Article T.........................................The Parties 10
Article UDirectors, Trustee and Shareholders and Massachusetts Business Trust
10
Article V............................................Captions 11
<PAGE>
AGREEMENT made as of the first day of January, 2000, by and between T. ROWE
PRICE ASSOCIATES, INC., a Maryland corporation having its principal office and
place of business at 100 East Pratt Street, Baltimore, Maryland 21202 ("PRICE
ASSOCIATES"), and each Fund which is listed on Appendix A (as such Appendix may
be amended from time to time) and which evidences its agreement to be bound
hereby by executing a copy of this Agreement (each such Fund individually
hereinafter referred to as "THE FUND", whose definition may be found in Article
T);
WHEREAS, Price Associates has the capability of providing the Funds with
certain accounting services ("ACCOUNTING SERVICES");
WHEREAS, the Fund desires to appoint Price Associates to provide these
Accounting Services and Price Associates desires to accept such appointment;
WHEREAS, the Board of Directors of the Fund has authorized the Fund to
utilize various pricing services for the purpose of providing to Price
Associates securities prices for the calculation of the Fund's net asset value.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
A. TERMS OF APPOINTMENT/DUTIES OF PRICE ASSOCIATES
-----------------------------------------------
Subject to the terms and conditions set forth in this Agreement, the Fund
hereby employs and appoints Price Associates to provide, and Price Associates
agrees to provide, the following Accounting Services:
1.
Maintain for each Fund a daily trial balance, a general ledger, subsidiary
records and capital stock accounts;
2.
Maintain for each Fund an investment ledger, including amortized bond and
foreign dollar denominated costs where applicable;
3. Maintain for each Fund all records relating to the Fund's income and
expenses;
4.
Provide for the daily valuation of each Fund's portfolio securities and the
computation of each Fund's daily net asset value per share ("NAV"). Such daily
valuations shall be made in accordance with the valuation policies established
by each of the Fund's Board of Directors including, but not limited to, the
utilization of such pricing valuation sources and/or pricing services as
determined by the Boards.
<PAGE>
Price Associates shall have no liability for any losses or damages incurred
by the Fund as a result of erroneous portfolio security evaluations provided by
such designated sources and/or pricing services; provided that, Price Associates
reasonably believes the prices are accurate, has adhered to its normal
verification control procedures, and has otherwise met the standard of care as
set forth in Article G of this Agreement;
5.
Provide daily cash flow and transaction status information to each
Fund's adviser;
6. Authorize the payment of Fund expenses, either through instruction of
custodial bank or utilization of custodian^s automated transfer system;
7. Prepare for each Fund such financial information that is reasonably
necessary for shareholder reports, reports to the Board of Directors and to the
officers of the Fund, reports to the Securities and Exchange Commission, the
Internal Revenue Service and other Federal and state regulatory agencies;
8. Provide each Fund with such advice that may be reasonably necessary to
properly account for all financial transactions and to maintain the Fund's
accounting procedures and records so as to insure compliance with generally
accepted accounting and tax practices and rules;
9. Maintain for each Fund all records that may be reasonably required in
connection with the audit performed by each Fund's independent accountant, the
Securities and Exchange Commission, the Internal Revenue Service or such other
Federal or state regulatory agencies; and
10. Cooperate with each Fund's independent public accountants and take all
reasonable action in the performance of its obligations under the Agreement to
assure that the necessary information is made available to such accountants for
the expression of their opinion without any qualification as to the scope of
their examination including, but not limited to, their opinion included in each
such Fund's annual report on Form N-SAR and annual amendment to Form N-1A.
B. FEES AND OUT-OF-POCKET EXPENSES
-------------------------------
Each Fund shall pay to Price Associates for its Accounting Services
hereunder, fees as set forth in the Schedule attached hereto. In addition, each
Fund will reimburse Price Associates for out-of-pocket expenses such as postage,
printed forms, voice and data transmissions, record retention, disaster
recovery, third party vendors, equipment leases and other similar items as may
be agreed upon between Price Associates and the Fund. Some invoices will
contain costs for both the Funds and other funds serviced by Price Associates.
In these cases, a reasonable allocation methodology will be used to allocate
these costs to the Funds.
<PAGE>
C. REPRESENTATIONS AND WARRANTEES OF PRICE ASSOCIATES
--------------------------------------------------
Price Associates represents and warrants to the Fund that:
1.
It is a corporation duly organized and existing in good standing under the laws
of Maryland.
2. It is duly qualified to carry on its business in Maryland.
3.
It is empowered under applicable laws and by its charter and By-Laws to enter
into and perform this Agreement.
4. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
5. It has, and will continue to have, access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
D. REPRESENTATIONS AND WARRANTIES OF THE FUND
------------------------------------------
The Fund represents and warrants to Price Associates that:
1.
It is a corporation or business trust, as the case may be, duly organized and
existing and in good standing under the laws of Maryland or Massachusetts, as
the case may be.
2.
It is empowered under applicable laws and by its Articles of Incorporation or
Declaration of Trust, as the case may be, and By-Laws have been taken to
authorize it to enter into and perform this Agreement.
3.
All proceedings required by said Articles of Incorporation or Declaration of
Trust, as the case may be, and By-Laws have been taken to authorize it to enter
into and perform this Agreement.
E. OWNERSHIP OF SOFTWARE AND RELATED MATERIAL
------------------------------------------
All computer programs, magnetic tapes, written procedures, and similar
items purchased and/or developed and used by Price Associates in performance of
this Agreement shall be the property of Price Associates and will not become the
property of the Funds.
F. QUALITY SERVICE STANDARDS
-------------------------
Price Associates and the Fund may, from time to time, agree to certain
quality service standards, with respect to Price Associates' services hereunder.
G. STANDARD OF CARE/INDEMNIFICATION
--------------------------------
Notwithstanding anything to the contrary in this Agreement:
<PAGE>
1.
Where a pricing error results in loss or dilution to a Fund of less than
$10,000, the determination of liability for the error will be made by Price
Associates. Where a pricing error results in loss or dilution to a Fund of
$10,000 or more but less than $100,000, liability for the error will be resolved
through negotiations between Fund Counsel and Price Associates. Where a pricing
error results in loss or dilution to a Fund of the lesser of 1/2 of 1% of NAV or
$100,000 or more, the error will be promptly reported to the Board of Directors
of the Fund (unless the Fund is fully compensated for the loss or dilution),
provided that final settlement with respect to such errors will not be made
until approved by the Board of Directors of the Fund. A summary of all pricing
errors and their effect on the Funds will be reported to the Funds^ Audit
Committee on an annual basis. In determining the liability of Price Associates
for a pricing error, an error or omission will not be deemed to constitute
negligence when it is determined that:
o Price Associates had in place "appropriate procedures and an adequate
system of internal controls;"
o the employee responsible for the error or omission had been reasonably
trained and was being appropriately monitored; and
o the error or omission did not result from wanton or reckless conduct on
the part of the employee.
It is understood that Price Associates is not obligated to have in place
separate procedures to prevent each and every conceivable type of error or
omission. The term "appropriate procedures and adequate system of internal
controls" shall mean procedures and controls reasonably designed to prevent and
detect errors and omissions. In determining the reasonableness of such
procedures and controls, weight will be given to such factors as are
appropriate, including the prior occurrence of any similar errors or omissions,
when such procedures and controls were in place and fund accounting industry
standards in place at the time of the error.
2. The Fund shall indemnify and hold Price Associates harmless from and
against all losses, costs, damages, claims, actions, and expenses, including
reasonable expenses for legal counsel, incurred by Price Associates resulting
from: (i) any action or omission by Price Associates or its agents or
subcontractors in the performance of their duties hereunder; (ii) Price
Associates acting upon instructions believed by it to have been executed by a
duly authorized officer of the Fund; or (iii) Price Associates acting upon
information provided by the Fund in form and under policies agreed to by Price
Associates and the Fund. Price Associates shall not be entitled
<PAGE>
to such indemnification in respect of actions or omissions constituting
negligence or willful misconduct of Price Associates or where Price Associates
has not exercised reasonable care in selecting or monitoring the performance of
its agents or subcontractors.
3. Price Associates shall indemnify and hold harmless the Fund from all
losses, costs, damages, claims, actions and expenses, including reasonable
expenses for legal counsel, incurred by the Fund resulting from the negligence
or willful misconduct of Price Associates or which result from Price Associates'
failure to exercise reasonable care in selecting or monitoring the performance
of its agents or subcontractors. The Fund shall not be entitled to such
indemnification with respect to actions or omissions constituting negligence or
willful misconduct of such Fund or its agents or subcontractors; unless such
negligence or misconduct is attributable to Price Associates.
4.
In the event either party is unable to perform its obligations under the terms
of this Agreement because of acts of God, strikes or other causes reasonably
beyond its control, such party shall not be liable to the other party for any
loss, cost, damage, claim, action or expense resulting from such failure to
perform or otherwise from such causes.
5.
In order that the indemnification provisions contained in this Article G shall
apply, upon the assertion of a claim for which either party may be required to
indemnify the other, the party seeking indemnification shall promptly notify the
other party of such assertion, and shall keep the other party advised with
respect to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the party
seeking indemnification in the defense of such claim, or to defend against said
claim in its own name or in the name of the other party. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
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>
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.
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.
<PAGE>
3. Upon termination hereof, the Fund shall pay to Price Associates such
compensation as may be due as of the date of such termination, and shall
likewise reimburse for out-of-pocket expenses related to its services hereunder.
M. NOTICE
------
Any notice as required by this Agreement shall be sufficiently given (i)
when sent to an authorized person of the other party at the address of such
party set forth above or at such other address as such party may from time to
time specify in writing to the other party; or (ii) as otherwise agreed upon by
appropriate officers of the parties hereto.
N. ASSIGNMENT
----------
Neither this Agreement nor any rights or obligations hereunder may be
assigned either voluntarily or involuntarily, by operation of law or otherwise,
by either party without the prior written consent of the other party, provided
this shall not preclude Price Associates from employing such agents and
subcontractors as it deems appropriate to carry out its obligations set forth
hereunder.
O. AMENDMENT/INTERPRETIVE PROVISIONS
---------------------------------
The parties by mutual written agreement may amend this Agreement at any
time. In addition, in connection with the operation of this Agreement, Price
Associates and the Fund may agree from time to time on such provisions
interpretive of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement.
Any such interpretive or additional provisions are to be signed by all parties
and annexed hereto, but no such provision shall contravene any applicable
Federal or state law or regulation and no such interpretive or additional
provision shall be deemed to be an amendment of this Agreement.
P. FURTHER ASSURANCES
------------------
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
Q. MARYLAND LAW TO APPLY
---------------------
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of Maryland.
<PAGE>
R. MERGER OF AGREEMENT
-------------------
This Agreement, including the attached Appendix and Schedule supersedes any
prior agreement with respect to the subject hereof, whether oral or written.
S. COUNTERPARTS
------------
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instruments.
T. THE PARTIES
-----------
All references herein to "the Fund" are to each of the Funds listed on
Appendix A individually, as if this Agreement were between such individual Fund
and Price Associates. In the case of a series Fund or trust, all references to
"the Fund" are to the individual series or portfolio of such Fund or trust, or
to such Fund or trust on behalf of the individual series or portfolio, as
appropriate. The "Fund" also includes any T. Rowe Price Funds which may be
established after the execution of this Agreement. Any reference in this
Agreement to "the parties" shall mean Price Associates and such other individual
Fund as to which the matter pertains.
U. DIRECTORS, TRUSTEES AND SHAREHOLDERS AND MASSACHUSETTS BUSINESS TRUST
---------------------------------------------------------------------
It is understood and is expressly stipulated that neither the holders of
shares in the Fund nor any Directors or Trustees of the Fund shall be personally
liable hereunder.
With respect to any Fund which is a party to this Agreement and which is
organized as a Massachusetts business trust, the term "Fund" means and refers to
the trustees from time to time serving under the applicable trust agreement
(Declaration of Trust) of such Trust as the same may be amended from time to
time. It is expressly agreed that the obligations of any such Trust hereunder
shall not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust, as provided in the Declaration of Trust of the Trust. The
execution and delivery of this Agreement has been authorized by the trustees and
signed by an authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them, but shall bind only the trust
property of the Trust as provided in its Declaration of Trust.
<PAGE>
V. CAPTIONS
--------
The captions in the Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers.
T. ROWE PRICE ASSOCIATES, INC. T. ROWE PRICE FUNDS
/s/James S. Riepe /s/Carmen F. Deyesu
BY: ______________________________
BY:
--------------------------------------------------------------
James S. Riepe Carmen F. Deyesu
DATED:____________________________
DATED:____________________________
<PAGE>
APPENDIX A
----------
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
<PAGE>
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. Rowe Price Prime Reserve Fund-PLUS Class
T. ROWE PRICE REAL ESTATE FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. Rowe Price Tax-Efficient Balance Fund
T. Rowe Price Tax-Efficient Growth Fund
<PAGE>
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. Rowe Price Tax-Exempt Money Fund - PLUS Class
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC. on behalf of the:
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC. on behalf of the:
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE VALUE FUND, INC.
<PAGE>
AMENDMENT NO. 1
AGREEMENT
BETWEEN
T. ROWE PRICE ASSOCIATES, INC.
AND
THE T. ROWE PRICE FUNDS
FOR
FUND ACCOUNTING SERVICES
The Agreement for Fund Accounting Services of January 1, 2000, between T. Rowe
Price Associates, Inc. and each of the Parties listed on Appendix A thereto is
hereby amended, as of February 9, 2000, by adding thereto Institutional Equity
Funds, Inc., on behalf of Institutional Large-Cap Value Fund and Institutional
Small-Cap Stock Fund; T. Rowe Price Blue Chip Growth Fund, Inc., on behalf of T.
Rowe Price Blue Chip Growth Fund-Advisor Class; T. Rowe Price Equity Income
Fund, on behalf of T. Rowe Price Equity Income Fund -Advisor Class; T. Rowe
Price High Yield Fund, Inc., on behalf of T. Rowe Price High Yield Fund-Advisor
Class; T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price
International Bond Fund-Advisor Class and T. Rowe Price International Stock
Fund-Advisor Class; T. Rowe Price Mid-Cap Growth Fund, Inc., on behalf of T.
Rowe Price Mid-Cap Growth Fund-Advisor Class; T. Rowe Price Science & Technology
Fund, Inc., on behalf of T. Rowe Price Science & Technology Fund-Advisor Class;
T. Rowe Price Small-Cap Stock Fund, Inc., on behalf of T. Rowe Price Small-Cap
Stock Fund-Advisor Class; T. Rowe Price Small-Cap Value Fund, Inc., on behalf of
T. Rowe Price Small-Cap Value Fund-Advisor Class and T. Rowe Price Value Fund,
Inc., on behalf of T. Rowe Price Value Fund-Advisor Class.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. Rowe Price Blue Chip Growth Fund-Advisor Class
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
<PAGE>
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. Rowe Price Equity Income Fund-Advisor Class
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. Rowe Price High Yield Fund-Advisor Class
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Institutional Large-Cap Value Fund
Institutional Small-Cap Stock Fund
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
<PAGE>
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Bond Fund-Advisor Class
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Stock Fund-Advisor Class
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. Rowe Price Mid-Cap Growth Fund-Advisor Class
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. Rowe Price Prime Reserve Fund-PLUS Class
T. ROWE PRICE REAL ESTATE FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment Fund
<PAGE>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. Rowe Price Science & Technology Fund-Advisor Class
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. Rowe Price Small-Cap Stock Fund-Advisor Class
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. Rowe Price Small-Cap Value Fund-Advisor Class
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. Rowe Price Tax-Efficient Balanced Fund
T. Rowe Price Tax-Efficient Growth Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. Rowe Price Tax-Exempt Money Fund-PLUS Class
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
<PAGE>
T. ROWE PRICE SUMMIT FUNDS, INC. on behalf of the:
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC. on behalf of the:
T. Rowe Price Summit Municipal Money Market Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
T. ROWE PRICE VALUE FUND, INC.
T. Rowe Price Value Fund-Advisor Class
Attest:
/s/Patricia B. Lippert /s/ Carmen F. Deyesu
________________________ ______________________________
Patricia B. Lippert By: Carmen F. Deyesu
Secretary Treasurer
Attest: T. ROWE PRICE ASSOCIATES, INC.
/s/Barbara A. Van Horn /s/ Henry H. Hopkins
________________________ ______________________________
Barbara A. Van Horn By: Henry H. Hopkins
Secretary Managing Director
<PAGE>
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, 2000, as amended
February 9, 2000 between T. Rowe Price Associates, Inc. and each of the Parties
listed on Appendix A thereto is hereby amended, as of April 19, 2000, by adding
thereto T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price
Emerging Europe & Mediterranean Fund.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. Rowe Price Blue Chip Growth Fund-Advisor Class
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. Rowe Price Equity Income Fund-Advisor Class
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
<PAGE>
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. Rowe Price High Yield Fund-Advisor Class
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Institutional Large-Cap Value Fund
Institutional Small-Cap Stock Fund
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Bond Fund-Advisor Class
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Stock Fund-Advisor Class
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Growth & Income Fund
T. Rowe Price Emerging Europe & Mediterranean Fund
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
<PAGE>
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. Rowe Price Mid-Cap Growth Fund-Advisor Class
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. Rowe Price Prime Reserve Fund-PLUS Class
T. ROWE PRICE REAL ESTATE FUND, INC.
RESERVE INVESTMENT FUNDS, INC.
Reserve Investment Fund
Government Reserve Investment Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. Rowe Price Science & Technology Fund-Advisor Class
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. Rowe Price Small-Cap Stock Fund-Advisor Class
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. Rowe Price Small-Cap Value Fund-Advisor Class
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
<PAGE>
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Virginia Short-Term Tax-Free Bond Fund
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. Rowe Price Tax-Efficient Balanced Fund
T. Rowe Price Tax-Efficient Growth Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. Rowe Price Tax-Exempt Money Fund-PLUS Class
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC. 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>
T. ROWE PRICE VALUE FUND, INC.
T. Rowe Price Value Fund-Advisor Class
Attest:
/s/Patricia B. Lippert /s/Joseph A. Carrier
________________________ ______________________________
Patricia B. Lippert By: Joseph A. Carrier
Secretary Treasurer
Attest: T. ROWE PRICE ASSOCIATES, INC.
/s/Barbara A. Van Horn /s/ Henry H. Hopkins
________________________ ______________________________
Barbara A. Van Horn By: Henry H. Hopkins
Secretary Managing Director
The Agreement between T. Rowe Price Retirement Plan Services, Inc. and
the Taxable Funds, dated January 1, 2000, as amended.
