<PAGE>1
T. ROWE PRICE
_________________________________________________________________
T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore,
MD 21202
James S. Riepe
Managing Director
Dear Shareholder:
All of the T. Rowe Price mutual funds will hold shareholder
meetings in 1994 to elect directors, ratify the selection of
independent accountants, and approve amendments to a number of
investment policies.
The T. Rowe Price funds are not required to hold annual
meetings each year if the only items of business are to elect
directors or ratify accountants. In order to save fund expenses,
most of the funds have not held annual meetings for a number of
years. There are, however, conditions under which the funds must
ask shareholders to elect directors, and one is to comply with a
requirement that a minimum number have been elected by
shareholders, not appointed by the funds' boards. Since the last
annual meetings of the T. Rowe Price funds, several directors
have retired and new directors have been added. In addition, a
number of directors will be retiring in the near future.
Given this situation, we believed it appropriate to hold annual
meetings for all the T. Rowe Price funds in 1994. At the same
time, we reviewed the investment policies of all of the funds for
consistency and to assure the portfolio managers have the
flexibility they need to manage your money in today's fast
changing financial markets. The changes being recommended, which
are explained in detail in the enclosed proxy material, do not
alter the funds' investment objectives or basic investment
programs.
In many cases the proposals are common to several funds, so we
have combined certain proxy statements to save on fund expenses.
For those of you who own more than one of these funds, the
combined proxy may also save you the time of reading more than
one document before you vote and mail your ballots. The
proposals which are specific to an individual fund are easily
identifiable on the Notice and in the proxy statement discussion.
If you own more than one fund, please note that each fund has a
separate card. You should vote and sign each one, then return
all of them to us in the enclosed postage-paid envelope.
Your early response will be appreciated and could save your fund
the substantial costs associated with a follow-up mailing. We
know we are asking you to review a rather formidable proxy
<PAGE>2
statement, but this approach represents the most efficient one
for your fund as well as for the other funds. Thank you for your
cooperation. If you have any questions, please call us at
1-800-225-5132.
Sincerely,
/s/James S. Riepe
James S. Riepe
Director, Mutual Funds Division
<PAGE>
PAGE 3
FOREIGN EQUITY FUND
Notice of Meeting of Shareholders
April 20, 1994
The Annual Meeting of Shareholders of the Foreign Equity
Fund (the "Fund") will be held on Wednesday, April 20, 1994, at
11:00 o'clock a.m., Eastern time, at the offices of the Fund, 100
East Pratt Street, Baltimore, Maryland 21202. Currently, the
Fund is the sole portfolio of the Institutional International
Funds, Inc., a Maryland corporation (the "Corporation"). The
following matters will be acted upon at that time:
1. To elect 6 directors to serve until the next annual
meeting, if any, or until their successors shall have
been duly elected and qualified;
2. A. To amend the Fund's fundamental policies to increase
its ability to engage in borrowing transactions;
B. To amend the Fund's fundamental policies on investing
in commodities and futures contracts to permit
greater flexibility in futures trading;
C. To amend the Fund's fundamental policies on industry
concentration;
D. To amend the Fund's fundamental policies to increase
its ability to engage in lending transactions;
E. To amend the Fund's fundamental policies on the
issuance of senior securities;
F. To change from a fundamental to an operating policy
the Fund's policy on purchasing securities on margin;
G. To change from a fundamental to an operating policy
the Fund's policy on pledging assets;
H. To change from a fundamental to an operating policy
the Fund's policy on short sales;
3. To amend the Fund's Articles of Incorporation to delete
the requirement that stock certificates be issued to
shareholders;
4. To ratify or reject the selection of the firm of Coopers
& Lybrand as the independent accountants for the Fund
for the fiscal year 1994; and
5. To transact such other business as may properly come
before the meeting and any adjournments thereof.
<PAGE>4
LENORA V. HORNUNG
Secretary
March 2, 1994
100 East Pratt Street
Baltimore, Maryland 21202
_________________________________________________________________
YOUR VOTE IS IMPORTANT
Shareholders are urged to designate their choices on each of the
matters to be acted upon and to date, sign, and return the
enclosed proxy in the envelope provided, which requires no
postage if mailed in the United States. Your prompt return of
the proxy will help assure a quorum at the meeting and avoid the
additional Fund expense of further solicitation.
_________________________________________________________________
<PAGE>
PAGE 5
FOREIGN EQUITY FUND
Meeting of Shareholders--April 20, 1994
PROXY STATEMENT
This statement is furnished in connection with the
solicitation of proxies by the Foreign Equity Fund (the "Fund"),
currently the sole portfolio of the Institutional International
Funds, Inc. (the "Corporation"), a Maryland corporation, for use
at the Annual Meeting of Shareholders of the Fund to be held on
April 20, 1994, and at any adjournments thereof.
Shareholders are entitled to one vote for each full share,
and a proportionate vote for each fractional share, of the Fund
held as of the record date. Under Maryland law, shares owned by
two or more persons (whether as joint tenants, co-fiduciaries, or
otherwise) will be voted as follows, unless a written instrument
or court order providing to the contrary has been filed with the
Fund: (1) if only one votes, that vote will bind all; (2) if
more than one votes, the vote of the majority will bind all; and
(3) if more than one votes and the vote is evenly divided, the
vote will be cast proportionately.
In order to hold the meeting, a majority of the Fund's
shares entitled to be voted must have been received by proxy or
be present at the meeting. In the event that a quorum is present
but sufficient votes in favor of one or more of the Proposals are
not received by the time scheduled for the meeting, the persons
named as proxies may propose one or more adjournments of the
meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of
the shares present in person or by proxy at the session of the
meeting adjourned. The persons named as proxies will vote in
favor of such adjournment if they determine that such adjournment
and additional solicitation is reasonable and in the interests of
the Fund's shareholders.
The individuals named as proxies (or their substitutes) in
the enclosed proxy card (or cards if you have multiple accounts)
will vote in accordance with your directions as indicated thereon
if your proxy is received properly executed. You may direct the
proxy holders to vote your shares on a Proposal by checking the
appropriate box "For" or "Against," or instruct them not to vote
those shares on the Proposal by checking the "Abstain" box.
Alternatively, you may simply sign, date and return your proxy
card(s) with no specific instructions as to the Proposals. If
you properly execute your proxy card and give no voting
instructions with respect to a Proposal, your shares will be
voted for the Proposal. Any proxy may be revoked at any time
prior to its exercise by filing with the Fund a written notice of
revocation, by delivering a duly executed proxy bearing a later
date, or by attending the meeting and voting in person.
<PAGE>6
Abstentions and "broker non-votes" (as defined below) are
counted for purposes of determining whether a quorum is present,
but do not represent votes cast with respect to any Proposal.
"Broker non-votes" are shares held by a broker or nominee for
which an executed proxy is received by the Fund, but are not
voted as to one or more Proposals because instructions have not
been received from the beneficial owners or persons entitled to
vote and the broker or nominee does not have discretionary voting
power.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE
MEETING IS SUFFICIENT TO APPROVE PROPOSAL 1 FOR THE FUND.
APPROVAL OF PROPOSAL 3 REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE FUND'S OUTSTANDING SHARES. A
MAJORITY OF THE SHARES PRESENT IN PERSON OR BY PROXY AT THE
MEETING IS SUFFICIENT TO APPROVE PROPOSAL 4 FOR THE FUND.
APPROVAL OF ALL REMAINING PROPOSALS OF THE FUND REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF THE LESSER OF (A) 67% OF THE
SHARES PRESENT AT THE MEETING IN PERSON OR BY PROXY, OR (B) A
MAJORITY OF THE FUND'S OUTSTANDING SHARES.
If the proposed amendments to the Articles of Incorporation
and fundamental investment policies are approved, they will
become effective on or about May 1, 1994. If a proposed
amendment to the Articles of Incorporation or fundamental
investment policies is not approved, the Articles of
Incorporation or policy will remain unchanged.
The costs of the meeting, including the solicitation of
proxies, will be paid by the Corporation, on behalf of the Fund.
Persons holding shares as nominees will be reimbursed, upon
request, for their reasonable expenses in sending solicitation
materials to the principals of the accounts. In addition to the
solicitation of proxies by mail, directors, officers, and/or
employees of the Fund or of its investment manager, Rowe
Price-Fleming International, Inc. ("Price-Fleming"), may solicit
proxies in person or by telephone.
The approximate date on which this Proxy Statement and form
of proxy is first being mailed to shareholders is March 2, 1994.
1. ELECTION OF DIRECTORS
The Corporation's Board of Directors has nominated the
six (6) persons listed below for election as directors, each to
hold office until the next annual meeting (if any) or his
successor is duly elected and qualified. With the exception of
Mr. Deering, each of the nominees is a member of the present
Board of Directors of the Corporation and has served in that
capacity since originally elected. Mr. Deering was elected a
director of the Corporation by the Board of Directors effective
July 17, 1991. A shareholder using the enclosed proxy form can
vote for all or any of the nominees of the Board of Directors or
<PAGE>7
withhold his or her vote from all or any of such nominees. If
the proxy card is properly executed but unmarked, it will be
voted for all of the nominees. Each of the nominees has agreed
to serve as a director if elected; however, should any nominee
become unable or unwilling to accept nomination or election, the
persons named in the proxy will exercise their voting power in
favor of such other person or persons as the Board of Directors
of the Corporation may recommend. There are no family
relationships among these nominees.
