PRICE T ROWE INTERNATIONAL FUNDS INC (Form: 485BPOS, Received: 04/30/2003 08:16:46)

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Registration Nos. 002-65539/811-2958

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM N 1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

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Post Effective Amendment No. 85 /X/

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and/or

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

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Amendment No. 68 /X/

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T. Rowe Price International Funds, Inc.

Exact Name of Registrant as Specified in Charter

100 East Pratt Street, Baltimore, Maryland 21202

Address of Principal Executive Offices

410 345 2000

Registrant's Telephone Number, Including Area Code

Henry H. Hopkins

100 East Pratt Street, Baltimore, Maryland 21202

Name and Address of Agent for Service

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Approximate Date of Proposed Public Offering May 1, 2003

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

/ / Immediately upon filing pursuant to paragraph (b)

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/X/ On May 1, 2003 , pursuant to paragraph (b)

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/ / 60 days after filing pursuant to paragraph (a)(1)

/ / On (date) , pursuant to paragraph (a)(1)

/ / 75 days after filing pursuant to paragraph (a)(2)

/ / On (date) , pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

/ / This post effective amendment designates a new effective date for a previously filed post effective amendment.

PROSPECTUS

MAY 1, 2003

T. Rowe Price

International Funds — Foreign Bond Funds

Two international income funds seeking high current income and capital appreciation from foreign fixed-income securities.

The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

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1	About the Funds
	Objective, Strategy, Risks, and Expenses	1
	Other Information About the Funds	6

2	Information About Accounts in T. Rowe Price Funds
	Pricing Shares and Receiving Sale Proceeds	8
	Useful Information on Distributions and Taxes	11
	Transaction Procedures and Special Requirements	17
	Account Maintenance and Small Account Fees	19

3	More About the Funds
	Organization and Management	20
	Understanding Performance Information	22
	Investment Policies and Practices	23
	Financial Highlights	33

4	Investing With T. Rowe Price
	Account Requirements and Transaction Information	36
	Opening a New Account	37
	Purchasing Additional Shares	38
	Exchanging and Redeeming Shares	39
	Rights Reserved by the Funds	41
	Information About Your Services	42
	T. Rowe Price Brokerage	44
	Investment Information	45
	T. Rowe Price Privacy Policy	47

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T. Rowe Price International Funds, Inc.

T. Rowe Price International Bond Fund

T. Rowe Price Emerging Markets Bond Fund

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T. Rowe Price International, Inc. managed $18.0 billion in foreign stocks and bonds as of December 31, 2002 , through its offices in Baltimore, London, Tokyo, Singapore, Hong Kong, Buenos Aires, and Paris.

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Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve, or any other government agency, and are subject to investment risks, including possible loss of the principal amount invested.

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objective, strategy, risks, and expenses

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

International Bond Fund

Objective: : The fund seeks to provide high current income and capital appreciation by investing primarily in high-quality, nondollar-denominated bonds outside the U.S.

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Strategy: : N ormally , the fund will invest at least 80% of net assets in bonds and 65% of total assets in high-quality (AA or better) foreign bonds . The fund may invest up to 20% of total assets in below investment-grade, high-risk bonds, including those in default or with the lowest rating. Up to 20% of total assets may be invested in dollar- denominated foreign bonds such as Brady and other emerging market bonds.

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Although we expect to maintain an intermediate to long weighted average maturity, there are no maturity restric tions on the overall portfolio or on individual securities. The fund has wide flexibility to purchase and sell cur rencies and engage in hedging transactions. However, we normally do not attempt to cushion the impact of foreign currency fluctuations on the dollar. Therefore, the fund is likely to be heavily exposed to foreign curren cies.

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Investment decisions are based on fundamental market factors, such as yield and credit quality differences among bonds as well as demand and supply trends and currency values. The fund generally invests in countries where the combination of fixed-income returns and currency exchange rates appears attractive or, if the currency trend is unfavorable, where we believe the currency risk can be minimized through hedging. The fund sells holdings for a variety of reasons, such as to adjust its average maturity or quality, to shift assets into higher-yielding secu rities, or to alter geographic or currency exposure.

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Emerging Markets Bond Fund

Objective: The fund seeks to provide high income and capital appreciation.

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Strategy: The fund will normally invest at least 80 % (and potentially all) of net assets in the government or corpo rate debt securities of emerging nations. Fund holdings may include the lowest-rated bonds, including those in default.

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There are no maturity restrictions, and the fund`s weighted average maturity normally ranges between five and 10 years but may vary substantially because of market conditions. Under normal circumstances, most of the fund`s total assets are expected to be denominated in U.S. dollars, and the fund will not usually attempt to cushion the impact of foreign currency fluctuations on the dollar. Security selection relies heavily on research, which analyzes political and economic trends as well as creditworthiness. The fund tends to favor bonds it expects will be upgraded. The fund sells holdings for a variety of reasons, such as to adjust it s average maturity or quality, to shift assets into higher-yielding securities, or to alter geographic or currency exposure.

For details about each fund`s investment program, please see the Investment Policies and Practices section.

<R> Table 1 I nternational Funds Comparison Guide

Fund	Geographic focus	Quality of securities	Normal currency exposure	Expected risk relative to one another

International Bond	Outside U.S.	Primarily high quality	High	High
Emerging Markets Bond	Outside U.S.	Primarily lower quality	Varies	Higher

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Both of these funds are considered "nondiversified" for purposes of the Investment Company Act of 1940.

What are the main risks of investing in the funds?

The risk profile s of the funds var y with the types of bonds they purchase, their degree of currency exposure, and whether they invest in developed markets, emerging markets, or both. Of the two funds, Emerging Markets Bond is more risky , with highe r potential for sharp price declines.

Interest rate risk This risk refers to the decline in bond prices that accompanies a rise in the overall level of inter est rates. (Bond prices and interest rates move in opposite directions.) Because prices of long-term bonds are more sensitive to interest rate changes than prices of short-term bonds, the funds have greater interest rate risk than short-term bond funds.

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Credit risk This is the chance that any of the fund`s holdings will have their credit ratings downgraded or will default (fail to make scheduled interest or principal payments), potentially reducing the fund`s income level and share price. The risk of default is much greater for emerging market bonds.

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Nondiversified risk Because they are nondiversified, each fund can invest more of its assets in a smaller number of issuers than diversified funds. This could result in greater potential losses than for funds investing in a broader variety of issues.

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Currency risk This is the risk of a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency. The overall impact on each fund`s holdings can be significant and long-lasting, depending on the currencies represented in the portfolio, how each one appreciates or depreciates in relation to the U.S. dollar and whether currency positions are hedged. The International Bond Fund is normally heavily exposed to foreign currencies, so that changes in currency exchange rates are likely to play a significant role in fund performance. Bonds held in the Emerging Markets Bond Fund are often denomi nated in U.S. dollars to improve their marketability, but this does not protect them from substantial price declines in the face of political and economic turmoil . Currency trends are unpredictable, and to the extent each fund purchases and sells currencies, it will also be subject to the risk that its trading strategies, including efforts at hedging, will not succeed. Furthermore, hedging costs can be significant and reduce fund net asset value, and many emerging market currencies cannot be effectively hedged.

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Emerging market risk The funds` investments in emerging markets are subject to abrupt and severe price declines. The economic and political structures of developing nations, in most cases, do not compare favorably with the U.S. or other developed countries in terms of wealth and stability, and their financial markets often lack liquidity. These economies are less well developed and can be overly reliant on particular industries and more vulnerable to the ebb and flow of international trade and capital, trade barriers, and other protectionist or retaliatory measures. Some countries have legacies of hyperinflation and currency devaluations versus the dollar (which adversely affect returns to U.S. investors). Significant devaluations have occurred in recent years in vari ous emerging market countries . Governments of some emerging market countries have defaulted on their bonds and investors in this sector must be prepared for similar events in the future.

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Other risks of foreign investing Other risks result from the varying stages of economic and political development of foreign countries, the differing regulatory environments, trading days, and accounting standards of non-U.S. markets, and higher transaction costs. Government interference in capital markets, such as capital or currency controls, nationalization of companies or industries, expropriation of assets, or imposition of punitive taxes would also hurt the funds.

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Derivatives risk To the extent the funds use futures, swaps, and other derivatives , they are exposed to additional volatility and potential losses.

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

The share price and income level of each fund will fluctuate with changing marke t conditions and interest rate levels. W hen you sell your shares, you may lose money.

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

Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. Neither fund is suitable for near-term financial goals. Your decision should take into account whether you have any other for eign bond investments. If not, you may wish to invest in the International Bond Fund to gain broad exposure to opportunities abroad. The Emerging Markets Bond Fund may be an appropriate part of your portfolio if you are supplementing existing holdings that are primarily in developed foreign markets and can accept the potentially greater volatility of emerging markets.

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

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

How has each fund performed in the past?

The bar charts showing calendar year returns and the average annual total return table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a com parable market index. Fund past returns (before and after taxes) are not necessarily an indication of future perfor mance.

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

In addition, the average annual total return table shows hypothetical after-tax returns to suggest how taxes paid by the shareholder may influence returns. Actual after-tax returns depend on each investor`s situation and may differ from those shown. After-tax returns are not relevant if the shares are held in a tax-deferred account, such as a 401(k) or IRA. During periods of fund losses, the post-liquidation after-tax return may exceed the fund`s other returns because the loss generates a tax benefit that is factored into the result.

<R> Table 2 Average Annual Total Returns

	Periods ended December 31, 2002
	1 year	5 years	Shorter of 10 years or since inception	Inception date
International Bond Fund
Returns before taxes	21.80 %	3.85 %	5.91 %	9/10/86
Returns after taxes on distributions	20.40	2.85	3.83
Returns after taxes on distributions and sale of fund shares	13.29	2.60	3.73
J.P. Morgan Global Government Bond Broad Index , Non-U.S. Dollar	22.81	5.06	6.58
Lipper International Income Funds Average	16.02	5.06	7.26
Emerging Markets Bond Fund
Returns before taxes	9.52	5.46	12.81	12/30/94
Returns after taxes on distributions	6.10	1.44	8.07
Returns after taxes on distributions and sale of fund shares	5.74	2.21	7.98
J.P. Morgan Emerging Markets Bond Index Plus	14.24	7.18	13.85
Lipper Emerging Markets Debt Funds Average	11.26	5.25	10.61

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Returns are based on changes in principal value, reinvested dividends , and capital gain distributions, if any. Returns before taxes do not reflect effects of any income or capital gains taxes. All after-tax returns are calculated using the historical highest individual federal marginal income tax and capital gains rates. They do not reflect the impact of state and local taxes. Returns after taxes on distributions reflect the taxed return on the payment of dividends and capital gains. Returns after taxes on distributions and sale of fund shares assume the shares were sold at period - end and, therefore, are also adjusted for any capital gains or losses incurred by the shareholder. Market indexes do not include expenses, which are deducted from fund returns, or taxes.

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J.P. Morgan Global Government Bond Broad Index , Non U.S. Dollar tracks government bonds in the U.S. and 12 international markets.

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J.P. Morgan Emerging Markets Bond Index Plus tracks Brady Bonds of seventeen foreign countries.

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What fees or expenses will I pay?

The funds are 100% no load. There are no fees or charges to buy or sell fund shares, reinvest dividends, or exchange into other T. Rowe Price funds. There are no 12b 1 fees.

<R> Table 3 Fees and Expenses of the Funds *

Fund	Annual fund operating expenses (expenses that are deducted from fund assets)
	Management fee	Other expenses	Total annual fund operating expenses

International Bond	0.67 %	0.26 %	0.93 %
Emerging Markets Bond	0.77	0.37	1.14

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* Redemption proceeds of less than $5,000 sent by wire are subject to a $5 fee paid to the fund. Accounts with less than a $2,000 balance (with certain excep tions) are subject to a $10 fee. See Account Maintenance and Small Account Fees.

Example. The following table gives you an idea of how expense ratios may translate into dollars and helps you to compare the cost of investing in these funds with that of other mutual funds. Although your actual costs may be higher or lower, the table shows how much you would pay if operating expenses remain the same, you invest $10,000, earn a 5% annual return, and hold the investment for the following periods and then redeem:

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Fund	1 year	3 years	5 years	10 years
International Bond	$ 95	$ 296	$ 515	$ 1,143
Emerging Markets Bond	116	362	628	1,386

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other INFORMATION about the funds

Why invest in an international fund?

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Interest rates vary from country to country depending on local economic conditions and monetary and fiscal policies. By investing in foreign fixed - income markets, U.S. investors can benefit from potentially higher yields than their own markets provide. Also, foreign bond markets often move independently of one another and the U.S. markets. Therefore, diversifying internationally across various countries can help reduce portfolio volatility and smooth out returns.

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What are some of the advantages of investing in international fixed - income markets through mutual funds?

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Buying foreign bonds can be difficult and costly for the individual investor, and gaining access to many foreign markets can be complicated. Few investors have the time, the expertise, or the resources to evaluate foreign mar kets effectively on their own. Therefore, the professional management, broad diversification, and relative simplic ity of mutual funds make them an attractive, low-cost vehicle for this type of investing.

For more details on potential risks of foreign investments, please see Investment Policies and Practices and the Statement of Additional Information.

How does the portfolio manager try to reduce risk?

Consistent with each fund`s objective, the portfolio manager uses various tools to try to reduce risk and increase total return, including:

Diversification of assets to reduce the impact of a single holding or sector on a fund`s net asset value.

Thorough credit research by our own analysts.

Adjustment of fund duration to try to reduce the drop in price when interest rates rise or to benefit from the rise in price when rates fall. Duration is a measure of a fund`s sensitivity to interest rate changes.

Management of the impact of foreign currency changes on the fund`s portfolio to the degree discussed previ ously under "currency risk."

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

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

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With one quick sign - up, you can take advantage of our Electronic Delivery program and begin to receive updated fund reports and prospectuses online rather than through the mail. Log on to your account at troweprice.com for more information today.

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As a T. Rowe Price shareholder, you will want to know about the following policies and procedures that apply to all accounts in the T. Rowe Price family of stock, bond, and money market funds.

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Pricing Shares and Receiving Sale Proceeds

How and when shares are priced

The share price (also called "net asset value" or NAV per share) for all funds except the Japan Fund is calculated at the close of the New York Stock Exchange, normally 4 p.m. ET, each day that the exchange is open for business. (See the following section for information on the Japan Fund.) To calculate the NAV, a fund`s assets are valued and totaled, liabilities are subtracted, and the balance, called net assets, is divided by the number of shares outstanding. Market values are used to price stocks and bonds. Amortized cost is used to price securities held by money market fund s.

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

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

How your purchase, sale, or exchange price is determined

If we receive your request in correct form by 4 p.m. ET, your transaction will be priced at that day`s NAV. If we receive it after 4 p.m., it will be priced at the next business day`s NAV.

We cannot accept orders that request a particular day or price for your transaction or any other special conditions.

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

Note: The time at which transactions and shares are priced and the time until which orders are accepted may be changed in case of an emergency or if the New York Stock Exchange closes at a time other than 4 p.m. ET.

Japan Fund: Pricing and Transactions

The Japan Fund`s share price is calculated at the close of the New York Stock Exchange, normally 4 p.m. ET, when both it and the Tokyo Stock Exchange are open. The fund will not price shares or process orders on any day when either the New York or Tokyo Stock Exchange is closed. Orders received on such days will be pro cessed the next day the fund computes an NAV. As such, you may experience a delay in purchasing or redeeming fund shares. Exchanges: If you wish to exchange into the Japan Fund on a day the New York Stock Exchange is open but the Tokyo Stock Exchange is closed, the exchange out of the other T. Rowe Price fund will be processed on that day, but Japan Fund shares will not be purchased until the day the Japan Fund reopens. If you wish to exchange out of the Japan Fund on a day when the New York Stock Exchange is open but the Tokyo Stock Exchange is closed, the exchange will be delayed until the Japan Fund reopens.

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The Tokyo Stock Exchange is scheduled to be closed on the following weekdays: In 2003 — January 1, 2, 3, and 13; February 11; March 21; April 29; May 3 and 5; July 21; September 15 and 23; October 13; November 4 and 24; December 23 and 31 . In 2004 — January 1, 2, 3, 4, and 1 2 ; February 11; March 20; April 29; May 3, 4, and 5; July 19; September 20 and 23; October 11; November 3 and 23; December 23 and 31. If the Tokyo Stock Exchange closes on dates not listed, the fund will not be priced on those dates.

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How you can receive the proceeds from a sale

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

If your request is received by 4 p.m. ET in correct form, proceeds are usually sent on the next business day. Pro ceeds can be sent to you by mail or to your bank account by Automated Clearing House (ACH) transfer or bank wire. ACH is an automated method of initiating payments from, and receiving payments in, your financial insti tution account. Proceeds sent by ACH transfer are usually credited the second business day after the sale. Pro ceeds sent by bank wire should be credited to your account the first business day after the sale.

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

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

Contingent Redemption Fee

Short-term "market timers" who engage in frequent purchases and redemptions can disrupt a fund`s investment program and create additional transaction costs. For these reasons, certain T. Rowe Price funds, listed below, assess a fee on redemptions (including exchanges) of fund shares held for less than the period shown:

Fund	Holding period	Redemption fee
Diversified Small-Cap Growth	6 months	1 .00 %
Developing Technologies	1 year	1 .00 %
Emerging Europe & Mediterranean	1 year	2 .00 %
Emerging Markets Stock	1 year	2 .00 %
Equity Index 500	6 months	0 .50 %
Extended Equity Market Index	6 months	0 .50 %
High Yield	1 year	1 .00 %
International Discovery	1 year	2 .00 %
International Equity Index	6 months	1 .00 %
Latin America	1 year	2.00 %
Real Estate	6 months	1 .00 %
Small-Cap Value	1 year	1 .00 %
Tax-Efficient Balanced	1 year	1 .00 %
Tax-Efficient Growth	2 years	1 .00 %
Tax-Efficient Multi-Cap Growth	2 years	1 .00 %
Total Equity Market Index	6 months	0 .50 %
U.S. Bond Index	6 months	0 .50 %

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

In determining a holding period, the fund will use the anniversary date of a transaction. Thus, for a one-year period, shares purchased on January 1 will be subject to the fee if they are redeemed on or prior to the following December 31. If they are redeemed on or after January 1 of the following year, they will not be subject to the fee.

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

Useful Information on Distributions and Taxes

All net investment income and realized capital gains are distributed to shareholders.

Dividends and Other Distributions

Dividend and capital gain distributions are reinvested in additional fund shares in your account unless you select another option on your New Account Form. Reinvesting distributions results in compounding , that is, receiving income dividends and capital gain distributions on a rising number of shares.

Distributions not reinvested are paid by check or transmitted to your bank account via ACH. If the Post Office cannot deliver your check, or if your check remains uncashed for six months, the fund reserves the right to reinvest your distribution check in your account at the NAV on the day of the reinvestment and to reinvest all subsequent distributions in shares of the fund. No interest will accrue on amounts represented by uncashed distribution or redemption checks.

The following chart provides details on dividend payments.

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<R> Table 4 Dividend Payment Schedule

Fund	Dividends
Money market funds	Declared daily to shareholders of record as of 12 noon ET on that day. P urchases made after 12 noon ET receive the dividend on the next business day after payment has been received. Paid on the first business day of each month.
Bond funds *	Declared daily to shareholders of record as of 4 p.m. ET the previous business day. P ur chases made after 4 p.m. ET receive the divi dend on the next business day after payment has been received. Paid on the first business day of each month.
These stock funds only:* Balanced Dividend Growth Equity Income Equity Index 500 Growth & Income Personal Strategy Balanced Personal Strategy Income Real Estate	Declared quarterly, if any, in March, June, September, and December. Must be a shareholder of record as of 4 p.m. ET on the record date.
O ther stock funds*	Declared annually, if any, generally in December. Must be a shareholder of record as of 4 p.m. ET on the record date.
Retirement Funds * : Retirement Income Retirement 2010 Retirement 2020 Retirement 2030 Retirement 2040	Declared daily to shareholders of record as of 4 p.m. ET the previous business day. Pur chases made after 4 p.m. ET receive the divi dend on the next business day after payment has been received. Paid on the first business day of each month. Declared annually, if any, generally in December. Must be a shareholder of record as of 4 p.m. ET on the record date.
Tax-Efficient Balanced*	Municipal Portion Declared daily to shareholders of record as of 4 p.m. ET the previous business day. Pur chases made after 4 p.m. ET receive the divi dend on the next business day after payment has been received. Paid on the last business day of March, June, September, and December. Equity Portion Declared annually, if any, generally in December. Must be a shareholder of record as of 4 p.m. ET on the record date.

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* Mutual fund dividends may be eligible for the 70% deduction for dividends received by corporations to the extent the fund`s income consists of dividends paid by U.S. corporations.

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Bond or money f und shares will earn dividends through the date of redemption; also, shares redeemed on a Fri day or prior to a holiday (other than wire redemptions for money funds received before 12 noon ET) will con tinue to earn dividends until the next business day. Generally, if you redeem all of your bond or money fund shares at any time during the month, you will also receive all dividends earned through the date of redemption in the same check. When you redeem only a portion of your bond or money fund shares, all dividends accrued on those shares will be reinvested, or paid in cash, on the next dividend payment date.

Capital gain payments

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

Capital gain payments are not expected in money market funds, which are managed to maintain a constant share price.

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

Tax Information

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

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If you invest in the fund through a tax-deferred retirement account, you will not be subject to tax on dividends and distributions from the fund or the sale of fund shares if those amounts remain in the tax-deferred account.

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If you invest in the fund through a taxable account, y ou need to be aware of the possible tax consequences when:

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

A fund makes a distribution to your account.

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Tax-Free and Municipal Funds

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The regular monthly income dividends you receive from the t ax- f ree funds are expected to be exempt from fed eral income taxes. You must report your total tax-exempt income on IRS Form 1040. The IRS uses this informa tion to help determine the tax status of any Social Security payments you may have received during the year. For shareholders who receive Social Security benefits, the receipt of tax-exempt interest may increase the portion of benefits that are subject to tax.

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For the state specific tax-free funds, the monthly dividends you receive are also expected to be exempt from state and local income tax, if any.

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If the t ax- f ree funds invest in certain "private activity" bonds, shareholders who are subject to the alternative minimum tax (AMT) must include income generated by these bonds in their AMT computation. The portion of this fund`s income that should be included in your AMT calculation, if any, will be reported to you in January.

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Florida Intermediate Tax-Free Fund

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Although Florida does not have a state income tax, it does impose an intangibles property tax that applies to shares of mutual funds. However, a fund that is organized as a business trust and invested at least 90% in Florida municipal obligations, U.S. government obligations, and certain other designated securities on January 1 is exempt from the intangibles tax. If a fund`s portfolio is less than 90% invested in these exempt securities on Jan uary 1, the exemption applies only to the portion of assets (if any) invested in U.S. government obligations.

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The fund is organized as a business trust and will make every effort to have at least 90% of its portfolio invested in exempt securities on January 1 and, therefore, expects that the entire value of all fund shares will be exempt from the intangibles tax. Nevertheless, exemption is not guaranteed , since the fund has the right under certain conditions to invest in nonexempt securities.

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Tax-Efficient Balanced Fund

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A significant portion of the fund`s dividend is expected to be exempt from federal income taxes.

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Taxes on fund redemptions

When you sell shares in any fund, you may realize a gain or loss. An exchange from one fund to another is also a sale for tax purposes.

In January, you will be sent Form 1099-B indicating the date and amount of each sale you made in the fund dur ing the prior year. This information will also be reported to the IRS. For most new accounts or those opened by exchange in 1984 or later, we will provide the gain or loss on the shares you sold during the year based on the "average cost" single category method. This information is not reported to the IRS, and you do not have to use it. You may calculate the cost basis using other methods acceptable to the IRS, such as "specific identification."

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

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Taxes on fund distributions

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

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The tax treatment of a capital gain distribution is determined by how long the fund held the portfolio securities, not how long you held shares in the fund. Short-term (one year or less) capital gain distributions are taxable at the same rate as ordinary income and long-term gains on securities held more than 12 months are taxed at a maximum rate of 20%. If you realized a loss on the sale or exchange of fund shares that you held six months or less, your short-term loss must be reclassified to a long-term loss to the extent of any long-term capital gain dis tribution received during the period you held the shares. If you realize a loss on the sale or exchange of tax-free fund shares held six months or less, your capital loss is reduced by the tax-exempt dividends received on those shares. G ains and losses from the sale of foreign currencies and the foreign currency gain or loss resulting from the sale of a foreign debt security can increase or decrease an ordinary income dividend. Net foreign currency losses may cause monthly or quarterly dividend s to be reclassified as a return of capital.

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If the fund qualifies and elects to pass through nonrefundable foreign taxes paid to foreign governments during the year, your portion of such taxes will be reported to you as taxable income. However, you may be able to claim an offsetting credit or deduction on your tax return for those amounts. There can be no assurance that a fund will be able to meet the requirements to pass through foreign income taxes paid.

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Inflation Protected Bond Fund

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Inflation adjustments on Treasury inflation-protected securities exceeding deflation adjustments for a year will be distributed to you as a short-term capital gain. In computing the amount of the distribution , the fund cannot reduce inflation adjustments by short- or long-term losses from the sales of securities. Net deflation adjustments for a year may result in all or a portion of dividends paid earlier in the year to be treated as a return of capital.

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Retirement Funds

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Distributions by the underlying funds and changes in asset allocations may result in taxable distributions of ordi nary income or capital gains. Under current law, it is anticipated that the automatic conversion of a portfolio into the Retirement Income Fund will not be a taxable event.

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Tax-Free and Municipal Funds and Tax-Efficient Balanced Fund

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Gains and losses realized on the sale of market discount bonds with maturities beyond one year may be treated as ordinary income and cannot be offset by other capital losses. Therefore, to the extent a fund invests in these secu rities, the likelihood of a taxable gain distribution will be increased.

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Tax-Efficient Balanced Fund

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The Tax-Efficient Balanced Fund intends to invest a sufficient portion of its assets in municipal bonds and notes so that it will qualify to pay tax-exempt dividends. The portion of your income dividend derived from investment in tax-exempt securities will be exempt from federal income tax. A small portion may also be exempt from state income taxes. You will be sent any additional information you need to determine your taxes on fund distribu tions. The amount of such dividends will be reported to you on your calendar year-end statement.

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Tax consequences of hedging

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For funds investing in foreign securities, distributions resulting from the sale of certain foreign currencies, currency contracts, and the currency portion of gains on debt securities are taxed as ordinary income. Net foreign currency losses may cause monthly or quarterly dividends to be reclassified as a return of capital. Entering into certain options, futures, swaps, and forward foreign exchange contracts and transactions may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in the fund being required to distribute gains on such transactions even though it did not close the contracts during the year or receive cash to pay such distributions. The fund may not be able to reduce its distributions for losses on such transactions to the extent of unrealized gains in offsetting positions.

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

Tax effect of buying shares before a capital gain distribution

If you buy shares shortly before or on the "record date" — the date that establishes you as the person to receive the upcoming distribution — you receive a portion of the money you just invested in the form of a taxable distribution. Therefore, you may wish to find out a fund`s record date before investing. Of course, a fund`s share price may, at any time, reflect undistributed capital gains and unrealized appreciation, which may result in future taxable dis tributions. Such distributions can occur even in a year when the fund has a negative return.

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Transaction Procedures and Special Requirements

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Following these procedures helps assure timely and accurate transactions.

Purchase Conditions

Nonpayment

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

U.S. dollars

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

Sale (Redemption) Conditions

Holds on immediate redemptions: 10-day hold

If you sell shares that you just purchased and paid for by check or ACH transfer, the fund will process your redemption but will generally delay sending you the proceeds for up to 10 calendar days to allow the check or transfer to clear. If, during the clearing period, we receive a check drawn against your newly purchased shares , it will be returned marked "uncollected." (The 10-day hold does not apply to purchases paid for by bank wire or automatic purchases through your paycheck.)

Telephone, Tele*Access ® , and online account transactions

You may access your account or conduct transactions using the telephone or Tele*Access, or online . The T. Rowe Price funds and their agents use reasonable procedures to verify the identity of the shareholder. If these proce dures are followed, the funds and their agents are not liable for any losses that may occur from acting on unau thorized instructions. A confirmation is sent promptly after a transaction. Please review it carefully and contact T. Rowe Price immediately about any transaction you believe to be unauthorized. T elephone conversations are recorded.

Redemptions over $250,000

Large redemptions can adversely affect a portfolio manager`s ability to implement a fund`s investment strategy by causing the premature sale of securities that would otherwise be held. If, in any 90-day period, you redeem (sell) more than $250,000, or your sale amounts to more than 1% of fund net assets, the fund has the right to pay the difference between the redemption amount and the lesser of the two previously mentioned figures with securities from the fund.

Excessive Trading

T. Rowe Price may bar excessive traders from purchasing shares.

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Frequent trades or market timing in your account or accounts controlled by you can disrupt management of a fund and raise its expenses. To deter such activity, each fund has adopted the following excessive trading poli cies. Transactions placed directly or accepted by intermediaries in violation of these policies or from persons believed to be market timers are subject to rejection or cancellation by the funds.

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Trades placed directly with T. Rowe Price If you trade directly with T. Rowe Price , you can make one purchase and one sale or one sale and one purchase involving the same fund within any 120-day period. If you exceed this limit, or if your trad ing activity involves market timing, you may be barred indefinitely and without further notice from further purchases of the T. Rowe Price funds.

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

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Trades placed through intermediaries If you purchase fund shares through an intermediary including a broker, bank, investment adviser, recordkeeper, or other third party, you can make one purchase and one sale or one sale and one purchase involving the same fund within any 120-day period. If you exceed this limit or if you hold fund

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shares for less than 60 calendar days, you may be barred indefinitely and without further notice from further pur chases of the T. Rowe Price funds. Systematic purchases and redemptions are exempt from this policy.

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Keeping Your Account Open

Due to the relatively high cost to a fund of maintaining small accounts, we ask you to maintain an account bal ance of at least $1,000 ($10,000 for Summit Funds). If your balance is below this amount for three months or longer, we have the right to close your account after giving you 60 days to increase your balance.

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Signature Guarantees

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A signature guarantee is designed to protect you and the T. Rowe Price fu nds from fraud by verifying your signature.

You may need to have your signature guaranteed in certain situations, such as:

Written requests 1) to redeem over $100,000 or 2) to wire redemption
proceeds when prior bank account authorization is not on file .

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

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

Establishing certain services after the account is opened.

You can obtain a signature guarantee from most banks, savings institutions,
broker-dealers, and other guarantors acceptable to T. Rowe Price . We cannot accept guarantees from notaries public or organizations that do not provide reimbursement in the case of fraud.

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Account Maintenance and Small Account Fees

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Small Account Fee (all funds except Index Funds) Because of the disproportionately high costs of servicing accounts with low balances, a $10 fee, paid to T. Rowe Price Services, the funds` transfer agent, will automati cally be deducted from nonretirement accounts with balances falling below a minimum amount. The valuation of accounts and the deduction are expected to take place during the last five business days of September. The fee will be deducted from accounts with balances below $2,000, except for UGMA/UTMA accounts, for which the minimum is $500. The fee will be waived for any investor whose T. Rowe Price mutual fund accounts total $25,000 or more. Accounts employing automatic investing (e.g., payroll deduction, automatic purchase from a bank account, etc.) are also exempt from the charge. The fee does not apply to IRAs and other retirement plan accounts that utilize a prototype plan sponsored by T. Rowe Price, but a separate custodial or administrative fee may apply to such accounts.

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Account Maintenance Fee (Index Funds only) The account maintenance fee is charged on a quarterly basis usually during the last week of a calendar quarter. On the day of the assessment, accounts with balances below $10,000 will be charged the fee. Please note that the fee will be charged to accounts that fall below $10,000 for any rea son, including market fluctuations, redemptions, or exchanges. When an account with less than $10,000 is closed either through redemption or exchange, the fee will be charged and deducted from the proceeds. The fee will apply to IRA accounts. The fee does not apply to retirement plans directly registered with T. Rowe Price Services, or accounts maintained by intermediaries through NSCC ® Networking.

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Organization and Management

How are the funds organized?

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T. Rowe Price International Funds, Inc., a Maryland corporation (the "corporation"), currently consists of 12 series, each representing a separate portfolio with different objectives and investment policies. The 12 series and the years in which each was established are as follows: International Stock Fund, 1980; International Bond Fund, 1986; International Discovery Fund, 1988; European Stock Fund, New Asia Fund, 1990; Japan Fund, 1991; Latin America Fund, 1993; Emerging Markets Bond Fund, 1994; Emerging Markets Stock Fund, Global Stock Fund, 1995; International Growth & Income Fund, 1998; and Emerging Europe & Mediterranean Fund, 2000. Each is an " open-end investment company, " or mutual fund. Mutual funds pool money received from shareholders and invest it to try to achieve specified objectives.

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What is meant by "shares"?

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

Each share and fractional share entitles the shareholder to:

Receive a proportional interest in income and capital gain distributions.

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Cast one vote per share on certain fund matters, including the election of fund directors/trustees , changes in fundamental policies, or approval of changes in the fund`s management contract.

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Do T. Rowe Price funds have annual shareholder meetings?

The funds are not required to hold annual meetings and, to avoid unnecessary costs to fund shareholders, do not do so except when certain matters, such as a change in fundamental policies, must be decided. In addition, shareholders representing at least 10% of all eligible votes may call a special meeting, if they wish, for the purpose of voting on the removal of any fund director or trustee.
If a meeting is held and you cannot attend, you can vote by proxy. Before the meeting, the fund will send you proxy materials that explain the issues to be decided and include instructions on voting by mail or telephone, or on the Internet.

Who runs the funds?

General Oversight

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The corporation is governed by a Board of Directors / Trustees that meets regularly to review fund investments, performance, expenses, and other business affairs. The Board elects the corporation`s officers. The majority of Board members are independent of T. Rowe Price International.

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All decisions regarding the purchase and sale of fund investments are made by T. Rowe Price International — specifically by each fund`s portfolio managers .

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Investment Manager

T. Rowe Price International is responsible for the selection and management of each fund`s portfolio investments. The U.S. office of T. Rowe Price International is located at 100 East Pratt Street, Baltimore, Maryland 21202. Offices are also located in London, Tokyo, Singapore, Hong Kong, Buenos Aires, and Paris.

Portfolio Management

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Each fund has an Investment Advisory Committee whose chairman has day-to-day responsibility for managing the portfolio and works with the committee in developing and executing each fund`s investment program. The Investment Advisory Committees comprise the following members:

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International Bond Fund Ian D. Kelson, Chairman, Brian J. Brennan, Michael J. Conelius, and Christopher J. Rothery. Mr. Kelson joined T. Rowe Price International in 2000 as the head of international fixed-income investments. Prior to joining T. Rowe Price International, he spent 10 years as Chief Investment Officer, Fixed Income at Morgan Grenfell/Deutsche Asset Management.

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Emerging Markets Bond Fund Michael J. Conelius, Chairman, Julio A. Delgado, Ian D. Kelson, and Christopher J. Rothery. Mr. Conelius joined T. Rowe Price International in 1995 and has been responsible for portfolio management and analysis of emerging markets debt since that time. He joined T. Rowe Price in 1988 as a financial analyst.

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The Management Fee

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This fee has two parts — an "individual fund fee," which reflects a fund`s particular characteristics, and a "group fee." The group fee, which is designed to reflect the benefits of the shared resources of the T. Rowe Price invest ment management complex, is calculated daily based on the combined net assets of all T. Rowe Price funds (except the Spectrum Funds, the Retirement Funds, and any institutional, index, or private label mutual funds). The group fee schedule (shown below) is graduated, declining as the asset total rises, so shareholders benefit from the overall growth in mutual fund assets.

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Group Fee Schedule

0.334% *	First $50 billion

0.305%	Next $30 billion

0.300%	Next $40 billion

0.295%	Thereafter

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

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Each fund`s portion of the group fee is determined by the ratio of its daily net assets to the daily net assets of all . the T. Rowe Price funds described previously. Based on combined T. Rowe Price fund assets of over $ 8 4 billion . at December 31, 2002 , the group fee was 0.32%. . The individual fund fees are as follows: International Bond Fund, 0.35%; and Emerging Markets Bond Fund, 0.45%.

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Understanding Performance Information

This section should help you understand the terms used to describe fund performance. You will come across them in shareholder reports you receive from us, in our educational and informational materials, in T. Rowe Price advertisements, and in the media.

Total Return

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This tells you how much an investment has changed in value over a given period. It reflects any net increase or decrease in the share price and assumes that all dividends and capital gains (if any) paid during the period were reinvested in additional shares. Therefore, total return numbers include the effect of compounding.

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Advertisements may include cumulative or average annual total return figures, which may be compared with var ious indices, other performance measures, or other mutual funds.

Cumulative Total Return

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

Average Annual Total Return

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

Yield

The current or "dividend" yield on a fund or any investment tells you the relationship between the investment`s current level of annual income and its price on a particular day. The dividend yield reflects the actual income paid to shareholders for a given period, annualized, and divided by the price at the end of the period. For exam ple, a fund providing $5 of annual income per share and a price of $50 has a current yield of 10%. Yields can be calculated for any time period.

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For bond funds, t he advertised or SEC yield is found by determining the net income per share (as defined by the Securities and Exchange Commission) earned by a fund during a 30-day base period and dividing this amount by the share price on the last day of the base period. The SEC yield — also called the standardized yield — may differ from the dividend yield.

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Investment Policies and Practices

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

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Shareholder approval is required to substantively change fund objectives . Shareholder approval is also required to change certain investment restrictions noted in the following section as "fundamental policies." The manag ers also follow certain "operating policies" that can be changed without shareholder approval. Shareholders will receive at least 60 days` prior notice of any change in the policy requiring the fund to normally invest at least 80% of net assets in 1) bonds (International Bond) and 2) in government or corporate debt securities of emerg ing nations (Emerging Markets Bond). Fund investment restrictions and policies apply at the time of invest ment. A later change in circumstances will not require the sale of an investment if it was proper at the time it was made. (This exception does not apply to the fund`s borrowing policy . )

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Fund holdings of certain kinds of investments cannot exceed maximum percentages of total assets, which are set forth in this prospectus. For instance, fund investments in certain derivatives are limited to 10% of total assets. While these restrictions provide a useful level of detail about fund investments, investors should not view them as an accurate gauge of the potential risk of such investments. For example, in a given period, a 5% investment in derivatives could have significantly more of an impact on a fund`s share price than its weighting in the portfolio. The net effect of a particular investment depends on its volatility and the size of its overall return in relation to the performance of all other fund investments.

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

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

Types of Portfolio Securities

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

Fixed-Income Securities

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The funds` investments may include but shall not be limited to: (1) d ebt obligations issued or guaranteed by: (a) a foreign sovereign government or one of its agencies, authorities, instrumentalities, or political subdivisions, including a foreign state, province, or municipality, and (b) supranational organizations such as the World Bank, Asian Development Bank, European Investment Bank, and European Economic Community; (2) d ebt obliga tions: (a) of foreign banks and bank holding companies, and (b) of domestic banks and corporations issued in foreign currencies; and (3) f oreign corporate debt securities and commercial paper. Such securities may take a

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variety of forms including those issued in the local currency of the issuer, Brady bonds, Euro bonds, and bonds denominated in the e uro. Normally, the International Bond Fund will only purchase bonds denominated in for eign currencies (other than Brady and other emerging market bonds).

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The Emerging Markets Bond Fund may also invest in: such dollar-denominated fixed - income securities as (1) d ebt obligations issued or guaranteed by the U.S. government or its agencies or instrumentalities; (2) d omestic corporate debt securities; (3) d omestic commercial paper, including commercial paper indexed to certain spe cific foreign currency exchange rates; (4) d ebt obligations of domestic banks and bank holding companies; and (5) c ollateralized mortgage obligations or asset-backed bonds. The funds may from time to time purchase secu rities on a when-issued basis, invest in repurchase agreements, and purchase bonds convertible into equities.

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Nondiversified Investment Company

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The funds are able to invest more than 5% of their assets in the fixed - income securities of individual foreign governments. Each fund generally will not invest more than 5% of its assets in any individual corporate issuer, provided that (1) a fund may place assets in bank deposits or other short-term bank instruments with a matu rity of up to 30 days provided that (a) the bank has a short-term credit rating of A1+ (or, if unrated, the equiva lent as determined by T. Rowe Price International) and (b) the fund will not maintain more than 10% of its total assets with any single bank; and (2) the fund may maintain more than 5% of its total assets, including cash and currencies, in custodial accounts or deposits of the funds` custodian or sub-custodians.

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In addition, each fund intends to qualify as a regulated investment company for purposes of the Internal Reve nue Code. This requires each fund to limit its investments so that, at the end of each fiscal quarter, with respect to 50% of its total assets, no more than 5% of its assets is invested in the securities of a single issuer, and not more than 10% of the voting securities of any issuer are held by the fund. W ith respect to the remaining 50% of fund assets , no more than 25% may be invested in a single issuer. Since, as a nondiversified investment com pany, each fund is permitted to invest a greater proportion of its assets in the securities of a smaller number of issuers, the funds may be subject to greater credit risk with respect to their portfolio securities than an invest ment company that is more broadly diversified.

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Hybrid Instruments

These instruments (a type of potentially high-risk derivative) can combine the characteristics of securities, futures, and options. For example, the principal amount or interest rate of a hybrid could be tied (positively or negatively) to the price of some commodity, currency, or securities index or another interest rate (each a "bench mark"). Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging, duration management, and increased total return. Hybrids may or may not bear interest or pay divi dends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be lever aged and move (up or down) more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes the funds to the credit risk of the issuer of the hybrid. These risks may cause significant fluctuations in the net asset values of the funds.

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

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

Private Placements

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

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

Loan Participations and Assignments

Large loans to corporations or governments, including governments of less-developed countries (LDCs), may be shared or syndicated among several lenders, usually banks. Each fund could participate in such syndicates, or could buy part of a loan, becoming a direct lender. Participations and assignments involve special types of risk,

including limited marketability and the risks of being a lender. If a fund purchases a participation, it may only be able to enforce its rights through the lender, and it may assume the credit risk of the lender in addition to the borrower. In assignments, the funds` rights against the borrower may be more limited than those held by the original lender.

Operating policy The International Bond Fund may not invest more than 5% and Emerging Markets Bond Fund not more than 20% of total assets in loan participations and assignments.

High-Yield, High-Risk Bonds

While investments in high-yield, lower-quality securities offer the opportunity for substantial income and capi tal appreciation, there are significant risks associated with such investments, including:

Greater credit risk Companies and governments issuing lower-rated bonds are not as strong financially as those with higher credit ratings, and their bonds are often viewed as speculative investments. Such issuers are more vulnerable to real or perceived business setbacks and to changes in the economy, such as a recession, that might impair their ability to make timely interest and principal payments. Certain less-developed governments have in the past defaulted on payment of interest and principal on debt they have issued. As a result, your fund man ager relies heavily on proprietary T. Rowe Price International research when selecting these investments.

Reduced market liquidity High-yielding emerging market bonds are generally less "liquid" than higher-quality bonds issued by companies and governments in developed countries. Consequently, large purchases or sales of certain high-yield, emerging market debt issues may cause significant changes in their prices. Because many of these bonds do not trade frequently, when they do trade, their price may be substantially higher or lower than had been expected. A lack of liquidity also means that judgment may play a bigger role when seeking to establish the fair value of the securities.

Other factors The major factor influencing prices of high-quality bonds is changes in interest rate levels; but this is only one of several factors affecting prices of lower-quality bonds. Because the credit quality of the issuer is lower, such bonds are more sensitive to developments affecting the issuer`s underlying fundamentals, such as changes in financial condition, or a given country`s economy in general. In addition, the entire bond market in an emerging market can experience sudden and sharp price swings due to a variety of factors, including changes in economic forecasts, stock market activity, large or sustained sales by institutional investors, a high-profile default, a political upheaval of some kind, or just a change in the market`s psychology. This type of volatility is usually associated more with stocks than bonds, but investors in lower-quality bonds should also anticipate it.

Since mutual funds can be a major source of demand in certain markets, substantial cash flows into and out of these funds can affect high-yield bond prices. If, for example, a significant number of funds were to sell bonds to meet shareholder redemptions, both bond prices and a fund`s share price could fall more than underlying fundamentals might justify.

Defaulted bonds are acquired only if the fund manager foresees the potential for significant capital appreciation.

Brady Bonds Brady bonds, named after former U.S. Secretary of the Treasury Nicholas Brady, are used as a means of restructuring the external debt burden of a government in certain emerging markets. A Brady bond is created when an outstanding commercial bank loan to a government or private entity is exchanged for a new bond in connection with a debt restructuring plan. Brady bonds may be collateralized or uncollateralized and issued in various currencies (although typically in the U.S. dollar). They are often fully collateralized as to principal in U.S. Treasury zero coupon bonds. However, even with this collateralization feature, Brady bonds are often considered speculative, below investment-grade investments because the timely payment of interest is the responsibility of the issuing party (for example, a Latin American country) and the value of the bonds can fluctuate significantly based on the issuer`s ability or perceived ability to make these payments. Finally, some Brady bonds may be structured with floating rate or low fixed-rate coupons.

Operating policy The International Bond Fund may invest up to 20% of total assets in below investment-grade ("junk") bonds. The Emerging Markets Bond Fund may invest substantially all of its assets in such bonds.

Emerging Markets Bond Fund

Convertible Bonds Convertible bonds are debt instruments convertible into equity of the issuing company at cer tain times in the future and according to a certain exchange ratio. Typically, convertible bonds are callable by the company, which may, in effect, force conversion before the holder would otherwise choose.

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While the fund intends to invest primarily in debt securities, it may invest in convertible bonds or equity securi ties. While some countries or companies may be regarded as favorable investments, pure fixed - income opportu nities may be unattractive or limited due to insufficient supply, or legal or technical restrictions. In such cases, the fund may consider equity securities or convertible bonds to gain exposure to such markets.

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Operating policy The fund may invest up to 10% of total assets in convertible bonds and equity securities.

Concentration of Investments From time to time, the fund may invest more than 25% of its total assets in the secu rities of foreign governmental and corporate entities located in the same country. However, the fund will not invest more than 25% of its total assets in any single foreign governmental issuer or in two or more such issuers subject to a common, explicit guarantee.

International Bond Fund

Concentration in Banking Industry When the fund`s position in issues maturing in one year or less equals 35% or more of the fund`s total assets, the fund will, as a matter of fundamental policy, normally have 25% or more of its assets concentrated in securities in the banking industry. Investments in the banking industry may be affected by general economic conditions and exposure to credit losses arising from possible financial difficulties of borrow ers. The profitability of the banking industry is largely dependent on the availability and cost of funds for the purpose of financing lending operations under prevailing money market conditions.

Types of Investment Management Practices

Foreign Currency Transactions

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Each fund may engage in foreign currency transactions either on a spot (cash) basis at the rate prevailing in the currency exchange market at the time or through forward currency contracts ("forwards") with terms generally of less than one year. Forwards will be used primarily to adjust the foreign exchange exposure of each fund with a view to protecting the portfolio from adverse currency movements, based on T. Rowe Price International `s out look . Forwards can also be used in an effort to benefit from a currency believed to be appreciating in value ver sus other currencies. T he funds might be expected to enter into such contracts under the following circumstances:

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Lock In When management desires to lock in the U.S. dollar price on the purchase or sale of a security denomi nated in a foreign currency.

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Cross Hedge If a particular currency is expected to decrease against another currency, a fund may sell the cur rency expected to decrease and purchase a currency that is expected to increase against the currency sold in an amount approximately equal to some or all of a fund`s portfolio holdings denominated in the currency sold. A fund is not required to own securities in the currency purchased.

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Operating policy The International Bond Fund does not normally involve more than 50% of its assets in cross- hedging.

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Direct Hedge If T. Rowe Price International sought to eliminate substantially all of the risk of owning a particular currency or believed the portfolio could benefit from price appreciation in a given country`s bonds but did not want to hold the currency, it could employ a direct hedge back into the U.S. dollar. In either case, a fund would enter into a forward contract to sell the currency in which a portfolio security is denominated and purchase U.S. dollars at an exchange rate established at the time it initiated the contract. The cost of the direct hedge transaction may offset most, if not all, of the yield advantage offered by the foreign security, but a fund would hope to benefit from an increase (if any) in the value of the bond.

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Generally , the International Bond Fund seeks to maintain little net exposure to the U.S. dollar. Thus, any U.S. dollar investments, including any hedges into the U.S. dollar, will normally be offset by hedges out of the U.S. dollar .

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It is often not possible to effectively hedge the currency risk associated with emerging market bonds because their currency markets are not sufficiently developed.

Proxy Hedge T. Rowe Price International might choose to use a proxy hedge, which is less costly than a direct hedge. In this case, a fund, having purchased a bond, will sell a currency whose value is believed to be closely linked to the currency in which the bond is denominated. This type of hedging entails greater risk than a direct hedge because it is dependent on a stable relationship between the two currencies paired as proxies, and because the relationships can be very unstable at times.

