PRICE T ROWE INTERNATIONAL FUNDS INC (Form: 485BPOS, Received: 02/27/2004 16:40:12)

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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. 87 /X/

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and/or

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

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Amendment No. 70 /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 March 1, 2004

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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 March 1, 2004 , 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.

March 1, 2004

Prospectus

T. Rowe Price

International Stock Fund

A stock fund seeking long-term capital growth through investments in non-U.S. companies.

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	10
	Transaction Procedures and Special Requirements	16
	Account Maintenance and Small Account Fees	19

3	More About the Fund
	Organization and Management	20
	Understanding Performance Information	22
	Investment Policies and Practices	22
	Financial Highlights	27

4	Investing With T. Rowe Price
	Account Requirements and Transaction Information	29
	Opening a New Account	30
	Purchasing Additional Shares	31
	Exchanging and Redeeming Shares	32
	Rights Reserved by the Funds	34
	Information About Your Services	35
	T. Rowe Price Brokerage	37
	Investment Information	38
	T. Rowe Price Privacy Policy	40

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T. Rowe Price International Funds, Inc.

T. Rowe Price International Stock Fund

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T. Rowe Price International, Inc. managed $22.9 billion in foreign stocks and bonds as of December 31, 2003 , through its offices in Baltimore, London, 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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About the Fund 1

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objective, strategy, risks, and expenses

What is the fund`s objective?

The fund seeks long-term growth of capital through investments primarily in the common stocks of estab lished, non-U.S. companies.

What is the fund`s principal investment strategy?

The fund expect s to invest substantially all of the fund`s assets in stocks outside the U.S. and to diversify broadly among developed and emerging countries throughout the world. Stock selection reflects a growth style. We may purchase the stocks of companies of any size, but our focus will typically be on large and, to a lesser extent, medium-sized companies. Normally, at least 80% of the fund`s net assets will be invested in stocks.

T. Rowe Price International, Inc. ("T. Rowe Price International") employs in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase such stocks at reasonable prices in relation to present or anticipated earnings, cash flow, or book value, and valuation factors often influence our allocations among large-, mid-, or small-cap shares.

While we invest with an awareness of the global economic backdrop and our outlook for industry sectors and individual countries, bottom-up stock selection is the focus of our decision-making. Country allocation is driven largely by stock selection, though we may limit investments in markets that appear to have poor overall pros pects.

In selecting stocks, we generally favor companies with one or more of the following characteristics:

leading market position;

attractive business niche;

strong franchise or monopoly;

technological leadership or proprietary advantages;

seasoned management;

earnings growth and cash flow sufficient to support growing dividends; and

healthy balance sheet with relatively low debt.

While the fund invests primarily in common stocks, the fund may also purchase other securities, including futures and options, in keeping with the fund`s objective.

The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities.

What are the main risks of investing in the fund?

Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. Even invest ments in countries with highly developed economies are subject to significant risks. Some particular risks affect ing this fund include the following:

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Currency risk This refers to 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 a fund`s holdings can be signifi cant, unpredictable, and long-lasting , depending on the currencies represented in the portfolio and how each one appreciates or depreciates in relation to the U.S. dollar and whether currency positions are hedged. Under normal conditions, the fund does not engage in extensive foreign currency hedging programs. Further, exchange rate movements are volatile , and it is not possible to effectively hedge the currency risks of many developing countries.

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Geographic risk The economies and financial markets of certain regions — such as Latin America and Asia — can be interdependent and may all decline at the same time.

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. Fund performance will likely be hurt by exposure to nations in the midst of hyperinflation, currency devaluation, trade disagreements, sudden political upheaval, or interventionist gov ernment policies. Significant buying or selling by a few major investors may also heighten the volatility of emerging markets. These factors make investing in such countries significantly riskier than in other countries , and any one of the factors could cause the fund`s share price to decline.

Other risks of foreign investing Risks can result from varying stages of economic and political development, dif fering regulatory environments, trading days, and accounting standards, and higher transaction costs of non- U.S. markets. Investments outside the United States could be subject to governmental actions such as capital or currency controls, nationalization of a company or industry, expropriation of assets, or imposition of high taxes.

While certain countries have made progress in economic growth, liberalization, fiscal discipline, and political and social stability, there is no assurance these trends will continue.

Futures/options risk To the extent the fund uses futures and options, it is exposed to additional volatility and potential losses.

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As with all stock funds, the fund`s share price can fall because of weakness in one or more of its primary equity markets, a particular industry, or specific holdings. Stock markets can decline for many reasons, including adverse political or economic developments, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, our assessment of companies held in the fund may prove incorrect, resulting in losses or poor performance , even in rising markets.

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

The fund`s share price may decline, so when you sell your shares, you may lose money.

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

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Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. If you want to diversify your domestic stock portfolio by adding foreign investments, seek the long-term capital apprecia tion potential of growth stocks, and are comfortable with the risks that accompany foreign investments, the fund could be an appropriate part of your overall investment strategy.

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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 .

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.

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<R> Table 1 Average Annual Total Returns

	Periods ended December 31, 2003
	1 year	5 years	10 years
International Stock Fund
Returns before taxes	31.28 %	-1.34 %	3.64 %
Returns after taxes on distributions	30.62	-2.28	2.54
Returns after taxes on distributions and sale of fund shares	20.31	-1.43	2.68
MSCI EAFE Index	39.17	0.26	4.78
Lipper International Funds Average	34.74	1.28	4.65

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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. Taxes are computed using the highest federal income tax rate. The after-tax returns reflect the new lower ordinary income and capital gain rates effective under the Jobs and Growth Tax Relief Reconciliation Act of 2003, but do not reflect the new lower rate applicable to qualified dividends under the Act. The returns 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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MSCI EAFE Index tracks the stocks of about 1,000 companies in Europe, Australasia, and the Far East (EAFE).

What fees or expenses will I pay?

The fund is 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.

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	Annual fund operating expenses (expenses that are deducted from fund assets)
Management fee	0.67%
Other expenses	0.28%
Total annual fund operating expenses	0.95%

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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.

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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 fund 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, hold the investment for the following periods , and then redeem:

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1 year	3 years	5 years	10 years
$ 97	$ 303	$ 525	$ 1,166

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other INFORMATION about the fund

What are some of the potential rewards of investing overseas through the fund?

Investing abroad increases the opportunities available to you. Some foreign countries may have greater potential for economic growth than the U.S. Investing a portion of your overall portfolio in foreign stock funds can enhance your diversification while providing the opportunity to boost long-term returns.

How does the portfolio manager try to reduce risk?

The principal tools we use to try to reduce risk are intensive research and limiting exposure to any one industry or company. Currency hedging techniques may be used from time to time.

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Portfolio managers keep close watch on individual investments as well as on political and economic trends in each country and region. Holdings are adjusted according to the manager`s analysis and outlook.

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The impact on the fund`s share price from a drop in the price of a particular stock is reduced substantially by investing in a portfolio with dozens of different companies. Likewise, the impact of unfavorable developments in a particular country is reduced when investments are spread among many countries. However, the economies and financial markets of countries in a certain region may be influenced heavily by one another.

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

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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.

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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Information About Accounts in T. Rowe Price Funds 2

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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.

Pricing Shares and Receiving Sale Proceeds

How and when shares are priced

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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, the fund`s assets are valued and totaled, liabilities are subtracted, and the balance, called net assets, is divided by the number of shares outstanding. Market values are used to price stocks and bonds. Amortized cost is used to price securities held by money market fund s.

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The securities of funds investing in foreign markets are valued on the basis of the most recent closing market prices at 4 p.m. ET except under the circumstances described below . Most foreign markets close before 4 p.m . 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. If a fund determines that developments between the close of the foreign market and 4 p.m. ET will, in its judgment, materially affect the value of some or all of the fund`s securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of 4 p.m. ET. In deciding whether to make these adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets , and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities . A fund may also fair value securities in other situations, for example, when a particular foreign market is closed but the fund is open.

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The fund uses outside pricing services to provide it with closing market prices and information used for adjusting those prices. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day`s opening prices in the same markets, and adjusted prices.

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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

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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 2004 — January 1, 2 , 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. In 2005 — January 3 and 10; February 11; March 21; April 29; May 3, 4, and 5; July 18; September 19 and 23; October 10; November 3 and 23; December 23. 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

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Short-term "market timers" who engage in frequent purchases and redemptions can disrupt a fund`s investment program and create additional costs for long-term shareholders . 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 , which reduces the proceeds from such redemption by the amounts indicated :

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 %

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Redemption fees are paid to a fund to help offset 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.

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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.

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The following chart provides details on dividend payments :

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<R> Table 3 Dividend Payment Schedule

Fund	Dividends
Money market funds	Shares purchased by 12 noon ET via wire begin to earn dividends on that day . Other shares normally begin to earn dividends on the business day after payment is received. Declared daily and p aid on the first business day of each month.
Bond funds	Shares normally begin to earn dividends on the business day after payment is received . Declared daily and p aid 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 on the record date.
O ther stock funds	Declared annually, if any, generally in December. Must be a shareholder on the record date.
Retirement Funds : Retirement Income All other s	Shares normally begin to earn dividends on the business day after payment is received. Paid on the first business day of each month. Declared annually, if any, generally in December. Must be a shareholder on the record date.
Tax-Efficient Balanced	Municipal Portion Shares normally begin to earn dividends on the business day after payment is 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 on the record date.

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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.

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 will generally be subject to tax 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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Additional information about certain T. Rowe Price funds is listed below:

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Tax-Free and Municipal Funds
Regular monthly dividends (including the state specific tax-free funds) are expected to be exempt from federal income taxes. Exemption is not guaranteed , since the fund has the right under certain conditions to invest in nonexempt securities. You must report your total tax-free 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 dur ing the year.
Tax-Free and Municipal Funds (continued)
Tax-exempt dividends paid to Social Security recipients may increase the portion of benefits that are subject to tax. For state specific funds, the monthly dividends you receive are expected to be exempt from state and local income tax. For other funds, a small portion of your income dividend may be exempt from state and local income taxes. If the funds invest in certain "private activity" bonds, shareholders who are subject to the alternative minimum tax (AMT) must include income generated by those bonds in their AMT calculation. The portion of the fund`s income that should be included in your AMT calcula tion, if any, will be reported to you in January.
Tax-Efficient Balanced Fund
The fund intends to invest a sufficient portion of its assets in municipal bonds and notes so that it may qualify to pay tax-exempt dividends, which will be exempt from federal income tax. The fund may not always qualify to pay tax-exempt dividends. The amount of such dividends will be reported to you on your calendar year-end statement. You must report your total tax-exempt income on IRS Form 1040. This information is used by the IRS to help determine the tax status of any Social Security payments you may have received during the year. Tax-exempt interest paid to Social Security recipients may increase the portion of benefits that are subject to tax. A small portion of your income dividend may also be exempt from state income taxes. If the funds invest in certain "private activity" bonds, shareholders who are subject to the alternative minimum tax (AMT) must include income generated by those bonds in their AMT calculation. The portion of the fund`s income that should be included in your AMT calcula tion, if any, will be reported to you in January.
Florida Intermediate Tax-Free Fund
Florida does not have a state income tax but does impose an intangibles property tax that applies to shares of mutual funds. A fund organized as a business trust and invested at least 90% in Florida municipal obliga tions, U.S. government obligations, and certain other designated securities on January 1 is exempt from the tax. If a fund`s portfolio is less than 90% invested on January 1, the exemption applies only to the portion of assets (if any) invested in U.S. government obligations. 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 expects that the entire value of all fund shares will be exempt from the intangibles tax. Exemption is not guaranteed , since the fund has the right under certain conditions to invest in nonexempt securities.

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For individual shareholders, a portion of ordinary dividends representing qualified dividends received by the fund may be subject to tax at the lower rate applicable to long-term capital gains, rather than ordinary income. You may report it as a qualifying dividend in computing your taxes provided you have held the fund shares on which the dividend was paid for more than 60 days during the 120-day period beginning 60 days before the ex- dividend date. Ordinary
dividends that do not qualify for this lower rate are generally taxable at the investor ` s marginal income tax rate. This includes the portion of ordinary dividends derived from interest, short-term gains, distributions from cer tain nonqualified foreign corporations, and dividends received by the fund from stocks that were on loan. Lit tle, if any, of the ordinary dividends paid by the Real Estate Fund or the bond and money funds are expected to qualify for this lower rate.

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For corporate shareholders, a portion of ordinary dividends may be eligible for the 70% deduction for divi dends received by corporations to the extent the fund`s income consists of dividends paid by U.S. corporations. Little, if any, of the ordinary dividends paid by the bond and money funds are expected to qualify for this deduction.

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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.

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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."

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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.

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 gains on securities held more than 12 months are taxed at the lower rates applicable to long-term capital gains . 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 distribution received during the period you held the shares. If you realize d 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. For funds investing in foreign securities, distributions resulting from the sale of certain foreign currencies, cur rency 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.

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The following chart provides additional details on distributions for certain funds :

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<R> Table 4 Taxes on F und D istributions

Tax-Free and Municipal Funds
Gains 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. To the extent the fund invests in these securities, the likelihood of a taxable gain distribution will be increased.
Tax-Efficient Balanced Fund
Gains 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. To the extent the fund invests in these securities, the likelihood of a taxable gain distribution will be increased.
Inflation Protected Bond Fund
Inflation adjustments on Treasury inflation-protected securities exceeding deflation adjust ments for a year will be distributed to you as a short-term capital gain. In computing the distribution amount, 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.
Retirement Funds
Distributions by the underlying funds and changes in asset allocations may result in taxable distributions of ordinary income or capital gains.

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Tax consequences of hedging

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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.

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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 may 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 capi tal gains or income and unrealized appreciation, which may result in future taxable distributions. Such distribu tions can occur even in a year when the fund has a negative return.

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Transaction Procedures and Special Requirements

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.

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Excessive Trading and Market Timing

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T. Rowe Price may bar excessive traders and market timers from purchasing shares.

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Excessive trading or market timing in accounts that you own or control may disrupt management of a fund and raise its costs . While there is no assurance T. Rowe Price can prevent all excessive trading and market timing , each fund has adopted the policies set forth below to deter such activity. Persons trading directly or indirectly with T. Rowe Price or through intermediaries in violation of these policies or persons believed to be short-term market timers may be barred permanently or for a specific period of time from further purchases of the Price Funds . T ransactions placed by such persons are subject to rejection or cancellation without notice .

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All persons purchasing shares of a T. Rowe Price fund, directly or indirectly , can make only one "round trip" (i.e. one purchase and one sale or one sale and one purchase ) involving the same fund within any 120-day period .

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All persons purchas ing fund shares through an intermediary , including a broker, bank, investment adviser, recordkeeper, or other third party, and who hold the shares for less than 60 calendar days, are considered to have violated the policy .

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The following types of transactions are exempt from th ese polic ies: 1) trades 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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Int ermediaries often establish omnibus accounts in the T. Rowe Price funds for their customers. In such situa tions, T. Rowe Price cannot monitor trading activity by individual shareholders. However , T. Rowe Price reviews trading activ it y at the omnibus account level and looks for activity that indicates potential excessive trading or short-term market timing. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary to determine whether the fund`s polic ies ha ve been violated , and to what degree .

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T. Rowe Price may modify the 120-day and 60-day policies set forth above (for example, where a retirement plan with multiple investment options imposes a uniform restriction on trading in the plan for all investment options that differs from the T. Rowe Price fund`s polic ies ). These modifications would only be authorized if they provide substantially equivalent protection to the fund as the fund`s regular polic ies .

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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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More About the Fund 3

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Organization and Management

How is the fund organized?

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T. Rowe Price International Funds, Inc. (the "corporation") , was incorporated in Maryland in 1979 . C urrently the corporation consists of 12 series, each representing a separate pool of assets with different objectives and investment policies. 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 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 fund`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 .

Investment Manager

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T. Rowe Price International is responsible for the selection and management of fund portfolio investments. The U.S. office of T. Rowe Price International is located at 100 East Pratt Street, Baltimore, Maryland 21202.

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Portfolio Management

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The fund has an Investment Advisory Group that has day-to-day responsibility for managing the portfolio and developing and executing the fund`s investment program. The members of the advisory group are: Mark C.J. Bickford-Smith , James B.M. Seddon, and David J.L. Warren.

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Mark Bickford-Smith joined T. Rowe Price In ternational in 1995 and has 1 9 years of experience in research and financial analysis. James Seddon joined T. Rowe Price International in 1987 and has 1 7 years of experience in portfolio management. David Warren joined T. Rowe Price International in 1983 and has 2 4 years of experience in equity research, fixed - income research, and portfolio management.

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The Management Fee

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(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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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 $ 106 bil . lion at October 31, 2003 , the group fee was 0.32%. . The individual fund fee is 0.35%.

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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.

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 common stocks. 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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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

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In seeking to meet its investment objective, fund investments may be made 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 invest ment management practices.

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Fundamental policy The fund will not purchase a security if, as a result, with respect to 75% of its total assets, more than 5% of the fund `s total assets would be invested in securities of a single issuer or more than 10% of the outstanding voting securities of the issuer would be held by the fund.

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Fund investments are primarily in common stocks and, to a lesser degree, other types of securities as described below.

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Common and Preferred Stocks

Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks after bonds and before common stocks in its claim on income for dividend payments and on assets should the company be liquidated. After other claims are satisfied, common stockholders participate in company profits on a pro-rata basis; profits may be paid out in dividends or reinvested in the company to help it grow. Increases and decreases in earnings are usually reflected in a company`s stock price, so common stocks generally have the great est appreciation and depreciation potential of all corporate securities. While most preferred stocks pay a divi dend, preferred stock may be purchased where the issuer has omitted, or is in danger of omitting, payment of its dividend. Such investments would be made primarily for their capital appreciation potential.

Convertible Securities and Warrants

Investments may be made in debt or preferred equity securities convertible into, or exchangeable for, equity securities. Traditionally, convertible securities have paid dividends or interest at rates higher than common stocks but lower than nonconvertible securities. They generally participate in the appreciation or depreciation of the underlying stock into which they are convertible, but to a lesser degree. Some convertibles combine higher or lower current income with options and other features. Warrants are options to buy a stated number of shares of common stock at a specified price anytime during the life of the warrants (generally, two or more years). War rants can be highly volatile, have no voting rights, and pay no dividends.

Fixed-Income Securities

From time to time, we may invest in corporate and government fixed-income securities. These securities would be purchased in companies that meet fund investment criteria. The price of a bond fluctuates with changes in interest rates, generally rising when interest rates fall and falling when interest rates rise.

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, redemption, or conversion terms of a security could be related to the market price of some commodity, currency, or securities index. Such securities may bear interest or pay dividends at below market or even relatively nominal rates. Under certain conditions, the redemption value of a hybrid could be zero.

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

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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.

Types of Investment Management Practices

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 both 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. Significant investments in reserves could compromise the ability to achieve fund 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.

Foreign Currency Transactions

The fund will normally conduct its foreign currency exchange transactions, if any, either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward con tracts to purchase or sell foreign currencies. The fund will generally not enter into a forward contract with a term greater than one year.

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The fund will generally enter into forward foreign currency exchange contracts only under two circumstances. 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. Second, when T. Rowe Price International believes that the currency of a particular foreign country may move substantially against another currency, it may enter into a forward contract to sell or buy the former foreign currency (or another currency that acts as a proxy for that currency). The contract may approximate the value of some or all of the fund`s portfolio securities denominated in such foreign currency. Under unusual circumstances, the fund may commit a substantial portion or the entire value of its portfolio to the consummation of these contracts. T. Rowe Price International will consider the effect such a commitment to forward contracts would have on the fund`s investment program and the flexibility of the fund to purchase additional securities. Although forward contracts will be used primarily to protect the fund from adverse currency movements, they also involve the risk that anticipated currency movements will not be accurately predicted, and fund total return could be adversely affected as a result.

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There are some markets where it is not possible to engage in effective foreign currency hedging. This is generally true, for example, for the currencies of various emerging markets where the foreign exchange markets are not sufficiently developed to permit hedging activity to take place.

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 exposure to changes in securities prices and foreign currencies; as an efficient means of increasing or decreasing fund overall exposure to

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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 cur rencies.

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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.

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.

Tax Consequences of Hedging

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 are classified as capital gains or ordinary income.

Lending of Portfolio Securities

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 .

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

Portfolio Turnover

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Turnover is an indication of frequency of trading . We 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 capital gain distributions . The fund`s portfolio turnover rates are shown in the Financial Highlights table.

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Financial Highlights

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Table 5 , which provides information about the fund`s financial history, is based on a single share outstanding throughout the periods shown. 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 invest ment in the 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 fund`s indepen dent auditors , PricewaterhouseCoopers LLP.

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<R> Table 5 Financial Highlights

	Year ended October 31
	1999	2000	2001	200 2	200 3

Net asset value, beginning of period	$ 14.39	$ 16.70	$ 16.11	$ 1 0.65	$ 8.87
Income From Investment Operations
Net investment income	0.17	0.10	0.29	0. 11	0.14
Net gains or losses on securities (both realized and unrealized)	2.71	0.35	(4.48 )	( 1.56 )	1.76
Total from investment operations	2.88	0.45	(4.19 )	( 1.45 )	1.90
Less Distributions
Dividends (from net investment income)	(0.22 )	(0.13 )	(0.09 )	(0. 30 )	( 0.11 )
Distributions (from capital gains)	(0.35 )	(0.91 )	(1.18 )	( 0.03 )	—
Returns of capital	—	—	—	—	—
Total distributions	(0.57 )	(1.04 )	(1.27 )	( 0.33 )	( 0.11 )
Net asset value, end of period	$ 16.70	$ 16.11	$ 10.65	$ 8.87	$ 10.66
Total return	20.67 %	2.28 %	(28.17 )%	( 14.19 )%	21.69 %
Ratios/Supplemental Data
Net assets, end of period (in millions)	$ 10,615	$ 10,458	$ 6,370	$ 4,773	$ 4,874
Ratio of expenses to average net assets	0.85 %	0.84 %	0.90 %	0.9 2 %	0.95 %
Ratio of net income to average net assets	1.05 %	0.55 %	2.14 %	0.96 %	1.39 %
Portfolio turnover rate	17.6 %	38.2 %	17.4 %	21.6 %	25.2 %

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Investing With T. Rowe Price 4

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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 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.

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

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In order to obtain an account number, you must supply the name, date of birth, Social S ecurity or employer identifi cation number , and residential or business street address for each owner on the account.

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

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Note: Investment will be made, but services may not be established and IRS penalty withholding may occur until we receive a signed New Account Form.

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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

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.

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 customer identification 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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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.

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.

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Note: Corporate and other institutional accounts require documents showing the existence of the entity to open an account . Certain other fiduciary accounts (such as trusts or power of attorney arrangements) require documentation, which may include an original or certified copy of the trust agreement or power of attorney to open an account . For more information, call Investor Services.

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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

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.

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).

Web Address
troweprice.com

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.

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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

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.

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

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.

Investor Information

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.

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.

*Services vary by firm.

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

Investment Information

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.

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.

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, and Retirement Planning Kit .

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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.

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You may provide information when communicating or transacting business 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.

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:

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.

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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F37-040 3/1/04

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

1940 Act File No. 811-2958

March 1, 2004

Prospectus

T. Rowe Price

PAGE 33

International Stock Fund — Advisor Class

A stock fund seeking long-term capital growth through investments in non-U.S. companies. 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	12
	Distribution, Shareholder Servicing, and Recordkeeping Fees	14

3	More About the Fund
	Organization and Management	15
	Understanding Performance Information	17
	Investment Policies and Practices	17
	Financial Highlights	22

4	Investing With T. Rowe Price
	Account Requirements and Transaction Information	24
	Purchasing Additional Shares	25
	Exchanging and Redeeming Shares	25
	Rights Reserved by the Funds	25
	T. Rowe Price Privacy Policy	27

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PAGE 35

T. Rowe Price International Funds, Inc.

T. Rowe Price International Stock Fund — Advisor Class

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T. Rowe Price International, Inc. managed $ 22 . 9 billion in foreign stocks and bonds as of December 31, 2003 , through its offices in Baltimore, London, Singapore, Hong Kong, Buenos Aires, and Paris.

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About the Fund 1

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objective, strategy, risks, and expenses

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A word about the fund`s name and structure. Each Advisor Class is a share class of its respective T. Rowe Price fund. The Advisor Class is not a separate mutual fund. The shares are designed to be 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 long-term growth of capital through investments primarily in the common stocks of estab lished, non-U.S. companies.

What is the fund`s principal investment strategy?

In selecting stocks, we generally favor companies with one or more of the following characteristics:

leading market position;

attractive business niche;

strong franchise or monopoly;

technological leadership or proprietary advantages;

seasoned management;

earnings growth and cash flow sufficient to support growing dividends; and

healthy balance sheet with relatively low debt.

While the fund invests primarily in common stocks, the fund may also purchase other securities, including futures and options, in keeping with the fund`s objective.

The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities.

What are the main risks of investing in the fund?

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Geographic risk The economies and financial markets of certain regions — such as Latin America and Asia — can be interdependent and may all decline at the same time.

Emerging market risk To the extent the fund invests in emerging markets, it is subject to greater risk than a fund investing only in developed markets. 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. Fund performance will likely be hurt by exposure to nations in the midst of hyperinflation, currency devaluation, trade disagreements, sudden political upheaval, or interventionist gov ernment policies. Significant buying or selling by a few major investors may also heighten the volatility of emerging markets. These factors make investing in such countries significantly riskier than in other countries , and any one of the factors could cause the fund`s share price to decline.

While certain countries have made progress in economic growth, liberalization, fiscal discipline, and political and social stability, there is no assurance these trends will continue.

Futures/options risk To the extent the fund uses futures and options, it is exposed to additional volatility and potential losses.

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

The fund`s share price may decline, so when you sell your shares, you may lose money.

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

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Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. If you are investing through an intermediary, and want to diversify your domestic stock portfolio by adding foreign invest ments, seek the long-term capital appreciation potential of growth stocks, and if you are comfortable with the risks that accompany foreign investments, the fund could be an appropriate part of your overall investment strategy.

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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 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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	Periods ended December 31, 2003
	1 year	Since inception (3/31/00)
International Stock Fund — Advisor Class
Return s before taxes	31.12 %	-9.42 %
Return s after taxes on distributions	30.50	-10.29
Return s after taxes on distributions and sale of fund shares	20.21	-8.15
MSCI EAFE Index	39.17	-5.90
Lipper International Funds Average	34.74	-7.50

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MSCI EAFE Index tracks the stocks of about 1,000 companies in Europe, Australasia, and the Far East (EAFE).

What fees or expenses will I pay?

<R> Table 2 Fees and Expenses of the Advisor Class*

	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	0.19 %
Total annual fund operating expenses	1.11 % 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 November 1, 2003, T. Rowe Price International contractually obligated itself to bear any expenses a nd/or waive its fees through February 28, 2006, that would cause the class`s ratio of expenses to average net assets to exceed 1.15%. Expenses paid or assumed or fees waived 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 February 29, 2008, or if it would result in the expense ratio exceeding 1.15%. Any amounts reimbursed will have the effect of increasing fees o th erwise paid by the class. The fund operated under a previous expense limitation for which T. Rowe Price may be reimbursed.

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PAGE 39

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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, hold the investment for the following periods , and then redeem:

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1 year	3 years	5 years	10 years
$ 113	$ 353	$ 612	$ 1,352

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other INFORMATION about the fund

What are some of the potential rewards of investing overseas through the fund?

How does the portfolio manager try to reduce risk?

The principal tools we use to try to reduce risk are intensive research and limiting exposure to any one industry or company. Currency hedging techniques may be used from time to time.

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

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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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Information About Accounts in T. Rowe Price Funds 2

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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.

Pricing Shares and Receiving Sale Proceeds

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 that the e xchange is open for business. To calculate the NAV, the fund`s assets are valued and totaled, liabilities are subtracted, and each class`s proportionate 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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The fund uses outside pricing services to provide it with closing market prices and information used for adjust ing those prices. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. As a means of evaluating its fair value process, the fund routinely compares closing market prices , the next day`s opening prices in the same markets, and adjusted prices.

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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, trade deadlines , and other appli cable 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 correct form by 4 p.m. ET , 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 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 correct 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 interme diaries 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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PAGE 41

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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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The following chart provides details on dividend payments:

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<R> Table 3 Dividend Payment Schedule

Fund	Dividends
Bond funds	Shares normally begin to earn dividends on the business day after payment is received. Declared daily and p aid on the first business day of each month.
Equity Income Fund — Advisor Class	Declared quarterly, if any, in March, June, September, and December. Must be a shareholder on the record date.
Other stock funds	Declared annually, if any, generally in December. Must be a shareholder on the record date.
Retirement Funds : Retirement Income Fund — Advisor Class All others	Shares normally begin to earn dividends on the business day after payment is received. Paid on the first business day of each month. Declared annually, if any, generally in December. Must be a shareholder on the record date.

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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 will generally be subject to tax 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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For individual shareholders, a portion of ordinary dividends representing qualified dividends received by the fund may be subject to tax at the lower rate applicable to long-term capital gains, rather than ordinary income. You may report it as a qualifying dividend in computing your taxes provided you have held the fund shares on which the dividend was paid for more than 60 days during the 120-day period beginning 60 days before the ex- dividend date. Ordinary
dividends that do not qualify for this lower rate are generally taxable at the investor`s marginal income tax rate. This includes the portion of ordinary dividends derived from interest, short-term gains, distributions from cer

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tain nonqualified foreign corporations, and dividends received by the fund from stocks that were on loan. Lit tle, if any, of the ordinary dividends paid by the bond f und Advisor Classes are expected to qualify for this lower rate.

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For corporate shareholders, a portion of ordinary dividends may be eligible for the 70% deduction for divi dends received by corporations to the extent the fund`s income consists of dividends paid by U.S. corporations. Little, if any, of the ordinary dividends paid by the bond fund Advisor Classes are expected to qualify for this deduction.

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Note: R egular monthly dividends you receive from the Tax-Free Income Fund — Advisor Class are expected to be exempt from federal income taxes. Exemption is not guaranteed since the fund has the right under certain con ditions to invest in non exempt securities. 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. Tax-exempt dividends paid to Social Security recipients 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 also a sale for tax purposes.

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Taxes on fund distributions

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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 gains on securities held more than 12 months are taxed at the lower rates applicable to long-term capital gains . 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 distribution received during the period you held the shares. 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. For funds investing in foreign securities, distributions result ing 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.

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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. Gains realized on the sale of mar ket discount bonds with maturities beyond one year may be treated as ordinary income and cannot be offset by other capital losses. To the extent the fund invests in these securities, the likelihood of a taxable gain distribu tion will be increased.

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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 ordinary income or capital gains.

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Tax consequences of hedging

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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. 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.

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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 may 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. The intermediary will be responsible for a ny losses or expenses incurred by the fund or transfer agent . 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 and Market Timing

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T. Rowe Price may bar excessive traders and market timers from purchasing shares.

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Excessive trading or market timing in account s that you own or control may disrupt management of a fund and raise its costs . While there is no assurance T. Rowe Price can prevent all excessive trading and market timing , each fund has adopted the polic ies set forth below to deter such activity . Persons trading directly or indirectly with T. Rowe Price or through intermediaries in violation of these policies or persons believed to be short-term market timers may be barred permanently or for a specific period of time from further purchases of the Price Funds . T ransactions placed by such persons are subject to rejection or cancellation without notice .

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All persons purchasing shares of a T. Rowe Price fund, directly or indirectly, can make only one "round trip" (i.e. one purchase and one sale or one sale and one purchase) involving the same fund within any 120-day period.

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All persons purchasing fund shares through an intermediary, including a broker, bank, investment adviser, recordkeeper, or other third party, and who hold the shares for less than 60 calendar days, are considered to have violated the policy.

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You can make only one "round trip" (i.e. one purchase and one sale or one sale and one purchase ) involving the same fund within any 120-day period .

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Systematic purchases and redemptions are exempt from these policies.

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Intermediaries often establish omnibus accounts in the T. Rowe Price funds for their customers. In such situa tions, T. Rowe Price cannot monitor trading activity by individual shareholders. However, T. Rowe Price reviews trading activity at the omnibus account level and looks for activity that indicates potential excessive trading or short-term market timing. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary to determine whether the fund`s policies have been violated, and to what degree.

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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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The 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 per form.

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More About the Fund 3

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Organization and Management

How is the fund organized?

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T. Rowe Price International Funds, Inc. , (the "corporation") was incorporated in Maryland in 1979. C urrently , the corporation consists of 12 series, each representing a separate pool of assets with different objectives and investment policies. Each is an " open-end investment company, " or mutual fund. Mutual funds pool money received from shareholders of each class into a single portfolio and invest it to try to achieve specified objec tives. In 2000, the International Stock Fund issued a separate class of shares known as the Advisor Class.

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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 .

Investment Manager

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Portfolio Management

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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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Understanding Performance Information

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

Investment Policies and Practices

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80% of net assets in common stocks. 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

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Fundamental policy The fund will not purchase a security if, as a result, with respect to 75% of its total assets, more than 5% of the fund`s total assets would be invested in securities of a single issuer or more than 10% of the outstanding voting securities of the issuer would be held by the fund.

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Fund investments are primarily in common stocks and, to a lesser degree, other types of securities as described below.

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Common and Preferred Stocks

Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks after bonds and before common stocks in its claim on income for dividend payments and on assets should the company be liquidated. After other claims are satisfied, common stockholders participate in company profits on a pro-rata basis; profits may be paid out in dividends or reinvested in the company to help it grow. Increases and decreases in earnings are usually reflected in a company`s stock price, so common stocks generally have the greatest appreciation and depreciation potential of all corporate securities. While most preferred stocks pay a dividend, preferred stock may be purchased where the issuer has omitted, or is in danger of omitting, payment of its dividend. Such investments would be made primarily for their capital appreciation potential.

Convertible Securities and Warrants

Fixed-Income Securities

PAGE 49

Hybrid Instruments

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.

Types of Investment Management Practices

Reserve Position

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Borrowing Money and Transferring Assets

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

Foreign Currency Transactions

The fund will generally enter into forward foreign currency exchange contracts only under two circumstances. 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. Second, when T. Rowe Price International believes that the currency of a particular foreign country may move substantially against another currency, it may enter into a forward contract to sell or buy the former foreign currency (or another currency that acts as a proxy for that currency). The contract may approximate the value of some or all of the fund portfolio securities denominated in such foreign currency. Under unusual circumstances, the fund may commit a substantial portion or the entire value of its portfolio to the consummation of these contracts. T. Rowe Price International will consider the effect such a commitment to forward contracts would have on the fund`s investment program and the flexibility of the fund to purchase additional securities. Although forward contracts will be used primarily to protect the fund from adverse currency movements, they also involve the risk that anticipated currency movements will not be accurately predicted, and fund total return could be adversely affected as a result.

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 exposure to changes in securities prices and foreign currencies ; as an efficient means of increasing or decreasing 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 cur rencies.

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Tax Consequences of Hedging

Lending of Portfolio Securities

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

Portfolio Turnover

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Turnover is an indication of frequency of trading . We 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 capital gain dis tributions . The fund`s portfolio turnover rates are shown in the Financial Highlights table.

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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 auditors , PricewaterhouseCoopers LLP.

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<R> Table 4 Financial Highlights

	3/31/00 * through 10/31/00	Year ended October 31
		2001	2002	200 3

Net asset value, beginning of period	$ 19.12	$ 16.12	$ 10.66	$ 8 . 8 6
Income From Investment Operations
Net investment income	0.02	0.29	0.10	0.1 2
Net gains or losses on securities (both realized and unrealized)	(3.02 )	(4.46 )	(1.57 )	1. 76
Total from investment operations	(3.00 )	(4.17 )	(1.47 )	1. 88
Less Distributions
Dividends (from net investment income)	—	(0.11 )	(0.30 )	(0. 11 )
Distributions (from capital gains)	—	(1.18 )	(0.03 )	—
Returns of capital	—	—	—	—
Total distributions	—	(1.29 )	(0.33 )	(0. 11 )
Redemption fees added to paid in capital	—	—	—	—
Net asset value, end of period	$ 16.12	$ 10.66	$ 8. 8 6	$ 10 .6 3
Total return	(15.69 )%	(28.06 )%	(14.37 )%	2 1 . 49 %
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$ 1,500	$ 6,938	$ 10,207	$ 1 8 , 309
Ratio of expenses to average net assets	0.83 % a	1.05 %	1.15 %	1. 11 %
Ratio of net income to average net assets	0.63 % a	2.26 %	0.82 %	1.28 %
Portfolio turnover rate	38.2 %	17.4 %	21.6 %	25.2 %

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* Inception date.

a Annualized.

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Investing With T. Rowe Price 4

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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 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.

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:

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In order to obtain an account number, the intermediary must supply the name, Social Security or employer identifica tion number, and business street address for the account.

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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.

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via U . S . Postal Service

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

via private carriers/overnight services

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

Purchasing Additional ShareS

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

By Wire

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

PAGE 53

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. 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 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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E237-040 3/1/04

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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.

March 1, 2004

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Prospectus

T. Rowe Price

International Stock Fund — R Class

A stock fund seeking long-term capital growth through investments in non-U.S. companies. 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	13

3	More About the Fund
	Organization and Management	14
	Understanding Performance Information	16
	Investment Policies and Practices	16
	Financial Highlights	21

4	Investing With T. Rowe Price
	Account Requirements and Transaction Information	23
	Purchasing Additional Shares	24
	Exchanging and Redeeming Shares	24
	Rights Reserved by the Funds	24
	T. Rowe Price Privacy Policy	26

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T. Rowe Price International Funds, Inc.

T. Rowe Price International Stock Fund — R Class

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About the Fund 1

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objective, strategy, risks, and expenses

A word about the fund`s name and structure. Each R Class is a share class of its respective T. Rowe Price fund. The R Class is not a separate mutual fund. The shares are designed to be sold only through various third-party intermediaries that offer employer-sponsored retirement plans, including brokers, dealers, banks, insurance companies, retirement plan recordkeepers, and others.

What is the fund`s objective?

The fund seeks long-term growth of capital through investments primarily in the common stocks of estab lished, non-U.S. companies.

What is the fund`s principal investment strategy?

T.Rowe Price International, Inc. ("T. Rowe PRice International") employs in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase such stocks at reasonable prices in relation to present or anticipated earnings, cash flow, or book value, and valuation factors often influence our allocations among large-, mid-, or small-cap shares.

In selecting stocks, we generally favor companies with one or more of the following characteristics:

leading market position;

attractive business niche;

strong franchise or monopoly;

technological leadership or proprietary advantages;

seasoned management;

earnings growth and cash flow sufficient to support growing dividends; and

healthy balance sheet with relatively low debt.

While the fund invests primarily in common stocks, the fund may also purchase other securities, including futures and options, in keeping with the fund`s objective.

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The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities.

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What are the main risks of investing in the fund?

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Geographic risk The economies and financial markets of certain regions — such as Latin America and Asia — can be interdependent and may all decline at the same time.

While certain countries have made progress in economic growth, liberalization, fiscal discipline, and political and social stability, there is no assurance these trends will continue.

Futures/options risk To the extent the fund uses futures and options, it is exposed to additional volatility and potential losses.

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

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The fund`s share price may decline, so when you sell your shares, you may lose money .

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

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Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. If you are investing through an intermediary, want to diversify your domestic stock portfolio by adding foreign invest ments, seek the long-term capital appreciation potential of growth stocks, and are comfortable with the risks that accompany foreign investments, the fund could be an appropriate part of your overall investment strategy.

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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 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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Table 1 Average Annual Total Returns

	Periods ended December 31, 2003
	1 year	Since inception (9/30/02)
International Stock Fund — R Class
Return s before taxes	30.71 %	32.18 %
Return s after taxes on distributions	30.09	31.32
Return s after taxes on distributions and sale of fund shares	19.94	26.99
MSCI EAFE Index	39.17	36.94
Lipper International Funds Average	34.74	32.64

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MSCI EAFE Index tracks the stocks of about 1,000 companies in Europe, Australasia, and the Far East (EAFE).

What fees or expenses will I pay?

<R> Table 2 Fees and Expenses of the R Class*

	Annual fund operating expenses (expenses that are deducted from fund assets)
Management fee	0.67%
Distribution and service (12b-1) fees	0.50%
Other expenses	0.76%
Total annual fund operating expenses	1.93%
Fee waiver/reimbursement	0.53% a
Net expenses	1.40% 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 March 1 , 200 4 , T. Rowe Price International contractually obligated itself to bear any expenses and/or waive its fees through February 28, 2006, that would cause the class`s ratio of expenses to average net assets to exceed 1.40% . Expenses paid or assumed or fees waived under this agreement are subject to reimbursement to T. Rowe Price International by the fund whenever the class`s expense ratio is below 1.40% ; however, no reimbursement will be made after February 28, 200 8 , or if it would result in the expense ratio exceeding 1.40% . Any amounts reimbursed will have the effect of increasing fees oth erwise paid by the class. The fund operated under a previous expense limitation for which T. Rowe Price may be reimbursed.

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1 year	3 years	5 years	10 years
$ 143	$ 481	$ 922	$ 2,149

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other INFORMATION about the fund

What are some of the potential rewards of investing overseas through the fund?

How does the portfolio manager try to reduce risk?

The principal tools we use to try to reduce risk are intensive research and limiting exposure to any one industry or company. Currency hedging techniques may be used from time to time.

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

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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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Information About Accounts in T. Rowe Price Funds 2

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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 R Class accounts .

Pricing Shares and Receiving Sale Proceeds

How and when shares are priced

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The securities of funds investing in foreign markets are valued on the basis of the most recent closing market prices at 4 p.m. ET except under the circumstances described below . Most foreign markets close before 4 p.m. 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. If a fund determines that developments between the close of the foreign market and 4 p.m. ET will, in its judgment, materially affect the value of some or all of the fund`s securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of 4 p.m. ET. In deciding whether to make these adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets , and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities . A fund may also fair value securities in other situations, for example, when a particular foreign market is closed but the fund is open.

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The fund uses outside pricing services to provide it with closing market prices and information used for adjust ing those prices. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day`s opening prices in the same markets, and adjusted prices.

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How your purchase, sale, or exchange price is determined

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

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How proceeds are received

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Useful Information on Distributions and Taxes

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

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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.

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

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The following chart provides details on dividend payments:

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<R> Table 3 Dividend Payment Schedule

Fund	Dividends
Bond funds	Shares normally begin to earn dividends on the business day after payment is received. Declared daily and p aid on the first business day of each month.
Equity Income Fund — R Class	Declared quarterly, if any, in March, June, September, and December. Must be a shareholder on the record date.
Other stock funds	Declared annually, if any, generally in December. Must be a shareholder on the record date.
Retirement Funds : Retirement Income Fund — R Class All others	Shares normally begin to earn dividends on the business day after payment is received. Paid on the first business day of each month. Declared annually, if any, generally in December. Must be a shareholder on the record date.

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Capital gains payments

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

Tax Information

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, y ou will generally be subject to tax when:

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

The fund makes a distribution to your account.

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For individual shareholders, a portion of ordinary dividends representing qualified dividends received by the fund may be subject to tax at the lower rate applicable to long-term capital gains, rather than ordinary income. You may report it as a qualifying dividend in computing your taxes provided you have held the fund shares on which the dividend was paid for more than 60 days during the 120-day period beginning 60 days before the ex- dividend date. Ordinary
dividends that do not qualify for this lower rate are generally taxable at the investor`s marginal income tax rate. This includes the portion of ordinary dividends derived from interest, short-term gains, distributions from cer tain nonqualified foreign corporations, and dividends received by the fund from stocks that were on loan. Lit tle, if any, of the ordinary dividends paid by the bond fund R Class es are expected to qualify for this lower rate.

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For corporate shareholders, a portion of ordinary dividends may be eligible for the 70% deduction for divi dends received by corporations to the extent the fund`s income consists of dividends paid by U.S. corporations. Little, if any, of the ordinary dividends paid by the bond fund R Class es are expected to qualify for this deduc tion.

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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 also a sale for tax purposes.

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Taxes on fund distributions

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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 gains on securities held more than 12 months are taxed at the lower rates applicable to long-term capital gains . 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 distribution received during the period you held the shares. 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 dividend s to be re classified 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 ordinary income or capital gains.

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Tax consequences of hedging

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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. 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 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 may 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

Purchase Conditions for Intermediaries

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. The intermediary will be responsible for a ny losses or expenses incurred by the fund or transfer agent . 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

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

Holds on immediate redemptions: 10-day hold

Redemptions over $250,000

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Excessive Trading and Market Timing

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T. Rowe Price may bar excessive traders and market timers from purchasing shares.

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Excessive trading or market timing in account s that you own or control may disrupt management of a fund and raise its costs . While there is no assurance T. Rowe Price can prevent all excessive trading and market timing , each fund has adopted the polic ies set forth below to deter such activity . Persons trading directly or indirectly with T. Rowe Price or through intermediaries in violation of these policies or persons believed to be short-term market timers may be barred permanently or for a specific period of time from further purchases of the Price Funds . Transactions placed by such persons are subject to rejection or cancellation without notice .

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All persons purchasing shares of a T. Rowe Price fund, directly or indirectly, can make only one "round trip" (i.e. one purchase and one sale or one sale and one purchase) involving the same fund within any 120-day period.

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All persons purchasing fund shares through an intermediary, including a broker, bank, investment adviser, recordkeeper, or other third party, and who hold the shares for less than 60 calendar days, are considered to have violated the policy.

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Systematic purchases and redemptions are exempt from these policies.

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Intermediaries often establish omnibus accounts in the T. Rowe Price funds for their customers. In such situa tions, T. Rowe Price cannot monitor trading activity by individual shareholders. However , T. Rowe Price reviews trading activ ity at the omnibus account level and looks for activity that indicates potential excessive trading or short-term market timing. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary to determine whether the fund`s polic ies have been violated , and to what degree .

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Signature Guarantees

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

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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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 R 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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More About the Fund 3

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Organization and Management

How is the fund organized?

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T. Rowe Price International Funds, Inc. , (the "corporation") was incorporated in Maryland in 1979. C urrently , the corporation consists of 12 series, each representing a separate pool of assets with different objectives and investment policies. Each is an " open-end investment company, " or mutual fund. Mutual funds pool money received from shareholders of each class into a single portfolio and invest it to try to achieve specified objectives. In 2002, the International Stock Fund issued a separate class of shares known as the R Class.

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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 R 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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Do T. Rowe Price funds have annual shareholder meetings?

Who runs the fund?

General Oversight

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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 .

Investment Manager

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Portfolio 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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Understanding Performance Information

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

Investment Policies and Practices

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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

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Fund investments are primarily in common stocks and, to a lesser degree, other types of securities as described below.

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Common and Preferred Stocks

Convertible Securities and Warrants

Fixed-Income Securities

Hybrid Instruments

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.

Types of Investment Management Practices

Reserve Position

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Borrowing Money and Transferring Assets

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

Foreign Currency Transactions

The fund will generally enter into forward foreign currency exchange contracts only under two circumstances. 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. Second, when T. Rowe Price International believes that the currency of a particular foreign country may move substantially against another currency, it may enter into a forward contract to sell or buy the former foreign currency (or another currency that acts as a proxy for that currency). The contract may approximate the value of some or all of the fund portfolio securities denominated in such foreign currency. Under unusual circumstances, the fund may commit a substantial portion or the entire value of its portfolio to the consummation of these contracts. T. Rowe Price International will consider the effect such a commitment to forward contracts would have on the fund`s investment program and the flexibility of the fund to purchase additional securities. Although forward contracts will be used primarily to protect the fund from adverse currency movements, they also involve the risk that anticipated currency movements will not be accurately predicted, and fund total return could be adversely affected as a result.