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Year Owned, Shares
of Directly Beneficially
Original or Owned
Name, Address Election Indirectly, Directly
and Date of Birth Principal as as of as of
of Nominee Occupations(1) Director 1/31/94(2) 1/31/94
_________________________________________________________________
Leo C. Bailey Retired; Director 1989 -- 177,668
3396 S. Placita of the following T. Rowe
Fabula Price Funds: International,
Green Valley, AZ Growth Stock, New Era,
85614 Science & Technology, Index
3/3/24 Trust (since inception),
Balanced (since inception),
Mid-Cap Growth (since inception),
OTC (since inception), Dividend
Growth (since inception), and
Blue Chip Growth (since inception)
Anthony W. President and Chief 1991 -- 89,098
Deering Operating Officer,
10275 Little The Rouse Company,
Patuxent Parkway real estate developers, Columbia,
Columbia, MD Maryland; Advisory Director,
21044 Kleinwort, Benson (North
1/28/45 America) Corporation, a
registered broker-dealer,
and a Director/Trustee of
T. Rowe Price International Funds,
Inc., and the 16 T. Rowe
Price Income Funds/Trusts
Donald W. Principal, 1989 -- 172,099
Dick, Jr. Overseas Partners, Inc.,
375 Park Avenue a financial investment
Avenue firm; formerly (6/65-3/89)
New York, NY Director and Vice President-
10152 Consumer Products Division,
1/27/43 McCormick & Company,
<PAGE>8
________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Year Owned, Shares
of Directly Beneficially
Original or Owned
Name, Address Election Indirectly, Directly
and Date of Birth Principal as as of as of
of Nominee Occupations(1) Director 1/31/94(2) 1/31/94
_________________________________________________________________
Inc., international food
processors; Director/
Trustee, Waverly Press,
Inc. and the following T. Rowe
Price Funds/Trusts: International,
Growth Stock, Growth & Income,
New America Growth, Capital
Appreciation, Balanced (since
inception), Mid-Cap Growth
(since inception), OTC (since
inception), Dividend Growth (since
inception), and Blue Chip Growth
(since inception)
Addison Lanier Financial 1989 -- 26,523
441 Vine Street, management; President
#2310 and Director, Thomas
Cincinnati, OH Emery's Sons, Inc. and
45202-2913 Emery Group, Inc.; Director/
1/12/24 Trustee, Scinet Development
and Holdings, Inc. and the
following T. Rowe Price Funds/
Trusts: International,
New America Growth,
Equity Income, Small-Cap
Value, Balanced (since inception),
Mid-Cap Growth (since inception),
OTC (since inception), Dividend
Growth (since inception), and
Blue Chip Growth (since inception)
*M. David Testa Chairman of the 1989 -- 461,137
100 East Pratt Board and member of
Street Executive Committee of
Baltimore, MD the Fund; Managing
21202 Director, T. Rowe Price
4/22/44 Associates, Inc.;
Chairman of the Board, Rowe
Price-Fleming International,
Inc. and the following T. Rowe
Price Funds: International
and Growth Stock; Vice
<PAGE>9
________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Year Owned, Shares
of Directly Beneficially
Original or Owned
Name, Address Election Indirectly, Directly
and Date of Birth Principal as as of as of
of Nominee Occupations(1) Director 1/31/94(2) 1/31/94
_________________________________________________________________
President and Director, T.
Rowe Price Trust Company and
T. Rowe Price Balanced Fund, Inc.
(since inception); Director of the
following T. Rowe Price Funds:
Dividend Growth (since
inception) and Blue Chip Growth
(since inception); Vice President,
T. Rowe Price Spectrum Fund, Inc.
(since inception)
*Martin G. Wade President and 1989 -- 3,740
25 Copthall member of Executive
Avenue Committee of the Fund;
London, EC2R 7DR President, Rowe Price-Fleming
England International, Inc.; Director,
2/16/43 Robert Fleming Holdings
Limited; President and Director,
T. Rowe Price International Funds,
Inc.
* Nominees considered "interested persons" of Price-Fleming.
(1) Except as otherwise noted, each individual has held the
office indicated, or other offices in the same company, for
the last five years.
(2) The Fund is designed for institutional investors,
particularly trust companies and banks, acting for
themselves, or in a fiduciary, advisory, agency, custodial
or similar capacity. Fund shares may not be purchased
directly by individual investors, including the Fund's
directors, although institutions may purchase shares on
behalf of individuals.
The directors of the Corporation who are officers or
employees of Price-Fleming receive no remuneration from the
Corporation. For the year 1993, Messrs. Bailey, Deering, Dick
and Lanier, were each paid a director's fee by the Fund in
accordance with the following fee schedule: a fee of $25,000 per
year as the initial fee for the first Price Fund/Trust on which a
director serves; a fee of $5,000 for each of the second, third,
and fourth Price Funds/Trusts on which a director serves; a fee
of $2,500 for each of the fifth and sixth Price Funds/Trusts on
<PAGE>10
which a director serves; and a fee of $1,000 for each of the
seventh and any additional Price Funds/Trusts on which a director
serves. For the year ended December 31, 1993, this group of
directors received from the Fund directors' fees aggregating
$10,149, including expenses. Those nominees indicated by an
asterisk (*) are persons who, for purposes of Section 2(a)(19) of
the Investment Company Act of 1940 are considered "interested
persons" of Price-Fleming. Each such nominee is deemed to be an
"interested person" by virtue of his officership, directorship
and/or employment with Price-Fleming. Messrs. Bailey, Deering,
Dick, and Lanier are the independent directors of the
Corporation.
The Price Funds have established a Joint Audit Committee,
which is comprised of at least one independent director
representing each of the Funds. Messrs. Bailey, Deering and
Dick, directors of the Corporation, are members of the Committee.
The other member is Hubert D. Vos. These directors also receive
a fee of $500 for each Committee meeting attended. The Audit
Committee holds two regular meetings during each fiscal year, at
which time it meets with the independent accountants of the Price
Funds to review: (1) the services provided; (2) the findings of
the most recent audit; (3) management's response to the findings
of the most recent audit; (4) the scope of the audit to be
performed; (5) the accountants' fees; and (6) any accounting
questions relating to particular areas of the Price Funds'
operations or the operations of parties dealing with the Price
Funds, as circumstances indicate.
The Board of Directors of the Corporation has an Executive
Committee which is authorized to assume all the powers of the
Board to manage the Corporation, with respect to the Fund, in
the intervals between meetings of the Board, except the powers
prohibited by statute from being delegated.
The Board of Directors of the Corporation has a Nominating
Committee, which is comprised of all the Corporation's
independent directors. The Nominating Committee, which functions
only in an advisory capacity, is responsible for reviewing and
recommending to the full Board candidates for election as
independent directors to fill vacancies on the Fund's Board of
Directors. The Nominating Committee will consider written
recommendations from shareholders for possible nominees.
Shareholders should submit their recommendations to the Secretary
of the Corporation. Members of the Nominating Committee met
informally during the last full fiscal year, but the Committee as
such held no formal meetings.
The Board of Directors held eight meetings during the last
full fiscal year. With the exception of Mr. Wade, each director
standing for reelection attended 75% or more of the aggregate of
(i) the total number of meetings of the Board of Directors (held
during the period for which he was a director) and (ii) the total
<PAGE>11
number of meetings held by all committees of the Board on which
he served.
2. APPROVAL OR DISAPPROVAL OF CHANGES TO THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES
The Investment Company Act of 1940 (the "1940 Act") requires
investment companies such as the Fund to adopt certain specific
investment policies that can be changed only by shareholder vote.
An investment company may also elect to designate other policies
that may be changed only by shareholder vote. Both types of
policies are often referred to as "fundamental policies."
Certain of the Fund's fundamental policies have been adopted in
the past to reflect regulatory, business or industry conditions
that are no longer in effect. Accordingly, the Fund's Board of
Directors has approved, and has authorized the submission to the
Fund's shareholders for their approval, the amendment and/or
reclassification of certain of the fundamental policies
applicable to the Fund.
The proposed amendments would (i) conform the fundamental
policies of the Fund to ones which are expected to become
standard for all T. Rowe Price Funds, (ii) simplify and modernize
the limitations that are required to be fundamental by the 1940
Act and (iii) eliminate as fundamental any limitations that are
not required to be fundamental by that Act. The Board believes
that standardized policies will assist the Fund and Price-Fleming
in monitoring compliance with the various investment restrictions
to which the T. Rowe Price Funds are subject. By reducing to a
minimum those limitations that can be changed only by shareholder
vote, the Fund would be able to minimize the costs and delay
associated with holding frequent annual shareholders' meetings.