<PAGE>
AGREEMENT
BETWEEN
T. ROWE PRICE RETIREMENT PLAN SERVICES, INC.
AND
T. ROWE PRICE FUNDS
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
Article A Terms of Appointment................................ 2
Article B Duties of RPS....................................... 2
1. Contributions - Retirement Plans and Retirement Accounts 2
2. Retirement Plans - Redemptions to Cover Distributions 3
3. Other Provisions............................. 4
4. Exchanges.................................... 5
5. Books and Records............................ 5
6. Tax Information.............................. 6
7. Other Information to be Furnished to the Funds 6
8. Telephone/On-Line Services................... 6
9. Correspondence............................... 7
10. Prospectuses/Confirmation Statements......... 7
11. Proxies...................................... 7
12. Form N-SAR................................... 7
13. Withholding.................................. 7
Article C Fee and Out-of-Pocket Expenses...................... 8
1. Postage...................................... 8
2. Proxies...................................... 8
3. Communications............................... 8
4. Record Retention............................. 9
5. Disaster Recovery............................ 9
Article D Representations and Warranties of RPS............... 9
Article E Representations and Warranties of the Fund.......... 10
Article F Standard of Care/Indemnification.................... 10
Article G Dual Interests...................................... 13
Article H Documentation....................................... 13
Article I Recordkeeping/Confidentiality....................... 14
Article J Ownership of Software and Related Material.......... 15
Article K As of Transactions.................................. 15
1. Reporting.................................... 16
2. Liability.................................... 16
<PAGE>
Article L Term and Termination of Agreement................... 18
Article M Notice ............................................. 19
Article N Assignment.......................................... 19
Article O Amendment/Interpretive Provisions................... 19
Article P Further Assurances.................................. 20
Article Q Maryland Law to Apply............................... 20
Article R Merger of Agreement................................. 20
Article S Counterparts........................................ 20
Article T The Parties......................................... 20
Article U Directors, Trustees and Shareholders and Massachusetts Business Trust
21
Article V Captions............................................ 21
<PAGE>
AGREEMENT, made as of the first day of January, 2000, by and between T. ROWE
PRICE RETIREMENT PLAN SERVICES, INC., a Maryland corporation having its
principal office and place of business at 100 East Pratt Street, Baltimore,
Maryland 21202 ("RPS"), and EACH FUND WHICH IS LISTED ON APPENDIX A (as such
Appendix may be amended from time to time) and which evidences its agreement to
be bound hereby by executing a copy of this Agreement (each Fund hereinafter
referred to as "THE FUND") whose definition may be found in Article T;
WHEREAS, the Funds are named investment options under various tax-sheltered
plans, including, but not limited to, state and local government deferred
compensation plans, 403(b) plans, and profit sharing, thrift, 401(k) and money
purchase pension plans for self-employed individuals, professional partnerships
and corporations (collectively referred to as "RETIREMENT PLANS"); and the Fund
has determined that such investments of Retirement Plans in the Funds are in the
best long-term interest of the Funds;
WHEREAS, RPS has the capability of providing special services, on behalf of
the Fund, for the accounts of individuals ("PARTICIPANTS") participating in
these Retirement Plans ("RETIREMENT ACCOUNTS");
WHEREAS, RPS represents that it is registered with the Securities and
Exchange Commission as a Transfer Agent under Section 17A of the Securities
Exchange Act of 1934 (THE "'34 ACT");
WHEREAS, RPS may subcontract or jointly contract with other parties on behalf
of the Funds to perform certain of the functions described herein, RPS may also
enter into, on behalf of the Funds, certain banking relationships to perform
various banking services, including, but not limited to, check deposits,
disbursements, automatic clearing house transactions ("ACH") and wire transfers.
Subject to guidelines mutually agreed upon by the Funds and RPS, excess
balances, if any, resulting from these banking relationships will be invested
and the income therefrom will be used to offset fees which would otherwise be
charged to the Funds under this Agreement;
WHEREAS, the Fund desires to contract with RPS to provide the functions and
services described herein in connection with the Retirement Plans and Retirement
Accounts;
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
A. TERMS OF APPOINTMENT
--------------------
Subject to the terms and conditions set forth in this Agreement, the Fund
hereby employs and appoints RPS to perform the services and functions described
herein in connection with certain Retirement Plan and Retirement Accounts as
agreed upon by the parties.
B. DUTIES OF RPS
-------------
RPS agrees that it will perform the following services:
1. CONTRIBUTIONS - RETIREMENT PLANS AND RETIREMENT ACCOUNTS
------------- - ---------- ----- --- ---------- --------
After RPS has received monies from Retirement Plans and has determined the
proper allocation of such monies to the Retirement Accounts of Participants
based upon instructions received from Participants, Retirement Plans or their
designees, or Retirement Plan Administrator(s) ("ADMINISTRATOR(S)"), RPS
will, as a responsibility under the Agreement:
a.
In the case of a new Participant, establish and maintain a Retirement
Account for such Participant;
b.
Compute the number of shares of each Fund to which the Participant is
entitled in accordance with the price per share of such Fund as
calculated and provided by the Fund for orders received at that time and
date, and purchase the appropriate shares in each such Retirement
Account;
c.
Calculate the aggregate of all purchases in the Retirement Accounts and
transmit the net purchase order to T. Rowe Price Services, Inc.
("SERVICES") or directly to the Fund, as the case may be, for purchase
into an omnibus account established in each Fund registered in RPS^ or
its affiliates^ name as agent for Retirement Plans or in the individual
Retirement Plan^s name ("OMNIBUS ACCOUNT"); and
d.
Transmit to Services, by wire, at a time mutually agreed upon by both
parties, the aggregate money allocated to coincide with the purchase
order.
<PAGE>
2. RETIREMENT PLANS - REDEMPTIONS TO COVER DISTRIBUTIONS.
---------- ----- - ----------- -- ----- -------------
After RPS has received instructions from the Administrator regarding
distributions to be made to Participants or their designated beneficiaries
from Funds designated as investment options under the Retirement Plan, RPS
will, as a responsibility under the Agreement:
a.
Compute the number of shares to be redeemed from each such Retirement
Account for such distributions in accordance with the price per share of
such Fund as calculated and provided by the Fund for orders received in
good order at that time and date.
b. After such computation, calculate the aggregate amount of all
redemptions in the Retirement Accounts.
c.
Transmit any net redemption order to Services or directly to the Fund,
as the case may be, for the Omnibus Account of each Fund. Services will
wire proceeds to RPS to coincide with the redemption order for each
Omnibus Account. RPS will Distribute to Participants or their
designated beneficiaries the amount to be disbursed.
d.
After RPS has received instructions from the Administrator regarding
disbursements to be made regarding the payment of fees due the
Administrator, or other persons including RPS, RPS will, as a
responsibility under this Agreement:
i.
Compute the number of shares to be redeemed from each Retirement
Account to pay for such disbursements and the total number of all
shares to be redeemed in accordance with the price per share for
orders received in good order at that time and date, of such Fund as
calculated and provided by the Fund;
ii.
Inform Services, or the Funds directly, as the case may be, of the
necessary Shares to be redeemed from the Omnibus Account of the Funds
to cover such disbursements; and
iii.
Mail or wire to the Administrator or such other person as designated
by the Administrator the amount to be disbursed.
<PAGE>
3. OTHER PROVISIONS
----- ----------
a.
If any instruction tendered by an Administrator to purchase or redeem
shares in a Retirement Account is not satisfactory to RPS, RPS shall
promptly notify the Administrator of such fact together with the
reason therefore;
b.
The authority of RPS to perform its responsibilities under Paragraph
B(2) with respect to each Fund shall be suspended upon RPS^s receipt
of notification from such Fund of the suspension of the determination
of the Fund's net asset value per share and shall remain suspended
until RPS receives proper notification from the Fund; and
c.
The Fund will promptly inform RPS of the declaration of any dividend
or distribution on account of the capital stock of any Fund so that
RPS may properly credit income and capital gain payments to each
Retirement Account.
4. EXCHANGES
---------
Effect exchanges of shares of the Funds in the Retirement Accounts upon
receipt of appropriate instructions from the Administrator and/or Participant
in accordance with the price per share of the Funds as calculated and
provided by the Fund for orders received in good order at that time and date.
Calculate and transmit a net purchase and redemption order to Services or
the Fund, as the case may be, for the Omnibus Account of each Fund. RPS will
transmit by wire the aggregate monies allocated to each Fund to Services to
coincide with any net purchase order or instruct Services to wire to it
monies from each Fund^s Omnibus Account to coincide with any net redemption
order.
5. BOOKS AND RECORDS
----- --- -------
RPS shall maintain records showing for each Retirement Plan or Retirement
Account, the following:
a. Names, addresses and tax identification numbers, when provided;
b. Number of shares held of each Fund;
c.
Historical information regarding the account of each Participant and/or
Retirement Plan, including dividends and capital gain distributions
invested in shares;
<PAGE>
d. Any instructions from a Participant or Administrator, including all
forms executed by a Participant with respect to elections with respect
to payment options in connection with the redemption of shares or
distribution elections, if applicable; and
e.
Any information required in order for RPS to perform the calculations
contemplated under this Agreement.
Any such records maintained pursuant to Rule 31a-1 under the Investment
Company Act of 1940 ("THE ACT") will be preserved for the periods prescribed
in Rule 31a-2 thereunder. Disposition of such records after such prescribed
periods shall be as mutually agreed upon from time to time by RPS and the
Funds. The retention of such records, which may be inspected by the Fund at
reasonable times, shall be at the expense of the Funds. All records
maintained by RPS in connection with the performance of its duties under this
Agreement will remain the property of the Funds and, in the event of
termination of this Agreement, will be delivered to the Fund as of the date
of termination of this agreement or at such other time as may be mutually
agreed upon.
6. TAX INFORMATION
--- -----------
RPS shall also prepare and file with appropriate federal agencies, such
information returns and reports as required by applicable Federal statutes
relating to redemptions effected in Retirement Accounts which constitute
reportable distributions. RPS will also prepare and submit to Participants,
such reports containing information as is required by applicable Federal law.
7. OTHER INFORMATION TO BE FURNISHED TO THE FUNDS
----- ----------- -- -- --------- -- --- -----
RPS will furnish to the Fund, such information, including Participant
lists and statistical information as may be agreed upon from time to time
between RPS and the Fund. Permission of the Administrator may also be
required.
8. TELEPHONE/ON-LINE SERVICES
----------------- --------
RPS will promptly respond to any telephone calls from Administrators
and/or Participants relating to the Retirement Accounts and/or questions
pertaining to the Funds. Procedures for processing telephone transactions
will be mutually agreed upon by both parties.
<PAGE>
RPS will also be responsible for providing a telephone voice response unit
and on-line access services.
9. CORRESPONDENCE
--------------
RPS will promptly and fully answer correspondence from Administrators and
Participants relating to Retirement Accounts and transfer agent procedures,
and such other correspondence as may from time to time be mutually agreed
upon with the Funds. Copies of all correspondence will be retained by RPS in
accordance with applicable law.
10. PROSPECTUSES/CONFIRMATION STATEMENTS
------------------------- ----------
RPS will be responsible for mailing all confirmations and statements
relating to transactions in the Funds, prospectuses, semi-annual and annual
reports of the Funds and other enclosures and mailings, as may be requested
by the Funds or required by applicable Federal law.
11. PROXIES
-------
As requested by the Funds, RPS shall assist in the mailing of proxy cards
and other material required to be mailed by the Fund in connection with
shareholder meetings of the Fund and shall assist in the receipt, examination
and tabulation of returned proxies and the certification of the vote to the
Fund.
12. FORM N-SAR
---- -----
RPS shall maintain such records, if any, as shall enable the Fund to
fulfill the requirements of Form N-SAR.
13. WITHHOLDING
-----------
The Fund and RPS shall agree to procedures to be followed with respect to
RPS's responsibilities in connection with compliance for federal withholding
on distributions to Participants from Retirement Accounts.
C. FEES AND OUT-OF-POCKET EXPENSES
-------------------------------
Each Fund shall pay to RPS for its services hereunder fees computed as set
forth in the Fee Schedule attached hereto. Except as provided below, RPS will
be responsible for all expenses relating to the providing of services. Each
Fund, however, will reimburse RPS for the following out-of-pocket expenses and
charges incurred in providing services:
<PAGE>
1.
Postage. The cost of postage and freight for mailing materials, including
--------
confirmations and statements as well as Fund prospectuses and Fund
shareholder reports, to Participants with investments in the Fund, 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.
b.
Print & Mail House. The cost of internal and third party printing and
----- - ---- -----
mail house services, including printing of statements and reports.
c. Voice and Data. The cost of equipment (including associated
----- --- ----
maintenance), supplies and services used for communicating with the
Participants or their Administrator, the Fund's transfer agent, other
Fund offices, and other agents of either the Fund or RPS. These charges
shall include:
^
telephone toll charges (both incoming and outgoing, local, long
distance and mailgrams); and
^
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 optical
disc, cd rom or 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>
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, Florida and
Colorado.
3.
It is empowered under applicable laws and by its charter and by-laws to enter
into and perform this Agreement.
4.
All requisite corporate proceedings have been taken to authorize it to enter
into and perform this Agreement.
5. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
6. It is registered with the Securities and Exchange Commission as a Transfer
Agent pursuant to Section 17A of the '34 Act.
E. REPRESENTATIONS AND WARRANTIES OF THE FUND
------------------------------------------
The Fund represents and warrants to RPS that:
1.
It is a corporation or business trust duly organized and existing and in good
standing under the laws of Maryland, or Massachusetts, as the case may be.
2.
It is empowered under applicable laws and by its Articles of Incorporation or
Declaration of Trust, as the case may be, and By-Laws to enter into and
perform this Agreement.
3.
All proceedings required by said Articles of Incorporation or Declaration of
Trust, as the case may be, and By-Laws have been taken to authorize it to
enter into and perform this Agreement.
4. It is an investment company registered under the Act.
5.
A registration statement under the Securities Act of 1933 ("the '33 Act") is
currently effective and will remain effective, and appropriate state
securities law filing have been made and will continue to be made, with
respect to all shares of the Fund being offered for sale.
F. STANDARD OF CARE/INDEMNIFICATION
--------------------------------
Notwithstanding anything to the contrary in this Agreement:
<PAGE>
1. RPS shall not be liable to the Fund for any act or failure to act by it or
its agents or subcontractors on behalf of the Fund in carrying or attempting
to carry out the terms and provisions of this Agreement provided RPS has
acted in good faith and without negligence or willful misconduct and selected
and monitored the performance of its agents and subcontractors with
reasonable care.
2.
The Fund shall indemnify and hold RPS harmless from and against all losses,
costs, damages, claims, actions and expenses, including reasonable expenses
for legal counsel, incurred by RPS resulting from: (i) any action or omission
by RPS or its agents or subcontractors in the performance of their duties
hereunder; (ii) RPS acting upon instructions reasonably believed by it to
have been executed by a duly authorized officer of the Fund; or (iii) RPS
acting upon information provided by the Fund in form and under policies
agreed to by RPS and the Fund. RPS shall not be entitled to such
indemnification in respect of actions or omissions constituting negligence or
willful misconduct of RPS or where RPS has not exercised reasonable care in
selecting or monitoring the performance of its agents or subcontractors.
3. Except as provided in Article K of this Agreement, RPS shall indemnify and
hold harmless the Fund from all losses, costs, damages, claims, actions and
expenses, including reasonable expenses for legal counsel, incurred by the
Fund resulting from negligence or willful misconduct of RPS or which result
from RPS' failure to exercise reasonable care in selecting or monitoring the
performance of its agents or subcontractors. The Fund shall not be entitled
to such indemnification in respect of actions or omissions constituting
negligence or willful misconduct of such Fund or its agents or
subcontractors; unless such negligence or misconduct is attributable to RPS.
4. In determining RPS' liability, an isolated error or omission will normally
not be deemed to constitute negligence when it is determined that:
^ RPS had in place "appropriate procedures;"
^ the employees responsible for the error or omission had been
reasonably trained and were being appropriately monitored; and
<PAGE>
^
the error or omission did not result from wanton or reckless conduct
on the part of the employees.
It is understood that RPS is not obligated to have in place separate
procedures to prevent each and every conceivable type of error or omission.
The term "appropriate procedures" shall mean procedures reasonably
designed to prevent and detect errors and omissions. In determining the
reasonableness of such procedures, weight will be given to such factors as
are appropriate, including the prior occurrence of any similar errors or
omissions when such procedures were in place and transfer agent industry
standards in place at the time of the occurrence.
5.
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes or other causes
reasonably beyond its control, such party shall not be liable to the other
party for any loss, cost, damage, claims, actions or expense resulting from
such failure to perform or otherwise from such causes.
6.
In order that the indemnification provisions contained in this Article F
shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to participate
with the party seeking indemnification in the defense of such claim, or to
defend against said claim in its own name or in the name of the 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.
<PAGE>
G. DUAL INTERESTS
--------------
It is understood that some person or persons may be directors, officers, or
shareholders of both RPS and the Fund and that the existence of any such dual
interest shall not affect the validity of this Agreement or of any transactions
hereunder except as otherwise provided by a specific provision of applicable
law.
H. DOCUMENTATION
-------------
1.
As requested by RPS, the Fund shall promptly furnish to RPS the following:
a.
copy of the resolution of the Directors/Trustees of the Fund
authorizing the appointment of RPS and the execution and delivery of
this Agreement;
b.
A copy of the Articles of Incorporation or Declaration of Trust, as
the case may be, and By-Laws of the Fund and all amendments thereto;
c.
An opinion of counsel for the Fund with respect to the validity of
the stock, the number of Shares authorized, the status of redeemed
Shares, and the number of Shares with respect to which a
Registration Statement has been filed and is in effect; and
d.
A copy of the Fund's current and new prospectuses and shareholder
reports issued by the Fund.
The delivery of any such document to either party hereto for the purpose of
any other agreement to which the Fund and RPS are or were parties shall be
deemed to be delivery for the purposes of this Agreement.
2.
As requested by RPS, the Fund will also furnish to RPS from time to
time the following documents:
a.
Each resolution of the Board of Directors/Trustees of the Fund
authorizing the original issue of its shares;
b.
Each Registration Statement filed with the Securities and Exchange
Commission and amendments and orders thereto in effect with respect
to the sale of shares with respect to the Fund;
c.
A certified copy of each amendment to the Articles of Incorporation
or Declaration of Trust, and the By-Laws of the Fund;
<PAGE>
d.
Certified copies of each vote of the Board of Directors/Trustees
authorizing officers to give instructions to the Fund; and
e.
Such other documents or opinions which RPS, in its discretion, may
reasonably deem necessary or appropriate in the proper performance
of its duties under this Agreement.
3. RPS hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of check forms and
facsimile signature imprinting devices, if any, and for the preparation or
use, and for keeping account of, such forms and devices.
I. RECORDKEEPING/CONFIDENTIALITY
-----------------------------
1.
RPS shall keep records relating to the services to be performed hereunder,
in the form and manner as it may deem advisable, provided that RPS shall
keep all records in such form and in such manner as required by applicable
law, including the Act and the '34 Act.
2. RPS and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any
other person, except: (a) after prior notification to and approval in
writing by the other party hereto, which approval shall not be unreasonably
withheld and may not be withheld where RPS or the Fund may be exposed to
civil or criminal contempt proceedings for failure to comply; (b) when
requested to divulge such information by duly constituted governmental
authorities; (c) after so requested by the other party hereto; or (d) by
the Administrator. The permission of the Administrator may be required
before disclosure is made to the Funds.