Forward contracts involve other risks, including, but not limited to, significant volatility in currency markets. In addition, currency moves may not occur exactly as T. Rowe Price International expected, so use of forward con tracts could adversely affect a fund`s total return.

Costs of Hedging When a fund purchases a foreign bond with a higher interest rate than is available on U.S. bonds of a similar maturity, the additional yield on the foreign bond could be substantially lessened if the fund were to enter into a direct hedge by selling the foreign currency and purchasing the U.S. dollar.

This is what is known as the "cost" of hedging. Proxy hedging attempts to reduce this cost through an indirect hedge back to the U.S. dollar.

It is important to note that hedging costs are treated as capital transactions and are not, therefore, deducted from a fund`s dividend distribution and are not reflected in its yield. Instead, such costs will, over time, be reflected in a fund`s net asset value per share.

Hedging may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in an increase (or decrease) in the amount of taxable dividends paid by the funds and could affect whether dividends paid by the funds are classified as capital gains or ordinary income.

Reserve Position

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

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Borrowing Money and Transferring Assets

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

Fundamental policy Borrowings may not exceed 33xb6 / xb8 % of total assets.

Operating policy Fund transfers of portfolio securities as collateral will not be made except as necessary in con nection with permissible borrowings or investments, and then such transfers may not exceed 33xb6 / xb8 % of total assets. Fund purchases of additional securities will not be made when borrowings exceed 5% of total assets.

Futures and Options

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

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

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

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Lending of Portfolio Securities

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Fund securities may be lent to broker-dealers, other institutions, or other persons to earn additional income. R isk s include the potential insolvency of the broker-dealer or other borrower that could result in delays in recov ering securities and capital losses. Additionally, losses could result from the reinvestment of collateral received on loaned securities in investments that default or do not perform well .

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Fundamental policy The value of loaned securities may not exceed 33xb6 / xb8 % of total assets.

When-Issued Securities and Forward Commitment Contracts

The funds may purchase securities on a when-issued or delayed delivery basis or may purchase or sell securities on a forward commitment basis. There is no limit on fund investments in these securities. The price of these securities is fixed at the time of the commitment to buy, but delivery and payment can take place a month or more later. During the interim period, the market value of the securities can fluctuate, and no interest accrues to the purchaser. At the time of delivery, the value of the securities may be more or less than the purchase or sale price. To the extent the funds remain fully or almost fully invested (in securities with a remaining maturity of more than one year) at the same time they purchase these securities, there will be greater fluctuations in the fund net asset values than if the funds did not purchase them.

Portfolio Turnover

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Turnover is an indication of frequency of trading . The funds will not generally trade in securities for short-term profits, but, when circumstances warrant, securities may be purchased and sold without regard to the length of time held. Each time the fund purchases or sells a security, it incurs a cost. This cost is reflected in the fund`s net asset value but not in its operating expenses. The higher the turnover rate, the higher the transaction costs and the greater the impact on the fund`s total return. Higher turnover can also increase the possibility of taxable capi tal gain distributions . The funds` portfolio turnover rates are shown in the Financial Highlights table .

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Location of Company

The funds ordinarily invest in the securities of at least three countries; however, they may invest in the securi ties of one country, including the U.S., for temporary defensive purposes.

Emerging Markets Bond Fund

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In determining the location of a company, the funds will generally rely on the designations set forth in the Mor gan Stanley Classification Index .

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The fund will normally invest at least 80 % of its net assets in the securities of emerging market governments or companies located (as defined above) in emerging market countries.

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Bond Ratings and High-Yield Bonds

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Larger bond issues are evaluated by rating agencies such as Moody`s and Standard & Poor`s on the basis of the issuer`s ability to meet all required interest and principal payments. The highest ratings are assigned to issuers perceived to be the best credit risks. T. Rowe Price International research analysts also evaluate all portfolio hold ings, including those rated by an outside agency. Other things being equal, lower-rated bonds have higher yields due to greater risk. High-yield bonds, also called "junk" bonds, are those rated below BBB.

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Bond ratings are not guarantees. They are estimates of a company`s financial strength. Ratings can change at any time due to real or perceived changes in a company`s business fundamentals.

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Table 5 shows the rating scale used by several major rating agencies. T. Rowe Price International considers pub licly available ratings but emphasizes its own credit analysis when selecting investments.

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<R> Table 5 Ratings of Corporate Debt Securities

Moody`s Investors Service, Inc.

Standard & Poor`s Corporation

Fitch IBCA, Inc.

Definition

Long Term

Aaa

AAA

Highest quality

High quality

Upper medium grade

Baa

BBB

Medium grade

Speculative

Highly speculative

Caa

CCC, CC

Vulnerable to default

Default is imminent

DDD, DD, D

Probably in default

Moody`s

S&P

Fitch

Commercial Paper

P-1

Superior quality

A-1+ A-1

Extremely strong quality Strong quality

F-1+ F-1

Exceptionally strong quality Very strong quality

P-2

Strong quality

A-2

Satisfactory quality

F-2

Good credit quality

P-3

Acceptable quality

A-3 B C

Adequate quality Speculative quality Doubtful quality

F-3

Fair credit quality

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Financial Highlights

Table 6, which provides information about each fund`s financial history, is based on a single share outstanding throughout the periods shown. Each fund`s section of the table is part of the fund`s financial statements, which are included in its annual report and are incorporated by reference into the Statement of Additional Information (available upon request). The total returns in the table represent the rate that an investor would have earned or lost on an investment in each fund (assuming reinvestment of all dividends and distributions and no payment of account or (if applicable) redemption fees). The financial statements in the annual report were audited by the funds` independent accountants, PricewaterhouseCoopers LLP.

<R> Table 6 Financial Highlights

	Year ended December 31
International Bond Fund	1998	1999	2000	2001	2002

Net asset value, beginning of period	$ 9.58	$ 10.46	$ 9.16	$ 8.47	$ 7.86
Income From Investment Operations
Net investment income	0.51	0.37	0.40	0.32	0.25
Net gains or losses on securities (both realized and unrealized)	0.88	(1.18 )	(0.70 )	(0.61 )	1.43
Total from investment operations	1.39	(0.81 )	(0.30 )	(0.29 )	1.68
Less Distributions
Dividends (from net investment income)	(0.51 )	(0.33 )	—	—	(0.25 )
Distributions (from capital gains)	—	(0.11 )	—	—	—
Returns of capital	—	(0.05 )	(0.39 )	(0.32 )	—
Total distributions	(0.51 )	(0.49 )	(0.39 )	(0.32 )	(0.25 )
Net asset value, end of period	$ 10.46	$ 9.16	$ 8.47	$ 7.86	$ 9.29
Total return	15.03 %	(7.86 )%	(3.13 )%	(3.41 )%	21.80 %
Ratios/Supplemental Data
Net assets, end of period (in millions)	$ 926	$ 779	$ 753	$ 762	$ 1,058
Ratio of expenses to average net assets	0.88 %	0.90 %	0.91 %	0.95 %	0.93 %
Ratio of net income to average net assets	5.19 %	3.93 %	4.76 %	3.98 %	3.01 %
Portfolio turnover rate	128.9 %	94.9 %	160.5 %*	107.6 %	113.9 %

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* Excludes the effect of the acquisition of the T. Rowe Price Global Bond Fund`s assets.

<R> Table 6 Financial Highlights (continued)

Emerging Markets Bond Fund	Year ended December 31
	1998	1999	2000	2001	2002

Net asset value, beginning of period	$ 13.71	$ 9.23	$ 10.11	$ 10.54	$ 10.32
Income From Investment Operations
Net investment income	1.31 *	0.97	1.17	1.19	0.83
Net gains or losses on securities (both realized and unrealized)	(4.29 )	0.99	0.31	(0.25 )	0.11
Total from investment operations	(2.98 )	1.96	1.48	0.94	0.94
Less Distributions
Dividends (from net investment income)	(1.31 )	(0.73 )	(1.05 )	(1.16 )	(0.85 )
Distributions (from capital gains)	(0.19 )	—	—	—	—
Returns of capital	—	(0.35 )	—	—	—
Total distributions	(1.50 )	(1.08 )	(1.05 )	(1.16 )	(0.85 )
Net asset value, end of period	$ 9.23	$ 10.11	$ 10.54	$ 10.32	$ 10.41
Total return	(23.09 )%*	22.97 %	15.20 %	9.35 %	9.52 %
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$ 148,111	$ 173,078	$ 163,937	$ 155,563	$ 211,099
Ratio of expenses to average net assets	1.25 %*	1.25 %	1.21 %	1.16 %	1.14 %
Ratio of net income to average net assets	11.52 %*	10.56 %	11.23 %	11.37 %	8.14 %
Portfolio turnover rate	78.4 %	54.0 %	69.5 %	75.5 %	51.4 %

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* Excludes expenses in excess of a 1.25% voluntary expense limitation in effect through December 31, 2000.

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Account Requirements and Transaction Information

Tax Identification
Number

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We must have your correct Social Security or tax identification number on a signed New Account Form or W-9 Form. Otherwise, federal law requires the funds to withhold a percentage (currently 30 %) of your dividends, capital gain distributions, and redemptions, and may subject you to an IRS fine. If this information is not received within 60 days after your account is established, your account may be redeemed at the fund`s net asset value ( NAV ) on the redemption date.

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Transaction Confirmations

We send immediate confirmations for most of your fund transactions, but some, such as systematic purchases and dividend reinvestments, are reported on your account statement. Please review confirmations and statements as soon as you receive them and promptly report any discrepancies to Shareholder Services.

Employer-Sponsored Retirement Plans and Institutional Accounts

T. Rowe Price
Trust Company
1-800-492-7670

Transaction procedures in the following sections may not apply to employer-sponsored retirement plans and institu tional accounts. For procedures regarding employer-sponsored retirement plans, please call T. Rowe Price Trust Com pany or consult your plan administrator. For institutional account procedures, please call your designated account manager or service representative.

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We do not accept third-party checks, except for IRA r ollover checks that are properly endorsed. In addition, T. Rowe Price does not accept purchases made by credit card check.

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Opening a New Account

$2,500 minimum initial investment; $1,000 for retirement plans or gifts or transfers to minors (UGMA / UTMA) accounts ($25,000 minimum initial investment for Summit Funds only)

Account Registration

If you own other T. Rowe Price funds, be sure to register any new account just like your existing accounts so you can exchange among them easily. (The name and account type would have to be identical.)

For joint accounts or other types of accounts owned or controlled by more than one party, either owner/party has com plete authority to act on behalf of all and give instructions concerning the account without notice to the other party. T. Rowe Price may, in its sole discretion , require written authorization from all owners/parties to act on the account for certain transactions (for example, to transfer ownership).

By Mail

Please make your check payable to T. Rowe Price Funds (otherwise it will be returned) and send your check, together with the New Account Form, to the appropriate address below:

via U.S. Postal Service

T. Rowe Price Account Services
P.O. Box 17300
Baltimore, MD 21297-1300

via private carriers/overnight services

T. Rowe Price Account Services
Mailcode 17300
4515 Painters Mill Road
Owings Mills, MD 21117-4903

By Wire

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

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

Complete a New Account Form and mail it to one of the appropriate T. Rowe Price addresses listed under "By Mail."

Note: Investment will be made, but no services will be established and IRS penalty withholding may occur until we receive a signed New Account Form.

By Exchange

Call Shareholder Services or use Tele*Access or your personal computer (see Automated Services under Information About Your Services). The new account will have the same registration as the account from which you are exchanging. Services for the new account may be carried over by telephone request if they are preauthorized on the existing account. For limitations on exchanging, see the explanation of Excessive Trading under Transaction Procedures and Special Requirements.

In Person

Drop off your New Account Form at any location listed on the back cover and obtain a receipt.

Purchasing Additional Shares

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$100 minimum additional purchase ($1,000 for Summit Funds) ; $50 minimum f or retirement plans, Automatic Asset Builder, and gifts or transfers to minors (UGMA / UTMA) accounts ( $100 for Summit Funds )

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By ACH Transfer

Use Tele*Access or your personal computer or call Shareholder Services if you have established electronic transfers using the ACH system.

By Wire

Call Shareholder Services or use the wire instructions listed in Opening a New Account.

By Mail

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

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

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

via U.S. Postal Service

T. Rowe Price Account Services
P.O. Box 17300
Baltimore, MD 21297-1300

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

By Automatic
Asset Builder

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

Exchanging and Redeeming Shares

Exchange Service

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

Redemptions

Redemption proceeds can be mailed to your account address, sent by ACH transfer to your bank, or wired to your bank (provided your bank information is already on file). For charges, see Electronic Transfers — By Wire under Infor mation About Your Services. Please note that large redemption requests initiated through automated services may be routed to a service representative.

If you request to redeem a specific dollar amount, and the market value of your account is less than the amount of your request, we will redeem all shares from your account.

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

For redemptions by check or electronic transfer, please see Information About Your Services.

By Phone

Call Shareholder Services

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

By Mail

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

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For nonretirement and IRA accounts:

via U.S. Postal Service

T. Rowe Price Account Services
P.O. Box 17302
Baltimore, MD 21297-1302

via private carriers/overnight services

T. Rowe Price Account Services
Mailcode 17302
4515 Painters Mill Road
Owings Mills, MD 21117-4903

For employer-sponsored retirement accounts:

via U.S. Postal Service

T. Rowe Price Trust Company
P.O. Box 17479
Baltimore, MD 21297-1479

via private carriers/overnight services

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

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

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Rights Reserved by the Funds

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T. Rowe Price funds and their agents reserve the following rights: (1) to waive or lower investment minimums; (2) to accept initial purchases by telephone or mailgram; (3) to refuse any purchase or exchange order; (4) to cancel or rescind any purchase or exchange order (including, but not limited to, orders deemed to result in excessive trading, market timing, fraud, or 5% ownership) upon notice to the shareholder within five business days of the trade or if the written confirmation has not been received by the shareholder, whichever is sooner; (5) to cease offering fund shares at any time to all or certain groups of investors; ( 6 ) to freeze any account and suspend account services when notice has been received of a dispute between the registered or beneficial account owners or there is reason to believe a fraudulent transaction may occur; ( 7 ) to otherwise modify the conditions of purchase and any services at any time; ( 8 ) to waive any redemption, small account, maintenance , or other fees charged to a group of shareholder s ; ( 9 ) to act on instruc tions reasonably believed to be genuine ; and ( 10 ) to involuntarily redeem your account in cases of threatening conduct , suspected fraudulent or illegal activity , or if the fund is unable , through its procedures, to verify information provided by you . These actions will be taken when, in the sole discretion of management, they are deemed to be in the best inter est of the fund.

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

PAGE 33

information about your Services

Shareholder Services
1-800-225-5132

Investor Services
1-800-638-5660

Many services are available to you as a shareholder; some you receive automatically, and others you must authorize or request on the New Account Form. By signing up for services on the New Account Form rather than later on, you avoid having to complete a separate form and obtain a signature guarantee. This section discusses some of the services cur rently offered. Our Services Guide, which we mail to all new shareholders, contains detailed descriptions of these and other services.

Note: Corporate and other institutional accounts require an original or certified resolution to establish services and to redeem by mail. Certain other fiduciary accounts (such as trusts or power of attorney arrangements) require documen tation, which may include an original or certified copy of the trust or power of attorney to establish services and to redeem by mail. For more information, call Investor Services.

Retirement Plans

We offer a wide range of plans for individuals, institutions, and large and small businesses: Traditional IRAs, Roth IRAs, SIMPLE IRAs, SEP-IRAs, Keoghs (profit sharing, money purchase pension), 401(k)s, and 403(b)(7)s. For information on IRAs or our no-load variable annuity, call Investor Services. For information on all other retirement plans, please call our Trust Company at 1 800 492 7670.

Investing for College Expenses

We can help you save for future college expenses on a tax-advantaged basis.

Education Savings Account s (ESAs) (formerly known as Education IRAs)

Invest up to $2,000 a year depending on your annual income ; account earnings are tax- free when used for qualified expenses .

529 Plans

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T. Rowe Price offers three 529 plans: the T. Rowe Price College Savings Plan (a national plan sponsored by the Educa tion Trust of Alaska), t he Maryland College Investment Plan, and the University of Alaska College Savings Plan. For more information, call toll - free
1-866-521-1894.

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Automated Services

Tele*Access
1-800-638-2587
24 hours, 7 days

Tele*Access

24-hour service via a toll-free number enables you to (1) access information on fund performance, prices, distributions, account balances, and your latest transaction; (2) request checks, prospectuses, services forms, duplicate statements, and tax forms; and (3) buy, sell, and exchange shares in your accounts (see Electronic Transfers in this section).

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Web Address
troweprice.com

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Online Account Access

You can sign up online to conduct account transactions through our Web site on the Internet. If you subscribe to America Online ® , you can access our Web site via keyword "T. Rowe Price" and conduct transactions in your account.

Plan Account Line
1-800-401-3279

This 24-hour service is similar to Tele*Access but is designed specifically to meet the needs of retirement plan inves tors.

By Telephone and
In Person

Buy, sell, or exchange shares by calling one of our service representatives or by visiting one of our investor center loca tions whose addresses are listed on the back cover.

Electronic Transfers

By ACH

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With no charges to pay, you can move as little as $100 or as much as $ 250,000 between your bank account and fund account using the ACH system. Enter instructions via Tele*Access or your personal computer, or call Shareholder Ser vices.

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By Wire

Electronic transfers can be conducted via bank wire. There is a $5 fee for wire redemptions under $5,000, and your bank may charge for incoming or outgoing wire transfers regardless of size.

Checkwriting

(Not available for equity funds or the High Yield, Emerging Markets Bond, or U.S. Bond Index Funds) You may write an unlimited number of free checks on any money market fund and most bond funds, with a minimum of $500 per check. Keep in mind, however, that a check results in a redemption; a check written on a bond fund will create a taxable event which you and we must report to the IRS.

Automatic Investing

Automatic Asset Builder

You can instruct us to move $50 ($100 for Summit Funds) or more from your bank account, or you can instruct your employer to send all or a portion of your paycheck to the fund or funds you designate.

Automatic Exchange

You can set up systematic investments from one fund account into another, such as from a money fund into a stock fund.

t. ROWE PRICE Brokerage

To Open an Account
1-800-638-5660

For Existing
Brokerage Customers
1-800-225-7720

Investments available through our brokerage service include stocks, options, bonds, and others at commission sav ings over full-service brokers . * We also provide a wide range of services, including:

Automated Telephone and Computer Services

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You can enter stock and option orders, access quotes, and review account information around the clock by phone with Tele-Trader or via the Internet with Account Access-Brokerage. For stock trades entered through Tele-Trader, you will pay a commission of $35 for up to 1,000 shares plus $.02 for each share over 1,000 . For stock trades entered through Account Access-Brokerage, you will pay a commission of $19.95 for up to 1,000 shares plus $.02 for each share over 1,000. Option trades entered through Account Access-Brokerage or Tele-Trader save you 10% over our standard com mission schedule. All trades are subject to a $ 40 minimum commission except stock trades placed through Account Access-Brokerage and Tele-Trader . All limit and stop orders entered, regardless of order entry means, are subject to a $5 order handling fee assessed upon execution.

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Investor Information

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A variety of informative reports, such as our Brokerage Insights series , as well as access to online research tools , can help you better evaluate economic trends and investment opportunities.

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Dividend Reinvestment Service

If you elect to participate in this service, the cash dividends from the eligible securities held in your account will auto matically be reinvested in additional shares of the same securities free of charge. Most securities listed on national secu rities exchanges or Nasdaq are eligible for this service.

PAGE 35

*Services vary by firm.

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

Investment Information

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To help you monitor your investments and make decisions that accurately reflect your financial goals, T. Rowe Price offers a wide variety of information in addition to account statements. Most of this information is also available on our Web site at troweprice.com.

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<R>

A note on mailing procedures: If two or more members of a household own the same fund, we economize on fund expenses by sending only one fund report and prospectus. If you need additional copies or do not want your mailings to be "householded," please call Shareholder Services at 1-800-225-5132 or write to us at P.O. Box 17630, Baltimore, M D 21297-1630.

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Shareholder Reports

Fund managers` annual and semiannual reviews of their strategies and performance.

The T. Rowe Price Report

A quarterly investment newsletter discussing markets and financial strategies and including the Performance Update, a review of all T. Rowe Price fund results.

Insights

Educational reports on investment strategies and financial markets.

Investment Guides

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Asset Mix Worksheet, Diversifying Overseas: A T. Rowe Price Guide to International Investing, Managing Your Retirement Distribution, Retirement Readiness Guide, Retirement Planning Kit, and Tax Considerations for Investors.

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T. rowe price Privacy Policy

In the course of doing business with T. Rowe Price, you share personal and financial information with us. We treat this information as confidential and recognize the importance of protecting access to it.

You may provide information when communicating or transacting with us in writing, electronically, or by phone. For instance, information may come from applications, requests for forms or literature, and your transactions and account positions with us. On occasion, such information may come from consumer reporting agencies and those providing services to us.

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We do not sell information about current or former customers to any third parties, and we do not disclose it to third parties unless necessary to process a transaction, service an account, or as otherwise permitted by law. We may share information within the T. Rowe Price family of companies in the course of providing or offering products and ser vices to best meet your investing needs. We may also share that information with companies that perform adminis trative or marketing services for T. Rowe Price, with a research firm we have hired, or with a business partner, such as a bank or insurance company with which we are developing or offering investment products. When we enter into such a relationship, our contracts restrict the companies` use of our customer information, prohibiting them from sharing or using it for any purposes other than those for which they were hired.

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We maintain physical, electronic, and procedural safeguards to protect your personal information. Within T. Rowe Price, access to such information is limited to those who need it to perform their jobs, such as servicing your accounts, resolving problems, or informing you of new products or services. Finally, our Code of Ethics, which applies to all employees, restricts the use of customer information and requires that it be held in strict confidence.

This Privacy Policy applies to the following T. Rowe Price family of companies:

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T. Rowe Price Associates, Inc.; T. Rowe Price Advisory Services, Inc.; T. Rowe Price Investment Services, Inc.; T. Rowe Price Savings Bank; T. Rowe Price Trust Company; and the T. Rowe Price Funds.

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PAGE 37

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

For mutual fund or T. Rowe Price Brokerage information

Investor Services

1-800-638-5660

For existing accounts

Shareholder Services

1-800-225-5132

For the hearing impaired

1-800-367-0763

For performance, prices,
account information, or
to conduct transactions

Tele*Access ®

24 hours, 7 days
1-800-638-2587

Internet address

troweprice.com

Plan Account Line

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

A fund Statement of Additional Information has been filed with the Securities and Exchange Commission and is incorpo rated by reference into this pro spectus. Further information about fund investments, including a review of market conditions and the manager`s recent strategies and their impact on performance, is available in the annual and semiannual shareholder reports. To obtain free copies of any of these documents, or for shareholder inquiries, call
1-800-638-5660.

Fund information and Statements of Additional Information are also available from the Public Reference Room of the Securities and Exchange Commission. Infor-
mation on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Fund reports and other fund information are available on the EDGAR Database on the SEC`s Internet site at http://www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the Public Reference Room, Washington D.C. 20549-0102.

Investor Centers

For directions, call
1-800-225-5132 or
visit our Web site

Baltimore Area

Downtown

105 East Lombard Street

Owings Mills

Three Financial Center
4515 Painters Mill Road

Boston Area

386 Washington Street
Wellesley

Chicago Area

1900 Spring Road
Suite 104
Oak Brook

Colorado Springs

2260 Briargate Parkway

Los Angeles Area

Warner Center
21800 Oxnard Street
Suite 270
Woodland Hills

New Jersey/New York Area

51 JFK Parkway, 1st Floor
Short Hills, New Jersey

San Francisco Area

1990 N. California Boulevard
Suite 100
Walnut Creek

Tampa

4211 W. Boy Scout Boulevard
8th Floor

Washington, D.C. Area

Downtown

900 17th Street, N.W.
Farragut Square

Tysons Corner

1600 Tysons Boulevard
Suite 150

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C02-040 5/1/03

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

1940 Act File No. 811-2958

PROSPECTUS

MAY 1, 2003

T. ROWE PRICE

International Bond Fund — Advisor Class

A fund seeking high current income and capital appreciation through investments in foreign bonds. This class of shares is sold only through financial intermediaries.

The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

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1	About the Fund
	Objective, Strategy, Risks, and Expenses	1
	Other Information About the Fund	5

2	Information About Accounts in T. Rowe Price Funds
	Pricing Shares and Receiving Sale Proceeds	7
	Useful Information on Distributions and Taxes	8
	Transaction Procedures and Special Requirements	11
	Distribution, Shareholder Servicing, and Recordkeeping Fees	12

3	More About the Fund
	Organization and Management	13
	Understanding Performance Information	15
	Investment Policies and Practices	16
	Financial Highlights	2 5

4	Investing With T. Rowe Price
	Account Requirements and Transaction Information	2 7
	Purchasing Additional Shares	2 8
	Exchanging and Redeeming Shares	2 8
	Rights Reserved by the Funds	2 8
	T. Rowe Price Privacy Policy	3 0

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T. Rowe Price International Funds, Inc.

T. Rowe Price International Bond Fund — Advisor Class

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objective, strategy, risks, and expenses

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A word about the fund`s name and structure. International Bond Fund — Advisor Class is a share class of T. Rowe Price International Bond Fund. The Advisor Class is not a separate mutual fund. It is sold only through brokers, dealers, banks, insurance companies, and other financial intermediaries that provide various distribution and administrative services .

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What is the fund`s objective?

The fund seeks to provide high current income and capital appreciation by investing primarily in high-quality, nondollar-denominated bonds outside the U.S.

What is the fund`s principal investment strategy?

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N ormally , the fund will invest at least 80% of net assets in bonds and 65% of total assets in high-quality (AA or better) foreign bonds . The fund may invest up to 20% of total assets in below investment-grade, high-risk bonds, including those in default or with the lowest rating. Up to 20% of total assets may be invested in dollar-denomi nated foreign bonds such as Brady and other emerging market bonds.

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For details about the fund`s investment program, please see the Investment Policies and Practices section.

What are the main risks of investing in the fund?

The fund is subject to the usual risks of fixed-income investing as well as the special risks of international investing.

Interest rate risk This refers to the decline in bond prices that usually accompanies a rise in interest rates. Longer- maturity bonds typically suffer greater declines than those with shorter maturities.

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Credit risk Thi s is the chance that any of the fund `s holding s will have its credit rating downgraded or will default ( fail to make scheduled interest or principal payments ), potentially reducing the fund`s income level and share price. The risk of default is much greater for emerging market bonds.

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Nondiversified risk Because it is nondiversified, the fund can invest more of its assets in a smaller number of issu ers than diversified funds. This could result in greater potential losses than for funds investing in a broader vari ety of issues.

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Currency risk This is the risk of a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency. The overall impact on the fund`s holdings can be significant and long-lasting, depending on the currencies represented in the portfolio, how each one appreciates or depreciates in relation to the U.S. dollar and whether currency positions are hedged. Because the fund is nor mally heavily exposed to foreign currencies, and does not attempt to hedge the impact of these currencies on the dollar, changes in currency exchange rates are likely to have a significant effect on the fund`s performance. Cur rency trends are unpredictable, and to the extent the fund purchases and sells currencies, it will also be subject to the risk that its trading strategies, including efforts at hedging, will not succeed. Furthermore, hedging costs can be significant and reduce fund net asset value, and many emerging market currencies cannot be effectively hedged.

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Emerging market risk The fund`s investments in emerging markets are subject to abrupt and severe price declines. . The economic and political structures of developing nations, in most cases, do not compare favorably with the .

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U.S. or other developed countries in terms of wealth and stability, and their financial markets often lack liquidity. . These economies are less well developed and can be overly reliant on particular industries and more vulnerable . to the ebb and flow of international trade and capital trade barrier s , and other protectionist or retaliatory mea . sures . Some countries have legacies of hyperinflation and currency devaluations versus the dollar (which adversely affect returns to U.S. investors). Significant devaluations have occurred in recent years in various emerging market countries . Governments of some emerging market countries have defaulted on their bonds and investors in this sector must be prepared for similar events in the future.

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Derivatives risk To the extent the fund uses futures, swaps, and other derivatives , it is exposed to additional vola tility and potential losses.

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

The share price and income level of the fund will fluctuate with changing marke t conditions and interest rate levels. W hen you sell your shares, you may lose money.

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

Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. If you are investing through an intermediary and are willing to accept the special risks associated with international invest ing and the general risks of investing in bonds to achieve current income and potential capital growth, this fund could be appropriate for you.

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

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

How has the fund performed in the past?

The bar chart showing calendar year returns and the average annual total return table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a com parable market index. Fund past returns (before and after taxes) are not necessarily an indication of future perfor mance.

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

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<R> Table 1 Average Annual Total Returns

	Periods ended December 31, 2002
	1 year	Since inception (3/31/00)
International Bond Fund — Advisor Class
Returns before taxes	21.65 %	5.41 %
Returns after taxes on distributions	20.32	4.98
Returns after taxes on distributions and sale of fund shares	13.20	4.13
J.P. Morgan Global Government Bond Broad Index, Non-U.S.Dollar	22.81	5.95
Lipper International Income Funds Average	16.02	6.58

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J.P. Morgan Global Government Bond Broad Index , Non - U.S. Dollar tracks government bonds in the U.S. and 12 international markets.

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What fees or expenses will I pay?

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	Annual fund operating expenses (expenses that are deducted from fund assets)
Management fee	0.67 %
Distribution and service (12b-1) fees	0.25 %
Other expenses	0.16 %
Total annual fund operating expenses	1.08 % a

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* Redemption proceeds of less than $5,000 sent by wire are subject to a $5 fee paid to the fund.

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a Effective January 1, 2002, T. Rowe Price International contractually obligated itself to bear any expenses (other than management fees and certain other portfolio level expenses) through December 31, 2003, that would cause the class`s ratio of expenses to average net assets to exceed 1.15%. Expenses paid or assumed under this agreement are subject to reimbursement to T. Rowe Price International by the fund whenever the class`s expense ratio is below 1.15%; however, no reimbursement will be made after December 31, 2005, or if it would result in the expense ratio exceeding 1.15%. Any amounts reim bursed will have the effect of increasing fees otherwise paid by the class.

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Example. The following table gives you an idea of how expense ratios may translate into dollars and helps you to compare the cost of investing in this class with that of other mutual funds. Although your actual costs may be higher or lower, the table shows how much you would pay if operating expenses remain the same, the expense limitation currently in place is not renewed, you invest $10,000, earn a 5% annual return, and hold the invest ment for the following periods and then redeem:

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1 year	3 years	5 years	10 years
$ 110	$ 343	$ 595	$ 1,317

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other INFORMATION about the fund

Why invest in an international fund?

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What are some of the advantages of investing in international fixed - income markets through mutual funds?

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For more details on potential risks of foreign investments, please see Investment Policies and Practices and the Statement of Additional Information.

How does the portfolio manager try to reduce risk?

Consistent with the fund`s objective, the portfolio manager uses various tools to try to reduce risk and increase total return, including:

Diversification of assets to reduce the impact of a single holding or sector on the fund`s net asset value.

Thorough credit research by our own analysts.

Management of the impact of foreign currency changes on the fund`s portfolio to the degree discussed previ ously under "currency risk."

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

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

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As a T. Rowe Price shareholder, you will want to know about the following policies and procedures that apply to all Advisor Class accounts.

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Pricing Shares and Receiving Sale Proceeds

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How and when shares are priced

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

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How your purchase, sale, or exchange price is determined

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Advisor Class shares are intended for purchase and may be held only through various third-party intermediaries including brokers, dealers, banks, insurance companies, retirement plan recordkeepers, and others. Consult your intermediary to find out about how to purchase, sell, or exchange your shares, cut-off times, and other applicable procedures for these transactions. The intermediary may charge a fee for its services.

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The fund may have an agreement with your intermediary that permits the intermediary to accept orders on behalf of the fund until 4 p.m. ET. In such cases, if your order is received by the intermediary in good form by 4 p.m. ET and transmitted to the fund and paid for in accordance with the agreement, it will be priced at the next NAV computed after the intermediary received your order.

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Note: The time at which transactions and shares are priced and the time until which orders are accepted by the fund or an intermediary may be changed in case of an emergency or if the New York Stock Exchange closes at a time other than 4 p.m. ET.

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How proceeds are received

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Normally, the fund transmits proceeds to intermediaries for redemption orders received in good form on either the next or third business day after receipt, depending on the arrangement with the intermediary. Under certain circumstances and when deemed to be in the fund`s best interests, proceeds may not be sent to intermediaries for up to seven calendar days after receipt of the redemption order. You must contact your intermediary about procedures for receiving your redemption proceeds.

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Useful Information on Distributions and Taxes

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All net investment income and realized capital gains are distributed to shareholders.

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Dividends and Other Distributions

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Dividend and capital gain distributions are reinvested in additional fund shares in your account unless you select another option on your New Account Form. Reinvesting distributions results in compounding, that is, receiving income dividends and capital gain distributions on a rising number of shares.

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No interest will accrue on amounts represented by uncashed distribution or redemption checks.

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Income dividends

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The funds declare and pay dividends (if any) quarterly for the Equity Income Fund — Advisor Class; declare daily and pay monthly for the High Yield Fund — Advisor Class, International Bond Fund — Advisor Class, New Income Fund — Advisor Class, and Tax-Free Income Fund — Advisor Class; and declare and pay annually for all other Advisor Classes.

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A portion of fund dividends (other than International Growth & Income Fund — Advisor Class and International Stock Fund — Advisor Class ) may be eligible for the 70% deduction for dividends received by corporations to the extent the funds` income consists of dividends paid by U.S. corporations.

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Capital gains payments

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

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Tax Information

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You should contact your intermediary for the tax information that will be sent to you and reported to the IRS.

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If you invest in the fund through a taxable account, you need to be aware of the possible tax consequences when:

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

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The fund makes a distribution to your account.

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Note: The regular monthly income dividends you receive from the Tax-Free Income Fund — Advisor Class are expected to be exempt from federal income taxes. You must report your total tax-exempt income on IRS Form 1040. The IRS uses this information to help determine the tax status of any Social Security payments you may have received during the year. For shareholders who receive Social Security benefits, the receipt of tax-exempt interest may increase the portion of benefits that are subject to tax.

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If the Tax-Free Income Fund invests in certain "private activity" bonds, shareholders who are subject to the alternative minimum tax (AMT) must include income generated by these bonds in their AMT computation. The portion of this fund`s income that should be included in your AMT calculation, if any, will be reported to you in January.

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Taxes on fund redemptions

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When you sell shares in any fund, you may realize a gain or loss. An exchange from one fund to another is still a sale for tax purposes.

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Note: If you realize a loss on the sale or exchange of Tax-Free Income Fund — Advisor Class shares held six months or less, your capital loss is reduced by the tax-exempt dividends received on those shares.

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Taxes on fund distributions

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the foreign currency gain or loss resulting from the sale of a foreign debt security can increase or decrease an ordinary income dividend. Net foreign currency losses may cause monthly or quarterly dividends to be reclassi fied as a return of capital.

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Note: Gains and losses realized on the sale of market discount bonds with maturities beyond one year may be treated as ordinary income and cannot be offset by other capital losses. Therefore, to the extent the Tax-Free Income Fund — Advisor Class invests in these securities, the likelihood of a taxable gain distribution will be increased.

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Tax consequences of hedging

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For funds investing in foreign securities, distributions resulting from the sale of certain foreign currencies, cur rency contracts, and debt securities are taxed as ordinary income. Entering into certain options, futures, swaps, and forward foreign exchange contracts and transactions may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in a fund being required to distribute gains on such transactions even though it did not close the contracts during the year or receive cash to pay such distributions. A fund may not be able to reduce its distributions for losses on such transactions to the extent of unrealized gains in offsetting positions.

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

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Tax effect of buying shares before a capital gain or dividend distribution

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If you buy shares shortly before or on the "record date" — the date that establishes you as the person to receive the upcoming distribution — you will receive a portion of the money you just invested in the form of a taxable distri bution. Therefore, you may wish to find out a fund`s record date before investing. Of course, a fund`s share price may, at any time, reflect undistributed capital gains or income and unrealized appreciation, which may result in future taxable distributions. Such distributions can occur even in a year when the fund has a negative return.

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Transaction Procedures and Special Requirements

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Purchase Conditions for Intermediaries

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Nonpayment

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If the fund receives a check or ACH transfer that does not clear or the payment is not received in a timely man ner, your purchase may be canceled. Any losses or expenses incurred by the fund or transfer agent will be the responsibility of the intermediary. The fund and its agents have the right to reject or cancel any purchase, exchange, or redemption due to nonpayment.

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U.S. dollars

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

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Sale (Redemption) Conditions

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Holds on immediate redemptions: 10-day hold

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If an intermediary sells shares that it just purchased and paid for by check or ACH transfer, the fund will process the redemption but will generally delay sending the proceeds for up to 10 calendar days to allow the check or transfer to clear. (The 10-day hold does not apply to purchases paid for by bank wire.)

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Redemptions over $250,000

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Excessive Trading

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T. Rowe Price may bar excessive traders from purchasing shares.

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Frequent trades or market timing in your account or accounts controlled by you can disrupt management of the fund and raise its expenses. To deter such activity, each fund has adopted the following excessive trading policy. Transactions accepted by intermediaries in violation of these policies or from persons believed to be market tim ers are subject to rejection or cancellation by the funds.

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You can make one purchase and one sale or one sale and one purchase involving the same fund within any 120- day period. If you exceed this limit or if you hold fund shares for less than 60 calendar days, you may be barred indefinitely and without further notice from further purchases of the T. Rowe Price funds. Systematic purchases and redemptions are exempt from this policy.

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Signature Guarantees

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An intermediary may need to obtain a signature guarantee in certain situations and should consult its T. Rowe Price Financial Institution Services representative.

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You can obtain a signature guarantee from most banks, savings institutions,
broker-dealers, and other guarantors acceptable to T. Rowe Price. We cannot accept guarantees from notaries public or organizations that do not provide reimbursement in the case of fraud.

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distribution, shareholder servicing, and recordkeeping fees

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Advisor Class has adopted a 12b-1 plan under which it pays a fee at the rate of up to 0. 25% of its daily net assets per year to various intermediaries for distribution and servicing of its shares. These payments may be more or less than the costs incurred by the intermediaries. Because the fees are paid from the Advisor Class net assets on an ongoing basis, they will increase the cost of your investment and, over time, could result in your paying more than with other types of sales charges. The Advisor Class may also separately compensate intermediaries at a rate of up to 0.10% of daily net assets per year for various recordkeeping and transfer agent services they perform.

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Organization and Management

How is the fund organized?

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T. Rowe Price International Funds, Inc. , a Maryland corporation (the "corporation"), currently consists of 12 series, each representing a separate portfolio with different objectives and investment policies. The 12 series and the years in which each was established are as follows: International Stock Fund, 1980; International Bond Fund, 1986; International Discovery Fund, 1988; European Stock Fund, New Asia Fund , 1990; Japan Fund, 1991; Latin America Fund, 1993; Emerging Markets Bond Fund, 1994; Emerging Markets Stock Fund, Global Stock Fund, 1995; International Growth & Income Fund, 1998; and Emerging Europe & Mediterranean Fund, 2000. Each is an " open-end investment company, " or mutual fund. In 2000, the International Bond Fund issued a sep arate class of shares known as the Advisor Class . Mutual funds pool money received from shareholders and invest it to try to achieve specified objectives.

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What is meant by "shares"?

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

Each share and fractional share entitles the shareholder to:

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Receive a proportional interest in income and capital gain distributions of the class. The income dividends for Advisor Class shares will generally differ from those of the original class to the extent that the expense ratios of the classes differ .

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Cast one vote per share on certain fund matters, including the election of fund directors/trustees , changes in fundamental policies, or approval of changes in the fund`s management contract. Shareholders of each class have exclusive voting rights on matters affecting only that class.

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Do T. Rowe Price funds have annual shareholder meetings?

Who runs the fund?

General Oversight

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The corporation is governed by a Board of Directors /Trustees that meets regularly to review fund investments, performance, expenses, and other business affairs. The Board elects the corporation`s officers. The majority of Board members are independent of T. Rowe Price International.

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All decisions regarding the purchase and sale of fund investments are made by T. Rowe Price International — specifically by the fund`s portfolio managers .

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Investment Manager

T. Rowe Price International is responsible for the selection and management of the fund`s portfolio investments. The U.S. office of T. Rowe Price International is located at 100 East Pratt Street, Baltimore, Maryland 21202. Offices are also located in London, Tokyo, Singapore, Hong Kong, Buenos Aires, and Paris.

Portfolio Management

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Th e fund has an Invest ment Advisory Committee with the following members: Ian D. Kelson , Chairman, Brian J. Brennan, Michael J. Conelius, and Christopher J. Rothery. The committee chairman has day-to-day responsibility for managing the portfolio and works with the committee in developing and executing the fund`s investment program. Mr. Kelson joined T. Rowe Price International in 2000 as the head of i nternational fixed - income investments. Prior to joining T. Rowe Price International, he spent 10 years as Chief Investment Officer , Fixed Income at Morgan Grenfell/Deutsche Asset Management.

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The Management Fee

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Group Fee Schedule

0.334%*	First $50 billion

0.305%	Next $30 billion

0.300%	Next $40 billion

0.295%	Thereafter

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

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The fund`s portion of the group fee is determined by the ratio of its daily net assets to the daily net assets of all . the T. Rowe Price funds described previously. Based on combined T. Rowe Price fund assets of over $ 8 4 billion . at December 31, 2002 , the group fee was 0.32%. . The individual fund fee is 0.35%.

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Understanding Performance Information

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This section should help you understand the terms used to describe fund performance.

Total Return

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Advertisements may include cumulative or average annual total return figures, which may be compared with var ious indices, other performance measures, or other mutual funds.

Cumulative Total Return

Average Annual Total Return

Yield

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Investment Policies and Practices

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Shareholder approval is required to substantively change fund objectives . Shareholder approval is also required to change certain investment restrictions noted in the following section as "fundamental policies." The manag ers also follow certain "operating policies" that can be changed without shareholder approval. Shareholders will receive at least 60 days` prior notice of any change in the policy requiring the fund to normally invest at least 80% of net assets in bonds. Fund investment restrictions and policies apply at the time of investment. A later change in circumstances will not require the sale of an investment if it was proper at the time it was made. (This exception does not apply to the fund`s borrowing policy . )

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

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

Types of Portfolio Securities

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

Fixed-Income Securities

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The fund`s investments may include but shall not be limited to: (1) d ebt obligations issued or guaranteed by: (a) a foreign sovereign government or one of its agencies, authorities, instrumentalities, or political subdivisions, including a foreign state, province, or municipality, and (b) supranational organizations such as the World Bank, Asian Development Bank, European Investment Bank, and European Economic Community; (2) d ebt obliga tions: (a) of foreign banks and bank holding companies, and (b) of domestic banks and corporations issued in foreign currencies; and (3) f oreign corporate debt securities and commercial paper. Such securities may take a variety of forms including those issued in the local currency of the issuer, Brady bonds, Euro bonds, and bonds denominated in the e uro. Normally, the fund will only purchase bonds denominated in foreign currencies (other than Brady and other emerging market bonds).

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Nondiversified Investment Company

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The fund is able to invest more than 5% of its assets in the fixed - income securities of individual foreign govern ments. The fund generally will not invest more than 5% of its assets in any individual corporate issuer, pro vided that (1) a fund may place assets in bank deposits or other short-term bank instruments with a maturity of up to 30 days provided that (a) the bank has a short-term credit rating of A1+ (or, if unrated, the equivalent as determined by T. Rowe Price International) and (b) the fund will not maintain more than 10% of its total assets with any single bank; and (2) the fund may maintain more than 5% of its total assets, including cash and cur rencies, in custodial accounts or deposits of the fund`s custodian or sub-custodians.

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In addition, the fund intends to qualify as a regulated investment company for purposes of the Internal Revenue Code. This requires the fund to limit its investments so that, at the end of each fiscal quarter, with respect to 50% of its total assets, no more than 5% of its assets is invested in the securities of a single issuer, and not more than 10% of the voting securities of any issuer are held by the fund. W ith respect to the remaining 50% of fund assets , no more than 25% may be invested in a single issuer. Since, as a nondiversified investment company, the fund is permitted to invest a greater proportion of its assets in the securities of a smaller number of issuers, the fund may be subject to greater credit risk with respect to its portfolio securities than an investment company that is more broadly diversified.

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Hybrid Instruments

These instruments (a type of potentially high-risk derivative) can combine the characteristics of securities, futures, and options. For example, the principal amount or interest rate of a hybrid could be tied (positively or negatively) to the price of some commodity, currency, or securities index or another interest rate (each a "bench mark"). Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging, duration management, and increased total return. Hybrids may or may not bear interest or pay divi dends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be lever aged and move (up or down) more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes the fund to the credit risk of the issuer of the hybrid. These risks may cause significant fluctuations in the net asset value of the fund.

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

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

Private Placements

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

Loan Participations and Assignments

Large loans to corporations or governments, including governments of less-developed countries (LDCs), may be shared or syndicated among several lenders, usually banks. The fund could participate in such syndicates, or could buy part of a loan, becoming a direct lender. Participations and assignments involve special types of risk, including limited marketability and the risks of being a lender. If the fund purchases a participation, it may only be able to enforce its rights through the lender, and it may assume the credit risk of the lender in addition to the borrower. In assignments, the fund`s rights against the borrower may be more limited than those held by the original lender.

Operating policy The fund may not invest more than 5% . of total assets in loan participations and assignments.

High-Yield, High-Risk Bonds

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Reduced market liquidity High-yielding emerging market bonds are generally less "liquid" than higher-quality bonds issued by companies and governments in developed countries. Consequently, large purchases or sales of certain high-yield, emerging market debt issues may cause significant changes in their prices. Because many of these bonds do not trade frequently, when they do trade, their price s may be substantially higher or lower than had been expected. A lack of liquidity also means that judgment may play a bigger role when seeking to establish the fair value of the securities.

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forecasts, stock market activity, large or sustained sales by institutional investors, a high-profile default, a political upheaval of some kind, or just a change in the market`s psychology. This type of volatility is usually associated more with stocks than bonds, but investors in lower-quality bonds should also anticipate it.

Defaulted bonds are acquired only if the fund manager foresees the potential for significant capital appreciation.

Operating policy The fund may invest up to 20% of total assets in below investment-grade ("junk") bonds.

Types of Investment Management Practices

Foreign Currency Transactions

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The fund may engage in foreign currency transactions either on a spot (cash) basis at the rate prevailing in the currency exchange market at the time or through forward currency contracts ("forwards") with terms generally of less than one year. Forwards will be used primarily to adjust the foreign exchange exposure of the fund with a view to protecting the portfolio from adverse currency movements, based on T. Rowe Price International `s out look . Forwards can also be used in an effort to benefit from a currency believed to be appreciating in value ver sus other currencies. T he fund might be expected to enter into such contracts under the following circumstances:

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Lock In When management desires to lock in the U.S. dollar price on the purchase or sale of a security denomi nated in a foreign currency.

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Cross Hedge If a particular currency is expected to decrease against another currency, the fund may sell the cur rency expected to decrease and purchase a currency that is expected to increase against the currency sold in an amount approximately equal to some or all of the fund`s portfolio holdings denominated in the currency sold. The fund is not required to own securities in the currency purchased.

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Operating policy The fund does not normally involve more than 50% of its assets in cross-hedging.

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Direct Hedge If T. Rowe Price International sought to eliminate substantially all of the risk of owning a particular currency or believed the portfolio could benefit from price appreciation in a given country`s bonds but did not want to hold the currency, it could employ a direct hedge back into the U.S. dollar. In either case, a fund would enter into a forward contract to sell the currency in which a portfolio security is denominated and purchase U.S. dollars at an exchange rate established at the time it initiated the contract. The cost of the direct hedge transaction may offset most, if not all, of the yield advantage offered by the foreign security, but the fund would hope to ben efit from an increase (if any) in the value of the bond.

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Generally , the fund seeks to maintain little net exposure to the U.S. dollar. Thus, any U.S. dollar investments, including any hedges into the U.S. dollar, will normally be offset by hedges out of the U.S. dollar .

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It is often not possible to effectively hedge the currency risk associated with emerging market bonds because their currency markets are not sufficiently developed.

Proxy Hedge T. Rowe Price International might choose to use a proxy hedge, which is less costly than a direct hedge. In this case, the fund, having purchased a bond, will sell a currency whose value is believed to be closely linked to the currency in which the bond is denominated. This type of hedging entails greater risk than a direct hedge because it is dependent on a stable relationship between the two currencies paired as proxies, and because the relationships can be very unstable at times.