Finally, the Directors also believe that Price-Fleming's ability
to manage the Fund's assets in a changing investment environment
will be enhanced and that investment management opportunities
will be increased by these changes.
A. PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT POLICY
TO INCREASE ITS ABILITY TO ENGAGE IN BORROWING TRANSACTIONS
The Board of Directors has proposed an amendment to the
Fund's Fundamental Investment Policies which would permit the
Fund greater flexibility to engage in borrowing transactions.
The current restriction is not required by applicable law. The
new restriction would (1) allow the Fund to borrow larger amounts
of money; (2) borrow from persons other than banks or other Price
Funds to the extent permitted by applicable law; and (3) clarify
that the Fund's restriction on borrowing does not prohibit the
Fund from entering into reverse repurchase agreements and other
proper investments and transactions. The new restriction would
also conform the Fund's policy on borrowing to one which is
<PAGE>12
expected to become standard for all T. Rowe Price Funds. The
Board believes that standardized policies will assist the Fund
and Price-Fleming in monitoring compliance with the various
investment restrictions to which the T. Rowe Price Funds are
subject. The Board has directed that such amendment be submitted
to shareholders for approval or disapproval.
The Fund's current fundamental policy in the area of
borrowing is as follows:
"[As a matter of fundamental policy, the Fund may not:]
Borrow money, except the Fund may borrow from banks or other
Price Funds as a temporary measure for extraordinary or
emergency purposes, and then only in amounts not exceeding
30% of its total assets valued at market. The Fund will not
borrow in order to increase income (leveraging), but only to
facilitate redemption requests which might otherwise require
untimely disposition of portfolio securities. Interest paid
on any such borrowings will reduce net investment income.
The Fund may enter into futures contracts as set forth in
[its fundamental policy on futures];"
As amended, the Fund's fundamental policy on borrowing would
be as follows:
"[As a matter of fundamental policy, the Fund may not:]
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;"
If approved, the primary effect of the proposals would be
to allow the Fund to: (1) borrow up to 33 1/3% (or such higher
amount permitted by law) of its total assets (including the
amount borrowed) less liabilities (other than borrowings) as
opposed to the current limitation of 30%; (2) borrow from persons
in addition to banks and other mutual funds advised by
Price-Fleming or T. Rowe Price Associates, Inc. ("Price Funds");
and (3) enter into reverse repurchase agreements and other
investments consistent with the Fund's investment objective and
program.
<PAGE>13
33 1/3% Limitation
The increase in the amount of money which the Fund could
borrow is primarily designed to allow the Fund greater
flexibility to meet shareholder redemption requests should the
need arise. As is the case under its current policy, the Fund
would not borrow to increase income through leveraging. It is
possible the Fund's ability to borrow a larger percentage of its
assets could adversely affect the Fund if the Fund were unable to
liquidate sufficient securities, or the Fund were forced to
liquidate securities at unfavorable prices, to pay back the
borrowed sums. However, the Directors believe the risks of such
possibilities are outweighed by the greater flexibility the Fund
would have in borrowing. The increased ability to borrow should
permit the Fund, if it were faced with substantial shareholder
redemptions, to avoid liquidating securities at unfavorable
prices or times to a greater degree than would be the case under
the current policy.
Reverse Repurchase Agreements
To facilitate portfolio liquidity, it is possible the
Fund could enter into reverse repurchase agreements. In a
repurchase agreement, the Fund would purchase securities from a
bank or broker-dealer (Counterparty) with the agreement that the
Counterparty would repurchase the securities at a later date.
Reverse repurchase agreements are ordinary repurchase agreements
in which a fund is a seller of, rather than the purchaser of,
securities and agrees to repurchase them at an agreed upon time
and price. Reverse repurchase agreements can avoid certain
market risks and transaction costs associated with an outright
sale and repurchase. Reverse repurchase agreements, however, may
be viewed as borrowings. To the extent they are, the proposed
amendment would clarify that the Fund's restrictions on borrowing
would not prohibit the Fund from entering into a reverse
repurchase agreement.
Other Changes
The other proposed changes in the Fund's fundamental
policy--to allow the Fund to borrow from persons other than banks
and other Price Funds to the extent consistent with applicable
law--and to engage in transactions other than reverse repurchase
agreements which may involve a borrowing--are simply designed to
permit the Fund the greatest degree of flexibility permitted by
law in pursuing its investment program. As noted above, the Fund
will not use its increased flexibility to borrow to engage in
transactions which would result in leveraging the Fund. All
activities of the Fund are, of course, subject to the 1940 Act
and the rules and regulations thereunder as well as various state
securities laws.
<PAGE>14
The Board of Directors recommends that shareholders vote FOR
the proposal.
B. PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL POLICIES ON
INVESTING IN COMMODITIES AND FUTURES CONTRACTS TO PROVIDE
GREATER FLEXIBILITY IN FUTURES TRADING
The Board of Directors has proposed amendments to the
Fund's Fundamental Investment Policies on commodities and
futures. The principal purpose of the proposals is to conform
the Fund's policies on commodities and futures with policies
which are expected to become standard for all T. Rowe Price
Funds. The Board has directed that such amendments be submitted
to shareholders for approval or disapproval.
The Fund's current fundamental policies in the area of
investing in commodities and futures are as follows:
Commodities
"[As a matter of fundamental policy, the Fund may not:]
Purchase or sell commodities or commodity contracts; except
that it may (i) enter into futures contracts and options on
futures contracts, subject to [its fundamental policy on
futures]; (ii) enter into forward foreign currency exchange
contracts (although the Fund does not consider such
contracts to be commodities); and (iii) purchase or sell
instruments which have the characteristics of both futures
contracts and securities;"
Futures Contracts
"[As a matter of fundamental policy, the Fund may not:]
Enter into a futures contract or an option thereon, although
the Fund may enter into financial and currency futures
contracts or options on financial and currency futures
contracts;"
As amended, the Fund's fundamental policies on investing in
futures and commodities would be combined and would be as
follows:
"[As a matter of fundamental policy, the Fund may not:]
Purchase or sell physical commodities; except that it may
enter into futures contracts and options thereon;"
In addition, the Board of Directors intends to adopt the
following operating policy, which may be changed by the Board of
Directors without further shareholder approval.
"[As a matter of operating policy, the Fund will not:]
Purchase a futures contract or an option thereon if, with
<PAGE>15
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 (the "New Operating Policy");"
If adopted, the primary effect of the amendment would be to
remove the restriction in the current policies that the Fund may
only enter into financial and currency futures. Although not
specifically described in the amended fundamental restriction,
the Fund would continue to have the ability to enter into forward
foreign currency contracts and to invest in instruments which
have the characteristics of futures and securities.
The Fund has no current intention of investing in
non-financial types of futures. However, the new policy, if
adopted, would allow it to do so. The risks of any such futures
activity could differ from the risks of the Fund's currently
permitted futures activity. As noted, the principal purpose of
seeking the proposed change in the Fund's fundamental policies is
to conform such policies to ones which are expected to become
standard for all T. Rowe Price Funds. The Board of Directors
believes that standardized policies will assist the Fund and
Price-Fleming in monitoring compliance with the various
investment restrictions to which the T. Rowe Price Funds are
subject.
The Board of Directors recommends that shareholders vote FOR
the proposal.
C. PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL POLICY ON INDUSTRY
CONCENTRATION
The Board of Directors has proposed an amendment to the
Fundamental Investment Policy of the Fund on industry
concentration. The amendment would not result in a change in the
way in which the Fund invests its assets. If the amendment is
adopted, under the new fundamental policy, it would be prohibited
from investing more than 25% of its total assets in the
securities of any single foreign government. The Fund currently
has an operating policy prohibiting such investments. The Board
has directed that such amendment be submitted to shareholders for
approval or disapproval.
The Fund's current fundamental policy in the area of
industry concentration is as follows:
"[As a matter of fundamental policy, the Fund may not:]
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 other than
obligations issued or guaranteed by the U.S. Government or
<PAGE>16
any foreign government, their agencies or instrumentalities;
provided that, as a matter of operating policy, the Fund
will not invest more than 25% of its total assets in
securities issued by any one foreign government;"
As amended the Fund's fundamental policy on industry
concentration would be as follows:
"[As a matter of fundamental policy, the Fund may not:]
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;"
The amended policy does not include any reference to
obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities as an exception to the general
prohibition against industry concentration. This is because the
Securities and Exchange Commission ("SEC") has determined that
the U.S. government is not an industry. Therefore, there is no
need to make specific reference to this position in the policy.
By contrast, the SEC considers foreign governments to be
industries for purposes of industry concentration
restrictions. As a result, the Fund would continue to be
prohibited from investing more than 25% of the value of its total
assets in the securities of foreign governments, unless the SEC
were to determine foreign governments were not an industry for
purposes of this concentration restriction.
The Board of Directors recommends that shareholders vote FOR
the proposal.
D. PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT POLICY
REGARDING THE MAKING OF LOANS
The Board of Directors has proposed an amendment to the
Fundamental Investment Policies of the Fund in order to: (i)
increase slightly the amount of its assets which may be subject
to its lending policy; and (ii) allow the Fund to purchase the
entire or any portion of the debt of a company. The new
restriction would also conform the Fund's policy on lending to
one which is expected to become standard for all T. Rowe Price
Funds. The Board believes that standardized policies will assist
the Fund and Price-Fleming in monitoring compliance with the
various investment restrictions to which the T. Rowe Price Funds
are subject. The Board has directed that such amendment be
submitted to shareholders for approval or disapproval.
The Fund's current fundamental policy in the area of making
loans is as follows:
<PAGE>17
"[As a matter of fundamental policy, the Fund may not:]
Make loans, although the Fund may purchase money market
securities and enter into repurchase agreements; provided,
however, that the Fund may acquire publicly-distributed
bonds, debentures, notes and other debt securities and may
purchase debt securities at private placement within the
limits imposed on the acquisition of restricted securities;"
As amended, the Fund's fundamental policy on loans would be
as follows:
"[As a matter of fundamental policy, the Fund may not:]
Make loans, although the Fund may (i) participate in an
interfund lending program with other Price Funds provided
that no such loan may be made if, as a result, the aggregate
of such loans would exceed 33 1/3% of the value of the
Fund's total assets; (ii) purchase money market securities
and enter into repurchase agreements; and (iii) acquire
publicly-distributed or privately-placed debt securities and
purchase debt;"
33 1/3% Restriction
The Fund's current fundamental policy on lending restricts
the Fund to lending no more than 30% of the value of the Fund's
total assets. The new policy would raise this amount to 33 1/3%
of the value of the Fund's total assets. The purpose of this
change is to conform the Fund's policy to one that is expected to
become standard for all T. Rowe Price Funds and to permit the
Fund to lend its assets to the maximum extent permitted under
applicable law. The Board of Directors does not view this change
as significantly raising the level of risk to which the Fund
would be subject.
Purchase of Debt
The Fund's fundamental policy on lending allows the Fund to
purchase debt securities as an exception to the general
limitations on making loans. However, there is no similar
exception for the purchase of straight debt, e.g., a corporate
loan held by a bank for example which might not be considered a
debt security. The amended policy would allow the purchase of
this kind of debt. Because the purchase of straight debt could
be viewed as a loan by the Fund to the issuer of the debt, the
Board of Directors has determined to clarify this matter by
including the purchase of debt as an exception to the Fund's
general prohibition against making loans. The purchase of debt
might be subject to greater risks of illiquidity and
unavailability of public information than would be the case for
an investment in a publicly held security. The primary purpose
of this proposal is to conform the Fund's fundamental policy in
this area to one that is expected to become standard for all T.
Rowe Price Funds. The Fund will continue to invest primarily in
<PAGE>18
equity securities. However, the Board of Directors believes that
increased standardization will help promote operational
efficiencies and facilitate monitoring of compliance with the
Fund's investment restrictions.
Other Matters
For purposes of this restriction, the Fund will consider the
acquisition of a debt security to include the execution of a note
or other evidence of an extension of credit with a term of more
than nine months. Because such transactions by the Fund could be
viewed as a loan by the Fund to the maker of the note, the Board
of Directors has determined to clarify this matter by including
these transactions as an exception to the Fund's general
prohibition against making loans.
The Board of Directors recommends that shareholders vote FOR
the proposal.
E. TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION ON THE
ISSUANCE OF SENIOR SECURITIES
The Fund's Board of Directors has proposed an amendment to
the Fund's Fundamental Investment Policy on issuing senior
securities which would allow the Fund to issue senior securities
to the extent permitted under the 1940 Act. The new policy, if
adopted, would provide the Fund with greater flexibility in
pursuing its investment objective and program. The Board has
directed that such amendment be submitted to shareholders for
approval or disapproval.
The Fund's current fundamental policy in the area of issuing
senior securities is as follows:
"[As a matter of fundamental policy, the Fund may not:]
Issue senior securities;"
As amended, the Fund's fundamental policy on issuing senior
securities would be as follows:
"[As a matter of fundamental policy, the Fund may not:]
Issue senior securities except in compliance with the
Investment Company Act of 1940;"
The 1940 Act limits a Fund's ability to issue senior
securities or engage in investment techniques which could be
deemed to create a senior security. Although the definition of a
"senior security" involves complex statutory and regulatory
concepts, a senior security is generally thought of as a class of
security preferred over shares of the Fund with respect to the
Fund's assets or earnings. It generally does not include
temporary or emergency borrowings by the Fund (which might occur
<PAGE>19
to meet shareholder redemption requests) in accordance with
federal law and the Fund's investment limitations. Various
investment techniques that obligate the Fund to pay money at a
future date (e.g., the purchase of securities for settlement on a
date that is longer than required under normal settlement
practices) occasionally raise questions as to whether a "senior
security" is created. The Fund utilizes such techniques only in
accordance with applicable regulatory requirements under the 1940
Act. Although the Fund has no current intention of issuing
senior securities, the proposed change will clarify the Fund's
authority to issue senior securities in accordance with the 1940
Act without the need to seek shareholder approval.
The Board of Directors recommends that shareholders vote FOR
the proposal.
F. PROPOSAL TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT
POLICY ON PURCHASING SECURITIES ON MARGIN
The Board of Directors has proposed that the Fund's
Fundamental Investment Policy on purchasing securities on margin
be changed from a fundamental policy to an operating policy.
Fundamental policies may be changed only by shareholder vote,
while operating policies may be changed by the Board of Directors
without shareholder approval. The purpose of the proposal is to
allow the Fund greater flexibility in responding to market and
regulatory developments by providing the Board of Directors with
the authority to make changes in the Fund's policy on margin
without further shareholder approval. The new restriction would
also conform the Fund's policy on margin to one which is expected
to become standard for all T. Rowe Price Funds. The Board
believes that standardized policies will assist the Fund and
Price-Fleming in monitoring compliance with the various
investment restrictions to which the T. Rowe Price Funds are
subject. The Board has directed that such amendment be submitted
to shareholders for approval or disapproval.
The Fund's current fundamental policy in the area of
purchasing securities on margin is as follows:
"[As a matter of fundamental policy, the Fund may not:]
Purchase securities on margin, except for use of short-term
credit necessary for clearance of purchases of portfolio
securities; except that it may make margin deposits in
connection with futures contracts, subject to [its
fundamental policy on futures];"
As amended, the Fund's operating policy on purchasing
securities on margin would be as follows:
"[As a matter of operating policy, the Fund may not:]
Purchase securities on margin, except (i) for use of
<PAGE>20
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;"
Both the Fund's current policy and the proposed operating
policy prohibit the purchase of securities on margin but allow
the Fund to make margin deposits in connection with futures
contracts and use such short-term credit as is necessary for
clearance of purchases of portfolio securities. The proposed
operating policy also would acknowledge that the Fund is
permitted to make margin deposits in connection with other
investments in addition to futures. Such investments might
include, but are not limited to, written options where the Fund
could be required to put up margin with a broker as security for
the Fund's obligation to deliver the security on which the option
is written.
The Board of Directors recommends that shareholders vote FOR
the proposal.
G. PROPOSAL TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT
POLICY ON PLEDGING ITS ASSETS
The Board of Directors has proposed that the Fund's
Fundamental Investment Policy on pledging its assets be
eliminated and replaced with an operating policy. Fundamental
policies may be changed by shareholder vote, while operating
policies may be changed by vote of the Board of Directors without
shareholder approval. Applicable law does not require the
current percentage limitation set forth in the policy and does
not require such policy to be fundamental. The new operating
policy would allow the Fund to pledge, in connection with Fund
indebtedness, 33 1/3% of its total assets (a slight increase from
the current restriction) and allow the Fund to pledge assets in
connection with permissible investments. The Board of Directors
believes it is advisable to provide the Fund with greater
flexibility in pursuing its investment objective and program and
responding to regulatory and market developments. The new
restriction would also conform the Fund's policy on pledging its
assets to one which is expected to become standard for all T.
Rowe Price Funds. The Board believes that standardized policies
will assist the Fund and Price-Fleming in monitoring compliance
with the various investment restrictions to which the T. Rowe
Price Funds are subject. The Board has directed that such
proposals be submitted to shareholders for approval or
disapproval.
The Fund's current fundamental policy in the area of
pledging its assets is as follows:
<PAGE>21
"[As a matter of fundamental policy, the Fund may not:]
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 30% of the Fund's total
assets valued at market at the time of the borrowing;"
The operating policy on pledging of assets, to be adopted by
the Fund, would be as follows:
"[As a matter of operating policy, the Fund may not:]
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 the borrowing or investment;"
The operating policy would allow the Fund to pledge 33 1/3%
of its total assets instead of the current 30%. The new policy,
in addition to allowing pledging in connection with indebtedness
would clarify the Fund's ability to pledge its assets in
connection with permissible investments. Such pledging could
arise, for example, when the Fund engages in futures or options
transactions or purchases securities on a when-issued or forward
basis. As an operating policy, the Board of Directors could
modify the proposed policy on pledging in the future as the need
arose, without seeking further shareholder approval.
Pledging assets to other parties is not without risk.
