PAGE 1
Registration Nos. 2-43237/811-2215
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Post-Effective Amendment No. / 26 / /X/
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. / 21 / /X/
Fiscal Year Ended December 31, 1993
___________________________________
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
________________________________________
(Exact Name of Registrant as Specified in Charter)
100 East Pratt Street, Baltimore, Maryland 21202
__________________________________________ _____
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (410) 547-2000
______________
Henry H. Hopkins
100 East Pratt Street
Baltimore, Maryland 2l202
_________________________
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering May 1, 1994
___________
It is proposed that this filing will become effective (check
appropriate box):
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/X/ on May 1, 1994 pursuant to paragraph (a) of Rule (485)
PAGE 2
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933+
_________________________________________________________________
Pursuant to Section 24f-2 of the Investment Company Act of 1940,
the Registrant has registered an indefinite number of securities
under the Securities Act of 1933 and intends to file a 24f-2
Notice by February 28, 1994.
+Not applicable, as no securities are being registered by this
Post-Effective Amendment No. 26 to the Registration Statement.
PAGE 3
The Registration Statement of T. Rowe Price Small-Cap
Value Fund, Inc. on Form N-1A (File Number 2-43237) is hereby
amended under the Securities Act of 1933 to update financial
information, make other changes in the Registrant's Prospectus
and Statement of Additional Information, and to satisfy the
annual amendment requirements of Rule 8(b)-16 under the
Investment Company Act of 1940.
This Amendment consists of the following:
Cross Reference Sheet
Part A of Form N-1A, Revised Prospectus
Part B of Form N-1A, Statement of Additional Information
Part C of Form N-1A, Other Information
Accountants' Consent
PAGE 4
CROSS REFERENCE SHEET
N-1A Item No. Location
Part A
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary of
Fund Fees and
Expenses
Item 3. Condensed Financial Information Financial
Highlights
Item 4. General Description of Registrant Investment
Summary;
Investment
Objective and
Program;
Summary of
Fund Fees and
Expenses;
Investing in
Small-Cap
Stocks;
Investment
Policies;
Performance
Information;
Capital Stock
Item 5. Management of Fund Summary of
Fund Fees and
Expenses;
Management of
the Fund;
Expenses and
Management
Fee
Item 5A. Management's Discussion of +
Fund Performance
Item 6. Capital Stock and Other Securites Capital
Stock;
Dividends and
Distributions;
Taxes
Item 7. Purchase of Securities Being NAV, Pricing,
Offered and Effective
Date;
Shareholder
Services;
Conditions of
Your Purchase;
Completing the
New Account
Form; Opening
PAGE 5
a New Account;
Purchasing
Additional
Shares
Item 8. Redemption or Repurchase NAV, Pricing,
and Effective
Date; Receiving
Your Proceeds;
Conditions of
Your Purchase;
Exchanging
and Redeeming
Shares
Item 9. Pending Legal Proceedings +
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of
Contents
Item 12. General Information and History +
Item 13. Investment Objectives and Policies Investment
Objectives and
Policies;
Risk Factors;
Investment
Program;
Portfolio
Management
Practices;
Investment
Restrictions;
Investment
Performance
Item 14. Management of the Registrant Management of
Fund
Item 15. Control Persons and Principal Principal
Holders of Securities Holders of
Securities
Item 16. Investment Advisory and Other Investment
Services Management
Services;
Custodian;
Legal Counsel;
Independent
Accountants
Item 17. Brokerage Allocation Portfolio
Transactions
Item 18. Capital Stock and Other Securities Dividends and
Distributions;
Capital Stock
Item 19. Purchase, Redemption and Pricing Pricing of
PAGE 6
of Securities Being Offered Securities;
Net Asset Value
Per Share;
Redemptions
in Kind;
Federal and
State
Registration of
Shares; Ratings
of Corporate
Debt Securities
Item 20. Tax Status Tax Status
Item 21. Underwriters Distributor for
Fund
Item 22. Calculation of Yield Quotations of
Money Market Funds +
Item 23. Financial Statements Incorporated by
Reference from
Annual Report
PART C
Information required to be included in Part C is set forth under
the appropriate item, so numbered, in Part C to this Registration
Statement.
+ Not applicable or negative answer
PAGE 7
PAGE 1
Small-Cap Value Investment Summary
Fund The Fund's objective is long-term capital
growth through investment primarily in the
stock of small companies which are believed
Prospectus to be undervalued and have potential for
May 1, 1994 capital appreciation. Such companies
T. Rowe Price generally have a market value of less than
Small-Cap Value Fund, $500 million.
Inc. ___________________________________________
T. Rowe Price
Table of Contents 100% No Load. This Fund has no sales
charges, no redemption fees, and no 12b-1
Fund Information fees. 100% of your investment is credited
Investment Objective and to your account.
Program
Summary of Fund Fees and Services. The Fund provides easy access
Expenses to your money through bank wires or
Financial Highlights telephone redemptions and offers easy
Investing in Small-Cap exchange to other T. Rowe Price Funds.
Stocks
Investment Policies T. Rowe Price Associates, Inc. (T. Rowe
Performance Information Price) was founded in 1937 by the late
Capital Stock Thomas Rowe Price, Jr. As of December 31,
NAV, Pricing, and 1993, the firm and its affiliates managed
Effective Date over $49 billion for approximately 2.5
Receiving Your Proceeds million individual and institutional
Dividends and investor accounts.
Distributions ___________________________________________
Taxes This prospectus contains information you
Management of the Fund should know about the Fund before you
Expenses and Management invest. Please keep it for future
Fee reference. A Statement of Additional
How to Invest Information for the Fund (dated May 1,
Shareholder Services 1994) has been filed with the Securities
Conditions of Your and Exchange Commission and is incorporated
Purchase by reference in this prospectus. It is
Completing the New available at no charge by calling: 1-800-
Account Form 638-5660.
Opening a New Account
Purchasing Additional THESE SECURITIES HAVE NOT BEEN APPROVED OR
Shares DISAPPROVED BY THE SECURITIES AND EXCHANGE
Exchanging and COMMISSION, OR ANY STATE SECURITIES
Redeeming Shares COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION, OR ANY STATE
SECURITIES COMMISSION, PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PAGE
INVESTMENT The Fund's investment objective is
OBJECTIVE long-term capital growth. The Fund will
AND PROGRAM invest primarily in the common stock of
companies with relatively small market
capitalizations (small-cap) which are
believed to be undervalued and have good
prospects for capital appreciation.
The Fund's share price will fluctuate
with changing market conditions, and your
investment may be worth more or less when
redeemed than when purchased. The Fund
should not be relied upon as a complete
investment program, nor used to play
short-term swings in the stock market. In
addition, stocks of small companies may be
subject to more abrupt or erratic price
movements than larger company securities.
The Fund cannot guarantee it will achieve
its investment objective.
The Fund will invest primarily in small
companies using a value approach. This
approach entails finding companies whose
current stock price is believed not to
adequately reflect their underlying value
as measured by assets, earnings, cash flow
or business franchises.
Investing in small Small companies--those with a
companies using a value capitalization (market value) of $500
approach. million or less--may offer greater
potential for capital appreciation since
they are often overlooked or undervalued by
investors. Because of their size,
small-cap stocks are less actively followed
by stock analysts and less information is
available on which to base stock price
evaluations. As a result, greater
variations often exist between the current
stock price and its estimated underlying
value which may present greater opportunity
for long-term capital growth.
The Fund's manager, T. Rowe Price
Associates, Inc. (T. Rowe Price) will rely
on its proprietary research to identify
undervalued, small-cap stocks before their
value is recognized by the investment
community. Stocks will be selected when T.
Rowe Price believes: (1) the current stock
price is undervalued based on a low price
to earnings ratio, cash flow or estimated
asset value per share and (2) the potential
for a catalyst exists (such as increased
investor attention, asset sales or a change
in management) which will cause the stock's
price to increase to reflect the company's
underlying value.
Investors should realize that the very
nature of investing in small companies
involves greater risk than is customarily
associated with more established companies.
The Fund is designed for long-term
investors who are willing to accept greater
investment risks in search of substantial
long-term rewards. Small companies often
have limited product lines, markets, or
financial resources, and they may be
dependent upon small or inexperienced
management. The securities of small
companies may have limited marketability
and may be subject to more abrupt or
erratic market movements than securities of
larger companies or the market averages in
general. However, small companies may
offer greater opportunities for capital
appreciation than large, more established
companies. In addition, small companies
are often overlooked by the investment
community. Therefore, these securities may
be undervalued and provide the potential
for significant capital appreciation.
Although the Fund will invest primarily
in U.S. common stocks, it may also purchase
other types of securities, for example,
foreign securities, convertible securities
and warrants, when considered consistent
with the Fund's investment objectve and
program. The Fund may also engage in a
variety of investment management practices,
such as buying and selling futures and
options. Please see Investment Policies
for a more complete description of these
and other permissible Fund investments.
Effective as of 4:00 p.m. (ET) on March 4,
1993 ("Closing Date"), and until otherwise
determined by the Fund's Board of
Directors, the offering of shares of the
Fund is limited to (i) persons who are
shareholders of the Fund, or whose orders
to purchase shares of the Fund were mailed
or received, as of the Closing Date; (ii)
participants of employer-sponsored
retirement plans administered by T. Rowe
Price Retirement Plan Services, Inc.; and
(iii) defined contribution plans with
assets of $50,000,000 or more not
administered by T. Rowe Price Retirement
Plan Services, Inc. In addition, as of the
Closing Date, the Fund ceased taking any
further orders for the purchase of its
shares from omnibus-brokerage accounts.
The Fund reserves the right in appropriate
cases to extend the offering to other
classes of persons, to restrict sales
further, or to withdraw the offering
altogether, all without notice.
SUMMARY OF The Fund is 100% no-load . . . you pay no
FUND FEES AND fees to purchase, exchange or redeem
EXPENSES shares, nor any ongoing marketing (12b-1)
expenses. Lower expenses benefit you by
increasing your investment return from the
Fund.
Shown below are all expenses and fees the
Fund incurred during its fiscal year.
Where applicable, expenses were restated to
reflect current fees. Expenses are
expressed as a percent of average Fund net
assets. More information about these
expenses may be found below and under
Expenses and Management Fee and in the
Statement of Additional Information under
Management Fee and Limitation on Fund
Expenses.
Shareholder Transaction Annual Fund
Expenses Expenses
Sales load None Management 0.70%
"charge" on purchases Total other 0.30%
Sales load None (Shareholder
"charge" on reinvested servicing,
dividends custodial,
auditing, etc.)+
Redemption fees None Distribution None
Exchange fees None fees (12b-1) _____
Total Fund
Expenses 1.00%
+The Fund charges a $5.00 fee for wire
redemptions under $5,000, subject to change
without notice.
Example of The following example illustrates the
Fund expenses. expenses you would incur on a $1,000
investment, assuming a 5% annual rate of
return and redemption at the end of each
period shown. For example, expenses for
the first year in the Fund would be $10.
This is an illustration only. Actual
expenses and performance may be more or
less than shown.
1 Year--$10 3 Years--$32 5 Years--$55
10 Years--$122
Management Fee. The Fund pays T. Rowe
Price an investment management fee
consisting of a flat Individual Fund Fee of
0.35% of the Fund's net assets and a Group
Fee, defined on page __ under Expenses and
Management Fee, of 0.35% as of December 31,
1993. Thus, the total combined management
fee for the Fund would be 0.70% of net
assets.
Effective January 1, 1992, T. Rowe Price
agreed to extend the Fund's 1.25% expense
limitation for a period of two years
through December 31, 1993. Expenses paid
or assumed under this agreement are subject
to reimbursement to T. Rowe Price by the
Fund whenever the Fund's expense ratio is
below 1.25%; however, no reimbursement will
be made after December 31, 1995, or if it
would result in the expense ratio exceeding
1.25%.
Transfer Agent, Shareholder Servicing, and
Administrative Costs. The Fund paid fees
to: (i) T. Rowe Price Services, Inc. (TRP
Services) for transfer and dividend
disbursing agent functions and shareholder
services for all accounts; (ii) T. Rowe
Price Retirement Plan Services, Inc. for
subaccounting and recordkeeping services
for certain retirement accounts; and (iii)
T. Rowe Price for calculating the daily
share price and maintaining the portfolio
and general accounting records of the Fund.
These fees totaled approximately $564,000,
$95,000, and $60,000, respectively.
FINANCIAL The following table provides information
HIGHLIGHTS about the Fund's financial history. It is
based on a single share outstanding
throughout each fiscal year (which ends on
the last day of December). The most recent
five years of the table are part of the
Fund's financial statements which are
included in the Fund's annual report and
incorporated by reference into the
Statement of Additional Information, which
is available to shareholders. The
financial highlights for periods subsequent
to June 30, 1988, presented below, was
included in financial statements audited by
the Fund's independent accountants, Coopers
& Lybrand, whose reports thereon were
unqualified. The financial highlights for
the years ended June 30, 1988 and prior
were derived from financial statements
which were audited by other independent
accountants, whose reports expressed
unqualified opinions on those statements.
Investment Activities Distributions
Net Real-
ized and
Net Unreal- Total
Asset ized Gain from
Value, Net (Loss) Invest- Net Net
Begin- Invest- on ment Invest-Real- Total
Year Ended, ning of ment Invest- Activi- ment lized Distri-
June 30+ Period Income ments ties Income Gain butions
_________________________________________________________________
1984 $9.30 $.06 $(2.28) $(2.22) -- -- --
1985 7.08 .01 1.96 1.97 -- -- --
1986 9.05 (.01) 1.79 1.78 -- -- --
1987 10.83 (.01) .69 .68 -- -- --
1988 11.51 .01 (1.52) (1.51) -- -- --
_________________________________________________________________
Year Ended,
December 31
_________________________________________________________________
1988++ $10.00 $.08+++$(.47) $(.39) $(.08)$(.55)$(.63)
1989 8.98 .14+++ 1.45 1.59 (.14) (.90)(1.04)
1990 9.53 .23+++(1.31) (1.08) (.24) (.12) (.36)
1991 8.09 .13+++ 2.61 2.74 (.12) (.34) (.46)
1992 10.37 .11 2.05 2.16 (.10) (.15) (.25)
1993 12.28 .12 2.73 2.85 (.10) (.35) (.45)
End of Period
Ratio
of
Total Ratio Net
Return of Invest-
Net (Includes Expenses ment Port-
Asset Rein- to Income
folio
Value, vested Net Average to Aver- Turn-
Year Ended, End of Divi- Assets ($ Net age Net over
June 30+ Period dends) Thousands) Assets Assets Rate
_________________________________________________________________
1984 $7.08 (23.2)% $20,971 0.90% 0.70% 30.0%
1985 9.05 28.8% 26,127 0.90% 0.10% 22.0
1986 10.83 20.8% 30,606 0.90% (0.10)% 52.0
1987 11.51 7.3% 32,274 0.90% (0.03)% 70.0
1988 10.00 (11.8)% 25,500 1.20% 0.10% 50.0
_________________________________________________________________
Year Ended,
December 31
_________________________________________________________________
1988++ $8.98 (3.8)% $ 25,574 1.25%+++1.81% 54.2%
1989 9.53 18.1% 32,837 1.25%+++1.42% 43.3%
1990 8.09 (11.3)% 26,438 1.25%+++2.57% 33.1%
1991 10.37 34.2% 53,228 1.25%+++1.31% 30.5%
1992 12.28 20.9% 264,021 1.25% 0.98% 12.1%
1993 14.68 23.3% 452,116 1.05% 0.91% 11.8%
_________________________________________________
+ Information for each of the six years in the period ended
1988, represents the activities of the Fund's predecessor,
PEMCO.
++ For the period June 30, 1988 (commencement of Fund operations) to
December 31, 1988.
+++ Excludes expenses in excess of a 1.25% voluntary expense
limitation in effect through December 31, 1993.
_________________________ ___________________________________________
INVESTING IN SMALL-CAP Common stocks of large and small companies
STOCKS offer a way to invest for long-term growth
of capital. As the U.S. economy has
expanded, corporate profits have grown, and
share values have risen. Small companies
often grow faster than large and can
generate greater earnings increases.
Prices of small-company shares have risen
over time, but this rise has been
punctuated by periodic declines. As with
large stocks, prices of even the best
managed, most profitable small companies
are subject to market risk, which means
they can fluctuate widely. In the short
run, small-company stocks tend to be more
volatile than large for a number of reasons
relating to their marketplace and their
business environment. For this reason,
investors in these stocks should have a
long-term horizon and be willing to wait
out bear markets.
The accompanying charts show year-by-
year returns as well as longer-term
performance. (The small-company universe
is represented by the Nasdaq Composite
Index of stocks traded over the counter.)
In six of the years from 1972, when the
Index began, through 1993, these stocks
posted negative returns, as shown, which
means they rose 73% of the time. For this
same time span, however, all cumulative
returns for 10-year rolling periods were
positive. Thus, the risk of incurring a
loss was reduced considerably for longer
holding periods.
Your investment in the Fund will be
subject to the fluctuations--up or down--
described above. You should weigh this
factor carefully before investing.
NASDAQ Rolling
10-Year Periods
_______________
1981 71.61%
1982 73.79
1983 202.20
1984 313.49
1985 318.62
1986 256.39
1987 214.58
1988 223.26
1989 200.93
1990 84.76
1991 199.40
1992 191.27
1993 178.82
NASDAQ -- Annual Returns
________________________
1972 17.18%
1973 31.06
1974 35.11
1975 29.76
1976 26.10
1977 7.33
1978 12.31
1979 28.11
1980 33.88
1981 3.21
1982 18.67
1983 19.87
1984 11.22
1985 31.36
1986 7.36
1987 5.26
1988 15.41
1989 19.26
1990 17.80
1991 56.84
1992 15.45
1993 14.75
______________________________________
This chart is intended as an illustration
of historical small company common stock
behavior and does not represent the
performance of any T. Rowe Price mutual
fund. Past results do not indicate future
returns.
INVESTMENT This section takes a detailed look at some
POLICIES of the types of securities the Fund may
hold in its portfolio and the various kinds
of investment practices that may be used in
day-to-day portfolio management. The Fund's
investment program is subject to further
restrictions and risks described in the
"Statement of Additional Information."
Shareholder approval is required
to substantively change the Fund's
objective (stated on page __) and to change
certain investment restrictions noted in
the following section as "fundamental
policies." The managers also follow
certain "operating policies" which can be
changed without shareholder approval.
However, significant changes are discussed
with shareholders in Fund reports.
Types of Portfolio Securities
Fund managers have In seeking to meet its investment
considerable leeway in objective, the Fund may invest in any type
choosing investment of security whose investment
strategies and selecting characteristics are consistent with the
securities they believe Fund's investment program. These and some
will help the fund of the other investment techniques the Fund
achieve its objectives. may use are described in the following
pages.
Fundamental Policy. The Fund will not
purchase a security if, as a result, with
respect to 75% of its total assets, more
than 5% of its total assets would be
invested in securities of the issuer or
more than 10% of the voting securities of
the issuer would be held by the fund.
Common and Preferred Stocks. Stocks
represent shares of ownership in a company.
Generally, preferred stock has a specified
dividend and ranks after bonds and before
common stocks in its claim on income for
dividend payments and on assets should the
company be liquidated. After other claims
are satisfied, common stockholders
participate in company profits on a pro
rata basis; profits may be paid out in
dividends or reinvested in the company to
help it grow. Increases and decreases in
earnings are usually reflected in a
company's stock price, so common stocks
generally have the greatest appreciation
and depreciation potential of all corporate
securities. While most preferred stocks
pay a dividend, the Fund may purchase
preferred stock where the issuer has
omitted, or is in danger of omitting,
payment of its dividend. Such investments
would be made primarily for their capital
appreciation potential.
Convertible Securities and Warrants. The
Fund may invest in debt or preferred equity
securities convertible into or exchangeable
for equity securities. Traditionally,
convertible securities have paid dividends
or interest at rates higher than common
stocks but lower than non-convertible
securities. They generally participate in
the appreciation or depreciation of the
underlying stock into which they are
convertible, but to a lesser degree. In
recent years, convertibles have been
developed which combine higher or lower
current income with options and other
features. Warrants are options to buy a
stated number of shares of common stock at
a specified price any time during the life
of the warrants (generally, two or more
years).
Foreign Securities. The Fund may invest in
foreign securities. These include non-
dollar denominated securities traded
outside of the U.S. and dollar denominated
securities traded in the U.S. (such as
ADRs). Such investments increase a
portfolio's diversification and may enhance
return, but they also involve some special
risks such as exposure to potentially
adverse local political and economic
developments; nationalization and exchange
controls; potentially lower liquidity and
higher volatility; possible problems
arising from accounting, disclosure,
settlement, and regulatory practices that
differ from U.S. standards; and the chance
that fluctuations in foreign exchange rates
will decrease the investment's value
(favorable changes can increase its value).
Operating Policy. The Fund may invest up to
20% of its total assets in foreign
securities.
Fixed Income Securities. The Fund may
invest in debt securities of any type
without regard to quality or rating. Such
securities would be purchased in companies
which meet the investment criteria for the
Fund. The price of a bond fluctuates with
changes in interest rates, rising when
interest fall and falling when interest
rise. The Fund will not purchase a non-
investment grade debt security (or junk
bond) if immediately after such purchase
the Fund would have more than 5% of its
total assets invested in such securities.
High Yield/High Risk Investing. The total
return and yield of lower quality (high
yield/high risk) bonds, commonly referred
to as "junk bonds," can be expected to
fluctuate more than the total return and
yield of higher quality, shorter-term
bonds, but not as much as common stocks.
Junk bonds are regarded as predominantly
speculative with respect to the issuer's
continuing ability to meet principal and
interest payments.
Operating Policy. The Fund may not invest
more than 5% in securities rated below-
investment grade.
Hybrid Instruments. These instruments can
combine the characteristics of securities,
futures and options. For example, the
principal amount, redemption or conversion
terms of a security could be related to the
market price of some commodity, currency or
securities index. Such securities may bear
interest or pay dividends at below market
(or even relatively nominal) rates. Under
certain conditions, the redemption value of
such an investment could be zero. Hybrids
can have volatile prices and limited
liquidity and their use by the Fund may not
be successful.
Operating Policy. The Fund may invest up
to 10% of its total assets in hybrid
instruments.
Private Placements (Restricted Securities).
These securities are sold directly to a
small number of investors, usually
institutions. Unlike public offerings, such
securities are not registered with the SEC.
Although certain of these securities may be
readily sold, for example under Rule 144A,
the sale of others may involve substantial
delays and additional costs.
Operating Policy. The Fund will not invest
more than 15% of its net assets in illiquid
securities.
Types of Management Practices
Cash Position. The Fund will hold a certain
portion of its assets in money market
securities, including repurchase
agreements, in the two highest rating
categories, maturing in one year or less.
For temporary, defensive purposes, the Fund
may invest without limitation in such
securities. This 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 market
volatility.
Borrowing Money and Transferring Assets.
The Fund can borrow money from banks as a
temporary measure for emergency purposes,
to facilitate redemption requests, or for
other purposes consistent with the fund's
investment objectives and program. Such
borrowings may be collateralized with fund
assets, subject to restrictions.
Fundamental Policy. Borrowings may not
exceed 33 1/3% of total Fund assets.
Operating Policies. The Fund may not
transfer as collateral any portfolio
securities except as necessary in
connection with permissible borrowings or
investments, and then such transfers may
not exceed 33 1/3% of the Fund's total
assets. The Fund may not purchase
additional securities when borrowings
exceed 5% of total assets.
Futures and Options. Futures are often used
to manage risk, because they enable the
investor to buy or sell an asset in the
future at an agreed upon price. Options
give the investor the right, but not the
obligation, to buy or sell an asset at a
predetermined price in the future. The Fund
may buy and sell futures contracts (and
options on such contracts) to manage its
exposure to changes in securities prices
and foreign currencies and as an efficient
means of adjusting its overall exposure to
certain markets. The Fund may purchase,
sell, or write call and put options on
securities, financial indices, and foreign
currencies.
Futures contracts and options may not
always be successful hedges; their prices
can be highly volatile; using them could
lower the Fund's total return; and the
potential loss from the use of futures can
exceed the Fund's initial investment in
such contracts.
Operating Policies. Futures: Initial margin
deposits and premiums on options used for
non-hedging purposes will not equal more
than 5% of the Fund's net asset value.
Options on securities: The total market
value of securities against which the fund
has written call or put options may not
exceed 25% of its total assets. The Fund
will not commit more than 5% of its total
assets to premiums when purchasing call or
put options.
Managing Foreign Currency Risk. Investors
in foreign securities may "hedge" their
exposure to potentially unfavorable
currency changes by purchasing a contract
to exchange one currency for another on
some future date at a specified exchange
rate. In certain circumstances, a "proxy
currency" may be substituted for the
currency in which the investment is
denominated, a strategy known as "proxy
hedging." Although foreign currency
transactions will be used primarily to
protect the Fund's foreign securities from
adverse currency movements relative to the
dollar, they involve the risk that
anticipated currency movements will not
occur and the Fund's total return could be
reduced.
Lending of Portfolio Securities. Like other
mutual funds, the Fund may lend securities
to broker-dealers, other institutions, or
other persons to earn additional income.
The principal risk is the potential
insolvency of the broker-dealer or other
borrower. In this event, the Fund could
experience delays in recovering its
securities and possibly capital losses.
Fundamental Policy. The value of loaned
securities may not exceed 33 1/3% of the
Fund's total assets.
Portfolio Transactions. The Fund will not
generally trade in securities for short-
term profits but, when circumstances
warrant, securities may be purchased and
sold without regard to the length of time
held. The Fund's portfolio turnover rates
for the years 1993, 1992, and 1992 were
11.8%, 12.1%, and 30.5%, respectively.
PERFORMANCE The Fund may advertise total return figures
INFORMATION on both a cumulative and compound average
annual basis and compare them to various
indices (e.g., the S&P 500), other mutual
funds or other performance measures. (The
total return of the Fund consists of the
change in its net asset value per share and
the net income it earns.) Cumulative total
return compares the amount invested at the
beginning of a period with the amount
redeemed at the end of the period, assuming
the reinvestment of all dividends and
capital gain distributions. The compound
average annual total return indicates a
yearly compound average of the Fund's
performance, derived from the cumulative
total return. The annual compound rate of
return for the Fund may vary from any
average. Further information about the
Fund's performance is contained in its
annual report which is available free of
charge.
CAPITAL STOCK The Fund is a Maryland corporation
organized in 1988 and registered with the
Securities and Exchange Commission under
the Investment Company Act of 1940 as a
diversified, open-end investment company,
commonly known as a "mutual fund." A
mutual fund, such as the Fund, enables
shareholders to: (1) obtain professional
management of investments, including T.
Rowe Price's proprietary research; (2)
diversify their portfolio to a greater
degree than would be generally possible if
they were investing as individuals and
thereby reduce, but not eliminate risks;
and (3) simplify the recordkeeping and
reduce transaction costs associated with
investments. The Fund is a series fund and
has the authority to issue other series in
addition to the one currently in existence.
Because the Fund has issued only one
series, however, the term "Fund" as used in
this prospectus refers to that series only.
The Fund has an Investment Advisory
Committee composed of the following
members: Preston G. Athey, Chairman, and
Gregory A. McCrickard. The Committee
Chairman has day-to-day responsibility for
managing the Fund and works with the
Committee in developing and executing the
Fund's investment program. Mr. Athey has
been Chairman of the Committee from 1988-
1990 and since 1992. He has been managing
investments since joining T. Rowe Price in
1978.
Shareholder Rights. The Fund issues one
class of capital stock, all shares of which
have equal rights with regard to voting,
redemptions, dividends, distributions, and
liquidations. Fractional shares have
voting rights and participate in any
distributions and dividends. Shareholders
have no preemptive or conversion rights;
nor do they have cumulative voting rights.
When the Fund's shares are issued, they are
fully paid and nonassessable. The Fund
does not routinely hold annual meetings of
shareholders. However, if shareholders
representing at least 10% of all votes of
the Fund entitled to be cast so desire,
they may call a special meeting of
shareholders of the Fund for the purpose of
voting on the question of the removal of
any director(s). The total authorized
capital stock of the Fund consists of
1,000,000,000 shares, each having a par
value of $.01. As of December 31, 1993,
there were approximately 37,900
shareholders in the Fund and 3,055,121
shareholders in the other 56 T. Rowe Price
Funds.
The Fund is the successor to a New York
limited partnership, PEMCO, which was
registered with the SEC as a mutual fund
and managed by T. Rowe Price. On June 30,
1988, following approval of its partners,
the partnership was reorganized as a
Maryland corporation.
________________________ ___________________________________________
FUND OPERATIONS AND The following sections apply to this Fund
SERVICES and all T. Rowe Price Equity Funds.
________________________ ___________________________________________
NAV, PRICING, AND Net Asset Value Per Share (NAV). The NAV
EFFECTIVE DATE per share, or share price, for the Fund is
normally determined as of 4:00 pm Eastern
Time (ET) each day the New York Stock
Exchange is open. The Fund's share price
is calculated by subtracting its
liabilities from its total assets and
dividing the result by the total number of
shares outstanding. Among other things,
the Fund's liabilities include accrued
expenses and dividends payable, and its
total assets include portfolio securities
valued at market as well as income accrued
but not yet received.
If your order is received Purchased shares are priced at that day's
in good order before 4:00 NAV if your request is received before 4:00
pm ET, you will receive pm ET in good order. (See Completing the
that day's NAV. New Account Form and Opening a New
Account.) If received later than 4:00 pm
ET, shares will be priced at the next
business day's NAV.
Redemptions are priced at that day's NAV
if your request is received before 4:00 pm
ET in good order at the transfer agent's
offices at T. Rowe Price Account Services,
P.O. Box 89000, Baltimore, MD 21289-0220.
If received after 4:00 pm ET, shares will
be priced at the next business day's NAV.
Also, we cannot accept requests which
specify a particular date for purchase or
redemption or which specify any special
conditions. If your redemption request
cannot be accepted, you will be notified
and given further instructions.
Exchanges are normally priced in the same
manner as purchases and redemptions.
However, if you are exchanging into a bond
or money fund and the release of your
exchange proceeds is delayed for the
allowable five business days (see Receiving
Your Proceeds), you will not begin to earn
dividends until the sixth business day
after the exchange.
The Fund reserves the right to change the
time at which purchases, redemptions, and
exchanges are priced if the New York Stock
Exchange closes at a time other than 4:00
pm ET or an emergency exists.
________________________ ___________________________________________
RECEIVING YOUR PROCEEDS Redemption proceeds are mailed to the
address, or sent by wire or ACH transfer to
the bank account, designated on your New
Account Form. They are generally sent the
next business day after your redemption
request is received in good order.
Proceeds sent by bank wire should be
credited to your bank account the next
business day and proceeds sent by ACH
transfer should be credited the second day
after the sale. In addition, under unusual
conditions, or when deemed to be in the
best interest of the Fund, redemption
proceeds may not be sent for up to five
business days after your request is
received to allow for the orderly
liquidation of securities. Requests by
mail for wire redemptions (unless
previously authorized) must have a
signature guarantee.
________________________ ___________________________________________
DIVIDENDS AND The Fund distributes all net investment
DISTRIBUTIONS income and capital gains to shareholders.
Dividends from net investment income and
distributions from capital gains, if any,
are normally declared in December and paid
in January. However, dividends from net
investment income for the Balanced, Growth
& Income, Equity Income, and Dividend
Growth Funds will be declared and paid
quarterly. Dividends and distributions
declared by the Fund will be reinvested
unless you choose an alternative payment
option on the New Account Form. Dividends
not reinvested are paid by check or
transmitted to your bank account via ACH.
If the U.S. Postal Service 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 then current
NAV and to reinvest all subsequent
distributions in shares of the Fund.
________________________ ___________________________________________
TAXES Dividends and Distributions. In January,
the Fund will mail you Form 1099-DIV
indicating the federal tax status of your
dividends and capital gain distributions.
Form 1099-DIV will be Generally, dividends and distributions are
mailed to you in January. taxable in the year they are paid.
However, any dividends and distributions
paid in January but declared during the
________
prior three months are taxable in the year
they are declared. Dividends and
distributions are taxable to you regardless
of whether they are taken in cash or
reinvested. Dividends and short-term
capital gain distributions are taxable as
ordinary income; long-term capital gain
distributions are taxable as long-term
capital gains. The capital gain holding
period is determined by the length of time
the Fund has held the securities, not the
length of time you have owned Fund shares.
Shares Sold. A redemption or exchange of
Fund shares is treated as a sale for tax
purposes which will result in a short or
long-term capital gain or loss, depending
on how long you have owned the shares. In
January, the Fund will mail you Form 1099-B
indicating the trade date and proceeds from
all sales and exchanges.
Undistributed Income and Gains. At the
time of purchase, the share price of the
Fund may reflect undistributed income,
capital gains or unrealized appreciation of
securities. Any income or capital gains
from these amounts which are later
distributed to you are fully taxable.
Foreign Transactions (All Funds other than
New America Growth Fund). Distributions
resulting from the sale of certain foreign
currencies and debt securities, to the
extent of foreign exchange gains, are taxed
as ordinary income or loss. If the Fund
pays nonrefundable taxes to foreign
governments during the year, the taxes will
reduce the Fund's dividends.
Corporations. All or part of the Fund's
dividends will be eligible for the 70%
deduction for dividends received by
corporations.
Tax-Qualified Retirement Plans. Tax-
qualified retirement plans generally will
not be subject to federal tax liability on
either distributions from the Fund or
redemption of shares of the Fund. Rather,
participants in such plans will be taxed
when they begin taking distributions from
the plans.
________________________ ___________________________________________
MANAGEMENT OF THE FUND Investment Manager. T. Rowe Price is
responsible for selection and management of
the Fund's portfolio investments. T. Rowe
Price serves as investment manager to a
variety of individual and institutional
investors, including limited and real
estate partnerships and other mutual funds.
Board of Directors/Trustees. The
management of the Fund's business and
affairs is the responsibility of the Fund's
Board of Directors/Trustees.
Portfolio Transactions. Decisions with
respect to the purchase and sale of the
Fund's portfolio securities are made by T.
Rowe Price. The Fund's Board of
Directors/Trustees has authorized T. Rowe
Price to utilize certain brokers indirectly
related to T. Rowe Price in the capacity of
broker in connection with the execution of
the Fund's portfolio transactions.
Investment Services. T. Rowe Price
Investment Services, Inc., a wholly-owned
subsidiary of T. Rowe Price, is the
distributor for this Fund as well as all
other T. Rowe Price Funds.
Transfer and Dividend Disbursing Agent,
Shareholder Servicing and Administrative.
TRP Services, a wholly-owned subsidiary of
T. Rowe Price, serves the Fund as transfer
and dividend disbursing agent. T. Rowe
Price Retirement Plan Services, Inc., a
wholly-owned subsidiary of T. Rowe Price,
performs subaccounting and recordkeeping
services for shareholder accounts in
certain retirement plans investing in the
Price Funds. T. Rowe Price calculates the
daily share price and maintains the
portfolio and general accounting records of
the Fund. The address for TRP Services and
T. Rowe Price Retirement Plan Services,
Inc. is 100 East Pratt Street, Baltimore,
Maryland 21202.
________________________ ___________________________________________
EXPENSES AND The Fund bears all expenses of its
MANAGEMENT FEE operations other than those incurred by T.
Rowe Price under its Investment Management
Agreement with T. Rowe Price. Fund
expenses include: the management fee;
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'/trustees'
fees and expenses.
Management Fee. The Fund pays T. Rowe
Price an investment management fee
consisting of an Individual Fund Fee and a
Group Fee. See Summary of Fund Fees and
Expenses for the Individual Fund Fee. The
Group Fee varies and is based on the
combined net assets of all mutual funds
sponsored and managed by T. Rowe Price and
Rowe Price-Fleming International, Inc.,
excluding T. Rowe Price Spectrum Fund,
Inc., and any institutional or private
label mutual funds, and distributed by T.
Rowe Price Investment Services, Inc.
The Fund pays, as its portion of the
Group Fee, an amount equal to the ratio of
its daily net assets to the daily net
assets of all the Price Funds. The table
below shows the annual Group Fee rate at
various asset levels of the combined Price
Funds:
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
0.330% Next $10 billion
0.320% Next $10 billion
0.310% Thereafter
Based on combined Price Funds' assets of
approximately $34.7 billion at December 31,
1993, the Group Fee was 0.35%.
________________________ ___________________________________________
SHAREHOLDER SERVICES The following is a brief summary of
services available to shareholders in the
T. Rowe Price Funds, some of which may be
restricted or unavailable to retirement
plan accounts. You must authorize most of
these services on a New Account or
Shareholder Services Form. Services may be
modified or withdrawn at any time without
notice. Please verify all transactions on
your confirmation statements promptly after
receiving them. Any discrepancies must be
reported to Shareholder Services
immediately.
Automatic Asset Builder. You can have us
move $50 or more on the same day each month
from your bank account or invest $50 or
more from your paycheck into any T. Rowe
Price Fund.
Investor Services Discount Brokerage Service. You can trade
1-800-638-5660 stocks, bonds, options, CDs, Treasury
1-410-547-2308 Bills, and precious metals at substantial
savings through our Discount Brokerage
Service. Call Investor Services for more
information.
Exchange Service. You can move money from
one account to an existing identically
registered account or open a new
identically registered account. Remember
that, for tax purposes, an exchange is
treated as a redemption and a new purchase.
Exchanges into a state tax-free fund are
limited to investors residing in states
where those funds are qualified for sale.
Some of the T. Rowe Price Funds may impose
a redemption fee of .50-2%, payable to such
Funds, on shares held for less than twelve
months, or in some Funds, six months.
Retirement Plans. For details on IRAs,
please call Investor Services at 1-800-638-
5660. For details on all other retirement
plans, please call our Trust Company at 1-
800-492-7670.
Shareholder Telephone Services. The following services
Services are explained fully in the Services Guide,
1-800-225-5132 which is mailed to new T. Rowe Price
1-410-625-6500 investors. If you don't have a copy,
please call Shareholder Services. (All
telephone calls to Shareholder Services and
Investor Services are recorded in order to
protect you, the Fund, and its agents.)
24-Hour Service. Tele*AccessR provides
information on yields, prices, latest
dividends, account balances, and last
transaction as well as the ability to
request prospectuses, account forms,
duplicate statements, and initiate
purchase, redemption and exchange orders
(if you have established Telephone
Services). Just call 1-800-638-2587 and
press the appropriate codes into your
touch-tone phone. PC*AccessR provides
the same information as Tele*Access, but
on a personal computer.
Electronic Transfers. We offer three
free methods for purchasing or redeeming
Fund shares in amounts of $100 to
$100,000 through ACH transfers between
your bank and Fund accounts:
-- By calling Shareholder Services
during business hours (Tele-
ConnectR);
-- By touch-tone phone any day,
any time (Tele*Access);
-- By personal computer any day,
any time (PC*Access).
If your bank checking and Fund account
are not identically registered, you will
need a signature guarantee to establish
this service.
Wire Transfers. Wire transfers can be
processed through bank wires (a $5 charge
applies to redemption amounts under
$5,000, and your bank may charge you for
receiving wires). While this is usually
the quickest transfer method, the Fund
reserves the right to temporarily suspend
wires under unusual circumstances.
________________________ ___________________________________________
CONDITIONS OF YOUR Account Balance. If your account drops
PURCHASE below $1,000 for three months or more, the
Fund has the right to close your account,
after giving 60 days' notice, unless you
make additional investments to bring your
account value to $1,000 or more.
Broker-Dealers. Purchases or redemptions
through broker-dealers, banks, and other
institutions may be subject to service fees
imposed by those entities. No such fees
are charged by T. Rowe Price Investment
Services or the Fund if shares are
purchased or redeemed directly from the
Fund.
Excessive Trading and Exchange Limitations.
To protect Fund shareholders against
disruptions in portfolio management which
might occur as a result of too frequent buy
and sell activity and to minimize Fund
expenses associated with such transaction
activity, the Fund prohibits excessive
trading in any account (or group of
accounts managed by the same person).
Within any 120 consecutive-day period,
investors may not exchange between Price
Funds more than twice or buy and sell the
Price Funds more than once, if the
transactions involve substantial assets or
a substantial portion of the assets in the
account or accounts. This policy is
applied on a multi-fund basis. Any
transactions above and beyond these
guidelines will be considered to be
excessive trading, and the investor may be
prohibited from making additional purchases
or exercising the exchange privilege.
This policy does not apply to exchanges
solely between, or purchases and sales
solely of, the Price Money Funds, nor does
it apply to simple redemptions from any
Fund.
Nonpayment. If your check, wire or ACH
transfer does not clear, or if payment is
not received for any telephone purchase,
the transaction will be cancelled and you
will be responsible for any loss the Fund
or Investment Services incurs. If you are
already a shareholder, the Fund can redeem
shares from any identically registered
account in this Fund or any other T. Rowe
Price Fund as reimbursement for any loss
incurred. You may be prohibited or
restricted from making future purchases in
any of the T. Rowe Price Funds.
U.S. Dollars. All purchases must be paid
for in U.S. dollars, and checks must be
drawn on U.S. banks.
Redemptions in Excess of $250,000.
Redemption proceeds are normally paid in
cash. However, if you redeem more than
$250,000, or 1% of the Fund's net assets,
in any 90-day period, the Fund may in its
discretion: (1) pay the difference between
the redemption amount and the lesser of
these two figures with securities of the
Fund or (2) delay the transmission of your
proceeds for up to five business days after
your request is received.
Signature Guarantees. A signature
guarantee is designed to protect you and
the Fund by verifying your signature. You
will need one to:
(1) Establish certain services after the
_____
account is opened.
(2) Redeem over $50,000 by written
request (unless you have authorized
Telephone Services).
(3) Redeem shares when proceeds are: (i)
being mailed to an address other
than the address of record, (ii)
made payable to other than the
registered owner(s), or (iii) being
sent to a bank account other than
the bank account listed on your fund
account.
(4) Transfer shares to another owner.
(5) Send us written instructions asking
us to wire redemption proceeds
(unless previously authorized).
(6) Establish Electronic Transfers when
your bank checking and fund account
are not identically registered.
These requirements may be waived or
modified in certain instances.
Acceptable guarantors are all eligible
guarantor institutions as defined by the
Securities Exchange Act of 1934 such as:
commercial banks which are FDIC members,
trust companies, firms which are members of
a domestic stock exchange, and foreign
branches of any of the above. We cannot
accept guarantees from institutions or
individuals who do not provide
reimbursement in the case of fraud, such as
notaries public.
Telephone Exchange and Redemption.
Telephone exchange and redemption are
established automatically when you sign the
New Account Form unless you check the box
which states that you do not want these
services. The Fund uses reasonable
procedures (including shareholder identity
verification) to confirm that instructions
given by telephone are genuine. If these
procedures are not followed, it is the
opinion of certain regulatory agencies that
the Fund may be liable for any losses that
may result from acting on the instructions
given. All conversations are recorded, and
a confirmation is sent within five business
days after the telephone transaction.
Ten-Day Hold. The mailing of proceeds for
redemption requests involving any shares
purchased by personal, corporate or
government check, or ACH transfer is
generally subject to a 10-day delay to
allow the check or transfer to clear. The
10-day clearing period does not affect the
trade date on which your purchase or
redemption order is priced, or any
dividends and capital gain distributions to
which you may be entitled through the date
of redemption. 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
made by wire, Automatic Asset Builder-
Paycheck, or cashier's, treasurer's, or
certified checks.
The Fund and its agents reserve the right
to: (1) reject any purchase or exchange,
cancel any purchase due to nonpayment, or
reject any exchange or redemption where the
Fund has not received payment; (2) waive or
lower the investment minimums; (3) accept
initial purchases by telephone or mailgram;
(4) waive the limit on subsequent purchases
by telephone; (5) reject any purchase or
exchange prior to receipt of the
confirmation statement; (6) redeem your
account (see Tax Identification Number);
(7) modify the conditions of purchase at
any time; and (8) reject any check not made
directly payable to the Fund or T. Rowe
Price (call Shareholder Services for more
information).
________________________ ___________________________________________
COMPLETING THE NEW Tax Identification Number. We must have
ACCOUNT FORM your correct social security or corporate
tax identification number and a signed New
Account Form or W-9 Form. Otherwise,
federal law requires the Fund to withhold a
percentage (currently 31%) of your
dividends, capital gain distributions, and
redemptions, and may subject you to an IRS
penalty. You also will be prohibited from
opening another account by exchange. If
this information is not received within 60
You must provide your tax days after your account is established,
ID number and sign the your account may be redeemed, priced at the
New Account Form. NAV on the date of redemption.
Unless you otherwise request, one
shareholder report will be mailed to
multiple account owners with the same tax
identification number and same zip code and
to those shareholders who have requested
that their accounts be combined with
someone else's for financial reporting.
Account Registration. If you own other T.
Rowe Price Funds, make certain the
registration (name and account type) is
identical to your other funds for easy
exchange. Remember to sign the form
exactly as the name appears in the
registration section.
Services. By signing up for services on
the New Account Form, rather than after the
account is opened, you will avoid having to
complete a separate form and obtain a
signature guarantee (see Conditions of Your
Purchase).
________________________ ___________________________________________
OPENING A NEW ACCOUNT Minimum initial investment: $2,500 ($1,000
for retirement
plans and
UGMA/UTMA and
IRA accounts;
$50 per month
for Automatic
Asset Builder
accounts--see
Shareholder
Services)
By Mail Send your New Account Form and
check to:
Checks payable to T. Rowe Regular Mail Mailgram,
Price Funds. Express,
Registered, or
Certified Mail
T. Rowe Price T. Rowe Price
Account Services Account Services
P.O. Box 17300 10090 Red Run
Baltimore, MD Boulevard
21298-9353 Owings Mills, MD
21117
___________________________________________
Investor Services By Wire Call Investor Services for an
1-800-638-5660 account number and use Wire Address
1-410-547-2308 below. Then, complete the New
Account Form and mail it to one of
the addresses above. (Not
applicable to retirement plans.)
Wire Address Morgan Guaranty
(to give to your Trust Company of
bank): New York
ABA #021000238
T. Rowe Price
(fund name)/
AC-00153938
Account name(s)
and account
number
Shareholder Services ___________________________________________
1-800-225-5132 By Exchange Call Shareholder Services. The
1-410-625-6500 new account will have the same
registration as the account
from which you are exchanging.
Services for the new account
may be carried over by
telephone request if
preauthorized on the existing
account. See Excessive Trading
and Exchange Limitations under
Conditions of Your Purchase.
___________________________________________
In Person Drop off your New Account Form
and obtain a receipt at a
T. Rowe Price Investor Center:
101 East T. Rowe Price
Lombard StreetFinancial Center
First Floor First Floor
Baltimore, MD 10090 Red Run
Boulevard
Owings Mills, MD
Farragut ARCO Tower
Square 31st Floor
First Floor 515 South
900 17th Flower Street
Street, NW Los Angeles,
Washington, CA
DC
________________________ ___________________________________________
PURCHASING ADDITIONAL Minimum: $100 ($50 for retirement plans)
SHARES
By Wire Call Shareholder Services or
use the Wire Address (see
Opening a New Account).
___________________________________________
By Mail Indicate your account number
and the Fund name on your
check. Mail it to us at the
Shareholder Services address below with the stub
1-800-225-5132 from a statement confirming a
1-410-625-6500 prior transaction or a note
stating that you want to
purchase shares in that Fund
and giving us the account
number.
T. Rowe Price Funds
Account Services
P.O. Box 89000
Baltimore, MD 21289-1500
___________________________________________
By ACH Use Tele*Access, PC*Access or
Transfer call Shareholder Services (if
you have established Telephone
Services) for ACH transfers.
___________________________________________
By Fill out the Automatic Asset
Automatic Builder section on the New
Asset Account or Shareholder Services
Builder Form.
___________________________________________
Minimum: $5,000
By Phone Call Shareholder Services.
________________________ ___________________________________________
EXCHANGING AND REDEEMING By Phone Call Shareholder Services. If
SHARES you find our phones busy during
unusually volatile markets,
please consider placing your
order by express mail,
mailgram, Tele*Access or
PC*Access if you have
authorized Telephone Services.
For exchange policy, see
Excessive Trading and Exchange
Limitations under Conditions of
Your Purchase.
Redemption proceeds can be
mailed, sent by electronic
transfer, or wired to your
bank. The Fund charges a $5.00
fee for wire redemptions under
$5,000, subject to change
without notice. Your bank may
also charge you for receiving
wires.
___________________________________________
Shareholder Services By Mail Indicate account name(s) and
1-800-225-5132 numbers, fund name(s), and
1-410-625-6500 exchange or redemption amount.
For exchanges, indicate the
accounts you are exchanging
from and to along with the
amount. We require the
signature of all owners exactly
as registered, and possibly a
signature guarantee (see
Signature Guarantees under
Conditions of Your Purchase).
Note: Distributions from
retirement accounts, including
T. Rowe Price Trust IRAs, must be in writing.
Company Please call Shareholder
1-800-492-7670 Services to obtain an IRA
1-410-625-6585 Distribution Request Form. For
employer-sponsored retirement
accounts, call T. Rowe Price
Trust Company or your plan
administrator for instructions.
Shareholders holding previously
issued certificates must
conduct transactions by mail.
If you lose a stock
certificate, you may incur an
expense to replace it. Call
Shareholder Services for
further information.
Mailing addresses:
Regular Mail Mailgram,
Express,
Registered, or
Certified Mail
Non-Retirement
and IRA
Accounts All Accounts
______________ _____________
T. Rowe Price T. Rowe Price
Account ServicesAccount
P.O. Box 89000 Services
Baltimore, MD 10090 Red Run
21289-0220 Boulevard
Owings Mills,
MD 21117
Employer-Sponsored
Retirement Accounts
______________________
T. Rowe Price Trust Company
P.O. Box 89000
Baltimore, MD 21289-0300
jal\servsect.equ
To Open an Account: Prospectus
Investor Services
1-800-638-5660 T. Rowe Price
547-2308 in Baltimore Small-Cap Value Fund
Yields & Prices:
Tele*AccessR May 1, 1994
24 hours, 7 days a week
1-800-638-2587
625-7676 in Baltimore
Existing Account:
Shareholder Services
1-800-225-5132
625-6500 in Baltimore
Investor Centers:
101 East Lombard Street
First Floor
Baltimore, Maryland
Farragut Square
First Floor
900 17th Street, NW
Washington, DC
T. Rowe Price Financial
Center
First Floor
10090 Red Run Boulevard
Owings Mills, Maryland
ARCO Tower
31st Floor
515 South Flower Street
Los Angeles, California
T. Rowe Price
Invest With ConfidenceR
PAGE 1
STATEMENT OF ADDITIONAL INFORMATION
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
(collectively the "Funds" and individually the "Fund")
This Statement of Additional Information is not a
prospectus but should be read in conjunction with the appropriate
Fund's prospectus dated May 1, 1994, which may be obtained from
T. Rowe Price Investment Services, Inc., 100 East Pratt Street,
Baltimore, Maryland 21202.
If you would like a prospectus for a Fund of which you are
not a shareholder, please call 1-800-638-5660. A prospectus with
more complete information, including management fees and expenses
will be sent to you. Please read it carefully.
The date of this Statement of Additional Information is May
1, 1994.
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TABLE OF CONTENTS
Page Page
Asset-Backed Securities. . . Lending of Portfolio
Capital Stock. . . . . . . . Securities. . . . . . . . .
Custodian. . . . . . . . . . Management of Fund . . . . .
Distributor for Fund . . . . Mortgage-Related
Dividends and Distributions. Securities. . . . . . . . .
Federal and State Net Asset Value Per Share. .
Registration of Shares. . . Options. . . . . . . . . . .
Foreign Currency Organization of the Fund . .
Transactions. . . . . . . . Portfolio Transactions . . .
Foreign Futures and Options. Pricing of Securities. . . .
Foreign Securities . . . . . Principal Holders of
Futures Contracts. . . . . . Securities. . . . . . . . .
Hybrid Instruments . . . . . Ratings of Corporate
Independent Accountants. . . Debt Securities . . . . . .
Illiquid or Restricted Repurchase Agreements. . . .
Securities. . . . . . . . . Risk Factors . . . . . . . .
Investment Management Tax Status . . . . . . . . .
Services. . . . . . . . . . Taxation of Foreign
Investment Objectives Shareholders. . . . . . . .
and Polices . . . . . . . . Warrants . . . . . . . . . .
Investment Performance . . . When-Issued Securities and Forward
Investment Program . . . . . Commitment Contracts. . . .
Investment Restrictions. . . Yield Information. . . . . .
Legal Counsel. . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of each
Fund's investment objectives and policies discussed in each
Fund's prospectus. The Funds will not make a material change in
their investment objectives without obtaining shareholder
approval. Unless otherwise specified, the investment programs
and restrictions of the Funds are not fundamental policies. Each
Fund's operating policies are subject to change by each Board of
Directors/Trustees without shareholder approval. However,
shareholders will be notified of a material change in an
operating policy. Each Fund's fundamental policies may not be
changed without the approval of at least a majority of the
outstanding shares of the Fund or, if it is less, 67% of the
shares represented at a meeting of shareholders at which the
holders of 50% or more of the shares are represented.
Throughout this Statement of Additional Information, "the
Fund" is intended to refer to each Fund listed on the cover page,
unless otherwise indicated.
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RISK FACTORS
General
Because of its investment policy, the Fund may or may not be
suitable or appropriate for all investors. The Fund is not a
money market fund and is not an appropriate investment for those
whose primary objective is principal stability. The Fund will
normally have substantially all (for the Balanced Fund 50-70%) of
its assets in equity securities (e.g., common stocks). This
portion of the Fund's assets will be subject to all of the risks
of investing in the stock market. There is risk in all
investment. The value of the portfolio securities of the Fund
will fluctuate based upon market conditions. Although the Fund
seeks to reduce risk by investing in a diversified portfolio,
such diversification does not eliminate all risk. There can, of
course, be no assurance that the Fund will achieve its investment
objective. Reference is also made to the sections entitled
"Types of Securities" and "Portfolio Management Practices" for
discussions of the risks associated with the investments and
practices described therein as they apply to the Fund.
After purchase by the Fund, a security may cease to be rated
or its rating may be reduced below the minimum required for
purchase by the Fund. Neither event will require a sale of such
security by the Fund. However, T. Rowe Price will consider such
event in its determination of whether the Fund should continue to
hold the security. To the extent that the ratings given by
Moody's or S&P may change as a result of changes in such
organizations or their rating systems, the Fund will attempt to
use comparable ratings as standards for investments in accordance
with the investment policies contained in the prospectus.
Balanced, Blue Chip Growth, Capital Appreciation, Dividend
Growth, Equity Income, Growth & Income, New Era, OTC, and Small-
Cap Value Funds
Debt Obligations
Although the Fund's assets are invested primarily in common
stocks, the Fund may invest in convertible securities, corporate
debt securities and preferred stocks which hold the prospect of
contributing to the achievement of the Fund's objectives. Yields
on short, intermediate, and long-term securities are dependent on
a variety of factors, including the general conditions of the
money and bond markets, the size of a particular offering, the
maturity of the obligation, and the credit quality and rating of
the issue. Debt securities with longer maturities tend to have
higher yields and are generally subject to potentially greater
capital appreciation and depreciation than obligations with
shorter maturities and lower yields. The market prices of debt
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securities usually vary, depending upon available yields. An
increase in interest rates will generally reduce the value of
portfolio investments, and a decline in interest rates will
generally increase the value of portfolio investments. The
ability of the Fund to achieve its investment objective is also
dependent on the continuing ability of the issuers of the debt
securities in which the Fund invests to meet their obligations
for the payment of interest and principal when due. The Fund's
investment program permits it to purchase below investment grade
securities. Since investors generally perceive that there are
greater risks associated with investment in lower quality
securities, the yields from such securities normally exceed those
obtainable from higher quality securities. However, the
principal value of lower-rated securities generally will
fluctuate more widely than higher quality securities. Lower
quality investments entail a higher risk of default--that is, the
nonpayment of interest and principal by the issuer than higher
quality investments. Although the Fund seeks to reduce risk by
portfolio diversification, credit analysis (considered by T. Rowe
Price to be among the most stringent in the investment management
industry), and attention to trends in the economy, industries and
financial markets, such efforts will not eliminate all risk.
There can, of course, be no assurance that the Fund will achieve
its investment objective.
Special Risks of High Yield Investing
The Fund may invest in low quality bonds commonly referred
to as "junk bonds." Junk bonds are regarded as predominantly
speculative with respect to the issuer's continuing ability to
meet principal and interest payments. Because investment in low
and lower-medium quality bonds involves greater investment risk,
to the extent the Fund invests in such bonds, achievement of its
investment objective will be more dependent on T. Rowe Price's
credit analysis than would be the case if the Fund was investing
in higher quality bonds. High yield bonds may be more
susceptible to real or perceived adverse economic conditions than
investment grade bonds. A projection of an economic downturn, or
higher interest rates, for example, could cause a decline in high
yield bond prices because the advent of such events could lessen
the ability of highly leverage issuers to make principal and
interest payments on their debt securities. In addition, the
secondary trading market for high yield bonds may be less liquid
than the market for higher grade bonds, which can adversely
affect the ability of a Fund to dispose of its portfolio
securities. Bonds for which there is only a "thin" market can be
more difficult to value inasmuch as objective pricing data may be
less available and judgment may play a greater role in the
valuation process.
All Funds, Except Equity Index Fund
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Foreign Securities
The Fund may invest in U.S. dollar-denominated and non U.S.
dollar-denominated securities of foreign issuers.
Because the Fund may invest in foreign securities,
investment in the Fund involves risks that are different in some
respects from an investment in a fund which invests only in
securities of U.S. domestic issuers. Foreign investments may be
affected favorably or unfavorably by changes in currency rates
and exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S.
company, and foreign companies may not be subject to accounting,
auditing, and financial reporting standards and requirements
comparable to those applicable to U.S. companies. There may be
less governmental supervision of securities markets, brokers and
issuers of securities. Securities of some foreign companies are
less liquid or more volatile than securities of U.S. companies,
and foreign brokerage commissions and custodian fees are
generally higher than in the United States. Settlement practices
may include delays and may differ from those customary in United
States markets. Investments in foreign securities may also be
subject to other risks different from those affecting U.S.
investments, including local political or economic developments,
expropriation or nationalization of assets, restrictions on
foreign investment and repatriation of capital, imposition of
withholding taxes on dividend or interest payments, currency
blockage (which would prevent cash from being brought back to the
United States), and difficulty in enforcing legal rights outside
the U.S.
INVESTMENT PROGRAM
Types of Securities
In addition to the investments described in the Fund's
prospectus, the Fund may invest in the following:
Illiquid or Restricted Securities
Restricted securities may be sold only in privately
negotiated transactions or in a public offering with respect to
which a registration statement is in effect under the Securities
Act of 1933 (the "1933 Act"). Where registration is required,
the Fund may be obligated to pay all or part of the registration
expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to
sell a security under an effective registration statement. If,
during such a period, adverse market conditions were to develop,
PAGE 6
the Fund might obtain a less favorable price than prevailed when
it decided to sell. Restricted securities will be priced at fair
value as determined in accordance with procedures prescribed by
the Fund's Board of Directors/Trustees. If through the
appreciation of illiquid securities or the depreciation of liquid
securities, the Fund should be in a position where more than 15%
of the value of its net assets are invested in illiquid assets,
including restricted securities, the Fund will take appropriate
steps to protect liquidity.
Notwithstanding the above, the Fund may purchase securities
which, while privately placed, are eligible for purchase and sale
under Rule 144A under the 1933 Act. This rule permits certain
qualified institutional buyers, such as the Fund, to trade in
privately placed securities even though such securities are not
registered under the 1933 Act. T. Rowe Price under the
supervision of the Fund's Board of Directors/Trustees, will
consider whether securities purchased under Rule 144A are
illiquid and thus subject to the Fund's restriction of investing
no more than 15% of its assets in illiquid securities. A
determination of whether a Rule 144A security is liquid or not is
a question of fact. In making this determination, T. Rowe Price
will consider the trading markets for the specific security
taking into account the unregistered nature of a Rule 144A
security. In addition, T. Rowe Price could consider the (1)
frequency of trades and quotes, (2) number of dealers and
potential purchases, (3) dealer undertakings to make a market,
and (4) the nature of the security and of marketplace trades
(e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer). The liquidity
of Rule 144A securities would be monitored, and if as a result of
changed conditions it is determined that a Rule 144A security is
no longer liquid, the Fund's holdings of illiquid securities
would be reviewed to determine what, if any, steps are required
to assure that the Fund does not invest more than 15% of its
assets in illiquid securities. Investing in Rule 144A securities
could have the effect of increasing the amount of the Fund's
assets invested in illiquid securities if qualified institutional
buyers are unwilling to purchase such securities.
There are, of course, other types of securities that are, or
may become available, which are similar to the foregoing and the
Fund may invest in these securities.
All Funds, Except Equity Index Fund
Hybrid Instruments
Hybrid Instruments have recently been developed and combine
the elements of futures contracts or options with those of debt,
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preferred equity or a depository instrument (hereinafter "Hybrid
Instruments"). Often these Hybrid Instruments are indexed to the
price of a commodity, particular currency, or a domestic or
foreign debt or equity securities index. Hybrid Instruments may
take a variety of forms, including, but not limited to, debt
instruments with interest or principal payments or redemption
terms determined by reference to the value of a currency or
commodity or securities index at a future point in time,
preferred stock with dividend rates determined by reference to
the value of a currency, or convertible securities with the
conversion terms related to a particular commodity.
The risks of investing in Hybrid Instruments reflect a
combination of the risks from investing in securities, options,
futures and currencies, including volatility and lack of
liquidity. Reference is made to the discussion of futures,
options, and forward contracts herein for a discussion of these
risks. Further, the prices of the Hybrid Instrument and the
related commodity or currency may not move in the same direction
or at the same time. Hybrid Instruments may bear interest or pay
preferred dividends at below market (or even relatively nominal)
rates. Alternatively, Hybrid Instruments may bear interest at
above market rates but bear an increased risk of principal loss
(or gain). In addition, because the purchase and sale of Hybrid
Instruments could take place in an over-the-counter market or in
a private transaction between the Fund and the seller of the
Hybrid Instrument, the creditworthiness of the contra party to
the transaction would be a risk factor which the Fund would have
to consider. Hybrid Instruments also may not be subject to
regulation of the Commodities Futures Trading Commission
("CFTC"), which generally regulates the trading of commodity
futures by U.S. persons, the SEC, which regulates the offer and
sale of securities by and to U.S. persons, or any other
governmental regulatory authority.
Capital Appreciation, Equity Income, New America Growth, New Era,
OTC, Science & Technology, and Small-Cap Value Funds
Warrants
The Fund may invest in warrants; however, in order to
comply with the securities law of a certain state, not more than
5% of its assets (at the time of purchase) will be invested in
warrants other than warrants acquired in units or attached to
other securities. Of such 5% not more than 2% of assets at the
time of purchase may be invested in warrants that are not listed
on the New York or American Stock Exchanges. Should the law of
this state change or should the Fund obtain a waiver of its
application, the Fund may invest in warrants to a greater extent
than 5% of its assets. Warrants are pure speculation in that
they have no voting rights, pay no dividends and have no rights
PAGE 8
with respect to the assets of the corporation issuing them.
Warrants basically are options to purchase equity securities at a
specific price valid for a specific period of time. They do not
represent ownership of the securities, but only the right to buy
them. Warrants differ from call options in that warrants are
issued by the issuer of the security which may be purchased on
their exercise, whereas call options may be written or issued by
anyone. The prices of warrants do not necessarily move parallel
to the prices of the underlying securities.
Balanced Fund
Fixed income securities in which the Fund may invest
include, but are not limited to, those described below.
U.S. Government Obligations. Bills, notes, bonds and other
debt securities issued by the U.S. Treasury. These are direct
obligations of the U.S. Government and differ mainly in the
length of their maturities.
U.S. Government Agency Securities. Issued or guaranteed by
U.S. Government sponsored enterprises and federal agencies.
These include securities issued by the Federal National Mortgage
Association, Government National Mortgage Association, Federal
Home Loan Bank, Federal Land Banks, Farmers Home Administration,
Banks for Cooperatives, Federal Intermediate Credit Banks,
Federal Financing Bank, Farm Credit Banks, the Small Business
Association, and the Tennessee Valley Authority. Some of these
securities are supported by the full faith and credit of the U.S.
Treasury; and the remainder are supported only by the credit of
the instrumentality, which may or may not include the right of
the issuer to borrow from the Treasury.
Bank Obligations. Certificates of deposit, bankers'
acceptances, and other short-term debt obligations. Certificates
of deposit are short-term obligations of commercial banks. A
bankers' acceptance is a time draft drawn on a commercial bank by
a borrower, usually in connection with international commercial
transactions. Certificates of deposit may have fixed or variable
rates. The Fund may invest in U.S. banks, foreign branches of
U.S. banks, U.S. branches of foreign banks, and foreign branches
of foreign banks.