Costs of Hedging When the fund purchases a foreign bond with a higher interest rate than is available on U.S. bonds of a similar maturity, the additional yield on the foreign bond could be substantially lessened if the fund were to enter into a direct hedge by selling the foreign currency and purchasing the U.S. dollar.

This is what is known as the "cost" of hedging. Proxy hedging attempts to reduce this cost through an indirect hedge back to the U.S. dollar.

Hedging may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in an increase (or decrease) in the amount of taxable dividends paid by the fund and could affect whether dividends paid by the fund are classified as capital gains or ordinary income.

Reserve Position

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

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Borrowing Money and Transferring Assets

Fundamental policy Borrowings may not exceed 33xb6 / xb8 % of total assets.

Futures and Options

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Lending of Portfolio Securities

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Fundamental policy The value of loaned securities may not exceed 33xb6 / xb8 % of total assets.

When-Issued Securities and Forward Commitment Contracts

The fund may purchase securities on a when-issued or delayed delivery basis or may purchase or sell securities on a forward commitment basis. There is no limit on fund investments in these securities. The price of these securities is fixed at the time of the commitment to buy, but delivery and payment can take place a month or more later. During the interim period, the market value of the securities can fluctuate, and no interest accrues to the purchaser. At the time of delivery, the value of the securities may be more or less than the purchase or sale price. 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 net asset value than if the fund did not purchase them.

Portfolio Turnover

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Turnover is an indication of frequency of trading . 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. Each time the fund purchases or sells a security, it incurs a cost. This cost is reflected in the fund`s net asset value but not in its operating expenses. The higher the turnover rate, the higher the transaction costs and the greater the impact on the fund`s total return. Higher turnover can also increase the possibility of taxable capi tal gain distributions . The fund`s portfolio turnover rate s are shown in the Financial Highlights table.

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Location of Company

The fund ordinarily invests in the securities of at least three countries; however, it may invest in the securities of one country, including the U.S., for temporary defensive purposes.

Bond Ratings and High-Yield Bonds

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Bond ratings are not guarantees. They are estimates of a company`s financial strength. Ratings can change at any time due to real or perceived changes in a company`s business fundamentals.

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Table 3 shows the rating scale used by several major rating agencies. T. Rowe Price International considers pub licly available ratings but emphasizes its own credit analysis when selecting investments.

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<R> Table 3 Ratings of Corporate Debt Securities

Moody`s Investors Service, Inc.

Standard & Poor`s Corporation

Fitch IBCA, Inc.

Definition

Long Term

Aaa

AAA

Highest quality

High quality

Upper medium grade

Baa

BBB

Medium grade

Speculative

Highly speculative

Caa

CCC, CC

Vulnerable to default

Default is imminent

DDD, DD, D

Probably in default

Moody`s

S&P

Fitch

Commercial Paper

P-1

Superior quality

A-1+ A-1

Extremely strong quality Strong quality

F-1+ F-1

Exceptionally strong quality Very strong quality

P-2

Strong quality

A-2

Satisfactory quality

F-2

Good credit quality

P-3

Acceptable quality

A-3 B C

Adequate quality Speculative quality Doubtful quality

F-3

Fair credit quality

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Financial Highlights

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Table 4, which provides information about the class`s financial history, is based on a single share outstanding throughout the periods shown. The table is part of the class`s financial statements, which are included in its annual report and are incorporated by reference into the Statement of Additional Information (available upon request). The total returns in the table represent the rate that an investor would have earned or lost on an invest ment in the class (assuming reinvestment of all dividends and distributions and no payment of account or (if applicable) redemption fees). The financial statements in the annual report were audited by the fund`s indepen dent accountants, PricewaterhouseCoopers LLP.

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<R> Table 4 Financial Highlights

	3/31/00* through 12/31/00	Year ended December 31
		2001	2002

Net asset value, beginning of period	$ 8.88	$ 8.47	$ 7.85
Income From Investment Operations
Net investment income	0.30 a	0.31 a	0.24
Net gains or losses on securities (both realized and unrealized)	(0.42 )	(0.62 )	1.43
Total from investment operations	(0.12 )	(0.31 )	1.67
Less Distributions
Dividends (from net investment income)	—	—	(0.24 )
Distributions (from capital gains)	—	—	—
Returns of capital	(0.29 )	(0.31 )	—
Total distributions	(0.29 )	(0.31 )	(0.24 )
Redemption fees added to paid in capital	—	—	—
Net asset value, end of period	$ 8.47	$ 7.85	$ 9.28
Total return	(1.29 )% a	(3.73 )% a	21.65 %
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$ 120	$ 5,026	$ 14,760
Ratio of expenses to average net assets	1.15 % ac	1.15 % a	1.08 %
Ratio of net income to average net assets	4.60 % ac	3.28 % a	2.82 %
Portfolio turnover rate	160.5 % bc	107.6 %	113.9 %

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* Inception date.

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a Excludes expenses in excess of a 1.15% voluntary expense limitation in effect through December 31, 2001.

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b Excludes the effect of the acquisition of the T. Rowe Price Global Bond Fund`s assets.

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c Annualized.

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Account Requirements and Transaction Information

Tax Identification
Number

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The intermediary must provide us with its certified Social Security or tax identification number (TIN). Otherwise, federal law requires the funds to withhold a percentage (currently 30 %) of dividends, capital gain distributions, and redemptions, and may subject the intermediary or account holder to an IRS fine. If this information is not received within 60 days after the account is established, the account may be redeemed at the fund`s net asset value ( NAV ) on the redemption date.

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The information in
this section is for use
by intermediaries only. Shareholders should contact their intermediary for information regarding the intermediary`s policies on purchasing, exchanging, and redeeming fund shares as well as initial and subsequent investment minimums.

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All initial and subsequent investments by intermediaries must be made by bank wire.

Opening a New Account

$2,500 minimum initial investment; $1,000 for retirement plans or gifts or transfers to minors (UGMA / UTMA) accounts

Intermediaries should call Financial Institution Services for an account number and assignment to a dedicated service representative and give the following wire information to their bank:

Complete a New Account Form and mail it to one of the appropriate addresses listed below. I ntermediaries must also enter into a separate agreement with the fund or its agent.

via U . S . Postal Service

T. Rowe Price Financial Institution Services
P.O. Box 17603
Baltimore, MD 21297-1603

via private carriers/overnight services

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T. Rowe Price Financial Institution Services
Mail Code: OM-17603
4515 Painters Mill Road
Owings Mills, MD 21117-4842

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Purchasing Additional ShareS

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$100 minimum additional purchase; $50 minimum for retirement plans, Automatic Asset Builder, and gifts or transfers to minors (UGMA/UTMA) accounts

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By Wire

Intermediaries should call Financial Institution Services or use the wire instructions listed in Opening a New Account.

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Exchanging and redeeming ShareS

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Exchange Service

You can move money from one account to an existing identically registered account or open a new identically regis tered account. Intermediaries should call their Financial Institution Services representative.

Redemptions

Unless otherwise indicated, redemption proceeds will be wired to the intermediary`s designated bank. Intermediaries should contact their Financial Institution Services representative.

Rights Reserved by the Funds

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T. Rowe Price funds and their agents reserve the following rights: (1) to refuse any purchase or exchange order; (2) to cancel or rescind any purchase or exchange order (including, but not limited to, orders deemed to result in excessive trading, market timing, fraud, or 5% ownership) upon notice to the intermediary within five business days of the trade or if the written confirmation has not been received by the shareholder, whichever is sooner; (3) to cease offering fund shares at any time to all or certain groups of investors; ( 4 ) to freeze any account and suspend account services when notice has been received of a dispute between the registered or beneficial account owners or there is reason to believe a fraudulent transaction may occur; ( 5 ) to otherwise modify the conditions of purchase and any services at any time; ( 6 ) to act on instructions reasonably believed to be genuine ; and (7) to involuntarily redeem your account in cases of threatening conduct, suspected fraudulent or illegal activity, or if the fund is unable, through its procedures, to verify information provided by you . These actions will be taken when, in the sole discretion of management, they are deemed to be in the best interest of the fund.

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T. rowe price Privacy Policy

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We do not sell information about current or former customers to any third parties, and we do not disclose it to third parties unless necessary to process a transaction, service an account, or as otherwise permitted by law. We may share information within the T. Rowe Price family of companies in the course of providing or offering products and ser vices to best meet your investing needs. We may also share that information with companies that perform adminis trative or marketing services for T. Rowe Price, with a research firm we have hired, or with a business partner, such as a bank or insurance company with which we are developing or offering investment products. When we enter into such a relationship, our contracts restrict the companies ` use of our customer information, prohibiting them from sharing or using it for any purposes other than those for which they were hired.

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This Privacy Policy applies to the following T. Rowe Price family of companies:

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T. Rowe Price Associates, Inc.; T. Rowe Price Advisory Services, Inc.; T. Rowe Price Investment Services, Inc.; T. Rowe Price Savings Bank; T. Rowe Price Trust Company; and the T. Rowe Price Funds.

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1940 Act File No. 811-2958

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E276-040 5/1/03

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

A fund Statement of Additional Information has been filed with the Secu rities and Exchange Commission and is incorporated by reference into this prospectus. Further information about fund investments, including a review of market conditions and the manager`s recent strategies and their impact on performance, is available in the annual and semiannual share holder reports. To obtain free copies of any of these documents, call your intermediary.

Fund information and Statements of Additional Information are also available from the Public Reference Room of the Securities and Exchange Commission. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Fund reports and other fund information are available on the EDGAR Database on the SEC`s Internet site at http://www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the Public Reference Room, Washington D.C. 20549-0102.

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The date of this Statement of Additional Information is May 1, 2003 .

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T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price International Bond Fund ®

T. Rowe Price International Bond Fund — Advisor Class

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

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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This Statement of Additional Information is not a prospectus but should be read in conjunction with the appropriate fund prospectus dated May 1, 2003 , which may be obtained from T. Rowe Price Investment Services, Inc. ( "Investment Services" ).

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Each fund`s financial statements for the fiscal period ended December 31, 2002 , and the report of independent accountants are included in each fund`s Annual Report and incorporated by reference into this Statement of Additional Information.

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If you would like a prospectus or an annual or semiannual shareholder report for a fund of which you are not a shareholder, please call 1-800-638-5660 and they will be sent to you at no charge . Please read them carefully.

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TABLE OF CONTENTS

	Page		Page

Capital Stock	53	Legal Counsel	55
Code of Ethics	46	Management of the Fund	25
Custodian	46	Net Asset Value per Share	49
Distributor for the Fund	44	Other Shareholder Services	44
Dividends and Distributions	50	Portfolio Management Practices	10
Federal Registration of Shares	54	Portfolio Transactions	46
Independent Accountants	55	Pricing of Securities	49
Investment Management Services	41	Principal Holders of Securities	40
Investment Objectives and Policies	2	Ratings of Corporate Debt Securities	56
Investment Performance	52	Risk Factors	2
Investment Program	7	Tax Status	50
Investment Restrictions	23	Yield Information	51

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INVESTMENT OBJECTIVES AND POLICIES

The following information supplements the discussion of each fund`s investment objectives and policies discussed in each fund`s prospectus.

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Shareholder approval is required to substantively change fund objectives. 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 ( "Board" ) without shareholder approval. Each fund`s fundamental policies may not be changed without the approval of at least a majority of the outstanding shares of the fund or, if it is less, 67% of the shares represented at a meeting of shareholders at which the holders of 50% or more of the shares are represented. References to the following are as indicated:

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Investment Company Act of 1940 ( "1940 Act" )

Securities and Exchange Commission ( "SEC" )

T. Rowe Price Associates, Inc. ( "T. Rowe Price" )

Moody`s Investors Service, Inc. ( "Moody`s" )

Standard & Poor`s Corporation ( "S&P" )

Internal Revenue Code of 1986 ( "Code" )

T. Rowe Price International, Inc. ( "T. Rowe Price International" )

RISK FACTORS

Reference is also made to the sections entitled " Investment Program " and "Portfolio Management Practices" for discussions of the risks associated with the investments and practices described therein as they apply to the fund.

The fund`s investment manager, T. Rowe Price International, one of America`s largest managers of no-load international mutual fund assets, regularly analyzes a broad range of international equity and fixed - income markets in order to assess the degree of risk and level of return that can be expected from each market. Based upon its current assessment, T. Rowe Price International believes long-term growth of capital may be achieved by investing in marketable securities of non-United States companies which have the potential for growth of capital. Of course, there can be no assurance that T. Rowe Price International`s forecasts of expected return will be reflected in the actual returns achieved by the fund.

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

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

Political and Economic Factors Individual foreign economies of some countries differ favorably or unfavorably from the United States` economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency, and balance of payments position. The internal politics of some foreign countries are not as stable as in the United States. For example, in 1991, the existing government in Thailand was overthrown in a military coup. In 1994-1995, the Mexican peso plunged in value , setting off a severe crisis in the Mexican economy. Asia is still coming to terms with its own crisis and recessionary conditions sparked by widespread currency weakness in late 1997. In 1998, there was substantial turmoil in markets throughout the world. In 1999, the democratically elected government of Pakistan was overthrown by a military coup. The Russian government also defaulted on all its domestic debt. In addition, significant external political risks currently affect some foreign countries. Both Taiwan and China still claim sovereignty of one another and there is a demilitarized border and hostile relations between North and South Korea. In 2001, Argentina defaulted on its foreign-owned debt and had the peso devalued, resulting in the resignation of its president and deadly riots in December in response to government-mandated austerity measures. In 2002, many countries throughout the world struggled economically in the face of a severe decline in the U.S. stock market, a weak American economy, threats of war, and terrorism.

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

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

Investment and Repatriation Restrictions Foreign investment in the securities markets of certain foreign countries is restricted or controlled to varying degrees. These restrictions limit and , at times , preclude investment in certain of such countries and increase the cost and expenses of the fund. Investments by foreign investors are subject to a variety of restrictions in many developing countries. These restrictions may take the form of prior governmental approval, limits on the amount or type of securities held by foreigners, and limits on the types of companies in which foreigners may invest. Additional or different restrictions may be imposed at any time by these or other countries in which the fund invests. In addition, the repatriation of both investment income and capital from several foreign countries is restricted and controlled under certain regulations, including in some cases the need for certain government consents. For example, capital invested in Chile normally cannot be repatriated for one year. In 1998, the government of Malaysia imposed currency controls which effectively made it impossible for foreign investors to convert Malaysian ringgits to foreign currencies.

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

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

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

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

Costs Investors should understand that the expense ratios of the fund can be expected to be higher than investment companies investing in domestic securities since the cost of maintaining the custody of foreign securities and the rate of advisory fees paid by the fund is higher.

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

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

Japan

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

Economy The Japanese economy languished for much of the last decade. Lack of effective governmental action in the areas of tax reform to reduce high tax rates, banking regulation to address enormous amounts of bad

debt, and economic reforms to attempt to stimulate spending are among the factors cited as possible causes of Japan`s economic problems. The yen has had a history of unpredictable and volatile movements against the dollar; a weakening yen hurts U.S. investors holding yen-denominated securities. Finally, the Japanese stock market has experienced wild swings in value and has often been considered significantly overvalued.

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

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

Emerging Market Investing

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

Latin America

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

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

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

Sovereign Debt A number of Latin American countries are among the largest debtors of developing countries. There have been moratoria on, and reschedulings of, repayment with respect to these debts. Such events can

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restrict the flexibility of these debtor nations in the international markets and result in the imposition of onerous conditions on their economies.

Asia (ex-Japan)

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

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

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

Risk Factors of Investing in Debt Obligations

Because of its investment polic y , 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. There is risk in all investment. The value of the portfolio securities of each fund will fluctuate based upon market, economic , and foreign exchange 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 these results.

Yields on short-, intermediate-, and long-term securities are dependent on a variety of factors, including the general conditions of the money, bond , and foreign exchange markets ; the size of a particular offering ; the maturity of the obligation ; and the rating of the issue. Debt securities with longer maturities tend to produce 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 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 each fund to achieve its investment objective is also dependent on the continuing ability of the issuers of the debt securities in which each fund invests to meet their obligations for the payment of interest and principal when due.

After purchase by a 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 a fund. However, T. Rowe Price International will consider such event in its determination of whether a fund should continue to hold the security. To the extent that the ratings given by Moody`s and S&P may change as a result of changes in such organizations or their rating systems, the funds will attempt to use comparable ratings as standards for investments in accordance with the investment policies contained in the prospectus.

Special Risks of Investing in Junk Bonds The following special considerations are additional risk factors associated with the fund`s investments in lower-rated debt securities.

Youth and Growth of the Lower-Rated Debt Securities Market The market for lower-rated debt securities is relatively new and its growth has paralleled a long economic expansion. Past experience may not, therefore, provide an accurate indication of future performance of this market, particularly during periods of economic recession. An economic downturn or increase in interest rates is likely to have a greater negative effect on this market, the value of lower-rated debt securities in the fund`s portfolio, the fund`s net asset value and the ability of the bonds` issuers to repay principal and interest, meet projected business goals, and obtain additional financing than on higher-rated securities. These circumstances also may result in a higher incidence of defaults

than with respect to higher-rated securities. An investment in the fund is more risky than investment in shares of a fund which invests only in higher-rated debt securities.

Sensitivity to Interest Rate and Economic Changes Prices of lower-rated debt securities may be more sensitive to adverse economic changes or corporate developments than higher-rated investments. Debt securities with longer maturities, which may have higher yields, may increase or decrease in value more than debt securities with shorter maturities. Market prices of lower-rated debt securities structured as zero - coupon or pay-in-kind securities are affected to a greater extent by interest rate changes and may be more volatile than securities which pay interest periodically and in cash. Where it deems it appropriate and in the best interests of fund shareholders, the fund may incur additional expenses to seek recovery on a debt security on which the issuer has defaulted and to pursue litigation to protect the interests of security holders of its portfolio companies.

Liquidity and Valuation Because the market for lower-rated securities may be thinner and less active than for higher-rated securities, there may be market price volatility for these securities and limited liquidity in the resale market. Nonrated securities are usually not as attractive to as many buyers as rated securities are, a factor which may make nonrated securities less marketable. These factors may have the effect of limiting the availability of the securities for purchase by the fund and may also limit the ability of the fund to sell such securities at their fair value either to meet redemption requests or in response to changes in the economy or the financial markets.

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Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of lower-rated debt securities, especially in a thinly traded market. To the extent the fund owns or may acquire illiquid or restricted lower-rated securities, these securities may involve special registration responsibilities, liabilities , costs, and liquidity and valuation difficulties. Changes in values of debt securities which the fund owns will affect its net asset value per share. If market quotations are not readily available for the fund`s lower-rated or nonrated securities, these securities will be valued by a method that the fund`s Board believes accurately reflects fair value. Judgment plays a greater role in valuing lower-rated debt securities than with respect to securities for which more external sources of quotations and last sale information are available.

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Taxation Special tax considerations are associated with investing in lower-rated debt securities structured as zero - coupon or pay-in-kind securities. The fund accrues income on these securities prior to the receipt of cash payments. The fund must distribute substantially all of its income to its shareholders to qualify for pass-through treatment under the tax laws and may, therefore, have to dispose of its portfolio securities to satisfy distribution requirements.

INVESTMENT PROGRAM

Types of Securities

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

Hybrid Instruments

Hybrid instruments (a type of potentially high-risk derivative) have been developed and combine the elements of futures contracts or options with those of debt, preferred equity, or a depository instrument (hereinafter "hybrid instruments" ). Generally, a hybrid instrument will be a debt security, preferred stock, depository share, trust certificate, certificate of deposit, or other evidence of indebtedness on which a portion of or all interest payments, and/or the principal or stated amount payable at maturity, redemption, or retirement is determined by reference to prices, changes in prices, or differences between prices of securities, currencies, intangibles, goods, articles, or commodities (collectively "underlying assets" ) or by another objective index, economic factor, or other measure, such as interest rates, currency exchange rates, commodity indices, and securities indices (collectively "benchmarks" ). Thus, hybrid instruments may take a variety of forms, including, but not limited to, debt instruments with interest or principal payments or redemption terms determined by reference to the value of a currency or commodity or securities index at a future point in time, preferred stock with dividend rates determined by reference to the value of a currency, or convertible securities with the conversion terms related to a particular commodity.

Hybrid instruments can be an efficient means of creating exposure to a particular market, or segment of a market, with the objective of enhancing total return. For example, a fund may wish to take advantage of

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

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

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

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

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Hybrid instruments may also carry liquidity risk since the instruments are often "customized" to meet the portfolio needs of a particular investor, and therefore, the number of investors that are willing and able to buy such instruments in the secondary market may be smaller than that for more traditional debt securities. In addition, because the purchase and sale of hybrid instruments could take place in an over-the-counter market without the guarantee of a central clearing organization or in a transaction between the fund and the issuer of the hybrid instrument, the creditworthiness of the counterparty or issuer of the hybrid instrument would be an additional risk factor which the fund would have to consider and monitor. Hybrid instruments also may not be subject to regulation by the Commodities Futures Trading Commission ( "CFTC" ), which generally regulates the trading of commodity futures by U.S. persons, the SEC, which regulates the offer and sale of securities by and to U.S. persons, or any other governmental regulatory authority.

Illiquid or Restricted Securities

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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,

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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 . If, through the appreciation of illiquid securities or the depreciation of liquid securities, the fund should be in a position where more than 15% of the value of its net assets is invested in illiquid assets, including restricted securities, the fund will take appropriate steps to protect liquidity.

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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 International, under the supervision of the fund`s Board , will consider whether securities purchased under Rule 144A are illiquid and thus subject to the fund`s restriction of investing no more than 15% of its net assets in illiquid securities. A determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination, T. Rowe Price International 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 International could consider the following: (1) frequency of trades and quotes; (2) number of dealers and potential purchase r s; (3) dealer undertakings to make a market; and (4) the nature of the security and of marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer). The liquidity of Rule 144A securities would be monitored and, if as a result of changed conditions it is determined that a Rule 144A security is no longer liquid, the fund`s holdings of illiquid securities would be reviewed to determine what, if any, steps are required to assure that the fund does not invest more than 15% of its net assets in illiquid securities. Investing in Rule 144A securities could have the effect of increasing the amount of the fund`s assets invested in illiquid securities if qualified institutional buyers are unwilling to purchase such securities.

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Emerging Markets Bond Fund

The securities of U.S. issuers in which the fund may invest include, but are not limited to, the following:

U.S. Government Obligations Debt securities issued by the U.S. Treasury. These are direct obligations of the U.S. g overnment 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 ( "Fannie Mae" or "FNMA" ), Government National Mortgage Association ( "Ginnie Mae" or "GNMA" ), 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; 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, banker ` s acceptances, and other short-term debt obligations. Certificates of deposit are short-term obligations of commercial banks. A banker ` s 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.

Savings and Loan Obligations Negotiable certificates of deposit and other short-term debt obligations of savings and loan associations.

Supranational Agencies Securities of certain supranational entities, such as the International Development Bank.

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 such 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,

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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 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.

Asset Backed Receivables The asset-backed securities that may be purchased include, but are not limited to, Certificates for Automobile Receivables (CARS SM ) and Credit Card Receivable Securities. CARS SM represent undivided fractional interests in a trust whose assets consists of a pool of motor vehicle retail installment sales contracts and security interests in the vehicles securing these contracts. In addition to the general risks pertaining to all asset-backed securities, CARS SM are subject to the risks of delayed payments or losses if the full amounts due on underlying sales contracts are not realized by the trust due to unanticipated legal or administrative costs of enforcing the contracts or due to depreciation, damage , or loss of the vehicles securing the contracts. Credit Card Receivable Securities are backed by receivables from revolving credit card accounts. Since balances on revolving credit card accounts are generally paid down more rapidly than CARS SM , issuers often lengthen the maturity of these securities by providing for a fixed period during which interest payments are passed through and principal payments are used to fund the transfer of additional receivables to the underlying pool. The failure of the underlying receivables to generate principal payments may therefore shorten the maturity of these securities. In addition, unlike most other asset-backed securities, Credit Card Receivable Securities are backed by obligations that are not secured by an interest in personal or real property.

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

PORTFOLIO MANAGEMENT PRACTICES

Lending of Portfolio Securities

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Securities loans are made to broker-dealers, 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. The collateral, in turn, is invested in short-term securities. 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 a portion of the interest on the investment of the collateral . Normally, the fund employs an agent to implement its securities lending program and the agent receives a fee from the fund for its services. The fund has a right to call each loan and obtain the securities within such period of time that coincides with the normal settlement period for purchases and sales of such securities in the respective markets. The fund will not have the right to vote on securities while they are being lent, but it will call a loan in anticipation of any important vote. The risks in lending portfolio securities, as with other extensions of secured credit, consist of a possible default by the borrower, delay in receiving additional collateral or in the recovery of the securities or possible loss of rights in the collateral , should the borrower fail financially. Loans will be made only to firms deemed by T. Rowe Price International to be of good standing and will not be made unless, in the judgment of T. Rowe Price International, the consideration to be earned from such loans would justify the risk. Additionally, the fund bears the risk that the reinvestment of collateral will result in a principal loss. Finally, there is also the risk that the price of the securities will increase while they are on loan and the collateral will not adequately cover their value.

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Interfund Borrowing and Lending

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

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equitable treatment of all participating funds. The program is subject to the oversight and periodic review of the Boards of the Price Funds.

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Repurchase Agreements

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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 . 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 enter into repurchase agreements only where (1) the underlying securities are of the type (excluding maturity limitations) which the fund`s investment guidelines would allow it to purchase directly, (2) the market value of the underlying security, including interest accrued, will be at all times equal to or exceed the value of the repurchase agreement, and (3) payment for the underlying security is made only upon physical delivery or evidence of book-entry transfer to the account of the custodian or a bank acting as agent. In the event of a bankruptcy or other default of a seller of a repurchase agreement, the fund could experience both delays in liquidating the underlying security and losses, including: (a) possible decline in the value of the underlying security during the period while the fund seeks to enforce its rights thereto; (b) possible subnormal levels of income and lack of access to income during this period; and (c) expenses of enforcing its rights.

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Money Market Reserves

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T he fund may invest its cash reserves primarily in one or more money market funds established for the exclusive . use of the T. Rowe Price family of mutual funds and other clients of T. Rowe Price. Currently, two such money . market funds are in operation : T. Rowe Price Reserve Investment Fund ( "RIF" ) and T. Rowe Price Government . Reserve Investment Fund ( "GRF" ) , each a series of the T. Rowe Price Reserve Investment Funds, Inc. . Additional series may be created in the future. These funds were created and operate under an e xemptive o rder issued by the S E C .

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

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

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Neither fund is insured or guaranteed by the FDIC or any other government agency. Although the funds seek to maintain a stable net asset value of $1.00 per share, it is possible to lose money by investing in them .

Options

Options are a type of potentially high-risk derivative.

Writing Covered Call Options

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The fund may write (sell) American or European style "covered" call options and purchase options to close out options previously written by the fund. In writing covered call options, the fund expects to generate additional premium income , which should serve to enhance the fund`s total return and reduce the effect of any price decline of the security or currency involved in the option. Covered call options will generally be written on securities or currencies which, in T. Rowe Price International`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.

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A call option gives the holder (buyer) the right to purchase, and the writer (seller) has the obligation to sell, a security or currency at a specified price (the exercise price) at expiration of the option (European style) or at any time until a certain date (the expiration date) (American style). So long as the obligation of the writer of a call option continues, he may be assigned an exercise notice by the broker-dealer through whom such option was sold, requiring him to deliver the underlying security or currency against payment of the exercise price. This

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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.

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

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Portfolio securities or currencies on which call options may be written will be purchased solely on the basis of investment considerations consistent with the fund`s investment objective. The writing of covered call options is a conservative investment technique believed to involve relatively little risk (in contrast to the writing of naked or uncovered options, which the fund generally will not do) but capable of enhancing the fund`s total return. When writing a covered call option, a fund, in return for the premium, gives up the opportunity for profit from a price increase in the underlying security or currency above the exercise price, but conversely retains the risk of loss should the price of the security or currency decline. Unlike one that 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 the fund has written expires, the fund will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security or currency during the option period. If the call option is exercised, the fund will realize a gain or loss from the sale of the underlying security or currency. The fund does not consider a security or currency covered by a call to be "pledged" as that term is used in the fund`s policy , which limits the pledging or mortgaging of its assets. If the fund writes an uncovered option as described above, it will bear the risk of having to purchase the security subject to the option at a price higher than the exercise price of the option. As the price of a security could appreciate substantially, the fund`s loss could be significant.

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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 International, 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 on its primary exchange 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 mean of closing bid and ask prices. 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.

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Closing transactions will be effected in order to realize a profit on an outstanding call option, to prevent an underlying security or currency from being called, or to permit the sale of the underlying security or currency. Furthermore, effecting a closing transaction will permit the fund to write another call option on the underlying security or currency with either a different exercise price or expiration date or both. If the fund desires to sell a particular security or currency from its portfolio on which it has written a call option, or purchased a put option, it will seek to effect a closing transaction prior to, or concurrently with, the sale of the security or currency. There is, of course, no assurance that the fund will be able to effect such closing transactions at favorable prices. If the fund cannot enter into such a transaction, it may be required to hold a security or currency that it might otherwise have sold. When the fund writes a covered call option, it runs the risk of not

being able to participate in the appreciation of the underlying securities or currencies above the exercise price, as well as the risk of being required to hold on to securities or currencies that are depreciating in value. This could result in higher transaction costs. The fund will pay transaction costs in connection with the writing of options to close out previously written options. Such transaction costs are normally higher than those applicable to purchases and sales of portfolio securities.

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

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

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

Writing Covered Put Options

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

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The fund would write put options only on a covered basis . This means that the fund would maintain , in a segregated account , cash, U.S. government securities, other liquid high-grade debt obligations, or other suitable cover as determined by the SEC, in an amount not less than the exercise price . Alternatively, 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.)

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The fund would generally write covered put options in circumstances where T. Rowe Price International 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.

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

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The premium received by the fund for writing covered put 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 on its primary exchange 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 me an of the closing bid and ask prices.

Purchasing Put Options

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

The fund may purchase a put option on an underlying security or currency (a "protective put" ) owned by the fund as a defensive technique in order to protect against an anticipated decline in the value of the security or currency. Such hedge protection is provided only during the life of the put option when the fund, as the holder of the put option, is able to sell the underlying security or currency at the put exercise price regardless of any decline in the underlying security`s market price or currency`s exchange value. For example, a put option may be purchased in order to protect unrealized appreciation of a security or currency where T. Rowe Price deems it desirable to continue to hold the security or currency because of tax considerations. The premium paid for the put option and any transaction costs would reduce any capital gain otherwise available for distribution when the security or currency is eventually sold.

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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.

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The fund will not commit more than 5% of its assets to premiums when purchasing put options. The premium paid by the fund when purchasing a put option will be recorded as an asset of the fund in the portfolio of investments. This asset will be adjusted daily to the option`s current market value, which will be the latest sale price on its primary exchange 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 mean of closing bid and ask prices. 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.

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Purchasing Call Options

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

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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

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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.

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The fund may also purchase call options on underlying securities or currencies it owns in order to protect unrealized gains on call options previously written by it. A call option would be purchased for this purpose where tax considerations make it inadvisable to realize such gains through a closing purchase transaction. Call options may also be purchased at times to avoid realizing losses.

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The fund will not commit more than 5% of its assets to premiums when purchasing call and put options. The premium paid by the fund when purchasing a call option will be recorded as an asset of the fund in the portfolio of investments . This asset will be adjusted daily to the option`s current market value, which will be the latest sale price on its primary exchange 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 mean of closing bid and ask prices.

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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.

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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 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 c ounter - 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 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.

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

Futures Contracts

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

Transactions in Futures

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The fund may enter into financial futures contracts including stock index, interest rate, and currency futures ( "futures" or "futures contracts" ); however, the fund has no current intention of entering into stock index futures. The fund, however, reserves the right to trade in financial futures of any kind.

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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 International 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,

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the fund must sell futures cont r acts with respect to indices or subindices whose movements will have a significant correlation with movements in the prices of the fund`s portfolio securities.

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

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The fund will enter into futures contracts , which are traded on national or foreign futures exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading in the United States are regulated under the Commodity Exchange Act by the CFTC. Although techniques other than the sale and purchase of futures contracts could be used for the above-referenced purposes, futures contracts offer an effective and relatively low - cost means of implementing the fund`s objectives in these areas.

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Regulatory Limitations

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If the fund purchases or sells futures contracts or related options which do not qualify as bona fide hedging under applicable CFTC rules, the aggregate initial margin deposits and premium required to establish those positions cannot exceed 5% of the liquidation value of the fund after taking into account unrealized profits and unrealized losses on any such contracts it has entered into, provided, however, that in the case of an option that is in-the-money at the time of purchase, the in-the-money amount may be excluded in calculating the 5% limitation. For purposes of this policy, options on futures contracts and foreign currency options traded on a commodities exchange will be considered "related options." This policy may be modified by the Board without a shareholder vote and does not limit the percentage of the fund`s assets at risk to 5%.

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

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

Trading in Futures Contracts

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

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Unlike when the fund purchases or sells a security, no price would be paid or received by the fund upon the purchase or sale of a futures contract. Upon entering into a futures contract, and to maintain the fund`s open positions in futures contracts, the fund would be required to deposit with its custodian in a segregated account in the name of the futures broker an amount of cash or liquid assets known as "initial margin." The margin required for a particular futures contract is set by the exchange on which the contract is traded and may be significantly modified from time to time by the exchange during the term of the contract. Futures contracts are customarily purchased and sold on margins that may range upward from less than 5% of the value of the contract being traded.

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Financial futures are valued daily at closing settlement prices. 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 a payment by the fund ( "variation margin" ) to restore the margin account to the amount of the initial margin.

S ubsequent payments ( "mark-to-market payments" ) 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 . If the value of the open futures position increases in the case of a sale or decreases in the case of a purchase, the fund will pay the amount of the daily change in value to the broker. However, if the value of the open futures position decreases in the case of a sale or increases in the case of a purchase, the broker will pay the amount of the daily change in value to the fund.

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.

As an example of an offsetting transaction in which the underlying instrument is not delivered, the contractual obligations arising from the sale of one contract of September Treasury bills on an exchange may be fulfilled at any time before delivery of the contract is required (i.e., on a specified date in September, the "delivery month" ) by the purchase of one contract of September Treasury bills on the same exchange. In such instance, the difference between the price at which the futures contract was sold and the price paid for the offsetting purchase, after allowance for transaction costs, represents the profit or loss to the fund.

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.

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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.

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

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Liquidity The fund may elect to close some or all of its futures positions at any time prior to their expiration. The fund would do so to reduce exposure represented by long futures positions or short futures positions. The fund may close its positions by taking opposite positions , which would operate to terminate the fund`s position in the futures contracts. Final determinations of mark-to-market payments 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.

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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

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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 mark-to-market and variation margin payments . However, in the event futures contracts have been used to hedge the underlying instruments, the fund would continue to hold the underlying instruments subject to the hedge until the futures contracts could be terminated. In such circumstances, an increase in the price of underlying instruments, if any, might partially or completely offset losses on the futures contract. However, as described next, there is no guarantee that the price of the underlying instruments will, in fact, correlate with the price movements in the futures contract and thus provide an offset to losses on a futures contract.

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Hedging Risk A decision 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 or economic events. 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 International 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.

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Successful use of futures contracts by the fund for hedging purposes is also subject to T. Rowe Price International`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 certain degree, T. Rowe Price International 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 ha d 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 mark-to-market and 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.

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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. Increased participation by speculators in the futures market might also cause temporary price distortions. Due to the possibility of price distortion in the futures market and also because of imperfect correlation between price movements in the underlying instruments and movements in the prices of futures contracts, even a correct forecast of general market trends by T. Rowe Price International might not result in a successful hedging transaction over a very short time period.

Options on Futures Contracts

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

Options (another type of potentially high-risk derivative) on futures are similar to options on underlying instruments except that options on futures give the purchaser the right, in return for the premium paid, to assume a position in a futures contract (a long position if the option is a call and a short position if the option is a put), rather than to purchase or sell the futures contract, at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by the delivery of the accumulated balance in the writer`s

futures margin account which represents the amount by which the market price of the futures contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the futures contract. Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid. Options on futures contracts are valued daily at the last sale price o n its primary exchange 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 mean of closing bid and ask prices.

As an alternative to writing or purchasing call and put options on stock index futures, the fund may write or purchase call and put options on financial indices. Such options would be used in a manner similar to the use of options on futures contracts. From time to time, a single order to purchase or sell futures contracts (or options thereon) may be made on behalf of the fund and other T. Rowe Price funds. Such aggregated orders would be allocated among the funds and the other T. Rowe Price funds in a fair and nondiscriminatory manner.

Special Risks of Transactions in Options on Futures Contracts

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The risks described under "Special Risks of Transactions i n Futures Contracts" are substantially the same as the risks of using options on futures. If the fund were to write an option on a futures contract, it would be required to deposit initial margin and maintain mark-to-market payments in the same manner as a regular futures contract. In addition, where the fund seeks to close out an option position by writing or buying an offsetting option covering the same index, underlying instrument, or contract and having the same exercise price and expiration date, its ability to establish and close out positions on such options will be subject to the maintenance of a liquid secondary market. Reasons for the absence of a liquid secondary market on an exchange include the following: (1) there may be insufficient trading interest in certain options; (2) restrictions may be imposed by an exchange on opening transactions or closing transactions or both; (3) trading halts, suspensions, or other restrictions may be imposed with respect to particular classes or series of options, or underlying instruments; (4) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (5) the facilities of an exchange or a clearing corporation may not at all times be adequate to handle current trading volume; or (6) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in the class or series of options) would cease to exist, although outstanding options on the exchange that had been issued by a clearing corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms. There is no assurance that higher - than - anticipated trading activity or other unforeseen events might not, at times, render certain of the facilities of any of the clearing corporations inadequate, and thereby result in the institution by an exchange of special procedures , which may interfere with the timely execution of customers` orders.

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Additional Futures and Options Contracts

Although the fund has no current intention of engaging in futures or options transactions other than those described above, it reserves the right to do so. Such futures and options trading might involve risks which differ from those involved in the futures and options described above.

Foreign Futures and Options

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

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loss thereon may be affected by any variance in the foreign exchange rate between the time the fund`s order is placed and the time it is liquidated, offset , or exercised.

Foreign Currency Transactions

A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a . future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at . a price set at the time of the contract. These contracts are principally traded in the interbank market conducted . directly between currency traders (usually large, commercial banks) and their customers. A forward contract . generally has no deposit requirement, and no commissions are charged at any stage for trades. The fund may . enter into forward contracts for a variety of purposes in connection with the management of the foreign . securities portion of its portfolio . . The fund`s use of such contracts would include, but not be limited to, the following:

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

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

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

If the fund retains the portfolio security and engages in an offsetting transaction, the fund will incur a gain or a loss (as described below) to the extent that there has been movement in forward contract prices. If the fund engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the foreign currency. Should forward prices decline during the period between the fund`s entering into a forward contract for the sale of a foreign currency and the date it enters into an offsetting contract for the purchase of the foreign currency, the fund will realize a gain to the extent the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, the fund will suffer a loss to the extent 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 International. It also should be realized that this method of hedging against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange at a future date. Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time, they tend to limit any potential gain which might result from an increase in the value of that currency.

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

Under certain circumstances, the Emerging Markets Bond Fund may commit a substantial portion or the entire value of its assets to the consummation of these contracts. T. Rowe Price International will consider the effect a substantial commitment of its assets to forward contracts would have on the investment program of the fund and the flexibility of the fund to purchase additional securities.

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

<R>

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

</R>

<R>

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

</R>

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

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

<R>

In order for the fund to continue to qualify for federal income tax treatment as a regulated investment company, at least 90% of its gross income for a taxable year must be derived from qualifying income, i.e., dividends, interest, income derived from loans of securities, and gains from the sale of securities or currencies. Tax regulations could be issued limiting the extent that net gain realized from options, futures, or forward foreign exchange contracts on currencies is qualifying income for purposes of the 90% requirement.

</R>

<R>

Entering into certain options, futures contracts, swaps, or forward foreign exchange contracts may result in the "constructive sale" of offsetting stocks or debt securities of the fund.

</R>

The Internal Revenue Service has issued a notice proposing alternative methods for the inclusion or deduction of certain payments made under swap contracts. Although not anticipated, it is possible that final rules could result in changes to the amounts recorded by the fund, potentially impacting the tax results of the fund.

PAGE 83

When-Issued Securities and Forward Commitment Contracts

<R>

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 values decline 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 . 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, liquid, high-grade debt securities, or other suitable cover as permitted by the SEC with its custodian bank equal in value to its commitments for the securities 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.

</R>

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.

INVESTMENT RESTRICTIONS

<R>

Fundamental policies may not be changed without the approval of the lesser of (1) 67% of the fund`s shares present at a meeting of shareholders if the holders of more than 50% of the outstanding shares are present in person or by proxy or (2) more than 50% of a fund`s outstanding shares. Other restrictions in the form of operating policies are subject to change by the fund`s Board without shareholder approval. Any investment restriction which involves a maximum percentage of securities or assets shall not be considered to be violated unless an excess over the percentage occurs immediately after, and is caused by, an acquisition of securities or assets of, or borrowings by, the fund. Calculation of the fund`s total assets for compliance with any of the following fundamental or operating policies or any other investment restrictions set forth in the fund`s prospectus or Statement of Additional Information will not include cash collateral held in connection with securities lending activities.

</R>

Fundamental Policies

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

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 33xb6 / xb8 % 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;

Commodities Purchase or sell physical commodities , except that it may enter into futures contracts and options thereon;

Industry Concentration (Emerging Markets Bond Fund) 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;

Industry Concentration (International Bond Fund) 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, provided, however, that the fund will normally concentrate 25% or more of its assets in securities of the banking industry when the fund`s position in issues maturing in one year or less equals 35% or more of the fund`s total assets;

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 33xb6 / xb8 % 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;

Real Estate Purchase or sell real estate, including limited partnership interests therein, unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business);

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

Underwriting Underwrite securities issued by other persons, except to the extent that the fund may be deemed to be an underwriter within the meaning of the 1933 Act in connection with the purchase and sale of its portfolio securities in the ordinary course of pursuing its investment program.

NOTES

The following Notes should be read in connection with the above-described fundamental policies. The Notes are not fundamental policies.

With respect to investment restriction (2), the fund does not consider currency contracts or hybrid investments to be commodities.

For purposes of investment restriction (3):

U.S., state, or local governments, or related agencies or instrumentalities, are not considered an industry .

<R>

I ndustries are determined by reference to the classifications of industries and sub-industries set forth in the Morgan Stanley Capital International/Standard & Poor`s Global Industry Classification Standard .

</R>

It is the position of the staff of the SEC that foreign governments are industries for purposes of this restriction.

For as long as this staff position is in effect, the fund will not invest more than 25% of its total assets in the securities of any single foreign governmental issuer. For purposes of this restriction, governmental entities are considered separate issuers.

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

Operating Policies

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

Borrowing Purchase additional securities when money borrowed exceeds 5% of its total assets;

Control of Portfolio Companies Invest in companies for the purpose of exercising management or control;

<R>

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;

</R>

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

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

PAGE 85

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;

<R>

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 33xb6 / xb8 % of the fund`s total assets at the time of borrowing or investment;

</R>

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

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;

Short Sales Effect short sales of securities; or

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

<R>

In addition to the restrictions described above, some foreign countries limit, or prohibit, all direct foreign investment in the securities of their companies. However, the governments of some countries have authorized the organization of investment funds to permit indirect foreign investment in such securities. For tax purposes, these funds may be known as Passive Foreign Investment Companies. Each fund is subject to certain percentage limitations under the 1940 Act and certain state laws relating to the purchase of securities of investment companies, and may be subject to the limitation that no more than 10% of the value of the fund`s total assets may be invested in such securities.

</R>

<R>

MANAGEMENT OF the fund

</R>

<R>

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 or T. Rowe Price International for more than five years.

</R>

<R>

The fund is governed by a Board that meets regularly to review fund investments, performance, expenses, and other business affairs. The Board elects the fund`s officers. The Board also is responsible for performing various duties imposed on it by the 1940 Act and by the laws of Maryland or Massachusetts. The majority of Board members are independent of T. Rowe Price and T. Rowe Price International. The directors who are also employees or officers of T. Rowe Price are referred to as inside or interested directors. Each Board currently has three committees, described in the following paragraphs.

</R>

<R>

The Committee of Independent Directors, which consists of all of the independent directors of the funds, is responsible for selecting candidates for election as independent directors to fill vacancies on each fund`s Board. F. Pierce Linaweaver is chairman of the committee. The committee will consider written recommendations from shareholders for possible nominees. Shareholders should submit their recommendations to the secretary of the funds. The committee held one formal meeting during the last fiscal year .

</R>

<R>

The Joint Audit Committee is comprised of David K. Fagin, Hanne M. Merriman , John G. Schreiber, and Paul M. Wythes , all independent directors . The Audit Committee holds two regular meetings during each fiscal year, at which time it meets with the independent accountants of the T. Rowe Price funds to review: (1) the services provided; (2) the findings of the most recent audit s ; (3) management`s response to the findings of the most recent audit s ; (4) the scope of the audit s to be performed; (5) the accountants` fees; and (6) any accounting or other questions relating to particular areas of the T. Rowe Price funds` operations or the operations of parties dealing with the T. Rowe Price funds, as circumstances indicate. The Audit Committee for the funds met two time s in 200 2 . All members of the committee participated in the meetings.

</R>

<R>

The fund`s Executive Committee, consisting of the fund`s interested directors, has been authorized by its respective Board 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.

</R>

<R>

* The term "director" is used to refer to directors or trustees, as applicable.

</R>

<R>

Independent Directors *

</R>

<R>

Name, Date of Birth, and Number of Portfolios in Fund Complex Overseen by Director	Term of Of fice(a) and Length of Time Served	Principal Occupation(s) During Past 5 Years	Other Directorships of Public Companies
Anthony W. Deering 1/28/45 105 portfolios	Since 1991	Director, Chairman of the Board, President, and Chief Executive Officer, The Rouse Company, real estate developers ; Director, Mercantile Bank (4/03 to present )	The Rouse Company and Mercantile Bank
Donald W. Dick, Jr. 1/27/43 105 portfolios	Since 1988	Principal, EuroCapital Advisors, LLC, an acquisition and management advisory firm	None
David K. Fagin 4/9/38 105 portfolios	Since 2001	Director, Golden Star Resources Ltd., Canyon Resources Corp. (5/00 to present) , and Pacific Rim Mining Corp. (2/02 to present) ; Chairman and President, Nye Corporation	Golden Star Resources Ltd., Canyon Resources Corp. , and Pacific Rim Mining Corp.
F. Pierce Linaweaver 8/22/34 105 portfolios	Since 2001	President, F. Pierce Linaweaver & Associates, Inc., consulting environmental and civil engineers	None
Hanne M. Merriman 11/16/41 105 portfolios	Since 2001	Retail Business Consultant	Ann Taylor Stores Corporation, Ameren Corp., Finlay Enterprises, Inc., The Rouse Company, and US Airways Group, Inc.
John G. Schreiber 10/21/46 105 portfolios	Since 2001	Owner/President, Centaur Capital Partners, Inc., a real estate investment company; Senior Advisor and Partner, Blackstone Real Estate Advisors, L.P.	AMLI Residential Properties Trust, Host Marriott Corporation, and The Rouse Company, real estate developers
Hubert D. Vos 8/2/33 105 portfolios	Since 2001	Owner/President, Stonington Capital Corporation, a private investment company	None
Paul M. Wythes 6/23/33 105 portfolios	Since 1996	Founding Partner of Sutter Hill Ventures, a venture capital limited partnership, providing equity capital to young high - technology companies throughout the United States	Teltone Corporation

</R>

<R>

* All information about the directors was current as of December 31, 200 2 .

</R>

<R>

(a) Each director serves until election of a successor.

</R>

PAGE 87

<R>

Inside Directors *

</R>

<R>

Name, Date of Birth, and
Number of Portfolios in Fund
Complex Overseen by Director

Term of Of fice(a) and Length of Time Served

Principal Occupation(s) During Past 5 Years

Other Directorships of Public Companies

</R>

<R>

James S. Riepe
6/25/43
105 portfolios

Since 2002

Director and Vice President, T. Rowe Price; Vice Chairman of the Board, Director, and Vice President, T. Rowe Price Group, Inc.; Chairman of the Board and Director, T. Rowe Price Global Asset Management Limited, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of the Board, Director, President, and Trust Officer, T. Rowe Price Trust Company; Director, T. Rowe Price International, Inc. and T. Rowe Price Global Investment Services Limited Chairman of the Board

None

</R>

<R>

M. David Testa
4/22/44
105 portfolios

Since 1979

Chief Investment Officer, Director, and Vice President, T. Rowe Price; Vice Chairman of the Board, Chief Investment Officer, Director, and Vice President, T. Rowe Price Group, Inc.; Director, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited; Chairman of the Board and Director, T. Rowe Price International, Inc.; Director and Vice President , T. Rowe Price Trust Company Director and Vice President

None

</R>

<R>

* All information about the directors was current as of December 31, 200 2 .