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Futures and Options

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Tax Consequences of Hedging

Lending of Portfolio Securities

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

Portfolio Turnover

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Financial Highlights

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<R> Table 4 Financial Highlights

	9 /30 /0 2 * through 10/31/02	Year ended October 31
		200 3

Net asset value, beginning of period	$ 8. 29	$ 8.88
Income From Investment Operations
Net investment income	—	0.13 b
Net gains or losses on securities (both realized and unrealized)	0. 59	1.72
Total from investment operations	0. 59	1.85
Less Distributions
Dividends (from net investment income)	—	( 0 .11 )
Distributions (from capital gains)	—	—
Returns of capital	—	—
Total distributions	—	—
Redemption fees added to paid in capital	—	—
Net asset value, end of period	$ 8 . 88	$ 10.62
Total return	7. 1 2 %	21.10 % b
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$ 107	$ 216
Ratio of expenses to average net assets	1 .22 % a	1.40 % b
Ratio of net income to average net assets	(0 . 2 1 )% a	0.82 % b
Portfolio turnover rate	21. 6 %	25.2 %

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* Inception date.

a Annualized.

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b Excludes expenses in excess of a 1.40% contractual expense limitation in effect through 2/28/04.

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Investing With T. Rowe Price 4

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Account Requirements and Transaction Information

Tax Identification
Number

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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:

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In order to obtain an account number, the intermediary must supply the name, Social Security or employer identifica tion number, and business street address for the account.

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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.

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via U . S . Postal Service

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

via private carriers/overnight services

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

Purchasing Additional ShareS

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

By Wire

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

Exchanging and redeeming ShareS

Exchange Service

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 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

E437-040 3/1/04

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.

March 1, 2004

Prospectus

T. Rowe Price

International Growth & Income Fundxd1 Advisor Class

A stock fund s eeking long-term capital growth and a reasonable level of income through investments in non-U.S. companies . 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	12
	Distribution, Shareholder Servicing, and Recordkeeping Fees	14

3	More About the Fund
	Organization and Management	15
	Understanding Performance Information	17
	Investment Policies and Practices	18
	Financial Highlights	22

4	Investing With T. Rowe Price
	Account Requirements and Transaction Information	24
	Purchasing Additional Shares	25
	Exchanging and Redeeming Shares	25
	Rights Reserved by the Funds	25
	T. Rowe Price Privacy Policy	27

T. Rowe Price International Funds, Inc.

T. Rowe Price International Growth & Income Fundxd1 Advisor Class

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T. Rowe Price International, Inc. managed $22.9 billion in foreign stocks and bonds as of QTRENDDATE , through its offices in Baltimore, London, Singapore, Hong Kong, Buenos Aires, and Paris.

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About the Fund 1

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objective, strategy, risks, and expenses

A word about the fund`s name and structure. Each ADVISOR/R Class is a share class of its respective T.x11 Rowe Price fund . The ADVISOR/R Class is not a separate mutual fund. ADVISOR LANG/R CLASS LANG .

What is the fund`s objective?

The fund seeks long-term growth of capital and reasonable income through investments primarily in the common stocks of well-established, dividend-paying non-U.S. companies.

What is the fund`s principal investment strategy?

We expect to invest substantially all of the fund`s assets outside the U.S. and to diversify broadly, primarily among the world`s developed countries. The fund will invest primarily (at least 65% of total assets) in the stocks of dividend-paying , large, well-established companies that have favorable prospects for capital appreciation, as determined by T. Rowe Price International . Investments in emerging markets will be modest and limited to more mature developing countries.

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In selecting common stocks, we combine proprietary quantitative analysis with bottom-up fundamental research and a regional, country , and sector outlook. Our investing style reflects both growth and value considerations , although in general we place less emphasis on above-average earnings growth and more on "value" characteris tics such as above-average dividend yields or below-average price/earnings or price/book value ratios. Valuation factors often influence our allocations among large-, mid-, or small-cap shares. Country and sector allocation s are driven by stock selection as well as views on overall prospects.

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While the fund invests primarily in common stocks, the fund may also purchase other securities, including futures and options, in keeping with the fund`s objective.

THE/EACH fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities.

What are the main risks of investing in the fund ?

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Geographic risk The economies and financial markets of CERTAIN/VARIOUS regions --SUCH AS LATIN AMERICA AND ASIA-- can be interdependent and may all decline at the same time.

While certain countries have made progress in economic growth, liberalization, fiscal discipline, and political and social stability, there is no assurance these trends will continue.

Futures/options risk To the extent the fund uses futures and options, it is exposed to additional volatility and potential losses.

As with all stock funds, the fund`s share price can fall because of weakness in one or more of its primary equity markets, a particular industry, or specific holdings. Stock markets can decline for many reasons, including adverse political or economic developments, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, our assessment of companies held in A/THE fund may prove incorrect, resulting in losses or poor performance, even in rising markets.

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

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THE/EACH fund`s share price may decline, so when SHARE PRICE LANG . FDIC LANGUAGE

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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, are comfortable with the special risks that accompany international invest ing, seek long-term capital appreciation, and can accept the risks associated with common stocks, including both growth and value stocks, the fund could be an appropriate part of your overall investment strategy.

THE/EACH 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/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 the fund performance compares with that of a comparable market index. Fund past returns (before and after taxes) are not necessarily an indication of future performance .

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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Table 1 Average Annual Total Returns

	Periods ended AVGANNDATE
	1 year	Since inception ( SINCEINCDATE )
International Growth & Income Fundxd0 Advisor Class
Return s before taxes	AVERAGE1 %	AVGANLSINC %
Return s after taxes on distributions	PRETAX1	PRETAXSINC
Return s after taxes on distributions and sale of fund shares	POSTTAX1	POSTTAXSINC
BROADMEASURE	BROAD1	BMAVGANLSINC
PEERGROUP	PEER1	PEERSINCEINC

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MSCI EAFE Index tracks the stocks of about 1,000 companies in Europe, Australasia, and the Far East (EAFE).

What fees or expenses will I pay?

<R> Table FEETABLE# Fees and Expenses of the ADVISOR/R Class*

	Annual fund operating expenses (expenses that are deducted from fund assets)
Management fee	0.67 %
Distribution and service (12b-1) fees	DISTRIBFEE %
Other expenses	0.80 %
Total annual fund operating expenses	1.72 %
Fee waiver/reimbursement	0.57 % FN1
Net expenses	1.15% FN1

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

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a Effective March 1, 200 4 , T. Rowe Price International contractually obligated itself to bear any expenses and/or waive its fees t hrough February 28, 2006, that would cause the class`s ratio of expenses to average net assets to exceed 1.15%. Expenses paid or assumed or fees waived 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 February 29, 2008, or if it would result in the expense ratio exceeding 1.15%. Any amounts reimbursed will have the effect of increasing fees oth erwise paid by the class. The fund operated under a previous expense limitation for which T. Rowe Price may be reimbursed.

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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, EXPENSE LIMIT you invest $10,000, earn a 5% annual return, hold the investment for the following periods , and then redeem:

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1 year	3 years	5 years	10 years
$ HYPEXP1	$ HYPEXP3	$ HYPEXP5	$ HYPEXP10

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other INFORMATION about the fund

What are some of the potential rewards of investing overseas through the fund ?

How does the portfolio manager try to reduce risk?

The principal tools we use to try to reduce risk are intensive research and limiting exposure to any one industry or company. Currency hedging techniques may be used from time to time.

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

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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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Information About Accounts in T. Rowe Price Funds 2

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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 that the exchange is open for business. To calculate the NAV, the fund`s assets are valued and totaled, liabilities are subtracted, and each class`s proportionate 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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The securities of funds investing in foreign markets are valued on the basis of the most recent closing market prices at 4 p.m. ET except under the circumstances described below. Most foreign markets close before 4 p.m. 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. If a fund determines that developments between the close of the foreign market and 4 p.m. ET will, in its judgment, materially affect the value of some or all of the fund`s securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of 4 p.m. ET. In deciding whether to make these adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. A fund may also fair value securities in other situations, for example, when a particular foreign market is closed but the fund is open.

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The fund uses outside pricing services to provide it with closing market prices and information used for adjust ing those prices. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day`s opening prices in the same markets, and adjusted prices.

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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, trade deadlines, and other appli cable 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 correct form by 4 p.m. ET, 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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How proceeds are received

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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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The following chart provides details on dividend payments:

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<R> Table DIVIDENDTABLE# Dividend Payment Schedule (Continued)

Fund	Dividends
Bond funds	Shares normally begin to earn dividends on the business day after payment is received. Declared daily and p aid on the first business day of each month.
Equity Income Fund — Advisor Class	Declared quarterly, if any, in March, June, September, and December. Must be a shareholder on the record date.
Other stock funds	Declared annually, if any, generally in December. Must be a shareholder on the record date.
Retirement Funds : Retirement Income Fund — Advisor Class All others	Shares normally begin to earn dividends on the business day after payment is received. Paid on the first business day of each month. Declared annually, if any, generally in December. Must be a shareholder on the record date.

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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 will generally be subject to tax 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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For individual shareholders, a portion of ordinary dividends representing qualified dividends received by the fund may be subject to tax at the lower rate applicable to long-term capital gains, rather than ordinary income. You may report it as a qualifying dividend in computing your taxes provided you have held the fund shares on which the dividend was paid for more than 60 days during the 120-day period beginning 60 days before the ex- dividend date. Ordinary
dividends that do not qualify for this lower rate are generally taxable at the investor`s marginal income tax rate. This includes the portion of ordinary dividends derived from interest, short-term gains, distributions from cer tain nonqualified foreign corporations, and dividends received by the fund from stocks that were on loan. Lit tle, if any, of the ordinary dividends paid by the bond fund Advisor Classes are expected to qualify for this lower rate.

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For corporate shareholders, a portion of ordinary dividends may be eligible for the 70% deduction for divi dends received by corporations to the extent the fund`s income consists of dividends paid by U.S. corporations. Little, if any, of the ordinary dividends paid by the bond fund Advisor Classes are expected to qualify for this deduction.

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The IRS uses this information to help determine the tax status of any Social Security payments you may have received during the year. Tax-exempt dividends paid to Social Security recipients may increase the portion of benefits that are subject to tax.

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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 also a sale for tax purposes.

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Taxes on fund distributions

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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 gains on securities held more than 12 months are taxed at the lower rates applicable to long-term capital gains. 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 distribution received during the period you held the shares. 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. For funds investing in foreign securities, distributions result ing 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.

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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 ordinary income or capital gains.

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Tax consequences of hedging

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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. 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.

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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 may 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. The intermediary will be responsible for any losses or expenses incurred by the fund or transfer agent. 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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Redemptions over $250,000

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Excessive Trading and Market Timing

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T. Rowe Price may bar excessive traders and market timers from purchasing shares.

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Excessive trading or market timing in accounts that you own or control may disrupt management of a fund and raise its costs. While there is no assurance T. Rowe Price can prevent all excessive trading and market timing, each fund has adopted the policies set forth below to deter such activity. Persons trading directly or indirectly with T. Rowe Price or through intermediaries in violation of these policies or persons believed to be short-term market timers may be barred permanently or for a specific period of time from further purchases of the Price Funds. Transactions placed by such persons are subject to rejection or cancellation without notice.

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All persons purchasing shares of a T. Rowe Price fund, directly or indirectly, can make only one "round trip" (i.e. one purchase and one sale or one sale and one purchase) involving the same fund within any 120-day period.

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All persons purchasing fund shares through an intermediary, including a broker, bank, investment adviser, recordkeeper, or other third party, and who hold the shares for less than 60 calendar days, are considered to have violated the policy.

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You can make only one "round trip" (i.e. one purchase and one sale or one sale and one purchase) involving the same fund within any 120-day period.

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Systematic purchases and redemptions are exempt from these policies.

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Intermediaries often establish omnibus accounts in the T. Rowe Price funds for their customers. In such situa tions, T. Rowe Price cannot monitor trading activity by individual shareholders. However, T. Rowe Price reviews trading activity at the omnibus account level and looks for activity that indicates potential excessive trading or short-term market timing. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary to determine whether the fund`s policies have been violated, and to what degree.

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T. Rowe Price may modify the 120-day and 60-day policies set forth above (for example, where a retirement plan with multiple investment options imposes a uniform restriction on trading in the plan for all investment options that differs from the T. Rowe Price fund`s policies). These modifications would only be authorized if they provide substantially equivalent protection to the fund as the fund`s regular policies.

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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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The 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 per form.

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More About the Fund 3

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Organization and Management

How is the fund organized?

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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/R 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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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 GENERAL OVERSIGHT LANG .

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Investment Manager

Portfolio Management

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The fund has an Investment Advisory Group that has day-to-day responsibility for managing the portfolio and developing and executing the fund`s investment program. The members of the advisory group are: Raymond A. Mills, Ph.D., James B.M. Seddon, Robert W. Smith, David J.L. Warren, and Richard T. Whitney.

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Raymond Mills joined T. Rowe Price International in 2000, has been with T. Rowe Price since 1997, and has been managing investments since 1998. James Seddon joined T. Rowe Price International in 1987 and has 1 6 years of experience in portfolio management. Robert Smith joined T. Rowe Price International in 1996, has been with T. Rowe Price since 1992, and has 1 5 years of experience in financial analysis. David Warren joined T. Rowe Price International in 1983 and has 24 years of experience in equity research, fixed-income research, and portfolio management. Richard Whitney joined T. Rowe Price International in 1998, has been with T. Rowe Price since 1985, and has 1 8 years of experience in equity research and portfolio management.

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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 (on the next page) 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

* Represents a blended group fee rate containing various breakpoints.

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THE/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 $ 106 . billion at TRPA_Q , the group fee was 0.32%. . The individual fund fee is IND_FUNDFEEPCT %.

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Understanding Performance Information

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

Total Return

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

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. 80% POLICY 80% POLICY CONT'D Fund investment restrictions and policies apply at the time of investment. RULE2A7 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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PAGE 93

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

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In seeking to meet its investment objective , fund investments may be made in any type of security or instrument TYPES OF PORTFOLIO LANG whose investment characteristics are consistent with its investment program . The following pages describe various types of fund securities and investment management practices.

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Fundamental policy THE/EACH fund will not purchase a security if, as a result, with respect to 75% of its total assets, more than 5% of the funds`s total assets would be invested in securities of a single issuer or more than 10% of the outstanding voting securities of the issuer would be held by the fund .

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Fund investments are primarily in common stocks and, to a lesser degree, other types of securities as described below.

Common and Preferred Stocks

Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks after bonds and before common stocks in its claim on income for dividend payments and on assets should the company be liquidated. After other claims are satisfied, common stockholders participate in company profits on a pro-rata basis; profits may be paid out in dividends or reinvested in the company to help it grow. Increases and decreases in earnings are usually reflected in a company`s stock price, so common stocks generally have the greatest appreciation and depreciation potential of all corporate securities. While most preferred stocks pay a dividend, preferred stock may be purchased where the issuer has omitted, or is in danger of omitting, payment of its dividend. Such investments would be made primarily for their capital appreciation potential.

Convertible Securities AND WARRANTS

Fixed-Income Securities

Hybrid Instruments (BOND FUND/BOND 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 (EQUITY ASSETS FOR TAX-EFFICIENT BALANCED FUND) .

Private Placements

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

Types of Investment Management Practices

Reserve Position (BOND FUND/BOND FUNDS)

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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 both T. Rowe Price internal money market funds RESERVE LANG (INST) . 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. Significant investments in reserves could compromise the ability to achieve fund 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. RESERVE TEF LANG

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Borrowing Money and Transferring Assets

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

Foreign Currency Transactions

The fund will generally enter into forward foreign currency exchange contracts only under two circumstances. First, when A/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. Second, when T. Rowe Price International believes that the currency of a particular foreign country may move substantially against another currency, it may enter into a forward contract to sell or buy the former foreign currency (or another currency that acts as a proxy for that currency). The contract may approximate the value of some or all of the fund portfolio securities denominated in such foreign currency. Under unusual circumstances, A/THE fund may commit a substantial portion or the entire value of its portfolio to the consummation of these contracts. T. Rowe Price International will consider the effect such a commitment to forward contracts would have on the fund`s investment program and the flexibility of the fund to purchase additional securities. Although forward contracts will be used primarily to protect the fund from adverse currency movements, they also involve the risk that anticipated currency movements will not be accurately predicted, and fund total return could be adversely affected as a result.

Futures and Options (BOND FUND/BOND FUNDS)

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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 exposure to changes in securities prices AND BOND PRICES/, BOND PRICES, AND FOREIGN CURRENCIES ; as an efficient means of increasing or decreasing 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

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PAGE 95

Tax Consequences of Hedging

Lending of Portfolio Securities

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

Portfolio Turnover (BOND FUND/BOND FUNDS)

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Financial Highlights

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Table FINHIGHTABLE# , which provides information about EACH FUND'S/THE CLASS'S/THE FUND'S financial history, is based on a single share outstanding throughout the FINANCIAL HIGHLIGHTS LANG 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 investment 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 independent auditors , PricewaterhouseCoopers LLP.

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<R> Table FINHIGHTABLE# Financial Highlights

	9 /30 /0 2 * through 10/31/02	Year ended October 31
		200 3

Net asset value, beginning of period	$ 7 . 10	$ 7 . 34
Income From Investment Operations
Net investment income	—	0. 09 a
Net gains or losses on securities (both realized and unrealized)	0. 24	2 . 07
Total from investment operations	0. 24	2 . 16
Less Distributions
Dividends (from net investment income)	—	( 0 . 08 )
Distributions (from capital gains)	—	(0.01 )
Returns of capital	—	—
Total distributions	—	(0.09 )
Redemption fees added to paid in capital	—	—
Net asset value, end of period	$ 7 . 34	$ 9 . 41
Total return	3 . 38 % a	2 9 . 8 0 % a
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$ 10 3	$ 3,513
Ratio of expenses to average net assets	1 . 15 % ab	1. 15 % a
Ratio of net income to average net assets	0 . 06 % ab	0. 71 % a
Portfolio turnover rate	2 4 . 6 %	5 3 .2 %

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* Inception date.

a Excludes expenses in excess of a 1.15% contractual expense limitation in effect through 2/28/04.

b Annualized.

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Investing With T. Rowe Price 4

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Account Requirements and Transaction Information

Tax Identification
Number

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:

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In order to obtain an account number, the intermediary must supply the name, Social Security or employer identifica tion number, and business street address for the account.

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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.

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via U . S . Postal Service

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

via private carriers/overnight services

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

Purchasing Additional ShareS

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

By Wire

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

Exchanging and redeeming ShareS

Exchange Service

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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PAGE 99

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. 40ACTNO

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E227-040 3/1/04

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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.

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March 1, 2004

Prospectus

T. Rowe Price

International Growth & Income Fund — R Class

A stock fund s eeking long-term capital growth and a reasonable level of income through investments in non-U.S. companies . 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	13

3	More About the Fund
	Organization and Management	14
	Understanding Performance Information	16
	Investment Policies and Practices	17
	Financial Highlights	21

4	Investing With T. Rowe Price
	Account Requirements and Transaction Information	23
	Purchasing Additional Shares	24
	Exchanging and Redeeming Shares	24
	Rights Reserved by the Funds	24
	T. Rowe Price Privacy Policy	26

T. Rowe Price International Funds, Inc.

T. Rowe Price International Growth & Income Fund — R Class

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T. Rowe Price International, Inc. managed $22.9 billion in foreign stocks and bonds as of December 31, 2003 , through its offices in Baltimore, London, Singapore, Hong Kong, Buenos Aires, and Paris.

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About the Fund 1

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objective, strategy, risks, and expenses

What is the fund`s objective?

The fund seeks long-term growth of capital and reasonable income through investments primarily in the common stocks of well-established, dividend-paying non-U.S. companies.

What is the fund`s principal investment strategy?

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While the fund invests primarily in common stocks, the fund may also purchase other securities, including futures and options, in keeping with the fund`s objective.

The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities.

What are the main risks of investing in the fund?

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Geographic risk The economies and financial markets of certain regions — such as Latin America and Asia — can be interdependent and may all decline at the same time.

While certain countries have made progress in economic growth, liberalization, fiscal discipline, and political and social stability, there is no assurance these trends will continue.

Futures/options risk To the extent the fund uses futures and options, it is exposed to additional volatility and potential losses.

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

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The fund`s share price may decline, so when you sell your shares, you may lose money .

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

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 the fund performance compares with that of a comparable market index. Fund past returns (before and after taxes) are not necessarily an indication of future performance.

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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Table 1 Average Annual Total Returns

	Periods ended December 31, 2003
	1 year	Since inception (9/30/02)
International Growth & Income Fund — R Class
Return s before taxes	39.40 %	35.98 %
Return s after taxes on distributions	39.20	35.49
Return s after taxes on distributions and sale of fund shares	25.60	30.47
MSCI EAFE Index	39.17	36.94
Lipper International Funds Average	34.74	32.64

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MSCI EAFE Index tracks the stocks of about 1,000 companies in Europe, Australasia, and the Far East (EAFE).

What fees or expenses will I pay?

<R> Table 2 Fees and Expenses of the R Class*

	Annual fund operating expenses (expenses that are deducted from fund assets)
Management fee	0.67%
Distribution and service (12b-1) fees	0.50%
Other expenses	1.40%
Total annual fund operating expenses	2.57%
Fee waiver/reimbursement	1.17% a
Net expenses	1.40% 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 March 1, 200 4 , T. Rowe Price International contractually obligated itself to bear any expenses and/or waive its fees t hrough February 28, 2006, that would cause the class`s ratio of expenses to average net assets to exceed 1. 40 %. Expenses paid or assumed or fees waived under this agreement are subject to reimbursement to T. Rowe Price International by the fund whenever the class`s expense ratio is below 1. 40 %; however, no reimbursement will be made after February 29, 2008, or if it would result in the expense ratio exceeding 1. 40 %. Any amounts reimbursed will have the effect of increasing fees oth erwise paid by the class. The class operated under a previous expense limitation for which T. Rowe Price International may be reimbursed.

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1 year	3 years	5 years	10 years
$ 143	$ 527	$ 1,109	$ 2,689

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other INFORMATION about the fund

What are some of the potential rewards of investing overseas through the fund?

How does the portfolio manager try to reduce risk?

The principal tools we use to try to reduce risk are intensive research and limiting exposure to any one industry or company. Currency hedging techniques may be used from time to time.

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

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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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Information About Accounts in T. Rowe Price Funds 2

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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 R Class accounts .

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Pricing Shares and Receiving Sale Proceeds

How and when shares are priced

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The securities of funds investing in foreign markets are valued on the basis of the most recent closing market prices at 4 p.m. ET except under the circumstances described below . Most foreign markets close before 4 p.m. 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. If a fund determines that developments between the close of the foreign market and 4 p.m. ET will, in its judgment, materially affect the value of some or all of the fund`s securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of 4 p.m. ET. In deciding whether to make these adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets , and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities . A fund may also fair value securities in other situations, for example, when a particular foreign market is closed but the fund is open.

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The fund uses outside pricing services to provide it with closing market prices and information used for adjust ing those prices. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day`s opening prices in the same markets, and adjusted prices.

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How your purchase, sale, or exchange price is determined

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How proceeds are received

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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.

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

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The following chart provides details on dividend payments:

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<R> Table 3 Dividend Payment Schedule

Fund	Dividends
Bond funds	Shares normally begin to earn dividends on the business day after payment is received. Declared daily and p aid on the first business day of each month.
Equity Income Fund — R Class	Declared quarterly, if any, in March, June, September, and December. Must be a shareholder on the record date.
Other stock funds	Declared annually, if any, generally in December. Must be a shareholder on the record date.
Retirement Funds : Retirement Income Fund — R Class All others	Shares normally begin to earn dividends on the business day after payment is received. Paid on the first business day of each month. Declared annually, if any, generally in December. Must be a shareholder on the record date.

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Capital gains payments

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

Tax Information

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, y ou will generally be subject to tax when:

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

The fund makes a distribution to your account.

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For individual shareholders, a portion of ordinary dividends representing qualified dividends received by the fund may be subject to tax at the lower rate applicable to long-term capital gains, rather than ordinary income. You may report it as a qualifying dividend in computing your taxes provided you have held the fund shares on which the dividend was paid for more than 60 days during the 120-day period beginning 60 days before the ex- dividend date. Ordinary
dividends that do not qualify for this lower rate are generally taxable at the investor`s marginal income tax rate. This includes the portion of ordinary dividends derived from interest, short-term gains, distributions from cer tain nonqualified foreign corporations, and dividends received by the fund from stocks that were on loan. Lit tle, if any, of the ordinary dividends paid by the bond fund R Class es are expected to qualify for this lower rate.

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For corporate shareholders, a portion of ordinary dividends may be eligible for the 70% deduction for divi dends received by corporations to the extent the fund`s income consists of dividends paid by U.S. corporations. Little, if any, of the ordinary dividends paid by the bond fund R Class es are expected to qualify for this deduc tion.

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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 also a sale for tax purposes.

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Taxes on fund distributions

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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 gains on securities held more than 12 months are taxed at the lower rates applicable to long-term capital gains . 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 distribution received during the period you held the shares. 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 dividend s to be re classified 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 ordinary income or capital gains.

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Tax consequences of hedging

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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. 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 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 may 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

Purchase Conditions for Intermediaries

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. The intermediary will be responsible for a ny losses or expenses incurred by the fund or transfer agent. 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

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

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Redemptions over $250,000

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Excessive Trading and Market Timing

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T. Rowe Price may bar excessive traders and market timers from purchasing shares.

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Excessive trading or market timing in account s that you own or control may disrupt management of a fund and raise its costs . While there is no assurance T. Rowe Price can prevent all excessive trading and market timing , each fund has adopted the polic ies set forth below to deter such activity . Persons trading directly or indirectly with T. Rowe Price or through intermediaries in violation of these policies or persons believed to be short-term market timers may be barred permanently or for a specific period of time from further purchases of the Price Funds. Transactions placed by such persons are subject to rejection or cancellation without notice .

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All persons purchasing shares of a T. Rowe Price fund, directly or indirectly, can make only one "round trip" (i.e. one purchase and one sale or one sale and one purchase) involving the same fund within any 120-day period.

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All persons purchasing fund shares through an intermediary, including a broker, bank, investment adviser, recordkeeper, or other third party, and who hold the shares for less than 60 calendar days, are considered to have violated the policy.

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Systematic purchases and redemptions are exempt from these policies.

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Intermediaries often establish omnibus accounts in the T. Rowe Price funds for their customers. In such situa tions, T. Rowe Price cannot monitor trading activity by individual shareholders. However , T. Rowe Price reviews trading activ ity at the omnibus account level and looks for activity that indicates potential excessive trading or short-term market timing. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary to determine whether the fund`s polic ies have been violated , and to what degree .

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Signature Guarantees

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

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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The R Class has adopted a 12b-1 plan under which it pays a fee at the rate of up to 0. 50% 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 R 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 R 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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More About the Fund 3

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Organization and Management

How is the fund organized?

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T. Rowe Price International Funds, Inc. , (the "corporation") was incorporated in Maryland in 1979. C urrently , the corporation consists of 12 series, each representing a separate pool of assets with different objectives and investment policies. Each is an " open-end investment company, " or mutual fund. Mutual funds pool money received from shareholders of each class into a single portfolio and invest it to try to achieve specified objectives. In 2002, the International Growth & Income Fund issued a separate class of shares known as the R Class.

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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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Do T. Rowe Price funds have annual shareholder meetings?

Who runs the fund?

General Oversight

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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

Portfolio Management

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The fund has an Investment Advisory Group that has day-to-day responsibility for managing the portfolio and developing and executing the fund`s investment program. The members of the advisory group are: Raymond A. Mills, Ph.D., James B.M. Seddon, Robert W. Smith, David J.L. Warren, and Richard T. Whitney.

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International in 1983 and has 24 years of experience in equity research, fixed-income research, and portfolio management. Richard Whitney joined T. Rowe Price International in 1998, has been with T. Rowe Price since 1985, and has 1 8 years of experience in equity research and portfolio management.

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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 (on the next page) 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

* Represents a blended group fee rate containing various breakpoints.

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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 $ 106 bil . lion at December 31, 2003 , the group fee was 0.32%. . The individual fund fee is 0.35%.

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Understanding Performance Information

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

Total Return

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

Investment Policies and Practices

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. 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 borrow ing 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

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Fundamental policy The fund will not purchase a security if, as a result, with respect to 75% of its total assets, more than 5% of the fund`s total assets would be invested in securities of a single issuer or more than 10% of the outstanding voting securities of the issuer would be held by the fund.

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Fund investments are primarily in common stocks and, to a lesser degree, other types of securities as described below.

Common and Preferred Stocks

Convertible Securities and Warrants

Fixed-Income Securities

Hybrid Instruments

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.

Types of Investment Management Practices

Reserve Position

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Borrowing Money and Transferring Assets

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

Foreign Currency Transactions

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Futures and Options

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Tax Consequences of Hedging

Lending of Portfolio Securities

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

Portfolio Turnover

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Financial Highlights

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<R> Table 4 Financial Highlights

	9 /30 /0 2 * through 10/31/02	Year ended October 31
		200 3

Net asset value, beginning of period	$ 7 . 10	$ 7 . 34
Income From Investment Operations
Net investment income	—	0.09 a
Net gains or losses on securities (both realized and unrealized)	0. 24	2 . 0 4
Total from investment operations	0. 24	2 . 1 3
Less Distributions
Dividends (from net investment income)	—	( 0.08 )
Distributions (from capital gains)	—	( 0.01 )
Returns of capital	—	—
Total distributions	—	( 0.09 )
Redemption fees added to paid in capital	—	—
Net asset value, end of period	$ 7 . 34	$ 9 . 38
Total return	3 . 38 % a	2 9 . 38 % a
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$ 10 3	$ 9 10
Ratio of expenses to average net assets	1 .40 % ab	1. 40 % a
Ratio of net income to average net assets	(0 . 19 ) % ab	0. 89 % a
Portfolio turnover rate	2 4 . 6 %	5 3 .2 %

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* Inception date.

a Excludes expenses in excess of a 1.40% contractual expense limitation in effect through 2/28/04.

b Annualized.

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Investing With T. Rowe Price 4

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Account Requirements and Transaction Information

Tax Identification
Number

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:

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In order to obtain an account number, the intermediary must supply the name, Social Security or employer identifica tion number, and business street address for the account.

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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.

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via U . S . Postal Service

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

via private carriers/overnight services

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

Purchasing Additional ShareS

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

By Wire

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

Exchanging and redeeming ShareS

Exchange Service

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 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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940 Act File No. 811-2958

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E427-040 3/1/04

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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.

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March 1, 2004

Prospectus

T. Rowe Price

International Funds — Equity
Portfolios

A choice of global, international, and
regional stock funds for investors
seeking long-term capital growth by
diversifying beyond U.S. borders.

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	1 6

2	Information About Accounts in T. Rowe Price Funds
	Pricing Shares and Receiving Sale Proceeds	1 8
	Useful Information on Distributions and Taxes	2 1
	Transaction Procedures and Special Requirements	2 7
	Account Maintenance and Small Account Fees	3 0

3	More About the Funds
	Organization and Management	3 1
	Understanding Performance Information	3 4
	Investment Policies and Practices	3 5
	Financial Highlights	4 0

4	Investing With T. Rowe Price
	Account Requirements and Transaction Information	51
	Opening a New Account	5 2
	Purchasing Additional Shares	5 3
	Exchanging and Redeeming Shares	5 4
	Rights Reserved by the Funds	5 6
	Information About Your Services	5 7
	T. Rowe Price Brokerage	59
	Investment Information	6 0
	T. Rowe Price Privacy Policy	6 2

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T. Rowe Price International Funds, Inc.

T. Rowe Price Emerging Europe & Mediterranean Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Growth & Income Fund

T. Rowe Price International Stock Fund

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price New Asia Fund

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T. Rowe Price International, Inc. managed $22.9 billion in foreign stocks and bonds as of December 31, 2003 , through its offices in Baltimore, London, Singapore, Hong Kong, Buenos Aires, and Paris.

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1 objective, strategy, risks, and expenses

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

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Worldwide funds:

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Emerging Markets Stock Fund

Objective: : The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located ( or with primary operations ) in emerging markets.

Strategy: : T he fund expects to make substantially all of its investments (normally at least 80% of net assets) in emerging markets in Latin America, Asia, Europe, Africa, and the Middle East. Stock selection reflects a growth style. An emerging market includes any country defined as emerging or developing by the International Bank for Reconstruction and Development (World Bank), the International Finance Corporation, or the United Nations.

Countries in which the fund may invest are listed below and others will be added as opportunities develop:

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Asia: China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, and Vietnam.

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Latin America: Argentina, Belize, Brazil, Chile, Colombia, Mexico, Panama, Peru, and Venezuela.

Europe: Croatia, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia, and Turkey.

Africa and the Middle East: Botswana, Egypt, Israel, Jordan, Mauritius, Morocco, Nigeria, South Africa, Tunisia, and Zimbabwe.

Global Stock Fund

Objective: The fund seeks long-term growth of capital through investments primarily in the common stocks of established companies throughout the world, including the U.S.

Strategy: We will diversify broadly by investing in a variety of industries in developed and, to a lesser extent, emerging markets. Normally, the fund will invest in at least five countries, one of which will be the U.S. Stock selection reflects a growth style. While we can purchase stocks without regard to a company`s market capitalization (shares outstanding multiplied by share price), investments will generally be in large and, to a lesser extent, medium-sized companies. The percentage of assets invested in U.S. and foreign stocks (stocks will normally be at least 80% of net assets) will vary over time according to the manager`s outlook.

International Discovery Fund

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Objective: The fund seeks long-term growth of capital through investments primarily in the common stocks of rapidly growing, small - to medium-sized companies outside the U.S.

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Strategy: The fund expect s to invest substantially all of the fund`s assets outside the U.S. and to diversify broadly among developed and emerging countries throughout the world. Stock selection reflects a growth style. The fund will emphasize small - to medium-sized companies. Depending on conditions, the fund`s portfolio should be composed of at least 10 countries and 100 different companies. Normally, at least 80% of the fund`s net assets will be invested in stocks.

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International Growth & Income Fund

Objective: : The fund seeks long-term growth of capital and reasonable income through investments primarily in the common stocks of well-established, dividend-paying non-U.S. companies.

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Strategy: : We expect to invest substantially all of the fund`s assets outside the U.S. and to diversify broadly, primarily among the world`s developed countries. The fund will invest primarily (at least 65% of total assets) in the stocks of dividend-paying , large, well-established companies that have favorable prospects for capital appreciation, as determined by T. Rowe Price International , Inc. ("T. Rowe Price International") . Investments in emerging markets will be modest and limited to more mature developing countries.

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International Stock Fund

Objective: : The fund seeks long-term growth of capital through investments primarily in the common stocks of established, non-U.S. companies.

Strategy: : The fund expect s to invest substantially all of the fund`s assets in stocks outside the U.S. and to diversify broadly among developed and emerging countries throughout the world. Stock selection reflects a growth style. We may purchase the stocks of companies of any size, but our focus will typically be on large and, to a lesser extent, medium-sized companies. Normally, at least 80% of the fund`s net assets will be invested in stocks.

Regional or country funds:

Emerging Europe & Mediterranean Fund

Objective: The fund seeks long-term growth of capital through investments primarily in the common stocks of companies in the emerging market countries of Europe and the Mediterranean region.

Strategy: The fund expects to make substantially all of its investments (normally at least 80% of net assets) in the emerging markets of Europe, including Eastern Europe and the former Soviet Union, and the Mediterranean region, including the Middle East and North Africa. Normally, seven to 12 countries will be represented in the portfolio. The fund may invest in common stocks in the countries listed below, as well as others as their mar kets develop:

Primary Emphasis: Croatia, Czech Republic, Egypt, Estonia, Greece, Hungary, Israel, Poland, Russia, and Turkey.

Others: Bulgaria, Jordan, Latvia, Lebanon, Lithuania, Morocco, Romania, Slovakia, Slovenia, and Tunisia.

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The fund may purchase the stocks of companies of any size, but our focus will typically be on the large r and, to a lesser extent, medium-sized companies in the region . The fund seeks to take advantage of opportunities arising from such trends as privatization, the reduction of trade barriers, and progress toward Economic and Monetary Union in Europe. The fund is registered as "nondiversified," meaning it may invest a greater portion of assets in a single company and own more of the company`s voting securities than is permissible for a "diversified" fund. Depending on conditions, the fund`s portfolio should be composed of at least 30 to 50 different companies. Stock selection reflects a growth style.

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European Stock Fund

Objective: The fund seeks long-term growth of capital through investments primarily in the common stocks of European companies. Current income is a secondary objective.

Strategy: Normally, at least five countries will be represented in the portfolio. The fund expects to make substan tially all of its investments (normally at least 80% of net assets) in stocks of companies located in the countries listed below, as well as others as their markets develop:

Primary Emphasis: Austria, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and United Kingdom.

Others: Belgium, Czech Republic, Greece, Hungary, Israel, Poland, Russia, and Turkey.

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Stock selection reflects a growth style. We also seek to take advantage of opportunities arising from such trends as privatization, the reduction of trade barriers, progress toward E conomic and M onetary U nion, and the potential growth of the emerging economies of Eastern Europe.

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Japan Fund

Objective: The fund seeks long-term growth of capital through investments in common stocks of companies located (or with primary operations) in Japan.

Strategy: T he fund expects to make substantially all of its investment s (normally at least 80% of net assets) across a wide range of Japanese industries and companies. Stock selection reflects a growth style.

Note: For special pricing and transaction information about the Japan Fund, please see Pricing Shares and Receiving Sale Proceeds in Section 2.

Latin America Fund

Objective: The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located (or with primary operations) in Latin America.

Strategy: T he fund expects to make substantially all of its investments (normally at least 80% of net assets) in Latin American companies. At least four countries should be represented at any time. Investments may be made in the countries below, as well as others as their markets develop:

Primary Emphasis: Argentina, Brazil, Chile, Mexico, Peru, and Venezuela.

Others: Belize, Colombia, Ecuador, and Guatemala.

Stock selection reflects a growth style. We may make substantial investments (at times more than 25% of total assets) in the telephone companies of various Latin American countries. These utilities play a critical role in a country`s economic development. The fund is registered as "nondiversified," meaning it may invest a greater portion of assets in a single company and own more of the company`s voting securities than is permissible for a "diversified" fund. In some markets, such as Brazil, the fund may purchase preferred stock because of its liquid ity advantage over common stock.

New Asia Fund

Objective: The fund seeks long-term growth of capital through investments in companies located (or with pri mary operations) in Asia (excluding Japan).

Strategy: The fund expects to make substantially all of its investments (normally at least 80% of net assets) in the countries listed below, as well as others as their markets develop:

Primary Emphasis: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Thailand.

Others: Pakistan and Vietnam.

Stock selection reflects a growth style. The fund is registered as "nondiversified," meaning it may invest a greater portion of assets in a single company and own more of the company`s voting securities than is permissible for a "diversified" fund.

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All funds (excluding International Growth & Income Fund):

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The funds use a growth investing approach in their individual investment strategies.

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Growth Investing

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T. Rowe Price International employs in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase such stocks at reason able prices in relation to present or anticipated earnings, cash flow, or book value, and valuation factors often influence our allocations among large-, mid-, or small-cap shares.

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In selecting stocks, we generally favor companies with one or more of the following characteristics:

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leading market position;

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attractive business niche;

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strong franchise or monopoly;

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technological leadership or proprietary advantages;

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seasoned management;

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earnings growth and cash flow sufficient to support growing dividends; and

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healthy balance sheet with relatively low debt.

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<R> Table 1 International Funds Comparison Guide

Fund	Geographic focus	Company emphasis	Expected risk relative to one another

Emerging Europe & Mediterranean	Europe and the Mediterranean region	All sizes	Highest
Emerging Markets Stock	Worldwide (excluding U.S.)	All sizes	Highest
European Stock	Europe (including Eastern Europe)	All sizes	Moderate
Global Stock	Worldwide (including U.S.)	Large, well established	Lower
International Discovery	Worldwide (excluding U.S.)	Small - to medium-sized	Higher
International Growth & Income	Worldwide (excluding U.S.)	Large, well established	Moderate
International Stock	Worldwide (excluding U.S.)	Large, well established	Moderate
Japan	Japan	All sizes	Higher
Latin America	Latin America	All sizes	Highest
New Asia	Far East and Pacific Basin (excluding Japan)	All sizes	Highest

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In addition to their investments in common stocks (which will normally comprise 80% of fund net assets), t he funds may also purchase other securities, including futures and options, in keeping with each fund`s objectives.

Each fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities.

What are the main risks of investing in the funds?

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The risk profile of the funds varies with the investment style they pursue, their geographic focus, and whether they invest in developed markets, emerging markets, or both. Even investments in countries with highly devel oped economies are subject to significant risks.

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Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. Some particular risks affecting these funds include the following:

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Currency risk This refers to 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 a fund`s holdings can be signifi cant, unpredictable, and long-lasting , depending on the currencies represented in the portfolio and how each one appreciates or depreciates in relation to the U.S. dollar and whether currency positions are hedged. Under normal conditions, the funds do not engage in extensive foreign currency hedging programs. Further, exchange rate movements are volatile , and it is not possible to effectively hedge the currency risks of many developing countries.

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Geographic risk (Japan and regional funds) Funds that are less diversified across geographic regions, countries, industries, or individual companies are generally riskier than more diversified funds. Thus, for example, inves tors in the Japan Fund are fully exposed to that country`s economic cycles, stock market valuations, and currency exchange rates, which could increase its risks compared with a more diversified fund. In addition, investors in Japan should be aware of specific problems, including tax laws that discourage consumer spending and dampen growth, deflation, a banking system burdened with bad loans, and the government`s unsatisfactory progress on effecting credible solutions to these problems. The economies and financial markets of certain regions — such as Latin America, Asia, and Europe and the Mediterranean region — can be interdependent and may all decline at the same time.

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Emerging market risk (Emerging Europe & Mediterranean, Emerging Markets Stock, Latin America, New Asia; other funds to a lesser degree, except Japan) 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

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vulnerable to the ebb and flow of international trade, trade barriers, and other protectionist or retaliatory mea sures. Certain countries have legacies and /or periodic episodes of hyperinflation and currency devaluations, par ticularly Russia and many Latin American nations, and more recently many Asian countries. Governments in many emerging market countries participate to a significant degree in their economies and securities markets. Investments in countries or regions that have recently begun moving away from central planning and state- owned industries toward free markets should be regarded as speculative. While some countries have made progress in economic growth, liberalization, fiscal discipline, and political and social stability, there is no assur ance these trends will continue. Some countries have histories of instability and upheaval that could cause their governments to act in a detrimental or hostile manner toward private enterprise or foreign investment. Significant external risks currently affect some emerging countries.

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The volatility of emerging markets may be heightened by the actions of a few major investors. For example, sub stantial increases or decreases in cash flows of mutual funds investing in these markets could significantly affect local stock prices and, therefore, fund share prices. These factors make investing in such countries significantly riskier than in other countries and any one of them could cause a fund`s share price to decline.

Small- and medium-sized company risk (International Discovery; others to a lesser degree) To the extent each fund invests in small- and mid-capitalization stocks, it is likely to be more volatile than a fund that invests only in large companies. Small and medium-sized companies are generally riskier because they may have limited product lines, capital, and managerial resources. Their securities may trade less frequently and with greater price swings.

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Nondiversified status (Emerging Europe & Mediterranean, Latin America, and New Asia) There is additional risk with each fund because it is nondiversified and thus can invest more of its assets in a smaller number of compa nies. Thus, for example, poor performance by a single large holding of a fund would adversely affect fund perfor mance more than if the fund were invested in a larger number of companies.

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Futures/options risk To the extent each fund uses futures and options, it is exposed to additional volatility and potential losses.

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As with all stock funds, each fund`s share price can fall because of weakness in one or more of its primary equity markets, a particular industry, or specific holdings. Stock markets can decline for many reasons, including adverse political or economic developments, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, our assessment of companies held in a fund may prove incorrect, resulting in losses or poor performance, even in rising markets.

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

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Each fund`s share price may decline, so when you sell your shares, you may lose money .

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

Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. Your decision should take into account whether you have any other foreign stock investments. If not, you may wish to invest in a widely
diversified fund to gain the broadest exposure to global opportunities. A diversified emerging markets fund may be an appropriate part of your portfolio if you are supplementing existing holdings primarily in developed for eign markets. If you seek to supplement a diversified portfolio with a concentrated investment, a regional or sin gle-country fund may be appropriate.

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

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

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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 .

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<R> Table 2 Average Annual Total Returns

	Periods ended December 31, 2003
	1 year	5 years	Shorter of 10 years or since inception	Inception date
Emerging Europe & Mediterranean Fund
Return s before taxes	69.22 %	— %	6.57 %	8/31/00
Return s after taxes on distributions	69.11	—	6.49
Return s after taxes on distributions and sale of fund shares	44.99	—	5.60
MSCI Emerging Markets Europe and Middle East Index	66.40	—	-0.23
Emerging Markets Stock Fund
Return s before taxes	52.30	13.52	5.79	3/31/95
Return s after taxes on distributions	51.97	13.65	5.73
Return s after taxes on distributions and sale of fund shares	33.98	12.03	5.08
MSCI Emerging Markets Free Index	56.28	10.62	1.82
Lipper Emerging Markets Funds Average	55.42	11.81	4.10
European Stock Fund
Return s before taxes	36.57	-0.30	8.75	2/28/90
Return s after taxes on distributions	35.89	-1.32	7.57
Return s after taxes on distributions and sale of fund shares	23.75	-0.63	7.26
MSCI Europe Index	39.14	-0.45	9.09
Lipper Europea n Region Funds Average	37.58	1.54	8.43
Global Stock Fund
Return s before taxes	30.05	0.65	7.01	12/29/95
Return s after taxes on distributions	29.88	0.16	6.28
Return s after taxes on distributions and sale of fund shares	19.53	0.36	5.78
MSCI World Index	33.76	-0.39	5.48
Lipper Global Funds Average	32.09	2.20	7.03 **
International Discovery Fund
Return s before taxes	65.29	17.55	8.50	12/30/88
Return s after taxes on distributions	64.97	15.28	7.18
Return s after taxes on distributions and sale of fund shares	42.43	14.13	6.72
MSCI EAFE Small-Cap Index *	57.76	5.48	0.95
Citigroup Non-U.S. Extended Market Index	53.73	5.88	5.17
Lipper International Small-Cap Funds Average	55.14	9.52	8.70
International Growth & Income Fund
Return s before taxes	39.48	3.06	3.37	12/21/98
Return s after taxes on distributions	39.28	2.10	2.41
Return s after taxes on distributions and sale of fund shares	25.66	2.06	2.32
MSCI EAFE Index	39.17	0.26	-1.26
Lipper International Funds Average	34.74	1.28	1.28 * * *
International Stock Fund
Return s before taxes	31.28	-1.34	3.64	5/9/80
Return s after taxes on distributions	30.62	-2.28	2.54
Return s after taxes on distributions and sale of fund shares	20.31	-1.43	2.68
MSCI EAFE Index	39.17	0.26	4.78
Lipper International Funds Average	34.74	1.28	4.65
Japan Fund
Return s before taxes	44.14	1.63	-0.88	12/30/91
Return s after taxes on distributions	44.14	0.89	-1.45
Return s after taxes on distributions and sale of fund shares	28.69	1.08	-0.96
TSE First Section Index	37.04	0.21	-2.77
TSE Second Section Index	59.37	13.79	1.79
MSCI Japan Index	36.15	0.14	-1.71
Lipper Japan ese Funds Average	37.84	2.01	0.37
Latin America Fund
Return s before taxes	57.92	12.80	2.75	12/29/93
Return s after taxes on distributions	57.13	12.43	2.41
Return s after taxes on distributions and sale of fund shares	37.62	11.02	2.17
MSCI EMF Latin America Index	73.66	12.20	5.00
Lipper Latin America n Funds Average	59.90	10.32	1.47
New Asia Fund
Return s before taxes	53.54	11.62	-0.81	9/28/90
Return s after taxes on distributions	53.08	11.71	-1.26
Return s after taxes on distributions and sale of fund shares	34.79	10.31	-0.89
MSCI All Country Far East Free Ex-Japan Index	44.96	5.71	-3.53
Lipper Pacific Ex-Japan Funds Average	46.50	9.94	-1.04

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* Principal return only.