Short-Term Corporate Debt Securities. Outstanding
nonconvertible corporate debt securities (e.g., bonds and
debentures) which have one year or less remaining to maturity.
Corporate notes may have fixed, variable, or floating rates.
Commercial Paper. Short-term promissory notes issued by
corporations primarily to finance short-term credit needs.
Certain notes may have floating or variable rates.
PAGE 9
Foreign Government Securities. Issued or guaranteed by a
foreign government, province, instrumentality, political
subdivision or similar unit thereof.
Savings and Loan Obligations. Negotiable certificates of
deposit and other short-term debt obligations of savings and loan
associations.
Supranational Agencies. The Fund may also invest in the
securities of certain supranational entities, such as the
International Development Bank.
When-Issued Securities and Forward Commitment Contracts
The Fund may purchase securities on a "when-issued" or
delayed delivery basis ("When-Issueds") and may purchase
securities on a forward commitment basis ("Forwards"). The Fund
may invest without limitation in When-Issueds and Forwards. The
price of such securities, which may be expressed in yield terms,
is fixed at the time the commitment to purchase is made, but
delivery and payment take place at a later date. Normally, the
settlement date occurs within 90 days of the purchase for When-
Issueds, but may be substantially longer for Forwards. During
the period between purchase and settlement, no payment is made by
the Fund to the issuer and no interest accrues to the Fund. The
purchase of these securities will result in a loss if their value
declines prior to the settlement date. This could occur, for
example, if interest rates increase prior to settlement. The
longer the period between purchase and settlement, the greater
the risks are. At the time the Fund makes the commitment to
purchase these securities, it will record the transaction and
reflect the value of the security in determining its net asset
value. The Fund will cover these securities by maintaining cash
and/or liquid, high-grade debt securities with its custodian bank
equal in value to commitments for them during the time between
the purchase and the settlement. Therefore, the longer this
period, the longer the period during which alternative investment
options are not available to the Fund (to the extent of the
securities used for cover). Such securities either will mature
or, if necessary, be sold on or before the settlement date.
To the extent the Fund remains fully or almost fully
invested (in securities with a remaining maturity of more than
one year) at the same time it purchases these securities, there
will be greater fluctuations in the Fund's net asset value than
if the Fund did not purchase them.
Mortgage-Related Securities
PAGE 10
Mortgage-Backed Securities. Mortgage-backed securities are
securities representing an interest in a pool of mortgages. The
mortgages may be of a variety of types, including adjustable
rate, conventional 30-year fixed rate, graduated payment, and 15-
year. Principal and interest payments made on the mortgages in
the underlying mortgage pool are passed through to the Fund. This
is in contrast to traditional bonds where principal is normally
paid back at maturity in a lump sum. Unscheduled prepayments of
principal shorten the securities' weighted average life and may
lower their total return. (When a mortgage in the underlying
mortgage pool is prepaid, an unscheduled principal prepayment is
passed through to the Fund. This principal is returned to the
Fund at par. As 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.
Stripped Agency Mortgage-Backed Securities. The Fund may
invest up to 10% of its total assets in stripped mortgage
securities.
Stripped Agency Mortgage-Backed securities representing
interests in a pool of mortgages, the cash flow of which has been
separated into its interest and principal components. "IOs"
(interest only securities) receive the interest portion of the
cash flow while "POs" (principal only securities) receive the
principal portion. Stripped Agency Mortgage-Backed Securities
may be issued by U.S. Government Agencies or by private issuers
similar to those described below with respect to CMOs and
privately-issued mortgage-backed certificates. As interest rates
rise and fall, the value of IOs tends to move in the same
direction as interest rates. The value of the other
mortgage-backed securities described herein, like other debt
instruments, will tend to move in the opposite direction compared
to interest rates. Under the Internal Revenue Code of 1986, as
amended (the "Code"), POs may generate taxable income from the
current accrual of original issue discount, without a
corresponding distribution of cash to the Fund.
The cash flows and yields on IO and PO classes are extremely
sensitive to the rate of principal payments (including
prepayments) on the related underlying mortgage assets. For
example, a rapid or slow rate of principal payments may have a
material adverse effect on the prices of IOs or POs,
respectively. If the underlying mortgage assets experience
greater than anticipated prepayments of principal, an investor
PAGE 11
may fail to recoup fully its initial investment in an IO class of
a stripped mortgage-backed security, even if the IO class is
rated AAA or Aaa or is derived from a full faith and credit
obligation. Conversely, if the underlying mortgage assets
experience slower than anticipated prepayments of principal, the
price on a PO class will be affected more severely than would be
the case with a traditional mortgage-backed security.
The staff of the Securities and Exchange Commission has
advised the Fund that it believes the Fund should treat IOs and
POs, other than government-issued IOs or POs backed by fixed rate
mortgages, as illiquid securities and, accordingly, limit its
investments in such securities, together with all other illiquid
securities, to 15% of the Fund's net assets. Under the Staff's
position, the determination of whether a particular
government-issued IO and PO backed by fixed rate mortgages may be
made on a case by case basis under guidelines and standards
established by the Fund's Board of Directors/Trustees. The
Fund's Board of Directors/Trustees has delegated to T. Rowe Price
the authority to determine the liquidity of these investments
based on the following guidelines: the type of issuer; type of
collateral, including age and prepayment characteristics; rate of
interest on coupon relative to current market rates and the
effect of the rate on the potential for prepayments; complexity
of the issue's structure, including the number of tranches; size
of the issue and the number of dealers who make a market in the
IO or PO. The Fund will treat non-government-issued IOs and POs
not backed by fixed or adjustable rate mortgages as illiquid
unless and until the Securities and Exchange Commission modifies
its position.
Collateralized Mortgage Obligations (CMOs)
CMOs are bonds that are collateralized by whole loan
mortgages or mortgage pass-through securities. The bonds issued
in a CMO deal are divided into groups, and each group of bonds is
referred to as a "tranche." Under the traditional CMO structure,
the cash flows generated by the mortgages or mortgage pass-
through securities in the collateral pool are used to first pay
interest and then pay principal to the CMO bondholders. The
bonds issued under a CMO structure are retired sequentially as
opposed to the pro rata return of principal found in traditional
pass-through obligations. Subject to the various provisions of
individual CMO issues, the cash flow generated by the underlying
collateral (to the extent it exceeds the amount required to pay
the stated interest) is used to retire the bonds. Under the CMO
structure, the repayment of principal among the different
tranches is prioritized in accordance with the terms of the
particular CMO issuance. The "fastest-pay" tranche of bonds, as
specified in the prospectus for the issuance, would initially
receive all principal payments. When that tranche of bonds is
PAGE 12
retired, the next tranche, or tranches, in the sequence, as
specified in the prospectus, receive all of the principal
payments until they are retired. The sequential retirement of
bond groups continues until the last tranche, or group of bonds,
is retired. Accordingly, the CMO structure allows the issuer to
use cash flows of long maturity, monthly-pay collateral to
formulate securities with short, intermediate and long final
maturities and expected average lives.
In recent years, new types of CMO structures have evolved.
These include floating rate CMOs, planned amortization classes,
accrual bonds and CMO residuals. These newer structures affect
the amount and timing of principal and interest received by each
tranche from the underlying collateral. Under certain of these
new structures, given classes of CMOs have priority over others
with respect to the receipt of prepayments on the mortgages.
Therefore, depending on the type of CMOs in which the Fund
invests, the investment may be subject to a greater or lesser
risk of prepayment than other types of mortgage-related
securities.
The primary risk of any mortgage security is the uncertainty
of the timing of cash flows. For CMOs, the primary risk results
from the rate of prepayments on the underlying mortgages serving
as collateral. An increase or decrease in prepayment rates
(resulting from a decrease or increase in mortgage interest
rates) will affect the yield, average life and price of CMOs.
The prices of certain CMOs, depending on their structure and the
rate of prepayments, can be volatile. Some CMOs may also not be
as liquid as other securities.
Asset-Backed Securities
The credit quality of most asset-backed securities depends
primarily on the credit quality of the assets underlying such
securities, how well the entity issuing the security is insulated
from the credit risk of the originator or any other affiliated
entities and the amount and quality of any credit support
provided to the securities. The rate of principal payment on
asset-backed securities generally depends on the rate of
principal payments received on the underlying assets which in
turn may be affected by a variety of economic and other factors.
As a result, the yield on any asset-backed security is difficult
to predict with precision and actual yield to maturity may be
more or less than the anticipated yield to maturity. Asset-
backed securities may be classified as pass-through certificates
or collateralized obligations.
Pass-through certificates are asset-backed securities which
represent an undivided fractional ownership interest in an
underlying pool of assets. Pass-through certificates usually
PAGE 13
provide for payments of principal and interest received to be
passed through to their holders, usually after deduction for
certain costs and expenses incurred in administering the pool.
Because pass-through certificates represent an ownership interest
in the underlying assets, the holders thereof bear directly the
risk of any defaults by the obligors on the underlying assets not
covered by any credit support. See "Types of Credit Support".
Asset-backed securities issued in the form of debt
instruments, also known as collateralized obligations, are
generally issued as the debt of a special purpose entity
organized solely for the purpose of owning such assets and
issuing such debt. Such assets are most often trade, credit card
or automobile receivables. The assets collateralizing such
asset-backed securities are pledged to a trustee or custodian for
the benefit of the holders thereof. Such issuers generally hold
no assets other than those underlying the asset-backed securities
and any credit support provided. As a result, although payments
on such asset-backed securities are obligations of the issuers,
in the event of defaults on the underlying assets not covered by
any credit support (see "Types of Credit Support"), the issuing
entities are unlikely to have sufficient assets to satisfy their
obligations on the related asset-backed securities.
Methods of Allocating Cash Flows. While many asset-backed
securities are issued with only one class of security, many
asset-backed securities are issued in more than one class, each
with different payment terms. Multiple class asset-backed
securities are issued for two main reasons. First, multiple
classes may be used as a method of providing credit support.
This is accomplished typically through creation of one or more
classes whose right to payments on the asset-backed security is
made subordinate to the right to such payments of the remaining
class or classes. See "Types of Credit Support". Second,
multiple classes may permit the issuance of securities with
payment terms, interest rates or other characteristics differing
both from those of each other and from those of the underlying
assets. Examples include so-called "strips" (asset-backed
securities entitling the holder to disproportionate interests
with respect to the allocation of interest and principal of the
assets backing the security), and securities with class or
classes having characteristics which mimic the characteristics of
non-asset-backed securities, such as floating interest rates
(i.e., interest rates which adjust as a specified benchmark
changes) or scheduled amortization of principal.
Asset-backed securities in which the payment streams on the
underlying assets are allocated in a manner different than those
described above may be issued in the future. The Fund may invest
in such asset-backed securities if such investment is otherwise
PAGE 14
consistent with its investment objectives and policies and with
the investment restrictions of the Fund.
Types of Credit Support. Asset-backed securities are often
backed by a pool of assets representing the obligations of a
number of different parties. To lessen the effect of failures by
obligors on underlying assets to make payments, such securities
may contain elements of credit support. Such credit support
falls into two classes: liquidity protection and protection
against ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances,
generally by the entity administering the pool of assets, to
ensure that scheduled payments on the underlying pool are made in
a timely fashion. Protection against ultimate default ensures
ultimate payment of the obligations on at least a portion of the
assets in the pool. Such protection may be provided through
guarantees, insurance policies or letters of credit obtained from
third parties, through various means of structuring the
transaction or through a combination of such approaches.
Examples of asset-backed securities with credit support arising
out of the structure of the transaction include "senior-
subordinated securities" (multiple class asset-backed securities
with certain classes subordinate to other classes as to the
payment of principal thereon, with the result that defaults on
the underlying assets are borne first by the holders of the
subordinated class) and asset-backed securities that have
"reserve funds" (where cash or investments, sometimes funded from
a portion of the initial payments on the underlying assets, are
held in reserve against future losses) or that have been "over
collateralized" (where the scheduled payments on, or the
principal amount of, the underlying assets substantially exceeds
that required to make payment of the asset-backed securities and
pay any servicing or other fees). The degree of credit support
provided on each issue is based generally on historical
information respecting the level of credit risk associated with
such payments. Delinquency or loss in excess of that anticipated
could adversely affect the return on an investment in an asset-
backed security.
Automobile Receivable Securities. The Fund may invest in
Asset Backed Securities which are backed by receivables from
motor vehicle installment sales contracts or installment loans
secured by motor vehicles ("Automobile Receivable Securities").
Since installment sales contracts for motor vehicles or
installment loans related thereto ("Automobile Contracts")
typically have shorter durations and lower incidences of
prepayment, Automobile Receivable Securities generally will
exhibit a shorter average life and are less susceptible to
prepayment risk.
PAGE 15
Most entities that issue Automobile Receivable Securities
create an enforceable interest in their respective Automobile
Contracts only by filing a financing statement and by having the
servicer of the Automobile Contracts, which is usually the
originator of the Automobile Contracts, take custody thereof. In
such circumstances, if the servicer of the Automobile Contracts
were to sell the same Automobile Contracts to another party, in
violation of its obligation not to do so, there is a risk that
such party could acquire an interest in the Automobile Contracts
superior to that of the holders of Automobile Receivable
Securities. Also although most Automobile Contracts grant a
security interest in the motor vehicle being financed, in most
states the security interest in a motor vehicle must be noted on
the certificate of title to create an enforceable security
interest against competing claims of other parties. Due to the
large number of vehicles involved, however, the certificate of
title to each vehicle financed, pursuant to the Automobile
Contracts underlying the Automobile Receivable Security, usually
is not amended to reflect the assignment of the seller's security
interest for the benefit of the holders of the Automobile
Receivable Securities. Therefore, there is the possibility that
recoveries on repossessed collateral may not, in some cases, be
available to support payments on the securities. In addition,
various state and federal securities laws give the motor vehicle
owner the right to assert against the holder of the owner's
Automobile Contract certain defenses such owner would have
against the seller of the motor vehicle. The assertion of such
defenses could reduce payments on the Automobile Receivable
Securities.
Credit Card Receivable Securities. The Fund may invest in
Asset Backed Securities backed by receivables from revolving
credit card agreements ("Credit Card Receivable Securities").
Credit balances on revolving credit card agreements ("Accounts")
are generally paid down more rapidly than are Automobile
Contracts. Most of the Credit Card Receivable Securities issued
publicly to date have been Pass-Through Certificates. In order
to lengthen the maturity of Credit Card Receivable Securities,
most such securities provide for a fixed period during which only
interest payments on the underlying Accounts are passed through
to the security holder and principal payments received on such
Accounts are used to fund the transfer to the pool of assets
supporting the related Credit Card Receivable Securities of
additional credit card charges made on an Account. The initial
fixed period usually may be shortened upon the occurrence of
specified events which signal a potential deterioration in the
quality of the assets backing the security, such as the
imposition of a cap on interest rates. The ability of the issuer
to extend the life of an issue of Credit Card Receivable
Securities thus depends upon the continued generation of
additional principal amounts in the underlying accounts during
PAGE 16
the initial period and the non-occurrence of specified events.
An acceleration in cardholders' payment rates or any other event
which shortens the period during which additional credit card
charges on an Account may be transferred to the pool of assets
supporting the related Credit Card Receivable Security could
shorten the weighted average life and yield of the Credit Card
Receivable Security.
Credit cardholders are entitled to the protection of a
number of state and federal consumer credit laws, many of which
give such holder the right to set off certain amounts against
balances owed on the credit card, thereby reducing amounts paid
on Accounts. In addition, unlike most other Asset Backed
Securities, Accounts are unsecured obligations of the cardholder.
Other Assets. T. Rowe Price anticipates that Asset Backed
Securities backed by assets other than those described above will
be issued in the future. The Fund may invest in such securities
in the future if such investment is otherwise consistent with its
investment objective and policies.
All Funds
PORTFOLIO MANAGEMENT PRACTICES
Lending of Portfolio Securities
For the purpose of realizing additional income, the Fund may
make secured loans of portfolio securities amounting to not more
than 33 1/3% of its total assets. This policy is a fundamental
policy. Securities loans are made to broker-dealers or
institutional investors or other persons, pursuant to agreements
requiring that the loans be continuously secured by collateral at
least equal at all times to the value of the securities lent
marked to market on a daily basis. The collateral received will
consist of cash, U.S. government securities, letters of credit or
such other collateral as may be permitted under its investment
program. While the securities are being lent, the Fund will
continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. The
Fund has a right to call each loan and obtain the securities on
five business days' notice or, in connection with securities
trading on foreign markets, within such longer period of time
which coincides with the normal settlement period for purchases
and sales of such securities in such foreign markets. The Fund
will not have the right to vote securities while they are being
lent, but it will call a loan in anticipation of any important
vote. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in
receiving additional collateral or in the recovery of the
PAGE 17
securities or possible loss of rights in the collateral should
the borrower fail financially. Loans will only be made to firms
deemed by T. Rowe Price to be of good standing and will not be
made unless, in the judgment of T. Rowe Price, the consideration
to be earned from such loans would justify the risk.
Other Lending/Borrowing
Subject to approval by the Securities and Exchange
Commission and certain state regulatory agencies, the Fund may
make loans to, or borrow funds from, other mutual funds sponsored
or advised by T. Rowe Price or Price-Fleming (collectively,
"Price Funds"). The Fund has no current intention of engaging in
these practices at this time.
Repurchase Agreements
The Fund may enter into a repurchase agreement through which
an investor (such as the Fund) purchases a security (known as the
"underlying security") from a well-established securities dealer
or a bank that is a member of the Federal Reserve System. Any
such dealer or bank will be on T. Rowe Price's approved list and
have a credit rating with respect to its short-term debt of at
least A1 by Standard & Poor's Corporation, P1 by Moody's
Investors Service, Inc., or the equivalent rating by T. Rowe
Price. At that time, the bank or securities dealer agrees to
repurchase the underlying security at the same price, plus
specified interest. Repurchase agreements are generally for a
short period of time, often less than a week. Repurchase
agreements which do not provide for payment within seven days
will be treated as illiquid securities. The Fund will only enter
into repurchase agreements where (i) the underlying securities
are of the type (excluding maturity limitations) which the Fund's
investment guidelines would allow it to purchase directly, (ii)
the market value of the underlying security, including interest
accrued, will be at all times equal to or exceed the value of the
repurchase agreement, and (iii) payment for the underlying
security is made only upon physical delivery or evidence of book-
entry transfer to the account of the custodian or a bank acting
as agent. In the event of a bankruptcy or other default of a
seller of a repurchase agreement, the Fund could experience both
delays in liquidating the underlying security and losses,
including: (a) possible decline in the value of the underlying
security during the period while the Fund seeks to enforce its
rights thereto; (b) possible subnormal levels of income and lack
of access to income during this period; and (c) expenses of
enforcing its rights.
All Funds, Except Equity Index Fund
Options
PAGE 18
Writing Covered Call Options
The Fund may write (sell) American or European style
"covered" call options and purchase options to close out options
previously written by a Fund. In writing covered call options,
the Fund expects to generate additional premium income which
should serve to enhance the Fund's total return and reduce the
effect of any price decline of the security or currency involved
in the option. Covered call options will generally be written on
securities or currencies which, in T. Rowe Price's opinion, are
not expected to have any major price increases or moves in the
near future but which, over the long term, are deemed to be
attractive investments for the Fund.
A call option gives the holder (buyer) the "right to
purchase" a security or currency at a specified price (the
exercise price) at expiration of the option (European style) or
at any time until a certain date (the expiration date) (American
style). So long as the obligation of the writer of a call option
continues, he may be assigned an exercise notice by the broker-
dealer through whom such option was sold, requiring him to
deliver the underlying security or currency against payment of
the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the
writer effects a closing purchase transaction by repurchasing an
option identical to that previously sold. To secure his
obligation to deliver the underlying security or currency in the
case of a call option, a writer is required to deposit in escrow
the underlying security or currency or other assets in accordance
with the rules of a clearing corporation.
The Fund will write only covered call options. This means
that the Fund will own the security or currency subject to the
option or an option to purchase the same underlying security or
currency, having an exercise price equal to or less than the
exercise price of the "covered" option, or will establish and
maintain with its custodian for the term of the option, an
account consisting of cash, U.S. government securities or other
liquid high-grade debt obligations having a value equal to the
fluctuating market value of the optioned securities or
currencies.
Portfolio securities or currencies on which call options may
be written will be purchased solely on the basis of investment
considerations consistent with the Fund's investment objective.
The writing of covered call options is a conservative investment
technique believed to involve relatively little risk (in contrast
to the writing of naked or uncovered options, which the Fund will
not do), but capable of enhancing the Fund's total return. When
writing a covered call option, a Fund, in return for the premium,
gives up the opportunity for profit from a price increase in the
PAGE 19
underlying security or currency above the exercise price, but
conversely retains the risk of loss should the price of the
security or currency decline. Unlike one who owns securities or
currencies not subject to an option, the Fund has no control over
when it may be required to sell the underlying securities or
currencies, since it may be assigned an exercise notice at any
time prior to the expiration of its obligation as a writer. If a
call option which the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain
may be offset by a decline in the market value of the underlying
security or currency during the option period. If the call
option is exercised, the Fund will realize a gain or loss from
the sale of the underlying security or currency. The Fund does
not consider a security or currency covered by a call to be
"pledged" as that term is used in the Fund's policy which limits
the pledging or mortgaging of its assets.
The premium received is the market value of an option. The
premium the Fund will receive from writing a call option will
reflect, among other things, the current market price of the
underlying security or currency, the relationship of the exercise
price to such market price, the historical price volatility of
the underlying security or currency, and the length of the option
period. Once the decision to write a call option has been made,
T. Rowe Price, in determining whether a particular call option
should be written on a particular security or currency, will
consider the reasonableness of the anticipated premium and the
likelihood that a liquid secondary market will exist for those
options. The premium received by the Fund for writing covered
call options will be recorded as a liability of the Fund. This
liability will be adjusted daily to the option's current market
value, which will be the latest sale price at the time at which
the net asset value per share of the Fund is computed (close of
the New York Stock Exchange), or, in the absence of such sale,
the latest asked price. The option will be terminated upon
expiration of the option, the purchase of an identical option in
a closing transaction, or delivery of the underlying security or
currency upon the exercise of the option.
Closing transactions will be effected in order to realize a
profit on an outstanding call option, to prevent an underlying
security or currency from being called, or, to permit the sale of
the underlying security or currency. Furthermore, effecting a
closing transaction will permit the Fund to write another call
option on the underlying security or currency with either a
different exercise price or expiration date or both. If the Fund
desires to sell a particular security or currency from its
portfolio on which it has written a call option, or purchased a
put option, it will seek to effect a closing transaction prior
to, or concurrently with, the sale of the security or currency.
There is, of course, no assurance that the Fund will be able to
PAGE 20
effect such closing transactions at favorable prices. If the
Fund cannot enter into such a transaction, it may be required to
hold a security or currency that it might otherwise have sold.
When the Fund writes a covered call option, it runs the risk of
not being able to participate in the appreciation of the
underlying securities or currencies above the exercise price, as
well as the risk of being required to hold on to securities or
currencies that are depreciating in value. This could result in
higher transaction costs. The Fund will pay transaction costs in
connection with the writing of options to close out previously
written options. Such transaction costs are normally higher than
those applicable to purchases and sales of portfolio securities.
Call options written by the Fund will normally have
expiration dates of less than nine months from the date written.
The exercise price of the options may be below, equal to, or
above the current market values of the underlying securities or
currencies at the time the options are written. From time to
time, the Fund may purchase an underlying security or currency
for delivery in accordance with an exercise notice of a call
option assigned to it, rather than delivering such security or
currency from its portfolio. In such cases, additional costs may
be incurred.
The Fund will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or
more than the premium received from the writing of the option.
Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying
security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by
appreciation of the underlying security or currency owned by the
Fund.
In order to comply with the requirements of several states,
the Fund will not write a covered call option if, as a result,
the aggregate market value of all portfolio securities or
currencies covering call or put options exceeds 25% of the market
value of the Fund's net assets. Should these state laws change
or should the Fund obtain a waiver of its application, the Fund
reserves the right to increase this percentage. In calculating
the 25% limit, the Fund will offset, against the value of assets
covering written calls and puts, the value of purchased calls and
puts on identical securities or currencies with identical
maturity dates.
Writing Covered Put Options
The Fund may write American or European style covered put
options and purchase options to close out options previously
written by the Fund. A put option gives the purchaser of the
PAGE 21
option the right to sell, and the writer (seller) has the
obligation to buy, the underlying security or currency at the
exercise price during the option period (American style) or at
the expiration of the option (European style). So long as the
obligation of the writer continues, he may be assigned an
exercise notice by the broker-dealer through whom such option was
sold, requiring him to make payment of the exercise price against
delivery of the underlying security or currency. The operation
of put options in other respects, including their related risks
and rewards, is substantially identical to that of call options.
The Fund would write put options only on a covered basis,
which means that the Fund would maintain in a segregated account
cash, U.S. government securities or other liquid high-grade debt
obligations in an amount not less than the exercise price or the
Fund will own an option to sell the underlying security or
currency subject to the option having an exercise price equal to
or greater than the exercise price of the "covered" option at all
times while the put option is outstanding. (The rules of a
clearing corporation currently require that such assets be
deposited in escrow to secure payment of the exercise price.)
The Fund would generally write covered put options in
circumstances where T. Rowe Price wishes to purchase the
underlying security or currency for the Fund's portfolio at a
price lower than the current market price of the security or
currency. In such event the Fund would write a put option at an
exercise price which, reduced by the premium received on the
option, reflects the lower price it is willing to pay. Since the
Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this
technique could be used to enhance current return during periods
of market uncertainty. The risk in such a transaction would be
that the market price of the underlying security or currency
would decline below the exercise price less the premiums
received. Such a decline could be substantial and result in a
significant loss to the Fund. In addition, the Fund, because it
does not own the specific securities or currencies which it may
be required to purchase in exercise of the put, cannot benefit
from appreciation, if any, with respect to such specific
securities or currencies. In order to comply with the
requirements of several states, the Fund will not write a covered
put option if, as a result, the aggregate market value of all
portfolio securities or currencies covering put or call options
exceeds 25% of the market value of the Fund's net assets. Should
these state laws change or should the Fund obtain a waiver of its
application, the Fund reserves the right to increase this
percentage. In calculating the 25% limit, the Fund will offset,
against the value of assets covering written puts and calls, the
value of purchased puts and calls on identical securities or
currencies with identical maturity dates.
PAGE 22
Purchasing Put Options
The Fund may purchase American or European style put
options. As the holder of a put option, the Fund has the right
to sell the underlying security or currency at the exercise price
at any time during the option period (American style) or at the
expiration of the option (European style). The Fund may enter
into closing sale transactions with respect to such options,
exercise them or permit them to expire. The Fund may purchase
put options for defensive purposes in order to protect against an
anticipated decline in the value of its securities or currencies.
An example of such use of put options is provided below.
The Fund may purchase a put option on an underlying security
or currency (a "protective put") owned by the Fund as a defensive
technique in order to protect against an anticipated decline in
the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as
the holder of the put option, is able to sell the underlying
security or currency at the put exercise price regardless of any
decline in the underlying security's market price or currency's
exchange value. For example, a put option may be purchased in
order to protect unrealized appreciation of a security or
currency where T. Rowe Price deems it desirable to continue to
hold the security or currency because of tax considerations. The
premium paid for the put option and any transaction costs would
reduce any capital gain otherwise available for distribution when
the security or currency is eventually sold.
The Fund may also purchase put options at a time when the
Fund does not own the underlying security or currency. By
purchasing put options on a security or currency it does not own,
the Fund seeks to benefit from a decline in the market price of
the underlying security or currency. If the put option is not
sold when it has remaining value, and if the market price of the
underlying security or currency remains equal to or greater than
the exercise price during the life of the put option, the Fund
will lose its entire investment in the put option. In order for
the purchase of a put option to be profitable, the market price
of the underlying security or currency must decline sufficiently
below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale
transaction.
To the extent required by the laws of certain states, the
Fund may not be permitted to commit more than 5% of its assets to
premiums when purchasing put and call options. Should these
state laws change or should the Fund obtain a waiver of its
application, the Fund may commit more than 5% of its assets to
premiums when purchasing call and put options. The premium paid
by the Fund when purchasing a put option will be recorded as an
PAGE 23
asset of the Fund. This asset will be adjusted daily to the
option's current market value, which will be the latest sale
price at the time at which the net asset value per share of the
Fund is computed (close of New York Stock Exchange), or, in the
absence of such sale, the latest bid price. This asset will be
terminated upon expiration of the option, the selling (writing)
of an identical option in a closing transaction, or the delivery
of the underlying security or currency upon the exercise of the
option.
Purchasing Call Options
The Fund may purchase American or European style call
options. As the holder of a call option, the Fund has the right
to purchase the underlying security or currency at the exercise
price at any time during the option period (American style) or at
the expiration of the option (European style). The Fund may
enter into closing sale transactions with respect to such
options, exercise them or permit them to expire. The Fund may
purchase call options for the purpose of increasing its current
return or avoiding tax consequences which could reduce its
current return. The Fund may also purchase call options in order
to acquire the underlying securities or currencies. Examples of
such uses of call options are provided below.
Call options may be purchased by the Fund for the purpose of
acquiring the underlying securities or currencies for its
portfolio. Utilized in this fashion, the purchase of call
options enables the Fund to acquire the securities or currencies
at the exercise price of the call option plus the premium paid.
At times the net cost of acquiring securities or currencies in
this manner may be less than the cost of acquiring the securities
or currencies directly. This technique may also be useful to the
Fund in purchasing a large block of securities or currencies that
would be more difficult to acquire by direct market purchases.
So long as it holds such a call option rather than the underlying
security or currency itself, the Fund is partially protected from
any unexpected decline in the market price of the underlying
security or currency and in such event could allow the call
option to expire, incurring a loss only to the extent of the
premium paid for the option.
To the extent required by the laws of certain states, the
Fund may not be permitted to commit more than 5% of its assets to
premiums when purchasing call and put options. Should these
state laws change or should the Fund obtain a waiver of its
application, the Fund may commit more than 5% of its assets to
premiums when purchasing call and put options. The Fund may also
purchase call options on underlying securities or currencies it
owns in order to protect unrealized gains on call options
previously written by it. A call option would be purchased for
PAGE 24
this purpose where tax considerations make it inadvisable to
realize such gains through a closing purchase transaction. Call
options may also be purchased at times to avoid realizing losses.
Dealer (Over-the-Counter) Options
The Fund may engage in transactions involving dealer
options. Certain risks are specific to dealer options. While
the Fund would look to a clearing corporation to exercise
exchange-traded options, if the Fund were to purchase a dealer
option, it would rely on the dealer from whom it purchased the
option to perform if the option were exercised. Failure by the
dealer to do so would result in the loss of the premium paid by
the Fund as well as loss of the expected benefit of the
transaction.
Exchange-traded options generally have a continuous liquid
market while dealer options have none. Consequently, the Fund
will generally be able to realize the value of a dealer option it
has purchased only by exercising it or reselling it to the dealer
who issued it. Similarly, when the Fund writes a dealer option,
it generally will be able to close out the option prior to its
expiration only by entering into a closing purchase transaction
with the dealer to which the Fund originally wrote the option.
While the Fund will seek to enter into dealer options only with
dealers who will agree to and which are expected to be capable of
entering into closing transactions with the Fund, there can be no
assurance that the Fund will be able to liquidate a dealer option
at a favorable price at any time prior to expiration. Until the
Fund, as a covered dealer call option writer, is able to effect a
closing purchase transaction, it will not be able to liquidate
securities (or other assets) or currencies used as cover until
the option expires or is exercised. In the event of insolvency
of the contra party, the Fund may be unable to liquidate a dealer
option. With respect to options written by the Fund, the
inability to enter into a closing transaction may result in
material losses to the Fund. For example, since the Fund must
maintain a secured position with respect to any call option on a
security it writes, the Fund may not sell the assets which it has
segregated to secure the position while it is obligated under the
option. This requirement may impair a Fund's ability to sell
portfolio securities or currencies at a time when such sale might
be advantageous.
The Staff of the SEC has taken the position that purchased
dealer options and the assets used to secure the written dealer
options are illiquid securities. The Fund may treat the cover
used for written OTC options as liquid if the dealer agrees that
the Fund may repurchase the OTC option it has written for a
maximum price to be calculated by a predetermined formula. In
such cases, the OTC option would be considered illiquid only to
PAGE 25
the extent the maximum repurchase price under the formula exceeds
the intrinsic value of the option. Accordingly, the Fund will
treat dealer options as subject to the Fund's limitation on
unmarketable securities. If the SEC changes its position on the
liquidity of dealer options, the Fund will change its treatment
of such instrument accordingly.
Equity Index Fund
The only option activity the Fund currently may engage in is
the purchase of S&P 500 call options. Such activity is subject
to the same risks described above under "Purchasing Call
Options". The Fund reserves the right to engage in other options
activity, however.
All Equity Funds
Futures Contracts
Transactions in Futures
The Fund may enter into futures contracts, including stock
index, interest rate and currency futures ("futures or futures
contracts"). The New Era Fund may also enter into futures on
commodities related to the types of companies in which it
invests, such as oil and gold futures. The Equity Index Fund may
only enter into stock index futures, such as the S&P 500 stock
index, to provide an efficient means of maintaining liquidity
while being invested in the market, to facilitate trading or to
reduce transaction costs. It will not use futures for hedging
purposes.
Stock index futures contracts may be used to provide a hedge
for a portion of the Fund's portfolio, as a cash management tool,
or as an efficient way for T. Rowe Price to implement either an
increase or decrease in portfolio market exposure in response to
changing market conditions. The Fund may, purchase or sell
futures contracts with respect to any stock index. Nevertheless,
to hedge the Fund's portfolio successfully, the Fund must sell
futures contacts with respect to indices or subindices whose
movements will have a significant correlation with movements in
the prices of the Fund's portfolio securities.
Interest rate or currency futures contracts may be used as a
hedge against changes in prevailing levels of interest rates or
currency exchange rates in order to establish more definitely the
effective return on securities or currencies held or intended to
be acquired by the Fund. In this regard, the Fund could sell
interest rate or currency futures as an offset against the effect
of expected increases in interest rates or currency exchange
rates and purchase such futures as an offset against the effect
PAGE 26
of expected declines in interest rates or currency exchange
rates.
The Fund will enter into futures contracts which are traded
on national or foreign futures exchanges, and are standardized as
to maturity date and underlying financial instrument. Futures
exchanges and trading in the United States are regulated under
the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are traded in London at the London
International Financial Futures Exchange in Paris at the MATIF
and in Tokyo at the Tokyo Stock Exchange. Although techniques
other than the sale and purchase of futures contracts could be
used for the above-referenced purposes, futures contracts offer
an effective and relatively low cost means of implementing the
Fund's objectives in these areas.
Regulatory Limitations
The Fund will engage in futures contracts and options
thereon only for bona fide hedging, yield enhancement, and risk
management purposes, in each case in accordance with rules and
regulations of the CFTC and applicable state law.
The Fund may not purchase or sell futures contracts or
related options if, with respect to positions which do not
qualify as bona fide hedging under applicable CFTC rules, the sum
of the amounts of initial margin deposits and premiums paid on
those portions would exceed 5% of the net asset value of the Fund
after taking into account unrealized profits and unrealized
losses on any such contracts it has entered into; provided,
however, that in the case of an option that is in-the-money at
the time of purchase, the in-the-money amount may be excluded in
calculating the 5% limitation. For purposes of this policy
options on futures contracts and foreign currency options traded
on a commodities exchange will be considered "related options".
This policy may be modified by the Board of Directors/Trustees
without a shareholder vote and does not limit the percentage of
the Fund's assets at risk to 5%.
In accordance with the rules of the State of California, the
Fund will apply above 5% test without excluding the value of
initial margin and premiums paid for bona fide hedging portions.
The Fund's use of futures contracts will not result in
leverage. Therefore, to the extent necessary, in instances
involving the purchase of futures contracts or the writing of
call or put options thereon by the Fund, an amount of cash, U.S.
government securities or other liquid, high-grade debt
obligations, equal to the market value of the futures contracts
and options thereon (less any related margin deposits), will be
PAGE 27
identified in an account with the Fund's custodian to cover (such
as owning an offsetting position) the position, or alternative
cover will be employed. Assets used as cover or held in an
identified account cannot be old while the position in the
corresponding option or future is open, unless they are replaced
with similar assets. As a result, the commitment of a large
portion of a Fund's assets to cover or identified accounts could
impede portfolio management or the fund's ability to meet
redemption requests or over current obligations.
If the CFTC or other regulatory authorities adopt different
(including less stringent) or additional restrictions, the Fund
would comply with such new restrictions.
Trading in Futures Contracts
A futures contract provides for the future sale by one party
and purchase by another party of a specified amount of a specific
financial instrument (e.g., units of a stock index) for a
specified price, date, time and place designated at the time the
contract is made. Brokerage fees are incurred when a futures
contract is bought or sold and margin deposits must be
maintained. Entering into a contract to buy is commonly referred
to as buying or purchasing a contract or holding a long position.
Entering into a contract to sell is commonly referred to as
selling a contract or holding a short position.
Unlike when the Fund purchases or sells a security, no price
would be paid or received by the Fund upon the purchase or sale
of a futures contract. Upon entering into a futures contract,
and to maintain the Fund's open positions in futures contracts,
the Fund would be required to deposit with its custodian in a
segregated account in the name of the futures broker an amount of
cash, U.S. government securities, suitable money market
instruments, or liquid, high-grade debt securities, known as
"initial margin." The margin required for a particular futures
contract is set by the exchange on which the contract is traded,
and may be significantly modified from time to time by the
exchange during the term of the contract. Futures contracts are
customarily purchased and sold on margins that may range upward
from less than 5% of the value of the contract being traded.
If the price of an open futures contract changes (by
increase in the case of a sale or by decrease in the case of a
purchase) so that the loss on the futures contract reaches a
point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the margin.
However, if the value of a position increases because of
favorable price changes in the futures contract so that the
margin deposit exceeds the required margin, the broker will pay
the excess to the Fund.
PAGE 28
These subsequent payments, called "variation margin," to and
from the futures broker, are made on a daily basis as the price
of the underlying assets fluctuate making the long and short
positions in the futures contract more or less valuable, a
process known as "marking to the market." The Fund expects to
earn interest income on its margin deposits.
Although certain futures contracts, by their terms, require
actual future delivery of and payment for the underlying
instruments, in practice most futures contracts are usually
closed out before the delivery date. Closing out an open futures
contract purchase or sale is effected by entering into an
offsetting futures contract sale or purchase, respectively, for
the same aggregate amount of the identical securities and the
same delivery date. If the offsetting purchase price is less
than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting
sale price is more than the original purchase price, the Fund
realizes a gain; if it is less, the Fund realizes a loss. The
transaction costs must also be included in these calculations.
There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular
futures contract at a particular time. If the Fund is not able
to enter into an offsetting transaction, the Fund will continue
to be required to maintain the margin deposits on the futures
contract.
For example, the Standard & Poor's 500 Stock Index is
composed of 500 selected common stocks, most of which are listed
on the New York Stock Exchange. The S&P 500 Index assigns
relative weightings to the common stocks included in the Index,
and the Index fluctuates with changes in the market values of
those common stocks. In the case of the S&P 500 Index, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500
Index were $150, one contract would be worth $75,000 (500 units x
$150). The stock index futures contract specifies that no
delivery of the actual stock making up the index will take place.
Instead, settlement in cash occurs. Over the life of the
contract, the gain or loss realized by the Fund will equal the
difference between the purchase (or sale) price of the contract
and the price at which the contract is terminated. For example,
if the Fund enters into a futures contract to buy 500 units of
the S&P 500 Index at a specified future date at a contract price
of $150 and the S&P 500 Index is at $154 on that future date, the
Fund will gain $2,000 (500 units x gain of $4). If the Fund
enters into a futures contract to sell 500 units of the stock
index at a specified future date at a contract price of $150 and
the S&P 500 Index is at $152 on that future date, the Fund will
lose $1,000 (500 units x loss of $2).
PAGE 29
Special Risks of Transactions in Futures Contracts
Volatility and Leverage. The prices of futures contracts
are volatile and are influenced, among other things, by actual
and anticipated changes in the market and interest rates, which
in turn are affected by fiscal and monetary policies and national
and international political and economic events.
Most United States futures exchanges limit the amount of
fluctuation permitted in futures contract prices during a single
trading day. The daily limit establishes the maximum amount that
the price of a futures contract may vary either up or down from
the previous day's settlement price at the end of a trading
session. Once the daily limit has been reached in a particular
type of futures contract, no trades may be made on that day at a
price beyond that limit. The daily limit governs only price
movement during a particular trading day and therefore does not
limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Futures contract prices
have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting
some futures traders to substantial losses.
Because of the low margin deposits required, futures trading
involves an extremely high degree of leverage. As a result, a
relatively small price movement in a futures contract may result
in immediate and substantial loss, as well as gain, to the
investor. For example, if at the time of purchase, 10% of the
value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract
would result in a total loss of the margin deposit, before any
deduction for the transaction costs, if the account were then
closed out. A 15% decrease would result in a loss equal to 150%
of the original margin deposit, if the contract were closed out.
Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the futures contract.
However, the Fund would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in
the underlying financial instrument and sold it after the
decline. Furthermore, in the case of a futures contract
purchase, in order to be certain that the Fund has sufficient
assets to satisfy its obligations under a futures contract, the
Fund earmarks to the futures contract money market instruments
equal in value to the current value of the underlying instrument
less the margin deposit.
Liquidity. The Fund may elect to close some or all of its
futures positions at any time prior to their expiration. The
Fund would do so to reduce exposure represented by long futures
positions or short futures positions. The Fund may close its
PAGE 30
positions by taking opposite positions which would operate to
terminate the Fund's position in the futures contracts. Final
determinations of variation margin would then be made, additional
cash would be required to be paid by or released to the Fund, and
the Fund would realize a loss or a gain.
Futures contracts may be closed out only on the exchange or
board of trade where the contracts were initially traded.
Although the Fund intends to purchase or sell futures contracts
only on exchanges or boards of trade where there appears to be an
active market, there is no assurance that a liquid market on an
exchange or board of trade will exist for any particular contract
at any particular time. In such event, it might not be possible
to close a futures contract, and in the event of adverse price
movements, the Fund would continue to be required to make daily
cash payments of variation margin. However, in the event futures
contracts have been used to hedge the underlying instruments, the
Fund would continue to hold the underlying instruments subject to
the hedge until the futures contracts could be terminated. In
such circumstances, an increase in the price of underlying
instruments, if any, might partially or completely offset losses
on the futures contract. However, as described below, there is
no guarantee that the price of the underlying instruments will,
in fact, correlate with the price movements in the futures
contract and thus provide an offset to losses on a futures
contract.
Hedging Risk. A decision of whether, when, and how to hedge
involves skill and judgment, and even a well-conceived hedge may
be unsuccessful to some degree because of unexpected market
behavior, market or interest rate trends. There are several
risks in connection with the use by the Fund of futures contracts
as a hedging device. One risk arises because of the imperfect
correlation between movements in the prices of the futures
contracts and movements in the prices of the underlying
instruments which are the subject of the hedge. T. Rowe Price
will, however, attempt to reduce this risk by entering into
futures contracts whose movements, in its judgment, will have a
significant correlation with movements in the prices of the
Fund's underlying instruments sought to be hedged.
Successful use of futures contracts by the Fund for hedging
purposes is also subject to T. Rowe Price's ability to correctly
predict movements in the direction of the market. It is possible
that, when the Fund has sold futures to hedge its portfolio
against a decline in the market, the index, indices, or
instruments underlying futures might advance and the value of the
underlying instruments held in the Fund's portfolio might
decline. If this were to occur, the Fund would lose money on the
futures and also would experience a decline in value in its
underlying instruments. However, while this might occur to a
PAGE 31
certain degree, T. Rowe Price believes that over time the value
of the Fund's portfolio will tend to move in the same direction
as the market indices used to hedge the portfolio. It is also
possible that if the Fund were to hedge against the possibility
of a decline in the market (adversely affecting the underlying
instruments held in its portfolio) and prices instead increased,
the Fund would lose part or all of the benefit of increased value
of those underlying instruments that it has hedged, because it
would have offsetting losses in its futures positions. In
addition, in such situations, if the Fund had insufficient cash,
it might have to sell underlying instruments to meet daily
variation margin requirements. Such sales of underlying
instruments might be, but would not necessarily be, at increased
prices (which would reflect the rising market). The Fund might
have to sell underlying instruments at a time when it would be
disadvantageous to do so.
In addition to the possibility that there might be an
imperfect correlation, or no correlation at all, between price
movements in the futures contracts and the portion of the
portfolio being hedged, the price movements of futures contracts
might not correlate perfectly with price movements in the
underlying instruments due to certain market distortions. First,
all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors might close
futures contracts through offsetting transactions, which could
distort the normal relationship between the underlying
instruments and futures markets. Second, the margin requirements
in the futures market are less onerous than margin requirements
in the securities markets, and as a result the futures market
might attract more speculators than the securities markets do.
Increased participation by speculators in the futures market
might also cause temporary price distortions. Due to the
possibility of price distortion in the futures market and also
because of the imperfect correlation between price movements in
the underlying instruments and movements in the prices of futures
contracts, even a correct forecast of general market trends by T.
Rowe Price might not result in a successful hedging transaction
over a very short time period.
Options on Futures Contracts
The Fund may purchase and sell options on the same types of
futures in which it may invest.
Options on futures are similar to options on underlying
instruments except that options on futures give the purchaser the
right, in return for the premium paid, to assume a position in a
futures contract (a long position if the option is a call and a
short position if the option is a put), rather than to purchase
PAGE 32
or sell the futures contract, at a specified exercise price at
any time during the period of the option. Upon exercise of the
option, the delivery of the futures position by the writer of the
option to the holder of the option will be accompanied by the
delivery of the accumulated balance in the writer's futures
margin account which represents the amount by which the market
price of the futures contract, at exercise, exceeds (in the case
of a call) or is less than (in the case of a put) the exercise
price of the option on the futures contract. Purchasers of
options who fail to exercise their options prior to the exercise
date suffer a loss of the premium paid.
As an alternative to writing or purchasing call and put
options on stock index futures, the Fund may write or purchase
call and put options on stock indices. Such options would be
used in a manner similar to the use of options on futures
contracts. From time to time, a single order to purchase or sell
futures contracts (or options thereon) may be made on behalf of
the Fund and other T. Rowe Price Funds. Such aggregated orders
would be allocated among the Funds and the other T. Rowe Price
Funds in a fair and non-discriminatory manner.
Special Risks of Transactions in Options on Futures Contracts
The risks described under "Special Risks of Transactions on
Futures Contracts" are substantially the same as the risks of
using options on futures. In addition, where the Fund seeks to
close out an option position by writing or buying an offsetting
option covering the same index, underlying instrument or contract
and having the same exercise price and expiration date, its
ability to establish and close out positions on such options will
be subject to the maintenance of a liquid secondary market.
Reasons for the absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient
trading interest in certain options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing
transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or
series of options, or underlying instruments; (iv) unusual or
unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic
or other reasons, decide or be compelled at some future date to
discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that
exchange (or in the class or series of options) would cease to
exist, although outstanding options on the exchange that had been
issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with
their terms. There is no assurance that higher than anticipated
PAGE 33
trading activity or other unforeseen events might not, at times,
render certain of the facilities of any of the clearing
corporations inadequate, and thereby result in the institution by
an exchange of special procedures which may interfere with the
timely execution of customers' orders.
Additional Futures and Options Contracts
Although the Fund has no current intention of engaging in
futures or options transactions other than those described above,
it reserves the right to do so. Such futures and options trading
might involve risks which differ from those involved in the
futures and options described above.
Foreign Futures and Options
Participation in foreign futures and foreign options
transactions involves the execution and clearing of trades on or
subject to the rules of a foreign board of trade. Neither the
National Futures Association nor any domestic exchange regulates
activities of any foreign boards of trade, including the
execution, delivery and clearing of transactions, or has the
power to compel enforcement of the rules of a foreign board of
trade or any applicable foreign law. This is true even if the
exchange is formally linked to a domestic market so that a
position taken on the market may be liquidated by a transaction
on another market. Moreover, such laws or regulations will vary
depending on the foreign country in which the foreign futures or
foreign options transaction occurs. For these reasons, when the
Fund trades foreign futures or foreign options contracts, it may
not be afforded certain of the protective measures provided by
the Commodity Exchange Act, the CFTC's regulations and the rules
of the National Futures Association and any domestic exchange,
including the right to use reparations proceedings before the
Commission and arbitration proceedings provided by the National
Futures Association or any domestic futures exchange. In
particular, funds received from the Fund for foreign futures or
foreign options transactions may not be provided the same
protections as funds received in respect of transactions on
United States futures exchanges. In addition, the price of any
foreign futures or foreign options contract and, therefore, the
potential profit and loss thereon may be affected by any variance
in the foreign exchange rate between the time the Fund's order is
placed and the time it is liquidated, offset or exercised.
Foreign Currency Transactions
A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time
PAGE 34
of the contract. These contracts are principally traded in the
interbank market conducted directly between currency traders
(usually large, commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions
are charged at any stage for trades.
The Fund may enter into forward contracts for a variety of
purposes in connection with the management of the foreign
securities portion of its portfolio. The Fund's use of such
contracts would include, but not be limited to, the following:
First, when the Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency, it may
desire to "lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale, for a
fixed amount of dollars, of the amount of foreign currency
involved in the underlying security transactions, the Fund will
be able to protect itself against a possible loss resulting from
an adverse change in the relationship between the U.S. dollar and
the subject foreign currency during the period between the date
the security is purchased or sold and the date on which payment
is made or received.
Second, when T. Rowe Price believes that one currency may
experience a substantial movement against another currency,
including the U.S. dollar, it may enter into a forward contract
to sell or buy the amount of the former foreign currency,
approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. Alternatively,
where appropriate, the Fund may hedge all or part of its foreign
currency exposure through the use of a basket of currencies or a
proxy currency where such currency or currencies act as an
effective proxy for other currencies. In such a case, the Fund
may enter into a forward contract where the amount of the foreign
currency to be sold exceeds the value of the securities
denominated in such currency. The use of this basket hedging
technique may be more efficient and economical than entering into
separate forward contracts for each currency held in the Fund.
The precise matching of the forward contract amounts and the
value of the securities involved will not generally be possible
since the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered
into and the date it matures. The projection of short-term
currency market movement is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Other than as set forth above, and immediately below,
the Fund will also not enter into such forward contracts or
maintain a net exposure to such contracts where the consummation
of the contracts would obligate the Fund to deliver an amount of
foreign currency in excess of the value of the Fund's portfolio
PAGE 35
securities or other assets denominated in that currency. The
Fund, however, in order to avoid excess transactions and
transaction costs, may maintain a net exposure to forward
contracts in excess of the value of the Fund's portfolio
securities or other assets to which the forward contracts relate
(including accrued interest to the maturity of the forwards on
such securities provided the excess amount is "covered" by
liquid, high-grade debt securities, denominated in any currency,
at least equal at all times to the amount of such excess. For
these purposes "the securities or other assets to which the
forward contracts relate" may be securities or assets denominated
in a single currency, or where proxy forwards are used,
securities denominated in more than one currency). Under normal
circumstances, consideration of the prospect for currency
parities will be incorporated into the longer term investment
decisions made with regard to overall diversification strategies.
However, T. Rowe Price believes that it is important to have the
flexibility to enter into such forward contracts when it
determines that the best interests of the Fund will be served.
At the maturity of a forward contract, the Fund may sell the
portfolio security and make delivery of the foreign currency, or
it may retain the security and either extend the maturity of the
forward contract (by "rolling" that contract forward) or may
initiate a new forward contract.
As indicated above, it is impossible to forecast with
absolute precision the market value of portfolio securities at
the expiration of the forward contract. Accordingly, it may be
necessary for the Fund to purchase additional foreign currency on
the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign
currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of
foreign currency the Fund is obligated to deliver. However, as
noted, in order to avoid excessive transactions and transaction
costs, the Fund may use liquid, high-grade debt securities
denominated in any currency, to cover the amount by which the
value of a forward contract exceeds the value of the securities
to which it relates.
If the Fund retains the portfolio security and engages in an
offsetting transaction, the Fund will incur a gain or a loss (as
described below) to the extent that there has been movement in
forward contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new forward
contract to sell the foreign currency. Should forward prices
decline during the period between the Fund's entering into a
PAGE 36
forward contract for the sale of a foreign currency and the date
it enters into an offsetting contract for the purchase of the
foreign currency, the Fund will realize a gain to the extent the
price of the currency it has agreed to sell exceeds the price of
the currency it has agreed to purchase. Should forward prices
increase, the Fund will suffer a loss to the extent of the price
of the currency it has agreed to purchase exceeds the price of
the currency it has agreed to sell.
The Fund's dealing in forward foreign currency exchange
contracts will generally be limited to the transactions described
above. However, the Fund reserves the right to enter into
forward foreign currency contracts for different purposes and
under different circumstances. Of course, the Fund is not
required to enter into forward contracts with regard to its
foreign currency-denominated securities and will not do so unless
deemed appropriate by T. Rowe Price. It also should be realized
that this method of hedging against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices
of the securities. It simply establishes a rate of exchange at a
future date. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the
hedged currency, at the same time, they tend to limit any
potential gain which might result from an increase in the value
of that currency.
Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. It will do so
from time to time, and investors should be aware of the costs of
currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on
the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer.
Federal Tax Treatment of Options, Futures Contracts and Forward
Foreign Exchange Contracts
The Fund may enter into certain option, futures, and forward
foreign exchange contracts, including options and futures on
currencies, which will be treated as Section 1256 contracts or
straddles.
Transactions which are considered Section 1256 contracts
will be considered to have been closed at the end of the Fund's
fiscal year and any gains or losses will be recognized for tax
purposes at that time. Such gains or losses from the normal
closing or settlement of such transactions will be characterized
PAGE 37
as 60% long-term capital gain or loss and 40% short-term capital
gain or loss regardless of the holding period of the instrument.
The Fund will be required to distribute net gains on such
transactions to shareholders even though it may not have closed
the transaction and received cash to pay such distributions.
Options, futures and forward foreign exchange contracts,
including options and futures on currencies, which offset a
foreign dollar denominated bond or currency position may be
considered straddles for tax purposes in which case a loss on any
position in a straddle will be subject to deferral to the extent
of unrealized gain in an offsetting position. The holding period
of the securities or currencies comprising the straddle will be
deemed not to begin until the straddle is terminated. For
securities offsetting a purchased put, this adjustment of the
holding period may increase the gain from sales of securities
held less than three months. The holding period of the security
offsetting an "in-the-money qualified covered call" option on an
equity security will not include the period of time the option is
outstanding.
Losses on written covered calls and purchased puts on
securities, excluding certain "qualified covered call" options on
equity securities, may be long-term capital loss, if the security
covering the option was held for more than twelve months prior to
the writing of the option.
In order for the Fund to continue to qualify for federal
income tax treatment as a regulated investment company, at least
90% of its gross income for a taxable year must be derived from
qualifying income; i.e., dividends, interest, income derived from
loans of securities, and gains from the sale of securities or
currencies. Pending tax regulations could limit the extent that
net gain realized from option, futures or foreign forward
exchange contracts on currencies is qualifying income for
purposes of the 90% requirement. In addition, gains realized on
the sale or other disposition of securities, including option,
futures or foreign forward exchange contracts on securities or
securities indexes and, in some cases, currencies, held for less
than three months, must be limited to less than 30% of the Fund's
annual gross income. In order to avoid realizing excessive gains
on securities or currencies held less than three months, the Fund
may be required to defer the closing out of option, futures or
foreign forward exchange contracts) beyond the time when it would
otherwise be advantageous to do so. It is anticipated that
unrealized gains on Section 1256 option, futures and foreign
forward exchange contracts, which have been open for less than
three months as of the end of the Fund's fiscal year and which
are recognized for tax purposes, will not be considered gains on
securities or currencies held less than three months for purposes
of the 30% test.
PAGE 38
INVESTMENT RESTRICTIONS
Fundamental policies may not be changed without the approval
of the lesser of (1) 67% of the Fund's shares present at a
meeting of shareholders if the holders of more than 50% of the
outstanding shares are present in person or by proxy or (2) more
than 50% of the Fund's outstanding shares. Other restrictions in
the form of operating policies are subject to change by the
Fund's Board of Directors/Trustees without shareholder approval.
Any investment restriction which involves a maximum percentage of
securities or assets shall not be considered to be violated
unless an excess over the percentage occurs immediately after,
and is caused by, an acquisition of securities or assets of, or
borrowings by, the Fund.
Fundamental Policies
As a matter of fundamental policy, the Fund may not:
(1) Borrowing. Borrow money except that the Fund may
(i) borrow for non-leveraging, temporary or
emergency purposes and (ii) engage in reverse
repurchase agreements and make other investments
or engage in other transactions, which may involve
a borrowing, in a manner consistent with the
Fund's investment objective and program, provided
that the combination of (i) and (ii) shall not
exceed 33 1/3% of the value of the Fund's total
assets (including the amount borrowed) less
liabilities (other than borrowings) or such other
percentage permitted by law. Any borrowings which
come to exceed this amount will be reduced in
accordance with applicable law. The Fund may
borrow from banks, other Price Funds or other
persons to the extent permitted by applicable law;
(2) Commodities. Purchase or sell physical
commodities; except that it may enter into futures
contracts and options thereon;
(3) Industry Concentration. Purchase the securities
of any issuer if, as a result, more than 25% of
the value of the Fund's total assets would be
invested in the securities of issuers having their
principal business activities in the same
industry;
PAGE 39
(4) Loans. Make loans, although the Fund may (i) lend
portfolio securities and participate in an
interfund lending program with other Price Funds
provided that no such loan may be made if, as a
result, the aggregate of such loans would exceed
33 1/3% of the value of the Fund's total assets;
(ii) purchase money market securities and enter
into repurchase agreements; and (iii) acquire
publicly-distributed or privately-placed debt
securities and purchase debt;
(5) Percent Limit on Assets Invested in Any One
Issuer. Purchase a security if, as a result, with
respect to 75% of the value of its total assets,
more than 5% of the value of the Fund's total
assets would be invested in the securities of a
single issuer, except securities issued or
guaranteed by the U.S. Government or any of its
agencies or instrumentalities;
(6) Percent Limit on Share Ownership of Any One
Issuer. Purchase a security if, as a result, with
respect to 75% of the value of the Fund's total
assets, more than 10% of the outstanding voting
securities of any issuer would be held by the Fund
(other than obligations issued or guaranteed by
the U.S. Government, its agencies or
instrumentalities);
(7) Real Estate. Purchase or sell real estate unless
acquired as a result of ownership of securities or
other instruments (but this shall not prevent the
Fund from investing in securities or other
instruments backed by real estate or in securities
of companies engaged in the real estate business);
(8) Senior Securities. Issue senior securities except
in compliance with the Investment Company Act of
1940; 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 Securities Act of 1933 in
connection with the purchase and sale of its
portfolio securities in the ordinary course of
pursuing its investment program.
With respect to investment restrictions (1) and (4), the
Fund will not borrow from or lend to any other Price
PAGE 40
Fund unless they apply for and receive an exemptive
order from the SEC or the SEC issues rules permitting
such transactions. The Fund has no current intention of
engaging in any such activity and there is no assurance
the SEC would grant any order requested by the Fund or
promulgate any rules allowing the transactions.
With respect to investment restriction (2), the Fund
does not consider currency contracts or hybrid
investments to be commodities.
For purposes of investment restriction (3), U.S., state
or local governments, or related agencies or
instrumentalities, are not considered an industry.
For purposes of investment restriction (4), the Fund
will consider the acquisition of a debt security to
include the execution of a vote or other evidence of an
extension of credit with a term of more than nine
months.
Operating Policies
As a matter of operating policy, the Fund may not:
(1) Borrowing. The Fund will not purchase additional
securities when money borrowed exceeds 5% of its
total assets;
(2) Control of Portfolio Companies. Invest in
companies for the purpose of exercising management
or control;
(3) Futures Contracts. Purchase a futures contract or
an option thereon if, with respect to positions in
futures or options on futures which do not
represent bona fide hedging, the aggregate initial
margin and premiums on such options would exceed
5% of the Fund's net asset value;
(4) Illiquid Securities. Purchase illiquid securities
and securities of unseasoned issuers if, as a
result, more than 15% of its net assets would be
invested in such securities, provided that the
Fund will not invest more than 5% of its total
assets in restricted securities and not more than
5% in securities of unseasoned issuers.
Securities eligible for resale under Rule 144A of
the Securities Act of 1933 are not included in the
5% limitation but are subject to the 15%
limitation;
PAGE 41
(5) Investment Companies. Purchase securities of
open-end or closed-end investment companies except
in compliance with the Investment Company Act of
1940 and applicable state law. Duplicate fees may
result from such purchases;
(6) Margin. Purchase securities on margin, except (i)
for use of short-term credit necessary for
clearance of purchases of portfolio securities and
(ii) it may make margin deposits in connection
with futures contracts or other permissible
investments;
(7) Mortgaging. Mortgage, pledge, hypothecate or, in
any manner, transfer any security owned by the
Fund as security for indebtedness except as may be
necessary in connection with permissible
borrowings or investments and then such
mortgaging, pledging or hypothecating may not
exceed 33 1/3% of the Fund's total assets at the
time of borrowing or investment;
(8) Oil and Gas Programs. Purchase participations or
other direct interests in or enter into leases
with respect to, oil, gas, or other mineral
exploration or development programs;
(9) Options, Etc. Invest in puts, calls, straddles,
spreads, or any combination thereof, except to the
extent permitted by the prospectus and Statement
of Additional Information;
(10) Ownership of Portfolio Securities by Officers and
Directors/Trustees. Purchase or retain the
securities of any issuer if, to the knowledge of
the Fund's management, those officers and
directors of the Fund, and of its investment
manager, who each owns beneficially more than .5%
of the outstanding securities of such issuer,
together own beneficially more than 5% of such
securities;
(11) Short Sales. Effect short sales of securities;
(12) Unseasoned Issuers. Purchase a security (other
than obligations issued or guaranteed by the U.S.,
any foreign, state or local government, their
agencies or instrumentalities) if, as a result,
more than 5% of the value of the Fund's total
assets would be invested in the securities of
PAGE 42
issuers which at the time of purchase had been in
operation for less than three years (for this
purpose, the period of operation of any issuer
shall include the period of operation of any
predecessor or unconditional guarantor of such
issuer). This restriction does not apply to
securities of pooled investment vehicles or
mortgage or asset-backed securities; or
(13) Warrants. Invest in warrants if, as a result
thereof, more than 2% of the value of the total
assets of the Fund would be invested in warrants
which are not listed on the New York Stock
Exchange, the American Stock Exchange, or a
recognized foreign exchange, or more than 5% of
the value of the total assets of the Fund would be
invested in warrants whether or not so listed.
For purposes of these percentage limitations, the
warrants will be valued at the lower of cost or
market and warrants acquired by the Fund in units
or attached to securities may be deemed to be
without value.
For purposes of investment restriction (5), the Fund has
no current intention of purchasing the securities of
other investment companies.
Blue Chip Growth Fund
Notwithstanding anything in the above fundamental and
operating restrictions to the contrary, the Fund may invest all
of its assets in a single investment company or a series thereof
in connection with a "master-feeder" arrangement. Such an
investment would be made where the Fund (a "Feeder"), and one or
more other Funds with the same investment objective and program
as the Fund, sought to accomplish its investment objective and
program by investing all of its assets in the shares of another
investment company (the "Master"). The Master would, in turn,
have the same investment objective and program as the Fund. The
Fund would invest in this manner in an effort to achieve the
economies of scale associated with having a Master fund make
investments in portfolio companies on behalf of a number of
Feeder funds. In the event that the Fund exercises its right to
convert to a Master Fund/Feeder Fund structure, it will do so in
compliance with the Guidelines for Registration of a Master
Fund/Feeder Fund as established by the North American Securities
Administrators Association, Inc. ("NASAA").
MANAGEMENT OF FUND
PAGE 43
The officers and directors of the Fund are listed below.
Unless otherwise noted, the address of each is 100 East Pratt
Street, Baltimore, Maryland 21202. Except as indicated, each has
been an employee of T. Rowe Price for more than five years. In
the list below, the Fund's directors who are considered
"interested persons" of T. Rowe Price as defined under
Section 2(a)(19) of the Investment Company Act of 1940 are noted
with an asterisk (*). These directors are referred to as inside
directors by virtue of their officership, directorship, and/or
employment with T. Rowe Price.