J. OWNERSHIP OF SOFTWARE AND RELATED MATERIAL
------------------------------------------
All computer programs, magnetic tapes, written procedures and similar items
purchased and/or developed and used by RPS in performance of the Agreement shall
be the property of RPS and will not become the property of the Fund.
<PAGE>
K. AS OF TRANSACTIONS
------------------
For purposes of this Article K, the term "TRANSACTION" shall mean any
single or "related transaction" (as defined below) involving the purchase or
redemption of shares (including exchanges) processed at a time other than the
time of the computation of the Fund's net asset value per share next computed
after receipt of any such transaction order by RPS due to an act or omission of
RPS. "AS OF PROCESSING" refers to the processing of these Transactions. If
more than one Transaction ("RELATED TRANSACTION") in the Fund is caused by or
occurs as a result of the same act or omission, such transactions shall be
aggregated with other transactions in the Fund and be considered as one
Transaction.
1. REPORTING
RPS shall:
a.
Utilize a system to identify all Transactions, and shall compute the
net effect of such Transactions upon the Fund on a daily, monthly
and rolling 365 day basis. The monthly and rolling 365 day periods
are hereinafter referred to as "CUMULATIVE."
b.
Supply to the Fund, from time to time as mutually agreed upon, a
report summarizing the Transactions and the daily and Cumulative net
effects of such Transactions both in terms of aggregate dilution and
loss ("DILUTION") or gain and negative dilution ("GAIN")
experienced by the Fund, and the impact such Gain or Dilution has
had upon the Fund's net asset value per share.
c.
With respect to any Transaction which causes Dilution to the Fund of
$100,000 or more, immediately provide the Fund: (i) a report
identifying the Transaction and the Dilution resulting therefrom,
(ii) the reason such Transaction was processed as described above,
and (iii) the action that RPS has or intends to take to prevent the
reoccurrence of such as of processing ("REPORT").
2. LIABILITY
a.
It will be the normal practice of the Fund not to hold RPS liable
with respect to any Transaction which causes Dilution to any single
Fund of less than $25,000. RPS will, however, closely monitor for
each Fund the daily and Cumulative
<PAGE>
Gain/Dilution which is caused by Transactions of less than $25,000.
When the Cumulative Dilution to any Fund exceeds 3/10 of 1% per
share, RPS, in consultation with counsel to the Fund, will make
appropriate inquiry to determine whether it should take any remedial
action. RPS will report to the Board of Directors/Trustees of the
Fund ("BOARD"), as appropriate, any action it has taken.
b.
Where a Transaction causes Dilution to a Fund greater than $25,000
("SIGNIFICANT TRANSACTION") but less than $100,000, RPS will review
with Counsel to the Fund the circumstances surrounding the
underlying Significant Transaction to determine whether the
Significant Transaction was caused by or occurred as a result of a
negligent act or omission by RPS. If it is determined that the
Dilution is the result of a negligent action or omission by RPS, RPS
and outside counsel for the Fund will negotiate settlement. All
such Significant Transactions will be reported to the Audit
Committee at its annual meeting (unless the settlement fully
compensates the Fund for any Dilution). Any Significant
Transaction, however, causing Dilution in excess of the lesser of
$100,000 or a penny per share will be promptly reported to the Board
--------
and resolved at the next scheduled Board Meeting. Settlement for
Significant Transactions causing Dilution of $100,000 or more will
not be entered into until approved by the Board. The factors to
consider in making any determination regarding the settlement of a
Significant Transaction would include but not be limited to:
i.
Procedures and controls adopted by RPS to prevent As Of
Processing;
ii.
Whether such procedures and controls were being followed at the
time of the Significant Transaction;
iii.
The absolute and relative volume of all transactions processed by
RPS on the day of the Significant Transaction;
iv.
The number of Transactions processed by RPS during prior relevant
periods, and the net Dilution/Gain as a result of all such
Significant Transactions to the Fund and to all other Funds; and
<PAGE>
v.
The prior response of RPS to recommendations made by the Funds
regarding improvement to RPS^s As Of Processing procedures.
c.
In determining RPS' liability with respect to a Significant Transaction, an
isolated error or omission will normally not be deemed to constitute negligence
when it is
determined that:
^
RPS had in place "appropriate procedures".
^
the employees responsible for the error or omission had been
reasonably trained and were being appropriately monitored; and
^
the error or omission did not result from wanton or reckless conduct
on the part of the employees.
It is understood that RPS is not obligated to have in place separate
procedures to prevent each and every conceivable type of error or
omission. The term "appropriate procedures" shall mean procedures
reasonably designed to prevent and detect errors and omissions. In
determining the reasonableness of such procedures, weight will be
given to such factors as are appropriate, including the prior
occurrence of any similar errors or omissions when such procedures
were in place and transfer agent industry standards in place at the
time of the occurrence.
L. TERM AND TERMINATION OF AGREEMENT
---------------------------------
1.
This Agreement shall run for a period of one (1) year from the date first
written above and will be renewed from year to year thereafter unless
terminated by either party as provided hereunder.
2.
This Agreement may be terminated by the Funds upon one hundred twenty (120)
days' prior written notice to RPS; and by RPS, upon three hundred
sixty-five (365) days' prior written notice to the Fund.
3.
Upon termination hereof, the Fund shall pay to RPS such compensation as may
be due as of the date of such termination, and shall likewise reimburse for
out-of-pocket expenses related to its services hereunder.
<PAGE>
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.
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.
S. COUNTERPARTS
------------
This Agreement may be executed by the parties hereto in any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
<PAGE>
T. THE PARTIES
-----------
All references herein to "the Fund" are to each of the Funds listed on
Appendix A individually, as if this Agreement were between such individual Fund
and RPS. In the case of a series Fund or trust, all references to "the Fund"
are to the individual series or portfolio of such Fund or trust, or to such Fund
or trust on behalf of the individual series or portfolio, as appropriate. Any
reference in this Agreement to "the parties" shall mean RPS and such other
individual Fund as to which the matter pertains. The "Fund" also includes any
T. Rowe Price Fund which may be established after the date of this Agreement.
Any reference in this Agreement to "the parties" shall mean the Funds and
RPS.
U. DIRECTORS, TRUSTEES AND SHAREHOLDERS AND MASSACHUSETTS BUSINESS TRUST
---------------------------------------------------------------------
It is understood and is expressly stipulated that neither the holders of
shares in the Fund nor any Directors or Trustees of the Fund shall be personally
liable hereunder. With respect to any Fund which is a party to this Agreement
and which is organized as a Massachusetts business trust, the term "Fund" means
and refers to the trustees from time to time serving under the applicable trust
agreement (Declaration of Trust) of such Trust as the same may be amended from
time to time. It is expressly agreed that the obligations of any such Trust
hereunder shall not be binding upon any of the trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust, as provided in the Declaration of Trust of the Trust.
The execution and delivery of this Agreement has been authorized by the
Trustees and signed by an authorized officer of the Trust, acting as such, and
neither such authorization by such Trustees nor 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>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers.
T. ROWE PRICE RETIREMENT PLAN T. ROWE PRICE FUNDS
SERVICES, INC.
/s/Charles E. Vieth /s/Carmen F. Deyesu
BY: ______________________________
BY:
--------------------------------------------------------------
Charles E. Vieth Carmen F. Deyesu
DATED:____________________________
DATED:____________________________
<PAGE>
APPENDIX A
-------- -
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
<PAGE>
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Growth & Income Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
<PAGE>
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC. on behalf of the:
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE VALUE FUND, INC.
<PAGE>
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, 2000, between T. Rowe Price
Retirement Plan Services, Inc. and each of the Parties listed on Appendix A
thereto is hereby amended, as of February 9, 2000, by adding thereto
Institutional Equity Funds, Inc., on behalf of Institutional Large-Cap Value
Fund and Institutional Small-Cap Stock Fund; T. Rowe Price Blue Chip Growth
Fund, Inc., on behalf of T. Rowe Price Blue Chip Growth Fund-Advisor Class; T.
Rowe Price Equity Income Fund, on behalf of T. Rowe Price Equity Income Fund
- -Advisor Class; T. Rowe Price High Yield Fund, Inc., on behalf of T. Rowe Price
High Yield Fund-Advisor Class; T. Rowe Price International Funds, Inc., on
behalf of T. Rowe Price International Bond Fund-Advisor Class and T. Rowe Price
International Stock Fund-Advisor Class; T. Rowe Price Mid-Cap Growth Fund, Inc.,
on behalf of T. Rowe Price Mid-Cap Growth Fund-Advisor Class; T. Rowe Price
Science & Technology Fund, Inc., on behalf of T. Rowe Price Science & Technology
Fund-Advisor Class; T. Rowe Price Small-Cap Stock Fund, Inc., on behalf of T.
Rowe Price Small-Cap Stock Fund-Advisor Class; T. Rowe Price Small-Cap Value
Fund, Inc., on behalf of T. Rowe Price Small-Cap Value Fund-Advisor Class and T.
Rowe Price Value Fund, Inc., on behalf of T. Rowe Price Value Fund-Advisor
Class.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. Rowe Price Blue Chip Growth Fund-Advisor Class
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
<PAGE>
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. Rowe Price Equity Income Fund-Advisor Class
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. Rowe Price High Yield Fund-Advisor Class
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Institutional Large-Cap Value Fund
Institutional Small-Cap Stock Fund
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
<PAGE>
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Bond Fund-Advisor Class
T. Rowe Price International Discovery Fund
T. Rowe Price International Growth & Income Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Stock Fund-Advisor Class
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. Rowe Price Mid-Cap Growth Fund-Advisor Class
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. Rowe Price Science & Technology Fund-Advisor Class
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
<PAGE>
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. Rowe Price Small-Cap Stock Fund-Advisor Class
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. Rowe Price Small-Cap Value Fund-Advisor Class
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC. on behalf of the:
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE VALUE FUND, INC.
T. Rowe Price Value Fund-Advisor Class
Attest:
/s/Patricia B. Lippert /s/Carmen F. Deyesu
_____________________ _________________________
Patricia B. Lippert, By: Carmen F. Deyesu
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,
Secretary Vice President
<PAGE>
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, 2000, as amended February 9,
2000 between T. Rowe Price Retirement Plan Services, Inc. and each of the
Parties listed on Appendix A thereto is hereby amended, as of April 19, 2000, by
adding thereto T. Rowe Price International Funds, Inc., on behalf of T. Rowe
Price Emerging Europe & Mediterranean Fund.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. Rowe Price Blue Chip Growth Fund-Advisor Class
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE CORPORATE INCOME FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. Rowe Price Equity Income Fund-Advisor Class
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.
<PAGE>
T. ROWE PRICE HIGH YIELD FUND, INC.
T. Rowe Price High Yield Fund-Advisor Class
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index Fund
T. Rowe Price Total Equity Market Index Fund
INSTITUTIONAL EQUITY FUNDS, INC.
Institutional Large-Cap Value Fund
Institutional Small-Cap Stock Fund
Mid-Cap Equity Growth Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Bond Fund-Advisor Class
T. Rowe Price International Discovery Fund
T. Rowe Price International Growth & Income Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Stock Fund-Advisor Class
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price Emerging Europe & Mediterranean Fund
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. Rowe Price Mid-Cap Growth Fund-Advisor Class
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
<PAGE>
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. Rowe Price Personal Strategy Balanced Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. Rowe Price Science & Technology Fund-Advisor Class
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. Rowe Price Small-Cap Stock Fund-Advisor Class
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. Rowe Price Small-Cap Value Fund-Advisor Class
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE SUMMIT FUNDS, INC. on behalf of the:
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
<PAGE>
T. ROWE PRICE VALUE FUND, INC.
T. Rowe Price Value Fund-Advisor Class
Attest:
/s/Patricia B. Lippert /s/Joseph A. Carrier
_____________________ _________________________
Patricia B. Lippert, By: Joseph A. Carrier
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,
Secretary Vice President
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. 15 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated January 20, 2000 relating to the financial
statements and financial highlights appearing in the December 31, 1999 Annual
Report to Shareholders of Spectrum Growth Fund, Spectrum Income Fund, and
Spectrum International Fund (comprising T. Rowe Price Spectrum Funds, Inc.),
which are incorporated by reference into the Registration Statement. We also
consent to the references to us under the heading "Financial Highlights" in the
Prospectus and under the heading "Independent Accountants" in the Statement of
Additional Information.
PricewaterhouseCoopers LLP
Baltimore, Maryland
April 24, 2000
<PAGE>
PAGE 46
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<NET-ASSETS> (105713)
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<NET-CHANGE-FROM-OPS> 7188
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<NUMBER-OF-SHARES-SOLD> 71118
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<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
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<EXPENSE-RATIO> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000808303
<NAME> T ROWE PRICE SPECTRUM FUND INC
<SERIES>
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<NAME> SPECTRUM INTERNATIONAL FUND
<MULTIPLIER> 1000
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1999
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<PAID-IN-CAPITAL-COMMON> 65443
<SHARES-COMMON-STOCK> 6124
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<ACCUMULATED-NII-CURRENT> (8)
<OVERDISTRIBUTION-NII> (8)
<ACCUMULATED-NET-GAINS> 194
<OVERDISTRIBUTION-GAINS> 194
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<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 681
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</TABLE>
T. Rowe Price Associates, Inc. Statement of Policy on Securities
Transactions, dated March 1, 2000.
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
ON
SECURITIES TRANSACTIONS
BACKGROUND INFORMATION.
LEGAL REQUIREMENT. In accordance with the requirements of the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940 and the Insider Trading and Securities Fraud
Enforcement Act of 1988, T. Rowe Price Associates, Inc. ("PRICE ASSOCIATES")
and the mutual funds ("TRPA FUNDS") which it manages have adopted this
Statement of Policy on Securities Transactions ("STATEMENT"). Both Rowe
Price-Fleming International, Inc. ("RPFI") and T. Rowe Fleming Asset
Management Limited ("TRFAM") have also adopted Statements of Policy on
Securities Transactions. Funds sponsored and managed by Price Associates or
RPFI will be referred to as the "PRICE FUNDS."
PRICE ASSOCIATES' FIDUCIARY POSITION. As an investment adviser, Price
Associates is in a fiduciary position which requires it to act with an eye
only to the benefit of its clients, avoiding those situations which might
place, or appear to place, the interests of Price Associates or its
officers, directors and employees in conflict with the interests of clients.
PURPOSE OF STATEMENT. The Statement was developed to help guide Price
Associates' employees and independent directors and the independent
directors of the Price Funds in the conduct of their personal investments
and to:
o eliminate the possibility of a transaction occurring that the Securities
and Exchange Commission or other regulatory bodies would view as illegal,
such as FRONT RUNNING (see definition below);
o avoid situations where it might appear that Price Associates or the Price
Funds or any of their officers, directors or employees had personally
benefited at the expense of a client or fund shareholder or taken
inappropriate advantage of their fiduciary positions; and
o prevent, as well as detect, the misuse of material, non-public
information.
Employees and the independent directors of Price Associates and the Price
Funds are urged to consider the reasons for the adoption of this Statement.
Price Associates' and the Price Funds' reputations could be adversely
affected as the result of even a single transaction considered questionable
in light of the fiduciary duties of Price Associates and the independent
directors of the Price Funds.
<PAGE>
FRONT RUNNING. Front Running is illegal. It is generally defined as the
purchase or sale of a security by an officer, director or employee of an
investment adviser or mutual fund in anticipation of and prior to the
adviser effecting similar transactions for its clients in order to take
advantage of or avoid changes in market prices effected by client
transactions.
PERSONS SUBJECT TO STATEMENT. The provisions of this Statement apply as
described below to the following persons and entities. Each person and entity
is classified as either an Access Person or a Non-Access Person as described
below. The provisions of this Statement may also apply to an Access Person's or
Non-Access Person's spouse, minor children, and certain other relatives, as
further described on page 4-4 of this Statement. Access Persons are subject to
all provisions of this Statement. Non-Access Persons are subject to the general
principles of the Statement and its reporting requirements, but are exempt from
prior clearance requirements except for transactions in Price Associates' stock.
The persons and entities covered by this Statement are:
PRICE ASSOCIATES. Price Associates, each of its subsidiaries and their
retirement plans, and the Price Associates Employee Partnerships.
PERSONNEL. Each officer, inside director and employee of Price Associates
and its subsidiaries, including T. Rowe Price Investment Services, Inc., the
principal underwriter of the Price Funds.
CERTAIN TEMPORARY WORKERS. These workers include:
o All temporary workers hired on the Price Associates payroll ("TRPA
TEMPORARIES");
o All agency temporaries whose assignments at Price Associates exceed four
weeks or whose cumulative assignments exceed eight weeks over a
twelve-month period;
o All independent or agency-provided consultants whose assignments exceed
four weeks or whose cumulative assignments exceed eight weeks over a
twelve-month period AND whose work is closely related to the ongoing work
of Price Associates' employees (versus project work that stands apart
from ongoing work); and
o Any contingent worker whose assignment is more than casual in nature or
who will be
exposed to the kinds of information and situations that would create
conflicts on matters covered in the Code.
RPFI PERSONNEL. As stated in the first paragraph, a Statement of Policy on
Securities Transactions has been adopted by RPFI. Under that Statement, all
RPFI personnel (officers, directors and employees) stationed in Baltimore
will be subject to this Statement.
TRFAM PERSONNEL. As stated in the first paragraph, a Statement of Policy on
Securities Transactions has been adopted by TRFAM. Under that Statement,
all TRFAM personnel (officers, directors, and employees) stationed in
Baltimore will be subject to this Statement.
<PAGE>
RETIRED EMPLOYEES. Retired employees of Price Associates who continue to
receive investment research information from Price Associates.
INDEPENDENT DIRECTORS OF PRICE ASSOCIATES AND THE PRICE FUNDS. The independent
directors of Price Associates include those directors of Price Associates who
are neither officers nor employees of Price Associates. The independent
directors of the Price Funds include those directors of the Price Funds who are
not deemed to be "interested persons" of Price Associates.
Although subject to the general principles of this Statement, including the
definition of "beneficial ownership," independent directors are subject only to
modified reporting requirements. The independent directors of the Price Funds
are exempt from prior clearance requirements. The independent directors of
Price Associates are exempt from the prior clearance requirements except for
Price Associates' stock.
ACCESS PERSONS. Certain persons and entities are classified as "ACCESS PERSONS"
under the Code. The term "ACCESS PERSON" means:
o Price Associates;
o
any officer (vice president or above) or director (excluding independent
directors) of Price Associates or the Price Funds;
o
any employee of Price Associates or the Price Funds who, in connection
with his or her regular functions or duties, makes, participates in, or
obtains or has access to information regarding the purchase or sale of
securities by a Price Fund or other advisory client, or whose functions
relate to the making of any recommendations with respect to the
purchases or sales; or
o
any person in a control relationship to Price Associates or a Price Fund
who obtains or has access to information concerning recommendations made
to a Price Fund or other advisory client with regard to the purchase or
sale of securities by the Price Fund or advisory client.