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* * Since 12/31/9 5 .

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*** Since 12/31/98.

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MSCI Emerging Markets Europe and Middle East Index is a market capitalization weighted index consisting of about 1 06 securities in s even world markets .

MSCI Emerging Markets Free Index is a market capitalization weighted index of over 850 stocks traded in 22 world markets.

MSCI Europe Index is a market capitalization weighted index of approximately 500 stocks traded in 15 European markets.

MSCI World Index tracks the stocks of approximately 1,300 companies representing the stock markets of
22 countries.

MSCI EAFE Small - Cap Index is a market capitalization weighted index of almost 1,000 small-cap stocks in 21 world markets.

MSCI EAFE Index tracks the stocks of about 1,000 companies in Europe, Australasia, and the Far East (EAFE).

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Citigroup Non-U.S. Extended Market Index (EMI) is a small-capitalization subindex of the Citigroup Broad Market Index (BMI). While the BMI measures the per formance of the entire universe of securities, the EMI covers the small-cap stock universe.

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The TSE First Section Index is a market capitalization weighted index of about 1,300 of the larger companies on the Tokyo Stock Exchange.

The TSE Second Section Index is a market capitalization weighted index of about 500 of the smaller and newly listed companies on the Tokyo Stock Exchange.

MSCI Japan Index is an unmanaged index of approximately 300 foreign stock prices and reflects the common stock prices of the index companies translated into U.S. dollars, assuming reinvestment of all dividends paid by the index stocks net of any applicable foreign taxes.

MSCI E MF Latin America Index is a market capitalization weighted index of approximately 140 stocks traded in seven Latin American markets.

MSCI All Country Far East Free Ex-Japan Index tracks the stocks of nine Far East countries, excluding Japan.

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What fees or expenses will I pay?

The funds are 100% no load. The Emerging Europe & Mediterranean, Emerging Markets Stock, International Discovery, and Latin America Funds impose a 2% redemption fee, payable to the funds, on shares purchased and held less than one year. There are no other 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.

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Fund	Shareholder fees (fees paid directly from your investment)	Annual fund operating expenses (expenses that are deducted from fund assets)
	Redemption fees a	Management fee	Other expenses	Total annual fund operating expenses	Fee waiver/ expense reimbursement	Net expenses

Emerging Europe & Mediterranean c	2 %	1.07 %	0.93 %	2. 00 %	0. 25 % b	1.75 % b
Emerging Markets Stock	2	1.07	0. 36	1. 43	—	—
European Stock	—	0.82	0. 30	1. 1 2	—	—
Global Stock c	—	0.67	0. 7 5	1. 42	0. 22 b	1.20 b
International Discovery	2	1.07	0. 3 4	1. 4 1	—	—
International Growth & Income c	—	0. 67	1.1 9	1.8 6	0.6 1 b	1.25 b
International Stock	—	0.67	0. 2 8	0. 9 5	—	—
Japan	—	0.82	0. 5 6	1. 3 8	—	—
Latin America	2	1.07	0. 4 8	1. 5 5	—	—
New Asia	—	0.82	0. 35	1. 17	—	—

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a On shares purchased and held for less than one year .

b T. Rowe Price International is contractually obligated to waive any fees and bear any expenses to the extent such fees or expenses would cause the funds` ratios of expenses to average net assets to exceed the indicated percentage limitations. Fees waived or expenses paid or assumed are subject to reimburse ment to T. Rowe Price International by each fund through the indicated reimbursement date, but no reimbursement will be made if it would result in a fund`s expense ratio exceeding its specified limit. A summary of the funds` expense limitations and the periods for which they are effective is set forth below: <R>

Fund	Limitation Period	Expense Ratio Limitation	Reimbursement Date

Emerging Europe & Mediterranean	11/1 /0 2 — 2/2 8 /0 5	1.75%	2/28 /0 7
Global Stock	11/1/03 — 2/28/06	1.20%	2/29/08
International Growth & Income	11/1 /0 2 — 2/2 8 /0 5	1.25%	2/28 /0 7

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c The fund operated under a previous expense limitation for which T. Rowe Price International may be reimbursed.

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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 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, the expense limitations currently in place are not renewed (if applicable), you invest $10,000, earn a 5% annual return, hold the investment for the following periods , and then redeem:

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Fund	1 year	3 years	5 years	10 years
Emerging Europe & Mediterranean	$ 178	$ 595	$ 1,047	$ 2,300
Emerging Markets Stock	146	452	782	1,713
European Stock	114	356	617	1,363
Global Stock	122	397	726	1,656
International Discovery	144	446	771	1,691
International Growth & Income	127	505	929	2,112
International Stock	97	303	525	1,166
Japan	141	437	755	1,657
Latin America	158	490	845	1,845
New Asia	119	372	644	1,420

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other INFORMATION about the funds

What are some of the potential rewards of investing overseas through the funds?

Investing abroad increases the opportunities available to you. Some foreign countries may have greater potential for economic growth than the U.S. Emerging market, regional, and single-country funds allow investors to seek potentially superior growth in the areas they view as most promising, but with commensurately higher risks. Investing a portion of your overall portfolio in foreign stock funds can enhance your diversification while pro viding the opportunity to boost long-term returns.

How does the portfolio manager try to reduce risk?

The principal tools we use to try to reduce risk are intensive research and limiting exposure to any one industry or company. Currency hedging techniques may be used from time to time.

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The impact on each fund`s share price from a drop in the price of a particular stock is reduced substantially by investing in a portfolio with dozens of different companies. Likewise, the impact of unfavorable developments in a particular country is reduced when investments are spread among many countries. Investors should pay close attention to how many countries a fund typically expects to invest in, particularly in regard to our regional funds and, of course, the single-country Japan Fund. However, the economies and financial markets of coun tries in a certain region may be influenced heavily by one another.

What are the potential rewards of investing in small companies overseas?

In general, small companies are more dynamic and can adapt more quickly than larger ones to changing eco nomic and market conditions, which may help them increase their earnings faster. In addition, the movement of small-company shares is not perfectly correlated with the movements of large-cap stocks. Since many U.S.-based international funds focus on large or medium-sized foreign companies, adding a small-cap international fund could enhance the diversification of a portfolio while providing the opportunity to boost long-term returns.

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

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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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You should also review the information in Section 2 that discusses contingent redemption fees for the Emerging Europe & Mediterranean, Emerging Markets Stock, International Discovery, and Latin America Funds .

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Important i nformation a bout the International Discovery Fund

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As of March 31, 2003, the International Discovery Fund resumed offering shares to new investors. The fund was closed after March 13, 2000 to preserve its ability to invest in a limited universe of rapidly growing, small- to medium-sized companies outside the U.S. Given changed market conditions, the Adviser and Fund Directors concluded it was in the shareholders` interests to open the fund to new investments.

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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.

2 Pricing Shares and Receiving Sale Proceeds

How and when shares are priced

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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.

Japan Fund: Pricing and Transactions

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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 a 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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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.

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

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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 %

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Useful Information on Distributions and Taxes

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

Dividends and Other Distributions

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The following chart provides details on dividend payments :

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<R> Table 4 Dividend Payment Schedule

Fund	Dividends
Money market funds	Shares purchased by 12 noon ET via wire begin to earn dividends on that day . Other shares normally begin to earn dividends on the business day after payment is received. Declared daily and p aid on the first business day of each month.
Bond funds	Shares normally begin to earn dividends on the business day after payment is received . Declared daily and p aid 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 on the record date.
O ther stock funds	Declared annually, if any, generally in December. Must be a shareholder on the record date.
Retirement Funds : Retirement Income All other s	Shares normally begin to earn dividends on the business day after payment is received. Paid on the first business day of each month. Declared annually, if any, generally in December. Must be a shareholder on the record date.
Tax-Efficient Balanced	Municipal Portion Shares normally begin to earn dividends on the business day after payment is 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 on the record date.

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Capital gain payments

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 taxable account, y ou will generally be subject to tax 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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Additional information about certain T. Rowe Price funds is listed below:

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Tax-Free and Municipal Funds
Regular monthly dividends (including the state specific tax-free funds) are expected to be exempt from federal income taxes. Exemption is not guaranteed , since the fund has the right under certain conditions to invest in nonexempt securities. You must report your total tax-free 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 dur ing the year.
Tax-Free and Municipal Funds (continued)
Tax-exempt dividends paid to Social Security recipients may increase the portion of benefits that are subject to tax. For state specific funds, the monthly dividends you receive are expected to be exempt from state and local income tax. For other funds, a small portion of your income dividend may be exempt from state and local income taxes. If the funds invest in certain "private activity" bonds, shareholders who are subject to the alternative minimum tax (AMT) must include income generated by those bonds in their AMT calculation. The portion of the fund`s income that should be included in your AMT calcula tion, if any, will be reported to you in January.
Tax-Efficient Balanced Fund
The fund intends to invest a sufficient portion of its assets in municipal bonds and notes so that it may qualify to pay tax-exempt dividends, which will be exempt from federal income tax. The fund may not always qualify to pay tax-exempt dividends. The amount of such dividends will be reported to you on your calendar year-end statement. You must report your total tax-exempt income on IRS Form 1040. This information is used by the IRS to help determine the tax status of any Social Security payments you may have received during the year. Tax-exempt interest paid to Social Security recipients may increase the portion of benefits that are subject to tax. A small portion of your income dividend may also be exempt from state income taxes. If the funds invest in certain "private activity" bonds, shareholders who are subject to the alternative minimum tax (AMT) must include income generated by those bonds in their AMT calculation. The portion of the fund`s income that should be included in your AMT calcula tion, if any, will be reported to you in January.
Florida Intermediate Tax-Free Fund
Florida does not have a state income tax but does impose an intangibles property tax that applies to shares of mutual funds. A fund organized as a business trust and invested at least 90% in Florida municipal obliga tions, U.S. government obligations, and certain other designated securities on January 1 is exempt from the tax. If a fund`s portfolio is less than 90% invested on January 1, the exemption applies only to the portion of assets (if any) invested in U.S. government obligations. 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 expects that the entire value of all fund shares will be exempt from the intangibles tax. Exemption is not guaranteed , since the fund has the right under certain conditions to invest in nonexempt securities.

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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.

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Taxes on fund distributions

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The following chart provides additional details on distributions for certain funds :

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<R> Table 5 Taxes on F und D istributions

Tax-Free and Municipal Funds
Gains 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. To the extent the fund invests in these securities, the likelihood of a taxable gain distribution will be increased.
Tax-Efficient Balanced Fund
Gains 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. To the extent the fund invests in these securities, the likelihood of a taxable gain distribution will be increased.
Inflation Protected Bond Fund
Inflation adjustments on Treasury inflation-protected securities exceeding deflation adjust ments for a year will be distributed to you as a short-term capital gain. In computing the distribution amount, 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.
Retirement Funds
Distributions by the underlying funds and changes in asset allocations may result in taxable distributions of ordinary income or capital gains.

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Tax consequences of hedging

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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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Transaction Procedures and Special Requirements

Following these procedures helps assure timely and accurate transactions.

Purchase Conditions

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

Telephone, Tele*Access ® , and online account transactions

Redemptions over $250,000

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Excessive Trading and Market Timing

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T. Rowe Price may bar excessive traders and market timers from purchasing shares.

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Int ermediaries often establish omnibus accounts in the T. Rowe Price funds for their customers. In such situa tions, T. Rowe Price cannot monitor trading activity by individual shareholders. However , T. Rowe Price reviews trading actively at the omnibus account level and looks for activity that indicates potential excessive trading or short-term market timing. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary to determine whether the fund`s polic ies ha ve been violated , and to what degree .

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Keeping Your Account Open

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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.

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Account Maintenance and Small Account Fees

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3 Organization and Management

How are the funds organized?

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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?

Who runs the funds?

General Oversight

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All decisions regarding the purchase and sale of fund investments are made by T. Rowe Price International or Global Investment Services (see below) .

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Investment Manager

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T. Rowe Price International (or Global Investment Services) is responsible for the selection and management of fund portfolio investments. T. Rowe Price International has entered into a sub advisory agreement with Global Investment Services for the management of the Japan Fund and the Japanese investments of the International Discovery Fund. T. Rowe Price International and Global Investment Services are wholly owned subsidiaries of T. Rowe Price Group, Inc. The U.S. offices of T. Rowe Price International and Global Investment Services are located at 100 East Pratt Street, Baltimore, Maryland 21202.

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Portfolio Management

Each fund has an Investment Advisory Group that has day to day responsibility for managing the portfolio and developing and executing each fund`s investment program. The members of each advisory group are listed below.

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Emerging Europe & Mediterranean Fund Christopher D. Alderson and David J.L. Warren .

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Emerging Markets Stock Fund Christopher D. Alderson, Frances Dydasco, Mark J.T. Edwards, Gonzalo Px87 n garo , and David J.L. Warren .

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European Stock Fund Robert A. Revel-Chion, James B.M. Seddon , and David J.L. Warren .

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Global Stock Fund Gonzalo Px87 ngaro , Robert W. Smith , William J. Stromberg, Dean Tenerelli, and David J.L. Warren .

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International Discovery Fund Frances Dydasco, Mark J.T. Edwards, M. Campbell Gunn , Justin Thomson , and David J.L. Warren .

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International Growth & Income Fund Raymond A. Mills, Ph.D., James B.M. Seddon, Robert W. Smith , David J.L. Warren, and Richard T. Whitney .

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International Stock Fund Mark C.J. Bickford-Smith, James B.M. Seddon, and David J.L. Warren.

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Japan Fund M. Campbell Gunn and David J.L. Warren.

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Latin America Fund Gonzalo Px87 ngaro and David J.L. Warren .

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New Asia Fund Frances Dydasco, Mark J.T. Edwards , and David J.L. Warren .

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<R> Portfolio Management

Name	Year Joined T. Rowe Price International	Years of Experience	Type of Experience
Christopher D. Alderson	1988	18	Research; Portfolio Management
Mark C.J. Bickford-Smith	1995	19	Research; Financial Analysis
Frances Dydasco	1996	15	Research; Financial Analysis
Mark J.T. Edwards	1987	19	Financial Analysis
M. Campbell Gunn	2002	25	Research; Portfolio Management
Raymond A. Mills	2000	7	Portfolio Management
Gonzalo Px87 ngaro	1998	13	Equity Research ; Portfolio Management
Robert A. Revel-Chion	1998	16	Portfolio Management
James B.M. Seddon	1987	17	Portfolio Management
Robert W. Smith	1996	17	Financial Analysis ; Portfolio Management
William J. Stromberg	1987*	17	Equity Research; Portfolio Management
Dean Tenerelli	1999	11	Research; Portfolio Management
Justin Thomson	1998	13	Portfolio Management
David J.L. Warren	1983	24	Equity Research; Fixed - Income Research; Portfolio Management
Richard T. Whitney	1998	20	Equity Research; Portfolio Management

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* Year joined T. Rowe Price Associates.

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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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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 $ 106 bil . lion at October 31, 2003 , the group fee was 0.32%. . The individual fund fees are as follows: Global Stock, Inter national Growth & Income, and International Stock Funds, 0.35%; European Stock, Japan, and New Asia Funds, 0.50%; Emerging Europe & Mediterranean, Emerging Markets Stock, International Discovery, and Latin America Funds, 0.75%.

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Understanding Performance Information

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

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 a change in the fund`s policy requiring it to normally invest 80% of its assets in stocks or a particular region, as the case may be. 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

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In seeking to meet their investment objectives, fund investments may be made in any type of security or instru ment (including certain potentially high-risk derivatives described in this section) whose investment characteris tics are consistent with their investment programs. The following pages describe various types of fund securities and investment management practices.

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Fundamental policy With the exception of the Emerging Europe & Mediterranean, Latin America, and New Asia Funds, a fund will not purchase a security if, as a result, with respect to 75% of its total assets, more than 5% of the fund`s total assets would be invested in securities of a single issuer or more than 10% of the outstanding vot ing securities of the issuer would be held by the fund.

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Nondiversified Status — Emerging Europe & Mediterranean, Latin America, and New Asia Funds

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Each fund is registered as a nondiversified mutual fund. This means that the fund may invest a greater portion of its assets in, and own a greater amount of the voting securities of, a single company than a diversified fund, which may subject the fund to greater risk with respect to its portfolio securities. However, because the fund intend s to qualify as a "regulated investment compan y " under the Internal Revenue Code, the fund must invest so that, at the end of each fiscal quarter, with respect to 50% of its total assets, no more than 5% of its total 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. With respect to the remaining 50% of fund assets, no more than 25% may be invested in a single issuer.

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Fund investments may include the following:

Common and Preferred Stocks

Convertible Securities and Warrants

Fixed-Income Securities

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From time to time, we may invest in corporate and government fixed-income securities as well as below-invest ment-grade bonds, commonly referred to as "junk" bonds. These securities would be purchased in companies that meet fund investment criteria. The price of a bond fluctuates with changes in interest rates, generally rising when interest rates fall and falling when interest rates rise. Below investment grade bonds , or "junk bonds," can be more volatile and have greater risk of default than investment - grade bonds.

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Operating policy The Emerging Europe & Mediterranean, Emerging Markets Stock, Latin America, and New Asia Funds may each invest 10% of total assets in below investment-grade bonds. The Global Stock Fund may invest 5% of total assets in below i nvestment-grade bonds.

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Hybrid Instruments

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.

Types of Investment Management Practices

Reserve Position

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Borrowing Money and Transferring Assets

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

Foreign Currency Transactions

The funds will normally conduct their foreign currency exchange transactions, if any, either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward con tracts to purchase or sell foreign currencies. The funds will generally not enter into a forward contract with a term greater than one year.

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The funds will generally enter into forward foreign currency exchange contracts only under two circumstances. First, when a 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. Second, when T. Rowe Price International believes that the currency of a particular foreign country may move substantially against another currency, it may enter into a forward contract to sell or buy the former foreign currency (or another currency that acts as a proxy for that currency). The contract may approximate the value of some or all of the funds` portfolio securities denominated in such foreign currency. Under unusual circumstances, a fund may commit a substantial portion or the entire value of its portfolio to the consummation of these contracts. T. Rowe Price International will consider the effect such a commitment to forward contracts would have on each fund`s investment program and the flexibility of each fund to purchase additional securities. Although forward contracts will be used primarily to protect the fund from adverse currency movements, they also involve the risk that anticipated currency movements will not be accurately predicted, and fund total return could be adversely affected as a result.

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Futures and Options

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Tax Consequences of Hedging

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 are classified as capital gains or ordinary income.

Lending of Portfolio Securities

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

Portfolio Turnover

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Turnover is an indication of frequency of trading . We will not generally trade in securities for short-term prof its, 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 cap ital gain distributions . The funds` portfolio turnover rates are shown in the Financial Highlights table .

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Financial Highlights

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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 reports were audited by the funds` independent auditors , Pricewaterhouse-
Coopers LLP.

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<R> Table 6 Financial Highlights

	8/31 /00 * through 10 /31/00	Year ended October 31
Emerging Europe & Mediterranean Fund		2001	200 2	2 003

Net asset value, beginning of period	$ 10.00	$ 8.65	$ 5.89	$ 6.82
Income From Investment Operations
Net investment income	(0.01 ) a	(0.0 6 ) a	(0.05 ) a	0.04 a
Net gains or losses on securities (both realized and unrealized)	( 1.34 )	( 2.64 )	0.98	3.93
Total from investment operations	( 1.35 )	( 2.70 )	0.93	3.97
Less Distributions
Dividends (from net investment income)	—	—	—	—
Distributions (from capital gains)	—	(0.07 )	—	—
Returns of capital	—	—	—	—
Total distributions	—	(0.07 )	—	—
Redemption fees added to paid - in - capital	—	0.01	—	0.02
Net asset value, end of period	$ 8.65	$ 5.89	$ 6.82	$ 10.81
Total return	( 13.50 )% a	( 31.28 )% a	15.79 % a	58.50 % a
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$ 25,533	$ 17,331	$ 21,481	$ 46,813
Ratio of expenses to average net assets	1.75 % a b	1.75 % a	1.75 % a	1.75 % a
Ratio of net income to average net assets	(0.73 ) % a b	(0. 82 )% a	(0. 66 )% a	0.51 % a
Portfolio turnover rate	62 .9 % b	83.1 %	94.5 %	54.1 %

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* Inception date.

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a Excludes expenses in excess of a 1.75% contractual expense limitation in effect through February 28, 2005 .

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b Annualized.

<R> Table 6 Financial Highlights (continued)

	Year ended October 31
Emerging Markets Stock Fund	1999	2000	2001	200 2	200 3

Net asset value, beginning of period	$ 7.95	$ 11.08	$ 12.42	$ 9.15	$ 9.87
Income From Investment Operations
Net investment income	( 0. 01 ) a	(0.02 )	0.02	0.04	0.09
Net gains or losses on securities (both realized and unrealized)	3.18	1.34	( 3.30 )	0.68	4.36
Total from investment operations	3.17	1.32	( 3.28 )	0.72	4.45
Less Distributions
Dividends (from net investment income)	(0. 04 )	—	—	(0. 01 )	( 0.02 )
Distributions (from capital gains)	—	—	—	—	—
Returns of capital	—	—	—	—	—
Total distributions	(0. 04 )	—	—	( 0. 01 )	( 0.02 )
Redemption fees added to paid - in - capital	—	0.02	0.01	0.01	—
Net asset value, end of period	$ 11.08	$ 12.42	$ 9.15	$ 9.87	$ 14.30
Total return	40.08 % a	12.09 %	( 26.33 )%	7.97 %	45.16 %
Ratios/Supplemental Data
Net assets, end of period (in thousands )	$ 108,418	$ 152,990	$ 131,436	$ 158,465	$ 345,380
Ratio of expenses to average net assets	1.75 % a	1.50 %	1.58 %	1.51 %	1.43 %
Ratio of net income to average net assets	(0.14 ) % a	( 0. 12 ) %	0.19 %	0.41 %	1.12 %
Portfolio turnover rate	59.0 %	56.1 %	70.3 %	70.5 %	65.6 %

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a Excludes expenses in excess of a 1.75% contractual expense limitation in effect through October 31, 2001.

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<R> Table 6 Financial Highlights (continued)

	Year ended October 31
European Stock Fund	199 9	2000	200 1	200 2	200 3

Net asset value, beginning of period	$ 22.38	$ 22.29	$ 21.69	$ 15.28	$ 12.77
Income From Investment Operations
Net investment income	0. 2 3	0. 18	0. 40	0. 16	0.22
Net gains or losses on securities (both realized and unrealized)	2.1 4	1.26	( 5.23 )	( 2.31 )	2.79
Total from investment operations	2.3 7	1.44	( 4.83 )	( 2.15 )	3.01
Less Distributions
Dividends (from net investment income)	(0. 28 )	(0. 14 )	(0. 16 )	(0. 36 )	(0.14 )
Distributions (from capital gains)	( 2.18 )	( 1.9 0 )	( 1.42 )	—	—
Returns of capital	—	—	—	—	—
Total distributions	( 2.46 )	( 2.04 )	( 1.58 )	(0. 36 )	(0.14 )
Net asset value, end of period	$ 22.29	$ 21.69	$ 1 5.28	$ 1 2.77	$ 15.64
Total return	1 1.44 %	6.28 %	( 2 3.98 ) %	( 14.51 ) %	23.83 %
Ratios/Supplemental Data
Net assets, end of period (in millions)	$ 1,382	$ 1, 250	$ 814	$ 643	$ 800
Ratio of expenses to average net assets	1.05 %	1.02 %	1.09 %	1.11 %	1.12 %
Ratio of net income to average net assets	0.97 %	0.71 %	2. 03 %	1.03 %	1.56 %
Portfolio turnover rate	15 .7 %	24 .5 %	5.8 %	16 .1 %	23.1 %

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<R> Table 6 Financial Highlights (continued)

	Year ended October 31
Global Stock Fund	199 9	2000	200 1	200 2	200 3

Net asset value, beginning of period	$ 14.03	$ 16.77	$ 18.04	$ 12.96	$ 1 0.90
Income From Investment Operations
Net investment income	0. 05 a	0. 02 a	0. 14 a	0. 02 a	0. 05 a
Net gains or losses on securities (both realized and unrealized)	3.2 4	1. 80	( 4.41 )	( 1.96 )	2. 15
Total from investment operations	3.29	1. 82	( 4. 27 )	( 1.94 )	2.20
Less Distributions
Dividends (from net investment income)	(0. 10 )	(0.06 )	( 0.02 )	(0. 12 )	(0. 03 )
Distributions (from capital gains)	( 0.45 )	( 0. 49 )	( 0.79 )	—	—
Returns of capital	—	—	—	—	—
Total distributions	( 0.55 )	( 0. 55 )	( 0.81 )	(0. 12 )	(0. 03 )
Net asset value, end of period	$ 16.77	$ 18.04	$ 1 2.96	$ 1 0.90	$ 1 3.07
Total return	24.17 % a	10.9 8 % a	( 2 4.69 ) % a	( 1 5.15 ) % a	2 0.24 % a
Ratios/Supplemental Data
Net assets, end of period (in thousands )	$ 73,837	$ 107,4 5 9	$ 73,325	$ 62,735	$ 74,725
Ratio of expenses to average net assets	1. 20 % a	1. 20 % a	1. 20 % a	1. 20 % a	1.20 % a
Ratio of net income to average net assets	0. 40 % a	0. 15 % a	0.89 % a	0.20 % a	0.42 % a
Portfolio turnover rate	37.5 %	71 .5 %	5 2.3 %	48.4 %	38.7 %

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a Excludes expenses in excess of a 1.20% contractual expense limitation in effect through October 31, 2003.

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<R> Table 6 Financial Highlights (continued)

	Year ended October 31
International Discovery Fund	199 9	2000	200 1	200 2	200 3

Net asset value, beginning of period	$ 14. 99	$ 26.75	$ 34.52	$ 1 9.28	$ 1 5.34
Income From Investment Operations
Net investment income	( 0. 0 3 )	0. 0 6	0. 06	0. 0 1	0. 0 8
Net gains or losses on securities (both realized and unrealized)	12.09	10.39	( 9.49 )	( 3.95 )	9.79
Total from investment operations	12.06	10.45	( 9.43 )	( 3 .94 )	9.87
Less Distributions
Dividends (from net investment income)	(0. 01 )	—	—	—	—
Distributions (from capital gains)	( 0. 30 )	( 2.81 )	( 5.83 )	—	—
Returns of capital	—	—	—	—	—
Total distributions	( 0. 31 )	( 2.81 )	( 5.83 )	—	—
Redemption fees added to paid-in-capital	0.01	0.13	0.02	—	—
Net asset value, end of period	$ 26.75	$ 34.52	$ 19.28	$ 1 5.34	$ 25.21
Total return	82.11 %	40.07 %	( 31.90 ) %	( 20.44 ) %	64.3 4 %
Ratios/Supplemental Data
Net assets, end of period (in thousands )	$ 381,462	$ 905,387	$ 500,403	$ 359,514	$ 652,046
Ratio of expenses to average net assets	1. 42 %	1. 2 7 %	1. 38 %	1. 44 %	1.41 %
Ratio of net income to average net assets	(0.17 ) %	0. 15 %	0. 25 %	0. 06 %	0.4 6 %
Portfolio turnover rate	98.2 %	81.0 %	59.1 %	93.9 %	115.9 %

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<R> Table 6 Financial Highlights (continued)

	12/21/98 * through 10 /31/ 99	Year ended October 31
International Growth & Income Fund		200 0	200 1	2 00 2	2003

Net asset value, beginning of period	$ 10.00	$ 11.00	$ 10.75	$ 8.19	$ 7.34
Income From Investment Operations
Net investment income	0.16 a	0.14 a	0.11 a	0.0 9 a	0.02 a
Net gains or losses on securities (both realized and unrealized)	0.84	0.03 b	(1.90 )	(0.84 )	2.13
Total from investment operations	1.00	0.17	(1.79 )	(0.75 )	2.15
Less Distributions
Dividends (from net investment income)	—	(0.19 )	(0.13 )	(0.10 )	(0.08 )
Distributions (from capital gains)	—	(0. 23 )	(0.64 )	—	(0.01 )
Returns of capital	—	—	—	—	—
Total distributions	—	(0. 42 )	(0.77 )	(0.10 )	(0.09 )
Net asset value, end of period	$ 11.00	$ 10.75	$ 8.19	$ 7.34	$ 9.40
Total return	10.00 % a	1.43 % a	(17.99 ) % a	(9.31 ) % a	29.66 % a
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$ 9,776	$ 1 0,118	$ 8,500	$ 10,654	$ 114,999
Ratio of expenses to average net assets	1. 2 5 % a c	1. 2 5 % a	1. 2 5 % a	1. 2 5 % a	1.25 % a
Ratio of net income to average net assets	1.87 % a c	1.24 % a	1.24 % a	1.25 % a	1.36 % a
Portfolio turnover rate	35.8 % c	32.2 %	8 .5 %	24.6 %	53.2 %

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* Inception date.

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a Excludes expenses in excess of a 1. 2 5% contractual expense limitation in effect through February 28, 2005 .

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b The amount presented is calculated pursuant to a methodology prescribed by the Securities and Exchange Commission for a share outstanding throughout the period. This amount is inconsistent with the fund`s aggregate gains and losses because of the timing of sales and redemptions of fund shares in relation to fluctuating market values for the investment portfolio.

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c Annualized.

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<R> Table 6 Financial Highlights (continued)

	Year ended October 31
International Stock Fund	1999	2000	2001	200 2	200 3

Net asset value, beginning of period	$ 14.39	$ 16.70	$ 16.11	$ 1 0.65	$ 8.87
Income From Investment Operations
Net investment income	0.17	0.10	0.29	0. 11	0.14
Net gains or losses on securities (both realized and unrealized)	2.71	0.35	(4.48 )	( 1.56 )	1.76
Total from investment operations	2.88	0.45	(4.19 )	( 1.45 )	1.90
Less Distributions
Dividends (from net investment income)	(0.22 )	(0.13 )	(0.09 )	(0. 30 )	( 0.11 )
Distributions (from capital gains)	(0.35 )	(0.91 )	(1.18 )	( 0.03 )	—
Returns of capital	—	—	—	—	—
Total distributions	(0.57 )	(1.04 )	(1.27 )	( 0.33 )	( 0.11 )
Net asset value, end of period	$ 16.70	$ 16.11	$ 10.65	$ 8.87	$ 10.66
Total return	20.67 %	2.28 %	(28.17 )%	( 14.19 )%	21.69 %
Ratios/Supplemental Data
Net assets, end of period (in millions)	$ 10,615	$ 10,458	$ 6,370	$ 4,773	$ 4,874
Ratio of expenses to average net assets	0.85 %	0.84 %	0.90 %	0.9 2 %	0.95 %
Ratio of net income to average net assets	1.05 %	0.55 %	2.14 %	0.96 %	1.39 %
Portfolio turnover rate	17.6 %	38.2 %	17.4 %	21.6 %	25.2 %

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<R> Table 6 Financial Highlights (continued)

	Year ended October 31
Japan Fund	199 9	2000	200 1	200 2	200 3

Net asset value, beginning of period	$ 6.72	$ 1 3.62	$ 1 1.59	$ 6.58	$ 5.06
Income From Investment Operations
Net investment income	(0.02 )	(0.06 )	( 0. 0 4 )	( 0. 0 4 )	( 0. 0 2 )
Net gains or losses on securities (both realized and unrealized)	6.92	(1.92 )	( 3.77 )	( 1. 48 )	2. 08
Total from investment operations	6.90	(1.98 )	( 3.81 )	( 1. 52 )	2. 06
Less Distributions
Dividends (from net investment income)	—	—	—	—	—
Distributions (from capital gains)	—	( 0. 05 )	( 1.20 )	—	—
Returns of capital	—	—	—	—	—
Total distributions	—	( 0. 05 )	( 1.20 )	—	—
Net asset value, end of period	$ 1 3.62	$ 11.59	$ 6.58	$ 5.06	$ 7.12
Total return	102.68 %	(14.61 ) %	( 36.45 ) %	( 23.10 ) %	40.71 %
Ratios/Supplemental Data
Net assets, end of period (in thousands )	$ 513,739	$ 309,686	$ 146,406	$ 101,879	$ 170,707
Ratio of expenses to average net assets	1. 14 %	1. 09 %	1. 2 5 %	1. 35 %	1. 38 %
Ratio of net income to average net assets	( 0. 27 ) %	( 0. 38 ) %	(0.43 ) %	( 0. 6 0 ) %	( 0.4 3 ) %
Portfolio turnover rate	58.8 %	59 .5 %	45.8 %	104.2 %	254.7 %

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<R> Table 6 Financial Highlights (continued)

	Year ended October 31
Latin America Fund	199 9	2000	200 1	200 2	200 3

Net asset value, beginning of period	$ 7.22	$ 8.03	$ 10.19	$ 8.21	$ 7.25
Income From Investment Operations
Net investment income	0.09	0. 0 5	0. 15	0. 18	0. 13
Net gains or losses on securities (both realized and unrealized)	0.86	2.14	( 2.0 9 )	( 0.79 )	2.94
Total from investment operations	0.95	2.19	( 1.94 )	( 0.61 )	3.0 7
Less Distributions
Dividends (from net investment income)	(0. 14 )	(0.04 )	(0.04 )	(0.29 )	—
Distributions (from capital gains)	—	—	—	(0.06 )	—
Returns of capital	—	—	—	—	—
Total distributions	( 0. 14 )	( 0.04 )	( 0.04 )	(0.35 )	—
Redemption fees added to paid-in-capital	—	0. 01	—	—	—
Net asset value, end of period	$ 8.03	$ 10.19	$ 8.21	$ 7.25	$ 10.32
Total return	13.57 %	27.41 %	( 19.10 ) %	( 8.15 ) %	42.34 %
Ratios/Supplemental Data
Net assets, end of period (in thousands )	$ 200,385	$ 228,655	$ 155,239	$ 126,905	$ 166,059
Ratio of expenses to average net assets	1. 6 2 %	1 . 46 %	1. 49 %	1 .53 %	1.55 %
Ratio of net income to average net assets	1.05 %	0. 42 %	1.40 %	1.88 %	1.55 %
Portfolio turnover rate	43 .2 %	27.5 %	29.9 %	21.0 %	27.4 %

</R>

<R> Table 6 Financial Highlights (continued)

	Year ended October 31
New Asia Fund	199 9	2000	200 1	200 2	200 3

Net asset value, beginning of period	$ 4.93	$ 7.20	$ 7.12	$ 5.11	$ 5.68
Income From Investment Operations
Net investment income	0. 05	0. 0 4	0. 03	0. 0 3	0. 0 6
Net gains or losses on securities (both realized and unrealized)	2.31	(0.08 ) a	( 2.04 )	0.54	2. 44
Total from investment operations	2.36	(0.04 )	( 2.01 )	0.57	2. 5 0
Less Distributions
Dividends (from net investment income)	(0. 09 )	(0.0 4 )	—	—	(0. 0 4 )
Distributions (from capital gains)	—	—	—	—	—
Returns of capital	—	—	—	—	—
Total distributions	( 0. 09 )	( 0. 04 )	—	—	(0. 0 4 )
Net asset value, end of period	$ 7.20	$ 7.12	$ 5.11	$ 5.68	$ 8.14
Total return	48.73 %	(0.68 ) %	( 28.23 ) %	11 .15 %	44.30 %
Ratios/Supplemental Data
Net assets, end of period (in million s )	$ 996	$ 875	$ 527	$ 562	$ 826
Ratio of expenses to average net assets	1. 2 1 %	1. 08 %	1. 2 2 %	1. 17 %	1. 17 %
Ratio of net income to average net assets	0. 87 %	0. 41 %	0. 4 9 %	0. 53 %	1.06 %
Portfolio turnover rate	69.9 %	52.2 %	49.0 %	72.0 %	71 .7 %

</R>

<R>

a The amount presented is calculated pursuant to a methodology prescribed by the Securities and Exchange Commission for a share outstanding throughout the period. This amount is inconsistent with the fund`s aggregate gains and losses because of the timing of sales and redemptions of fund shares in relation to fluctuating market values for the investment portfolio.

</R>

<R>

</R>

PAGE 163

4 Account Requirements and Transaction Information

Tax Identification
Number

<R>

</R>

Transaction Confirmations

Employer-Sponsored Retirement Plans and Institutional Accounts

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

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.

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

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:

<R>

</R>

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

<R>

Note: Investment will be made, but services may not be established and IRS penalty withholding may occur until we receive a signed New Account Form.

</R>

By Exchange

In Person

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

Purchasing Additional Shares

<R>

</R>

PAGE 165

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

Redemptions

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

By Mail

<R>

</R>

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

Rights Reserved by the Funds

<R>

</R>

PAGE 167

information about your Services

Shareholder Services
1-800-225-5132

Investor Services
1-800-638-5660

<R>

</R>

Retirement Plans

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

Automated Services

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

Tele*Access

Web Address
troweprice.com

Online Account Access

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

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

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

Automated Telephone and Computer Services

Investor Information

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.

Dividend Reinvestment Service

PAGE 169

*Services vary by firm.

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

Investment Information

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

<R>

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

</R>

T. rowe price Privacy Policy

<R>

</R>

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

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.

PAGE 171

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.

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

<R>

C01-040 3/1/04

</R>

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

1940 Act File No. 811-2958

This Statement of Additional Information is divided into two parts (Part I and Part II). Part I contains information that is particular to each fund, while Part II contains information that generally applies to all of the funds in the T. Rowe Price family of funds ( the Price Funds" ).

The date of this Statement of Additional Information ("SAI") is March 1, 2004.

T. ROWE PRICE BALANCED FUND, INC.

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.

T. Rowe Price Blue Chip Growth Fund — Advisor Class

T. Rowe Price Blue Chip Growth Fund — R Class

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST ("California Funds")

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 MID -CAP GROWTH FUND, INC.

T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.

T. ROWE PRICE DIVIDEND GROWTH FUND, INC.

T. ROWE PRICE EQUITY INCOME FUND

T. Rowe Price Equity Income Fund — Advisor Class

T. Rowe Price Equity Income Fund — R Class

T. ROWE PRICE FINANCIAL SERVICES FUND, INC.

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 Growth Stock Fund — Advisor Class

T. Rowe Price Growth Stock Fund — R Class

T. ROWE PRICE HEALTH SCIENCES FUND, INC.

T. ROWE PRICE HIGH YIELD FUND, INC.

T. Rowe Price High Yield Fund — Advisor Class

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund

T. Rowe Price Extended Equity Market Index Fund

T. Rowe Price Total Equity Market Index Fund

T. ROWE PRICE INFLATION PROTECTED BOND FUND, INC.

T. ROWE PRICE INSTITUTIONAL EQUITY FUNDS, INC. ("Institutional Equity Funds")

T. Rowe Price Institutional Large-Cap Core Growth Fund

T. Rowe Price Institutional Large-Cap Growth Fund

T. Rowe Price Institutional Large-Cap Value Fund

T. Rowe Price Institutional Mid-Cap Equity Growth Fund

T. Rowe Price Institutional Small-Cap Stock 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 Emerging Europe & Mediterranean Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Bond Fund ®

T. Rowe Price International Bond Fund — Advisor Class

T. Rowe Price International Discovery Fund

T. Rowe Price International Growth & Income Fund

PAGE 173

T. Rowe Price International Growth & Income Fund — Advisor Class

T. Rowe Price International Growth & Income Fund — R Class

T. Rowe Price International Stock Fund

T. Rowe Price International Stock Fund — Advisor Class

T. Rowe Price International Stock Fund — R Class

T. Rowe Price Japan Fund

T. Rowe Price Latin America Fund

T. Rowe Price New Asia Fund

T. ROWE PRICE INTERNATIONAL INDEX FUND, INC.

T. Rowe Price International Equity Index Fund

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.

T. ROWE PRICE MID-CAP GROWTH FUND, INC.

T. Rowe Price Mid-Cap Growth Fund — Advisor Class

T. Rowe Price Mid-Cap Growth Fund — R Class

T. ROWE PRICE MID-CAP VALUE FUND, INC.

T. Rowe Price Mid-Cap Value Fund — Advisor Class

T. Rowe Price Mid-Cap Value Fund — R Class

T. ROWE PRICE NEW AMERICA GROWTH FUND

T. ROWE PRICE NEW ERA FUND, INC.

T. ROWE PRICE NEW HORIZONS FUND, INC.

T. ROWE PRICE NEW INCOME FUND, INC.

T. Rowe Price New Income Fund — Advisor Class

T. Rowe Price New Income Fund — R Class

T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC. ("Personal Strategy Funds")

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. ("Reserve Investment Funds")

T. Rowe Price Government Reserve Investment Fund

T. Rowe Price Reserve Investment Fund

T. ROWE PRICE RETIREMENT FUNDS, INC. ("Retirement Funds")

T. Rowe Price Retirement 2005 Fund

T. Rowe Price Retirement 2010 Fund

T. Rowe Price Retirement 2010 Fund — Advisor Class

T. Rowe Price Retirement 2010 Fund — R Class

T. Rowe Price Retirement 2015 Fund

T. Rowe Price Retirement 2020 Fund

T. Rowe Price Retirement 2020 Fund — Advisor Class

T. Rowe Price Retirement 2020 Fund — R Class

T. Rowe Price Retirement 2025 Fund

T. Rowe Price Retirement 2030 Fund

T. Rowe Price Retirement 2030 Fund — Advisor Class

T. Rowe Price Retirement 2030 Fund — R Class

T. Rowe Price Retirement 2035 Fund

T. Rowe Price Retirement 2040 Fund

T. Rowe Price Retirement 2040 Fund — Advisor Class

T. Rowe Price Retirement 2040 Fund — R Class

T. Rowe Price Retirement Income Fund

T. Rowe Price Retirement Income Fund — Advisor Class

T. Rowe Price Retirement Income Fund — R Class

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.

T. Rowe Price Science & Technology Fund — Advisor Class

T. ROWE PRICE SHORT TERM BOND FUND, INC.

T. ROWE PRICE SMALL-CAP STOCK FUND, INC.

T. Rowe Price Small-Cap Stock Fund — Advisor Class

T. ROWE PRICE SMALL-CAP VALUE FUND, INC.

T. Rowe Price Small-Cap Value Fund — Advisor Class

T. ROWE PRICE SPECTRUM FUND, INC. ("Spectrum Fund s ")

Spectrum Growth Fund

Spectrum Income Fund

Spectrum International Fund

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Florida Intermediate Tax-Free Fund

Georgia Tax-Free Bond Fund

Maryland Short-Term Tax-Free Bond Fund

Maryland Tax-Free Bond Fund

Maryland Tax-Free Money Fund

New Jersey Tax-Free Bond Fund

New York Tax-Free Bond Fund

New York Tax-Free Money Fund

Virginia Tax-Free Bond Fund

T. ROWE PRICE SUMMIT FUNDS, INC. ("Summit Income Funds")

T. Rowe Price Summit Cash Reserves Fund

T. Rowe Price Summit GNMA Fund

T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC. ("Summit Municipal Funds")

T. Rowe Price Summit Municipal Money Market Fund

T. Rowe Price Summit Municipal Intermediate Fund

T. Rowe Price Summit Municipal Income Fund

T. ROWE PRICE TAX-EFFICIENT FUNDS, INC. ("Tax-Efficient Funds")

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 Income Fund — Advisor Class

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 Funds")

U.S. Treasury Intermediate Fund

U.S. Treasury Long-Term Fund

U.S. Treasury Money Fund

T. ROWE PRICE VALUE FUND, INC.

T. Rowe Price Value Fund — Advisor Class

PAGE 175

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

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

Each fund`s financial statements for its most recent fiscal period and the report of independent auditors are included in each fund`s a nnual or semiannual r eport and incorporated by reference into this Statement of Additional Information. The Diversified Mid-Cap Growth Fund, Retirement 2005 Fund, Retirement 2010 Fund — Advisor Class, Retirement 2010 Fund — R Class, Retirement 2015 Fund, Retirement 2020 Fund — Advisor Class, Retirement 2020 Fund — R Class, Retirement 2025 Fund, Retirement 2030 Fund — Advisor Class, Retirement 2030 Fund — R Class, Retirement 2035 Fund, Retirement 2040 Fund — Advisor Class, Retirement 2040 Fund — R Class, Retirement Income Fund — Advisor Class, and Retirement Income Fund — R Class have not been in existence for a long enough time to have complete financial statements.

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.

TABLE OF CONTENTS

	Page		Page

Capital Stock	176	Management of the Fund	9
Code of Ethics	170	Net Asset Value per Share	172
Custodian	170	Organization of the Fund	180
Distributor for the Fund s	84	Other Shareholder Services	80
Dividends and Distributions	173	Portfolio Management Practices	146
Federal Registration of Shares	183	Portfolio Transactions	86
Independent Auditors	99	Pricing of Securities	170
Investment Management Services	63	Principal Holders of Securities	54
Investment Objectives and Policies	109	Ratings of Commercial Paper	183
Investment Objectives and Policies	109	Ratings of Corporate Debt Securities	184
Investment Program	131	Ratings of Municipal Notes and Variable Rate Securities	185
Investment Restrictions	183	Risk Factors	109
Legal Counsel	183	T. Rowe Price Proxy Voting — Process and Policies	181
	164	Tax Status	173

References to the following are as indicated:

Internal Revenue Code of 1986 ( "Code" )

Investment Company Act of 1940 ( "1940 Act" )

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

Securities Act of 1933 ( "1933 Act" )

Securities and Exchange Commission ( "SEC" )

Securities Exchange Act of 1934 ( "1934 Act" )

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

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

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

Advisor Class

The Advisor Class is a share class of its respective T. Rowe Price fund. The Advisor Class is not a separate mutual fund. The shares are designed to be sold only through brokers, dealers, banks, insurance companies, and other financial intermediaries that provide various distribution and administrative services.

R Class

The R Class is a share class of its respective T. Rowe Price fund. The R Class is not a separate mutual fund. The shares are designed to be sold only through various third-party intermediaries that offer employer-sponsored retirement plans, including brokers, dealers, banks, insurance companies, retirement plan recordkeepers, and others.

Government Reserve Investment and Reserve Investment Funds

These funds are not available for direct purchase by members of the public.

PAGE 177

Institutional Funds (except Institutional Foreign Equity Fund)

These funds are designed exclusively for institutional investors. Qualifying entities typically include banks, pension and profit sharing plans, and trust, insurance, and investment companies that meet applicable state securities laws.

PART I

Below is a table showing the prospectus and shareholder report dates for each fund . The table also lists each fund`s category which should be used to identify groups of funds that are referenced throughout this SAI .