All Funds
Independent Directors/Trustees
LEO C. BAILEY, Retired; Address: 3396 South Placita Fabula, Green
Valley, Arizona 85614
DONALD W. DICK, JR., Principal, Overseas Partners, Inc., a
financial investment firm; formerly (6/65-3/89) Director and Vice
President-Consumer Products Division, McCormick & Company, Inc.,
international food processors; Director, Waverly Press, Inc.,
Baltimore, Maryland; Address: 375 Park Avenue, Suite 2201, New
York, New York 10152
DAVID K. FAGIN, Chairman, Chief Executive Officer and Director,
Golden Star Resources, Ltd.; formerly (1986-7/91) President,
Chief Operating Officer and Director, Homestake Mining Company;
Address: One Norwest Center, 1700 Lincoln Street, Suite 1950,
Denver, Colorado 80203
ADDISON LANIER, Financial management; President and Director,
Thomas Emery's Sons, Inc., and Emery Group, Inc.; Director,
Scinet Development and Holdings, Inc.; Address: 441 Vine Street,
#2310, Cincinnati, Ohio 45202-2913
JOHN K. MAJOR, Chairman of the Board and President, KCMA
Incorporated, Tulsa, Oklahoma; Address: 126 E. 26 Place, Tulsa,
Oklahoma 74114-2422
HANNE M. MERRIMAN, Retail business consultant; formerly,
President and Chief Operating Officer, Nan Duskin, Inc., a
women's specialty store, Director and Chairman Federal Reserve
Bank of Richmond, and President and Chief Executive Officer,
Honeybee, Inc., a division of Spiegel, Inc; Director, Ann Taylor
Stores Corporation, Central Illinois Public Service Company,
CIPSCO Incorporated, The Rouse Company, State Farm Mutual
Automobile Insurance Company and USAir Group, Inc., Member,
National Women's Forum; Trustee, American-Scandinavian Foundation
HUBERT D. VOS, President, Stonington Capital Corporation, a
private investment company; Address: 1231 State Street, Suite
210, Santa Barbara, CA 93190-0409
PAUL M. WYTHES, Founding General Partner, Sutter Hill Ventures, a
venture capital limited partnership providing equity capital to
young high technology companies throughout the United States;
PAGE 44
Director, Teltone Corporation, Interventional Technologies Inc.,
and Stuart Medical, Inc.; Address: 755 Page Mill Road, Suite
A200, Palo Alto, California 94304
Officers
HENRY H. HOPKINS, Vice President--Managing Director, T. Rowe
Price; Vice President and Director, T. Rowe Price Investment
Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price
Trust Company; Vice President, Rowe Price-Fleming International,
Inc. and T. Rowe Price Retirement Plan Services, Inc.
LENORA V. HORNUNG, Secretary--Vice President, T. Rowe Price
CARMEN F. DEYESU, Treasurer--Vice President, T. Rowe Price, T.
Rowe Price Services, Inc., and T. Rowe Price Trust Company
DAVID S. MIDDLETON, Controller--Vice President, T. Rowe Price, T.
Rowe Price Services, Inc., and T. Rowe Price Trust Company
ROGER L. FIERY, Assistant Vice President--Vice President, Rowe
Price-Fleming International, Inc.
EDWARD T. SCHNEIDER, Assistant Vice President--Vice President, T.
Rowe Price Services, Inc.
INGRID I. VORDEMBERGE, Assistant Vice President--Employee, T.
Rowe Price
Balanced Fund
*JAMES S. RIEPE, Chairman of the Board--Managing Director, T.
Rowe Price; Chairman of the Board, T. Rowe Price Services, Inc.,
T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price
Trust Company; President and Director, T. Rowe Price Investment
Services, Inc; Director, Rhone-Poulenc Rorer, Inc.
*M. DAVID TESTA, Vice President and Director--Managing Director
of T. Rowe Price; Chairman of the Board, Rowe Price-Fleming
International, Inc.; Vice President and Director, T. Rowe Price
Trust Company; Chartered Financial Analyst
RICHARD T. WHITNEY, President--Vice President of T. Rowe Price
and T. Rowe Price Trust Company
STEPHEN W. BOESEL, Vice President--Managing Director, T. Rowe
Price
ANDREW M. BROOKS, Vice President--Vice President, T. Rowe Price
JONATHAN M. GREENE, Vice President--Vice President of T. Rowe
Price and T. Rowe Price Trust Company
JAMES A.C. KENNEDY, III, Vice President--Managing Director of T.
Rowe Price
EDMUND M. NOTZON, Vice President--Vice President, T. Rowe Price
and T. Rowe Price Trust Company; formerly, (1972-1989) charter
member of the U.S. Senior Executive Services and Director,
Analysis and Evaluation Division in the Office of Water
Regulations and Standards of the U.S. Environmental Protection
Agency
PAGE 45
PETER VAN DYKE, Vice President--Managing Director, T. Rowe Price;
Vice President of Rowe Price-Fleming International, Inc. and T.
Rowe Price Trust Company
Blue Chip Growth Fund
*THOMAS H. BROADUS, JR., President and Director--Managing
Director, T. Rowe Price; Chartered Financial Analyst and
Chartered Investment Counselor
*JAMES S. RIEPE, Vice President and Director--Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe
Price Trust Company; President and Director, T. Rowe Price
Investment Services, Inc; Director, Rhone-Paulenc Rorer, Inc.
*M. DAVID TESTA, Director--Managing Director, T. Rowe Price;
Chairman of the Board, Rowe Price-Fleming International, Inc.;
Vice President and Director, T. Rowe Price Trust Company;
Chartered Financial Analyst
LARRY J. PUGLIA, Vice President--Vice President, T. Rowe Price
Capital Appreciation Fund
*GEORGE J. COLLINS, Chairman of the Board--President, Chief
Executive Officer and Managing Director, T. Rowe Price; Director,
Rowe Price-Fleming International, Inc., T. Rowe Price Retirement
Plan Services, Inc. and T. Rowe Price Trust Company; Chartered
Investment Counselor
*JAMES S. RIEPE, Vice President and Trustee--Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price
Trust Company; President and Director, T. Rowe Price Investment
Services, Inc.; Director, Rhone-Poulenc Rorer, Inc.
*GEORGE A. ROCHE, Director - Managing Director and Chief
Financial Officer, T. Rowe Price; Vice President and Director,
Rowe Price-Fleming International, Inc.
RICHARD P. HOWARD, President--Vice President of T. Rowe Price;
Chartered Financial Analyst
ARTHUR B. CECIL, III, Vice President--Vice President of T. Rowe
Price
CHARLES A. MORRIS, Vice President--Vice President of T. Rowe
Price
DAVID A. REA, Vice President--Vice President, T. Rowe Price
ALAN R. STUART, Vice President--Vice President of T. Rowe Price
Dividend Growth Fund
*JAMES S. RIEPE, Vice President and Director--Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe
Price Trust Company; President and Director, T. Rowe Price
Investment Services, Inc; Director, Rhone-Paulenc Rorer, Inc.
PAGE 46
*M. DAVID TESTA, Director--Managing Director, T. Rowe Price;
Chairman of the Board, Rowe Price-Fleming International, Inc.;
Vice President and Director, T. Rowe Price Trust Company;
Chartered Financial Analyst
BRIAN C. ROGERS, President--Managing Director, T. Rowe Price
WILLIAM J. STROMBERG, Executive Vice President--Vice President,
T. Rowe Price
LARRY J. PUGLIA, Vice President--Vice President, T. Rowe Price;
formerly (7/82-8/88) Senior Manager, Peat Marwick Main & Co.
ALAN R. STUART, Vice President--Vice President, T. Rowe Price
Equity Income Fund
*THOMAS H. BROADUS, JR., Vice President and Chairman of the
Board--Managing Director, T. Rowe Price; Chartered Financial
Analyst and Chartered Investment Counselor
*JAMES S. RIEPE, Vice President and Trustee--Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc. and T. Rowe
Price Trust Company; President and Director, T. Rowe Price
Investment Services, Inc.; Director, Rhone-Poulenc Rorer, Inc.
*M. DAVID TESTA, Trustee--Managing Director, T. Rowe Price;
Chairman of the Board, Rowe Price-Fleming International, Inc.;
Vice President and Director, T. Rowe Price Trust Company;
Chartered Financial Analyst
BRIAN C. ROGERS, President--Managing Director, T. Rowe Price
ANDREW M. BROOKS, Vice President--Vice President, T. Rowe Price
RICHARD P. HOWARD, Vice President--Vice President, T. Rowe Price;
Chartered Financial Analyst
DENISE S. JEVNE, Vice President-Vice President, T. Rowe Price
ROBERT W. SMITH, Vice President-Vice President, T. Rowe Price;
formerly (1987-1992) Investment Analyst, Massachusetts Financial
Services, Inc., Boston, Massachusetts
WILLIAM J. STROMBERG, Vice President--Vice President, T. Rowe
Price
MARK J. VASELKIV, Vice President-Vice President, T. Rowe Price
Growth & Income Fund
*STEPHEN W. BOESEL, President and Director - Vice President, T.
Rowe Price
*JAMES S. RIEPE, Chairman of the Board - Managing Director, T.
Rowe Price; Chairman of the Board, T. Rowe Price Services, Inc.,
T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price
Trust Company; President and Director, T. Rowe Price Investment
Services, Inc.; Director, Rhone-Paulenc Rorer, Inc.
*M. DAVID TESTA, Director--Managing Director, T. Rowe Price;
Chairman of the Board, Rowe Price-Fleming International, Inc.;
Vice President and Director, T. Rowe Price Trust Company;
Chartered Financial Analyst
ANDREW M. BROOKS, Vice President - Vice President, T. Rowe Price
PAGE 47
ARTHUR B. CECIL, III, Vice President - Vice President, T. Rowe
Price; Chartered Financial Analyst
BRENT W. CLUM, Vice President - Vice President, T. Rowe Price;
formerly (1985-1988) Senior Tax Consultant, Arthur Andersen and
Company
GREGORY A. MCCRICKARD, Vice President - Vice President, T. Rowe
Price
LARRY J. PUGLIA, Vice President - Vice President, T. Rowe Price
RICHARD T. WHITNEY, Vice President - Vice President, T. Rowe
Price; Chartered Financial Analyst
Growth Stock Fund
*JAMES S. RIEPE, Vice President and Director - Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe
Price Trust Company; President and Director, T. Rowe Price
Investment Services, Inc.; Director, Rhone-Paulenc Rorer, Inc.
*M. DAVID TESTA, Chairman of the Board - Managing Director, T.
Rowe Price; Chairman of the Board, Rowe Price-Fleming
International, Inc.; Vice President and Director, T. Rowe Price
Trust Company; Chartered Financial Analyst
JOHN D. GILLESPIE, President - Vice President, T. Rowe Price
CARTER O. HOFFMAN, Vice President - Managing Director, T. Rowe
Price; Chartered Investment Counselor
JAMES A.C. KENNEDY, Vice President - Managing Director, T. Rowe
Price
BRIAN C. ROGERS, Vice President - Managing Director, T. Rowe
Price
ALAN R. STUART, Vice President - Vice President, T. Rowe Price
Equity Index Fund
*JAMES S. RIEPE, Vice President and Director--Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc. and T. Rowe
Price Trust Company; President and Director, T. Rowe Price
Investment Services, Inc.; Director, Rhone-Poulenc Rorer, Inc.
*M. DAVID TESTA, Director--Managing Director, T. Rowe Price;
Chairman of the Board, Rowe Price-Fleming International, Inc.;
Vice President and Director, T. Rowe Price Trust Company;
Chartered Financial Analyst
RICHARD T. WHITNEY, President--Vice President, T. Rowe Price
KRISTEN D. FARROW, Vice President--Assistant Vice President, T.
Rowe Price; formerly (9/84-6/89) Teacher at Wilbraham & Munson
Academy, Boston, Massachusetts and Bwyrn Mawr School, Baltimore,
Maryland
JONATHAN M. GREENE, Vice President--Vice President, T. Rowe Price
ALAN R. STUART, Vice President-Vice President, T. Rowe Price
PAGE 48
Mid-Cap Growth Fund
*JOHN H. LAPORTE, JR., Chairman of the Board--Managing Director,
T. Rowe Price; Chartered Financial Analyst
*JAMES A. C. KENNEDY, III, Director--Managing Director, T. Rowe
Price
*JAMES S. RIEPE, Chairman of the Board--Managing Director, T.
Rowe Price; Chairman of the Board, T. Rowe Price Services, Inc.,
T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price
Trust Company; President and Director, T. Rowe Price Investment
Services, Inc; Director, Rhone-Poulenc Rorer, Inc.
BRIAN W. H. BERGHUIS, President--Vice President, T. Rowe Price
MARCY L. FISHER, Vice President-Assistant Vice President, T. Rowe
Price
JOHN F. WAKEMAN, Vice President--Vice President, T. Rowe Price
RICHARD T. WHITNEY, Vice President--Vice President, T. Rowe Price
New America Growth Fund
*JOHN H. LAPORTE, JR., President and Trustee--Managing Director
of T. Rowe Price; Chartered Financial Analyst
*JAMES S. RIEPE, Vice President and Trustee--Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe
Price Trust Company; President and Director, T. Rowe Price
Investment Services, Inc.; Director, Rhone-Poulenc Rorer, Inc.
BRIAN W. H. BERGHUIS, Executive Vice President--Vice President of
T. Rowe Price
GREGORY V. DONOVAN, Vice President--Vice President of T. Rowe
Price
JOHN WAKEMAN, Vice President--Vice President of T. Rowe Price
New Era Fund
*GEORGE J. COLLINS, Director - President, Managing Director, and
Chief Executive Officer, T. Rowe Price; Director, Rowe
Price-Fleming International, Inc., T. Rowe Price Trust Company,
and T. Rowe Price Retirement Plan Services, Inc.; Chartered
Investment Counselor
*CARTER O. HOFFMAN, Director - Managing Director, T. Rowe Price;
Chartered Investment Counselor
*JAMES S. RIEPE, Vice President - Managing Director, T. Rowe
Price; Chairman of the Board, T. Rowe Price Services, Inc., T.
Rowe Price Retirement Plan Services, Inc., and T. Rowe Price
Trust Company; President and Director, T. Rowe Price Investment
Services, Inc.; Director, Rhone-Paulenc Rorer, Inc.
*GEORGE A. ROCHE, President and Director - Managing Director and
Chief Financial Officer, T. Rowe Price; Vice President and
Director, Rowe Price-Fleming International, Inc.
STEPHEN W. BOESEL, Vice President - Vice President, T. Rowe Price
PAGE 49
HUGH M. EVANS, III, Vice President - Employee, T. Rowe Price;
formerly (7/1/88-7/1/90) Analyst, Morgan Stanley & Co., Inc., New
York, New York
RICHARD P. HOWARD, Vice President - Vice President, T. Rowe
Price; Chartered Financial Analyst
JAMES A.C. KENNEDY, III, Vice President - Managing Director, T.
Rowe Price
CHARLES M. OBER, Vice President - Vice President, T. Rowe Price;
Chartered Financial Analyst DAVID L. REA, Vice President - Vice
President, T. Rowe Price
ALAN R. STUART, Vice President - Vice President, T. Rowe Price
DAVID J. WALLACK, Vice President - Vice President, T. Rowe Price;
formerly (9/89-7/90) attended Carnegie Mellon Graduate School and
(4/84-9/88) Fund Raising Project Manager, J. Paul Getty Trust and
Harvard University
New Horizons Fund
*JOHN H. LAPORTE, President and Director - Managing Director of
T. Rowe Price; Chartered Financial Analyst
*JAMES S. RIEPE, Vice President and Director - Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe
Price Trust Company; President and Director, T. Rowe Price
Investment Services, Inc.; Director, Rhone-Poulenc Rorer, Inc.
*M. DAVID TESTA, Director--Managing Director, T. Rowe Price;
Chairman of the Board, Rowe Price-Fleming International, Inc.;
Vice President and Director, T. Rowe Price Trust Company;
Chartered Financial Analyst
PRESTON G. ATHEY, Vice President - Vice President of T. Rowe
Price
BRIAN W. H. BERGHUIS, Vice President - Vice President of T. Rowe
Price
BRENT W. CLUM, Vice President - Vice President, T. Rowe Price;
formerly (1985-1988) Senior Tax Consultant, Arthur Anderson & Co.
GREGORY V. DONOVAN, Vice President - Vice President of T. Rowe
Price
MARCY L. FISHER, Vice President - Assistant Vice President of T.
Rowe Price
JILL L. HAUSER, Vice President - Vice President of T. Rowe Price
DENISE E. JEVNE, Vice President - Vice President of T. Rowe Price
JOSEPH KLEIN, III, Vice President - Vice President, T. Rowe Price
CHARLES A. MORRIS, Vice President - Vice President of T. Rowe
Price
BRIAN D. STANSKY, Vice President - Vice President of T. Rowe
Price
JOHN WAKEMAN, Vice President - Vice President of T. Rowe Price
OTC Fund
PAGE 49
*JOHN H. LAPORTE, JR., Chairman of the Board--Managing Director
of T. Rowe Price; Chartered Financial Analyst
*JAMES S. RIEPE, Vice President and Director--Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc. and T. Rowe
Price Trust Company; President and Director, T. Rowe Price
Investment Services, Inc.; Director, Rhone-Poulenc Rorer, Inc.
GREGORY A. McCRICKARD, President--Vice President, T. Rowe Price
MARCY L. FISHER, Vice President--Assistant Vice President, T.
Rowe Price
JAMES A. C. KENNEDY, III, Vice President--Managing Director of T.
Rowe Price
BRIAN D. STANSKY, Vice President--Vice President, T. Rowe Price
RICHARD T. WHITNEY, Vice President--Vice President, T. Rowe
Price; Chartered Financial Analyst
Science & Technology Fund
*JOHN H. LAPORTE, JR., Chairman of the Board - Managing Director,
T. Rowe Price; Chartered Financial Analyst
*JAMES S. RIEPE, Vice President and Director - Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe
Price Trust Company; President and Director, T. Rowe Price
Investment Services, Inc.; Director, Rhone-Paulenc Rorer, Inc.
CHARLES A. MORRIS, President - Vice President, T. Rowe Price
LISE J. BUYER, Vice President - Vice President, T. Rowe Price;
formerly (4/91-4/92) PC Analyst, Cowen & Co., (2/90-4/92) PC
Analyst, Needham & Co., and (2/87-1/90) Analyst, Prudential Bache
Securities
GREGORY V. DONOVAN, Vice President - Vice President, T. Rowe
Price
MARCY L. FISHER, Vice President - Assistant Vice President, T.
Rowe Price
JILL L. HAUSER, Vice President - Vice President, T. Rowe Price
JOSEPH KLEIN, III, Vice President - Vice President, T. Rowe Price
BRIAN D. STANSKY, Vice President - Vice President, T. Rowe Price
Small-Cap Value Fund
*JOHN H. LAPORTE, JR., Chairman of the Board--Managing Director
of T. Rowe Price; Chartered Financial Analyst
*JAMES S. RIEPE, Vice President and Director--Managing Director,
T. Rowe Price; Chairman of the Board, T. Rowe Price Services,
Inc., T. Rowe Price Retirement Plan Services, Inc. and T. Rowe
Price Trust Company; President and Director, T. Rowe Price
Investment Services, Inc.; Director, Rhone-Paulenc Rorer, Inc.
*GEORGE A. ROCHE, Director - Managing Director and Chief
Financial Officer, T. Rowe Price; Vice President and Director,
Rowe Price-Fleming International, Inc.
PRESTON G. ATHEY, President--Vice President, T. Rowe Price
PAGE 50
MARCY L. FISHER, Vice President--Assistant Vice President, T.
Rowe Price
JONATHAN M. GREENE, Vice President--Vice President of T. Rowe
Price and T. Rowe Price Trust Company
GREGORY A. MCCRICKARD, Vice President--Vice President, T. Rowe
Price
RICHARD T. WHITNEY, Vice President--Vice President, T. Rowe Price
and T. Rowe Price Trust Company; Chartered Financial Analyst
The Fund's Executive Committee, consisting of the Fund's
interested directors/trustees, has been authorized by its
respective Board of Directors/Trustees to exercise all powers of
the Board to manage the Fund in the intervals between meetings of
the Board, except the powers prohibited by statute from being
delegated.
PRINCIPAL HOLDERS OF SECURITIES
As of the date of the prospectus, the officers and directors
of the Fund, as a group, owned less than 1% of the outstanding
shares of the Fund.
INVESTMENT MANAGEMENT SERVICES
Services
Under the Management Agreement, T. Rowe Price provides the
Fund with discretionary investment services. Specifically, T.
Rowe Price is 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 is also responsible for effecting all security transactions
on behalf of the Fund, including the negotiation of commissions
and the allocation of principal business and portfolio brokerage.
In addition to these services, T. Rowe Price provides the Fund
with certain corporate administrative services, including:
maintaining the Fund's corporate existence and corporate records;
registering and qualifying Fund shares under federal and state
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 employees to serve as
officers, directors, and committee members of the Fund without
cost to the Fund.
PAGE 51
The Management Agreement also provides that T. Rowe Price,
its directors, officers, employees, and certain other persons
performing specific functions for the Fund will only be liable to
the Fund for losses resulting from willful misfeasance, bad
faith, gross negligence, or reckless disregard of duty.
All Funds Except Equity Index Fund
Management Fee
The Fund pays T. Rowe Price a fee ("Fee") which consists of
two components: a Group Management Fee ("Group Fee") and an
Individual Fund Fee ("Fund Fee"). The Fee is paid monthly to T.
Rowe Price on the first business day of the next succeeding
calendar month and is calculated as described below.
The monthly Group Fee ("Monthly Group Fee") is the sum of
the daily Group Fee accruals ("Daily Group Fee Accruals") for
each month. The Daily Group Fee Accrual for any particular day
is computed by multiplying the Price Funds' group fee accrual as
determined below ("Daily Price Funds' Group Fee Accrual") by the
ratio of the Fund's net assets for that day to the sum of the
aggregate net assets of the Price Funds for that day. The Daily
Price Funds' Group Fee Accrual for any particular day is
calculated by multiplying the fraction of one (1) over the number
of calendar days in the year by the annualized Daily Price Funds'
Group Fee Accrual for that day as determined in accordance with
the following schedule:
Price Funds'
Annual Group Base Fee
Rate for Each Level of Assets
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
0.330% Next $10 billion
0.320% Next $10 billion
0.310% Thereafter
For the purpose of calculating the Group Fee, the Price
Funds include all the mutual funds distributed by T. Rowe Price
Investment Services, Inc., (excluding T. Rowe Price Spectrum
Fund, Inc. and any institutional or private label mutual funds).
For the purpose of calculating the Daily Price Funds' Group Fee
PAGE 52
Accrual for any particular day, the net assets of each Price Fund
are determined in accordance with the Fund's prospectus as of the
close of business on the previous business day on which the Fund
was open for business.
The monthly Fund Fee ("Monthly Fund Fee") is the sum of the
daily Fund Fee accruals ("Daily Fund Fee Accruals") for each
month. The Daily Fund Fee Accrual for any particular day is
computed by multiplying the fraction of one (1) over the number
of calendar days in the year by the individual Fund Fee Rate and
multiplying this product by the net assets of the Fund for that
day, as determined in accordance with the Fund's prospectus as of
the close of business on the previous business day on which the
Fund was open for business. The individual fund fees for each
Fund are listed in the chart below:
Individual Fund Fees
Balanced Fund 0.15%
Blue Chip Growth Fund 0.30%
Capital Appreciation Fund 0.30%
Dividend Growth Fund 0.20%
Equity Income Fund 0.25%
Growth & Income Fund 0.15%
Growth Stock Fund 0.25%
Equity Index Fund 0.20%
Mid-Cap Growth Fund 0.35%
New America Growth Fund 0.35%
New Era Fund 0.25%
New Horizons Fund 0.35%
OTC Fund 0.45%
Science & Technology Fund 0.35%
Small-Cap Value Fund 0.35%
The following chart sets forth the total management fees, if
any, paid to T. Rowe Price by each Fund, during the last three
years:
Fund 1993 1992 1991
Balanced $ 1,169,038 $ 158,000 *
Blue Chip Growth --** * *
Capital Appreciation 2,740,545 1,539,000 1,119,000
Dividend Growth --** * *
Equity Income 15,154,800 10,430,000 6,829,000
Growth & Income 5,209,477 3,693,000 2,991,000
Growth Stock 11,117,706 11,217,000 9,367,000
Equity Index --** --** --**
Mid-Cap Growth 152,853 --** *
New America Growth 3,988,797 2,385,000 1,166,000
New Era 4,365,990 4,337,000 4,660,000
PAGE 53
New Horizons 10,367,727 9,589,000 8,089,000
OTC 1,547,061 1,858,000 2,126,495
Science & Technology 2,841,791 1,479,000 809,000
Small-Cap Value 2,963,580 1,165,000 119,000
* Prior to commencement of operations.
** Due to each Fund's expense limitation in effect at that time,
no management fees were paid by the Funds to T. Rowe Price.
Limitation on Fund Expenses
The Management Agreement between the Fund and T. Rowe Price
provides that the Fund will bear all expenses of its operations
not specifically assumed by T. Rowe Price. However, in
compliance with certain state regulations, T. Rowe Price will
reimburse the Fund for certain expenses which in any year exceed
the limits prescribed by any state in which the Fund's shares are
qualified for sale. Presently, the most restrictive expense
ratio limitation imposed by any state is 2.5% of the first $30
million of the Fund's average daily net assets, 2% of the next
$70 million of the Fund's assets, and 1.5% of net assets in
excess of $100 million. Reimbursement by the Fund to T. Rowe
Price of any expenses paid or assumed under a state expense
limitation may not be made more than two years after the end of
the fiscal year in which the expenses were paid or assumed.
Balanced, Blue Chip Growth, Capital Appreciation, Dividend
Growth, Equity Index, Mid-Cap Growth, New America Growth, Science
& Technology and Small-Cap Value Funds
The following chart sets forth expense ratio limitations and
the periods for which they are effective. For each, T. Rowe
Price has agreed to bear any Fund expenses which would cause the
Fund's ratio of expenses to average net assets to exceed the
indicated percentage limitations. The expenses borne by T. Rowe
Price are subject to reimbursement by the Fund through the
indicated reimbursement date, provided no reimbursement will be
made if it would result in the Fund's expense ratio exceeding its
applicable limitation.
Expense
Limitation Ratio Reimbursement
Fund Period Limitation Date
Balanced+ January 1, 1993- 1.00% December 31, 1996
December 31, 1994
Blue Chip Growth June 30, 1993- 1.25% December 31, 1996
December 31, 1994
Capital
Appreciation January 1, 1990- 1.25% December 31, 1995
December 31, 1993
PAGE 54
Dividend Growth December 30, 1992- 1.00% December 31, 1996
December 31, 1994
Equity Index++ January 1, 1994- 0.45% December 31, 1997
December 31, 1995
Mid-Cap Growth* January 1, 1994- 1.25% December 31, 1997
December 31, 1995
New America
Growth January 1, 1990- 1.25% December 31, 1995
December 31, 1993
Science &
Technology January 1, 1992- 1.25% December 31, 1995
December 31, 1993
Small-Cap
Value January 1, 1992- 1.25% December 31, 1995
December 31, 1993
+ The Balanced Fund previously operated under a 1.00%
limitation that expired December 31, 1992. The reimbursement
period for this limitation extends through December 31, 1994.
++ The Equity Index Fund previously operated under a 0.45%
limitation that expired December 31, 1993. The reimbursement
period for this limitation extends through December 31, 1995.
* The Mid-Cap Growth Fund previously operated under a 1.25%
limitation that expired December 31, 1993. The reimbursement
period for this limitation extends through December 31, 1995.
Each of the above-referenced Fund's Management Agreement also
provides that one or more additional expense limitation periods
(of the same or different time periods) may be implemented after
the expiration of the current expense limitation, and that with
respect to any such additional limitation period, the Fund may
reimburse T. Rowe Price, provided the reimbursement does not
result in the Fund's aggregate expenses exceeding the additional
expense limitation.
Pursuant to the Balanced Fund's current expense limitation,
$280,000 of management fees were not accrued by the Fund for the
year ended December 31, 1993. Pursuant to the previous expense
limitation, $571,000 remains subject to reimbursement through
December 31, 1994.
Pursuant to the Blue Chip Growth Fund's current expense
limitation, $53,000 of management fees were not accrued by the
Fund for the period ended December 31, 1993, and $30,000 of other
expenses were borne by T. Rowe Price and subject to further
reimbursement.
Pursuant to the Dividend Growth Fund's current expense
limitation, $145,000 of management fees were not accrued by he
Fund for the period ended December 31, 1993, and $84,000 of other
PAGE 55
Fund expenses borne by T. Rowe Price and are subject to future
reimbursement.
Pursuant to the Equity Index Fund's current expense
limitation, $293,000 of management fees were not accrued by the
Fund for the year ended December 31, 1993, and $20,000 of other
expenses were borne by T. Rowe Price. Additionally, $338,000 of
unaccrued fees and expenses remain subject to future
reimbursement. Pursuant to a previous expense limitation,
$421,000 of unaccrued fees and expenses from 1990-1991 have been
permanently waived.
Pursuant to Mid-Cap Growth Fund's current expense limitation,
$136,000 of management fees were not accrued by the Fund for the
year ended December 31, 1993. Additionally, $92,000 of unaccrued
fees and expenses from 1992 are subject to future reimbursement.
For New America Growth Fund, during the year ended December
31, 1987, $326,000 of management fees were not accrued by the
Fund pursuant to an annual state limitation. In 1988, the Fund
obtained a variance from this limitation which permitted the 1987
fees to be reimbursed to T. Rowe Price. The unaccrued fees from
1987 were to be reimbursed to T. Rowe Price only to the extent
that doing so would not cause the Fund's ratio of expenses to
average net assets to exceed any expense limitation then in
effect. Pursuant to these provisions, the remaining $278,000 of
fees were reimbursed to T. Rowe Price during the year ended
December 31, 1993.
Pursuant to Science & Technology Fund's previous expense
limitation, $264,000 of unaccrued 1990-1991 fees were repaid
during the year ended December 31, 1993, and $170,000 of 1990-
1991 fees have been permanently waived.
Pursuant to Small-Cap Value Fund's current and previous
expense limitations, $180,000 of unaccrued 1990-1991 fees,
representing the entire unaccrued balance, were reimbursed to the
Manager during the year ended December 31, 1993.
Capital Appreciation Fund
Management Fee
The Fund pays T. Rowe Price a fee ("Fee") which consists of
three components: a Group Management Fee ("Group Fee"), an
Individual Fund Fee ("Fund Fee") and a performance fee adjustment
("Performance Fee Adjustment") based on the performance of the
Fund relative to the Standard & Poor's 500 Stock Index (the
"Index"). The Fee is paid monthly to T. Rowe Price on the first
business day of the next succeeding calendar month and is
calculated as described below. The performance adjustment for
PAGE 56
the year ended December 31, 1993, decreased management fees by
$220,000.
The Monthly Group Fee and Monthly Fund Fee are combined (the
"Combined Fee") and are subject to a Performance Fee Adjustment,
depending on the total return investment performance of the Fund
relative to the total return performance of the Standard & Poor's
500 Stock Composite Index (the "Index") during the previous
thirty-six (36) months. The Performance Fee Adjustment is
computed as of the end of each month and if an adjustment
results, is added to, or subtracted from the Combined Fee. No
Performance Fee Adjustment is made to the Combined Fee unless the
investment performance ("Investment Performance") of the Fund
(stated as a percent) exceeds, or is exceeded by, the investment
record ("Investment Record") of the Index (stated as a percent)
by at least one full point. (The difference between the
Investment Performance and Investment Record will be referred to
as the Investment Performance Differential.) The Performance Fee
Adjustment for any month is calculated by multiplying the rate of
the Performance Fee Adjustment ("Performance Fee Adjustment") (as
determined below) achieved for the 36-month period, times the
average daily net assets of the Fund for such 36-month period and
dividing the product by 12. The Performance Fee Adjustment Rate
is calculated by multiplying the Investment Performance
Differential (rounded downward to the nearest full point) times a
factor of .02%. Regardless of the Investment Performance
Differential, the Performance Fee Adjustment Rate shall not
exceed .30%. the same period.
Example
For example, if the Investment Performance Differential
was 11.6, it would be rounded to 11. The Investment
Performance Differential of 11 would be multiplied by
.02% to arrive at the Performance Fee Adjustment Rate of
.22%. The .22% Performance Fee Adjustment Rate would be
multiplied by the fraction of 1/12 and that product would
be multiplied by the Fund's average daily net assets for
the 36-month period to arrive at the Performance Fee
Adjustment.
The computation of the Investment Performance of the Fund and
the Investment Record of the Index will be made in accordance
with Rule 205-1 under the Investment Advisers Act of 1940 or any
other applicable rule as, from time to time, may be adopted or
amended. These terms are currently defined as follows:
The Investment Performance of the Fund is the sum of: (i) the
change in the Fund's net asset value per share during the period;
(ii) the value of the Fund's cash distributions per share having
PAGE 57
an exdividend date occurring within the period; and (iii) the per
share amount of any capital gains taxes paid or accrued during
such period by the Fund for undistributed, realized long-term
capital gains.
The Investment Record of the Index is the sum of: (i) the
change in the level of the Index during the period; and (ii) the
value, computed consistently with the Index, of cash
distributions having an exdividend date occurring within the
period made by companies whose securities comprise the Index.
Equity Index Fund
Management Fee
The Fund pays T. Rowe Price an annual investment management
fee in monthly installments of .20% of the average daily net
asset value of the Fund. Due to the effect of the Fund's expense
limitation, for the years ended December 31, 1992, December 31,
1991 and for the fiscal period ended December 31, 1990, the Fund
did not pay T. Rowe Price an investment management fee.
Equity Income, Growth & Income, Growth Stock, New Era, and New
Horizons Funds
T. Rowe Price Spectrum Fund, Inc.
The Fund is a party to a Special Servicing Agreement
("Agreement") between and among T. Rowe Price Spectrum Fund, Inc.
("Spectrum Fund"), T. Rowe Price, T. Rowe Price Services, Inc.
and various other T. Rowe Price funds which, along with the Fund,
are funds in which Spectrum Fund invests (collectively all such
funds "Underlying Price Funds").
The Agreement provides that, if the Board of
Directors/Trustees 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.
PAGE 58
All Funds
DISTRIBUTOR FOR FUND
T. Rowe Price Investment Services, Inc. ("Investment
Services"), a Maryland corporation formed in 1980 as a wholly-
owned subsidiary of T. Rowe Price, serves as the Fund's
distributor. Investment Services is registered as a broker-
dealer under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. The
offering of the Fund's shares is continuous.
Investment Services is located at the same address as the
Fund and T. Rowe Price -- 100 East Pratt Street, Baltimore,
Maryland 21202.
Investment Services serves as distributor to the Fund
pursuant to an Underwriting Agreement ("Underwriting Agreement"),
which provides that the Fund will pay all fees and expenses in
connection with: registering and qualifying its shares under the
various state "blue sky" laws; preparing, setting in type,
printing, and mailing its prospectuses and reports to
shareholders; and issuing its shares, including expenses of
confirming purchase orders.
The Underwriting 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 Fund shares, except for those fees and
expenses specifically assumed by the Fund. Investment Services'
expenses are paid by T. Rowe Price.
Investment Services acts as the agent of the Fund in
connection with the sale of its shares in all states in which the
shares are qualified and in which Investment Services is
qualified as a broker-dealer. Under the Underwriting Agreement,
Investment Services accepts orders for Fund shares at net asset
value. No sales charges are paid by investors or the Fund.
All Funds
CUSTODIAN
State Street Bank and Trust Company is the custodian for the
Fund's securities and cash, but it does not participate in the
Fund's investment decisions. Portfolio securities purchased in
the U.S. are maintained in the custody of the Bank and may be
PAGE 59
entered into the Federal Reserve Book Entry System, or the
security depository system of the Depository Trust Corporation.
The Fund has entered into a Custodian Agreement with The Chase
Manhattan Bank, N.A., London, pursuant to which portfolio
securities which are purchased outside the United States are
maintained in the custody of various foreign branches of The
Chase Manhattan Bank and such other custodians, including foreign
banks and foreign securities depositories as are approved by the
Fund's Board of Directors/Trustees in accordance with regulations
under the Investment Company Act of 1940. The 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.
PORTFOLIO TRANSACTIONS
Investment or Brokerage Discretion
Decisions with respect to the purchase and sale of portfolio
securities on behalf of the Fund are made by T. Rowe Price. T.
Rowe Price is also responsible for implementing these decisions,
including the negotiation of commissions and the allocation of
portfolio brokerage and principal business.
How Brokers and Dealers are Selected
Equity Securities
In purchasing and selling the Fund's portfolio securities, it
is T. Rowe Price's policy to obtain quality execution at the most
favorable prices through responsible brokers and dealers and, in
the case of agency transactions, at competitive commission rates.
However, under certain conditions, the Fund may pay higher
brokerage commissions in return for brokerage and research
services. As a general practice, over-the-counter orders are
executed with market-makers. In selecting among market-makers,
T. Rowe Price generally seeks to select those it believes to be
actively and effectively trading the security being purchased or
sold. In selecting broker-dealers to execute the Fund's
portfolio transactions, consideration is given to such factors as
the price of the security, the rate of the commission, the size
and difficulty of the order, the reliability, integrity,
financial condition, general execution and operational
capabilities of competing brokers and dealers, and brokerage and
research services provided by them. It is not the policy of T.
Rowe Price to seek the lowest available commission rate where it
is believed that a broker or dealer charging a higher commission
rate would offer greater reliability or provide better price or
execution.
PAGE 60
Fixed Income Securities
Fixed income securities are generally purchased from the
issuer or a primary market-maker acting as principal for the
securities on a net basis, with no brokerage commission being
paid by the client. Transactions placed through dealers serving
as primary market-makers reflect the spread between the bid and
asked prices. Securities may also be purchased from underwriters
at prices which include underwriting fees.
With respect to equity and fixed income securities, T. Rowe
Price may effect principal transactions on behalf of the Fund
with a broker or dealer who furnishes brokerage and/or research
services, designate any such broker or dealer to receive selling
concessions, discounts or other allowances, or otherwise deal
with any such broker or dealer in connection with the acquisition
of securities in underwritings.
How Evaluations are Made of the Overall Reasonableness of
Brokerage Commissions Paid
On a continuing basis, T. Rowe Price seeks to determine what
levels of commission rates are reasonable in the marketplace for
transactions executed on behalf of the Fund. In evaluating the
reasonableness of commission rates, T. Rowe Price considers: (a)
historical commission rates, both before and since rates have
been fully negotiable; (b) rates which other institutional
investors are paying, based on available public information; (c)
rates quoted by brokers and dealers; (d) the size of a particular
transaction, in terms of the number of shares, dollar amount, and
number of clients involved; (e) the complexity of a particular
transaction in terms of both execution and settlement; (f) the
level and type of business done with a particular firm over a
period of time; and (g) the extent to which the broker or dealer
has capital at risk in the transaction.
Description of Research Services Received from Brokers and
Dealers
T. Rowe Price receives a wide range of research services from
brokers and dealers. These services include information on the
economy, industries, groups of securities, individual companies,
statistical information, accounting and tax law interpretations,
political developments, legal developments affecting portfolio
securities, technical market action, pricing and appraisal
services, credit analysis, risk measurement analysis, performance
analysis and analysis of corporate responsibility issues. These
services provide both domestic and international perspective.
Research services are received primarily in the form of written
reports, computer generated services, telephone contacts and
personal meetings with security analysts. In addition, such
PAGE 61
services may be provided in the form of meetings arranged with
corporate and industry spokespersons, economists, academicians
and government representatives. In some cases, research services
are generated by third parties but are provided to T. Rowe Price
by or through broker-dealers.
Research services received from brokers and dealers are
supplemental to T. Rowe Price's own research effort and, when
utilized, are subject to internal analysis before being
incorporated by T. Rowe Price into its investment process. As a
practical matter, it would not be possible for T. Rowe Price's
Equity Research Division to generate all of the information
presently provided by brokers and dealers. T. Rowe Price pays
cash for certain research services received from external
sources. T. Rowe Price also allocates brokerage for research
services which are available for cash. While receipt of research
services from brokerage firms has not reduced T. Rowe Price's
normal research activities, the expenses of T. Rowe Price could
be materially increased if it attempted to generate such
additional information through its own staff. To the extent that
research services of value are provided by brokers or dealers, T.
Rowe Price may be relieved of expenses which it might otherwise
bear.
T. Rowe Price has a policy of not allocating brokerage
business in return for products or services other than brokerage
or research services. In accordance with the provisions of
Section 28(e) of the Securities Exchange Act of 1934, T. Rowe
Price may from time to time receive services and products which
serve both research and non-research functions. In such event,
T. Rowe Price makes a good faith determination of the anticipated
research and non-research use of the product or service and
allocates brokerage only with respect to the research component.
Commissions to Brokers who Furnish Research Services
Certain brokers who provide quality execution services also
furnish research services to T. Rowe Price. In order to be
assured of continuing to receive research services considered of
value to its clients, T. Rowe Price has adopted a brokerage
allocation policy embodying the concepts of Section 28(e) of the
Securities Exchange Act of 1934, which permits an investment
adviser to cause an account to pay commission rates in excess of
those another broker or dealer would have charged for effecting
the same transaction, if the adviser determines in good faith
that the commission paid is reasonable in relation to the value
of the brokerage and research services provided. The
determination may be viewed in terms of either the particular
transaction involved or the overall responsibilities of the
adviser with respect to the accounts over which it exercises
investment discretion. Accordingly, while T. Rowe Price cannot
PAGE 62
readily determine the extent to which commission rates or net
prices charged by broker-dealers reflect the value of their
research services, T. Rowe Price would expect to assess the
reasonableness of commissions in light of the total brokerage and
research services provided by each particular broker.
Internal Allocation Procedures
T. Rowe Price has a policy of not precommitting a specific
amount of business to any broker or dealer over any specific time
period. Historically, the majority of brokerage placement has
been determined by the needs of a specific transaction such as
market-making, availability of a buyer or seller of a particular
security, or specialized execution skills. However, T. Rowe
Price does have an internal brokerage allocation procedure for
that portion of its discretionary client brokerage business where
special needs do not exist, or where the business may be
allocated among several brokers which are able to meet the needs
of the transaction.
Each year, T. Rowe Price assesses the contribution of the
brokerage and research services provided by brokers, and attempts
to allocate a portion of its brokerage business in response to
these assessments. Research analysts, counselors, various
investment committees, and the Trading Department each seek to
evaluate the brokerage and research services they receive from
brokers and make judgments as to the level of business which
would recognize such services. In addition, brokers sometimes
suggest a level of business they would like to receive in return
for the various brokerage and research services they provide.
Actual brokerage received by any firm may be less than the
suggested allocations but can, and often does, exceed the
suggestions, because the total brokerage business is allocated on
the basis of all the considerations described above. In no case
is a broker excluded from receiving business from T. Rowe Price
because it has not been identified as providing research
services.
Miscellaneous
T. Rowe Price's brokerage allocation policy is consistently
applied to all its fully discretionary accounts, which represent
a substantial majority of all assets under management. Research
services furnished by brokers through which T. Rowe Price effects
securities transactions may be used in servicing all accounts
(including non-Fund accounts) managed by T. Rowe Price.
Conversely, research services received from brokers which execute
transactions for the Fund are not necessarily used by T. Rowe
Price exclusively in connection with the management of the Fund.
PAGE 63
From time to time, orders for clients may be placed through a
computerized transaction network.
The Fund does not allocate business to any broker-dealer on
the basis of its sales of the Fund's shares. However, this does
not mean that broker-dealers who purchase Fund shares for their
clients will not receive business from the Fund.
Some of T. Rowe Price's other clients have investment
objectives and programs similar to those of the Fund. T. Rowe
Price may occasionally make recommendations to other clients
which result in their purchasing or selling securities
simultaneously with the Fund. As a result, the demand for
securities being purchased or the supply of securities being sold
may increase, and this could have an adverse effect on the price
of those securities. It is T. Rowe Price's policy not to favor
one client over another in making recommendations or in placing
orders. T. Rowe Price frequently follows the practice of
grouping orders of various clients for execution which generally
results in lower commission rates being attained. In certain
cases, where the aggregate order is executed in a series of
transactions at various prices on a given day, each participating
client's proportionate share of such order reflects the average
price paid or received with respect to the total order. T. Rowe
Price has established a general investment policy that it will
ordinarily not make additional purchases of a common stock of a
company for its clients (including the T. Rowe Price Funds) if,
as a result of such purchases, 10% or more of the outstanding
common stock of such company would be held by its clients in the
aggregate.
To the extent possible, T. Rowe Price intends to recapture
solicitation fees paid in connection with tender offers through
T. Rowe Price Investment Services, Inc., the Fund's distributor.
At the present time, T. Rowe Price does not recapture commissions
or underwriting discounts or selling group concessions in
connection with taxable securities acquired in underwritten
offerings. T. Rowe Price does, however, attempt to negotiate
elimination of all or a portion of the selling-group concession
or underwriting discount when purchasing tax-exempt municipal
securities on behalf of its clients in underwritten offerings.
Transactions with Related Brokers and Dealers
As provided in the Investment Management Agreement between
the Fund and T. Rowe Price, T. Rowe Price is responsible not only
for making decisions with respect to the purchase and sale of the
Fund's portfolio securities, but also for implementing these
decisions, including the negotiation of commissions and the
allocation of portfolio brokerage and principal business. It is
expected that T. Rowe Price may place orders for the Fund's
PAGE 64
portfolio transactions with broker-dealers through the same
trading desk T. Rowe Price uses for portfolio transactions in
domestic securities. The trading desk accesses brokers and
dealers in various markets in which the Fund's foreign securities
are located. These brokers and dealers may include certain
affiliates of Robert Fleming Holdings Limited ("Robert Fleming
Holdings") and Jardine Fleming Group Limited ("JFG"), persons
indirectly related to T. Rowe Price. Robert Fleming Holdings,
through Copthall Overseas Limited, a wholly-owned subsidiary,
owns 25% of the common stock of Rowe Price-Fleming International,
Inc. ("RPFI"), an investment adviser registered under the
Investment Advisers Act of 1940. Fifty percent of the common
stock of RPFI is owned by TRP Finance, Inc., a wholly-owned
subsidiary of T. Rowe Price, and the remaining 25% is owned by
Jardine Fleming Holdings Limited, a subsidiary of JFG. JFG is
50% owned by Robert Fleming Holdings and 50% owned by Jardine
Matheson Holdings Limited. Orders for the Fund's portfolio
transactions placed with affiliates of Robert Fleming Holdings
and JFG will result in commissions being received by such
affiliates.
The Board of Directors/Trustees of the Fund has authorized T.
Rowe Price to utilize certain affiliates of Robert Fleming and
JFG in the capacity of broker in connection with the execution of
the Fund's portfolio transactions. These affiliates include, but
are not limited to, Jardine Fleming Securities Limited ("JFS"), a
wholly-owned subsidiary of JFG, Robert Fleming & Co. Limited
("RF&Co."), Jardine Fleming Australia Securities Limited, and
Robert Fleming, Inc. (a New York brokerage firm). Other
affiliates of Robert Fleming Holding and JFG also may be used.
Although it does not believe that the Fund's use of these brokers
would be subject to Section 17(e) of the Investment Company Act
of 1940, the Board of Directors/Trustees of the Fund has agreed
that the procedures set forth in Rule 17(e)(1) under that Act
will be followed when using such brokers.
Other
For the years 1993, 1992, and 1991, the total brokerage
commissions paid by each Fund including the discounts received by
securities dealers in connection with underwritings, and the
percentage of these commissions, paid to firms which provided
research, statistical, or other services to T. Rowe Price in
connection with the management of each Fund, or, in some cases,
to each Fund, as shown below.
1993 1992 1991
Fund Commissions % Commissions % Commissions %
Balanced $ 91,678 46.1% $ 162,000 46%$ 122,000 65%
PAGE 65
Blue Chip
Growth 177,317 10% * * * *
Capital
Apprec-
iation 1,141,732 45.28% 439,000 55% 478,000 59%
Dividend
Growth 282,409 22% * * * *
Equity
Income 4,660,406 42.12% 3,419,000 37% 3,087,000 36%
Growth &
Income 2,814,544 26.9% 2,218,000 24% 2,051,000 31%
Growth
Stock 3,983,572 40.4% 3,392,000 41% 1,753,000 65%
Equity
Index 20,978 8.6% 39,000 2.8% 10,000 *
Mid-Cap
Growth 441,166 18.9% 119,000 39% *
New America
Growth 2,345,540 17.6% 1,349,00 20% 1,435,000 24%
New Era 1,758,270 28.03% 299,000 95% 451,000 63%
New
Horizons 7,336,582 8.2% 4,810,000 13% 4,239,000 14%
OTC 776,333 6.68% 120,000 35.83% 51,000 None
Science &
Tech-
nology 2,186,853 23.97% 861,000 19% 909,000 16%
Small-Cap
Value 995,993 11.4% 661,000 26.2% 117,000 12.8%
On December 31, 1993, the Balanced Fund held 38,200 shares of
the common stock of J.P. Morgan with a value of $2,650,000. In
1993, J.P. Morgan was among the Fund's regular brokers or dealers
as defined in Rule 10b-1 under the Investment Company Act of
1940.
On December 31, 1993, the Capital Appreciation Fund held
commercial paper of the following regular brokers or dealers of
the Fund Bear Stearns, BT Securities, Goldman Sachs Group,
Merrill Lynch, and Morgan Stanley Group, respectively, with a
value of $5,000,000, $5,834,000, $5,000,000, $5,000,000, and
$5,012,000, respectively. In 1993, Bear Stearns, BT Securities,
Goldman Sachs Group, Merrill Lynch, and Morgan Stanley Group were
among the Fund's regular brokers or dealers as defined in Rule
10b-1 under the Investment Company Act of 1940.
On December 31, 1993, the Equity Income Fund held 250,000
shares of the common stock of J.P. Morgan with a value of
$17,344,000. In 1993, J.P. Morgan was among the Fund's regular
brokers or dealers as defined in Rule 10b-1 under the Investment
Company Act of 1940.
PAGE 66
On December 31, 1993, the Growth Stock Fund held 150,000
shares of the common stock of J.P. Morgan with a value of
$10,406,000. In 1993, J.P. Morgan was among the Fund's regular
brokers or dealers as defined in Rule 10b-1 under the Investment
Company Act of 1940.
On December 31, 1993, the New Era Fund held commercial paper
of the following regular brokers or dealers of the Fund BT
Securities, Citicorp, Goldman Sachs Group, Merrill Lynch, and
Morgan Stanley Group, respectively, with a value of $639,000,
$4,997,000, $5,000,000, $5,000,000, and $5,000,000, respectively.
In 1993, Bear Stearns, BT Securities, Goldman Sachs Group,
Merrill Lynch, and Morgan Stanley Group were among the Fund's
regular brokers or dealers as defined in Rule 10b-1 under the
Investment Company Act of 1940.
On December 31, 1993, the Science & Technology Fund held
commercial paper of the following regular brokers or dealers of
the Fund Bankers Trust Company with a value of $5,598,000. In
1993, Bankers Trust Company was among the Fund's regular brokers
or dealers as defined in Rule 10b-1 under the Investment Company
Act of 1940.
The portfolio turnover rate for each Fund for the years ended
1993, 1992, and 1991, was as follows:
Fund 1993 1992 1991
Balanced 8.7% 207.7% 239.9%
Blue Chip Growth 152.5% * *
Capital Appreciation 39.4% 30.3% 50.7%
Dividend Growth 51.2% * *
Equity Income 31.2% 30% 33.5%
Growth & Income 22.4% 29.9% 47.9%
Growth Stock 35.3% 27.4% 31.8%
Equity Index .80% 0.1% 5.8%
Mid-Cap Growth 62.4% 51.9% *
New America Growth 43.7% 26.4% 42.3%
New Era 24.7% 16.9% 9.0%
New Horizons 49.4% 49.6% 32.5%
OTC 40.8% 30.7% 31%
Science & Technology 163.4% 144% 148%
Small-Cap Value 11.8% 12% 31%
All Funds, Except Equity Index Fund
PRICING OF SECURITIES
Equity securities listed or regularly traded on a securities
exchange (including NASDAQ) are valued at the last quoted sales
price on the day the valuations are made. A security which is
PAGE 67
listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary market for
such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at
a price within the limits of the latest bid and asked prices
deemed by the Board of Directors/Trustees, or by persons
delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter
market and are valued at a price deemed best to reflect fair
value as quoted by dealers who make markets in these securities
or by an independent pricing service. Short-term debt securities
are valued at their cost in local currency which, when combined
with accrued interest, approximates fair value.
For purposes of determining the Fund's net asset value per
share, all assets and liabilities initially expressed in foreign
currencies are converted into U.S. dollars at the mean of the bid
and offer prices of such currencies against U.S. dollars quoted
by a major bank.
Assets and liabilities for which the above valuation
procedures are inappropriate or are deemed not to reflect fair
value are stated at fair value as determined in good faith by or
under the supervision of the officers of the Fund, as authorized
by the Board of Directors/Trustees.
All Funds
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
the Fund's 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 calculated as of the close of trading on the
New York Stock Exchange ("NYSE") every day the NYSE is open for
trading. The NYSE is closed on the following days: New Year's
Day, Washington's Birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Determination of net asset value (and the offering, sale
redemption and repurchase of shares) for 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
PAGE 68
owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net
assets, or (d) during which a governmental body having
jurisdiction over the Fund may by order permit such a suspension
for the protection of the Fund's shareholders; provided that
applicable rules and regulations of the Securities and Exchange
Commission (or any succeeding governmental authority) shall
govern as to whether the conditions prescribed in (b), (c), or
(d) exist.
DIVIDENDS AND DISTRIBUTIONS
Unless you elect otherwise, the Fund's annual capital gain
distribution, if any, will be reinvested on the reinvestment date
using the NAV per share of that date. The reinvestment date
normally precedes the payment date by about 10 days although the
exact timing is subject to change.
TAX STATUS
The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986,
as amended ("Code").
A portion of the dividends paid by the Fund may be eligible
for the dividends-received deduction for corporate shareholders.
For tax purposes, it does not make any difference whether
dividends and capital gain distributions are paid in cash or in
additional shares. The Fund must declare dividends 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 100% of ordinary income and capital gains as of
December 31 to avoid federal income tax.
At the time of your purchase, the Fund's net asset value may
reflect undistributed capital gains or net unrealized
appreciation of securities held by the Fund. A subsequent
distribution to you of such amounts, although constituting a
return of your investment, would be taxable as a capital gain
distribution. For federal income tax purposes, 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. On March 31, 1993, the books of each Fund
indicated that each Fund's aggregate net assets included
undistributed net income, net realized capital gains, and
unrealized appreciation which are listed below.
PAGE 69
Undistributed Net Realized Unrealized
Fund Net Income Capital Gains Appreciation
Balanced $ 55,090 $ 1,025,471 $ 20,061,385
Blue Chip Growth * * *
Capital Appreciation 2,626,042 1,647,801 32,963,924
Dividend Growth * 111,317 472,825
Equity Income 866,534 38,535,200 228,065,617
Growth & Income * 11,728,721 192,399,318
Growth Stock 24,655 117,447,447 529,184,587
Equity Index 94,324 156,485 12,347,027
Mid-Cap Growth 13,735 397,973 3,277,481
New America Growth * 17,060,459 99,156,580
New Era 3,474,540 15,966,158 176,906,351
New Horizons * 81,970,386 410,188,247
OTC * * *
Science & Technology * 13,147,068 42,558,089
Small-Cap Value 1,309,191 2,408,380 54,441,208
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).
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.
All Funds Except Equity Index Fund
To the extent the Fund invests in foreign securities, the
following would apply:
Passive Foreign Investment Companies
The Fund may purchase the securities of certain foreign
investment funds or trusts called passive foreign investment
companies. Capital gains on the sale of such holdings will be
PAGE 70
deemed to be ordinary income regardless of how long the Fund
holds its investment. In addition to bearing their proportionate
share of the funds expenses (management fees and operating
expenses) shareholders will also indirectly bear similar expenses
of such funds. In addition, the Fund may be subject to corporate
income tax and an interest charge on certain dividends and
capital gains earned from these investments, regardless of
whether such income and gains were distributed to shareholders.
In accordance with tax regulations, the Fund intends to
treat these securities as sold on the last day of the Fund's
fiscal year and recognize any gains for tax purposes at that
time; losses will not be recognized. Such gains will be
considered ordinary income which the Fund will be required to
distribute even though it has not sold the security and received
cash to pay such distributions.
Foreign Currency Gains and Losses
Foreign currency gains and losses, including the portion of
gain or loss on the sale of debt securities attributable to
foreign exchange rate fluctuations, are taxable as ordinary
income. If the net effect of these transactions is a gain, the
dividend paid by the Fund will be increased; if the result is a
loss, the income dividend paid by the Fund will be decreased.
Adjustments to reflect these gains and losses will be made at the
end of the Fund's taxable year.
Balanced Fund
YIELD INFORMATION
From time to time, the Fund may advertise a yield figure
calculated in the following manner:
An income factor is calculated for each security in the
portfolio, which in the case of bonds is based upon the
security's market value at the beginning of the period and yield-
to-maturity as determined in conformity with regulations of the
Securities and Exchange Commission, and in the case of stocks is
based upon the stated dividend rate. The income factors are then
totalled for all securities in the portfolio. Next, expenses of
the Fund for the period net of expected reimbursements are
deducted from the income to arrive at net income, which is then
converted to a per-share amount by dividing net income by the
average number of shares outstanding during the period. The net
income per share is divided by the net asset value on the last
day of the period to produce a monthly yield which is then
annualized. Quoted yield factors are for comparison purposes
only, and are not intended to indicate future performance or
forecast the dividend per share of the Fund.
PAGE 71
All Funds
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
gains dividends. The results shown are historical and should not
be considered indicative of the future performance of the Fund.
Each average annual compound rate of return is derived from the
cumulative performance of the Fund over the time period
specified. The annual compound rate of return for the Fund over
any other period of time will vary from the average.
Cumulative Performance Percentage Change
1 Yr. 5 Yrs. 10 Yrs. Since
Ended Ended Ended Inception
12/31/93 12/31/93 12/31/93 12/31/93
S&P 500 10.07% 97.34% 301.77%
Dow Jones
Industrial Avg. 16.99 105.25 333.86
CPI 2.75 21.00 43.93
Equity Index Fund 9.42 52.02%
3/30/92
Dividend Growth Fund 19.41 19.41
12/30/92
Blue Chip Growth Fund 14.32
6/30/93
Growth Stock Fund 15.56 96.73 251.42 10,472.21
4/11/50
New America Growth Fund 17.44 153.87 269.31
9/30/85
Lipper Growth
Fund Index 14.19 102.77 248.11 219.09
Equity Income Fund 14.84 74.08 220.77
10/31/85
Lipper Equity Income
Fund Average 13.38 78.00 160.86
PAGE 72
Growth & Income Fund 12.96 81.64 186.93 292.39
12/21/82
Lipper Growth and Income
Fund Index 14.86 87.67 252.07 334.61
Capital Appreciation Fund15.66 84.41 156.43
6/30/86
Lipper Capital Appreciation
Funds Average 15.16 107.86 120.81
New Era Fund 15.33 53.18 194.60 1,040.50
1/20/69
Lipper Natural Resources
Funds Average 22.94 55.30 119.33 N/A
Science & Technology Fund24.25 228.01 199.48
9/30/87
Lipper Science and
Technology Index 23.55 130.75 88.59
Balanced Fund 13.35% 92.62% 253.40% 20,369.52%
12/31/39
Lipper Balanced
Fund Index 11.70 82.55 219.63 N/A
Lehman Brothers
Aggregate Index 9.75 70.64 206.56 N/A
Salomon Brothers Broad
Investment Grade Index 9.92 71.22 207.91 N/A
New Horizons Fund 22.01 134.34 178.05 3,587.41
6/3/60
OTC Fund 18.40 77.10 172.23% 14,347.80
6/1/56
Small-Cap Value Fund 23.30 109.51 101.51
6/30/88
NASDAQ Composite 14.75 103.68 178.82 N/A
Lipper Small Company
Growth Funds Average 16.93 121.43 228.73 N/A
Mid-Cap Growth Fund 26.24 57.21
6/30/92
S&P 400 Mid-Cap Index 13.96 32.29
NASDAQ 14.75 37.83
Lipper Growth
Fund Index 14.19 26.77
Lipper Growth Fund
Category Average 10.61 24.43
PAGE 73
Average Annual Compound Rates of Return
1 Yr. 5 Yrs. 10 Yrs. Since
Ended Ended Ended Inception
12/31/93 12/31/93 12/31/93 12/31/93
S&P 500 10.07% 14.56% 14.92%
Dow Jones
Industrial Avg. 16.99 15.47 15.81
CPI 2.75 3.89 3.71
Equity Index Fund 9.42 11.81%
3/30/92
Dividend Growth Fund 19.41 19.41
12/30/92
Blue Chip Growth Fund 14.32
6/30/93
Growth Stock Fund 15.56 14.49 13.39 11.25
4/11/50
New America Growth Fund 17.44 20.48 17.16
9/30/85
Lipper Growth
Fund Index 14.19 15.19 13.28 N/A
Equity Income Fund 14.84 11.72 15.34
10/31/85
Lipper Equity Income
Fund Average 13.38 12.14 12.17
Growth & Income Fund 12.96 12.68 11.12 13.20
12/21/82
Lipper Growth and Income
Fund Index 14.86 13.42 13.41 14.29
Capital Appreciation Fund15.66 13.02 13.37
6/30/86
Lipper Capital Appreciation
Funds Average 15.16 15.24 10.59
New Era Fund 15.33 8.90 11.41 10.25
1/20/69
Lipper Natural Resources
Funds Average 22.94 8.98 7.72 N/A
Science & Technology Fund24.25 26.82 19.18
9/30/87
Lipper Science and
Technology Index 23.55 18.20 10.68
Balanced Fund 13.35 14.01 13.45 10.36
12/31/39
PAGE 74
Lipper Balanced
Fund Index 11.70 12.79 12.32 N/A
Lehman Brothers
Aggregate Index 9.75 11.28 11.85 N/A
Salomon Brothers Broad
Investment Grade Index 9.92 11.36 11.90 N/A
New Horizons Fund 22.01 18.57 10.77 11.34
6/3/60
OTC Fund 18.40 12.11 10.53 14.15
6/1/56
Small-Cap Value Fund 23.30 15.94 13.58
6/30/88
NASDAQ Composite 14.75 15.29 10.80 N/A
Lipper Small Company
Growth Funds Average 16.93 16.76 12.16 N/A
Mid-Cap Growth Fund 26.24 35.06
6/30/92
S&P 400 Mid-Cap Index 13.96 11.61
NASDAQ 14.75 23.78
Lipper Growth
Fund Index 14.19 17.13
Lipper Growth Fund
Category Average 10.61 15.57
From time to time, in reports and promotions literature: (1)
the Fund's total return performance or P/E ratio may be compared
to any one or combination of the following: (i) the Standard &
Poor's 500 Stock Index so that you may compare the Fund's results
with those of a group of unmanaged securities widely regarded by
investors as representative of the stock market in general; (ii)
other groups of mutual funds, including T. Rowe Price Funds,
tracked by: (A) Lipper Analytical Services, a widely used
independent research firm which ranks mutual funds by overall
performance, investment objectives, and assets; (B) Morningstar,
Inc., another widely used independent research firm which ranks
mutual funds; or (C) other financial or business publications,
such as Business Week, Money Magazine, Forbes and Barron's, which
provide similar information; (iii) indices of stocks comparable
to those in which the Fund invests; (2) the Consumer Price Index
(measure for inflation) may be used to assess the real rate of
return from an investment in the Fund; (3) other government
statistics such as GNP, and net import and export figures derived
from governmental publications, e.g., The Survey of Current
Business, may be used to illustrate investment attributes of the
Fund or the general economic, business, investment, or financial
environment in which the Fund operates; (4) the effect of tax-
deferred compounding on the Fund's investment returns, or on
returns in general, may be illustrated by graphs, charts, etc.
where such graphs or charts would compare, at various points in
PAGE 75
time, the return from an investment in the Fund (or returns in
general) on a tax-deferred basis (assuming reinvestment of
capital gains and dividends and assuming one or more tax rates)
with the return on a taxable basis; and (5) the sectors or
industries in which the Fund invests may be compared to relevant
indices or surveys (e.g., S&P Industry Surveys) in order to
evaluate the Fund's historical performance or current or
potential value with respect to the particular industry or
sector. In connection with (4) above, information derived from
the following chart may be used:
IRA Versus Taxable Return
Assuming 9% annual rate of return, $2,000 annual contribution
and 28% tax bracket.
Year Taxable Tax Deferred
10 $ 28,700 $ 33,100
15 51,400 64,000
20 82,500 111,500
25 125,100 184,600
30 183,300 297,200
IRAs
An IRA is a long-term investment whose objective is to
accumulate personal savings for retirement. Due to the long-term
nature of the investment, even slight differences in performance
will result in significantly different assets at retirement.
Mutual funds, with their diversity of choice, can be used for IRA
investments. Generally, individuals may need to adjust their
underlying IRA investments as their time to retirement and
tolerance for risk changes.