</R>

<R>

(a) Each director serves until election of a successor.

</R>

<R>

Officers

</R>

<R>

Name, Date of Birth, and Principal Occupations

Position(s) Held With Fund (s)

</R>

<R>

Christopher D. Alderson, 3/29/62
Vice President , T. Rowe Price , T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc.

Vice President

</R>

<R>

Name, Date of Birth, and Principal Occupations

Position(s) Held With Fund (s)

</R>

<R>

Mark C.J. Bickford-Smith, 4/30/62
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc.

Vice President

</R>

<R>

Stephen V. Booth, 6/21/61
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and
T. Rowe Price Trust Company ; Certified Public Accountant

Vice President

</R>

<R>

Brian J. Brennan, 7/14/64
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.

Vice President

</R>

<R>

Joseph A. Carrier, 12/30/60
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and
T. Rowe Price Investment Services, Inc.

Treasurer

</R>

Michael J. Conelius, 6/16/64
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and
T. Rowe Price International, Inc.

Vice President

<R>

Ann B. Cranmer, 3/23/47
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc.; Vice President and Secretary, T. Rowe Price
Global Asset Management Limited and T. Rowe Price Global
Investment Services Limited

Assistant Vice President

</R>

Frances Dydasco, 5/8/66
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc.

Vice President

Mark J.T. Edwards, 10/27/57
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc.

Vice President

Roger L. Fiery III, 2/10/59
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and
T. Rowe Price International, Inc.

Assistant Vice President

PAGE 89

<R>

Name, Date of Birth, and Principal Occupations

Position(s) Held With Fund (s)

</R>

<R>

John R. Ford, 11/25/57
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.;
Chief Investment Officer, Director, and Vice President,
T. Rowe Price International , Inc.

President

</R>

<R>

Gregory S. Golczewski, 1/15/66
Assistant Vice President, T. Rowe Price ; Vice President,
T. Rowe Price Trust Company

Vice President

</R>

<R>

M. Campbell Gunn, 3/9/56
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc.; (1998-2002) Managing Director and Chief
Investment Officer of MEIJI Dresdner Asset Management

Vice President

</R>

<R>

Henry H. Hopkins, 12/23/42
Director and Vice President , T. Rowe Price Group, Inc. ,
T. Rowe Price Investment Services, Inc., T. Rowe Price
Services, Inc., and T. Rowe Price Trust Company ; Vice
President, T. Rowe Price , T. Rowe Price International, Inc.,
and T. Rowe Price Retirement Plan Services, Inc.

Vice President

</R>

<R>

Ian D. Kelson, 8/16/56
Vice President , T. Rowe Price , T. Rowe Price Group, Inc. , and
T. Rowe Price International, Inc. ; formerly Head of Fixed
Income for Morgan Grenfell/Deutsche Asset Management
(2000)

Vice President

</R>

<R>

Patricia B. Lippert, 1/12/53
Assistant Vice President, T. Rowe Price and T. Rowe Price
Investment Services, Inc.

Secretary

</R>

<R>

Raymond A. Mills, 12/3/60
Vice President, T. Rowe Price , T. Rowe Price Group, Inc., and
T. Rowe Price International , Inc.; formerly Principal Systems
Engineer at TASC, Inc.; Chartered Financial Analyst

Vice President

</R>

<R>

George A. Murnaghan, 5/1/56
Vice President , T. Rowe Price , T. Rowe Price Group, Inc. ,
T . Rowe Price International, Inc., T. Rowe Price Investment
Services, Inc., and T. Rowe Price Trust Company

Vice President

</R>

<R>

Name, Date of Birth, and Principal Occupations

Position(s) Held With Fund (s)

</R>

<R>

Gonzalo Px87 nga r o, 11/27/68
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc.

Vice President

</R>

D. James Prey III, 11/26/59
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.

Vice President

<R>

Robert A. Revel-Chion, 3/9/65
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc.

Vice President

</R>

<R>

Christopher J. Rothery, 5/26/63
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc.

Vice President

</R>

<R>

James B.M. Seddon, 6/17/64
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc.

Vice President

</R>

<R>

Robert W. Smith, 4/11/61
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and
T. Rowe Price International, Inc.

Vice President

</R>

Benedict R.F. Thomas, 8/27/64
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc.

Vice President

Justin Thomson, 1/14/68
Vice President, T. Rowe Price Group, Inc. and T. Rowe Price
International, Inc. ; (1998 to present) Small-Cap Coordinator,
T. Rowe Price International; formerly (1991-1998) Portfolio
Manager, G.T. Capital/Invesco

Vice President

<R>

Julie L. Waples, 5/12/70
Vice President, T. Rowe Price

Vice President

</R>

PAGE 91

<R>

Name, Date of Birth, and Principal Occupations

Position(s) Held With Fund (s)

</R>

<R>

David J.L. Warren, 4/14/57
Vice President , T. Rowe Price and T. Rowe Price Group, Inc.;
Chief Executive Officer , Director, and President, T. Rowe
Price International, Inc.; Director, T. Rowe Price Global Asset
Management Limited and T. Rowe Price Global Investment
Services Limited

Executive Vice President

</R>

<R>

William F. Wendler II, 3/14/62
Vice President, T. Rowe Price, T. Rowe Price Group, Inc. , and
T. Rowe Price International, Inc.

Vice President

</R>

<R>

Richard T. Whitney, 5/7/58
Vice President, T. Rowe Price, T. Rowe Price Group, Inc.,
T. Rowe Price Trust Company, and T. Rowe Price International ,
Inc.

Vice President

</R>

<R>

Edward A. Wiese, 4/12/59
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and
T. Rowe Price Trust Company; Chief Executive Officer ,
Directo r, and Vice President, T. Rowe Price Savings Bank;
Chartered Financial Analyst

Vice President

</R>

Director Compensation Table

The fund does not pay pension or retirement benefits to its officers or directors. Also, any director of the fund who is an officer or employee of T. Rowe Price or T. Rowe Price International does not receive any remuneration from the fund.

<R>

Name of Person	Aggregate Compensation From Fund(a)	Total Compensation From Fund and Fund Complex Paid to Directors(b)
Emerging Markets Bond Fund
Anthony W. Deering	$ 660	$ 110,000
Donald W. Dick, Jr.	660	110,000
David K. Fagin	662	112,000
F. Pierce Linaweaver	662	113,000
Hanne M. Merriman	660	110,000
John G. Schreiber	662	112,000
Hubert D. Vos	660	110,000
Paul M. Wythes	662	112,000
International Bond Fund
Anthony W. Deering	$ 1,064	$ 110,000
Donald W. Dick, Jr.	1,064	110,000
David K. Fagin	1,072	112,000
F. Pierce Linaweaver	1,072	113,000
Hanne M. Merriman	1,064	110,000
John G. Schreiber	1,072	112,000
Hubert D. Vos	1,064	110,000
Paul M. Wythes	1,072	112,000

</R>

<R>

Amounts in this column are based on accrued compensation for fiscal year 2002 .

</R>

<R>

Amounts in this column are based on compensation received for fiscal year 2002 . The T. Rowe Price complex included 105 funds as of December 31, 200 2 .

</R>

Directors` Holdings in the T. Rowe Price Funds

<R>

The following table sets forth the T. Rowe Price fund holdings of the independent and inside directors, as of December 31, 200 2 .

</R>

<R>

	Deering	Dick	Fagin	Linaweaver	Merriman	Schreiber	Vos	Wythes
Aggregate Holdings, All Funds	over $100,000	over $100,000	over $100,000	over $100,000	over $100,000	over $100,000	over $100,000	over $100,000
Balanced Fund	None	None	None	over $100,000	None	None	None	None
Blue Chip Growth Fund	None	$10,001- $50,000	$ 5 0,001- $ 10 0,000	None	over $100,000	None	None	None
Blue Chip Growth Fund — Advisor Class	None	None	None	None	None	None	None	None
Blue Chip Growth Fund — R Class	None	None	None	None	None	None	None	None
Blue Chip Growth Portfolio	None	None	None	None	None	None	None	None
Blue Chip Growth Portfolio — II	None	None	None	None	None	None	None	None
California Tax-Free Bond Fund	None	None	None	None	None	None	None	None
California Tax-Free Money Fund	None	None	None	None	None	None	None	None
Capital Appreciation Fund	None	over $100,000	None	None	$10,001- $50,000	None	None	None
Capital Opportunity Fund	None	None	None	None	None	None	None	None
Corporate Income Fund	None	None	None	None	None	None	None	None
Developing Technologies Fund	None	None	None	None	None	None	None	None
Diversified Small-Cap Growth Fund	None	None	None	None	None	None	None	None
Dividend Growth Fund	None	None	$10,001- $50,000	None	$10,001- $50,000	None	None	None
Emerging Europe & Mediterranean Fund	None	None	None	None	None	None	None	None
Emerging Markets Bond Fund	None	None	None	None	None	None	None	None
Emerging Markets Stock Fund	None	None	None	None	None	None	None	None
Equity Income Fund	None	$50,001- $100,000	$10,001- $50,000	None	$50,001- $100,000	None	$10,001- $50,000	None
Equity Income Fund — Advisor Class	None	None	None	None	None	None	None	None
Equity Income Fund — R Class	None	None	None	None	None	None	None	None
Equity Income Portfolio	None	None	None	None	None	None	None	None
Equity Income Portfolio — II	None	None	None	None	None	None	None	None
Equity Index 500 Fund	None	None	None	None	over $100,000	None	None	None
Equity Index 500 Portfolio	None	None	None	None	None	None	None	None
European Stock Fund	$50,001- $100,000	$10,001- $50,000	$10,001- $50,000	None	None	None	None	None
Extended Equity Market Index Fund	None	None	None	None	None	None	None	None
Financial Services Fund	None	$10,001- $50,000	None	None	None	None	None	None
Florida Intermediate Tax- Free Fund	None	None	None	None	None	None	None	None
Georgia Tax-Free Bond Fund	None	None	None	None	None	None	None	None
Global Stock Fund	None	None	None	None	None	None	None	None
Global Technology Fund	None	None	None	None	None	None	None	None
GNMA Fund	None	None	None	None	None	over $100,000	None	None
Government Reserve Investment Fund	None	None	None	None	None	None	None	None
Growth & Income Fund	None	$1- $10,000	None	None	None	over $100,000	None	$10,001- $50,000
Growth Stock Fund	None	$10,001- $50,000	None	$10,001- $50,000	None	None	None	None
Growth Stock Fund — Advisor Class	None	None	None	None	None	None	None	None
Growth Stock Fund — R Class	None	None	None	None	None	None	None	None
Health Sciences Fund	None	$10,001- $50,000	None	None	None	None	$10,001- $50,000	$1- $10,000
Health Sciences Portfolio	None	None	None	None	None	None	None	None
Health Sciences Portfolio — II	None	None	None	None	None	None	None	None
High Yield Fund	None	$10,001- $50,000	None	over $100,000	None	over $100,000	None	None
High Yield Fund — Advisor Class	None	None	None	None	None	None	None	None
Inflation Protected Bond Fund	None	None	None	None	None	None	None	None
Institutional Emerging Markets Equity Fund	None	None	None	None	None	None	None	None
Institutional Foreign Equity Fund	None	None	None	None	None	None	None	None
Institutional High Yield Fund	None	None	None	None	None	None	None	None
Institutional Large-Cap Growth Fund	None	None	None	None	None	None	None	None
Institutional Large-Cap Value Fund	None	None	None	None	None	None	None	None
Institutional Mid-Cap Equity Growth Fund	None	None	None	None	None	None	None	None
Institutional Small-Cap Stock Fund	None	None	None	None	None	None	None	None
International Bond Fund	None	$10,001- $50,000	None	None	None	None	None	None
International Bond Fund — Advisor Class	None	None	None	None	None	None	None	None
International Discovery Fund	$10,001- $50,000	$10,001- $50,000	None	over $100,000	None	None	None	over $100,000
International Equity Index Fund	None	None	None	None	None	None	None	None
International Growth & Income Fund	None	None	None	None	None	None	None	None
International Growth & Income Fund — Advisor Class	None	None	None	None	None	None	None	None
International Growth & Income Fun d — R Class	None	None	None	None	None	None	None	None
International Stock Fund	over $100,000	None	over $100,000	None	None	None	None	None
International Stock Fund — Advisor Class	None	None	None	None	None	None	None	None
International Stock Fund — R Class	None	None	None	None	None	None	None	None
International Stock Portfolio	None	None	None	None	None	None	None	None
Japan Fund	None	None	None	None	None	None	None	None
Latin America Fund	None	None	None	None	None	None	None	None
Limited-Term Bond Portfolio	None	None	None	None	None	None	None	None
Maryland Short-Term Tax- Free Bond Fund	None	None	None	None	None	None	None	None
Maryland Tax-Free Bond Fund	None	None	None	None	None	None	None	None
Maryland Tax-Free Money Fund	None	None	None	None	None	None	None	None
Media & Telecommunications Fund	$10,001- $50,000	None	None	None	None	None	None	None
Mid-Cap Growth Fund	None	$10,001- $50,000	over $100,000	None	None	None	$10,001- $50,000	None
Mid-Cap Growth Fund — Advisor Class	None	None	None	None	None	None	None	None
Mid-Cap Growth Fund — R Class	None	None	None	None	None	None	None	None
Mid-Cap Growth Portfolio	None	None	None	None	None	None	None	None
Mid-Cap Growth Portfolio — II	None	None	None	None	None	None	None	None
Mid-Cap Value Fund	None	None	None	None	None	None	None	None
Mid-Cap Value Fund — Advisor Class	None	None	None	None	None	None	None	None
Mid-Cap Value Fund — R Class	None	None	None	None	None	None	None	None
New America Growth Fund	None	None	None	over $100,000	$10,001- $50,000	None	None	$10,001- $50,000
New America Growth Portfolio	None	None	None	None	None	None	None	None
New Asia Fund	None	None	$10,001- $50,000	None	None	None	None	None
New Era Fund	None	None	None	None	None	None	$10,001- $50,000	None
New Horizons Fund	over $100,000	$10,001- $50,000	$1- $10,000	over $100,000	$10,001- $50,000	None	$10,001- $50,000	$50,001- $100,000
New Income Fund	None	$50,001- $100,000	None	None	None	over $100,000	None	None
New Income Fund — Advisor Class	None	None	None	None	None	None	None	None
New Income Fund — R Class	None	None	None	None	None	None	None	None
New Jersey Tax-Free Bond Fund	None	None	None	None	None	None	None	None
New York Tax-Free Bond Fund	None	None	None	None	None	None	None	None
New York Tax-Free Money Fund	None	None	None	None	None	None	None	None
Personal Strategy Balanced Fund	None	None	None	None	None	None	None	None
Personal Strategy Balanced Portfolio	None	None	None	None	None	None	None	None
Personal Strategy Growth Fund	None	None	None	None	None	None	None	None
Personal Strategy Income Fund	None	None	None	None	None	None	None	None
Prime Reserve Fund	None	over $100,000	None	$10,001- $50,000	$50,001- $100,000	$10,001- $50,000	None	None
Prime Reserve Portfolio	None	None	None	None	None	None	None	None
Real Estate Fund	None	None	None	None	None	None	None	None
Reserve Investment Fund	None	None	None	None	None	None	None	None
Retirement 2010 Fund	None	None	None	None	None	None	None	None
Retirement 2020 Fund	None	None	None	None	None	None	None	None
Retirement 2030 Fund	None	None	None	None	None	None	None	None
Retirement 2040 Fund	None	None	None	None	None	None	None	None
Retirement Income Fund	None	None	None	None	None	None	None	None
Science & Technology Fund	None	None	None	None	$10,001- $50,000	None	$10,001- $50,000	$10,001- $50,000
Science & Technology Fund — Advisor Class	None	None	None	None	None	None	None	None
Short-Term Bond Fund	None	None	$50,001- $100,000	None	None	over $100,000	None	None
Small-Cap Stock Fund	None	$10,001- $50,000	over $100,000	None	None	None	$10,001- $50,000	None
Small-Cap Stock Fund — Advisor Class	None	None	None	None	None	None	None	None
Small-Cap Value Fund	None	$10,001- $50,000	None	None	None	None	$10,001- $50,000	$10,001- $50,000
Small-Cap Value Fund — Advisor Class	None	None	None	None	None	None	None	None
Spectrum Growth Fund	None	None	None	None	over $100,000	None	None	None
Spectrum Income Fund	None	None	None	None	None	None	None	None
Spectrum International Fund	None	None	None	None	$10,001- $50,000	None	None	None
Summit Cash Reserves Fund	None	over $100,000	over $100,000	None	None	over $100,000	None	None
Summit GNMA Fund	None	None	None	None	None	None	None	None
Summit Municipal Income Fund	None	None	None	None	None	over $100,000	None	None
Summit Municipal Intermediate Fund	None	None	None	None	None	over $100,000	None	None
Summit Municipal Money Market Fund	None	None	None	None	over $100,000	over $100,000	None	None
Tax-Efficient Balanced Fund	None	None	$50,001- $100,000	None	None	None	None	None
Tax-Efficient Growth Fund	None	None	$10,001- $50,000	None	None	None	None	None
Tax-Efficient Multi-Cap Growth Fund	None	None	None	None	None	None	None	None
Tax-Exempt Money Fund	None	None	None	None	None	over $100,000	None	None
Tax-Free High Yield Fund	None	None	None	None	None	over $100,000	None	None
Tax-Free Income Fund	None	None	None	None	None	over $100,000	None	None
Tax-Free Income Fund — Advisor Class	None	None	None	None	None	None	None	None
Tax-Free Intermediate Bond Fund	None	None	None	None	None	None	None	None
Tax-Free Short- Intermediate Fund	None	None	None	None	None	over $100,000	None	None
Total Equity Market Index Fund	None	None	None	None	None	None	None	None
U.S. Bond Index Fund	None	None	None	None	None	None	None	None
U.S. Treasury Intermediate Fund	None	over $100,000	None	None	None	over $100,000	None	None
U.S. Treasury Long-Term Fund	None	None	None	None	None	over $100,000	None	None
U.S. Treasury Money Fund	None	None	None	None	None	over $100,000	None	None
Value Fund	None	$10,001- $50,000	$ 5 0,001- $ 10 0,000	None	$50,001- $100,000	over $100,000	None	over $100,000
Value Fund — Advisor Class	None	None	None	None	None	None	None	None
Virginia Tax-Free Bond Fund	None	None	None	None	None	None	None	None

</R>

PAGE 93

PAGE 95

PAGE 97

<R>

	Riepe	Testa
Aggregate Holdings, All Funds	over $100,000	over $100,000
Balanced Fund	over $100,000	None
Blue Chip Growth Fund	None	None
Blue Chip Growth Fund — Advisor Class	None	None
Blue Chip Growth Fund — R Class	None	None
Blue Chip Growth Portfolio	None	None
Blue Chip Growth Portfolio — II	None	None
California Tax-Free Bond Fund	None	None
California Tax-Free Money Fund	None	None
Capital Appreciation Fund	over $100,000	None
Capital Opportunity Fund	None	None
Corporate Income Fund	None	None
Developing Technologies Fund	None	None
Diversified Small-Cap Growth Fund	None	None
Dividend Growth Fund	None	None
Emerging Europe & Mediterranean Fund	None	None
Emerging Markets Bond Fund	None	None
Emerging Markets Stock Fund	$10,001-$50,000	over $100,000
Equity Income Fund	over $100,000	None
Equity Income Fund — Advisor Class	None	None
Equity Income Fund — R Class	None	None
Equity Income Portfolio	None	None
Equity Income Portfolio — II	None	None
Equity Index 500 Fund	None	None
Equity Index 500 Portfolio	None	None
European Stock Fund	None	None
Extended Equity Market Index Fund	None	None
Financial Services Fund	None	None
Florida Intermediate Tax-Free Fund	None	None
Georgia Tax-Free Bond Fund	None	None
Global Stock Fund	None	None
Global Technology Fund	None	None
GNMA Fund	None	None
Government Reserve Investment Fund	None	None
Growth & Income Fund	over $100,000	None
Growth Stock Fund	None	None
Growth Stock Fund — Advisor Class	None	None
Growth Stock Fund — R Class	None	None
Health Sciences Fund	None	over $100,000
Health Sciences Portfolio	None	None
Health Sciences Portfolio — II	None	None
High Yield Fund	over $100,000	over $100,000
High Yield Fund — Advisor Class	None	None
Inflation Protected Bond Fund	None	None
Institutional Emerging Markets Equity Fund	None	None
Institutional Foreign Equity Fund	None	None
Institutional High Yield Fund	None	over $100,000
Institutional Large-Cap Growth Fund	None	None
Institutional Large-Cap Value Fund	None	None
Institutional Mid-Cap Equity Growth Fund	None	None
Institutional Small-Cap Stock Fund	None	None
International Bond Fund	None	None
International Bond Fund — Advisor Class	None	None
International Discovery Fund	$1-$10,000	$10,001-$50,000
International Equity Index Fund	None	None
International Growth & Income Fund	None	None
International Growth & Income Fund — Advisor Class	None	None
International Growth & Income Fund — R Class	None	None
International Stock Fund	over $100,000	over $100,000
International Stock Fund — Advisor Class	None	None
International Stock Fund — R Class	None	None
International Stock Portfolio	None	None
Japan Fund	over $100,000	None
Latin America Fund	None	None
Limited-Term Bond Portfolio	None	None
Maryland Short-Term Tax-Free Bond Fund	None	None
Maryland Tax-Free Bond Fund	None	None
Maryland Tax-Free Money Fund	None	None
Media & Telecommunications Fund	None	None
Mid-Cap Growth Fund	None	over $100,000
Mid-Cap Growth Fund — Advisor Class	None	None
Mid-Cap Growth Fund — R Class	None	None
Mid-Cap Growth Portfolio	None	None
Mid-Cap Growth Portfolio — II	None	None
Mid-Cap Value Fund	None	over $100,000
Mid-Cap Value Fund — Advisor Class	None	None
Mid-Cap Value Fund — R Class	None	None
New America Growth Fund	None	None
New America Growth Portfolio	None	None
New Asia Fund	$1-$10,000	None
New Era Fund	None	None
New Horizons Fund	None	over $100,000
New Income Fund	None	None
New Income Fund — Advisor Class	None	None
New Income Fund — R Class	None	None
New Jersey Tax-Free Bond Fund	None	None
New York Tax-Free Bond Fund	None	None
New York Tax-Free Money Fund	None	None
Personal Strategy Balanced Fund	None	None
Personal Strategy Balanced Portfolio	None	None
Personal Strategy Growth Fund	None	None
Personal Strategy Income Fund	None	None
Prime Reserve Fund	$50,001-$100,000	$1-$10,000
Prime Reserve Portfolio	None	None
Real Estate Fund	None	$10,001-$50,000
Reserve Investment Fund	None	None
Retirement 2010 Fund	None	None
Retirement 2020 Fund	None	None
Retirement 2030 Fund	None	None
Retirement 2040 Fund	None	None
Retirement Income Fund	None	None
Science & Technology Fund	over $100,000	None
Science & Technology Fund — Advisor Class	None	None
Short-Term Bond Fund	over $100,000	None
Small-Cap Stock Fund	None	None
Small-Cap Stock Fund — Advisor Class	None	None
Small-Cap Value Fund	over $100,000	over $100,000
Small-Cap Value Fund — Advisor Class	None	None
Spectrum Growth Fund	None	None
Spectrum Income Fund	None	None
Spectrum International Fund	None	None
Summit Cash Reserves Fund	over $100,000	over $100,000
Summit GNMA Fund	None	None
Summit Municipal Income Fund	None	None
Summit Municipal Intermediate Fund	None	over $100,000
Summit Municipal Money Market Fund	over $100,000	None
Tax-Efficient Balanced Fund	None	None
Tax-Efficient Growth Fund	None	None
Tax-Efficient Multi-Cap Growth Fund	None	None
Tax-Exempt Money Fund	None	None
Tax-Free High Yield Fund	None	None
Tax-Free Income Fund	None	$10,001-$50,000
Tax-Free Income Fund — Advisor Class	None	None
Tax-Free Intermediate Bond Fund	None	None
Tax-Free Short-Intermediate Fund	over $100,000	None
Total Equity Market Index Fund	over $100,000	None
U.S. Bond Index Fund	None	None
U.S. Treasury Intermediate Fund	None	None
U.S. Treasury Long-Term Fund	None	None
U.S. Treasury Money Fund	None	None
Value Fund	over $100,000	over $100,000
Value Fund — Advisor Class	None	None
Virginia Tax-Free Bond Fund	None	None

</R>

PAGE 99

PRINCIPAL HOLDERS OF SECURITIES

<R>

As of March 31, 2003 , the officers and directors of the fund, as a group, owned less than 1% of the outstanding shares of the fund.

</R>

<R>

As of March 31, 2003 , the following shareholders of record owned more than 5% of the outstanding shares of the fund:

</R>

<R>

Emerging Markets Bond Fund: Charles Schwab & Co. Inc. ( 6.71%), Reinvest Account, Attn.: Mutual Fund Department, 101 Montgomery Street, San Francisco, California 94104-4122; and Yachtcrew & Co., T. Rowe Price Associates, Attn.: Fund Accounting Department, 100 East Pratt Street, Baltimore, Maryland 21202-1009.*

</R>

<R>

* Yachtcrew & Co . owns 43.82 % of the outstanding shares of the fund through the Spectrum Fund. Shares of the fund held by the Spectrum Fund are echo-voted by Spectrum Fund in the same proportion as the shares of the fund are voted by its non-Spectrum Fund shareholders.

</R>

<R>

International Bond Fund: Charles Schwab & Co. Inc. ( 11.51 %) , Reinvest Account, Attn.: Mutual Fund Department, 101 Montgomery Street, San Francisco, California 94104-4122; and Yachtcrew & Co., T. Rowe Price Associates, Attn.: Fund Accounting Department, 100 East Pratt Street, Baltimore, Maryland 21202-1009.*

</R>

<R>

* Yachtcrew & Co . owns 45.95 % of the outstanding shares of the fund through the Spectrum Fund. Shares of the fund held by the Spectrum Fund are echo - voted by Spectrum Fund in the same proportion as the shares of the fund are voted by its non-Spectrum Fund shareholders.

</R>

INVESTMENT MANAGEMENT SERVICES

Services

<R>

Under the Investment Management Agreement, T. Rowe Price International provides the fund with discretionary investment services. Specifically, T. Rowe Price International 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 International 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 International provides the fund with certain corporate administrative services, including: maintaining the fund`s corporate existence and corporate records; registering and qualifying fund shares under federal laws; monitoring

</R>

PAGE 101

<R>

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 International`s employees to serve as officers, directors, and committee members of the fund without cost to the fund.

</R>

<R>

The Investment Management Agreement also provides that T. Rowe Price International, its directors, officers, employees, and certain other persons performing specific functions for the fund will be liable to the fund only for losses resulting from willful misfeasance, bad faith, gross negligence, or reckless disregard of duty.

</R>

<R>

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

</R>

Approval of Investment Management Agreements

<R>

The Investment Management Agreements of the funds are reviewed each year by the B oards to determine whether the agreements should be renewed for a one - year period or not. Renewal of the agreements requires the majority vote of the B oard , including a majority of the independent directors. Each fund B oard consists of a majority of independent directors.

</R>

<R>

In approving the continuation of the I nvestment M anagement A greements for each fund for the current year, the Board reviewed reports prepared by T. Rowe Price International, materials provided by fun d counsel and counsel to the independent directors, as well as other information. The Board considered the nature and quality of the investment management services provided to the fun d by T. Rowe Price International under the I nvestment M anagement A greements and the personnel who provide these services, including the historical performance of the fun d compared to its benchmark index and its peer group of similar investment companies. In addition, the Board considered other services provided to the fun d by T. Rowe Price International and its affiliates, such as administrative services, shareholder services, fund accounting, assistance in meeting legal and regulatory requirements, and other services necessary for the fun d`s operation.

</R>

The Board considered the fees paid to T. Rowe Price International for investment management services, as well as compensation paid to T. Rowe Price International or its affiliates for other non-advisory services provided to the fun d. In connection with its review of the fees paid to T. Rowe Price International and its affiliates, the Board reviewed information provided by Lipper Inc. comparing the fun d`s advisory fee rate and overall expense ratio with those of comparable funds. Where applicable, the Board considered that the fun d`s advisory fee structure reflects breakpoints, which permit fee reductions resulting from economies of scale. Additionally and where applicable, the Board considered the contractual fee waivers and expense reimbursements agreed to by T. Rowe Price International.

The Board also considered the costs incurred and the benefits received by T. Rowe Price International and its affiliates, including the profitability of T. Rowe Price International from providing advisory services to the fun d. In reviewing data concerning the profitability of T. Rowe Price International, the Board examined, among other components, the cost allocation methodology utilized in the presentation. In addition, the Board considered other potential benefits to T. Rowe Price International, such as the research services T. Rowe Price International receives from brokers in return for allocating fun d brokerage in a "soft dollar" arrangement.

Based on the information reviewed and the discussions, the Board concluded that it was satisfied with the nature and quality of the services provided by T. Rowe Price International to the fun d and that the management fee rate was reasonable in relation to such services. The independent directors of the fun d were assisted by independent legal counsel in their deliberations.

Management Fee

<R>

The fund pays T. Rowe Price International 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 International on the first business day of the next succeeding calendar month and is calculated as described next.

</R>

<R>

The monthly Group Fee ( "Monthly Group Fee" ) is the sum of the daily Group Fee accruals ( "Daily Group Fee Accruals" ) for each month. The Daily Group Fee Accrual for any particular day is computed by multiplying the Price Funds` group fee accrual as determined below ( "Daily Price Funds` Group Fee Accrual" ) by the ratio of the Price Fund s ` net assets for that day to the sum of the aggregate net assets of the Price Funds for that day. The Daily Price Funds` Group Fee Accrual for any particular day is calculated by multiplying the fraction of one (1) over the number of calendar days in the year by the annualized Daily Price Funds` Group Fee Accrual for that day as determined in accordance with the following schedule:

0.480%	First $1 billion	0.360%	Next $2 billion	0.310%	Next $16 billion
0.450%	Next $1 billion	0.350%	Next $2 billion	0.305%	Next $30 billion
0.420%	Next $1 billion	0.340%	Next $5 billion	0.300%	Next $40 billion
0.390%	Next $1 billion	0.330%	Next $10 billion	0.295%	Thereafter
0.370%	Next $1 billion	0.320%	Next $10 billion

</R>

<R>

For the purpose of calculating the Group Fee, the Price Funds include all the mutual funds distributed by Investment Services (excluding the T. Rowe Price Spectrum Funds, Retirement Funds, and any institutional, index, or private label mutual funds). For the purpose of calculating the Daily Price Funds` Group Fee Accrual for any particular day, the net assets of each Price Fund are determined in accordance with the fund`s prospectus as of the close of business on the previous business day on which the fund was open for business.

</R>

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 . are listed in the following table:

<R>

Emerging Markets Bond Fund	0.45 %
International Bond Fund	0.35

</R>

<R>

The following table sets forth the total management fees, if any, paid to T. Rowe Price International by each fund , during the last three fiscal years: <R>

Fund	2002	2001	2000
Emerging Markets Bond	$ 1,416,000	$ 1,205,000	$ 1,408,000
International Bond*	5,964,000	5,245,000	4,686,000

</R>

<R>

* The fund has two classes of shares. The management fee is allocated to each class based on relative net assets.

</R>

Expense Limitations and Reimburseme nts

The following chart sets forth expense ratio limitations and the periods for which they are effective. For each, T. Rowe Price International has agreed to bear any fund expenses (other than interest, taxes, brokerage, and other expenditures that are capitalized in accordance with generally accepted accounting principles and extraordinary expenses) which would cause the fund`s ratio of expenses to average net assets to exceed the indicated percentage limitation. (The expense limitation for the Advisor Class relates to operating expenses other than management fees and certain other portfolio level expenses such as fees for custody, outside directors, and auditors.) The expenses borne by T. Rowe Price International 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.

PAGE 103

Fund	Limitation Period	Expense Ratio Limitation	Reimbursement Date
International Bond Fund — Advisor Class*	January 1, 2002 — December 31, 2003	1.15 %	December 31, 2005

* The International Bond Fund — Advisor Class previously operated under a 1.15% limitation that expired December 31, 2001. The reimbursement period for this limitation extends through December 31, 2003.

<R>

Each of the above-referenced fund`s Investment 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 International, provided the reimbursement does not result in the fund`s aggregate expenses exceeding the additional expense limitation.

</R>

<R>

T. Rowe Price Spectrum Fund, Inc.

</R>

<R>

The International Bond and Emerging Markets Bond Funds are parties to Special Servicing Agreements between and among T. Rowe Price Spectrum Fund, Inc. ( "Spectrum Fund" ), T. Rowe Price, T. Rowe Price International, and various other T. Rowe Price funds which, along with such funds, are funds in which Spectrum Fund invests (collectively all such funds " u nderlying Price f unds" ).

</R>

<R>

The Special Servic ing Agreement s provide that if the Board of any u nderlying Price f und determines that such u nderlying fund`s share of the aggregate expenses of the Spectrum or Retirement Funds, respectively, is less than the estimated savings to the u nderlying Price f und from the operation of the Spectrum or Retirement Funds, respectively , the u nderlying Price f und will bear those expenses in proportion to the average daily value of its shares owned by the Spectrum or Retirement Funds, respectively , provided further that no u nderlying Price f und 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 u nderlying Price f unds and the resulting reduction in shareholder servicing costs. Although such cost savings are not certain, the estimated savings to the u nderlying Price f unds generated by the operation of the Spectrum or Retirement Funds, respectively, are expected to be sufficient to offset most, if not all, of the expenses incurred by the Spectrum or Retirement Funds, respectively .

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Management Related Services

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

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T. Rowe Price Services, Inc. ( "Services" ), a wholly owned subsidiary of T. Rowe Price, acts as the fund`s transfer and dividend disbursing agent and provides shareholder and administrative services. T. Rowe Price Retirement Plan Services, Inc. ( "RPS" ), also a wholly owned subsidiary, provide s recordkeeping, sub-transfer agency, and administrative services for certain types of retirement plans investing in the fund. The fees paid by the fund to Services and RPS are based on the costs to Services and RPS of providing these services plus a return on capital employed in support of the services. The address for each is 100 East Pratt Street, Baltimore, M aryland 21202.

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T. Rowe Price, under a separate agreement with the fund, provides accounting services to the fund. The fund paid the expenses shown in the following table during the last three fiscal years to T. Rowe Price for accounting services.

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Fund	2002	2001	2000
Emerging Markets Bond	$ 105,000	$ 105,000	$ 104,000
International Bond	119,000	120,000	116,000
International Bond Fund — Advisor Class	1,000	0	0

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other shareholder services

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The shares of some fund shareholders are held in omnibus accounts maintained by various third parties, including retirement plan sponsors, insurance companies, banks, and broker-dealers. The fund has adopted an administrative fee payment ( "AFP" ) program that authorizes the fund to make payments to these third parties. The payments are made for transfer agent, recordkeeping, and other administrative services provided by, or on behalf of, the third parties with respect to such shareholders and the omnibus accounts. Under the AFP program, the funds paid the amounts set forth below to various third parties in calendar year 2002.

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Emerging Markets Bond Fund	$ 0
International Bond Fund	39,364

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Each Advisor and R Class has adopted an administrative fee payment ( "AFP" ) program under which various intermediaries, including intermediaries receiving 12b-1 payments, may receive payments from the c lass in addition to 12b-1 fees for providing various recordkeeping and transfer agent type services to the c lasses and/or shareholders thereof. These services include , but are not limited to : transmission of net purchase and redemption orders; maintenance of separate records for shareholders reflecting purchases, redemptions, and share balances; mailing of shareholder confirmations and periodic statements; and telephone services in connection with the above. Under the AFP program, the fund paid the amounts set forth below to various third parties in calendar year 200 2 .

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International Bond Fund — Advisor Class

$ 3,785

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Control of Investment Advis e r

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T. Rowe Price Group, Inc. ( "Group" ) owns 100% of the stock of T. Rowe Price Associates, In c., which in turn owns 100% of T. Rowe Price International, Inc. Group was formed in 2000 as a holding company for the T. Rowe Price - affiliated companies.

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DISTRIBUTOR FOR THE FUND

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Investment Services, a Maryland corporation formed in 1980 as a wholly owned subsidiary of T. Rowe Price, serves as the fund`s distributor for all T. Rowe Price mutual funds on a continuous basis . 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.

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

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Investment Services serves as distributor to the f und , pursuant to an Underwriting Agreement ( "Underwriting Agreement" ), which provides that the fund will pay all fees and expenses in connection with: necessary state filings; preparing, setting in type, printing, and mailing of prospectuses and reports to shareholders; and issuing shares, including expenses of confirming purchase orders.

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The Underwriting Agreement also provides that Investment Services will pay all fees and expenses in connection with: printing and distributing prospectuses and reports for use in offering and selling fund shares; preparing, setting in type, printing, and mailing all sales literature and advertising; Investment Services` federal and state registrations as a broker-dealer; and offering and selling shares for each fund, except for those fees and expenses specifically assumed by the fund. Investment Services` expenses are paid by T. Rowe Price.

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

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International Bond Fund — Advisor Class

Distribution and Shareholder Services Plan

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The fund d irectors adopted a Plan pursuant to Rule 12b-1 with respect to each Advisor Class ( "Class" ). Each Plan provides that the Class may compensate Investment Services or such other persons as the fund or Investment Services designates, to finance any or all of the distribution, shareholder servicing, maintenance of shareholder accounts, and/or other administrative services with respect to Class shares. It is expected that most, if not all, payments under the Plan will be made (either directly, or indirectly through Investment Services) to brokers, dealers, banks, insurance companies, and intermediaries other than Investment Services. Under the Plan, each Advisor Class pays a fee at the annual rate of up to 0.25% of that class`s average daily net assets. Normally, the full amount of the fee is paid to the intermediary on shares sold through that intermediary. However, a lesser amount may be paid based on the level of services provided. Intermediaries may use the payments for, among other purposes, compensating employees engaged in sales and/or shareholder servicing of the Class, as well as for a wide variety of other purposes associated with supporting, distributing, and servicing Class shares. The amount of fees paid by a Class during any year may be more or less than the cost of distribution and other services provided to the Class and its investors. NASD rules limit the amount of annual distribution and service fees that may be paid by a mutual fund and impose a ceiling on the cumulative distribution fees paid. The Plan complies with these rules.

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The Plan requires that Investment Services provide, or cause to be provided, a quarterly written report identifying the amounts expended by each Class and the purposes for which such expenditures were made to the fund d irectors for their review.

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Prior to approving the Plan, the fund considered various factors relating to the implementation of the Plan and determined that there is a reasonable likelihood that the Plan will benefit each fund, its Class, and the Class`s shareholders. The fund d irectors noted that, to the extent the Plan allows a fund to sell Class shares in markets to which it would not otherwise have access, the Plan may result in additional sales of fund shares. This may enable a fund to achieve economies of scale that could reduce expenses. In addition, certain ongoing shareholder services may be provided more effectively by intermediaries with which shareholders have an existing relationship.

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The Plan is renewable from year to year with respect to each fund, so long as its continuance is approved at least annually (1) by the vote of a majority of the fund d irectors and (2) by a vote of the majority of the fund`s independent directors ( "Rule 12b-1 Directors" ), cast in person at a meeting called for the purpose of voting on such approval. The Plan may not be amended to increase materially the amount of fees paid by any Class thereunder unless such amendment is approved by a majority vote of the outstanding shares of such Class and by the fund d irectors in the manner prescribed by Rule 12b-1 under the 1940 Act. The Plan is terminable with respect to a Class at any time by a vote of a majority of the Rule 12b-1 Directors or by a majority vote of the outstanding shares in the Class.

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The following payments for the period ended December 31, 2002 , were made to third - party intermediaries, including broker-dealers and insurance companies, for the distribution, shareholder servicing, maintenance of shareholder accounts , and/or other administrati ve services under the Advisor Class 12b-1 Plan s .

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International Bond Fund — Advisor Class

$ 23,000

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CUSTODIAN

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

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

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CODE OF ETHICS

The fund, its investment adviser (T. Rowe Price International), and its principal underwriter (T. Rowe Price Investment Services) have a written Code of Ethics which requires persons with access to investment information ("Access Persons") to obtain prior clearance before engaging in personal securities transactions. Transactions must be executed within three business days of their clearance. In addition, all employees must report their personal securities transactions within 10 days after the end of the calendar quarter. Access Persons will not be permitted to effect transactions in a security if: there are pending client orders in the security; the security has been purchased or sold by a client within seven calendar days; the security is being considered for purchase for a client; or the security is subject to internal trading restrictions. In addition, Access Persons are prohibited from profiting from short-term trading (e.g., purchases and sales involving the same security within 60 days). Any person becoming an Access Person must file a statement of personal securities holdings within 10 days of this date. All Access Persons are required to file an annual statement with respect to their personal securities holdings. Any material violation of the Code of Ethics is reported to the Board of the fund. The Board also reviews the administration of the Code of Ethics on an annual basis.

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 and the use of affiliates to assist in routing orders for execution.

The fund`s purchases and sales of portfolio securities are normally done on a principal basis and do not involve the payment of a commission although they may involve the designation of selling concessions. That part of the discussion below relating solely to brokerage commissions would not normally apply to the fund. However, it is included because T. Rowe Price International does manage a significant number of common stock portfolios which do engage in agency transactions and pay commissions and because some research and services resulting from the payment of such commissions may benefit the fund.

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How Brokers and Dealers Are Selected

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.

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

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T. Rowe Price International may cause a fund to pay a broker-dealer who furnishes research services a commission for executing a transaction that may be in excess of the commission another broker-dealer would have received for executing the transaction if it is determined that such commission is reasonable in relation to the value of the research services which have been provided. In some cases, research services are generated by third parties but are provided to T. Rowe Price International by or through broker-dealers.

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Equity Securities

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In purchasing and selling equity securities, it is T. Rowe Price International`s policy to seek to obtain quality . execution at favorable security prices through responsible brokers and dealers and at competitive commission . rates . However, under certain conditions, higher brokerage commissions may be paid in return for brokerage . and research services. . In selecting broker s and dealers to execute the fund`s portfolio transactions, consideration is given to such factors as the price of the security, the rate of the commission, the size and difficulty of the order, the reliability, integrity, financial condition, general execution , and operational capabilities of competing brokers and dealers, their expertise in particular markets, and brokerage and research services provided by them. It is not the policy of T. Rowe Price International 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.

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

How Evaluations Are Made of the Overall Reasonableness of Brokerage Commissions Paid

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On a continuing basis, T. Rowe Price International seeks to determine what levels of commission rates are reasonable in the marketplace for transactions executed on behalf of clients . In evaluating the reasonableness of commission rates, T. Rowe Price International considers: (a) historical commission rates ; (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 and dollar amount ; (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.

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Descriptions of Research Services Received From Brokers and Dealers

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T. Rowe Price International 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

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securities, individual companies, statistics, political developments, technical market action, pricing and appraisal services, and performance analyses of all the countries in which a fund`s portfolio is likely to be invested. Research services are received primarily in the form of written reports, e - m ails, computer - generated services, telephone contacts , and personal meetings with security analysts. In addition, such services may be provided in the form of meetings arranged with corporate and industry spokespersons, economists, academicians , and government representatives. T. Rowe Price International cannot readily determine the extent to which commissions charged by brokers reflect the value of their research services, but brokers generally 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, T. Rowe Price International is relieved of expenses which it might otherwise bear. In some cases, research services are generated by third parties but are provided to T. Rowe Price International by or through brokers.

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Commissions to Brokers Who Furnish Research Services

<R>

Certain broker -dealers that provide quality brokerage and execution services also furnish research services to T. Rowe Price International. T. Rowe Price International 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 research services, or which furnishes research services deemed to be of lesser value, if such commission is deemed reasonable in relation to the research services provided by the broker or dealer , 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, T. Rowe Price International may assess the reasonableness of commissions in light of the total research services provided by each particular broker. T. Rowe Price International may receive research, as defined in Section 28(e), in connection with selling concessions and designations in fixed - price offerings for non-ERISA accounts. Research is used overall to benefit such accounts which purchase in the offerings.

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Miscellaneous

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

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Some of T. Rowe Price International `s other clients have investment objectives and programs similar to those of the fund. T. Rowe Price International may make recommendations to other clients which result in their purchasing or selling securities simultaneously with the fund. As a result, the demand for securities being purchased or the supply of securities being sold may increase, and this could have an adverse effect on the price of those securities. It is T. Rowe Price International `s policy not to favor one client over another in making recommendations or in placing orders. T. Rowe Price International may follow the practice of grouping orders of various clients for execution , which generally results in lower commission rates being attained. Clients should be aware, however, that the grouping of their orders with other clients may sometimes result in a more favorable price and at other times may result in a less favorable price than if the client orders had not been grouped. 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 International 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 f unds) 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. For purposes of determining the 10% limit, T. Rowe Price International includes securities held by clients of affiliated advisers.

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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.

PAGE 109

Other

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For the last three fiscal years, the total brokerage commissions paid by each fund, including the discounts received by securities dealers in connection with underwritings, are shown below. <R>

Fund	2002 Commissions	2001 Commissions	2000 Commissions
Emerging Markets Bond	$ 605,000	$ 0	$ 0
International Bond	205,000	0	0

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<R>

Portfolio Turnover

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<R>

The portfolio turnover rates for the fund (if applicable) for the last three fiscal years were: <R>

Fund	2002	2001	2000
Emerging Markets Bond	51.4 %	75.5 %	69.5 %
International Bond	113.9	107.6	160.5

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PRICING OF SECURITIES

Debt securities are generally traded in the over-the-counter market . Securities with original maturities of one year or more are valued using prices furnished by dealers who make markets in such securities or by an independent pricing service, which considers yield or price of bonds of comparable quality, coupon, maturity, and type, as well as prices quoted by dealers who make markets in such securities. Securities with original maturities less than one year are stated at fair value , which is determined by using a matrix system that establishes a value for each security based on bid-side money market yields .

Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation.

Assets and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and ask prices of such currencies against U.S. dollars quoted by a major bank.

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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 .

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Trading in the portfolio securities of the fund may take place in various foreign markets on certain days (such as Saturday) when the fund is not open for business and does not calculate its net asset value. In addition, trading in a fund`s portfolio securities may not occur on days when the fund is open.

NET ASSET VALUE PER SHARE

The purchase and redemption price of the fund`s shares is equal to the fund`s net asset value per share or share price. The fund determines its net asset value per share by subtracting its liabilities (including accrued expenses and dividends payable) from its total assets (the market value of the securities the fund holds plus cash and other assets, including income accrued but not yet received) and dividing the result by the total number of shares outstanding. The net asset value per share of the fund is normally calculated as of the close of trading on the New York Stock Exchange ( "NYSE" ) every day the NYSE is open for trading. The NYSE is closed on the following days: New Year`s Day, Dr. Martin Luther King, Jr. Holiday, Presidents` Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

Determination of net asset value (and the offering, sale, redemption, and repurchase of shares) for the fund may , be suspended at times (a) during which the NYSE is closed, other than customary weekend and holiday , closings, , (b) during which trading on the NYSE is restricted, (c) during which an emergency exists as a result of which disposal by the fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for the fund fairly to determine the value of its net assets, or (d) during which a governmental body having jurisdiction over the fund may by order permit such a suspension for the protection of the fund`s shareholders, provided that applicable rules and regulations of the SEC (or any succeeding governmental authority) shall govern as to whether the conditions prescribed in (b), (c), or (d) exist.

DIVIDENDS AND DISTRIBUTIONS

Unless you elect otherwise, dividends and capital gain distributions, if any, will be reinvested on the reinvestment date using the NAV per share of that date. The reinvestment date normally precedes the payment date by one day, although the exact timing is subject to change and can be as great as 10 days.

TAX STATUS

The fund intends to qualify as a "regulated investment company" under Subchapter M of the Code.

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Dividends and distributions paid by the fund s may not be eligible for the dividends-received deduction for corporate shareholders, if as expected, none of the fund`s income consists of dividends paid by U . S . corporations. Long-term capital gain distributions paid from the fund are never eligible for this deduction. For tax purposes, it does not make any difference whether dividends and capital gain distributions are paid in cash or in additional shares. The fund must declare dividends by December 31 of each year equal to at least 98% of ordinary income (as of December 31) and capital gains (as of October 31) in order to avoid a federal excise tax and distribute within 12 months 100% of ordinary income and capital gains as of its tax year-end to avoid federal income tax.