Fund	Fund Category	Fiscal Year End	Annual Report Date	Semiannual Report Date	Prospectus Date
Balanced	Equity	Dec 31	Dec 31	June 30	May 1
Blue Chip Growth	Equity	Dec 31	Dec 31	June 30	May 1
Blue Chip Growth Fund — Advisor Class	Equity	Dec 31	Dec 31	June 30	May 1
Blue Chip Growth Fund — R Class	Equity	Dec 31	Dec 31	June 30	May 1
California Tax-Free Bond	State Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
California Tax-Free Money	State Tax-Free Money	Feb 28	Feb 28	August 30	July 1
Capital Appreciation	Equity	Dec 31	Dec 31	June 30	May 1
Capital Opportunity	Equity	Dec 31	Dec 31	June 30	May 1
Corporate Income	Taxable Bond	May 31	May 31	Nov 30	Oct 1
Developing Technologies	Equity	Dec 31	Dec 31	June 30	May 1
Diversified Mid-Cap Growth	Equity	Dec 31	Dec 31	June 30	May 1
Diversified Small-Cap Growth	Equity	Dec 31	Dec 31	June 30	May 1
Dividend Growth	Equity	Dec 31	Dec 31	June 30	May 1
Emerging Europe & Mediterranean	International Equity	Oct 31	Oct 31	April 30	March 1
Emerging Markets Bond	International Bond	Dec 31	Dec 31	June 30	May 1
Emerging Markets Stock	International Equity	Oct 31	Oct 31	April 30	March 1
Equity Income	Equity	Dec 31	Dec 31	June 30	May 1
Equity Income Fund — Advisor Class	Equity	Dec 31	Dec 31	June 30	May 1
Equity Income Fund — R Class	Equity	Dec 31	Dec 31	June 30	May 1
Equity Index 500	Index Equity	Dec 31	Dec 31	June 30	May 1
European Stock	International Equity	Oct 31	Oct 31	April 30	March 1
Extended Equity Market Index	Index Equity	Dec 31	Dec 31	June 30	May 1
Financial Services	Equity	Dec 31	Dec 31	June 30	May 1
Florida Intermediate Tax-Free	State Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
Georgia Tax-Free Bond	State Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
Global Stock	International Equity	Oct 31	Oct 31	April 30	March 1
Global Technology	Equity	Dec 31	Dec 31	June 30	May 1
GNMA	Taxable Bond	May 31	May 31	Nov 30	Oct 1
Government Reserve Investment	Taxable Money	May 31	May 31	Nov 30	Oct 1
Growth & Income	Equity	Dec 31	Dec 31	June 30	May 1
Growth Stock	Equity	Dec 31	Dec 31	June 30	May 1
Growth Stock Fund — Advisor Class	Equity	Dec 31	Dec 31	June 30	May 1
Growth Stock Fund — R Class	Equity	Dec 31	Dec 31	June 30	May 1
Health Sciences	Equity	Dec 31	Dec 31	June 30	May 1
High Yield	Taxable Bond	May 31	May 31	Nov 30	Oct 1
High Yield Fund — Advisor Class	Taxable Bond	May 31	May 31	Nov 30	Oct 1
Inflation Protected Bond	Taxable Bond	May 31	May 31	Nov 30	Oct 1
Institutional Emerging Markets Equity	International Equity	Oct 31	Oct 31	April 30	March 1
Institutional Foreign Equity	International Equity	Oct 31	Oct 31	April 30	March 1
Institutional High Yield	International Bond	May 31	May 31	Nov 30	Oct 1
Institutional Large-Cap Core Growth	Equity	Dec 31	Dec 31	June 30	May 1
Institutional Large-Cap Growth	Equity	Dec 31	Dec 31	June 30	May 1
Institutional Large-Cap Value	Equity	Dec 31	Dec 31	June 30	May 1
Institutional Mid-Cap Equity Growth	Equity	Dec 31	Dec 31	June 30	May 1
Institutional Small-Cap Stock	Equity	Dec 31	Dec 31	June 30	May 1
International Bond	International Bond	Dec 31	Dec 31	June 30	May 1
International Bond Fund — Advisor Class	International Bond	Dec 31	Dec 31	June 30	May 1
International Discovery	International Equity	Oct 31	Oct 31	April 30	March 1
International Equity Index	International Equity	Oct 31	Oct 31	April 30	March 1
International Growth & Income	International Equity	Oct 31	Oct 31	April 30	March 1
International Growth & Income Fund — Advisor Class	International Equity	Oct 31	Oct 31	April 30	March 1
International Growth & Income Fund — R Class	International Equity	Oct 31	Oct 31	April 30	March 1
International Stock	International Equity	Oct 31	Oct 31	April 30	March 1
International Stock Fund — Advisor Class	International Equity	Oct 31	Oct 31	April 30	March 1
International Stock Fund — R Class	International Equity	Oct 31	Oct 31	April 30	March 1
Japan	International Equity	Oct 31	Oct 31	April 30	March 1
Latin America	International Equity	Oct 31	Oct 31	April 30	March 1
Maryland Short-Term Tax- Free Bond	State Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
Maryland Tax-Free Bond	State Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
Maryland Tax-Free Money	State Tax-Free Money	Feb 28	Feb 28	August 30	July 1
Media & Telecommunications	Equity	Dec 31	Dec 31	June 30	May 1
Mid-Cap Growth	Equity	Dec 31	Dec 31	June 30	May 1
Mid-Cap Growth Fund — Advisor Class	Equity	Dec 31	Dec 31	June 30	May 1
Mid-Cap Growth Fund — R Class	Equity	Dec 31	Dec 31	June 30	May 1
Mid-Cap Value	Equity	Dec 31	Dec 31	June 30	May 1
Mid-Cap Value Fund — Advisor Class	Equity	Dec 31	Dec 31	June 30	May 1
Mid-Cap Value Fund — R Class	Equity	Dec 31	Dec 31	June 30	May 1
New America Growth	Equity	Dec 31	Dec 31	June 30	May 1
New Asia	International Equity	Oct 31	Oct 31	April 30	March 1
New Era	Equity	Dec 31	Dec 31	June 30	May 1
New Horizons	Equity	Dec 31	Dec 31	June 30	May 1
New Income	Taxable Bond	May 31	May 31	Nov 30	Oct 1
New Income Fund — Advisor Class	Bond	May 31	May 31	Nov 30	Oct 1
New Income Fund — R Class	Bond	May 31	May 31	Nov 30	Oct 1
New Jersey Tax-Free Bond	State Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
New York Tax-Free Bond	State Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
New York Tax-Free Money	State Tax-Free Money	Feb 28	Feb 28	August 30	July 1
Personal Strategy Balanced	Blended	May 31	May 31	Nov 30	Oct 1
Personal Strategy Growth	Blended	May 31	May 31	Nov 30	Oct 1
Personal Strategy Income	Blended	May 31	May 31	Nov 30	Oct 1
Prime Reserve	Taxable Money	May 31	May 31	Nov 30	Oct 1
Real Estate	Equity	Dec 31	Dec 31	June 30	May 1
Reserve Investment	Taxable Money	May 31	May 31	Nov 30	Oct 1
Retirement 2005	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2010	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2010 Fund — Advisor Class	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2010 Fund — R Class	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2015	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2020	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2020 Fund — Advisor Class	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2020 Fund — R Class	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2025	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2030	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2030 Fund — Advisor Class	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2030 Fund — R Class	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2035	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2040	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2040 Fund — Advisor Class	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement 2040 Fund — R Class	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement Income	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement Income Fund — Advisor Class	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Retirement Income Fund — R Class	Fund-of-Funds	May 31	May 31	Nov 30	Oct 1
Science & Technology	Equity	Dec 31	Dec 31	June 30	May 1
Science & Technology Fund — Advisor Class	Equity	Dec 31	Dec 31	June 30	May 1
Short-Term Bond	Bond	May 31	May 31	Nov 30	Oct 1
Small-Cap Stock	Equity	Dec 31	Dec 31	June 30	May 1
Small-Cap Stock Fund — Advisor Class	Equity	Dec 31	Dec 31	June 30	May 1
Small-Cap Value	Equity	Dec 31	Dec 31	June 30	May 1
Small-Cap Value Fund — Advisor Class	Equity	Dec 31	Dec 31	June 30	May 1
Spectrum Growth	Fund-of-Funds	Dec 31	Dec 31	June 30	May 1
Spectrum Income	Fund-of-Funds	Dec 31	Dec 31	June 30	May 1
Spectrum International	Fund-of-Funds	Dec 31	Dec 31	June 30	May 1
Summit Cash Reserves	Money	Oct 31	Oct 31	April 30	March 1
Summit GNMA	Bond	Oct 31	Oct 31	April 30	March 1
Summit Municipal Income	Bond	Oct 31	Oct 31	April 30	March 1
Summit Municipal Intermediate	Bond	Oct 31	Oct 31	April 30	March 1
Summit Municipal Money Market	Money	Oct 31	Oct 31	April 30	March 1
Tax-Efficient Balanced	Equity	Feb 28	Feb 28	August 30	July 1
Tax-Efficient Growth	Equity	Feb 28	Feb 28	August 30	July 1
Tax-Efficient Multi-Cap Growth	Equity	Feb 28	Feb 28	August 30	July 1
Tax-Exempt Money	Tax-Free Money	Feb 28	Feb 28	August 30	July 1
Tax-Free High Yield	Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
Tax-Free Income	Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
Tax-Free Income Fund — Advisor Class	Tax Free Bond	Feb 28	Feb 28	August 30	July 1
Tax-Free Intermediate Bond	Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
Tax-Free Short-Intermediate	Tax-Free Bond	Feb 28	Feb 28	August 30	July 1
Total Equity Market Index	Index Equity	Dec 31	Dec 31	June 30	May 1
U.S. Bond Index	Index Bond	Oct 31	Oct 31	April 30	March 1
U.S. Treasury Intermediate	Taxable Bond	May 31	May 31	Nov 30	Oct 1
U.S. Treasury Long-Term	Taxable Bond	May 31	May 31	Nov 30	Oct 1
U.S. Treasury Money	Taxable Money	May 31	May 31	Nov 30	Oct 1
Value	Equity	Dec 31	Dec 31	June 30	May 1
Value Fund — Advisor Class	Equity	Dec 31	Dec 31	June 30	May 1
Virginia Tax-Free Bond	State Tax-Free Bond	Feb 28	Feb 28	August 30	July 1

PAGE 179

MANAGEMENT OF the fund S

Retirement and Spectrum Funds (collectively and individually, " Fund s- of - Funds ")

PAGE 181

The management of the business and affairs of the Funds-of-Funds is the responsibility of the Board of Directors ("Board") . In exercising their responsibilities, the Board, among other things, will refer to the Special Servicing Agreement and policies and guidelines included in an Application for an Exemptive Order (and accompanying Notice and Order) issued by the SEC in connection with the Spectrum Funds (which also applies to Retirement Funds). A majority of directors of the Funds-of-Funds will be non-interested persons as defined in Section 2(a)(19) of the 1940 Act. However, the directors and officers of the Funds-of-Funds and certain directors and officers o f T. Rowe Price and T. Rowe Price International also serve in similar positions with most of the various Price F unds in which the Retirement and Spectrum Funds invest (collectively "underlying Price funds" ) . Thus, if the interests of the Funds-of-Funds and the underlying Price funds were ever to become divergent, it is possible that a conflict of interest could arise and affect how this latter group of persons fulfill their fiduciary duties to the Funds-of-Funds and the underlying Price funds. The directors of Funds-of-Funds believe t hey have structured the Funds-of-Funds to avoid these concerns. However, conceivably, a situation could occur where proper action for the Funds-of-Funds could be adverse to the interests of an underlying Price fund, or the reverse could occur. If such a possibility arises, the directors and officers of the affected fund s , T. Rowe Price , and T. Rowe Price International will carefully analyze the situation and take all steps they believe reasonable to minimize and, where possible, eliminate the potential conflict.

The officers and directors ( a ) of the Price F unds are listed below. Unless otherwise noted, the address of each is 100 Ea st Pratt Street, Baltimore, Maryland 21202. Except as indicated, each has been an employee of T. Rowe Price or T. Rowe Price International for five or more years.

Each fund is governed by a Board of Directors/Trustees ("Board s ") that meets regularly to review a wide variety of matters affecting the funds, including investments, performance, compliance matters, advisory fees and expenses, and other business affairs. The Boards elect the fund s` officers. The Board s also are 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.

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 in 2003 .

The Joint Audit Committee is comprised of Dona ld W. Dick, Jr., David K. Fagin, and John G. Schreiber , 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 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 Price Funds` operations or the operations of parties dealing with the Price Funds, as circumstances indicate. The Audit Committee met twice in 200 3 . All members of the committee participated in the meetings.

The funds` Executive Committee, consisting of the funds` interested directors, has been authorized by its respective Board to exercise all powers of the Boards to manage the funds in the intervals between meetings of the Boards, except the powers prohibited by statute from being delegated.

(a) The term "director" is used to refer to directors or trustees, as applicable.

Independent Directors ( a )

Name, Year of Birth, and Number of Portfolios in Fund Complex Overseen by Director	Principal Occupation(s) During Past 5 Years	Other Directorships of Public Companies
Anthony W. Deering 19 45 1 11 portfolios	Director, Chairman of the Board, 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. 1943 11 1 portfolios	Principal, EuroCapital Advisors, LLC, an acquisition and management advisory firm	None
David K. Fagin 19 38 11 1 portfolios	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.
Karen N. Horn 19 43 11 1 portfolios	Managing Director and President, Global Private Client Services, Mar s h Inc. (1999-2003) ; Managing Director and Head of International Private Banking, Bankers Trust (1996-1999)	Eli Lilly and Company and Georgia Pacific (effective May 2004)
F. Pierce Linaweaver 19 34 11 1 portfolios	President, F. Pierce Linaweaver & Associates, Inc., consulting environmental and civil engineers	None
John G. Schreiber 19 46 11 1 portfolios	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 and The Rouse Company, real estate developers

( a ) All information about the directors was current as of December 31, 200 3 , except for the number of portfolios which is current as of the date of this Statement of Additional Information .

Inside Directors ( a )

Name, Year of Birth, and Number of Portfolios in Fund Complex Overseen by Director	Principal Occupation(s) During Past 5 Years	Other Directorships of Public Companies
James A.C. Kennedy 19 53 43 portfolios	Director and Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	None
John H. Laporte 1945 15 portfolios	Vice President, T. Rowe Price; Director and Vice President, T. Rowe Price Group, Inc.	None
William T. Reynolds 19 48 37 portfolios	Director and Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; Director, T. Rowe Price Global Asset Management Limited President, New Income and U.S. Treasury Funds; Vice President, Personal Strategy Funds	None
James S. Riepe 19 43 11 1 portfolios	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, all funds	None
M. David Testa 19 44 11 1 portfolios	Director and Vice President, T. Rowe Price and T. Rowe Price Trust Company ; Vice Chairman of the Board, 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. President, Institutional Equity Funds; Vice President, Balanced Fund and Capital Appreciation Fund	None

PAGE 183

( a ) All information about the directors was current as of December 31, 200 3 , except for the number of portfolios which is current as of the date of this Statement of Additional Information .

Term of Office and Length of Time Served

The directors serve until retirement, resignation, or election of a successor. The following table shows the year from which each director has served on each fund`s Board.

Fund	Deering	Dick	Fagin	Horn	Kennedy	Laporte	Linaweaver	Reynolds	Riepe	Schreiber	Testa
Balanced	2001	1991	1991	2003	1997	—	2001	—	1991	2001	1991
Blue Chip Growth	2001	1993	1993	2003	1997	—	2001	—	1993	2001	1993
California Tax-Free Income Trust	1986	2001	2001	2003	—	—	1986	1991	1986	1992	1997
Capital Appreciation	2001	1986	1988	2003	1997	—	2001	—	1986	2001	1997
Capital Opportunity	2001	1994	1994	2003	—	1994	2001	—	1994	2001	1997
Corporate Income	1995	2001	2001	2003	—	—	1995	1995	1995	1995	1997
Developing Technologies	2001	2000	2000	2003	2001	—	2001	—	2000	2001	2000
Diversified Mid-Cap Growth	2003	2003	2003	2003	2003	—	2003	—	2003	2003	2003
Diversified Small-Cap Growth	2001	1997	1997	2003	—	1997	2001	—	1997	2001	1997
Dividend Growth	2001	1992	1992	2003	1997	—	2001	—	1992	2001	1992
Equity Income	2001	1994	1988	2003	1997	—	2001	—	1985	2001	1994
Equity Series	2001	1994	1994	2003	—	1994	2001	—	1994	2001	1994
Financial Services	2001	1996	1996	2003	1997	—	2001	—	1996	2001	1996
Fixed Income Series	1994	2001	2001	2003	—	—	1994	1997	1994	1994	1997
Global Technology	2001	2000	2000	2003	2001	—	2001	—	2000	2001	2000
GNMA	1985	2001	2001	2003	—	—	1985	1997	1985	1992	1997
Growth & Income	2001	1982	1994	2003	1997	—	2001	—	1982	2001	1994
Growth Stock	2001	1980	1994	2003	1997	—	2001	—	1982	2001	1984
Health Sciences	2001	1995	1995	2003	—	1995	2001	—	1995	2001	1995
High Yield	1984	2001	2001	2003	—	—	1984	1997	1984	1992	1997
Index Trust	2001	1994	1994	2003	1997	—	2001	—	1990	2001	1994
Inflation Protected Bond	2002	2002	2002	2003	—	—	2002	2002	2002	2002	2002
Institutional Equity	2001	1996	1996	2003	1997	—	2001	—	1996	2001	1996
Institutional Income	2002	2002	2002	2003	—	—	2002	2002	2002	2002	2002
Institutional International	1991	1989	2001	2003	—	—	2001	—	2002	2001	1989
International	1991	1988	2001	2003	—	—	2001	—	2002	2001	1979
International Index	2000	2000	2001	2003	—	—	2001	—	2002	2001	2000
International Series	1994	1994	2001	2003	—	—	2001	—	2002	2001	1994
Media & Telecommunications	2001	1997	1997	2003	2001	—	2001	—	1993	2001	1997
Mid-Cap Growth	2001	1992	1992	2003	1992	—	2001	—	1992	2001	2001
Mid-Cap Value	2001	1996	1996	2003	1997	—	2001	—	1996	2001	1996
New America Growth	2001	1985	1994	2003	—	1985	2001	—	1985	2001	1997
New Era	2001	1994	1988	2003	1997	—	2001	—	1994	2001	1997
New Horizons	2001	1994	1988	2003	—	1988	2001	—	1983	2001	1994
New Income	1980	2001	2001	2003	—	—	1983	1997	1983	1992	1997
Personal Strategy	2001	1994	1994	2003	1997	—	2001	—	1994	2001	1994
Prime Reserve	1979	2001	2001	2003	—	—	1980	1995	1994	1992	1997
Real Estate	2001	1997	1997	2003	1997	—	2001	—	1997	2001	1997
Reserve Investment	1997	2001	2001	2003	—	—	1997	1997	1997	1997	1997
Retirement	2002	2002	2002	2003	2002	—	2002	—	2002	2002	2002
Science & Technology	2001	1994	1994	2003	—	1988	2001	—	1987	2001	1997
Short-Term Bond	1983	2001	2001	2003	—	—	1983	1997	1983	1992	1997
Small-Cap Stock	2001	1992	1992	2003	—	1994	2001	—	1992	2001	1997
Small-Cap Value	2001	1994	1994	2003	—	1994	2001	—	1988	2001	1997
Spectrum	2001	1999	1999	2003	2001	—	2001	—	1990	2001	1999
State Tax-Free Income Trust	1986	2001	2001	2003	—	—	1986	1991	1986	1992	1997
Summit	1993	2001	2001	2003	—	—	1993	1997	1993	1993	1997
Summit Municipal	1993	2001	2001	2003	—	—	1993	1993	1993	1993	1997
Tax-Efficient	2001	1997	1997	2003	1997	—	2001	—	1997	2001	1997
Tax-Exempt Money	1983	2001	2001	2003	—	—	1983	1991	1983	1992	1997
Tax-Free High Yield	1984	2001	2001	2003	—	—	1984	1989	1984	1992	1997
Tax-Free Income	1983	2001	2001	2003	—	—	1979	1990	1983	1992	1997
Tax-Free Intermediate	1992	2001	2001	2003	—	—	1992	1994	1992	1992	1997
Tax-Free Short-Intermediate	1983	2001	2001	2003	—	—	1983	1994	1983	1992	1997
U.S. Bond Index	2000	2001	2001	2003	—	—	2000	2000	2000	2000	2000
U.S. Treasury	1989	2001	2001	2003	—	—	1989	1997	1989	1992	1997
Value	2001	1994	1994	2003	1997	—	2001	—	1994	2001	1994

Officers

Name, Year of Birth, and Principal Occupation(s)	Position(s) Held With Fund(s)
Jeanne M. Aldave, 1971 Assistant Vice President, T. Rowe Price	Vice President, International Index Fund
Christopher D. Alderson, 19 62 Vice President , T. Rowe Price , T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc.	Vice President, Institutional International Fund s and International Funds
Kennard W. Allen, 1977 Employee, T. Rowe Price; formerly Equity Research Intern, Tonge Investment Advisors (to 2000); student, Colby College (to 2000)	Vice President, Developing Technologies Fund and Science & Technology Fund
Francisco Alonso, 19 78 Vice President, T. Rowe Price ; f ormerly student, University of Ohio ( to 2000) ; intern, Morgan Stanley Dean Witter (to 2000)	Vice President, New Horizons Fund and Small- Cap Stock Fund
Jeffrey A. Arricale, 19 71 Vice President , T. Rowe Price; f ormerly student, T he W harton School, University of Pennsylvania ( to 2001); M anager, A ssurance, KPMG LLP ( to 1 999) ; CPA	Vice President, B lue Chip Growth Fund, Capital Opportunity Fund, Financial Services Fund, Growth & Income Fund, and New America Growth Fund
Preston G. Athey, 19 49 Vice President, T. Rowe Price , T. Rowe Price Group, Inc., and T. Rowe Price Trust Company ; CFA, CIC	President, Small-Cap Value Fund; Vice President, Institutional Equity Funds and Small-Cap Stock Fund
E. F rederick Bair, 19 69 Vice President, T. Rowe Price and T. Rowe Price Trust Company ; CFA, CPA	Executive Vice President, Index Trust; Vice President, Diversified Small-Cap Growth Fund
Carol G. Bartha, 19 42 Employee, T. Rowe Price	Assistant Vice President, Growth Stock Fund
P. Robert Bartolo , 1972 Employee, T. Rowe Price ; f ormerly intern, T. Rowe Price (to 2001) ; CPA	Vice President, Media & Telecommunications Fund
Connice A. Bavely, 1951 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; C FA	President, GNMA Fund; Executive Vice President, Summit Funds; Vice President, Inflation Protected Bond Fund, New Income Fund, and Short-Term Bond Fund
R. Scott Berg , 1972 Employee, T. Rowe Price ; f ormerly student, Stanford Graduate School of Business (to 2002); intern, T. Rowe Price (to 2001); Financial Analysis and Planning Manager, Mead Consumer & Office Products (to 2000)	Vice President, New America Growth Fund
Brian W.H. Berghuis, 1958 Vice Presiden t, T. Rowe Price and T. Rowe Price Group, Inc.; CFA	President, Mid-Cap Growth Fund; Executive Vice President, Institutional Equity Funds; Vice President, New America Growth Fund, New Horizons Fund , and Retirement Funds
Christopher A. Berrier , 1977 Employee, T. Rowe Price ; f ormerly intern, Riggs Capital Partners (to 1999)	Vice President, New Horizons Fund
Laurie M. Bertner, 1 9 77 Vice President, T. Rowe Price ; f ormerly s tudent , Em o ry University, Atlanta ( to 2000) ; financial analyst, Legacy Asset Management	Vice President, Growth & Income Fund and Health Sciences Fund
Mark C.J. Bickford-Smith, 19 62 Vice President, T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc.	Vice President, Institutional International Funds, International Funds, and International Index Fund
Stephen W. Boesel, 1944 Vice Presiden t, T. Rowe Price , T. Rowe Price Group, Inc. , and T. Rowe Price Trust Company	President, Capital Appreciation Fund; Executive Vice President, Personal Strategy Funds, Retirement Funds, and Spectrum Funds; Vice President, Balanced Fund, Equity Income Fund, Institutional Equity Funds , Real Estate Fund, and Value Fund
Stephen V. Booth, 19 61 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company ; C PA	Vice President, all funds
Brian J. Brennan, 1964 Vice President, T. Rowe Price , T. Rowe Price Group, Inc. , and T. Rowe Price Trust Company ; C FA	Vice President, Inflation Protected Bond Fund, International Funds, and New Income Fund
Linda A. Brisson, 1959 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, California Tax-Free Funds and State Tax-Free Funds
Andrew M. Brooks, 1956 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, Capital Appreciation Fund, Equity Income Fund, High Yield Fund, Institutional Income Funds, Mid-Cap Value Fund , and Value Fund
Brace C. Brooks, 1 9 67 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Vice President, Mid-Cap Growth Fund and Small-Cap Stock Fund
Steven G. Brooks, 1954 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA	Vice President, California Tax-Free Funds, Corporate Income Fund, Prime Reserve Fund, Reserve Investment Funds, Short-Term Bond Fund, State Tax-Free Funds, Summit Funds, Summit Municipal Funds, Tax-Exempt Money Fund, and U.S. Treasury Funds
Brian E. Burns, 1960 Assistant Vice President, T. Rowe Price	Vice President, Prime Reserve Fund, Reserve Investment Funds, Summit Funds, and U.S. Treasury Funds
Jennifer A. Callaghan , 19 69 Assistant Vice President, T. Rowe Pric e	Assistant Vice President, Corporate Income Fund, Inflation Protected Bond Fund, New Income Fund, and Short-Term Bond Fund
Christopher W. Carlson, 1 9 67 Vice President, T. Rowe Price and T. Rowe Price Group, In c.	Vice President, Developing Technologies Fund and New Horizons Fund
Joseph A. Carrier, 1960 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Investment Services, Inc.	Treasurer, all funds
Patrick S. Cassidy, 1964 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Vice President, Corporate Income Fund, New Income Fund, Prime Reserve Fund, Reserve Investment Funds, Short-Term Bond Fund , and Summit Funds
Arthur B. Cecil III, 1942 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA	Vice President, Capital Appreciation Fund, Equity Income Fund, and Growth & Income Fund
D. Kyle Cerminara , 1977 Employee, T. Rowe Price ; f ormerly Investment Banking Analyst, Legg Mason Wood Walker (to 2000); analyst, Deutsche Asset Management (to 1999); student, University of Maryland (to 1999); CFA	Vice President, Financial Services Fund
Kara Cheseby, 1 9 63 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Vice President, Media & Telecommunications Fund, Mid-Cap Value Fund, and Value Fund
Jonathan M. Chirunga , 19 6 6 Vice President, T. Rowe Price , formerly Municipal Credit Analyst /Associate Director, Standard & Poor`s Rating Services (to 2001)	Vice President, State Tax-Free Funds
Stephanie C. Clancy, 1 96 4 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, International Index Fund
Jerome A. Clark, 1961 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Trust Company ; CFA	Vice President, Retirement Funds and U.S. Treasury Funds
Maria H. Condez, 19 62 Employee, T. Rowe Price	Assistant Vice President, California Tax-Free Funds, State Tax-Free Funds, Summit Municipal Funds , and Tax-Exempt Money Fund
Michael J. Conelius, 19 64 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. ; CFA	Vice President, International Funds , and T. R
Ann B. Cranmer, 1947 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; FCIS	Assistant Vice President, International Funds
Julio A. Delgado, 1 9 6 5 Vice President, T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc.	Vice President, International Funds
G. Richard Dent, 1 9 60 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, California Tax-Free Funds, State Tax-Free Funds, Summit Municipal Funds , Tax- Exempt Money Fund, Tax-Free High Yield Fund, and Tax-Free Income Fund
Wendy R. Diffenbaugh, 1953 Assistant Vice President, T. Rowe Price	Vice President, Balanced Fund and Index Trust ; Assistant Vice President, International Index Fund
Anna M. Dopkin, 1967 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA	President, Financial Services Fund and Growth & Income Fund; Vice President, Equity Income Fund, Growth Stock Fund, Institutional Equity Funds, Mid-Cap Growth Fund, and Real Estate Fund
Frances Dydasco, 19 66 Vice President, T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc.	Vice President, International Funds
Donald J. Easley, 1 9 71 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Vice President, Blue Chip Growth Fund, Diversified Mid-Cap Growth Fund, Global Technology Fund, and Science & Technology Fund
Mark J.T. Edwards, 1 9 57 Vice President, T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc.	Vice President, International Funds
Henry M. Ellenbogen, 1 9 71 Vice President, T. Rowe Price ; Executive Vice President, Business Development, HelloAsia ( to 2001) ; f ormerly Chief of Staff, U.S. Representative Peter Deutsch (to 1999)	Vice President, Blue Chip Growth Fund, Media & Telecommunications Fund, Mid-Cap Growth Fund, and Mid-Cap Value Fund
Hugh M. Evans III, 19 66 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CF A	Vice President, New Horizons Fund, Small-Cap Stock Fund, and Small-Cap Value Fund
Joseph B. Fath, 1971 Employee, T. Rowe Price; formerly intern, T. Rowe Price (to 2001); Chief Financial Officer and Co-founder, Broadform, Inc. (to 2000); student, the Wharton School, University of Pennsylvania (to 1999); CPA	Vice President, New Horizons Fund
Roger L. Fiery III, 1959 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, Inc. , and T. Rowe Price Trust Company ; CPA	Vice President, all funds
Mark S. Finn , 1 9 63 Vice President, T. Rowe Price ; CPA , C FA	Vice President, Corporate Income Fund, Prime Reserve Fund , and Summit Funds
Alisa Fiumara, 1974 Employee, T. Rowe Price ; formerly Associate Analyst, Legg Mason (to 2000); CFA	Vice President, Prime Reserve Fund and Summit Funds
Robert N. Gensler, 1957 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	President, Global Technology Fund and Media & Telecommunications Fund; Vice President, Blue Chip Growth Fund, Developing Technologies Fund, Growth Stock Fund, High Yield Fund, Institutional Income Fund s, and Science & Technology Fund
Eric M. Gerster, 1971 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Vice President, Developing Technologies Fund, Global Technology Fund, Media & Telecommunications Fund, Mid-Cap Growth Fund, New Horizons Fund, and Science & Technology Fund
David R. Giroux, 19 75 Vice President, T. Rowe Price and T. Rowe Price Group, Inc .; C FA	Vice President, Capital Appreciation Fund, Capital Opportunity Fund, Dividend Growth Fund, Growth & Income Fund, and Value Fund
Gregory S. Golczewski, 1966 Vice President, T. Rowe Price and T. Rowe Price Trust Company	Vice President, California Tax-Free Funds, Corporate Income Fund, GNMA Fund, High Yield Fund, Inflation Protected Bond Fund, Institutional Income Funds, International Funds, New Income Fund, Prime Reserve Fund, Reserve Investment Funds, Retirement Funds, Short- Term Bond Fund, Spectrum Funds, State Tax- Free Funds, Summit Funds, Summit Municipal Funds, Tax-Exempt Money Fund, Tax-Free High Yield Fund, Tax-Free Income Fund, Tax-Free Intermediate Bond Fund, Tax-Free Short- Intermediate Fund, U.S. Bond Index Fund, and U.S. Treasury Funds
Michael J. Grogan , 197 1 Employee, T. Rowe Price ; CFA	Assistant Vice President, New Income Fund
M. Campbell Gunn, 1 956 Vice President, T. Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc.	Vice President, International Funds
Jill L. Hauser, 1958 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, Capital Opportunity Fund, Developing Technologies Fund, Global Technology Fund, Science & Technology Fund, and Tax-Efficient Funds
Francies W. Hawks, 19 44 Assistant Vice President, T. Rowe Price	Assistant Vice President, New Horizons Fund and Small-Cap Value Fund
Charles B. Hill, 1961 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	President, Tax-Free Intermediate Bond Fund and Tax-Free Short-Intermediate Fund; Executive Vice President, Summit Municipal Funds; Vice President, Short-Term Bond Fund, State Tax- Free Funds, Tax-Free High Yield Fund, Tax-Free Income Fund, and U.S. Treasury Funds
An n M. Holcomb, 1 9 72 Vice President, T. Rowe Price ; CFA	Executive Vice President, Index Trust
Michael W. Holton, 1 968 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Executive Vice President, Financial Services Fund; Vice President, Capital Opportunity Fund, Dividend Growth Fund, Growth & Income Fund, and Value Fund
Henry H. Hopkins, 1 9 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, all funds
Thomas J. Huber, 1966 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA	President, Dividend Growth Fund; Vice President, Blue Chip Growth Fund, Institutional Equity Funds, Real Estate Fund, and Tax- Efficient Funds
Kris H. Jenner, 1962 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; M.D., D. Phil.	President, Health Sciences Fund; Vice President, Blue Chip Growth Fund, Growth Stock Fund, Mid-Cap Growth Fund, New Horizons Fund, and Small-Cap Stock Fund
Lewis Johnson, 1 969 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; f ormerly equity analyst intern, Capital Research Company ( to 1999)	Vice President, New Era Fund
T. Dylan Jones, 1971 Assistant Vice President, T. Rowe Price	Assistant Vice President, California Tax-Free Funds, State Tax-Free Funds, Summit Municipal Funds , and Tax-Exempt Money Fund
Ke i r R . Joyce , 19 72 Assistant Vice President, T. Rowe Price	Assistant Vice President, GNMA Fund and Summit Funds
Paul A. Karpers, 1967 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Vice President, High Yield Fund and Institutional Income Fund s
Ian D. Kelson , 1956 Vice President , T. Rowe Price , T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc. ; formerly Head of Fixed Income, Morgan Grenfell/Deutsche Asset Management ( to 2000)	Vice President, International Funds
Susan J. Klein, 1 9 50 Vice President, T. Rowe Pri ce	Vice President, Health Sciences Fund, New Era Fund, and Small-Cap Value Fund
John H. Laporte, 1945 Vice President , T. Rowe Price; Director and Vice President , T. Rowe Price Group, Inc. ; CFA	President, New Horizons Fund; Vice President, Diversified Small-Cap Growth Fund, Health Sciences Fund, Personal Strategy Funds, and Spectrum Funds
Marcy M. L ash , 1 9 6 3 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, State Tax-Free Funds, Tax- Exempt Money Fund, Tax-Free High Yield Fund, Tax-Free Income Fund, and Tax Free Short- Intermediate Fund
David M. Lee, 1 9 62 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	President, Real Estate Fund; Vice President, Capital Appreciation Fund, Dividend Growth Fund, Growth & Income Fund, and New Era Fund
Christopher R. Leonard, 1 9 73 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; formerly research associate, Morgan Stanley Dean Witter (to 2000); CFA	Vice President, Blue Chip Growth Fund, Health Sciences Fund, and New America Growth Fund
Alan D. Levenson, 1958 Vi c e President, T. Rowe Price and T. Rowe Price Group, Inc. ; Ph.D.	Vice President, California Tax-Free Funds, GNMA Fund, Inflation Protected Bond Fund, New Income Fund, Prime Reserve Fund, Reserve Investment Funds, State Tax-Free Funds, Summit Funds, Summit Municipal Funds, Tax- Exempt Money Fund, and U.S. Treasury Funds
John D. Linehan, 1965 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. ; CFA	Executive Vice President, Value Fund; Vice President, Equity Income Fund, Institutional Equity Funds, and New Era Fund
Patricia B. Lippert, 1953 Assistant Vice President, T. Rowe Price and T. Rowe Price Investment Services, Inc.	Secretary, all funds
Kevin P. Loome, 1967 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. ; CFA	Vice President, High Yield Fund and Institutional Income Fund s
Anh Lu, 19 68 Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc.; formerly Business Development Manager, Microsoft (to 2000); Vice President, Salomon Smith Barney Hong Kong (to 2001)	Vice President, Global Technology Fund and Science & Technology Fund
Joseph K. Lynagh, 1958 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA	President, Tax-Exempt Money Fund; Executive Vice President, California Tax-Free Funds, State Tax-Free Funds, and Summit Municipal Funds; Vice President, Prime Reserve Fund, Reserve Investment Funds, Summit Funds, and U.S. Treasury Funds
James E. MacMiller , 1 9 6 6 Assistant Vice President, T. Rowe Price	Vice President, High Yield Fund and Institutional Income Fund s
Konstantine B. Mallas, 1963 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Executive Vice President, California Tax-Free Funds and Summit Municipal Funds ; Vice President, State Tax-Free Funds, Tax-Free High Yield Fund, Tax-Free Income Fund, Tax-Free Intermediate Bond Fund, and Tax-Free Short- Intermediate Fund
Robert J. Marcotte, 19 62 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, Mid-Cap Growth Fund, New America Growth Fund, and Small-Cap Stock Fund
Jay S. Markowitz, 1962 Vice President , T. Rowe Price; f ormerly T ransplant S urgeon and Assistant Professor of Surgery, Johns Hopkins University School of Medicine ( to 2001) ; M.D.	Vice President, Health Sciences Fund and New Horizons Fund
Gregory A. McCrickard, 1 958 Vice President, T. Rowe Price , T. Rowe Price Group, Inc., and T. Rowe Price Trust Company ; CFA	President, Small-Cap Stock Fund; Executive Vice President, Institutional Equity Funds; Vice President, Mid-Cap Value Fund, Retirement Funds , and Small-Cap Value Fund
James M. McDonald, 1949 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company	Executive Vice President, Prime Reserve Fund, Reserve Investment Funds, and Summit Funds; Vice President, California Tax-Free Funds, State Tax-Free Funds, Summit Municipal Funds, Tax- Exempt Money Fund, and U.S. Treasury Funds
Michael J. McGonigle, 1966 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, High Yield Fund and Institutional Income Funds
Hugh D. McGuirk, 1960 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Executive Vice President, Tax-Efficient Funds; Vice President, State Tax-Free Funds, Summit Municipal Funds , Tax-Free High Yield Fund, Tax-Free Income Fund, Tax-Free Intermediate Bond Fund, and Tax-Free Short-Intermediate Fund
Heather K. McPherson , 1 9 60 Employee, T. Rowe Price ; formerly intern, Salomon Smith Barney (2001); Vice President of Finance and Administration, Putnam Lovell Securities, Inc. ; CPA	Vice President, Capital Appreciation Fund , Equity Income Fund, and Mid-Cap Value Fund
Cheryl A. Mickel, 1967 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Vice President, Inflation Protected Bond Fund, Short-Term Bond Fund, Summit Funds, and U.S. Treasury Funds
Joseph M. Milano, 1972 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Executive Vice President, New America Growth Fund; Vice President, Financial Services Fund, Global Technology Fund, Institutional Equity Funds, Mid-Cap Growth Fund, Mid-Cap Value Fund, New Horizons Fund, Small-Cap Stock Fund, and Value Fund
Mary J. Miller, 1955 Vice President , T. Rowe Price and T. Rowe Price Group, Inc. ; CF A	President, California Tax-Free Funds, Corporate Income Fund, State Tax-Free Funds, Summit Municipal Funds, Tax-Free High Yield Fund, and Tax-Free Income Fund; Executive Vice President, Tax-Free Intermediate Bond Fund; Vice President, Inflation Protected Bond Fund, Prime Reserve Fund, Reserve Investment Funds, Summit Funds, Tax-Efficient Funds, Tax-Exempt Money Fund, Tax-Free Short-Intermediate Fund, and U.S. Treasury Funds
Raymond A. Mills, 1 9 60 Vice President, T. Rowe Price , T. Rowe Price Group, Inc., and T. Rowe Price International , Inc.; Ph.D., CFA	President, International Index Fund ; Vice President, Balanced Fund, Index Trust, and International Funds
George A. Murnaghan, 1956 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, Institutional International Funds, International Funds, Retirement Funds, and Spectrum Funds
James M. Murphy, 1967 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Portfolio Manager at Prudential Investments (to 2000); CFA	Executive Vice President, Tax-Free High Yield Fund; Vice President, Summit Municipal Funds and Tax-Free Income Fund
Sudhir Nanda, 1959 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; Ph.D. , CFA	Vice President, Diversified Mid-Cap Growth Fund, Diversified Small-Cap Growth Fund, and Index Trust
Philip A. Nestico, 19 76 Assistant Vice President, T. Rowe Price	Vice President, Capital Opportunity Fund, Diversified Small-Cap Growth Fund, Financial Services Fund, and Real Estate Fund
Edmund M. Notzon III, 1 9 45 Vice President, T. Rowe Price , T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Trust Company ; Ph.D., CFA	President, Personal Strategy Funds, Retirement Funds, Spectrum Funds , and U.S. Bond Index Fund; Vice President, Balanced Fund, GNMA Fund, Inflation Protected Bond Fund, and New Income Fund
Charles M. Ober, 19 50 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	President, New Era Fund; Vice President, Capital Appreciation Fund and Real Estate Fund
Curt J. Organt , 1 9 68 Vice President, T. Rowe Price; formerly Financial and Marketing Analyst, DAP Products, Inc.	Vice President, Mid-Cap Value Fund, Small-Cap Stock Fund, and Small-Cap Value Fund
Gonzalo Px87 nga r o, 1968 Vice President, T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc. ; CFA	Vice President, International Funds
Timothy E . Parker, 1974 Vice President , T. Rowe Price; f ormerly student, Darden Graduate School, University of Virginia ( to 2001) ; Financial Analyst , Robert W. Baird & Co. Inc. (to 1999)	Vice President, Blue Chip Growth Fund, Dividend Growth Fund, and New Era Fund
Charles G. Pepin , 19 66 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, Health Sciences Fund, Institutional Equity Funds, Mid-Cap Value Fund, New America Growth Fund, New Horizons Fund, Small-Cap Stock Fund, and Small-Cap Value Fund
Donald J. Peters, 1959 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	President, Diversified Mid-Cap Growth Fund and Tax-Efficient Funds ; Vice President, Diversified Small-Cap Growth Fund and Dividend Growth Fund
Joan R. Potee, 1947 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, Prime Reserve Fund, Reserve Investment Funds, Summit Funds, and U.S. Treasury Funds
D. James Prey III, 1959 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, Global Technology Fund, Growth Stock Fund, International Funds , Media & Telecommunications Fund, and Science & Technology Fund
Larry J. Puglia, 19 60 Vice President, T. R owe Price and T. Rowe Price Group, Inc. ; C FA, CPA	President, Blue Chip Growth Fund; Executive Vice President, Institutional Equity Funds and Personal Strategy Funds; Vice President, Financial Services Fund, Growth Stock Fund, and Retirement Funds
Karen M. Regan , 19 67 Assistant Vice President, T. Rowe Price	Vice President, Blue Chip Growth Fund, Dividend Growth Fund, and Growth & Income Fund
Vernon A. Reid , Jr., 1954 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, Corporate Income Fund, Inflation Protected Bond Fund, New Income Fund, and U.S. Treasury Funds
Robert A. Revel-Chion, 1 965 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International, Inc.	Vice President, International Funds
Stephen P. Richter, 1969 Vice President, T. Rowe Price; formerly Vice President at Euler ACI (to 2000); CFA	Vice President, Summit Municipal Funds , Tax- Free High Yield Fund, and Tax-Free Income Fund
Brian C. Rogers, 19 55 Chief Investment Officer, Director and Vice President, T. Rowe Price Group, Inc.; Chief Investment Officer and Vice President, T. Rowe Price ; Vice President, T. Rowe Price Trust Compan y ; CFA , CIC	President, Equity Income Fund and Value Fund; Executive Vice President, Institutional Equity Funds; Vice President, Capital Appreciation Fund, Personal Strategy Funds, Real Estate Fund, Retirement Funds, and Spectrum Funds
Christopher J. Rothery, 19 63 Vice President, T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc.	Vice President, International Funds
Jeffrey Rottinghaus , 19 70 Vice President , T. Rowe Price; f ormerly, student, the Wharton School, University of Pennsylvania ( to 2001); I nformation T echnology C onsultant, Kelly-Lewey & Associates ( to 1999) ; CPA	Vice President, Blue Chip Growth Fund, Developing Technologies Fund, Dividend Growth Fund, Global Technology Fund, Growth & Income Fund, and Science & Technology Fund
Robert M. Rubino, 1953 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CPA	Vice President, Corporate Income Fund, New Income Fund, Short-Term Bond Fund, and Summit Funds
Philip W. Ruedi, 19 71 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Vice President, Mid-Cap Growth Fund
R. Todd Ruppert, 1956 Director, Chief Executive Officer, and President, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited; Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Trust Company	Vice President, Institutional International Funds
James B.M. Seddon, 1 9 64 Vice President, T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc.	Vice President, Institutional International Funds, International Funds, and International Index Fund
Daniel O. Shackelford, 1958 Vice President, T. Rowe Price , T. Rowe Price Group, Inc. , and T. Rowe Price Trust Company ; CFA	President, Inflation Protected Bond Fund; Vice President, New Income Fund and U.S. Treasury Funds
Robert W. Sharps, 1 9 71 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CF A, CP A	Executive Vice President, Growth Stock Fund and Institutional Equity Funds ; Vice President, Blue Chip Growth Fund, Financial Services Fund, Growth & Income Fund, and New America Growth Fund
John Carl A. Sherman, 1 972 Vice President, T. Rowe Price Group, Inc. , and T. Rowe Price International , Inc.	Vice President, Health Sciences Fund
Charles M. Shriver, 1 9 67 Assistant Vice President, T. Rowe Price; C FA	Assistant Vice President, Personal Strategy Funds and U.S. Bond Index Fund
Robert W. Smith, 1 9 61 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc.	President, Growth Stock Fund and New America Growth Fund; Executive Vice President, Institutional Equity Funds; Vice President, Blue Chip Growth Fund, Growth & Income Fund, International Funds, and Media & Telecommunications Fund
Michael F. Sola, 1969 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	President, Developing Technologies Fund and Science & Technology Fund; Vice President, Global Technology Fund, Growth Stock Fund, New Horizons Fund, and Small-Cap Stock Fund
William J. Stromberg, 1 9 60 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	President, Capital Opportunity Fund; Vice President, Dividend Growth Fund, Equity Income Fund, Financial Services Fund, Real Estate Fund , and Tax-Efficient Funds
Walter P. Stuart III , 1960 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	Vice President, High Yield Fund and Institutional Income Fund s
Timothy G. Taylor, 1975 Employee, T. Rowe Price	Assistant Vice President, State Tax-Free Funds, Summit Municipal Funds, Tax-Free Intermediate Bond Fund, and Tax-Free Short-Intermediate Fund
Thomas E. Tewksbury, 1961 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, High Yield Fund
Justin Thomson, 1 9 68 Vice President, T. Rowe Price Group, Inc. , and T. Rowe Price International, Inc.	Vice President, International Funds
David A. Tiberii , 1 9 6 5 Vice President, T. Rowe Price and T. Rowe Price Group Inc.; CFA	Executive Vice President, Corporate Income Fund ; Vice President, New Income Fund and Short-Term Bond Fund
Susan Troll , 1 9 6 6 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CPA	Vice President, Prime Reserve Fund and Summit Funds
Mark J. Vaselkiv, 19 58 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	President, High Yield Fund and Institutional Income Funds; Executive Vice President, Corporate Income Fund; Vice President, Balanced Fund, Personal Strategy Funds, Retirement Funds, and Summit Funds
J. David Wagner, 19 74 Vice President, T. Rowe Price and T. Rowe Price Group, In c. ; f ormerly s tudent, Darden Graduate School of Business Administration, University of Virginia ( to 2000) ; CFA	Vice President, Financial Services Fund, Mid - Cap Value Fund, Small-Cap Stock Fund, and Small-Cap Value Fund
John F. Wakeman, 1962 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Executive Vice President, Mid-Cap Growth Fund; Vice President, Diversified Mid-Cap Growth Fund, Institutional Equity Funds, and New Horizons Fund
David J. Wallack, 19 60 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	President, Mid-Cap Value Fund; Vice President, Capital Appreciation Fund, Institutional Equity Funds, New Era Fund, Small-Cap Value Fund, and Value Fund
Julie L. Waples, 1970 Vice President, T. Rowe Price	Vice President, all Equity Funds, Index Trust, Institutional Equity Funds, Institutional International Funds, International Funds, International Index Fund, Personal Strategy Funds, and Tax-Efficient Funds
Lea C. Ward, 1968 Assistant Vice President, T. Rowe Price; formerly Customer Finance Analyst, Lucent Technologies (to 2000)	Vice President, Prime Reserve Fund and Summit Funds
David J.L. Warren, 1957 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; C hief 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, International Funds; Vice President, Institutional International Funds, Retirement Funds, and Spectrum Funds
Mark R. W eigman , 1962 Vice President, T. Rowe Price , T. Rowe Price Group, Inc. , and T. Rowe Price Trust Company ; CFA, CIC	Vice President, Diversified Mid-Cap Growth Fund and Tax-Efficient Funds
John D. Wells, 1960 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, GNMA Fund and Summit Funds
William F. Wendler II , 1962 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International , Inc.	Vice President, Institutional International Funds and International Funds
Dale E. West, 1 9 69 Vice President, T. Rowe Price Group, Inc. , and T. Rowe Price International , Inc. ; CFA	Vice President, Media & Telecommunications Fund
Richard T. Whitney, 19 58 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International , Inc. , and T. Rowe Price Trust Company ; CFA	President, Balanced Fund and Index Trust; Executive Vice President, Diversified Small-Cap Growth Fund and International Index Fund; Vice President, Capital Opportunity Fund, Institutional Equity Funds, International Funds, Personal Strategy Funds , and Retirement Funds
Edward A. Wiese, 1959 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; Directo r, C hief Investment Officer, and Vice President, T. Rowe Price Savings Bank; CFA	President, Prime Reserve Fund, Reserve Investment Fund s , Short-Term Bond Fund, and Summit Funds; Executive Vice President, U.S. Treasury Funds; Vice President, California Tax- Free Funds, Institutional International Funds, International Funds, Retirement Funds, Summit Municipal Funds, State Tax-Free Funds, Tax- Exempt Money Fund, Tax-Free Intermediate Bond Fund, and Tax-Free Short-Intermediate Fund
Thea N. Williams, 1961 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.	Vice President, Corporate Income Fund, High Yield Fund, and Institutional Income Funds
Mary C. W ojci echowski , 1 962 Vice President, T. Rowe Price ; CFA	Vice President, Index Trust, International Index Fund , and Personal Strategy Funds
Paul W. Wojcik, 1 9 70 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; CFA	President, Diversified Small-Cap Growth Fund
R. Candler Young, 1 971 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. ; formerly Investment Banking Summer Associate, Goldman Sachs & Company (to 1999)	Vice President, Growth & Income Fund, Mid- Cap Growth Fund, New America Growth Fund, and New Horizons Fund
Wenhua Zhang, 19 70 Vice President , T. Rowe Price; f ormerly student, the Wharton School, University of Pennsylvania ( to 2001); Swiss Reinsurance Company ( to 1999 ) ; CFA , CPA	Vice President, Developing Technologies Fund, Global Technology Fund, and Small-Cap Stock Fund

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Director s` Compensation

The fund s do not pay pension or retirement benefits to its directors or officers. The following table shows remuneration paid by the funds to the independent directors. Also, any director of the fund who is an officer or employee of T. Rowe Price or T. Rowe Price International (inside directors) does not receive any remuneration from the funds.