Other Features and Benefits
The Fund is a member of the T. Rowe Price Family of Funds
and may help investors achieve various long-term investment
goals, such as investing money for retirement, saving for a down
payment on a home, or paying college costs. To explain how the
Fund could be used to assist investors in planning for these
goals and to illustrate basic principles of investing, various
worksheets and guides prepared by T. Rowe Price Associates, Inc.
and/or T. Rowe Price Investment Services, Inc. may be made
available. These currently include: the Asset Mix Worksheet
which is designed to show shareholders how to reduce their
investment risk by developing a diversified investment plan; the
College Planning Guide which discusses various aspects of
financial planning to meet college expenses and assists parents
in projecting the costs of a college education for their
PAGE 76
children; the Retirement Planning Kit (also available in a PC
version) includes a detailed workbook to determine how much money
you may need for retirement and suggests how you might invest to
achieve your objectives; and the Retirees Financial Guide which
includes a detailed workbook to determine how much money you can
afford to spend and still preserve your purchasing power and
suggests how you might invest to reach your goal. From time to
time, other worksheets and guides may be made available as well.
Of course, an investment in the Fund cannot guarantee that such
goals will be met.
To assist investors in understanding the different returns
and risk characteristics of various investments, the
aforementioned guides will include presentation of historical
returns of various investments using published indices. An
example of this is shown below.
Historical Returns for Different Investments
Annualized returns for periods ended 12/31/93
50 years 20 years 10 years 5 years
Small-Company Stocks 15.3% 18.8% 10.0% 13.3%
Large-Company Stocks 12.3 12.8 14.9 14.5
Foreign Stocks N/A 14.4 17.9 2.3
Long-Term Corporate Bonds 5.6 10.2 14.0 13.0
Intermediate-Term U.S.
Gov't. Bonds 5.7 9.8 11.4 11.3
Treasury Bills 4.6 7.5 6.4 5.6
U.S. Inflation 4.3 5.9 3.7 3.9
Sources: Ibbotson Associates, Morgan Stanley. Foreign stocks
reflect performance of The Morgan Stanley Capital International
EAFE Index, which includes some 1,000 companies representing the
stock markets of Europe, Australia, New Zealand, and the Far
East. This chart is for illustrative purposes only and should
not be considered as performance for, or the annualized return
of, any T. Rowe Price Fund. Past performance does not guarantee
future results.
Also included will be various portfolios demonstrating how
these historical indices would have performed in various
PAGE 77
combinations over a specified time period in terms of return. An
example of this is shown below.
Performance of Retirement Portfolios*
Asset Mix Average Annualized Value
Returns 20 Years of
Ended 12/31/93 $10,000
Investment
After Period
___________________________________________ ____________
Nominal Real Best Worst
PortfolioGrowthIncomeSafetyReturnReturn**Year Year
I. Low
Risk 40% 40% 20% 11.3% 5.4% 24.9% -9.3%$ 79,775
II. Moderate
Risk 60% 30% 10% 12.1% 6.2% 29.1%-15.6%$ 90,248
III. High
Risk 80% 20% 0% 12.9% 7.0% 33.4%-21.9%$100,031
Source: T. Rowe Price Associates; data supplied by Lehman
Brothers, Wilshire Associates, and Ibbotson Associates.
* Based on actual performance for the 20 years ended 1993 of
stocks (85% Wilshire 5000 and 15% Europe, Australia, Far East
[EAFE] Index), bonds (Lehman Brothers Aggregate Bond Index
from 1976-93 and Lehman Brothers Government/Corporate Bond
Index from 1974-75), and 30-day Treasury bills from January
1974 through December 1993. Past performance does not
guarantee future results. Figures include changes in
principal value and reinvested dividends and assume the same
asset mix is maintained each year. This exhibit is for
illustrative purposes only and is not representative of the
performance of any T. Rowe Price fund.
** Based on inflation rate of 5.9% for the 20-year period ended
12/31/93.
From time to time, Insights, a T. Rowe Price publication of
reports on specific investment topics and strategies, may be
included in the Fund's fulfillment kit. Such reports may include
information concerning: calculating taxable gains and losses on
mutual fund transactions, coping with stock market volatility,
benefiting from dollar cost averaging, understanding
international markets, investing in high-yield "junk" bonds,
growth stock investing, conservative stock investing, value
investing, investing in small companies, tax-free investing,
PAGE 78
fixed income investing, investing in mortgage-backed securities,
as well as other topics and strategies.
Dividend Growth Fund
Growing income from rising dividends
A line graph titled "Growing income from rising dividends" which
depicts hypothetical income and yield on a original investment of
$10,000 in a stock currently yielding 3% and whose dividends grow
8% a year. The chart shows a range of yields from 0% to 15% and
income from $0 to $1,500, for five year periods from zero to 20.
The yield and income for each of the periods are approximately as
listed below.
5 Years 10 Years 15 Years 20 Years
Yield 4% 6% 9% 14%
Income $400 $600 $900 $1,400
Chart depicts hypothetical income and yield on an original
investment of $10,000 in a stock currently yielding 3% and whose
dividends grow 8% a year. Example is for illustrative purposes
only and is not indicative of an investment in the T. Rowe Price
Dividend Growth Fund.
New Horizons and OTC Fund
PERFORMANCE OF LARGE VS. SMALL COMPANY
STOCKS FOLLOWING RECESSIONS
(Total Return For 12 Months After Recession)
Bar graph appears here comparing large and small company
stocks during eight post-recession periods.
Large Company Stocks
Post- 5/54- 4/58- 2/61- 11/70- 3/75- 7/80-11/82- 3/91-
Recession5/55 4/59 2/62 11/71 3/76 7/81 11/83 3/92
Periods
_________________________________________________________________
36% 38% 13% 11% 28% 14% 26% 11%
_________________________________________________________________
Small Company Stocks
Post- 5/54- 4/58- 2/61- 11/70- 3/75- 7/80-11/82- 3/91-
Recession5/55 4/59 2/62 11/71 3/76 7/81 11/83 3/92
PAGE 79
Periods
_________________________________________________________________
51% 53% 18% 12% 58% 45% 44% 28%
_________________________________________________________________
Source: T. Rowe Price Associates
Data supplied by Ibbotson Associates
The average price-earnings (p/e) ratio of the T. Rowe Price
New Horizons Fund is a valuation measure widely used by the
investment community with respect to small company stocks, and,
in the opinion of T. Rowe Price, has been a good indicator of
future small-cap stock performance. The following chart is
intended to show the history of the average (unweighted) p/e
ratio of the New Horizons Fund's portfolio companies compared
with the p/e ratio of the Standard & Poor's 500 Index. Of
course, the portfolio of the OTC Fund will differ from the
portfolio of the New Horizons Fund. Earnings per share are
estimated by T. Rowe Price for each quarter end.
T. ROWE PRICE NEW HORIZONS FUND, INC.
P/E Ratio of Fund's Portfolio Securities
Relative To The S & P "500" P/E Ratio
(12 Months Forward) January 31, 1993
This is a one line chart that shows the p/e ratio of the New
Horizons Fund relative to the p/e ratio of the S&P 500 Stock
Index. The ratio between the two p/e's is depicted quarterly
from 1/31/61 to 1/31/93.
The horizontal axis is divided into two year periods. The
vertical axis indicates the relative p/e ratio with 0.5, 1,
1.5, 2, and 2.5 indicated by horizontal lines. The ratio
at 12/31/61 is 2, is at the lowest point in the first
quarter of 1977 at approximately 0.95, is at the highest
point near the end of 1983 at approximately 2.2, and is at
1.22 on January 31, 1993.
Source: T. Rowe Price Associates, Inc.
Science & Technology Fund
No-Load Versus Load and 12b-1 Funds
Unlike the T. Rowe Price funds, many mutual funds charge
sales fees to investors or use fund assets to finance
distribution activities. These fees are in addition to the
normal advisory fees and expenses charged by all mutual funds.
There are several types of fees charged which vary in magnitude
PAGE 80
and which may often be used in combination. A sales charge (or
"load") can be charged at the time the fund is purchased
(front-end load) or at the time of redemption (back-end load).
Front-end loads are charged on the total amount invested.
Back-end loads or "redemption fees" are charged either on the
amount originally invested or on the amount redeemed. 12b-1
plans allow for the payment of marketing and sales expenses from
fund assets. These expenses are usually computed daily as a
fixed percentage of assets.
The Fund is a no-load fund which imposes no sales charges
or 12b-1 fees. No-load funds are generally sold directly to the
public without the use of commissioned sales representatives.
This means that 100% of your purchase is invested for you.
The examples in the attached table show the impact on
investment performance of the most common types of sales charges.
For each example the investor has $10,000 to invest and each fund
performs at a compound annual rate of 6% per year (net of fund
expenses, including management fees) for ten years. The "Total
After 10 Years" shows the amount the investor would receive from
the fund after ten years. Net charges are the total sales fee(s)
paid by the investor or charged to the fund's assets. Figures
for total return are net of Fund expenses including management
fees.
The table is for illustrative purposes and is not intended
to reflect the anticipated performance of the Fund.
If a $10,000 investment produced a 6% annual total return for
ten years in a mutual fund that has . . .
A Sales 1 1.00%
Charge 12b-1
No A of 2% A Plan
Sales Redemp- With a Sales Distri-
Charge tion Fee 1% Redemp- Charge bution
"No-Load" of 1% tion Fee of 8.5% Fee
_________ ________ __________ _______ _______
Original
Investment $10,000 $10,000 $10,000 $10,000 $10,000
(Sales Charge) N/C 2 N/C (200) (850) N/C
_______ _______ _______ _______ _______
Amount Credited
to Account $10,000 $10,000 $ 9,800 $ 9,150 $10,000
Compounded at 6%
For Ten Years $17,908 $17,908 $17,550 $16,386 $16,196
Less Redemption Fee N/C (179) (176) N/C N/C
_______ _______ _______ _______ _______
PAGE 81
Total After
10 Years $17,908 $17,729 $17,374 $16,386 $16,196
Net Charges $0 ($179) ($376) ($850)($1,332)
1 Figures have been rounded
2 N/C - No charge
3 Net of 12b-1 plan distribution charges
Small-Cap Value Fund
T. ROWE PRICE NEW HORIZONS FUND, INC.
P/E Ratio of Fund's Portfolio Securities
Relative to the S&P "500" P/E Ratio
(12 Months Forward) January 31, 1993
This is a one-line chart that shows the p/e ratio of the New
Horizons Fund relative to the p/e ratio of the S&P 500 Stock
Index. The ratio between the two p/e's is depicted quarterly
from 1/31/61 to 1/31/93.
The horizontal axis is divided into four year periods. The
vertical axis indicates the relative p/e ratio with 0.5, 1, 1.5,
2, and 2.5 indicated by horizontal lines. The ratio at 12/31/61
is 2, is at the lowest point in the first quarter of 1977 at
approximately 0.95, is at the highest point near the end of 1993
at approximately 2.2, and is at 1.22 on January 31, 1993.
Redemptions in Kind
In the unlikely event a shareholder were to receive an in
kind redemption of portfolio securities of the Fund, brokerage
fees could be incurred by the shareholder in a subsequent sale of
such securities.
Issuance of Fund Shares for Securities
Transactions involving issuance of Fund shares for
securities or assets other than cash will be limited to (1) bona
fide reorganizations; (2) statutory mergers; or (3) other
acquisitions of portfolio securities that: (a) meet the
investment objective and policies of the Fund; (b) are acquired
for investment and not for resale except in accordance with
applicable law; (c) have a value that is readily ascertainable
via listing on or trading in a recognized United States or
international exchange or market; and (d) are not illiquid.
Balanced Fund
From time to time, in reports and promotional literature,
the Fund, may compare its performance or yield to Overnight
PAGE 82
Government Repurchase Agreements, Treasury bills, notes, and
bonds, certificates of deposit, and six-month money market
certificates. Performance or yield may also be compared to (1)
indices of broad groups of managed and unmanaged securities
considered to be representative of or similar to Fund portfolio
holdings (2) other mutual funds or (3) other measures of
performance set forth on publications such as:
Advertising News Service, Inc., "Bank Rate Monitor - The
Weekly Financial Rate Reporter" is a weekly publication
which lists the yields on various money market
instruments offered to the public by 100 leading banks
and thrift institutions in the U.S., including loan rates
offered by these banks. Bank certificates of deposit
differ from mutual funds in several ways: the interest
rate established by the sponsoring bank is fixed for the
term of a CD; there are penalties for early withdrawal
from CDs, and the principal on a CD is insured.
Donoghue Organization, Inc., "Donoghue's Money Fund
Report" is a weekly publication which tracks net assets,
yield, maturity, and portfolio holdings on approximately
380 money market mutual funds offered in the U.S. These
funds are broken down into various categories such as
U.S. Treasury, Domestic Prime and Euros, Domestic Prime
and Euros and Yankees, and Aggressive.
Lipper Analytical Services, Inc. Average of Balanced
Funds - a widely used independent research firm which
ranks mutual funds by overall performance, investment
objectives, and assets.
Lipper Analytical Services, Inc., "Lipper Mutual Fund
Performance Analysis" is a monthly publication which
tracks net assets, total return, principal return and
yield on approximately 950 fixed income mutual funds
offered in the United States. Fund categories include:
Growth, Mixed Income, and Flexible Portfolios.
Major Competitors - the average of the following mutual
funds: Fidelity Puritan, Vanguard Wellington, Twentieth
Century Balanced, or other similar mutual funds.
Merrill Lynch, Pierce, Fenner & Smith, Inc., "Taxable
Bond Indices" is a monthly publication which lists
principal, coupon and total return on over 100 different
taxable bond indices tracked by Merrill Lynch, together
with the par weighted characteristics of each Index. The
index used as a benchmark for the High Yield Fund is the
High Yield Index. The two indices used as benchmarks for
PAGE 83
the Short-Term Bond Fund are the 91-Day Treasury Bill
Index and the 1-2.99 Year Treasury Note Index.
Morningstar, Inc., is a widely used independent research
firm which rates mutual funds by overall performance,
investment objectives and assets.
Mutual Fund Values, published by Morningstar, Inc., is a
mutual fund tracking system which provides a top
performer list every two weeks based on performanced and
risk measurements.
Salomon Brothers Inc., "Market Performance" - a monthly
publication which tracks principal return, total return
and yield on the Salomon Brothers Broad Investment Grade
Bond Index and the components of the Index.
Salomon Brothers Broad Investment Grade Index - a widely
used index composed of U.S. domestic government,
corporate, and mortgage-backed fixed income securities.
Shearson Lehman Brothers, Inc. "The Bond Market Report" -
a monthly publication which tracks principal, coupon and
total return on the Shearson Lehman Govt./Corp. Index and
Shearson Lehman Aggregate Bond Index, as well as all the
components of these Indices.
Telerate Systems, Inc., a market data distribution
network computer system to which we subscribe which
tracks a broad range of financial markets including, the
daily rates on money market instruments, public corporate
debt obligations and public obligations of the U.S.
Treasury and agencies of the U.S. Government.
Wall Street Journal, is a national daily financial news
publication which lists the yields and current market
values on money market instruments, public corporate debt
obligations, public obligations of the U.S. Treasury and
agencies of the U.S. government as well as common stocks,
preferred stocks, convertible preferred stocks, options
and commodities; in addition to indices prepared by the
research departments of such financial organizations as
Shearson Lehman/American Express Inc. and Merrill Lynch,
Pierce, Fenner and Smith, Inc., including information
provided by the Federal Reserve Board.
Balanced Fund
On August 31, 1992, the T. Rowe Price Balanced Fund acquired
substantially all of the assets of the Axe-Houghton Fund B, a
series of Axe-Houghton Funds, Inc. As a result of this
PAGE 84
acquisition, the Securities & Exchange Commission requires that
the historical performance information of the Balanced Fund be
based on the performance of Fund B. Therefore, all performance
information of the Balanced Fund prior to September 1, 1992,
reflects the performance of Fund B and investment managers other
than T. Rowe Price. Performance information after August 31,
1992, reflects the combined assets of the Balanced Fund and Fund
B.
All Funds, Except Capital Appreciation, Equity Income and New
America Growth Funds
CAPITAL STOCK
The Fund's Charter authorizes the Board of Directors to
classify and reclassify any and all shares which are then
unissued, including unissued shares of capital stock into any
number of classes or series, each class or series consisting of
such number of shares and having such designations, such powers,
preferences, rights, qualifications, limitations, and
restrictions, as shall be determined by the Board subject to the
Investment Company Act and other applicable law. The shares of
any such additional classes or series might therefore differ from
the shares of the present class and series of capital stock and
from each other as to preferences, conversions or other rights,
voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption, subject to
applicable law, and might thus be superior or inferior to the
capital stock or to other classes or series in various
characteristics. The Board of Directors may increase or decrease
the aggregate number of shares of stock or the number of shares
of stock of any class or series that the Fund has authorized to
issue without shareholder approval.
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.
PAGE 85
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 Investment Company Act of 1940.
Capital Appreciation, Equity Income and New America Growth Funds
ORGANIZATION OF THE FUND
For tax and business reasons, the Fund's were organized as
Massachusetts Business Trusts in 1985 for the Equity Income and
New America Growth Funds and 1986 for the Capital Appreciation
Fund, and are registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 as a
diversified, open-end investment company, commonly known as a
"mutual fund."
The Declaration of Trust permits the Board of Trustees to
issue an unlimited number of full and fractional shares of a
single class. The Declaration of Trust also provides that the
Board of Trustees may issue additional series or classes of
shares. Each share represents an equal proportionate beneficial
interest in the Fund. In the event of the liquidation of the
Fund, each share is entitled to a pro rata share of the net
assets of the Fund.
PAGE 86
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 trustees (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 trustees unless and
until such time as less than a majority of the trustees holding
office have been elected by shareholders, at which time the
trustees then in office will call a shareholders' meeting for the
election of trustees. Pursuant to Section 16(c) of the
Investment Company Act of 1940, holders of record of not less
than two-thirds of the outstanding shares of the Fund may remove
a trustee by a vote cast in person or by proxy at a meeting
called for that purpose. Except as set forth above, the trustees
shall continue to hold office and may appoint successor trustees.
Voting rights are not cumulative, so that the holders of more
than 50% of the shares voting in the election of trustees can, if
they choose to do so, elect all the trustees of the Trust, in
which event the holders of the remaining shares will be unable to
elect any person as a trustee. No amendments may be made to the
Declaration of Trust without the affirmative vote of a majority
of the outstanding shares of the Trust.
Shares have no preemptive or conversion rights; the right of
redemption and the privilege of exchange are described in the
prospectus. Shares are fully paid and nonassessable, except as
set forth below. The Trust may be terminated (i) upon the sale
of its assets to another diversified, open-end management
investment company, if approved by the vote of the holders of
two-thirds of the outstanding shares of the Trust, or (ii) upon
liquidation and distribution of the assets of the Trust, if
approved by the vote of the holders of a majority of the
outstanding shares of the Trust. If not so terminated, the Trust
will continue indefinitely.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the Fund. However, the Declaration of Trust disclaims
shareholder liability for acts or obligations of the Fund and
requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by
the Fund or a Trustee. The Declaration of Trust provides for
indemnification from Fund property for all losses and expenses of
any shareholder held personally liable for the obligations of the
Fund. Thus, the risk of a shareholder's incurring financial loss
on account of shareholder liability is limited to circumstances
in which the Fund itself would be unable to meet its obligations,
a possibility which T. Rowe Price believes is remote. Upon
payment of any liability incurred by the Fund, the shareholders
of the Fund paying such liability will be entitled to
reimbursement from the general assets of the Fund. The Trustees
PAGE 87
intend to conduct the operations of the Fund in such a way so as
to avoid, as far as possible, ultimate liability of the
shareholders for liabilities of such Fund.
FEDERAL AND STATE REGISTRATION OF SHARES
The Fund's shares are registered for sale under the
Securities Act of 1933, and the Fund or its shares are registered
under the laws of all states which require registration, as well
as the District of Columbia and Puerto Rico.
LEGAL COUNSEL
Shereff, Friedman, Hoffman, & Goodman, whose address is 919
Third Avenue, New York, New York 10022, is legal counsel to the
Fund.
INDEPENDENT ACCOUNTANTS
Blue Chip Growth, Dividend Growth, Equity Income, Growth &
Income, Mid-Cap Growth, New America Growth, and New Era Funds
Price Waterhouse, 7 St. Paul Street, Suite 1700, Baltimore,
Maryland 21202, are independent accountants to the Fund.
Balanced, Capital Appreciation, Growth Stock, Equity Index Fund,
New Horizons, OTC, Science & Technology, and Small-Cap Value
Funds
Coopers & Lybrand, 217 East Redwood Street, Baltimore,
Maryland 21202, are independent accountants to the Fund.
Financial Statements
Blue Chip Growth Fund
The financial statements of the Fund for the period ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report for the period ended
December 31, 1993. A copy of the Annual Report accompanies this
Statement of Additional Information. The following financial
statements and the report of independent accountants appearing in
the Annual Report for the period ended December 31, 1993, are
incorporated into this Statement of Additional Information by
reference:
PAGE 88 Annual
Report Page
Report of Independent Accountants 11
Statement of Net Assets, December 31, 1993 5-7
Statement of Operations, June 30, 1993
(Commencement of Operations) to
December 31, 1993 7
Statement of Changes in Net Assets, June 30,
1993 (Commencement of Operations) to
December 31, 1993 8
Notes to Financial Statements, December 31, 1993 8-9
Financial Highlights, June 30, 1993
(Commencement of Operations) to
December 31, 1993 10
Dividend Growth Fund
The financial statements of the Fund for the period ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report for the period ended
December 31, 1993. A copy of the Annual Report accompanies this
Statement of Additional Information. The following financial
statements and the report of independent accountants appearing in
the Annual Report for the period ended December 31, 1993, are
incorporated into this Statement of Additional Information by
reference:
Annual
Report Page
Report of Independent Accountants 11
Statement of Net Assets, December 31, 1993 4-6
Statement of Operations, December 30, 1992
(Commencement of Operations) to
December 31, 1993 7
Statement of Changes in Net Assets, December 30,
1992 (Commencement of Operations) to
December 31, 1993 8
Notes to Financial Statements, December 31, 1993 8-10
Financial Highlights, December 30, 1992
(Commencement of Operations) to
December 31, 1993 10
Equity Income Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report for the year ended December
31, 1993. A copy of the Annual Report accompanies this Statement
of Additional Information. The following financial statements
PAGE 89
and the report of independent accountants appearing in the Annual
Report for the year ended December 31, 1993 are incorporated into
this Statement of Additional Information by reference:
Annual Report
Page
____________
Report of Independent Accountants 15
Statement of Net Assets, December 31, 1993 5-9
Statement of Operations, year ended
December 31, 1993 10
Statement of Changes in Net Assets, years ended
December 31, 1993 and December 31, 1992 11
Notes to Financial Statements, December 31, 1993 12-13
Financial Highlights 14
Growth & Income Fund
The financial statements of the Fund for the year ended
December 31, 1993 and the report of independent accountants are
included in the Fund's Annual Report for the year ended December
31, 1993. A copy of the Annual Report accompanies this Statement
of Additional Information. The following financial statements
and the report of independent accountants appearing in the Annual
Report for the year ended December 31, 1993 are incorporated into
this Statement of Additional Information by reference:
Annual Report Page
__________________
Report of Independent Accountants 15
Statement of Net Assets, December 31, 1993 6-9
Statement of Operations, year ended
December 31, 1993 10
Statement of Changes in Net Assets, years ended
December 31, 1993 and December 31, 1992 11
Notes to Financial Statements, December 31, 1993 12-13
Financial Highlights 14
Mid-Cap Growth Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report for the year ended December
31, 1993. A copy of the Annual Report accompanies this Statement
of Additional Information. The following financial statements
and the report of independent accountants appearing in the Annual
Report for the year ended December 31, 1993, are incorporated
into this Statement of Additional Information by reference:
PAGE 90
Annual
Report Page
Report of Independent Accountants 11
Statement of Net Assets, December 31, 1993 5-7
Statement of Operations, December 31, 1993 7
Statement of Changes in Net Assets,
year ended December 31, 1993 and
June 30, 1992 (Commencement of Operations)
to December 31, 1992 8
Notes to Financial Statements, December 31, 1993 8-10
Financial Highlights, year ended December 31, 1993
and June 30, 1992 (Commencement of Operations)
to December 31, 1992 10
New America Growth Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report for the year ended December
31, 1993. A copy of the Annual Report accompanies this Statement
of Additional Information. The following financial statements
and the report of independent accountants appearing in the Annual
Report for the year ended December 31, 1993 are incorporated into
this Statement of Additional Information by reference:
Annual Report
Page
Report of Independent Accountants 13
Statement of Net Assets, December 31, 1993 7-8
Statement of Operations, year ended
December 31, 1993 9
Statement of Changes in Net Assets,
years ended December 31, 1993 and
December 31, 1992 10
Notes to Financial Statements
December 31, 1993 10-11
Financial Highlights 12
New Era Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report for the year ended December
31, 1993. A copy of the Annual Report accompanies this Statement
of Additional Information. The following financial statements
and the report of independent accountants appearing in the Annual
Report for the year ended December 31, 1993, are incorporated
into this Statement of Additional Information by reference:
PAGE 91
Annual Report
Page
_____________
Report of Independent Accountants 14
Statement of Net Assets, December 31, 1993 7-8
Statement of Operations, year ended
December 31, 1993 9
Statement of Changes in Net Assets, years ended
December 31, 1993 and December 31, 1992 10
Notes to Financial Statements,
December 31, 1993 11-12
Financial Highlights 13
Balanced Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants, are
included in the Fund's Annual Report. A copy of the Annual
Report accompanies this Statement of Additional Information. The
following financial statements and the report of independent
accountants appearing in the Annual Report for the year ended
December 31, 1993 and are incorporated into this Statement of
Additional Information by reference:
Annual Report
Page
Report of Independent Accountants 18
Statement of Net Assets, December 31, 1993 6-12
Statement of Operations, year ended
December 31, 1993 13
Statement of Changes in Net Assets, December 31, 1993,
two-months ended December 31, 1992 and year ended
October 31, 1992 14
Notes to Financial Statements, December 31, 1993 15-16
Financial Highlights 17
Capital Appreciation Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report. A copy of the Annual
Report accompanies this Statement of Additional Information. The
following financial statements and the report of independent
accountants appearing in the Annual Report for the year ended
December 31, 1993, are incorporated into this Statement of
Additional Information by reference.
PAGE 92
Annual Report
Page
_____________
Report of Independent Accountants 16
Statement of Net Assets, December 31, 1993 7-10
Statement of Operations, year ended
December 31, 1993 11
Statement of Changes in Net Assets,
years ended December 31, 1993 and
December 31, 1992 12
Notes to Financial Statements
December 31, 1993 13-14
Financial Highlights 15
Growth Stock Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report. A copy of the Annual
Report accompanies this Statement of Additional Information. The
following financial statements and the report of independent
accountants appearing in the Annual Report for the year ended
December 31, 1993, are incorporated into this Statement of
Additional Information by reference:
Annual Report
Page
_____________
Report of Independent Accountants 15
Statement of Net Assets, December 31, 1993 6-10
Statement of Operations, year ended December 31, 1993 10
Statement of Changes in Net Assets, years ended
December 31, 1993 and December 31, 1992 11
Notes to Financial Statements 11-13
Financial Highlights 14
Equity Index Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report. A copy of the Annual
Report accompanies this Statement of Additional Information. The
following financial statements and the report of independent
accountants appearing in the Annual Report for the year ended
December 31, 1993, are incorporated into this Statement of
Additional Information by reference:
PAGE 93
Annual
Report Page
___________
Report of Independent Accountants 15
Statement of Net Assets, December 31, 1993 6-11
Statement of Operations, year ended December 31, 1993 11
Statement of Changes in Net Assets, years ended
December 31, 1993 and December 31, 1992 12
Notes to Financial Statements, December 31, 1993 12-14
Financial Highlights 14
New Horizons Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report. A copy of the Annual
Report accompanies this Statement of Additional Information. The
following financial statements and the report of independent
accountants appearing in the Annual Report for the year ended
December 31, 1993, are incorporated into this Statement of
Additional Information by reference:
Annual Report
Page
_____________
Report of Independent Accountants 18
Portfolio of Investments, December 31, 1993 8-11
Statement of Assets and Liabilities, December 31, 199312
Statement of Operations, year ended
December 31, 1993 13
Statement of Changes in Net Assets, years ended
December 31, 1993 and December 31, 1992 14
Notes to Financial Statements 15-16
Financial Highlights 17
OTC Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report. A copy of the Annual
Report accompanies this Statement of Additional Information. The
following financial statements and the report of independent
accountants appearing in the Annual Report for the year ended
December 31, 1993, are incorporated into this Statement of
Additional Information by reference:
PAGE 94
Annual Report Page
__________________
Report of Independent Accountants 11
Statement of Net Assets, December 31, 1993 4-6
Statement of Operations, year ended December 31, 1993 7
Statement of Changes in Net Assets, years ended
December 31, 1993 and December 31, 1992 8
Notes to Financial Statements 8-9
Financial Highlights 10
Science & Technology Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants, are
included in the Fund's Annual Report. A copy of the Annual
Report accompanies this Statement of Additional Information. The
following financial statements and the report of independent
accountants appearing in the Annual Report for the year ended
December 31, 1993, are incorporated into this Statement of
Additional Information by reference.
Annual Report Page
__________________
Report of Independent Accountants 14
Portfolio of Investments, December 31, 1993 7-8
Statement of Assets and Liabilities, December 31, 1993 8
Statement of Operations, year ended
December 31, 1993 9
Statement of Changes in Net Assets, years
ended December 31, 1993 and December 31, 1992 10
Notes to Financial Statements 11-12
Financial Highlights 13
Small-Cap Value Fund
The financial statements of the Fund for the year ended
December 31, 1993, and the report of independent accountants are
included in the Fund's Annual Report. A copy of the Annual
Report accompanies this Statement of Additional Information. The
following financial statements and the report of independent
accountants appearing in the Annual Report for the year ended
December 31, 1993, are incorporated into this Statement of
Additional Information by reference:
Annual Report Page
__________________
Report of Independent Accountants 15
Portfolio of Investments, December 31, 1993 5-8
Statement of Assets and Liabilities,
PAGE 95
December 31, 1993 9
Statement of Operations, year ended
December 31, 1993 10
Statement of Changes in Net Assets, years ended
December 31, 1993 and December 31, 1992 11
Notes to Financial Statements 12-13
Financial Highlights 14
RATINGS OF CORPORATE DEBT SECURITIES
Moody's Investors Services, Inc. (Moody's)
Aaa-Bonds rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are
generally referred to as "gilt edge."
Aa-Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds.
A-Bonds rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations.
Baa-Bonds rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba-Bonds rated Ba are judged to have speculative elements:
their futures cannot be considered as well assured. Often the
protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and
bad times over the future. Uncertainty of position characterize
bonds in this class.
B-Bonds rated B generally lack the characteristics of a
desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
Caa-Bonds rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with
respect to principal or interest.
PAGE 96
Ca-Bonds rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked short-comings.
Standard & Poor's Corporation (S&P)
AAA-This is the highest rating assigned by Standard & Poor's
to a debt obligation and indicates an extremely strong capacity
to pay principal and interest.
AA-Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very
strong.
A-Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions.
BBB-Bonds rated BBB are regarded as having an adequate
capacity to pay principal and interest. Whereas they normally
exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay principal and interest for bonds in this
category than for bonds in the A category.
BB, C, CCC, CC-Bonds rated BB, B, CCC, and CC are regarded on
balance, as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal. BB
indicates the lowest degree of speculation and CC the highest
degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse
conditions.
Fitch Investors Service, Inc.
AAA-High grade, broadly marketable, suitable for investment by
trustees and fiduciary institutions, and liable to but slight
market fluctuation other than through changes in the money rate.
The prime feature of a "AAA" bond is the showing of earnings
several times or many times interest requirements for such
stability of applicable interest that safety is beyond reasonable
question whenever changes occur in conditions. Other features
may enter, such as a wide margin of protection through
collateral, security or direct lien on specific property.
Sinking funds or voluntary reduction of debt by call or purchase
or often factors, while guarantee or assumption by parties other
than the original debtor may influence their rating.
PAGE 97
AA-Of safety virtually beyond question and readily salable.
Their merits are not greatly unlike those of "AAA" class but a
bond so rated may be junior though of strong lien, or the margin
of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured, but influenced
as to rating by the lesser financial power of the enterprise and
more local type of market.
PAGE 8
PART C OTHER INFORMATION
Item 24 - Financial Statements and Exhibits
(a) Financial Statements.
The Condensed Financial Information (Financial
Highlights table) is included in Part A of the Registration
Statement. Portfolio of Investments, Statement of Assets and
Liabilities, Statement of Operations, and Statement of Changes in
Net Assets are included in the Annual Report to Shareholders, the
pertinent portions of which are incorporated by reference in Part
B of the Registration Statement.
(b) Exhibits.
(1) Articles of Incorporation of Small-Cap Value
Fund, Inc. (filed with Amendment No. 13)
(2) Amended By-Laws of Small-Cap Value Fund, Inc.,
dated May 1, 1991
(3) Inapplicable
(4) Specimen Stock Certificate of Small-Cap Value
Fund, Inc. (filed with Amendment No. 13)
(5) Investment Management Agreement between
Small-Cap Value Fund, Inc., and T. Rowe Price Associates, Inc.,
dated May 1, 1991
(6) Underwriting Agreement between Small-Cap Value
Fund, Inc., and T. Rowe Price Investment Services, Inc., dated
June 24, 1988
(7) Inapplicable
(8)(a) Custodian Agreement between T. Rowe Price Funds
and State Street Bank and Trust Company, dated September 28,
1987, as amended to June 24, 1988, October 19, 1988, February 22,
1989, July 19, 1989, September 15, 1989, December 15, 1989,
December 20, 1989, January 25, 1990, February 21, 1990, June 12,
1990, July 18, 1990, October 15, 1990, February 13, 1991, March
6, 1991, September 12, 1991, November 6, 1991, April 23, 1992,
September 2, 1992, November 3, 1992, December 16, 1992, December
21, 1992, January 28, 1993, April 22, 1993, September 16, 1993,
and November 3, 1993
(8)(b) Subcustodian Agreement between the Registrant,
PAGE 9
State Street Bank and Trust Company and The Chase Manhattan Bank,
N.A., dated January 1, 1989
(9)(a) Transfer Agency and Service Agreement between
T. Rowe Price Services, Inc. and T. Rowe Price Funds, dated
January 1, 1994
(9)(b) Agreement between T. Rowe Price Associates,
Inc. and T. Rowe Price Funds for Fund Accounting Services, dated
January 1, 1994
(9)(c) Agreement between T. Rowe Price Retirement Plan
Services, Inc. and the Taxable Funds, dated January 1, 1994
(10) Inapplicable
(11) Consent of Independent Accounts
(12) Inapplicable
(13) Inapplicable
(14) Inapplicable
(15) Inapplicable
(16) Total Return Performance Methodology
Item 25. Persons Controlled by or Under Common Control.
None.
Item 26. Number of Holders of Securities
As of December 31, 1993 there were 25,000 shareholders in the
Fund.
Item 27. Indemnification
The Registrant maintains comprehensive Errors and Omissions and
Officers and Directors insurance policies written by the Evanston
Insurance Company, The Chubb Group, and ICI Mutual Insurance Co.
These policies provide coverage for the named insureds, which
include T. Rowe Price Associates, Inc. ("Manager"), Rowe
Price-Fleming International, Inc. ("Price-Fleming"), T. Rowe
Price Investment Services, Inc., T. Rowe Price Services, Inc., T.
Rowe Price Trust Company, T. Rowe Price Stable Asset Management,
Inc., RPF International Bond Fund and thirty-three other
investment companies, namely, T. Rowe Price Growth Stock Fund,
PAGE 10
Inc., T. Rowe Price New Horizons Fund, Inc., T. Rowe Price New
Era Fund, Inc., T. Rowe Price New Income Fund, Inc., T. Rowe
Price Prime Reserve Fund, Inc., T. Rowe Price Tax-Free Income
Fund, Inc., T. Rowe Price Tax-Exempt Money Fund, Inc., T. Rowe
Price International Funds, Inc., T.Rowe Price Growth & Income
Fund, Inc., T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.,
T. Rowe Price Short-Term Bond Fund, Inc., T. Rowe Price High
Yield Fund, Inc., T. Rowe Price Tax-Free High Yield Fund, Inc.,
T. Rowe Price New America Growth Fund, T. Rowe Price Equity
Income Fund, T. Rowe Price GNMA Fund, T. Rowe Price Capital
Appreciation Fund, T. Rowe Price State Tax-Free Income Trust, T.
Rowe Price California Tax-Free Income Trust, T. Rowe Price
Science & Technology Fund, Inc., Institutional International
Funds, Inc., T. Rowe Price U.S. Treasury Funds,
Inc., T. Rowe Price Index Trust, Inc., T. Rowe Price Spectrum
Fund, Inc., T. Rowe Price Balanced Fund, Inc., T. Rowe Price
Adjustable Rate U.S. Government Fund, Inc., T. Rowe Price Mid-Cap
Growth Fund, Inc., T. Rowe Price OTC Fund, Inc., T. Rowe Price
Tax-Free Insured Intermediate Bond Fund, Inc., T. Rowe Price
Dividend Growth Fund, Inc., T. Rowe Price Blue Chip Growth Fund,
Inc., T. Rowe Price Summit Funds, Inc., and T. Rowe Price Summit
Municipal Funds, Inc. The Registrant and the thirty-three
investment companies listed above, with the exception of T. Rowe
Price Index Trust, Inc. and Institutional International Funds,
Inc., will be collectively referred to as the Price Funds. The
investment manager for the Price Funds, including T. Rowe Price
Index Trust, Inc., is the Manager. Price-Fleming is the
investment manager to T. Rowe Price International Funds, Inc. and
Institutional International Funds, Inc., and is 50% owned by TRP
Finance, Inc., a wholly-owned subsidiary of the Manager, 25%
owned by Copthall Overseas Limited, a wholly-owned subsidiary of
Robert Fleming Holdings Limited, and 25% owned by Jardine Fleming
International Holdings Limited. In addition to the corporate
insureds, the policies also cover the officers, directors, and
employees of each of the named insureds. The premium is
allocated among the named corporate insureds in accordance with
the provisions of Rule l7d-1(d)(7) under the Investment Company
Act of 1940.
Article X, Section 10.01 of the Small-Cap Value Fund, Inc.'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
PAGE 11
threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative
(hereinafter collectively referred to as a "Proceeding") against
any judgments, penalties, fines, settlements, and reasonable
expenses (including attorneys' fees) incurred by such Indemnitee
in connection with any Proceeding, to the fullest extent that
such indemnification may be lawful under applicable Maryland law,
as from time to time amended. The Corporation shall pay any
reasonable expenses so incurred by such Indemnitee in defending
a Proceeding in advance of the final disposition thereof to the
fullest extent that such advance payment may be lawful under
applicable Maryland law, as from time to time amended. Subject
to any applicable limitations and requirements set forth in the
Corporation's Articles of Incorporation and in these By-Laws,
any payment of indemnification or advance of expenses shall be
made in accordance with the procedures set forth in applicable
Maryland law, as from time to time amended.
Notwithstanding the foregoing, nothing herein shall protect
or purport to protect any Indemnitee against any liability to
which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard
of the duties involved in the conduct of his office ("Disabling
Conduct").
Anything in this Article X to the contrary notwithstanding,
no indemnification shall be made by the Corporation to any
Indemnitee unless:
(a) there is a final decision on the merits by a court or
other body before whom the Proceeding was brought that the
Indemnitee was not liable by reason of Disabling Conduct; or
(b) in the absence of such a decision, there is a
reasonable determination, based upon a review of the facts, that
the Indemnitee was not liable by reason of Disabling Conduct,
which determination shall be made by:
(i) the vote of a majority of a quorum of directors
who are neither "interested persons" of the Corporation as
defined in Section 2(a)(19) of the Investment Company Act 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
PAGE 12
Indemnitee is entitled to indemnification as above provided, and
only if one of the following conditions is met:
(a) the Indemnitee provides a security for his
undertaking; or
(b) the Corporation shall be insured against losses
arising by reason of any lawful advances; or
(c) there is a determination, based on a review of readily
available facts, that there is reason to believe that the
Indemnitee will ultimately be found entitled to indemnification,
which determination shall be made by:
(i) a majority of a quorum of directors who are
neither "interested persons" of the Corporation as defined in
Section 2(a)(l9) of the Investment Company Act of l940, nor
parties to the Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Section 10.02 of the Small-Cap Value Fund, Inc.'s By-Laws
provides as follows:
Section 10.02. Insurance of Officers, Directors, Employees
and Agents. To the fullest extent permitted by applicable
Maryland law and by Section 17(h) of the Investment Company Act
of 1940, as from time to time amended, the Corporation may
purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee, or agent of the
Corporation, or who is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other
enterprise, against any liability asserted against him and
incurred by him in or arising out of his position, whether or not
the Corporation would have the power to indemnify him against
such liability.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
PAGE 13
registrant in the successful defense of any action, suit
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Investment Manager.
Rowe Price-Fleming International, Inc. ("Price-Fleming"), a
Maryland corporation, is a corporate joint venture 50% owned by
TRP Finance, Inc., a wholly-owned subsidiary of the Manager, and
was organized in 1979 to provide investment counsel service with
respect to foreign securities for institutional investors in the
United States. Price-Fleming, in addition to managing private
counsel client accounts, also sponsors registered investment
companies which invest in foreign securities, serves as general
partner of RPFI International Partners, Limited Partnership, and
provides investment advice to the T. Rowe Price Trust Company,
trustee of the International Common Trust Fund.
T. Rowe Price Investment Services, Inc. ("Investment Services"),
a wholly- owned subsidiary of the Manager, is a Maryland
corporation organized in 1980 for the purpose of acting as the
principal underwriter and distributor for the Price Funds.
Investment Services is registered as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. In 1984, Investment
Services expanded its activities to include a discount brokerage
service.
TRP Distribution, Inc., a wholly-owned subsidiary of Investment
Services, is a Maryland corporation organized in 1991. It was
organized for and engages in the sale of certain investment
related products prepared by Investment Services.
T. Rowe Price Associates Foundation, Inc., was organized in 1981
for the purpose of making charitable contributions to religious,
charitable, scientific, literary and educational organizations.
The Foundation (which is not a subsidiary of the Manager) is
funded solely by contributions from the Manager and income from
investments.
T. Rowe Price Services, Inc. ("Price Services"), a wholly-owned
subsidiary of the Manager, is a Maryland corporation organized in
1982 and is registered as a transfer agent under the Securities
Exchange Act of 1934. Price Services provides transfer agent,
PAGE 14
dividend disbursing, and certain other services, including
shareholder services, to the Price Funds.
T. Rowe Price Retirement Plan Services, Inc. ("RPS"), a
wholly-owned subsidiary of the Manager, was incorporated in
Maryland in 1991 and is registered as a transfer agent under the
Securities Exchange Act of 1934. RPS provides administrative,
recordkeeping, and subaccounting services to administrators of
employee benefit plans.
T. Rowe Price Trust Company ("Trust Company"), a wholly-owned
subsidiary of the Manager, is a Maryland chartered limited
purpose trust company, organized
in 1983 for the purpose of providing fiduciary services. The
Trust Company serves as trustee/custodian for employee benefit
plans, common trust funds and a few trusts.
T. Rowe Price Threshold Fund II, L.P., a Delaware limited
partnership, was organized in 1986 by the Manager, and invests in
private financings of small companies with high growth potential;
the Manager is the General Partner of the partnership.
RPFI International Partners, Limited Partnership, is a Delaware
limited partnership organized in 1985 for the purpose of
investing in a diversified group of small and medium-sized
rapidly growing non-U.S. companies.
Price-Fleming is the general partner of this partnership, and
certain clients of Price-Fleming are its limited partners.
T. Rowe Price Real Estate Group, Inc. ("Real Estate Group"), is a
Maryland corporation and a wholly-owned subsidiary of the Manager
established in 1986 to provide real estate services.
Subsidiaries of Real Estate Group are: T. Rowe Price Realty
Income Fund I Management, Inc., a Maryland corporation (General
Partner of T. Rowe Price Realty Income Fund I, A No-Load Limited
Partnership), T. Rowe Price Realty Income Fund II Management,
Inc., a Maryland corporation (General Partner of T. Rowe Price
Realty Income Fund II, America's Sales-Commission-Free Real
Estate Limited Partnership), T. Rowe Price Realty Income Fund III
Management, Inc., a Maryland corporation (General Partner of T.
Rowe Price Realty Income Fund III, America's
Sales-Commission-Free Real Estate Limited Partnership, a Delaware
limited partnership), and T. Rowe Price Realty Income Fund IV
Management, Inc., a Maryland corporation (General Partner of T.
Rowe Price Realty Income Fund IV, America's Sales-Commission-Free
Real Estate Limited Partnership). Real Estate Group serves as
investment manager to T. Rowe Price Renaissance Fund, Ltd., A
Sales-Commission-Free Real Estate Investment, established in 1989
as a Maryland corporation which qualifies as a REIT.
PAGE 15
T. Rowe Price Stable Asset Management, Inc. ("Stable Asset
Management") is a Maryland corporation organized in 1988 as a
wholly-owned subsidiary of the Manager. Stable Asset Management,
which is registered as an investment adviser under the Investment
Advisers Act of 1940, specializes in the management of investment
portfolios which seek stable and consistent investment returns
through the use of guaranteed investment contracts, bank
investment contracts, structured or synthetic investment
contracts, and short-term fixed-income securities.
T. Rowe Price Recovery Fund Associates, Inc., a Maryland
corporation, is a wholly-owned subsidiary of the Manager
organized in 1988 for the purpose of serving as the General
Partner of T. Rowe Price Recovery Fund, L.P., a Delaware limited
partnership which invests in financially distressed companies.
T. Rowe Price (Canada), Inc. is a Maryland corporation organized
in 1988 as a wholly-owned subsidiary of the Manager. This entity
is registered as an investment adviser under the Investment
Advisers Act of 1940, and may apply for registration as an
investment manager under the Securities Act of Ontario in order
to be eligible to provide certain services to the RPF
International Bond Fund, a trust (whose shares are sold in
Canada) which Price-Fleming serves as investment adviser.
Since 1983, the Manager has organized several distinct Maryland
limited partnerships, which are informally called the Pratt
Street Ventures partnerships, for the purpose of acquiring
interests in growth-oriented businesses.
Tower Venture, Inc., a wholly-owned subsidiary of the Manager, is
a Maryland corporation organized in 1989 for the purpose of
serving as a general partner of 100 East Pratt St., L.P., a
Maryland limited partnership whose limited partners also include
the Manager. The purpose of the partnership is to further
develop and improve the property at 100 East Pratt Street, the
site of the Manager's headquarters, through the construction of
additional office, retail and parking space.
TRP Suburban, Inc. is a Maryland corporation organized in 1990 as
a wholly-owned subsidiary of the Manager. TRP Suburban has
entered into agreements with McDonogh School and
CMANE-McDonogh-Rowe Limited Partnership to construct an office
building in Owings Mills, Maryland, which houses the Manager's
transfer agent, plan administrative services, retirement plan
services and operations support functions.
TRP Finance, Inc. and TRP Finance MRT, Inc., wholly-owned
subsidiaries of the Manager, are Delaware corporations organized
PAGE 16
in 1990 to manage certain passive corporate investments and other
intangible assets. TRP Finance MRT, Inc. was dissolved on
October 4, 1993.
T. Rowe Price Strategic Partners Fund, L.P. is a Delaware limited
partnership organized in 1990 for the purpose of investing in
small public and private companies seeking capital for expansion
or undergoing a restructuring of ownership. The general partner
of the Fund is T. Rowe Price Strategic Partners, L.P., a Delaware
limited partnership whose general partner is T. Rowe Price
Strategic Partners Associates, Inc., ("Strategic Associates"), a
Maryland corporation which is a wholly-owned subsidiary of the
Manager. Strategic Associates also serves as the general partner
of T. Rowe Price Strategic Partners II, L.P., a Delaware limited
partnership established in 1992, which in turn serves as general
partner of T. Rowe price Strategic Partners Fund II, L.P., a
Delaware limited partnership organized in 1992.
Listed below are the directors of the Manager who have other
substantial businesses, professions, vocations, or employment
aside from that of Director of the Manager:
JAMES E. HALBKAT, JR., Director of the Manager. Mr. Halbkat is
President of U.S. Monitor Corporation, a provider of public
response systems. Mr. Halbkat's address is: P.O. Box 23109,
Hilton Head Island, South Carolina 29925.
JOHN W. ROSENBLUM, Director of the Manager. Mr. Rosenblum is the
Tayloe Murphy Professor at the University of Virginia, and a
director of: Chesapeake Corporation, a manufacturer of paper
products, Cadmus Communications Corp., a provider of printing and
communication services; Comdial Corporation, a manufacturer of
telephone systems for businesses; and Cone Mills Corporation, a
textiles producer. Mr. Rosenblum's address is: P.O. Box 6550,
Charlottesville, Virginia 22906.
ROBERT L. STRICKLAND, Director of the Manager. Mr. Strickland is
Chairman of Lowe's Companies, Inc., a retailer of specialty home
supplies. Mr. Strickland's address is 604 Two Piedmont Plaza
Building, Winston-Salem, North Carolina 27104.
PHILIP C. WALSH, Director of the Manager. Mr. Walsh is a
Consultant to Cyprus Amax Minerals Company, Englewood, Colorado,
and a director of Piedmont Mining Company, Inc., Charlotte, North
Carolina. Mr. Walsh's address is: Blue Mill Road, Morristown,
New Jersey 07960.
With the exception of Messrs. Halbkat, Rosenblum, Strickland, and
Walsh, all of the directors of the Manager are employees of the
Manager.
PAGE 17
George J. Collins, who is Chief Executive Officer, President, and
a Managing Director of the Manager, is a Director of
Price-Fleming.
George A. Roche, who is Chief Financial Officer and a Managing
Director of the Manager, is a Vice President and a Director of
Price-Fleming.
M. David Testa, who is a Managing Director of the Manager, is
Chairman of the Board of Price-Fleming.
Charles H. Salisbury, Jr., who is a Managing Director of the
Manager, is a Vice President and a Director of Price-Fleming.
Henry H. Hopkins, Charles P. Smith, and Peter Van Dyke, who are
Managing Directors of the Manager, are Vice Presidents of
Price-Fleming.
Robert P. Campbell, Robert C. Howe, Veena A. Kutler, Heather R.
Landon, George A. Murnaghan, William F. Wendler, II, and Edward
A. Wiese, who are Vice Presidents of the Manager, are Vice
Presidents of Price-Fleming.
Alvin M. Younger, Jr., who is a Managing Director and the
Secretary and Treasurer of the Manager, is Secretary and
Treasurer of Price-Fleming.
Joseph P. Croteau, who is a Vice President of the Manager, is
Controller of Price-Fleming.
Nolan L. North, who is a Vice President and Assistant Treasurer
of the Manager, is Assistant Treasurer of Price-Fleming.
Leah P. Holmes, who is an Assistant Vice President of the
Manager, is a Vice President of Price-Fleming.
Barbara A. Van Horn, who is Assistant Secretary of the Manager,
is Assistant Secretary of Price-Fleming.
Certain directors and officers of the Manager are also officers
and/or directors of one or more of the Price Funds and/or one or
more of the affiliated entities listed herein.
See also "Management of Fund," in Registrant's Statement of
Additional Information.
Item 29. Principal Underwriters.
(a) The principal underwriter for the Small-Cap Value Fund, Inc.
PAGE 18
is Investment Services. Investment Services acts as the
principal underwriter for the other thirty-three Price Funds.
Investment Services is a wholly-owned subsidiary of the Manager,
is registered as a broker-dealer under the Securities Exchange
Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. Investment Services was formed for the
limited purpose of distributing the shares of the Price Funds and
will not engage in the general securities business. Since the
Price Funds are sold on a no-load basis, Investment Services does
not receive any 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.
Positions and
Name and Principal Positions and Offices Offices With
Business Address With Underwriter Registrant
James Sellers Riepe President and Director Vice
President and
Director
Henry Holt Hopkins Vice President and Vice
Director President
Mark E. Rayford Director None
Charles E. Vieth Vice President and None
Director
Patricia M. Archer Vice President None
Edward C. Bernard Vice President None
Joseph C. Bonasorte Vice President None
Meredith C. Callanan Vice President None
Victoria C. Collins Vice President None
Christopher W. Dyer Vice President None
Mark S. Finn Vice President None
and Director
Forrest R. Foss Vice President None
Patricia O'Neil Goodyear Vice President None
James W. Graves Vice President None
Andrea G. Griffin Vice President None
Thomas Grizzard Vice President None
David J. Healy Vice President None
Joseph P. Healy Vice President None
Walter J. Helmlinger Vice President None
Eric G. Knauss Vice President None
Douglas G. Kremer Vice President None
Sharon Renae Krieger Vice President None
Keith Wayne Lewis Vice President None
David L. Lyons Vice President None
Sarah McCafferty Vice President None
PAGE 19
Maurice Albert Minerbi Vice President None
George A. Murnaghan Vice President None
Steven Ellis Norwitz Vice President None
Kathleen M. O'Brien Vice President None
Charles S. Peterson Vice President None
Pamela D. Preston Vice President None
Lucy Beth Robins Vice President None
John Richard Rockwell Vice President None
William F. Wendler, II Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Alvin M. Younger, Jr. Secretary and Treasurer None
Joseph P. Croteau Controller None
Catherine L. Berkenkemper Assistant Vice President None
Patricia Sue Butcher Assistant Vice President None
Laura H. Chasney Assistant Vice President None
George G. Finney Assistant Vice President None
John A. Galateria Assistant Vice President None
Keith J. Langrehr Assistant Vice President None
C. Lillian Matthews Assistant Vice President None
Tom J. Mauer Assistant Vice President None
Janice D. McCrory Assistant Vice President None
Sandra J. McHenry Assistant Vice President None
JeanneMarie B. Patella Assistant Vice President None
Arthur J. Silber Assistant Vice President None
Charles S. Peterson Assistant Vice President None
Mary A. Tamberrino Assistant Vice President None
Monica R. Tucker Assistant Vice President None
Linda C. Wright Assistant Vice President None
Nolan L. North Assistant Treasurer None
Barbara A. VanHorn Assistant Secretary None
<PAGE 14>
(c) Not applicable. Investment Services will not receive any
compensation with respect to its activities as underwriter for
the Price Funds since the Price Funds are sold on a no-load
basis.
Item 30. Location of Accounts and Records.
All accounts, books, and other documents required to be
maintained by T. Rowe Price Small-Cap Value Fund, Inc., under
Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder will be maintained by T. Rowe Price Small-Cap Value
Fund, Inc., at its offices at 100 East Pratt Street, Baltimore,
Maryland 21202. Transfer, dividend disbursing, and shareholder
service activities are performed by T. Rowe Price Services, Inc.,
at 100 East Pratt Street, Baltimore, Maryland 21202. Custodian
activities for T. Rowe Price Small Cap-Value Fund, Inc., are
PAGE 20
performed at State Street Bank and Trust Company's Service Center
(State Street South), 1776 Heritage Drive, Quincy, Massachusetts
02171.
Item 31. Management Services.
Registrant is not a party to any management-related service
contract, other than as set forth in the Prospectus.
Item 32. Undertakings.
(a) Inapplicable.
(b) Inapplicable.
(c) If requested to do so by the holders of at least 10% of
all votes entitled to be cast, the Registrant will call
a meeting of shareholders for the purpose of voting on
the question of removal of a trustee or trustees and
will assist in communications with other shareholders
to the extent required by Section 16(c).
(d) The Fund agrees to furnish, upon request and without
charge, a copy of its Annual Report to each person to
whom a prospectus is delivered.
(b) Inapplicable.
(c) Inapplicable.
PAGE 21
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Baltimore, State of
Maryland, this 28th day of February, 1994.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
/s/John H. Laporte
By: John H. Laporte
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/John H. Laporte
John H. Laporte Chairman of the Board February 28, 1994
/s/Carmen F. Deyesu
Carmen F. Deyesu Treasurer/Chief February 28, 1994
Financial Officer
/s/Addison Lanier
Addison Lanier Director February 28, 1994
/s/James S. Riepe
James S. Riepe Vice President and February 28, 1994
Director
/s/Hubert D. Vos
Hubert D. Vos Director February 28, 1994
/s/Paul M. Wythes
Paul M. Wythes Director February 28, 1994
PAGE 1
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
ARTICLES OF AMENDMENT
T. Rowe Price Small-Cap Value Fund, Inc., a Maryland
corporation, having its principal office in the City of
Baltimore, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended by
deleting Paragraph (B)(ii) and Paragraph (B)(iv) therefrom
Article SEVENTH and inserting in lieu thereof a new Paragraph
(B)(ii) and Paragraph (B)(iv) to read in full as follows:
"(ii) Price. Such shares shall be redeemed at their net
asset value determined as set forth in paragraph
(C) of this Article SEVENTH as of such time as the
Board of Directors shall have theretofore
prescribed by resolution, less such amounts not in
excess of 2% of the net asset value of the shares
redeemed, if any, as the Board of Directors shall
from time to time determine to be appropriate in
order to reduce the effect of disruptive trading
activity on the remaining shareholders of the Fund
and the management of its investment portfolio.
PAGE 2
All such amounts deducted shall be retained by the
Fund. In the absence of a resolution to the
contrary, the redemption price of shares deposited
shall be calculated using the net asset value of
such shares next determined as set forth in
paragraph (C) of this Article SEVENTH after
receipt of such application.
(iv) Effect of Suspension of Determination of Net Asset
Value. If, pursuant to paragraph (C)(iii) of this
Article SEVENTH, the Board of Directors shall declare a
suspension of the determination of net asset value, the
rights of shareholders (including those who shall have
applied for redemption pursuant to paragraph (B)(i) of
Article SEVENTH but who shall not yet have received
payment) to have shares redeemed and paid for by the
Corporation shall be suspended until the termination of
such suspension is declared. Any record holder whose
redemption right is so suspended may, during the period
of such suspension, by appropriate written notice of
revocation to the office or agency where application
was made, revoke his application and withdraw any share
certificates which accompanied such application. The
redemption price of shares for which redemption
applications have not been revoked shall be the net
asset value of such shares next determined as set forth
PAGE 3
in paragraph (C) of this Article SEVENTH after the
termination of such suspension, less such amounts not
in excess of 2% of the net asset value of the shares
redeemed, if any, as the Board of Directors shall from
time to time determine to be appropriate in order to
reduce the effect of disruptive trading activity on the
remaining shareholders of the Fund and the management
of its investment portfolio. All such amounts deducted
shall be retained by the Fund. Payment of the
redemption price for such redemptions shall be made
within seven (7) days after the date upon which the
proper application was made plus the period after such
application during which the determination of net asset
value was suspended."
SECOND: The Charter of the Corporation is hereby amended by
deleting subparagraph (viii) "Certificates" of Paragraph E,
Article SEVENTH thereof.
THIRD: The Board of Directors of the Corporation, on March
6, 1991, duly adopted resolutions in which were set forth the
foregoing amendments of the Charter of the Corporation, declaring
that said amendments as proposed were advisable and directing
that they be submitted for action thereon by the shareholders of
the Corporation at the annual meeting of shareholders to be held
on April 18, 1991.
PAGE 4
FOURTH: Notice setting forth a summary of the change to be
effected by said amendments of the Charter, and stating that a
purpose of said meeting of shareholders would be to take action
thereon, was given, as required by law, to all shareholders
entitled to vote thereon.
FIFTH: The amendment to Article SEVENTH (new Paragraphs
(B)(ii) and (B)(iv)) of the Charter is hereinabove set forth was
approved by the shareholders of the Corporation at said meeting
on April 18, 1991, by the affirmative vote of 2,060,452.613
shares of the 3,471,204.352 shares of common stock issued and
outstanding, or 59.358% of the votes entitled to be cast thereon,
which vote was sufficient to approve such amendment pursuant to
the provisions of the Charter of the Corporation which require
the approval of a majority of the votes entitled to be cast on
any such amendment, notwithstanding any provision of the law
requiring a greater portion.
SIXTH: The amendment to Article SEVENTH (deletion of
subparagraph (viii) "Certificates" of paragraph E) of the Charter
as hereinabove set forth was approved by the shareholders of the
Corporation at said meeting on April 18, 1991, by the affirmative
vote of 2,453,082.923 shares of the 3,471,204.352 shares of
common stock issued and outstanding, or 70.670% of the votes
entitled to be cast thereon, which vote was sufficient to approve
such amendment pursuant to the provisions of the Charter of the
Corporation which require the approval of a majority of the votes
PAGE 5
entitled to be cast on any such amendment, notwithstanding any
provision of the law requiring a greater portion.
SEVENTH: The amendments of the Charter as hereinabove set
forth has been duly advised by the Board of Directors and
approved by the shareholders of the Corporation.
IN WITNESS WHEREOF, T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
has caused these presents to be signed in its name and on its
behalf by its Vice President, and its corporate seal to be
hereunto affixed and attested by its Secretary, on May 1, 1991.
T. ROWE PRICE SMALL-CAP VALUE FUND,
INC.
By: /s/James S. Riepe
James S. Riepe, Vice President
ATTEST:
/s/Lenora V. Hornung
Lenora V. Hornung, Secretary
STATE OF MARYLAND )
) SS.:
COUNTY OF BALTIMORE )
I HEREBY CERTIFY that on May 1, 1991, before me the
subscriber, a Notary Public of the State of Maryland, in and for
the City of Baltimore, personally appeared James S. Riepe, Vice
President of T. ROWE PRICE SMALL-CAP VALUE FUND, INC., a Maryland
corporation, and in the name and on behalf of said Corporation
acknowledged the foregoing Articles of Amendment to be the
PAGE 6
corporate act of said Corporation; and at the same time made oath
in due form of law that the matters and facts set forth in said
Articles of Amendment with respect to the approval of the said
amendments are true to the best of his knowledge, information and
belief.
WITNESS my hand and notarial seal, the day and year last
above written.
/s/Catherine L. Berkenkemper
Notary Public
My Commission expires:
October 1, 1991
PAGE 1
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
(A Maryland Corporation)
BY-LAWS
ARTICLE I
NAME OF CORPORATION,
LOCATION OF OFFICES AND SEAL
Section 1.01.Name: The name of the Corporation is
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
Section 1.02.Principal Office: The principal office of
the Corporation in the State of Maryland shall be located in the
City of Baltimore. The Corporation may, in addition, establish
and maintain such other offices and places of business, within or
outside the State of Maryland, as the Board of Directors may from
time to time determine. [ MGCL, Sections 2-103(4), 2-
108(a)(1) ]*
Section 1.03.Seal: The corporate seal of the
Corporation shall be circular in form, and shall bear the name of
the Corporation, the year of its incorporation, and the words
"Corporate Seal, Maryland." The form of the seal shall be
subject to alteration by the Board of Directors and the seal may
be used by causing it or a facsimile to be impressed or affixed
or printed or otherwise reproduced. In lieu of affixing the
corporate seal to any document it shall be sufficient to meet the
requirements of any law, rule, or regulation relating to a
corporate seal to affix the word "(Seal)" adjacent to the
signature of the authorized officer of the Corporation. Any
officer or Director of the Corporation shall have authority to
affix the corporate seal of the Corporation to any document
requiring the same. [ MGCL, Sections 1-304(b), 2-103(3) ]
ARTICLE II
SHAREHOLDERS
PAGE 2
Section 2.01.Annual Meetings: The Corporation shall
not be required to hold an annual meeting of its shareholders in
any year unless the Investment Company Act of 1940 requires an
election of directors by shareholders. In the event that the
Corporation shall be so required to
____________________
* 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.
old an annual meeting, such meeting shall be held at a date and
time set by the Board of Directors, which date shall be no later
than 120 days after the occurrence of the event requiring the
meeting. Any shareholders' meeting held in accordance with the
preceding sentence shall for all purposes constitute the annual
meeting of shareholders for the fiscal year of the Corporation in
which the meeting is held. At any such meeting, the shareholders
shall elect directors to hold the offices of any directors who
have held office for more than one year or who have been elected
by the Board of Directors to fill vacancies which result from any
cause. Except as the Articles of Incorporation or statute
provides otherwise, Directors may transact any business within
the powers of the Corporation as may properly come before the
meeting. Any business of the Corporation may be transacted at
the annual meeting without being specially designated in the
notice, except such business as is specifically required by
statute to be stated in the notice. [MGCL, Section 2-501]
(Section 2.01. Annual Meetings, amended April 19, 1990)
Section 2.02.Special Meetings: Special meetings of the
shareholders may be called at any time by the Chairman of the
Board, the President, any Vice President, or by the Board of
Directors. Special meetings of the shareholders shall be called
by the Secretary on the written request of shareholders entitled
to cast at least ten (10) percent of all the votes entitled to be
cast at such meeting, provided that (a) such request shall state
the purpose or purposes of the meeting and the matters proposed
to be acted on, and (b) the shareholders requesting the meeting
shall have paid to the Corporation the reasonably estimated cost
of preparing and mailing the notice thereof, which the Secretary
shall determine and specify to such shareholders. Unless
requested by shareholders entitled to cast a majority of all the
votes entitled to be cast at the meeting, a special meeting need
not be called to consider any matter which is substantially the
same as a matter voted upon at any special meeting of the
shareholders held during the preceding twelve (12) months.