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<R>

At the time of your purchase, the fund`s net asset value may reflect undistributed income, capital gains , or net unrealized appreciation of securities held by the fund. A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable either as dividends or capital gain distributions. For federal income tax purposes, the fund is permitted to carry forward its net realized capital losses, if any, for eight years and realize net capital gains up to the amount of such losses without being required to pay taxes on, or distribute , such gains.

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Income received by the fund from sources within various foreign countries may be subject to foreign income taxes withheld at the source. Under the Code, if more than 50% of the value of the fund`s total assets at the close of its taxable year comprise securities issued by foreign corporations or governments, the fund may file an election with the Internal Revenue Service to "pass through" to the fund`s shareholders the amount of any foreign income taxes paid by the fund. Pursuant to this election, shareholders will be required to: (1) include in gross income, even though not actually received, their respective pro - rata share of foreign taxes paid by the fund; (2) treat their pro - rata share of foreign taxes as paid by them; and (3) either deduct their pro - rata share of foreign taxes in computing their taxable income, or use it as a foreign tax credit against U.S. income taxes (but not both). No deduction for foreign taxes may be claimed by a shareholder who does not itemize deductions.

The fund intends to meet the requirements of the Code which permit it to elect to "pass through" to its shareholders foreign income taxes paid, but there can be no assurance that the fund will be able to do so. Each shareholder will be notified within 60 days after the close of each taxable year of the fund, if the fund will "pass through" foreign taxes paid for that year, and, if so, the amount of each shareholder`s pro - rata share (by country) of (1) the foreign taxes paid, and (2) the fund`s gross income from foreign sources. Of course, shareholders who are not liable for federal income taxes, such as retirement plans qualified under Section 401 of the Code, will not be affected by any such "pass through" of foreign tax credits.

If, in any taxable year, the fund should not qualify as a regulated investment company under the Code: (1) the fund would be taxed at normal corporate rates on the entire amount of its taxable income, if any, without a deduction for dividends or other distributions to shareholders; (2) the fund`s distributions to the extent made

PAGE 111

out of the fund`s current or accumulated earnings and profits would be taxable to shareholders as ordinary dividends (regardless of whether they would otherwise have been considered capital gain dividends), and the fund may qualify for the 70% deduction for dividends received by corporations; and (3) foreign tax credits would not "pass through" to shareholders.

Taxation of Foreign Shareholders

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The C ode provides that dividends from net income (which are deemed to include for this purpose each shareholder`s pro - rata share of foreign taxes paid by the fund — see discussion of "pass through" of the foreign tax credit to U.S. shareholders) will be subject to U.S. tax. For shareholders who are not engaged in a business in the U.S., this tax would be imposed at the rate of 30% upon the gross amount of the dividends in the absence of a Tax Treaty providing for a reduced rate or exemption from U.S. taxation. Distributions of net long-term capital gains realized by the fund are not subject to tax unless the foreign shareholder is engaged in a business in the U.S. and the gains are connected with that business, or the shareholder is a nonresident alien individual who was physically present in the U.S. during the tax year for more than 182 days.

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Passive Foreign Investment Companies

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The fund may purchase the securities of certain foreign investment funds or trusts , called passive foreign investment companies , for U.S. tax purposes. Such foreign investment funds or trusts have been the only or primary way to invest in certain countries. In addition to bearing their proportionate share of the fund`s expenses (management fees and operating expenses), shareholders will also indirectly bear similar expenses of such foreign investment funds or trusts. Capital gains on the sale of such holdings are considered ordinary income regardless of how long the fund held its investment. In addition, the fund may be subject to corporate income tax and an interest charge on certain dividends and capital gains earned from these investments, regardless of whether such income and gains are distributed to shareholders.

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<R>

To avoid such tax and interest, the fund intends to treat these securities as sold on the last day of its fiscal year and recognize any gains for tax purposes at that time; deductions for losses are allowable only to the extent of any gains resulting from these deemed sales for prior taxable years. Such gains and losses will be treated as ordinary income. The fund will be required to distribute any resulting income , even though it has not sold the security and received cash to pay such distributions.

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Foreign Currency Gains and Losses

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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 ordinary income dividend paid by the fund will be increased. If the result is a loss, the income dividend paid by the fund will be decreased, or , to the extent such dividend has already been paid, it may be classified as a return of capital. Adjustments to reflect these gains and losses will be made at the end of the fund`s taxable year.

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YIELD INFORMATION

In conformity with regulations of the SEC, an income factor is calculated for each security in the portfolio, based upon the security`s market value at the beginning of the period and expected yield-to-maturity. The income factors are then totaled for all securities in the portfolio. Next, expenses of the fund for the period, net of expected reimbursements, are deducted from the income to arrive at net income, which is then converted to a per share amount by dividing net income by the average number of shares outstanding during the period. The net income per share is divided by the net asset value on the last day of the period to produce a monthly yield which is then annualized. Quoted yield factors are for comparison purposes only and are not intended to indicate future performance or forecast the dividend per share of the fund.

Emerging Markets Bond Fund

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The fund`s yield calculated as set forth above for the month ended December 31, 2002 , was 6.59 %.

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International Bond Fund

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The fund`s yield calculated as set forth above for the month ended December 31, 2002 , was 2.30 %.

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International Bond Fund — Advisor Class

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The fund`s yield calculated as set forth above for the month ended December 31, 2002 , was 2.17 %.

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INVESTMENT PERFORMANCE

Total Return Performance

The fund`s calculation of total return performance includes the reinvestment of all capital gain distributions and income dividends for the period or periods indicated, without regard to tax consequences to a shareholder in the fund. Total return is calculated as the percentage change between the beginning value of a static account in the fund and the ending value of that account measured by the then current net asset value, including all shares acquired through reinvestment of income and capital gain dividends. The results shown are historical and should not be considered indicative of the future performance of the fund. Each average annual compound rate of return is derived from the cumulative performance of the fund over the time period specified. The annual compound rate of return for the fund over any period of time will vary from the average.

<R>

Cumulative Performance Percentage Change Periods Ended 12/31/02
Fund	1 Yr.	5 Yrs.	10 Yrs.	Since Inception	Inception Date
Emerging Markets Bond	9.52 %	30.47 %	—	162.29 %	12/30/94
International Bond	21.80	20.79	77.56 %	211.95	09/10/86
International Bond Fund — Advisor Class	21.65	—	—	15.60	03/31/00

</R>

<R>

Average Annual Compound Rates of Return Periods Ended 12/31/02
Fund	1 Yr.	5 Yrs.	10 Yrs.	Since Inception	Inception Date
Emerging Markets Bond	9.52 %	5.46 %	—	12.81 %	12/30/94
International Bond	21.80	3.85	5.91 %	7.23	09/10/86
International Bond Fund — Advisor Class	21.65	—	—	5.41	03/31/00

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Outside Sources of Information

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From time to time, in reports and promotional literature: (1) the fund`s total return performance, ranking, or any other measure of the fund`s performance may be compared to any one or combination of the following: (a) a broad-based index, (b) other groups of mutual funds, including T. Rowe Price funds, tracked by independent research firm s, ranking entities, or financial publications , (c) indices of securities comparable to those in which the fund invests; (2) the c onsumer p rice i ndex (or any other measure for inflation), or government statistics, such as GNP, may be used to illustrate investment attributes of the fund or the general economic, business, investment, or financial environment in which the fund operates; (3) various financial, economic, and market statistics developed by brokers, dealers, and other persons may be used to illustrate aspects of the fund`s performance; (4) the effect of tax-deferred compounding on the fund`s investment returns, or on returns in general in both qualified and nonqualified retirement plans or any other tax - advantage d product, may be illustrated by graphs, charts, etc.; (5) the sectors or industries in which the fund invests may be compared to relevant indices or surveys in order to evaluate the fund`s historical performance or current or potential value with respect to the particular industry or sector ; and (6) the fund may disclose the performance of other funds or accounts managed by T. Rowe Price in a manner similar to the fund .

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Other Publications

From time to time, in newsletters and other publications issued by Investment Services, T. Rowe Price mutual fund portfolio managers may discuss economic, financial, and political developments in the U.S. and abroad and how these conditions have affected or may affect securities prices or the fund; individual securities within the fund`s portfolio; and their philosophy regarding the selection of individual stocks, including why specific stocks have been added, removed, or excluded from the fund`s portfolio.

Other Features and Benefits

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The fund is a member of the T. Rowe Price family of funds and may help investors achieve various long-term investment goals, which include, but are not limited to, investing money for retirement, saving for a down payment on a home, or paying college costs. To explain how the fund could be used to assist investors in planning for these goals and to illustrate basic principles of investing, various worksheets and guides prepared by T. Rowe Price and/or Investment Services may be made available.

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The T. Rowe Price funds, including the Advisor Classes, are considered to be "no-load" funds. They impose no front-end or back-end sales loads. However, the Advisor Classes do charge 12b-1 fees. Under applicable National Association of Securities Dealers Regulation, Inc. ( "NASDR" ) regulations, mutual funds that have no front-end or deferred sales charges and whose total asset-based charges for sales-related expenses and/or service fees (as defined by NASDR) do not exceed 0.25% of average net assets per year may be referred to as no-load funds.

Redemptions in Kind

The fund has filed a notice of election under Rule 18f-1 of the 1940 Act. This permits the fund to effect redemptions in kind and in cash as set forth in its prospectus.

In the unlikely event a shareholder were to receive an in-kind redemption of portfolio securities of the fund, it would be the responsibility of the shareholder to dispose of the securities. The shareholder would be at risk that the value of the securities would decline prior to their sale, that it would be difficult to sell the securities , and that brokerage fees could be incurred.

Issuance of Fund Shares for Securities

Transactions involving issuance of fund shares for securities or assets other than cash will be limited to (1) bona fide reorganizations; (2) statutory mergers; or (3) other acquisitions of portfolio securities that: (a) meet the investment objective and policies of the fund; (b) are acquired for investment and not for resale except in accordance with applicable law; (c) have a value that is readily ascertainable via listing on or trading in a recognized United States or international exchange or market; and (d) are not illiquid.

CAPITAL STOCK

The T. Rowe Price International Funds, Inc. (the "corporation" ) is a Maryland corporation.

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Currently, the corporation consists of the following 12 series, each representing a separate portfolio with different objectives and investment policies. The 12 series are as follows: International Stock Fund (and separate class es of shares — International Stock Fund — Advisor Class and International Stock Fund — R Class ) , International Bond Fund (and a separate class of shares — International Bond Fund — Advisor Class) , International Discovery Fund, European Stock Fund, New Asia Fund, Japan Fund, Latin America Fund, Emerging Markets Bond Fund, Emerging Markets Stock Fund, Global Stock Fund, International Growth & Income Fund (and separate classes of shares — International Growth & Income Fund — Advisor Class and International Growth & Income Fund — R Class) , and Emerging Europe & Mediterranean Fund.

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Each fund is registered with the SEC under the 1940 Act as a n open-end investment company, commonly known as a "mutual fund." The Charter also provides that the Board may issue additional series and classes of shares.

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The fund`s Charter authorizes the Board 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,

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limitations, and restrictions as shall be determined by the Board subject to the 1940 Act and other applicable law. The shares of any such additional classes or series might therefore differ from the shares of the present class and series of capital stock and from each other as to preferences, conversions , or other rights, voting powers, restrictions, limitations as to dividends, qualifications , or terms or conditions of redemption, subject to applicable law, and might thus be superior or inferior to the capital stock or to other classes or series in various characteristics. The Board 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.

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Each share of each series and class has equal voting rights with every other share and class of every other series and classes, and all shares of all series vote as a single group except where a separate vote of any class or series is required by the 1940 Act, the laws of the State of Maryland, the Corporation`s Articles of Incorporation, the By- Laws of the Corporation, or as the Board may determine in its sole discretion. Where a separate vote is required with respect to one or more classes or series, then the shares of all other classes or series vote as a single class or series, provided that, as to any matter which does not affect the interest of a particular class or series, only the holders of shares of the one or more affected classes or series is entitled to vote. The preferences, rights, and other characteristics attaching to any series of shares, including the present series of capital stock, might be altered or eliminated, or the series might be combined with another series, by action approved by the vote of the holders of a majority of all the shares of all series entitled to be voted on the proposal, without any additional right to vote as a series by the holders of the capital stock or of another affected series.

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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 Corporation , a special meeting of shareholders of the Corporation shall be called by the Secretary of the Corporation on the written request of shareholders entitled to cast (a) in the case of a meeting for the purpose of removing a director, at least ten (10) percent and (b) in the case of a meeting for any other purpose, at least 25 percent, in each case of all the votes entitled to be cast at such meeting, provided that any such request shall state the purpose or purposes of the meeting and the matters proposed to be acted on . Shareholders requesting such a meeting must pay to the Corporation the reasonably estimated costs of preparing and mailing the notice of the meeting. The Corporation , however, will otherwise assist the shareholders seeking to hold the special meeting in communicating to the other shareholders of the Corporation to the extent required by Section 16(c) of the 1940 Act.

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federal registration of shares

The fund`s shares are registered for sale under the 1933 Act. Registration of the fund`s shares is not required under any state law, but the fund is required to make certain filings with and pay fees to the states in order to sell its shares in the states.

legal counsel

Shearman & Sterling, whose address is 599 Lexington Avenue, New York, New York 10022 , is legal counsel to the fund.

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INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 250 West Pratt Street, 21st Floor, Baltimore, Maryland 21201, are the independent accountants to the fund.

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The financial statements of the fund listed below for the period ended December 31, 2002 , and the report of independent accountants are included in each fund`s Annual Report for the period ended December 31, 2002 . A copy of each Annual Report accompanies this Statement of Additional Information. The following financial statements and the report of independent accountants appearing in each Annual Report for the period ended December 31, 2002 , are incorporated into this Statement of Additional Information by reference (references are to page numbers in th e report ):

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ANNUAL REPORT REFERENCES:
	EMERGINg MARKETS BOND	International BOND
Financial Highlights, December 31, 2002	13	11
Portfolio of Investments, December 31, 2002	23-29	14-21
Statement of Assets and Liabilities, December 31, 2002	30	22
Statement of Operations, year ended December 31, 2002	32	31
Statement of Changes in Net Assets, years ended December 31, 2002, and December 31, 2001	35	33-34
Notes to Financial Statements, December 31, 2002	36-42	36-42
Report of Independent Accountants	43	43

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	International BOND Fund — Advisor Class
Financial Highlights, December 31, 2002	12
Portfolio of Investments, December 31, 2002	14-21
Statement of Assets and Liabilities, December 31, 2002	22
Statement of Operations, year ended December 31, 2002	31
Statement of Changes in Net Assets, years ended December 31, 2002, and December 31, 2001	33-34
Notes to Financial Statements, December 31, 2002	36-42
Report of Independent Accountants	43

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RATINGS OF CORPORATE DEBT SECURITIES

Moody`s Investors Service, Inc.

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."

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Aa — Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group , they comprise what are generally know n as high-grade bonds.

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A — Bonds rated A possess many favorable investment attributes and are to be considered as upper medium-grade obligations.

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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.

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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 characterizes 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.

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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 repayment of principal or payment of interest.

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Ca — Bonds rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C — Bonds rated C represent the lowest rated and have extremely poor prospects of attaining investment standing.

Standard & Poor`s Corporation

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, B, CCC, CC, C — Bonds rated BB, B, CCC, CC, and C 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 C 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.

D — In default.

Fitch IBCA, Inc.

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AAA — High grade, broadly marketable, suitable for investment by trustees and fiduciary institutions, and liable to slight market fluctuation other than through changes in the money rate. The prime feature of a n 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 wide margin of protection through collateral, security, or direct lien on specific property. Sinking

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funds or voluntary reduction of debt by call or purchase are often factors, while guarantee or assumption by parties other than the original debtor may influence the rating.

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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.

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A — Bonds rated A are considered to be investment grade and of high credit quality. The obligor`s ability to pay interest and repay principal is considered to be strong but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.

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BBB — Bonds rated BBB are considered to be investment grade and of satisfactory credit quality. The obligor`s ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these bonds and therefore impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings.

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BB, B, CCC, CC, and C — Bonds rated BB, B, CCC, CC, and C are regarded on balance as predominantly speculative with respect to the issuer`s capacity to pay interest and repay principal in accordance with the terms of the obligation for bond issues not in default. BB indicates the lowest degree of speculation and C the highest degree of speculation. The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer, and the current and prospective financial condition and operating performance of the issuer.

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PART C

OTHER INFORMATION

Item 23. Exhibits

(a)(1) Articles of Amendment and Restatement of T. Rowe Price International Funds, Inc., dated February 16, 1990 (electronically filed with Amendment No. 42 dated February 28, 1994)

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(a)(2) Articles Supplementary of T. Rowe Price International Funds, Inc. on behalf of T. Rowe Price European Stock, T. Rowe Price International Bond, T. Rowe Price International Discovery, T. Rowe Price New Asia, and T. Rowe Price Global Government Bond Funds , dated March 4, 1991 (electronically filed with Post-Effective Amendment No. 1 to Form N-14 dated September 10, 1996)

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(a)(3) Articles of Amendment of T. Rowe Price International Funds, Inc., dated May 1, 1991 (electronically filed with Amendment No. 62 dated April 28, 2000)

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(a)(4) Articles Supplementary of T. Rowe Price International Funds, Inc. on behalf of T. Rowe Price Japan Fund , dated October 18, 1991 (electronically filed with Post- Effective Amendment No. 1 to Form N-14 dated September 10, 1996)

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(a)( 5 ) Articles Supplementary of T. Rowe Price International Funds, Inc. on behalf of T. Rowe Price Latin America Fund , dated November 4, 1993 (electronically filed with Amendment No. 41 dated December 16, 1993)

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(a)( 6 ) Articles Supplementary of T. Rowe Price International Funds, Inc., dated February 18, 1994 (electronically filed with Amendment No. 42 dated February 28, 1994)

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(a)( 7 ) Articles Supplementary of T. Rowe Price International Funds, Inc. on behalf of T. Rowe Price Emerging Markets Bond Fund , dated November 2, 1994 (electronically filed with Amendment No. 44 dated December 22, 1994)

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(a)( 8 ) Articles Supplementary of T. Rowe Price International Funds, Inc. on behalf Emerging Markets Stock Fund , dated January 25, 1995 (electronically filed with Amendment No. 49 dated March 22, 1995)

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(a)( 9 ) Articles Supplementary of T. Rowe Price International Funds, Inc. on behalf of T. Rowe Price Global Stock Fund , dated October 11, 1995 (electronically filed with Amendment No. 50 dated October 12, 1995)

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(a)(1 0 ) Articles Supplementary of T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price International Growth & Income Fund, dated December 1, 1998 (electronically filed with Amendment No. 57 dated December 16, 1998)

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(a)(1 1 ) Articles Supplementary of T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price International Bond Fund — Advisor Class and T. Rowe Price International Stock Fund — Advisor Class, dated March 14, 2000 (electronically filed with Amendment No. 60 dated March 27, 2000)

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(a)(1 2 ) Articles Supplementary of T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price Emerging Europe & Mediterranean Fund, dated April 28, 2000 (electronically filed with Amendment No. 62 dated April 28, 2000)

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(a)(1 3 ) Articles Supplementary of T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price International Stock Fund — R Class, T. Rowe Price International Growth & Income Fund — Advisor Class, and T. Rowe Price International Growth & Income Fund — R Class, dated September 5, 2002 (electronically filed with Amendment No. 67 dated February 28, 2003

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(b) By-Laws of Registrant, as amended May 1, 1991, September 30, 1993, July 21, 1999, and February 5, 2003 (electronically filed with Amendment No. 67 dated February 28, 2003

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(c)(1) Specimen Stock Certificate for T. Rowe Price International Bond Fund (filed with Amendment No. 10)

(c)(2) Specimen Stock Certificate for T. Rowe Price International Stock Fund (filed with Amendment No. 10)

(c)(3) Specimen Stock Certificate for T. Rowe Price International Discovery Fund (filed with Amendment No. 14)

(c)(4) Specimen Stock Certificate for T. Rowe Price European Stock Fund (filed with Amendment No. 18)

(c)(5) Specimen Stock Certificate for T. Rowe Price New Asia Fund (filed with Amendment No. 21)

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(c)( 6 ) T. Rowe Price Japan, T. Rowe Price Short-Term Global Income, T. Rowe Price Latin America, T. Rowe Price Emerging Markets Bond, T. Rowe Price Emerging Markets

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Bond, T. Rowe Price Global Stock, and T. Rowe Price International Growth & Income Funds. See Article FIFTH, Capital Stock, Paragraphs (A)-(E) of the Articles of Amendment and Restatement electronically filed with Amendment No. 19, Article II, Shareholders, Sections 2.01-2.11 and Article VIII, Capital Stock, Sections 8.01- 8.06 of the Bylaws (filed with Amendment No. 19)

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(d)(1) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price International Bond Fund, dated May 1, 1990 (electronically filed with Amendment No. 42 dated February 28, 1994)

(d)(2) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price International Stock Fund, dated May 1, 1990 (electronically filed with Amendment No. 42 dated February 28, 1994)

(d)(3) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price International Discovery Fund, dated May 1, 1991 (electronically filed with Amendment No. 42 dated February 28, 1994)

(d)(4) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price European Stock Fund, dated May 1, 1990 (electronically filed with Amendment No. 42 dated February 28, 1994)

(d)(5) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price New Asia Fund, dated May 1, 1991 (electronically filed with Amendment No. 42 dated February 28, 1994)

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(d)( 6 ) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price Japan Fund, dated November 6, 1991 (electronically filed with Amendment No. 42 dated February 28, 1994)

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(d)( 7 ) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price Latin America Fund, dated November 3, 1993 (electronically filed with Amendment No. 41 dated December 16, 1993)

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(d)( 8 ) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price Emerging Markets Bond Fund, dated November 2, 1994 (electronically filed with Amendment No. 44 dated December 22, 1994)

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(d)( 9 ) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price Emerging Markets Stock Fund, dated January 25, 1995 (electronically filed with Amendment No. 49 dated March 22, 1995)

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(d)(1 0 ) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price Global Stock Fund, dated November 1, 1995 (electronically filed with Amendment No. 51 dated December 20, 1995)

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(d)(1 1 ) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price International Growth & Income Fund, dated November 4, 1998 (electronically filed with Amendment No. 56 dated November 19, 1998)

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(d)(1 2 ) Investment Management Agreement between Registrant and Rowe Price-Fleming International, Inc., on behalf of T. Rowe Price Emerging Europe & Mediterranean Fund, dated April 19, 2000 (electronically filed with Amendment No. 62 dated April 28, 2000)

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(e) Underwriting Agreement between Registrant and T. Rowe Price Investment Services, Inc., dated May 1, 2003

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(f) Inapplicable

(g) Custody Agreements

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(g)(1) Custodian Agreement between T. Rowe Price Funds and State Street Bank and Trust Company, dated January 28, 1998, as amended November 4, 1998, April 21, 1999, February 9, 2000, April 19, 2000, July 18, 2000, October 25, 2000, February 7, 2001, June 7, 2001, July 24, 2001 , April 24, 2002 , July 24, 2002 , and September 4, 2002

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(g)(2) Global Custody Agreement between The Chase Manhattan Bank and T. Rowe Price Funds, dated January 3, 1994, as amended April 18, 1994, August 15, 1994, November 28, 1994, May 31, 1995, November 1, 1995, July 31, 1996, July 23, 1997, September 3, 1997, October 29, 1997,

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December 15, 1998, October 6, 1999, February 9, 2000, April 19, 2000, July 18, 2000, October 25, 2000, July 24, 2001 , April 24, 2002 , and July 24, 2002

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(h) Other Agreements

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(h)(1) Transfer Agency and Service Agreement between T. Rowe Price Services, Inc. and T. Rowe Price Funds, dated January 1, 2003

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(h)(2) Agreement between T. Rowe Price Associates, Inc. and T. Rowe Price Funds for Fund Accounting Services, dated January 1, 2003

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(h)(3) Agreement between T. Rowe Price Retirement Plan Services, Inc. and the T. Rowe Price Funds, dated January 1, 2003

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(i) Inapplicable

(j) Other Opinions

(j)(1) Consent of Independent Accountants

(j)(2) Opinion of Counsel

(j) ( 3 ) Power of Attorney

(k) Inapplicable

(l) Inapplicable

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(m)(1) Rule 12b-1 Plan for T. Rowe Price International Stock Fund — Advisor Class dated May 1, 2003

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(m)(2) Rule 12b-1 Plan for T. Rowe Price International Bond Fund — Advisor Class dated May 1, 2003

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(m)(3) Rule 12b-1 Plan for T. Rowe Price International Stock Fund — R Class dated May 1, 2003

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(m)(4) Rule 12b-1 Plan for T. Rowe Price International Growth & Income Fund — Advisor Class dated May 1, 2003

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(m)(5) Rule 12b-1 Plan for T. Rowe Price International Growth & Income Fund — R C lass dated May 1, 2003

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(m)( 6 ) Form of Selling Agreement to be used by T. Rowe Price Investment Services, Inc. (electronically filed with Amendment No. 60 dated March 27, 2000)

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(n)(1) Rule 18f-3 Plan for T. Rowe Price International Stock Fund — Advisor Class dated February 9, 2000 (electronically filed with Amendment No. 60 dated March 27, 2000)

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(n)(2) Rule 18f-3 Plan for T. Rowe Price International Bond Fund — Advisor Class dated February 9, 2000 (electronically filed with Amendment No. 60 dated March 27, 2000)

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(n)(3) Rule 18f-3 Plan for T. Rowe Price International Stock Fund — R Class dated July 24, 2002 (electronically filed with Amendment No. 66 dated September 3, 2002)

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(n)(4) Rule 18f-3 Plan for T. Rowe Price International Growth & Income Fund — Advisor Class and R Class dated July 24, 2002 (electronically filed with Amendment No. 66 dated September 3, 2002)

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(p) Code of Ethics, dated April 1, 200 2

Item 24. Persons Controlled by or Under Common Control With Registrant

None

Item 25. Indemnification

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The Registrant maintains comprehensive Errors and Omissions and Officers and Directors insurance policies written by ICI Mutual. These policies provide coverage for T. Rowe Price Associates, Inc. ("Manager"), and its subsidiaries and affiliates as listed in Item 26 of this Registration Statement (with the exception of the T. Rowe Price Associates Foundation, Inc.), and all other investment companies in the T. Rowe Price family of mutual funds. In addition to the corporate insureds, the policies also cover the officers, directors, and employees of the Manager, its subsidiaries, and affiliates. The premium is allocated among the named corporate insureds in accordance with the provisions of Rule 17d 1(d)(7) under the Investment Company Act of 1940.

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General. The Charter of the Corporation provides that to the fullest extent permitted by Maryland or federal law, no director or officer of the Corporation shall be personally liable to the Corporation or the holders of Shares for money damages and each director and officer shall be indemnified by the Corporation; provided, however , that nothing therein shall be deemed to protect any director or officer of the Corporation against any liability to the Corporation of the holders of Shares to which such director or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.

Article X, Section 10.01 of the Registrant's By-Laws provides as follows:

Section 10.01. Indemnification and Payment of Expenses in Advance : The Corporation shall indemnify any individual ("Indemnitee") who is a present or former director, officer, employee, or agent of the Corporation, or who is or has been serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, who, by reason of his position was, is, or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (hereinafter collectively referred to as a "Proceeding") against any judgments, penalties, fines, settlements, and reasonable expenses (including attorneys' fees) incurred by such Indemnitee in connection with any Proceeding, to the fullest extent that such indemnification may be lawful under Maryland law. The Corporation shall pay any reasonable expenses so incurred by such Indemnitee in defending a Proceeding in advance of the final disposition thereof to the fullest extent that such advance payment may be lawful under Maryland law. Subject to any applicable limitations and requirements set forth in the Corporation's Articles of Incorporation and in these By-Laws, any payment of indemnification or advance of expenses shall be made in accordance with the procedures set forth in Maryland law.

Notwithstanding the foregoing, nothing herein shall protect or purport to protect any Indemnitee against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office ("Disabling Conduct").

Anything in this Article X to the contrary notwithstanding, no indemnification shall be made by the Corporation to any Indemnitee unless:

(a) there is a final decision on the merits by a court or other body before whom the Proceeding was brought that the Indemnitee was not liable by reason of Disabling Conduct; or

(b) in the absence of such a decision, there is a reasonable determination, based upon a review of the facts, that the Indemnitee was not liable by reason of Disabling Conduct, which determination shall be made by:

(i) the vote of a majority of a quorum of directors who are neither "interested persons" of the Corporation as defined in Section 2(a)(19) of the Investment Company Act, nor parties to the Proceeding; or

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(ii) an independent legal counsel in a written opinion.

Anything in this Article X to the contrary notwithstanding, any advance of expenses by the Corporation to any Indemnitee shall be made only upon the undertaking by such Indemnitee to repay the advance unless it is ultimately determined that such Indemnitee is entitled to indemnification as above provided, and only if one of the following conditions is met:

(a) the Indemnitee provides a security for his undertaking; or

(b) the Corporation shall be insured against losses arising by reason of any lawful advances; or

(c) there is a determination, based on a review of readily available facts, that there is reason to believe that the Indemnitee will ultimately be found entitled to indemnification, which determination shall be made by:

(i) a majority of a quorum of directors who are neither "interested persons" of the Corporation as defined in Section 2(a)(19) of the Investment Company Act, nor parties to the Proceeding; or

(ii) an independent legal counsel in a written opinion.

Section 10.02. Insurance of Officers, Directors, Employees, and Agents. To the fullest extent permitted by applicable Maryland law and by Section 17(h) of the Investment Company Act 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 Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Item 26. Business and Other Connections of Investment Manager

<R>

T. Rowe Price International, Inc. , a Maryland corporation, is a wholly owned subsidiary of T RP Finance , Inc. ( "T. Rowe Price International" ) was incorporated in Maryland in 1979 and provides investment counsel service with respect to foreign securities for institutional investors in the United States. In addition to managing private counsel client accounts, T. Rowe Price International also sponsors registered investment companies which invest in foreign securities, serves as general partner of T. Rowe Price International Partners, Limited Partnership, and provides investment advice to the T. Rowe Price Trust Company, trustee of the International Common Trust Fund.

</R>

<R>

T. Rowe Price Global Investment Services Limited is a British c orporation, organized in 2000, and a wholly owned subsidiary of T. Rowe Price Group Inc . Global Investment Services provides investment management, sales, and client servicing to institutional and retail investors, primarily to non-United States investors.

</R>

<R>

T. Rowe Price Global Asset Management Limited ( "Global Asset Management" ) , a British corporation, is an SEC registered investment adviser under the Investment Advisers Act of 1940. Global Asset Management is also regulated by the English Financial S ervices Authority and provides investment management services to Japanese investment trusts and other accounts for institutional investors in Japan pursuant to one or more delegation agreements entered into between Daiwa SB Investments, Ltd. and Global Asset Management or other advisory agreements. Global Asset Management is a wholly owned subsidiary of T. Rowe Price Group, Inc .

</R>

<R>

M. DAVID TESTA, Chairman of the Board and Director of T. Rowe Price International, Inc.; Director, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited ; Vice Chairman of the Board, Chief Investment Officer ; Director and Vice President , T. Rowe Price Group , Inc. and T. Rowe Price Trust Company; Chief Investment Officer, Director, and Vice President, T. Rowe Price Associates, Inc.

</R>

PAGE 127

<R>

JOHN R. FORD, Chief Investment Officer, Director, and Vice President , T. Rowe Price International, Inc. ; Vice President, T. Rowe Price Associates, Inc. and T. Rowe Price Group, Inc.

</R>

<R>

JAMES S. RIEPE, Director , T. Rowe Price International, Inc. and T. Rowe Price Global Investment Services Limited; Director and Vice President, T. Rowe Price Associates, Inc . ; Vice Chairman of the Board, Director, and Vice President , T. Rowe Price Group , Inc.; Chairman of the Board and Director, T. Rowe Price Global Asset Management Limited, T. Rowe Price Investment Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Retirement Plan Services, Inc.; Chairman of the Board, Director, President and Trust Officer, T. Rowe Price Trust Company.

</R>

<R>

GEORGE A. ROCHE, Director, T. Rowe Price International, Inc.; Chairman of the Board, Director, and President, T. Rowe Price Group , Inc. ; Director and President, T. Rowe Price Associates, Inc.

</R>

<R>

DAVID J.L. WARREN, Chief Executive Officer, Director , and President , T. Rowe Price International, Inc. ; Vice President, T. Rowe Price Associates, Inc. and T. Rowe Price Group, Inc.; Director, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited.

</R>

<R>

With the exception of Chiho Amano , Carol A. Bambrough, Toby Baker , Jose Costa Buck, Russell Burdett, Dawn A. Day, Trevor Paul Denton, Vanessa Dekker, Janet Duff, Jeremy Ellis, Jeremy M. Fisher, M. Campbell Gunn, Pascal Hautcoeur, J. Amanda Maskell, Tara L. Moore, Kay E. Murray, Sally Patterson, S. Leigh Robertson, John Carl A. Sherman, Michael E. Simcock, Neil Smith, Miki Takeyama, Connie Tse, Kurt A. Umbarger, and Susan A. Woodstock, all officers of T. Rowe Price International are officers and/or employees of Price Associates and may also be officers and/or directors of one or more subsidiaries of Price Associates and/or one or more of the registered investment companies for which Price Associates or T. Rowe Price International serves as investment adviser.

</R>

See also "Management of the Funds," in the Registrant's Statement of Additional Information.

Item 27. Principal Underwriters

<R>

(a) The principal underwriter for the Registrant is Investment Services. Investment Services acts as the principal underwriter for the T. Rowe Price family of mutual funds, including the following investment companies: T. Rowe Price Growth Stock Fund, Inc., T. Rowe Price New Horizons Fund, Inc., T. Rowe Price New Era Fund, Inc., T. Rowe Price New Income Fund, Inc., T. Rowe Price Prime Reserve Fund, Inc., T. Rowe Price Tax-Free

</R>

<R>

Income Fund, Inc., T. Rowe Price Tax-Exempt Money Fund, Inc., T. Rowe Price International Funds, Inc., T. Rowe Price Growth & Income Fund, Inc., T. Rowe Price Tax-Free Short-Intermediate Fund, Inc., T. Rowe Price Short-Term Bond Fund, Inc., T. Rowe Price High Yield Fund, Inc., T. Rowe Price Tax-Free High Yield Fund, Inc., T. Rowe Price New America Growth Fund, T. Rowe Price Equity Income Fund, T. Rowe Price GNMA Fund, T. Rowe Price Capital Appreciation Fund, T. Rowe Price California Tax Free Income Trust, T. Rowe Price State Tax-Free Income Trust, T. Rowe Price Science & Technology Fund, Inc., T. Rowe Price Small-Cap Value Fund, Inc., T. Rowe Price 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 Mid Cap Growth Fund, Inc., T. Rowe Price Small Cap Stock Fund, Inc., T. Rowe Price Tax Free Intermediate Bond Fund, Inc., T. Rowe Price Dividend Growth Fund, Inc., T. Rowe Price Blue Chip Growth Fund, Inc., T. Rowe Price Summit Funds, Inc., T. Rowe Price Summit Municipal Funds, Inc., T. Rowe Price Equity Series, Inc., T. Rowe Price International Series, Inc., T. Rowe Price Fixed Income Series, Inc., T. Rowe Price Personal Strategy Funds, Inc., T. Rowe Price Value Fund, Inc., T. Rowe Price Capital Opportunity Fund, Inc., T. Rowe Price Corporate Income Fund, Inc., T. Rowe Price Health Sciences Fund, Inc., T. Rowe Price Mid Cap Value Fund, Inc., T. Rowe Price Institutional Equity Funds, Inc., T. Rowe Price Financial Services Fund, Inc., T. Rowe Price Diversified Small Cap Growth Fund, Inc., T. Rowe Price Tax Efficient Funds, Inc., T. Rowe Price Reserve Investment Funds, Inc., T. Rowe Price Media & Telecommunications Fund, Inc., T. Rowe Price Real Estate Fund, Inc., T. Rowe Price Developing Technologies Fund, Inc., T. Rowe Price Global Technology Fund, Inc., T. Rowe Price U.S. Bond Index Fund, Inc., T. Rowe Price International Index Fund, Inc. , T. Rowe Price Institutional Income Funds, Inc. , T. Rowe Price Retirement Funds, Inc. , and T. Rowe Price Inflation Protected Bond Fund, Inc.

</R>

<R>

Investment Services is a wholly owned subsidiary of T. Rowe Price Associates, Inc., is registered as a broker-dealer under the Securities Exchange Act of 1934 , and is a member of the National Association of Securities Dealers, Inc. Investment Services has been formed for the limited purpose of distributing the shares of the Price Funds and will not engage in the general securities business. Investment Services will not receive any commissions or other compensation for acting as principal underwriter.

</R>

PAGE 129

(b) The address of each of the directors and officers of Investment Services listed below is 100 East Pratt Street, Baltimore, Maryland 21202. <R>

Name	Positions and Offices With Underwriter	Positions and Offices With Registrant
James S. Riepe	Chairman of the Board and Director	Chairman of the Board
Edward C. Bernard	President and Director	None
Henry H. Hopkins	Vice President and Director	Vice President
Wayne D. O`Melia	Vice President and Director	None
Charles E. Vieth	Vice President and Director	None
Patricia M. Archer	Vice President	None
Steven J. Banks	Vice President	None
John T. Bielski	Vice President	None
John H. Boyd	Vice President	None
Renee Q. Boyd	Vice President	None
Darrell N. Braman	Vice President	None
Ronae M. Brock	Vice President	None
Meredith C. Callanan	Vice President	None
John H. Cammack	Vice President	None
Susan R. Camp	Vice President	None
Ann R. Campbell	Vice President	None
Christine M. Carolan	Vice President	None
Joseph A. Carrier	Vice President	None
Laura H. Chasney	Vice President	None
Renee M. Christoff	Vice President	None
Jerome A. Clark	Vice President	None
Joseph A. Crumbling	Vice President	None
Christine S. Fahlund	Vice President	None
Laurie L. Fierro	Vice President	None
Forrest R. Foss	Vice President	None
Thomas A. Gannon	Vice President	None
John R. Gilner	V ice President	None
John Halaby	Vice President	None
Douglas E. Harrison	Vice President	None
David J. Healy	Vice President	None
Joanne M. Healy	Vice President	None
Joseph P. Healy	Vice President	None
Walter J. Helmlinger	Vice President	None
Duane E. Higdon	Vice President	None
Christopher A. Jarmush	Vice President	None
Salvador G. LaBella	Vice President	None
Steven A. Larson	Vice President	None
Cynthia W. LaRue	Vice President	None
Gayle A. Lomax	Vice President	None
Gayatri Malik	Vice President	None
Sarah McCafferty	Vice President	None
Mark J. Mitchell	Vice President	None
Nancy M. Morris	Vice President	None
George A. Murnaghan	Vice President	None
Steven E. Norwitz	Vice President	None
Edmund M. Notzon III	Vice President	None
Barbara A. O'Connor	Vice President	None
David Oestreicher	Vice President	None
Regina M. Pizzonia	Vice President	None
Kathleen G. Polk	Vice President	None
Peter Preisler	Vice President	None
Pamela D. Preston	Vice President	None
Kylelane Purcell	Vice President	None
Suzanne J. Ricklin	Vice President	None
George D. Riedel	Vice President	None
John R. Rockwell	Vice President	None
Christopher J. Rohan	Vice President	None
Kenneth J. Rutherford	Vice President	None
Alexander Savich	Vice President	None
Kristin E. Seeberger	Vice President	None
John W. Seufert	Vice President	None
Donna B. Singer	Vice President	None
Carole H. Smith	Vice President	None
Scott Such	Vice President	None
Jerome Tuccille	Vice President	None
Walter L. Wdowiak	Vice President	None
Barbara A. O`Connor	Treasurer	None
Barbara A. Van Horn	Secretary	None
Kimberly B. Andersen	Assistant Vice President	None
Shane Baldino	Assistant Vice President	None
Richard J. Barna	Assistant Vice President	None
Catherine L. Berkenkemper	Assistant Vice President	None
Elizabeth A. Ca i rns	Assistant Vice President	None
Sheila P. Callahan	Assistant Vice President	None
Patricia M. Cannon	Assistant Vice President	None
Jodi Ann Casson	Assistant Vice President	None
Renee L. Chapman	Assistant Vice President	None
Linsley G. Craig	Assistant Vice President	None
Jon Derek Dry	Assistant Vice President	None
Dominick J. Dunnigan	Assistant Vice President	None
Cheryl L. Emory	Assistant Vice President	None
Bruce S. Fulton	Assistant Vice President	None
John A. Galateria	Assistant Vice President	None
Karen L. Glooch	Assistant Vice President	None
Jason L. Gounaris	Assistant Vice President	None
David A.J. Groves	Assistant Vice President	None
Kristen L. Heerema	Assistant Vice President	None
David A. Hueser	Assistant Vice President	None
Shawn M. Isaacson	Assistant Vice President	None
Suzanne M. Knoll	Assistant Vice President	None
Patricia B . Lippert	Assistant Vice President	Secretary
Lois Lynch	Assistant Vice President	None
Karen M. Magness	Assistant Vice President	None
Amy L. Marker	Assistant Vice President	None
C. Lillian Matthews	Assistant Vice President	None
Janice D. McCrory	Assistant Vice President	None
Jennifer H. McDonnell	Assistant Vice President	None
John T. McGuigan	Assistant Vice President	None
Daniel M. Middelton	Assistant Vice President	None
Laurie K. Mitchell	Assistant Vice President	None
Thomas R. Morelli	Assistant Vice President	None
Clark P. Neel	Assistant Vice President	None
Danielle Nicholson Smith	Assistant Vice President	None
JeanneMarie B. Patella	Assistant Vice President	None
Jean E. Ramos-Izquierdo	Assistant Vice President	None
Seamus A. Ray	Assistant Vice President	None
Shawn D. Reagan	Assistant Vice President	None
Jennifer L. Richardson	Assistant Vice President	None
Kristin M. Rodriguez	Assistant Vice President	None
Ramon D. Rodriguez	Assistant Vice President	None
Deborah D. Seidel	Assistant Vice President	None
Kevin C. Shea	Assistant Vice President	None
Thomas L. Siedell	Assistant Vice President	None
John A. Stranovsky	Assistant Vice President	None
Robyn S. Thompson	Assistant Vice President	None
Judith B. Ward	Assistant Vice President	None
William R. Weker, Jr.	Assistant Vice President	None
Natalie C. Widdowson	Assistant Vice President	None
Mary G. Williams	Assistant Vice President	None
Linda C. Wright	Assistant Vice President	None
Timothy R. Yee	Assistant Vice President	None

</R>

PAGE 131

(c) Not applicable. Investment Services will not receive any compensation with respect to its activities as underwriter for the Price Funds.

Item 28. Location of Accounts and Records

All accounts, books, and other documents required to be maintained by the Registrant under Section 31(a) of the Investment Company Act of 1940 and the rules thereunder will be maintained by the Registrant at its offices at 100 East Pratt Street, Baltimore, Maryland 21202. Transfer, dividend disbursing, and shareholder service activities are performed by T. Rowe Price Services, Inc., at 4515 Painters Mill Road, Owings Mills, Maryland 21117. Custodian activities for the Registrant are performed at State Street Bank and Trust Company's Service Center (State Street South), 1776 Heritage Drive, Quincy, Massachusetts 02171.

<R>

Custody of Registrant`s portfolio securities which are purchased outside the United States is maintained by JPMorgan Chase Bank , London, in its foreign branches , with other banks or foreign depositories . JPMorgan Chase Bank , London, is located at Woolgate House, Coleman Street, London EC2P 2HD England.

</R>

Item 29. Management Services

Registrant is not a party to any management related service contract, other than as set forth in the Prospectus or Statement of Additional Information.

Item 30. Undertakings

(a) Not applicable

PAGE 133

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Baltimore, State of Maryland, this April 29, 2003.

T. Rowe Price International Funds, Inc.

/s/James S. Riepe

By: James S. Riepe

Chairman of the Board

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:

Signature Title Date

/s/James S. Riepe Chairman of the Board April 29, 2003

James S. Riepe (Chief Executive Officer)

<R>

</R>

/s/Joseph A. Carrier Treasurer (Chief April 29, 2003

Joseph A. Carrier Financial Officer)

<R>

* Director April 29, 2003

</R>

Anthony W. Deering

* Director April 29, 2003

Donald W. Dick, Jr.

* Director April 29, 2003

David K. Fagin

* Director April 29, 2003

F. Pierce Linaweaver

* Director April 29, 2003

Hanne M. Merriman

<R>

* Director April 29, 2003

</R>

John G. Schreiber

/s/M. David Testa Director and April 29, 2003

M. David Testa Vice President

* Director April 29, 2003

Hubert D. Vos

* Director April 29, 2003

Paul M. Wythes

*/s/Henry H. Hopkins Vice President and April 29, 2003

Henry H. Hopkins Attorney In Fact

UNDERWRITING AGREEMENT

BETWEEN

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

AND

T. ROWE PRICE INVESTMENT SERVICES, INC.

THIS UNDERWRITING AGREEMENT, made as of the 1st day of May 2003, by and between T. ROWE PRICE INTERNATIONAL FUNDS, 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 shares of the Fund`s capital stock may be divided into classes (all such shares being referred to herein as "Shares") and the Fund currently is authorized to offer more than one class of Shares; 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 T. Rowe Price International, Inc. ("Price International") 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; and

WHEREAS, the Fund has adopted one or more plans pursuant to Rule 12b-1 under the ICA- 40 (the "Plan") with respect to one or more classes of Shares (the "12b-1 Shares") authorizing payments by the Fund to the Distributor or others with respect to the distribution and/or provision of shareholder and administrative services with respect to such 12b-1 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 23, 1996, as amended.

(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.

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 ("SEC") 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 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 International act as investment advisers ("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 Funds by accepting unconditional orders to purchase the Shares placed with Distributor by investors or by selected dealers 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.

The Distributor shall have the right to enter into selected dealer agreements with registered and qualified securities dealers and other financial institutions of its choice for the sale of Shares, provided that the Fund shall approve the forms of such agreements. Within the United States, the Distributor shall offer and sell Shares only to such selected dealers as are members in good standing of the NASD or are institutions exempt from registration under applicable federal securities laws. Shares sold to selected dealers shall be for resale by such dealers only at the public offering price as defined in Paragraph 5 hereof.

3. Sale of Shares by the 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.

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.

Neither Distributor nor any selected dealer nor any other person is 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 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. 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, 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.

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.

11. Payment of the Distributor Under the Plan.

a. The Fund shall pay fees to the Distributor, or to such persons as the Fund or Distributor may direct, for distribution, shareholder and/or administrative servicing expenses with respect to the Fund`s 12b-1 Shares. Such fees shall be paid under the Plan(s) adopted by the Fund and this Agreement.

b. So long as any such Plan or any amendment thereto is in effect, the Distributor shall inform the Board of the distribution expenses and shareholder and administrative servicing expenses incurred with respect to the 12b-1 Shares by the Distributor. So long as any such Plan (or any amendment thereto) is in effect, at the request of the Board or any agent or representative of the Fund, the Distributor shall provide such additional information as may reasonably be requested concerning the activities of the Distributor hereunder and the costs incurred in performing such activities with respect to the 12b-1 Shares.

12. 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.

13. 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.

14. 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 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 the 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.

15. 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, 2004 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 15, 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.

16. 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 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.

17. Separate Agreement as to Classes. The amendment or termination of this Agreement with respect to any class of Shares shall not result in the amendment or termination of this Agreement with respect to any other class of Shares unless explicitly so provided.

18. 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.

19. 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 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 INTERNATIONAL

FUNDS, INC.

/s/Patricia B. Lippert James S. Riepe

__________________________ By: ____________________________________

Patricia B. Lippert, Secretary James S. Riepe, Chairman of the Board

ATTEST: T. ROWE PRICE INVESTMENT SERVICES, INC.

/s/Barbara A. Van Horn /s/Henry H. Hopkins

__________________________ By: ________________________________

Barbara A. Van Horn, Secretary Henry H. Hopkins, Vice President

L:TRPPRODEDGAgreementsUnderwriting AgreementsUnderINT2.fm

Custodian Agreement

This Agreement is made as of January 28, 1998 by and between each entity set forth on Appendix A hereto (as such Appendix A may be amended from time to time) which executes a copy of this Agreement (each referred to herein as the "Fund" ), and State Street Bank and Trust Company, a Massachusetts trust company with its principal place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Custodian" ).

Witnesseth:

Whereas, each Fund desires to retain the Custodian to act as custodian of certain of the assets of the Fund, and the Custodian is willing to provide such services to each Fund, upon the terms and conditions hereinafter set forth; and

Whereas, except as otherwise set forth herein, this Agreement is intended to supersede that certain custodian contract among the parties hereto dated September 28, 1987, as amended; and

Whereas, the Funds have retained Chase Manhattan Bank, N.A. to act as the Funds` custodian with respect to the assets of each such Fund to be held outside of the United States of America (except as otherwise set forth in this Agreement) pursuant to a written custodian agreement (the "Foreign Custodian Agreement" ),

Now, Therefore, in consideration of the mutual covenants and agreements hereinafter contained, each of the parties hereto agrees as follows:

Section 1. Employment of Custodian and Property to be Held by It.