Name of Person	Aggregate Compensation From F und(a)	Total Compensation From Fund and Fund Complex Paid to Directors(b)
Balanced
Anthony W. Deering	$1, 379	$ 110,000
Donald W. Dick, Jr.	1, 379	110,000
David K. Fagin	1 , 405	112,000
Karen Horn	256	21,347
F. Pierce Linaweaver	1, 419	113,000
John G. Schreibe r	1, 405	11 2 ,000
Blue Chip Growth
Anthony W. Deering	$ 3, 108	$ 110,000
Donald W. Dick, Jr.	3, 108	110,000
David K. Fagin	3, 173	112,000
Karen Horn	586	21,347
F. Pierce Linaweaver	3, 205	113,000
John G. Schreiber	3, 173	11 2 ,000
California Tax-Free Bond
Anthony W. Deering	$7 42	$ 110,000
Donald W. Dick , Jr.	7 42	110,000
David K. Fagin	7 55	112,000
Karen Horn	138	21,347
F. Pierce Linaweaver	7 62	113,000
John G. Schreiber	7 55	11 2 ,000
California Tax-Free Money
Anthony W. Deering	$ 6 67	$ 110,000
Donald W. Dick , Jr.	6 67	110,000
David K. Fagin	678	112,000
Karen Horn	126	21,347
F. Pierce Linaweaver	6 84	113,000
John G. Schreiber	678	11 2 ,000
Capital Appreciation
Anthony W. Deering	$ 1,54 2	$ 110,000
Donald W. Dick, Jr.	1, 54 2	110,000
David K. Fagin	1, 5 72	112,000
Karen Horn	304	21,347
F. Pierce Linaweaver	1,5 86	113,000
John G. Schreiber	1,5 72	11 2 ,000
Capital Opportunity
Anthony W. Deering	$ 652	$ 110,000
Donald W. Dick, Jr.	652	110,000
David K. Fagin	663	112,000
Karen Horn	124	21,347
F. Pierce Linaweaver	668	113,000
John G. Schreiber	663	11 2 ,000
Corporate Income
Anthony W. Deering	$ 667	$ 110,000
Donald W. Dick, Jr.	667	110,000
David K. Fagin	678	112,000
Karen Horn	126	21,347
F. Pierce Linaweaver	684	113,000
John G. Schreiber	678	11 2 ,000
Developing Technologies
Anthony W. Deering	$ 636	$ 110,000
Donald W. Dick, Jr.	636	110,000
David K. Fagin	647	112,000
Karen Horn	122	21,347
F. Pierce Linaweaver	652	11 3 ,000
John G. Schreiber	647	11 2 ,000
Diversified Mid-Cap Growth (c)
Anthony W. Deering	$ 699	$ 110,000
Donald W. Dick, Jr.	699	110,000
David K. Fagin	699	11 0 ,000
Karen N. Horn	699	11 0 ,000
F. Pierce Linaweaver	699	110,000
John G. Schreiber	699	11 0 ,000
Diversified Small-Cap Growth
Anthony W. Deering	$ 650	$ 110,000
Donald W. Dick, Jr.	650	110,000
David K. Fagin	661	11 2 ,000
Karen Horn	124	21,347
F. Pierce Linaweaver	666	113,000
John G. Schreiber	661	11 2 ,000
Dividend Growth
Anthony W. Deering	$ 874	$ 110,000
Donald W. Dick, Jr.	874	110,000
David K. Fagin	889	112,000
Karen Horn	164	21,347
F. Pierce Linaweaver	897	113,000
John G. Schreiber	889	11 2 ,000
Emerging Europe & Mediterranean
Anthony W. Deering	$ 6 38	$110,000
Donald W. Dick, Jr.	6 38	110,000
David K. Fagin	6 49	112,000
Karen Horn	122	21,347
F. Pierce Linaweaver	654	113,000
John G. Schreiber	6 49	112,000
Emerging Markets Bond
Anthony W. Deering	$ 729	$ 110,000
Donald W. Dick, Jr.	729	110,000
David K. Fagin	741	112,000
Karen Horn	136	21,347
F. Pierce Linaweaver	747	113,000
John G. Schreiber	741	11 2 ,000
Emerging Markets Stock
Anthony W. Deering	$ 717	$ 110,000
Donald W. Dick, Jr.	717	110,000
David K. Fagin	729	112,000
Karen Horn	143	21,347
F. Pierce Linaweaver	735	113,000
John G. Schreiber	729	11 2 ,000
Equity Income
Anthony W. Deering	$5, 217	$ 110,000
Donald W. Dick, Jr.	5 , 217	110,000
David K. Fagin	5, 308	112,000
Karen Horn	1,009	21,347
F. Pierce Linaweaver	5, 353	113,000
John G. Schreiber	5, 308	11 2 ,000
Equity Index 500
Anthony W. Deering	$ 1,954	$ 110,000
Donald W. Dick, Jr.	1,954	110,000
David K. Fagin	1,992	112,000
Karen Horn	372	21,347
F. Pierce Linaweaver	2, 012	113,000
John G. Schreiber	1,992	11 2 ,000
European Stock
Anthony W. Deering	$ 929	$ 110,000
Donald W. Dick, Jr.	929	110,000
David K. Fagin	946	112,000
Karen Horn	176	21,347
F. Pierce Linaweaver	955	113,000
John G. Schreiber	946	11 2 ,000
Extended Equity Market Index
Anthony W. Deering	$ 660	$ 110,000
Donald W. Dick, Jr.	660	110,000
David K. Fagin	671	112,000
Karen Horn	127	21,347
F. Pierce Linaweaver	677	113,000
John G. Schreiber	671	11 2 ,000
Financial Services
Anthony W. Deering	$ 751	$ 110,000
Donald W. Dick, Jr.	751	110,000
David K. Fagin	764	112,000
Karen Horn	143	21,347
F. Pierce Linaweaver	770	113,000
John G. Schreiber	764	11 2 ,000
Florida Intermediate Tax-Free
Anthony W. Deering	$6 73	$ 110,000
Donald W. Dick , Jr.	6 73	110,000
David K. Fagin	6 85	112,000
Karen Horn	127	21,347
F. Pierce Linaweaver	6 90	113,000
John G. Schreiber	6 85	11 2 ,000
Georgia Tax-Free Bond
Anthony W. Deering	$ 6 63	$ 110,000
Donald W. Dick , Jr.	6 63	110,000
David K. Fagin	6 74	112,000
Karen Horn	125	21,347
F. Pierce Linaweaver	6 79	113,000
John G. Schreiber	6 74	11 2 ,000
Global Stock
Anthony W. Deering	$ 6 54	$ 110,000
Donald W. Dick , Jr.	6 54	110,000
David K. Fagin	6 65	112,000
Karen Horn	124	21,.347
F. Pierce Linaweaver	6 70	113,000
John G. Schreiber	6 65	11 2 ,000
Global Technology
Anthony W. Deering	$ 653	$ 110,000
Donald W. Dick, Jr.	653	110,000
David K. Fagin	664	112,000
Karen Horn	124	21,347
F. Pierce Linaweaver	669	113,000
John G. Schreiber	664	11 2 ,000
GNMA
Anthony W. Deering	$ 1,235	$110,000
Donald W. Dick , Jr.	1, 235	110,000
David K. Fagin	1, 259	112,000
Karen Horn	215	21,347
F. Pierce Linaweaver	1, 272	113,000
John G. Schreiber	1, 259	11 2 ,000
Government Reserve Investment
Anthony W. Deering	$ 260	$110,000
Donald W. Dick , Jr.	260	110,000
David K. Fagin	260	112,000
Karen Horn	199	21,347
F. Pierce Linaweaver	260	113,000
John G. Schreiber	260	11 2 ,000
Growth & Income
Anthony W. Deering	$1, 378	$ 110,000
Donald W. Dick, Jr.	1, 378	110,000
David K. Fagin	1, 406	112,000
Karen Horn	249	21,347
F. Pierce Linaweaver	1, 420	113,000
John G. Schreiber	1, 406	11 2 ,000
Growth Stock
Anthony W. Deering	$2, 490	$ 110,000
Donald W. Dick, Jr.	2, 490	110,000
David K. Fagin	2,539	112,000
Karen Horn	485	21,347
F. Pierce Linaweaver	2,564	113,000
John G. Schreiber	2,539	11 2 ,000
Health Sciences
Anthony W. Deering	$ 974	$ 110,000
Donald W. Dick, Jr.	974	110,000
David K. Fagin	991	112,000
Karen Horn	186	21,347
F. Pierce Linaweaver	1 ,0 00	113,000
John G. Schreiber	991	11 2 ,000
High Yield
Anthony W. Deering	$ 1,8 94	$110,000
Donald W. Dick , Jr.	1,8 94	110,000
David K. Fagin	1, 928	112,000
Karen Horn	374	21,347
F. Pierce Linaweaver	1, 945	113,000
John G. Schreiber	1, 928	11 2 ,000
Inflation Protected Bond
Anthony W. Deering	$ 633	$110,000
Donald W. Dick , Jr.	633	110,000
David K. Fagin	643	11 2 ,000
Karen Horn	121	21,347
F. Pierce Linaweaver	648	11 3 ,000
John G. Schreiber	643	11 2 ,000
Institutional Emerging Markets Equity
Anthony W. Deering	$ 6 30	$110,000
Donald W. Dick , Jr.	630	110,000
David K. Fagin	640	11 2 ,000
Karen Horn	120	21,347
F. Pierce Linaweaver	645	11 3 ,000
John G. Schreiber	640	11 2 ,000
Institutional Foreign Equity
Anthony W. Deering	$ 1,126	$110,000
Donald W. Dick , Jr.	1,126	110,000
David K. Fagin	1,148	11 2 ,000
Karen Horn	194	21,347
F. Pierce Linaweaver	1,159	11 3 ,000
John G. Schreiber	1,148	11 2 ,000
Institutional High Yield
Anthony W. Deering	$ 810	$110,000
Donald W. Dick , Jr.	810	110,000
David K. Fagin	821	11 2 ,000
Karen Horn	166	21,347
F. Pierce Linaweaver	827	11 3 ,000
John G. Schreiber	821	11 2 ,000
I nstitutional Large-Cap Core Growth
Anthony W. Deering	$ 1 62	$ 110 , 000
Donald W. Dick, Jr.	1 62	110 , 000
David K. Fagin	1 62	11 2, 0 00
Karen Horn	119	21,347
F. Pierce Linaweaver	1 62	113 , 0 00
John G. Schreiber	1 62	11 2, 0 00
I nstitutional Large-Cap Growth
Anthony W. Deering	$ 628	$ 110,000
Donald W. Dick, Jr.	628	110,000
David K. Fagin	638	112,000
Karen Horn	120	21,347
F. Pierce Linaweaver	644	113,000
John G. Schreiber	638	11 2 ,000
I nstitutional Large-Cap Value
Anthony W. Deering	$ 628	$ 110,000
Donald W. Dick, Jr.	628	110,000
David K. Fagin	638	112,000
Karen Horn	120	21,347
F. Pierce Linaweaver	644	113,000
John G. Schreiber	638	11 2 ,000
I nstitutional Mid-Cap Equity Growth
Anthony W. Deering	$7 52	$ 110,000
Donald W. Dick, Jr.	7 52	110,000
David K. Fagin	7 65	112,000
Karen Horn	144	21,347
F. Pierce Linaweaver	771	113,000
John G. Schreiber	765	11 2 ,000
I nstitutional Small-Cap Stock
Anthony W. Deering	$ 783	$ 110,000
Donald W. Dick, Jr.	783	110,000
David K. Fagin	7 96	112,000
Karen Horn	149	21,347
F. Pierce Linaweaver	803	113,000
John G. Schreiber	7 96	11 2 ,000
International Bond
Anthony W. Deering	$ 1, 129	$ 110,000
Donald W. Dick, Jr.	1, 129	110,000
David K. Fagin	1, 149	112,000
Karen Horn	211	21,347
F. Pierce Linaweaver	1, 160	113,000
John G. Schreiber	1, 149	11 2 ,000
International Discovery
Anthony W. Deering	$ 8 16	$ 110,000
Donald W. Dick, Jr.	8 16	110,000
David K. Fagin	8 30	112,000
Karen Horn	164	21,347
F. Pierce Linaweaver	8 37	113,000
John G. Schreiber	8 30	11 2 ,000
International Equity Index
Anthony W. Deering	$ 6 32	$ 110,000
Donald W. Dick, Jr.	6 32	110,000
David K. Fagin	6 42	112,000
Karen Horn	120	21,347
F. Pierce Linaweaver	6 47	113,000
John G. Schreiber	6 42	11 2 ,000
International Growth & Income
Anthony W. Deering	$ 640	$ 110,000
Donald W. Dick, Jr.	640	110,000
David K. Fagin	650	112,000
Karen Horn	127	21,347
F. Pierce Linaweaver	655	113,000
John G. Schreiber	650	11 2 ,000
International Stock
Anthony W. Deering	$ 2,576	$ 110,000
Donald W. Dick, Jr.	2,576	110,000
David K. Fagin	2,633	112,000
Karen Horn	465	21,347
F. Pierce Linaweaver	2,662	113,000
John G. Schreiber	2,633	11 2 ,000
Japan
Anthony W. Deering	$ 674	$ 110,000
Donald W. Dick, Jr.	674	110,000
David K. Fagin	685	112,000
Karen Horn	130	21,347
F. Pierce Linaweaver	691	113,000
John G. Schreiber	685	11 2 ,000
Latin America
Anthony W. Deering	$ 686	$ 110,000
Donald W. Dick, Jr.	686	110,000
David K. Fagin	697	112,000
Karen Horn	131	21,347
F. Pierce Linaweaver	703	113,000
John G. Schreiber	697	11 2 ,000
Maryland Short-Term Tax-Free Bond
Anthony W. Deering	$ 728	$ 110,000
Donald W. Dick , Jr.	728	110,000
David K. Fagin	740	112,000
Karen Horn	137	21,347
F. Pierce Linaweaver	747	113,000
John G. Schreiber	740	11 2 ,000
Maryland Tax-Free Bond
Anthony W. Deering	$1,2 03	$ 110,000
Donald W. Dick , Jr.	1,2 03	110,000
David K. Fagin	1, 227	112,000
Karen Horn	212	21,347
F. Pierce Linaweaver	1, 239	113,000
John G. Schreiber	1, 227	11 2 ,000
Maryland Tax-Free Money
Anthony W. Deering	$ 657	$ 110,000
Donald W. Dick , Jr.	657	110,000
David K. Fagin	6 68	112,000
Karen Horn	124	21,347
F. Pierce Linaweaver	6 73	113,000
John G. Schreiber	6 68	11 2 ,000
Media & Telecommunications
Anthony W. Deering	$ 8 36	$ 110,000
Donald W. Dick, Jr.	8 36	110,000
David K. Fagin	8 50	112,000
Karen Horn	161	21,347
F. Pierce Linaweaver	8 58	113,000
John G. Schreiber	8 50	11 2 ,000
Mid-Cap Growth
Anthony W. Deering	$ 3,704	$ 110,000
Donald W. Dick, Jr.	3,704	110,000
David K. Fagin	3,775	112,000
Karen Horn	773	21,347
F. Pierce Linaweaver	3,810	113,000
John G. Schreiber	3,775	11 2 ,000
Mid-Cap Value
Anthony W. Deering	$ 1, 134	$ 110,000
Donald W. Dick, Jr.	1, 134	110,000
David K. Fagin	1, 154	112,000
Karen Horn	232	21,347
F. Pierce Linaweaver	1, 165	113,000
John G. Schreiber	1, 154	11 2 ,000
New America Growth
Anthony W. Deering	$ 983	$ 110,000
Donald W. Dick, Jr.	983	110,000
David K. Fagin	1, 00 1	112,000
Karen Horn	184	21,347
F. Pierce Linaweaver	1, 011	113,000
John G. Schreiber	1, 0 0 1	11 2 ,000
New Asia
Anthony W. Deering	$ 893	$ 110,000
Donald W. Dick, Jr.	893	110,000
David K. Fagin	909	112,000
Karen Horn	176	21,347
F. Pierce Linaweaver	917	113,000
John G. Schreiber	909	11 2 ,000
New Era
Anthony W. Deering	$1, 068	$ 110,000
Donald W. Dick, Jr.	1, 068	110,000
David K. Fagin	1, 089	112,000
Karen Horn	199	21,347
F. Pierce Linaweaver	1, 099	113,000
John G. Schreiber	1, 089	11 2 ,000
New Horizons
Anthony W. Deering	$2, 286	$ 110,000
Donald W. Dick, Jr.	2, 286	110,000
David K. Fagin	2,331	112,000
Karen Horn	450	21,347
F. Pierce Linaweaver	2,354	113,000
John G. Schreiber	2,331	11 2 ,000
New Income
Anthony W. Deering	$ 1, 556	$110,000
Donald W. Dick , Jr.	1 ,556	110,000
David K. Fagin	1, 586	112,000
Karen Horn	279	21,347
F. Pierce Linaweaver	1, 602	113,000
John G. Schreiber	1, 586	11 2 ,000
New Jersey Tax-Free Bond
Anthony W. Deering	$6 90	$ 110,000
Donald W. Dick , Jr.	6 90	110,000
David K. Fagin	702	112,000
Karen Horn	130	21,347
F. Pierce Linaweaver	707	113,000
John G. Schreiber	702	11 2 ,000
New York Tax-Free Bond
Anthony W. Deering	$ 725	$ 110,000
Donald W. Dick , Jr.	725	110,000
David K. Fagin	737	112,000
Karen Horn	135	21,347
F. Pierce Linaweaver	7 43	113,000
John G. Schreiber	7 37	11 2 ,000
New York Tax-Free Money
Anthony W. Deering	$6 72	$ 110,000
Donald W. Dick , Jr.	6 72	110,000
David K. Fagin	6 84	112,000
Karen Horn	126	21,347
F. Pierce Linaweaver	6 89	113,000
John G. Schreiber	6 84	11 2 ,000
Personal Strategy Balanced
Anthony W. Deering	$ 9 23	$110,000
Donald W. Dick , Jr.	9 23	110,000
David K. Fagin	9 40	112,000
Karen Horn	174	21,347
F. Pierce Linaweaver	949	113,000
John G. Schreiber	9 40	11 2 ,000
Personal Strategy Growth
Anthony W. Deering	$ 7 95	$110,000
Donald W. Dick , Jr.	7 95	110,000
David K. Fagin	808	112,000
Karen Horn	153	21,347
F. Pierce Linaweaver	815	113,000
John G. Schreiber	808	11 2 ,000
Personal Strategy Income
Anthony W. Deering	$ 7 50	$110,000
Donald W. Dick , Jr.	7 50	110,000
David K. Fagin	7 63	112,000
Karen Horn	142	21,347
F. Pierce Linaweaver	769	113,000
John G. Schreiber	763	11 2 ,000
Prime Reserve
Anthony W. Deering	$ 3, 060	$110,000
Donald W. Dick , Jr.	3, 060	110,000
David K. Fagin	3, 129	112,000
Karen Horn	505	21,347
F. Pierce Linaweaver	3, 164	113,000
John G. Schreiber	3, 129	11 2 ,000
Real Estate
Anthony W. Deering	$ 701	$ 110,000
Donald W. Dick, Jr.	701	110,000
David K. Fagin	713	112,000
Karen Horn	137	21,347
F. Pierce Linaweaver	718	113,000
John G. Schreiber	713	11 2 ,000
Reserve Investment
Anthony W. Deering	$ 541	$ 110,000
Donald W. Dick, Jr.	541	110,000
David K. Fagin	541	112,000
Karen N. Horn	434	21,347
F. Pierce Linaweaver	541	11 3 ,000
John G. Schreiber	541	11 2 ,000
Retirement 2005( d )
Anthony W. Deering	$ 156	$ 110,000
Donald W. Dick, Jr.	156	110,000
David K. Fagin	156	112,000
Karen N. Horn	156	11 0 ,000
F. Pierce Linaweaver	156	11 1 ,000
John G. Schreiber	156	11 2 ,000
Retirement 2010
Anthony W. Deering	$642	$110,000
Donald W. Dick, Jr.	642	110,000
David K. Fagin	653	112,000
Karen Horn	126	21,347
F. Pierce Linaweaver	658	113,000
John G. Schreiber	653	112,000
Retirement 2015 ( d )
Anthony W. Deering	$ 156	$ 110,000
Donald W. Dick, Jr.	156	110,000
David K. Fagin	156	112,000
Karen N. Horn	156	11 0 ,000
F. Pierce Linaweaver	156	11 1 ,000
John G. Schreiber	156	11 2 ,000
Retirement 2020
Anthony W. Deering	$646	$110,000
Donald W. Dick, Jr.	646	110,000
David K. Fagin	657	112,000
Karen Horn	128	21,347
F. Pierce Linaweaver	662	113,000
John G. Schreiber	657	112,000
Retirement 2025 ( d )
Anthony W. Deering	$ 156	$ 110,000
Donald W. Dick, Jr.	156	110,000
David K. Fagin	156	112,000
Karen N. Horn	156	11 0 ,000
F. Pierce Linaweaver	156	11 1 ,000
John G. Schreiber	156	11 2 ,000
Retirement 2030
Anthony W. Deering	$639	$110,000
Donald W. Dick, Jr.	639	110,000
David K. Fagin	649	112,000
Karen Horn	124	21,347
F. Pierce Linaweaver	654	113,000
John G. Schreiber	649	112,000
Retirement 2035 ( d )
Anthony W. Deering	$ 156	$ 110,000
Donald W. Dick, Jr.	156	110,000
David K. Fagin	156	112,000
Karen N. Horn	156	11 0 ,000
F. Pierce Linaweaver	156	11 1 ,000
John G. Schreiber	156	11 2 ,000
Retirement 2040
Anthony W. Deering	$629	$110,000
Donald W. Dick, Jr.	629	110,000
David K. Fagin	639	112,000
Karen Horn	121	21,347
F. Pierce Linaweaver	645	113,000
John G. Schreiber	639	112,000
Retirement Income
Anthony W. Deering	$634	$110,000
Donald W. Dick, Jr.	634	110,000
David K. Fagin	644	112,000
Karen Horn	122	21,347
F. Pierce Linaweaver	649	113,000
John G. Schreiber	644	112,000
Science & Technology
Anthony W. Deering	$ 2,308	$ 110,000
Donald W. Dick, Jr.	2,308	110,000
David K. Fagin	2,354	112,000
Karen Horn	456	21,347
F. Pierce Linaweaver	2,376	113,000
John G. Schreiber	2,354	11 2 ,000
Short-Term Bond
Anthony W. Deering	$ 1, 0 79	$110,000
Donald W. Dick , Jr.	1,0 79	110,000
David K. Fagin	1,0 98	112,000
Karen Horn	207	21,347
F. Pierce Linaweaver	1, 108	113,000
John G. Schreiber	1, 0 98	11 2 ,000
Small-Cap Stock
Anthony W. Deering	$2, 315	$ 110,000
Donald W. Dick, Jr.	2, 315	110,000
David K. Fagin	2, 361	112,000
Karen Horn	458	21,347
F. Pierce Linaweaver	2, 384	113,000
John G. Schreiber	2, 361	11 2 ,000
Small-Cap Value
Anthony W. Deering	$ 1,829	$ 110,000
Donald W. Dick, Jr.	1,829	110,000
David K. Fagin	1,865	112,000
Karen Horn	354	21,347
F. Pierce Linaweaver	1,884	113,000
John G. Schreiber	1,865	11 2 ,000
Spectrum Growth
Anthony W. Deering	$ 1, 429	$ 110,000
Donald W. Dick, Jr.	1, 429	110,000
David K. Fagin	1, 457	112,000
Karen Horn	267	21,347
F. Pierce Linaweaver	1, 471	113,000
John G. Schreiber	1, 457	11 2 ,000
Spectrum Income
Anthony W. Deering	$ 1,937	$ 110,000
Donald W. Dic k , Jr.	1,937	110,000
David K. Fagin	1,975	112,000
Karen Horn	358	21,347
F. Pierce Linaweaver	1,993	113,000
John G. Schreiber	1,975	11 2 ,000
Spectrum International
Anthony W. Deering	$ 650	$ 110,000
Donald W. Dic k , Jr.	650	110,000
David K. Fagin	661	112,000
Karen Horn	124	21,347
F. Pierce Linaweaver	666	113,000
John G. Schreiber	661	11 2 ,000
Summit Cash Reserves
Anthony W. Deering	$ 1,968	$ 110,000
Donald W. Dick, Jr.	1,968	110,000
David K. Fagin	2, 011	112,000
Karen Horn	328	21,347
F. Pierce Linaweaver	2, 033	113,000
John G. Schreiber	2, 011	11 2 ,000
Summit GNMA
Anthony W. Deering	$ 6 70	$ 110,000
Donald W. Dick, Jr.	6 70	110,000
David K. Fagin	6 82	112,000
Karen Horn	125	21,347
F. Pierce Linaweaver	6 8 7	113,000
John G. Schreiber	6 82	11 2 ,000
Summit Municipal Income
Anthony W. Deering	$ 6 65	$ 110,000
Donald W. Dick, Jr.	6 65	110,000
David K. Fagin	6 7 6	112,000
Karen Horn	125	21,347
F. Pierce Linaweaver	6 82	113,000
John G. Schreiber	6 7 6	11 2 ,000
Summit Municipal Intermediate
Anthony W. Deering	$ 6 74	$ 110,000
Donald W. Dick, Jr.	6 74	110,000
David K. Fagin	6 8 6	112,000
Karen Horn	127	21,347
F. Pierce Linaweaver	6 91	113,000
John G. Schreiber	6 8 6	11 2 ,000
Summit Municipal Money Market
Anthony W. Deering	$7 55	$ 110,000
Donald W. Dick, Jr.	7 55	110,000
David K. Fagin	768	112,000
Karen Horn	146	21,347
F. Pierce Linaweaver	7 74	113,000
John G. Schreiber	7 68	11 2 ,000
Tax-Efficient Balanced
Anthony W. Deering	$ 644	$ 110,000
Donald W. Dick , Jr.	644	110,000
David K. Fagin	655	112,000
Karen Horn	122	21,347
F. Pierce Linaweaver	6 60	113,000
John G. Schreiber	655	11 2 ,000
Tax-Efficient Growth
Anthony W. Deering	$6 54	$ 110,000
Donald W. Dick , Jr.	6 54	110,000
David K. Fagin	6 65	112,000
Karen Horn	124	21,347
F. Pierce Linaweaver	6 70	113,000
John G. Schreiber	6 65	11 2 ,000
Tax-Efficient Multi-Cap Growth
Anthony W. Deering	$ 634	$ 110,000
Donald W. Dick , Jr.	634	110,000
David K. Fagin	644	112,000
Karen Horn	120	21,347
F. Pierce Linaweaver	649	113,000
John G. Schreiber	644	11 2 ,000
Tax-Exempt Money
Anthony W. Deering	$9 35	$ 110,000
Donald W. Dick , Jr.	9 35	110,000
David K. Fagin	9 52	112,000
Karen Horn	170	21,347
F. Pierce Linaweaver	9 61	113,000
John G. Schreiber	9 52	11 2 ,000
Tax-Free High Yield
Anthony W. Deering	$1, 111	$ 110,000
Donald W. Dick , Jr.	1, 111	110,000
David K. Fagin	1, 132	112,000
Karen Horn	199	21,347
F. Pierce Linaweaver	1, 143	113,000
John G. Schreiber	1, 132	11 2 ,000
Tax-Free Income
Anthony W. Deering	$1, 284	$ 110,000
Donald W. Dick , Jr.	1, 284	110,000
David K. Fagin	1, 310	112,000
Karen Horn	232	21,347
F. Pierce Linaweaver	1, 323	113,000
John G. Schreiber	1, 310	11 2 ,000
Tax-Free Intermediate Bond
Anthony W. Deering	$6 97	$ 110,000
Donald W. Dick , Jr.	697	110,000
David K. Fagin	709	112,000
Karen Horn	131	21,347
F. Pierce Linaweaver	715	113,000
John G. Schreiber	709	11 2 ,000
Tax-Free Short-Intermediate
Anthony W. Deering	$8 77	$ 110,000
Donald W. Dick , Jr.	8 77	110,000
David K. Fagin	8 93	112,000
Karen Horn	161	21,347
F. Pierce Linaweaver	901	113,000
John G. Schreiber	893	11 2 ,000
Total Equity Market Index
Anthony W. Deering	$ 718	$ 110,000
Donald W. Dick, Jr.	718	110,000
David K. Fagin	730	112,000
Karen Horn	138	21,347
F. Pierce Linaweaver	736	113,000
John G. Schreiber	730	11 2 ,000
U.S. Bond Index
Anthony W. Deering	$ 6 64	$ 110,000
Donald W. Dick, Jr.	6 64	110,000
David K. Fagin	675	112,000
Karen Horn	124	21,347
F. Pierce Linaweaver	681	113,000
John G. Schreiber	675	11 2 ,000
U.S. Treasury Intermediate
Anthony W. Deering	$ 7 99	$110,000
Donald W. Dick , Jr.	7 99	110,000
David K. Fagin	813	112,000
Karen Horn	145	21,347
F. Pierce Linaweaver	820	113,000
John G. Schreiber	813	11 2 ,000
U.S. Treasury Long-Term
Anthony W. Deering	$ 74 7	$110,000
Donald W. Dick , Jr.	74 7	110,000
David K. Fagin	7 60	112,000
Karen Horn	137	21,347
F. Pierce Linaweaver	7 66	113,000
John G. Schreiber	7 60	11 2 ,000
U.S. Treasury Money
Anthony W. Deering	$ 1, 1 02	$110,000
Donald W. Dick , Jr.	1,1 02	110,000
David K. Fagin	1,1 24	112,000
Karen Horn	196	21,347
F. Pierce Linaweaver	1,1 34	113,000
John G. Schreiber	1,1 24	11 2 ,000
Value
Anthony W. Deering	$ 1, 173	$ 110,000
Donald W. Dick, Jr.	1, 173	110,000
David K. Fagin	1, 196	112,000
Karen Horn	217	21,347
F. Pierce Linaweaver	1, 207	113,000
John G. Schreiber	1, 196	11 2 ,000
Virginia Tax-Free Bond
Anthony W. Deering	$ 801	$ 110,000
Donald W. Dick , Jr.	801	110,000
David K. Fagin	815	112,000
Karen Horn	148	21,347
F. Pierce Linaweaver	8 22	113,000
John G. Schreiber	815	11 2 ,000

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Amounts in this column are based on accrued compensation for calendar year 2003

Amounts in this column are based on compensation received for calendar year 2003 .

( d ) Expenses estimated for the period February 27, 2004 through May 31, 2004.

Directors` Holdings in the Price Funds

The following table sets forth the Price F und holdings of the independent and inside directors, as of December 31, 200 3 .

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

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

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PRINCIPAL HOLDERS OF SECURITIES

As of January 31, 2004 , the directors and officers of the funds, as a group, owned less than 1% of the outstanding shares of any fund.

As of January 31, 2004, the following shareholders of record owned more than 5% of the outstanding shares of the funds .

Shareholder	Fund	%
Aage V. Jensen Charity Foundation Aeulestrasse 5 9490 Vaduz Liechtenstein	Institutional Large-Cap Growth Institutional Large-Cap Value	18.12 12.01
Arnold Sagner/Monica Sagner: Agent ZCOR Limited Partnership LLP P. O. Box 416 Ellicott City, Maryland 21041-0416	Maryland Tax-Free Money	11.55
Barnaclesail c/o T. Rowe Price Associates Attn. : Mid - Cap Growth Fund 100 East Pratt Street Baltimore, Maryland 21202-1009	Government Reserve Investment	49.59(a)
Bread & Co. c/o T. Rowe Price Associates Attn. : Balanced Fund 1 00 East Pratt Street Baltimore, Maryland 21202-1009	Institutional High Yield	2 0.30
Bridgesail & Co. c/o T. Rowe Price Associates Att n.: Science & Technology Fund 100 East Pratt Street Baltimore, Maryland 21202-1009	Government Reserve Investment	17.86
Brookline Contributory Retirement Systems 333 Washington Street Brookline, Massachusetts 02445-6853	Institutional Small-Cap Stock	5. 55
Carter O. Hoffman 20 Meadow Road Baltimore, Maryland 21212-1021	Maryland Tax-Free Money	5.41
Carey & Co. c/o Huntington Trust Co. 7 Easton Oval Columbus, Ohio 43219-6010	Institutional Large-Cap Value	57.42( a )
Charles Schwab & Co. Inc. Reinvest Account Attn.: Mutual Fund Department 101 Montgomery Street San Francisco, California 94104-4122	Capital Appreciation Emerging Markets Stock European Stock Financial Services High Yield International Bond Japan Mid-Cap Growth Mid-Cap Value New Asia New Era Small-Cap Value Summit Municipal Intermediate Tax-Free Short-Intermediate	7.17 9.98 12.10 7.11 5.36 11.71 7.76 11.87 5.84 8.85 8.99 5.58 15.76 5.56
Coleman M. Brandt Grace L. Brandt JT TEN 330 West 72nd Street, Apt. 10A New York, New York 10023-2649	New York Tax-Free Money	7.58
Episcopal Community Services of the Diocese of Pennsylvania Attn. : Arthur J. Eyre 225 South 3rd Street Philadelphia, Pennsylvania 19106-3910	Institutional Large-Cap Growth Institutional Large-Cap Value	22.52 14.78
Georgette O`Connor Day TR Georgette O`Connor Day Trust 301 North Bundy Drive Los Angeles, California 90049-2827	California Tax-Free Money	6.14
Fidelity Management TR FBO Retirement Savings Plan for Pilots of US Airways Inc. 82 Devonshire Street Z1M Boston, Massachusetts 02109-3614	Institutional Large-Cap Value	9.45
Hartford Life Insurance Co. Separate Account TK Attn. : David Ten Broeck P.O. Box 2999 Hartford, Connecticut 06104-2999	Personal Strategy Balanced Personal Strategy Growth	5 .21 5.59
Harris Trust & Savings Bank Agent for Various Trust/ Custodian Accounts Reinvest Account Mutual Funds Unit P.O. Box 71940 Chicago, Illinois 60694-1940	Institutional Emerging Markets Equity	13.05
Harris Trust & Savings Bank Agent for Various Trust/ Custodian Accounts Cash Account Mutual Funds Unit P.O. Box 71940 Chicago, Illinois 60694-1940	Institutional Emerging Markets Equity	39.06( a)
Hollowwave Company State Street Corporation Attn. : Mutual Fund Department P.O. Box 9242 Boston, Massachusetts 02209-9242	Institutional Mid-Cap Equity Growth	13.77
Ladybug & Co. c/o T. Rowe Price Associates Attn. : Personal Strategy Balanced Fund 100 East Pratt Street Baltimore, Maryland 21202-1009	Institutional High Yield	9.20
Mac & Co. Mutual Funds Operations P.O. Box 3198 525 William Penn Place Pittsburgh, PA 15219-1707	Retirement 2010 Retirement 2020 Retirement 2030 Retirement 2040 Retirement Income	8.34 7.06 5.65 6.82 8.27
Mainbody & Co. c/o T. Rowe Price Associates Attn. : GNMA Fund 1 00 East Pratt Street Baltimore, Maryland 21202-1009	Government Reserve Investment	23.88
Manulife Financial USA Attn. : Laura Ross SRS Accounting 250 Bloor Street East 7E Floor Toronto Ontario Canada M4W1E5	Health Sciences Spectrum Income	7 . 18 23.02
Mercantile Safe Deposit & Trust TR Maryland Institute Attn.: Mutual Funds 766 Old Hammonds Ferry Road Linthicum, Maryland 21090-1317	Institutional Emerging Markets Equity	6.75
National Financial Services LLC for the E xclusive B enefit of O ur C ustomers 200 Liberty Street One World Financial Center , 5th Floor New York, New York 10281-1003	Mid-Cap Value	6.09
National Financial Services LLC for the Exclusive Benefit of Our Customers 200 Liberty Street One World Financial Center New York, New York 10281-1003	Emerging Europe & Mediterranean	5.36
National Financial Services for the E xclusive B enefit of O ur C ustomers 200 Liberty Street One World Financial Center , 4 th Floor New York, New York 10281-1003	Capital Appreciation	5.10
Northern Trust Co. Custodian FBO Joseph P. Kennedy Jr. Foundation P.O. Box 92956 Chicago, Illinois 60675-2956	Corporate Income	5.72
Northern Trust Co. Trust FBO AVAYA 22-09732 P.O. Box 92956 Chicago, Illinois 60675-2956	Institutional High Yield	8.21
Northern Trust Company TR FBO Pfizer Savings and Investment Plan P.O. Box 92994 Chicago, Illinois 60675-2956	Value	6. 32
Northern Trust Co. TR Illinois Tool Works Pension Trust Attn.: Felix Rodriquez 3600 West Lake Avenue Glenview, Illinois 60025-1215	Institutional Small-Cap Stock	1 7.75
Norwest Bank Company N A TR FBO State of Minnesota Deferred Compensation Plan Minnesota State Deferred Compensation Plan Trus t c/o Great West Life Recordkeeper 8515 E ast Orchard Road Attn.: 2T2 Englewood, Colorado 80111-5037	Small-Cap Stock	6 . 10
Oceanoar & Co. c/o T. Rowe Price Associates Attn.: Small-Cap Value Fund 100 East Pratt Street Baltimore, Maryland 21202-1009	Reserve Investment	5.08
Overlap & C o. c/o T. Rowe Price Associates Attn.: Small-Cap Stock Fund 100 East Pratt Street Baltimore, Maryland 21202-1009	Reserve Investment	9. 65
Pershing Division of DLJ Securities Corporation for Exclusive Benefit of T. Rowe Price Money Fund Customer Accounts 1 Pershing Plaza Jersey City, New Jersey 07399-0002	Emerging Markets Stock Maryland Tax-Free Money Summit Cash Reserves Tax-Exempt Money	19.66 5. 36 5.53 6.50
Pirateline & Company T. Rowe Price Associates Attn.: Fund Accounting Department 1 00 East Pratt Street Baltimore, Maryland 21202-1009	Growth & Income International Growth & Income International Stock New Horizons Mid-Cap Value	8.98 44.41( a ) 7.00 8.33 9.00
Post & Co. c/o The Bank of New York Mutual Fund Reorg Department, 6th Floor P.O. Box 1066 Wall Street Station New York, New York 10268-1066	Institutional Large-Cap Core Growth	61.70( a )
P u tnam Investments Thomson Holdings Inc. Savings Plan Attn. DC Plan Admin. Team One Investors W a y Mailstop N7E Norwood, Massachusetts 02062-1599	Value	5. 22
Reinco P.O. Box 1930 Honolulu, HI 96805-1930	Institutional Large-Cap Growth	14.84
Saxon and Co. Omnibus P.O. Box 7780-1888 Philadelphia, Pennsylvania 19182-0001	Growth Stock	6.99
Seamile & Co. T. Rowe Price Associates Attn. : Capital Appreciation Fund 100 East Pratt Street Baltimore, Maryland 21202-1009	Reserve Investment	11.03
Schering-Plough Corp. Post Retirement Institute c/o Gary Karlin One Giralda Farms Madison, New Jersey 07940-1010	Institutional Emerging Markets Equity	17.71
Sigler & Co. Cust Smithsonian Institution Tony Moceri 3 Chase M etrotech Center, 5th Floor Brooklyn, New York 1 1245 - 0001	Institutional Small-Cap Stock	17.75
Smithsonian Institution Ms. Debra Winstead Tony Moceri 3 Chase Metrotech Center, 5th Floor Brooklyn, New York 11245-0001	Institutional Foreign Equity	5.29
State Street Bank & Trust Co. Trust TR For Defined Benefit Plans of Zeneca Holdings Inc. Attn. : Robert Skinner One Enterprise Drive, W5C North Quincy, Massachusetts 02171-2126	Institutional High Yield	9. 53
State Street Custodian Telluride Association Attn.: Dan Connolly 200 Newport Avenue North Quincy, Massachusttes 02171-2145	Institutional Emerging Markets Equity	9.13
State Street Trust & Banking Company FBO Fund Number 2371040 Shirovama JT Trust Tower 4-3-1 Toranomon Minato-KU Tokyo, Japan 105-6014	Institutional Small-Cap Stock	1 4.51
Stichting Pensioenfonds Van de Koninklijke Nedlloyd P.O. Box 1982 3000 B Z Rotterdam The Netherlands	Institutional Mid-Cap Equity Growth	7 . 71
Strafe & Co. FAO MWC Hosp Auth Fiduciary Cap P.O. Box 160 Westerville, Ohio 43086-0160	Institutional Large-Cap Growth	6.65
T. Rowe Price Associates Foundation, Inc. 100 East Pratt Street Baltimore, Maryland 21202-1009	Spectrum International	7.97
T. Rowe Price Associates Attn.: Financial Reporting Department 100 East Pratt Street Baltimore, Maryland 21202-1009	Summit Municipal Money Market	30.53( a)
T. Rowe Price Finance Inc. 802 West Street Suite 301 Wilmington, Delaware 19801-1526	Inflation Protected Bond Institutional Emerging Markets Equity Institutional Large-Cap Growth Institutional Large-Cap Value Institutional Large - Cap Core Growth International Equity Index Tax-Efficient Balanced U.S. Bond Index	5.62 14.30 7.50 6.34 7.83 10.34 7.48 12.04
T. Rowe Price Managed GIC Attn. : Stable Value Fund T. Rowe Price Associates, Inc. 100 East Pratt Street , 7th Floor Baltimore, Maryland 21202-1009	Reserve Investment	5.78
T. Rowe Price Trust Company, Inc. Attn.: Asset Reconciliations P.O. Box 17215 Baltimore, Maryland 21297-1215	Mid-Cap Growth Summit Cash Reserves	1 6. 48 22.81
T. Rowe Price Trust Company, Inc. Dividend Growth Fund (DGF) Attn.: Asset Reconciliation P.O. Box 17215 Baltimore, Maryland 21297-1215	Dividend Growth	19.45
T. Rowe Price Trust Company, Inc. Attn.: Installation Team for TRPS Institutional Control Department P.O. Box 17125 Baltimore, Maryland 21297-1125	Capital Opportunity Value	5.68 24.98
T. Rowe Price Trust Company, Inc. Media & Telecommunications Fund DST #121 P.O. Box 17215 Baltimore, Maryland 21297-1215	Media & Telecommunications	8 . 99
T. Rowe Price Trust Company, Inc. Attn.: RPS Control Department 10090 Red Run Boulevard Owings Mills, Maryland 21117-4842	Equity Index 500	36.25(b)
T. Rowe Price Trust Company , Inc. TR Balanced Attn.: Asset Reconciliation P.O. Box 17215 Baltimore, Maryland 21297-1215	Personal Strategy Balanced	7 1 . 0 0 ( b)
T. Rowe Price Trust Company , Inc. TR Growth Attn: Asset Reconciliation P.O. Box 17215 Baltimore, Maryland 21297-1215	Personal Strategy Growth	62. 22 ( b)
T. Rowe Price Trust Company , Inc. TR Income Attn.: Asset Reconciliation P.O. Box 17215 Baltimore, Maryland 21297-1215	Personal Strategy Income	6 4.73 ( b)
T. Rowe Price Trust Company, Inc. Attn.: TRPS Institutional Control Department P.O. Box 17215 Baltimore, Maryland 21297-1215	Balanced Capital Appreciation Equity Income Extended Equity Market Index Growth & Income Growth Stock New America Growth New Era New Horizons New Income International Stock Prime Reserve Science & Technology Short-Term Bond Small-Cap Value Spectrum Growth Spectrum Income U.S. Treasury Intermediate U.S. Treasury Long-Term U.S. Treasury Money	53.41( b) 14.49 22.64 20.60 27.26( b) 20.26 25.43( b) 5.14 33.16( b) 14.04 17.12 17.18 23.86 5.18 23.33 21.44 24.70 23.61 10.58 16.63
T. Rowe Price Trust Company, Inc. T . Rowe Price OTC Fund Attn.: RPS Control Department P.O. Box 17215 Baltimore, Maryland 21297-1215	Small-Cap Stock	1 7 . 53
T. Rowe Price RPS Attn.: Asset Reconciliation P.O. Box 17215 Baltimore, Maryland 21297-1215	International Discovery	6.00
T. Rowe Price RPS Inc. Omnibus Acct #127 P.O. Box 17215 Baltimore, Maryland 21297-1215	International Growth & Income	6.84
T. Rowe Price RPS Inc. Co. Omnibus Plan Install Team for #113 P.O. Box 17215 Baltimore, Maryland 21297-1215	Global Stock	19. 00
T. Rowe Price RPS Inc. Omnibus Plan New Business-Conv Assts #135 IXF P.O. Box 17215 Baltimore, Maryland 21297-1215	International Equity Index	5.25
T. Rowe Price RPS Inc. Omniplan Account Corporate Income Fund Fund #02/112 P.O. Box 17215 Baltimore, Maryland 21297-1215	Corporate Income	7.35
T. Rowe Price Retirement Plan Services TR Blue Chip Growth Fun d A ttn.: Asset Reconciliations P.O. Box 17215 Baltimore, Maryland 21297-1215	Blue Chip Growth	37.46(c )
T. Rowe Price Retirement Plan Services, Inc. Omnibus Account Retirement 2010, #140 P.O. Box 17215 Baltimore, Maryland 21297-1215	Retirement 2010	49.34 ( c)
T. Rowe Price Retirement Plan Services, Inc. Omnibus Account Retirement 2020, #141 P.O. Box 17215 Baltimore, Maryland 21297-1215	Retirement 2020	50.48 ( c)
T. Rowe Price Retirement Plan Services, Inc. Omnibus Account Retirement 2030, #142 P.O. Box 17215 Baltimore, Maryland 21297-1215	Retirement 2030	53.08 ( c)
T. Rowe Price Retirement Plan Services, Inc. Omnibus Account Retirement 2040, #143 P.O. Box 17215 Baltimore, Maryland 21297-1215	Retirement 2040	55.56( c)
T. Rowe Price Retirement Plan Services, Inc. Omnibus Account Retirement Income, #145 P.O. Box 17215 Baltimore, Maryland 21297-1215	Retirement Income	25.81 ( c)
T. Rowe Price Retirement Plan Services, Inc. Omnibus Plan New Business-Conv. Assets #134 UBX P.O. Box 17215 Baltimore, Maryland 21297-1215	U.S. Bond Index	13.92
T. Rowe Price Retirement Plan Service s , Inc. Attn.: RPS Cash Group 4515 Painters Mill Road Owings Mills, Maryland 21117-4 903	U.S. Treasury Money	9.95
Taskforce & Co. c/o T. Rowe Price Associates Attn. : Equity Income Fund 100 East Pratt Street Baltimore, Maryland 21202-1009	Reserve Investment	11.10
T he Jewish Foundation of Cincinnati 8044 Montgomery Road, Suite 700 Cincinnati , Ohio 45236-2926	Institutional Large-Cap Core Growth	30.46( a)
Trustees of T. Rowe Price U.S. Retirement Program Attn.: Financial Reporting Department P.O. Box 89000 Baltimore, Maryland 21289-0001	Developing Technologies	7.42
Tuna & Co. c/o T. Rowe Price Associates Attn. : New Income Fund 100 East Pratt Street Baltimore, Maryland 21202-1009	Reserve Investment	6.49
Vanguard Fiduciary Trust Company T. Rowe Price Retail Class Funds Attn.: Outside Funds P.O. Box 2600 VM 613 Valley Forge, Pennsylvania 19482-2600	International Discovery	5.08
Wachovia Bank N A Omnibus Reinvest/Reinvest 1525 West Wt. Harris Boulevard Charlotte, North Carolina 28288-0001	Institutional Large-Cap Growth	5.07
Wave Board & Co. c/o State Stree t Bank and Trust Attn.: Rob Spencer One Enterprise Drive #W3A Quincy, Massachusetts 02171-2126	Institutional Large-Cap Growth	25.30( a)
Wilmington Trust Co. Agent U/A with Future Value Inc. c/o Mutual Funds P.O. Box 8971 Wilmington, Delaware 19899-8971	Institutional High Yield	7. 21
Wilmington Trust Co. TR FBO Continental Airlines Inc. DCP Plan c/o Mutual Funds P.O. Box 8971 Wilmington, Delaware 19899-8971	Latin America New America Growth	7.17 10.53
Yachtcrew & Co. T. Rowe Price Associates, Inc. Attn.: Fund Accounting Department 100 East Pratt Street Baltimore, Maryland 21202-1009	Emerging Markets Bond GNMA High Yield International Bond New Income Short-Term Bond U.S. Treasury Long-Term	37.86 ( d ) 35.68 ( d ) 25.08 ( d ) 43.72 ( d ) 37.50 ( d ) 14.29 45.15 ( d )

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(a) At the level of ownership indicated, the shareholder would be able to determine the outcome of most issues that are submitted to shareholders for vote .