[ MGCL, Section 2-502 ]
PAGE 3
Section 2.03.Place of Meetings: All shareholders'
meetings shall be held at such place within the United States as
may be fixed from time to time by the Board of Directors.
[ MGCL, Section 2-503 ]
Section 2.04.Notice of Meetings: Not less than ten
(10) days, nor more than ninety (90) days before each
shareholders' meeting, the Secretary or an Assistant Secretary of
the Corporation shall give to each shareholder entitled to vote
at the meeting, and each other shareholder entitled to notice of
the meeting, written notice stating (1) the time and place of the
meeting, and (2) the purpose or purposes of the meeting if the
meeting is a special meeting or if notice of the purpose is
required by statute to be given. Such notice shall be personally
delivered to the shareholder, or left at his residence or usual
place of business, or mailed to him at his address as it appears
on the records of the Corporation. No notice of a shareholders'
meeting need be given to any shareholder who shall sign a written
waiver of such notice, whether before or after the meeting, which
is filed with the records of shareholders' meetings, or to any
shareholder who is present at the meeting in person or by proxy.
Notice of adjournment of a shareholders' meeting to another time
or place need not be given if such time and place are announced
at the meeting, unless the adjournment is for more than one
hundred twenty (120) days after the original record date. [
MGCL, Sections 2-504, 2-511(d) ]
Section 2.05.Voting - In General: Except as otherwise
specifically provided in the Articles of Incorporation or these
By-Laws, or as required by provisions of the Investment Company
Act with respect to the vote of a series, if any, of the
Corporation, at every shareholders' meeting, each shareholder
shall be entitled to one vote for each share of stock of the
Corporation validly issued and outstanding and held by such
shareholder, except that no shares held by the Corporation shall
be entitled to a vote. Fractional shares shall be entitled to
fractional votes. Except as otherwise specifically provided in
the Articles of Incorporation, or these By-Laws, or as required
by provisions of the Investment Company Act, a majority of all
the votes cast at a meeting at which a quorum is present is
sufficient to approve any matter which properly comes before the
meeting. The vote upon any question shall be by ballot whenever
requested by any person entitled to vote, but, unless such a
request is made, voting may be conducted in any way approved by
the meeting. [ MGCL, Sections 2-214(a)(i), 2-506(a)(2), 2-
507(a), 2-509(b) ]
Section 2.06.Shareholders Entitled to Vote: If,
pursuant to Section 8.05 hereof, a record date has been fixed for
the determination of shareholders entitled to notice of or to
vote at any shareholders' meeting, each shareholder of the
Corporation shall be entitled to vote in person or by proxy, each
PAGE 4
share or fraction of a share of stock outstanding in his name on
the books of the Corporation on such record date. If no record
date has been fixed for the determination of shareholders, the
record date for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the
close of business on the day on which notice of the meeting is
mailed or the 30th day before the meeting, whichever is the
closer date to the meeting, or, if notice is waived by all
shareholders, at the close of business on the tenth (10th) day
next preceding the date of the meeting. [ MGCL, Sections 2-507,
2-511 ]
Section 2.07.Voting - Proxies: The right to vote by
proxy shall exist only if the instrument authorizing such proxy
to act shall have been executed in writing by the shareholder
himself, or by his attorney thereunto duly authorized in writing.
No proxy shall be valid more than eleven (11) months after its
date unless it provides for a longer period. [ MGCL, Section 2-
507(b) ]
Section 2.08.Quorum: The presence at any shareholders'
meeting, in person or by proxy, of shareholders entitled to cast
a majority of the votes entitled to be cast at the meeting shall
constitute a quorum. [ MGCL, Section 2-506(a) ]
Section 2.09.Absence of Quorum: In the absence of a
quorum, the holders of a majority of shares entitled to vote at
the meeting and present thereat in person or by proxy, or, if no
shareholder entitled to vote is present in person or by proxy,
any officer present who is entitled to preside at or act as
Secretary of such meeting, may adjourn the meeting sine die or
from time to time. Any business that might have been transacted
at the meeting originally called may be transacted at any such
adjourned meeting at which a quorum is present.
Section 2.10.Stock Ledger and List of Shareholders: It
shall be the duty of the Secretary or Assistant Secretary of the
Corporation to cause an original or duplicate stock ledger to be
maintained at the office of the Corporation's transfer agent,
containing the names and addresses of all shareholders and the
number of shares of each class held by each shareholder. Such
stock ledger may be in written form, or any other form capable of
being converted into written form within a reasonable time for
visual inspection. Any one or more persons, who together are and
for at least six (6) months have been shareholders of record of
at least five percent (5%) of the outstanding capital stock of
the Corporation, may submit (unless the Corporation at the time
of the request maintains a duplicate stock ledger at its
principal office) a written request to any officer of the
Corporation or its resident agent in Maryland for a list of the
PAGE 5
shareholders of the Corporation. Within twenty (20) days after
such a request, there shall be prepared and filed at the
Corporation's principal office a list, verified under oath by an
officer of the Corporation or by its stock transfer agent or
registrar, which sets forth the name and address of each
shareholder and the number of shares of each class which the
shareholder holds. [ MGCL, Sections 2-209, 2-513 ]
Section 2.11.Informal Action By Shareholders: Any
action required or permitted to be taken at a meeting of
shareholders may be taken without a meeting if the following are
filed with the records of shareholders' meetings:
(a) A unanimous written consent
which sets forth the action and
is signed by each shareholder
entitled to vote on the matter;
and
(b) A written waiver of any right to
dissent signed by each
shareholder entitled to notice
of the meeting, but not entitled
to vote at it. [ MGCL, Section
2-505 ]
ARTICLE III
BOARD OF DIRECTORS
Section 3.01.Number and Term of Office: The Board of
Directors shall consist of one (1) Director, which number may be
increased by a resolution of a majority of the entire Board of
Directors, provided that the number of Directors shall not be
more than fifteen (15) nor less than the lesser of (i) three (3)
or (ii) the number of shareholders of the Corporation. Each
Director (whenever elected) shall hold office until the next
annual meeting of shareholders and until his successor is elected
and qualifies or until his earlier death, resignation, or
removal. [ MGCL, Sections 2-402, 2-404, 2-405 ]
Section 3.02.Qualification of Directors: No member of
the Board of Directors need be a shareholder of the Corporation,
but at least one member of the Board of Directors shall be a
person who is not an interested person (as such term is defined
in the Investment Company Act) of the investment adviser of the
Corporation, nor an officer or employee of the Corporation. [
MGCL, Section 2-403; Investment Company Act, Section 10(d) ]
PAGE 6
Section 3.03.Election of Directors: Until the first
annual meeting of shareholders, or until successors are duly
elected and qualified, the Board of Directors shall consist of
the persons named as such in the Articles of Incorporation.
Thereafter, except as otherwise provided in Sections 3.04 and
3.05 hereof, at each annual meeting, the shareholders shall elect
Directors to hold office until the next annual meeting and/or
until their successors are elected and qualify. In the event
that Directors are not elected at an annual shareholders'
meeting, then Directors may be elected at a special shareholders'
meeting. Directors shall be elected by vote of the holders of a
plurality of the shares present in person or by proxy and
entitled to vote. [ MGCL, Section 2-404 ]
Section 3.04.Removal of Directors: At any meeting of
shareholders, duly called and at which a quorum is present, the
shareholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any
Director or Directors from office, either with or without cause,
and may elect a successor or successors to fill any resulting
vacancies for the unexpired terms of removed Directors. [ MGCL,
Sections 2-406, 2-407 ]
Section 3.05.Vacancies and Newly Created Directorships:
If any vacancies occur in the Board of Directors by reason of
resignation, removal or otherwise, or if the authorized number of
Directors is increased, the Directors then in office shall
continue to act, and such vacancies (if not previously filled by
the shareholders) may be filled by a majority of the Directors
then in office, whether or not sufficient to constitute a quorum,
provided that, immediately after filling such vacancy, at least
two-thirds of the Directors then holding office shall have been
elected to such office by the shareholders of the Corporation.
In the event that at any time, other than the time preceding the
first meeting of shareholders, less than a majority of the
Directors of the Corporation holding office at that time were so
elected by the shareholders, a meeting of the shareholders shall
be held promptly and in any event within sixty (60) days for the
purpose of electing Directors to fill any existing vacancies in
the Board of Directors unless the Securities and Exchange
Commission shall by order extend such period. Except as provided
in Section 3.04 hereof, a Director elected by the Board of
Directors to fill a vacancy shall be elected to hold office until
the next annual meeting of shareholders or until his successor is
elected and qualifies. [ MGCL, Section 2-407; Investment Company
Act, Section 16(a) ]
Section 3.06.General Powers:
(a) The property, business, and affairs of the
Corporation shall be managed under the direction of the Board of
PAGE 7
Directors which may exercise all the powers of the Corporation
except such as are by law, by the Articles of Incorporation, or
by these By-Laws conferred upon or reserved to the shareholders
of the Corporation. [ MGCL, Section 2-401 ]
(b) All acts done by any meeting of the Directors or
by any person acting as a Director, so long as his successor
shall not have been duly elected or appointed, shall,
notwithstanding that it be afterwards discovered that there was
some defect in the election of the Directors or such person
acting as a Director or that they or any of them were
disqualified, be as valid as if the Directors or such person, as
the case may be, had been duly elected and were or was qualified
to be Directors or a Director of the Corporation.
Section 3.07.Power to Issue and Sell Stock: The Board
of Directors may from time to time authorize by resolution the
issuance and sale of any of the Corporation's authorized shares
to such persons as the Board of Directors shall deem advisable
and such resolution shall set the minimum price or value of
consideration for the stock or a formula for its determination,
and shall include a fair description of any consideration other
than money and a statement of the actual value of such
consideration as determined by the Board of Directors or a
statement that the Board of Directors has determined that the
actual value is or will be not less than a certain sum. [ MGCL,
Section 2-203 ]
Section 3.08.Power to Declare Dividends:
(a) The Board of Directors, from time to time as it
may deem advisable, may declare and the Corporation pay
dividends, in cash, property, or shares of the Corporation
available for dividends out of any source available for
dividends, to the shareholders according to their respective
rights and interests. [ MGCL, Section 2-309 ]
(b) The Board of Directors shall cause to be
accompanied by a written statement any dividend payment wholly or
partly from any source other than the Corporation's accumulated
undistributed net income (determined in accordance with good
accounting practice and the rules and regulations of the
Securities and Exchange Commission then in effect) not including
profits or losses realized upon the sale of securities or other
properties. Such statement shall adequately disclose the source
or sources of such payment and the basis of calculation and shall
be otherwise in such form as the Securities 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
PAGE 8
distribute pro rata among the shareholders a stock dividend out
of the Corporation's authorized but unissued shares of stock,
including any shares previously purchased by the Corporation,
provided that such dividend shall not be distributed in shares of
any class with respect to any shares of a different class. The
shares so distributed shall be issued at the par value thereof,
and there shall be transferred to stated capital, at the time
such dividend is paid, an amount of surplus equal to the
aggregate par value of the shares issued as a dividend and there
may be transferred from earned surplus to capital surplus such
additional amount as the Board of Directors may determine. [
MGCL, Section 2-309 ]
Section 3.09.Annual and Regular Meetings: The annual
meeting of the Board of Directors for choosing officers and
transacting other proper business shall be held after the annual
shareholders' meeting at such time and place as may be specified
in the notice of such meeting of the Board of Directors or, in
the absence of such annual shareholders' meeting, at such time
and place as the Board of Directors may provide. The Board of
Directors from time to time may provide by resolution for the
holding of regular meetings and fix their time and place (within
or outside the State of Maryland). [ MGCL, Section 2-409(a) ]
Section 3.l0.Special Meetings: Special meetings of the
Board of Directors shall be held whenever called by the Chairman
of the Board, the President (or, in the absence or disability of
the President, by any Vice President), the Treasurer, or two or
more Directors, at the time and place (within or outside the
State of Maryland) specified in the respective notices or waivers
of notice of such meetings.
Section 3.11.Notice: Notice of annual, regular, and
special meetings shall be in writing, stating the time and place,
and shall be mailed to each Director at his residence or regular
place of business or caused to be delivered to him personally or
to be transmitted to him by telegraph, cable, or wireless at
least two (2) days before the day on which the meeting is to be
held. Except as otherwise required by the By-Laws or the
Investment Company Act, such notice need not include a statement
of the business to be transacted at, or the purpose of, the
meeting. [ MGCL, Section 2-409(b) ]
Section 3.12.Waiver of Notice: No notice of any
meeting need be given to any Director who is present at the
meeting or to any Director who signs a waiver of the notice of
the meeting (which waiver shall be filed with the records of the
meeting), whether before or after the meeting. [ MGCL, Section
2-409(c) ]
Section 3.13.Quorum and Voting: At all meetings of the
Board of Directors the presence of one-third of the total number
PAGE 9
of Directors authorized, but not less than two (2) Directors if
there are at least two directors, shall constitute a quorum. In
the absence of a quorum, a majority of the Directors present may
adjourn the meeting, from time to time, until a quorum shall be
present. The action of a majority of the Directors present at a
meeting at which a quorum is present shall be the action of the
Board of Directors unless the concurrence of a greater proportion
is required for such action by law, by the Articles of
Incorporation or by these By-Laws. [ MGCL, Section 2-408 ]
Section 3.14.Conference Telephone: Members of the
Board of Directors or of any committee designated by the Board,
may participate in a meeting of the Board or of such committee by
means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear
each other at the same time, and participation by such means
shall constitute presence in person at such meeting. [ MGCL,
Section 2-409(d) ]
Section 3.15.Compensation: Each Director may receive
such remuneration for his services as shall be fixed from time to
time by resolution of the Board of Directors.
Section 3.16.Action Without a Meeting: Any action
required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting
if a unanimous written consent which sets forth the action is
signed by all members of the Board or of such committee and such
written consent is filed with the minutes of proceedings of the
Board or committee. [ MGCL, Section 2-408(c) ]
Section 3.17.Director Emeritus: Upon the retirement of
a Director of the Corporation, the Board of Directors may
designate such retired Director as a Director Emeritus. The
position of Director Emeritus shall be honorary only and shall
not confer upon such Director Emeritus any responsibility, or
voting authority, whatsoever with respect to the Corporation. A
Director Emeritus may, but shall not be required to, attend the
meetings of the Board of Directors and receive materials normally
provided Directors relating to the Corporation. The Board of
Directors may establish such compensation as it may deem
appropriate under the circumstances to be paid by the Corporation
to a Director Emeritus.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
PAGE 10
Section 4.01.How Constituted: By resolution adopted by
the Board of Directors, the Board may appoint from among its
members one or more committees, including an Executive Committee,
each consisting of at least two (2) Directors. Each member of a
committee shall hold office during the pleasure of the Board. [
MGCL, Section 2-411 ]
Section 4.02.Powers of the Executive Committee: Unless
otherwise provided by resolution of the Board of Directors, the
Executive Committee, in the intervals between meetings of the
Board of Directors, shall have and may exercise all of the powers
of the Board of Directors to manage the business and affairs of
the Corporation except the power to:
(a) Declare dividends or
distributions on stock;
(b) Issue stock other than as
provided in Section 2-411(b) of
Corporations and Associations
Article of the Annotated Code of
Maryland;
(c) Recommend to the shareholders
any action which requires
shareholder approval;
(d) Amend the By-Laws; or
(e) Approve any merger or share
exchange which does not require
shareholder approval.
[ MGCL, Section 2-411(a) ]
Section 4.03.Other Committees of the Board of
Directors: To the extent provided by resolution of the Board,
other committees shall have and may exercise any of the powers
that may lawfully be granted to the Executive Committee. [ MGCL,
Section 2-411(a) ]
Section 4.04.Proceedings, Quorum, and Manner of Acting:
In the absence of appropriate resolution of the Board of
Directors, each committee may adopt such rules and regulations
governing its proceedings, quorum and manner of acting as it
shall deem proper and desirable, provided that the quorum shall
not be less than two (2) Directors. In the absence of any member
of any such committee, the members thereof present at any
meeting, whether or not they constitute a quorum, may appoint a
member of the Board of Directors to act in the place of such
absent member. [ MGCL, Section 2-411(c) ]
PAGE 11
Section 4.05.Other Committees: The Board of Directors
may appoint other committees, each consisting of one or more
persons who need not be Directors. Each such committee shall
have such powers and perform such duties as may be assigned to it
from time to time by the Board of Directors, but shall not
exercise any power which may lawfully be exercised only by the
Board of Directors or a committee thereof.
ARTICLE V
OFFICERS
Section 5.01.General: The officers of the Corporation
shall be a President, one or more Vice Presidents (one or more of
whom may be designated Executive Vice President), a Secretary,
and a Treasurer, and may include one or more Assistant Vice
Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be appointed
in accordance with the provisions of Section 5.11 hereof. The
Board of Directors may elect, but shall not be required to elect,
a Chairman of the Board. [ MGCL, Section 2-412 ]
Section 5.02.Election, Term of Office and
Qualifications: The officers of the Corporation (except those
appointed pursuant to Section 5.11 hereof) shall be elected by
the Board of Directors at its first meeting and thereafter at
each annual meeting of the Board. If any officer or officers are
not elected at any such meeting, such officer or officers may be
elected at any subsequent regular or special meeting of the
Board. Except as provided in Sections 5.03, 5.04, and 5.05
hereof, each officer elected by the Board of Directors shall hold
office until the next annual meeting of the Board of Directors
and until his successor shall have been chosen and qualified.
Any person may hold two or more offices of the Corporation,
except that neither the Chairman of the Board, nor the President,
may hold the office of Vice President, but no person shall
execute, acknowledge, or verify any instrument in more than one
capacity if such instrument is required by law, the Articles of
Incorporation, or these By-Laws to be executed, acknowledged, or
verified by two or more officers. The Chairman of the Board
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
PAGE 12
Assistant Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 5.04.Removal: Any officer may be removed from
office by the Board of Directors whenever in the judgment of the
Board of Directors the best interests of the Corporation will be
served thereby. [ MGCL, Section 2-413(c) ]
Section 5.05Vacancies and Newly Created Offices: If
any vacancy shall occur in any office by reason of death,
resignation, removal, disqualification or other cause, or if any
new office shall be created, such vacancies or newly created
offices may be filled by the Board of Directors at any meeting
or, in the case of any office created pursuant to Section 5.11
hereof, by any officer upon whom such power shall have been
conferred by the Board of Directors. [ MGCL, Section 2-413(d) ]
Section 5.06.Chairman of the Board: Unless otherwise
provided by resolution of the Board of Directors, the Chairman of
the Board, if there be such an officer, shall be the chief
executive and operating officer of the Corporation, shall preside
at all shareholders' meetings, and at all meetings of the Board
of Directors. He shall be ex officio a member of all standing
committees of the Board of Directors. Subject to the supervision
of the Board of Directors, he shall have general charge of the
business, affairs, property, and operation of the Corporation and
its officers, employees, and agents. He may sign (unless the
President or a Vice President shall have signed) certificates
representing stock of the Corporation authorized for issuance by
the Board of Directors and shall have such other powers and
perform such other duties as may be assigned to him from time to
time by the Board of Directors.
Section 5.07.President: Unless otherwise provided by
resolution of the Board of Directors, the President shall, at the
request of or in the absence or disability of the Chairman of the
Board, or if no Chairman of the Board has been chosen, he shall
preside at all shareholders' meetings and at all meetings of the
Board of Directors and shall in general exercise the powers and
perform the duties of the Chairman of the Board. He may sign
(unless the Chairman or a Vice President shall have signed)
certificates representing stock of the Corporation authorized for
issuance by the Board of Directors. Except as the Board of
Directors may otherwise order, he may sign in the name and on
behalf of the Corporation all deeds, bonds, contracts, or
agreements. He shall exercise such other powers and perform such
other duties as from time to time may be assigned to him by the
Board of Directors.
Section 5.08.Vice President: The Board of Directors
shall, from time to time, designate and elect one or more Vice
Presidents (one or more of whom may be designated Executive Vice
PAGE 13
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
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
PAGE 14
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 15
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
PAGE 16
function without a custodian or shall be liquidated. If so
directed by vote of the holders of a majority of the outstanding
shares of stock of the Corporation, the custodian shall deliver
and pay over all property of the Corporation held by it as
specified in such vote.
ARTICLE VII
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
Section 7.01.Execution of Instruments: All deeds,
documents, transfers, contracts, agreements, requisitions or
orders, promissory notes, assignments, endorsements, checks and
drafts for the payment of money by the Corporation, and other
instruments requiring execution by the Corporation shall be
signed by the Chairman, the President, a Vice President, or the
Treasurer, or as the Board of Directors may otherwise, from time
to time, authorize. Any such authorization may be general or
confined to specific instances.
Section 7.02.Voting of Securities: Unless otherwise
ordered by the Board of Directors, the Chairman, the President,
or any Vice President shall have full power and authority on
behalf of the Corporation to attend and to act and to vote, or in
the name of the Corporation to execute proxies to vote, at any
meeting of shareholders of any company in which the Corporation
may hold stock. At any such meeting such officer shall possess
and may exercise (in person or by proxy) any and all rights,
powers, and privileges incident to the ownership of such stock.
The Board of Directors may by resolution from time to time confer
like powers upon any other person or persons. [ MGCL, Section
2-509 ]
PAGE 17
ARTICLE VIII
CAPITAL STOCK
Section 8.01.Ownership of Shares:
(a) Certificates certifying the ownership of shares
will not be issued for shares of the Corporation purchased or
otherwise acquired after May 1, 1991. The ownership of shares,
full or fractional, shall be recorded on the books of the
Corporation or its agent. The record books of the Corporation as
kept by the Corporation or its agent, as the case may be, shall
be conclusive as to the number of shares held from time to time
by each such shareholder. The Corporation reserves the right to
require the surrender of outstanding certificates if the Board of
Directors so determines. [ MGCL, Section 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. Ownership of Shares, amended May 1, 1991)
Section 8.02.Transfer of Capital Stock:
(a) Shares of stock of the Corporation shall be
transferable only upon the books of the Corporation kept for such
purpose and, if one or more certificates representing such shares
have been issued, upon surrender to the Corporation or its
transfer agent or agents of such certificate or certificates duly
endorsed, or accompanied by appropriate evidence of assignment,
transfer, succession, or authority to transfer.
(b) The Corporation shall be entitled to treat the
holder of record of any share of stock as the absolute owner
thereof for all purposes, and accordingly shall not be bound to
recognize any legal, equitable, or other claim or interest in
such share on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise
expressly provided by the statutes of the State of Maryland.
Section 8.03.Transfer Agents and Registrars: The Board
of Directors may, from time to time, appoint or remove transfer
agents and registrars of transfers of shares of stock of the
Corporation, and it may appoint the same person as both transfer
agent and registrar.
(Section 8.03. Transfer Agents and Registrars, amended May 1,
1991)
PAGE 18
Section 8.04.Transfer Regulations: The shares of stock
of the Corporation may be freely transferred, and the Board of
Directors may, from time to time, adopt lawful rules and
regulations with reference to the method of transfer of the
shares of stock of the Corporation.
Section 8.05.Fixing of Record Date: The Board of
Directors may fix in advance a date as a record date for the
determination of the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof,
or to express consent to corporate action in writing without a
meeting, or to receive payment of any dividend or other
distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion, or exchange of
stock, or for any other proper purpose, provided that such record
date shall be a date not more than sixty (60) days nor, in the
case of a meeting of shareholders, less than ten (10) days prior
to the date on which the particular action, requiring such
determination of shareholders, is to be taken. In such case,
only such shareholders as shall be shareholders of record on the
record date so fixed shall be entitled to such notice of, and to
vote at, such meeting or adjournment, or to give such consent, or
to receive payment of such dividend or other distribution, or to
receive such allotment of rights, or to exercise such rights, or
to take other action, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any
such record date. A meeting of shareholders convened on the date
for which it was called may be adjourned from time to time
without notice to a date not more than one hundred twenty (120)
days after the original record date. [ MGCL, Section 2-511 ]
Section 8.06.Lost, Stolen or Destroyed Certificates:
If a certificate for stock of the Corporation is alleged to have
been lost, stolen or destroyed, no new certificate will be
issued. Instead, ownership of the shares formerly represented by
the lost, stolen or destroyed certificate shall be recorded on
the books of the Corporation or its agent, in accordance with the
provisions of Section 8.01 of these By-Laws. Before recording
ownership of such shares, the Board of Directors, or any officer
authorized by the Board, may, in its discretion, require the
owner of the lost, stolen, or destroyed certificate (or his legal
representative) to give the Corporation a bond or other
indemnity, in such form and in such amount as the Board or any
such officer may direct and with such surety or sureties as may
be satisfactory to the Board of any such officer, sufficient to
indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction
of any such certificate. [ MGCL, Section 2-213 ]
(Section 8.06. Lost, Stolen or Destroyed Certificates, amended
May 1, 1991)
PAGE 19
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 as its
accountant to examine the accounts of the Corporation and to sign
and certify financial statements filed by the Corporation. The
accountant's certificates and reports shall be addressed both to
the Board of Directors and to the shareholders.
(b) A majority of the members of the Board of
Directors who are not interested persons (as such term is defined
in the Investment Company Act) of the Corporation shall select
the accountant, by vote cast in person, at any meeting held
before the first annual shareholders' meeting, and thereafter
shall select the accountant annually, by vote cast in person, at
a meeting
held within thirty (30) days before or after the beginning of the
fiscal year of the Corporation or within thirty (30) days before
the annual shareholders' meeting in that year. Such selection
shall be submitted for ratification or rejection at the next
succeeding annual shareholders' meeting. If such meeting shall
reject such selection, the accountant shall be selected by
majority vote of the Corporation's outstanding voting securities,
either at the meeting at which the rejection occurred or at a
subsequent meeting of shareholders called for the purpose.
(c) Any vacancy occurring between annual meetings, due
to the death or resignation of the accountant, may be filled by
the vote of a majority of those members of the Board of Directors
who are not interested persons (as so defined) of the
Corporation, cast in person at a meeting called for the purpose
of voting on such action.
(d) The employment of the accountant shall be
conditioned upon the right of the Corporation by vote of a
majority of the outstanding voting securities at any meeting
called for the purpose to terminate such employment forthwith
without any penalty. [ Investment Company Act, Section 32(a) ]
PAGE 20
ARTICLE X
INDEMNIFICATION AND INSURANCE
Section 10.01.Indemnification and Payment of Expenses
in Advance: The Corporation shall indemnify any individual
("Indemnitee") who is a present or former director, officer,
employee, or agent of the Corporation, or who is or has been
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, who, by reason of his
position was, is, or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative
(hereinafter collectively referred to as a "Proceeding") against
any judgments, penalties, fines, settlements, and reasonable
expenses (including attorneys' fees) incurred by such Indemnitee
in connection with any Proceeding, to the fullest extent that
such indemnification may be lawful under Maryland law. The
Corporation shall pay any reasonable expenses so incurred by such
Indemnitee in defending a Proceeding in advance of the final
disposition thereof to the fullest extent that such advance
payment may be lawful under Maryland law. Subject to any
applicable limitations and requirements set forth in the
Corporation's Articles of Incorporation and in these By-Laws, any
payment of indemnification or advance of expenses shall be made
in accordance with the procedures set forth in Maryland law.
Notwithstanding the foregoing, nothing herein shall
protect or purport to protect any Indemnitee against any
liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office
("Disabling Conduct").
Anything in this Article X to the contrary
notwithstanding, no indemnification shall be made by the
Corporation to any Indemnitee unless:
(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
PAGE 21
was not liable by reason of
Disabling Conduct, which
determination shall be made by:
(i)
the vote of a majority of a
quorum of directors who are
neither "interested persons"
of the Corporation as defined
in Section 2(a)(19) of the
Investment Company Act, nor
parties to the Proceeding; or
(ii)
an independent legal counsel
in a written opinion.
Anything in this Article X to the contrary
notwithstanding, any advance of expenses by the Corporation to
any Indemnitee shall be made only upon the undertaking by such
Indemnitee to repay the advance unless it is ultimately
determined that such Indemnitee is entitled to indemnification as
above provided, and only if one of the following conditions is
met:
(a) the Indemnitee provides a security
for his undertaking; or
(b) the Corporation shall be insured
against losses arising by reason
of any lawful advances; or
(c) there is a determination, based on
a review of readily available
facts, that there is reason to
believe that the Indemnitee will
ultimately be found entitled to
indemnification, which
determination shall be made by:
(i)
a majority of a quorum of
directors who are neither
"interested persons" of the
Corporation as defined in
Section 2(a)(19) of the
Investment Company Act, nor
parties to the Proceeding; or
(ii)
an independent legal counsel
in a written opinion.
PAGE 22
Section 10.02.Insurance of Officers, Directors,
Employees and Agents: To the fullest extent permitted by
applicable Maryland law and by Section 17(h) of the Investment
Company Act, as from time to time amended, the Corporation may
purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee, or agent of the Corporation,
or who is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against
any liability asserted against him and incurred by him in or
arising out of his position, whether or not the Corporation would
have the power to indemnify him against such liability. [ MGCL,
Section 2-418(k) ]
ARTICLE XI
AMENDMENTS
Section 11.01.General: Except as provided in Section
11.02 hereof, all By-Laws of the Corporation, whether adopted by
the Board of Directors or the shareholders, shall be subject to
amendment, alteration, or repeal, and new By-Laws may be made, by
the affirmative vote of a majority of either:
(a) the holders of record of the outstanding shares
of stock of the Corporation entitled to vote, at any annual or
special meeting the notice or waiver of notice of which shall
have specified or summarized the proposed amendment, alteration,
repeal, or new By-Law; or
(b) the Directors present at any regular or special
meeting at which a quorum is present if the notice or waiver of
notice thereof or material sent to the Directors in connection
therewith on or prior to the last date for the giving of such
notice under these By-Laws shall have specified or summarized the
proposed amendment, alteration, repeal, or new By-Law.
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.
PAGE 23
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.
law:ByLaws.SCV/Agmts
BY-LAWS
OF
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
AS AMENDED:
APRIL 19, 1990
MAY 1, 1991
PAGE 24
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. SHAREHOLDERS1
2.01. Annual Meetings . . . . . . . . . . . .1
2.02. Special Meetings. . . . . . . . . . . .2
2.03. Place of Meetings . . . . . . . . . . .2
2.04. Notice of Meetings. . . . . . . . . . .2
2.05. Voting - in General . . . . . . . . . .2
2.06. Shareholders Entitled to Vote . . . . .3
2.07. Voting - Proxies. . . . . . . . . . . .3
2.08. Quorum. . . . . . . . . . . . . . . . .3
2.09. Absence of Quorum . . . . . . . . . . .3
2.10. Stock Ledger and List of Shareholders .3
2.11. Informal Action by Shareholders . . . .4
ARTICLE III. . . . . . . . . . . BOARD OF DIRECTORS4
3.01. Number and Term of Office . . . . . . .4
3.02. Qualification of Directors. . . . . . .4
3.03. Election of Directors . . . . . . . . .4
3.04. Removal of Directors. . . . . . . . . .4
3.05. Vacancies and Newly Created Directorships5
3.06. General Powers. . . . . . . . . . . . .5
3.07. Power to Issue and Sell Stock . . . . .5
3.08. Power to Declare Dividends. . . . . . .5
3.09. Annual and Regular Meetings . . . . . .6
3.10. Special Meetings. . . . . . . . . . . .6
3.11. Notice. . . . . . . . . . . . . . . . .6
3.12. Waiver of Notice. . . . . . . . . . . .6
3.13. Quorum and Voting . . . . . . . . . . .6
3.14. Conference Telephone. . . . . . . . . .7
3.15. Compensation. . . . . . . . . . . . . .7
PAGE 25
3.16. Action without a Meeting. . . . . . . .7
3.17. Director Emeritus . . . . . . . . . . .7
ARTICLE IV. EXECUTIVE
COMMITTEE AND OTHER
COMMITTEES. . . . . . . . . . . . . . .7
4.01. How Constituted . . . . . . . . . . . .7
4.02. Powers of the Executive Committee . . .7
4.03. Other Committees of the Board of
Directors . . . . . . . . . . . . . . .8
4.04. Proceedings, Quorum and Manner of Acting8
4.05. Other Committees. . . . . . . . . . . .8
ARTICLE V. OFFICERS. . . . . . . . . . . . . . . .8
5.01. General . . . . . . . . . . . . . . . .8
5.02. Election, Term of Office
and Qualifications. . . . . . . . . . .8
5.03. Resignation . . . . . . . . . . . . . .9
5.04. Removal . . . . . . . . . . . . . . . .9
5.05. Vacancies and Newly Created Offices . .9
5.06. Chairman of the Board . . . . . . . . .9
5.07. President . . . . . . . . . . . . . . .9
5.08. Vice President. . . . . . . . . . . . 10
5.09. Treasurer and Assistant Treasurers. . 10
5.10. Secretary and Assistant Secretaries . 10
5.11. Subordinate Officers. . . . . . . . . 10
5.12. Remuneration. . . . . . . . . . . . . 11
ARTICLE VI.. . . . . CUSTODY OF SECURITIES AND CASH11
6.01. Employment of a Custodian . . . . . . 11
6.02. Central Certificate Service . . . . . 11
6.03. Cash Assets . . . . . . . . . . . . . 11
6.04. Free Cash Accounts. . . . . . . . . . 12
6.05. Action Upon Termination of
Custodian Agreement . . . . . . . . . 12
ARTICLE VII. EXECUTION OF
INSTRUMENTS,
VOTING OF SECURITIES. . . . . . . . . 12
7.01. Execution of Instruments. . . . . . . 12
7.02. Voting of Securities. . . . . . . . . 12
PAGE 26
ARTICLE VIII. CAPITAL STOCK
13
8.01. Ownership of Shares . . . . . . . . . 13
8.02. Transfer of Capital Stock . . . . . . 13
8.03. Transfer Agents and Registrars. . . . 13
8.04. Transfer Regulations. . . . . . . . . 13
8.05. Fixing of Record Date . . . . . . . . 13
8.06. Lost, Stolen, or Destroyed Certificates14
ARTICLE IX. FISCAL YEAR,
ACCOUNTANT 14
9.01. Fiscal Year . . . . . . . . . . . . . 14
9.02. Accountant. . . . . . . . . . . . . . 14
ARTICLE X. INDEMNIFICATION AND INSURANCE . . . . 15
10.01. Indemnification and Payment of Expenses in
Advance . . . . . . . . . . . . . . . 15
10.02. Insurance of Officers, Directors, Employees
and Agents. . . . . . . . . . . . . . 16
ARTICLE XI.. . . . . . . . . . . . . . . AMENDMENTS17
11.01. General . . . . . . . . . . . . . . . 17
11.02. By Shareholders Only. . . . . . . . . 17
ARTICLE XII. . . . . . . . . . . . . .MISCELLANEOUS17
12.01 Use of the Term "Annual Meeting". . . 17
PAGE 1
INVESTMENT MANAGEMENT AGREEMENT
Between
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
and
T. ROWE PRICE ASSOCIATES, INC.
INVESTMENT MANAGEMENT AGREEMENT, made as of the 1st day
of May, 1991, by and between T. ROWE PRICE SMALL-CAP VALUE FUND,
INC., a Maryland corporation (hereinafter called the "Fund"), and
T. ROWE PRICE ASSOCIATES, INC., a corporation organized and
existing under the laws of the State of Maryland (hereinafter
called the "Manager").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end
management investment company and is registered as such under the
federal Investment Company Act of 1940, as amended (the "Act");
and
WHEREAS, the Manager is engaged principally in the
business of rendering investment supervisory services and is
registered as an investment adviser under the federal Investment
Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires the Manager to render
investment supervisory services to the Fund in the manner and on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Duties and Responsibilities of Manager.
A. Investment Management Services. The Manager
shall act as investment manager and shall supervise and direct
the investments of the Fund in accordance with the Fund's
investment objective, program and restrictions as provided in its
prospectus, as amended from time to time, and such other
limitations as the Fund may impose by notice in writing to the
Manager. The Manager shall obtain and evaluate such information
PAGE 2
relating to the economy, industries, businesses, securities
markets and securities as it may deem necessary or useful in the
discharge of its obligations hereunder and shall formulate and
implement a continuing program for the management of the assets
and resources of the Fund in a manner consistent with its
investment objective. In furtherance of this duty, the Manager,
as agent and attorney-in-fact with respect to the Fund, is
authorized, in its discretion and without prior consultation with
the Fund, to:
(i) buy, sell, exchange, convert, lend, and
otherwise trade in any stocks, bonds, and
other securities or assets; and
(ii) place orders and negotiate the commissions
(if any) for the execution of transactions
in securities with or through such brokers,
dealers, underwriters or issuers as the
Manager may select.
B. Financial, Accounting, and Administrative
Services. The Manager shall maintain the existence and records
of the Fund; maintain the registrations and qualifications of
Fund shares under federal and state law; monitor the financial,
accounting, and administrative functions of the Fund; maintain
liaison with the various agents employed by the Fund (including
the Fund's transfer agent, custodian, independent accountants and
legal counsel) and assist in the coordination of their activities
on behalf of the Fund.
C. Reports to Fund. The Manager shall furnish to or
place at the disposal of the Fund such information, reports,
evaluations, analyses and opinions as the Fund may, at any time
or from time to time, reasonably request or as the Manager may
deem helpful to the Fund.
D. Reports and Other Communications to Fund
Shareholders. The Manager shall assist the Fund in developing
all general shareholder communications, including regular
shareholder reports.
E. Fund Personnel. The Manager agrees to permit
individuals who are officers or employees of the Manager to serve
(if duly elected or appointed) as officers, directors, members of
any committee of directors, members of any advisory board, or
members of any other committee of the Fund, without remuneration
from or other cost to the Fund.
F. Personnel, Office Space, and Facilities of
Manager. The Manager at its own expense shall furnish or provide
and pay the cost of such office space, office equipment, office
personnel, and office services as the Manager requires in the
performance of its investment advisory and other obligations
under this Agreement.
PAGE 3
2. Allocation of Expenses.
A. Expenses Paid by Manager.
(1) Salaries
and Fees of Officers. The Manager shall pay all
salaries, expenses, and fees of the officers and
directors of the Fund who are affiliated with the
Manager.
(2) Assumption
of Fund Expenses by Manager. The payment or
assumption by the Manager of any expense of the Fund
that the Manager is not required by this Agreement to
pay or assume shall not obligate the Manager to pay
or assume the same or any similar expense of the Fund
on any subsequent occasion.
B. Expenses Paid by Fund. The Fund shall bear all
expenses of its organization, operations, and business not
specifically assumed or agreed to be paid by the Manager as
provided in this Agreement. In particular, but without limiting
the generality of the foregoing, the Fund shall pay:
(1) Custody and
Accounting Services. All expenses of the transfer,
receipt, safekeeping, servicing and accounting for
the Fund's cash, securities, and other property,
including all charges of depositories, custodians,
and other agents, if any;
(2) Shareholder
Servicing. All expenses of maintaining and servicing
shareholder accounts, including all charges of the
Fund's transfer, shareholder recordkeeping, dividend
disbursing, redemption, and other agents, if any;
(3) Shareholder
Communications. All expenses of preparing, setting
in type, printing, and distributing reports and other
communications to shareholders;
(4) Shareholder
Meetings. All expenses incidental to holding
meetings of Fund shareholders, including the printing
of notices and proxy material, and proxy solicitation
therefor;
(5)
Prospectuses. All expenses of preparing, setting in
type, and printing of annual or more frequent
revisions of the Fund's prospectus and of mailing
them to shareholders;
(6) Pricing.
All expenses of computing the Fund's net asset value
per share, including the cost of any equipment or
services used for obtaining price quotations;
PAGE 4
(7)
Communication Equipment. All charges for equipment
or services used for communication between the
Manager or the Fund and the custodian, transfer agent
or any other agent selected by the Fund;
(8) Legal and
Accounting Fees and Expenses. All charges for
services and expenses of the Fund's legal counsel and
independent auditors;
(9) Directors'
Fees and Expenses. All compensation of directors,
other than those affiliated with the Manager, and all
expenses incurred in connection with their service;
(10) Federal
Registration Fees. All fees and expenses of
registering and maintaining the registration of the
Fund under the Act and the registration of the Fund's
shares under the Securities Act of 1933, as amended
(the "'33 Act"), including all fees and expenses
incurred in connection with the preparation, setting
in type, printing, and filing of any registration
statement and prospectus under the '33 Act or the
Act, and any amendments or supplements that may be
made from time to time;
(11) State
Registration Fees. All fees and expenses of
qualifying and maintaining qualification of the Fund
and of the Fund's shares for sale under securities
laws of various states or jurisdictions, and of
registration and qualification of the Fund under all
other laws applicable to the Fund or its business
activities (including registering the Fund as a
broker-dealer, or any officer of the Fund or any
person as agent or salesman of the Fund in any
state);
PAGE 5
(12) Issue and
Redemption of Fund Shares. All expenses incurred in
connection with the issue, redemption, and transfer
of Fund shares, including the expense of confirming
all share transactions, and of preparing and
transmitting the Fund's certificates;
(13) Bonding and
Insurance. All expenses of bond, liability, and
other insurance coverage required by law or deemed
advisable by the Fund's board of directors;
(14) Brokerage
Commissions. All brokers' commissions and other
charges incident to the purchase, sale, or lending of
the Fund's portfolio securities;
(15) Taxes. All
taxes or governmental fees payable by or with respect
of the Fund to federal, state, or other governmental
agencies, domestic or foreign, including stamp or
other transfer taxes;
(16) Trade
Association Fees. All fees, dues, and other expenses
incurred in connection with the Fund's membership in
any trade association or other investment
organization; and
(17)
Nonrecurring and Extraordinary Expenses. Such
nonrecurring expenses as may arise, including the
costs of actions, suits, or proceedings to which the
Fund is a party and the expenses the Fund may incur
as a result of its legal obligation to provide
indemnification to its officers, directors, and
agents.
3. Management Fee. The Fund shall pay the Manager a
fee ("Fee") which will consist of two components: a Group
Management Fee ("Group Fee"), and an Individual Fund Fee ("Fund
Fee"). The Fee shall be paid monthly to the Manager on the first
business day of the next succeeding calendar month and shall be
calculated as follows:
A. Group Fee. The monthly Group Fee ("Monthly Group
Fee") shall be the sum of the daily Group Fee accruals ("Daily
Group Fee Accruals") for each month. The Daily Group Fee Accrual
for any particular day will be computed by multiplying the Price
Funds' group fee accrual as determined below ("Daily Price Funds'
Group Fee Accrual") by the ratio of the Fund's net assets for
that day to the sum of the aggregate net assets of the Price
Funds for that day. The Daily Price Funds' Group Fee Accrual for
any particular day shall be calculated by multiplying the
fraction of one (1) over the number of calendar days in the year
by the annualized Daily Price Funds' Group Fee Accrual for that
day as determined in accordance with the following schedule:
Price Funds' Annual Group
Base Fee Rate for Each Level of Assets
PAGE 6
_____________________________________________________
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
0.330% Next $10 billion
0.320% Thereafter
The Price Funds shall include all the mutual
funds distributed by T. Rowe Price Investment Services, Inc.
excluding any institutional or private label mutual funds. For
the purpose of calculating the Daily Price Funds' Group Fee
Accrual for any particular day, the net assets of each Price Fund
shall be determined in accordance with the Fund's prospectus as
of the close of business on the previous business day on which
the Fund was open for business.
B. Fund Fee. The monthly Fund Fee ("Monthly Fund
Fee") shall be the sum of the daily Fund Fee accruals ("Daily
Fund Fee Accruals") for each month. The Daily Fund Fee Accrual
for any particular day will be computed by multiplying the
fraction of one (1) over the number of calendar days in the year
by the Fund Fee Rate of 0.35% and multiplying this product by the
net assets of the Fund for that day, as determined in accordance
with the Fund's prospectus as of the close of business on the
previous business day on which the Fund was open for business.
C. Expense Limitation. To the extent that the
aggregate expenses of every character incurred by the Fund in any
fiscal year, including but not limited to Fees of the Manager
computed as hereinabove set forth, but excluding interest, taxes,
brokerage, and other expenditures which are capitalized in
accordance with generally accepted accounting principles and
extraordinary expenses, shall exceed the limit ("State Expense
Limit") prescribed by any state in which the Fund's shares are
qualified for sale, such excess amount shall be the liability of
the Manager to pay in the manner specified below. To determine
the Manager's liability for the Fund's expenses, the expenses of
the Fund shall be annualized monthly as of the last day of the
month. If the annualized expenses for any month exceed the State
Expense Limit, the payment of the Fee for such month (if there be
any) shall be reduced by such excess ("Excess Amount") and in the
event the Excess Amount exceeds the amount due as the Fee, the
Manager shall remit to the Fund the difference between the Excess
Amount and the amount due as the Fee; provided, however, that an
adjustment shall be made on or before the last day of the first
month of the next succeeding fiscal year if the aggregate
expenses for the fiscal year do not exceed the State Expense
Limit.
However, as part of the consideration for the Fund's
entering into this Agreement, the Manager hereby agrees that
through December 31, 1989, the expense limit will be 1.25% of the
average daily net assets of the Fund ("1.25% Expense
Limitation"); provided, however, that (1) any amount paid or
PAGE 7
assumed by the Manager pursuant to the 1.25% Expense Limitation
(but not over any State Expense Limit) shall be reimbursed by the
Fund to the Manager after December 31, 1989 (such reimbursement
period being referred to as the "Original Reimbursement Period");
(2) no such reimbursement, with respect to such Original
Reimbursement Period, shall be made to the Manager after December
31, 1991; and (3) such reimbursement shall only be made to the
extent that it does not result in the Fund's aggregate expenses
exceeding an expense limit of 1.25%. The Manager may voluntarily
agree to an additional expense limitation (any such additional
expense limitation hereinafter referred to as an "Additional
Expense Limitation"), for any additional period of time beyond
December 31, 1989 (any such additional period being hereinafter
referred to as an "Additional Period") provided, however, that:
(1) any amount paid or assumed by the Manager pursuant to an
Additional Expense Limitation (but in no case over any State
Expense Limit) shall be reimbursed by the Fund to the Manager
after the last day of the Additional Period (such additional
reimbursement period being hereinafter referred to as an
"Additional Reimbursement Period"); (2) no reimbursement for an
Additional Reimbursement Period shall be made to the Manager more
than two years after the end of an Additional Period; and (3)
reimbursement for an Additional Reimbursement Period shall only
be made to the extent that it does not result in the Fund's
aggregate expenses exceeding the Additional Expense Limitation
applicable to such Additional Reimbursement Period.
D. Proration of Fee. If this Agreement becomes
effective or terminates before the end of any month, the Fee for
the period from the effective date to the end of such month or
from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such
effectiveness or termination occurs.
4. Brokerage. Subject to the approval of the board
of directors of the Fund, the Manager, in carrying out its duties
under Paragraph 1.A., may cause the Fund to pay a broker-dealer
which furnishes brokerage or research services [as such services
are defined under Section 28(e) of the Securities Exchange Act of
l934, as amended (the "'34 Act")], a higher commission than that
which might be charged by another broker-dealer which does not
furnish brokerage or research services or which furnishes
brokerage or research services deemed to be of lesser value, if
such commission is deemed reasonable in relation to the brokerage
and research services provided by the broker-dealer, viewed in
terms of either that particular transaction or the overall
responsibilities of the Manager with respect to the accounts as
to which it exercises investment discretion (as such term is
defined under Section 3(a)(35) of the '34 Act).
5. Manager's Use of the Services of Others. The
Manager may (at its cost except as contemplated by Paragraph 4 of
this Agreement) employ, retain or otherwise avail itself of the
services or facilities of other persons or organizations for the
purpose of providing the Manager or the Fund with such
statistical and other factual information, such advice regarding
economic factors and trends, such advice as to occasional
transactions in specific securities or such other information,
advice or assistance as the Manager may deem necessary,
PAGE 8
appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to the Fund, or in the discharge
of Manager's overall responsibilities with respect to the other
accounts which it serves as investment manager.
6. Ownership of Records. All records required to be
maintained and preserved by the Fund pursuant to the provisions
of rules or regulations of the Securities and Exchange Commission
under Section 31(a) of the Act and maintained and preserved by
the Manager on behalf of the Fund are the property of the Fund
and will be surrendered by the Manager promptly on request by the
Fund.
7. Reports to Manager. The Fund shall furnish or
otherwise make available to the Manager such prospectuses,
financial statements, proxy statements, reports, and other
information relating to the business and affairs of the Fund as
the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this
Agreement.
8. Services to Other Clients. Nothing herein
contained shall limit the freedom of the Manager or any
affiliated person of the Manager to render investment supervisory
and corporate administrative services to other investment
companies, to act as investment manager or investment counselor
to other persons, firms or corporations, or to engage in other
business activities; but so long as this Agreement or any
extension, renewal or amendment hereof shall remain in effect or
until the Manager shall otherwise consent, the Manager shall be
the only investment manager to the Fund.
9. Limitation of Liability of Manager. Neither the
Manager nor any of its officers, directors, or employees, nor any
person performing executive, administrative, trading, or other
functions for the Fund (at the direction or request of the
Manager) or the Manager in connection with the Manager's
discharge of its obligations undertaken or reasonably assumed
with respect to this Agreement, shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates,
except for loss resulting from willful misfeasance, bad faith, or
gross negligence in the performance of its or his duties on
behalf of the Fund or from reckless disregard by the Manager or
any such person of the duties of the Manager under this
Agreement.
10. Use of Manager's Name. The Fund may use the name
"T. Rowe Price Small-Cap Value Fund, Inc." or any other name
derived from the name "T. Rowe Price" only for so long as this
Agreement or any extension, renewal or amendment hereof remains
in effect, including any similar agreement with any organization
which shall have succeeded to the business of the Manager as
investment manager. At such time as this Agreement or any
extension, renewal or amendment hereof, or such other similar
PAGE 9
agreement shall no longer be in effect, the Fund will (by
corporate action, if necessary) cease to use any name derived
from the name "T. Rowe Price," any name similar thereto or any
other name indicating that it is advised by or otherwise
connected with the Manager, or with any organization which shall
have succeeded to the Manager's business as investment manager.
11. Term of Agreement. The term of this Agreement
shall begin on the date first above written, and unless sooner
terminated as hereinafter provided, this Agreement shall remain
in effect through April 30, 1992. Thereafter, this Agreement
shall continue in effect from year to year, subject to the
termination provisions and all other terms and conditions hereof,
so long as: (a) such continuation shall be specifically approved
at least annually by the board of directors of the Fund or by
vote of a majority of the outstanding voting securities of the
Fund and, concurrently with such approval by the board of
directors or prior to such approval by the holders of the
outstanding voting securities of the Fund, as the case may be, by
the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the directors of the
Fund who are not parties to this Agreement or interested persons
of any such party; and (b) the Manager shall not have notified
the Fund, in writing, at least 60 days prior to April 30, 1992 or
prior to April 30th of any year thereafter, that it does not
desire such continuation. The Manager shall furnish to the Fund,
promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.
12. Amendment and Assignment of Agreement. This
Agreement may not be amended or assigned without the affirmative
vote of a majority of the outstanding voting securities of the
Fund, and this Agreement shall automatically and immediately
terminate in the event of its assignment.
13. Termination of Agreement. This Agreement may be
terminated by either party hereto, without the payment of any
penalty, upon 60 days' prior notice in writing to the other
party; provided, that in the case of termination by the Fund such
action shall have been authorized by resolution of a majority of
the directors of the Fund who are not parties to this Agreement
or interested persons of any such party, or by vote of a majority
of the outstanding voting securities of the Fund.
PAGE 10
14. Miscellaneous.
A. Captions. The captions in this Agreement are
included for convenience of reference only and in no way define
or delineate any of the provisions hereof or otherwise affect
their construction or effect.
B. Interpretation. Nothing herein contained shall
be deemed to require the Fund to take any action contrary to its
Articles of Incorporation or By-Laws, or any applicable statutory
or regulatory requirement to which it is subject or by which it
is bound, or to relieve or deprive the board of directors of the
Fund of its responsibility for and control of the conduct of the
affairs of the Fund.
C. Definitions. Any question of interpretation of
any term or provision of this Agreement having a counterpart in
or otherwise derived from a term or provision of the Act shall be
resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested person," "assignment," and "affiliated person," as
used in Paragraphs 2, 8, 11, 12, and 13 hereof, shall have the
meanings assigned to them by Section 2(a) of the Act. In
addition, where the effect of a requirement of the Act reflected
in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized and their respective seals to be hereunto
affixed, as of the day and year first above written.
Attest: T. ROWE PRICE SMALL-CAP VALUE FUND,
INC.
By:
_______________________________
__________________________________________
Secretary
Attest: T. ROWE PRICE ASSOCIATES, INC.
PAGE 11
By:
________________________________
__________________________________________
Assistant Secretary
SCVMgAgt/edg
PAGE 1
UNDERWRITING AGREEMENT
BETWEEN
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
AND
T. ROWE PRICE INVESTMENT SERVICES, INC.
THIS UNDERWRITING AGREEMENT, made as of the 24th day of
June, 1988, by and between T. ROWE PRICE SMALL-CAP VALUE FUND,
INC., a corporation organized and existing under the laws of the
State of Maryland (hereinafter called the "Fund"), and T. ROWE
PRICE INVESTMENT SERVICES, INC., a corporation organized and
existing under the laws of the State of Maryland (hereinafter
called the "Distributor").
WITNESSETH:
WHEREAS, the Fund proposes to engage in business as an
open-end management investment company and to register as such
under the federal Investment Company Act of 1940, as amended
("ICA-40"); and
WHEREAS, the Distributor is engaged principally in the
business of distributing shares of the investment companies
sponsored and managed by either T. Rowe Price Associates, Inc.
("Price Associates") or Rowe Price-Fleming International, Inc.
("Price-Fleming") and is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, ("SEA-34") and is a
member of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, the Fund desires the Distributor to act as the
distributor in the public offering of its shares;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1.
Delivery of Fund Documents. The Fund has furnished Distributor
with copies, properly certified or authenticated, of each of the
following:
(a) Articles of Incorporation, dated April 21,
1988.
(b) By-Laws of the Fund as in effect on the date
hereof.
(c) Resolutions of the Board of Directors of the
Fund selecting Distributor as principal
underwriter and approving this form of agreement.
The Fund shall furnish the Distributor from time to
time with copies, properly certified or authenticated, of all the
amendments of, or supplements to, the foregoing, if any.
PAGE 2
The Fund shall furnish Distributor promptly with
properly certified or authenticated copies of any registration
statements filed by it with the Securities and Exchange
Commission under the Securities Act of 1933, as amended ("SA-33")
or ICA-40, together with any financial statements and exhibits
included therein, and all amendments or supplements thereto
hereafter filed.
2. Sale of Shares. Subject to the provisions of
Paragraphs 3, 4, and 6 hereof, and to such minimum purchase
requirements as may from time to time be currently indicated in
the Fund's prospectus, the Distributor is authorized to sell, as
agent on behalf of the Fund, shares of the Fund's capital stock
("Shares") authorized for issuance and registered under SA-33.
Distributor may also sell Shares under offers of exchange between
and among the investment companies for which Price Associates
and/or Price-Fleming act as investment managers ("Price Funds").
Distributor may also purchase as principal such Shares for resale
to the public. Such sale will be made by Distributor on behalf
of the Fund by accepting unconditional orders to purchase the
Shares placed with Distributor by investors and such purchases
will be made by Distributor only after acceptance by Distributor
of such orders. The sales price to the public of such Shares
shall be the public offering price as defined in Paragraph 5
hereof.
3. Sale of Shares by Fund. The rights granted to the
Distributor shall be nonexclusive in that the Fund reserves the
right to sell its Shares to investors pursuant to applications
received and accepted by the Fund or its transfer agent.
Further, the Fund reserves the right to issue Shares in
connection with the merger or consolidation of any other
investment company, trust or personal holding company with the
Fund or the Fund's acquisition by the purchase or otherwise, of
all or substantially all of the assets of an investment company,
trust or personal holding company. Any right granted to
Distributor to accept orders for Shares, or to make sales on
behalf of the Fund or to purchase Shares for resale, will not
apply to Shares issued in connection with the merger or
consolidation of any other investment company with the Fund or
its acquisition by purchase or otherwise, of all or substantially
all of the assets of any investment company, trust or personal
holding company, or substantially all of the outstanding shares
or interests of any such entity, and such right shall not apply
to Shares that may be offered by the Fund to shareholders by
virtue of their being shareholders of the Fund.
4. Shares Covered by this Agreement. This Agreement
relates to the issuance and sale of Shares that are duly
authorized, registered, and available for sale by the Fund,
including redeemed or repurchased Shares if and to the extent
that they may be legally sold and if, but only if, the Fund
authorizes the Distributor to sell them.
5. Public Offering Price. All Shares sold by the
Distributor pursuant to this Agreement shall be sold at the
public offering price. The public offering price for all
accepted subscriptions will be the net asset value per share, as
determined in the manner provided in the Fund's Articles of
Incorporation, as now in effect, or as they may be amended (and
as reflected in the Fund's then current prospectus), next
determined after the order is accepted by the Distributor. The
Distributor will process orders submitted by brokers for the sale
of Shares at the public offering price exclusive of any
commission charged by such broker to his customer.
6. Suspension of Sales. If and whenever the
determination of net asset value is suspended and until such
suspension is terminated, no further orders for Shares shall be
accepted by the Distributor except such unconditional orders
placed with the Distributor before it had knowledge of the
suspension. In addition, the Fund reserves the right to suspend
sales and Distributor's authority to accept orders for Shares on
behalf of the Fund if, in the judgment of the Board of Directors
of the Fund, it is in the best interests of the Fund to do so,
such suspension to continue for such period as may be determined
by the Board of Directors of the Fund; and in that event, no
orders to purchase Shares shall be processed or accepted by the
Distributor on behalf of the Fund while such suspension remains
in effect except for Shares necessary to cover unconditional
orders accepted by Distributor before it had knowledge of the
suspension, unless otherwise directed by the Board of Directors
of the Fund.
PAGE 3
7. Solicitation of Orders. In consideration of the
rights granted to the Distributor under this Agreement,
Distributor will use its best efforts (but only in states in
which Distributor may lawfully do so) to obtain from investors
unconditional orders for Shares authorized for issuance by the
Fund and registered under SA-33, provided that Distributor may in
its discretion reject any order to purchase Shares. This does
not obligate the Distributor to register or maintain its
registration as a broker or dealer under the state securities
laws of any jurisdiction if, in the discretion of the
Distributor, such registration is not practical or feasible. The
Fund shall make available to the Distributor at the expense of
the Distributor such number of copies of the Fund's currently
effective prospectus as the Distributor may reasonably request.
The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the
Distributor may reasonably request for use in connection with the
distribution of Shares.
8. Authorized Representations. The Fund is not
authorized by the Distributor to give on behalf of the
Distributor any information or to make any representations other
than the information and representations contained in a
registration statement or prospectus filed with the SEC under
SA-33 and/or ICA-40, covering Shares, as such registration
statement and prospectus may be amended or supplemented from time
to time.
Distributor is not authorized by the Fund to give on
behalf of the Fund any information or to make any representations
in connection with the sale of Shares other than the information
and representations contained in a registration statement or
prospectus filed with the Securities and Exchange Commission
("SEC") under SA-33 and/or ICA-40, covering Shares, as such
registration statement and prospectus may be amended or
supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on behalf of
the Fund for the Distributor's use. This shall not be construed
to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may
deem appropriate. No person other than Distributor is authorized
to act as principal underwriter (as such term is defined in
ICA-40, as amended) for the Fund.
9. Registration and Sale of Additional Shares. The
Fund will, from time to time, use its best efforts to register
under SA-33, such Shares of the Fund as Distributor may
reasonably be expected to sell on behalf of the Fund. In
connection therewith, the Fund hereby agrees to register an
indefinite number of Shares pursuant to Rule 24f-2 under ICA-40,
and to register such Shares as shall be deemed advisable pursuant
to Rule 24e-2 under ICA-40, as amended. The Fund will, in
cooperation with the Distributor, take such action as may be
necessary from time to time to qualify such Shares (so registered
or otherwise qualified for sale under SA-33), in any state
mutually agreeable to the Distributor and the Fund, and to
maintain such qualification.
PAGE 4
10. Expenses. The Fund shall pay all fees and
expenses:
a. in connection with the preparation, setting
in type and filing of any registration
statement and prospectus under SA-33 and/or
ICA-40, and any amendments or supplements
that may be made from time to time;
b. in connection with the registration and
qualification of Shares for sale in the
various states in which the Fund shall
determine it advisable to qualify such Shares
for sale. (Including registering the Fund as
a broker or dealer or any officer of the Fund
or other person as agent or salesman of the
Fund in any state.);
c. of preparing, setting in type, printing and
mailing any report or other communication to
shareholders of the Fund in their capacity as
such;
d. of preparing, setting in type, printing and
mailing prospectuses annually to existing
shareholders;
e. in connection with the issue and transfer of
Shares resulting from the acceptance by
Distributor of orders to purchase Shares
placed with the Distributor by investors,
including the expenses of confirming such
purchase orders; and
f. of any issue taxes or (in the case of Shares
redeemed) any initial transfer taxes.
The Distributor shall pay (or will enter into
arrangements providing that persons other than Distributor shall
pay) all fees and expenses:
a. of printing and distributing any prospectuses
or reports prepared for its use in connection
with the distribution of Shares to the
public;
b. of preparing, setting in type, printing and
mailing any other literature used by the
Distributor in connection with the
distribution of the Shares to the public;
c. of advertising in connection with the
distribution of such Shares to the public;
d. incurred in connection with its registration
as a broker or dealer or the registration or
qualification of its officers, directors or
representatives under federal and state laws;
and
e. incurred in connection with the sale and
offering for sale of Shares which have not
been herein specifically allocated to the Fund.
PAGE 5
11. Conformity With Law. Distributor agrees that in
selling Shares it shall duly conform in all respects with the
laws of the United States and any state in which such Shares may
be offered for sale by Distributor pursuant to this Agreement and
to the rules and regulations of the NASD.
12. Independent Contractor. Distributor shall be an
independent contractor and neither Distributor, nor any of its
officers, directors, employees, or representatives is or shall be
an employee of the Fund in the performance of Distributor's
duties hereunder. Distributor shall be responsible for its own
conduct and the employment, control, and conduct of its agents
and employees and for injury to such agents or employees or to
others through its agents or employees. Distributor assumes full
responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
13. Indemnification. Distributor agrees to indemnify
and hold harmless the Fund and each of its directors, officers,
employees, representatives and each person, if any, who controls
the Fund within the meaning of Section 15 of SA-33 against any
and all losses, liabilities, damages, claims or expenses
(including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claim or expense and reasonable
legal counsel fees incurred in connection therewith) to which the
Fund or such of its directors, officers, employees,
representatives or controlling person may become subject under
SA-33, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which
(i) may be based upon any wrongful act by Distributor or any of
Distributor's directors, officers, employees or representatives,
or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance
upon information furnished to the Fund by Distributor. In no
case (i) is Distributor's indemnity in favor of the Fund, or any
person indemnified to be deemed to protect the Fund or such
indemnified person against any liability to which the Fund or
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement or (ii) is
Distributor to be liable under its indemnity agreement contained
in this Paragraph with respect to any claim made against the Fund
or any person indemnified unless the Fund or such person, as the
case may be, shall have notified Distributor in writing of the
claim within a reasonable time after the summons or other first
written notification giving information of the nature of the
claim shall have been served upon the Fund or upon such person
(or after the Fund or such person shall have received notice of
such service on any designated agent). However, failure to
notify Distributor of any such claim shall not relieve
Distributor from any liability which Distributor may have to the
Fund or any person against whom such action is brought otherwise
than on account of Distributor's indemnity agreement contained in
this Paragraph.
Distributor shall be entitled to participate, at its
own expense, in the defense, or, if Distributor so elects, to
assume the defense of any suit brought to enforce any such claim,
but, if Distributor elects to assume the defense, such defense
shall be conducted by legal counsel chosen by Distributor and
satisfactory to the Fund, to its directors, officers, employees
or representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that
Distributor elects to assume the defense of any such suit and
retain such legal counsel, the Fund, its directors, officers,
employees, representatives or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If
Distributor does not elect to assume the defense of any such
suit, Distributor will reimburse the Fund, such directors,
officers, employees, representatives or controlling person or
persons, defendant or defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them.
Distributor agrees to promptly notify the Fund of the
commencement of any litigation or proceedings against it or any
of its directors, officers, employees or representatives in
connection with the issue or sale of any Shares.