All Access Persons are notified of their status under the Code.
INVESTMENT PERSONNEL. An Access Person is further identified as "INVESTMENT
PERSONNEL" if, in connection with his or her regular functions or duties, he
or she "makes or participates in making recommendations regarding the
purchase or sale of securities" by a Price Fund or other advisory client.
The term "Investment Personnel" includes, but is not limited to:
<PAGE>
o those employees who are authorized to make investment decisions or to
recommend securities transactions on behalf of the firm's clients
(investment counselors and members of the mutual fund advisory
committees);
o research and credit analysts; and
o traders who assist in the investment process.
All Investment Personnel are deemed Access Persons under the Code. All
Investment Personnel are notified of their status under the Code.
Investment Personnel are prohibited from investing in initial public
offerings.
NON-ACCESS PERSONS. Persons who do not fall within the definition of Access
Persons are deemed "NON-ACCESS PERSONS".
QUESTIONS ABOUT THE STATEMENT. You are urged to seek the advice of the
Chairperson of the Ethics Committee when you have questions as to the
application of this Statement to individual circumstances.
TRANSACTIONS SUBJECT TO STATEMENT. Except as provided below, the provisions of
this Statement apply to transactions that fall under either one of the following
two conditions:
FIRST, you are a "BENEFICIAL OWNER" of the security under the Rule 16a-1 of the
Securities Exchange Act of 1934 ("EXCHANGE ACT"), as defined below.
SECOND, if you CONTROL or direct securities trading for another person or
entity, those trades are subject to this Statement even if you are not a
beneficial owner of the securities. For example, if you have an exercisable
trading authorization of an unrelated person's or entity's brokerage account, or
are directing another person's or entity's trades, those transactions will be
subject to this Statement to the same extent your personal trades would be,
unless exempted as described below.
DEFINITION OF BENEFICIAL OWNER. A "beneficial owner" is any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise, has or shares in the opportunity, directly or
indirectly, to profit or share in any profit derived from a transaction in the
security.
A person has beneficial ownership in:
o
securities held by members of the person's immediate family SHARING THE
SAME HOUSEHOLD, although the presumption of beneficial ownership may be
rebutted;
o
a person's interest in securities held by a trust, which may include
both trust beneficiaries or trustees with investment control;
<PAGE>
oa person's right to acquire securities through the exercise or
conversion of any derivative security, whether or not presently
exercisable;
o
a general partner's proportionate interest in the portfolio securities
held by a general or limited partnership;
o
certain performance-related fees other than an asset-based fee, received
by any broker, dealer, bank, insurance company, investment company,
investment adviser, investment manager, trustee or person or entity
performing a similar function; and
o
a person's right to dividends that is separated or separable from the
underlying securities. Otherwise, right to dividends alone shall not
represent beneficial ownership in the securities.
A shareholder shall not be deemed to have beneficial ownership in the portfolio
securities held by a corporation or similar entity in which the person owns
securities if the shareholder is not a controlling shareholder of the entity and
does not have or share investment control over the entity's portfolio.
REQUESTS FOR EXEMPTIONS. If you have beneficial ownership of a security, any
transaction involving that security is presumed to be subject to the relevant
requirements of this Statement, UNLESS you have no control over the transaction.
Such a situation MAY arise, for example, if you have delegated investment
authority to an independent investment adviser, or your spouse has an
independent trading program in which you have no input. Similarly, if your
spouse has investment control over, but no beneficial ownership in, an unrelated
account, an exemption may be appropriate.
If you are involved in an investment account for a family situation, trust,
partnership, corporation, etc., which you feel should not be subject to the
Statement's relevant prior approval and/or reporting requirements, you should
submit a written request for clarification or exemption to Baltimore
Legal/Compliance (Attn. D. Jones). Any such request for clarification or
exemption should name the account, your interest in the account, the persons or
firms responsible for its management, and the basis upon which the exemption is
being claimed. Exemptions are NOT self-executing; any exemption must be granted
through Baltimore Legal/Compliance.
TRANSACTIONS IN STOCK OF PRICE ASSOCIATES. Because Price Associates is a public
company, ownership of its stock subjects its officers, inside and independent
directors, and employees to special legal requirements under the Federal
securities laws. Each officer, director and employee is responsible for his or
her own compliance with these requirements. In connection with these legal
requirements, Price Associates has adopted the following rules and procedures:
INDEPENDENT DIRECTORS OF PRICE FUNDS. The independent directors of the
Price Funds are prohibited from owning the stock of Price Associates.
<PAGE>
QUARTERLY EARNINGS REPORT. Generally, all employees and independent
directors of Price Associates must refrain from initiating transactions in
Price Associates' stock in which they have a beneficial interest from the
sixth trading day following the end of the quarter (or such other date as
management shall from time to time determine) until the third trading day
following the public release of earnings. Employees and independent
directors will be notified in writing through the Office of the Secretary of
Price Associates ("SECRETARY") from time to time as to the controlling
dates.
PRIOR CLEARANCE. Employees and independent directors of Price Associates
are required to obtain clearance prior to effecting any proposed transaction
(including gifts and transfers) involving shares of Price Associates' stock
owned beneficially or through the Employee Stock Purchase Plan. Requests
for prior clearance must be in writing on the form entitled, "Notification
of Proposed Transaction" (available from Corporate Records Department) and
be submitted to the Secretary who is responsible for processing and
maintaining the records of all such requests. This would include sales of
stock purchased through Price Associates Employee Stock Purchase Plan
("ESPP"). Purchases effected through the ESPP are automatically reported to
the Secretary. Receiving prior clearance does not relieve employees and
independent directors of Price Associates from conducting their personal
securities transactions in full compliance with the Code, including its
prohibition on trading while in possession of material, inside information.
Transactions in Price Associates' stock are subject to the 60-Day Rule
except for transactions effected through the ESPP and certain options
exercises. See p. 4-18.
<TABLE>
<CAPTION>
<C><S>
ALL EMPLOYEES AND INDEPENDENT DIRECTORS OF PRICE ASSOCIATES MUST
OBTAIN PRIOR CLEARANCE OF ANY TRANSACTION INVOLVING PRICE
ASSOCIATES' STOCK FROM THE OFFICE OF THE SECRETARY OF PRICE
ASSOCIATES.
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</TABLE>
INITIAL DISCLOSURE OF HOLDINGS. Each new employee must report to the
Secretary any shares of Price Associates' stock of which he or she has
beneficial ownership no later than 10 days after his or her starting date of
employment.
DIVIDEND REINVESTMENT PLANS. Purchases of Price Associates' stock owned
outside of the ESPP and effected through a dividend reinvestment plan need
not receive prior clearance if the Secretary's office has been previously
notified by the employee that he or she will be participating in that plan.
Reporting of transactions effected through that plan need only be made
quarterly, except that employees who are subject to Section 16 of the
Securities Exchange Act of 1934 reporting must report such transactions
monthly.
EFFECTIVENESS OF PRIOR CLEARANCE. Prior clearance of transactions in Price
Associates' stock is effective for five (5) business days from and including
the date the clearance is granted, unless (i) advised to the contrary by the
Secretary prior to the proposed transaction, or (ii) the person receiving
the approval comes into possession of material, non-public information
concerning the firm. If the proposed transaction in Price Associates' stock
is not executed within this time period, a new clearance must be obtained.
<PAGE>
REPORTING OF DISPOSITION OF PROPOSED TRANSACTION. Covered persons must
notify the Secretary of the disposition (whether the proposed transaction
was effected or not) of each transaction involving shares of Price
Associates' stock owned directly within two business days of its execution,
or within seven business days of the date of prior clearance, if not
executed.
INSIDER REPORTING AND LIABILITY. Under current rules, certain officers,
directors and 10% stockholders of a publicly traded company ("INSIDERS") are
subject to the requirements of Section 16. Insiders include the directors
and certain managing directors of Price Associates.
SEC REPORTING. There are three reporting forms which insiders are required
to file with the SEC to report their purchase, sale and transfer
transactions in, and holdings of, Price Associates' stock. Although the
Secretary will provide assistance in complying with these requirements as an
accommodation to insiders, it remains the legal responsibility of each
insider to assure that the applicable reports are filed in a timely manner.
O FORM 3. The initial ownership report by an insider is required to be filed
on Form 3. This report must be filed within ten days after a person becomes an
insider (i.e., is elected as a director or appointed as managing director) to
report all current holdings of Price Associates' stock. Following the election
or appointment of an insider, the Secretary will deliver to the insider a Form 3
for appropriate signatures and will file such Form with the SEC.
O FORM 4. Any change in the insider's ownership of Price Associates' stock
must be reported on a Form 4 unless eligible for deferred reporting on year-end
Form 5. The Form 4 is due by the 10th day following the end of the month in
which the ownership change occurred. Following receipt of the Notice of
Disposition of the proposed transaction, the Secretary will deliver to the
insider a Form 4, as applicable, for appropriate signatures and will file such
Form with the SEC.
O FORM 5. Any transaction or holding which is exempt from reporting on Form
4, such as option exercises, small purchases of stock, gifts, etc. may be
reported on a deferred basis on Form 5 within 45 days after the end of the
calendar year in which the transaction occurred. No Form 5 is necessary if all
transactions and holdings were previously reported on Form 4.
LIABILITY FOR SHORT-SWING PROFITS. Under Federal securities laws,
profit realized by certain officers, as well as directors and 10%
stockholders of a company (including Price Associates) as a result of a
purchase and sale (or sale and purchase) of stock of the company within
a period of less than six months must be returned to the firm upon
request.
OFFICE OF THRIFT SUPERVISION ("OTS") REPORTING. Price Associates is the
holding company of T. Rowe Price Savings Bank, which is regulated by the
OTS. OTS regulations require that the Managing Directors of Price
Associates, as well as any vice president in charge of any Price Associates'
affiliate, file reports regarding their personal holdings of the stock of
Price Associates and of the stock of any non-affiliated savings banks or
savings and
<PAGE>
loan holding companies. Although the Secretary will provide assistance in
complying with these requirements as an accommodation, it remains the
responsibility of each person required to file such reports to ensure that
such reports are filed in a timely manner.
PRIOR CLEARANCE REQUIREMENTS (OTHER THAN PRICE ASSOCIATES' STOCK) FOR ACCESS
PERSONS.
ALL ACCESS PERSONS must obtain prior clearance before directly or indirectly
initiating, recommending, or in any way participating in, the purchase or sale
of a security in which the Access Person has, or by reason of such transaction
may acquire, any beneficial interest or which he or she controls, unless
exempted below. NON-ACCESS PERSONS are NOT required to obtain prior clearance
before engaging in any securities transactions, except for transaction in Price
Associates' stock.
<TABLE>
<CAPTION>
<C><S>
ALL EMPLOYEES AND INDEPENDENT DIRECTORS OF PRICE ASSOCIATES MUST
OBTAIN PRIOR CLEARANCE OF ANY TRANSACTION INVOLVING PRICE
ASSOCIATES' STOCK FROM THE OFFICE OF THE SECRETARY OF PRICE
ASSOCIATES.
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</TABLE>
Where required, prior clearance must be obtained regardless of whether the
transaction is effected through TRP Brokerage or through an unaffiliated
broker/dealer. Receiving prior clearance does not relieve Access Persons from
conducting their personal securities transactions in full compliance with the
Code, including its prohibition on trading while in possession of material,
inside information, and with applicable law, including the prohibition on Front
Running (see page 4-1 for definition of Front Running). Please note that the
prior clearance procedures do NOT check compliance with the 60-Day Rule (p.
4-17).
TRANSACTIONS (OTHER THAN IN PRICE ASSOCIATES' STOCK) EXEMPT FROM PRIOR
CLEARANCE. The following transactions are exempt from the prior clearance
requirements:
MUTUAL FUNDS AND VARIABLE INSURANCE PRODUCTS. Purchases or redemptions
of shares of any open-end investment companies, including the Price
Funds, and variable insurance products.
UNIT INVESTMENT TRUSTS. Purchases or sales of shares in unit investment
trusts.
U.S. GOVERNMENT OBLIGATIONS. Purchases or sales of direct obligations
of the U.S. Government.
PRO RATA DISTRIBUTIONS. Purchases effected by the exercise of rights
issued pro rata to all holders of a class of securities or the sale of
rights so received.
MANDATORY TENDERS. Purchases and sales of securities pursuant to a
mandatory tender offer.
<PAGE>
SPOUSAL PAYROLL DEDUCTION PLANS. Purchases by an Access Person's spouse
pursuant to a payroll deduction plan, provided the Compliance Department
has been previously notified by the Access Person that the spouse will
be participating in the payroll deduction plan.
EXERCISE OF STOCK OPTION OF CORPORATE EMPLOYER BY SPOUSE. Transactions
involving the exercise by an Access Person's spouse of a stock option
issued by the corporation employing the spouse.
DIVIDEND REINVESTMENT PLANS. Purchases effected through an established
Dividend Reinvestment Plan ("DRP"), provided the Compliance Department
is first notified by the Access Person that he or she will be
participating in the DRP. An Access Person's purchase of share(s) of
the issuer to initiate participation in the DRP or an Access Person's
purchase of shares in addition to those purchased with dividends (a
"CONNECTED PURCHASE") AND any sale of shares from the DRP MUST receive
prior clearance.
SYSTEMATIC INVESTMENT PLANS. Purchases effected through a systematic
investment plan involving the automatic investment of a set dollar
amount on predetermined dates, provided the Compliance Department has
been previously notified by the Access Person that he or she will be
participating in the plan. An Access Person's purchase of securities of
the issuer to initiate participation in the plan AND any sale of shares
from such a plan MUST receive prior clearance.
INHERITANCES. The acquisition of securities through inheritance.
GIFTS. The giving of or receipt of a security as a gift.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE (OTHER THAN PRICE ASSOCIATES' STOCK)
FOR ACCESS PERSONS. ALL Access Persons should follow the procedures set forth
below before engaging in the transactions described.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR INITIAL PUBLIC OFFERINGS
("IPOS"):
NON-INVESTMENT PERSONNEL. Access Persons who are NOT Investment
Personnel ("NON-INVESTMENT PERSONNEL") may purchase securities that are
the subject of an IPO ONLY if prior written approval has been obtained
from the Chairperson of the Ethics Committee or his or her designee
("DESIGNEE"), which may include N. Morris, S. McCafferty or A. Brooks.
An IPO is an offering of securities registered under the Securities Act
of 1933 when the issuer of the securities, immediately before the
registration, was not subject to certain reporting requirements of the
Securities Exchange Act of 1934.
<PAGE>
In considering such a request for approval, the Chairperson will
determine whether the proposed transaction presents a conflict of
interest with any of the firm's clients or otherwise violates the Code.
The Chairperson will also determine whether the following conditions
have been met:
1.
The purchase is made through the Non-Investment Personnel's regular
broker;
2.
The number of shares to be purchased is commensurate with the normal
size and activity of the Non-Investment Personnel's account; and
3.
The transaction otherwise meets the requirements of the NASD's rules
on free riding and withholding.
Non-Investment Personnel will not be permitted to purchase shares in an IPO
if any of the firm's clients are prohibited from doing so. Therefore,
Non-Investment Personnel MUST check with the Equity Trading Desk the day the
offering is priced before purchasing in the IPO. This prohibition will
remain in effect until the firm's clients have had the opportunity to
purchase in the secondary market once the underwriting is completed --
commonly referred to as the aftermarket.
INVESTMENT PERSONNEL. Investment Personnel may NOT purchase securities
in an IPO.
NON-ACCESS PERSONS. Although Non-Access Persons are not required to
receive prior clearance before purchasing shares in an IPO, any
Non-Access Person who is a registered representative of Investment
Services should be aware that NASD rules may restrict his or her ability
to buy shares in a "hot issue," which is a new issue that trades at a
premium in the secondary market whenever that trading commences.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR PRIVATE PLACEMENTS. Access
Persons may not invest in a private placement of securities, including the
purchase of limited partnership interests, unless prior written approval has
been obtained from the Chairperson of the Ethics Committee or a Designee.
In considering such a request for approval, the Chairperson will determine
whether the investment opportunity (private placement) should be reserved
for the firm's clients, and whether the opportunity is being offered to the
Access Person by virtue of his or her position with the firm. The
Chairperson will also secure, if appropriate, the approval of the proposed
transaction from the chairperson of the applicable investment steering
committee.
CONTINUING OBLIGATION. An Access Person who has received approval to
invest in a private placement of securities and who, at a later date,
anticipates participating in the firm's investment decision process
regarding the purchase or sale of securities of the issuer of that
private placement on behalf of any client, must immediately disclose his
or her prior investment in the private placement to the Chairperson of
the Ethics Committee and to the chairperson of the appropriate
investment steering committee.
<PAGE>
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR ALL OTHER SECURITIES
TRANSACTIONS. Requests for prior clearance by Access Persons for all other
securities transactions requiring prior clearance may be made orally, in
writing, or by electronic mail (e-mail address "Personal Trades," which
appears under "Trades" in the electronic mail address book) to the Equity
Trading Department of Price Associates, which will be responsible for
processing and maintaining the records of all such requests. All requests
must include the name of the security, the number of shares or amount of
bond involved, whether a foreign security is involved, and the nature of the
transaction, i.e., whether the transaction is a purchase, sale or short
sale. Responses to all requests will be made by the Trading Department
documenting the request and its approval/disapproval.
Requests will normally be processed on the same day; however, additional
time may be required for prior clearance of transactions in foreign
securities.
EFFECTIVENESS OF PRIOR CLEARANCE. Prior clearance of a securities
transaction is effective for three (3) business days FROM AND INCLUDING the
date the clearance is granted, regardless of the time of day when clearance
is granted. If the proposed securities transaction is not executed within
this time, a new clearance must be obtained
REASONS FOR DISALLOWING ANY PROPOSED TRANSACTION. A proposed securities
transaction will be disapproved by the Trading Department and/or the Chairperson
of the Ethics Committee if:
PENDING CLIENT ORDERS. Orders have been placed by Price Associates or
RPFI to purchase or sell the security.
PURCHASES AND SALES WITHIN SEVEN (7) CALENDAR DAYS. The security has
been purchased or sold by any client of Price Associates or, in the case
of a foreign security, for any client of either Price Associates or RPFI,
within seven calendar days immediately prior to the date of the proposed
transaction. For example, if a client transaction occurs on Monday, an
Access Person may not purchase or sell that security until Tuesday of the
following week. If all clients have eliminated their holdings in a
particular security, the seven-day restriction is not applicable to an
Access Person's transactions in that security.
APPROVED COMPANY RATING CHANGES. A change in the rating of an approved
company as reported in the firm's Daily Research News has occurred within
seven (7) calendar days immediately prior to the date of the proposed
transaction. Accordingly, trading would not be permitted until the
eighth (8) calendar day.
SECURITIES SUBJECT TO INTERNAL TRADING RESTRICTIONS. The security is
limited or restricted by Price Associates or RPFI as to purchase or sale
for client accounts.