Each Fund hereby employs the Custodian as the custodian of certain of its assets, including those securities it desires to be held within the United States of America ( "domestic securities" ) and those securities it desires to be held outside the United States of America (the "United States" ) which are (i) not held on the Funds` behalf by Chase Manhattan Bank, N.A. pursuant to the Foreign Custodian Agreement and (ii) described with greater particularity in Section 3 hereof (such securities shall be referred to herein as "foreign securities" ). Each Fund agrees to deliver to the Custodian all domestic securities, foreign securities and cash owned by it from time to time, and all payments of income, payments of principal or capital distributions received by it with respect to

securities held by it hereunder, and the cash consideration received by it for such new or treasury shares of capital stock of each Fund as may be issued or sold from time to time ( "Shares" ). The Custodian shall not be responsible for any property of any Fund held or received by such Fund (i) not delivered to the Custodian, or (ii) held in the custody of Chase Manhattan Bank N.A .

The Custodian is authorized to employ one or more sub- custodians located within the United States, provided that the Custodian shall have obtained the written acknowledgment of the Fund with respect to such employment. The Custodian is authorized to employ sub-custodians located outside the United States as noted on Schedule A attached hereto (as such Schedule A may be amended from time to time). The Custodian shall have no more or less responsibility or liability to any Fund on account of any actions or omissions of any sub-custodian so employed than any such sub- custodian has to the Custodian and shall not release any sub- custodian from any responsibility or liability unless so agreed in writing by the Custodian and the applicable Fund. With the exception of State Street Bank and Trust Company (London branch), the Custodian shall not be liable for losses arising from the bankruptcy, insolvency or receivership of any sub-custodian located outside the United States.

Section 2. Duties of the Custodian with Respect to Property of the Funds Held By the Custodian in the United States.

Section 2.1 Holding Securities . The Custodian shall hold and physically segregate for the account of each Fund all non-cash property to be held by it in the United States, including all domestic securities owned by the Fund other than (a) securities which are maintained pursuant to Section 2.9 in a clearing agency which acts as a securities depository or in a book-entry system authorized by the United States Department of the Treasury and certain federal agencies (each, a "U.S. Securities System" ) and (b) commercial paper of an issuer for which the Custodian acts as issuing and paying agent ( "Direct Paper" ) which is deposited and/or maintained in the Direct Paper system of the Custodian (the "Direct Paper System" ) pursuant to Section 2.10.

Section 2.2 Delivery of Investments . The Custodian shall release and deliver domestic investments owned by a Fund held by the Custodian or in a U.S. Securities System account of the Custodian or in the Custodian`s Direct Paper System account ( "Direct Paper System Account" ) only upon receipt of Proper Instructions, which

may be continuing instructions when agreed to by the parties, and only in the following cases:

1) Upon sale of such investments for the account of the Fund and receipt of payment therefor;

2) Upon the receipt of payment in connection with any repurchase agreement related to such investments entered into by the Fund;

3) In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.9 hereof;

4) To the depository agent in connection with tender or other similar offers for portfolio investments of the Fund;

5) To the issuer thereof or its agent when such investments are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian;

6) To the issuer thereof, or its agent, for transfer into the name of the Fund or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.8 or into the name or nominee name of any sub-custodian appointed pursuant to Section 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian;

7) Upon the sale of such investments for the account of the Fund, to the broker or its clearing agent, against a receipt, for examination in accordance with usual "street delivery" custom; provided that in any such case the Custodian shall have no responsibility or liability for any loss arising from the delivery of such investments prior to receiving payment for such investments except as may arise from the Custodian`s own negligence or willful misconduct;

8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the investments of the issuer of such investments, or pursuant to provisions for conversion contained in such investments, or pursuant to any deposit agreement; provided that, in any such case, the new investments and cash, if any, are to be delivered to the Custodian;

9) In the case of warrants, rights or similar investments, the surrender thereof in the exercise of such warrants, rights or similar investments or the surrender of interim receipts or temporary investments for definitive investments; provided that, in any such case, the new investments and cash, if any, are to be delivered to the Custodian or against a receipt;

10) For delivery in connection with any loans of investments made on behalf of the Fund, but only against receipt of adequate collateral as agreed upon from time to time by the Fund or its duly-appointed agent (which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, or such other property as the Fund may agree), except that in connection with any loans for which collateral is to be credited to the Custodian`s account in the book-entry system authorized by the U.S. Department of the Treasury, the Custodian will not be held liable or responsible for the delivery of investments owned by the Fund prior to the receipt of such collateral in the absence of the Custodian`s negligence or willful misconduct;

11) For delivery as security in connection with any borrowing by the Fund requiring a pledge of assets by the Fund, but only against receipt of amounts borrowed, except where additional collateral is required to secure a borrowing already made, subject to Proper Instructions, further securities may be released and delivered for that purpose;

12) For delivery in accordance with the provisions of any agreement among the Fund, the Custodian and a broker- dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act" ) and a member of The National Association of Securities Dealers, Inc. ( "NASD" ),

relating to compliance with the rules of The Options Clearing Corporation, the rules of any registered national securities exchange or of any similar organization or organizations, or under the Investment Company Act of 1940, as amended from time to time (the "1940 Act" ), regarding escrow or other arrangements in connection with transactions by the Fund;

13) For delivery in accordance with the provisions of any agreement among the Fund, the Custodian, and a Futures Commission Merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any Contract Market, or any similar organization or organizations, or under the 1940 Act, regarding account deposits in connection with transactions by the Fund;

14) Upon receipt of instructions from the transfer agent for the Fund (the "Transfer Agent" ), for delivery to such Transfer Agent or to the holders of shares in connection with distributions in kind, as may be described from time to time in the Fund`s currently effective prospectus, statement of additional information or other offering documents (all, as amended, supplemented or revised from time to time, the "Prospectus" ), in satisfaction of requests by holders of Shares for repurchase or redemption; and

15) For any other purpose, but only upon receipt of Proper Instructions specifying (a) the investments to be delivered, (b) setting forth the purpose for which such delivery is to be made, and (c) naming the person or persons to whom delivery of such investments shall be made.

Section 2.3 Registration of Investments . Domestic investments held by the Custodian (other than bearer securities) shall be registered in the name of the Fund or in the name of any nominee of the Fund or of any nominee of the Custodian which nominee shall be assigned exclusively to the Fund, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser as the Fund, or in the name or nominee name of any agent appointed pursuant to Section 2.8 or in the name or nominee name of any sub-custodian appointed pursuant to Section 1. All securities accepted by the Custodian on behalf of the Fund under the terms of

this Agreement shall be in good deliverable form. If, however, the Fund directs the Custodian to maintain securities in "street name", the Custodian shall utilize its best efforts only to timely collect income due the Fund on such securities and to notify the Fund of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers.

Section 2.4 Bank Accounts . The Custodian shall open and maintain a separate bank account or accounts in the United States in the name of the Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Agreement, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Fund, other than cash maintained by the Fund in a bank account established and used in accordance with Rule 17f-3 under the 1940 Act. Monies held by the Custodian for the Fund may be deposited by the Custodian to its credit as custodian in the banking department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable in the performance of its duties hereunder; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the 1940 Act, and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall be approved by vote of a majority of the board of directors or the board of trustees of the applicable Fund (as appropriate and in each case, the "Board" ). Such funds shall be deposited by the Custodian in its capacity as custodian and shall be withdrawable by the Custodian only in that capacity.

Section 2.5 Collection of Income . Subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to United States registered investments held hereunder to which the Fund shall be entitled either by law or pursuant to custom in the investments business, and shall collect on a timely basis all income and other payments with respect to United States bearer investments if, on the date of payment by the issuer, such investments are held by the Custodian or its agent thereof and shall credit such income, as collected, to the Fund`s custodian account. Without limiting the generality of the foregoing, the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due, collect interest when due on investments held hereunder, and receive and collect all stock dividends, rights and other items of like nature as and when they become due and payable. With respect to income due the Fund on United States investments of the Fund loaned (pursuant to the provisions of Section 2.2 (10))

in accordance with a separate agreement between the Fund and the Custodian in its capacity as lending agent, collection thereof shall be in accordance with the terms of such agreement. Except as otherwise set forth in the immediately preceding sentence, income due the Fund on United States investments of the Fund loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the Fund; the Custodian will have no duty or responsibility in connection therewith other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Fund is properly entitled.

Section 2.6 Payment of Fund Monies . Upon receipt of Proper Instructions, which may be continuing instructions when agreed to by the parties, the Custodian shall, from monies of the Fund held by the Custodian, pay out such monies in the following cases only:

1) Upon the purchase of domestic investments, options, futures contracts or options on futures contracts for the account of the Fund but only (a) against the delivery of such investments, or evidence of title to such options, futures contracts or options on futures contracts, to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the 1940 Act to act as a custodian and has been designated by the Custodian as its agent for this purpose in accordance with Section 2.8) registered in the name of the Fund or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.9 hereof; (c) in the case of a purchase involving the Direct Paper System, in accordance with the conditions set forth in Section 2.10 hereof; or (d) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign, such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions;

2) In connection with conversion, exchange or surrender of investments owned by the Fund as set forth in Section 2.2 hereof;

3) For the redemption or repurchase of Shares as set forth in Section 4 hereof;

4) For the payment of any expense or liability incurred by the Fund, including but not limited to the following payments for the account of the Fund: interest, taxes, management fees, accounting fees, transfer agent fees, legal fees, and operating expenses of the Fund (whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses);

5) For the payment of any dividends declared by the Board;

6) For payment of the amount of dividends received in respect of investments sold short;

7) For repayment of a loan upon redelivery of pledged securities and upon surrender of the note(s), if any, evidencing the loan; or

8) In connection with any repurchase agreement entered into by the Fund with respect to which the collateral is held by the Custodian, the Custodian shall act as the Fund`s "securities intermediary"( as that term is defined in Part 5 of Article 8 of the Massachusetts Uniform Commercial Code, as amended), and, as securities intermediary, the Custodian shall take the following steps on behalf of the Fund: (a) provide the Fund with notification of the receipt of the purchased securities, and (b), by book-entry identify on the books of the Custodian as belonging to the Fund uncertificated securities registered in the name of the Fund and held in the Custodian`s account at the Federal Reserve Bank. In connection with any repurchase agreement entered into by the Fund with respect to which the collateral is not held by the Custodian, the Custodian shall (a) provide the Fund with such notification as it may receive with respect to such collateral, and (b), by book-entry or otherwise, identify as belonging to the Fund securities as shown in the Custodian`s account on the books of the entity appointed by the Fund to hold such collateral.

9) For any other purpose, but only upon receipt of Proper Instructions specifying (a) the amount of such payment,

(b) setting forth the purpose for which such payment is to be made, and (c) naming the person or persons to whom such payment is to be made.

Section 2.7 Liability for Payment in Advance of Receipt of Securities Purchased . In any and every case where payment for purchase of domestic securities for the account of the Fund is made by the Custodian in advance of receipt of the securities purchased in the absence of specific written instructions from the Fund to so pay in advance, the Custodian shall be absolutely liable to the Fund for such securities to the same extent as if the securities had been received by the Custodian.

Section 2.8 Appointment of Agents . The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company, which is itself qualified under the 1940 Act to act as a custodian, as its agent to carry out such of the provisions of this Section 2 as the Custodian may from time to time direct; provided, however, that the appointment of any such agent shall not relieve the Custodian of its responsibilities or liabilities hereunder.

Section 2.9 Deposit of Investments in U.S. Securities Systems . The Custodian may deposit and/or maintain domestic investments owned by the Fund in a U.S. Securities System in accordance with applicable Federal Reserve Board and United States Securities and Exchange Commission ( "SEC" ) rules and regulations, if any, subject to the following provisions:

1) The Custodian may keep domestic investments of the Fund in a U.S. Securities System provided that such investments are represented in an account of the Custodian in the U.S. Securities System ( "Account" ) which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers;

2) The records of the Custodian with respect to domestic investments of the Fund which are maintained in a U.S. Securities System shall identify by book-entry those investments belonging to the Fund;

3) The Custodian shall pay for domestic investments purchased for the account of the Fund upon (i) receipt of advice from the U.S. Securities System that such investments have been transferred to the Account, and

(ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Fund. The Custodian shall transfer domestic investments sold for the account of the Fund upon (i) receipt of advice from the U.S. Securities System that payment for such investments has been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Fund. Copies of all advices from the U.S. Securities System of transfers of domestic investments for the account of the Fund shall identify the Fund, be maintained for the Fund by the Custodian and be provided to the Fund at its request. Upon request, the Custodian shall furnish the Fund confirmation of each transfer to or from the account of the Fund in the form of a written advice or notice and shall furnish to the Fund copies of daily transaction sheets reflecting each day`s transactions in the U.S. Securities System for the account of the Fund;

4) The Custodian shall provide the Fund with any report obtained by the Custodian on the U.S. Securities System`s accounting system, internal accounting control and procedures for safeguarding domestic investments deposited in the U.S. Securities System;

5) The Custodian shall have received from the Fund the initial or annual certificate, as the case may be, described in Section 10 hereof; and

6) Anything to the contrary in this Agreement notwithstanding, the Custodian shall be liable to the Fund for any loss or damage to the Fund resulting from use of the U.S. Securities System by reason of any negligence, misfeasance or misconduct of the Custodian or any of its agents or of any of its or their employees, or from failure of the Custodian or any such agent to enforce effectively such rights as it may have against the U.S. Securities System. At the election of the Fund, the Fund shall be entitled to be subrogated to the rights of the Custodian with respect to any claim against the U.S. Securities System or any other person which the Custodian may have as a consequence of any such loss, expense or damage if and to the extent that

the Fund has not been made whole for any such loss, expense or damage.

Section 2.10 Fund Assets Held in the Direct Paper System . The Custodian may deposit and/or maintain investments owned by the Fund in the Direct Paper System subject to the following provisions:

1) No transaction relating to investments in the Direct Paper System will be effected in the absence of Proper Instructions;

2) The Custodian may keep investments of the Fund in the Direct Paper System only if such investments are represented in the Direct Paper System Account, which account shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers;

3) The records of the Custodian with respect to investments of the Fund which are maintained in the Direct Paper System shall identify by book-entry those investments belonging to the Fund;

4) The Custodian shall pay for investments purchased for the account of the Fund upon the making of an entry on the records of the Custodian to reflect such payment and transfer of investments to the account of the Fund. The Custodian shall transfer investments sold for the account of the Fund upon the making of an entry on the records of the Custodian to reflect such transfer and receipt of payment for the account of the Fund;

5) The Custodian shall furnish the Fund confirmation of each transfer to or from the account of the Fund, in the form of a written advice or notice, of Direct Paper on the next business day following such transfer and shall furnish to the Fund copies of daily transaction sheets reflecting each day`s transaction in the Direct Paper System for the account of the Fund; and

6) The Custodian shall provide the Fund with any report on its system of internal accounting control as the Fund may reasonably request from time to time.

Section 2.11 Segregated Account . The Custodian shall, upon receipt of Proper Instructions, establish and maintain a segregated

account or accounts for and on behalf of the Fund, into which account or accounts may be transferred cash and/or investments, including investments maintained in an account by the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the Exchange Act and a member of the NASD (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Fund, (ii) for purposes of segregating cash or government investments in connection with options purchased, sold or written by the Fund or commodity futures contracts or options thereon purchased or sold by the Fund, (iii) for the purposes of compliance by the Fund with the procedures required by 1940 Act Release No. 10666, or any other procedures subsequently required under the 1940 Act relating to the maintenance of segregated accounts by registered investment companies, and (iv) for other purposes, but only, in the case of clause (iv) upon receipt of Proper Instructions specifying (a) the investments to be delivered, (b) setting forth the purpose for which such delivery is to be made, and (c) naming the person or persons to whom delivery of such investments shall be made.

Section 2.12 Ownership Certificates for Tax Purposes . The Custodian shall execute ownership and other certificates and affidavits for all United States federal and state tax purposes in connection with receipt of income or other payments with respect to domestic investments of the Fund held by it hereunder and in connection with transfers of such investments.

Section 2.13 Proxies . The Custodian shall, with respect to the domestic investments held hereunder, cause to be promptly executed by the registered holder of such investments, if the investments are registered otherwise than in the name of the Fund or a nominee of the Fund, all proxies without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Fund such proxies, all proxy soliciting materials received by the Custodian and all notices received relating to such investments.

Section 2.14 Communications Relating to Fund Investments . Subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund all written information (including, without limitation, pendency of calls and maturities of domestic investments and expirations of rights in connection therewith and notices of

exercise of call and put options written by the Fund and the maturity of futures contracts purchased or sold by the Fund) received by the Custodian in connection with the domestic investments being held for the Fund pursuant to this Agreement. With respect to tender or exchange offers, the Custodian shall transmit to the Fund all written information received by the Custodian, any agent appointed pursuant to Section 2.8 hereof, or any sub-custodian appointed pursuant to Section 1 hereof, from issuers of the domestic investments whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Fund desires to take action with respect to any tender offer, exchange offer or any other similar transaction, the Fund shall notify the Custodian at least two (2) New York Stock Exchange business days prior to the time such action must be taken under the terms of the tender, exchange offer or other similar transaction, and it will be the responsibility of the Custodian to timely transmit to the appropriate person(s) such notice. Where the Fund provides the Custodian with less than two (2) New York Stock Exchange business days notice of its desired action, the Custodian shall use its best efforts to timely transmit the Fund`s notice to the appropriate person. It is expressly noted that the parties may agree to alternative procedures with respect to such two (2) New York Stock Exchange business days notice period on a selective and individual basis.

Section 2.15 Reports to Fund by Independent Public Accountants . The Custodian shall provide the Fund, at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding investments, futures contracts and options on futures contracts, including domestic investments deposited and/or maintained in a U.S. Securities System, relating to the services provided by the Custodian under this Agreement. Such reports shall be of sufficient scope and detail, as may reasonably be required by the Fund, to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and if there are no such inadequacies the reports shall so state.

Section 3. Duties of the Custodian with Respect to Certain Property of the Funds Held Outside of the United States

Section 3.1 Definitions. The following capitalized terms shall have the respective following meanings:

"Foreign Securities System" means a clearing agency or a securities depository listed on Schedule A hereto.

"Foreign Sub-Custodian" means a foreign banking institution set forth on Schedule A hereto.

Section 3.2 Holding Securities. The Custodian shall identify on its books as belonging to the Funds the foreign securities held by each Foreign Sub-Custodian or Foreign Securities System. The Custodian may hold foreign securities for all of its customers, including the Funds, with any Foreign Sub-Custodian in an account that is identified as belonging to the Custodian for the benefit of its customers, provided however, that (i) the records of the Custodian with respect to foreign securities of the Funds which are maintained in such account shall identify those securities as belonging to the Funds and (ii) the Custodian shall require that securities so held by the Foreign Sub-Custodian be held separately from any assets of such Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.

Section 3.3 Foreign Securities Systems. Foreign securities shall be maintained in a Foreign Securities System in a designated country only through arrangements implemented by the Foreign Sub-Custodian in such country pursuant to the terms of this Agreement.

Section 3.4 Transactions in Foreign Custody Account.

3.4.1. Delivery of Foreign Securities . The Custodian or a Foreign Sub-Custodian shall release and deliver foreign securities of the Funds held by such Foreign Sub-Custodian, or in a Foreign Securities System account, only upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:

(i) upon the sale of such foreign securities for the Funds in accordance with reasonable market practice in the country where such foreign securities are held or traded, including, without limitation: (A) delivery against expectation of receiving later payment; or (B) in the case of a sale effected through a Foreign Securities System in accordance with the rules governing the operation of the Foreign Securities System;

(ii) in connection with any repurchase agreement related to foreign securities;

(iii) to the depository agent in connection with tender or other similar offers for foreign securities of the Funds;

(iv) to the issuer thereof or its agent when such foreign securities are called, redeemed, retired or otherwise become payable;

(v) to the issuer thereof, or its agent, for transfer into the name of the Custodian (or the name of the respective Foreign Sub-Custodian or of any nominee of the Custodian or such Foreign Sub-Custodian) or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units;

(vi) to brokers, clearing banks or other clearing agents for examination or trade execution in accordance with market custom; provided that in any such case the Foreign Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Foreign Sub- Custodian`s own negligence or willful misconduct;

(vii) for exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement;

(viii) in the case of warrants, rights or similar foreign securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities;

(ix) or delivery as security in connection with any borrowing by the Funds requiring a pledge of assets by the Funds;

(x) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;

(xi) in connection with the lending of foreign securities; and

(xii) for any other proper purpose, but only upon receipt of Proper Instructions specifying the foreign securities to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper Fund purpose, and naming the person or persons to whom delivery of such securities shall be made.

3.4.2. Payment of Fund Monies . Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the respective Foreign Securities System to pay out, monies of a Fund in the following cases only:

(i) upon the purchase of foreign securities for the Fund, unless otherwise directed by Proper Instructions, by (A) delivering money to the seller thereof or to a dealer therefor (or an agent for such seller or dealer) against expectation of receiving later delivery of such foreign securities; or (B) in the case of a purchase effected through a Foreign Securities System, in accordance with the rules governing the operation of such Foreign Securities System;

(ii) in connection with the conversion, exchange or surrender of foreign securities of the Fund;

(iii) for the payment of any expense or liability of the Fund, including but not limited to the following payments: interest, taxes, investment advisory fees, transfer agency fees, fees under this Agreement, legal fees, accounting fees, and other operating expenses;

(iv) for the purchase or sale of foreign exchange or foreign exchange contracts for the Fund, including transactions executed with or through the Custodian or its Foreign Sub-Custodians;

(v) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;

(vii) in connection with the borrowing or lending of foreign securities; and

(viii) for any other proper Fund purpose, but only upon receipt of Proper Instructions specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper Fund purpose, and naming the person or persons to whom such payment is to be made.

3.4.3. Market Conditions. Notwithstanding any provision of this Agreement to the contrary, settlement and payment for foreign securities received for the account of the Funds and delivery of foreign securities maintained for the account of the Funds may be effected in accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs, including, without limitation, delivering foreign securities to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) with the expectation of receiving later payment for such foreign securities from such purchaser or dealer.

Section 3.5 Registration of Foreign Securities. The foreign securities maintained in the custody of a Foreign Custodian (other than bearer securities) shall be registered in the name of the applicable Fund or in the name of the Custodian or in the name of any Foreign Sub-Custodian or in the name of any nominee of the foregoing, and the Fund agrees to hold any such nominee harmless from any liability as a holder of record of such foreign securities. The Custodian or a Foreign Sub-Custodian shall not be obligated to accept securities on behalf of a Fund under the terms of this Agreement unless the form of such securities and the manner in which they are delivered are in accordance with reasonable market practice.

Section 3.6 Bank Accounts. A bank account or bank accounts opened and maintained outside the United States on behalf of a Fund with a Foreign Sub-Custodian shall be subject only to draft or order by the Custodian or such Foreign Sub-Custodian, acting pursuant to the terms of this Agreement to hold cash received by or from or for the account of the Fund.

Section 3.7 Collection of Income. T he Custodian shall use reasonable commercial efforts to collect all income and other payments with respect to the foreign securities held hereunder to which the Funds shall be entitled and shall credit such income, as

collected, to the applicable Fund. In the event that extraordinary measures are required to collect such income, the Fund and the Custodian shall consult as to such measures and as to the compensation and expenses of the Custodian relating to such measures.

Section 3.8 Proxies. W ith respect to the foreign securities held under this Section 3, the Custodian will use reasonable commercial efforts to facilitate the exercise of voting and other shareholder proxy rights, subject always to the laws, regulations and practical constraints that may exist in the country where such securities are issued. The Fund acknowledges that local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of the Fund to exercise shareholder rights.

Section 3.9 Communications Relating to Foreign Securities. The Custodian shall transmit promptly to the Fund written information (including, without limitation, pendency of calls and maturities of foreign securities and expirations of rights in connection therewith) received by the Custodian in connection with the foreign securities being held for the account of the Fund. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Fund written information so received by the Custodian in connection with the foreign securities whose tender or exchange is sought or from the party (or its agents) making the tender or exchange offer.

Section 3.10 Liability of Foreign Sub-Custodians and Foreign Securities Systems. Each agreement pursuant to which the Custodian employs as a Foreign Sub-Custodian shall, to the extent possible, require the Foreign Sub-Custodian to exercise reasonable care in the performance of its duties and, to the extent possible, to indemnify, and hold harmless, the Custodian from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the Foreign Sub-Custodian`s performance of such obligations. At the Fund`s election, the Funds shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Funds have not been made whole for any such loss, damage, cost, expense, liability or claim.

Section 3.11 Tax Law. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on the Fund or the Custodian as custodian of the Funds by

the tax law of the United States or of any state or political subdivision thereof. It shall be the responsibility of the Fund to notify the Custodian of the obligations imposed on the Fund or the Custodian as custodian of the Funds by the tax law of countries set forth on Schedule A hereto, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to assist the Fund with respect to any claim for exemption or refund under the tax law of countries for which the Fund has provided such information.

Section 4 . Payments for Repurchases or Redemptions and Sales of Shares.

From such funds as may be available for the purpose, the Custodian shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares which have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares, the Custodian is authorized upon receipt of, and in accordance with, instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares, the Custodian shall honor checks drawn on the Custodian by a holder of Shares, which checks have been furnished by the Fund to the holder of Shares, when presented to the Custodian in accordance with such written procedures and controls as may be mutually agreed upon from time to time between the Fund and the Custodian.

The Custodian shall receive from the distributor for the Shares or from the Transfer Agent and deposit to the account of the Fund such payments as are received by the distributor or the Transfer Agent, as the case may be, for Shares issued or sold from time to time. The Custodian will notify the Fund and the Transfer Agent of any payments for Shares received by it from time to time.

Section 5 . Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value and Net Income.

The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Board to keep the books of account of the Fund and/or compute the net asset value per Share of the outstanding Shares or, if directed in writing

to do so by the Fund, shall itself keep such books of account and/ or compute such net asset value per Share. If so directed, the Custodian shall also (i) calculate daily the net income of the Fund as described in the Prospectus and shall advise the Fund and the Transfer Agent daily of the total amounts of such net income, and/ or (ii) advise the Transfer Agent periodically of the division of such net income among its various components. The calculations of the net asset value per share and the daily income of the Fund shall be made at the time or times described from time to time in the Prospectus.

Section 6. Proper Instructions.

"Proper Instructions," as such term is used throughout this Agreement, means either (i) a writing, including a facsimile transmission, signed by one or more persons as set forth on, and in accordance with, an "Authorized Persons List," as such term is defined herein (each such instruction a "Written Proper Instruction"), (ii) a "Client Originated Electronic Financial Instruction," as such term is defined in the Data Access Services Addendum hereto, given in accordance with the terms of such Addendum, or (iii) instructions received by the Custodian from a third party in accordance with any three-party agreement which requires a segregated asset account in accordance with Section 2.11.

Each Written Proper Instruction shall set forth a brief description of the type of transaction involved (choosing from among the types of transactions set forth on the Authorized Persons List), including a specific statement of the purpose for which such action is requested, and any modification to a Written Proper Instruction must itself be a Written Proper Instruction and subject to all the provisions herein relating to Written Proper Instructions. The Fund will provide the Custodian with an "Authorized Persons List," which list shall set forth (a) the names of the individuals (each an "Authorized Person") who are authorized by the Board to give Written Proper Instructions with respect to the transactions described therein, and (b) the number of Authorized Persons whose signature or approval, as the case may be, is necessary for the Custodian to be able to act in accordance with such Written Proper Instructions with respect to a particular type of transaction. The Custodian may accept oral instructions or instructions delivered via electronic mail as Proper Instructions if the Custodian reasonably believes such instructions to have been given by an Authorized Person or Persons (as appropriate to the type of transaction); provided, however, that in no event will instructions delivered orally or via electronic mail be considered Proper

Instructions with respect to transactions involving the movement of cash, securities or other assets of a Fund. The Custodian shall be entitled to rely upon instructions given in accordance with an Authorized Persons List until it actually receives written notice from the Board of the applicable Fund to the contrary.

Section 7. Evidence of Authority.

Subject to Section 9 hereof, the Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper reasonably and in good faith believed by it to be genuine and to have been properly executed by or on behalf of the Fund. The Custodian may receive and accept a copy of a vote of the Board, certified by the secretary or an assistant secretary of the applicable Fund, as conclusive evidence (a) of the authority of any person to act in accordance with such vote or (b) of any determination or of any action by the Board described in such vote, and such vote may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary.

Section 8. Actions Permitted without Express Authority.

The Custodian may in its discretion and without express authority from the Fund:

1) make payments to itself or others for minor expenses of handling investments or other similar items relating to its duties under this Agreement, provided that all such payments shall be accounted for to the Fund;

2) surrender investments in temporary form for investments in definitive form;

3) endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments; and

4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the investments and property of the Fund except as otherwise directed by the Board.

Section 9 . Responsibility of Custodian.

The Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. Notwithstanding anything to the contrary herein, the Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Agreement, and it shall be kept indemnified by and shall be without liability to the Fund for any action taken or omitted by it in good faith without negligence. In order for the indemnification provision contained in this Section to apply, it is understood that if in any case the Fund may be asked by the Custodian to indemnify or hold the Custodian harmless, the Fund shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the Custodian will use reasonable care to identify, and notify the Fund promptly concerning, any situation which presents or appears likely to present the probability of such a claim for indemnification. The Fund shall have the option to defend the Custodian against any claim which may be the subject of a claim for indemnification hereunder, and in the event that the Fund so elects, it will notify the Custodian thereof and, thereupon, (i) the Fund shall take over complete defense of the claim and (ii) the Custodian shall initiate no further legal or other expenses with respect to such claim. The Custodian shall in no case confess any claim or make any compromise with respect to any claim for which it will seek indemnity from the Fund except with the Fund's prior written consent. Nothing herein shall be construed to limit any right or cause of action on the part of the Custodian under this Agreement which is independent of any right or cause of action on the part of the Fund. The Custodian shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund or other such counsel as agreed to by the parties) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. The Custodian shall be entitled to rely upon, and shall have no duty of inquiry with respect to, the accuracy of any representation or warranty given to it by the Fund or any duly-authorized employee or agent thereof, and shall be without liability for any action reasonably taken or omitted by it in reliance thereon. Regardless of whether assets held pursuant to this Agreement are maintained in the custody of a foreign banking institution, a foreign securities depository, or a branch or affiliate of a U.S. bank, the Custodian shall not be liable for any loss, damage, cost, expense, liability

or claim resulting from, or caused by, the direction of or authorization by the Fund to maintain custody of any securities or cash or other property of the Fund in a foreign country including, but not limited to, losses resulting from the nationalization or expropriation of assets, the imposition of currency controls or restrictions, acts of war or terrorism or civil unrest, riots, revolutions, work stoppages, natural disasters or other similar events or acts.

Except as may arise from the Custodian`s own negligence or willful misconduct or the negligence or willful misconduct of a sub-custodian or agent, the Custodian shall be without liability to the Fund for any loss, liability, claim or expense resulting from or caused by: (i) events or circumstances beyond the reasonable control of the Custodian or any sub-custodian or Securities System or any agent or nominee of any of the foregoing, including, without limitation, the interruption, suspension or restriction of trading on or the closure of any securities market, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions; (ii) errors by the Fund or its duly- appointed investment advisor in their instructions to the Custodian provided such instructions have been given in accordance with this Agreement; (iii) the insolvency of or acts or omissions by a Securities System; (iv) any delay or failure of any broker, agent or intermediary, central bank or other commercially prevalent payment or clearing system to deliver to the Custodian`s sub- custodian or agent securities purchased or in the remittance or payment made in connection with securities sold; (v) any delay or failure of any company, corporation or other body in charge of registering or transferring securities in the name of the Custodian, the Fund, the Custodian`s sub-custodians, nominees or agents, or any consequential losses arising out of such delay or failure to transfer such securities, including non-receipt of bonus, dividends and rights and other accretions or benefits; (vi) delays or inability to perform its duties due to any disorder in market infrastructure with respect to any particular security or Securities System; and (vii) changes to any provision of any present or future law or regulation or order of the United States, or any state thereof, or of any other country or political subdivision thereof, or any order of any court of competent jurisdiction.

The Custodian shall be liable for the acts or omissions of a foreign banking institution acting as a sub-custodian hereunder to the same extent as set forth with respect to sub-custodians generally in this Agreement.

If the Fund requires the Custodian to take any action with respect to investments, which action involves the payment of money or which action may, in the reasonable opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund being liable for the payment of money or incurring liability of some other form, the Fund, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it.

If the Custodian, or any of its affiliates, subsidiaries or agents, advances cash or investments to the Fund for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement), or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Agreement, except such as may arise from its or its nominee`s own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the Fund shall be security therefor, and should the Fund fail to repay the Custodian promptly the Custodian shall be entitled to utilize available cash and to dispose of the Fund assets to the extent necessary to obtain reimbursement, provided that the Custodian gives the Fund reasonable notice to repay such cash or securities advanced, and provided further that such notice requirement shall not preclude the Custodian`s right to assert and execute on such lien.

Except as may arise from the Custodian`s own negligence or willful misconduct, or the negligence or willful misconduct of a subcustodian or agent appointed by the Custodian, the Fund agrees to indemnify and hold the Custodian harmless from and against any and all costs, expenses, losses, damages, charges, reasonable counsel fees, payments and liabilities which may be asserted against the Custodian (i) acting in accordance with any Proper Instruction, or (ii) for any acts or omissions of Chase Manhattan Bank N.A .

Notwithstanding any provision herein to the contrary, to the extent the Custodian is found to be liable hereunder for any loss, liability, claim, expense or damage, the Custodian shall be liable only for such loss, liability, claim, expense or damage which was reasonably foreseeable.

Section 10. Effective Period, Termination and Amendment.

This Agreement shall become effective as of the date of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto, and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party, such termination to take effect not sooner than thirty (30) days after the date of such delivery or mailing in the case of a termination by the Fund, and not sooner than one hundred eighty (180) days after the date of such delivery or mailing in the case of termination by the Custodian; provided, however that the Custodian shall not act under Section 2.9 hereof in the absence of receipt of an initial certificate of a Fund`s secretary, or an assistant secretary thereof, that the Board has approved the initial use of a particular U.S. Securities System, as required by the 1940 Act or any applicable Rule thereunder, and that the Custodian shall not act under Section 2.10 hereof in the absence of receipt of an initial certificate of a Fund`s secretary, or an assistant secretary thereof, that the Board has approved the initial use of the Direct Paper System; provided further, however, that the Fund shall not amend or terminate this Agreement in contravention of any applicable federal or state regulations, or any provision of the Fund`s articles of incorporation, agreement of trust, by-laws and/or registration statement (as applicable, the "Governing Documents" ); and further provided that the Fund may at any time by action of its Board (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Agreement in the event of the appointment of a conservator or receiver for the Custodian by the United States Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction.

Upon termination of the Agreement, the Fund shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its reasonable costs, expenses and disbursements, provided that the Custodian shall not incur any costs, expenses or disbursements specifically in connection with such termination unless it has received prior approval from the Fund, such approval not to be unreasonably withheld.

Section 11. Successor Custodian.

If a successor custodian shall be appointed by the Board, the Custodian shall, upon termination, deliver to such successor custodian at the offices of the Custodian, duly endorsed and in the form for transfer, all investments and other properties then held by it hereunder, and shall transfer to an account of the successor custodian all of the Fund`s investments held in a Securities System. If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a copy of a vote of the Board, certified by the secretary or an assistant secretary of the applicable Fund, deliver at the offices of the Custodian and transfer such investments, funds and other properties in accordance with such vote. In the event that no written order designating a successor custodian or certified copy of a vote of the Board shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of its own selection and having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $100,000,000, all property held by the Custodian under this Agreement and to transfer to an account of such successor custodian all of the Fund`s investments held in any Securities System; thereafter, such bank or trust company shall be the successor of the Custodian under this Agreement.

In the event that any property held pursuant to this Agreement remains in the possession of the Custodian after the date of termination hereof owing to failure of the Fund to procure the certified copy of the vote referred to or of the Board to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such property, and the provisions of this Agreement relating to the duties and obligations of the Custodian shall remain in full force and effect.

Section 12. General.

Section 12.1 Compensation of Custodian. The Custodian shall be entitled to compensation for its services and reimbursement of its expenses as Custodian as agreed upon from time to time between the Fund and the Custodian.

Section 12.2 Massachusetts Law to Apply. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts.

Section 12.3 Records . The Custodian shall create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of the Fund under the 1940 Act, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the SEC. The Custodian shall, at the Fund`s request, supply the Fund with a tabulation of investments owned by the Fund and held by the Custodian hereunder, and shall, when requested to do so by an officer of the Fund, and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations.

Section 12.4 Opinion of Fund`s Independent Accountant. The Custodian shall take all reasonable action as the Fund may from time to time request to obtain from year to year favorable opinions from the Fund`s independent accountants with respect to its activities hereunder in connection with the preparation of the Fund`s Form N-1A, the preparation of the Fund`s Form N-SAR, the preparation of any other annual reports to the SEC with respect to the Fund, and with respect to any other requirements of the SEC.

Section 12.5 Interpretive and Additional Provisions. In connection with the operation of this Agreement, the Custodian and the Fund may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Governing Documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement.

Section 12.6 Bond. The Custodian shall at all times maintain a bond in such form and amount as is acceptable to the Fund, which shall be issued by a reputable fidelity insurance company authorized to do business in the place where such bond is issued, against larceny and embezzlement, covering each officer and employee of

the Custodian who may, singly or jointly with others, have access to securities or funds of the Fund, either directly or through authority to receive and carry out any certificate instruction, order request, note or other instrument required or permitted by this Agreement. The Custodian agrees that it shall not cancel, terminate or modify such bond insofar as it adversely affects the Fund except after written notice given to the Fund not less than 10 days prior to the effective date of such cancellation, termination or modification. The Custodian shall, upon request, furnish to the Fund a copy of each such bond and each amendment thereto.

Section 12.7 Confidentiality. The Custodian agrees to treat all records and other information relative to the Fund and its prior, present or future shareholders as confidential, and the Custodian, on behalf of itself and its employees, agrees to keep confidential all such information except, after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where the Custodian may be exposed to civil or criminal contempt proceedings for failure to comply when requested to divulge such information by duly constituted authorities, or when so requested by the Fund.

Section 12.8 Exemption from Lien. Except as set forth in Section 9 hereof, the securities and other assets held by the Custodian hereunder shall not be subject to lien or charge of any kind in favor of the Custodian or any person claiming through the Custodian. Nothing herein shall be deemed to deprive the Custodian of its right to invoke any and all remedies available at law or equity to collect amounts due it under this Agreement.

Section 12.9 Assignment . This Agreement may not be assigned by either party without the written consent of the other, except that either party may assign its rights and obligations hereunder to a party controlling, controlled by, or under common control with such party.

Section 12.10 Prior Agreements. Without derogating the rights established thereunder prior to the date of this Agreement, this Agreement supersedes and terminates, as of the date hereof, all prior agreements between the Fund and the Custodian relating to the custody of Fund assets.

S ection 12.11 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts taken together shall constitute but one and the same Agreement.

Section 12.12 Notices . Any notice, instruction or other instrument required to be given hereunder may be delivered in person to the offices of the parties as set forth herein during normal business hours or delivered prepaid registered mail or by telex, cable or telecopy to the parties at the following addresses or such other addresses as may be notified by any party from time to time.

To any Fund: c/o T. Rowe Price Associates, Inc.

100 East Pratt Street

Baltimore, Maryland 21202

Attention: Carmen Deyesu

Telephone: 410-345-6658

Telecopy: 410-685-8827/8830

To the Custodian: State Street Bank and Trust Company

1776 Heritage Drive

North Quincy, Massachusetts 02171, U.S.A.

Attention: Carol C. Ayotte

Telephone: 617-985-6894

Telecopy: 617-537-6321

Such notice, instruction or other instrument shall be deemed to have been served in the case of a registered letter at the expiration of five business days after posting, in the case of cable twenty-four hours after dispatch and, in the case of telex, immediately on dispatch and if delivered outside normal business hours it shall be deemed to have been received at the next time after delivery when normal business hours commence and in the case of cable, telex or telecopy on the business day after the receipt thereof. Evidence that the notice was properly addressed, stamped and put into the post shall be conclusive evidence of posting.

Section 12.13 Entire Agreement. This Agreement (including all schedules, appendices, exhibits and attachments hereto) constitutes the entire Agreement between the parties with respect to the subject matter hereof.

Section 12.14 Headings Not Controlling. Headings used in this Agreement are for reference purposes only and shall not be deemed a part of this Agreement.

S ection 12.15 Survival. All provisions regarding indemnification, confidentiality, warranty, liability and limits thereon shall survive following the expiration or termination of this Agreement.

Section 12.16 Severability. In the event any provision of this Agreement is held illegal, void or unenforceable, the balance shall remain in effect.

Section 12.17 The Parties. All references herein to the "Fund" are to each of the funds listed on Appendix A hereto individually, as if this Agreement were between such individual Fund and the Custodian. In the case of a series fund or trust, all references to the "Fund" are to the individual series or portfolio of such fund or trust, or to such fund or trust on behalf of the individual series or portfolio, as appropriate. Any reference in this Agreement to "the parties" shall mean the Custodian and such other individual Fund as to which the matter pertains. Each Fund hereby represents and warranties that (i) it has the requisite power and authority under applicable laws and its Governing Documents to enter into and perform this Agreement, (ii) all requisite proceedings have been taken to authorize it to enter into and perform this Agreement, and (iii) its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Fund or any law or regulation applicable to it.

Section 12.18 Directors and Trustees . It is understood and is expressly stipulated that neither the holders of Shares nor any member of the Board be personally liable hereunder. Whenever reference is made herein to an action required to be taken by the Board, such action may also be taken by the Board`s executive committee.

Section 12.19 Massachusetts Business Trust . With respect to any Fund which is a party to this Agreement and which is organized as a Massachusetts business trust, the term "Fund" means and refers to the trustees from time to time serving under the applicable trust agreement of such trust, as the same may be amended from time to time (the "Declaration of Trust" ). It is expressly agreed that the obligations of any such Fund hereunder shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of the Fund personally, but bind only the trust property of the Fund as set forth in the applicable Declaration of Trust. In the case of each Fund which is a Massachusetts business trust (in each case, a "Trust" ), the execution and delivery of this Agreement on behalf of the Trust has been authorized by the trustees, and signed by an authorized officer, of the Trust, in each case acting in such capacity and not individually, and neither such authorization by the trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them

individually, but shall bind only the trust property of the Trust as provided in its Declaration of Trust.

Section 12.20 Reproduction of Documents. This Agreement and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

Section 12.21 Shareholder Communications Election. SEC Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, the Custodian needs the Fund to indicate whether it authorizes the Custodian to provide the Fund`s name, address, and share position to requesting companies whose securities the Fund owns. If the Fund tells the Custodian "no", the Custodian will not provide this information to requesting companies. If the Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the Custodian is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For the Fund`s protection, the Rule prohibits the requesting company from using the Fund`s name and address for any purpose other than corporate communications. Please indicate below whether the Fund consents or objects by checking one of the alternatives below.

YES [ ] The Custodian is authorized to release the Fund`s name, address, and share positions.

NO [X] The Custodian is not authorized to release the Fund`s name, address, and share positions.

DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT

Addendum to the Custodian Agreement (as defined below) between each fund listed on Appendix A to the Custodian Agreement, as such Appendix A is amended from time to time (each such fund listed on Appendix A shall be individually referred to herein as the "Fund" ), and State Street Bank and Trust Company ( "State Street" ).

PREAMBLE

WHEREAS, State Street has been appointed as custodian of certain assets of the Fund pursuant to a certain Custodian Agreement (the "Custodian Agreement" ) dated as of January 28, 1998, and amended thereafter from time to time;

WHEREAS, State Street has developed and utilizes proprietary accounting and other systems, including State Street`s proprietary Multicurrency HORIZON R Accounting System, in its role as custodian of the Fund, and maintains certain Fund-related data ( "Fund Data" ) in databases under the control and ownership of State Street (the "Data Access Services" ); and

WHEREAS, State Street makes available to the Fund (and certain of the Fund`s agents as set forth herein) certain Data Access Services solely for the benefit of the Fund, and intends to provide additional services, consistent with the terms and conditions of this Addendum.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the parties agree as follows:

1. SYSTEM AND DATA ACCESS SERVICES

a. System . Subject to the terms and conditions of this Addendum and solely for the purpose of providing access to Fund Data as set forth herein, State Street hereby agrees to provide the Fund, or certain third parties approved by State Street that serve as the Fund`s investment advisors, investment managers or fund accountants (the "Fund Accountants" ) or as the Fund`s independent auditors (the "Auditor" ), with access to State Street`s Multicurrency HORIZON R Accounting System and the other information systems described in Attachment A (collectively, the "System" ) on a remote basis solely on the computer hardware, system software and telecommunication links described in Attachment B (the "Designated

Configuration" ) or on any designated substitute or back-up equipment configuration consented to in writing by State Street, such consent not to be unreasonably withheld.

b. Data Access Services . State Street agrees to make available to the Fund the Data Access Services subject to the terms and conditions of this Addendum and such data access operating standards and procedures as may be issued by State Street from time to time. The Fund shall be able to access the System to (i) originate electronic instructions to State Street in order to (a) effect the transfer or movement of cash or securities held under custody by State Street or (b) transmit accounting or other information (the transactions described in (i)(a) and (i)(b) above are referred to herein as "Client Originated Electronic Financial Instructions" ), and (ii) access data for the purpose of reporting and analysis, which shall all be deemed to be Data Access Services for purposes of this Addendum.

c. Additional Services . State Street may from time to time agree to make available to the Fund additional Systems that are not described in the attachments to this Addendum. In the absence of any other written agreement concerning such additional systems, the term "System" shall include, and this Addendum shall govern, the Fund`s access to and use of any additional System made available by State Street and/or accessed by the Fund.

2. NO USE OF THIRD PARTY SYSTEMS-LEVEL SOFTWARE

State Street and the Fund acknowledge that in connection with the Data Access Services provided under this Addendum, the Fund will have access, through the Data Access Services, to Fund Data and to functions of State Street`s proprietary systems; provided, however that in no event will the Fund have direct access to any third party systems-level software that retrieves data for, stores data from, or otherwise supports the System.

3. LIMITATION ON SCOPE OF USE

a. Designated Equipment; Designated Locations . The System and the Data Access Services shall be used and accessed solely on and through the Designated Configuration at the offices of the Fund or the Fund Accountants in Baltimore, Maryland or Owings Mills, Maryland ( "Designated Locations" ).

b. Designated Configuration; Trained Personnel . State Street and the Fund shall be responsible for supplying, installing

and maintaining the Designated Configuration at the Designated Locations. State Street and the Fund agree that each will engage or retain the services of trained personnel to enable both parties to perform their respective obligations under this Addendum. State Street agrees to use commercially reasonable efforts to maintain the System so that it remains serviceable, provided, however, that State Street does not guarantee or assure uninterrupted remote access use of the System.

c. Scope of Use . The Fund will use the System and the Data Access Services only for the processing of securities transactions, the keeping of books of account for the Fund and accessing data for purposes of reporting and analysis. The Fund shall not, and shall cause its employees and agents not to (i) permit any unauthorized third party to use the System or the Data Access Services, (ii) sell, rent, license or otherwise use the System or the Data Access Services in the operation of a service bureau or for any purpose other than as expressly authorized under this Addendum, (iii) use the System or the Data Access Services for any fund, trust or other investment vehicle), other than as set forth herein, without the prior written consent of State Street, (iv) allow access to the System or the Data Access Services through terminals or any other computer or telecommunications facilities located outside the Designated Locations, (v) allow or cause any information (other than portfolio holdings, valuations of portfolio holdings, and other information reasonably necessary for the management or distribution of the assets of the Fund) transmitted from State Street`s databases, including data from third party sources, available through use of the System or the Data Access Services to be redistributed or retransmitted to another computer, terminal or other device for other than use for or on behalf of the Fund or (vi) modify the System in any way, including without limitation developing any software for or attaching any devices or computer programs to any equipment, system, software or database which forms a part of or is resident on the Designated Configuration.

d. Other Locations . Except in the event of an emergency or of a planned System shutdown, the Fund`s access to services performed by the System or to Data Access Services at the Designated Locations may be transferred to a different location only upon the prior written consent of State Street. In the event of an emergency or System shutdown, the Fund may use any back-up site included in the Designated Configuration or any other back-up site agreed to by State Street, which agreement will not be unreasonably withheld. The Fund may secure from State Street the right to access the System or the Data Access Services through computer and telecommunications

facilities or devices complying with the Designated Configuration at additional locations only upon the prior written consent of State Street and on terms to be mutually agreed upon by the parties.

e. Title . Title and all ownership and proprietary rights to the System, including any enhancements or modifications thereto, whether or not made by State Street, are and shall remain with State Street.

f. No Modification . Without the prior written consent of State Street, the Fund shall not modify, enhance or otherwise create derivative works based upon the System, nor shall the Fund reverse engineer, decompile or otherwise attempt to secure the source code for all or any part of the System.

g. Security Procedures . The Fund shall comply with data access operating standards and procedures and with user identification or other password control requirements and other security procedures as may be issued from time to time by State Street for use of the System on a remote basis and to access the Data Access Services. The Fund shall have access only to the Fund Data and authorized transactions agreed upon from time to time by State Street and, upon notice from State Street, the Fund shall discontinue remote use of the System and access to Data Access Services for any security reasons cited by State Street; provided, that, in such event, State Street shall, for a period not less than 180 days (or such other shorter period specified by the Fund) after such discontinuance, assume responsibility to provide accounting services under the terms of the Custodian Agreement.

h. Inspections . State Street shall have the right to inspect the use of the System and the Data Access Services by the Fund, the Fund Accountants and the Auditor to ensure compliance with this Addendum. The on-site inspections shall be upon prior written notice to Fund, the Fund Accountants and the Auditor and at reasonably convenient times and frequencies so as not to result in an unreasonable disruption of the Fund`s or the Fund Accountants` or the Auditor respective businesses.