The Fund agrees to indemnify and hold harmless
Distributor and each of its directors, officers, employees,
representatives and each person, if any, who controls Distributor
within the meaning of
PAGE 6
Section 15 of SA-33 against any and all losses, liabilities,
damages, claims or expenses (including the reasonable costs of
investigating or defending any alleged loss, liability, damage,
claim or expense and reasonable legal counsel fees incurred in
connection therewith) to which Distributor or such of its
directors, officers, employees, representatives or controlling
person may become subject under SA-33, under any other statute,
at common law, or otherwise, arising out of the acquisition of
any Shares by any person which (i) may be based upon any wrongful
act by the Fund or any of Fund's directors, officers, employees
or representatives, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact
contained in a registration statement, prospectus, shareholder
report or other information covering Shares filed or made public
by the Fund or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in
reliance upon information furnished to Distributor by the Fund.
In no case (i) is the Fund's indemnity in favor of the
Distributor, or any person indemnified to be deemed to protect
the Distributor or such indemnified person against any liability
to which the Distributor or such person would otherwise be
subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his duties or by reason of his
reckless disregard of his obligations and duties under this
Agreement, or (ii) is the Fund to be liable under its indemnity
agreement contained in this Paragraph with respect to any claim
made against Distributor, or person indemnified unless
Distributor, or such person, as the case may be, shall have
notified the Fund in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served
upon Distributor or upon such person (or after Distributor or
such person shall have received notice of such service on any
designated agent). However, failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which
the Fund may have to Distributor or any person against whom such
action is brought otherwise than on account of the Fund's
indemnity agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its own
expense, in the defense, or, if the Fund so elects, to assume the
defense of any suit brought to enforce any such claim, but, if
the Fund elects to assume the defense, such defense shall be
conducted by legal counsel chosen by the Fund and satisfactory to
Distributor, to its directors, officers, employees or
representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that the Fund
elects to assume the defense of any such suit and retain such
legal counsel, Distributor, its directors, officers, employees,
representatives or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Fund does not
elect to assume the defense of any such suit, the Fund will
reimburse Distributor, such directors, officers, employees,
representatives or controlling person or persons, defendant or
defendants in such suit for the reasonable fees and expenses of
any legal counsel retained by them. The Fund agrees to promptly
notify Distributor of the commencement of any litigation or
proceedings against it or any of its directors, officers,
employees, or representatives in connection with the issue or
sale of any Shares.
14. Duration and Termination of This Agreement. This
Agreement shall become effective upon its execution ("effective
date") and, unless terminated as provided, shall remain in effect
through April 30, 1989, and from year to year thereafter, but
only so long as such continuance is specifically approved at
least annually by the vote of a majority of the directors of the
Fund who are not interested persons of Distributor or of the
Fund, cast in person at a meeting called for the purpose of
voting on such approval, and by vote of the directors of the Fund
or of a majority of the outstanding voting securities of the
Fund. This Agreement may, on 60 days' written notice, be
terminated at any time, without the payment of any penalty, by
the vote of a majority of the directors of the Fund who are not
interested persons of Distributor or the Fund, by a vote of a
majority of the outstanding voting securities of the Fund, or by
Distributor. This Agreement will automatically terminate in the
event of its assignment. In interpreting the provisions of this
Paragraph 14, the definitions contained in Section 2(a) of ICA-40
(particularly the definitions of "interested person,"
"assignment," and "majority of the outstanding securities") shall
be applied.
15. Amendment of this Agreement. No provisions of
this Agreement may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing signed by the party
against which
PAGE 7
enforcement of the change, waiver, discharge, or termination is
sought. If the Fund should at any time deem it necessary or
advisable in the best interests of the Fund that any amendment of
this Agreement be made in order to comply with the
recommendations or requirements of the SEC or other governmental
authority or to obtain any advantage under state or federal tax
laws and notifies Distributor of the form of such amendment, and
the reasons therefor, and if Distributor should decline to assent
to such amendment, the Fund may terminate this Agreement
forthwith. If Distributor should at any time request that a
change be made in the Fund's Articles of Incorporation or By-Laws
or in its methods of doing business, in order to comply with any
requirements of federal law or regulations of the SEC, or of a
national securities association of which Distributor is or may be
a member relating to the sale of Shares, and the Fund should not
make such necessary change within a reasonable time, Distributor
may terminate this Agreement forthwith.
16. Miscellaneous. It is understood and expressly
stipulated that neither the shareholders of the Fund, nor the
directors of the Fund shall be personally liable hereunder. The
captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
17. Notice. Any notice required or permitted to be
given by either party to the other shall be deemed sufficient if
sent by registered or certified mail, postage prepaid, addressed
by the party giving notice to the other party at the last address
PAGE 8
furnished by the other party to the party giving notice: if to
the Fund, 100 East Pratt Street, Baltimore, Maryland 21202, and
if to the Distributor, at 100 East Pratt Street, Baltimore,
Maryland 21202.
ATTEST: T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
____________________________
By:____________________________________________
Secretary President
ATTEST: T. ROWE PRICE INVESTMENT SERVICES, INC.
____________________________
By:____________________________________________
Assistant Secretary President
SJH:SmCpDistAg
The Custodian Agreement dated September 28, 1987, as amended,
between State Street Bank and Trust Company and T. Rowe Price
Funds should be inserted here.
PAGE 1
CUSTODIAN CONTRACT
Between
STATE STREET BANK AND TRUST COMPANY
and
EACH OF THE PARTIES INDICATED
ON APPENDIX A
DATED: SEPTEMBER 28, 1987
FRF 07/87
PAGE 2
TABLE OF CONTENTS
1. Employment of Custodian and Property to be Held By It. . . . . . . . .1
2. Duties of the Custodian with Respect to Property of the Fund
Held by the Custodian in the United States.. . . . . . . . . . . . .2
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . . .2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . .2
1) Sale . . . . . . . . . . . . . . . . . . . . . . . . . .2
2) Repurchase Agreement . . . . . . . . . . . . . . . . . .2
3) Securities System. . . . . . . . . . . . . . . . . . . .3
4) Tender Offer . . . . . . . . . . . . . . . . . . . . . .3
5) Redemption by Issuer . . . . . . . . . . . . . . . . . .3
6) Transfer to Issuer, Nominee, Exchange. . . . . . . . . .3
7) Sale to Broker . . . . . . . . . . . . . . . . . . . . .3
8) Exchange or Conversion . . . . . . . . . . . . . . . . .4
9) Warrants, Rights . . . . . . . . . . . . . . . . . . . .4
10) Loans of Securities. . . . . . . . . . . . . . . . . . .4
11) Borrowings . . . . . . . . . . . . . . . . . . . . . . .4
12) Options. . . . . . . . . . . . . . . . . . . . . . . . .5
13) Futures. . . . . . . . . . . . . . . . . . . . . . . . .5
14) In-Kind Distributions. . . . . . . . . . . . . . . . . .5
15) Miscellaneous. . . . . . . . . . . . . . . . . . . . . .5
16) Type of Payment. . . . . . . . . . . . . . . . . . . . .6
2.3 Registration of Securities . . . . . . . . . . . . . . . . . .6
2.4 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . .7
2.5 Sale of Shares and Availability of Federal Funds . . . . . . .7
2.6 Collection of Income, Dividends. . . . . . . . . . . . . . . .7
2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . . . . .8
1) Purchases. . . . . . . . . . . . . . . . . . . . . . . .8
2) Exchanges. . . . . . . . . . . . . . . . . . . . . . . .9
3) Redemptions. . . . . . . . . . . . . . . . . . . . . . .9
4) Expense and Liability. . . . . . . . . . . . . . . . . .9
5) Dividends. . . . . . . . . . . . . . . . . . . . . . . .9
6) Short Sale Dividend. . . . . . . . . . . . . . . . . . .10
7) Loan . . . . . . . . . . . . . . . . . . . . . . . . . .10
8) Miscellaneous. . . . . . . . . . . . . . . . . . . . . .10
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased . . . . . . . . . . . . . . . . . . .10
2.9 Appointment of Agents. . . . . . . . . . . . . . . . . . . . .10
2.10 Deposit of Securities in Securities System . . . . . . . . . .10
1) Account of Custodian . . . . . . . . . . . . . . . . . .11
2) Records. . . . . . . . . . . . . . . . . . . . . . . . .11
3) Payment of Fund Monies, Delivery of
Securities . . . . . . . . . . . . . . . . . . . . . .11
4) Reports. . . . . . . . . . . . . . . . . . . . . . . . .12
5) Annual Certificate . . . . . . . . . . . . . . . . . . .12
6) Indemnification. . . . . . . . . . . . . . . . . . . . .12
2.11 Fund Assets Held in the Custodian's Direct Paper
System . . . . . . . . . . . . . . . . . . . . . . . . . . .13
2.12 Segregated Account . . . . . . . . . . . . . . . . . . . . . .14
PAGE 3
2.13 Ownership Certificates for Tax Purposes. . . . . . . . . . . .15
2.14 Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.15 Communications Relating to Fund Portfolio
Securities . . . . . . . . . . . . . . . . . . . . . . . . .15
2.16 Reports to Fund by Independent Public Accountants. . . . . . .16
3. Duties of the Custodian with Respect to Property
of the Fund Held Outside of the United States. . . . . . . . . . . .16
3.1 Appointment of Foreign Sub-Custodians. . . . . . . . . . . . .16
3.2 Assets to be Held. . . . . . . . . . . . . . . . . . . . . . .17
3.3 Foreign Securities Depositories. . . . . . . . . . . . . . . .17
3.4 Segregation of Securities. . . . . . . . . . . . . . . . . . .17
3.5 Access of Independent Accountants of the Fund. . . . . . . . .17
3.6 Reports by Custodian . . . . . . . . . . . . . . . . . . . . .18
3.7 Transactions in Foreign Assets of the Fund . . . . . . . . . .18
3.8 Responsibility of Custodian, Sub-Custodian and
Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.9 Monitoring Responsibilities. . . . . . . . . . . . . . . . . .19
3.10 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . . .19
4. Payments for Repurchases or Redemptions and Sales of
Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . . . .19
5. Proper Instructions. . . . . . . . . . . . . . . . . . . . . . . . . .20
6. Actions Permitted Without Express Authority. . . . . . . . . . . . . .21
7. Evidence of Authority, Reliance on Documents . . . . . . . . . . . . .21
8. Duties of Custodian with Respect to the Books of Account
and Calculations of Net Asset Value and Net Income . . . . . . . . .22
9. Records, Inventory . . . . . . . . . . . . . . . . . . . . . . . . . .22
10. Opinion of Fund's Independent Accountant . . . . . . . . . . . . . . .23
11. Compensation of Custodian. . . . . . . . . . . . . . . . . . . . . . .23
12. Responsibility of Custodian. . . . . . . . . . . . . . . . . . . . . .23
13. Effective Period, Termination and Amendment. . . . . . . . . . . . . .25
14. Successor Custodian. . . . . . . . . . . . . . . . . . . . . . . . . .26
15. Interpretive and Additional Provisions . . . . . . . . . . . . . . . .28
16. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
17. Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
18. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
19. Exemption from Liens . . . . . . . . . . . . . . . . . . . . . . . . .29
20. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . .29
21. Prior Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
22. The Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
23. Governing Documents. . . . . . . . . . . . . . . . . . . . . . . . . .30
24. Subcustodian Agreement . . . . . . . . . . . . . . . . . . . . . . . .30
25. Directors and Trustees . . . . . . . . . . . . . . . . . . . . . . . .30
26. Massachusetts Business Trust . . . . . . . . . . . . . . . . . . . . .30
27. Successors of Parties. . . . . . . . . . . . . . . . . . . . . . . . .31
PAGE 4
CUSTODIAN CONTRACT
This Contract by and between State Street Bank and Trust
Company, a Massachusetts trust company, having its principal
place of business at 225 Franklin Street, Boston, Massachusetts,
02110 (hereinafter called the "Custodian"), and each fund which
is listed on Appendix A (as such Appendix may be amended from
time to time) and which evidences its agreement to be bound
hereby by executing a copy of this Contract (each such fund
individually hereinafter called the "Fund," whose definition may
be found in Section 22),
WITNESSETH: That in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto agree as
follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of
its assets, including securities it desires to be held in places
within the United States ("domestic securities") and securities
it desires to be held outside the United States ("foreign
securities") pursuant to the Governing Documents of the Fund.
The Fund agrees to deliver to the Custodian all securities and
cash now or hereafter owned or acquired by it, and all payments
of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for
such new or treasury shares of capital stock ("Shares") of the
Fund as may be issued or sold from time to time. The Custodian
shall not be responsible for any property of the Fund held or
received by the Fund and not delivered to the Custodian.
With respect to domestic securities, upon receipt of "Proper
Instructions" (within the meaning of Article 5), the Custodian
shall from time to time employ one or more sub-custodians located
in the United States, but only in accordance with an applicable
vote by the Board of Directors/Trustees of the Fund, and provided
that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of
any sub-custodian so employed than any such sub-custodian has to
the Custodian, and further provided that the Custodian shall not
release the sub-custodian from any responsibility or liability
unless mutually agreed upon by the parties in writing. With
respect to foreign securities and other assets of the Fund held
outside the United States, the Custodian shall employ Chase
Manhattan Bank, N.A., as a sub-custodian for the Fund in
accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of the Fund all
PAGE 5
non-cash property, to be held by it in the United States,
including all domestic securities owned by the Fund, other
than (a) securities which are maintained pursuant to Section
2.10 in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S.
Department of the Treasury, collectively referred to herein
as "Securities System," and (b) commercial paper of an
issuer for which the Custodian acts as issuing and paying
agent ("Direct Paper") which is deposited and/or maintained
in the Direct Paper System of the Custodian pursuant to
Section 2.11.
2.2 Delivery of Securities. The Custodian shall release
and deliver domestic securities owned by the Fund held by
the Custodian or in a Securities System account of the
Custodian or in the Custodian's Direct Paper book entry
system account ("Direct Paper System Account") only upon
receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by mutual agreement of
the parties, and only in the following cases:
1) Sale. Upon sale of such securities for the
account of the Fund and receipt of payment
therefor;
2) Repurchase Agreement. Upon the receipt of payment
in connection with any repurchase agreement
related to such securities entered into by the
Fund;
3) Securities System. In the case of a sale effected
through a Securities System, in accordance with
the provisions of Section 2.10 hereof;
4) Tender Offer. To the depository agent or other
receiving agent in connection with tender or other
similar offers for portfolio securities of the
Fund;
5) Redemption by Issuer. To the issuer thereof or
its agent when such securities are called,
redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) Transfer to Issuer, Nominee. Exchange. To the
issuer thereof, or its agent, for transfer into
the name of the Fund or into the name of any
nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or
nominee name of any sub-custodian appointed
pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other
evidence representing the same aggregate face
amount or number of units and bearing the same
interest rate, maturity date and call provisions,
PAGE 6
if any; provided that, in any such case, the new
securities are to be delivered to the Custodian;
7) Sale to Broker or Dealer. Upon the sale of such
securities for the account of the Fund, to the
broker or its clearing agent or dealer, against a
receipt, for examination in accordance with
"street delivery" custom; provided that in any
such case, the Custodian shall have no
responsibility or liability for any loss arising
from the delivery of such securities prior to
receiving payment for such securities except as
may arise from the Custodian's failure to act in
accordance with its duties as set forth in
Section 12.
8) Exchange or Conversion. For exchange or
conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization,
split-up of shares, change of par value or
readjustment of the securities of the issuer of
such securities, or pursuant to provisions for
conversion contained in such securities, or
pursuant to any deposit agreement provided that,
in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;
9) Warrants, Rights. In the case of warrants, rights
or similar securities, the surrender thereof in
the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or
temporary securities for definitive securities;
provided that, in any such case, the new
securities and cash, if any, are to be delivered
to the Custodian;
10) Loans of Securities. For delivery in connection
with any loans of securities made by the Fund, but
only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and
the Fund, which may be in the form of cash,
obligations issued by the United States
government, its agencies or instrumentalities, or
such other property as mutually agreed by the
parties, except that in connection with any loans
for which collateral is to be credited to the
Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury,
the Custodian will not be held liable or
responsible for the delivery of securities owned
by the Fund prior to the receipt of such
collateral, unless the Custodian fails to act in
accordance with its duties set forth in
Article 12;
PAGE 7
11) Borrowings. For delivery as security in
connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only
against receipt of amounts borrowed, except where
additional collateral is required to secure a
borrowing already made, subject to Proper
Instructions, further securities may be released
for that purpose;
12) Options. For delivery in accordance with the
provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing
Corporation, any registered national securities
exchange, any similar organization or
organizations, or the Investment Company Act of
1940, regarding escrow or other arrangements in
connection with transactions by the Fund;
13) Futures. For delivery in accordance with the
provisions of any agreement among the Fund, the
Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act,
relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any
Contract Market, any similar organization or
organizations, or the Investment Company Act of
1940, regarding account deposits in connection
with transactions by the Fund;
14) In-Kind Distributions. Upon receipt of
instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in
connection with distributions in kind, as may be
described from time to time in the Fund's
currently effective prospectus and statement of
additional information ("prospectus"), in
satisfaction of requests by holders of Shares for
repurchase or redemption;
15) Miscellaneous. For any other proper corporate
purpose, but only upon receipt of, in addition to
Proper Instructions, a certified copy of a
resolution of the Board of Directors/Trustees or
of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities to
be delivered, setting forth the purpose for which
such delivery is to be made, declaring such
PAGE 8
purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of
such securities shall be made; and
16) Type of Payment. In any or all of the above
cases, payments to the Fund shall be made in cash,
by a certified check upon or a treasurer's or
cashier's check of a bank, by effective bank wire
transfer through the Federal Reserve Wire System
or, if appropriate, outside of the Federal Reserve
Wire System and subsequent credit to the Fund's
Custodian account, or, in case of delivery through
a stock clearing company, by book-entry credit by
the stock clearing company in accordance with the
then current street custom, or such other form of
payment as may be mutually agreed by the parties,
in all such cases collected funds to be promptly
credited to the Fund.
2.3 Registration of Securities. Domestic securities held
by the Custodian (other than bearer securities) shall be
registered in the name of the Fund or in the name of any
nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless
the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered
investment companies having the same investment adviser as
the Fund, or in the name or nominee name of any agent
appointed pursuant to Section 2.9 or in the name or nominee
name of any sub-custodian appointed pursuant to Article 1.
All securities accepted by the Custodian on behalf of the
Fund under the terms of this Contract shall be in "street
name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the United States in
the name of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the
provisions hereof all cash received by it from or for the
account of the Fund, other than cash maintained by the Fund
in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for the Fund may be deposited for the
Fund's credit in the Banking Department of the Custodian or
in such other banks or trust companies as the Custodian may
in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the
funds to be deposited with each such bank or trust company
shall be approved by vote of a majority of the Board of
Directors/Trustees of the Fund. Such funds shall be
PAGE 9
deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that
capacity.
2.5 Sale of Shares and Availability of Federal Funds. Upon
mutual agreement between the Fund and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions,
make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for
Shares of the Fund which are deposited into the Fund's
account.
2.6 Collection of Income, Dividends. The Custodian shall
collect on a timely basis all income and other payments with
respect to United States registered securities held
hereunder to which the Fund shall be entitled either by law
or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to United States bearer securities if, on the date
of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income
or other payments, as collected, to the Fund's custodian
account. Without limiting the generality of the foregoing,
the Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on
securities held hereunder. The Custodian will also receive
and collect all stock dividends, rights and other items of
like nature as and when they become due or payable. Income
due the Fund on United States securities loaned pursuant to
the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty
or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Fund is
properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper
Instructions,
which may be continuing instructions when deemed appropriate
by mutual agreement of the parties, the Custodian shall pay
out monies of the Fund in the following cases only:
1) Purchases. Upon the purchase of domestic
securities, options, futures contracts or options
on futures contracts for the account of the Fund
but only (a) against the delivery of such
securities, or evidence of title to such options,
futures contracts or options on futures contracts,
to the Custodian (or any bank, banking firm or
trust company doing business in the United States
or abroad which is qualified under the Investment
PAGE 10
Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian
as its agent for this purpose in accordance with
Section 2.9 hereof) registered in the name of the
Fund or in the name of a nominee of the Fund or of
the Custodian referred to in Section 2.3 hereof or
in other proper form for transfer; (b) in the case
of a purchase effected through a Securities
System, in accordance with the conditions set
forth in Section 2.10 hereof or (c) in the case of
a purchase involving the Direct Paper System, in
accordance with the conditions set forth in
Section 2.11; or (d) in the case of repurchase
agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer
which is a member of NASD, (i) against delivery of
the securities either in certificate form or
through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities
or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the
Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Fund. All coupon bonds
accepted by the Custodian shall have the coupons
attached or shall be accompanied by a check
payable on coupon payable date for the interest
due on such date.
2) Exchanges. In connection with conversion,
exchange or surrender of securities owned by the
Fund as set forth in Section 2.2 hereof;
3) Redemptions. For the redemption or repurchase of
Shares issued by the Fund as set forth in Article
4 hereof;
4) Expense and Liability. For the payment of any
expense or liability incurred by the Fund,
including but not limited to the following
payments for the account of the Fund: interest,
taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund
whether or not such expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) Dividends. For the payment of any dividends or
other distributions to shareholders declared
pursuant to the Governing Documents of the Fund;
6) Short Sale Dividend. For payment of the amount of
dividends received in respect of securities sold
short;
7) Loan. For repayment of a loan upon redelivery of
pledged securities and upon surrender of the
PAGE 11
note(s), if any, evidencing the loan;
8) Miscellaneous. For any other proper purpose, but
only upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of
the Board of Directors/Trustees or of the
Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary
or an Assistant Secretary, specifying the amount
of such payment, setting forth the purpose for
which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be
made.
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased. In any and every case where payment
for purchase of domestic securities for the account of the
Fund is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been
received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time
or times in its discretion appoint (and may at any time
remove) any other bank or trust company, which is itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out
such of the provisions of this Article 2 as the Custodian
may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of
its responsibilities or liabilities hereunder.
2.10 Deposit of Securities in Securities Systems. The
Custodian may deposit and/or maintain domestic securities
owned by the Fund in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal
agencies, collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and
regulations, if any, and subject to the following
provisions:
1) Account of Custodian. The Custodian may keep
domestic securities of the Fund in a Securities
System provided that such securities are
represented in an account ("Account") of the
Custodian in the Securities System which shall not
include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise
PAGE 12
for customers;
2) Records. The records of the Custodian, with
respect to domestic securities of the Fund which
are maintained in a Securities System, shall
identify by book-entry those securities belonging
to the Fund;
3) Payment of Fund Monies, Delivery of Securities.
Subject to Section 2.7, the Custodian shall pay
for domestic securities purchased for the account
of the Fund upon (i) receipt of advice from the
Securities System that such securities have been
transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to
reflect such payment and transfer for the account
of the Fund. Subject to Section 2.2, the
Custodian shall transfer domestic securities sold
for the account of the Fund upon (i) receipt of
advice from the Securities System that payment for
such securities has been transferred to the
Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies
of all advices from the Securities System of
transfers of domestic securities for the account
of the Fund shall identify the Fund, be maintained
for the Fund by the Custodian and be provided to
the Fund at its request. The Custodian shall
furnish the Fund confirmation of each transfer to
or from the account of the Fund in the form of a
written advice or notice and shall furnish to the
Fund copies of daily transaction sheets reflecting
each day's transactions in the Securities System
for the account of the Fund;
4) Reports. The Custodian shall provide the Fund
with any report obtained by the Custodian on the
Securities System's accounting system, internal
accounting control and procedures for safeguarding
domestic securities deposited in the Securities
System, and further agrees to provide the Fund
with copies of any documentation it has relating
to its arrangements with the Securities Systems as
set forth in this Agreement or as otherwise
required by the Securities and Exchange
Commission;
5) Annual Certificate. The Custodian shall have
received the initial or annual certificate, as the
case may be, required by Article 13 hereof;
6) Indemnification. Anything to the contrary in this
Contract notwithstanding, the Custodian shall be
liable to the Fund for any loss or expense,
PAGE 13
including reasonable attorneys fees, or damage to
the Fund resulting from use of the Securities
System by reason of any failure by the Custodian
or any of its agents or of any of its or their
employees or agents or from failure of the
Custodian or any such agent to enforce effectively
such rights as it may have against the Securities
System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the
Custodian with respect to any claim against the
Securities System or any other person which the
Custodian may have as a consequence of any such
loss, expense or damage if and to the extent that
the Fund has not been made whole for any such
loss, expense or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper
System. The Custodian may deposit and/or maintain
securities owned by the Fund in the Direct Paper System of
the Custodian subject to the following provisions:
1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in
the Direct Paper System only if such securities
are represented in an account ("Account") of the
Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to
securities of the Fund which are maintained in the
Direct Paper System shall identify by book-entry
those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased
for the account of the Fund upon the making of an
entry on the records of the Custodian to reflect
such payment and transfer of securities to the
account of the Fund. The Custodian shall transfer
securities sold for the account of the Fund upon
the making of an entry on the records of the
Custodian to reflect such transfer and receipt of
payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation
of each transfer to or from the account of the
Fund, in the form of a written advice or notice,
of Direct Paper on the next business day following
such transfer and shall furnish to the Fund copies
of daily transaction sheets reflecting each day's
transaction in the Securities System for the
account of the Fund;
PAGE 14
6) The Custodian shall provide the Fund with any
report on its system of internal accounting
control as the Fund may reasonably request from
time to time;
2.12 Segregated Account. The Custodian shall, upon receipt
of Proper Instructions, which may be of a continuing nature
where deemed appropriate by mutual agreement of the parties,
establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts
may be transferred cash and/or securities, including
securities maintained in an account by the Custodian
pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund, the Custodian
and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization
or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund, (ii) for purposes
of segregating cash or government securities in connection
with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or
sold by the Fund, (iii) for the purposes of compliance by
the Fund with the procedures required by Investment Company
Act Release No. 10666, or any subsequent release, rule or
policy, of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt
of, in addition to Proper Instructions, a certified copy of
a resolution of the Board of Directors/Trustees or of the
Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate
purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it and in
connection with transfers of such securities.
2.14 Proxies. If the securities are registered other than
in the name of the Fund or a nominee of the Fund, the
Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the
PAGE 15
registered holder of such securities, all proxies, without
indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Fund such proxies,
all proxy soliciting materials and all notices relating to
such securities.
2.15 Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to the Fund all
written information (including, without limitation, pendency
of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund and the
maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the domestic
securities being held for the Fund by the Custodian, an
agent appointed under Section 2.9, or sub-custodian
appointed under Section 1. With respect to tender or
exchange offers, the Custodian shall transmit promptly to
the Fund all written information received by the Custodian,
an agent appointed under Section 2.9, or sub-custodian
appointed under Section 1 from issuers of the domestic
securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer.
If the Fund desires to take action with respect to any
tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian of such
desired action at least 72 hours (excluding holidays and
weekends) prior to the time such action must be taken under
the terms of the tender, exchange offer, or other similar
transaction, and it will be the responsibility of the
Custodian to timely transmit to the appropriate person(s)
the Fund's notice. Where the Fund does not notify the
Custodian of its desired action within the aforesaid 72 hour
period, the Custodian shall use its best efforts to timely
transmit the Fund's notice to the appropriate person.
2.16 Reports to Fund by Independent Public Accountants. The
Custodian shall provide the Fund, at such times as the Fund
may reasonably require, with reports by independent public
accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including
domestic securities deposited and/or maintained in a
Securities System, relating to the services provided by the
Custodian under this Contract; such reports shall be of
sufficient scope and in sufficient detail, as may reasonably
be required by the Fund to provide reasonable assurance that
any material inadequacies existing or arising since the
prior examination would be disclosed by such examination.
The reports must describe any material inadequacies
disclosed and, if there are no such inadequacies, the
reports shall so state.
PAGE 16
3. Duties of the Custodian with Respect to Property of the Fund
Held Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Custodian
is authorized and instructed to employ Chase Manhattan Bank,
N.A, ("Chase") as sub-custodian for the Fund's securities,
cash and other assets maintained outside of the United
States ("foreign assets") all as described in the
Subcustodian Agreement between the Custodian and Chase.
Upon receipt of "Proper Instructions", together with a
certified resolution of the Fund's Board of
Directors/Trustees, the Custodian and the Fund may agree to
designate additional proper institutions and foreign
securities depositories to act as sub-custodians of the
Fund's foreign assets. Upon receipt of Proper Instructions
from the Fund, the Custodian shall cease the employment of
any one or more of such sub-custodians for maintaining
custody of the Fund's foreign assets.
3.2 Assets to be Held. The Custodian shall limit the
foreign assets maintained in the custody of foreign sub-
custodians to foreign assets specified under the terms of
the Subcustodian Agreement between the Custodian and Chase.
3.3 Foreign Securities Depositories. Except as may
otherwise be agreed upon in writing by the Custodian and the
Fund, foreign assets of the Fund shall be maintained in
foreign securities depositories only through arrangements
implemented by the banking institutions serving as sub-
custodians pursuant to the terms hereof.
3.4 Segregation of Securities. The Custodian shall
identify on its books as belonging to the Fund, the foreign
assets of the Fund held by Chase and by each foreign sub-
custodian.
3.5 Access of Independent Accountants of the Fund. Upon
request of the Fund, the Custodian will use its best efforts
(subject to applicable law) to arrange for the independent
accountants, officers or other representatives of the Fund
or the Custodian to be afforded access to the books and
records of Chase and any banking or other institution
employed as a sub-custodian for the Fund by Chase or the
Custodian insofar as such books and records relate to the
performance of Chase or such banking or other institution
under any agreement with the Custodian or Chase. Upon
request of the Fund, the Custodian shall furnish to the Fund
such reports (or portions thereof) of Chase's external
auditors as are available to the Custodian and which relate
directly to Chase's system of internal accounting controls
applicable to Chase's duties as a subcustodian or which
relate to the internal accounting controls of any
subcustodian employed by Chase with respect to foreign
assets of the Fund.
PAGE 17
3.6 Reports by Custodian. The Custodian will supply to the
Fund from time to time, as mutually agreed upon, statements
in respect of the foreign assets of the Fund held pursuant
to the terms of the Subcustodian Agreement between the
Custodian and Chase, including but not limited, to an
identification of entities having possession of the Fund's
foreign assets and advices or notifications of any transfers
of foreign assets to or from each custodial account
maintained by any sub-custodian on behalf of the Fund
indicating, as to foreign assets acquired for the Fund, the
identity of the entity having physical possession of such
foreign assets.
3.7 Transactions in Foreign Assets of the Fund. All
transactions with respect to the Fund's foreign assets shall
be in accordance with, and subject to, the provisions of the
Subcustodian Agreement between Chase and the Custodian.
3.8 Responsibility of Custodian, Sub-Custodian, and Fund.
Notwithstanding anything to the contrary in this Custodian
Contract, the Custodian shall not be liable to the Fund for
any loss, damage, cost, expense, liability or claim arising
out of or in connection with the maintenance of custody of
the Fund's foreign assets by Chase or by any other banking
institution or securities depository employed pursuant to
the terms of any Subcustodian Agreement between Chase and
the Custodian, except that the Custodian shall be liable for
any such loss, damage, cost, expense, liability or claim to
the extent provided in the Subcustodian Agreement between
Chase and the Custodian or attributable to the failure of
the Custodian to exercise the standard of care set forth in
Article 12 hereof in the performance of its duties under
this Contract or such Subcustodian Agreement. At the
election of the Fund, the Fund shall be entitled to be
subrogated to the rights of the Custodian under the
Subcustodian Agreement with respect to any claims arising
thereunder against Chase or any other banking institution or
securities depository employed by Chase if and to the extent
that the Fund has not been made whole therefor. As between
the Fund and the Custodian, the Fund shall be solely
responsible to assure that the maintenance of foreign
securities and cash pursuant to the terms of the
Subcustodian Agreement complies with all applicable rules,
regulations, interpretations and orders of the Securities
and Exchange Commission, and the Custodian assumes no
responsibility and makes no representations as to such
compliance.
3.9 Monitoring Responsibilities. With respect to the
Fund's foreign assets, the Custodian shall furnish annually
to the Fund, during the month of June, information
concerning the sub-custodians employed by the Custodian.
PAGE 18
Such information shall be similar in kind and scope to that
furnished to the Fund in connection with the initial
approval of this Contract. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian
learns of a material adverse change in the financial
condition of a sub-custodian.
3.10 Branches of U.S. Banks. Except as otherwise set forth
in this Contract, the provisions of this Article 3 shall not
apply where the custody of the Fund's assets is maintained
in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment
Company Act of 1940 which meets the qualification set forth
in Section 26(a) of said Act. The appointment of any such
branch as a sub-custodian shall be governed by Section 1 of
this Contract.
4. Payments for Repurchases or Redemptions and Sales of Shares
of the Fund
From such funds as may be available for the purpose but
subject to the limitations of the Governing Documents of the Fund
and any applicable votes of the Board of Directors/Trustees of
the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of the
Fund, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholder. In connection with
the redemption or repurchase of Shares of the Fund, the Custodian
shall honor checks drawn on the Custodian by a holder of Shares,
which checks have been furnished by the Fund to the holder of
Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to
time between the Fund and the Custodian.
The Custodian shall receive from the distributor for the
Fund's Shares or from the Transfer Agent of the Fund and deposit
as received into the Fund's account such payments as are received
for Shares of the Fund issued or sold from time to time by the
Fund. The Custodian will provide timely notification to the Fund
and the Transfer Agent of any receipt by it of payments for
Shares of the Fund.
5. Proper Instructions
Proper Instructions as used herein means a writing signed or
initialled by one or more person or persons as the Board of
Directors/Trustees shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the
purpose for which such action is requested, or shall be a blanket
instruction authorizing specific transactions of a repeated or
PAGE 19
routine nature. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all
oral instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the
authorization by the Board of Directors/Trustees of the Fund
accompanied by a detailed description of procedures approved by
the Board of Directors/Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or
electronic devices provided that the Board of Directors/Trustees
and the Custodian are satisfied that such procedures afford
adequate safeguards for the Fund's assets.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express
authority from the Fund:
1) make payments to itself or others for minor
expenses of handling securities or other similar
items relating to its duties under this Contract,
provided that all such payments shall be accounted
for to the Fund;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments on
the same day as received; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange,
substitution, purchase, transfer and other
dealings with the securities and property of the
Fund except as otherwise directed by the Board of
Directors/Trustees of the Fund.
7. Evidence of Authority, Reliance on Documents
The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other
instrument or paper reasonably and in good faith believed by it
to be genuine and to have been properly executed by or on behalf
of the Fund in accordance with Article 5 hereof. The Custodian
may receive and accept a certified copy of a vote of the Board of
Directors/Trustees of the Fund as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or
(b) of any determination or of any action by the Board of
Directors/Trustees pursuant to the Governing Documents of the
Fund as described in such vote, and such vote may be considered
as in full force and effect until receipt by the Custodian of
written notice to the contrary. So long as and to the extent
that it is in the exercise of the standard of care set forth in
Article 12 hereof, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of
title thereto received by it or delivered by it pursuant to this
PAGE 20
Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party
or parties.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the person or persons appointed by the Board of
Directors/Trustees of the Fund to keep the books of account of
the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do
so by the Fund, shall itself keep such books of account and/or
compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Fund
as described in the Fund's currently effective prospectus and
shall advise the Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various
components. The calculations of the net asset value per share
and the daily income of the Fund shall be made at the time or
times and in the manner described from time to time in the Fund's
currently effective prospectus.
9. Records, Inventory
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the
Fund. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the
Custodian be open for inspection and audit by duly authorized
officers, employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission, and, in the
event of termination of this Agreement, will be delivered in
accordance with Section 14 hereof. The Custodian shall, at the
Fund's request, supply the Fund with a tabulation of securities
owned by the Fund and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall
be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations. The Custodian shall
conduct a periodic inventory of all securities and other property
subject to this Agreement and provide to the Fund a periodic
reconciliation of the vaulted position of the Fund to the
appraised position of the Fund. The Custodian will promptly
report to the Fund the results of the reconciliation, indicating
any shortages or discrepancies uncovered thereby, and take
appropriate action to remedy any such shortages or discrepancies.
PAGE 21
10. Opinion of Fund's Independent Accountant
The Custodian shall cooperate with the Fund's independent
public accountants in connection with the annual and other audits
of the books and records of the Fund and take all reasonable
action, as the Fund may from time to time request, to provide
from year to year the necessary information to such accountants
for the expression of their opinion without any qualification as
to the scope of their examination, including but not limited to,
any opinion in connection with the preparation of the Fund's Form
N-lA, and Form N-SAR or other annual reports to the Securities
and Exchange Commission and with respect to any other
requirements of such Commission.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation
for its services and expenses as Custodian, as agreed upon from
time to time between the Fund and the Custodian.
12. Responsibility of Custodian
Notwithstanding anything to the contrary in this Agreement,
the Custodian shall be held to the exercise of reasonable care in
carrying out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence.
In order for the indemnification provision contained in this
Section to apply, it is understood that if in any case the Fund
may be asked to indemnify or save the Custodian harmless, the
Fund shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further
understood that the Custodian will use all reasonable care to
identify and notify the Fund promptly concerning any situation
which presents or appears likely to present the probability of
such a claim for indemnification against the Fund. The Fund,
shall have the option to defend the Custodian against any claim
which may be the subject of this indemnification, and in the
event that the Fund so elects, it will so notify the Custodian,
and thereupon the Fund shall take over complete defense of the
claim and the Custodian shall in such situation initiate no
further legal or other expenses for which it shall seek
indemnification under this Section. The Custodian shall in no
case confess any claim or make any compromise in any case in
which the Fund will be asked to indemnify the Custodian except
with the Fund's prior written consent. Nothing herein shall be
construed to limit any right or cause of action on the part of
the Custodian under this Contract which is independent of any
right or cause of action on the part of the Fund. The Custodian
shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Fund or such other counsel as may be
agreed to by the parties) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to
such advice. Notwithstanding the foregoing, the responsibility
PAGE 22
of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate Agreement entered into
between the Custodian and the Fund.
If the Fund requires the Custodian to take any action with
respect to securities, which action involves the payment of money
or which action may, in the opinion of the Custodian, result in
the Custodian or its nominee assigned to the Fund being liable
for the payment of money or incurring liability of some other
form, the Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or
securities for any purpose or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the
account of the Fund shall be security therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the Fund's
assets to the extent necessary to obtain reimbursement, provided
that the Custodian gives the Fund reasonable notice to repay such
cash or securities advanced, however, such notice shall not
preclude the Custodian's right to assert any lien under this
provision.
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage
prepaid to the other party, such termination to take effect not
sooner than sixty (60) days after the date of such delivery or
mailing in the case of a termination by the Fund, and not sooner
than 180 days after the date of such delivery or mailing in the
case of a termination by the Custodian; provided, however that
the Custodian shall not act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Directors/Trustees of
the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary
or an Assistant Secretary that the Board of Directors/Trustees
has reviewed the use by the Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company
Act of 1940, as amended and that the Custodian shall not act
under Section 2.11 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the
Board of Directors/Trustees has approved the initial use of the
Direct Paper System and the receipt of an annual certificate of
PAGE 23
the Secretary or an Assistant Secretary that the Board of
Directors/Trustees has reviewed the use by the Fund of the Direct
Paper System; provided further, however, that the Fund shall not
amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the
Governing Documents of the Fund, and further provided, that the
Fund may at any time by action of its Board of Directors/Trustees
(i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event
at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements, provided that the Custodian
shall not incur any costs, expenses or disbursements specifically
in connection with such termination unless it has received prior
approval from the Fund, which approval shall not be unreasonably
withheld.
14. Successor Custodian
If a successor custodian shall be appointed by the Board of
Directors/Trustees of the Fund, the Custodian shall, upon
termination, deliver to such successor custodian at the office of
the Custodian, duly endorsed and in the form for transfer, all
securities, funds and other properties then held by it hereunder
and shall transfer to an account of the successor custodian all
of the Fund's securities held in a Securities System. The
Custodian shall also use its best efforts to assure that the
successor custodian will continue any subcustodian agreement
entered into by the Custodian and any subcustodian on behalf of
the Fund.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Directors/Trustees of the Fund, deliver
at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of
Directors/Trustees shall have been delivered to the Custodian on
or before the date when such termination shall become effective,
then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the Investment
Company Act of 1940, doing business in Boston, Massachusetts, of
its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not
PAGE 24
less than $25,000,000, all securities, funds and other properties
held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this
Contract and to transfer to an account of such successor
custodian all of the Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of the vote referred to or of the Board of
Directors/Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this
Contract relating to the duties and obligations of the Custodian
shall remain in full force and effect. If while this Contract is
in force the Fund shall be liquidated pursuant to law, the
Custodian shall distribute, either in cash or (if the Fund so
orders) in the portfolio securities and other assets of the Fund,
pro rata among the holders of shares of the Fund as certified by
the Transfer Agent, the property of the Fund which remains after
paying or satisfying all expenses and liabilities of the Fund.
Section 12 hereof shall survive any termination of this Contract.
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with
the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Governing Documents of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
16. Notice
Any notice shall be sufficiently given when sent by
registered or certified mail, or by such other means as the
parties shall agree, to the other party at the address of such
party set forth above or at such other address as such party may
from time to time specify in writing to the other party.
17. Bond
The Custodian shall, at all times, maintain a bond in such
form and amount as is acceptable to the Fund which shall be
issued by a reputable fidelity insurance company authorized to do
business in the place where such bond is issued against larceny
PAGE 25
and embezzlement, covering each officer and employee of the
Custodian who may, singly or jointly with others, have access to
securities or funds of the Fund, either directly or through
authority to receive and carry out any certificate instruction,
order request, note or other instrument required or permitted by
this Agreement. The Custodian agrees that it shall not cancel,
terminate or modify such bond insofar as it adversely affects the
Fund except after written notice given to the Fund not less than
10 days prior to the effective date of such cancellation,
termination or modification. The Custodian shall furnish to the
Fund a copy of each such bond and each amendment thereto.
18. Confidentiality
The Custodian agrees to treat all records and other
information relative to the Fund and its prior, present or future
shareholders as confidential, and the Custodian, on behalf of
itself and its employees, agrees to keep confidential all such
information except, after prior notification to and approval in
writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Custodian may be
exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
19. Exemption from Liens
The securities and other assets held by the Custodian for
the Fund shall be subject to no lien or charge of any kind in
favor of the Custodian or any person claiming through the
Custodian, but nothing herein shall be deemed to deprive the
Custodian of its right to invoke any and all remedies available
at law or equity to collect amounts due it under this Agreement.
Neither the Custodian nor any sub-custodian appointed pursuant to
Section 1 hereof shall have any power or authority to assign,
hypothecate, pledge or otherwise dispose of any securities held
by it for the Fund, except upon the direction of the Fund, duly
given as herein provided, and only for the account of the Fund.
20. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth
of Massachusetts.
21. Prior Contracts
Without derogating any of the rights established by such
contracts, this Contract supersedes and terminates, as of the
date hereof, all prior contracts between the Fund and the
Custodian relating to the custody of the Fund's assets.
22. The Parties
All references herein to "the Fund" are to each of the funds
listed on Appendix A individually, as if this Contract were
between such individual fund and the Custodian. In the case of a
series fund or trust, all references to "the Fund" are to the
individual series or portfolio of such fund or trust, or to such
fund or trust on behalf of the individual series or portfolio, as
PAGE 26
appropriate. Any reference in this Contract to "the parties"
shall mean the Custodian and such other individual Fund as to
which the matter pertains.
23. Governing Documents.
The term "Governing Documents" means the Articles of
Incorporation, Agreement of Trust, By-Laws and Registration
Statement filed under the Securities Act of 1933, as amended from
time to time.
24. Subcustodian Agreement.
Reference to the "Subcustodian Agreement" between the
Custodian and Chase shall mean any such agreement which shall be
in effect from time to time between Chase and the Custodian with
respect to foreign assets of the Fund.
25. Directors and Trustees.
It is understood and is expressly stipulated that neither
the holders of shares in the Fund nor any Directors or Trustees
of the Fund shall be personally liable hereunder.
26. Massachusetts Business Trust
With respect to any Fund which is a party to this Contract
and which is organized as a Massachusetts business trust, the
term Fund means and refers to the trustees from time to time
serving under the applicable trust agreement (Declaration of
Trust) of such Trust as the same may be amended from time to
time. It is expressly agreed that the obligations of any such
Trust hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the trust property of the Trust,
as provided in the Declaration of Trust of the Trust. The
execution and delivery of this Contract has been authorized by
the trustees and signed by an authorized officer of the Trust,
acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed
to have been made by any of them but shall bind only the trust
property of the Trust as provided in its Declaration of Trust.
27. Successors of Parties.
This Contract shall be binding on and shall inure to the
benefit of the Fund and the Custodian and their respective
successors.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the dates indicated below.
DATED: September 28, 1987
__________________
PAGE 27
STATE STREET BANK AND TRUST
COMPANY
ATTEST:
/s/Kathleen M. Kubit By/s/Charles Cassidy
_____________________ _________________________________
Assistant Secretary Vice President
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Stock Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
PAGE 28
(SIGNATURES CONTINUED)
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
New York Tax-Free Money Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
New York Tax-Free Bond Fund
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
DATED: September 28, 1987
___________________
ATTEST:
/s/Nancy J. Wortman By/s/Carmen F. Deyesu
____________________________ __________________________________
PAGE 29
Appendix A
The following Funds are parties to this Agreement and have
so indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price California Tax-Free Income Trust on behalf of
the
California Tax-Free Bond Fund and
California Tax-Free Money Fund
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Equity Income Fund
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Institutional Trust on behalf of the
Tax-Exempt Reserve Portfolio
T. Rowe Price International Trust on behalf of the
T. Rowe Price International Bond Fund and
T. Rowe Price International Stock Fund
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price State Tax-Free Income Trust on behalf of the
Maryland Tax-Free Bond Fund,
New York Tax-Free Bond Fund and
New York Tax-Free Money Fund
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
T. Rowe Price U.S. Treasury Money Fund, Inc.
PAGE 30
AMENDMENT NO. 1 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
THIS AGREEMENT, made as of this 24th day of June, 1988, by
and between: T. Rowe Price Growth Stock Fund, Inc., T. Rowe Price
New Horizons Fund, Inc., T. Rowe Price New Era Fund, Inc., T.
Rowe Price New Income Fund, Inc., T. Rowe Price Prime Reserve
Fund, Inc., T. Rowe Price International Trust, T. Rowe Price U.S.
Treasury Money Fund, Inc., T. Rowe Price Growth & Income Fund,
Inc., T. Rowe Price Tax-Exempt Money Fund, Inc., T. Rowe Price
Tax-Free Income Fund, Inc., T. Rowe Price Tax-Free Short-
Intermediate Fund, Inc., T. Rowe Price Short-Term Bond Fund,
Inc., T. Rowe Price High Yield Fund, Inc., T. Rowe Price Tax-Free
High Yield Fund, Inc., T. Rowe Price New America Growth Fund, T.
Rowe Price Equity Income Fund, T. Rowe Price GNMA Fund, T. Rowe
Price Capital Appreciation Fund, T. Rowe Price Institutional
Trust, T. Rowe Price State Tax-Free Income Trust, T. Rowe Price
California Tax-Free Income Trust, T. Rowe Price Science &
Technology Fund, Inc., (hereinafter together called the "Funds"
and individually "Fund") and State Street Bank and Trust Company,
a Massachusetts trust,
W I T N E S S E T H:
It is mutually agreed that the Custodian Contract made by
the parties on the 28th day of September, 1987, is hereby amended
by adding thereto the T. Rowe Price Small-Cap Value Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW HORIZONS FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW ERA FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW INCOME FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
PAGE 31
(SIGNATURES CONTINUED)
T. ROWE PRICE PRIME RESERVE FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE INTERNATIONAL TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
/s/Henry H.Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE GROWTH & INCOME FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE HIGH YIELD FUND, INC.
/s/ Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
PAGE 32
(SIGNATURES CONTINUED)
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE NEW AMERICA GROWTH FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE EQUITY INCOME FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE GNMA FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE CAPITAL APPRECIATION FUND
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE INSTITUTIONAL TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
PAGE 33
(SIGNATURES CONTINUED)
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/William Blackwell
______________________________________________
By:
PAGE 34
AMENDMENT NO. 2 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, between State Street Bank and Trust Company and
each of the Parties listed on Appendix A thereto is hereby
further amended, as of October 19, 1988, by adding thereto the T.
Rowe Price International Discovery Fund, Inc., a separate series
of T. Rowe Price International Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
PAGE 35
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/Guy R. Sturgeon
______________________________________________
By:
PAGE 36
AMENDMENT NO. 3 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988 and October 19, 1988, between State Street Bank and
Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of February 22, 1989, by
adding thereto the T. Rowe Price International Equity Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
PAGE 37
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/K. Donelson
______________________________________________
By:
PAGE 38
AMENDMENT NO. 4 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988 and February 22, 1989, between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
July 19, 1989, by adding thereto the Institutional International
Funds, Inc., on behalf of the Foreign Equity Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
PAGE 39
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 40
AMENDMENT NO. 5 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, and July 19,
1989 between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of September 15, 1989, by adding thereto the T. Rowe Price
U.S. Treasury Funds, Inc., on behalf of the U.S. Treasury
Intermediate Fund and the U.S. Treasury Long-Term Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
PAGE 41
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 42
AMENDMENT NO. 6 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19, 1989
and September 15, 1989, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is
hereby further amended, as of December 15, 1989, by restating
Section 2.15 as follows:
2.15 Communications Relating to Fund Portfolio Securities. The
Custodian shall transmit promptly to the Fund all written
information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put
options written by the Fund and the maturity of futures contracts
purchased or sold by the Fund) received by the Custodian from
issuers of the domestic securities being held for the Fund by the
Custodian, an agent appointed under Section 2.9, or sub-custodian
appointed under Section 1. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund all
written information received by the Custodian, an agent appointed
under Section 2.9, or sub-custodian appointed under Section 1
from issuers of the domestic securities whose tender or exchange
is sought and from the party (or his agents) making the tender or
exchange offer. If the Fund desires to take action with respect
to any tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian of such desired
action at least 48 hours (excluding holidays and weekends) prior
to the time such action must be taken under the terms of the
tender, exchange offer, or other similar transaction, and it will
be the responsibility of the Custodian to timely transmit to the
appropriate person(s) the Fund's notice. Where the Fund does not
notify the custodian of its desired action within the aforesaid
48 hour period, the Custodian shall use its best efforts to
timely transmit the Fund's notice to the appropriate person. It
is expressely noted that the parties may negotiate and agree to
alternative procedures with respect to such 48 hour notice period
on a selective and individual basis.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
PAGE 43
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
PAGE 44
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U. S. TREASURY FUNDS, INC.
U. S. Treasury Intermediate Fund
U. S. Treasury Long-Term Fund
/s/Carmen F. Deyesu
______________________________________________
By: Carmen F. Deyesu,
Treasurer
STATE STREET BANK AND TRUST COMPANY
/s/ E. D. Hawkes, Jr.
______________________________________________
By: E. D. Hawkes, Jr.
Vice President
PAGE 45
Amendment No. 7 filed on Form SE January 25, 1990 with
International Trust (CIK 313212) Post Effective Amendment No. 17.
PAGE 46
AMENDMENT NO. 8 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, and December 20,
1989, between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of January 25, 1990, by adding thereto the T. Rowe Price
European Stock Fund, a separate series of T. Rowe Price
International Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 47
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 48
AMENDMENT NO. 9 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
and January 25, 1990 between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of February 21, 1990, by adding thereto the
T. Rowe Price Index Trust, Inc., on behalf of the T. Rowe Price
Equity Index Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 49
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins
Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
___________________________________________
By:
PAGE 50
AMENDMENT NO. 10 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, between State Street Bank
and Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of June 12, 1990, by adding
thereto the T. Rowe Price Spectrum Fund, Inc., on behalf of the
Spectrum Growth Fund and the Spectrum Income Fund.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL TRUST
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. ROWE PRICE U.S. TREASURY MONEY FUND, INC.
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 51
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
___________________________________________
By:
PAGE 52
AMENDMENT NO. 11 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, and June 12, 1990 between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
July 18, 1990, by adding thereto the T. Rowe Price New Asia Fund,
a separate series of the T. Rowe Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
PAGE 53
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Guy R. Sturgeon
___________________________________________
By: Guy R. Sturgeon
PAGE 54
AMENDMENT NO. 12 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, and July 18,
1990 between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of October 15, 1990, by adding thereto the T. Rowe Price
Global Government Bond Fund, a separate series of the T. Rowe
Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 55
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE INSTITUTIONAL TRUST
Tax-Exempt Reserve Portfolio
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Guy R. Sturgeon
___________________________________________
By:
PAGE 56
AMENDMENT NO. 13 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, and October 15, 1990, between State Street Bank and Trust
Company and each of the Parties listed on Appendix A thereto is
hereby further amended, as of February 13, 1991, by adding
thereto the Virginia Tax-Free Bond Fund and New Jersey Tax-Free
Bond Fund, two separate series of the T. Rowe Price State Tax-
Free Income Trust
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
PAGE 57
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/ Guy Sturgeon
___________________________________________
By: Vice President
PAGE 58
AMENDMENT NO. 14 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, and February 13, 1991, between State
Street Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of March 6,
1991, by adding thereto the T. Rowe Price Balanced Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 59
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
___________________________________________
By:
PAGE 60
AMENDMENT NO. 15 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, and March 6, 1991,
between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of September 12, 1991, by adding thereto the T. Rowe Price
Adjustable Rate U.S. Government Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 61
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S.
GOVERNMENT FUND, INC.
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
PAGE 62
STATE STREET BANK AND TRUST COMPANY
/s/
___________________________________________
By:
PAGE 63
AMENDMENT NO. 16 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as
amended June 24, 1988, October 19, 1988, February 22, 1989, July
19, 1989, September 15, 1989, December 15, 1989, December 20,
1989, January 25, 1990, February 21, 1990, June 12, 1990, July
18, 1990, October 15, 1990, February 13, 1991, March 6, 1991 and
September 12, 1991, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of November 6, 1991, by adding thereto the T.
Rowe Price Japan Fund, a separate series of the T. Rowe Price
International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
PAGE 64
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY
FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL
EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S.
GOVERNMENT FUND, INC.
PAGE 65
/s/Henry H. Hopkins
__________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
___________________________________________
By:
PAGE 66
AMENDMENT NO. 17 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991 and November 6, 1991, between State Street
Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of April 23,
1992, by adding thereto the T. Rowe Price Mid-Cap Growth Fund,
Inc. and T. Rowe Price Short-Term Global Income Fund, a separate
series of the T. Rowe Price International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
PAGE 67
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE INTERNATIONAL EQUITY FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
/s/Henry H. Hopkins
__________________________________
By: Henry H. Hopkins, Vice President
PAGE 68
STATE STREET BANK AND TRUST COMPANY
/s/
_________________________________________
By:
PAGE 69
AMENDMENT NO. 18 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, and April 23, 1992, between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
September 2, 1992, by adding thereto the T. Rowe Price OTC Fund,
a series of the T. Rowe Price OTC Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 70
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins, Vice President
PAGE 71
STATE STREET BANK AND TRUST COMPANY
/s/
_____________________________________________
By:
PAGE 72
AMENDMENT NO. 19 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, and
September 2, 1992, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of November 3, 1992, by adding thereto the T.
Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 73
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
PAGE 74
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 75
AMENDMENT NO. 20 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, and November 3, 1992, between State Street Bank and
Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of December 16, 1992, by
adding thereto the T. Rowe Price Dividend Growth Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
PAGE 76
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
PAGE 77
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 78
AMENDMENT NO. 21 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, and December 16, 1992, between State
Street Bank and Trust Company and each of the Parties listed on
Appendix A thereto is hereby further amended, as of December 21,
1992, by adding thereto the Maryland Short-Term Tax-Free Bond
Fund, an additional series to the T. Rowe Price State Tax-Free
Income Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 79
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
PAGE 80
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 81
AMENDMENT NO. 22 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, and December 21,
1992, between State Street Bank and Trust Company and each of the
Parties listed on Appendix A thereto is hereby further amended,
as of January 28, 1993, by adding thereto the Georgia Tax-Free
Bond Fund and the Florida Insured Intermediate Tax-Free Fund,
additional series to the T. Rowe Price State Tax-Free Income
Trust.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 82
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
PAGE 83
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
______________________________________________
By:
PAGE 84
AMENDMENT NO. 23 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
and January 28, 1993, between State Street Bank and Trust Company
and each of the Parties listed on Appendix A thereto is hereby
further amended, as of April 22, 1993, by adding thereto the T.
Rowe Price Blue Chip Growth Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
PAGE 85
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
PAGE 86
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
/s/Henry H. Hopkins
______________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_______________________________________________
By:
PAGE 87
AMENDMENT NO. 24 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, and April 22, 1993, between State Street Bank
and Trust Company and each of the Parties listed on Appendix A
thereto is hereby further amended, as of June 30, 1993, by adding
thereto the Spectrum Balanced Fund, a series of the T. Rowe Price
Spectrum Fund, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
PAGE 88
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum Balanced Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
PAGE 89
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_____________________________________________
By:
PAGE 90
AMENDMENT NO. 25 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, and June 30, 1993, between
State Street Bank and Trust Company and each of the Parties
listed on Appendix A thereto is hereby further amended, as of
September 16, 1993, by adding thereto the T. Rowe Price Summit
Funds, Inc. and T. Rowe Price Summit Municipal Funds, Inc.
Notwithstanding anything to the contrary herein, it is
understood that the T. Rowe Price Summit Funds, Inc. and T. Rowe
Price Summit Municipal Funds, Inc. (collectively referred to as
the "Funds") shall not be responsible for paying any of the fees
or expenses set forth herein but that, in accordance with the
Investment Management Agreement, dated September 16, 1993,
between the Funds and T. Rowe Price Associates, Inc. ("T. Rowe
Price"), the Funds will require T. Rowe Price to pay all such
fees and expenses.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
PAGE 91
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
PAGE 92
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum Balanced Fund
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_____________________________________________
By:
PAGE 93
AMENDMENT NO. 26 TO CUSTODIAN CONTRACT BETWEEN
STATE STREET BANK AND TRUST COMPANY AND
THE T. ROWE PRICE FUNDS
W I T N E S S E T H:
The Custodian Contract of September 28, 1987, as amended
June 24, 1988, October 19, 1988, February 22, 1989, July 19,
1989, September 15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990, July 18,
1990, October 15, 1990, February 13, 1991, March 6, 1991,
September 12, 1991, November 6, 1991, April 23, 1992, September
2, 1992, November 3, 1992, December 16, 1992, December 21, 1992,
January 28, 1993, April 22, 1993, June 30, 1993, and September
16, 1993, between State Street Bank and Trust Company and each of
the Parties listed on Appendix A thereto is hereby further
amended, as of November 3, 1993, by adding thereto the T. Rowe
Price Latin America Fund, a separate series of the T. Rowe Price
International Funds, Inc.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE NEW HORIZONS FUND, INC.
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Income Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
PAGE 94
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND,
INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
New Jersey Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
Spectrum Balanced Fund
T. ROWE PRICE BALANCED FUND, INC.
PAGE 95
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT
FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. Rowe Price OTC Fund
T. ROWE PRICE TAX-FREE INSURED INTEREMEDIATE
BOND FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE SUMMIT FUNDS, INC.
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
T. Rowe Price Summit Municipal Money Market
Fund
T. Rowe Price Summit Municipal Intermediate
Fund
T. Rowe Price Summit Municipal Income Fund
/s/Henry H. Hopkins
_____________________________________________
By: Henry H. Hopkins, Vice President
STATE STREET BANK AND TRUST COMPANY
/s/
_____________________________________________
By:
PAGE 1
AGREEMENT effective January 1, 1989 between THE CHASE MANHATTAN
BANK, N.A. ("Chase"), the T. ROWE PRICE SMALL-CAP VALUE FUND,
INC. ("Fund"); and STATE STREET BANK AND TRUST COMPANY ("State
Street").
WHEREAS, State Street serves as the custodian in the United
States for the securities and other assets of the Fund; and
WHEREAS, the Fund desires to use the services of Chase in
connection with the custody of securities and other assets
outside the United States, which services currently are
administered through the offices of the Chase branch in London,
England;
NOW THEREFORE, in consideration of the mutual covenants and
agreements herein, the parties hereto hereby agree as follows.
1. Custody Account. Chase agrees to establish and
maintain (a) a custody account in the name of State Street,
acting as custodian for the Fund ("Custody Account") for any and
all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money and any certificates,
receipts, warrants or other instruments representing rights to
receive, purchase or subscribe for the same or evidencing or
representing any other rights or interests therein and other
PAGE 2
similar property issued and sold primarily outside the United
States by a foreign government, a national of any foreign country
or a corporation or other organization incorporated or organized
under the laws of any foreign country and securities issued or
guaranteed by the Government of the United States or by any state
or any political subdivision thereof or by any agency thereof or
by any entity organized under the laws of the United States or of
any state thereof which have been issued and sold primarily
outside the United States (hereinafter called "Securities") from
time to time received by Chase or its subcustodian (as defined in
subparagraph (b) (iv) of Section 3) for the account of State
Street, and (b) a deposit account in the name of State Street
acting as custodian for the Fund ("Deposit Account")
for any and all cash and cash equivalents (hereinafter called
"Cash") in any currency received by Chase or its subcustodian for
the account of State Street, which Cash shall not be subject to
withdrawal by draft or check.
2. Maintenance of Securities and Cash Abroad.
(a) Securities in the Custody Account shall be held in such
country or other jurisdiction as shall be approved by the Board
of Directors of the Fund and specified from time to time in
Instructions, provided that such country or other jurisdiction
shall be one in which (i) the principal trading market for such
Securities is located, (ii) such Securities are to be presented
for payment, or (iii) such Securities are acquired for the
Custody Account.
PAGE 3
(b) Cash in the Deposit Account shall be credited to an
account as held in the name of Chase in such amounts and in such
country or other jurisdiction as shall be approved by the Board
of Directors of the Fund and so specified from time to time in
Instructions, provided that such country or other jurisdiction
shall be one in which such Cash is the legal currency for the
payment of public or private debts.
3. Eligible Foreign Custodians and Securities
Depositories.
(a) State Street authorizes Chase to hold the Securities in
the Custody Account and the Cash in the Deposit Account in
custody and deposit accounts, respectively, which have been
established by Chase with (i) one of its branches, (ii) a branch
of a qualified U.S. bank, (iii) an eligible foreign custodian, or
(iv) an eligible foreign securities depository; provided,
however, that the Board of Directors of the Fund has approved the
use of and the terms of, and Chase's contract with, each such
eligible foreign custodian or eligible foreign securities
depository by resolution, and Instructions to such effect have
been provided to Chase; and provided further, that any one of its
branches, a branch of a qualified U.S. bank or an eligible
foreign custodian selected to act as Chase's subcustodian is
authorized to hold such Securities or Cash in its account with
any eligible foreign securities depository in which it
participates.
(b) For purposes of this Agreement:
PAGE 4
(i) "qualified U.S. bank" shall mean a qualified
U.S. bank as defined in Rule 17f-5 under the Investment
Company Act of 1940;
(ii) "eligible foreign custodian" shall mean (A) a
banking institution or trust company, incorporated or
organized under the laws of a country other than the United
States, that is regulated as such by that country's
government or an agency thereof and that has shareholders'
equity in excess of $200 million in U.S. currency (or a
foreign currency equivalent thereof) (B) a majority-owned
direct or indirect subsidiary of a qualified U.S. bank or
bank-holding company that is incorporated or organized under
the laws of a country other than the United States and that
has shareholders' equity in excess of $100 million in U.S.
currency (or a foreign currency equivalent thereof), or (C)
a banking institution or trust company, incorporated or
organized under the laws of a country other than the United
States or a majority owned direct or indirect subsidiary of
a qualified U.S. bank or bank-holding company that is
incorporated or organized under the laws of a country other
than the United States, which has been approved for use by
registered investment companies as a foreign custodian
pursuant to an exemptive order issued by the Securities and
Exchange Commission;
(iii) "eligible foreign securities depository" shall
mean a securities depository or clearing agency,
incorporated or organized under the laws of a country other
PAGE 5
than the United States, which operates (A) the central
system for handling of securities or equivalent book-entries
in that country, or (B) a transnational system for the
central handling of securities or equivalent book-entries;
and
(iv) "subcustodian" shall mean any branch of a
qualified U.S. bank, any eligible foreign custodian or any
eligible foreign securities depository with which Chase has
entered an agreement of the type contemplated hereunder
regarding Securities and/or Cash held in or to be acquired
for the Custody Account or the Deposit Account.
4. Use of Subcustodian. With respect to Securities in the
Custody Account and Cash in the Deposit Account which are held by
a subcustodian pursuant to Section 3,
(a) Chase will identify on its books as belonging to the
Fund any Securities or Cash, as the case may be, held by such
subcustodian.