<PAGE>
REQUESTS FOR WAIVERS OF PRIOR CLEARANCE DENIALS. If an Access Person's request
for prior clearance has been denied, he or she may apply to the Chairperson of
the Ethics Committee for a waiver. All such requests must be in writing and
must fully describe the basis upon which the waiver is being requested. Waivers
are NOT routinely granted.
BROKERAGE CONFIRMATIONS AND PERIODIC ACCOUNT STATEMENTS. ALL ACCESS PERSONS AND
NON-ACCESS PERSONS must request broker-dealers executing their transactions to
send to the attention of Compliance, Legal Department, T. Rowe Price Associates,
Inc., P.O. Box 17218, Baltimore, Maryland 21297-1218 a duplicate confirmation
with respect to each and every reportable transaction, including Price
Associates' stock, and a copy of all periodic statements for all securities
accounts in which the Access Person or Non-Access Person is considered to have
beneficial ownership and/or control (see Page 4-4 for a discussion of beneficial
ownership and control concepts).
NOTIFICATION OF BROKER/DEALER ACCOUNTS. ALL ACCESS PERSONS AND NON-ACCESS
PERSONS must give written notice to Baltimore Legal/Compliance before opening or
trading in a securities account with any broker/dealer, including TRP Brokerage.
NEW EMPLOYEES. New employees must give written notice to Baltimore
Legal/Compliance of any existing securities accounts maintained with any
broker/dealer when joining the firm (no later than 10 days after the
starting date).
OFFICERS, DIRECTORS AND REGISTERED REPRESENTATIVES OF INVESTMENT SERVICES.
The NASD requires each associated person of T. Rowe Price Investment
Services, Inc. to:
o Obtain approval from Investment Services (request should be in writing
and be directed to Baltimore Legal/Compliance) before opening or placing
the initial trade in a securities account with any broker/dealer; and
o Provide the broker/dealer with written notice of his or her association
with Investment Services.
TRANSACTION REPORTING REQUIREMENTS (OTHER THAN PRICE ASSOCIATES' STOCK
TRANSACTIONS). ALL Access Persons AND Non-Access Persons must report all
securities transactions unless the transaction is exempted from reporting below.
TRANSACTIONS EXEMPT FROM REPORTING. The following transactions are exempt
from the reporting requirements:
MUTUAL FUNDS AND VARIABLE INSURANCE PRODUCTS. The purchase or
redemption of shares of any open-end investment companies, including the
Price Funds, and variable insurance products, except that any employee
who serves as the president or executive vice president of a Price Fund
must report his or her beneficial ownership or control of shares in that
Fund to Baltimore Legal/Compliance through electronic mail to Dottie
Jones.
<PAGE>
STOCK SPLITS AND SIMILAR ACQUISITIONS. The acquisition of additional
shares of existing corporate holdings through the reinvestment of income
dividends and capital gains in mutual funds, stock splits, stock
dividends, exercise of rights, exchange or conversion.
U.S. GOVERNMENT OBLIGATIONS. Purchases or redemptions of direct
obligations of the U.S. Government.
DIVIDEND REINVESTMENT PLANS. The purchase of securities with dividends
effected through an established DRP. If, however, a Connected Purchase
or a sale must receive prior clearance (see p. 4-9), that transaction
must also be reported.
TRANSACTIONS THAT MUST BE REPORTED. Other than the transactions specified
above as exempt, ALL Access Persons AND Non-Access Persons are required to
file a report of the following securities transactions:
CLEARED TRANSACTIONS. Any transaction that is subject to the prior
clearance requirements, including purchases in initial public offerings
and private placement transactions. Although Non-Access Persons are not
required to receive prior clearance for securities transactions (other
than Price Associates' stock), they MUST report any transaction that
would have been required to be prior cleared by an Access Person.
UNIT INVESTMENT TRUSTS. The purchase or sale of shares of a Unit
Investment Trust.
PRO RATA DISTRIBUTIONS. Purchase effected by the exercise of rights
issued pro rata to all holders of a class of securities or the sale of
rights so received.
INHERITANCES. Acquisition of securities through inheritance.
GIFTS. Acquisition or disposition of securities by gift.
MANDATORY TENDERS. Purchases and sales of securities pursuant to a
mandatory tender offer.
SPOUSAL PAYROLL DEDUCTION PLANS/SPOUSAL STOCK OPTION. Transactions
involving the purchase or exchange of securities by the spouse of an
Access Person or Non-Access Person pursuant to a payroll deduction plan
or the exercise by the spouse of an Access Person or Non-Access Person
of a stock option issued by the spouse's employer. REPORTING OF SPOUSAL
PAYROLL DEDUCTION PLAN TRANSACTIONS NEED ONLY BE MADE QUARTERLY;
REPORTING OF A SPOUSAL STOCK OPTION EXERCISE MUST BE MADE WITHIN TEN
DAYS OF THE EXERCISE.
SYSTEMATIC INVESTMENT PLANS. Transactions involving the purchase of
securities by an Access Person or Non-Access Person pursuant to a
systematic investment plan.
<PAGE>
REPORTING OF SYSTEMATIC INVESTMENT PLAN TRANSACTIONS NEED ONLY BE MADE
QUARTERLY.
REPORT FORM. If the executing broker/dealer provides a confirmation or
similar statement directly to Baltimore Legal/Compliance, you do not need to
make a further report. All other transactions must be reported on the form
designated "T. Rowe Price Associates, Inc. Employee's Report of Securities
Transactions," a supply of which is available from Baltimore
Legal/Compliance.
WHEN REPORTS ARE DUE. You must report a securities transaction within ten
(10) days after the trade date or within (10) days after the date on which
you first gain knowledge of the transaction (for example, a bequest) if this
is later. Reporting of transactions involving either systematic investment
plans or the purchase of securities by a spouse pursuant to a payroll
deduction plan, however, may be reported quarterly.
TRANSACTION REPORTING REQUIREMENTS FOR THE INDEPENDENT DIRECTORS OF PRICE
ASSOCIATES AND THE INDEPENDENT DIRECTORS OF THE PRICE FUNDS. The independent
directors of Price Associates and the independent directors of the Price Funds
are subject to the same reporting requirements as Access Persons and Non-Access
Persons except that reports need only be filed quarterly. Specifically: (1) a
report for each securities transaction must be filed with Baltimore/Legal
Compliance no later than ten (10) days after the end of the calendar quarter in
which the transaction was effected; and (2) a report must be filed for each
quarter, regardless of whether there have been any reportable transactions.
Baltimore/ Legal Compliance will send the independent directors of Price
Associates and the Price Funds a reminder letter and reporting form
approximately ten days prior to the end of each calendar quarter.
MISCELLANEOUS RULES REGARDING PERSONAL SECURITIES TRANSACTIONS. These rules vary
in their applicability depending upon whether you are an Access Person.
The following rules apply to ALL Access Persons AND Non-Access Persons and,
where indicated, to the independent directors of Price Associates and the Price
Funds.
DEALING WITH CLIENTS. Access Persons, Non-Access Persons and the
independent directors of Price Associates and the Price Funds may not,
directly or indirectly, sell to or purchase from a client any security.
This prohibition does not preclude the purchase or redemption of shares of
any mutual fund that is a client of Price Associates.
CLIENT INVESTMENT PARTNERSHIPS.
CO-INVESTING. Access Persons and Non-Access Persons, including employee
partnerships, and the independent directors of Price Associates and the
Price Funds are not permitted to co-invest in client investment
partnerships of Price Associates, RPFI, or their affiliates, such as
Strategic Partners, Threshold, and International Partners.
<PAGE>
DIRECT INVESTMENT. The independent directors of the Price Funds are not
permitted to invest as limited partners in client investment
partnerships of Price Associates, RPFI, or their affiliates.
INVESTMENT CLUBS. These restrictions vary depending upon the person's
status, as follows:
NON-ACCESS PERSONS. A Non-Access Person may form or participate in a
stock or investment club without approval of the Chairperson of the
Ethics Committee. Only transactions in Price Associates' stock are
subject to prior clearance requirements. Club transactions must be
reported just as the Non-Access Person's individual trades are reported.
ACCESS PERSONS. An Access Person may not form or participate in a stock
or investment club unless prior written approval has been obtained from
the Chairperson of the Ethics Committee. All transactions by such a
stock or investment club in which an Access Person has beneficial
ownership or control are subject to the same prior clearance and
reporting requirements applicable to an individual Access Person's
trades. However, if the Access Person has beneficial ownership solely
by virtue of his or her spouse's participation in the club and has no
investment control or input into decisions regarding the club's
securities transactions, he or she may request the waiver of prior
clearance requirements of the club's transactions (except for
transactions in Price Associates' stock) from the Chairperson of the
Ethics Committee as part of the approval process.
MARGIN ACCOUNTS. While brokerage margin accounts are discouraged, you may
open and maintain margin accounts for the purchase of securities provided
such accounts are with brokerage firms with which you maintain a regular
brokerage account.
TRADING ACTIVITY. You are discouraged from engaging in a pattern of
securities transactions which either:
o Is so excessively frequent as to potentially impact your ability to
carry out your assigned responsibilities, or
o Involves securities positions that are disproportionate to your net
assets.
At the discretion of the Chairperson of the Ethics Committee, written
notification of excessive trading may be sent to your supervisor.
The following rules apply ONLY to ACCESS PERSONS:
LARGE COMPANY EXEMPTION. Although subject to prior clearance, transactions
involving securities in certain large companies, within the parameters set
by the Ethics Committee (the "EXEMPT LIST"), will be approved under normal
circumstances, as follows:
<PAGE>
TRANSACTIONS INVOLVING EXEMPT LIST SECURITIES. This exemption applies
to transactions involving no more than $20,000 or the nearest round lot
(even if the amount of the transaction MARGINALLY exceeds $20,000) per
security per week in securities of companies with market capitalizations
of $5 billion or more, unless the rating on the security as reported in
the firm's Daily Research News has been changed to a 1 or a 5 within the
seven (7) calendar days immediately prior to the date of the proposed
transaction. If such a rating change has occurred, the exemption is not
available.
TRANSACTIONS INVOLVING OPTIONS ON EXEMPT LIST SECURITIES. Access
Persons may not purchase uncovered put options or sell uncovered call
options unless otherwise permitted under the "Options and Futures"
discussion on p. 4-16. Otherwise, in the case of options on an
individual security on the Exempt List (if it has not had a prohibited
rating change), an Access Person may trade the GREATER of 5 contracts or
sufficient option contracts to control $20,000 in the underlying
security; thus an Access Person may trade 5 contracts even if this
permits the Access Person to control more than $20,000 in the underlying
security. Similarly, the Access Person may trade more than 5 contracts
as long as the number of contracts does not permit him or her to control
more than $20,000 in the underlying security.
These parameters are subject to change by the Ethics Committee.
EXCHANGE-TRADED INDEX OPTIONS. Although subject to prior clearance, an
Access Person's transactions involving exchange-traded index options, within
the parameters set by the Ethics Committee, will be approved under normal
circumstances. Generally, an Access Person may trade the GREATER of 5
contracts or sufficient contracts to control $20,000 in the underlying
securities; thus an Access Person may trade 5 contracts even if this permits
the Access Person to control more than $20,000 in the underlying securities.
Similarly, the Access Person may trade more than 5 contracts as long as the
number of contracts does not permit him or her to control more than $20,000
in the underlying security.
These parameters are subject to change by the Ethics Committee.
CLIENT LIMIT ORDERS. The Equity Trading Desk may approve an Access Person's
proposed trade even if a limit order has been entered for a client for the
same security, if:
o The Access Person's trade will be entered as a market order; and
o The client's limit order is 10% or more away from the market at the time
of approval of the Access Person's trade.
OPTIONS AND FUTURES. Please consult the specific section on Exchange-Traded
Index Options (p. 4-16) for transactions in those options.
<PAGE>
<TABLE>
<CAPTION>
<C><S>
BEFORE ENGAGING IN OPTIONS AND FUTURE TRANSACTIONS, ACCESS PERSONS SHOULD
UNDERSTAND THE IMPACT THAT THE 60-DAY RULE MAY HAVE UPON THEIR ABILITY TO
CLOSE OUT A POSITION WITH A PROFIT (SEE PAGE 4-17).
-------------------------------------------------------------------------
</TABLE>
OPTIONS AND FUTURES ON SECURITIES AND INDICES NOT HELD BY PRICE
ASSOCIATES' OR RPFI'S CLIENTS. There are no specific restrictions with
respect to the purchase, sale or writing of put or call options or any
other option or futures activity, such as multiple writings, spreads and
straddles, on securities of companies (and options or futures on such
securities) which are not held by any of Price Associates' or RPFI's
clients.
OPTIONS ON SECURITIES OF COMPANIES HELD BY PRICE ASSOCIATES' OR RPFI'S
CLIENTS. With respect to options on securities of companies which are
held by any of Price Associates' or RPFI's clients, it is the firm's
policy that an Access Person should not profit from a price decline of a
security owned by a client (other than an Index account). Therefore, an
Access Person may: (i) purchase call options and sell covered call
options and (ii) purchase covered put options and sell put options. An
Access Person may not purchase uncovered put options or sell uncovered
call options, even if the issuer of the underlying securities is
included on the Exempt List, unless purchased in connection with other
options on the same security as part of a straddle, combination or
spread strategy which is designed to result in a profit to the Access
Person if the underlying security rises in or does not change in value.
The purchase, sale and exercise of options are subject to the same
restrictions as those set forth with respect to securities, i.e., the
option should be treated as if it were the common stock itself.
OTHER OPTIONS AND FUTURES HELD BY PRICE ASSOCIATES' OR RPFI'S CLIENTS.
Any other option or futures transaction with respect to domestic or
foreign securities held by any of Price Associates' clients or with
respect to foreign securities held by RPFI's clients will be approved or
disapproved on a case-by-case basis after due consideration is given as
to whether the proposed transaction or series of transactions might
appear to or actually create a conflict with the interests of any of
Price Associates' or RPFI's clients. Such transactions include
transactions in futures and options on futures involving financial
instruments regulated solely by the CFTC.
SHORT SALES. Short sales by Access Persons are subject to prior clearance.
In addition, Access Persons may not sell any security short which is owned
by any client of Price Associates or RPFI, except that short sales may be
made "against the box" for tax purposes. A short sale "against the box" is
one in which the seller owns an amount of securities equivalent to the
number he or she sells short. All short sales, including short sales
against the box, are subject to the 60-Day Rule described below.
THE 60-DAY RULE. Access Persons are prohibited from profiting from the
purchase and sale or sale and purchase of the same (or equivalent) securities
within 60 calendar days. An "equivalent" security means any option, warrant,
convertible security, stock appreciation
<PAGE>
right, or similar right with an exercise or conversion privilege at a price
related to the subject security, or similar securities with a value derived
from the value of the subject security. Thus, for example, the rule
prohibits options transactions on or short sales of a security within 60 days
of its purchase. In addition, the rule applies regardless of the Access
Person's other holdings of the same security or whether the Access Person has
split his or her holdings into tax lots. For example, if an Access Person
buys 100 shares of XYZ stock on March 1, 1998 and another 100 shares of XYZ
stock on March 1, 2000, he or she may not sell ANY shares of XYZ stock at a
profit for 60 days following March 1, 2000. The 60-Day Rule "clock" restarts
EACH time the Access Person trades in that security.
EXEMPTIONS FROM THE 60-DAY RULE. The 60-Day Rule does not apply to:
o any transaction by a Non-Access Person except for transactions in
Price Associates' stock not exempted below;
o any transaction exempt from prior clearance (see p. 4-8);
o the purchase and sale or sale and purchase of exchange traded index
options;
o any transaction in Price Associates' stock effected through the ESPP;
and
o the exercise of "in the money" Price Associates' stock options and
the subsequent sale of the derivative shares.
Prior clearance procedures do NOT check compliance with the 60-Day Rule
when considering a trading request. Access Persons are responsible for
checking their compliance with this rule before entering a trade.
Access Persons may request a waiver from the 60-Day Rule. Such requests
should be directed in writing to the Chairperson of the Ethics
Committee. These waivers are NOT routinely granted.
INVESTMENTS IN NON-LISTED SECURITIES FIRMS. Access Persons may not purchase
or sell the shares of a broker/dealer, underwriter or federally registered
investment adviser unless that entity is traded on an exchange or listed as
a NASDAQ stock or permission is given under the Private Placement Procedures
(see p. 4-10).
OWNERSHIP REPORTING REQUIREMENTS - ONE-HALF OF ONE PERCENT OWNERSHIP. If an
employee or an independent director of Price Associates or an independent
director of the Price Funds owns more than 1/2 of 1% of the total outstanding
shares of a public or private company, he or she must immediately report in
writing such fact to Baltimore Legal/Compliance, providing the name of the
company and the total number of such company's shares beneficially owned.
<PAGE>
DISCLOSURE OF PERSONAL SECURITIES HOLDINGS BY ACCESS PERSONS. Upon commencement
of employment, appointment or promotion (no later than 10 days after the
starting date), each Access Person must disclose in writing all current
securities holdings in which he or she is considered to have beneficial
ownership and control ("Securities Holdings Report") (see page 4-4 for
definition of the term Beneficial Owner). The form to provide the Securities
Holding Report will be provided upon commencement of employment, appointment or
promotion and should be submitted to Baltimore Legal/Compliance.
All Investment Personnel and Managing Directors are also required to file a
Securities Holding Report on an annual basis, in conjunction with the annual
verification process. Effective January 2001, this requirement will be extended
to ALL Access Persons, pursuant to federal law.
CONFIDENTIALITY OF RECORDS. Price Associates makes every effort to protect the
privacy of all persons and entities in connection with their Securities Holdings
Reports and Reports of Securities Transactions.
SANCTIONS. Strict compliance with the provisions of this Statement is
considered a basic provision of association with Price Associates and the Price
Funds. The Ethics Committee and Baltimore Legal/Compliance are primarily
responsible for administering this Statement. In fulfilling this function, the
Ethics Committee will institute such procedures as it deems reasonably necessary
to monitor each person's and entity's compliance with this Statement and to
otherwise prevent and detect violations.
VIOLATIONS BY ACCESS PERSONS, NON-ACCESS PERSONS AND DIRECTORS OF PRICE
ASSOCIATES. Upon discovering a material violation of this Statement by any
person or entity other than an independent director of a Price Fund, the
Ethics Committee will impose such sanctions as it deems appropriate and as
are approved by the Management Committee or the Board of Directors
including, INTER ALIA, a letter of censure or suspension, a fine, a
suspension of trading privileges or termination of employment and/or
officership of the violator. In addition, the violator may be required to
surrender to Price Associates, or to the party or parties it may designate,
any profit realized from any transaction that is in violation of this
Statement. All material violations of this Statement shall be reported to
the Board of Directors of Price Associates and to the Board of Directors of
any Price Fund with respect to whose securities such violations may have
been involved.
VIOLATIONS BY INDEPENDENT DIRECTORS OF PRICE FUNDS. Upon discovering a
material violation of this Statement by an independent director of a Price
Fund, the Ethics Committee shall report such violation to the Board on which
the director serves. The Price Fund Boards will impose such sanctions as
they deem appropriate.