4. PROPRIETARY INFORMATION

a. Proprietary Information . The Fund acknowledges and State Street represents that the System and the databases, computer programs, screen formats, report formats, interactive design techniques, documentation and other information made available to the Fund by State Street as part of the Data Access Services and

through the use of the System constitute copyrighted, trade secret, or other proprietary information of substantial value to State Street. Any and all such information provided by State Street to the Fund shall be deemed proprietary and confidential information of State Street (hereinafter "Proprietary Information" ). The Fund agrees that it will hold such Proprietary Information in the strictest confidence and secure and protect it in a manner consistent with its own procedures for the protection of its own confidential information and to take appropriate action by instruction or agreement with its employees or agents who are permitted access to the Proprietary Information to satisfy its obligations hereunder. The Fund further acknowledges that State Street shall not be required to provide the Fund Accountants or the Auditor with access to the System unless it has first received from the Fund Accountants and the Auditor an undertaking with respect to State Street`s Proprietary Information in the form of Attachment C and/or Attachment C-1 to this Addendum. The Fund shall use all commercially reasonable efforts to assist State Street in identifying and preventing any unauthorized use, copying or disclosure of the Proprietary Information or any portions thereof or any of the logic, formats or designs contained therein.

b. Cooperation . Without limitation of the foregoing, the Fund shall advise State Street immediately in the event the Fund learns or has reason to believe that any person to whom the Fund has given access to the Proprietary Information, or any portion thereof, has violated or intends to violate the terms of this Addendum, and the Fund will, at its reasonable expense, cooperate with State Street in seeking injunctive or other equitable relief in the name of the Fund or State Street against any such person.

c. Injunctive Relief . The Fund acknowledges that the disclosure of any Proprietary Information, or of any information which at law or equity ought to remain confidential, will immediately give rise to continuing irreparable injury to State Street inadequately compensable in damages at law. In addition, State Street shall be entitled to obtain immediate injunctive relief against the breach or threatened breach of any of the foregoing undertakings, in addition to any other legal remedies which may be available.

d. Survival . The provisions of this Section 4 shall survive the termination of this Addendum.

5. LIMITATION ON LIABILITY

a. Standard of Care and Limitation on Amount and Time for Bringing Action . State Street shall be held to a standard of reasonable care with respect to all of its duties and obligations under this Addendum. The Fund agrees that any liability of State Street to the Fund or any third party arising with respect to the System or State Street`s provision of Data Access Services under this Data Access Services Addendum shall be limited to the amount paid by the Fund for the preceding 24 months for such services. The foregoing limitation shall relate solely to State Street`s provision of the Data Access Services pursuant to this Addendum and is not intended to limit State Street`s responsibility to perform in accordance with the Custodian Agreement, including its duty to act in accordance with Proper Instructions. In no event shall State Street be liable to the Fund or any other party pursuant to this Addendum for any special, indirect, punitive or consequential damages even if advised of the possibility of such damages. No action, regardless of form, arising out of the terms of this Addendum may be brought by the Fund more than two years after the Fund has knowledge that the cause of action has arisen.

b. Limited Warranties . NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE MADE BY STATE STREET.

c. Third-Party Data . Organizations from which State Street may obtain certain data included in the System or the Data Access Services are solely responsible for the contents of such data, and State Street shall have no liability for claims arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof.

d. Regulatory Requirements . As between State Street and the Fund, the Fund shall be solely responsible for the accuracy of any accounting statements or reports produced using the Data Access Services and the System and the conformity thereof with any requirements of law.

e. Force Majeure . Neither party shall be liable for any costs or damages due to delay or nonperformance under this Data Access Services Addendum arising out of any cause or event beyond such party`s control, including, without limitation, cessation of services hereunder or any damages resulting therefrom to the other party as a result of work stoppage, power or other mechanical

failure, computer virus, natural disaster, governmental action, or communication disruption.

6. INDEMNIFICATION

The Fund agrees to indemnify and hold State Street harmless from any loss, damage or expense including reasonable attorney`s fees, (a "loss") suffered by State Street arising from (i) the negligence or willful misconduct in the use by the Fund of the Data Access Services or the System, including any loss incurred by State Street resulting from a security breach at the Designated Locations or committed by the Fund`s employees or agents or the Fund Accountants or the and Auditor, and (ii) any loss resulting from incorrect Client Originated Electronic Financial Instructions. State Street shall be entitled to rely on the validity and authenticity of Client Originated Electronic Financial Instructions without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established by State Street from time to time.

7. FEES

Fees and charges for the use of the System and the Data Access Services and related payment terms shall be as set forth in the custody fee schedule in effect from time to time between the parties (the "Fee Schedule" ). Any tariffs, duties or taxes imposed or levied by any government or governmental agency by reason of the transactions contemplated by this Addendum, including, without limitation, federal, state and local taxes, use, value added and personal property taxes (other than income, franchise or similar taxes which may be imposed or assessed against State Street) shall be borne by the Fund. Any claimed exemption from such tariffs, duties or taxes shall be supported by proper documentary evidence delivered to State Street.

8. TRAINING, IMPLEMENTATION AND CONVERSION

a. Training . State Street agrees to provide training, at a designated State Street training facility or at the Designated Locations, to the Fund`s personnel in connection with the use of the System on the Designated Configuration. The Fund agrees that it will set aside, during regular business hours or at other times agreed upon by both parties, sufficient time to enable all operators of the System and the Data Access Services, designated by the Fund, to receive the training offered by State Street pursuant to this Addendum.

b. Installation and Conversion . State Street and the Fund shall be responsible for the technical installation and conversion ( "Installation and Conversion" ) of the Designated Configuration. The Fund shall have the following responsibilities in connection with Installation and Conversion of the System:

(i) The Fund shall be solely responsible for the timely acquisition and maintenance of the hardware and software that attach to the Designated Configuration in order to use the Data Access Services at the Designated Locations, and

(ii) State Street and the Fund each agree that they will assign qualified personnel to actively participate during the Installation and Conversion phase of the System implementation to enable both parties to perform their respective obligations under this Addendum.

9. SUPPORT

During the term of this Addendum, State Street agrees to provide the support services set out in Attachment D to this Addendum.

10. TERM

a. Term . This Addendum shall become effective on the date of its execution by State Street and shall remain in full force and effect until terminated as herein provided.

b. Termination . Either party may terminate this Addendum (i) for any reason by giving the other party at least one-hundred and eighty (180) days` prior written notice in the case of notice of termination by State Street to the Fund or thirty (30) days` notice in the case of notice from the Fund to State Street of termination; or (ii) immediately for failure of the other party to comply with any material term and condition of the Addendum by giving the other party written notice of termination. In the event the Fund shall cease doing business, shall become subject to proceedings under the bankruptcy laws (other than a petition for reorganization or similar proceeding) or shall be adjudicated bankrupt, this Addendum and the rights granted hereunder shall, at the option of State Street, immediately terminate with notice to the Fund. This Addendum shall in any event terminate as to any Fund within ninety (90) days after the termination of the Custodian Agreement.

c. Termination of the Right to Use . Upon termination of this Addendum for any reason, any right to use the System and access to the Data Access Services shall terminate and the Fund shall immediately cease use of the System and the Data Access Services. Immediately upon termination of this Addendum for any reason, the Fund shall return to State Street all copies of documentation and other Proprietary Information in its possession; provided, however, that in the event that either party terminates this Addendum or the Custodian Agreement for any reason other than the Fund`s breach, State Street shall provide the Data Access Services for a period of time and at a price to be agreed upon in writing by the parties.

11. MISCELLANEOUS

a. Year 2000 . State Street will take all steps necessary to ensure that its products (and those of its third-party suppliers) reflect the available state of the art technology to offer products that are Year 2000 compliant, including, but not limited to, century recognition of dates, calculations that correctly compute same century and multi-century formulas and date values, and interface values that reflect the date issues arising between now and the next one-hundred years. If any changes are required, State Street will make the changes to its products at no cost to the Fund and in a commercially reasonable time frame and will require third- party suppliers to do likewise.

b. Assignment; Successors . This Addendum and the rights and obligations of the Fund and State Street hereunder shall not be assigned by either party without the prior written consent of the other party, except that State Street may assign this Addendum to a successor of all or a substantial portion of its business, or to a party controlling, controlled by, or under common control with State Street.

c. Survival . All provisions regarding indemnification, warranty, liability and limits thereon, and confidentiality and/or protection of proprietary rights and trade secrets shall survive the termination of this Addendum.

d. Entire Agreement . This Addendum and the attachments hereto constitute the entire understanding of the parties hereto with respect to the Data Access Services and the use of the System and supersedes any and all prior or contemporaneous representations or agreements, whether oral or written, between the parties as such may relate to the Data Access Services or the System, and cannot

be modified or altered except in a writing duly executed by the parties. This Addendum is not intended to supersede or modify the duties and liabilities of the parties hereto under the Custodian Agreement or any other agreement between the parties hereto except to the extent that any such agreement specifically refers to the Data Access Services or the System. No single waiver or any right hereunder shall be deemed to be a continuing waiver.

e. Severability . If any provision or provisions of this Addendum shall be held to be invalid, unlawful, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired.

f. Governing Law . This Addendum shall be interpreted and construed in accordance with the internal laws of The Commonwealth of Massachusetts without regard to the conflict of laws provisions thereof.

ATTACHMENT A

Multicurrency HORIZON R Accounting System

System Product Description

I. The Multicurrency HORIZON R Accounting System is designed to provide lot level portfolio and general ledger accounting for SEC and ERISA type requirements and includes the following services: 1) recording of general ledger entries; 2) calculation of daily income and expense; 3) reconciliation of daily activity with the trial balance, and 4) appropriate automated feeding mechanisms to (i) domestic and international settlement systems, (ii) daily, weekly and monthly evaluation services, (iii) portfolio performance and analytic services, (iv) customer`s internal computing systems and (v) various State Street provided information services products.

II. GlobalQuest R GlobalQuest R is designed to provide customer access to the following information maintained on The Multicurrency HORIZON R Accounting System: 1) cash transactions and balances; 2) purchases and sales; 3) income receivables; 4) tax refund; 5) daily priced positions; 6) open trades; 7) settlement status; 8) foreign exchange transactions; 9) trade history; and 10) daily, weekly and monthly evaluation services.

III. HORIZON R Gateway. HORIZON R Gateway provides customers with the ability to (i) generate reports using information maintained on the Multicurrency HORIZON R Accounting System which may be viewed or printed at the customer`s location; (ii) extract and download data from the Multicurrency HORIZONR Accounting System; and (iii) access previous day and historical data. The following information which may be accessed for these purposes: 1) holdings; 2) holdings pricing; 3) transactions, 4) open trades; 5) income; 6) general ledger and 7) cash.

IV. State Street Interchange . State Street Interchange is an open information delivery architecture wherein proprietary communication products, data formats and workstation tools are replaced by industry standards and is designed to enable the connection of State Street`s network to customer networks, thereby facilitating the sharing of information.

ATTACHMENT C

Undertaking

(Fund Accountants)

The undersigned understands that in the course of its employment as Fund Accountant to each fund listed on Appendix A (as amended from time to time) to that certain Custodian Agreement dated as of January 28, 1998 (the "Fund" ), it will have access to State Street Bank and Trust Company`s Multicurrency HORIZON Accounting System and other information systems (collectively, the "System" ).

The undersigned acknowledges that the System and the databases, computer programs, screen formats, report formats, interactive design techniques, documentation, and other information made available to the Undersigned by State Street Bank and Trust Company ( "State Street" ) as part of the Data Access Services provided to the Fund and through the use of the System constitute copyrighted, trade secret, or other proprietary information of substantial value to State Street. Any and all such information provided by State Street to the Undersigned shall be deemed proprietary and confidential information of State Street (hereinafter "Proprietary Information" ). The undersigned agrees that it will hold such Proprietary Information in confidence and secure and protect it in a manner consistent with its own procedures for the protection of its own confidential information and to take appropriate action by instruction or agreement with its employees who are permitted access to the Proprietary Information to satisfy its obligations hereunder.

The undersigned will not attempt to intercept data, gain access to data in transmission, or attempt entry into any system or files for which it is not authorized. It will not intentionally adversely affect the integrity of the System through the introduction of unauthorized code or data, or through unauthorized deletion.

Upon notice by State Street for any reason, any right to use the System and access to the Data Access Services shall terminate and the Undersigned shall immediately cease use of the System and the Data Access Services. Immediately upon notice by State Street for any reason, the undersigned shall return to State Street all copies of documentation and other Proprietary Information in its possession.

[The Fund Accountants]

By: ______________________________

Title: ______________________________

Date: ______________________________

ATTACHMENT C-1

Undertaking

(Auditor)

The undersigned understands that in the course of its employment as Auditor to each fund listed on Appendix A (as amended from time to time) to that certain Custodian Agreement dated as of January 28, 1998 (the "Fund" ) it will have access to State Street Bank and Trust Company`s Multicurrency HORIZON Accounting System and other information systems (collectively, the "System" ).

[The Auditor]

By: ______________________________

Title: ______________________________

Date: ______________________________

ATTACHMENT D

Support

During the term of this Addendum, State Street agrees to provide the following on-going support services:

a. Telephone Support. The Fund Designated Persons may contact State Street`s HORIZON R Help Desk and Fund Assistance Center between the hours of 8 a.m. and 6 p.m. (Eastern time) on all business days for the purpose of obtaining answers to questions about the use of the System, or to report apparent problems with the System. From time to time, the Fund shall provide to State Street a list of persons who shall be permitted to contact State Street for assistance (such persons being referred to as the "Fund Designated Persons" ).

b. Technical Support . State Street will provide technical support to assist the Fund in using the System and the Data Access Services. The total amount of technical support provided by State Street shall not exceed 10 resource days per year. State Street shall provide such additional technical support as is expressly set forth in the fee schedule in effect from time to time between the parties (the "Fee Schedule" ). Technical support, including during installation and testing, is subject to the fees and other terms set forth in the Fee Schedule.

c. Maintenance Support . State Street shall use commercially reasonable efforts to correct system functions that do not work according to the System Product Description as set forth on Attachment A in priority order in the next scheduled delivery release or otherwise as soon as is practicable.

d. System Enhancements . State Street will provide to the Fund any enhancements to the System developed by State Street and made a part of the System; provided that State Street offer the Fund reasonable training on the enhancement. Charges for system enhancements shall be as provided in the Fee Schedule. State Street retains the right to charge for related systems or products that may be developed and separately made available for use other than through the System.

e. Custom Modifications . In the event the Fund desires custom modifications in connection with its use of the System, the Fund shall make a written request to State Street providing specifications for the desired modification. Any custom

modifications may be undertaken by State Street in its sole discretion in accordance with the Fee Schedule.

f. Limitation on Support . State Street shall have no obligation to support the Fund`s use of the System: (1) for use on any computer equipment or telecommunication facilities which does not conform to the Designated Configuration or (ii) in the event the Fund has modified the System in breach of this Addendum.

In Witness Whereof , each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date and year first written above.

T. Rowe Price Growth Stock Fund, Inc.

T. Rowe Price New Horizons Fund, Inc.

T. Rowe Price New Era Fund, Inc.

T. Rowe Price New Income Fund, Inc.

T. Rowe Price Prime Reserve Fund, Inc.

T. Rowe Price International Funds, Inc.

T. Rowe Price International Bond Fund

T. Rowe Price International Stock Fund

T. Rowe Price International Discovery Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Government Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price Short-Term Bond Fund, Inc.

T. Rowe Price Tax-Free Income Fund, Inc.

T. Rowe Price Tax-Exempt Money Fund, Inc.

T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.

T. Rowe Price High Yield Fund, Inc.

T. Rowe Price Tax-Free High Yield Fund, Inc.

T. Rowe Price New America Growth Fund

T. Rowe Price Equity Income Fund

T. Rowe Price GNMA Fund

T. Rowe Price Capital Appreciation Fund

T. Rowe Price State Tax-Free Income Trust

Maryland Tax-Free Bond Fund

Maryland Short-Term Tax-Free Bond Fund

New York Tax-Free Bond Fund

New York Tax-Free Money Fund

Virginia Tax-Free Bond Fund

Virginia Short-Term Tax-Free Bond Fund

New Jersey Tax-Free Bond Fund

Georgia Tax-Free Bond Fund

Florida Insured Intermediate Tax-Free Fund

T. Rowe Price California Tax-Free Income Trust

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. Rowe Price Science & Technology Fund, Inc.

T. Rowe Price Small-Cap Value Fund, Inc.

Institutional International Funds, Inc.

Foreign Equity Fund

T. Rowe Price U.S. Treasury Funds, Inc.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. Rowe Price Index Trust, Inc.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

T. Rowe Price Spectrum Fund, Inc.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. Rowe Price Balanced Fund, Inc.

T. Rowe Price Short-Term U.S. Government Fund, Inc.

T. Rowe Price Mid-Cap Growth Fund, Inc.

T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Blue Chip Growth Fund, Inc.

T. Rowe Price Summit Funds, Inc.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Summit GNMA Fund

T. Rowe Price Summit Municipal Funds, Inc.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. Rowe Price Equity Series, Inc.

T. Rowe Price Equity Income Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced
Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price International Series, Inc.

T. Rowe Price International Stock Portfolio

T. Rowe Price Fixed Income Series, Inc.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. Rowe Price Personal Strategy Funds, Inc.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. Rowe Price Value Fund, Inc.

T. Rowe Price Capital Opportunity Fund, Inc.

T. Rowe Price Corporate Income Fund, Inc.

T. Rowe Price Health Sciences Fund, Inc.

T. Rowe Price Mid-Cap Value Fund, Inc.

Institutional Equity Funds, Inc.

Mid-Cap Equity Growth Fund

T. Rowe Price Diversified Small-Cap Growth Fund, Inc.

T. Rowe Price Financial Services Fund, Inc.

T. Rowe Price Real Estate Fund, Inc.

T. Rowe Price Small Cap Stock Fund, Inc.

T. Rowe Price Small Cap Stock Fund

T. Rowe Price Media & Telecommunications Fund, Inc.

T. Rowe Price Tax Efficient Balanced Fund, Inc.

Reserve Investment Funds, Inc.

Government Reserve Investment Fund

Reserve Investment Fund

Signature attested to: Executed on Behalf of each Fund:

/s/Suzanne E. Fraunhoffer /s/Carmen Deyesu

By: _____________________ By: ____________________

Name: Suzanne E. Fraunhoffer Name: Carmen Deyesu

Title: Legal Assistant Title: Treasurer for

each of the foregoing

Signature Attested to: State Street Bank and Trust Company

/s/Glenn Ciotti /s/Ronald E. Logue

By: _____________________ By: ____________________

Name: Glenn Ciotti Name: Ronald E. Logue

Title: VP & Assoc. Counsel Title: Executive Vice

President

Schedule A

Country Subcustodian Central Depository

United Kingdom State Street Bank None;

and Trust Company The Bank of England,

The Central Gilts Office (CGO);

The Central Moneymarkets Office (CMO)

Euroclear (The Euroclear System)/ State Street London Limited

appendix A

T. Rowe Price Growth Stock Fund, Inc.

T. Rowe Price New Horizons Fund, Inc.

T. Rowe Price New Era Fund, Inc.

T. Rowe Price New Income Fund, Inc.

T. Rowe Price Prime Reserve Fund, Inc.

T. Rowe Price International Funds, Inc.

T. Rowe Price International Bond Fund

T. Rowe Price International Stock Fund

T. Rowe Price International Discovery Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Government Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price Short-Term Bond Fund, Inc.

T. Rowe Price Tax-Free Income Fund, Inc.

T. Rowe Price Tax-Exempt Money Fund, Inc.

T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.

T. Rowe Price High Yield Fund, Inc.

T. Rowe Price Tax-Free High Yield Fund, Inc.

T. Rowe Price New America Growth Fund

T. Rowe Price Equity Income Fund

T. Rowe Price GNMA Fund

T. Rowe Price Capital Appreciation Fund

T. Rowe Price State Tax-Free Income Trust

Maryland Tax-Free Bond Fund

Maryland Short-Term Tax-Free Bond Fund

New York Tax-Free Bond Fund

New York Tax-Free Money Fund

Virginia Tax-Free Bond Fund

Virginia Short-Term Tax-Free Bond Fund

New Jersey Tax-Free Bond Fund

Georgia Tax-Free Bond Fund

Florida Insured Intermediate Tax-Free Fund

T. Rowe Price California Tax-Free Income Trust

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. Rowe Price Science & Technology Fund, Inc.

T. Rowe Price Small-Cap Value Fund, Inc.

Institutional International Funds, Inc.

Foreign Equity Fund

T. Rowe Price U.S. Treasury Funds, Inc.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. Rowe Price Index Trust, Inc.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

T. Rowe Price Spectrum Fund, Inc.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. Rowe Price Balanced Fund, Inc.

T. Rowe Price Short-Term U.S. Government Fund, Inc.

T. Rowe Price Mid-Cap Growth Fund, Inc.

T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Blue Chip Growth Fund, Inc.

T. Rowe Price Summit Funds, Inc.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Summit GNMA Fund

T. Rowe Price Summit Municipal Funds, Inc.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. Rowe Price Equity Series, Inc.

T. Rowe Price Equity Income Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price International Series, Inc.

T. Rowe Price International Stock Portfolio

T. Rowe Price Fixed Income Series, Inc.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. Rowe Price Personal Strategy Funds, Inc.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. Rowe Price Value Fund, Inc.

T. Rowe Price Capital Opportunity Fund, Inc.

T. Rowe Price Corporate Income Fund, Inc.

T. Rowe Price Health Sciences Fund, Inc.

T. Rowe Price Mid-Cap Value Fund, Inc.

Institutional Equity Funds, Inc.

Mid-Cap Equity Growth Fund

T. Rowe Price Diversified Small-Cap Growth Fund, Inc.

T. Rowe Price Financial Services Fund, Inc.

T. Rowe Price Real Estate Fund, Inc.

T. Rowe Price Small Cap Stock Fund, Inc.

T. Rowe Price Small Cap Stock Fund

T. Rowe Price Media & Telecommunications Fund, Inc.

T. Rowe Price Tax Efficient Balanced Fund, Inc.

Reserve Investment Funds, Inc.

Government Reserve Investment Fund

Reserve Investment Fund

AMENDMENT NO. 1

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of November 4, 1998, by adding thereto T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price International Growth & Income Fund.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Equity Income Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.

Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.

Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.

Reserve Investment Fund

Government Reserve Investment Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Bond Fund

Maryland Short-Term Tax-Free Bond Fund

New York Tax-Free Bond Fund

New York Tax-Free Money Fund

New Jersey Tax-Free Bond Fund

Virginia Tax-Free Bond Fund

Virginia Short-Term Tax-Free Bond Fund

Florida Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT BALANCED FUND, INC.

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

/s/Henry H. Hopkins

By: _____________________________________

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

/s/Stephen F. Brown

By: _____________________________________

Stephen F. Brown, Vice President

AMENDMENT NO. 2

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, as amended November 4, 1998 between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of April 21, 1999, by adding thereto T. Rowe Price Tax-Efficient Funds, Inc., on behalf of T. Rowe Price Tax-Efficient Balanced Fund and T. Rowe Price Tax-Efficient Growth Fund.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Equity Income Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.

Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.

Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.

Reserve Investment Fund

Government Reserve Investment Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Bond Fund

Maryland Short-Term Tax-Free Bond Fund

New York Tax-Free Bond Fund

New York Tax-Free Money Fund

New Jersey Tax-Free Bond Fund

Virginia Tax-Free Bond Fund

Virginia Short-Term Tax-Free Bond Fund

Florida Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.

T. Rowe Price Tax-Efficient Balanced Fund

T. Rowe Price Tax-Efficient Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

/s/ Henry H. Hopkins

By: _____________________________________

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

/s/ Ronald E. Logue

By: _____________________________________

Ronald E. Logue, Vice Chairman

AMENDMENT NO. 3

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, as amended November 4, 1998 and April 21, 1999 between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of February 9, 2000, by adding thereto Institutional Equity Funds, Inc., on behalf of Institutional Large- Cap Value Fund and Institutional Small-Cap Stock Fund.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Equity Income Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.

Institutional Large-Cap Value Fund

Institutional Small-Cap Stock Fund

Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.

Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.

Reserve Investment Fund

Government Reserve Investment Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Bond Fund

Maryland Short-Term Tax-Free Bond Fund

New York Tax-Free Bond Fund

New York Tax-Free Money Fund

New Jersey Tax-Free Bond Fund

Virginia Tax-Free Bond Fund

Virginia Short-Term Tax-Free Bond Fund

Florida Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.

T. Rowe Price Tax-Efficient Balanced Fund

T. Rowe Price Tax-Efficient Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

/s/ Henry H. Hopkins

By: _____________________________________

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

/s/ Ronald E. Logue

By: _____________________________________

Ronald E. Logue, Vice Chairman

AMENDMENT NO. 4

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, as amended November 4, 1998, April 21, 1999, and February 9, 2000 between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of April 19, 2000, by adding thereto T. Rowe Price International Funds, Inc., on behalf of T. Rowe Price Emerging Europe & Mediterranean Fund.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Equity Income Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.

Institutional Large-Cap Value Fund

Institutional Small-Cap Stock Fund

Institutional Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.

Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. Rowe Price Emerging Europe & Mediterranean Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.

Reserve Investment Fund

Government Reserve Investment Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Bond Fund

Maryland Short-Term Tax-Free Bond Fund

New York Tax-Free Bond Fund

New York Tax-Free Money Fund

New Jersey Tax-Free Bond Fund

Virginia Tax-Free Bond Fund

Virginia Short-Term Tax-Free Bond Fund

Florida Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.

T. Rowe Price Tax-Efficient Balanced Fund

T. Rowe Price Tax-Efficient Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

/s/ Henry H. Hopkins

By: _____________________________________

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

/s/ Ronald E. Logue

By: _____________________________________

Ronald E. Logue, Vice Chairman

AMENDMENT NO. 5

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, as amended November 4, 1998, April 21, 1999, February 9, 2000, and April 19, 2000 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, 2000, by adding thereto T. Rowe Price Developing Technologies Fund, Inc., T. Rowe Price Global Technology Fund, Inc., and T. Rowe Price U.S. Bond Index Fund, Inc.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DEVELOPING TECHNOLOGIES FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Equity Income Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC.

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.

Institutional Large-Cap Value Fund

Institutional Small-Cap Stock Fund

Institutional Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.

Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. Rowe Price Emerging Europe & Mediterranean Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.

Reserve Investment Fund

Government Reserve Investment Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Bond Fund

Maryland Short-Term Tax-Free Bond Fund

New York Tax-Free Bond Fund

New York Tax-Free Money Fund

New Jersey Tax-Free Bond Fund

Virginia Tax-Free Bond Fund

Virginia Short-Term Tax-Free Bond Fund

Florida Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.

T. Rowe Price Tax-Efficient Balanced Fund

T. Rowe Price Tax-Efficient Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. BOND INDEX FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

/s/ Henry H. Hopkins

By: _____________________________________

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

/s/ Ronald E. Logue

By: _____________________________________

Ronald E. Logue, Vice Chairman

AMENDMENT NO. 6

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, as amended November 4, 1998, April 21, 1999, February 9, 2000, April 19, 2000 and July 18, 2000 between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of October 25, 2000, by adding thereto T. Rowe Price International Index Fund, Inc., on behalf of T. Rowe Price International Equity Index Fund; T. Rowe Price Tax-Efficient Funds, Inc., on behalf of T. Rowe Price Tax-Efficient Multi-Cap Growth Fund; and T. Rowe Price Equity Series, Inc., on behalf of T. Rowe Price Blue Chip Growth Portfolio, T. Rowe Price Equity Index 500 Portfolio, and T. Rowe Price Health Sciences Portfolio.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DEVELOPING TECHNOLOGIES FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Blue Chip Growth Portfolio

T. Rowe Price Equity Income Portfolio

T. Rowe Price Equity Index 500 Portfolio

T. Rowe Price Health Sciences Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC.

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.

Institutional Large-Cap Value Fund

Institutional Small-Cap Stock Fund

Institutional Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.

Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. Rowe Price Emerging Europe & Mediterranean Fund

T. ROWE PRICE INTERNATIONAL INDEX FUND, INC.

T. Rowe Price International Equity Index Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.

Reserve Investment Fund

Government Reserve Investment Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Bond Fund

Maryland Short-Term Tax-Free Bond Fund

New York Tax-Free Bond Fund

New York Tax-Free Money Fund

New Jersey Tax-Free Bond Fund

Virginia Tax-Free Bond Fund

Virginia Short-Term Tax-Free Bond Fund

Florida Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.

T. Rowe Price Tax-Efficient Balanced Fund

T. Rowe Price Tax-Efficient Growth Fund

T. Rowe Price Tax-Efficient Multi-Cap Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. BOND INDEX FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

/s/ Henry H. Hopkins

By: _____________________________________

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

/s/ Ronald E. Logue

By: _____________________________________

Ronald E. Logue, Vice Chairman

AMENDMENT NO. 7

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, as amended November 4, 1998, April 21, 1999, February 9, 2000, April 19, 2000, July 18, 2000, and October 25, 2000 between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of February 7, 2001, by adding thereto T. Rowe Price State Tax-Free Income Trust, on behalf of Maryland Tax-Free Money Fund.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DEVELOPING TECHNOLOGIES FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Blue Chip Growth Portfolio

T. Rowe Price Equity Income Portfolio

T. Rowe Price Equity Index 500 Portfolio

T. Rowe Price Health Sciences Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC.

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.

Institutional Large-Cap Value Fund

Institutional Small-Cap Stock Fund

Institutional Mid-Cap Equity Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.

Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. Rowe Price Emerging Europe & Mediterranean Fund

T. ROWE PRICE INTERNATIONAL INDEX FUND, INC.

T. Rowe Price International Equity Index Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

RESERVE INVESTMENT FUNDS, INC.

Reserve Investment Fund

Government Reserve Investment Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SHORT-TERM U.S. GOVERNMENT FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Money Fund

Maryland Tax-Free Bond Fund

Maryland Short-Term Tax-Free Bond Fund

New York Tax-Free Bond Fund

New York Tax-Free Money Fund

New Jersey Tax-Free Bond Fund

Virginia Tax-Free Bond Fund

Virginia Short-Term Tax-Free Bond Fund

Florida Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.

T. Rowe Price Tax-Efficient Balanced Fund

T. Rowe Price Tax-Efficient Growth Fund

T. Rowe Price Tax-Efficient Multi-Cap Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. BOND INDEX FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

/s/ Henry H. Hopkins

By: _____________________________________

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

/s/ Ronald E. Logue

By: _____________________________________

Ronald E. Logue, Vice Chairman

AMENDMENT NO. 8

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, as amended November 4, 1998, April 21, 1999, February 9, 2000, April 19, 2000, July 18, 2000, October 25, 2000, and February 7, 2001 between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of July 24, 2001, by adding thereto Institutional Equity Funds, Inc., on behalf of Institutional Large-Cap Growth Fund.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DEVELOPING TECHNOLOGIES FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Blue Chip Growth Portfolio

T. Rowe Price Equity Income Portfolio

T. Rowe Price Equity Index 500 Portfolio

T. Rowe Price Health Sciences Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC.

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

INSTITUTIONAL EQUITY FUNDS, INC.

Institutional Large-Cap Value Fund

Institutional Small-Cap Stock Fund

Institutional Mid-Cap Equity Growth Fund

Institutional Large-Cap Growth Fund

INSTITUTIONAL INTERNATIONAL FUNDS, INC.

Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. Rowe Price Emerging Europe & Mediterranean Fund

T. ROWE PRICE INTERNATIONAL INDEX FUND, INC.

T. Rowe Price International Equity Index Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

T. ROWE PRICE RESERVE INVESTMENT FUNDS, INC.

T. Rowe Price Reserve Investment Fund

T. Rowe Price Government Reserve Investment Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Money Fund

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 Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.

T. Rowe Price Tax-Efficient Balanced Fund

T. Rowe Price Tax-Efficient Growth Fund

T. Rowe Price Tax-Efficient Multi-Cap Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. BOND INDEX FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

By: /s/Henry H. Hopkins

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

By: /s/Joseph L. Hooley

Joseph L. Hooley

Executive Vice President

AMENDMENT NO. 9

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, as amended November 4, 1998, April 21, 1999, February 9, 2000, April 19, 2000, July 18, 2000, October 25, 2000, February 7, 2001, and July 24, 2001 between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of April 24, 2002, by adding thereto T. Rowe Price Institutional Income Funds, Inc., on behalf of T. Rowe Price Institutional High Yield Fund.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DEVELOPING TECHNOLOGIES FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Blue Chip Growth Portfolio

T. Rowe Price Equity Income Portfolio

T. Rowe Price Equity Index 500 Portfolio

T. Rowe Price Health Sciences Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC.

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

T. ROWE PRICE INSTITUTIONAL EQUITY FUNDS, INC.

T. Rowe Price Institutional Large-Cap Value Fund

T. Rowe Price Institutional Small-Cap Stock Fund

T. Rowe Price Institutional Mid-Cap Equity Growth Fund

T. Rowe Price Institutional Large-Cap Growth Fund

T. ROWE PRICE INSTITUTIONAL INCOME FUNDS, INC.

T. Rowe Price Institutional High Yield Fund

T. ROWE PRICE INSTITUTIONAL INTERNATIONAL FUNDS, INC.

T. Rowe Price Institutional Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. Rowe Price Emerging Europe & Mediterranean Fund

T. ROWE PRICE INTERNATIONAL INDEX FUND, INC.

T. Rowe Price International Equity Index Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

T. ROWE PRICE RESERVE INVESTMENT FUNDS, INC.

T. Rowe Price Reserve Investment Fund

T. Rowe Price Government Reserve Investment Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Money Fund

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 Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.

T. Rowe Price Tax-Efficient Balanced Fund

T. Rowe Price Tax-Efficient Growth Fund

T. Rowe Price Tax-Efficient Multi-Cap Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. BOND INDEX FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

By: /s/Henry H. Hopkins

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

/s/Ronald E. Logue

Ronald E. Logue, Vice Chairman

AMENDMENT NO. 10

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

The Custodian Contract of January 28, 1998, as amended November 4, 1998, April 21, 1999, February 9, 2000, April 19, 2000, July 18, 2000, October 25, 2000, February 7, 2001, July 24, 2001, and April 24, 2002 between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of July 24, 2002, by adding thereto T. Rowe Price Inflation Protected Bond Fund, Inc.; T. Rowe Price Institutional International Funds, Inc., on behalf of T. Rowe Price Institutional Emerging Markets Equity Fund; T. Rowe Price Retirement Funds, Inc., on behalf of T. Rowe Price Retirement 2010 Fund, T. Rowe Price Retirement 2020 Fund, T. Rowe Price Retirement 2030 Fund, and T. Rowe Price Retirement 2040 Fund.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DEVELOPING TECHNOLOGIES FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Blue Chip Growth Portfolio

T. Rowe Price Equity Income Portfolio

T. Rowe Price Equity Index 500 Portfolio

T. Rowe Price Health Sciences Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC.

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

T. ROWE PRICE INFLATION PROTECTED BOND FUND, INC.

T. ROWE PRICE INSTITUTIONAL EQUITY FUNDS, INC.

T. Rowe Price Institutional Large-Cap Value Fund

T. Rowe Price Institutional Small-Cap Stock Fund

T. Rowe Price Institutional Mid-Cap Equity Growth Fund

T. Rowe Price Institutional Large-Cap Growth Fund

T. ROWE PRICE INSTITUTIONAL INCOME FUNDS, INC.

T. Rowe Price Institutional High Yield Fund

T. ROWE PRICE INSTITUTIONAL INTERNATIONAL FUNDS, INC.

T. Rowe Price Institutional Emerging Markets Equity Fund

T. Rowe Price Institutional Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. Rowe Price Emerging Europe & Mediterranean Fund

T. ROWE PRICE INTERNATIONAL INDEX FUND, INC.

T. Rowe Price International Equity Index Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

T. ROWE PRICE RESERVE INVESTMENT FUNDS, INC.

T. Rowe Price Reserve Investment Fund

T. Rowe Price Government Reserve Investment Fund

T. ROWE PRICE RETIREMENT FUNDS, INC.

T. Rowe Price Retirement 2010 Fund

T. Rowe Price Retirement 2020 Fund

T. Rowe Price Retirement 2030 Fund

T. Rowe Price Retirement 2040 Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Money Fund

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 Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.

T. Rowe Price Tax-Efficient Balanced Fund

T. Rowe Price Tax-Efficient Growth Fund

T. Rowe Price Tax-Efficient Multi-Cap Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. BOND INDEX FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

By: /s/Henry H. Hopkins

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

By: /s/Joseph L. Hooley

Joseph L. Hooley

Executive Vice President

AMENDMENT NO. 11

TO CUSTODIAN CONTRACT BETWEEN

STATE STREET BANK AND TRUST COMPANY AND

THE T. ROWE PRICE FUNDS

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund

California Tax-Free Money Fund

T. ROWE PRICE CAPITAL APPRECIATION FUND

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.

T. ROWE PRICE CORPORATE INCOME FUND, INC.

T. ROWE PRICE DEVELOPING TECHNOLOGIES FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. ROWE PRICE EQUITY SERIES, INC.

T. Rowe Price Blue Chip Growth Portfolio

T. Rowe Price Equity Income Portfolio

T. Rowe Price Equity Index 500 Portfolio

T. Rowe Price Health Sciences Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

T. ROWE PRICE FIXED INCOME SERIES, INC.

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Prime Reserve Portfolio

T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC.

T. ROWE PRICE GNMA FUND

T. ROWE PRICE GROWTH & INCOME FUND, INC.

T. ROWE PRICE GROWTH STOCK FUND, INC.

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

T. ROWE PRICE INFLATION PROTECTED BOND FUND, INC.

T. ROWE PRICE INSTITUTIONAL EQUITY FUNDS, INC.

T. Rowe Price Institutional Large-Cap Value Fund

T. Rowe Price Institutional Small-Cap Stock Fund

T. Rowe Price Institutional Mid-Cap Equity Growth Fund

T. Rowe Price Institutional Large-Cap Growth Fund

T. ROWE PRICE INSTITUTIONAL INCOME FUNDS, INC.

T. Rowe Price Institutional High Yield Fund

T. ROWE PRICE INSTITUTIONAL INTERNATIONAL FUNDS, INC.

T. Rowe Price Institutional Emerging Markets Equity Fund

T. Rowe Price Institutional Foreign Equity Fund

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price New Asia Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Growth & Income Fund

T. Rowe Price Emerging Europe & Mediterranean Fund

T. ROWE PRICE INTERNATIONAL INDEX FUND, INC.

T. Rowe Price International Equity Index Fund

T. ROWE PRICE INTERNATIONAL SERIES, INC.

T. Rowe Price International Stock Portfolio

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUNDS, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC.

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. ROWE PRICE PRIME RESERVE FUND, INC.

T. ROWE PRICE REAL ESTATE FUND, INC.

T. ROWE PRICE RESERVE INVESTMENT FUNDS, INC.

T. Rowe Price Reserve Investment Fund

T. Rowe Price Government Reserve Investment Fund

T. ROWE PRICE RETIREMENT FUNDS, INC.

T. Rowe Price Retirement 2010 Fund

T. Rowe Price Retirement 2020 Fund

T. Rowe Price Retirement 2030 Fund

T. Rowe Price Retirement 2040 Fund

T. Rowe Price Retirement Income Fund

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. ROWE PRICE SHORT-TERM BOND FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. ROWE PRICE SPECTRUM FUND, INC.

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Maryland Tax-Free Money Fund

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 Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC.

T. Rowe Price Tax-Efficient Balanced Fund

T. Rowe Price Tax-Efficient Growth Fund

T. Rowe Price Tax-Efficient Multi-Cap Growth Fund

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC.

T. ROWE PRICE TAX-FREE INCOME FUND, INC.

T. ROWE PRICE TAX-FREE INTERMEDIATE BOND FUND, INC.

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC.

T. ROWE PRICE U.S. BOND INDEX FUND, INC.

T. ROWE PRICE U.S. TREASURY FUNDS, INC.

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE SUMMIT FUNDS, INC.

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC.

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE VALUE FUND, INC.

By: /s/Henry H. Hopkins

Henry H. Hopkins, Vice President

STATE STREET BANK AND TRUST COMPANY

By: /s/ Joseph L. Hooley

Joseph L. Hooley

Executive Vice President

GLOBAL CUSTODY AGREEMENT

This AGREEMENT is effective January 3, 1994, and is between THE CHASE

MANHATTAN BANK, N.A. (the "Bank") and EACH OF THE ENTITIES LISTED ON SCHEDULE A

HERETO, Individually and Separately (each individually, the "Customer").

1. CUSTOMER ACCOUNTS.

The Bank agrees to establish and maintain the following accounts

("Accounts"):

(a)

A custody account in the name of the Customer ("Custody Account") for any

and all stocks, shares, bonds, debentures, notes, mortgages or other

obligations for the payment of money, bullion, coin and any certificates,

receipts, warrants or other instruments representing rights to receive,

purchase or subscribe for the same or evidencing or representing any other

rights or interests therein and other similar property whether

certificated or uncertificated as may be received by the Bank or its

Subcustodian (as defined in Section 3) for the account of the Customer

("Securities"); and

(b)

A deposit account in the name of the Customer ("Deposit Account") for any

and all cash in any currency received by the Bank or its Subcustodian for

the account of the Customer, which cash shall not be subject to withdrawal

by draft or check.

The Customer warrants its authority to: 1) deposit the cash and Securities

("Assets") received in the Accounts and 2) give Instructions (as defined in

Section 11) concerning the Accounts. The Bank may deliver securities of the

same class in place of those deposited in the Custody Account.

Upon written agreement between the Bank and the Customer, additional Accounts

may be established and separately accounted for as additional Accounts under the

terms of this Agreement.

2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS.

Unless Instructions specifically require another location acceptable to the

Bank:

(a)

Securities will be held in the country or other jurisdiction in which the

principal trading market for such Securities is located, where such

Securities are to be presented for payment or where such Securities are

acquired; and

(b)

Cash will be credited to an account in a country or other jurisdiction in

which such cash may be legally deposited or is the legal currency for the

payment of public or private debts.

Cash may be held pursuant to Instructions in either interest or non-interest

bearing accounts as may be available for the particular currency. To the extent

Instructions are issued and the Bank can comply with such Instructions, the Bank

is authorized to maintain cash balances on deposit for the Customer with itself

or one of its affiliates at such reasonable rates of interest as may from time

to time be paid on such accounts, or in non-interest bearing accounts as the

Customer may direct, if acceptable to the Bank.

If the Customer wishes to have any of its Assets held in the custody of an

institution other than the established Subcustodians as defined in Section 3 (or

their securities depositories), such arrangement must be authorized by a written

agreement, signed by the Bank and the Customer.

3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.

The Bank may act under this Agreement through the subcustodians listed in

Schedule B of this Agreement with which the Bank has entered into subcustodial

agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets

in the Accounts in accounts which the Bank has established with one or more of

its branches or Subcustodians. The Bank and Subcustodians are authorized to

hold any of the Securities in their account with any securities depository in

which they participate.

The Bank reserves the right to add new, replace or remove Subcustodians. The

Customer will be given reasonable notice by the Bank of any amendment to

Schedule B. Upon request by the Customer, the Bank will identify the name,

address and principal place of business of any Subcustodian of the Customer's

Assets and the name and address of the governmental agency or other regulatory

authority that supervises or regulates such Subcustodian.

4. USE OF SUBCUSTODIAN.

(a) The Bank will identify such Assets on its books as belonging to the

Customer.

(b) A Subcustodian will hold such Assets together with assets belonging to

other customers of the Bank in accounts identified on such Subcustodian's

books as special custody accounts for the exclusive benefit of customers

of the Bank.

the instructions of the Bank or its agent. Any Securities held in a

securities depository for the account of a Subcustodian will be subject

only to the instructions of such Subcustodian.

(d) Any agreement the Bank enters into with a Subcustodian for holding its

customer's assets shall provide that such assets will not be subject to

any right, charge, security interest, lien or claim of any kind in favor

of such Subcustodian or its creditors except for a claim for payment for

safe custody or administration, and that the beneficial ownership of such

assets will be freely transferable without the payment of money or value

other than for safe custody or administration.

The foregoing shall not apply to the extent of any special agreement or

arrangement made by the Customer with any particular Subcustodian.

5. DEPOSIT ACCOUNT TRANSACTIONS.

(a) The Bank or its Subcustodians will make payments from the Deposit Account

upon receipt of Instructions which include all information required by the

Bank.

(b) In the event that any payment to be made under this Section 5 exceeds the

funds available in the Deposit Account, the Bank, in its discretion, may

advance the Customer such excess amount which shall be deemed a loan

payable on demand, bearing interest at the rate customarily charged by the

Bank on similar loans.

prior to actual collection and reconciliation to the Deposit Account, with

interest, dividends, redemptions or any other amount due, the Customer

will promptly return any such amount upon oral or written notification:

(i) that such amount has not been received in the ordinary course of

business or (ii) that such amount was incorrectly credited. If the

Customer does not promptly return any amount upon such notification, the

Bank shall be entitled, upon oral or written notification to the Customer,

to reverse such credit by debiting the Deposit Account for the amount

previously credited. The Bank or its Subcustodian shall have no duty or

obligation to institute legal proceedings, file a claim or a proof of

claim in any insolvency proceeding or take any other action with respect

to the collection of such amount, but may act for the Customer upon

Instructions after consultation with the Customer.

6. CUSTODY ACCOUNT TRANSACTIONS.

(a) Securities will be transferred, exchanged or delivered by the Bank or its

Subcustodian upon receipt by the Bank of Instructions which include all

information required by the Bank. Settlement and payment for Securities

received for, and delivery of Securities out of, the Custody Account may

be made in accordance with the customary or established securities trading

or securities processing practices and procedures in the jurisdiction or

market in which the transaction occurs, including, without limitation,

delivery of Securities to a purchaser, dealer or their agents against a

receipt with the expectation of receiving later payment and free delivery.

Delivery of Securities out of the Custody Account may also be made in any

manner specifically required by Instructions acceptable to the Bank.

(b) The Bank, in its discretion, may credit or debit the Accounts on a

contractual settlement date with cash or Securities with respect to any

sale, exchange or purchase of Securities. Otherwise, such transactions

will be credited or debited to the Accounts on the date cash or Securities

are actually received by the Bank and reconciled to the Account.

(i) The Bank may reverse credits or debits made to the Accounts in its

discretion if the related transaction fails to settle within a

reasonable period, determined by the Bank in its discretion, after the

contractual settlement date for the related transaction.

(ii)

If any Securities delivered pursuant to this Section 6 are returned by

the recipient thereof, the Bank may reverse the credits and debits of

the particular transaction at any time.

7. ACTIONS OF THE BANK.

The Bank shall follow Instructions received regarding assets held in the

Accounts. However, until it receives Instructions to the contrary, the Bank

will:

(a) Present for payment any Securities which are called, redeemed or retired

or otherwise become payable and all coupons and other income items which

call for payment upon presentation, to the extent that the Bank or

Subcustodian is actually aware of such opportunities.

(b) Execute in the name of the Customer such ownership and other certificates

as may be required to obtain payments in respect of Securities.

Securities.

(d) Appoint brokers and agents for any transaction involving the Securities,

including, without limitation, affiliates of the Bank or any Subcustodian.

(e) Issue statements to the Customer, at times mutually agreed upon,

identifying the Assets in the Accounts.