(b) In the event that a subcustodian permits any of the
Securities or Cash, as the case may be, placed in its care to be
held in an eligible foreign securities depository, such
subcustodian will be required by its agreement with Chase to
identify on its books such Securities or Cash, as the case may
be, as being held for the account of Chase as a Custodian for its
customers.
(c) Any Securities in the Custody Account or Cash in the
Deposit Account held by a subcustodian of Chase will be subject
only to the instructions of Chase or its agents; and any
PAGE 6
Securities or Cash, as the case may be, held in an eligible
foreign securities depository for the account of a subcustodian
will be subject only to the instructions of such subcustodian.
(d) Chase will only deposit Securities or Cash, as the case
may be, in an account with a subcustodian which includes
exclusively the assets held by Chase for its customers, and Chase
will cause such account to be designated by such subcustodian as
a special custody account for the exclusive benefit of customers
of Chase.
(e) Any agreement Chase shall enter into with a
subcustodian with respect to the holding of Securities or Cash
shall require that: (i) the Securities or Cash, as the case may
be, are not subject to any right, charge, security interest, lien
or claim of any kind in favor or such subcustodian or its
creditors except a claim of payment for their safe custody or
administration, and (ii) beneficial ownership of such Securities
or Cash, as the case may be, is freely transferable without the
payment of money or value other than for safe custody or
administration; provided, however, that the foregoing shall not
apply to the extent that any of the above-mentioned rights or
charges result from any arrangements by the Fund or State Street
on behalf of the Fund with any subcustodian.
(f) Chase shall allow officers of, independent public
accountants engaged by, or other representatives of the Fund or
State Street access at reasonable times to the records of Chase
relating to the Securities held in the Custody Account and Cash
held in the Deposit Account as is required by such officers,
PAGE 7
accountants or representatives in connection with their
examination of the books and records pertaining to the affairs of
the Fund or State Street. Subject to restrictions under
applicable law, any agreement Chase shall enter into with any
subcustodian shall require any subcustodian holding any
Securities in the Custody Account or Cash in the Deposit Account
to permit officers of, independent public accountants employed
by, or other representatives of, the Fund or State Street access
at reasonable times to the records of such subcustodian as may be
required in connection with their examination of the books and
records pertaining to the affairs of the Fund or State Street.
Upon a request from State Street, Chase shall furnish to the Fund
and State Street such reports (or portions thereof) of Chase's
external auditors as relate directly to Chase's system of
internal accounting controls applicable to Chase's duties under
this Agreement. Chase shall use its best efforts to obtain and
furnish the Fund and State Street with such similar reports as
the Fund or State Street may request with respect to each
subcustodian holding Securities and Cash.
(g) Chase shall supply to the Fund and State Street no less
than monthly a statement in respect to any Securities in the
Custody Account and Cash in the Deposit Account held by a
subcustodian, including an identification of the entity having
possession of the Securities or Cash, as the case may be, and
including a description thereof. Chase shall send to the Fund
and State Street an advice or notification of any transfers of
Securities to or from the Custody Account, indicating, as to
PAGE 8
Securities acquired for the account of State Street for the Fund,
the identity of the entity having physical possession of such
Securities and with respect to transfers of Securities to or from
the Custody Account shall include appropriate statements, reports
and/or advices, as the case may be, reflecting transactions in
the Deposit Account.
(h) Chase hereby represents and warrants to the Fund that
in its opinion, after due inquiry, the established procedures to
be followed by each of its branches, each branch of a qualified
U.S. bank, each eligible foreign custodian and each eligible
foreign securities depository holding Securities of the Fund in
the account of State Street pursuant to this Agreement afford
protection for such Securities at least equal to that afforded by
Chase's established procedures with respect to similar securities
held by Chase (and its securities depositories) in New York.
5. Deposit Account Payments. Subject to the provisions of
Section 7, Chase shall make, or cause its subcustodians to make,
payments of Cash credited to the Deposit Account only.
(a) in connection with the purchase of Securities for the
Fund in the account of State Street and the delivery of such
Securities to, or the crediting of such Securities to the account
of, Chase or its subcustodian, each such payment to be made at
prices as confirmed by Instructions (as defined in Section 9
hereof) from Authorized Persons (as defined in Section 10
hereof);
PAGE 9
(b) for the payments to be made in connection with the
conversion, exchange or surrender of Securities held in the
Custody Account;
(c) for other proper corporate purposes of the Fund; or
(d) upon the termination of this Custody Agreement as
hereinafter set forth.
All payments of cash for a purpose permitted by subsection
(a) or (b) of this Section 5 will be made only upon receipt by
Chase of Instructions from Authorized Persons which shall specify
the purpose for which the payment is to be made. In the case of
any payment to be made for the purpose permitted by subsection
(c) of this Section 5, Chase must first receive a certified copy
of a resolution of the Board of Directors of the Fund adequately
describing such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such
payment is to be made. Any payment pursuant to subsection (d) of
this Section 5 will be made in accordance with Section 17.
In the event that any payment made under this Section 5
exceeds the funds available in the Deposit Account, Chase may, in
its discretion, advance the Fund an amount equal to such excess
and such advance shall be deemed a loan from Chase to the Fund,
payable on demand, bearing interest at the rate of interest
customarily charged by Chase on similar loans.
If Chase causes the Deposit Account to be credited on the
payable date for interest, dividends or redemptions, State Street
will promptly return to Chase any such amount or property so
credited upon oral or written notification that neither Chase not
its subcustodian can collect such amount or property in the
PAGE 10
ordinary course of business. Except for such actions as Chase
may lawfully perform pursuant to Instructions of Authorized
Persons, Chase or its subcustodian, as the case may be, shall
have no duty or obligation to institute legal proceedings, file a
claim or proof of claim in any insolvency proceeding or take any
other action with respect to the collection of such amount or
property.
6. Custody Account Transactions. Subject to the
provisions of Section 7, Securities in the Custody Account will
be transferred, exchanged or delivered by Chase or its
subcustodians only.
(a) upon sale of such Securities held for the Fund in the
account of State Street and receipt by Chase or its subcustodian
only of payment therefor, each such payment to be in the amount
confirmed by Instructions from Authorized Persons;
(b) when such Securities are called, redeemed or retired,
or otherwise become payable;
(c) in exchange for or upon conversion into other
Securities alone, other Securities and Cash or Cash alone
pursuant to any plan or merger, consolidation, reorganization,
recapitalization, tender offer, exchange offer, or readjustment;
(d) upon conversion of such Securities pursuant to their
terms into other Securities;
(e) upon exercise of subscription, purchase or other
similar rights represented by such Securities;
(f) for the purpose of exchanging interim receipts or
temporary Securities for definitive Securities;
PAGE 11
(g) for the purpose of redeeming in kind shares of the
capital stock of the Fund against delivery to Chase or its
subcustodian of such shares to be so redeemed;
(h) for other proper corporate purposes of the Fund; or
(i) upon the termination of this Custody Agreement as
hereinafter set forth.
All transfers, exchanges or deliveries of Securities in the
Custody Account for a purpose permitted by either subsection (a),
(b), (c), (d), (e), or (f) of this Section 6 will be made, except
as provided in Section 8, only upon receipt by Chase of
Instructions from Authorized Persons which shall specify the
purpose of the transfer, exchange or delivery to be made. In the
case of any transfer or delivery to be made for the purpose
permitted by subsection (g) of this Section 6, Chase must first
receive Instructions from Authorized Persons specifying the
shares held by Chase or its subcustodian to be so transferred or
delivered and naming the person or persons to whom transfers or
delivery of such shares shall be made. In the case of any
transfer, exchange or delivery to be made for the purpose
permitted by subsection (h) of this Section 6, Chase must first
receive a certified copy of a resolution of the Board of
Directors of the Fund adequately describing such transfer,
exchange or delivery, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom
delivery of such Securities shall be made. Any transfer or
delivery pursuant to subsection (i) of this Section 6 will be
made in accordance with Section 17 of this Agreement.
PAGE 12
7. Custody Account Procedures. With respect to any
transaction involving Securities held in or to be acquired for
the Custody Account, Chase in its discretion may cause the
Deposit Account to be credited on the contractual settlement date
with the proceeds of any sale or exchange of Securities from the
Custody Account and to be debited on the contractual settlement
date for the cost of Securities purchased or acquired for the
Custody Account. Chase may reverse any such credit or debit if
the transaction with respect to which such credit or debit were
made fails to settle within a reasonable period, determined by
Chase in its discretion, after the contractual settlement date,
except that if any Securities delivered pursuant to this Section
7 are returned by the recipient thereof, Chase may cause any such
credits and debits to be reversed at any time. With respect to
any transaction as to which Chase does not determine so to credit
or debit the Deposit Account, the proceeds from the sale or
exchange of Securities will be credited and the cost of such
Securities purchased or acquired will be debited to the Deposit
Account on the date such proceeds or Securities are received by
Chase.
Notwithstanding the preceding paragraph, settlement and
payment for Securities received for, and delivery of Securities
out of, the Custody Account may be effected in accordance with
the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation,
delivering Securities to the purchaser thereof or to a dealer
PAGE 13
therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such
Securities from such purchaser or dealer.
8. Actions of Chase. Until Chase receives Instructions
from Authorized Persons to the contrary, Chase will, or will
instruct its subcustodian, to:
(a) present for payment any Securities in the Custody
Account which are called, redeemed or retired or otherwise become
payable and all coupons and other income items which call for
payment upon presentation to the extent that Chase or
subcustodian is aware of such opportunities for payment, and hold
cash received upon presentation of such Securities in accordance
with the provisions of Sections 2, 3 and 4 of this Agreement;
(b) in respect of Securities in the Custody Account,
execute in the name of State Street or the Fund such ownership
and other certificates as may be required to obtain payments in
respect thereof; and
(c) exchange interim receipts or temporary Securities in
the Custody Account for definitive Securities.
9. Instructions. As used in this Agreement, the term
"Instructions" means instructions of the Fund received by Chase,
via telephone, telex, TWX, facsimile transmission, bank wire or
other teleprocess or electronic instruction system acceptable to
Chase which Chase reasonably believes in good faith to have been
given by Authorized Persons or which are transmitted with proper
testing or authentication pursuant to terms and conditions which
Chase may specify.
PAGE 14
Any Instructions delivered to Chase by telephone shall
promptly thereafter be confirmed in writing by an Authorized
Person (which confirmation may bear the facsimile signature of
such Person), but the Fund will hold Chase harmless for the
Fund's failure to send such confirmation in writing or the
failure of such confirmation to conform to the telephone
instructions received. Unless otherwise expressly provided, all
Instructions shall continue in full force and effect until
cancelled or superseded. If Chase requires test arrangements,
authentication methods or other security devices to be used with
respect to Instructions, any Instructions given by the Fund
thereafter shall be given and processed in accordance with such
terms and conditions for the use of such arrangements, methods or
devices as Chase may put into effect and modify from time to
time. The Fund shall safeguard any testkeys, identification codes
or other security devices which Chase shall make available to
them. Chase may electronically record any Instructions given by
telephone, and any other telephone discussions, with respect to
the Custody Account.
10. Authorized Persons. As used in this Agreement, the
term "Authorized Persons" means such officers or such agents of
the Fund as have been designated by a resolution of the Board of
Directors of the Fund, a certified copy of which has been
provided to Chase, to act on behalf of the Fund or State Street
in the performance of any acts which Authorized Persons may do
under this Agreement. Such persons shall continue to be
Authorized Persons until such time as Chase receives Instructions
PAGE 15
from Authorized Persons that any such officer or agent is no
longer an Authorized Person.
11. Nominees. Securities in the Custody Account which are
ordinarily held in registered form may be registered in the name
of Chase's nominee or, as to any Securities in the possession of
an entity other than Chase, in the name of such entity's nominee.
The Fund agrees to hold any such nominee harmless from any
liability as a holder of record of such Securities, except for
the negligence, fraud or willful misconduct of such nominee.
Chase may without notice cause any such Securities to cease to be
registered in the name of any such nominee and to be registered
in the name of the Fund or State Street. In the event that any
Securities registered in the name of Chase's nominee or held by
one of its subcustodians and registered in the name of such
subcustodian's nominee are called for partial redemption by the
issuer of such Security, Chase may allot, or cause to be
allotted, the called portion to the respective beneficial holders
of such class of security in any manner Chase deems to be fair
and equitable.
12. Standard of Care. Chase shall be responsible for the
performance of only such duties as are contemplated or set forth
herein or contained in Instructions given to Chase by Authorized
Persons which are not contrary to the provisions of this
Agreement. Chase will use reasonable care in the performance of
its duties hereunder, including, without limitation, the
PAGE 16
safekeeping of Securities in the Custody Account and of Cash in
the Deposit Account. Chase shall be liable to and shall
indemnify and hold the Fund harmless for any loss which shall
occur as the result of the failure of a subcustodian to exercise
reasonable care with respect to the safekeeping of such
Securities and Cash to the same extent that Chase would be liable
to the Fund if Chase, as the Fund's custodian or subcustodian,
were holding such Securities and Cash for the benefit of the Fund
in New York. In the event of any loss to the Fund by reason of
the failure of Chase or its subcustodian to utilize reasonable
care, Chase shall be liable to the Fund to the extent of the
Fund's damages, in an amount to be mutually agreed upon in good
faith by Chase and the Fund. Chase shall be held to the exercise
of reasonable care in carrying out this Agreement but shall be
indemnified by, and shall be without liability to, the Fund for
any action taken or omitted by Chase in good faith without
negligence, fraud or willful misconduct. Chase shall be entitled
to rely, and may act, on advice of counsel (who may be counsel
for the Fund) on all matters and shall be without liability for
any action reasonably taken or omitted pursuant to such advice.
All collections of funds or other property paid or
distributed in respect of Securities in the Custody Account shall
be made at the risk of the Fund. Chase shall have no liability
for any loss occasioned by delay in the actual receipt of notice
by Chase or by its subcustodian of any payment, redemption or
other transaction regarding Securities in the Custody Account in
respect of which Chase has agreed to take action as provided in
PAGE 17
Section 8 hereof, unless such loss results from the negligence,
fraud or willful misconduct of Chase or its subcustodian. Chase
shall not be liable for any action taken in good faith upon
Instructions or upon any certified copy of any resolution and may
rely on the genuineness of any such documents which it may in
good faith believe to be validly executed. Chase shall not be
liable for any loss resulting from, or caused by, the direction
of the Fund to maintain custody of any Securities or cash in a
foreign country including, but not limited to, nationalization,
expropriation, currency restrictions, acts of war or terrorism,
insurrection, revolution, nuclear fusion, fission or radiation,
or acts of God.
13. Insurance. Chase represents and warrants that it
currently maintains a banker's blanket bond which provides
standard fidelity and non-negligent loss coverage with respect to
the Securities and Cash which may be held by subcustodians
pursuant to this Agreement. Chase agrees that if at any time it
for any reason discontinues such coverage, it shall immediately
give 60 days' prior written notice to State Street and the Fund.
Chase need not maintain any insurance for the benefit of the Fund
or State Street.
14. Corporate Actions; Proxies. Whenever Chase receives
information concerning the Securities which requires
discretionary action by the beneficial owner of the Securities
and affects the value of the Securities (other than a proxy),
such as subscription rights, bonus issues, stock repurchase plans
and rights offerings, or legal notices or other material intended
PAGE 18
to be transmitted to securities holders ("Corporate Actions"),
Chase will give the Fund notice of such Corporate Actions to the
extent that Chase's central corporate actions department has
actual knowledge of a Corporate Action in time to notify its
customers.
When a rights entitlement or a fractional interest resulting
from a rights issue, stock dividend, stock split or similar
Corporate Action is received which bears an expiration date,
Chase will endeavor to obtain Instructions from the Fund but if
Instructions are not received in time for Chase to take timely
action (or actual notice of such Corporate Action was received
too late to seek Instructions), Chase is authorized to sell such
rights entitlement or fractional interest and to credit the
Deposit Account with the Proceeds.
Chase shall promptly forward to the Fund proxies relative to
the Securities in the Custody Account (pursuant to any operating
agreement in effect between Chase and the Fund) by means as shall
permit, to the extent reasonably practicable under the
circumstances, the Fund to take timely action. Subject to the
above, Chase will cause its nominee to execute and deliver to the
Fund proxies relating to Securities in the Custody Account
registered in the name of such nominee but without indicating the
manner in which such proxies are to be voted. Proxies relating
to bearer Securities will be delivered in accordance with written
instructions from Authorized Persons.
PAGE 19
15. Fees and Expenses. The Fund agrees to pay to Chase
from time to time such compensation for its services pursuant to
this Agreement and Chase's out-of-pocket or incidental expenses,
including (but without limitation) reasonable legal fees, as may
be mutually agreed upon in writing from time to time. The Fund
hereby agrees to hold Chase harmless from any liability or loss
resulting from any taxes or other governmental charges, and any
expenses related thereto, which may be imposed, or assessed with
respect to the Custody Account or any Securities in the Custody
Account and also agrees to hold Chase, its subcustodians, and
their respective nominees harmless from any liability as a record
holder of Securities in the Custody Accounts, except for its or
their negligence; provided, however, that the Fund shall not be
liable for any assessments of taxes or other governmental
charges, and any expenses related there to as result from the
negligence, fraud or willful misconduct of Chase, or any of its
subcustodians or their respective nominees. Chase is authorized
to charge any account of State Street on behalf of the Fund for
such items and Chase shall have a lien on Securities in the
Custody Account and on Cash in the Deposit Account for any amount
owing to Chase from time to time under this Agreement, as long as
such lien would not contravene the provisions of the Order of the
Securities and Exchange Commission contained in Release No.
12053, dated November 20, 1981, as the same may be amended from
time to time.
PAGE 20
16. Effectiveness. This Agreement shall be effective on
the date first noted above.
17. Termination. This Agreement may be terminated by the
Fund, State Street or Chase by 60 days' written notice to the
others, sent by registered mail, provided that any termination by
State Street shall be authorized by a resolution of the Board of
Directors of the Fund, a certified copy of which shall accompany
such notice of termination, and provided further, that such
resolution shall specify the names of the persons to whom Chase
shall deliver the Securities in the Custody Account and to whom
the Cash in the Deposit Account shall be paid. If notice of
termination is given by Chase, State Street shall, within 90 days
following the giving of such notice, deliver to Chase a certified
copy of a resolution of the Board of Directors of the Fund
specifying the names of the persons to whom Chase shall deliver
the Securities in the Custody Account and to whom the Cash in the
Deposit Account shall be paid. In either case, Chase will deliver
such Securities and cash to the persons so specified, after
deducting therefrom any amounts which Chase determines in good
faith to be owed to it under Section 15. If within 90 days
following the giving of a notice of termination by Chase, Chase
does not receive from State Street a certified copy of a
resolution of the Board of Directors of the Fund specifying the
names of the persons to whom Chase shall deliver the Securities
in the Custody Account and to whom the Cash in the Cash Account
shall be paid, Chase, at its election, may deliver such
PAGE 21
Securities and pay such Cash to a bank or trust company doing
business in the State of New York to be held and disposed of
pursuant to the provisions of this Agreement, or to Authorized
Persons, or may continue to hold such Securities and Cash until a
certified copy of one or more resolutions as aforesaid is
delivered to Chase. The obligations of the parties hereto
regarding the use of reasonable care, indemnities and payment of
fees and expenses shall survive the termination of this
Agreement.
18. Notices. Any notice or other communication to Chase is
to be sent to the office of Chase at 1211 Avenue of the Americas
(33rd floor), New York, New York, 10036, Attention Global Custody
Division; to the Fund at 100 East Pratt Street, Baltimore,
Maryland, 21202 Attn: Treasurer; and to State Street at P.O. Box
1713, Boston, Massachusetts 02105, attention Mutual Fund
Services, or as such addresses may hereafter be changed on the
parties records in accordance with notice under this provision.
19. Governing Law and Successors and Assigns. This
Agreement shall be governed by the law of the State of New York
and shall not be assignable by either party, but shall bind the
successors and assigns of the Fund, State Street and Chase.
20. Headings. The headings of the paragraphs hereof are
included for convenience of reference only and do not form a part
of this Agreement.
21. Relationship of the Parties. Chase, State Street and
the Fund expressly agree that the establishment and maintenance
of the Custody Account and Deposit Account, in the name of State
PAGE 22
Street, shall not adversely affect the rights of the Fund under
this Agreement, and further agree that the Fund, in addition to
any rights it has in its own right against Chase, will have the
same rights as State Street has against Chase.
T. ROWE PRICE SMALL-CAP VALUE FUND,
INC.
By: /s/Carmen F. Deyesu
Carmen F. Deyesu
Treasurer
STATE STREET BANK AND TRUST COMPANY
By: /s/Robert F. ________
Robert F. __________
Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/Richard A. Samuel
Richard A. Samuel
Second Vice President
The Transfer Agency and Service Agreement between T. Rowe Price
Services, Inc. and T. Rowe Price Funds, dated January 1, 1994,
should be inserted here.
PAGE 1
TRANSFER AGENCY AND SERVICE AGREEMENT
between
T. ROWE PRICE SERVICES, INC.
and
EACH OF THE PARTIES INDICATED ON APPENDIX A
PAGE 2
TABLE OF CONTENTS
Page
Article A Terms of Appointment . . . . . . . . . . . . . .2
Article B Duties of Price Services . . . . . . . . . . . .3
1. Receipt of Orders/Payments. . . . . . . . .3
2. Written Redemptions . . . . . . . . . . . .4
3. Transfers . . . . . . . . . . . . . . . . .6
4. Confirmations . . . . . . . . . . . . . . .6
5. Issuance of Share Certificates. . . . . . .6
6. Returned Checks and ACH Debits. . . . . . 7
7. Redemptions of Shares under Ten Day Hold. 7
8. Dividends, Distributions and Other
Corporate Actions. . . . . . . . . . . . 9
9. Unclaimed Payments and Certificates . . .10
10. Books and Records . . . . . . . . . . . .10
11. Authorized Issued and Outstanding Shares.12
12. Tax Information . . . . . . . . . . . . .13
13. Information to be Furnished to the Fund .13
14. Correspondence. . . . . . . . . . . . . .13
15. Lost or Stolen Securities . . . . . . . .14
16. Telephone Services . . . . . . . . . . .14
17. Proxies . . . . . . . . . . . . . . . . .14
18. Form N-SAR. . . . . . . . . . . . . . . .15
19. Cooperation With Accountants. . . . . . .15
20. Blue Sky. . . . . . . . . . . . . . . . .15
21. Other Services. . . . . . . . . . . . . .15
22. Fees and Out-of-Pocket Expenses . . . . .15
Article C Representations and Warranties of the Price
Services. . . . . . . . . . . . . . . . . . .17
Article D Representations and Warranties of the Fund . .18
Article E Standard of Care/Indemnification . . . . . . .18
Article F Dual Interests . . . . . . . . . . . . . . . . 20
Article G Documentation. . . . . . . . . . . . . . . . . 20
Article H References to Price Services . . . . . . . . . 22
Article I Compliance with Governmental Rules and
Regulations . . . . . . . . . . . . . . . . . 22
Article J Ownership of Software and Related Material . . 22
PAGE 3
Article K Quality Service Standards. . . . . . . . . . . 23
Article L As of Transactions . . . . . . . . . . . . . . 23
Article M Term and Termination of Agreement. . . . . . . 26
Article N Notice . . . . . . . . . . . . . . . . . . . . 26
Article O Assignment . . . . . . . . . . . . . . . . . . 26
Article P Amendment/Interpretive Provisions. . . . . . . 26
Article Q Further Assurances . . . . . . . . . . . . . . 27
Article R Maryland Law to Apply. . . . . . . . . . . . . 27
Article S Merger of Agreement. . . . . . . . . . . . . . 27
Article T Counterparts . . . . . . . . . . . . . . . . . 27
Article U The Parties. . . . . . . . . . . . . . . . . . 27
Article V Directors, Trustees, Shareholders and Massachusetts
Business Trust . . . . . . . . . . . . . . . . 28
Article W Captions . . . . . . . . . . . . . . . . . . . 28
PAGE 4
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the first day of January, 1994, by and
between T. ROWE PRICE SERVICES, INC., a Maryland corporation
having its principal office and place of business at 100 East
Pratt Street, Baltimore, Maryland 21202 ("Price Services"), and
EACH FUND WHICH IS LISTED ON APPENDIX A (as such Appendix may be
amended from time to time) and which evidences its agreement to
be bound hereby by executing a copy of this Agreement (each such
Fund individually hereinafter referred to as "the Fund", whose
definition may be found in Article U);
WHEREAS, the Fund desires to appoint Price Services as its
transfer agent, dividend disbursing agent and agent in connection
with certain other activities, and Price Services desires to
accept such appointment;
WHEREAS, Price Services represents that it is registered
with the Securities and Exchange Commission as a Transfer Agent
under Section 17A of the Securities Exchange Act of 1934 ("'34
Act") and will notify each Fund promptly if such registration is
revoked or if any proceeding is commenced before the Securities
and Exchange Commission which may lead to such revocation;
WHEREAS, certain of the Funds are named investment options
under various tax-sheltered retirement plans including, but not
limited to, individual retirement accounts, simplified employee
pension plans, deferred compensation plans, 403(b) plans, and
profit sharing, thrift, and money purchase pension plans for
self-employed individuals and professional partnerships and
corporations, (collectively referred to as "Retirement Plans");
PAGE 5
WHEREAS, Price Services has the capability of providing
special services, on behalf of the Funds, for the accounts of
shareholders participating in these Retirement Plans ("Retirement
Accounts").
WHEREAS, Price Services may subcontract or jointly contract
with other parties, on behalf of the Funds, including, but not
limited to, DST, SRI, Moore Business Forms, Boston Financial Data
Services, Inc., and the 440 Financial Group, to perform certain
of the functions and services described herein including services
to Retirement Plans and Retirement Accounts. Price Services may
also enter into, on behalf of the Funds, certain banking
relationships to perform various banking services including, but
not limited to, check deposits, check disbursements, automated
clearing house transactions ("ACH") and wire transfers. Subject
to guidelines mutually agreed upon by the Funds and Price
Services, excess balances, if any, resulting from these banking
relationships will be invested and the income therefrom will be
used to offset fees which would otherwise be charged to the Funds
under this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
A. Terms of Appointment
Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints Price Services to
act, and Price Services agrees to act, as the Fund's transfer
agent, dividend disbursing agent and agent in connection with:
(1) the Fund's authorized and issued shares of its common stock
or shares of beneficial interest (all such stock and shares to be
PAGE 6
referred to as "Shares"); (2) any accumulation, open-account or
similar plans provided to the shareholders of the Fund
("Shareholders"), including, without limitation, any periodic
investment plan or periodic withdrawal program; and (3) certain
Retirement Plan and Retirement Accounts as agreed upon by the
parties.
The parties to the Agreement hereby acknowledge that from
time to time, Price Services and T. Rowe Price Trust Company may
enter into contracts ("Other Contracts") with employee benefit
plans and/or their sponsors for the provision of certain plan
participant services to Retirement Plans and Retirement Accounts.
Compensation paid to Price Services pursuant to this Agreement
is with respect to the services described herein and not with
respect to services provided under Other Contracts.
B. Duties of Price Services
Price Services agrees that it will perform the following
services:
1. Receipt of Orders/Payments
Receive for acceptance, orders/payments for the
purchase of Shares and promptly deliver payment and
appropriate documentation thereof to the authorized
custodian of the Fund (the "Custodian"). Upon receipt of
any check or other instrument drawn or endorsed to it as
agent for, or identified as being for the account of, the
Fund, Price Services will process the order as follows:
o Examine the check to determine if the check conforms to
the Funds' acceptance procedures (including certain
third-party check procedures). If the check conforms,
PAGE 7
Price Services will endorse the check and include the
date of receipt, will process the same for payment, and
deposit the net amount to the parties agreed upon
designated bank account prior to such deposit in the
Custodial account, and will notify the Fund and the
Custodian, respectively, of such deposits (such
notification to be given on a daily basis of the total
amount deposited to said accounts during the prior
business day);
o Open a new account, if necessary, and credit the
account of the investor with the number of Shares to be
purchased according to the price of the Fund's Shares
in effect for purchases made on that date, subject to
any instructions which the Fund may have given to Price
Services with respect to acceptance of orders for
Shares relating to payments so received by it;
o Maintain a record of all unpaid purchases and report
such information to the Fund daily;
o Process periodic payment orders, as authorized by
investors, in accordance with the payment procedures
for pre-authorized checking ("PAC") and ACH purchases
mutually agreed upon by both parties;
o Receive monies from Retirement Plans and determine the
proper allocation of such monies to the Retirement
Accounts based upon instructions received from
Retirement Plan participants or Retirement Plan
administrators ("Administrators"); and
PAGE 8
o Process telephone orders for purchases of Fund shares
from the Shareholder's bank account (via wire or ACH)
to the Fund in accordance with procedures mutually
agreed upon by both parties.
Upon receipt of funds through the Federal Reserve Wire
System that are designated for purchases in Funds which
declare dividends at 12:00 p.m. (or such time as set forth
in the Fund's current prospectus), Price Services shall
promptly notify the Fund and the Custodian of such deposit.
2. Redemptions
Receive for acceptance redemption requests, including
telephone redemptions and requests received from
Administrators for distributions to participants or their
designated beneficiaries or for payment of fees due the
Administrator or such other person, including Price
Services, and deliver the appropriate documentation
thereofto the Custodian. Price Services shall receive and
stamp with the date of receipt, all requests for redemptions
of Shares (including all certificates delivered to it for
redemption) and shall process said redemption requests as
follows, subject to the provisions of Section 7 hereof:
o Examine the redemption request and, for written
redemptions, the supporting documentation, to determine
that the request is in good order and all requirements
have been met;
o Notify the Fund on the next business day of the total
number of Shares presented and covered by all such
requests;
PAGE 9
o As set forth in the prospectus of the Fund, and in any
event, on or prior to the seventh (7th) calendar day
succeeding any such request for redemption, Price
Services shall, from funds available in the accounts
maintained by Price Services as agent for the Funds,
pay the applicable redemption price in accordance with
the current prospectus of the Fund, to the investor,
participant, beneficiary, Administrator or such other
person, as the case may be;
o If any request for redemption does not comply with the
Fund's requirements, Price Services shall promptly
notify the investor of such fact, together with the
reason therefore, and shall effect such redemption at
the price in effect at the time of receipt of all
appropriate documents;
o Make such withholdings as may be required under
applicable Federal and State tax law;
o In the event redemption proceeds for the payment of
fees are to be wired through the Federal Reserve Wire
System or by bank wire, Price Services shall cause such
proceeds to be wired in Federal funds to the bank
account designated; and
o Process periodic redemption orders as authorized by the
investor in accordance with the periodic withdrawal
procedures for Systematic Withdrawal Plan ("SWP") and
systematic ACH redemptions mutually agreed upon by both
parties.
PAGE 10
Procedures and requirements for effecting and accepting
redemption orders from investors by telephone, Tele*Access,
Mailgram, or written instructions shall be established by
mutual agreement between Price Services and the Fund
consistent with the Fund's current prospectus.
3. Transfers
Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions and
documentation and examine such instructions for conformance
with appropriate procedures and requirements. In this
regard, Price Services, upon receipt of a proper request for
transfer, including any transfer involving the surrender of
certificates of Shares, is authorized to transfer, on the
records of the Fund, Shares of the Fund, including
cancellation of surrendered certificates, if any, to credit
a like amount of Shares to the transferee and to
countersign, issue and deliver new certificates, if
requested, for those Funds issuing certificates.
4. Confirmations
Mail all confirmations and other enclosures requested
by the Fund to the shareholder, and in the case of
Retirement Accounts, to the Administrators, as may be
required by the Funds or by applicable Federal or state law.
5. Issuance of Share Certificates
o Those Funds which issue stock certificates shall supply
Price Services with a sufficient supply of blank stock
certificates and shall renew such supply upon request
of Price Services. Such blank stock certificates shall
PAGE 11
be properly signed, manually or facsimile, if
authorized by the Fund, and shall bear the seal or
facsimile thereof of the Fund; and notwithstanding the
death, resignation or removal of any officers of the
Fund authorized to sign certificates of stock, on
behalf of the Fund, Price Services may continue to
countersign certificates which bear the manual or
facsimile signature of such officer until otherwise
directed by the Fund.
o If an investor requests a share certificate of a Fund
which issues stock certificates (except shares in
Retirement Plans and Retirement Accounts which will be
non certificated), Price Services will countersign and
mail by first class mail, a share certificate to the
investor at his address as set forth on the transfer
books of the Fund, subject to any other instructions
for delivery of certificates which the Fund may give to
Price Services with respect to certificates
representing newly purchased Shares.
6. Returned Checks and ACH Debits
In order to minimize the risk of loss to the Fund by
reason of any check being returned unpaid, Price Services
will promptly identify and follow-up on any check or ACH
debit returned unpaid. For items returned, Price Services
may telephone the investor and/or redeposit the check or
debit for collection or cancel the purchase, as deemed
appropriate.
PAGE 12
7. Redemption of Shares under Ten Day Hold
o Uncollected Funds
Shares purchased by personal, corporate, or
governmental check, or by ACH will be considered
uncollected until the tenth calendar date following the
trade date of the trade ("Uncollected Funds");
o Good Funds
Share purchased by treasurer's, cashier, certified, or
official check, or by wire transfer will be considered
collected immediately ("Good Funds"). Absent
information to the contrary (i.e., notification from
the payee institution), Uncollected Funds will be
considered Good Funds on the tenth calendar day
following trade date.
o Redemption of Uncollected Funds
o Shareholders making telephone requests for
redemption of shares purchased with Uncollected
Funds will be given two options:
1. The Shareholder will be permitted to exchange
to a money market fund to preserve principal until
the funds are deemed Good Funds,
2. The redemption can be processed utilizing the
same procedures for written redemptions described
below.
o If a written redemption request is made for shares
where any portion of the payment for said shares
is in Uncollected Funds, and the request is in
good order, Price Services will promptly obtain
PAGE 13
the information relative to the payment necessary
to determine when the payment becomes Good Funds.
The redemption will be processed in accordance
with normal procedures, and the proceeds will be
held until confirmation that the payment is Good
Funds. On the seventh (7th) calendar day after
trade date, and each day thereafter until either
confirmation is received or the tenth (10th)
calendar day, Price Services will call the paying
institution to request confirmation that the check
or ACH in question has been paid. On the tenth
calendar day after trade date, the redemption
proceeds will be released, regardless of whether
confirmation has been received.
o Checkwriting Redemptions.
o Daily, all checkwriting redemptions $10,000 and
over reported as Uncollected Funds or insufficient
funds will be reviewed. An attempt will be made
to contact the shareholder to make good the funds
(through wire, exchange, transfer). Generally by
12:00 p.m. the same day, if the matter has not
been resolved, the redemption request will be
rejected and the check returned to the
Shareholder.
o All checkwriting redemptions under $10,000
reported as Uncollected or insufficient funds will
PAGE 14
be rejected and the check returned to the
Shareholder.
o Confirmations of Available Funds
The Fund expects that situations may develop whereby it
would be beneficial to determine if a person who has
placed an order for Shares has sufficient funds in his
or her checking account to cover the payment for the
Shares purchased. When this situation occurs, Price
Services may call the bank in question and request that
it confirm that sufficient funds to cover the purchase
are currently credited to the account in question.
Price Services will maintain written documentation or a
recording of each telephone call which is made under
the procedures outlined above. None of the above
procedures shall preclude Price Services from inquiring
as to the status of any check received by it in payment
for the Fund's Shares as Price Services may deem
appropriate or necessary to protect both the Fund and
Price Services. If a conflict arises between Section 2
and this Section 7, Section 7 will govern.
8. Dividends, Distributions and Other Corporate Actions
o The Fund will promptly inform Price Services of the
declaration of any dividend, distribution, stock split
or any other distributions of a similar kind on account
of its Capital Stock.
PAGE 15
o Price Services shall act as Dividend Disbursing Agent
for the Fund, and as such, shall prepare and make
income and capital gain payments to investors. As
Dividend Disbursing Agent, Price Services will on or
before the payment date of any such dividend or
distribution, notify the Custodian of the estimated
amount required to pay any portion of said dividend or
distribution which is payable in cash, and the Fund
agrees that on or before the payment date of such
distribution, it shall instruct the Custodian to make
available to Price Services sufficient funds for the
cash amount to be paid out. If an investor is entitled
to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits will be
made to his or her account.
9. Unclaimed Payments and Certificates
In accordance with procedures agreed upon by both
parties, report abandoned property to appropriate state and
governmental authorities of the Fund. Price Services shall,
90 days prior to the annual reporting of abandoned property
to each of the states, make reasonable attempts to locate
Shareholders for which (a) checks or share certificates have
been returned; (b) for which accounts have aged outstanding
checks; or (c) accounts with unissued shares that have been
coded with stop mail and meet the dormancy period guidelines
specified in the individual states. Price Services shall
PAGE 16
make reasonable attempts to contact shareholders for those
accounts which have significant aged outstanding checks.
10. Books and Records
Maintain records showing for each Shareholder's
account, Retirement Plan or Retirement Account, as the case
may be, the following:
o Names, address and tax identification number;
o Number of Shares held;
o Certain historical information regarding the
account of each Shareholder, including dividends
and distributions distributed in cash or invested
in Shares;
o Pertinent information regarding the establishment
and maintenance of Retirement Plans and Retirement
Accounts necessary to properly administer each
account;
o Information with respect to the source of
dividends and distributions allocated among income
(taxable and nontaxable income), realized short-
term gains and realized long-term gains;
o Any stop or restraining order placed against a
Shareholder's account;
o Information with respect to withholdings on
domestic and foreign accounts;
o Any instructions from a Shareholder including, all
forms furnished by the Fund and executed by a
PAGE 17
Shareholder with respect to (i) dividend or
distribution elections, and (ii) elections with
respect to payment options in connection with the
redemption of Shares;
o Any correspondence relating to the current
maintenance of a Shareholder's account;
o Certificate numbers and denominations for any
Shareholder holding certificates;
o Any information required in order for Price
Services to perform the calculations contemplated
under this Agreement.
Price Services shall maintain files and furnish
statistical and other information as required under this
Agreement and as may be agreed upon from time to time by
both parties or required by applicable law. However, Price
Services reserves the right to delete, change or add any
information to the files maintained; provided such
deletions, changes or additions do not contravene the terms
of this Agreement or applicable law and do not materially
reduce the level of services described in this Agreement.
Price Services shall also use its best efforts to obtain
additional statistical and other information as each Fund
may reasonably request for additional fees as may be agreed
to by both parties.
Any such records maintained pursuant to Rule 31a-1
under the Investment Company Act of 1940 ("the Act") will be
PAGE 18
preserved for the periods and maintained in a manner
prescribed in Rule 31a-2 thereunder. Disposition of such
records after such prescribed periods shall be as mutually
agreed upon by the Fund and Price Services. The retention
of such records, which may be inspected by the Fund at
reasonable times, shall be at the expense of the Fund. All
records maintained by Price Services in connection with the
performance of its duties under this Agreement will remain
the property of the Fund and, in the event of termination of
this Agreement, will be delivered to the Fund as of the date
of termination or at such other time as may be mutually
agreed upon.
All books, records, information and data pertaining to
the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of
this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except after
prior notification to and approval by the other party
hereto, which approval shall not be unreasonably withheld
and may not be withheld where Price Services or the Fund may
be exposed to civil or criminal contempt proceedings for
failure to comply; when requested to divulge such
information by duly constituted governmental authorities; or
after so requested by the other party hereto.
11. Authorized Issued and Outstanding Shares
Record the issuance of Shares of the Fund and maintain,
pursuant to Rule 17Ad-10(e) of the '34 Act, a record of the
total number of Shares of the Fund which are authorized,
PAGE 19
issued and outstanding, based upon data provided to it by
the Fund. Price Services shall also provide the Fund on a
regular basis the total number of Shares which are
authorized and issued and outstanding. Price Services shall
have no obligation, when recording the issuance of Shares,
to monitor the issuance of such Shares or to take cognizance
of any laws relating to the issuance or sale of such Shares.
12. Tax Information
Prepare and file with the Internal Revenue Service and
with other appropriate state agencies and, if required, mail
to investors, those returns for reporting dividends and
distributions paid as required to be so filed and mailed,
and shall withhold such sums required to be withheld under
applicable Federal and state income tax laws, rules, and
regulations. Additionally, Price Services will file and, as
applicable, mail to investors, any appropriate information
returns required to be filed in connection with Retirement
Plan processing, such as 1099R, 5498, as well as any other
appropriate forms that the Fund or Price Services may deem
necessary. The Fund and Price Services shall agree to
procedures to be followed with respect to Price Services'
responsibilities in connection with compliance with back-up
withholding and other tax laws.
13. Information to be Furnished to the Fund
Furnish to the Fund such information as may be agreed
upon between the Fund and Price Services including any
information that the Fund and Price Services agree is
necessary to the daily operations of the business.
PAGE 20
14. Correspondence
Promptly and fully answer correspondence from
shareholders and Administrators relating to Shareholder
Accounts, Retirement Accounts, transfer agent procedures,
and such other correspondence as may from time to time be
mutually agreed upon with the Funds. Unless otherwise
instructed, copies of all correspondence will be retained by
Price Services in accordance with applicable law and
procedures.
15. Lost or Stolen Securities
Pursuant to Rule 17f-1 of the '34 Act, report to the
Securities Information Center and/or the FBI or other
appropriate person on Form X-17-F-1A all lost, stolen,
missing or counterfeit securities. Provide any other
services relating to lost, stolen or missing securities as
may be mutually agreed upon by both parties.
16. Telephone Services
Maintain a Telephone Servicing Staff of representatives
("Representatives") sufficient to timely respond to all
telephonic inquiries reasonably foreseeable. The
Representatives will also effect telephone purchases,
redemptions, exchanges, and other transactions mutually
agreed upon by both parties, for those Shareholders who have
authorized telephone services. The Reprentatives shall
require each Shareholder effecting a telephone transaction
to properly identify themself before the transaction is
effected, in accordance with procedures agreed upon between
by both parties. Procedures for processing telephone
PAGE 21
transactions will be mutually agreed upon by both parties.
Price Services will also be responsible for providing
Tele*Access, PC*Access and such other Services as may be
offered by the Funds from time to time. Price Services will
maintain a special Shareholder Servicing staff to service
certain Shareholders with substantial relationships with the
Funds.
17. Proxies
Monitor the mailing of proxy cards and other material
supplied to it by the Fund in connection with Shareholder
meetings of the Fund and shall coordinate the receipt,
examination and tabulation of returned proxies and the
certification of the vote to the Fund.
18. Form N-SAR
Maintain such records, if any, as shall enable the Fund
to fulfill the requirements of Form N-SAR.
19. Cooperation With Accountants
Cooperate with each Fund's independent public
accountants and take all reasonable action in the
performance of its obligations under the Agreement to assure
that the necessary information is made available to such
accountants for the expression of their opinion without any
qualification as to the scope of their examination,
including, but not limited to, their opinion included in
each such Fund's annual report on Form N-SAR and annual
amendment to Form N-1A.
PAGE 22
20. Blue Sky
Provide to the Fund or its agent, on a daily, weekly,
monthly and quarterly basis, and for each state in which the
Fund's Shares are sold, sales reports and other materials
for blue sky compliance purposes as shall be agreed upon by
the parties.
21. Other Services
Provide such other services as may be mutually agreed
upon between Price Services and the Fund.
22. Fees and Out-of-Pocket Expenses
Each Fund shall pay to Price Services and/or its agents
for its Transfer Agent Services hereunder, fees computed as
set forth in Schedule A attached. Except as provided below,
Price Services will be responsible for all expenses relating
to the providing of Services. Each Fund, however, will
reimburse Price Services for the following out-of-pocket
expenses and charges incurred in providing Services:
o Postage. The cost of postage and freight for
mailing materials to Shareholders and Retirement
Plan participants, or their agents, including
overnight delivery, UPS and other express mail
services and special courier services required to
transport mail between Price Services locations
and mail processing vendors.
o Proxies. The cost to mail proxy cards and other
material supplied to it by the Fund and costs
related to the receipt, examination and tabulation
PAGE 23
of returned proxies and the certification of the
vote to the Fund.
o Communications
o Print. The printed forms used internally and
externally for documentation and processing
Shareholder and Retirement Plan participant,
or their agent's inquiries and requests;
paper and envelope supplies for letters,
notices, and other written communications
sent to Shareholders and Retirement Plan
participants, or their agents.
o Print & Mail House. The cost of internal
and third party printing and mail house
services, including printing of statements
and reports.
o Voice and Data. The cost of equipment
(including associated maintenance), supplies
and services used for communicating to and
from the Shareholders of the Fund and
Retirement Plan participants, or their
agents, the Fund's transfer agent, other Fund
offices, and other agents of either the Fund
or Price Services. These charges shall
include:
o telephone toll charges (both incoming
and outgoing, local, long distance and
mailgrams); and
PAGE 24
o data and telephone lines and associated
equipment such as modems, multiplexers,
and facsimile equipment.
o Record Retention. The cost of maintenance
and supplies used to maintain, microfilm,
copy, record, index, display, retrieve, and
store, in microfiche or microfilm form,
documents and records.
o Disaster Recovery. The cost of services,
equipment, facilities and other charges
necessary to provide disaster recovery for
any and all services listed in this
Agreement.
Out-of-pocket costs will be billed at cost to the
Funds. Allocation of monthly costs among the Funds will
generally be made based upon the number of Shareholder and
Retirement Accounts serviced by Price Services each month. Some
invoices for these costs will contain costs for both the Funds
and other funds serviced by Price Services. These costs will be
allocated based on a reasonable allocation mehodology. Where
possible, such as in the case of inbound and outbound WATS
charges, allocation will be made on the actual distribution or
usage.
C. Representations and Warranties of Price Services
Price Services represents and warrants to the Fund that:
1. It is a corporation duly organized and existing and in
good standing under the laws of Maryland;
PAGE 25
2. It is duly qualified to carry on its business in
Maryland and California;
3. It is empowered under applicable laws and by its
charter and by-laws to enter into and perform this
Agreement;
4. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
5. It is registered with the Securities and Exchange
Commission as a Transfer Agent pursuant to Section 17A of
the '34 Act; and
6. It has and will continue to have access to the
necessary facilities, equipment and personnel to perform its
duties and obligations under this Agreement.
D. Representations and Warranties of the Fund
The Fund represents and warrants to Price Services that:
1. It is a corporation or business trust duly organized
and existing and in good standing under the laws of Maryland
or Massachusetts, as the case may be;
2. It is empowered under applicable laws and by its
Articles of Incorporation or Declaration of Trust, as the
case may be, and By-Laws to enter into and perform this
Agreement;
3. All proceedings required by said Articles of
Incorporation or Declaration of Trust, as the case may be,
and By-Laws have been taken to authorize it to enter into
and perform this Agreement;
4. It is an investment company registered under the Act;
and
PAGE 26
5. A registration statement under the Securities Act of
1933 ("the '33 Act") is currently effective and will remain
effective, and appropriate state securities law filings have
been made and will continue to be made, with respect to all
Shares of the Fund being offered for sale.
E. Standard of Care/Indemnification
Notwithstanding anything to the contrary in this Agreement:
1. Price Services shall not be liable to any Fund for any
act or failure to act by it or its agents or subcontractors
on behalf of the Fund in carrying or attempting to carry out
the terms and provisions of this Agreement provided Price
Services has acted in good faith and without negligence or
willful misconduct and selected and monitored the
performance of its agents and subcontractors with reasonable
care.
2. The Fund shall indemnify and hold Price Services
harmless from and against all losses, costs, damages,
claims, actions and expenses, including reasonable expenses
for legal counsel, incurred by Price Services resulting
from: (i) any action or omission by Price Services or its
agents or subcontractors in the performance of their duties
hereunder; (ii) Price Services acting upon instructions
believed by it to have been executed by a duly authorized
officer of the Fund; or (iii) Price Services acting upon
information provided by the Fund in form and under policies
agreed to by Price Services and the Fund. Price Services
shall not be entitled to such indemnification in respect of
actions or omissions constituting negligence or willful
PAGE 27
misconduct of Price Services or where Price Services has not
exercised reasonable care in selecting or monitoring the
performance of its agents or subcontractors.
3. Except as provided in Article L of this Agreement,
Price Services shall indemnify and hold harmless the Fund
from all losses, costs, damages, claims, actions and
expenses, including reasonable expenses for legal counsel,
incurred by the Fund resulting from the negligence or
willful misconduct of Price Services or which result from
Price Services' failure to exercise reasonable care in
selecting or monitoring the performance of its agents or
subcontractors. The Fund shall not be entitled to such
indemnification in respect of actions or omissions
constituting negligence or willful misconduct of such Fund
or its agents or subcontractors; unless such negligence or
misconduct is attributable to Price Services.
4. In the event either party is unable to perform its
obligations under the terms of this Agreement because of
acts of God, strikes or other causes reasonably beyond its
control, such party shall not be liable to the other party
for any loss, cost, damage, claim, action or expense
resulting from such failure to perform or otherwise from
such causes.
5. In order that the indemnification provisions contained
in this Article E shall apply, upon the assertion of a claim
for which either party may be required to indemnify the
other, the party seeking indemnification shall promptly
notify the other party of such assertion, and shall keep the
PAGE 28
other party advised with respect to all developments
concerning such claim. The party who may be required to
indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim,
or to defend against said claim in its own name or in the
name of the other party. The party seeking indemnification
shall in no case confess any claim or make any compromise in
any case in which the other party may be required to
indemnify it except with the other party's prior written
consent.
6. Neither party to this Agreement shall be liable to the
other party for consequential damages under any provision of
this Agreement.
F. Dual Interests
It is understood that some person or persons may be
directors, officers, or shareholders of both the Funds and Price
Services (including Price Services's affiliates), and that the
existence of any such dual interest shall not affect the validity
of this Agreement or of any transactions hereunder except as
otherwise provided by a specific provision of applicable law.
G. Documentation
o As requested by Price Services, the Fund shall promptly
furnish to Price Services the following:
o A certified copy of the resolution of the
Directors/Trustees of the Fund authorizing the
appointment of Price Services and the execution
and delivery of this Agreement;
PAGE 29
o A copy of the Articles of Incorporation or
Declaration of Trust, as the case may be, and By-
Laws of the Fund and all amendments thereto;
o Specimens of all forms of outstanding and new
stock/share certificates in the forms approved by
the Board of Directors/Trustees of the Fund with a
certificate of the Secretary of the Fund as to
such approval;
o All account application forms and other documents
relating to Shareholders' accounts;
o An opinion of counsel for the Fund with respect to
the validity of the stock, the number of Shares
authorized, the status of redeemed Shares, and the
number of Shares with respect to which a
Registration Statement has been filed and is in
effect; and
o A copy of the Fund's current prospectus.
The delivery of any such document for the purpose of any
other agreement to which the Fund and Price Services are or were
parties shall be deemed to be delivery for the purposes of this
Agreement.
o As requested by Price Services, the Fund will also furnish
from time to time the following documents:
o Each resolution of the Board of Directors/Trustees of
the Fund authorizing the original issue of its Shares;
PAGE 30
o Each Registration Statement filed with the Securities
and Exchange Commission and amendments and orders
thereto in effect with respect to the sale of Shares
with respect to the Fund;
o A certified copy of each amendment to the Articles of
Incorporation or Declaration of Trust, and the By-Laws
of the Fund;
o Certified copies of each vote of the Board of
Directors/Trustees authorizing officers to give
instructions to the Transfer Agent;
o Specimens of all new certificates accompanied by the
Board of Directors/Trustees' resolutions approving such
forms;
o Such other documents or opinions which Price Services,
in its discretion, may reasonably deem necessary or
appropriate in the proper performance of its duties;
and
o Copies of new prospectuses issued.
Price Services hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to the Fund for
safekeeping of stock certificates, check forms and facsimile
signature imprinting devices, if any; and for the preparation or
use, and for keeping account of, such certificates, forms and
devices.
H. References to Price Services
Each Fund agrees not to circulate any printed matter which
contains any reference to Price Services without the prior
PAGE 31
approval of Price Services, excepting solely such printed matter
that merely identifies Price Services as agent of the Fund. The
Fund will submit printed matter requiring approval to Price
Services in draft form, allowing sufficient time for review by
Price Services and its legal counsel prior to any deadline for
printing.
I. Compliance With Governmental Rules and Regulations
Except as otherwise provided in the Agreement and except for
the accuracy of information furnished to the Fund by Price
Services, each Fund assumes full responsibility for the
preparation, contents and distribution of its prospectuses and
compliance with all applicable requirements of the Act, the '34
Act, the '33 Act, and any other laws, rules and regulations of
governmental authorities having jurisdiction over the Fund.
Price Services shall be responsible for complying with all laws,
rules and regulations of governmental authorities having
jurisdiction over transfer agents and their activities.
J. Ownership of Software and Related Material
All computer programs, magnetic tapes, written procedures
and similar items purchased and/or developed and used by Price
Services in performance of the Agreement shall be the property of
Price Services and will not become the property of the Fund.
K. Quality Service Standards
Price Services and the Fund may from time to time agree to
certain quality service standards, as well as incentives and
penalties with respect to Price Services' hereunder.
PAGE 32
L. As Of Transactions
For purposes of this Article L, the term "Transaction" shall
mean any single or "related transaction" (as defined below)
involving the purchase or redemption of Shares (including
exchanges) that is processed at a time other than the time of the
computation of the Fund's net asset value per Share next computed
after receipt of any such transaction order by Price Services.
If more than one Transaction ("Related Transaction") in the Fund
is caused by or occurs as a result of the same act or omission,
such transactions shall be aggregated with other transactions in
the Fund and be considered as one Transaction.
o Reporting
Price Services shall:
1. Utilize a system to identify all Transactions, and
shall compute the net effect of such Transactions upon
the Fund on a daily, monthly and rolling 365 day basis.
The monthly and rolling 365 day periods are hereafter
referred to as "Cumulative".
2. Supply to the Fund, from time to time as mutually
agreed upon, a report summarizing the Transactions and
the daily and Cumulative net effects of such
Transactions both in terms of aggregate dilution and
loss ("Dilution") or gain and negative dilution
("Gain") experienced by the Fund, and the impact such
Gain or Dilution has had upon the Fund's net asset
value per Share.
PAGE 33
3. With respect to any Transaction which causes
Dilution to the Fund of $25,000 or more, immediately
provide the Fund: (i) a report identifying the
Transaction and the Dilution resulting therefrom, (ii)
the reason such Transaction was processed as described
above, and (iii) the action that Price Services has or
intends to take to prevent the reoccurrence of such as
of processing ("Report").
o Liability
1. It will be the normal practice of the Funds not to
hold Price Services liable with respect to any
Transaction which causes Dilution to any single Fund of
less than $25,000. Price Services will, however,
closely monitor for each Fund the daily and Cumulative
Gain/Dilution which is caused by Transactions of less
than $25,000. When the Cumulative Dilution to any Fund
exceeds 3/10 of 1% per share, Price Services, in
consultation with counsel to the Fund, will make
appropriate inquiry to determine whether it should take
any remedial action. Price Services will report to the
Board of Directors/Trustees of the Fund ("Board") any
action it has taken.
2. Where a Transaction causes Dilution to a Fund of
$25,000 or more ("Significant Transaction"), Price
Services will review with counsel to the Fund the
Report and the circumstances surrounding the underlying
PAGE 34
Transaction to determine whether the Transaction was
caused by or occurred as a result of a negligent act or
omission by Price Services. If it is determined that
the Dilution is the result of a negligent action or
omission by Price Services, Price Services and outside
counsel for the Fund will negotiate settlement. All
such Significant Transactions will be reported to the
Board at its next meeting (unless the settlement fully
compensates the Fund for any Dilution). Any
Significant Transaction, however, causing Dilution in
excess of the lesser of $100,000 or a penny per Share
will be promptly reported to the Board. Settlement
will not be entered into with Price Services until
approved by the Board. The factors the Board would be
expected to consider in making any determination
regarding the settlement of a Significant Transaction
would include but not be limited to:
o Procedures and controls adopted by Price Services
to prevent "As Of" processing;
o Whether such procedures and controls were being
followed at the time of the Significant
Transaction;
o The absolute and relative volume of all
transactions processed by Price Services on the
day of the Significant Transaction;
PAGE 35
o The number of Transactions processed by Price
Services during prior relevant periods, and the
net Dilution/Gain as a result of all such
transactions to the Fund and to all other Price
Funds;
o The prior response of Price Services to
recommendations made by the Funds regarding
improvement to the Transfer Agent's "As Of"
Processing Procedures.
M. Term and Termination of Agreement
o This Agreement shall run for a period of one (1) year from
the date first written above and will be renewed from year
to year thereafter unless terminated by either party as
provided hereunder.
o This Agreement may be terminated by the Fund upon one
hundred twenty (120) days' written notice to Price Services;
and by Price Services, upon three hundred sixty-five (365)
days' writing notice to the Fund.
o Upon termination hereof, the Fund shall pay to Price
Services such compensation as may be due as of the date of
such termination, and shall likewise reimburse for out-of-
pocket expenses related to its services hereunder.
N. Notice
Any notice as required by this Agreement shall be
sufficiently given (i) when sent to an authorized person of the
other party at the address of such party set forth above or at
PAGE 36
such other address as such party may from time to time specify in
writing to the other party; or (ii) as otherwise agreed upon by
appropriate officers of the parties hereto.
O. Assignment
Neither this Agreement nor any rights or obligations
hereunder may be assigned either voluntarily or involuntarily, by
operation of law or otherwise, by either party without the prior
written consent of the other party, provided this shall not
preclude Price Services from employing such agents and
subcontractors as it deems appropriate to carry out its
obligations set forth hereunder.
P. Amendment/Interpretive Provisions
The parties by mutual written agreement may amend this
Agreement at any time. In addition, in connection with the
operation of this Agreement, Price Services and the Fund may
agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions are to
be signed by all parties and annexed hereto, but no such
provision shall contravene any applicable Federal or state law or
regulation and no such interpretive or additional provision shall
be deemed to be an amendment of this Agreement.
Q. Further Assurances
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the
purposes hereof.
PAGE 37
R. Maryland Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of Maryland.
S. Merger of Agreement
This Agreement, including the attached Appendices and
Schedules supersedes any prior agreement with respect to the
subject hereof, whether oral or written.
T. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instruments.
U. The Parties
All references herein to "the Fund" are to each of the Funds
listed on Appendix A individually, as if this Agreement were
between such individual Fund and Price Services. In the case of
a series Fund or trust, all references to "the Fund" are to the
individual series or portfolio of such Fund or trust, or to such
Fund or trust on behalf of the individual series or portfolio, as
appropriate. The "Fund" also includes any T. Rowe Price Funds
which may be established after the execution of this Agreement.
Any reference in this Agreement to "the parties" shall mean Price
Services and such other individual Fund as to which the matter
pertains.
V. Directors, Trustees and Shareholders and Massachusetts
Business Trust
It is understood and is expressly stipulated that neither
the holders of Shares in the Fund nor any Directors or Trustees
PAGE 38
of the Fund shall be personally liable hereunder. With respect to
any Fund which is a party to this Agreement and which is
organized as a Massachusetts business trust, the term "Fund"
means and refers to the trustees from time to time serving under
the applicable trust agreement (Declaration of Trust) of such
Trust as the same may be amended from time to time. It is
expressly agreed that the obligations of any such Trust hereunder
shall not be binding upon any of the trustees, shareholders,
nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Trust, as provided in the
Declaration of Trust of the Trust. The execution and delivery of
this Agreement has been authorized by the trustees and signed by
an authorized officer of the Trust, acting as such, and neither
such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any
of them, but shall bind only the trust property of the Trust as
provided in its Declaration of Trust.
W. Captions
The captions in the Agreement are included for convenience
of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
PAGE 39
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under
their seals by and through their duly authorized officers.
DATED: 2/18/94 T. ROWE PRICE SERVICES, INC.
ATTEST:
/s/Barbara A. VanHorn /s/Mark E. Rayford
____________________ BY:___________________________
Barbara A. VanHorn Mark E. Rayford
T. ROWE PRICE ADJUSTABLE RATE U.S. GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE DIVIDEND GROWTH FUND, INC
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
PAGE 40
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Money Fund
Virginia Tax-Free Money Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE SUMMIT FUNDS, INC.
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
PAGE 41
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
Summit Municipal Money Market Fund
Summit Municipal Intermediate Fund
Summit Municipal Income Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND,INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE INSURED INTERMDIATE BOND FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
DATED: 2/16/94
ATTEST:
/s/Lenora V. Hornung /s/Carmen F. Deyesu
_________________________ BY:__________________________
Lenora V. Hornung Carmen F. Deyesu
PAGE 42
APPENDIX A
The following Funds are parties to this Agreement, and have so
indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price California Tax-Free Income Trust on behalf of the
California Tax-Free Bond Fund and
California Tax-Free Money Fund
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Index Trust, Inc. on behalf of the
T. Rowe Price Equity Index Fund
T. Rowe Price Institutional International Funds, Inc. on behalf
of the
Foreign Equity Fund
T. Rowe Price International Funds, Inc. on behalf of the
T. Rowe Price International Bond Fund and
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. Rowe Price Latin America Fund
T. Rowe Price Mid-Cap Growth Fund
PAGE 43
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price OTC Fund, Inc.
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
T. Rowe Price Spectrum Fund, Inc. on behalf of the
Spectrum Growth Fund
Spectrum Income Fund
T. Rowe Price State Tax-Free Income Trust on behalf of the
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Georgia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
T. Rowe Price U.S. Treasury Funds, Inc. on behalf of the
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. Rowe Price Summit Funds, Inc. on behalf of the
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
PAGE 44
T. Rowe Price Summit Municipal Funds, Inc. on behalf of the
Summit Municipal Money Market Fund
Summit Municipal Intermediate Fund
Summit Municipal Income Fund
PAGE 45
SCHEDULE A - FEE SCHEDULE
Effective January 1, 1994 to December 31, 1994,
For the account of:
THE T. ROWE PRICE FUNDS
EQUITY FUNDS
T. Rowe Price New American Growth Fund
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Era Fund, Inc.
T. Rowe Price International Stock Fund
T. Rowe Price Equity Income Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Science & Technology Fund, Inc.
T. Rowe Price Small Capital Value Fund, Inc.
T. Rowe Price International Discovery Fund
Foreign Equity Fund
T. Rowe Price Equity Index Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Spectrum Growth Fund
T.Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Mid-Cap Growth Fund, Inc.
T. Rowe Price Over-the-Counter Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
BOND FUNDS
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price New Jersey Tax-Free Bond Fund
T. Rowe Price Virginia Tax-Free Bond Fund
T. Rowe Price Short Term Bond Fund, Inc.
T. Rowe Price Tax-Free Short Intermediate Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.
T. Rowe Price GNMA Fund
T. Rowe Price New York Tax-Free Bond Fund
T. Rowe Price California Tax-Free Bond Fund
T. Rowe Price International Bond Fund
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
T. Rowe Price Maryland Tax-Free Bond Fund
T. Rowe Price U.S. Treasury Intermediate Fund
T. Rowe Price U.S. Treasury Long-Term Fund
T. Rowe Price Global Government Bond Fund
PAGE 46
T. Rowe Price Spectrum Income Fund
T. Rowe Price Short-term Global Bond Fund
T. Rowe Price Tax-Free Insured Intermediate Fund, Inc.
T. Rowe Price Georgia Tax-Free Bond Fund
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Summit GNMA Fund
T. Rowe Price Summit Municipal Intermediate Fund
T. Rowe Price Summit Municipal Income Fund
Money Market Funds
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price U.S. Treasury Money Fund
T. Rowe Price New York Tax-Free Money Fund
T. Rowe Price California Tax-Free Money Fund
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit Municipal Money Market Fund
PAGE 47
The following fees for services provided by T. Rowe Price
Services, Inc. (TRPS) and vendors will be billed by TRPS for
1994:
I. T. Rowe Price Services Maintenance and Transaction Charges -
Billable Monthly
A. Base Fee
1. Per Fund - Beginning January 1, 1994, chargeable at
the rate of $1,000 per month to each Fund shown on the previous
page. The fee is waived for new Funds for the first 6 months
after effective date.
2. Monthly - $5,987,000 payable in twelve monthly
installments of $498,917.
B. Per Account Annual Fee - $3.63 for each Equity, Bond, and
Money Market Account serviced.
The Per Account Annual Fee will be billed monthly at a rate
of 1/12 of the annual fee for each Fund account serviced during
the month. Accounts serviced is defined as all open accounts at
month end plus accounts which closed during the month.
C. Transaction Fees
1. New Account Fees
a. $3.00 for every account opened, including fiduciary
accounts, excluding those opened by exchange and those
established as described in (b) below.
b. A fee of $1.00 will be assessed for accounts
established within the model and list functions programs and
under the agreement that the registrant's name will be quality
controlled subsequent to its establishment.