VIOLATIONS BY BALTIMORE EMPLOYEES OF RPFI OR TRFAM. Upon discovering a
material violation of this Statement by a Baltimore-based employee of RPFI
or TRFAM, the Ethics Committee shall report such violation to the Board of
Directors of RPFI or TRFAM, as appropriate. A material violation by a
Baltimore-based employee of RPFI shall also be
<PAGE>
reported to the Board of Directors of any RPFI Fund with respect to whose
securities such violations may have been involved.
March, 2000
Rowe Price-Fleming International, Inc. Statement of Policy on Securities
Transactions, dated March, 2000.
<PAGE>
ROWE PRICE-FLEMING INTERNATIONAL, INC.
STATEMENT OF POLICY
ON
SECURITIES TRANSACTIONS
BACKGROUND INFORMATION.
LEGAL REQUIREMENT. In accordance with the requirements of the securities
laws of the United States (i.e., the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940 and the
Insider Trading and Securities Fraud Enforcement Act of 1988) and the
various United Kingdom laws and regulations, Rowe Price-Fleming
International, Inc. ("RPFI") and the mutual funds which it manages ("RPFI
FUNDS") have adopted this Statement of Policy on Securities Transactions
("STATEMENT"). Both T. Rowe Price Associates, Inc. ("PRICE ASSOCIATES OR
TRPA") and T. Rowe Fleming Asset Management ("TRFAM") have also adopted
Statements of Policy on Securities Transactions. Funds sponsored and managed
by Price Associates or RPFI may be referred to collectively in this
Statement as the "PRICE FUNDS."
RPFI'S FIDUCIARY POSITION. As an investment adviser, RPFI is in a fiduciary
position which requires it to act with an eye only to the benefit of its
clients, avoiding those situations which might place, or appear to place,
the interests of RPFI or its officers, directors or employees in conflict
with the interests of clients.
PURPOSE OF STATEMENT. The Statement was developed to help guide RPFI and its
officers, non-affiliated directors and employees and the independent
directors of the RPFI Funds and Personnel of Related Entities, including all
Access Persons as defined below, in the conduct of their personal
investments and to:
o
eliminate the possibility of a transaction occurring that the United
States Securities and Exchange Commission or other regulatory bodies
would view as illegal, such as FRONT RUNNING (see definition below);
o
avoid situations where it might appear that RPFI or the RPFI Funds
or any of their officers, directors or employees had personally
benefited at the expense of a client or fund shareholder or taken
inappropriate advantage of their fiduciary positions; and
<PAGE>
o
prevent, as well as detect, the misuse of material, non-public
information.
All those covered by this Statement are urged to consider the reasons for
the adoption of this Statement. RPFI's and the RPFI Funds' reputations could
be adversely affected as the result of even a single transaction considered
questionable in light of the fiduciary duties of RPFI and the independent
directors of the RPFI Funds.
FRONT RUNNING. Front Running is illegal. It is generally defined as the
purchase or sale of a security by an officer, director or employee of an
investment adviser or mutual fund in anticipation of and prior to the
adviser effecting similar transactions for its clients in order to take
advantage of or avoid changes in market prices effected by the clients'
transactions.
ETHICS COMMITTEE. RPFI has established an Ethics Committee which is
responsible for the administration of this Statement. Its members are Martin
Wade and David Warren (London) and Henry Hopkins and M. David Testa
(Baltimore).
LONDON COMPLIANCE TEAM. The Ethics Committee has designated the London
Compliance Team to carry out the compliance functions described in this
Statement. The members of the London Compliance Team include Carol Eve,
Rachel Dickens, and Val Bailey.
PERSONS SUBJECT TO STATEMENT. The provisions of this Statement apply to the
following persons and entities. In the case of an individual, the Statement
also applies to the individual's spouse, minor children, and certain other
relatives, as further described on page 4-5 of this Statement.
RPFI. RPFI for its own account, including sponsored retirement plans of the
firm, if any.
RPFI OFFICERS, DIRECTORS AND EMPLOYEES. Each Officer, Director, and Employee
of RPFI. The term "Director" means any RPFI Director affiliated with Price
Associates or who is not an employee of Robert Fleming Holdings Limited
("RF" or "ROBERT FLEMING"). The responsibilities of the Robert-Fleming
related Directors (???) of RPFI are discussed separately on page 4-3 under
the heading "Non-Affiliated Directors of RPFI.".
<PAGE>
Each Officer, Director, and Employee stationed in RPFI's Baltimore office
will be referred to as BALTIMORE EMPLOYEES. Baltimore Employees are subject
to all the provisions of the TRPA Statement, including its prior clearance
and various reporting requirements. Therefore, although Baltimore Employees
will be subject to this Statement's general principles, they will not be
subject to the Statement's prior clearance or reporting requirements or the
restrictions on the use of non-affiliated brokers. The TRPA Statement is
considered a part of this Statement.
CERTAIN TEMPORARY WORKERS. These workers include:
o
Any temporary or consultant when his or her assignment at RPFI
exceeds or will exceed four weeks or when his or her cumulative
assignments exceed eight weeks over a twelve-month period; and
o
Any contingent worker immediately at the time of engagement if his
or her assignment is more than casual in nature or if he or she will
be exposed to the kinds of information and situations that would
create conflicts on matters covered in the Code.
PERSONNEL OF RELATED ENTITIES. Any officer, director or employee of one of
the entities ("RELATED ENTITIES") listed below who, in connection with his
or her regular functions or duties, makes, participates in, obtains, or has
access to information regarding the purchase or sale of a security by a
Price Fund or other advisory client, or whose functions or duties relate to
the making of any such recommendations with respect to the purchase or sale
of securities by any one or more of RPFI's clients.
o Robert Fleming Holdings Limited,
o Jardine Fleming Group, or
o Any other company in a control relationship to RPFI.
The London Compliance Team will keep a record of all such Related Entity
Personnel. This list, which shall be revised to reflect any changes on a
quarterly basis, shall be sent to the Compliance Section of the Legal
Department in Baltimore ("BALTIMORE LEGAL/COMPLIANCE").
<PAGE>
TRFAM PERSONNEL. As stated earlier, a Statement of Policy on Securities
Transactions has been adopted by TRFAM. Under that Statement any TRFAM
officer, director, or employee who has been seconded to TRFAM by RPFI and
who works in any office other than Baltimore will be subject to this
Statement.
NON-AFFILIATED DIRECTORS OF RPFI. Directors of RPFI who are neither officers
nor employees of RPFI or Price Associates and who, in connection with their
regular functions or duties, do not make, participate in, or obtain
information regarding the purchase or sale of a security by any one of
RPFI's clients, or whose functions or duties do not relate to the making of
any such recommendation with respect to the purchase or sale of securities
by any one of RPFI's clients. They are SUBJECT to:
^o^the Statement's general principles;
^o^the Statements transaction reporting requirements;
^o^restrictions on dealing with clients;
^o^co-investing restrictions;
^o^investment in client investment partnership restrictions; and
^o^1/2% ownership reporting requirements
They are EXEMPT from:
^^o^prior clearance requirements; and
^^o^the requirements and rules dealing with:
o^new issues;
o^investment clubs;
o^private placements;
o^short sales;
o^trading activity;
o^non-affiliated brokers;
o^brokerage confirmations, periodic account statements and
notification of broker/dealer accounts;
^^o^the 60-Day Rule; and
o^disclosure of personal securities holdings.
However, they are subject to personal securities transaction rules adopted
by their respective employers (Robert Fleming Holdings or Jardine Fleming
Group and their affiliates). In
<PAGE>
addition, any Non-Affiliated Director who, in connection with his or her
regular duties, receives information that would create conflicts on matters
covered by the Code, will be treated as Personnel of Related Entities.
INDEPENDENT DIRECTORS OF RPFI FUNDS. The Independent Directors of the RPFI
Funds are prohibited from owning the stock of Price Associates. They are
SUBJECT to:
^o^the Statement's general principles;
^o^the Statements transaction reporting requirements;
^o^restrictions on dealing with clients;
^o^co-investing restrictions;
^o^investment in client investment partnership restrictions; and
^o^1/2% ownership reporting requirements
They are EXEMPT from:
^^o^prior clearance requirements; and
^^o^the requirements and rules dealing with:
o^new issues;
o^investment clubs;
o^private placements;
o^short sales;
o^trading activity;
o^non-affiliated brokers;
o^brokerage confirmations, periodic account statements and
notification of broker/dealer accounts;
o^the 60-Day Rule; and
o^disclosure of personal securities holdings.
[Per DNB: Why aren't Independent and Non-Affiliated Directors subject to
confirm and b/d account requirements?]
ACCESS PERSONS. The term "ACCESS PERSON" means:
o^RPFI;
o^any officer (vice president or above) or director (excluding Independent
Directors of RPFI Funds and Non-Affiliated Directors of RPFI) of RPFI or the
Price Funds;
<PAGE>
o^any employee of RPFI, a Related Entity, or the Price Funds who, in
connection with his or her regular functions or duties, makes, participates
in, obtains, or has access to information regarding the purchase or sale of
securities by a Price Fund or other advisory client, or whose functions
relate to the making of any recommendations with respect to the purchases or
sales; or
o^any person in a control relationship to RPFI (excluding the Non-Affiliated
Directors of RPFI) or a Price Fund who obtains or has access to information
concerning recommendations made to a Price Fund or other advisory client
with regard to the purchase or sale of securities by the Price Fund or
advisory client.
The London Compliance Team notifies each Access Person of their status under
the Code. All Officers, Directors and Employees of RPFI are deemed to be
Access Persons.
INVESTMENT PERSONNEL. An Access Person is further identified as "INVESTMENT
PERSONNEL" if, in connection with his or her regular function on duties, he
or she makes or participates in making recommendations regarding the
purchase or sale of securities by a Price Fund or other advisory client. The
term "Investment Personnel" includes, but is not limited to:
o
those persons who are authorized to make investment decisions or
to recommend securities transactions on behalf of RPFI's
clients;
o research and credit analysts; and
o traders for RPFI.
All Investment Personnel are deemed Access Persons under the Code. The
London Compliance Team notifies all Investment Personnel of their status
under the Code.
QUESTIONS ABOUT THE STATEMENT. Covered Persons are urged to seek the advice
of Martin Wade, David Warren or Henry Hopkins or their designees when they
have questions as to the application of this Statement to their individual
circumstances.
<PAGE>
TRANSACTIONS SUBJECT TO STATEMENT. Except as provided below, the provisions
of this Statement apply to securities transactions that fall under one of
the following two conditions:
IF, you are a "BENEFICIAL OWNER" of the security under the Rule 16a-1 of the
United States Securities Exchange Act of 1934 ("EXCHANGE ACT"), as defined
below.
OR, if you CONTROL or direct securities trading for another person or entity,
those trades are subject to this Statement even if you are not a beneficial
owner of the securities. For example, if you have a power of attorney to direct
transactions in another person's account or give ongoing advice to another
person about his or her securities transactions, those transactions will be
subject to this Statement to the same extent your personal trades would be,
unless exempted as described below.
DEFINITION OF BENEFICIAL OWNER. A "beneficial owner" is any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise, has or shares in the opportunity to derive any
profit from a transaction in the security.
For example, a person has beneficial ownership in:
o^securities held by members of the person's immediate family SHARING THE
SAME HOUSEHOLD;
o^securities held by a trust, if that person is either a trust beneficiary
or a trustee with investment control;
o^the right to acquire securities through the exercise or conversion of any
derivative security, whether or not presently exercisable;
o^a proportionate interest in the portfolio securities held by a general or
limited partnership if that person is a general partner;
o^certain performance-related fees other than an asset-based fee, received
by any broker, dealer, bank, insurance company, investment company,
investment adviser, investment manager, trustee or person or entity
performing a similar function; and
<PAGE>
o^the right to dividends that is separated or separable from the underlying
securities. Otherwise, a right to dividends alone shall not represent
beneficial ownership in the securities.
A shareholder shall not be deemed to have beneficial ownership in the portfolio
securities held by a corporation or similar entity in which the person owns
securities if the shareholder is not a controlling shareholder of the entity and
does not have or share investment control over the entity's portfolio.
REQUESTS FOR EXEMPTIONS. If you have beneficial ownership of a security, any
transaction involving that security is presumed to be subject to the relevant
requirements of this Statement, UNLESS you have no control over the transaction.
Such a situation MAY arise, for example, if you have delegated investment
authority to an independent investment adviser, or your spouse has an
independent trading program in which you have no input. Similarly, if your
spouse has investment control over, but no beneficial ownership in, an unrelated
account, an exemption may be appropriate.
If you feel you should not be subject to the Statement's relevant prior
approval and/or reporting requirements, you should submit a written request
for clarification or exemption to the London Compliance Team. Any such
request for clarification or exemption should name the account, your
interest in the account, the persons or firms responsible for its
management, and the basis upon which the exemption is being claimed.
Exemptions are NOT self-executing; any exemption must be granted through the
London Compliance Team.
APPLICATION OF CERTAIN PROVISIONS OF THE STATEMENT. The application of the
provisions of this Statement varies depending upon a person's job
responsibilities, as follows:
o^ALL PERSONS subject to this Statement are bound by its general principles,
transaction reporting requirements, and sanctions provisions.
o^ALL ACCESS PERSONS, whether they are RPFI Officers, Directors or Employees
or Related Entity Personnel, are also subject to the brokerage notification
and initial and annual Securities Holdings Report requirements.
o^All Related Entity Personnel [DNB: "TRFAM Personnel"; however, this would
not pick up JF & RF] who are ALSO Investment Personnel, RPFI itself, and ALL
RPFI Officers, Directors, and Employees, regardless of whether they are
Investment Personnel, are subject to the prior clearance requirements for
transactions other than transactions in Price Associates' stock. These
persons and RPFI will be referred to as "CLEARING ACCESS PERSONS".
<PAGE>
o^All RPFI Officers, Directors, and Employees are also subject to other
requirements, including the prior clearance of transactions in Price
Associates' stock, as described below.
PROVISIONS APPLICABLE TO ALL PERSONS SUBJECT TO THIS STATEMENT. All persons
subject to this Statement are subject to the transaction reporting
requirements as described below, as well as the sanctions provisions (see p.
4-_).
TRANSACTION REPORTING REQUIREMENTS.
TRANSACTIONS THAT MUST BE REPORTED. Other than for the transactions
specified below as exempt, every Person subject to this Statement is
required to report to the London Compliance Team all securities
transactions, including the following:
CLEARED TRANSACTIONS. Any transaction that is subject to the prior
clearance requirements. Although only Clearing Access Persons must
receive prior clearance of trades, all persons subject to the Statement
MUST report any transaction that would have been required to be prior
cleared by a Clearing Access Person. This includes transactions by a
stock or investment club of which a person subject to this Statement is
a member. [CE & RD want to delete this]
PRO RATA DISTRIBUTIONS. Purchase effected by the exercise of rights
issued pro rata to all holders of a class of securities or the sale of
rights so received.
SECURITIES OF ROBERT FLEMING HOLDINGS, LTD. Transactions involving the
purchase or sale of the securities of Robert Fleming Holdings, Ltd.
directly from or to the issuer, including payroll deduction plan
transactions. However, these transactions need only be reported as a
current holding as part of an Access Person's initial and annual
Securities Holdings Report (see p. 4-_).
REGULAR SAVINGS SCHEMES. Transactions involving the purchase of
securities pursuant to a systematic investment plan, (i.e., a regular
savings scheme or savings plan) if the underlying investment(s) is not
exempt from prior clearance. REPORTING OF THESE TRANSACTIONS MUST BE
MADE PROMPTLY AFTER THE INDIVIDUAL RECEIVES HIS OR HER REPORTS REGARDING
THESE TRANSACTIONS (e.g., if the individual receives reports
semi-annually only, he or she must report the transactions on that
basis).
<PAGE>
MANDATORY TENDERS. Purchases and sales of securities pursuant to a
mandatory tender offer.
SPOUSAL PAYROLL DEDUCTION PLANS/SPOUSAL STOCK OPTION. Transactions
involving the purchase or exchange of securities by an Access Person's
spouse pursuant to a payroll deduction plan or the exercise by a spouse
of a stock option issued by the spouse's employer. REPORTING OF SPOUSAL
PAYROLL DEDUCTION PLAN TRANSACTIONS MUST BE MADE PROMPTLY AFTER THE
INDIVIDUAL RECEIVES HIS OR HER REPORTS REGARDING THESE TRANSACTIONS
(e.g., if the individual receives reports semi-annually only, he or she
must report the transactions on that basis); REPORTING OF A SPOUSAL
STOCK OPTION EXERCISE MUST BE MADE WITHIN 10 DAYS OF THE EXERCISE.
INHERITANCES. Acquisition of securities through inheritance.
GIFTS. Acquisition or disposition of securities by gift.
TRANSACTIONS EXEMPT FROM REPORTING. The following transactions are exempt
from the reporting requirements:
OPEN-ENDED COLLECTIVE INVESTMENT SCHEMES, INCLUDING UNIT TRUSTS AND U.S.
MUTUAL FUNDS. Purchases or redemptions of shares of any open-ended
collective investment schemes, unit trust and U.S. open-end investment
companies, including the Price Funds and similar, foreign-registered
investment vehicles, except that any person covered by this Statement
who serves as the president, chairman of the board, or executive vice
president of a Price Fund must report his or her beneficial ownership or
control of shares in that Fund to Baltimore Legal/Compliance at the time
of the initial purchase of shares.
GOVERNMENT OBLIGATIONS. Purchases or sales of direct U.S. or Foreign
Government obligations.
CORPORATE ACTIONS (E.G., STOCK SPLITS AND SIMILAR TRANSACTIONS). The
acquisition of additional shares of existing corporate holdings through
the reinvestment of income dividends and capital gains in mutual funds
and similar investment vehicles, stock splits, stock dividends, exercise
of rights, exchanges or conversions.
<PAGE>
DIVIDEND REINVESTMENT PLANS. The purchase of securities with dividends
effected through an established DRP. If, however, a Connected Purchase
or a sale must receive prior clearance (see p. 4-_), that transaction
must also be reported.
REPORT FORM. If the executing broker/dealer (including Robert Fleming or
Jardine Fleming) provides a confirmation, contract note or similar statement
directly to the London Compliance Team, you do not need to make a further
report. All other transactions must be reported on the form designated "Rowe
Price-Fleming International, Inc. Report of Securities Transactions," a
supply of which is available from the London Compliance Team.
WHEN REPORTS ARE DUE. Unless your broker/dealer provides a confirmation or
statement to the London Compliance Team, you must report a securities
transaction within ten (10) days after the trade date (for example, a
purchase in a private placement), or within (10) days after the date on
which you first gain knowledge of the transaction (for example, a bequest)
if this is later. Transactions involving either a regular savings scheme or
the purchase of securities by a spouse pursuant to a payroll deduction plan,
however, may be reported when the report is received. Transactions in the
stock of Robert Fleming Holdings, Ltd. may be reported as part of initial
and annual Securities Holdings Reports.