The Bank will send the Customer an advice or notification of any transfers of

Assets to or from the Accounts. Such statements, advices or notifications shall

indicate the identity of the entity having custody of the Assets. Unless the

Customer sends the Bank a written exception or objection to any Bank statement

within ninety (90) days of receipt, the Customer shall be deemed to have

approved such statement. The Bank shall, to the extent permitted by law, be

released, relieved and discharged with respect to all matters set forth in such

statement or reasonably implied therefrom as though it had been settled by the

decree of a court of competent jurisdiction in an action where the Customer and

all persons having or claiming an interest in the Customer or the Customer's

Accounts were parties if: (a) the Customer has failed to provide a written

exception or objection to any Bank statement within ninety (90) days of receipt

and where the Customer's failure to so provide a written exception or objection

within such ninety (90) day period has limited the Bank's (i) access to the

records, materials and other information required to investigate the Customer's

exception or objection, and (ii) ability to recover from third parties any

amounts for which the Bank may become liable in connection with such exception

or objection, or (b) where the Customer has otherwise explicitly approved any

such statement.

All collections of funds or other property paid or distributed in respect of

Securities in the Custody Account shall be made at the risk of the Customer.

The Bank shall have no liability for any loss occasioned by delay in the actual

receipt of notice by the Bank or by its Subcustodians of any payment, redemption

or other transaction regarding Securities in the Custody Account in respect of

which the Bank has agreed to take any action under this Agreement.

8. CORPORATE ACTIONS; PROXIES.

Whenever the Bank receives information concerning the Securities which

requires discretionary action by the beneficial owner of the Securities (other

than a proxy), such as subscription rights, bonus issues, stock repurchase plans

and rights offerings, or legal notices or other material intended to be

transmitted to securities holders ("Corporate Actions"), the Bank will give the

Customer notice of such Corporate Actions to the extent that the Bank's central

corporate actions department has actual knowledge of a Corporate Action in time

to notify its customers.

When a rights entitlement or a fractional interest resulting from a rights

issue, stock dividend, stock split or similar Corporate Action is received which

bears an expiration date, the Bank will endeavor to obtain Instructions from the

Customer or its Authorized Person, but if Instructions are not received in time

for the Bank to take timely action, or actual notice of such Corporate Action

was received too late to seek Instructions, the Bank is authorized to sell such

rights entitlement or fractional interest and to credit the Deposit Account with

the proceeds or take any other action it deems, in good faith, to be appropriate

in which case it shall be held harmless for any such action.

The Bank will deliver proxies to the Customer or its designated agent

pursuant to special arrangements which may have been agreed to in writing. Such

proxies shall be executed in the appropriate nominee name relating to Securities

in the Custody Account registered in the name of such nominee but without

indicating the manner in which such proxies are to be voted; and where bearer

Securities are involved, proxies will be delivered in accordance with

Instructions.

9. NOMINEES.

Securities which are ordinarily held in registered form may be registered in

a nominee name of the Bank, Subcustodian or securities depository, as the case

may be. The Bank may without notice to the Customer cause any such Securities

to cease to be registered in the name of any such nominee and to be registered

in the name of the Customer. In the event that any Securities registered in a

nominee name are called for partial redemption by the issuer, the Bank may allot

the called portion to the respective beneficial holders of such class of

security pro rata or in any other manner that is fair, equitable and

practicable. The Customer agrees to hold the Bank, Subcustodians, and their

respective nominees harmless from any liability arising directly or indirectly

from their status as a mere record holder of Securities in the Custody Account.

10. AUTHORIZED PERSONS.

As used in this Agreement, the term "Authorized Person" means employees or

agents including investment managers as have been designated by written notice

from the Customer or its designated agent to act on behalf of the Customer under

this Agreement. Such persons shall continue to be Authorized Persons until such

time as the Bank receives Instructions from the Customer or its designated agent

that any such employee or agent is no longer an Authorized Person.

11. INSTRUCTIONS.

The term "Instructions" means instructions of any Authorized Person received

by the Bank, via telephone, telex, TWX, facsimile transmission, bank wire or

other teleprocess or electronic instruction or trade information system

acceptable to the Bank which the Bank believes in good faith to have been given

by Authorized Persons or which are transmitted with proper testing or

authentication pursuant to terms and conditions which the Bank may specify.

Unless otherwise expressly provided, all Instructions shall continue in full

force and effect until canceled or superseded.

Any Instructions delivered to the Bank by telephone shall promptly thereafter

be confirmed in writing by an Authorized Person (which confirmation may bear the

facsimile signature of such Person), but the Customer will hold the Bank

harmless for the failure of an Authorized Person to send such confirmation in

writing, the failure of such confirmation to conform to the telephone

instructions received or the Bank's failure to produce such confirmation at any

subsequent time. The Bank may electronically record any Instructions given by

telephone, and any other telephone discussions with respect to the Custody

Account. The Customer shall be responsible for safeguarding any testkeys,

identification codes or other security devices which the Bank shall make

available to the Customer or its Authorized Persons.

12. STANDARD OF CARE; LIABILITIES.

(a) The Bank shall be responsible for the performance of only such duties as

are set forth in this Agreement or expressly contained in Instructions

which are consistent with the provisions of this Agreement.

Notwithstanding anything to the contrary in this Agreement:

(i) The Bank will use reasonable care with respect to its obligations

under this Agreement and the safekeeping of Assets. The Bank shall be

liable to the Customer for any loss which shall occur as the result of

the failure of a Subcustodian to exercise reasonable care with respect

to the safekeeping of such Assets to the same extent that the Bank

would be liable to the Customer if the Bank were holding such Assets in

New York. In the event of any loss to the Customer by reason of the

failure of the Bank or its Subcustodian to utilize reasonable care, the

Bank shall be liable to the Customer only to the extent of the

Customer's direct damages, and shall in no event be liable for any

special or consequential damages.

(ii)

The Bank will not be responsible for any act, omission, default or for

the solvency of any broker or agent which it or a Subcustodian appoints

unless such appointment was made negligently or in bad faith or for any

loss due to the negligent act of such broker or agent except to the

extent that such broker or agent (other than a Subcustodian) performs

in a negligent manner which is the cause of the loss to the Customer

and the Bank failed to exercise reasonable care in monitoring such

broker's or agent's performance where Customer has requested and Bank

has agreed to accept such monitoring responsibility.

(iii)

The Bank shall be indemnified by, and without liability to the Customer

for any action taken or omitted by the Bank whether pursuant to

Instructions or otherwise within the scope of this Agreement if such

act or omission was in good faith, without negligence. In performing

its obligations under this Agreement, the Bank may rely on the

genuineness of any document which it believes in good faith to have

been validly executed.

(iv)The Customer agrees to pay for and hold the Bank harmless from any

liability or loss resulting from the imposition or assessment of any

taxes or other governmental charges, and any related expenses with

respect to income from or Assets in the Accounts, except to the extent

that the Bank has failed to exercise reasonable care in performing any

obligations which the Bank may have agreed to assume (in addition to

those stated in this Agreement) with respect to taxes and such failure

by the Bank is the direct cause of such imposition or assessment of

such taxes, charges or expenses.

(v) The Bank shall be entitled to rely, and may act, upon the advice of

counsel (who may be counsel for the Customer) on all legal matters and

shall be without liability for any action reasonably taken or omitted

pursuant to such advice; provided, that the Bank gives (to the extent

practicable) prior notice to Customer of Bank's intention to so seek

advice of counsel and an opportunity for consultation with Customer on

the proposed contact with counsel.

(vi)

The Bank represents and warrants that it currently maintain a banker's

blanket bond which provides standard fidelity and non-negligent loss

coverage with respect to the Securities and Cash which may be held by

Subcustodians pursuant to this Agreement. The Bank agrees that if at

any time it for any reason discontinues such coverage, it shall

immediately give sixty (60) days' prior written notice to the Customer.

The Bank need not maintain any insurance for the benefit of the

Customer.

(vii)

Without limiting the foregoing, the Bank shall not be liable for any

loss which results from: (1) the general risk of investing, or (2)

investing or holding Assets in a particular country including, but not

limited to, losses resulting from nationalization, expropriation or

other governmental actions; regulation of the banking or securities

industry; currency restrictions, devaluations or fluctuations; and

market conditions which prevent the orderly execution of securities

transactions or affect the value of Assets.

(viii)

Neither party shall be liable to the other for any loss due to forces

beyond their control including, but not limited to strikes or work

stoppages, acts of war or terrorism, insurrection, revolution, nuclear

fusion, fission or radiation, or acts of God.

(b) Consistent with and without limiting the first paragraph of this Section

12, it is specifically acknowledged that the Bank shall have no duty or

responsibility to:

(i) question Instructions or make any suggestions to the Customer or an

Authorized Person regarding such Instructions;

(ii)

supervise or make recommendations with respect to investments or the

retention of Securities;

(iii)

advise the Customer or an Authorized Person regarding any default in

the payment of principal or income of any security other than as

provided in Section 5(c) of this Agreement;

(iv)

evaluate or report to the Customer or an Authorized Person regarding

the financial condition of any broker, agent (other than a

Subcustodian) or other party to which Securities are delivered or

payments are made pursuant to this Agreement;

(v) review or reconcile trade confirmations received from brokers. The

Customer or its Authorized Persons (as defined in Section 10) issuing

Instructions shall bear any responsibility to review such confirmations

against Instructions issued to and statements issued by the Bank.

notwithstanding that the Bank or any of its divisions or affiliates may

have a material interest in a transaction, or circumstances are such that

the Bank may have a potential conflict of duty or interest including the

fact that the Bank or any of its affiliates may provide brokerage services

to other customers, act as financial advisor to the issuer of Securities,

act as a lender to the issuer of Securities, act in the same transaction

as agent for more than one customer, have a material interest in the issue

of Securities, or earn profits from any of the activities listed herein.

13. FEES AND EXPENSES.

The Customer agrees to pay the Bank for its services under this Agreement

such amount as may be agreed upon in writing, together with the Bank's

reasonable out-of-pocket or incidental expenses, including, but not limited to,

reasonable legal fees. The Bank shall have a lien on and is authorized to charge

any Accounts of the Customer for any amount owing to the Bank under any

provision of this Agreement upon notice to the Customer.

14. MISCELLANEOUS.

(a) Foreign Exchange Transactions. Pursuant to Instructions, which may be

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

standing Instructions, to facilitate the administration of the Customer's

trading and investment activity, the Bank is authorized to enter into spot

or forward foreign exchange contracts with the Customer or an Authorized

Person for the Customer and may also provide foreign exchange through its

subsidiaries or Subcustodians. The Bank may establish rules or limitations

concerning any foreign exchange facility made available. In all cases

where the Bank, its subsidiaries, affiliates or Subcustodians enter into a

foreign exchange contract related to Accounts, the terms and conditions of

the then current foreign exchange contract of the Bank, its subsidiary,

affiliate or Subcustodian and, to the extent not inconsistent, this

Agreement shall apply to such transaction.

(b) Certification of Residency, etc. The Customer certifies that it is a

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

resident of the United States and agrees to notify the Bank of any changes

in residency. The Bank may rely upon this certification or the

certification of such other facts as may be required to administer the

Bank's obligations under this Agreement. The Customer will indemnify the

Bank against all losses, liability, claims or demands arising directly or

indirectly from any such certifications.

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

accountants, officers and advisers reasonable access to the records of the

Bank relating to the Assets as is required in connection with their

examination of books and records pertaining to the Customer's affairs.

Subject to restrictions under applicable law, the Bank shall also obtain

an undertaking to permit the Customer's independent public accountants

reasonable access to the records of any Subcustodian which has physical

possession of any Assets as may be required in connection with the

examination of the Customer's books and records.

(d) Governing Law; Successors and Assigns. This Agreement shall be governed

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

by the laws of the State of New York and shall not be assignable by either

party, but shall bind the successors in interest of the Customer and the

Bank.

(e) Entire Agreement; Applicable Riders. Customer represents that the Assets

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

deposited in the Accounts are (Check one):

X Employee Benefit Plan or other assets subject to the Employee

-- ----

Retirement Income Security Act of 1974, as amended ("ERISA");

X /2/ Mutual Fund assets subject to certain Securities and Exchange

Commission ("SEC") rules and regulations;

X /3/ Neither of the above.

With respect to each Customer, this Agreement consists exclusively of this

document together with Schedules A, B, Exhibits I - _______ and the

following Rider(s) to the extent indicated on Schedule A hereto opposite

the name of the Customer under the column headed "Applicable Riders to

Agreement":

X ERISA

- -

X MUTUAL FUND

- -

SPECIAL TERMS AND CONDITIONS

---

There are no other provisions of this Agreement and this Agreement supersedes

any other agreements, whether written or oral, between the parties. Any

amendment to this Agreement must be in writing, executed by both parties.

(f) Severability. In the event that one or more provisions of this Agreement

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

are held invalid, illegal or enforceable in any respect on the basis of

any particular circumstances or in any jurisdiction, the validity,

legality and enforceability of such provision or provisions under other

circumstances or in other jurisdictions and of the remaining provisions

will not in any way be affected or impaired.

(g) Waiver. Except as otherwise provided in this Agreement, no failure or

-------

delay on the part of either party in exercising any power or right under

this Agreement operates as a waiver, nor does any single or partial

exercise of any power or right preclude any other or further exercise, or

the exercise of any other power or right. No waiver by a party of any

provision of this Agreement, or waiver of any breach or default, is

effective unless in writing and signed by the party against whom the

waiver is to be enforced.

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

With respect to each Customer listed on Schedule A hereto under the heading

"ERISA Trusts."

With respect to each Customer listed on Schedule A hereto under the heading

"Investment Companies/Portfolios Registered Under the Investment Company

Act of 1940."

With respect to certain of the Customers listed on Schedule A hereto under

the heading "Separate Accounts" as indicated on Schedule A.

(h) Notices. All notices under this Agreement shall be effective when

--------

actually received. Any notices or other communications which may be

required under this Agreement are to be sent to the parties at the

following addresses or such other addresses as may subsequently be given

to the other party in writing:

Bank:

The Chase Manhattan Bank, N.A.

Chase MetroTech Center

Brooklyn, NY 11245

Attention: Global Investor Services

Telephone: (718) 242-3455

Facsimile: (718) 242-1374

Copy to:

The Chase Manhattan Bank, N.A.

Woolgate House

Coleman Street

London EC2P 2HD England

Attention: Global Investor Services

Telephone: 44-71-962-5000

Facsimile: 44-71-962-5377

Telex: 8954681CMBG

Customer :

Name of Customer from Schedule A

c/o T. Rowe Price

100 East Pratt Street

Baltimore, MD 21202

Attention: Treasurer

Telephone: (410) 625-6658

Facsimile: (410) 547-0180

(i) Termination. This Agreement may be terminated by the Customer or the

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

Bank by giving ninety (90) days written notice to the other, provided that

such notice to the Bank shall specify the names of the persons to whom the

Bank shall deliver the Assets in the Accounts. If notice of termination

is given by the Bank, the Customer shall, within ninety (90) days

following receipt of the notice, deliver to the Bank Instructions

specifying the names of the persons to whom the Bank shall deliver the

Assets. In either case the Bank will deliver the Assets to the persons so

specified, after deducting any amounts which the Bank determines in good

faith to be owed to it under Section 13. If within ninety (90) days

following receipt of a notice of termination by the Bank, the Bank does

not receive Instructions from the Customer specifying the names of the

persons to whom the Bank shall deliver the Assets, the Bank, at its

election, may deliver the Assets 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 the Assets until Instructions are provided to the Bank.

(j) Entire Agreement. This Agreement, including the Schedules and Riders

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

hereto, embodies the entire agreement and understanding of the parties in

respect of the subject matter contained in this Agreement. This Agreement

supersedes all other custody or other agreements between the parties with

respect to such subject matter, which prior agreements are hereby

terminated effective as of the date hereof and shall have no further force

or effect.

EACH OF THE CUSTOMERS, INDIVIDUALLY AND SEPARATELY

LISTED ON SECTION I OF SCHEDULE A HERETO

By:

/s/Carmen F. Deyesu

Carmen F. Deyesu

Treasurer & Vice President

EACH OF THE CUSTOMERS, INDIVIDUALLY AND SEPARATELY

LISTED ON SECTION II OF SCHEDULE A HERETO

By:

/s/Alvin M. Younger

Alvin M. Younger

Treasurer

EACH OF THE CUSTOMERS, INDIVIDUALLY AND SEPARATELY

LISTED ON SECTION III OF SCHEDULE A HERETO

By:

/s/Alvin M. Younger

Alvin M. Younger

Treasurer

THE CHASE MANHATTAN BANK, N.A.

By:

/s/Alan Naughton

Alan Naughton

Vice President

Schedule A

Page 1 of 2

LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO

GLOBAL CUSTODY AGREEMENT WITH

THE CHASE MANHATTAN BANK, N.A.

DATED JANUARY 3, 1994

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY

AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS The Mutual Fund Rider is

REGISTERED UNDER THE INVESTMENT applicable to all Customers

COMPANY ACT OF 1940 listed under Section I of

this Schedule A.

Equity Funds

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

T. Rowe Price Balanced Fund, Inc.

T. Rowe Price Blue Chip Growth Fund, Inc.

T. Rowe Price Capital Appreciation Fund

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Equity Income Fund

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price Growth Stock Fund, Inc.

Institutional International Funds, Inc. on behalf of:

Foreign Equity Fund

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price European Stock Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price New Asia Fund

T. Rowe Price Mid-Cap Growth Fund, Inc.

T. Rowe Price New Era Fund, Inc.

T. Rowe Price New Horizons Fund, Inc.

T. Rowe Price OTC Fund, Inc. on behalf of:

T. Rowe Price OTC Fund

T. Rowe Price Science & Technology Fund, Inc.

T. Rowe Price Small Cap Value Fund, Inc.

CUNA Mutual Funds, Inc. on behalf of:

CUNA Mutual Cornerstone Fund

Schedule A

Page 2 of 2

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY AGREEMENT

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

Income Funds

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

T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.

T. Rowe Price High Yield Fund, Inc.

T. Rowe Price New Income Fund, Inc.

T. Rowe Price Short-Term Bond Fund, Inc.

T. Rowe Price Summit Funds, Inc. on behalf of:

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Global Government Bond Fund

T. Rowe Price International Bond Fund

T. Rowe Price Short-Term Global Income Fund

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY

AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA The ERISA Rider is applicable

to all Customers Under

Section II of this

Schedule A.

T. Rowe Price Trust Company as Trustee for the

Johnson Matthey Salaried

Common Trust Funds

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

T. Rowe Price Trust Company, as Trustee

for the International Common Trust Fund

on behalf of the Underlying Trusts:

Foreign Discovery Trust

Foreign Discovery Trust-Augment

Pacific Discovery Trust

European Discovery Trust

Japan Discovery Trust

Latin American Discovery Trust

New York City International Common Trust Fund

III. OTHER No Riders are applicable

to the Customer listed

RPFI International Partners, L.P. under Section III of

this Schedule A.

ERISA RIDER TO GLOBAL CUSTODY AGREEMENT

BETWEEN THE CHASE MANHATTAN BANK, N.A. AND

EACH OF THE ENTITIES LISTED ON SCHEDULE A HERETO

EFFECTIVE JANUARY 3, 1994

Customer represents that the Assets being placed in the Bank's custody are

subject to ERISA. It is understood that in connection therewith the Bank is a

service provider and not a fiduciary of the plan and trust to which the assets

are related. The Bank shall not be considered a party to the underlying plan

and trust and the Customer hereby assumes all responsibility to assure that

Instructions issued under this Agreement are in compliance with such plan and

trust and ERISA.

This Agreement will be interpreted as being in compliance with the Department

of Labor Regulations Section 2550.404b-1 concerning the maintenance of indicia

of ownership of plan assets outside of the jurisdiction of the district courts

of the United States.

The following modifications are made to the Agreement:

Section 3. Subcustodians and Securities Depositories.

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

Add the following language to the end of Section 3:

As used in this Agreement, the term Subcustodian and the term securities

depositories include a branch of the Bank, a branch of a qualified U.S. bank, an

eligible foreign custodian, or an eligible foreign securities depository, where

such terms shall mean:

(a) "qualified U.S. bank" shall mean a U.S. bank as described in paragraph

(a)(2)(ii)(A)(1) of the Department of Labor Regulations Section

2550.404b-1;

(b) "eligible foreign custodian" shall mean a banking institution

incorporated or organized under the laws of a country other than the

United States which is supervised or regulated by that country's

government or an agency thereof or other regulatory authority in the

foreign jurisdiction having authority over banks; and

depository or clearing agency, incorporated or organized under the laws of

a country other than the United States, which is supervised or regulated

by that country's government or an agency thereof or other regulatory

authority in the foreign jurisdiction having authority over such

depositories or clearing agencies and which is described in paragraph

(c)(2) of the Department of Labor Regulations Section 2550.404b-1.

Section 4. Use of Subcustodian.

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

Subsection (d) of this section is modified by deleting the last sentence.

Section 5. Deposit Account Payments.

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

Subsection (b) is amended to read as follows:

(b) In the event that any payment made under this Section 5 exceeds the

funds available in the Deposit Account, such discretionary advance shall

be deemed a service provided by the Bank under this Agreement for which it

is entitled to recover its costs as may be determined by the Bank in good

faith.

Section 10. Authorized Persons.

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

Add the following paragraph at the end of Section 10:

Customer represents that: a) Instructions will only be issued by or for a

fiduciary pursuant to Department of Labor Regulation Section 404b-1 (a)(2)(i)

and b) if Instructions are to be issued by an investment manager, such entity

will meet the requirements of Section 3(38) of ERISA and will have been

designated by the Customer to manage assets held in the Customer Accounts

("Investment Manager"). An Investment Manager may designate certain of its

employees to act as Authorized Persons under this Agreement.

Section 14(a). Foreign Exchange Transactions.

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

Add the following paragraph at the end of Subsection 14(a):

Instructions to execute foreign exchange transactions with the Bank, its

subsidiaries, affiliates or Subcustodians will include (1) the time period in

which the transaction must be completed; (2) the location i.e., Chase New York,

----

Chase London, etc. or the Subcustodian with whom the contract is to be executed

and (3) such additional information and guidelines as may be deemed necessary;

and, if the Instruction is a standing Instruction, a provision allowing such

Instruction to be overridden by specific contrary Instructions.

MUTUAL FUND RIDER TO GLOBAL CUSTODY AGREEMENT

BETWEEN THE CHASE MANHATTAN BANK, N.A. AND

EACH OF THE ENTITIES LISTED ON SCHEDULE A HERETO

EFFECTIVE JANUARY 3, 1994

Customer represents that the Assets being placed in the Bank's custody are

subject to the Investment Company Act of 1940 (the Act), as the same may be

amended from time to time.

Except to the extent that the Bank has specifically agreed to comply with a

condition of a rule, regulation, interpretation promulgated by or under the

authority of the SEC or the Exemptive Order applicable to accounts of this

nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,

November 20, 1981), as amended, or unless the Bank has otherwise specifically

agreed, the Customer shall be solely responsible to assure that the maintenance

of Assets under this Agreement complies with such rules, regulations,

interpretations or exemptive order promulgated by or under the authority of the

Securities Exchange Commission.

The following modifications are made to the Agreement:

Section 3. Subcustodians and Securities Depositories.

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

Add the following language to the end of Section 3:

The terms Subcustodian and securities depositories as used in this Agreement

shall mean a branch of a qualified U.S. bank, an eligible foreign custodian or

an eligible foreign securities depository, which are further defined as follows:

(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in Rule

17f-5 under the Investment Company Act of 1940;

(b) "eligible foreign custodian" shall mean (i) a banking institution or

trust company incorporated or organized under the laws of a country other

than the United States that is regulated as such by that country's

government or an agency thereof and that has shareholders' equity in

excess of $200 million in U.S. currency (or a foreign currency equivalent

thereof), (ii) a majority owned direct or indirect subsidiary of a

qualified U.S. bank or bank holding company that is incorporated or

organized under the laws of a country other than the United States and

that has shareholders' equity in excess of $100 million in U.S. currency

(or a foreign currency equivalent thereof)(iii) a banking institution or

trust company incorporated or organized under the laws of a country other

than the United States or a majority owned direct or indirect subsidiary

of a qualified U.S. bank or bank holding company that is incorporated or

organized under the laws of a country other than the United States which

has such other qualifications as shall be specified in Instructions and

approved by the Bank; or (iv) any other entity that shall have been so

qualified by exemptive order, rule or other appropriate action of the SEC;

and

depository or clearing agency, incorporated or organized under the laws of

a country other than the United States, which operates (i) the central

system for handling securities or equivalent book-entries in that country,

or (ii) a transnational system for the central handling of securities or

equivalent book-entries.

The Customer represents that its Board of Directors has approved each of the

Subcustodians listed in Schedule B to this Agreement and the terms of the

subcustody agreements between the Bank and each Subcustodian, which are attached

as Exhibits I through of Schedule B, and further represents that its Board

----

has determined that the use of each Subcustodian and the terms of each

subcustody agreement are consistent with the best interests of the Fund(s) and

its (their) shareholders. The Bank will supply the Customer with any amendment

to Schedule B for approval. As requested by the Bank, the Customer will supply

the Bank with certified copies of its Board of Directors resolution(s) with

respect to the foregoing prior to placing Assets with any Subcustodian so

approved.

Section 11. Instructions.

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

Add the following language to the end of Section 11:

Deposit Account Payments and Custody Account Transactions made pursuant to

Section 5 and 6 of this Agreement may be made only for the purposes listed

below. Instructions must specify the purpose for which any transaction is to be

made and Customer shall be solely responsible to assure that Instructions are in

accord with any limitations or restrictions applicable to the Customer by law or

as may be set forth in its prospectus.

(a) In connection with the purchase or sale of Securities at prices as

confirmed by Instructions;

(b) When Securities are called, redeemed or retired, or otherwise become

payable;

securities and cash pursuant to any plan or merger, consolidation,

reorganization, recapitalization or readjustment;

(d) Upon conversion of Securities pursuant to their terms into other

securities;

(e) Upon exercise of subscription, purchase or other similar rights

represented by Securities;

(f) For the payment of interest, taxes, management or supervisory fees,

distributions or operating expenses;

(g) In connection with any borrowings by the Customer requiring a pledge of

Securities, but only against receipt of amounts borrowed;

(h) In connection with any loans, but only against receipt of adequate

collateral as specified in Instructions which shall reflect any

restrictions applicable to the Customer;

(i) For the purpose of redeeming shares of the capital stock of the Customer

and the delivery to, or the crediting to the account of, the Bank, its

Subcustodian or the Customer's transfer agent, such shares to be purchased

or redeemed;

(j) For the purpose of redeeming in kind shares of the Customer against

delivery to the Bank, its Subcustodian or the Customer's transfer agent of

such shares to be so redeemed;

(k) For delivery in accordance with the provisions of any agreement among the

Customer, the Bank and a broker-dealer registered under the Securities

Exchange Act of 1934 (the "Exchange Act") and a member of The National

Association of Securities Dealers, Inc. ("NASD"), relating to compliance

with the rules of The Options Clearing Corporation and of any registered

national securities exchange, or of any similar organization or

organizations, regarding escrow or other arrangements in connection with

transactions by the Customer;

(l) For release of Securities to designated brokers under covered call

options, provided, however, that such Securities shall be released only

upon payment to the Bank of monies for the premium due and a receipt for

the Securities which are to be held in escrow. Upon exercise of the

option, or at expiration, the Bank will receive from brokers the

Securities previously deposited. The Bank will act strictly in accordance

with Instructions in the delivery of Securities to be held in escrow and

will have no responsibility or liability for any such Securities which are

not returned promptly when due other than to make proper request for such

return;

(m) For spot or forward foreign exchange transactions to facilitate security

trading, receipt of income from Securities or related transactions;

(n) For other proper purposes as may be specified in Instructions issued by

an officer of the Customer which shall include a statement of the purpose

for which the delivery or payment is to be made, the amount of the payment

or specific Securities to be delivered, the name of the person or persons

to whom delivery or payment is to be made, and a certification that the

purpose is a proper purpose under the instruments governing the Customer;

and

o) Upon the termination of this Agreement as set forth in Section 14(i).

Section 12. Standard of Care; Liabilities.

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

Add the following subsection (c) to Section 12:

inquiry, the established procedures to be followed by each of its

branches, each branch of a qualified U.S. bank, each eligible foreign

custodian and each eligible foreign securities depository holding the

Customer's Securities pursuant to this Agreement afford protection for

such Securities at least equal to that afforded by the Bank's established

procedures with respect to similar securities held by the Bank and its

securities depositories in New York.

Section 14. Access to Records.

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

Add the following language to the end of Section 14(c):

Upon reasonable request from the Customer, the Bank shall furnish the

Customer such reports (or portions thereof) of the Bank's system of internal

accounting controls applicable to the Bank's duties under this Agreement. The

Bank shall endeavor to obtain and furnish the Customer with such similar reports

as it may reasonably request with respect to each Subcustodian and securities

depository holding the Customer's assets.

GLOBAL CUSTODY AGREEMENT

WITH

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

DATE

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

SPECIAL TERMS AND CONDITIONS RIDER

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

January, 1994

SUB-CUSTODIANS EMPLOYED BY

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

THE CHASE MANHATTAN BANK, N.A. LONDON, GLOBAL CUSTODY

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

COUNTRY SUB-CUSTODIAN CORRESPONDENT BANK

ARGENTINA The Chase Manhattan Bank, The Chase Manhattan

N.A., Main Branch Bank, N.A.

25 De Mayo 130/140 Buenos Aires

Buenos Aires

ARGENTINA

AUSTRALIA The Chase Manhattan Bank, The Chase Manhattan Bank

Australia Limited Australia Limited Sydney

36th Floor

World Trade Centre

Jamison Street

Sydney

New South Wales 2000

AUSTRALIA

AUSTRIA Creditanstalt - Bankvereln Credit Lyonnais Vienna

Schottengasse 6

A - 1011, Vienna

AUSTRIA

BANGLADESH Standard Chartered Bank Standard Chartered Bank

18-20 Motijheel C.A. Dhaka

Box 536,

Dhaka-1000

BANGLADESH

BELGIUM Generale Bank Credit Lyonnais Bank

3 Montagne Du Parc Brussels

1000 Bruxelles

BELGIUM

BOTSWANA Standard Chartered Bank Standard Chartered Bank

Botswana Ltd. Botswana Ltd.

4th Floor Commerce House Gabarone

The Mall

Gaborone

BOTSWANA

BRAZIL Banco Chase Manhattan, S.A. Banco Chase Manhattan

Chase Manhattan Center S.A., Sao Paolo

Rua Verbo Divino, 1400

Sao Paulo, SP 04719-002

BRAZIL

CANADA The Royal Bank of Canada Toronto Dominion Bank

Royal Bank Plaza Toronto

Toronto

Ontario M5J 2J5

CANADA

Canada Trust Toronto Dominion Bank

Canada Trust Tower Toronto

BCE Place

161 Bay at Front

Toronto

Ontario M5J 2T2

CANADA

CHILE The Chase Manhattan Bank, The Chase Manhattan

N.A., Agustinas 1235 Bank, N.A., Santiago

Casilla 9192

Santiago

CHILE

COLOMBIA Cititrust Colombia S.A. Cititrust Colombia S.A.

Sociedad Fiduciaria Sociedad Fiduciaria

Av. Jimenez No 8-89 Santafe de Bogota

Santafe de Bogota, DC

COLOMBIA

CZECH Ceskoslovenska Obchodni Ceskoslovenska

REPUBLIC Banka, A.S.; Na Prikoope 14 Obchodni Banka, A.S.

115 20 Praha 1 Praha

CZECH REPUBLIC

DENMARK Den Danske Bank Den Danske Bak

2 Holmens Kanala DK 1091 Copenhagen

Copenhagen

DENMARK

EUROBONDS Cedel S.A. A/c No. 17817

67 Blvd Grande Duchesse ECU:Lloyds Bank PLC

Charlotte LUXEMBOURG International Banking

Dividion

A/c Chase Manhattan Bank, London

N.A. London For all other

currencies: see

relevant country

EURO CDS First Chicago Clearing Centre ECU:Lloyds Bank PLC

27 Leadenhall Street Banking Division London

London EC3A 1AA For all other

UK currencies: see

relevant country

FINLAND Kansallis-Osake-Pankki Kanasallis-Osake-Pankki

Aleksanterinkatu 42

00100 Helsinki 10

FINLAND

FRANCE Banque Paribas Societe Generale Paris

Ref 256

BP 141

3, Rue D'Antin

75078 Paris

Cedex 02

FRANCE

GERMANY Chase Bank A.G. Chase Bank A.G.

Alexanderstrasse 59 Frankfurt

Postfach 90 01 09

60441 Frankfurt/Main

GERMANY

GREECE National Bank of Greece S.A. National Bank of Greece

38 Stadiou Street S.A. Athens

Athens A/c Chase Manhattan

GREECE Bank, N.A., London

A/c No. 040/7/921578-68

HONG KONG The Chase Manhattan Bank,NA The Chase Manhattan

40/F One Exchange Square Bank, N.A., Hong Kong

8, Connaught Place

Central, Hong Kong

HONG KONG

HUNGARY Citibank Budapest Rt. Citibank Budapest Rt.

Vaci Utca 19-21 Budapest

1052 Budapest V

HUNGARY

INDIA The Hongkong and Shanghai The Hongkong and

Banking Corporation Limited Shanghai Banking

52/60 Mahatma Gandhi Road Corporation Limited,

Bombay 400 001 Bombay

INDIA

INDONESIA The Hongkong and Shanghai The Chase Manhattan

Banking Corporation Limited Bank, N.A., Jakarta

World Trade Center

J1. Jend Sudirman Kav. 29-31

Jakarta 10023

INDONESIA

IRELAND Bank of Ireland Allied Irish Bank Dublin

International Financial Services Centre

1 Hargourmaster Place

Dublin 1

IRELAND

ISRAEL Bank Leumi Le-Israel B.M. Bank Leumi Le-Israel

19 Herzi Street B.M., Tel Aviv

65136 Tel Aviv

ISRAEL

ITALY The Chase Manhattan Bank, The Chase Manhattan

N.A., Piazza Meda 1 Bank, N.A., Milan

20121 Milan

ITALY

JAPAN The Chase Manhattan Bank, The Chase Manhattan

N.A.,1-3 Marunouchi 1-Chome Bank, N.A., Tokyo

Chiyoda-Ku

Tokyo 100

JAPAN

JORDAN Arab Bank Limited Arab Bank Limited

P.O. Box 950544-5 Amman

Amman

Shmeisani

JORDAN

LUXEMBOURG Banque Generale du Luxembourg Banque Generale du

S.A., 27 Avenue Monterey Luxembourg S.A.

LUXEMBOURG Luxembourg

MALAYSIA The Chase Manhattan Bank, The Chase Manhattan

N.A., Pernas International Bank, N.A., Kuala Lumpur

Jalan Sultan Ismail

50250, Kuala Lumpur

MALAYSIA

MEXICO The Chase Manhattan Bank, No correspondent Bank

N.A., Hamburgo 213, Piso 7 (Equities)

06660 Mexico D.F.

MEXICO

(Government Banco Nacional de Mexico, Banque Commerciale du

Bonds) Avenida Juarez No. Maroc

104-11 Piso Casablanca

06040 Mexico D.F.

MEXICO

NETHERLANDS ABN AMRO N.V. Credit Lyonnais

Securities Centre Bank Nederland N.V.

P.O. Box 3200 Rotterdam

4800 De Breda

NETHERLANDS

NEW ZEALAND National Nominees Limited National Bank of New Zealand

Level 2 BNZ Tower Wellington

125 Queen Street

Auckland

NEW ZEALAND

NORWAY Den Norske Bank Den Norske Bank

Kirkegaten 21 Oslo

Oslo 1

NORWAY

PAKISTAN Citibank N.A. Citibank N.A.

State Life Building No.1 Karachi

I.I. Chundrigar Road

Karachi

PAKISTAN

PERU Citibank, N.A. Citibank N.A. Lima

Camino Real 457

CC Torre Real - 5th Floor

San Isidro, Lima 27

PERU

PHILIPPINES The Hongkong and Shanghai The Hongkong and Shaghai

Banking Corporation Limited Banking Corporation

Hong Kong Bank Centre 3/F Limited, Manila

San Miguel Avenue

Ortigas Commercial Centre

Pasig Metro Manila

PHILIPPINES

POLAND Bank Polska Kasa Opieki Bank Potska Kasa Opieki

S.A., 6/12 Nowy Swiat Str S.A., Warsaw

00-920 Warsaw

POLAND

PORTUGAL Banco Espirito Santo & Banco Pinto &

Comercial de Lisboa Sotto Mayor

Servico de Gestaode Titulos Avenida Fontes

R. Mouzinho da Silvelra, Pereira de Melo

36 r/c, 1200 Lisbon 1000 Lisbon

PORTUGAL

SHANGHAI The Hongkong and Shanghai The Chase Manhattan

(CHINA) Banking Corporation Limited Bank, N.A.,Hong Kong

Shanghai Branch

Corporate Banking Centre

Unit 504, 5/F Shanghai Centre

1376 Hanjing Xi Lu

Shanghai

THE PEOPLE'S REPUBLIC OF CHINA

SCHENZHEN The Hongkong and Shanghai The Chase Manhattan

(CHINA) Banking Corporation Limited Bank, N.A., Hong Kong

1st Floor

Central Plaza Hotel

No. 1 Chun Feng Lu

Shenzhen

THE PEOPLE'S REPUBLIC OF CHINA

SINGAPORE The Chase Manhattan Bank, The Chase Manhattan

N.A. Bank, N.A.

Shell Tower Singapore

50 Raffles Place

Singapore 0104

SINGAPORE

SOUTH KOREA The Hongkong & Shanghai The Hongkong & Shanghai

Banking Corporation Limited Banking Corporation

6/F Kyobo Building Limited, Seoul

#1 Chongro, 1-ka Chongro-Ku,

Seoul

SOUGH KOREA

SPAIN The Chase Manhattan Bank, Banco Zaragozano, S.A.

N.A.,Calle Peonias 2 Madrid

7th Floor

La Piovera

28042 Madrid

SPAIN

URUGUAY The First National Bank The First National Bank

of Boston of Boston

Zabala 1463 Montevideo

Montevideo

URUGUAY

U.S.A The Chase Manhattan Bank, The Chase Manhattan

N.A. Bank, N.A.

1 Chase Manhattan Plaza New York

New York

NY 10081

U.S.A.

VENEZUELA Citibank N.A. Citibank N.A.

Carmelitas a Altagracia Caracas

Edificio Citibank

Caracas 1010

VENEZUELA

AMENDMENT AGREEMENT

AMENDMENT AGREEMENT, dated as of April 18, 1994 (the "AMENDMENT AGREE MENT")

to the Global Custody Agreement, effective January 3, 1994 (the "CUSTODY

AGREEMENT") by and between each of the Entities listed in Attachment A hereto,

separately and individually (each such entity referred to hereinafter as the

"CUSTOMER") and THE CHASE MANHATTAN BANK, N.A. (the "BANK"). Terms defined in

the Custody Agreement are used herein as therein defined.

WITNESSETH:

WHEREAS, the Customer wishes to appoint the Bank as its global custodian

and the bank wishes to accept such appointment pursuant to the terms of the

Custody Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

1. Amendment. Section I of Schedule A of the Custody Agreement ("SCHEDULE

---------

A") shall be amended to add each Customer listed in Attachment A hereto. The

revised Schedule A incorporating these changes in the form attached hereto as

Attachment B shall supersede the existing Schedule A in its entirety.

2. Agreement. The Customer agrees to be bound in all respects by all the

---------

terms and conditions of the Custody Agreement and shall be fully liable

thereunder as a "Customer" as defined in the Custody Agreement.

3. Confirmation of Agreement. Except as amended hereby, the Custody

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

Agreement is in full force and effect and as so amended is hereby ratified,

approved and confirmed by the Customer and the Bank in all respects.

4. Governing Law. This Amendment Agreement shall be construed in

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

accordance with and governed by the law of the State of New York without regard

to its conflict of law principles.

IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as

of the day and year first above written.

THE CHASE MANHATTAN BANK, N.A.

By: /s/Alan P. Naughton

Alan P. Naughton

Vice President

EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO,

SEPARATELY AND INDIVIDUALLY

By: /s/Carmen F. Deyesu

Carmen F. Deyesu

Treasurer

Attachment A

LIST OF CUSTOMERS

T. Rowe Price International Series, Inc. on behalf of the

T. Rowe Price International Stock Portfolio

T. Rowe Price Equity Series, Inc. on behalf of the

T. Rowe Price Equity Income Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price New America Growth Fund, Inc.

T. Rowe Price Income Series, Inc. on behalf of

T. Rowe Price Limited-Term Bond Portfolio

Attachment B

Schedule A

Page 1 of 2

LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO

GLOBAL CUSTODY AGREEMENT WITH

THE CHASE MANHATTAN BANK, N.A.

DATED JANUARY 3, 1993

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY

AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS The Mutual Fund Rider is

REGISTERED UNDER THE INVESTMENT applicable to all Customers

COMPANY ACT OF 1940 listed under Section I of

this Schedule A.

Equity Funds

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

T. Rowe Price Balanced Fund, Inc.

T. Rowe Price Blue Chip Growth Fund, Inc.

T. Rowe Price Capital Appreciation Fund

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Equity Income Fund

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price Growth Stock Fund, Inc.

Institutional International Funds, Inc. on behalf of:

Foreign Equity Fund

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price European Stock Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price New Asia Fund

T. Rowe Price International Series, Inc., on behalf of:

T. Rowe Price International Stock Portfolio

T. Rowe Price Mid-Cap Growth Fund, Inc.

T. Rowe Price New Era Fund, Inc.

T. Rowe Price New Horizons Fund, Inc.

T. Rowe Price OTC Fund, Inc. on behalf of:

T. Rowe Price OTC Fund

T. Rowe Price Science & Technology Fund, Inc.

T. Rowe Price Small-Cap Value Fund, Inc.

CUNA Mutual Funds, Inc. on behalf of:

CUNA Mutual Cornerstone Fund

T. Rowe Price Equity Series, Inc. on behalf of:

T. Rowe Price Equity Income Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price New America Growth Fund, Inc.

Attachment B

Schedule A

Page 2 of 2

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY

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

AGREEMENT

----------

Income Funds

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

T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.

T. Rowe Price High Yield Fund, Inc.

T. Rowe Price New Income Fund, Inc.

T. Rowe Price Short-Term Bond Fund, Inc.

T. Rowe Price Summit Funds, Inc. on behalf of:

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Global Government Income Fund

T. Rowe Price International Bond Fund

T. Rowe Price Short-Term Global Income Fund

T. Rowe Price Income Series, Inc. on behalf of:

T. Rowe Price Limited-Term Bond Portfolio

II. ACCOUNTS SUBJECT TO ERISA The ERISA Rider is applicable

to all Customers Under

Section II of this

Schedule A.

T. Rowe Price Trust Company as Trustee for the

Johnson Matthey Salaried

Savings Plan

Common Trust Funds

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

T. Rowe Price Trust Company,

as Trustee for the International

Common Trust Fund on behalf of

the Underlying Trusts:

Foreign Discovery Trust

Foreign Discovery Trust-Augment

Pacific Discovery Trust

European Discovery Trust

Japan Discovery Trust

Latin American Discovery Trust

New York City International Common Trust Fund

III. OTHER No Riders are applicable to

the Customer listed under

RPFI International Section III of this

Partners, L.P. Schedule A.

AMENDMENT AGREEMENT

AMENDMENT AGREEMENT, dated as of August 15, 1994 (the "AMENDMENT

AGREEMENT") to the Global Custody Agreement, effective January 3, 1994, as

amended (the "CUSTODY AGREEMENT") by and between each of the Entities listed in

Attachment A hereto, separately and individually (each such entity referred to

hereinafter as the "CUSTOMER") and THE CHASE MANHATTAN BANK, N.A. (the "BANK").

Terms defined in the Custody Agreement are used herein as therein defined.

WITNESSETH:

WHEREAS, the Customer wishes to appoint the Bank as its global custodian

and the Bank wishes to accept such appointment pursuant to the terms of the

Custody Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

1. Amendment. Section I of Schedule A of the Custody Agreement ("SCHEDULE

---------

A") shall be amended to add each Customer listed in Attachment A hereto. The

revised Schedule A incorporating these changes in the form attached hereto as

Attachment B shall supersede the existing Schedule A in its entirety.

2. Agreement. The Customer agrees to be bound in all respects by all the

---------

terms and conditions of the Custody Agreement and shall be fully liable

thereunder as a "Customer" as defined in the Custody Agreement.

3. Confirmation of Agreement. Except as amended hereby, the Custody

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

Agreement is in full force and effect and as so amended is hereby ratified,

approved and confirmed by the Customer and the Bank in all respects.

4. Governing Law. This Amendment Agreement shall be construed in

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

accordance with and governed by the law of the State of New York without regard

to its conflict of law principles.

IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as

of the day and year first above written.

THE CHASE MANHATTAN BANK, N.A.

By: /s/Alan P. Naughton

Alan P. Naughton

Vice President

EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO,

SEPARATELY AND INDIVIDUALLY

By: /s/Carmen F. Deyesu

Carmen F. Deyesu

Treasurer

Attachment A

LIST OF CUSTOMERS

T. Rowe Price Equity Series, Inc. on behalf of the

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Personal Strategy Funds, Inc. on behalf of

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

Attachment B

Schedule A

Page 1 of 2

LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO

GLOBAL CUSTODY AGREEMENT WITH

THE CHASE MANHATTAN BANK, N.A.

DATED JANUARY 3, 1993

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY

AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS The Mutual Fund Rider is

REGISTERED UNDER THE INVESTMENT applicable to all Customers

COMPANY ACT OF 1940 listed under Section I of

this Schedule A.

Equity Funds

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

T. Rowe Price Balanced Fund, Inc.

T. Rowe Price Blue Chip Growth Fund, Inc.

T. Rowe Price Capital Appreciation Fund

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Equity Income Fund

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price Growth Stock Fund, Inc.

Institutional International Funds, Inc. on behalf of:

Foreign Equity Fund

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price European Stock Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Stock Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price New Asia Fund

T. Rowe Price International Series, Inc., on behalf of:

T. Rowe Price International Stock Portfolio

T. Rowe Price Mid-Cap Growth Fund, Inc.

T. Rowe Price New Era Fund, Inc.

T. Rowe Price New Horizons Fund, Inc.

T. Rowe Price OTC Fund, Inc. on behalf of:

T. Rowe Price OTC Fund

T. Rowe Price Science & Technology Fund, Inc.

T. Rowe Price Small-Cap Value Fund, Inc.

CUNA Mutual Funds, Inc. on behalf of:

CUNA Mutual Cornerstone Fund

T. Rowe Price Equity Series, Inc. on behalf of:

T. Rowe Price Equity Income Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price New America Growth Fund, Inc.

Income Funds

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

T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.

T. Rowe Price High Yield Fund, Inc.

T. Rowe Price New Income Fund, Inc.

T. Rowe Price Short-Term Bond Fund, Inc.

T. Rowe Price Summit Funds, Inc. on behalf of:

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Global Government Income Fund

T. Rowe Price International Bond Fund

T. Rowe Price Short-Term Global Income Fund

T. Rowe Price Income Series, Inc. on behalf of:

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price Personal Strategy Funds, Inc. on behalf of:

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

Attachment B

Schedule A

Page 2 of 3

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY

AGREEMENT

II. ACCOUNTS SUBJECT TO ERISA The ERISA Rider is applicable

to all Customers Under

Section II of this

Schedule A.

T. Rowe Price Trust Company as Trustee for the

Johnson Matthey Salaried

Savings Plan

Common Trust Funds

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

T. Rowe Price Trust company,

as Trustee for the International

Common Trust Fund on behalf of

the Underlying Trusts:

Foreign Discovery Trust

Foreign Discovery Trust-Augment

Pacific Discovery Trust

European Discovery Trust

Japan Discovery Trust

Latin American Discovery Trust

New York City International Common Trust Fund

III. OTHER No Riders are applicable to

the Customer listed under

RPFI International Section III of this

Partners, L.P. Schedule A.

AMENDMENT AGREEMENT

AMENDMENT AGREEMENT, dated as of November 28, 1994 (the "Amendment

Agreement") to the Global Custody Agreement, effective January 3, 1994, as

amended (the "Custody Agreement") by and between each of the Entities listed in

Attachment A hereto, separately and individually (each such entity referred to

hereinafter as the "Customer") and THE CHASE MANHATTAN BANK, N.A. (the "Bank").

Terms defined in the Custody Agreement are used herein as therein defined.

WITNESSETH:

WHEREAS, the Customer wishes to appoint the Bank as its global custodian

and the Bank wishes to accept such appointment pursuant to the terms of the

Custody Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

1. Amendment. Section I of Schedule A of the Custody Agreement ("Schedule