2. Non-Automated Transactions
a. $1.05 for each non-automated transaction and
maintenance item processed for the Fund Group as a whole during a
month. The non-automated transaction count will include all
manually processed price dependent and maintenance transactions.
Also, the number of new account setups will be excluded from the
number of non-automated transactions.
b. Fee to be charged to the Funds based on each Fund's
number of total non-automated transactions and maintenance.
c. Fee to be billed monthly for that month.
PAGE 48
d. NOTE: The transaction count should not include
correction of transactions caused by non-shareholder
errors.
D. Telephone Fee
Billed at the rate of $5.20 per call for shareholder
servicing calls received in excess of 34,000 calls per
month. Calls received in Retail Services are allocated to
the Funds based on accounts serviced and calls received in
Telephone Services are allocated based on actual calls
received.
E. Items Scanned
$.29 will be billed for each document page scanned. It will
be allocated based on the number of items indexed to each
Fund.
F. Tele*Access
Base fee, per month for all calls is $39,000.
G. Institutional Electronic Interface
Maximum fee calculated is 10 basis points or less per Fund.
10 basis points < $500 million
8 basis points > $500 million < $1 billion
5 basis points > $1 billion < $2 billion
3 basis points > $2 billion
H. Correspondence
$4.20 billed for each shareholder correspondence request
completed in writing or by phone. Allocated to the Funds
based on accounts serviced.
I. Telephone Transaction Fee
Each price dependent transaction initiated through the
Telephone Services Group will be charged $.50.
II. Vendor Fees
A. DST
1. Annual Open Account Fee
a. $1.77 for each Equity Fund account serviced.
b. $4.20 for each Bond Fund account serviced.
c. $4.20 for each Money Market Fund account serviced.
PAGE 49
The Open Account Fee will be billed monthly at a rate of
1/12 of the annual fee for each Fund account serviced during
the month.
2. Closed Account Fee (Annualized)
Payable at an annual rate of $1.44. The Closed Account
Fee will be billed monthly at a rate of 1/12 of the
annual rate and will be charged in the month following
the month during which such account is closed and shall
cease to be charged in the month following the Purge
Date.
3. Fiduciary Sub-Accounting
Payable at the rate of $1.00 per month for each fiduciary
account. Fiduciary accounts closed during the prior year
will not be included as billable items.
4. Annual Base Fee Per Fund
Annual Fee of $7,205.88 will be charged at a monthly rate
of $600.49. The fee is waived for the first six (6)
months after a new Fund is effective. The definition of
new Fund excludes Funds created by mergers, purchases, or
reorganizations.
5. Bank Account Reconciliation System (Comp/Recon)
Annual charge of $120,000 payable at a rate of $10,000
per month.
6. TRAC 2000 - $7.00 per participant, per year
7. Voice Response Unit
a. $500 Set-up Fee will be charged for each investment
company unit.
b. $2,500 Maintenance Fee will be billed each month.
c. $.50 will be billed per call connected to the VRU.
8. Contingent Deferred Sales Charge.
Billed to each Fund utilizing this service at an annual
rate of $1.03 per open account.
B. State Street Bank
1. NSCC Settlements
PAGE 50
a. $11.30 for net redemptions
b. $ 5.14 per net purchases
2. Checkwriting Fees
$.565 for each checkwriting item processed (i.e. those
resulting in either redemptions or returned as non-
processable). This includes signature card maintenance
and verification, manual or special processing of checks,
stop payment processing, settlement functions, and
postage and mailing expenses to return canceled checks to
shareholders.
3. Stop Payments - Redemption/Distribution Accounts
$15.00 for each manual stop payment placed on a
redemption or distribution check.
4. ACH Transactions
$.06 for each ACH transaction processed by the Bank and
submitted to the ACH network.
5. Internal Book Transfers
$1.08 billed for money movement between TRP DDA's at the
Bank. Money is transferred by debit and credit memos.
6. Wire Fees
$4.00 for each incoming, manual, and internal bank
transfer wire; $3.75 for each outgoing transmission wire.
7. Paid checks
$.18 for each paid check processed.
8. DDA Research
$1.03 per request.
9. Special Handling
$2,917 billed per month for the special handling of
checks at Marina Bay.
10. Nightly Audits
$.0285 per page for the audit of the DST nightly update.
PAGE 51
11. VAX Computer Usage
Billed at the rate of $8,318 per month which covers both:
a. System Fee - for use of sub-systems such as capital
stock interface, PDPS, Direct Deposit, etc.
b. Communication Fee - charge for the line, modems, and
statistical multiplexers.
12. Abandoned Property
Services based on the following fee schedule:
a. Administrative charge $125/Fund
b. Processing charges $1.00/account
c. Due Diligence Mailings $1.50/account
d. Labor will be charged based on the number of hours
required.
13. Account maintenance $16.00 per account per month
14. Reporting (SSCAN) for selected accounts - $50.00 per
account per month
15. FDIC Passthrough - charged at prevailing FDIC rates
C. J.P. Morgan Bank
1. Wire Transfer Fees
Annual Account Maintenance $250.00
Annual MORCOM/CASH
First Account $5,000.00
Subsequent Accounts $3,000.00
Batch File Transfer (BFT)
Transmission $15.00 each
(capped at 10 per month)
BFT Per Outgoing Wire
Peak (8 a.m. and 8 p.m.) $0.064
Off Peak (8 p.m. and 8 a.m.) $0.032
Outgoing Wires
Straight-through (Repetive or Freetype)
80% of total volume $3.25
Book Transfer (IBT) $1.50
Repair (Freeform) $7.00
Zero Balance Transfer $1.00
PAGE 52
Incoming Wires
Fed or CHIPS $3.25
Book (IBT) $1.50
FDIC Passthrough - charged at prevailing FDIC rates
2. Controlled Disbursement Fees
Annual Account Maintenance
(capped at 6 accounts) $760.00 per
account
Annual MORCOM Next Day $1,385.00
per account
Annual MORCOM Check $715.00 per
account
Batch File Transfer (BFT)
Transmission (capped at 10 per month) $15.00 each
Same Day Match Pay (Dividend & Redemption Checks)
DCD Match $2,500.00
per account
TRPS Matches .005 per
item
Checks Paid
Up to 500,000 items $0.051
Up to 750,000 items $0.042
Up to 1,000,000 items $0.035
Stops
On-line $3.00
Returned Checks $3.00 per
item
3. The bank may charge interest at a rate in excess of normal
borrowing rates if the TRPS balance is overdrawn or is in a
negative collected balance status.
D. Fleet Bank of Massachusetts
1. Demand Deposit Services
a. Monthly Account Maintenance $13.00/
14.00 in
May
PAGE 53
b. Deposit Ticket $.85
c. Deposited Item Fee (all inclusive) $.054
d. Return of a Deposited Item
Redeposit Fee per deposit $1.00
Per redeposited item $.50
Returned item $3.00
2. Treasury Master System
a. Previous Day Balance Reporting
Monthly module charge $60.00
Per Account $10.00
b. Previous Day Detail
Monthly module charge $70.00
Per Transaction $.10
c. Current Day Detail
Monthly module charge $70.00
Per Transaction $.10
d. Depository Transfer
Monthly module charge $75.00
Per Transfer $.25
e. Money Movers per transfer $.50
f. Wire Transfer no addt'l
charge-
normal wire
fees only
3. Wire Transfer
a. Outgoing Repetitive Wire
Placed prior to 1:00 pm $9.00
Placed after 1:00 pm $10.00
b. Outgoing Non-Repetitive Wire
Placed prior to 1:00 pm $12.00
Placed after 1:00 pm $13.00
c. Incoming Wire $6.00
4. The bank may charge interest at a rate in excess of
normal borrowing rates if the TRPS balance is overdrawn
or is in a negative collected balance status.
5. FDIC Passthrough - charged at prevailing FDIC rates.
E. First National Bank of Maryland
1. Internal Fund Transfer $5.40
2. Returned Items $2.70
PAGE 54
3. Deposit Items Charge
varies
4. Deposit Tickets $.45
5. Return/redeposit items $2.25
6. Deposit Corrections $4.50
7. Check copy $9.00
8. First Facts
CDA Repetitive Wire $4.05
System Reports/Per Module $27.00
Per Report Previous Day $1.80
Per Report Current Day $3.60
9. Account maintenance $11.25
10. Debit item $.54
11. Credit transaction $.54
12. Foreign Deposit $4.50
13. ACH Debit $.117
14. Tax Deposits $.90
15. Film - Monthly $121.50
16. TRPS may be charged interest when TRPS's balance at FNB
is in a negative collected balance status. TRPS may
also receive balance credits on a positive investable
balance
17. FDIC Passthrough charged at prevailing FDIC rates
III. New Funds
Funds added during the term of this contract may have their
Maintenance and Transaction charges and other charges (Section
I) waived for a period of time, as agreed to by TRPS and Fund
Directors, following the establishment of the Fund. Out-of-
pocket expenses will be billed to the Fund from the Fund's
inception.
IN WITNESS WHEREOF, T.Rowe Price Funds and T.Rowe Price Services,
Inc. have agreed upon this fee schedule to be executed in their
names and on their behalf through their duly authorized officers:
T. ROWE PRICE FUNDS T. ROWE PRICE SERVICES, INC.
/s/Carmen F. Deyesu /s/Mark E. Rayford
NAME ____________________ NAME ________________________
Carmen F. Deyesu Mark E. Rayford
TITLE Treasurer TITLE President
DATE 2/16/94 DATE 2/18/94
The Agreement between T. Rowe Price Associates, Inc. and T. Rowe
Price Funds for Fund Accounting Services, dated January 1, 1994,
should be inserted here.
PAGE 1
AGREEMENT
between
T. ROWE PRICE ASSOCIATES, INC.
and
THE T. ROWE PRICE FUNDS
for
FUND ACCOUNTING SERVICES
PAGE 2
TABLE OF CONTENTS
Page
Article A Terms of Appointment/Duties of Price Associates .1
Article B Fees and Out-of-Pocket Expenses . . . . . . . . .2
Article C Representations and Warranties of Price Associates3
Article D Representations and Warranties of the Fund. . . .3
Article E Ownership of Software and Related Material. . . .3
Article F Quality Service Standards . . . . . . . . . . . .4
Article G Standard of Care/Indemnification. . . . . . . . .4
Article H Dual Interests. . . . . . . . . . . . . . . . . .5
Article I Documentation . . . . . . . . . . . . . . . . . .5
Article J Recordkeeping/Confidentiality . . . . . . . . . .5
Article K Compliance with Governmental Rules and Regulations6
Article L Terms and Termination of Agreement. . . . . . . .6
Article M Notice. . . . . . . . . . . . . . . . . . . . . . 6
Article N Assignment. . . . . . . . . . . . . . . . . . . . 7
Article O Amendment/Interpretive Provisions . . . . . . . .7
Article P Further Assurances. . . . . . . . . . . . . . . .7
Article Q Maryland Law to Apply . . . . . . . . . . . . . .7
Article R Merger of Agreement . . . . . . . . . . . . . . .7
Article S Counterparts. . . . . . . . . . . . . . . . . . .8
Article T The Parties . . . . . . . . . . . . . . . . . . . 8
Article U Directors, Trustee and Shareholders and Massachusetts
Business Trust. . . . . . . . . . . . . . . . . .8
PAGE 3
Article V Captions. . . . . . . . . . . . . . . . . . . . . 9
PAGE 4
AGREEMENT made as of the first day of January, 1994, by and
between T. ROWE PRICE ASSOCIATES, INC., a Maryland corporation
having its principal office and place of business at 100 East
Pratt Street, Baltimore, Maryland 21202 ("Price Associates"), and
each Fund which is listed on Appendix A (as such Appendix may be
amended from time to time) and which evidences its agreement to
be bound hereby by executing a copy of this Agreement (each such
Fund individually hereinafter referred to as "the Fund", whose
definition may be found in Article T);
WHEREAS, Price Associates has the capability of providing the
Funds with certain accounting services ("Accounting Services");
WHEREAS, the Fund desires to appoint Price Associates to
provide these Accounting Services and Price Associates desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
A. Terms of Appointment/Duties of Price Associates
Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints Price Associates
to provide, and Price Associates agrees to provide, the following
Accounting Services:
a. Maintain for each Fund a daily trial balance, a general
ledger, subsidiary records and capital stock accounts;
PAGE 5
b. Maintain for each Fund an investment ledger, including
amortized bond and foreign dollar denominated costs where
applicable;
c. Maintain for each Fund all records relating to the Fund's
income and expenses;
d. Provide for the daily valuation of each Fund's portfolio
securities and the computation of each Fund's daily net
asset value per share. Such daily valuations shall be
made in accordance with the valuation policies established
by each of the Fund's Board of Directors including, but
not limited to, the utilization of such pricing valuation
sources and/or pricing services as determined by the
Boards. Price Associates shall have no liability for any
losses or damages incurred by the Fund as a result of
erroneous portfolio security evaluations provided by such
designated sources and/or pricing services; provided that,
Price Associates reasonably believes the prices are
accurate, has adhered to its normal verification control
procedures, and has otherwise met the standard of care as
set forth in Article G of this Agreement;
e. Provide daily cash flow and transaction status information
to each Fund's adviser;
f. Prepare for each Fund such financial information that is
reasonably necessary for shareholder reports, reports to
PAGE 6
the Board of Directors and to the officers of the Fund,
and reports to the Securities and Exchange Commission and
the Internal Revenue Service and other Federal and state
regulatory agencies;
g. Provide each Fund with such advice that may be reasonably
necessary to properly account for all financial
transactions and to maintain the Fund's accounting
procedures and records so as to insure compliance with
generally accepted accounting and tax practices and rules;
h. Maintain for each Fund all records that may be reasonably
required in connection with the audit performed by each
Fund's independent accountant, the Securities and Exchange
Commission, the Internal Revenue Service or such other
Federal or state regulatory agencies; and
i. Cooperate with each Fund's independent public accountants
and take all reasonable action in the performance of its
obligations under the Agreement to assure that the
necessary information is made available to such
accountants for the expression of their opinion without
any qualification as to the scope of their examination
including, but not limited to, their opinion included in
each such Fund's annual report on Form N-SAR and annual
amendment to Form N-1A.
B. Fees and Out-of-Pocket Expenses
Each Fund shall pay to Price Associates for its Accounting
Services hereunder, fees as set forth in the Schedule attached
hereto. In addition, each Fund will reimburse Price Associates
PAGE 7
for out-of-pocket expenses such as postage, printed forms, voice
and data transmissions, record retention, disaster recovery,
third party vendors, equipment leases and other similar items as
may be agreed upon between Price Associates and the Fund. Some
invoices will contain costs for both the Funds and other funds
services by Price Associates. In these cases, a reasonable
allocation methodogy will be used to allocate these costs to the
Funds.
C. Representations and Warrantees of Price Associates
Price Associates represents and warrants to the Fund that:
1. It is a corporation duly organized and existing in good
standing under the laws of Maryland.
2. It is duly qualified to carry on its business in Maryland.
3. It is empowered under applicable laws and by its charter
and By-Laws to enter into and perform this Agreement.
4. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
5. It has, and will continue to have, access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
D. Representations and Warrantees of the Fund
The Fund represents and warrants to Price Associates that:
1. It is a corporation or business trust, as the case may be,
duly organized and existing and in good standing under the laws
of Maryland or Massachusetts, as the case may be.
PAGE 8
2. It is empowered under applicable laws and by its Articles
of Incorporation or Declaration of Trust, as the case may be, and
By-Laws have been taken to authorize it to enter into and perform
this Agreement.
3. All proceedings required by said Articles of Incorporation
or Declaration of Trust, as the case may be, and By-Laws have
been taken to authorize it to enter into and perform this
Agreement.
E. Ownership of Software and Related Material
All computer programs, magnetic tapes, written procedures,
and similar items purchased and/or developed and used by Price
Associates in performance of the Agreement shall be the property
of Price Associates and will not become the property of the
Funds.
F. Quality Service Standards
Price Associates and the Fund may, from time to time, agree
to certain quality service standards, with respect to Price
Associates' services hereunder.
G. Standard of Care/Indemnification
Notwithstanding anything to the contrary in this Agreement:
1. Price Associates shall not be liable to any Fund for any
act or failure to act by it or its agents or subcontractors on
behalf of the Fund in carrying or attempting to carry out the
terms and provisions of the Agreement provided Price Associates
has acted in good faith and without negligence or willful
misconduct and selected and monitored the performance of its
agents and subcontractors with reasonable care.
PAGE 9
2. The Fund shall indemnify and hold Price Associates
harmless from and against all losses, costs, damages, claims,
actions, and expenses, including reasonable expenses for legal
counsel, incurred by Price Associates resulting from: (i) any
action or omission by Price Associates or its agents or
subcontractors in the performance of their duties hereunder; (ii)
Price Associates acting upon instructions believed by it to have
been executed by a duly authorized officer of the Fund; or (iii)
Price Associates acting upon information provided by the Fund in
form and under policies agreed to by Price Associates and the
Fund. Price Associates shall not be entitled to such
indemnification in respect of actions or omissions constituting
negligence or willful misconduct of Price Associates or where
Price Associates has not exercised reasonable care in selecting
or monitoring the performance of its agents or subcontractors.
3. Price Associates shall indemnify and hold harmless the
Fund from all losses, costs, damages, claims, actions and
expenses, including reasonable expenses for legal counsel,
incurred by the Fund resulting from the negligence or willful
misconduct of Price Associates or which result from Price
Associates' failure to exercise reasonable care in selecting or
monitoring the performance of its agents or subcontractors. The
Fund shall not be entitled to such indemnification with respect
to actions or omissions constituting negligence or willful
misconduct of such Fund or its agents or subcontractors; unless
such negligence or misconduct is attributable to Price
Associates.
PAGE 10
4. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of
God, strikes or other causes reasonably beyond its control, such
party shall not be liable to the other party for any loss, cost,
damage, claim, action or expense resulting from such failure to
perform or otherwise from such causes.
5. In order that the indemnification provisions contained in
this Article F shall apply, upon the assertion of a claim for
which either party may be required to indemnify the other, the
party seeking indemnification shall promptly notify the other
party of such assertion, and shall keep the other party advised
with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense
of such claim, or to defend against said claim in its own name or
in the name of the other party. The party seeking
indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required
to indemnify it except with the other party's prior written
consent.
6. Neither party to this Agreement shall be liable to the
other party for consequential damages under any provision of this
Agreement.
H. Dual Interests
It is understood that some person or persons may be
directors, officers, or shareholders of both the Fund and Price
PAGE 11
Associates (including Price Associates' affiliates), and that the
existence of any such dual interest shall not affect the validity
of this Agreement or of any transactions hereunder except as
otherwise provided by a specific provision of applicable law.
I. Documentation
As requested by Price Associates, the Fund shall promptly
furnish to Price Associates such documents as it may reasonably
request and as are necessary for Price Associates to carry out
its responsibilities hereunder.
J. Recordkeeping/Confidentiality
1. Price Associates shall keep records relating to the
services to be performed hereunder, in the form and manner as it
may deem advisable, provided that Price Associates shall keep all
records in such form and in such manner as required by applicable
law, including the
Investment Company Act of 1940 ("the Act") and the Securities
Exchange Act of 1934 ("the '34 Act").
2. Price Associates and the Fund agree that all books,
records, information and data pertaining to the business of the
other party which are exchanged or received pursuant to the
negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other
person, except: (a) after prior notification to and approval in
writing by the other party hereto, which approval shall not be
unreasonably withheld and may not be withheld where Price
Associates or Fund may be exposed to civil or criminal contempt
proceedings for failure to comply; (b) when requested to divulge
PAGE 12
such information by duly constituted governmental authorities; or
(c) after so requested by the other party hereto.
K. Compliance With Governmental Rules and Regulations
Except as otherwise provided in the Agreement and except for
the accuracy of information furnished to the Funds by Price
Associates, each Fund assumes full responsibility for the
preparation, contents and distribution of its prospectuses, and
for complying with all applicable requirements of the Act, the
'34 Act, the Securities Act of 1933 (the "33 Act"), and any laws,
rules and regulations of governmental authorities having
jurisdiction over the Funds.
L. Term and Termination of Agreement
1. This Agreement shall run for a period of one (1) year from
the date first written above and will be renewed from year to
year thereafter unless terminated by either party as provided
hereunder.
2. This Agreement may be terminated by the Fund upon sixty
(60) days' written notice to Price Associates; and by Price
Associates, upon three hundred sixty-five (365) days' writing
notice to the Fund.
3. Upon termination hereof, the Fund shall pay to Price
Associates such compensation as may be due as of the date of such
termination, and shall likewise reimburse for out-of-pocket
expenses related to its services hereunder.
M. Notice
Any notice as required by this Agreement shall be
sufficiently given (i) when sent to an authorized person of the
PAGE 13
other party at the address of such party set forth above or at
such other address as such party may from time to time specify in
writing to the other party; or (ii) as otherwise agreed upon by
appropriate officers of the parties hereto.
N. Assignment
Neither this Agreement nor any rights or obligations
hereunder may be assigned either voluntarily or involuntarily, by
operation of law or otherwise, by either party without the prior
written consent of the other party, provided this shall not
preclude Price Associates from employing such agents and
subcontractors as it deems appropriate to carry out its
obligations set forth hereunder.
O. Amendment/Interpretive Provisions
The parties by mutual written agreement may amend this
Agreement at any time. In addition, in connection with the
operation of this Agreement, Price Associates and the Fund may
agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions are to
be signed by all parties and annexed hereto, but no such
provision shall contravene any applicable Federal or state law or
regulation and no such interpretive or additional provision shall
be deemed to be an amendment of this Agreement.
PAGE 14
P. Further Assurances
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the
purposes hereof.
Q. Maryland Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of Maryland.
R. Merger of Agreement
This Agreement, including the attached Appendices and
Schedules supersedes any prior agreement with respect to the
subject hereof, whether oral or written.
S. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instruments.
T. The Parties
All references herein to "the Fund" are to each of the Funds
listed on Appendix A individually, as if this Agreement were
between such individual Fund and Price Associates. In the case
of a series Fund or trust, all references to "the Fund" are to
the individual series or portfolio of such Fund or trust, or to
such Fund or trust on behalf of the individual series or
portfolio, as appropriate. The "Fund" also includes any T. Rowe
Price Funds which may be established after the execution of this
PAGE 15
Agreement. Any reference in this Agreement to "the parties"
shall mean Price Associates and such other individual Fund as to
which the matter pertains.
U. Directors, Trustees and Shareholders and Massachusetts
Business Trust
It is understood and is expressly stipulated that neither the
holders of shares in the Fund nor any Directors or Trustees of
the Fund shall be personally liable hereunder.
With respect to any Fund which is a party to this Agreement
and which is organized as a Massachusetts business trust, the
term "Fund" means and refers to the trustees from time to time
serving under the applicable trust agreement (Declaration of
Trust) of such Trust as the same may be amended from time to
time. It is expressly agreed that the obligations of any such
Trust hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the trust property of the Trust,
as provided in the Declaration of Trust of the Trust. The
execution and delivery of this Agreement has been authorized by
the trustees and signed by an authorized officer of the Trust,
acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed
to have been made by any of them, but shall bind only the trust
property of the Trust as provided in its Declaration of Trust.
PAGE 16
V. Captions
The captions in the Agreement are included for convenience of
reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under
their seals by and through their duly authorized officers.
DATED: 2/22/94 T. ROWE PRICE ASSOCIATES, INC.
ATTEST:
/s/Barbara A. VanHorn /s/Alvin M. Younger
_________________________ BY:___________________________
Barbara A. VanHorn Managing Director
PAGE 17
T. ROWE PRICE ADJUSTABLE RATE U.S.
GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME
TRUST
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND,
INC.
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE MID-CAP GROWTH FUND
T. ROWE PRICE NEW AMERICA GROWTH FUND
T. ROWE PRICE NEW ERA FUND, INC.
PAGE 18
T. ROWE PRICE NEW HORIZONS FUNDS, INC.
T. ROWE PRICE NEW INCOME FUND, INC.
T. ROWE PRICE OTC FUND, INC.
T. ROWE PRICE PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND,
INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Maryland Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
T. ROWE PRICE TAX-FREE HIGH YIELD FUND,
INC.
T. ROWE PRICE TAX-FREE INCOME FUND, INC.
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE
FUND, INC.
T. ROWE PRICE TAX-FREE INSURED
INTERMEDIATE BOND FUND, INC.
T. ROWE PRICE U.S. TREASURY FUNDS, INC.
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 19
T. ROWE PRICE SUMMIT FUNDS, INC.
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.
Summit Municipal Money Market Fund
Summit Municipal Intermediate Fund
Summit Municipal Income Fund
DATED: 2/16/94
ATTEST:
/s/Lenora V. Hornung /s/Carmen F. Deyesu
_________________________ BY:______________________________
Lenora V. Hornung Carmen F. Deyesu
PAGE 20
APPENDIX A
The following Funds are parties to this Agreement, and have so
indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price Adjustable Rate U.S.
Government Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc.
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price California Tax-Free Income
Trust on behalf of the
California Tax-Free Bond Fund and
California Tax-Free Money Fund
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Index Trust, Inc. on behalf
of the T. Rowe Price Equity Index Fund
T. Rowe Price Institutional International
Funds, Inc. on behalf of the
Foreign Equity Fund
T. Rowe Price International Equity Fund,
Inc.
PAGE 21
T. Rowe Price International Funds, Inc.
on behalf of the
T. Rowe Price International Bond Fund and
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery
Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. Rowe Price Latin American Fund
T. Rowe Price Mid-Cap Growth Fund
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price OTC Fund, Inc.
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Science & Technology Fund,
Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
T. Rowe Price Spectrum Fund, Inc. on
behalf of the
Spectrum Growth Fund
Spectrum Income Fund
T. Rowe Price State Tax-Free Income Trust
on behalf of the
Maryland Tax-Free Bond Fund,
Maryland Short-Term Tax-Free Bond Fund
New York Tax-Free Bond Fund and
New York Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
Virginia Tax-Free Bond Fund
Florida Insured Intermediate Tax-Free
Bond Fund
Georgia Tax-Free Bond Fund
PAGE 22
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free Insured
Intermediate Bond Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund,
Inc.
T. Rowe Price Tax-Free Income Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate
Fund, Inc.
T. Rowe Price U.S. Treasury Funds, Inc.
on behalf of the
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. Rowe Price Summit Funds, Inc. on
behalf of the
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
T. Rowe Price Summit Municipal Funds,
Inc. on behalf of
Summit Municipal Money Market Fund
Summit Municipal Intermediate Fund
Summit Municipal Income Fund
PAGE 23
FUND ACCOUNTING SERVICES
1994 FEE SCHEDULE
A. Fee Structure
1. Base Fee
Domestic Funds $60,000 each
International Funds $100,000 each
Spectrum Funds $35,000 each
Per Fund fee for basic recordkeeping
and financial reporting
2. Individual Fund Fee
Total fees reflecting special $ 883,000
characteristics of each Fund
3. Stock Lending Fee
Allocated to each Fund based $ 75,000
on ratio of net earnings from
stock loans
4. Additional Funds
Domestic Funds $60,000 each
International Funds $100,000 each
Spectrum Funds $35,000 each
B. Total Cost Per Fund
Growth Stock Fund $ 114,000
New Horizons Fund 95,000
Equity Income Fund 85,000
New Era Fund 72,000
International Stock Fund 115,000
Growth & Income Fund 85,000
New America Growth Fund 70,000
Capital Appreciation Fund 85,000
Small-Cap Value Fund 60,000
Foreign Equity Fund 105,000
International Discovery Fund 125,000
Science & Technology Fund 60,000
High Yield Fund 165,000
Tax-Free Income Fund 110,000
New Income Fund 100,000
Tax-Free High Yield Fund 110,000
European Stock Fund 100,000
Equity Index Fund 60,000
PAGE 24
New Asia Fund 110,000
Spectrum Growth Fund 35,000
GNMA Fund 120,000
International Bond Fund 125,000
Balanced Fund 90,000
Maryland Bond Fund 81,000
Tax-Free Short Intermediate Fund 85,000
Short-Term Bond Fund 120,000
California Bond Fund 72,000
New York Bond Fund 72,000
U.S. Treasury Short-Intermediate Fund 60,000
U.S. Treasury Long-Term Bond Fund 60,000
Spectrum Income Fund 35,000
Prime Reserve Fund 85,000
Tax-Exempt Money Fund 93,000
U.S. Treasury Money Fund 60,000
California Money Fund 67,000
New York Money Fund 67,000
Adjustable Rate Government Fund 110,000
Virginia Bond Fund 60,000
New Jersey Bond Fund 60,000
Global Government Bond Fund 100,000
OTC Fund 85,000
Japan Fund 100,000
Mid-Cap Growth Fund 60,000
Short-Term Global Fund 100,000
Maryland Short-Term Tax-Free Bond Fund 60,000
Florida Insured Intermediate Tax-Free Fund 60,000
Georgia Tax-Free Bond Fund 60,000
Tax-Free Insured Intermediate Bond Fund 60,000
Blue Chip Growth Fund 60,000
Dividend Growth Fund 65,000
Latin America Fund 100,000
Summit Cash Reserve Fund 60,000
Summit Limited-Term Bond Fund 60,000
Summit GNMA Fund 60,000
Summit Municipal Money Market Fund 60,000
Summit Municipal Intermediate Fund 60,000
Summit Municipal Income Fund 60,000
IN WITNESS WHEREOF, T. Rowe Price Funds and T. Rowe Price
Associates, Inc. have agreed upon this fee schedule to be
executed in their names and on their behalf through their duly
authorized officers:
T. ROWE PRICE FUNDS T. ROWE PRICE ASSOCIATES, INC.
/s/Carmen F. Deyesu /s/Alvin M. Younger
Name_________________________ Name__________________________
Carmen F. Deyesu Alvin M. Younger
Title Treasurer Title Treasurer and Managing
Director
Date 2/16/94 Date 2/16/94
The Agreement between T. Rowe Price Retirement Plan Services,
Inc. and the Taxable Funds, dated January 1, 1994, should be
inserted here.
PAGE 1
AGREEMENT
between
T. ROWE PRICE RETIREMENT PLAN SERVICES, INC.
and
EACH OF THE PARTIES INDICATED ON APPENDIX A
PAGE 2
TABLE OF CONTENTS
Page
Article A Terms of Appointment . . . . . . . . . . . . .2
Article B Duties of RPS. . . . . . . . . . . . . . . . .2
1. Purchases - Retirement Plans and
Retirement Accounts . . . . . . . . . . .2
2. Retirement Plans - Redemptions to Cover
Distributions . . . . . . . . . . . . . .3
3. Exchanges. . . . . . . . . . . . . . . . .4
4. Shares held by Retirement Accounts . . . .4
5. Books and Records. . . . . . . . . . . . .4
6. Tax Information. . . . . . . . . . . . . .5
7. Other Information to be furnished
to the Funds. . . . . . . . . . . . . . .6
8. Correspondence . . . . . . . . . . . . . .6
9. Mailings/Confirmation Statements . . . . .6
10. Proxies. . . . . . . . . . . . . . . . . .6
11. Form N-SAR . . . . . . . . . . . . . . . .6
12. Backup Withholding . . . . . . . . . . . .6
Article C Fee and Out-of-Pocket Expenses . . . . . . . .7
1. Postage. . . . . . . . . . . . . . . . . .7
2. Proxies. . . . . . . . . . . . . . . . . .7
3. Communications . . . . . . . . . . . . . .7
4. Record Retention . . . . . . . . . . . . .8
5. Disaster Recovery. . . . . . . . . . . . .8
Article D Representations and Warranties of RPS. . . . .8
Article E Representations and Warranties of the Fund . .8
Article F Standard of Care/Indemnification . . . . . . .9
Article G Dual Interests . . . . . . . . . . . . . . . 11
Article H Documentation. . . . . . . . . . . . . . . . 11
Article I Recordkeeping/Confidentiality. . . . . . . . 12
Article J Ownership of Software and Related Material . 13
PAGE 3
Article K As of Transactions . . . . . . . . . . . . . 13
1. Reporting. . . . . . . . . . . . . . . . 13
2. Liability. . . . . . . . . . . . . . . . 14
Article L Term and Termination of Agreement. . . . . . 15
Article M Notice . . . . . . . . . . . . . . . . . . . . 16
Article N Assignment . . . . . . . . . . . . . . . . . . 16
Article O Amendment/Interpretive Provisions. . . . . . 16
Article P Further Assurances . . . . . . . . . . . . . 16
Article Q Maryland Law to Apply. . . . . . . . . . . . 16
Article R Merger of Agreement. . . . . . . . . . . . . 17
Article S Counterparts . . . . . . . . . . . . . . . . 17
Article T The Parties. . . . . . . . . . . . . . . . . . 17
Article U Directors, Trustees and Shareholders and Massachusetts
Business Trust. . . . . . . . . . . . . . . 17
Article V Captions . . . . . . . . . . . . . . . . . . . 18
PAGE 4
AGREEMENT, made as of the first day of January, 1994, by and
between T. ROWE PRICE RETIREMENT PLAN SERVICES, INC., a Maryland
corporation having its principal office and place of business at
100 East Pratt Street, Baltimore, Maryland 21202 ("RPS"), and
EACH FUND WHICH IS LISTED ON APPENDIX A (as such Appendix may be
amended from time to time) and which evidences its agreement to
be bound hereby by executing a copy of this Agreement (each Fund
hereinafter referred to as "the Fund") whose definition may be
found in Article T;
WHEREAS, the Funds are named investment options under various
tax-sheltered plans, including, but not limited to, state
deferred compensation plans, 403(b) plans, and profit sharing,
thrift, and money purchase pension plans for self-employed
individuals, professional partnerships and corporations,
(collectively referred to as "Retirement Plans"); and the Fund
has determined that such investments of Retirement Plans in the
Funds are in the best long-term interest of the Funds;
WHEREAS, RPS has the capability of providing special
services, on behalf of the Fund, for the accounts ("Retirement
Accounts") of shareholders participating in these Retirement
Plans;
WHEREAS, RPS represents that it is registered with the
Securities and Exchange Commission as a Transfer Agent under
PAGE 5
Section 17A of the Securities Exchange Act of 1934 ("the '34
Act").
WHEREAS, RPS may subcontract or jointly contract with other
parties on behalf of the Funds to perform certain of the
functions described herein, RPS may also enter into, on behalf of
the Funds, certain banking relationships to perform various
banking services, including, but not limited to, check deposits,
disbursements, automatic clearing house transactions ("ACH") and
wire transfers. Subject to guidelines mutually agreed upon by
the Funds and RPS, excess balances, if any, resulting from these
banking relationships will be invested and the income therefrom
will be used to offset fees which would otherwise be charged to
the Funds under this Agreement.
WHEREAS, the Fund desires to contract with RPS the foregoing
functions and services described herein in connection with the
Retirement Plans and Retirement Accounts;
NOW THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
A. Terms of Appointment
Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints RPS to perform
the services and functions described herein in connection with
PAGE 6
certain Retirement Plan and Retirement Accounts as agreed upon by
the parties.
B. Duties of RPS:
RPS agrees that it will perform the following services:
1. Purchases - Retirement Plans and Retirement Accounts
After RPS has received monies from Retirement Plans and
has determined the proper allocation of such monies to the
Retirement Accounts or Retirement Plan participants
("Participants") based upon instructions received from
Participants, Retirement Plans or their designees, or
Retirement Plan Administrator(s) ("Administrator(s)"), RPS
will, as a responsibility under the Agreement:
a. Transmit by check or wire the aggregate money
allocated to each Fund to the Fund's custodian;
b. In the case of a new Participant, establish and
maintain a Retirement Account for such Participant;
and
c. Compute the number of shares of each Fund to which
the Participant is entitled according to the price of
such Fund shares as provided by such Fund for
purchases made at that time and date, and credit each
such Account with the number of shares of the Fund so
purchased.
PAGE 7
2. Retirement Plans - Redemptions to Cover Distributions.
After RPS has received instructions from the Administrator
regarding distributions to be made to Participants or their
designated beneficiaries from Funds designated as investment
options under the Retirement Plan, RPS will, as a
responsibility under the Agreement:
a. Compute the amount due for shares to be redeemed from
each Retirement Account or compute the number of
shares to be redeemed from each such Retirement
Account for such distributions and the total number
of all shares of each Fund to be redeemed in
accordance with the price per share at that time and
date of such Fund as calculated and provided by the
Fund. After such computation, inform the Fund of the
amount necessary to be redeemed. Distribute to
Participants or their designated beneficiaries the
amount to be disbursed.
b. After RPS has received instructions from the
Administrator regarding disbursements to be made
regarding the payment of fees due the Administrator,
or other persons including RPS, RPS will, as a
responsibility under this Agreement:
PAGE 8
i. Compute the number of shares to be redeemed from
each Retirement Account to pay for such
disbursements and the total number of all shares
to be redeemed in accordance with the price per
share at that time and date, of such Fund as
calculated and provided by the Fund;
ii. Effect the necessary redemption from the Fund's
custodian to cover such disbursements; and
iii. Mail to the Administrator or such other person as
designated by the Administrator the amount to be
disbursed.
c. Other Provisions
i. If any instruction tendered by an Administrator to
redeem shares in a Retirement Account is not
satisfactory to RPS, RPS shall promptly notify the
Administrator of such fact together with the
reason therefor;
ii. The authority of RPS to perform its
responsibilities under Paragraph B(2) with respect
to each Fund shall be suspended upon receipt of
notification by such Fund of the suspension of the
determination of the Fund's net asset value per
PAGE 9
share and shall remain suspended until proper
notification; and
iii. The Fund will promptly inform RPS of the
declaration of any dividend or distribution on
account of the capital stock of any Fund so that
RPS may properly credit income and capital gain
payments to each Retirement Account.
3. Exchanges
Effect exchanges of shares of the Funds upon receipt of
appropriate instructions from the Administrator and/or
Participant.
4. Shares held by Retirement Accounts will be
Noncertificate Shares
RPS will have neither responsibility nor authority to
issue stock certificates evidencing ownership of Fund shares
held by Participants. All shares held in Retirement Accounts
maintained by RPS shall be noncertificated shares.
5. Books and Records
RPS shall maintain records showing for each Retirement
Plan or Retirement Account, the following:
a. Names, addresses and tax identification numbers, when
provided;
b. Number of shares held;
PAGE 10
c. Historical information regarding the account of each
Participant and/or Retirement Plan, including
dividends and distributions invested in shares;
d. Pertinent information regarding the establishment and
maintenance of Retirement Plans and Retirement
Accounts necessary to properly administer each
account.
e. Any instructions from a Participant or Administrator
including, all forms furnished by the Fund and
executed by a Participant with respect to
(i) elections with respect to payment options in
connection with the redemption of shares; or
distribution elections, if applicable; and
f. Any information required in order for RPS to perform
the calculations contemplated under this Agreement.
Any such records maintained pursuant to Rule 31a-1 under
the Investment Company Act of 1940 ("the Act") will be
preserved for the periods prescribed in Rule 31a-2
thereunder. Disposition of such records after such
prescribed periods shall be as mutually agreed upon from time
to time by RPS and the Funds. The retention of such records,
which may be inspected by the Fund at reasonable times, shall
be at the expense of the Funds. All records maintained by
PAGE 11
RPS in connection with the performance of its duties under
this Agreement will remain the property of the Funds and, in
the event of termination of this Agreement, will be delivered
to the Fund as of the date of termination or at such other
time as may be mutually agreed upon.
6. Tax Information
RPS shall also prepare and file with appropriate federal
and state agencies, such information returns and reports as
required by applicable Federal and State statutes relating to
redemptions effected in Retirement Accounts which constitute
reportable distributions. RPS will also prepare and submit
to Participants, such reports containing information as is
required by applicable Federal and State law.
7. Other Information to be furnished to the Funds
RPS will furnish to the Fund, such information, including
shareholder lists and statistical information as may be
agreed upon from time to time between RPS and the Fund.
8. Correspondence
RPS will promptly and fully answer correspondence from
Administrators and in some cases, Participants, relating to
Retirement Accounts, transfer agent procedures, and such
other correspondence as may from time to time be mutually
agreed upon with the Funds. Unless otherwise instructed,
PAGE 12
copies of all correspondence will be retained by RPS in
accordance with applicable law.
9. Mailings/Confirmation Statements
RPS will be responsible for mailing all confirmations and
other enclosures and mailings, as requested by the
Administrators and as may be required of the Funds by
applicable Federal or state law.
10. Proxies
RPS shall monitor the mailing of proxy cards and other
material supplied to it by the Fund in connection with
shareholder meetings of the Fund and shall coordinate the
receipt, examination and tabulation of returned proxies and
the certification of the vote to the Fund.
11. Form N-SAR
RPS shall maintain such records, if any, as shall enable
the Fund to fulfill the requirements of Form N-SAR.
12. Withholding
The Fund and RPS shall agree to procedures to be followed
with respect to RPS's responsibilities in connection with
compliance for federal withholding for Participants.
PAGE 13
C. Fees and Out-of-Pocket Expenses
Each Fund shall pay to RPS for its services hereunder fees
computed as set forth in the Schedule attached hereto. Except as
provided below, RPS will be responsible for all expenses relating
to the providing of services. Each Fund, however, will reimburse
RPS for the following out-of-pocket expenses and charges incurred
in providing services:
1. Postage. The cost of postage and freight for mailing
materials to Participants, or their agents, including
overnight delivery, UPS and other express mail services
and special courier services required to transport mail
between RPS locations and mail processing vendors.
2. Proxies. The cost to mail proxy cards and other
material supplied to it by the Fund and costs related to
the receipt, examination and tabulation of returned
proxies and the certification of the vote to the Fund.
3. Communications
a. Print. The printed forms used internally and
externally for documentation and processing
Participant, or their agent's, inquiries and
requests; paper and envelope supplies for letters,
notices, and other written communications sent to
Administrators and Participants, or their agents.
PAGE 14
b. Print & Mail House. The cost of internal and third
party printing and mail house services, including
printing of statements and reports.
c. Voice and Data. The cost of equipment (including
associated maintenance), supplies and services used
for communicating to and from the Participants, or
their agents, the Fund's transfer agent, other Fund
offices, and other agents of either the Fund or RPS.
These charges shall include:
o telephone toll charges (both incoming and outgoing,
local, long distance and mailgrams); and
o data and telephone lines and associated equipment
such as modems, multiplexers, and facsimile
equipment.
4. Record Retention. The cost of maintenance and supplies
used to maintain, microfilm, copy, record, index,
display, retrieve, and store, in microfiche or microfilm
form, documents and records.
5. Disaster Recovery. The cost of services, equipment,
facilities and other charges necessary to provide
disaster recovery for any and all services listed in
this Agreement.
PAGE 15
D. Representations and Warranties of RPS
RPS represents and warrants to the Fund that:
1. It is a corporation duly organized and existing and in
good standing under the laws of Maryland.
2. It is duly qualified to carry on its business in
Maryland.
3. It is empowered under applicable laws and by its charter
and by-laws to enter into and perform this Agreement.
4. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
5. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
6. It is registered with the Securities and Exchange
Commission as a Transfer Agent pursuant to Section 17A of the
'34 Act.
E. Representations and Warranties of the Fund
The Fund represents and warrants to RPS that:
1. It is a corporation or business trust duly organized and
existing and in good standing under the laws of Maryland, or
Massachusetts, as the case may be.
2. It is empowered under applicable laws and by its
Articles of Incorporation or Declaration of Trust, as the
PAGE 16
case may be, and By-Laws to enter into and perform this
Agreement.
3. All proceedings required by said Articles of
Incorporation or Declaration of Trust, as the case may be,
and By-Laws have been taken to authorize it to enter into and
perform this Agreement.
4. It is an investment company registered under the Act.
5. A registration statement under the Securities Act of
1933 ("the '33 Act") is currently effective and will remain
effective, and appropriate state securities law filing have
been made and will continue to be made, with respect to all
shares of the Fund being offered for sale.
F. Standard of Care/Indemnification
Notwithstanding anything to the contrary in this Agreement:
1. RPS shall not be liable to the Fund for any act or
failure to act by it or its agents or subcontractors on
behalf of the Fund in carrying or attempting to carry out the
terms and provisions of this Agreement provided RPS has acted
in good faith and without negligence or willful misconduct
and selected and monitored the performance of its agents and
subcontractors with reasonable care.
2. The Fund shall indemnify and hold RPS harmless from and
against all losses, costs, damages, claims, actions and
PAGE 17
expenses, including reasonable expenses for legal counsel,
incurred by RPS resulting from: (i) any action or omission by
RPS or its agents or subcontractors in the performance of
their duties hereunder; (ii) RPS acting upon instructions
believed by it to have been executed by a duly authorized
officer of the Fund; or (iii) RPS acting upon information
provided by the Fund in form and under policies agreed to by
RPS and the Fund. RPS shall not be entitled to such
indemnification in respect of actions or omissions
constituting negligence or willful misconduct of RPS or where
RPS has not exercised reasonable care in selecting or
monitoring the performance of its agents or subcontractors.
3. Except as provided in Article K of this Agreement, RPS
shall indemnify and hold harmless the Fund from all losses,
costs, damages, claims, actions and expenses, including
reasonable expenses for legal counsel, incurred by the Fund
resulting from negligence or willful misconduct of RPS or
which result from RPS' failure to exercise reasonable care in
selecting or monitoring the performance of its agents or
subcontractors. The Fund shall not be entitled to such
indemnification in respect of actions or omissions
PAGE 18
constituting negligence or willful misconduct of such Fund or
its agents or subcontractors; unless such negligence or
misconduct is attributable to RPS.
4. In 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.
5. In order that the indemnification provisions contained
in this Article F shall apply, upon the assertion of a claim
for which either party may be required to indemnify the
other, the party seeking indemnification shall promptly
notify the other party of such assertion, and shall keep the
other party advised with respect to all developments
concerning such claim. The party who may be required to
indemnify shall have the option to participate with the party
seeking indemnification in the defense of such claim, or to
defend against said claim in its own name or in the name of
the other party. The party seeking indemnification shall in
no case confess any claim or make any compromise in any case
PAGE 19
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.
G. Dual Interests
It is understood that some person or persons may be
directors, officers, or shareholders of both RPS and the Fund and
that the existence of any such dual interest shall not affect the
validity of this Agreement or of any transactions hereunder
except as otherwise provided by a specific provision of
applicable law.
H. Documentation
1. As requested by RPS, the Fund shall promptly furnish to
RPS the following:
a. A certified copy of the resolution of the
Directors/Trustees of the Fund authorizing the
appointment of RPS and the execution and delivery of
this Agreement;
b. A copy of the Articles of Incorporation or
Declaration of Trust, as the case may be, and By-Laws
of the Fund and all amendments thereto;
PAGE 20
c. Specimens of all forms of outstanding and new
stock/share certificates in the forms approved by the
Board of Directors/Trustees of the Fund with a
certificate of the Secretary of the Fund as to such
approval;
d. All account application forms and other documents
relating to shareholders' accounts;
e. An opinion of counsel for the Fund with respect to
the validity of the stock, the number of Shares
authorized, the status of redeemed Shares, and the
number of Shares with respect to which a Registration
Statement has been filed and is in effect; and
f. A copy of the Fund's current prospectus.
The delivery of any such document for the purpose of any
other agreement to which the Fund and RPS are or were parties
shall be deemed to be delivery for the purposes of this
Agreement.
2. As requested by RPS, the Fund will also furnish from
time to time the following documents:
a. Each resolution of the Board of Directors/Trustees of
the Fund authorizing the original issue of its
shares;
PAGE 21
b. Each Registration Statement filed with the Securities
and Exchange Commission and amendments and orders
thereto in effect with respect to the sale of shares
with respect to the Fund;
c. A certified copy of each amendment to the Articles of
Incorporation or Declaration of Trust, and the
By-Laws of the Fund;
d. Certified copies of each vote of the Board of
Directors/Trustees authorizing officers to give
instructions to the Fund;
e. Specimens of all new certificates accompanied by the
Board of Directors/Trustees' resolutions approving
such forms;
f. Such other documents or opinions which RPS, in its
discretion, may reasonably deem necessary or
appropriate in the proper performance of its duties;
and
g. Copies of new prospectuses issued.
3. RPS hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for
safekeeping of check forms and facsimile signature imprinting
devices, if any, and for the preparation or use, and for
keeping account of, such forms and devices.
PAGE 22
I. Recordkeeping/Confidentiality
1. RPS shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem
advisable, provided that RPS shall keep all records in such
form and in such manner as required by applicable law,
including the Act and the '34 Act.
2. RPS and the Fund agree that all books, records,
information and data pertaining to the business of the other
party which are exchanged or received pursuant to the
negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed
to any other person, except: (a) after prior notification to
and approval in writing by the other party hereto, which
approval shall not be unreasonably withheld and may not be
withheld where RPS or the Fund may be exposed to civil or
criminal contempt proceedings for failure to comply; (b) when
requested to divulge such information by duly constituted
governmental authorities; or (c) after so requested by the
other party hereto.
J. Ownership of Software and Related Material
All computer programs, magnetic tapes, written procedures and
similar items purchased and/or developed and used by RPS in
PAGE 23
performance of the Agreement shall be the property of RPS and
will not become the property of the Fund.
K. As Of Transactions
For purposes of this Article K, the term "Transaction" shall
mean any single or "related transaction" (as defined below)
involving the purchase or redemption of shares (including
exchanges) that are processed at a time other than the time of
the computation of the Fund's net asset value per share next
computed after receipt of any such transaction order by RPS. If
more than one Transaction ("Related Transaction") in the Fund is
caused by or occurs as a result of the same act or omission, such
transactions shall be aggregated with other transactions in the
Fund and be considered as one Transaction.
1. Reporting
RPS shall:
a. Utilize a system to identify all Transactions, and
shall compute the net effect of such Transactions
upon the Fund on a daily, monthly and rolling 365 day
basis. The Monthly and rolling 365 day periods are
hereinafter referred to as ("Cumulative").
b. Supply to the Fund, from time to time as mutually
agreed upon, a report summarizing the Transactions
and the daily and Cumulative net effects of such
PAGE 24
Transactions both in terms of aggregate dilution and
loss ("Dilution") or gain and negative dilution
("Gain") experienced by the Fund, and the impact such
Gain or Dilution has had upon the Fund's net asset
value per share.
c. With respect to any Transaction which causes Dilution
to the Fund of $25,000 or more, immediately provide
the Fund: (i) a report identifying the Transaction
and the Dilution resulting therefrom, (ii) the reason
such Transaction was processed as described above,
and (iii) the action that RPS has or intends to take
to prevent the reoccurrence of such as of processing
("Report").
2. Liability
a. It will be the normal practice of the Fund not to
hold RPS liable with respect to any Transaction which
causes Dilution to any single Fund of less than
$25,000. RPS will, however, closely monitor for each
Fund the daily and Cumulative Gain/Dilution which is
caused by Transactions of less than $25,000. When
the Cumulative Dilution to any Fund exceeds 3/10 of
1% per share, RPS, in consultation with counsel to
the Fund, will make appropriate inquiry to determine
PAGE 25
whether it should take any remedial action. RPS will
report to the Board of Directors/Trustees of the Fund
("Board"), as appropriate, any action it has taken.
b. Where a Transaction causes Dilution to a Fund of
$25,000 or more ("Significant Transaction"), RPS will
review with counsel to the Fund, the Report and the
circumstances surrounding the underlying Transaction
to determine whether the Transaction was caused by or
occurred as a result of a negligent act or omission
by RPS. If it is determined that the Dilution is the
result of a negligent action or omission by RPS, RPS
and outside counsel for the Fund, as appropriate,
will negotiate settlement. All such Significant
Transactions will be reported to the Board at its
next meeting (unless the settlement fully compensates
the Fund for any Dilution). Any Significant
Transaction, however, causing Dilution in excess of
the lesser of $100,000 or a penny per share will be
promptly reported to the Board. Settlement will not
be entered into with RPS until approved by the Board.
The factors the Board or the Funds would be expected
PAGE 26
to consider in making any determination regarding the
settlement of a Significant Transaction would include
but not be limited to:
i. Procedures and controls adopted by RPS to prevent
As Of processing;
ii. Whether such procedures and controls were being
followed at the time of the Significant
Transaction;
iii. The absolute and relative volume of all
transactions processed by RPS on the day of the
Significant Transaction;
iv. The number of Transactions processed by RPS during
prior relevant periods, and the net Dilution/Gain
as a result of all such transactions to the Fund
and to all other Price Funds; and
v. The prior response of RPS to recommendations made
by the Funds regarding improvement to the Transfer
Agent's As Of Processing Procedures.
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.
PAGE 27
2. This Agreement may be terminated by the Funds upon one
hundred twenty (120) days' written notice to RPS; and by RPS,
upon three hundred sixty-five (365) days' writing notice to
the Fund.
3. Upon termination hereof, the Fund shall pay to RPS such
compensation as may be due as of the date of such
termination, and shall likewise reimburse for out-of-pocket
expenses related to its services hereunder.
M. Notice
Any notice as required by this Agreement shall be
sufficiently given (i) when sent to an authorized person of the
other party at the address of such party set forth above or at
such other address as such party may from time to time specify in
writing to the other party; or (ii) as otherwise agreed upon by
appropriate officers of the parties hereto.
N. Assignment
Neither this Agreement nor any rights or obligations
hereunder may be assigned either voluntarily or involuntarily, by
operation of law or otherwise, by either party without the prior
written consent of the other party
O. Amendment/Interpretive Provisions
The parties by mutual written agreement may amend this
Agreement at any time. In addition, in connection with the
PAGE 28
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 on any
number of counterparts, and all of said counterparts taken
PAGE 29
together shall be deemed to constitute one and the same
instruments.
T. The Parties
All references herein to "the Fund" are to each of the Funds
listed on Appendix A individually, as if this Agreement were
between such individual Fund and RPS. In the case of a series
Fund or trust, all references to "the Fund" are to the individual
series or portfolio of such fund or trust, or to such Fund or
trust on behalf of the individual series or portfolio, as
appropriate. Any reference in this Agreement to "the parties"
shall mean RPS and such other individual Fund as to which the
matter pertains. The "Fund" also includes any T. Rowe Price Fund
which may be established after the date of this Agreement.
Any reference in this Agreement to "the parties" shall mean
the Funds and RPS.
U. Directors, Trustees and Shareholders and Massachusetts
Business Trust
It is understood and is expressly stipulated that neither the
holders of shares in the Fund nor any Directors or Trustees of
the Fund shall be personally liable hereunder. With respect 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
PAGE 30
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.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under
their seals by and through their duly authorized officers.
PAGE 31
T. ROWE PRICE RETIREMENT PLAN DATED:2/18/94
SERVICES, INC.
ATTEST:
/s/Steve J. Zients
By: ________________________ ________________________
Steve J. Zients
T. ROWE PRICE ADJUSTABLE RATE U.S
GOVERNMENT FUND, INC.
T. ROWE PRICE BALANCED FUND, INC.
T. ROWE PRICE BLUE CHIP GROWTH FUND,
INC.
T. ROWE PRICE CAPITAL APPRECIATION FUND
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE EQUITY INCOME FUND
T. ROWE PRICE GNMA FUND
T. ROWE PRICE GROWTH & INCOME FUND, INC.
T. ROWE PRICE GROWTH STOCK FUND, INC.
T. ROWE PRICE HIGH YIELD FUND, INC.
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index Fund
INSTITUTIONAL INTERNATIONAL FUNDS, INC.
Foreign Equity Fund
T. ROWE PRICE INTERNATIONAL EQUITY FUND,
INC.
PAGE 32
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price International Bond Fund
T. Rowe Price International Discovery
Fund
T. Rowe Price International Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond
Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. Rowe Price Latin America Fund
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
T. ROWE PRICE OTC 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 PRIME RESERVE FUND, INC.
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND,
INC.
T. ROWE PRICE SHORT-TERM BOND FUND, INC.
T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
T. ROWE PRICE SPECTRUM FUND, INC.
Spectrum Growth Fund
Spectrum Income Fund
T. ROWE PRICE 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.
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
PAGE 33
DATED: 2/16/94
ATTEST:
/s/Carmen F. Deyesu
_________________________BY:_____________________________
/s/Carmen F. Deyesu
PAGE 34
APPENDIX A
The following Funds are parties to this Agreement, and have so
indicated their intention to be bound by such Agreement by
executing the Agreement on the dates indicated thereon.
T. Rowe Price Adjustable Rate U.S.
Government Fund, Inc.
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price Blue Chip Growth Fund,
Inc.
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Equity Income Fund
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc.
T. Rowe Price High Yield Fund, Inc.
T. Rowe Price Index Trust, Inc. on
behalf of the T. Rowe Price Equity Index
Fund
T. Rowe Price Institutional
International Funds, Inc. on behalf of
the
Foreign Equity Fund
T. Rowe Price International Equity Fund,
Inc.
PAGE 35
T. Rowe Price International Funds, Inc.
on behalf of the
T. Rowe Price International Bond Fund
T. Rowe Price International Stock Fund
T. Rowe Price International Discovery
Fund
T. Rowe Price European Stock Fund
T. Rowe Price New Asia Fund
T. Rowe Price Global Government Bond
Fund
T. Rowe Price Japan Fund
T. Rowe Price Short-Term Global Fund
T. Rowe Price Latin America Fund
T. Rowe Price New America Growth Fund
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price OTC Fund, Inc.
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Science & Technology Fund,
Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Small-Cap Value Fund, Inc.
T. Rowe Price Spectrum Fund, Inc. on
behalf of the
Spectrum Growth Fund
Spectrum Income Fund
T. Rowe Price U.S. Treasury Funds, Inc.
on behalf of the
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
PAGE 36
T. Rowe Price Summit Funds, Inc.
Summit Cash Reserves Fund
Summit Limited-Term Bond Fund
Summit GNMA Fund
PAGE 37
T. ROWE PRICE RETIREMENT PLAN SERVICES, INC.
FEE SCHEDULE
Fees for transfer agent services performed for retirement plan
accounts serviced by T. Rowe Price Retirement Plan Services, Inc.
("RPS").
Effective January 1, 1994 to December 31, 1994.
A. Base Fee
A monthly base fee of $500,000 ($6,000,000 per year)
allocated pro rata by account.
B. Per Participant Fee
A monthly per participant fee of $3.752 for each active (non-
zero balance) participant being serviced at the end of the
month. This fee will be allocated among the Funds based on
the relative number of non-zero accounts open at the end of
the month.
C. Per Transaction Fee
A fee for each Account transaction will be charged at the
rate of $.15 per transaction, except for dividend
transactions.
D. Institutional Support Group (ISG) Telephone Call
A fee of $5.24 per ISG telephone call will be charged to the
Fund(s) involved in the telephone call.
E. New Participant Fee
A one-time new participant fee of $3.31 will be charged each
time a participant is added to the records.
F. Perks Fee
Fees for selected PERKS plans will be $10 per account,
maximum $40 per participant, capped at 25 basis points.
PAGE 38
G. Billing Procedures
RPS will render to each two monthly invoices (one for PAS and
one for PERKS) each of which shall state: the number of
participants in existence at month-end and the Fund's pro
rata share, the assets by Fund at month-end, the number of
transactions recorded during the month for each Fund, the
number of new participants added during the month and the
fund's pro rata share; the out-of-pocket expenses for which
RPS is entitled to reimbursement under the Agreement, and the
Fund's pro rata share; and the total compensation due for the
month.
H. New Funds
Funds added during the term of this Agreement may have their
Maintenance and Transaction charges waived for a period of
time agreed upon between RPS and the Funds following the
establishment of the Fund. Out-of-pocket expenses will be
billed to the Fund from the Fund's inception.
IN WITNESS WHEREOF, T. Rowe Price Funds and T. Rowe Price
Retirement Plan Services, Inc. have agreed upon this fee schedule
to be executed in their names and on their behalf through their
duly authorized officers:
T. ROWE PRICE FUNDS T. ROWE PRICE RETIREMENT PLAN
SERVICES, INC.
Name /s/Carmen F. Deyesu Name /s/Steve J. Zients
Title Treasurer Title Vice President
Date 2/16/94 Date 2/17/94
PAGE 1
TOTAL RETURN PERFORMANCE
The total return performance of the Fund is measured by
using an index of adjusted net asset values that reflect both the
assumed investment of one share on the inception date of the Fund
and the inclusion of shares received from the reinvestment of all
Fund distributions, capital gains and income dividends, during
the Fund's history.
As an example, the following index assumes an
investment of one share of the T. Rowe Price New Era Fund on
January 20, 1969, its inception. Each year, the dividends and
capital gains per share were accumulated on the shares held and
were reinvested in additional fund shares at the Fund's actual
reinvestment price. Each year end, the investment was evaluated
at the reported net asset value of the Fund. These valuation
points comprise the performance index.
PAGE 2
Distributions
Per Share ReinvestmentCumulativeReportedIndex
(Div. & Cap.Share Price Share N.A.V. Total Valuation
Gains) HoldingPer Share HoldingPer Share Value Date
1.00000000 X $10.00 = $10.00000
1/20/69
1.00000000 X 9.73 = 9.73000
12/31/69
1970 ($0.16 X 1.00000000) / $ 9.35 = 0.01711230
1.01711230 X
9.49= 9.65240 12/31/70
1971 ( 0.16 X 1.01711230) / 9.95 = 0.01635557
1.03346787 X
10.33= 10.67572 12/31/71
1972 ( 0.16 X 1.03346787) / 10.54 = 0.01568832
1.04915619 X
12.27= 12.87315 12/31/72
1973 (0.243 X 1.04915619) / 11.84 = 0.02153251
1.07068870 X
11.79= 12.62342 12/31/73
1974 (0.2884 X 1.07068870) / 11.43 = 0.02701545
1.09770416 X
8.47= 9.29755 12/31/74
1975 (0.2855 X 1.09770416) / 8.48 = 0.03605690
1.13466106 X
9.94= 11.27853 12/31/75
1976 (0.2785 X 1.13466106) / 10.09 = 0.03131844
1.16597951 X
11.74= 13.68860 12/31/76
1977 (0.2745 X 1.16597951) / 11.20 = 0.02857691
1.19455641 X
11.00= 13.14012 12/31/77
1978 (0.57 X 1.19455641) / 10.13 = 0.06721591
1.26177232
X 11.66= 14.71227 12/31/78
1979 (0.768 X 1.26177232) / 11.18 = 0.08667631
1.34844863
X 17.45= 23.53043 12/31/79
1980 (0.8314 X 1.34844863) / 16.71 = 0.06709157
1.41554021
X 25.27= 35.77070 12/31/80
PAGE 3
Distributions
Per Share ReinvestmentCumulativeReportedIndex
(Div. & Cap.Share Price Share N.A.V. Total Valuation
Gains) HoldingPer Share HoldingPer Share Value Date
1981 ($2.1612 X 1.41554021)/$21.64 = 0.14137086
1.55691107 X
19.34 = 30.11066 12/31/81
1982 ( 3.9073 X 1.55691107)/ 14.15 = 0.42991651
1.98682758 X
15.53 = 30.85543 12/31/82
1983 ( 0.882 X 1.98682758) / 15.56 = 0.11262095
2.09944853 X
18.44 = 38.71383 12/31/83
1984 ( 1.90 X 2.09944853) / 16.89 = 0.23617242
2.33562095 X
17.13 = 40.00919 12/31/84
1985 ( 2.09 X 2.33562095) / 15.79 = 0.30914805
2.64476900 X
18.67 = 49.37784 12/31/85
1986 ( 1.35 X 2.64476900) / 17.74 = 0.20126483
2.84603383
1986 ( 2.40 X 2.84603383) / 18.03 = 0.37883978
3.22487361 X
17.76 = 57.27376 12/31/86
1987 ( 0.92 X 3.22487361) / 19.09 = 0.15541560
3.38028921
1987 ( 1.83 X 3.38028921) / 17.55 = 0.35247460
3.73276381 X
18.08 = 67.48837 12/31/87
Performance for any investment period is calculated as
the percentage difference between a beginning index value and an
ending index value. The ten-year performance from 12/31/77 to
12/31/87 for the New Era Fund would be calculated as:
67.48837 - 1 X 100 = 413.61%
13.14012
The five-year performance from 12/31/82 to 12/31/87
would be calculated as:
67.48837 - 1 X 100 = 118.72%
30.85543
The one-year performance from 12/31/86 to 12/31/87
would be calculated as:
67.48837 - 1 X 100 = 17.83%
57.27376
edg/TRPChart
PAGE 1
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of the
T. Rowe Price Small-Cap Value Fund
We consent to the incorporation by reference in
Post-Effective
Amendment No. 26 to the Registration Statement of the T. Rowe
Price Small-Cap Value Fund, on Form N-1A (File No. 2-43237) of
our report dated January 19, 1994, on our audit of the financial
statements and financial highlights of the Fund, which report is
included in the Annual Report to Shareholders for the year ended
December 31, 1993 which is incorporated by reference in the
Registration Statement. We also consent to the reference to our
Firm under the captions "Financial Highlights" in the Prospectus
and "Independent Accountants" in the Statement of Additional
Information.
/s/Coopers & Lybrand
COOPERS & LYBRAND
Baltimore, Maryland
February 25, 1994