Because assets that have been pledged to other parties may not be
readily available to the Fund, the Fund may have less flexibility
in liquidating such assets if needed. Therefore, the new policy,
by allowing the Fund to pledge a greater portion of its assets,
could, to a greater extent than the current policy, impair the
Fund's ability to meet current obligations, or impede portfolio
management. On the other hand, these potential risks should be
considered together with the potential benefits, such as
increased flexibility to borrow and the increased ability of the
Fund to pursue its investment program.
The Board of Directors recommends that shareholders vote FOR
the proposal.
H. TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT POLICY ON
SHORT SALES
The Fund's Board of Directors has proposed that the Fund's
Fundamental Investment Policy on effecting short sales be
eliminated and replaced with an identical operating policy.
Fundamental policies may be changed only by shareholder vote,
<PAGE>22
while operating policies may be changed by the Board of Directors
without shareholder approval. The current policy of the Fund is
not required by applicable law to be fundamental. The purpose of
the proposal is to provide the Fund with greater flexibility in
pursuing its investment objective and program. The Board has
directed that the proposal be submitted to shareholders for
approval or disapproval.
The Fund's current fundamental policy in the area of
effecting short sales of securities is as follows:
"[As a matter of fundamental policy, the Fund may not:]
Effect short sales of securities;"
The operating policy on short sales, to be adopted by the
Fund, would be as follows:
"[As a matter of operating policy, the Fund may not:]
Effect short sales of securities;"
The current fundamental policy was formerly required by
certain states to be fundamental. This is no longer the case and
the replacement of the policy with an operating policy will
adequately protect the Fund while providing greater flexibility
to the Fund to respond to market or regulatory developments by
allowing the Board of Directors the authority to make changes
in this policy without seeking further shareholder approval.
In a short sale, an investor, such as the Fund, sells a
borrowed security and must return the same security to the
lender. Although the Board has no current intention of allowing
the Fund to engage in short sales, if the proposed amendment is
adopted, the Board would be able to authorize the Fund to engage
in short sales at any time without further shareholder action.
In such a case, the Fund's prospectus would be amended and a
description of short sales and their risks would be set forth
therein.
The Board of Directors recommends that shareholders vote FOR
the proposal.
3. PROPOSAL TO AMEND THE CORPORATION'S ARTICLES OF
INCORPORATION TO REMOVE THE REQUIREMENT THAT STOCK
CERTIFICATES BE ISSUED TO FUND SHAREHOLDERS
Under the Corporation's Articles of Incorporation, the
Corporation is required to issue stock certificates to any
shareholder who makes a written request for them in accordance
with established procedures. In the absence of a proper request,
the Corporation is not required to issue such certificates.
After careful consideration of this provision, the Board of
Directors has determined that it would be advantageous to the
<PAGE>23
Corporation and its shareholders to amend the Articles of
Incorporation so as to remove this requirement in order to save
the Corporation the cost of issuing stock certificates. The
reasons for the proposed amendment to the Articles of
Incorporation are described below in more detail.
Reasons for the Proposal
Several years ago, Maryland law was amended to eliminate the
requirement that a corporation issue stock certificates for its
shares. The law was adopted in recognition of a growing trend
away from the issuance of stock certificates to the issuance of
book entry shares. Very few shareholders request stock
certificates. Nevertheless, because of the few shareholders
that do, the Corporation is required to maintain an inventory of
stock certificates for issuance to such shareholders. This
results in printing, operational, security, and transportation
expenses to the Corporation, which are borne by all shareholders.
Further, holding securities in certificate form has certain
disadvantages for shareholders. First, a shareholder who wishes
to redeem, exchange or transfer shares represented by lost
certificates must provide notarized documents attesting to the
loss and a check payable in an amount equal to 2% of the value of
the shares represented by such certificates in order to purchase
a surety bond to protect the Fund against fraudulent presentment.
Only after these procedural steps have been taken can a new
certificate be issued or shares represented by the lost
certificate, transferred, redeemed or exchanged. Second,
shareholders who hold certificates may not make telephone
requests for redemption or exchange of their shares, but must
request such transactions in writing. The proposal if adopted,
would not affect shareholders wishing to collateralize their
shares in connection with loans. Such shareholders would still
be able to accomplish this by setting up a pledge registration
through the Corporation's book entry share system. The majority
of the T. Rowe Price Funds do not issue stock certificates. The
elimination of certificates in the other T. Rowe Price Funds has
not proven to be disruptive and has not imposed undue hardships
on shareholders. Thus, the Directors do not believe it would be
disruptive for the Corporation.
It is the current intention of the Board of Directors not to
eliminate outstanding certificates. Thus, outstanding
certificates would not be recalled and only shares purchased
after the effective date of the proposal, currently contemplated
as May 1, 1994, would be affected. However, at some time in the
future, the Board of Directors might determine to recall
outstanding certificates and replace them with book entry shares.
The Board of Directors of the Corporation has determined
that the proposed amendment to the Articles of Incorporation is
advisable and has recommended that the amendment be approved by
shareholders.
<PAGE>24
The Board of Directors recommends that shareholders vote FOR
the proposal.
4. RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT
ACCOUNTANTS
The selection by the Board of Directors of the firm of
Coopers & Lybrand as the independent accountants for the
Corporation, on behalf of the Fund, for the fiscal year 1994 is
to be submitted for ratification or rejection by the shareholders
at the Shareholders Meeting. The firm of Coopers & Lybrand has
served the Corporation as independent accountants since the
Fund's inception. The independent accountants have advised the
Corporation that they have no direct or material indirect
financial interest in the Corporation or the Fund.
Representatives of the firm of Coopers & Lybrand are expected to
be present at the Shareholders Meeting and will be available to
make a statement, if they desire to do so, and to respond to
appropriate questions which the shareholders may wish to address
to them.
INVESTMENT MANAGER
The Fund's investment manager is Price-Fleming, a Maryland
corporation, 100 East Pratt Street, Baltimore, Maryland 21202.
The principal executive officer of Price-Fleming is Mr. Testa,
who together with George J. Collins, D. William J. Garrett, P.
John Manser, George A. Roche, Charles H. Salisbury, Jr. and Alan
H. Smith, constitute its Board of Directors. The address of
each of these persons, with the exception of Messrs. Garrett,
Manser and Smith, is 100 East Pratt Street, Baltimore, Maryland
21202, and, with the exception of Messrs. Garrett, Manser and
Smith, all are employed by T. Rowe Price Associates, Inc. ("T.
Rowe Price"). Mr. Garrett is Chairman of Robert Fleming
Securities Limited and a Director of Robert Fleming Holdings
Limited ("Robert Fleming Holdings"), Robert Fleming Investment
Trust, Robert Fleming Management Services Limited and various
other affiliates of Robert Fleming Holdings. Mr. Manser is
Chairman of Robert Fleming & Co. Limited, Chief Executive of
Robert Fleming Holdings, Deputy Chairman of Robert Fleming Asset
Management Limited and a Director of various other affiliates of
Robert Fleming Holdings, Fleming Investment Management Limited
and Jardine Fleming Group Limited. Mr. Manser is also a Director
of the U.K. Securities and Investments Board. Mr. Smith is the
Managing Director of Jardine Fleming Holdings Limited, Chairman
of Jardine Fleming Investment Management Limited, Jardine Fleming
& Co. Limited and Jardine Fleming Securities Limited, and a
Director of Robert Fleming Holdings, Robert Fleming, Inc. and
various other affiliates of Jardine Fleming. The address for
Messrs. Garrett and Manser is 25 Copthall Avenue, London, EC2R
<PAGE>25
7DR England. Mr. Smith's address is Jardine Fleming Holdings
Ltd., 46th Floor, Jardine House, GPO, Box 70, Hong Kong.
The officers of the Corporation (other than the nominees for
reelection as directors) and their positions with Price-Fleming
and T. Rowe Price are as follows:
_________________________________________________________________
Position Position Position with
Officer with Fund with Price-Fleming T. Rowe Price
_________________________________________________________________
*Edward A. Wiese Executive Vice Vice
Vice President President President
Christopher D. Alderson Vice President Vice President
John R. Ford Vice President Executive Vice
President
Henry H. Hopkins Vice President Vice Managing
President Director
Robert C. Howe Vice President Vice Vice
President President
George A. Murnaghan Vice President Vice Vice
President President
James S. Riepe Vice President Managing
Director
R. Todd Ruppert Vice President Vice
President
James B.M. Seddon Vice President Vice
President
David J. L. Warren Vice President Executive
Vice President
William F. Wendler, II Vice President Vice Vice
President President
Lenora V. Hornung Secretary Vice
President
Carmen F. Deyesu Treasurer Vice
President
David S. Middleton Controller Vice
President
Roger L. Fiery Assistant Vice Vice Employee
President President
Edward T. Schneider Assistant Vice Employee
President
Ingrid I. Vordemberge Assistant Vice Employee
President
* Mr. Wiese's date of birth is April 12, 1959 and he has been
employed by T. Rowe Price since April 1, 1986.