(b) T. Rowe Price Trust Company is a wholly owned subsidiary of T. Rowe Price Associates, In c., which is a wholly owned subsidiary of T. Rowe Price Group, Inc., each a Maryland corporation. T. Rowe Price Trust Company is not the beneficial owner of these shares. Such shares are held of record by T. Rowe Price Trust Company and are voted by various retirement plans and retirement participants.

( c ) T. Rowe Price Retirement Plan Services , Inc. is a wholly owned subsidiary of T. Rowe Price Associates, Inc., which is a wholly owned subsidiary of T. Rowe Price Group, Inc., each a Maryland corporation. T. Rowe Price Retirement Plan

PAGE 235

Services is not the beneficial owner of these shares. Such shares are held of record by T. Rowe Price Retirement Plan Services and are voted by various retirement plans and retirement participants.

(d ) Yachtcrew & Co owns the indicated percentage of the outstanding shares of the fund through the Spectrum Fund s . Shares of the fund held by the Spectrum Fund s are echo-voted by Spectrum Fund s in the same proportion as the shares of the fund are voted by its non-Spectrum Fund shareholders.

INVESTMENT MANAGEMENT SERVICES

T. Rowe Price International, Inc. is the investment manager for all international and foreign funds and has executed an Investment Management Agreement with each such fund. T. Rowe Price Associates, Inc. is the investment manager for all other funds and has executed an Investment Management Agreement with each such fund. T. Rowe Price Associates and T. Rowe Price International are hereinafter referred to as "Investment Managers" .

Services

Under the Investment Management Agreement (except for the Japan Fund and the Japanese investments of the . International Discovery Fund), the Investment Managers provide the funds with discretionary investment . services. Specifically, the Investment Managers are responsible for supervising and directing the investments of . the funds in accordance with the funds` investment objectives, programs, and restrictions as provided in the . funds` prospectuses and this SAI. The Investment Managers are also responsible for effecting all security . transactions on behalf of the funds, including the negotiation of commissions and the allocation of principal . business and portfolio brokerage . For the Japan Fund and the Japanese investments of the International Discovery Fund, T. Rowe Price International has entered into a subadvisory agreement with T. Rowe Price Global Investment Services Limited ( " Global Investment Servi ces" ) under which, subject to the supervision of T. Rowe Price International, Global Investment Services provides the same services described above that T. Rowe Price International provides for the other funds .

In addition to the services described above, the Investment Managers provide the funds with certain corporate administrative services, including: maintaining the funds` corporate existence and corporate records; registering and qualifying fund shares under federal laws; monitoring the financial, accounting, and administrative functions of the funds; maintaining liaison with the agents employed by the funds such as the funds` custodian and transfer agent; assisting the funds in the coordination of such agent ` s activities; and permitting employees of the Investment Managers to serve as officers, directors , and committee members of the funds without cost to the funds.

The Investment Management Agreements also provide that the Investment Managers , their directors , officers, employees, and certain other persons performing specific functions for the funds will be liable to the funds only for losses resulting from willful misfeasance, bad faith, gross negligence, or reckless disregard of duty. The su badvisory agreements with respect to the Japan and International Discovery Fund s have a similar provision limiting the liability of Global Investment Services for errors, mistakes , and losses other than those caused by its willful misfeasance, bad faith, or gross negligence .

Under the Investment Management Agreements, the Investment Managers are permitted to utilize the services or facilities of others to provide them or the fund s 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 the Investment Managers may deem necessary, appropriate, or convenient for the discharge of their obligations under the Investment Management Agreements or otherwise helpful to the fund s. The subadvisory agreement with respect to the Japan and International Discovery Funds ha s a similar provision permitting Global Investment Services to utilize, at its own cost , the services or facilities of others.

Approval of Investment Management Agreements

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 s, including a majority of the independent directors. Each fund B oard consists of a majority of independent directors.

In approving the continuation of the I nvestment M anagement A greements for each fund for the current year, the Boards reviewed reports prepared by the Investment Managers , materials provided by fun d counsel and counsel

to the independent directors, as well as other information. The Boards considered the nature and quality of the investment management services provided to the fun ds by the Investment Managers under the I nvestment M anagement A greements and the personnel who provide these services, including the historical performance of the fun ds compared to their benchmark indices and peer groups of similar investment companies. In addition, the Boards considered other services provided to the fun ds by the Investment Managers and their affiliates, such as administrative services, shareholder services, fund accounting, assistance in meeting legal and regulatory requirements, and other services necessary for the fun ds` operation.

The Boards considered the fees paid to the Investment Managers for investment management services, as well as compensation paid to the Investment Managers or its affiliates for other non-advisory services provided to the fun ds. In connection with their review of the fees paid to the Investment Managers and their affiliates, the Boards reviewed information provided by Lipper Inc. comparing the fun ds` advisory fee rates and overall expense ratios with those of comparable funds. Where applicable, the Boards considered that the fun ds` advisory fee structures reflect breakpoints, which permit fee reductions resulting from economies of scale. Additionally and where applicable, the Boards considered the contractual fee waivers and expense reimbursements agreed to by the Investment Managers .

The Boards also considered the costs incurred and the benefits received by the Investment Managers and their affiliates, including the profitability of the Investment Managers from providing advisory services to the fun ds. In reviewing data concerning the profitability of the Investment Managers , the Boards examined, among other components, the cost allocation methodology utilized in the presentation. In addition, the Boards considered other potential benefits to the Investment Managers , such as the research services the Investment Managers received from brokers in return for allocating fun d brokerage in "soft dollar" arrangements.

Based on the information reviewed and the discussions, the Boards concluded that they were satisfied with the nature and quality of the services provided by the Investment Managers to the fun ds and that the management fee rates were reasonable in relation to such services. The independent directors of the fun ds were assisted by independent legal counsel in their deliberations.

For the Retirement and Spectrum Funds, t he Board s considered the fact that the Retirement and Spectrum F und s pay no fees to the Investment Managers for investment management services.

Retirement and Spectrum Funds

The business of Retirement and Spectrum Funds will be conducted by their officers, directors, and the Investment Managers in accordance with policies and guidelines set up by their directors which were included in the Exemptive Order issued by the SEC (Investment Company Act Release No. IC-21425, October 18, 1995).

Apart from the 12b-1 fees to which Advisor and R Class es of the Retirement Funds are subject, e ach Retirement and Spectrum Fund will operate at a zero expense ratio. To accomplish this, the payment of each fund`s operational expenses (other than the 12b-1 fees) is subject to a Special Servicing Agreement described below as well as certain undertakings made by the Investment Managers under their Investment Management Agreements with the Retirement and Spectrum Fund s. Fund expenses include: shareholder servicing fees and expenses; custodian and accounting fees and expenses; legal and auditing fees; expenses of preparing and printing prospectuses and shareholder reports; registration fees and expenses; proxy and annual meeting expenses, if any; and directors` fees and expenses.

Special Servicing Agreements

There is a separate Special Servicing Agreement between and among each of the Spectrum Growth, Spectrum Income, Spectrum International, Retirement 2005, Retirement 2010, Retirement 2015, Retirement 2020, Retirement 2025, Retirement 2030, Retirement 2035, Retirement 2040 , and Retirement Income Funds; the underlying funds in which each such fund invests; and T. Rowe Price (or T. Rowe Price International in the case of the Spectrum International Fund).

The Special Servicing Agreement s provide that, if the Board of any underlying Price fund determines that such underlying fund`s share of the aggregate expenses of each Retirement and Spectrum Fund that invests in such underlying Price fund is less than the estimated savings to the underlying Price fund from the operation of each Retirement and Spectrum Fund that invests in such underlying Price fund, the underlying Price fund will bear those expenses in proportion to the average daily value of its shares owned by the Retirement and Spectrum

PAGE 237

Fund that invests in such underlying Price fund, provided further that no underlying Price fund will bear such expenses in excess of the estimated savings to it. Such savings are expected to result primarily from the elimination of numerous separate shareholder accounts which are or would have been invested directly in the underlying Price funds and the resulting reduction in shareholder servicing costs. Although such cost savings are not certain, the estimated savings to the underlying Price funds generated by the operation of each Retirement and Spectrum Fund are expected to be sufficient to offset most, if not all, of the expenses incurred by each Retirement and Spectrum Fund .

The Special Servicing Agreements also gives authority to each Retirement and Spectrum Fund to utilize the Price name so long as (1) the Special Servicing Agreements are in effect, and (2) the assets of the Retirement and Spectrum Funds are invested pursuant to each fund`s objectives and policies in shares of the various underlying Price funds (except for such cash or cash items as the directors may determine to maintain from time to time to meet current expenses and redemptions). The Special Servicing Agreements provide that the Retirement and Spectrum Funds will utilize assets deposited with the custodian of each fund from the sale of each fund`s shares to promptly purchase shares of the specified underlying Price funds, and will undertake redemption or exchange of such shares of the underlying Price funds in the manner provided by the objectives and policies of each fund.

Under the Investment Management Agreements with the Retirement and Spectrum Funds, and the Special Servicing Agreements, the Investment Managers ha ve agreed to bear any expenses of the Retirement and Spectrum Funds (other than 12b-1 fees) which exceed the estimated savings to each of the underlying Price funds. Of course, shareholders of the Retirement and Spectrum Funds will still indirectly bear their fair and proportionate share of the cost of operating the underlying Price funds in which the Retirement and Spectrum Funds invest because the Retirement and Spectrum Funds, as shareholder s of the underlying Price funds, will bear their proportionate share of any fees and expenses paid by the underlying Price funds. The Retirement and Spectrum Funds, as shareholder s of the selected underlying Price funds, will benefit only from cost-sharing reductions in proportion to their interest in such underlying Price funds.

All f unds except Index, Institutional, Reserve Investment, Retirement, Spectrum, Summit Income, and Summit Municipal Funds

Management Fee

The funds pay the Investment Managers 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 the Investment Managers on the first business day of the next succeeding calendar month and is calculated as described next.

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

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

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

The monthly Fund Fee ( "Monthly Fund Fee" ) is the sum of the daily Fund Fee accruals ( "Daily Fund Fee . Accruals" ) for each month. The Daily Fund Fee Accrual for any particular day is computed by multiplying the .

fraction of one (1) over the number of calendar days in the year by the individual Fund Fee Rate. The product of . this calculation is multiplied 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:

Fund	Fee%
Balanced	0.15 %
Blue Chip Growth	0.30
California Tax-Free Bond	0.10
California Tax-Free Money	0.10
Capital Appreciation	0.30
Capital Opportunity	0.35
Corporate Income	0.15
Developing Technologies	0.60
Diversified Mid-Cap Growth	0.35
Diversified Small-Cap Growth	0.35
Dividend Growth	0.20
Emerging Europe & Mediterranean	0.75
Emerging Markets Bond	0.45
Emerging Markets Stock	0.75
Equity Income	0.25
European Stock	0.50
Financial Services	0.35
Florida Intermediate Tax-Free	0.05
GNMA	0.15
Georgia Tax-Free Bond	0.10
Global Stock	0.35
Global Technology	0.45
Growth & Income	0.25
Growth Stock	0.25
Health Sciences	0.35
High Yield	0.30
Inflation Protected Bond	0.05
International Bond	0.35
International Discovery	0.75
International Growth & Income	0.35
International Stock	0.35
J apan	0.50
Latin America	0.75
Maryland Short-Term Tax-Free Bond	0.10
Maryland Tax-Free Bond	0.10
Maryland Tax-Free Money	0.10
Media & Telecommunications	0.35
Mid-Cap Growth	0.35
Mid-Cap Value	0.35
New America Growth	0.35
New Asia	0.50
New Era	0.25
New Horizons	0.35
New Income	0.15
New Jersey Tax-Free Bond	0.10
New York Tax-Free Bond	0.10
New York Tax-Free Money	0.10
Personal Strategy Balanced	0.25
Personal Strategy Growth	0.30
Personal Strategy Income	0.15
Prime Reserve	0.05
Real Estate	0.30
Science & Technology	0.35
Short-Term Bond	0.10
Small-Cap Stock	0.45
Small-Cap Value	0.35
Tax-Efficient Balanced	0.20
Tax-Efficient Growth	0.30
Tax-Efficient Multi-Cap Growth	0.35
Tax-Exempt Money	0.10
Tax-Free High Yield	0.30
Tax-Free Income	0.15
Tax-Free Intermediate Bond	0.05
Tax-Free Short-Intermediate	0.10
U.S. Treasury Intermediate	0.05
U.S. Treasury Long-Term	0.05
U.S. Treasury Money	0.00
Value	0.35
Virginia Tax-Free Bond	0.10

PAGE 239

Index, Institutional, Reserve Investment, Retirement, Spectrum, Summit Income, and Summit Municipal Funds

Management Fee

The Extended Equity Market Index, Institutional Emerging Markets Equity, Institutional High Yield, International Equity Index, Summit Cash Reserves, Summit GNMA, Summit Municipal Money Market, Summit Municipal Intermediate, Summit Municipal Income, Total Equity Market Index, and U.S. Bond Index Funds (collectively, "single-fee funds" ) pay the Investment Managers an annual fee (the "Fee" ). The Fee is paid monthly to the Investment Managers on the first business day of the next succeeding calendar month and is the sum of the Daily Fee accruals for each month. The Daily 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 appropriate Fee. The product of this calculation is multiplied by the net assets of the fund for that day, as determined in accordance with each fund`s prospectus as of the close of business on the previous business day on which the fund was open for business.

The Investment Management Agreement between each fund and the I nvestment Managers provides that the Investment Managers will pay all expenses of each fund`s operations, except interest, taxes, brokerage commissions, and other charges incident to the purchase, sale , or lending of the fund`s portfolio securities, directors` fees and expenses (including counsel fees and expenses) , and such non-recurring or extraordinary expenses that may arise, including the costs of actions, suits , or proceedings to which the fund is a party and the expenses the fund may incur as a result of its obligation to provide indemnification to its officers, directors , and agents. However, the Boards for the funds reserves the right to impose additional fees against shareholder accounts to defray expenses which would otherwise be paid by the Investment Managers under the Investment

Management Agreement. The Boards do not anticipate levying such charges; such a fee, if charged, may be retained by the funds or paid to the Investment Managers .

Fund	Fee%
Extended Equity Market Index	0.40 %
Institutional Emerging Markets Equity	1.10
Institutional High Yield	0.50
International Equity Index	0.50
Summit Cash Reserves	0.45
Summit GNMA	0.60
Summit Municipal Money Market	0.45
Summit Municipal Intermediate	0.50
Summit Municipal Income	0.50
Total Equity Market Index	0.40
U.S. Bond Index	0 .30

Each fund pays the Investment Managers an annual investment management fee in monthly installments of the amount listed below based on the average daily net asset value of the fund.

Fund	Fee%
Equity Index 500	0. 1 5 %
Institutional Foreign Equity	0.70
Institutional Large-Cap Core Growth	0.55
Institutional Large-Cap Growth	0. 55
Institutional Large-Cap Value	0.5 5
Institutional Mid-Cap Equity Growth	0.60
Institutional Small-Cap Stock	0.65

Government Reserve Investment and Reserve Investment Funds

Neither fund pays T. Rowe Price an investment management fee.

Japan Fund

Under a sub advisory agreement between T. Rowe Price International and Global Investment Services approved by the directors of the Japan Fund, Global Investment Services, subject to the supervision of T. Rowe Price International, will manage all the investments of the Japan Fund. For its services, Global Investment Services will receive 60% of the investment management fee received by T. Rowe Price International from the Japan Fund.

International Discovery Fund

Under a sub advisory agreement between T. Rowe Price International and Global Investment Services approved by the directors of the International Discovery Fund, Global Investment Services, subject to the supervision of T. Rowe Price International, will manage the yen-denominated investments of the International Discovery Fund. For its services, Global Investment Services will receive 50% of the investment management fee received by T. Rowe Price International from the International Discovery Fund attributable to the yen-denominated investments of the International Discovery Fund.

PAGE 241

Management Fee Compensation

The following table sets forth the total management fees, if any, paid to the I nvestment M anager s by each fund, during the fiscal years indicated :

Fund	Fiscal Year Ended
	2/28/03	2/28/02	2/29/01
California Tax-Free Bond	$ 1,113,000	$ 1,026,000	$ 933,000
California Tax-Free Money	333,000	330,000	351,000
Florida Intermediate Tax-Free	391,000	351,000	313,000
Georgia Tax-Free Bond	353,000	305,000	215,000
Maryland Short-Term Tax-Free Bond	802,000	561,000	485,000
Maryland Tax-Free Bond	5,430,000	4,898,000	4,289,000
Maryland Tax-Free Money	175,000	29,000	(a)
New Jersey Tax-Free Bond	581,000	532,000	464,000
New York Tax-Free Bond	964,000	884,000	795,000
New York Tax-Free Money	412,000	423,000	418,000
Tax-Efficient Balanced	231,000	267,000	252,000
Tax-Efficient Growth	406,000	489,000	556,000
Tax-Efficient Multi-Cap Growth	23,000	17,000	0
Tax-Exempt Money	3,048,000	3,197,000	2,937,000
Tax-Free High Yield	6,947,000	6,882,000	6,644,000
Tax-Free Income(b)	6,904,000	6,701,000	6,275,000
Tax-Free Intermediate Bond	561,000	473,000	417,000
Tax-Free Short-Intermediate	2,180,000	1,821,000	1,645,000
Virginia Tax-Free Bond	1,605,000	1,442,000	1,179,000

(a) Prior to commencement of operations.

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

Fund	Fiscal Year Ended
	5/31/03	5/31/02	5/31/01
Corporate Income	$ 297,000	$ 232,000	$ 124,000
GNMA	6,528,000	5,287,000	5,005,000
Government Reserve Investment	(a)	(a)	(a)
High Yield(b)	14,527,000	10,173,000	9,413,000
Inflation Protected Bond	0	(c)	(c)
Institutional High Yield	796,000	(c)	(c)
New Income(d)	9,469,000	8,361,000	7,887,000
Personal Strategy Balanced	3,071,000	3,775,000	3,604,000
Personal Strategy Growth	1,561,000	1,908,000	1,696,000
Personal Strategy Income	747,000	1,092,000	914,000
Prime Reserve	21,177,000	21,485,000	21,004,000
Reserve Investment	(a)	(a)	(a)
Retirement 2005	(a)	(a)	(a)
Retirement 2010	(a)	(a)	(a)
Retirement 2015	(a)	(a)	(a)
Retirement 2020	(a)	(a)	(a)
Retirement 2025	(a)	(a)	(a)
Retirement 2030	(a)	(a)	(a)
Retirement 2035	(a)	(a)	(a)
Retirement 2040	(a)	(a)	(a)
Retirement Income	(a)	(a)	(a)
Short-Term Bond	3,014,000	1,881,000	1,219,000
U.S. Treasury Intermediate	1,404,000	1,001,000	869,000
U.S. Treasury Long-Term	1,094,000	1,147,000	1,128,000
U.S. Treasury Money	3,442,000	3,163,000	2,945,000

(a) The fund does not pay an investment management fee.

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

(d) The fund has three classes of shares. The management fee is allocated to each class based on relative net assets

Fund	Fiscal Year Ended
	10/31/03	10/31/02	10/31/01
Emerging Europe & Mediterranean	321,000	87,000	48,000
Emerging Markets Stock	2,173,000	1,793,000	1,669,000
European Stock	5,720,000	6,316,000	8,430,000
Global Stock	448,000	359,000	465,000
Institutional Emerging Markets Equity	78,000	(a)	(a)
Institutional Foreign Equity	8,097,000	11,091,000	18,261,000
International Discovery	4,614,000	4,770,000	7,101,000
International Equity Index(b)	73,000	52,000	32,000
International Growth & Income(c)	198,000	(d)	(d)
International Stock(c)	30,300,000	39,511,000	55,864,000
Japan	915,000	1,085,000	1,727,000
Latin America	1,475,000	1,739,000	2,179,000
New Asia	4,974,000	5,351,000	5,854,000
Summit Cash Reserves	14,006,000	13,614,000	12,308,000
Summit GNMA	632,000	593,000	460,000
Summit Municipal Income(b)	464,000	429,000	378,000
Summit Municipal Intermediate(b)	565,000	506,000	422,000
Summit Municipal Money Market(b)	1,320,000	1,030,000	956,000
U.S. Bond Index(b)	271,000	180,000	83,000

(a) Prior to commencement of operations.

(b) The fee includes investment management fees and administrative expenses.

(d) Due to the fund`s expense limitation in effect at that time, no management fees were paid by the fund to the investment manager.

Fund	Fiscal Year Ended
	12/31/02	12/31/01	12/31/00
Balanced	$ 7,791,000	$ 8,542,000	$ 9,675,000
Blue Chip Growth(a)	35,354,000	41,035,000	45,037,000
Capital Appreciation	10,731,000	7,570,000	4,963,000
Capital Opportunity	439,000	559,000	686,000
Developing Technologies	12,000	62,000	(b)
Diversified Mid-Cap Growth	(c)	(c)	(c)
Diversified Small-Cap Growth	272,000	480,000	679,000
Dividend Growth	3,176,000	3,676,000	4,010,000
Emerging Markets Bond	1,416,000	1,205,000	1,408,000
Equity Income(a)	58,414,000	57,395,000	58,470,000
Equity Index 500	3,708,000	3,554,000	6,234,000
Extended Equity Market Index(d)	287,000	300,000	354,000
Financial Services	1,973,000	2,122,000	1,388,000
Global Technology	317,000	569,000	274,000
Growth & Income	11,391,000	14,691,000	18,013,000
Growth Stock(a)	23,442,000	27,400,000	33,072,000
Health Sciences	5,306,000	5,675,000	4,403,000
Institutional Large-Cap Core Growth	(c)	(c)	(c)
Institutional Large-Cap Growth	(b)	(b)	(c)
Institutional Large-Cap Value	(b)	(b)	(b)
Institutional Mid-Cap Equity Growth	1,731,000	1,704,000	1,896,000
Institutional Small-Cap Stock	2,158,000	1,624,000	432,000
International Bond(e)	5,964,000	5,245,000	4,686,000
Media & Telecommunications	3,224,000	4,885,000	7,174,000
Mid-Cap Growth(a)	41,271,000	42,179,000	39,493,000
Mid-Cap Value(a)	5,810,000	2,445,000	1,495,000
New America Growth	6,113,000	8,612,000	11,988,000
New Era	6,008,000	6,414,000	6,223,000
New Horizons	27,637,000	36,074,000	45,642,000
Real Estate	518,000	207,000	589,000
Science & Technology(e)	27,433,000	46,472,000	89,979,000
Small-Cap Stock(e)	26,755,000	20,306,000	15,623,000
Small-Cap Value(e)	17,130,000	11,370,000	8,294,000
Spectrum Growth	(f)	(f)	(f)
Spectrum Income	(f)	(f)	(f)
Spectrum International	(f)	(f)	(f)
Total Equity Market Index(d)	737,000	766,000	863,000
Value(e)	8,899,000	8,231,000	5,644,000

PAGE 243

(a) The fund has three classes of shares. The management fee is allocated to each class based on relative net assets.

(b) Due to the fund`s expense limitation in effect at that time, no management fees were paid by the fund to the investment manager.

(d) The fee includes investment management fees and administrative expenses.

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

(f) The fund does not pay an investment management fee.

Expense Limitations and Reimburseme nts

The following chart sets forth contractual expense ratio limitations and the periods for which they are effective. For each, the Investment Manager s ha ve 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 expenses borne by the Investmen t M anager s are subject to reimbursement by the fund s through the indicated reimbursement date, provided no reimbursement will be made if it would result in the fund s ` expense ratio s exceeding t heir applicable limitation s .

Fund	Limitation Period	Expense Ratio Limitation	Reimbursement Date
Blue Chip Growth Fund — Advisor Class ( a )	January 1, 200 4 — April 30, 2006	1.05%	April 30 , 200 8
Blue Chip Growth Fund — R Class	September 30, 2002 — April 30, 200 4	1.35%	April 30, 200 6
C alifornia Tax-Free Money(b )	March 1, 200 3 — June 30 , 200 5	0.55%	June 30, 2007
Corporate Income( c)	June 1, 200 3 — September 30 , 200 5	0.80%	September 30, 2007
Developing Technologies(d)	January 1 , 2003 — April 30, 2005	1.50 %	April 30, 2007
Diversified Mid-Cap Growth	December 31, 2003 — April 30, 2006	1.25%	(e)
Diversified Small-Cap Growth	May 1, 2002 — April 30, 2004	1.25%	April 30, 2006
Emerging Europe & Mediterranean ( f )	November 1 , 200 2 — February 28, 2005	1.75%	February 28, 2007
Equity Income Fund — Advisor Class ( g )	January 1, 200 4 — April 30, 200 6	1.00%	April 30, 200 8
Equity Income Fund — R Class	September 30, 2002 — April 30, 200 4	1.30%	April 30, 200 6
Equity Index 500( h )	May 1, 200 5 — April 30, 200 6	0.35%	April 30, 200 8
Georgia Tax-Free Bond	March 1, 2001 — February 28, 2003	0.65%	February 28, 2005
Global Stock( i )	November 1, 200 3 — February 28, 200 6	1.20%	February 29 , 200 8
Global Technology( j )	January 1, 2003 — April 30, 2005	1.50 %	April 30, 2007
Growth Stock Fund — Advisor Class ( k )	January 1, 200 4 — April 3 0 , 200 6	1.10%	Ap r il 3 0 , 200 8
Growth Stock Fund — R Class	September 30, 2002 — April 30, 200 4	1.35%	April 30, 200 6
Inflation Protected Bond	October 31, 2002 — September 30, 2004	0.50%	September 30, 2006
Institutional Large-Cap Core Growth	September 30, 2003 — April 30, 2005	0.65%	April 30, 2007
Institutional Large-Cap Growth ( l )	January 1 , 2003 — April 3 0 , 200 5	0.65%	April 3 0 , 200 7
Institutional Large-Cap Value ( m )	January 1, 200 4 — April 3 0 , 200 6	0.65%	April 3 0 , 200 8
Institutional Small-Cap Stock	January 1, 2002 — December 31, 200 3	0.75%	December 31, 200 5
International Bond Fund — Advisor Class ( n )	January 1, 200 4 — Ap r il 3 0 , 200 6	1.15%	Ap r il 3 0 , 200 8
International Growth & Income( o )	November 1 , 200 2 — February 28, 2005	1.25%	February 28, 2007
International Growth & Income Fund — Advisor Class ( p )	March 1 , 200 4 — February 28, 200 6	1.15%	February 2 9 , 200 8
International Growth & Income Fund — R Class ( q )	March 1 , 200 4 — February 28, 200 6	1.40%	February 2 9 , 200 8
International Stock Fund — Advisor Class ( r )	November 1, 2003 — February 28 , 200 6	1.15%	February 29 , 200 8
International Stock Fund — R Class ( s )	March 1 , 200 4 — February 28, 200 6	1.40%	February 2 9 , 200 8
Maryland Short-Term Tax-Free Bond	March 1, 2001 — February 28, 2003	0.60%	February 28, 2005
Maryland Tax-Free Money ( t )	March 1 , 200 3 — June 30, 2005	0.55%	June 30, 2007
Mid-Cap Growth Fund — Advisor Class ( u )	January 1, 200 4 — April 3 0 , 200 6	1.10%	Ap r il 3 0 , 200 8
Mid-Cap Growth Fund — R Class	September 30, 2002 — April 30, 200 4	1. 40 %	April 30, 200 6
Mid-Cap Value Fund — Advisor Class	September 30, 2002 — April 30, 200 4	1. 10 %	April 30, 200 6
Mid-Cap Value Fund — R Class	September 30, 2002 — April 30, 200 4	1. 40 %	April 30, 200 6
New Income Fund — Advisor Class	September 30, 2002 — September 30, 2004	0.90%	September 30, 2006
New Income Fund — R Class	September 30, 2002 — September 30, 2004	1.15%	September 30, 2006
New York Tax-Free Money	March 1, 2001 — February 28, 2003	0.55%	February 28, 2005
Personal Strategy Balanced	November 1, 2002 — September 30, 2004	0.90%	September 30, 2006
Personal Strategy Growth ( v )	June 1, 2002 — September 30, 2004	1.00%	September 30, 2006
Personal Strategy Income ( w )	June 1, 2002 — September 30, 2004	0.80%	September 30, 2006
Real Estate( x )	January 1, 200 4 — April 3 0 , 200 6	0 . 9 0%	April 3 0 , 200 8
Science & Technology Fund — Advisor Class ( y )	January 1, 200 4 — April 3 0 , 200 6	1.15%	April 3 0 , 200 8
Short-Term Bond( z )	June 1, 2002 — September 30 , 2004	0.55%	September 30, 2006
Small-Cap Stock Fund — Advisor Class ( aa )	January 1, 200 4 — April 3 0 , 200 6	1.20%	April 3 0 , 200 8
Small-Cap Value Fund — Advisor Class ( bb )	J anuary 1, 200 4 — April 3 0 , 200 6	1.15%	April 3 0 , 200 8
Tax-Efficient Multi-Cap Growth ( cc )	M arch 1, 200 4 — June 30 , 200 6	1.25%	June 30 , 200 8
Tax-Free Income Fund — Advisor Class	September 30, 2002 — June 30, 2004	0.90%	June 30, 2006
Value Fund — Advisor Class ( dd )	January 1, 200 4 — April 3 0 , 200 6	1.10%	April 3 0 , 200 8

PAGE 245

(a) The Blue Chip Growth Fund — Advisor Class previously operated under a 1 . 0 5% limitation that expired December 31, 200 3 . The reimbursement period for this limitation extends through December 31 , 200 5 .

( b ) The California Tax-Free Money Fund previously operated under a 0.55% limitation that expired February 28, 200 3 . The reimbursement period for this limitation extends through February 28, 200 5 .

( c ) The Corporate Income Fund previously operated under a 0.80% limitation that expired May 31, 200 3 . The reimbursement period for this limitation extends through May 31, 200 5 .

(d) The Developing Technologies Fund previously operated under a 1.50% limitation that expired December 31, 2002. The reimbursement period for this limitation extends through December 31, 2004.

( e ) No reimbursement will be made more than three years after any waiver or payment.

( f) The Emerging Europe & Mediterranean Fund previously operated under a 1.75% limitation that expired October 31, 2002. The reimbursement period for this limitation extends through October 31, 2004.

( g ) The Equity Income Fund — Advisor Class previously operated under a l.00% limitation that expired December 31, 2003. The reimbursement period for this limitation extends through December 31, 2005.

( h ) The Equity Index 500 Fund previously o perated under a 0. 3 5% limitation that expired December 31, 200 3 . The reimbursement period for this limitation extends through December 31, 200 5 .

(i) The Global Stock Fund previously operated under a 1.20% limitation that expired October 31, 200 3 . The reimbursement period for this limitation extends through October 31, 200 5 .

(j) The Global Technology Fund previously operated under a 1.50% limitation that expired December 31, 2002. The reimbursement period for this limitation extends through December 31, 200 4 .

(k) The Growth Stock Fund — Advisor Class previously operated under a 1 . 10 % limitation that expired December 31, 200 3 . The reimbursement period for this limitation extends through December 31 , 200 5 .

( l ) The Institutional Large-Cap Growth Fund previously operated under a 0.65% limitation that expired December 31 , 200 2 . The reimbursement period for this limitation extends through December 3 1 , 200 5 .

(m) The Institutional Large-Cap Value Fund previously operated under a 0.65% limitation that expired December 31, 200 3 . The reimbursement period for this limitation extends through December 31, 200 5 .

(n) The International Bond Fund — Advisor Class previously operated under a 1 . 1 5% limitation that expired December 31, 200 3 . The reimbursement period for this limitation extends through December 31 , 200 5 .

( o ) The International Growth & Income Fund previously operated under a 1.25% limitation that expired October 31, 2002. The reimbursement period for this limitation extends through October 31, 2004.

( p ) The International Growth & Income Fund — Advisor Class previously operated under a 1.15% limitation that expired February 28, 2004. The reimbursement period for this limitation extends through February 28, 2006.

( q ) The International Growth & Income Fund — R Class previously operated under a 1.40% limitation that expired February 28, 2004. The reimbursement period for this limitation extends through February 28, 2006.

( r ) The International Stock Fund — Advisor Class previously operated under a 1.15% limitation that expired October 31, 2003. The reimbursement period for this limitation extends through October 31, 2005.

( s ) The International Stock Fund — R Class previously operated under a 1. 40 % limitation that expired October 31, 2003. The reimbursement period for this limitation extends through October 31, 2005.

( t ) The Maryland Tax-Free Money Fund previously operated under a 0.55% limitation that expired February 28, 2003. The reimbursement period for this limitation extends through February 28, 2005 .

( u ) The Mid-Cap Growth Fund — Advisor Class previously operated under a 1.10% limitation that expired December 3 1, 200 3 . The reimbursement period for this limitation extends through December 31, 200 5 .

( v) The Personal Strategy Growth Fund previously operated under a 1.10% limitation that expired May 31, 2002. The reimbursement period for this limitation extends through May 31, 2004.

( w) The Personal Strategy Income Fund previously operated under a 0.90% limitation that expired May 31, 2002. The reimbursement period for this limitation extends through May 31, 2004.

( x ) The Real Estate Fund previously operated under a 1.00% limitation that expired December 31, 200 3 . The reimbursement period for this limitation extends through December 31, 200 5 .

( y ) The Science & Technology 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.

(z) The Short-Term Bond Fund previously operated under a 0.55% limitation that expired May 31, 2002. The reimbursement period for this limitation extends through May 31, 2004.

( aa ) The Small-Cap Stock Fund — Advisor Class previously operated under a 1.20% limitation that expired December 31, 200 3 . The reimbursement period for this limitation extends through December 31, 200 5 .

( bb ) The Small-Cap Value Fund — Advisor Class previously operated under a 1.15% limitation that expired December 31, 200 3 . The reimbursement period for this limitation extends through December 31, 200 5 .

(cc) The Tax-Efficient Multi-Cap Growth Fund previously operated under a 1.25% limitation that expired February 28, 200 4 . The reimbursement period for this limitation extends through February 29, 200 6 .

( dd ) The Value Fund — Advisor Class previously operated under a 1.10% limitation that expired December 31, 200 3 . The reimbursement period for this limitation extends through December 31, 200 5 .

The Investment Management Agreement s between the funds and the Investment Managers provide that the funds will bear all expenses of its operations not specifically assumed by the Investment Managers.

For the purpose of determining whether a fund is entitled to reimbursement, the expenses of a fund are calculated on a monthly basis. If a fund is entitled to reimbursement, that month`s advisory fee will be reduced or postponed, with any adjustment made after the end of the year.

Except for the California and New York F unds, e ach 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 s may reimburse the I nvestment M anager s , provided the reimbursement does not result in the fund s ` aggregate expenses exceeding the additional expense limitation. No reimbursement may be made for the California and New York Funds unless approved by shareholders.

California Tax-Free Mone y Fund Pursuant to the f und`s previous expense limitation, $ 74 ,000 of management fees were not accrued by the fund for the year ended February 28, 2003. At February 28, 2003 , unaccrued management fees aggregate $155,000 remain subject to reimbursement by the fund through February 28, 200 5 .

Corporate Income Fund Pursuant to the f und`s current expense limitation, $1 0 9 ,000 of management fees were not accrued by the fund for the year ended May 31, 200 3 . U naccrued fees in the amount of $2 1 3 ,000 remain subject to reimbursement by the fund through May 31, 200 5 .

Developing Technologies Fund Pursuant to the f und`s current expense limitation, $1 75 ,000 of management fees were not accrued by the fund for the period ended December 31, 200 2 . At December 31, 200 2 , unaccrued fees and other expenses in the amount of $ 374 ,000 remain subject to reimbursement by the fund through December 31, 2004.

Diversified Small-Cap Growth Fund Pursuant to the f und`s previous expense limitation, $1 26 ,000 of unaccrued fees remain subject to reimbursement by the fund through December 31, 2002. At December 31, 2002 unaccrued fees in the amount of $126,000 remain subject to reimbursement by the fund through April 30, 2006.

Emerging Europe & Mediterranean Fund At October 31, 2003, management fees waived and expenses previously reimbursed by the manager remain subject to repayment by the fund in the amount of $369,000 through October 31, 2004, and $74,000 through February 28, 2007.

Equity Index 500 Fund Pursuant to the f und`s previous expense limitation, $ 8 66 ,000 of management fees were not accrued by the fund for the year ended December 31, 200 2 . At December 31, 200 2 , unaccrued fees in the amount of $ 2 , 689 ,000 remain subject to reimbursement by the fund through December 31, 200 4 .

Georgia Tax-Free Bond Fund Pursuant to the f und`s previous expense limitation s , $ 5 ,000 of previously unaccrued management fees were accrued as expenses of the fund during the year ended February 28, 2003. At February 28, 2003 , unaccrued management fees in the amount of $1 0 ,000 remain subject to reimbursement by the fund through February 28, 200 5 .

Global Stock Fund At October 31, 2003, management fees waived remain subject to repayment by the fund in the amount of $277,000 through October 31, 2005 .

PAGE 247

Global Technology Fund Pursuant to the f und`s current expense limitation, $185,000 of management fees were not accrued by the fund for the year ended December 31, 200 2 At December 31, 2002 , unaccrued fees in the amount of $371,000 remain subject to reimbursement by the fund through December 31, 2004 .

Inflation Protected Bond Fund Pursuant to the f und`s current expense limitation, $28,000 of management fees were not accrued by the fund for the year ended May 31, 2003, and $87,000 of other fund expenses were borne by the manager. At May 31, 2003, unaccrued management fees and other expenses in the amount of $115,000 remain subject to reimbursement by the fund through September 30, 2006.

Institutional Large-Cap Growth Fund Pursuant to the f und`s current expense limitation, $2 0 ,000 of management fees were not accrued by the fund for the period ended December 31, 200 2 , and $ 96 ,000 of other fund expenses were borne by the manager. At December 31, 200 2 , unaccrued fees and other expenses in the amount of $ 1 33 ,000 remain subject to reimbursement by the fund through December 31, 2004.

Institutional Large-Cap Value Fund Pursuant to the f und`s current expense limitation, $ 2 1 ,000 of management fees were not accrued by the fund for the period ended December 31, 200 2 , and $ 90 ,000 of other fund expenses were borne by the manager. At December 31, 200 2 , unaccrued fees and other expenses in the amount of $179,000 remain subject to reimbursement by the fund through December 31, 2003 and $ 1 11,000 through December 31, 2005 .

Institutional Small-Cap Stock Fund Pursuant to the f und`s current expense limitation, $ 68 ,000 of previously unaccrued management fees were accrued as expenses of the fund for the period ended December 31, 200 2, of which $5,000 was payable at period-end .

International Growth & Income Fund At October 31, 2003, management fees waived and expenses previously reimbursed by the manager remain subject to repayment in the following amounts: $352,000 through October 31, 2004, $74,000 through February 28, 2006, and $112,000 through February 28, 2007 .

International Stock Fund-R Class At October 31, 2003, expenses previously reimbursed by the manager remain subject to repayment in the amount of $1,000 through February 28, 2006. For the year ended October 31, 2003, the Advisor Class operated below its expense limitation.

Maryland Tax-Free Money Fund Pursuan t to the fund`s previous expense limitation, $ 7 3,000 of management fees were not accrued by the fund for the year ended February 28, 2003 . At February 28, 2003 , unaccrued management fees in the amount of $166,000 remain subject to reimbursement by the fund through February 28, 2005.

New York Tax-Free Money Fund Pursuan t to the fund`s previous expense limitation , $ 55 ,000 of management fees were not accrued by the fund for the year ended February 28, 2003. At February 28, 2003 , unaccrued management fees aggregate $118,000 remain subject to reimbursement by the fund through February 28, 2005.

Real Estate Fund Pursuan t to the fund`s current expense limitation, $1 22 ,000 of management fees were not accrued by the fund for the year ended December 31, 200 2 . At December 31, 200 2 , unaccrued fees in the amount of $284,000 remain subject to reimbursement by the fund through December 31, 2003 , and $122,000 through December 31, 2005 .

Personal Strategy Balanced Fund Pursuan t to the fund`s current expense limitation, $569,000 of management fees were not accrued by the fund for the year ended May 31, 2003. At May 31, 2003, unaccrued management fees in the amount of $569,000 remain subject to reimbursement by the fund through September 30, 2006.

Personal Strategy Growth Fund Pursuan t to the fund`s current expense limitation, $ 502 ,000 of management fees were not accrued by the fund for the year ended May 31, 200 3 . At May 31, 200 3 , unaccrued management fees in the amount of $ 118 ,000 remain subject to reimbursement by the fund through 2004 , and $502,000 through 2006 .

Personal Strategy Income Fund Pursuan t to the fund`s current expense limitation, $ 488 ,000 of management fees were not accrued by the fund for the year ended May 31, 200 3 . At May 31, 200 3 , unaccrued management fees in the amount of $ 488, 000 remain subject to reimbursement by the fund through September 30, 2006, and $2 2 5,000 through May 31, 2004.

Short-Term Bond Fund Pursuan t to the fund`s current expense limitation, $ 688 ,000 of management fees were not accrued by the fund for the year ended May 31, 200 3 . At May 31, 200 3 , unaccrued management fees in the amount of $ 961 ,000 remain subject to reimbursement by the fund through May 31, 2004 , and $688,000 through September 30, 2006 .

Tax-Efficient Multi-Cap Growth Fund Pursuan t to the fund`s present expense limitation, $ 101 ,000 of management fees were not accrued by the fund for the year ended February 28, 2003 . At February 28, 2003, unaccrued fees and other expenses in the amount of $101,000 remain subject to reimbursement by the fund through February 28, 2006, and $137,000 through February 2 9 , 2004.

Management Related Services

In addition to the management fee, the funds pay 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 s` fees and expenses.

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 s . The fees paid by the fund s 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.

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

Fund	Fiscal Year Ended
	2/28/03	2/28/02	2/29/01
California Tax-Free Bond	$ 64,000	$ 64,000	$ 6 2 ,000
California Tax-Free Money	64,000	64,000	63,000
Florida Intermediate Tax-Free	64,000	64,000	63,000
Georgia Tax-Free Bond	64,000	64,000	63,000
Maryland Short-Term Tax-Free Bond	64,000	64,000	63,000
Maryland Tax-Free Bond	84,000	84,000	84,000
Maryland Tax-Free Money	64,000	59,000	(a)
New Jersey Tax-Free Bond	64,000	64,000	63,000
New York Tax-Free Bond	64,000	64,000	62,000
New York Tax-Free Money	64,000	64,000	63,000
Tax-Efficient Balanced	84,000	84,000	87,000
Tax-Efficient Growth	64,000	64,000	64,000
Tax-Efficient Multi-Cap Growth	64,000	64,000	11,000
Tax-Exempt Money	97,000	95,000	98,000
Tax-Free High Yield	104,000	104,000	102,000
Tax-Free Income	109,000	104,000	102,000
Tax-Free Income Fund — Advisor Class	0	(a)	(a)
Tax-Free Intermediate Bond	64,000	64,000	63,000
Tax-Free Short-Intermediate	64,000	64,000	59,000
Virginia Tax-Free Bond	64,000	64,000	63,000

( a ) Prior to commencement of operations .

PAGE 249

Fund	Fiscal Year Ended
	5/31/03	5/31/02	5/31/01
Corporate Income	$ 92,000	$ 84,000	$ 84,000
GNMA	104,000	104,000	104,000
Government Reserve Investment	64,000	64,000	64,000
High Yield	116,000	1 36 ,000	1 42 ,000
High Yield Fund — Advisor Class	21,000	3,000	(a)
Inflation Protected Bond	61,000	0	0
Institutional High Yield	104,000	0	0
New Income	130,000	109,000	106,000
New Income Fund — Advisor Class	0	(b)	(b)
New Income Fund — R Class	0	(b)	(b)
Personal Strategy Balanced	93,000	85,000	85,000
Personal Strategy Growth	93,000	84,000	84,000
Personal Strategy Income	93,000	8 5 ,000	8 4 ,000
Prime Reserve	93,000	98,000	98,000
Reserve Investment	72,000	64,000	64,000
Retirement 2005	(b)	(b)	(b)
Retirement 2010	(c)	(b)	(b)
Retirement 2010 Fund — Advisor Class	(b)	(b)	(b)
Retirement 2010 Fund — R Class	(b)	(b)	(b)
Retirement 2015	(b)	(b)	(b)
Retirement 2020	(c)	(b)	(b)
Retirement 2020 Fund — Advisor Class	(b)	(b)	(b)
Retirement 2020 Fund — R Class	(b)	(b)	(b)
Retirement 2025	(b)	(b)	(b)
Retirement 2030	(c)	(b)	(b)
Retirement 2030 Fund — Advisor Class	(b)	(b)	(b)
Retirement 2030 Fund — R Class	(b)	(b)	(b)
Retirement 2035	(b)	(b)	(b)
Retirement 2040	(c)	(b)	(b)
Retirement 2040 Fund — Advisor Class	(b)	(b)	(b)
Retirement 2040 Fund — R Class	(b)	(b)	(b)
Retirement Income	(c)	(b)	(b)
Short-Term Bond	84,000	84,000	84,000
U.S. Treasury Intermediate	64,000	64,000	64,000
U.S. Treasury Long-Term	64,000	64,000	64,000
U.S. Treasury Money	64,000	64,000	64,000

(a) Less than $1,000.