The London Compliance Team will send all such reports to Baltimore
Compliance quarterly.
TRANSACTION REPORTING REQUIREMENTS OF THE INDEPENDENT DIRECTORS OF THE RPFI
FUNDS AND THE NON-AFFILIATED DIRECTORS OF RPFI. The Independent Directors of
the RPFI Funds and the Non-Affiliated Directors of RPFI are subject to
similar reporting requirements as Access Persons, except that reports need
only be filed quarterly and the reports of the Independent Directors are
filed in Baltimore. Specifically, each Independent Director must file a
report for each quarter's transactions with Baltimore Legal/Compliance no
later than ten (10) calendar days after the end of the calendar quarter in
which the transactions were effected. Each Non-Affiliated Director must file
a report for each quarter's transactions with the London Compliance Team on
the same schedule. Reports must be filed for each quarter, regardless of
whether there have been any reportable transactions. Baltimore
Legal/Compliance will send the Independent Directors of the RPFI Funds a
reminder letter and Reporting Form approximately ten (10) days prior to the
end of each calendar quarter. [Does LCT send similar reminder to
Non-Affiliated Directors?]
<PAGE>
[Dottie: please confirm both groups report as indicated in revision.]
PROVISIONS APPLICABLE TO ALL ACCESS PERSONS. All Access Persons are also
subject to the permission and notification requirements for outside
broker/dealer accounts and the initial and annual Securities Holdings Report
requirements as described below, as well as the sanctions provisions (see p.
4-_).
PERMISSION AND NOTIFICATION REQUIREMENTS REGARDING OTHER BROKER/DEALER
ACCOUNTS (EXCLUDING ACCOUNTS WITH ROBERT FLEMING AND JARDINE FLEMING).
Access Persons must effect all their personal securities transactions
through the trading desks of Robert Fleming and Jardine Fleming,
respectively, [unless otherwise exempted. - CE & RD want to delete] TRP
Investment Services, Inc.'s Brokerage Division is considered an outside
broker/dealer for these purposes.
TRANSACTIONS EXEMPT FROM LONDON COMPLIANCE TEAM PERMISSION/NOTIFICATION
REQUIREMENTS. The following transactions are exempt from these requirements
without approval by the London Compliance Team if approved by RF Group
Compliance or JF Compliance, as appropriate:
o^IPOs
o^Investments in [Investment Trusts] made through Personal Equity Plans [or
IS's] [unless self-managed]
o^Exercise of Options and Warrants
o^Acquisitions of shares in investment trusts under any dividend
reinvestment or regular savings scheme
o^Exercise of Price Associates^ stock options, including cashless exercises,
if exercised through Deutsche Bank-Alex Brown and duplicate account
information is sent directly to RF Group Compliance by Deutsche Bank-Alex
Brown.
<PAGE>
An Access Person's trades in open-ended Collective Investment Schemes,
including Unit Trusts and U.S. Mutual Funds, do not require an exemption
from the London Compliance Team, RF Compliance, or JF Compliance.
Application for any other exemption from this requirement, including for an
Access Person's spouse's securities transactions if the spouse is subject to
conflicting requirements due to his or her employment, must be made to the
London Compliance Team. If the London Compliance Team approves the
application, it will forward it to RF Group Compliance or to JF Compliance,
as appropriate, for its approval as well.
PROCEDURES FOR PERMISSION AND NOTIFICATION.
ACCESS PERSONS. [Unless the transaction is exempted above,] RPFI Officers,
Directors, and Employees must contact the London Compliance Team to obtain
RF Group Compliance or JF Compliance permission, as appropriate, before
opening or trading in a securities account with any other broker/dealer. All
other Access Persons may obtain permission directly from RF Group Compliance
or JF Compliance but MUST inform the London Compliance Team within 10 days
of receiving such permission.
NEW ACCESS PERSONS. [Unless the transaction is exempted above,] new RPFI
Officers, Directors and Employees must apply to RF Group Compliance or JF
Compliance, as appropriate, through the London Compliance Team for
permission to maintain any existing securities accounts with any other
broker/dealer promptly upon joining the firm. All other new Access Persons
may obtain permission directly from RF Group Compliance or JF Compliance but
MUST inform the London Compliance Team within 10 days of receiving such
permission.
BROKERAGE CONFIRMATIONS AND PERIODIC ACCOUNT STATEMENTS. Robert Fleming and
Jardine Fleming notify the London Compliance Team of all transactions
effected through their trading desks by Access Persons. For transactions in
which Access Persons are considered to have beneficial ownership and/or
control (see page 4-_ for definitions of Beneficial Owner/Control) and that
are effected away from the Robert Fleming and Jardine Fleming trading desks,
Access Persons must request broker-dealers executing transactions to send to
the attention of the London Compliance Team the following documents:
<PAGE>
DUPLICATE CONFIRMATIONS. A duplicate confirmation or equivalent notice with
respect to each and every reportable transaction, including any transaction
in Price Associates' stock, within 10 days of execution.
PERIODIC STATEMENTS. A copy of all periodic statements for all such
securities accounts.
DISCLOSURE OF PERSONAL SECURITIES HOLDINGS BY ACCESS PERSONS. Upon
commencement of employment, appointment or promotion (no later than 10 days
after the starting date), each Access Person must disclose in writing all
current securities holdings in which he or she is considered to have
beneficial ownership and control ("SECURITIES HOLDINGS REPORT") (see page
4-_ for definitions of Beneficial Owner/Control). The form to provide the
Securities Holdings Report will be provided upon commencement of employment,
appointment or promotion and should be submitted to the London Compliance
Team, which will provide a copy to Baltimore Legal/Compliance.
All Investment Personnel and Directors (other than an Independent Director
of RPFI Funds or a Non-Affiliated Director of RPFI, who, in connection with
his or her regular functions or duties, does not make, participate in, or
obtain information regarding the purchase or sale of a security by any one
of RPFI's clients, or whose functions or duties do not relate to the making
of any such recommendation with respect to the purchase or sale of
securities by any one or more of RPFI's clients) are also required to file a
Securities Holding Report on an annual basis. Effective January 2001, this
requirement will be extended to ALL Access Persons, pursuant to United
States law. [DNB, CE and RD wants to delete language in parenthetical after
"Director of RPFI"]
CONFIDENTIALITY OF RECORDS. RPFI makes every effort to protect the privacy
of its Access Persons in connection with their Securities Holdings Reports
and Reports of Securities Transactions.
PROVISIONS APPLICABLE TO ALL CLEARING ACCESS PERSONS. All Clearing Access
Persons (see definition on p. 4-_) are also subject to prior clearance
requirements (other than for Price Associates' stock), a prohibition on
short sales, the 60-Day Rule, and restrictions on investment in Non-Listed
securities firms, as well as the sanctions provisions (see p. 4-_).
<PAGE>
PRIOR CLEARANCE REQUIREMENTS FOR CLEARING ACCESS PERSONS (OTHER THAN PRICE
ASSOCIATES' STOCK). All Clearing Access Persons must obtain prior clearance
before directly or indirectly initiating, recommending, or in any way
participating in the purchase or sale of a security in which the Clearing
Access Person has, or by reason of such transaction may acquire, any
beneficial interest or which he or she controls, unless exempted below.
PRIOR CLEARANCE MUST BE OBTAINED REGARDLESS OF HOW THE TRANSACTION IS
EFFECTED. Receiving prior clearance does not relieve Clearing Access Persons
from conducting their personal securities transactions in full compliance
with the Code including its prohibition on trading while in possession of
material, inside information, and with applicable law, including the
prohibition on Front Running (see page 4-1 for definition of Front Running).
Compliance with the 60-Day Rule (p. 4-_) is the responsibility of the Access
Person; it is not covered by prior clearance procedures. It is also the
Clearing Access Person's responsibility to ensure that all custody and
settlement requirements are met.
TRANSACTIONS EXEMPT FROM PRIOR CLEARANCE REQUIREMENTS (OTHER THAN PRICE
ASSOCIATES' STOCK). All securities transactions must receive prior clearance
except the following:
OPEN-ENDED COLLECTIVE INVESTMENT SCHEMES, INCLUDING UNIT TRUSTS AND U.S.
MUTUAL FUNDS. Purchases or redemptions of shares of any open-ended
collective investment scheme, unit trust and U.S. open-end investment
companies, including the Price Funds, and similar foreign-registered
investment vehicles.
GOVERNMENT OBLIGATIONS. Purchases or sales of direct U.S. or Foreign
Government obligations.
SECURITIES OF ROBERT FLEMING HOLDINGS, LTD. Purchases or sales of the
securities of Robert Fleming Holdings, Ltd. directly from or to the
issuer.
REGULAR SAVINGS SCHEMES. Purchases effected through a systematic
investment plan involving the automatic investment of a set amount on
predetermined dates (i.e., a regular savings scheme or savings plan),
provided that, if the underlying investment(s) in the scheme or plan is
not exempt from prior clearance, the London Compliance Team has been
previously notified by the Clearing Access Person that he or she will be
participating in the scheme or plan, and any purchase to initiate
participation in the scheme or plan, or any sale receives prior
clearance.
<PAGE>
DIVIDEND REINVESTMENT PLANS. Purchases effected through an established
Dividend Reinvestment Plan ("DRP"), provided the London Compliance Team
is first notified by the Clearing Access Person that he or she will be
participating in the DRP. A Clearing Access Person's purchase of
share(s) of the issuer to initiate participation in the DRP or his or
her purchase of shares in addition to those purchased with dividends (a
"CONNECTED PURCHASE") AND any sales of shares from the DRP MUST receive
prior clearance.
CORPORATE ACTIONS (E.G., STOCK SPLITS AND SIMILAR TRANSACTIONS). The
acquisition of additional shares of an existing holding through the
reinvestment of income dividends and capital gains in mutual funds and
similar investment vehicles, stock splits, stock dividends, exercise of
rights, exchanges or conversions.
MANDATORY TENDERS. Purchases and sales of securities pursuant to a
mandatory tender offer.
PAYROLL DEDUCTION PLANS. Purchases or exchanges by a Clearing Access
Person's spouse pursuant to a payroll deduction plan, provided the
London Compliance Team has been previously notified by the Clearing
Access Person that the spouse will be participating in the payroll
deduction plan.
EXERCISE OF STOCK OPTION OF CORPORATE EMPLOYER BY SPOUSE. Transactions
involving the exercise by a Clearing Access Person^s spouse of a stock
option issued by the corporation employing the spouse.
INHERITANCES. Acquisition of securities through inheritance.
GIFTS. Acquisition or disposition of securities by gift.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE (OTHER THAN PRICE ASSOCIATES'
STOCK) FOR CLEARING ACCESS PERSONS. Requests for prior clearance may be made
by electronic mail or by submitting a written form to the London Compliance
Team. The London Compliance Team is responsible for processing and
maintaining the records of all such requests. All requests must include the
name of the security, the number of shares or amount of bond involved, [the
nature of the transaction, i.e., whether the transaction is a purchase or
sale, and whether the securities are part of a new issue.] and the estimated
value of the requested transaction.
<PAGE>
The London Compliance Team will record whether the request was approved or
disapproved and the date and time of the approval or disapproval; the reason
for any disapproval; if approval was granted pursuant to an exemption being
granted, [the name of the person granting the exemption; and the estimated
value of the requested transaction.], the nature of the transaction (i.e.,
whether the transaction is a purchase or sales) and whether the securities
are part of a new issue.
Responses to all requests will be confirmed by the London Compliance Team by
electronic mail or on a standard written form documenting the request and
its approval/disapproval.
Requests will normally be processed on the same day they are received;
HOWEVER, ADDITIONAL TIME MAY BE REQUIRED.
EFFECTIVENESS OF PRIOR CLEARANCE. Prior clearance of a securities
transaction is effective for three (3) business days FROM AND INCLUDING the
date the clearance is granted. If the proposed securities transaction is not
executed within this time, a new clearance must be obtained.
REASONS FOR DISALLOWING PROPOSED TRANSACTIONS. A proposed security
transaction will be disapproved by the London Compliance Team if:
PENDING CLIENT ORDERS BY RPFI. An order has been placed by RPFI to
purchase or sell the security through the London, Baltimore or Hong Kong
trading desk.
PENDING CLIENT ORDERS BY PRICE ASSOCIATES. An order has been
placed by Price Associates to purchase or sell the security.
PURCHASES AND SALES WITHIN SEVEN (7) CALENDAR DAYS. The security has
been purchased or sold by any client of RPFI or Price Associates within
the seven (7) calendar days immediately prior to the date of the
proposed transaction. For example, if a client transaction occurs on
Monday, a Clearing Access Person may not purchase or sell that security
until Tuesday of the following week. If all clients have eliminated
their holdings in a particular security, the seven-day restriction is
not applicable to a Clearing Access Person's transactions in that
security.
<PAGE>
SECURITIES SUBJECT TO INTERNAL TRADING RESTRICTIONS. The issuer has been
placed on the RPFI Restricted List.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR INITIAL PUBLIC OFFERINGS
("IPOS").
INVESTMENT PERSONNEL. Although subject to prior clearance, Investment
Personnel may purchase securities which are the subject of an IPO if the
London Compliance Team determines that all of the following conditions
are met:
o
The issue is open to the general public and allocations are made
by the issuer / syndicate on a purely random basis (lottery) or
on a pro-rata basis per application (collectively "PRO-RATA
OFFERING");
o
No order for the purchase of any such securities has been
entered by RPFI or Price Associates on behalf of any client;
o
The number of shares to be purchased is commensurate with the
normal size and activity of the Investment Personnel's account;
and
o
The Investment Personnel wishing to purchase the securities will
NOT participate in the firm^s investment decision regarding any
client investment in the underwritten issue.
NON-INVESTMENT PERSONNEL. Clearing Access Persons other than Investment
Personnel ("NON-INVESTMENT PERSONNEL") may purchase securities in a
Pro-rata Offering if the first three of the four conditions described
above are met.
Non-Investment Personnel may also be granted approval to purchase
securities which are the subject of a Non-Pro-rata Offering. In
considering such a request for approval, the London Compliance Team will
determine whether the proposed transaction presents a conflict of
interest with any of the firm's clients or otherwise violates the Code.
Approvals will carry the following conditions:
1.
The purchase is made through the Non-Investment Personnel's
regular broker, bank, or from a syndicate member through a
general solicitation or subscription form, if relevant;
<PAGE>
2.
The number of shares to be purchased is commensurate with the
normal size and activity of the Non-Investment Personnel's
account; and
3.
If the transaction is a public offering in the United States, it
otherwise meets the restrictions on free riding and withholding
set by the National Association of Securities Dealers, Inc.
ALL PERSONNEL. Neither Investment Personnel nor Non-Investment Personnel
will be permitted to purchase in an IPO if any of RPFI's or Price
Associates^ clients are prohibited from doing so. This prohibition will
remain in effect until these clients have had the opportunity to
purchase in the secondary market once the underwriting is completed --
commonly referred to as the aftermarket. In addition, the 60-Day Rule
applies to transactions in securities purchased in an IPO.
JAPANESE NEW ISSUES. All RPFI Officers, Directors and Employees are
prohibited from purchasing a security which is the subject of an IPO in
Japan.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR PRIVATE PLACEMENTS. Approval
for a Clearing Access Person to invest in a private placement of securities,
including the purchase of limited partnership interests, must be sought from
the London Compliance Team in the usual manner. The approval process will
include a review by a member of the Ethics Committee or the Chief Investment
Officer ("CIO") to determine whether the investment opportunity (private
placement) should be reserved for the firm's clients, and whether the
opportunity is being offered to the Clearing Access Person by virtue of his
or her position with the firm.
CONTINUING OBLIGATION. Any person who has received approval to invest in
a private placement of securities and who, at a later date, anticipates
participating in the firm's investment decision process regarding the
purchase or sale of securities of the issuer of that private placement
on behalf of any client, must immediately disclose his or her prior
investment in the private placement to the London Compliance Team.
REQUESTS FOR WAIVERS OF PRIOR CLEARANCE DENIALS. If a Clearing Access Person
has been denied prior clearance, he or she may apply to the London
Compliance Team, which will refer the matter to a member of the Ethics
Committee for a waiver. All such requests must
<PAGE>
be in writing and must fully describe the basis upon which the waiver is
being requested. Waivers are NOT routinely granted.
LARGE CAPITALIZATION EXEMPTION. Although subject to prior clearance,
transactions involving securities in large companies, within the parameters
set by the Ethics Committee, will be approved under normal circumstances
("LARGE CAPITALIZATION SECURITIES").
TRANSACTIONS INVOLVING LARGE CAPITALIZATION SECURITIES. This exemption
applies to transactions involving no more than $20,000 (all dollar
references are to U.S. dollars) or the nearest round lot (if the amount
of the transaction only marginally exceeds $20,000) per security per
week in securities of companies with market capitalizations of $5
billion or more.
TRANSACTIONS INVOLVING OPTIONS ON LARGE CAPITALIZATION SECURITIES.
Clearing Access Persons may not purchase uncovered put options or sell
uncovered call options unless otherwise permitted under the "Options and
Futures" discussion on p. 4-17. Otherwise, in the case of options on an
individual security qualifying for the Large Capitalization Exemption, a
Clearing Access Person may trade the GREATER of 5 contracts or
sufficient option contracts to control $20,000 in the underlying
security; thus a Clearing Access Person may trade 5 contracts even if
this permits the Clearing Access Person to control more than $20,000 in
the underlying security. Similarly, the Clearing Access Person may trade
more than 5 contracts as long as the number of contracts does not permit
him or her to control more than $20,000 in the underlying security.
[DNB: last 2 sentences contradict each other]
These parameters are subject to change by the Ethics Committee.
EXCHANGE-TRADED INDEX OPTIONS. Although subject to prior clearance, a
Clearing Access Person's transactions involving exchange-traded index
options, within the following parameters set by the Ethics Committee, will
be approved under normal circumstances. Generally, a Clearing Access Person
may trade the GREATER of 5 contracts or sufficient contracts to control
$20,000 in the underlying securities; thus a Clearing Access Person may
trade 5 contracts even if this permits the Clearing Access Person to control
more than $20,000 in the underlying securities. Similarly, the Clearing
Access Person may trade more than 5 contracts as long as the number of
contracts does not permit him or her to control more than $20,000 in the
underlying security.
<PAGE>
These parameters are subject to change by the Ethics Committee.
CLIENT LIMIT ORDERS. The London Compliance Team may approve a Clearing
Access Person's proposed trade even if a limit order has been entered for a
client for the same security, if:
^o^The Clearing Access Person's trade will be entered as a market order; and
^o^The client's limit order is 10% or more away from the market at the time
of approval.