None of the officers of the Corporation own shares of the
common stock of Price-Fleming, its only class of securities. As
of December 31, 1993, all of the common stock of Price-Fleming
was owned by T. Rowe Price (100,000 shares), Robert Fleming
Holdings (50,000 shares), and Jardine Fleming Holdings Limited
("JFI") (50,000 shares), a subsidiary of Jardine Fleming Group
<PAGE>26
Limited ("JFG"). T. Rowe Price and Robert Fleming Holdings are
each considered to be an affiliated and controlling person of
Price-Fleming. JFG and JFI are considered to be affiliated
persons of Price-Fleming. T. Rowe Price has the right to elect a
majority of the board of directors of Price-Fleming, and Robert
Fleming Holdings has the right to elect the remaining directors,
one of whom will be nominated by JFG.
The following information pertains to transactions involving
common stock of T. Rowe Price, par value $.20 per share
("Stock"), during the period January 1, 1993 through December 31,
1993. There were no transactions during the period by any
director or officer of the Fund, or any director or officer of T.
Rowe Price which involved more than 1% of the outstanding Stock
of T. Rowe Price. These transactions did not involve, and should
not be mistaken for, transactions in the stock of the Fund.
During the period, the holders of certain options purchased
a total of 343,525 shares of common stock at varying prices from
$0.67 to $18.75 per share. Pursuant to the terms of T. Rowe
Price's Employee Stock Purchase Plan, eligible employees of T.
Rowe Price and its subsidiaries purchased an aggregate of 96,931
shares at fair market value. Such shares were purchased in the
open market during this period for employees' accounts.
The Company's Board of Directors has approved the repurchase
of shares of its common stock in the open market. During 1993,
the Company purchased 80,000 common shares under this plan,
leaving 1,432,000 shares authorized for future repurchase at
December 31, 1993.
During the period, T. Rowe Price issued 1,154,000 common
stock options with an exercise price of $28.13 per share to
certain employees under terms of the 1990 and 1993 Stock
Incentive Plans.
An audited consolidated balance sheet of Price-Fleming as of
December 31, 1993, is included in this Proxy Statement.
INVESTMENT MANAGEMENT AGREEMENT
Price-Fleming serves as investment manager to the Fund
pursuant to an Investment Management Agreement dated May 1, 1990
(the "Management Agreement"), which was approved by the
shareholders of the Fund on April 19, 1990. By its terms, the
Management Agreement will continue in effect from year to year as
long as it is approved annually by the Fund's Board of Directors
(at a meeting called for that purpose) or by vote of a majority
of the Fund's outstanding shares. In either case, renewal of the
Management Agreement must be approved by a majority of the Fund's
independent directors. On March 1, 1994, the directors of the
Corporation, on behalf of the Fund, including all of the
<PAGE>27
independent directors, voted to extend the Management Agreement
for an additional period of one year, commencing May 1, 1994, and
terminating April 30, 1995. The Management Agreement is subject
to termination by either party without penalty on 60 days'
written notice to the other and will terminate automatically in
the event of assignment.
Under the Management Agreement, Price-Fleming provides the
Corporation, on behalf of the Fund with discretionary investment
services. Specifically, Price-Fleming is responsible for
supervising and directing the investments of the Fund in
accordance with the Fund's investment objective, program and
restrictions as provided in its prospectus and Statement of
Additional Information. Price-Fleming is also responsible for
effecting all securities transactions on behalf of the Fund,
including the negotiation of commissions and the allocation of
principal business and portfolio brokerage. In addition to these
services, Price-Fleming provides the Fund with certain corporate
administrative services, including: maintaining the Corporation'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
Corporation, on behalf of the Fund, such as the Fund's custodian
and transfer agent; assisting the Fund in the coordination of
such agents' activities; and permitting Price-Fleming's employees
to serve as officers, directors and committee members of the Fund
without cost to the Fund.
The Management Agreement also provides that Price-Fleming,
its directors, officers, employees and certain other persons
performing specific functions for the Fund will only be liable to
the Fund for losses resulting from willful misfeasance, bad
faith, gross negligence or reckless disregard of duty.
The Management Agreement provides that the Fund will bear
all expenses of its operations not specifically assumed by
Price-Fleming. However, in compliance with certain state
regulations, Price-Fleming 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
average daily net assets, and 1.5% of net assets in excess of
$100 million. For the purpose of determining whether the Fund is
entitled to reimbursement, the expenses of the Fund are
calculated on a monthly basis. If the Fund is entitled to
reimbursement, that month's management fee will be reduced or
postponed, with any adjustment made after the end of the year.
For the ten-month fiscal period ended October 31, 1993, the
annualized ratio of operating expenses to average net assets of
the Fund was 0.86%. For the fiscal years ended December 31, 1992
<PAGE>28
and 1991, the ratios of operating expenses to average net assets
of the Fund were 0.99% and 1.00%, respectively.
For its services to the Fund under the Management Agreement,
Price-Fleming is paid an annual fee, in monthly installments,
based on the Fund's average daily net assets at the rate of
0.70%. At October 31, 1993, the net assets of the Fund were
$489,389,000, and a management fee of $2,064,000 was paid by the
Fund to Price-Fleming.
PORTFOLIO TRANSACTIONS
Investment or Brokerage Discretion
Decisions with respect to the purchase and sale of portfolio
securities on behalf of the Fund is made by Price-Fleming.
Price-Fleming is also responsible for implementing these
decisions, including the allocation of portfolio brokerage and
principal business and the negotiation of commissions.
How Brokers and Dealers are Selected
Equity Securities
Transactions on stock exchanges involve the payment of
brokerage commissions. In transactions on stock exchanges in the
United States, these commissions are negotiated. Traditionally,
commission rates have generally not been negotiated on stock
markets outside the United States. In recent years, however, an
increasing number of overseas stock markets have adopted a system
of negotiated rates, although a number of markets continue to be
subject to an established schedule of minimum commission rates.
It is expected that equity securities will ordinarily be
purchased in the primary markets, whether over-the-counter or
listed, and that listed securities may be purchased in the
over-the-counter market if such market is deemed the primary
market. In the case of securities traded on the over-the-counter
markets, there is generally no stated commission, but the price
usually includes an undisclosed commission or markup. In
underwritten offerings, the price includes a disclosed, fixed
commission or discount.
In purchasing and selling the Fund's portfolio securities,
it is Price-Fleming's policy to obtain quality execution at the
most favorable prices through responsible broker-dealers and, in
the case of agency transactions, at competitive commission rates
where such rates are negotiable. However, under certain
conditions, the Fund may pay higher brokerage commissions in
return for brokerage and research services. In selecting
broker-dealers to execute the Fund's portfolio transactions,
consideration is given to such factors as the price of the
<PAGE>29
security, the rate of the commission, the size and difficulty of
the order, the reliability, integrity, financial condition,
general execution and operational capabilities of competing
brokers and dealers, their expertise in particular markets and
the brokerage and research services they provide to Price-Fleming
or the Fund. It is not the policy of Price-Fleming to seek the
lowest available commission rate where it is believed that a
broker or dealer charging a higher commission rate would offer
greater reliability or provide better price or execution.
Fixed Income Securities
For fixed income securities, it is expected that purchases
and sales will ordinarily be transacted with the issuer, the
issuer's underwriter or with a primary market maker acting as
principal on a net basis, with no brokerage commission being paid
by the Fund. However, the price of the securities generally
includes compensation which is not disclosed separately.
Transactions placed through dealers who are serving as primary
market makers reflect the spread between the bid and asked
prices.
With respect to equity and fixed income securities,
Price-Fleming may effect principal transactions on behalf of the
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. The prices the Fund
pays to underwriters of newly-issued securities usually include a
concession paid by the issuer to the underwriter.
Descriptions of Research Services Received from Brokers and
Dealers
Price-Fleming receives a wide range of research services
from brokers and dealers covering investment opportunities
throughout the world, including information on the economies,
industries, groups of securities, individual companies,
statistics, political developments, technical market action,
pricing and appraisal services, and performance analyses of all
the countries in which the Fund's portfolio is likely to be
invested. Price-Fleming cannot readily determine the extent to
which commissions charged by brokers reflect the value of their
research services, but brokers occasionally suggest a level of
business they would like to receive in return for the brokerage
and research services they provide. To the extent that research
services of value are provided by brokers, Price-Fleming may be
relieved of expenses which it might otherwise bear. In some
cases, research services are generated by third parties but are
provided to Price-Fleming by or through brokers.
<PAGE>30
Commissions to Brokers who Furnish Research Services
Certain broker-dealers which provide quality execution
services also furnish research services to Price-Fleming.
Price-Fleming has adopted a brokerage allocation policy embodying
the concepts of Section 28(e) of the Securities Exchange Act of
1934, which permits an investment adviser to cause its clients to
pay a broker which furnishes brokerage or research services a
higher commission than that which might be charged by another
broker which does not furnish brokerage or research services, or
which furnishes brokerage or research services deemed to be of
lesser value, if such commission is deemed reasonable in relation
to the brokerage and research services provided by the broker,
viewed in terms of either that particular transaction or the
overall responsibilities of the adviser with respect to the
accounts as to which it exercises investment discretion.