(b) Prior to commencement of operations.

Fund	Fiscal Year Ended
	10/31/03	10/31/02	10/31/01
Emerging Europe & Mediterranean	$ 87,000	$ 104,000	105,000
Emerging Markets Stock	88,000	104,000	104,000
European Stock	10 7 ,000	107,000	107,000
Global Stock Fund	87,000	104,000	104,000
Institutional Emerging Markets Equity	84,000	(b)	(b)
Institutional Foreign Equity	108,000	109,000	108,000
International Discovery	106,000	106,000	108,000
International Equity Index	107,000	124,000	114,000
International Growth & Income	108,000	104,000	104,000
International Growth & Income Fund — Advisor Class	(a)	0	(b)
International Growth & Income Fund — R Class	(a)	0	(b)
International Stock	144,000	138,000	142,000
International Stock Fund — Advisor Class	(a)	(a)	(a)
International Stock Fund — R Class	(a)	0	(b)
Japan	68,000	84,000	85,000
Latin America	88,000	104,000	104,000
New Asia	90,000	105,000	105,000
Summit Cash Reserves	81,000	64,000	64,000
Summit GNMA	81,000	64,000	64,000
Summit Municipal Income	64,000	64,000	64,000
Summit Municipal Intermediate	64,000	64,000	64,000
Summit Municipal Money Market	64,000	64,000	64,000
U.S. Bond Index	84,000	84,000	77,000

(a) Less than $1,000.

(b) Prior to commencement of operations.

Fund	Fiscal Year Ended
	12/31/02	12/31/01	12/31/00
Balanced	$ 8 6 ,000	$ 86 ,000	$ 8 5 ,000
Blue Chip Growth	7 7 ,000	7 6 ,000	7 5 ,000
Blue Chip Growth Fund — Advisor Class	7 ,000	3 ,000	( a )
Blue Chip Growth Fund — R Class	0	(b)	(b)
Capital Appreciation	64,000	64,000	64,000
Capital Opportunity	64,000	64,000	64,000
Equity Income	9 8 ,000	9 9 ,000	9 5 ,000
Equity Income Fund — Advisor Class	5,000	( a )	( a )
Equity Income Fund — R Class	0	(b)	(b)
Equity Index 500	65,000	65,000	65,000
Developing Technologies	64 ,000	64 ,000	21 ,000
Diversified Mid-Cap Growth	(b)	(b)	(b)
Diversified Small-Cap Growth	64,000	64,000	64,000
Dividend Growth	64,000	64,000	64,000
Emerging Markets Bond	105,000	105,000	104,000
Extended Equity Market Index	6 4 ,000	6 5 ,000	6 4 ,000
Financial Services	64,000	6 4 ,000	64,000
Global Technology	84 ,000	84 ,000	21 ,000
Growth & Income	84,000	84,000	84,000
Growth Stock	1 2 4,000	1 0 4,000	1 0 4,000
Growth Stock Fund — Advisor Class	0	0	(b)
Growth Stock Fund — R Class	0	0	(b)
Health Sciences	64,000	64,000	64,000
Institutional Large-Cap Core Growth	(b)	(b)	(b)
Institutional Large-Cap Growth	64 ,000	11,000	( a )
Institutional Large-Cap Value	64 ,000	64 ,000	48 ,000
Institutional Mid-Cap Equity Growth	64,000	64,000	64,000
Institutional Small-Cap Stock	64 ,000	64 ,000	48 ,000
International Bond	119,000	120,000	116,000
International Bond Fund — Advisor Class	1,000	0	0
Media & Telecommunications	64,000	64,000	64,000
Mid-Cap Growth	8 3 ,000	8 0 ,000	75 ,000
Mid-Cap Growth Fund — Advisor Class	0	( a )	( a )
Mid-Cap Growth Fund — R Class	0	(b)	(b)
Mid-Cap Value	73 ,000	64 ,000	64 ,000
Mid-Cap Value Fund — Advisor Class	0	(b)	(b)
Mid-Cap Value Fund — R Class	0	(b)	(b)
New America Growth	64,000	64,000	64,000
New Era	64,000	64,000	64,000
New Horizons	84,000	84,000	84,000
Real Estate	64,000	64,000	64,000
Science & Technology	7 1 ,000	7 2 ,000	7 5 ,000
Science & Technology Fund — Advisor Class	8 ,000	7 ,000	2 ,000
Small-Cap Stock	9 7 ,000	9 8 ,000	9 5 ,000
Small-Cap Stock Fund — Advisor Class	2 ,000	1,000	( a )
Small-Cap Value	7 7 ,000	7 9 ,000	7 5 ,000
Small-Cap Value Fund — Advisor Class	2,000	( a )	( a )
Spectrum Growth	(c)	(c)	(c)
Spectrum Income	(c)	(c)	(c)
Spectrum International	(c)	(c)	(c)
Total Equity Market Index	64,000	64,000	64,000
Value	7 7 ,000	7 9 ,000	7 5 ,000
Value Fund — Advisor Class	2,000	(a)	2,000

PAGE 251

( a ) Less than $1,000.

( b ) Prior to commencement of operations .

other shareholder services

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 funds have 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 2003.

Fund	Paym e n t
Balanced	$ 296,992
Blue Chip Growth	654,547
Capital Appreciation	171,622
California Tax-Free Bond	209
California Tax-Free Money	1
Capital Opportunity	1, 530
Corporate Income	256
Developing Technologies	40
Diversified Mid-Cap Growth	0
Diversified Small-Cap Growth	32
Dividend Growth	8,432
Emerging Europe & Mediterranean	11
Emerging Markets Bond	1,203
Emerging Markets Stock	30,086
Equity Income	1, 002 , 712
Equity Index 500	107,009
European Stock	16 , 089
Extended Equity Market Index	0
Financial Services	14 , 602
Florida Intermediate Tax-Free	308
Georgia Tax-Free Bond	136
GNMA	11, 503
Government Reserve Investment	0
Global Stock	483
Global Technology	57
Growth & Income	1 6 , 608
Growth Stock	82 , 98 2
Health Sciences	137 , 951
High Yield	116 , 844
Inflation Protected Bond	502
Institutional Emerging Market Equity	0
Institutional Foreign Equity	0
Institutional High Yield	0
Institutional Large-Cap Core Growth	0
Institutional Large-Cap Growth	0
Institutional Large-Cap Value	0
Institutional Mid-Cap Equity Growth	0
Institutional Small-Cap Stock	0
International Bond	76 , 913
International Discovery	66,456
International Equity Index	0
International Growth & Income	37
International Stock	586,099
Japan	1,129
Latin America	1 0, 707
Maryland Short-Term Tax-Free Bond	2,193
Maryland Tax-Free Bond	8,806
Maryland Tax-Free Money	0
Media & Telecommunications	5,108
Mid-Cap Growth	2 , 043 , 403
Mid-Cap Value	131,200
New America Growth	8 5 , 405
New Asia	30,870
New Era	2 9 , 711
New Horizons	255,013
New Income	28 , 291
New Jersey Tax-Free Bond	68
New York Tax-Free Bond	831
New York Tax-Free Money	3
Personal Strategy Balanced	78,053
Personal Strategy Growth	59,877
Personal Strategy Income	31,511
Prime Reserve	35,565
Real Estate	842
Reserve Investment	0
Retirement 2005	(a)
Retirement 2010	94
Retirement 2015	(a)
Retirement 2020	41
Retirement 2025	(a)
Retirement 2030	52
Retirement 2035	(a)
Retirement 2040	29
Retirement Income	44
Science & Technology	289,898
Short-Term Bond	4,697
Small-Cap Stock	1, 288 , 440
Small-Cap Value	359,993
Spectrum Growth	46,960
Spectrum Income	611,454
Spectrum International	128
Summit Cash Reserves	0
Summit GNMA	0
Summit Municipal Money Market	0
Summit Municipal Intermediate	0
Summit Municipal Income	0
Tax-Efficient Balanced	58
Tax-Efficient Growth	0
Tax-Efficient Multi-Cap Growth	27
Tax-Exempt Money	92
Tax-Free High Yield	5,340
Tax-Free Income	7,923
Tax-Free Intermediate Bond	544
Tax-Free Short-Intermediate	7,205
Total Equity Market Index	0
U.S. Bond Index	0
U.S. Treasury Intermediate	3,308
U.S. Treasury Long-Term	369
U.S. Treasury Money	36 , 835
Value	153,830
Virginia Tax-Free Bond	2,026

PAGE 253

( a ) Prior to commencement of operations .

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 this AFP program, the funds paid the amounts set forth below to various third parties in calendar year 200 3 .

Fund	Payment
Blue Chip Growth Fund — Advisor Class	$ 625 , 594
Blue Chip Growth Fund — R Class	334
Equity Income Fund — Advisor Class	1,018 , 736
Equity Income Fund — R Class	15,011
Growth Stock Fund — Advisor Class	26,461
Growth Stock Fund — R Class	2,111
High Yield Fund — Advisor Class	480,553
International Bond Fund — Advisor Class	17,002
International Growth & Income Fund — Advisor Class	1,288
International Growth & Income Fund — R Class	196
International Stock Fund — Advisor Class	1,942
International Stock Fund — R Class	130
Mid-Cap Growth Fund — Advisor Class	88,198
Mid-Cap Growth Fund — R Class	13,961
Mid-Cap Value Fund — Advisor Class	17,045
Mid-Cap Value Fund — R Class	3,300
New Income Fund — Advisor Class	11
New Income Fund — R Class	259
Retirement 2010 Fund — Advisor Class	0
Retirement 2010 Fund — R Class	0
Retirement 2020 Fund- — Advisor Class	0
Retirement 2020 Fund — R Class	0
Retirement 2030 Fund — Advisor Class	0
Retirement 2030 Fund — R Class	0
Retirement 2040 Fund — Advisor Class	0
Retirement 2040 Fund — R Class	0
Retirement Income Fund — Advisor Class	0
Retirement Income Fund — R Class	0
Science & Technology Fund — Advisor Class	496 ,156
Small-Cap Stock Fund — Advisor Class	156 ,696
Small-Cap Value Fund — Advisor Class	203 ,793
Tax-Free Income Fund — Advisor Class	51 ,353
Value Fund — Advisor Class	53 ,576

PAGE 255

529 P lans

T. Rowe Price is the investment manager of several college savings plans established by states under section 529 of the Internal Revenue Code. Each plan has a number of portfolios that invest in underlying Price F unds including Blue Chip Growth, Equity Index 500, International Growth & Income, International Stock, Mid-Cap Growth, New Income, Short-Term Bond, Small-Cap Stock, Summit Cash Reserves, and Value Funds . Each portfolio establishes an omnibus account in the underlying Price F unds. Transfer agent and recordkeeping expenses incurred by the portfolios as a result of transactions by participants in the 529 plans that invest in the Price F u nds are paid for by the underlying Price F unds under their agreement with their transfer agent, T. Rowe Price Services, Inc.

Control of Investment Advis e r

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

DISTRIBUTOR FOR THE FUND S

Investment Services, a Maryland corporation formed in 1980 as a wholly owned subsidiary of T. Rowe Price, serves as 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. ( "NASD" )

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

Investment Services serves as distributor to the f und s , pursuant to an Underwriting Agreement ( "Underwriting Agreement" ), which provides that the funds (other than the single-fee funds) , 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. For the single-fee funds , the Underwriting Agreement provides that Investment Services will pay , or will arrange for others to pay, all of these fees and expenses.

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 funds. Investment Services` expenses are paid by T. Rowe Price.

Investment Services acts as the agent of the fund s , 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 s . No compensation is paid to Investment Services.

Advisor and R Classes

Distribution and Shareholder Services Plan

The fund d irectors adopted a p lan pursuant to Rule 12b-1 with respect to each Advisor Class and each R Class (collectively "Class" ) . Each Plan provides that the Class may compensate Investment Services or such other

persons as the fund s 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 p lan will be made (either directly, or indirectly through Investment Services) to brokers, dealers, banks, insurance companies, and intermediaries other than Investment Services. Under the p lan, each Advisor Class pays a fee at the annual rate of up to 0.25% of that class`s average daily net assets and each R Class pays a fee at the annual rate of up to 0.50% 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 p lan complies with these rules.

The p lan 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.

Prior to approving the p lan, the fund s considered various factors relating to the implementation of the p lan and determined that there is a reasonable likelihood that the p lan will benefit each fund, its Class, and the Class`s shareholders. The fund d irectors noted that to the extent the p lan allows a fund to sell Class shares in markets to which it would not otherwise have access, the p lan 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.

The p lan 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 funds ` independent directors ( "Rule 12b-1 Directors" ) , cast in person at a meeting called for the purpose of voting on such approval. The p lan 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 p lan 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.

The following payments for the fiscal year indicated w ere 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 p lan .

Fund	Fiscal Year Ended 2/28/03
Tax-Free Income Fund — Advisor Class	0

Fund	Fiscal Year Eended 5/31/03
High Yield Fund — Advisor Class	$ 925,000
New Income Fund — Advisor Class	0
New Income Fund — R Class	1,000
Retirement 2010 Fund — Advisor Class	(a)
Retirement 2010 Fund — R Class	(a)
Retirement 2020 Fund — Advisor Class	(a)
Retirement 2020 Fund — R Class	(a)
Retirement 2030 Fund — Advisor Class	(a)
Retirement 2030 Fund — R Class	(a)
Retirement 2040 Fund — Advisor Class	(a)
Retirement 2040 Fund — R Class	(a)
Retirement Income Fund — Advisor Class	(a)
Retirement Income Fund — R Class	(a)

PAGE 257

(a) Prior to commencement of operations

Fund	Fiscal Year Ended 10/31/03
International Growth & Income Fund — Advisor Class	$ 1,000
International Growth & Income Fund — R Class	1,000
International Stock Fund — Advisor Class	35,000
International Stock Fund — R Class	1,000

Fund	Fiscal Year Ended 12/31/02
Blue Chip Growth Fund — Advisor Class	$ 1,144 ,000
Blue Chip Growth Fund — R Class	0
Equity Income Fund — Advisor Class	1, 389, 000
Equity Income Fund — R Class	0
Growth Stock Fund — Advisor Class	0
Growth Stock Fund — R Class	0
International Bond Fund — Advisor Class	23,000
Mid-Cap Growth Fund — Advisor Class	72 ,000
Mid-Cap Growth Fund — R Class	0
Mid-Cap Value Fund — Advisor Class	0
Mid-Cap Value Fund — R Class	0
Science & Technology Fund — Advisor Class	1,133 ,000
Small-Cap Stock Fund — Advisor Class	223 ,000
Small-Cap Value Fund — Advisor Class	219,000
Value Fund — Advisor Class	69 ,000

PORTFOLIO TRANSACTIONS

All funds except International Funds

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 fixed-income 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 (except to the extent that the Corporate Income, High Yield, Institutional High Yield, New Income, and Personal Strategy Funds purchase equity securities) . However, it is included because T. Rowe Price 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.

How Brokers and Dealers Are Selected

Fixed-Income Securities

Fixed-income securities are generally purchased from the issuer or a primary market-maker acting as principal for the securities on a net basis, with no brokerage commission being paid by the client , although the price usually includes an undisclosed compensation. Transactions placed through dealers serving as primary market- makers reflect the spread between the bid and ask prices. Securities may also be purchased from underwriters at prices which include underwriting fees.

Equity Securities

In purchasing and selling equity securities, T. Rowe Price seek s 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. . As a general practice, over-the-counter orders are executed with market-makers through an electronic communications network . In selecting from among market-makers, T. Rowe Price generally seeks to select those it believes to be actively and effectively trading the security being purchased or sold

In selecting broker 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 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.

Equity and Fixed - Income Securities

With respect to equity and fixed-income securities, T. Rowe Price may effect principal transactions on behalf of the fund with a broker or dealer who furnishes brokerage and/or research services benefiting the fund ; 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 may receive research services in connection with brokerage transactions, including designations in fixed - price offerings.

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

On a continuing basis, T. Rowe Price seeks to determine what levels of commission rates are reasonable in the marketplace for transactions executed on behalf of clients . In evaluating the reasonableness of commission rates, T. Rowe Price 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, dollar amount, and number of clients involved ; (e) the complexity of a particular transaction in terms of both execution and settlement; (f) the level and type of business done with a particular firm over a period of time; and (g) the extent to which the broker or dealer has capital at risk in the transaction.

Description of Research Services Received From Brokers and Dealers

T. Rowe Price receives a wide range of research services from brokers and dealers. These services include information on the economy, industries, groups of securities, individual companies, statistical information, accounting and tax law interpretations, political developments, legal developments affecting portfolio securities, technical market action, pricing and appraisal services, credit analysis, risk measurement analysis, performance analysis, and analysis of corporate responsibility issues. These services provide both domestic and international perspective. Research services are received primarily in the form of written reports, computer-generated services, telephone contacts, and personal meetings with security analysts. S uch services may be provided in the form of meetings arranged with corporate and industry spokespersons, economists, academicians, and government representatives. In some cases, research services are generated by third parties but are provided to

PAGE 259

T. Rowe Price by or through broker-dealers. In addition, such services may include computers and related hardware.

Research services received from brokers and dealers are supplemental to T. Rowe Price`s own research effort s and, when utilized, are subject to internal analysis before being incorporated by T. Rowe Price into its investment process. As a practical matter, it would not be possible for T. Rowe Price`s Equity Research Division to generate all of the information presently provided by brokers and dealers. T. Rowe Price pays cash for certain research services received from external sources. T. Rowe Price also allocates brokerage for research services which are available for cash. While receipt of research services from brokerage firms has not reduced T. Rowe Price`s normal research activities, the expenses of T. Rowe Price could be materially increased if it attempted to generate such additional information through its own staff. To the extent that research services of value are provided by brokers or dealers, T. Rowe Price is relieved of expenses which it might otherwise bear.

T. Rowe Price has a policy of not allocating brokerage business in return for products or services other than brokerage or research services. In accordance with the provisions of Section 28(e) of the Securities Exchange Act of 1934, T. Rowe Price may from time to time receive services and products which serve both research and non- research functions. In such event, T. Rowe Price makes a good faith determination of the anticipated research and non-research use of the product or service and allocates brokerage only with respect to the research component.

Directed Brokerage

In 2002, the T. Rowe Price Funds that invest in domestic equity se curities adopted a commission recapture program. Under the program, a percentage of commissions generated by the portfolio transactions of those funds is re bated to the funds by the brokers and used to pay for certain fund operating expenses.

Commissions to Brokers Who Furnish Research Services

Certain brokers and dealers who provide quality brokerage and execution services also furnish research services to T. Rowe Price. With regard to the payment of brokerage commissions, T. Rowe Price has adopted a brokerage allocation policy embodying the concepts of Section 28(e) of the Securities Exchange Act of 1934, which permits an investment adviser to cause an account to pay commission rates in excess of those another broker or dealer would have charged for effecting the same transaction if the adviser determines in good faith that the commission paid is reasonable in relation to the value of the brokerage and research services provided. The determination may be viewed in terms of either the particular transaction involved or the overall responsibilities of the adviser with respect to the accounts over which it exercises investment discretion. Therefore, research may not necessarily benefit all accounts paying commissions to such brokers. Accordingly, while T. Rowe Price cannot readily determine the extent to which commission rates charged by broker-dealers reflect the value of their research services, T. Rowe Price would expect to assess the reasonableness of commissions in light of the total brokerage and research services provided by each particular broker. T. Rowe Price may receive research, as defined in Section 28(e), in connection with selling concessions and designations in fixed - price offerings in which the fund participate s . Such r esearch is used to benefit the accounts that purchase in the offering.

Internal Allocation Procedures

T. Rowe Price has a policy of not precommitting a specific amount of business to any broker or dealer over any specific time period. Historically, the majority of brokerage placement has been determined by the needs of a specific transaction such as market-making, availability of a buyer or seller of a particular security, or specialized execution skills. However, T. Rowe Price does have an internal brokerage allocation procedure for that portion of its discretionary client brokerage business where special needs do not exist, or where the business may be allocated among several brokers or dealers , which are able to meet the needs of the transaction.

Each year, T. Rowe Price assesses the contribution of the brokerage and research services provided by brokers and dealers and attempts to allocate a portion of its brokerage business in response to these assessments. Research analysts, counselors, various investment committees, and the Trading Department each seek to evaluate the brokerage , execution , and research services they receive from brokers and dealers and make judgments as to the level of business which would recognize such services. In addition, brokers and dealers sometimes suggest a level of business they would like to receive in return for the various brokerage and research services they provide. Actual b usiness received by any firm may be less than the suggested allocations but can, and often does, exceed the suggestions because the total business is allocated on the basis of all the

considerations described above. In no case is a broker or dealer excluded from receiving business from T. Rowe Price because it has not been identified as providing research services.

Miscellaneous

T. Rowe Price`s brokerage allocation policy is generally applied to all its fully discretionary accounts, which represent a substantial majority of all assets under management. Research services furnished by brokers or dealers through which T. Rowe Price effects securities transactions may be used in servicing all accounts (including non-fund accounts) managed by T. Rowe Price. Conversely, research services received from brokers or dealers which execute transactions for the fund are not necessarily used by T. Rowe Price exclusively in connection with the management of the fund.

From time to time, orders for clients may be placed through a computerized transaction network.

The fund does not allocate business to any broker-dealer on the basis of its sales of the fund`s shares. However, this does not mean that broker-dealers who purchase fund shares for their clients will not receive business from the fund.

Some of T. Rowe Price`s other clients have investment objectives and programs similar to those of the fund. T. Rowe Price may make recommendations to other clients which result in their purchasing or selling securities simultaneously with the fund. As a result, the demand for securities being purchased or the supply of securities being sold may increase, and this could have an adverse effect on the price of those securities. It is T. Rowe Price`s policy not to favor one client over another in making recommendations or in placing orders. T. Rowe Price frequently follows the practice of grouping orders of various clients for execution , which generally results in lower commission rates being attained. In certain cases, where the aggregate order is executed in a series of transactions at various prices on a given day, each participating client`s proportionate share of such order reflects the average price paid or received with respect to the total order. T. Rowe Price may include the T. Rowe Price Associates Foundation, Inc. and T he T. Rowe Price Program for Charitable Giving, Inc., not for profit entities, in aggregated orders from time to time. T . Rowe Price has established a general investment policy that it will ordinarily not make additional purchases of a common stock f or its clients (including the T. Rowe Price funds) if, as a result of such purchases, 10% or more of the outstanding common stock of the issuer would be held by its clients in the aggregate. For purposes of determining the 10% limit, T. Rowe Price includes securities held by clients of affiliated advisers.

T. Rowe Price may give advice and take action for clients, including investment companies, which differs from advice given or the timing or nature of action taken for other clients. T. Rowe Price is not obligated to initiate transactions for clients in any security that its principals, affiliates, or employees may purchase or sell for their own accounts or for other clients.

Purchase and sale transactions may be effected directly among and between non-ERISA client accounts (including affiliated mutual funds), provided no commission is paid to any broker, the security traded has readily available market quotations, and the transaction is effected at the independent current market price.

At the present time, T. Rowe Price does not recapture commissions or underwriting discounts or selling group concessions in connection with taxable securities acquired in underwritten offerings. T. Rowe Price does, however, attempt to negotiate elimination of all or a portion of the selling group concession or underwriting discount when purchasing tax-exempt municipal securities on behalf of its clients in underwritten offerings.

Trade Allocation Policies

T. Rowe Price has developed written trade allocation guidelines for its Equity, Municipal, and Taxable Fixed - Income Trading Desks. Generally, when the amount of securities available in a public offering or the secondary markets is insufficient to satisfy the volume or price requirements for the participating client portfolios, the guidelines require a pro - rata allocation based upon the relative sizes of the participating client portfolios or the relative sizes of the participating client orders, depending upon the market involved. In allocating trades made on a combined basis, the trading desks seek to achieve the same net unit price of the securities for each participating client. Because a pro - rata allocation may not always adequately accommodate all facts and circumstances, the guidelines provide for exceptions to allocate trades on an adjusted basis. For example, adjustments may be made: (i) to recognize the efforts of a portfolio manager in negotiating a transaction or a private placement; (ii) to eliminate de minimus positions; (iii) to give priority to accounts with specialized

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investment policies and objectives; and (iv) to reallocate in light of a participating portfolio`s characteristics (e.g., available cash, industry or issuer concentration, duration, credit exposure). Also, with respect to private placement transactions, conditions imposed by the issuer may limit availability of allocations to the fund .

International Funds

Investment or Brokerage Discretion

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.

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 pri mary market - maker acting as principal on a net basis, with no brokerage commission being paid by the fund. However, the price of the securities generally includes compensation which is not disclosed separately. Transactions placed through dealers who are serving as primary market - makers reflect the spread between the bid and asked prices.

With respect to equity and fixed-income securities, 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.

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.

Equity Securities

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.

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

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.

Descriptions of Research Services Received From Brokers and Dealers

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 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.

Commissions to Brokers Who Furnish Research Services

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.

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.

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

PAGE 263

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.

All funds

Total Brokerage Commissions

For the fiscal years indicated, the total brokerage commissions paid by each fund, or, in some cases, to each fund, including the discounts received by securities dealers in connection with underwritings, and the percentage of these commissions paid to firms which provided research, statistical, or other services to T. Rowe Price or T. Rowe Price International in connection with the management of each fund that invests in equity securities , are shown below.

Fund	Fiscal Year Ended
	2/28/03	%	2/28/02	%	2/28/01	%
California Tax-Free Bond	$ 182,000	(a)	$ 297,000	(a)	$ 194,000	(a)
California Tax-Free Money	4,000	(a)	19,000	(a)	0	(a)
Florida Intermediate Tax-Free	24,000	(a)	20,000	(a)	30,000	(a)
Georgia Tax-Free Bond	52,000	(a)	61,000	(a)	64,000	(a)
Maryland Short-Term Tax-Free Bond	84,000	(a)	27,000	(a)	6,000	(a)
Maryland Tax-Free Bond	385,000	(a)	484,000	(a)	333,000	(a)
Maryland Tax-Free Money	3,000	(a)	1,000	(a)	( b )	( b )
New Jersey Tax-Free Bond	91,000	(a)	96,000	(a)	91,000	(a)
New York Tax-Free Bond	289,000	(a)	255,000	(a)	206,000	(a)
New York Tax-Free Money	4,000	(a)	1,000	(a)	0	(a)
Tax-Efficient Balanced	4,000	(a)	19,000	(a)	21,000	(a)
Tax-Efficient Growth	18,000	0.0 %	11,000	0.0 %	22,000	0.0 %
Tax-Efficient Multi-Cap Growth	15,000	0.0	11,000	0.39	12,000	0.0
Tax-Exempt Money	69,000	(a)	4,000	(a)	0	(a)
Tax-Free High Yield	1,148,000	(a)	1,586,000	(a)	658,000	(a)
Tax-Free Income	959,000	(a)	1,103,000	(a)	922,000	(a)
Tax-Free Intermediate Bond	87,000	(a)	68,000	(a)	19,000	(a)
Tax-Free Short-Intermediate	172,000	(a)	141,000	(a)	217,000	(a)
Virginia Tax-Free Bond	254,000	(a)	361,000	(a)	129,000	(a)

(a) Percentages are not required for funds that do not invest in equity securities.

(b) Prior to commencement of operations.

Fund	Fiscal Year Ended
	5/31/03	%	5/31/02	%	5/31/01	%
Corporate Income	$ 121,000	94.0	$ 103,000	95.0	$ 103,000	98.0
GNMA	13,000	(a)	0	(a)	0	(a)
Government Reserve Investment	(b)	(b)	(b)	(b)	(b)	(b)
High Yield	14,294,000	86.0	9,189,000	82.0	7,746,000	87.0
Inflation Protected Bond	121,000	(a)	( c )	( c )	( c )	( c)
Institutional High Yield	1,291,000	(a)	( c )	( c )	( c )	( c )
New Income	1,343,000	96.0	1,734,000	98.0	1,387,000	112.0
Personal Strategy Balanced	654,000	17.0	843,000	14.0	564,000	11.0
Personal Strategy Growth	311,000	24.0	374,000	19.0	218,000	17.0
Personal Strategy Income	257,000	12.0	332,000	9.0	215,000	7.0
Reserve Investment	(b)	(b)	(b)	(b)	(b)	(b)
Retirement 2005	(c)	(c)	(c)	(c)	(c)	(c)
Retirement 2010	(b)	(b)	(c)	(c)	(c)	(c)
Retirement 2015	(c)	(c)	(c)	(c)	(c)	(c)
Retirement 2020	(b)	(b)	(c)	(c)	(c)	(c)
Retirement 2025	(c)	(c)	(c)	(c)	(c)	(c)
Retirement 2030	(b)	(b)	(c)	(c)	(c)	(c)
Retirement 2035	(c)	(c)	(c)	(c)	(c)	(c)
Retirement 2040	(b)	(b)	(c)	(c)	(c)	(c)
Retirement I ncome	(b)	(b)	(c)	(c)	(c)	(c)
Short-Term Bond	302,000	(a)	217,000	(a)	217,000	(a)
U.S. Treasury Intermediate	11,000	(a)	0	(a)	0	(a)
U.S. Treasury Long-Term	12,000	(a)	0	(a)	0	(a)

(a) Percentages are not required for funds that do not invest in equity securities.

(b) Not applicable.

( c ) Prior to commencement of operations.

Fund	Fiscal Year Ended
	10/31/03	%	10/31/02	%	10/31/01	%
Emerging Europe & Mediterranean	$ 159 ,000	32.9	$ 85,000	90.0	$ 86,000	96.0
Emerging Markets Stock	1,052 ,000	33.2	736,000	89.0	653,000	79.0
European Stock	724 ,000	33 .0	556,000	88.0	485,000	95.0
Global Stock	82 ,000	40.2	110,000	43.0	106,000	67.0
Institutional Emerging Markets Equity	61,000	4 3 . 0	( a )	( a )	( a )	( a )
Institutional Foreign Equity	1 , 720 , 000	30. 5	2,081,946	1.0	2,471,000	84.0
International Discovery	2 , 165 ,000	28.0	1,796,000	65.0	1,942,000	67.0
International Equity Index	11,000	0.1	14,000	0.0	10,000	3.0
International Growth & Income	7 7,000	2.0	7,000	12.0	5,000	89.0
International Stock	5, 961 ,000	38. 8	5,790,000	83.0	7,616,000	87.0
Japan	838,000	32. 3	306,000	78.0	347,000	86.0
Latin America	2 67 ,000	67. 8	249,000	85.0	368,000	85.0
Summit Cash Reserves	0	(b)	0	(b)	0	(b)
Summit GNMA	2,000	(b)	2,000	(b)	3,000	(b)
Summit Municipal Income	119,000	(b)	149,000	(b)	128,000	(b)
Summit Municipal Intermediate	49,000	(b)	44,000	(b)	47,000	(b)
Summit Municipal Money Market	0	(b)	1,000	(b)	1,000	(b)
U.S. Bond Index	15,000	(b)	23,000	(b)	6,000	(b)

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(a) Prior to commencement of operations.

(b) Percentages are not required for funds that do not invest in equity securities.

Fund	Fiscal Year Ended
	12/31/02	%	12/31/01	%	12/31/00	%
Balanced	$ 1,341,000	14.7 %	$ 1,203,000	10.9 %	$ 399,000	11.5 %
Blue Chip Growth	7,802,000	61.8	7,972,000	39.8	7,485,000	58.5
Capital Appreciation	2,513,000	14.1	2,345,000	14.1	1,305,000	32.5
Capital Opportunity	127,000	42.4	101,000	31.5	121,000	24.5
Developing Technologies	94,000	63.7	72,000	10.9	42,000	3.1
Diversified Mid-Cap Growth	( a )	( a )	( a )	( a )	( a )	( a )
Diversified Small-Cap Growth	88,000	24.5	55,000	2.4	105,000	1.3
Dividend Growth	554,000	48.3	640,000	66.5	1,070,000	72.0
Emerging Markets Bond	605,000	(b)	0	(b)	0	(b)
Equity Income	8,255,000	39.8	7,344,000	26.2	8,687,000	47.3
Equity Index 500	339,000	1.7	193,000	0.8	331,000	0.8
Extended Equity Market Index	42,000	7.3	42,000	0.1	51,000	0.0
Financial Services	604,000	39.7	539,000	51.4	348,000	56.3
Global Technology	543,000	50.2	510,000	45.4	362,000	15.9
Growth & Income	3,408,000	49.2	4,538,000	49.5	6,522,000	57.4
Growth Stock	6,963,000	42.4	8,332,000	52.7	10,878,000	41.3
Health Sciences	2,768,000	85.0	2,732,000	60.4	2,560,000	30.3
Institutional Large-Cap Core Growth	( a )	( a )	( a )	( a )	( a )	( a )
Institutional Large-Cap Growth	15,000	26.5	2,000	6.7	( a )	( a )
Institutional Large-Cap Value	7,000	25.3	5,000	18.1	3,000	58.9
Institutional Mid-Cap Equity Growth	489,000	58.1 %	$ 565,000	18.6 %	547,000	25.1 %
Institutional Small-Cap Stock	571,000	62.1	265,000	33.9	128,000	41.4
International Bond	205,000	(b)	0	(b)	0	(b)
Media & Telecommunications	4,243,000	45.0	3,993,000	43.2	3,517,000	36.5
Mid-Cap Growth	9,544,000	58.6	11,886,000	18.3	8,893,000	22.9
Mid-Cap Value	3,708,000	66.0	1,050,000	75.5	272,000	61.8
New America Growth	2,048,000	53.0	1,823,000	36.4	3,730,000	29.1
New Era	960,000	28.7	1,411,000	40.4	2,352,000	32.5
New Horizons	8,357,000	45.6	7,929,000	7.1	13,876,000	3.8
Real Estate	126,000	64.4	114,000	36.8	51,000	27.8
Science & Technology	8,785,000	35.1	15,035,000	31.4	13,388,000	39.5
Small-Cap Stock	5,313,000	55.4	2,865,000	38.0	2,214,000	38.4
Small-Cap Value	4,163,000	67.9	1,656,000	50.0	891,000	49.5
Spectrum Growth	(c)	(c)	(c)	(c)	(c)	(c)
Spectrum Income	(c)	(c)	(c)	(c)	(c)	(c)
Spectrum International	(c)	(c)	(c)	(c)	(c)	(c)
Value	2,120,000	59.1	2,221,000	55.1	1,330,000	74.6

(a) Prior to commencement of operations.

(b) Percentages are not required for funds that do not invest in equity securities.

Fund Holdings in Securities of Brokers and Dealers

The following lists the funds` holdings in securities of its top 10 brokers and dealers as of the end of the fiscal years indicated:

On December 31, 2002, the Balanced Fund held stock of Citigroup, Goldman Sachs Group, J.P. Morgan Chase, Morgan Stanley, and Deutsche Bank, with values of $18,543,000, $3,793,000, $5,492,000, $6,215,000, and $997,000, respectively. The fund also held bonds of Citigroup, Goldman Sachs Group, J.P. Morgan Chase, Lehman Brothers, Credit Suisse First Boston, and Morgan Stanley with values of $4,616,000, $2,768,000, $6,069,000, $1,468,000, $1,253,000, and $7,577,000, respectively.

On December 31, 2002, the Blue Chip Growth Fund held stock of Citigroup, Bank of America, Merrill Lynch, Morgan Stanley, Legg Mason, and Goldman Sachs Group, with values of $204,102,000, $94,615,000, $36,052,000, $47,106,000, $17,960,000, and $31,326,000, respectively.

On December 31, 2002, the Capital Opportunity Fund held stock of Citigroup, J.P. Morgan Chase, Merrill Lynch, Goldman Sachs Group, and Morgan Stanley, with values of $1,682,000, $526,000, $311,000, $272,000, and $116,000, respectively.

On December 31, 2002, the Diversified Small-Cap Growth Fund held stock of Legg Mason and Investment Technology Group, with values of $259,000 and $200,000, respectively.

On December 31, 2002, the Dividend Growth Fund held stock of Citigroup and Morgan Stanley, with values of $13,372,000 and $3,593,000, respectively.

On December 31, 2002, the Equity Income Fund held stock of Bank of America, Citigroup, and J.P. Morgan Chase, with values of $103,659,000, 78,826,000, and $79,200,000, respectively.

On December 31, 2002, the Equity Index 500 Fund held stock of Citigroup, Bank of America, J.P. Morgan Chase, Morgan Stanley, Merrill Lynch, Goldman Sachs, SunTrust, State Street, and Lehman Brothers, with values of $58,931,000, $34,020,000, $15,549,000, $14,223,000, 10,674,000, $10,666,000, $5,298,000, $4,126,000, and $4,234,000, respectively.

On December 31, 2002, the Extended Equity Market Index Fund held stock of Investment Technology Group, Raymond James Financial, and Instinet Group, with values of $35,000, $42,000, and $4,000, respectively.

On December 31, 2002, the Financial Services Fund held stock of Citigroup, Legg Mason, Neuberger Berman, Morgan Stanley, Bank of America, and Merrill Lynch with values of $12,517,000, $3,980,000, $3,483,000, $4,451,000, $9,399,000, and $7,362,000, respectively.

On December 31, 2002, the Growth & Income Fund held stock of Citigroup, Bank of America, J.P. Morgan Chase, Goldman Sachs Group, and Morgan Stanley, with values of $40,644,000, $28,385,000, $21,600,000, $14,778,000, $16,208,000, respectively.

On December 31, 2002, the Growth Stock Fund held stock of Merrill Lynch, Morgan Stanley, and Citigroup, with values of $40,606,000, $17,964,000, and $48,150,000, respectively.

On December 31, 2002, the Institutional Large-Cap Growth Fund held stock of Citigroup with a value of $236,000.

On December 31, 2002, the Institutional Large-Cap Value Fund held stock of Citigroup, Merrill Lynch, J.P. Morgan Chase, and FleetBoston Financial, with values of $244,000, $142,000, $130,000, and $112,000, respectively.

On December 31, 2002, the New America Growth Fund held stock of Citigroup and Goldman Sachs Group with values of $12,492,000 and $9,194,000, respectively.

On December 31, 2002, the Total Market Index Fund held stock of Citigroup, Bank of America, J.P. Morgan Chase, Morgan Stanley, Goldman Sachs Group, Merrill Lynch, SunTrust, Lehman Brothers, State Street, Raymond James Financial, and Investment Technology Group, with values of $2,907,000, $1,713,000,

PAGE 267

$778,000, $695,000, $531,000, $520,000, $271,000, $208,000, $207,000, $21,000, and $18,000, respectively.

On December 31, 2002, the Value Fund held stock of J.P. Morgan Chase, Bank of America, Citigroup, and Morgan Stanley, with values of $10,800,000, $13,914,000, $7,918,000, and $17,964,000, respectively.

Portfolio Turnover

The portfolio turnover rates for the funds (if applicable) for the fiscal years indicated are as follows:

Fund	Fiscal Year Ended
	2/28/03	2/28/02	2/28/01
California Tax-Free Bond	28.5 %	39.0 %	37.7 %
California Tax-Free Money	(a)	(a)	(a)
Florida Intermediate Tax-Free	12.8	15.3	19.5
Georgia Tax-Free Bond	24.8	32.1	33.9
Maryland Short-Term Tax-Free Bond	31.9	23.8	29.2
Maryland Tax-Free Bond	19.4	18.5	19.3
Maryland Tax-Free Money	(a)	(a)	(a)
New Jersey Tax-Free Bond	14.7	17.0	24.6
New York Tax-Free Bond	30.0	33.5	36.1
New York Tax-Free Money	(a)	(a)	(a)
Tax-Efficient Balanced	21.3	24.3	19.1
Tax-Efficient Growth	17.6	8.5	12.0
Tax-Efficient Multi-Cap Growth	27.0	15.4	10.4 (b)
Tax-Exempt Money	(a)	(a)	(a)
Tax-Free High Yield	30.8	32.7	15.1
Tax-Free Income	24.4	28.2	28.6
Tax-Free Intermediate Bond	20.7	19.7	17.3
Tax-Free Short-Intermediate	29.7	30.0	40.7 (c)
Virginia Tax-Free Bond	33.5	47.1	38.1

(a) Money funds are not required to show portfolio turnover.

( b) Annualized.

Fund	Fiscal Year Ended
	5/31/03	5/31/02	5/31/01
Corporate Income	92.9 %	91.1 %	98.1 %
GNMA	385.8 (a)	145.2	71.2
Government Reserve Investment	(b)	(b)	(b)
High Yield	59.9	71.3	80.1
Inflation Protected Bond	35.6 (c)	(d)	(d)
Institutional High Yield	72.3	(d)	(d)
New Income	221.2	222.0	112.1
Personal Strategy Balanced	87.8	97.2	61.5
Personal Strategy Growth	52.5	68.4	54.8
Personal Strategy Income	108.5	115.9	79.8
Prime Reserve	(b)	(b)	(b)
Reserve Investment	(b)	(b)	(b)
Retirement 2005	(d)	(d)	(d)
Retirement 2010	12.8 (c)	(d)	(d)
Retirement 2015	(d)	(d)	(d)
Retirement 2020	4.1 (c)	(d)	(d)
Retirement 2025	(d)	(d)	(d)
Retirement 2030	3.1 (c)	(d)	(d)
Retirement 2035	(d)	(d)	(d)
Retirement 2040	18.8 (c)	(d)	(d)
Retirement Income	6.2 (c)	(d)	(d)
Short-Term Bond	110.1 (a)	49.9	77.6
U.S. Treasury Intermediate	105.6	104.4	108.0
U.S. Treasury Long-Term	65.5	48.5	31.3
U.S. Treasury Money	(b)	(b)	(b)

(a) The fund`s higher portfolio turnover was due primarily to increased trading of mortgage dollar rolls.

(b) Money funds are not required to show portfolio turnover.

(c ) Annualized.

(d) Prior to commencement of operations.

Fund	Fiscal Year Ended
	10/31/03	10/31/02	10/31/01
Emerging Europe & Mediterranean	54.1 %	94.5 %	83.1 %
Emerging Markets Stock	65.6	70.5	70.3
European Stock	23.1	16.1	5.8
Global Stock	38.7	48.4	52.3
Institutional Emerging Markets Equity	70.4	(a)	(a)
Institutional Foreign Equity	27.8	20.0	21.4
International Discovery	115.9	93.9	59.1
International Equity Index	39.4	49.0	63.1 (b)
International Growth & Income	53.2	24.6	8.5
International Stock	25.2	21.6	17.4
Japan	254.7 (c)	104.2	45.8
Latin America	27.4	21.0	29.9
New Asia	71.7	72.0	49.0
Summit Cash Reserves	( d )	( d )	( d )
Summit GNMA	312.0	327.9	71.0
Summit Municipal Income	37.0	47.3	53.0
Summit Municipal Intermediate	29.8	18.5	20.3
Summit Municipal Money Market	( d )	( d )	( d )
U.S. Bond Index	190.3	140.4	83.9 ( e )

(a) Prior to commencement of operations.

(b) From the commencement of operations November 30, 2000 through October 31, 2001.

(c) The increase in the fund`s portfolio turnover from 2002 to 2003 was primarily the result of changes in the investment advisory group. New membership in the group had a different outlook on a number of the fund`s portfolio holdings and initiated changes in the composition of the portfolio as a result.

(d) Money funds are not required to show portfolio turnover.

( e ) Annualized.

PAGE 269

Fund	Fiscal Year Ended
	12/31/02	12/31/01	12/31/00
Balanced	49.1 %	36.0 %	16.5 %
Blue Chip Growth	46.2	48.3	50.9
Capital Appreciation	17.6	25.1	32.4
Capital Opportunity	48.2	53.6	64.7
Developing Technologies	81.5	107.5	232.6 (a)
Diversified Mid-Cap Growth	( b )	( b )	( b )
Diversified Small-Cap Growth	43.8	30.3	66.0
Dividend Growth	20.4	34.9	35.7
Emerging Markets Bond	51.4	75.5	69.5
Equity Income	15.2	17.3	21.9
Equity Index 500	6.6	4.0	9.1
Extended Equity Market Index	21.0	31.3	30.5
Financial Services	49.7	54.8	32.5
Global Technology	211.4	189.2	123.6 (a)
Growth & Income	44.7	65.9	80.3
Growth Stock	46.9	64.1	74.3
Health Sciences	62.7	74.6	110.6
Institutional Large-Cap Core Growth	( b )	( b )	( b )
Institutional Large-Cap Growth	91.3	98.2 (a)	( b )
Institutional Large-Cap Value	25.3	106.3	58.4 (a)
Institutional Mid-Cap Equity Growth	38.1	48.6	67.5
Institutional Small-Cap Stock	19.1	26.9	15.8 (a)
International Bond	113.9	107.6	160.5
Media & Telecommunications	184.9	241.1	197.5
Mid-Cap Growth	36.0	43.0	53.6
Mid-Cap Value	51.1	57.5	31.9
New America Growth	61.5	52.1	81.4
New Era	11.5	17.9	28.5
New Horizons	23.7	27.4	47.2
Real Estate	9.8	37.2	19.0
Science & Technology	60.8	143.6	134.1
Small-Cap Stock	15.3	16.5	32.8
Small-Cap Value	12.2	16.8	14.4
Spectrum Growth	3.9	6.1	11.6
Spectrum Income	14.1	22.7	19.3
Spectrum International	94.4	30.6	42.5
Total Equity Market Index	5.6	8.6	7.6
Value	29.6	42.2	55.9

(a ) Annualized.

( b ) Prior to commencement of operations.