INVESTMENT CLUBS. A Clearing Access Person may not form or participate in a
stock or investment club unless prior written approval has been obtained
from a member of the Ethics Committee. All transactions by such a stock or
investment club in which an individual has beneficial ownership or control
are subject to the same prior clearance and reporting requirements
applicable to an individual's trades. However, if a Clearing Access Person
has beneficial ownership solely by virtue of his or her spouse's
participation in the club and has no investment control or input into
decisions regarding the club's securities transactions, he or she may
request the waiver of prior clearance requirements for the club's
transactions, but not of reporting requirements, from a member of the Ethics
Committee as part of the approval process. Prior clearance waiver requests
by RPFI Officers, Directors and Employees for transactions in Price
Associates' stock (see p. _) will not be granted.
OPTIONS AND FUTURES. Please consult the specific section on Exchange-Traded
Index Options (p. 4-_) for transactions in these options.
<TABLE>
<CAPTION>
<C><S>
BEFORE ENGAGING IN OPTIONS AND FUTURES TRANSACTIONS,
ACCESS PERSONS SHOULD UNDERSTAND THE IMPACT THAT THE
60-DAY RULE MAY HAVE ON THEIR ABILITY TO CLOSE OUT A
POSITION (SEE PAGE 4-__).
--------------------------------------------------------
</TABLE>
OPTIONS AND FUTURES ON SECURITIES AND INDICES NOT HELD BY RPFI'S OR
PRICE ASSOCIATES^ CLIENTS. There are no specific restrictions with
respect to the purchase,
<PAGE>
sale or writing of put or call options or any other option or futures
activity, such as multiple writings, spreads and straddles, on
securities of issuers (and options or futures on such securities) which
are not held by any of RPFI's or Price Associates^ clients.
OPTIONS ON SECURITIES OF COMPANIES HELD BY RPFI'S OR PRICE ASSOCIATES^
CLIENTS. With respect to options on securities of issuers which are held
by any of RPFI's or Price Associate^s clients, it is the Firm^s policy
that a Clearing Access Person should not profit from a price decline of
a security owned by a client. Therefore, a Clearing Access Person may:
(i) purchase call options and sell covered call options and (ii)
purchase covered put options and sell put options. A Clearing Access
Person may NOT purchase uncovered put options or sell uncovered call
options, even if the issuer of the underlying security is eligible for
the Large Capitalization Exemption, unless purchased in connection with
other options on the same security as part of a straddle, combination or
spread strategy which is designed to result in a profit to the Clearing
Access Person if the underlying security rises in or does not change in
value. The purchase, sale and exercise of options are subject to the
same restrictions as those set forth with respect to securities, i.e.,
the option should be treated as if it were the common stock itself.
OTHER OPTIONS AND FUTURES HELD BY RPFI'S OR PRICE ASSOCIATES^ CLIENTS.
Any other option or futures transaction with respect to securities held
by any of RPFI's or Price Associates^ clients will be approved or
disapproved on a case-by-case basis after due consideration is given as
to whether the proposed transaction or series of transactions might
appear to or actually create a conflict with the interests of any of
RPFI's or Price Associates^ clients. Such securities include financial
instruments regulated solely by the United States Commodity Futures
Trading Commission ("CFTC").
SHORT SALES. Clearing Access Persons may not sell any security short which
is owned by any client of RPFI or Price Associates.
60-DAY RULE. RPFI adheres to the Robert Fleming and Jardine Fleming policy
that Clearing Access Persons are not permitted to engage in any security
transaction (EVEN A SALE AT A LOSS) unless the security has been held for 60
days. This rule includes transactions in equivalent securities. An
"equivalent" security means any option, warrant, convertible security, stock
appreciation right, or similar right with an exercise or conversion privilege
at a price
<PAGE>
related to the subject security, or similar securities with a value derived
from the value of the subject security. Thus, for example, the rule prohibits
options transactions on or short sales of a security within 60 days of its
purchase.
In addition, the rule applies regardless of the person's other holdings of
the same security or whether the person has split his or her holdings into
tax lots. For example, if a person buys 100 shares of XYZ stock on March 1,
1998 and another 100 shares of XYZ stock on March 1, 2000, he or she may not
sell ANY shares of XYZ stock at a profit for 60 days following March 1, 2000.
The 60-Day Rule "clock" restarts EACH time a trade is made in that security.
For purposes of this Code, the 60-Day Rule does not apply to:
^o^any transaction exempt from prior clearance (see p. 4-_);
^o^the purchase and sale or sale and purchase of exchange traded index
options; and
^o^the exercise of "in the money" Price Associates^ and/or Robert Fleming
stock options and the subsequent sale of the derivative shares.
Prior clearance procedures do NOT check compliance with the 60-Day Rule when
considering a trading request. Clearing Access Persons are responsible for
checking their compliance with this rule before entering a trade.
Clearing Access Persons may apply for a waiver from the 60-Day Rule to the
London Compliance Team, which will refer the matter to a member of the
Ethics Committee and to RF Group Compliance or JF Compliance, as
appropriate. All such requests must be in writing and must fully describe
the basis upon which the waiver is being requested; such waivers are NOT
routinely granted.
INVESTMENTS IN NON-LISTED SECURITIES FIRMS. Clearing Access Persons may not
purchase or sell the shares of a broker/dealer, underwriter or a U.S. or
other government registered investment adviser unless that entity is traded
on a recognized U.S., U.K., or foreign exchange, listed as a NASDAQ/NMS
stock, or permission is given under the Private Placement Procedures (See p.
4-_). The securities of Robert Fleming Holdings, Ltd. are exempted from this
restriction.
<PAGE>
PROVISIONS APPLICABLE TO ALL RPFI OFFICERS, DIRECTORS, AND EMPLOYEES. In
addition to the provisions noted above, RPFI Officers, Directors, and
Employees are also subject to the following requirements regarding
transactions in Price Associates' stock, dealing with clients, client
investment partnerships, margin accounts, trading activity, and 1/2 of 1%
ownership reporting, as well as the sanctions provisions (see p. 4-_).
TRANSACTIONS IN STOCK OF PRICE ASSOCIATES. Because Price Associates is a
public company, ownership of its stock subjects its officers, inside and
independent directors, and employees to special legal requirements under the
United States securities laws. These requirements have been extended to
apply to RPFI Officers, Directors and Employees. However, the Independent
Directors of the RPFI Funds are prohibited from owning the stock of Price
Associates. Each RPFI Officer, Director, and Employee is responsible for his
or her own compliance with these requirements. Price Associates^ stock may
be purchased through any broker-dealer, including T. Rowe Price Investment
Services, Inc^s TRP Brokerage division, as long as all other requirements
have been met. In connection with these legal requirements, RPFI has adopted
the following rules and procedures:
QUARTERLY EARNINGS REPORT. RPFI Officers, Directors and Employees must
refrain from initiating transactions in Price Associates' stock in which
they have a beneficial interest, generally from the sixth trading day
following the end of the quarter (or such other date as management shall
from time to time determine) until the third trading day following the
public release of earnings. They will be notified through the Office of the
Secretary of Price Associates ("SECRETARY") from time to time as to the
controlling dates.
PRIOR CLEARANCE. RPFI Officers, Directors and Employees are required to
obtain clearance prior to effecting any proposed transaction (including
gifts and transfers) involving shares of Price Associates' stock owned
beneficially. Requests for prior clearance must be in writing on the form
entitled "Notification of Proposed Transaction" (available from the Price
Associates^ Corporate Records Department) and submitted to the Secretary who
is responsible for processing and maintaining the records of all such
requests. Receiving prior clearance does not relieve RPFI Officers,
Directors and Employees from conducting their personal securities
transactions in full compliance with the applicable securities laws and
regulations, including the prohibition on trading while in possession of
material, inside information. Transactions in Price Associates^ stock are
subject to the 60-Day Rule except for certain options exercises. See p. 4-_.
<PAGE>
ALL RPFI OFFICERS, DIRECTORS AND EMPLOYEES MUST OBTAIN PRIOR
CLEARANCE OF ANY TRANSACTION INVOLVING PRICE ASSOCIATES^
STOCK FROM THE OFFICE OF THE SECRETARY OF PRICE ASSOCIATES.
CONTACT CLARA SALVINO (410-345-6790) OR BARBARA VAN HORN
(410-345-7733).
DIVIDEND REINVESTMENT PLANS. Purchases of Price Associates^ stock effected
through a dividend reinvestment plan need not receive prior clearance if the
Secretary^s office has been previously notified by the RPFI Officer,
Director, or Employee that he or she will be participating in that plan.
Reporting of transactions effected through that plan need only be made
quarterly, except that RPFI Officers, Directors, and Employees who are
subject to Section 16 of the United States Securities Exchange Act of 1934
reporting must report such transactions monthly.
EFFECTIVENESS OF PRIOR CLEARANCE. Prior clearance of transactions in Price
Associates' stock is effective for five (5) business days from and including
the date the clearance is granted, unless (i) advised to the contrary by the
Secretary prior to the proposed transaction, or (ii) the person receiving
the approval comes into possession of material, non-public information
concerning the firm. If the proposed transaction in Price Associates' stock
is not executed within this time period, a new clearance must be obtained.
REPORTING OF DISPOSITION OF PROPOSED TRANSACTION. RPFI Officers, Directors,
and Employees must notify the Secretary whether the proposed transaction in
Price Associates' stock was effected within two business days of its
execution, or within seven business days of the date of prior clearance, if
not executed.
INSIDER REPORTING AND LIABILITY. Under current rules, certain officers,
directors and 10% stockholders of a publicly traded company ("INSIDERS") are
subject to the requirements of Section 16. The Secretary will inform you if
you are an Insider of Price Associates. If you are an Insider, you should
refer to the TRPA Code for further information on reporting requirements for
Insiders.
LIABILITY FOR SHORT-SWING PROFITS. Under United States securities laws,
profit realized by certain officers, as well as directors and 10%
stockholders of a company (including Price Associates) as a result of a
purchase and sale (or sale and purchase) of stock of the company within a
period of less than six months must be returned to the firm upon request.
<PAGE>
DEALING WITH CLIENTS IN A PRINCIPAL TRANSACTION. RPFI Officers, Directors or
Employees may not, directly or indirectly, sell to or purchase from a RPFI
client any security. This prohibition does not preclude the purchase or
redemption of shares of any mutual fund that is a client of RPFI.
CLIENT INVESTMENT PARTNERSHIPS.
CO-INVESTING. RPFI Officers, Directors or Employees are not permitted to
co-invest in client investment partnerships of RPFI, Price Associates, or
their affiliates, such as International Partners, Strategic Partners and
Threshold.
DIRECT INVESTMENT. The Independent Directors of the RPFI Funds are not
permitted to invest as limited partners in client investment partnerships
of RPFI, Price Associates, or their affiliates.
MARGIN ACCOUNTS. While brokerage margin accounts are discouraged, RPFI
Officers, Directors and Employees may open and maintain margin accounts for
the purchase of securities provided such accounts are with brokerage firms
with which the RPFI Officer, Director or Employee maintains a regular
brokerage account.
TRADING ACTIVITY. RPFI Officers, Directors and Employees are discouraged
from engaging in a pattern of securities transactions which is either:
^o^So excessively frequent as to potentially impact his or her ability to
carry out assigned responsibilities, or
^o^Involve securities positions which are disproportionate to his or her net
assets.
At the discretion of the Ethics Committee, written notification of
excessive trading may be sent to the supervisor of the RPFI Officer,
Director, or Employee.
OWNERSHIP REPORTING REQUIREMENTS - ONE-HALF OF ONE PERCENT OWNERSHIP. If an
RPFI Officer, Director or Employee beneficially owns more than ^ of 1% of
the total outstanding shares of a public or private company, he or she must
immediately report in writing such fact to the London Compliance Team,
providing the name of the company and the total
<PAGE>
number of such company's shares beneficially owned. The London Compliance
Team will inform Baltimore Compliance about any such ownership promptly.
SANCTIONS. Strict compliance with the provisions of this Statement is
considered a basic provision of association with RPFI and the RPFI Funds.
The Ethics Committee and the London Compliance Team are primarily
responsible for administering this Statement. In fulfilling this function,
the Ethics Committee will institute such procedures as it deems reasonably
necessary to monitor Access Persons' compliance with this Statement and to
otherwise prevent and detect violations.
VIOLATIONS BY ACCESS PERSONS AND NON-AFFILIATED DIRECTORS OF RPFI. Upon
discovering a material violation of this Statement by an Access Person or
Non-Affiliated Director of RPFI, the Ethics Committee will impose such
sanctions as it deems appropriate or may, in its discretion, refer the
matter to the Board of Directors of RPFI to determine the appropriate
sanctions. Sanctions may include, inter alia, a letter of censure or
suspension, a fine, a suspension of trading privileges, or termination of
employment and/or officership of the violator. In addition, the violator may
be required to surrender to RPFI, or to the party or parties it may
designate, any profit realized from any transaction that is in violation of
this Statement. All material violations of this Statement shall be reported
to the Board of Directors of RPFI and to the Board of Directors of any RPFI
Fund with respect to whose securities such violations may have been
involved.
VIOLATIONS BY INDEPENDENT DIRECTORS OF RPFI FUNDS. Upon discovering a
material violation of this Statement by an Independent Director of a RPFI
Fund, the Ethics Committee shall report such violation to the Board of
Directors of RPFI and to the RPFI Fund Boards on which the director serves.
The RPFI Board of Directors and the RPFI Fund Boards will impose such
sanctions as they deem appropriate.
VIOLATIONS BY BALTIMORE EMPLOYEES OF RPFI. Upon discovering a material
violation of the Price Associates^ Statement of Policy on Securities
Transactions by a Baltimore-based employee of RPFI, the Price Associates^
Ethics Committee shall report such violation to the Board of Directors of
RPFI and to the Board of Directors of any RPFI Fund with respect to whose
securities such violations may have been involved.
March, 2000
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. ROWE PRICE VALUE FUND, INC.
and
INSTITUTIONAL EQUITY FUNDS, INC.
POWER OF ATTORNEY
RESOLVED, that the Corporations/Trusts (collectively the
"Corporations/Trusts" and individually the "Corporation/Trust") and each of its
directors/trustees 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/Trust 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/Trust, to be
offered by the Corporation/Trust, and the registration of the Corporation/Trust
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/Trust on its behalf, and to sign the names of each of such
directors/trustees and officers on his behalf as such director/trustee or
officer to any amendment or supplement (including Post-Effective Amendments) to
the Registration Statement on Form N-1A of the Corporation/Trust 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/Trust 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.
<PAGE>
PAGE 54
IN WITNESS WHEREOF, the above named Corporations/Trusts have caused these
presents to be signed and the same attested by its Secretary, each thereunto
duly authorized by its Board of Directors/Trustees, and each of the undersigned
has hereunto set his hand and seal as of the day set opposite his name.
ALL CORPORATIONS/TRUSTS
/s/Joseph A. Carrier
____________________________ Treasurer (Principal Financial Officer)
April 19, 2000
Joseph A. Carrier
/s/Donald W. Dick, Jr.
____________________________ Director/Trustee April 19, 2000
Donald W. Dick, Jr.
/s/David K. Fagin
____________________________ Director/Trustee April 19, 2000
David K. Fagin
/s/Hanne M. Merriman
____________________________ Director/Trustee April 19, 2000
Hanne M. Merriman
/s/Hubert D. Vos
____________________________ Director/Trustee April 19, 2000
Hubert D. Vos
Paul M. Wythes
____________________________ Director/Trustee April 19, 2000
Paul M. Wythes
(Signatures Continued)
JAMES S. RIEPE, Chairman of the Board (Principal Executive Officer)
<PAGE>
PAGE 55
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
INSTITUTIONAL EQUITY FUNDS, INC.
JAMES S. RIEPE, President and Director
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
JAMES S. RIEPE, Vice President and Director/Trustee
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE EQUITY SERIES, INC.
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE INDEX TRUST, 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 PERSONAL STRATEGY FUNDS, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE VALUE FUND, INC.
/s/James S. Riepe
____________________________ April 19, 2000
James S. Riepe
(Signatures Continued)
<PAGE>
PAGE 56
M. DAVID TESTA, Chairman of the Board
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
M. DAVID TESTA, Director/Trustee
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. ROWE PRICE VALUE FUND, INC.
M. DAVID TESTA, President and Director
T. ROWE PRICE EQUITY SERIES, INC.
INSTITUTIONAL EQUITY FUNDS, INC.
M. DAVID TESTA, Vice President and Director
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
/s/M. David Testa
____________________________ April 19, 2000
M. David Testa
(Signatures Continued)
<PAGE>
PAGE 57
JAMES A.C. KENNEDY, Director/Trustee
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.
T. ROWE PRICE VALUE FUND, INC.
JAMES A.C. KENNEDY, Vice President and Director
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE MID-CAP VALUE FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE REAL ESTATE FUND, INC.
INSTITUTIONAL EQUITY FUNDS, INC.
/s/James A.C. Kennedy
____________________________ April 19, 2000
James A.C. Kennedy
(Signatures Continued)
<PAGE>
PAGE 58
JOHN H. LAPORTE, Chairman of the Board
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
JOHN H. LAPORTE, Director
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
JOHN H. LAPORTE, President and Director/Trustee
T. ROWE PRICE HEALTH SCIENCES FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW HORIZONS FUND, INC.
JOHN H. LAPORTE, Executive Vice President and Director
T. ROWE PRICE EQUITY SERIES, INC.
JOHN H. LAPORTE, Vice President and Director
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
/s/John H. LaPorte
____________________________ April 19, 2000
John H. LaPorte
(Signatures Continued)
<PAGE>
PAGE 59
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
/s/Larry J. Puglia
____________________________ President April 19, 2000
Larry J. Puglia
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
/s/Richard T. Whitney
____________________________ President April 19, 2000
Richard T. Whitney
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
/s/William J. Stromberg
____________________________ President April 19, 2000
William J. Stromberg
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE VALUE FUND, INC.
/s/Brian C. Rogers
____________________________ President April 19, 2000
Brian C. Rogers
T. ROWE PRICE MID-CAP VALUE FUND, INC.
/s/Gregory A. McCrickard
____________________________ President April 19, 2000
Gregory A. McCrickard
T. ROWE PRICE NEW ERA FUND, INC.
/s/Charles M. Ober
____________________________ President April 19, 2000
Charles M. Ober
(Signatures Continued)
<PAGE>
PAGE 60
T. ROWE PRICE REAL ESTATE FUND, INC.
/s/David M. Lee
____________________________ President April 19, 2000
David M. Lee
ATTEST:
/s/Patricia B. Lippert
____________________________
Patricia B. Lippert, Secretary
CERTIFICATE OF VICE PRESIDENT
T. ROWE PRICE SPECTRUM FUND, INC.
Pursuant to Rule 306 of Regulation S-T
I, the undersigned, Henry H. Hopkins, Vice President of T. Rowe Price
Spectrum Fund, Inc. (the "Fund"), do hereby certify that the prospectus for the
Fund has been translated into the Spanish language. The Spanish version of the
prospectus constitutes a full and complete representation of the English version
which has been filed as a part of this Registration Statement. A copy of the
Spanish version will be available for inspection upon request.
WITNESS my hand and the seal of the Fund this April 28, 2000.
T. Rowe Price Spectrum Fund, Inc.
(Seal) /s/Henry H. Hopkins
Henry H. Hopkins, Vice President