Accordingly, Price-Fleming may assess the reasonableness of
commissions in light of the total brokerage and research services
provided by each particular broker.
Miscellaneous
Research services furnished by brokers through which
Price-Fleming effects securities transactions may be used in
servicing all accounts managed by Price-Fleming. Conversely,
research services received from brokers which execute
transactions for the Fund will not necessarily be used by
Price-Fleming exclusively in connection with the management of
the Fund.
Some of Price-Fleming's other clients have investment
objectives and programs similar to those of the Fund.
Price-Fleming 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 Price-Fleming's policy not to favor
one client over another in making recommendations or in placing
orders. Price-Fleming 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.
Price-Fleming has established a general investment policy that it
will ordinarily not make additional purchases of a common stock
of a company for its clients (including the T. Rowe Price Funds)
if, as a result of such purchases, 10% or more of the outstanding
common stock of such company would be held by its clients in the
aggregate.
<PAGE>31
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.
Transactions with Related Brokers and Dealers
As provided in the Investment Management Agreement between
the Fund and Price-Fleming, Price-Fleming is responsible not only
for making decisions with respect to the purchase and sale of the
Fund's portfolio securities, but also for implementing these
decisions, including the negotiation of commissions and the
allocation of portfolio brokerage and principal business. It is
expected that Price-Fleming will often place orders for the
Fund's portfolio transactions with broker-dealers through the
trading desks of certain affiliates of Robert Fleming Holdings
Limited ("Robert Fleming"), an affiliate of Price-Fleming.
Robert Fleming, through Copthall Overseas Limited, a wholly-owned
subsidiary, owns 25% of the common stock of Price-Fleming. Fifty
percent of the common stock of Price-Fleming is owned by TRP
Finance, Inc., a wholly-owned subsidiary of T. Rowe Price, and
the remaining 25% is owned by Jardine Fleming Holdings Limited, a
subsidiary of Jardine Fleming Group Limited ("JFG"). JFG is 50%
owned by Robert Fleming and 50% owned by Jardine Matheson
Holdings Limited. The affiliates through whose trading desks
such orders may be placed include Fleming Investment Management
Limited ("FIM"), Fleming International Fixed Interest Management
Limited ("FIFIM"), and Robert Fleming & Co. Limited ("RF&Co.").
FIM, FIFIM and RF&Co. are wholly-owned subsidiaries of Robert
Fleming. These trading desks will operate under strict
instructions from the Fund's portfolio manager with respect to
the terms of such transactions. Neither Robert Fleming, JFG, nor
their affiliates will receive any commission, fee, or other
remuneration for the use of their trading desks, although orders
for a Fund's portfolio transactions may be placed with affiliates
of Robert Fleming and JFG who may receive a commission.
The Board of Directors of the Corporation, on behalf of the
Fund, has authorized Price-Fleming to utilize certain affiliates
of Robert Fleming and JFG in the capacity of broker in connection
with the execution of each Fund's portfolio transactions,
provided that Price-Fleming believes that doing so will result in
an economic advantage (in the form of lower execution costs or
otherwise) being obtained for each Fund. These affiliates
include Jardine Fleming Securities Limited ("JFS"), a
wholly-owned subsidiary of JFG, RF&Co., Jardine Fleming Australia
Securities Limited, and Robert Fleming, Inc. (a New York
brokerage firm).
The above-referenced authorization was made in accordance
with Section 17(e) of the 1940 Act and Rule 17e-1 thereunder
which require the Fund's independent directors to approve the
procedures under which brokerage allocation to affiliates is to
<PAGE>32
be made and to monitor such allocations on a continuing basis.
Except with respect to tender offers, it is not expected that any
portion of the commissions, fees, brokerage, or similar payments
received by the affiliates of Robert Fleming in such transactions
will be recaptured by the Fund. The directors have reviewed and
from time to time may continue to review whether other recapture
opportunities are legally permissible and available and, if they
appear to be, determine whether it would be advisable for the
Fund to seek to take advantage of them.
During the ten-month fiscal period ended October 31, 1993,
the Fund paid JFS and RF&Co. $173,000 and $3,000, respectively,
in total brokerage commissions in connection with the Fund's
portfolio transactions. The brokerage commissions paid to JFS
and RF&Co. represented 20.3% and 0.4%, respectively, of the
Fund's aggregate brokerage commissions paid during 1993. The
aggregate dollar amount of transactions effected through JFS and
RF&Co. involving the payment of commissions (including discounts
received in connection with underwritings) represented 18.0% and
0.5%, respectively, of the aggregate dollar amount of all
transactions involving the payment of commissions during the
ten-month fiscal period ended October 31, 1993. In accordance
with the written procedures adopted pursuant to Rule 17e-1, the
independent directors of the Fund reviewed the Fund's 1993
transactions with affiliated brokers and determined that such
transactions resulted in an economic advantage to the Fund either
in the form of lower execution costs or otherwise.
Other
For the ten-month fiscal period ended October 31, 1993, the
total brokerage commissions paid by the Fund, including the
discounts received by securities dealers in connection with
underwritings, was $853,000. Of these commissions, approximately
79% were paid to firms which provided research, statistical, or
other services to Price-Fleming in connection with the management
of the Fund or, in some cases, to the Fund. For the fiscal years
ended December 31, 1992 and 1991, the total brokerage commissions
paid by the Fund, including the discounts received by securities
dealers in connection with underwritings, were $563,000 and
$389,000, respectively. Of these commissions, approximately 87%
and 84%, respectively, were paid to firms which provided
research, statistical, or other services to Price-Fleming in
connection with the management of the Fund or, in some cases, to
the Fund.
The annualized portfolio turnover rate of the Fund for the
ten-month fiscal period ended October 31, 1993 was 27.4%. The
portfolio turnover rates of the Fund for the fiscal years ended
December 31, 1992 and 1991, were 35.1% and 46.7%,
respectively.
<PAGE>33
OTHER BUSINESS
The management of the Fund knows of no other business which
may come before the meeting. However, if any additional matters
are properly presented at the meeting, it is intended that the
persons named in the enclosed proxy, or their substitutes, will
vote such proxy in accordance with their judgment on such
matters.
GENERAL INFORMATION
As of October 31, 1993, there were 36,734,120 shares of the
capital stock of the Fund outstanding, each with a par value of
$.01. As of October 31, 1993, approximately 6,311,061 shares of
the Fund, representing approximately 17.2% of the outstanding
stock, were owned by various private counsel clients of T. Rowe
Price, as to which T. Rowe Price has discretionary authority.
Accordingly, such shares are deemed to be owned beneficially by
T. Rowe Price only for the limited purpose as that term is
defined in Rule 13d-3 under the Securities Exchange Act of 1934.
T. Rowe Price disclaims actual beneficial ownership of such
shares.
A copy of the Annual Report of the Fund for the ten-month
fiscal period ended October 31, 1993, including financial
statements, has been mailed to shareholders of record at the
close of business on that date and to persons who became
shareholders of record between that time and the close of
business on February 18, 1994, the record date for the
determination of the shareholders who are entitled to be notified
of and to vote at the meeting.
ANNUAL MEETINGS
Under Maryland General Corporation Law, any corporation
registered under the 1940 Act is not required to hold an annual
meeting in any year in which the Act does not require action by
shareholders on the election of directors. The Board of
Directors of the Corporation, on behalf of the Fund, has
determined that in order to avoid the significant expense
associated with holding annual meetings, including legal,
accounting, printing and mailing fees incurred in preparing proxy
materials, the Fund will take advantage of these Maryland law
provisions. Accordingly, no annual meetings shall be held in any
year in which a meeting is not otherwise required to be held by
the 1940 Act for the election of Directors unless the Board of
Directors otherwise determine that there should be an annual
meeting. However, special meetings will be held in accordance
with applicable law or when otherwise determined by the Board of
Directors. The Corporation's By-Laws reflect this policy.
<PAGE>34
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal to be included
in the Proxy Statement for the next Annual Meeting, and if such
Annual Meeting is held in April, 1995, such proposal must be
submitted in writing and received by the Corporation's Secretary
at its Baltimore office prior to November 3, 1994.
FINANCIAL STATEMENT OF INVESTMENT MANAGER
The audited balance sheet of Price-Fleming which follows is
required by the 1940 Act, and should not be confused with, or
mistaken for, the financial statements of Foreign Equity Fund
which are set forth in the Annual Report of the Fund.
<PAGE>
PAGE 35
ROWE PRICE-FLEMING INTERNATIONAL, INC.
BALANCE SHEET
DECEMBER 31, 1993
(in thousands)
ASSETS
______
Cash and cash equivalents $ 5,964
Accounts receivable 14,093
Investments in mutual funds 2,936
Investment in RPFI International Partners, L.P. 1,912
Other assets 450
_______
$ 25,355
_______
_______
LIABILITIES AND STOCKHOLDERS' EQUITY
____________________________________
Liabilities
Accounts payable $ 4,904
Income taxes payable 2,224
_______
Total liabilities 7,128
_______
Stockholders' equity
Common stock, $.10 par value-200,000 shares
authorized, issued and outstanding 20
Capital in excess of par value 630
Retained earnings 17,382
Unrealized security holding gains 195
_______
Total stockholders' equity 18,227
_______
$ 25,355
_______
_______
The accompanying notes are an integral part of the balance sheet.<PAGE>
PAGE 36
ROWE PRICE-FLEMING INTERNATIONAL, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Rowe Price-Fleming International, Inc. (the Company) was
organized in 1979 and provides investment advisory services to
individual and institutional investors who seek portfolio
management of international securities. The Company operates
under a joint venture agreement between T. Rowe Price Associates,
Inc. (Price Associates) and Robert Fleming Holdings Limited
(Robert Fleming). The Company's common stock is 50%-owned by a
subsidiary of Price Associates, 25%-owned by a subsidiary of
Robert Fleming, and 25%-owned by a subsidiary of Jardine Fleming
Group Limited (Jardine Fleming). Jardine Fleming is 50%-owned by
Robert Fleming and 50%-owned by a subsidiary of Jardine Matheson
Holdings Limited.
Basis of preparation
____________________
The Company's financial statements are prepared in accordance
with generally accepted accounting principles in the United
States of America. Assets, liabilities, revenues and expenses
are recognized on the accrual basis.
Cash equivalents
________________
For purposes of financial statement disclosure, cash equivalents
consist of all short-term, highly liquid investments including T.
Rowe Price money market mutual funds. The cost of these
investments is equivalent to fair value.
Investments in mutual funds
___________________________
On December 31, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which requires the
Company to state its mutual fund investments at fair value and to
recognize the related unrealized holding gains, net of income
taxes, in a separate component of stockholders' equity. These
investments in mutual funds have been classified as available-
for-sale.
Concentration of credit risk
____________________________
Financial instruments which potentially expose the Company to
concentrations of credit risk as defined by SFAS No. 105 consist
primarily of investments in managed money market and bond mutual
funds and accounts receivable. Credit risk is believed to be
minimal in that counterparties to these financial instruments
have substantial assets including the diversified portfolios
under management by the Company which aggregate $15.4 billion at
December 31, 1993.
<PAGE>37
ROWE PRICE-FLEMING INTERNATIONAL, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investment in RPFI International Partners, L.P.
_______________________________________________
The Company has invested in and serves as general partner of RPFI
International Partners, L.P. which holds international equity
investments. The Company's partnership interest is stated at
cost adjusted for the Company's share of the earnings or losses
of the partnership subsequent to the date of investment. Because
RPFI International Partners, L.P. carries its investments at fair
value, the Company's carrying value approximates fair value. As
general partner, the Company must maintain an investment equal to
at least 1% of total partners' capital.<PAGE>
PAGE 38
ROWE PRICE-FLEMING INTERNATIONAL, INC.
NOTES TO BALANCE SHEET
NOTE 1 - INVESTMENTS IN AND TRANSACTIONS WITH MUTUAL FUNDS
__________________________________________________________
Investment in T. Rowe Price money market funds, which are
classified as cash equivalents in the accompanying financial
statements, aggregate $5,964,000 at December 31, 1993.
The Company's investments in managed international mutual funds
held at December 31, 1993 (in thousands) include:
Gross
unrealized Aggregate
Aggregate holding fair
cost gains (losses) value
________ ____________ _________
Stock funds $ 1,438 $ 294 $ 1,732
Bond funds 1,194 10 1,204
________ _________ ________
Total $ 2,632 $ 304 $ 2,936
________ _________ ________
________ _________ ________
NOTE 2 - INVESTMENT ADVISORY AND OTHER SERVICES
_______________________________________________
The Company provides investment advisory services to the T. Rowe
Price International Series of mutual funds under management
contracts which set forth the scope of services to be provided
and the fees to be charged. The contracts are subject to
periodic review and approval by the funds' board of directors and
shareholders.
The Company also provides investment advisory services to other
individual and institutional investors through other mutual
funds, common trust funds established by the T. Rowe Price Trust
Company, a wholly-owned subsidiary of Price Associates, and
private accounts. Further, as general partner, the Company
provides management services for RPFI International Partners.
Accounts receivable (in thousands) at December 31, 1993 for these
services are:
Price International Funds $ 5,157
T. Rowe Price Trust Company 1,045
RPFI International Partners 439
Other investors 7,452
_________
$ 14,093
_________
_________
<PAGE>39
ROWE PRICE-FLEMING INTERNATIONAL
NOTES TO FINANCIAL STATEMENTS (Continued)
Stockholders' equity at December 31, 1993 includes $1,328,000
which the Company is required to maintain under applicable
investment adviser regulations.
NOTE 3 - TRANSACTIONS WITH STOCKHOLDERS
_______________________________________
The Company is a member of a group of affiliated companies and
has extensive transactions and relationships with members of the
group.
Expenses recognized by the Company include fees charged by the
Company's stockholders and their affiliates for administration
and investment research services. Such fees are determined based
on a percentage of assets managed by the Company. The Company
reimburses its stockholders and affiliates for personnel,
facilities, and administrative and general expenses incurred on
their behalf.
Accounts payable (in thousands) at December 31, 1993 include the
following amounts from transactions with the Company's
stockholders and their affiliates:
Accounts payable
Robert Fleming and affiliates $ 4,396
Jardine Fleming and affiliates 207
________
$ 4,603
________
________
NOTE 4- INCOME TAXES
____________________
Deferred income taxes arise from differences between taxable
income for financial statement and income tax return purposes and
are calculated using the liability method.
The net deferred tax benefit of $293,000 included in other assets
at December 31, 1993 consists of total deferred tax assets of
$537,000 and total deferred tax liabilities of $244,000.
Deferred tax liabilities include $108,000 arising from unrealized
holding gains on available-for-sale securities and $128,000
arising from unrealized capital gains allocated from the
Company's partnership investment. Deferred tax assets include
$464,000 arising from temporary differences in the recognition of
the costs of compensation expense.
<PAGE>40
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Rowe Price-Fleming International, Inc.
In our opinion, the accompanying balance sheet presents fairly,
in all material respects, the financial position of Rowe Price-
Fleming International, Inc. at December 31, 1993, in conformity
with generally accepted accounting principles. This financial
statement is the responsibility of the Company's management; our
responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit in
accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE
Baltimore, Maryland
January 28, 1993
<PAGE>
PAGE 41
T. ROWE PRICE PROXY
_________________________________________________________________
INSTRUCTIONS:
1. Cast your vote by checking the appropriate boxes on the
reverse side. If you do not check a box, your vote will be
cast FOR that proposal.
2. Sign and date the card below.
3. Please return the signed card promptly using the enclosed
postage paid envelope, even if you will be attending the
meeting.
4. Please do not enclose checks or any other correspondence.
Please fold and detach card at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOREIGN EQUITY FUND MEETING: 11:00 A.M. EASTERN TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James S. Riepe and M. David
Testa, as proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as
designated below, all shares of stock of the Fund, which the
undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held on Wednesday, April 20, 1994, at the time
indicated above, at the offices of the Fund, 100 East Pratt
Street, Baltimore, Maryland 21202, and at any and all
adjournments thereof, with respect to the matters set forth below
and described in the Notice of Annual Meeting and Proxy Statement
dated March 2, 1994, receipt of which is hereby acknowledged.
Please sign exactly as name appears.
Only authorized officers should sign for
corporations. For information as to the
voting of stock registered in more than
one name, see page 3 of the Notice of
Annual Meeting and Proxy Statement.
Dated: ______________________, 1994
________________________________________
________________________________________
Signature(s)
<PAGE>
PAGE 42
T. ROWE PRICE WE NEED YOUR PROXY VOTE BEFORE APRIL 20, 1994
_________________________________________________________________
Please refer to the Proxy Statement discussion of each of these
matters.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
Please fold and detach card at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
1. Election of FOR all nominees / / WITHHOLD AUTHORITY / / 1.
directors. listed below to vote for all nominees
(except as marked listed below
to the contrary)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL
NOMINEE STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST
BELOW.)
Leo C. Bailey Anthony W. Deering Donald W. Dick, Jr.
Addison Lanier M. David Testa Martin G. Wade
2. Approve changes to the FOR each policy / / ABSTAIN / / 2.
Fund's fundamental listed below (except as
policies. marked to the contrary)
If you do NOT (underscored) wish to approve a policy change,
please check the appropriate box below:
/ / (A) Borrowing / / (D) Lending / / (G) Pledging Assets
/ / (B) Commodities / / (E) Senior / / (H) Short Sales
& Futures Securities
/ / (C) Industry / /(F) Purchasing on Margin
Concentration
3. Amend Articles of FOR / / AGAINST / / ABSTAIN / / 3.
Incorporation to delete the requirement
that stock certificates be issued.
4. Ratify the selection of FOR / / AGAINST / / ABSTAIN / / 4.
Coopers & Lybrand
as independent accountants.
5. I authorize the Proxies, in their discretion, to vote upon
such other business as may properly come before the meeting.