INDEPENDENT AUDITORS

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

The financial statements , and the report of independent accountants of the fund s listed below for the periods ending the fiscal years indicated , are included in each fund`s a nnual r eport for those periods and are incorporated into this S AI by reference . A copy of each fund`s a nnual r eport accompanies this SAI. Additionally, the unaudited Semiannual Report for the six months ended June 30, 2003 for the Equity, Index Equity, Institutional Equity, International Bond, and Spectrum Funds are incorporated into this S AI by reference :

Fund	Fiscal Year Ended
Equity, Index Equity, Institutional Equity, International Bond, and Spectrum Funds	12/31/02
Index Bond, Institutional International, International Equity, International Index Equity, Summit Income, and Summit Municipal Funds	10/31/03
State Tax-Free, Tax-Efficient, and Tax-Free Funds	2/28/03
Taxable Bond, Taxable Money , Personal Strategy, Reserve Investment, Retirement and U.S. Treasury Funds	5/31/03

ANNUAL REPORT REFERENCES

Fund	Financial Highlights	Portfolio of Investments	Statement of Assets and Liabilities	Statement of Net Assets	Statement of Operations	Statement of Changes in Net Assets	Notes to Financial Statements	Report of Independent Auditors
Balanced Fund	11	12-41	42	—	43	44	45-49	50
Blue Chip Growth Fund	13	—	—	16-22	23	24-25	26-31	32
Blue Chip Growth Fund — Advisor Class	14	—	—	16-22	23	24-25	26-31	32
Blue Chip Growth Fund — R Class	15	—	—	16-22	23	24-25	26-31	32
California Tax-Free Bond Fund	12	—	—	16-23	25	26	27-30	31
California Tax-Free Money Fund	11	13-15	24	—	25	26	27-30	31
Capital Appreciation Fund	9	10-17	18	—	19	20	21-25	26
Capital Opportunity Fund	9	10-22	—	—	23	24	25-29	30
Corporate Income Fund	11	—	—	12-24	25	26	27-32	33
Developing Technologies Fund	8	9-12	—	—	13	14	15-19	20
Diversified Mid-Cap Growth Fund	—	—	—	—	—	—	—	—
Diversified Small-Cap Growth Fund	9	—	—	10-21	22	23	24-28	29
Dividend Growth Fund	10	—	—	11-17	18	19	20-23	24
Emerging Europe & Mediterranean Fund	13	—	—	14-16	17	18	19-24	25
Emerging Markets Bond Fund	13	23-29	30	—	32	35	36-42	43
Emerging Markets Stock Fund	14	—	—	15-22	23	24	25-30	31
Equity Income Fund	8	—	—	11-18	19	20-21	22-26	27
Equity Income Fund — Advisor Class	9	—	—	11-18	19	20-21	22-26	27
Equity Income Fund — R Class	10	—	—	11-18	19	20-21	22-26	27
Equity Index 500 Fund	1	—	—	2-20	21	22	23-28	29
European Stock Fund	14	—	—	15-22	23	24	25-29	30
Extended Equity Market Index Fund	2	3-70	71	—	72	73	74-77	78
Financial Services Fund	8	—	—	9-11	12	13	14-18	19
Florida Intermediate Tax- Free Fund	8	—	—	9-12	13	14	15-17	18
Georgia Tax-Free Bond Fund	8	—	—	9-13	14	15	16-19	20
Global Stock Fund	14	—	—	15-25	26	27	28-32	33
Global Technology Fund	8	—	—	9-12	13	14	15-18	19
GNMA Fund	11	12-14	15	—	16	17	18-22	23
Government Reserve Investment Fund	12	—	—	21-22	23	25	26-28	29
Growth & Income Fund	10	—	—	11-17	18	19	20-24	25
Growth Stock Fund	10	—	—	13-19	20	21-22	23-28	29
Growth Stock Fund — Advisor Class	11	—	—	13-19	20	21-22	23-28	29
Growth Stock Fund — R Class	12	—	—	13-19	20	21-22	23-28	29
Health Sciences Fund	8	—	—	9-15	16	17	18-22	23
High Yield Fund	15	—	—	17-35	36-37	38-39	40-45	46
High Yield Fund — Advisor Class	16	—	—	17-35	36-37	38-39	40-45	46
Inflation Protected Bond Fund	11	—	—	12-13	14	15	16-19	20
Institutional Emerging Markets Equity Fund	8	9-12	13	—	14	15	16-17	18
Institutional Foreign Equity Fund	10	—	—	11-15	16	17	18-20	21
Institutional High Yield Fund	10	11-19	20	—	21	22	23-25	26
Institutional Large-Cap Core Growth Fund
Institutional Large-Cap Growth Fund	6	—	—	7-8	9	10	11-12	13
Institutional Large-Cap Value Fund	5	—	—	6-8	9	10	11-12	13
Institutional Mid-Cap Equity Growth Fund	8	—	—	9-12	13	14	15-16	17
Institutional Small-Cap Stock Fund	7	—	—	8-12	13	14	15-16	17
International Bond Fund	11	14-21	22	—	31	33-34	36-42	43
International Bond Fund — Advisor Class	12	14-21	22	—	31	33-34	36-42	43
International Discovery Fund	1 4	—	—	15-25	26	27	28-33	34
International Equity Index Fund	18	—	—	19-51	52	53	54-57	58
International Growth & Income Fund	18	21-31	3 2	—	3 3 -34	35-36	37-43	44
International Growth & Income Fund — Advisor Class	19	21-31	3 2	—	3 3 -34	35-36	37-43	44
International Growth & Income Fun d — R Class	20	21-31	3 2	—	3 3 -34	35-36	37-43	44
International Stock Fund	13	—	—	16-25	26-27	28-29	30-36	37
International Stock Fund — Advisor Class	14	—	—	16-25	26-27	28-29	30-36	37
International Stock Fund — R Class	15	—	—	16-25	26-27	28-29	30-36	37
Japan Fund	13	—	—	14-17	18	19	20-24	25
Latin America Fund	14	—	—	15-17	18	19	20-24	25
Maryland Short-Term Tax-Free Bond Fund	13	—	—	19-25	40	41	42-46	47
Maryland Tax-Free Bond Fund	14	—	—	26-39	40	41	42-46	47
Maryland Tax-Free Money Fund	12	—	—	15-18	40	41	42-46	47
Media & Telecommunications Fund	8	—	—	9-13	14	15	16-19	20
Mid-Cap Growth Fund	14	17-23	24	—	25	26	27-32	33
Mid-Cap Growth Fund — Advisor Class	15	17-23	24	—	25	26	27-32	33
Mid-Cap Growth Fund — R Class	16	17-23	24	—	25	26	27-32	33
Mid-Cap Value Fund	9	—	—	12-18	19	20-21	22-27	28
Mid-Cap Value Fund — Advisor Class	10	—	—	12-18	19	20-21	22-27	28
Mid-Cap Value Fund — R Class	11	—	—	12-18	19	20-21	22-27	28
New America Growth Fund	12	—	—	13-18	19	20	21-24	25
New Asia Fund	14	—	—	15-21	22	23	24-29	30
New Era Fund	9	—	—	10-15	16	17	18-22	23
New Horizons Fund	11	12-21	22	—	23	24	25-29	30
New Income Fund	13	16-28	29	—	30-31	32-33	34-41	42
New Income Fund — Advisor Class	14	16-28	29	—	30-31	32-33	34-41	42
New Income Fund — R Class	15	16-28	29	—	30-31	32-33	34-41	42
New Jersey Tax-Free Bond Fund	9	—	—	10-15	16	17	18-21	22
New York Tax-Free Bond Fund	12	—	—	17-23	24	25	26-29	30
New York Tax-Free Money Fund	11	—	—	13-16	24	25	26-29	30
Personal Strategy Balanced Fund	5	6-36	37	—	38	39	40-46	47
Personal Strategy Growth Fund	5	—	—	6-37	38	39	40-45	46
Personal Strategy Income Fund	5	6-36	37	—	38	39	40-45	46
Prime Reserve Fund	11	—	—	12-18	19	20	21-23	24
Real Estate Fund	8	—	—	9-1 1	12	13	14-17	18
Reserve Investment Fund	11	—	—	13-20	23	24	26-28	29
Retirement 20 05 Fund	—	—	—	—	—	—	—	—
Retirement 2010 Fund	5	—	—	6	7	8	9-11	12
Retirement 2010 Fund — Advisor Class	—	—	—	—	—	—	—	—
Retirement 2010 Fund — R Class	—	—	—	—	—	—	—	—
Retirement 20 15 Fund	—	—	—	—	—	—	—	—
Retirement 2020 Fund	5	—	—	6	7	8	9-11	12
Retirement 2020 Fund — Advisor Class	—	—	—	—	—	—	—	—
Retirement 2020 Fund — R Class	—	—	—	—	—	—	—	—
Retirement 20 25 Fund	—	—	—	—	—	—	—	—
Retirement 2030 Fund	5	—	—	6	7	8	9-11	12
Retirement 2030 Fund — Advisor Class	—	—	—	—	—	—	—	—
Retirement 2030 Fund — R Class	—	—	—	—	—	—	—	—
Retirement 20 35 Fund	—	—	—	—	—	—	—	—
Retirement 2040 Fund	5	—	—	6	7	8	9-11	12
Retirement 2040 Fund — Advisor Class	—	—	—	—	—	—	—	—
Retirement 2040 Fund — R Class	—	—	—	—	—	—	—	—
Retirement Income Fund	5	—	—	6	7	8	9-11	12
Retirement Income Fund — Advisor Class	—	—	—	—	—	—	—	—
Retirement Income Fund — R Class	—	—	—	—	—	—	—	—
Science & Technology Fund	8	—	—	10-14	15	16	17-21	22
Science & Technology Fund — Advisor Class	9	—	—	10-14	15	16	17-21	22
Short-Term Bond Fund	9	10-18	19	—	20	21	22-27	28
Small-Cap Stock Fund	12	14-24	25	—	26	27-28	29-33	34
Small-Cap Stock Fund — Advisor Class	13	14-24	25	—	26	27-28	29-33	34
Small-Cap Value Fund	7	9-20	21	—	22	23-24	25-30	31
Small-Cap Value Fund — Advisor Class	8	9-20	21	—	22	23-24	25-30	31
Spectrum Growth Fund	12	—	—	15	18	19	22-25	26
Spectrum Income Fund	13	—	—	16	18	20	22-25	26
Spectrum International Fund	14	—	—	17	18	21	22-25	26
Summit Cash Reserves Fund	5	—	—	6- 11	12	13	14-16	17
Summit GNMA Fund	6	7-9	10	—	11	12	13-16	17
Summit Municipal Income Fund	5	—	—	6-21	22	23	24-27	28
Summit Municipal Intermediate Fund	5	—	—	6-17	18	19	20-22	23
Summit Municipal Money Market Fund	5	—	—	6- 16	17	18	19-21	22
Tax-Efficient Balanced Fund	2	—	—	3-12	13	14	15-18	19
Tax-Efficient Growth Fund	2	—	—	3-8	9	10	11-14	15
Tax-Efficient Multi-Cap Growth Fund	2	3-11	12	—	13	14	15-18	19
Tax-Exempt Money Fund	2	—	—	3-12	13	14	15-17	18
Tax-Free High Yield Fund	2	—	—	3-25	26	27	28-31	32
Tax-Free Income Fund	2	—	—	4-23	24	25	26-29	30
Tax-Free Income Fund — Advisor Class	3	—	—	4-23	24	25	26-29	30
Tax-Free Intermediate Bond Fund	2	—	—	3-13	14	15	16-19	20
Tax-Free Short- Intermediate Fund	2	—	—	3-16	17	18	19-22	23
Total Equity Market Index Fund	1	—	—	2-59	60	61	62-65	66
U.S. Bond Index Fund	12	—	—	13-26	27	2 8	2 9-32	33
U.S. Treasury Intermediate Fund	20	—	—	24-26	30	32	34-38	39
U.S. Treasury Long-Term Fund	21	—	—	27-29	30	33	34-38	39
U.S. Treasury Money Fund	19	—	—	22-23	30	31	34-38	39
Value Fund	8	—	—	10-17	18	19-20	21-25	26
Value Fund — Advisor Class	9	—	—	10-17	18	19-20	21-25	26
Virginia Tax-Free Bond Fund	8	—	—	9-16	17	18	19-22	23

PAGE 271

PAGE 273

PAGE 275

UNAUDITED SEMIANNUAL REPORT REFERENCES

Fund	Financial Highlights	Portfolio of Investments	Statement of Assets and Liabilities	Statement of Net Assets	Statement of Operations	Statement of Changes in Net Assets	Notes to Financial Statements
Balanced Fund	14	15-35	36	—	37	38	39-43
Blue Chip Growth Fund	14	—	—	17-23	24	25-26	27-32
Blue Chip Growth Fund — Advisor Class	15	—	—	17-23	24	25-26	27-32
Blue Chip Growth Fund — R Class	16	—	—	17-23	24	25-26	27-32
Capital Appreciation Fund	10	11-18	19	—	20	21	22-25
Capital Opportunity Fund	10	—	—	11-23	24	25	26-30
Developing Technologies Fund	10	—	—	11-14	15	16	17-21
Diversified Mid-Cap Growth Fund	—	—	—	—	—	—	—
Diversified Small-Cap Growth Fund	10	—	—	11-22	23	24	25-28
Dividend Growth Fund	12	—	—	13-20	21	22	23-27
Emerging Markets Bond Fund	14	—	—	24-32	34	37	38-44
Equity Income Fund	10	13-20	21	—	22	23-24	25-29
Equity Income Fund — Advisor Class	11	13-20	21	—	22	23-24	25-29
Equity Income Fund — R Class	12	13-20	21	—	22	23-24	25-29
Equity Index 500 Fund	2	—	—	3-22	23	24	25-30
Extended Equity Market Index Fund	2	—	—	3-72	73	74	75-78
Global Technology Fund	10	—	—	11-14	15	16	17-20
Growth & Income Fund	12	—	—	13-20	21	22	23-26
Growth Stock Fund	10	—	—	13-19	20-21	22-23	24-29
Growth Stock Fund — Advisor Class	11	—	—	13-19	20-21	22-23	24-29
Growth Stock Fund — R Class	12	—	—	13-19	20-21	22-23	24-29
Health Sciences Fund	10	—	—	11-18	19	20	21-25
Institutional Large-Cap Core Growth Fund	—	—	—	—	—	—	—
Institutional Large-Cap Growth Fund	6	—	—	7-8	9	10	11-12
Institutional Large-Cap Value Fund	6	—	—	7-9	10	11	12-13
Institutional Mid-Cap Equity Growth Fund	10	—	—	11-14	15	16	17-18
Institutional Small-Cap Stock Fund	8	—	—	9-13	14	15	16-17
International Bond Fund	12	15-22	23	—	33	35-36	38-44
International Bond Fund — Advisor Class	13	15-22	23	—	33	35-36	38-44
Media & Telecommunications Fund	8	—	—	9-12	13	14	15-18
Mid-Cap Growth Fund	14	17-24	25	—	26	27	28-32
Mid-Cap Growth Fund — Advisor Class	15	17-24	25	—	26	27	28-32
Mid-Cap Growth Fund — R Class	16	17-24	25	—	26	27	28-32
Mid-Cap Value Fund	10	—	—	13-19	20-21	22-23	24-28
Mid-Cap Value Fund — Advisor Class	11	—	—	13-19	20-21	22-23	24-28
Mid-Cap Value Fund — R Class	12	—	—	13-19	20-21	22-23	24-28
New America Growth Fund	12	—	—	13-18	19	20	21-23
New Era Fund	10	—	—	11-15	16	17	18-21
New Horizons Fund	14	15-25	26	—	27	28	29-32
Real Estate Fund	10	—	—	11-13	14	15	16-19
Science & Technology Fund	10	12-16	17	—	18	19	20-25
Science & Technology Fund — Advisor Class	11	12-16	17	—	18	19	20-25
Small-Cap Stock Fund	14	16-26	27	—	28	29-30	31-35
Small-Cap Stock Fund — Advisor Class	15	16-26	27	—	28	29-30	31-35
Small-Cap Value Fund	10	12-24	25	—	26	27-28	29-33
Small-Cap Value Fund — Advisor Class	11	12-24	25	—	26	27-28	29-33
Spectrum Growth Fund	14	—	—	17	20	21	24-27
Spectrum Income Fund	15	—	—	18	20	22	24-27
Spectrum International Fund	16	—	—	19	20	23	24-27
Total Equity Market Index Fund	2	—	—	3-61	62	63	64-67
Value Fund	10	—	—	12-19	20	21-22	23-27
Value Fund — Advisor Class	11	—	—	12-19	20	21-22	23-27

PAGE 277

T. Rowe price Diversified MiD-Cap GrOWTH fund

December 15, 2003

statement of assets and liabilities

Assets

Cash $100,000

Prepaid registration fees 49,666

Total assets 149,666

Liabilities

Payable to manager (49,666)

Total liabilities (49,666)

NET ASSETS $100,000

OFFERING AND REDEMPTION PRICE $ 10.00

Net Assets Consist of:

Paid-in-capital applicable to 10,000 shares of $0.0001

par value capital stock outstanding; 1,000,000,000

shares authorized $100,000

PAGE 279

T. Rowe price Diversified MiD-Cap GrOWTH fund

statement of OPERATIONS

October 22, 2003

through

December 15, 2003

Expenses

Organization expenses $ 59 0

Reimbursed by manager (590)

Net investment income --

INCREASE (DECREASE) IN NET ASSETS

FROM START-UP OPERATIONS $ --

The accompanying notes are an integral part of these financial statements.

NOTE TO FINANCIAL STATEMENTS

T. Rowe Price Diversified Mid-Cap Growth Fund, Inc. (the fund) was organized on October 22, 2003, as a Maryland corporation and is registered under the Investment Company Act of 1940 as a diversified, open-end management company. Through December 15, 2003, the fund had no operations other than those matters related to organization and registration as an investment company, the registration of shares for sale under the Securities Act of 1933, and the sale of 10,000 shares of the fund at $10.00 per share on December 15, 2003 to T. Rowe Price Associates, Inc. via share exchange from a T. Rowe Price money market mutual fund. The exchange was settled in the ordinary course of business on December 15, 2003 with the transfer of $100,000 cash.

The fund has entered into an investment management agreement with T. Rowe Price Associates, Inc. (the manager). Under the terms of the investment management agreement, the manager is required to bear all expenses of the fund, excluding interest, taxes, brokerage commissions, and extraordinary expenses, through April 30, 2006, which would otherwise cause the fund`s ratio of total expenses to average net assets (expense ratio) to exceed its expense limitation of 1.25%. Through April 30, 2008, the fund is required to reimburse the manager for these expenses, provided that average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing the fund`s expense ratio to exceed its expense limitation. Through December 15, 2003, the fund incurred organization expenses in the approximate amount of $590, which the manager has paid on the fund`s behalf.

Also, through December 15, 2003, initial registration fees in the amount of $49,666 were prepaid by the manager on behalf of the fund. This amount will be repaid to the manager upon commencement of operations and prepaid registration fees will be amortized to expense over the period of benefit, typically one year.

PAGE 281

Report of Independent A UDITORS

To the Board of Directors and Shareholder of T. Rowe Price Diversified Mid-Cap Growth Fund

In our opinion, the accompanying statement of assets and liabilities and the related statement of operations present fairly, in all material respects, the financial position of T. Rowe Price Diversified Mid-Cap Growth Fund, ( the "Fund") at December 15, 2003, and the results of its operations for the period presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Fund`s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Baltimore, Maryland

December 15, 2003

PART I I

Part II of this SAI describes policies and practices that apply to the funds in the T. Rowe Price family of funds.

INVESTMENT OBJECTIVES AND POLICIES

The following information supplements the discussion of the funds` investment objectives and policies discussed in the funds` prospectuses. You should refer to each fund`s prospectus to determine the types of securities in which the fund invests. You wi l l then be able to review additional information set forth herein on those types of securities and their risks.

Shareholder approval is required to substantively change fund objectives. Unless otherwise specified, the investment programs and restrictions of the funds are not fundamental policies. The funds` operating policies are subject to change by the funds ` Boards without shareholder approval. The funds` fundamental policies may not be changed without the approval of at least a majority of the outstanding shares of the funds 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.

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 funds.

Risk Factors of Foreign Investing

Foreign securities (All funds that can invest in foreign securities)

Foreign securities include U.S. dollar-denominated and non-U.S. dollar-denominated securities of foreign issuers.

There are special risks in foreign investing. Certain of these risks are inherent in any mutual fund investing in foreign securities while others relate more to the countries in which the funds will invest. Many of the risks are more pronounced for investments in developing or emerging 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 Investments in foreign securities will normally be denominated in foreign currencies. American Depository Receipts ( "ADRs" ) are investments in foreign companies but are denominated in U.S. dollars.) Accordingly, a change in the value of any such currency against the U.S. dollar will result in a corresponding change in the U.S. dollar value of the funds` assets denominated in that currency. Such changes will also affect the funds` income. Generally, when a given currency appreciates against the dollar (the dollar weakens) , the value of the funds` securities denominated in that currency will rise. When a given currency depreciates against the dollar (the dollar strengthens) , the value of the funds` 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 funds . Investments by foreign investors are subject to a variety of restrictions in many developing countries. These restrictions may take the form of prior governmental approval, limits on the amount or type of securities held by foreigners, and limits on the types of companies in which foreigners may invest. Additional or different restrictions may be imposed at any time by these or other countries in which the funds invest . In addition, the repatriation of both investment income and capital from several foreign countries is restricted and controlled under certain regulations, including in some cases the need for certain government consents. For example, capital invested in Chile normally cannot be repatriated for one year. In 1998, the government of Malaysia imposed currency controls which effectively made it impossible for foreign investors to convert Malaysian ringgits to foreign currencies.

Market Characteristics It is contemplated that most foreign securities will be purchased in over-the-counter markets or on securities exchanges located in the countries in which the respective principal offices of the issuers of the various securities are located, if that is the best available market. Investments in certain markets may be made through 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 funds` 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 U.S. securities and such levels may not be sustainable. Commissions on foreign securities trades are generally higher than commissions on U.S. exchanges, and while there are an increasing

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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 U.S. 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 funds.

Investment Funds The funds may invest in investment funds which have been authorized by the governments of certain countries specifically to permit foreign investment in securities of companies listed and traded on the stock exchanges in these respective countries. I nvestment in these funds is subject to the provisions of the 1940 Act. If the funds invest in such investment funds, 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.

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.

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

Costs Investors should understand that the expense ratios of a fund investing primarily in foreign securities 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 funds, political or social instability, or diplomatic developments which could affect investments by U.S. persons in those countries.

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

Eastern Europe and Russia Changes occurring in Eastern Europe and Russia today could have long-term potential consequences. As restrictions fall, this could result in rising standards of living, lower manufacturing costs, growing consumer spending, and substantial economic growth. However, investment in most countries of Eastern Europe and Russia is highly speculative at this time. Political and economic reforms are too recent to establish a definite trend away from centrally planned economies and state-owned industries. 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 funds` 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 U.S. 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 funds to engage in foreign currency transactions designed to protect the value of the funds` interests in securities denominated in such currencies.

Sovereign Debt A number of Latin American countries are among the largest debtors of developing countries. There have been moratoria on, and reschedulings of, repayment with respect to these debts. Such events can restrict the flexibility of these debtor nations in the international markets and result in the imposition of onerous conditions on their economies.

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 U.S. dollar; a weakening yen hurts U.S. investors holding yen-denominated securities. Finally, the Japanese stock market has experienced wild swings in value and has often been considered significantly overvalued.

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

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

Asia (ex-Japan)

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

Foreign Currency Certain Asian countries may have managed currencies which are maintained at artificial levels to the U.S. dollar rather than at levels determined by the market. This type of system can lead to sudden and large adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign investors.

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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 funds to engage in foreign currency transactions designed to protect the value of the funds` 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 and others that impose strict repayment term schedules and require significant economic and financial restructuring.

Risk Factors of Investing in Taxable Debt Obligations

General

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 funds investing in debt securities to achieve their investment objectives is also dependent on the continuing ability of the issuers of the debt securities in which the funds invest to meet their obligations for the payment of interest and principal when due.

After purchase by the funds, a debt security may cease to be rated or its rating may be reduced below the minimum required for purchase by the funds. Neither event will require a sale of such security by the funds. However, such events will be considered in determin ing whether the funds should continue to hold the security. To the extent that the ratings given by Moody`s , S&P , or others 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. The ratings of Moody`s, S&P, and others represent their opinions as to the quality of securities that they undertake to rate. Ratings are not absolute standards of quality. When purchasing unrated securities, T. Rowe Price, under the supervision of the funds` Boards , determines whether the unrated security is of a quality comparable to that which the funds are allowed to purchase.

Full Faith and Credit Securities

Securities backed by the full faith and credit of the United States (for example, GNMA and U.S. Treasury securities) are generally considered to be among the most, if not the most, creditworthy investments available. While the U.S. government has honored its credit obligations continuously for the last 200 years, political events have , at times, called into question whether the United States would default on its obligations. Such an event would be unprecedented and there is no way to predict its results on the securities markets or the funds . However, it is very likely that default by the United States would result in losses to the fund s.

Mortgage Securities

Mortgage-backed securities, including GNMAs , differ from conventional bonds in that principal is paid back over the life of the security rather than at maturity. As a result, the holder of a mortgage-backed security (i.e., a fund) receives monthly scheduled payments of principal and interest, and may receive unscheduled principal payments representing prepayments on the underlying mortgages. Therefore , GNMA securities may not be an effective means of "locking in" long-term interest rates due to the need for the funds to reinvest scheduled and unscheduled principal payments. The incidence of unscheduled principal prepayments is also likely to increase in mortgage pools owned by the funds when prevailing mortgage loan rates fall below the mortgage rates of the securities underlying the individual pool. The effect of such prepayments in a falling rate environment is to (1) cause the funds to reinvest principal payments at the then lower prevailing interest rate, and (2) reduce the potential for capital appreciation beyond the face amount of the security and adversely affect the return to the funds. Conversely, in a rising interest rate environment such prepayments can be reinvested at higher prevailing interest rates which will reduce the potential effect of capital depreciation to which bonds are subject when interest rates rise. When interest rates rise and pre payments decline, GNMA securities become subject to

extension risk or the risk that the price of the securities will fluctuate more. In addition, prepayments of mortgage securities purchased at a premium (or discount) will cause such securities to be paid off at par, resulting in a loss (gain) to the funds. T. Rowe Price will actively manage the funds` portfolios in an attempt to reduce the risk associated with investment in mortgage-backed securities.

The market value of adjustable rate mortgage securities ( "ARMs" ), like other U.S. government securities, will generally vary inversely with changes in market interest rates, declining when interest rates rise and rising when interest rates decline. Because of their periodic adjustment feature, ARMs should be more sensitive to short-term interest rates than long-term rates. They should also display less volatility than long-term mortgage-backed securities. Thus, while having less risk of a decline during periods of rapidly rising rates, ARMs may also have less potential for capital appreciation than other investments of comparable maturities. Interest rate caps on mortgages underlying ARM securities may prevent income on the ARM from increasing to prevailing interest rate levels and cause the securities to decline in value. In addition, to the extent ARMs are purchased at a premium, mortgage foreclosures and unscheduled principal prepayments may result in some loss of the holders` principal investment to the extent of the premium paid. On the other hand, if ARMs are purchased at a discount, both a scheduled payment of principal and an unscheduled prepayment of principal will increase current and total returns and will accelerate the recognition of income that , when distributed to shareholders , will be taxable as ordinary income .

High Yield Securities

Special Risks of Investing in Junk Bonds The following special considerations are additional risks factors o f funds investing in lower-rated securities.

Lower-Rated Debt Securities Market 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 funds` portfolios, the funds` 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. Investment in funds which invest in lower-rated debt securities is more risky than investment in shares of funds which invest only in higher-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 funds` portfolios, the funds` 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. Investment in funds which invest in lower-rated debt securities is more risky than investment in shares of a funds which invest 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 funds 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 funds and may also limit the ability of the funds 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 funds own 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 funds own will affect its net asset value per share. If market quotations are not readily available for the funds` lower-rated or nonrated securities, these securities will be valued by a method that the funds` Boards believe 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.

Taxation Special tax considerations are associated with investing in lower-rated debt securities structured as zero - coupon or pay-in-kind securities. The funds accrue income on these securities prior to the receipt of cash payments. The funds 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.

Under an exemptive order issued by the SEC, the funds are permitted to invest the portion of their assets allocated to high-yield bonds in the T. Rowe Price Institutional High Yield Fund. Such an investment would allow funds to obtain the benefits of a fully diversified high-yield bond portfolio regardless of the amount of assets the funds invest in high-yield bonds.

The amount of any investment management fees that T. Rowe Price earns on the assets of fund s investing in the Institutional High Yield Fund will be used to offset investment management fees otherwise due T. Rowe Price from the investing fund s . Thus, T. Rowe Price will not receive any additional investment management fees from use of the Institutional High Yield Fund in this manner.

Risk Factors of Investing in Municipal Securities

General

Yields on municipal securities are dependent on a variety of factors, including the general conditions of the money market and the municipal bond market, the size of a particular offering, the maturity of the obligations, and the rating of the issue. Municipal 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 municipal 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 all the funds to achieve their investment objectives is also dependent on the continuing ability of the issuers of municipal securities in which the funds invest to meet their obligations for the payment of interest and principal when due. The ratings of Moody`s, S&P, and Fitch IBCA, Inc. ( "Fitch" ) represent their opinions as to the quality of municipal securities which they undertake to rate. Ratings are not absolute standards of quality; consequently, municipal securities with the same maturity, coupon, and rating may have different yields. There are variations in municipal securities, both within a particular classification and between classifications, depending on numerous factors. It should also be pointed out that, unlike other types of investments, offerings of municipal securities have traditionally not been subject to regulation by, or registration with, the SEC, although there have been proposals which would provide for regulation in the future.

The federal bankruptcy statutes relating to the debts of political subdivisions and authorities of states of the United States provide that, in certain circumstances, such subdivisions or authorities may be authorized to initiate bankruptcy proceedings without prior notice to or consent of creditors, which proceedings could result in material and adverse changes in the rights of holders of their obligations.

Proposals have been introduced in Congress to restrict or eliminate the federal income tax exemption for interest on municipal securities, and similar proposals may be introduced in the future. Proposed "Flat Tax" and "Value Added Tax" proposals would also have the effect of eliminating the tax preference for municipal securities. Some of the past proposals would have applied to interest on municipal securities issued before the date of enactment, which would have adversely affected their value to a material degree. If such a proposal were enacted, the availability of municipal securities for investment by the funds and the value of a funds` portfolios would be affected and, in such an event, the funds would reevaluate their investment objectives and policies. Also, recent changes to tax laws broadly lowering tax rates , including lower tax rates on dividends and capital gains, could have a negative impact on the desirability of owning municipal securities.

Although the banks and securities dealers with which the funds will transact business will be banks and securities dealers that T. Rowe Price believes to be financially sound, there can be no assurance that they will be able to honor their obligations to the funds with respect to such transactions.

Municipal Bond Insurance T he funds may purchase insured bonds from time to time. Municipal bond insurance provides an unconditional and irrevocable guarantee that the insured bond`s principal and interest will be paid when due. The guarantee is purchased from a private, non governmental insurance company.

There are two types of insured securities that may be purchased by the funds: bonds carrying either (1) new issue insurance; or (2) secondary insurance. New issue insurance is purchased by the issuer of a bond in order to improve the bond`s credit rating. By meeting the insurer`s standards and paying an insurance premium based on the bond`s principal value, the issuer is able to obtain a higher credit rating for the bond. Once purchased, municipal bond insurance cannot be canceled, and the protection it affords continues as long as the bonds are outstanding and the insurer remains solvent.

The funds may also purchase bonds that carry secondary insurance purchased by an investor after a bond`s original issuance. Such policies insure a security for the remainder of its term. Generally, the funds expect that portfolio bonds carrying secondary insurance will have been insured by a prior investor. However, the funds may, on occasion, purchase secondary insurance on their own behalf.

Each of the municipal bond insurance companies has established reserves to cover estimated losses. Both the method of establishing these reserves and the amount of the reserves vary from company to company. The risk that a municipal bond insurance company may experience a claim extends over the life of each insured bond. Municipal bond insurance companies are obligated to pay a bond`s interest and principal when due if the issuing entity defaults on the insured bond. Although defaults on insured municipal bonds have been low to date, there is no assurance this low rate will continue in the future. A higher than expected default rate could deplete loss reserves and adversely affect the ability of a municipal bond insurer to pay claims to holders of insured bonds, such as the funds.

High-Yiel d Securities Lower-quality bonds , commonly referred to as "junk bonds , " are regarded as predominantly speculative with respect to the issuer`s continuing ability to meet principal and interest payments. Because investment in low- and lower-medium-quality bonds involves greater investment risk, to the extent the funds invest in such bonds, achievement of their investment objectives will be more dependent on T. Rowe Price`s credit analysis than would be the case if the funds were investing in higher-quality bonds. High- yield bonds may be more susceptible to real or perceived adverse economic conditions than investment-grade bonds. A projection of an economic downturn or higher interest rates, for example, could cause a decline in high-yield bond prices because the advent of such events could lessen the ability of highly leveraged issuers to make principal and interest payments on their debt securities. In addition, the secondary trading market for high-yield bonds may be less liquid than the market for higher-grade bonds, which can adversely affect the ability of the funds to dispose of their portfolio securities. Bonds for which there is only a "thin" market can be more difficult to value inasmuch as objective pricing data may be less available , and judgment may play a greater role in the valuation process.

Risk Factors of Investing in Taxable and Tax-Free Money Market Funds

The fund s will limit their purchases of portfolio instruments to those U.S. dollar-denominated securities which the funds` Boards determine present minimal credit risk and which are e ligible s ecurities as defined in Rule 2a-7 under the 1940 Act . Eligible s ecurities are generally securities which have been rated (or whose issuer has been rated or whose issuer has comparable securities rated) in one of the two highest short-term rating categories (which may include sub-categories) by nationally recognized statistical rating organizations (" NRSROs ") or, in the case of any instrument that is not so rated, is of comparable high quality as determined by T. Rowe Price pursuant to written guidelines established under the supervision of the funds` Boards . In addition, the funds may treat variable and floating rate instruments with demand features as short-term securities pursuant to Rule 2a-7 under the 1940 Act.

There can be no assurance that the fund s will achieve their investment objective s or be able to maintain their net asset value s per share at $1.00. The price of the fund s is not guaranteed or insured by the U.S. government and their yield s are not fixed. While the fund s invest in high-grade money market instruments, investment in the fund s is not without risk even if all portfolio instruments are paid in full at maturity. An increase in interest rates

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could reduce the value of the fund s ` portfolio investments, and a decline in interest rates could increase the value.

State Tax-Free Funds

The following information about the State Tax-Free Funds is updated in June of each year. More current information is available in shareholder reports for these funds.

California Tax-Free Bond and California Tax-Free Money Funds

Risk Factors Associated with a California Portfolio

The funds` concentration in debt obligations of one state carries a higher risk than a portfolio that is geographically diversified. In addition to state general obligations and notes, the funds will invest in local bond issues, lease obligations , and revenue bonds, the credit quality and risk of which will vary according to each security ` s own structure and underlying economics.

Debt The state, its agencies, and local governmental entities issued $49.0 billion in long-term debt in 2002. Approximately 26% was general obligation debt, backed by the taxing power of the issuer, while 74% were revenue bonds and lease-backed obligations, issued for a wide variety of purposes, including transportation, housing, education, electric power, and health care.

As of March 1, 2003, the State of California had approximately $26.5 billion in outstanding general obligation bonds secured by the state`s revenue and taxing power. An additional $11.8 billion in authorized but unissued state general obligation debt remains to be issued to comply with voter initiatives and legislative mandates. Debt service on roughly 13% of the state`s outstanding general obligation debt is met from revenue-producing projects such as water, harbor, and housing facilities. As part of its cash management program, the state regularly issues short-term notes to meet its disbursement requirements in advance of revenue collections. During fiscal 2003, the state issued $12.5 billion in short-term notes for this purpose; during fiscal 2002 the state issued $13.2 billion in revenue anticipation notes and warrants. California also operates a commercial paper program, which it uses to finance construction projects. $1.0 billion of commercial paper was outstanding as of March 1, 2003. The state supports $6.3 billion in lease-purchase obligations attributable to the State Public Works Board and other issuers. These obligations are not backed by the full faith and credit of the state, but instead are subject to annual appropriations from the state`s General Fund.

In addition to the state obligations described above, bonds have been issued by special public authorities in California that are not obligations of the state. These include bonds issued by the California Housing Finance Agency, the Department of Water Resources, the Department of Veterans Affairs, California State University, and the California Transportation Commission.

Economy California`s economy is the largest among the 50 states and one of the largest in the world. Its population of 35 million as of July 1, 2002 , represented over 12% of the United States population. The state`s per capita personal income in 2001 exceeded the U.S. average by 7%. While the State of California benefited from its focus on the high - technology sector during 1999 and 2000, it has suffered through the high - technology slowdown that began in the spring of 2001.

California`s economy suffered through a severe recession during the early 1990s as the effects of a slowdown in the national economy were compounded by federal defense spending cuts and military base closings. From 1994 to 2000, the state was in a steady recovery, exhibiting significant job growth and gains in personal income. Growth stalled in 2001 coincident with the "tech bust"; however, job losses and unemployment levels were moderate in comparison to California`s early 1990s recession. The fallout from the "tech bust" manifested itself in much lower personal income tax receipts at the state level as capital gains, bonuses, and option income dropped off. The level of economic activity within the state is important as it influences the growth or contraction of state and local government revenues available for operations and debt service.

Recessionary influences and the effects of overbuilding in selected areas resulted in a contraction in real estate values in many regions of the state in prior years. All urban areas have shown improvement corresponding to gains in the general economic level. Future declines in property values could have a negative effect on the ability of certain local governments to meet their obligations.

As a state, California is more prone to earthquakes than most other states in the country, creating potential economic losses from damages. On January 17, 1994, a major earthquake, measuring 6.8 on the Richter scale,

hit Southern California centered in the area of Northridge. Total damage was estimated at $20 billion. Significant federal aid was received.

Legislative Due to the funds` concentration in the State of California and its municipal issuers, the funds may be affected by certain amendments to the California constitution and state statutes which limit the taxing and spending authority of California governmental entities and may affect their ability to meet their debt service obligations.

In 1978, California voters approved "Proposition 13," adding Article XIIIA to the state constitution which limits ad valorem taxes on real property to 1% of "full cash value" and restricts the ability of taxing entities to increase real property taxes. In subsequent actions, the state substantially increased its expenditures to provide assistance to its local governments to offset the losses in revenues and to maintain essential local services; in the early 1990s the state phased out most local aid in response to its own fiscal pressures.

Another constitutional amendment, Article XIIIB, was passed by voters in 1979 prohibiting the state from spending revenues beyond its annually adjusted "appropriations limit." Any revenues exceeding this limit must be returned to the taxpayers as a revision in the tax rate or fee schedule over the following two years. Such a refund, in the amount of $1.1 billion, occurred in fiscal year 1987.

Proposition 218, the "Right to Vote on Taxes Act," was approved by voters in 1996. It further restricts the ability of local governments to levy and collect both existing and future taxes, assessments, and fees. In addition to further limiting the financial flexibility of local governments in the state, it also increases the possibility of voter- determined tax rollbacks and repeals. The interpretation and application of this proposition will ultimately be determined by the courts.

An effect of the tax and spending limitations in California has been a broad scale shift by local governments away from general obligation debt that requires voter approval and pledging future tax revenues toward lease revenue financing that is subject to abatement and does not require voter approval. Lease-backed debt is generally viewed as a less secure form of borrowing and therefore entails greater credit risk. Local governments also raise capital through the use of Mello-Roos, 1915 Act, and Tax Increment Bonds, all of which are generally riskier than general obligation debt as they often rely on tax revenues to be generated by future development for their support.

Proposition 98, enacted in 1988, changed the state`s method of funding education for grades below the university level. Under this constitutional amendment, the schools are guaranteed a minimum share of state General Fund revenues. The major effect of Proposition 98 has been to restrict the state`s flexibility to respond to fiscal stress.

Future initiatives, if proposed and adopted, or future court decisions could create renewed pressure on California governments and their ability to raise revenues. The state and its underlying localities have displayed flexibility, however, in overcoming the negative effects of past initiatives.

Financial The recession of the early 1990s placed California`s finances under pressure. From 1991 through 1995, accumulated deficits were carried over into the following years and the state`s general obligation bonds were downgraded from AAA to A.

Reflecting the trend of economic recovery from 1996-2000, the state`s financial condition improved considerably during this period. Fiscal year 2000 closed with an unrestricted general fund budgetary reserve balance of $7.1 billion. Fiscal year 2001 was closed with an unrestricted general fund budgetary reserve of $5.4 billion. The state was upgraded to the AA level during 2000. Much of this cushion was the result of explosive growth in income tax receipts on capital gains and bonus and stock option income. The combination of a slowing economy, falling equity markets, and the state`s progressive income tax structure led to a substantial drop in the budgetary reserve to a negative $4.4 billion for fiscal year 2002. In addition, the state suffered through an electricity crisis brought about by a flawed attempt at deregulating the electricity industry that resulted in the issuance of $12 billion of power revenue bonds in late 2002 to finance electricity purchases. At this time, large budget gaps are unfolding for fiscal years 2003 and 2004. The Governor`s Mid-May 2003 Budget Revision has closed a $38.2 billion gap through spending reductions, bond issuance, fund transfers, deferrals, and increased taxes and fees; his proposal is under review by state legislators. In February 2003, Moody`s downgraded the state`s general obligation bonds to A2 from A1; in December 2002, S&P downgraded the state`s general obligations to A from A+. Fitch downgraded the state`s general obligation bonds to A from AA

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in December 2002 as well. While Moody`s and Standard & Poor`s carry a stable outlook on the state`s debt, Fitch has California on Rating Watch Negative. The consequences of the state`s fiscal actions reach beyond its own general obligation bond ratings. Many state agencies and local governments which depend upon state appropriations are vulnerable to cutbacks in funding during recessionary periods.

On December 6, 1994, Orange County filed for protection under Chapter 9 of the U.S. Bankruptcy Code after reports of significant losses in its investment pool. Upon restructuring, the realized losses in the pool were $1.6 billion or 21% of assets. More than 200 public entities, most of which, but not all, are located in Orange County were also depositors in the pool. The county defaulted on a number of its debt obligations. The county emerged from bankruptcy on June 12, 1996. Through a series of long-term financings, it repaid most of its obligations to pool depositors and has become current on its public debt obligations. The balance of claims against the county are payable from any proceeds received from litigation against securities dealers and other parties. The county`s ratings were restored to investment grade in 1998 and were upgraded again in 2000 to 2002.

Sectors Certain areas of potential investment concentration present unique risks. In 2002, $2 billion of tax- exempt debt issued in California was for public or non profit hospitals. A significant portion of the funds` assets may be invested in health care issues. For over a decade, the hospital industry has been under significant pressure to reduce expenses and shorten length of stay, a phenomenon that has negatively affected the financial health of many hospitals. All hospitals are dependent on third-party reimbursement sources such as the federal Medicare and state MediCal programs or private insurers. To the extent these third -party payers reduce reimbursement levels, the individual hospitals may be affected. In the face of these pressures, the trend of hospital mergers and acquisitions has accelerated in recent years. These organizational changes present both risks and opportunities for the institutions involved.

The funds may from time to time invest in electric revenue issues. The financial performance of these utilities was impacted by the industry moves toward deregulation and increased competition. California`s electric utility restructuring plan, Assembly Bill 1890, permitted direct competition to be phased in between 1998 and 2002. This restructuring plan proved to be flawed as it placed over reliance on the spot market for power purchases during a period of substantial supply and demand imbalance. Municipal utilities, while not subject to the legislation, were faced with competitive market forces and worked to pro actively prepare for deregulation. Now that deregulation has been disbanded, municipal utilities face a more traditional set of challenges. In particular, some electric revenue issuers have exposure to or participate in nuclear power plants which could affect the issuer ` s financial performance. Risks include unexpected outages or plant shutdowns or increased Nuclear Regulatory Commission surveillance.

The funds may invest in private activity bond issues for corporate and nonprofit borrowers. S old through various governmental conduits, these issues are backed solely by the revenues pledged by the respective borrow ing corporations. No governmental support is implied.

Florida Intermediate Tax-Free Fund

Risk Factors Associated with a Florida Portfolio

The fund ` s program of investing primarily in AAA rated Florida municipal bonds should significantly lessen the credit risks that would be associated with a portfolio of lower quality Florida bonds. Nevertheless, the fund ` s concentration in securities issued by the State of Florida and its political subdivisions involves greater risk than a fund broadly invested in bonds across many states and municipalities. The credit quality of the fund will depend upon the continued financial strength of the State of Florida and the numerous public bodies, municipalities , and other issuers of debt securities in Florida.

Debt The State of Florida and its local governments issue three basic types of debt, with varying degrees of credit risk: general obligation bonds backed by the unlimited taxing power of the issuer, revenue bonds secured by specific pledged revenues or charges for a related project, and tax-exempt lease obligations, supported by annual appropriations from the issuer, usually with no implied tax or specific revenue pledge. During 2002, Florida`s state and local governments issued approximately $18.8 billion of debt, an increase of almost 33% from the previous year. Debt issued in 2002 was for a wide variety of public purposes, including transportation, housing, education, health care, and utilities.

As of April 15, 2003, the State of Florida had about $16.6 billion of net tax-supported bonds secured by the state`s full faith and credit and various tax revenue. General obligation bonded debt service accounted for a modest 2.8% of all governmental expenditures in fiscal year 2002. Additionally, the state has another $3.8 billion in outstanding bonds which are secured by limited state taxes and revenues. The state`s General Obligation debt is rated Aa2 by Moody`s, AA+ by S&P, and AA by Fitch as of May 1, 2003. Moody`s changed its outlook on Florida to stable from negative based on recent signs of improvements in the state`s sales tax revenue collections and the state`s tradition of conservative fiscal management. S&P and Fitch affirmed their stable outlook on the state`s credit. Debt issued by the state may only be used to fund capital outlay projects. Florida is not authorized to issue debt to fund operations.

Several agencies of the state are authorized to issue debt that does not represent a pledge of the state`s credit. The Florida Housing Finance Authority and Florida Board of Regents are the largest of such issuers. The principal and interest on bonds issued by these bodies are payable solely from specified revenues such as mortgage repayments and university tuition and fees.

Economy Florida`s population totals approximately 16.6 million residents, making it the nation`s fourth most populous state. Because of continued in-migration from other states throughout the 1990s, Florida`s population increased at a faster rate than the national average. In 2002, Florida led the nation in job growth, achieving .9% growth over its 2001 level. As of March 2003, Florida`s unemployment rate was low at 5.3% (compared to the national average of 6%). The national recession that began in 2001 has somewhat impacted the Florida economy with regard to its hospitality and transportation business sectors. However, Florida has been able to maintain its strong tourism base as highlighted by the state`s record of 75.5 million visitors in 2002. This number has grown 6.3% since 2000. The increase in tourism in this recessionary market was partially driven by more tourists taking passenger vehicles trips to the state rather than air transportation.

Florida`s employment base continues to be bolstered by the services, trade, and government sectors that employ 31.4%, 23.2%, and 16.5% respectively of the state`s labor force. The services and trade sectors play a prominent role in Florida`s economy because of the state`s global tourism appeal. In 2002, Florida was the only state in the nation to post positive employment growth numbers. The state`s per capita effective buying income levels remain just below the national average.

Legislative Florida does not have a personal income tax. A constitutional amendment would be required in order to implement such a tax. Although the probability appears very low, the fund cannot rule out the possibility that a personal income tax may be implemented in the future. If such a tax were to be imposed, there is no assurance that interest earned on Florida municipal debt offerings would be exempt from this tax.

Under current Florida law, shares of the fund will be exempt from the state`s intangible personal property tax to the extent that on the annual assessment date (January 1) its assets are solely invested in Florida municipal obligations, U.S. government securities, certain short-term cash investments, or other tax - exempt securities. In recent years, the Florida Legislature began efforts to gradually reduce the intangibles tax. In its 2000 session, the Florida Legislature passed legislation which reduced the intangibles personal property tax rate to its current

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level of 1 mill or $.01 per thousand dollars. The 2001 Florida Legislature did not cut the tax rate on the intangibles tax ; however , it did raise the exemption amount to $250,000 per person from $20,000. This means up to a $500,000 exemption for married couples. Additionally, the l egislature granted the same exemption to non-natural Florida residents. However, the state delayed implementing the intangibles tax reduction until July 1, 2003 , as it anticipated revenue shortfalls related to the lingering 2001 national recession.

The Florida Constitution limits the total ad valorem property tax that may be levied by each county, municipality, and school district to 10 mills or 1.0% of value. The limit applies only to taxes levied for operating purposes and excludes taxes levied for the payment of bonds. This restricts the operating flexibility of local governments in the state and may result from time to time in budget deficits for some local units.

Financial The Florida Constitution and Statutes mandate that the state budget as a whole, and each separate fund within the state budget, be kept in balance from currently available revenues each state fiscal year (July 1 — June 30). The Governor and Comptroller are responsible for insuring that sufficient revenues are collected to meet appropriations and that no deficit occurs in any state fund.

The state`s revenue structure is narrowly based, relying on the sales and use tax for about 84% of its general fund revenues. The state initially estimated a fiscal 2002 revenue shortfall of $1.3 billion. However, its sales and use tax receipts outperformed expectations, leading to a slight surplus in general fund operations, maintaining its unreserved general fund balances at around $2 billion, or 9.6% of expenditures. The unreserved general fund balance enables the state to meet its constitutional budget stabilization reserve requirement of 5% of revenues and its goal to maintain a working capital reserve.

The state`s geographic location renders it vulnerable to natural disasters such as hurricanes. While these events can be devastating, the impact can sometimes stimulate the economy. For example, the state`s finances received a substantial boost in fiscal year 1993 resulting from increased economic activity associated with rebuilding efforts after Hurricane Andrew, which hit south Florida on August 24, 1992. In 1996 Florida settled a lawsuit with the tobacco industry in which the state sought to recover the costs associated with tobacco usage by Floridians. The total amount expected to be collected from the tobacco companies through the settlement is estimated to be around $13 billion over 25 years. This money will be used for children`s health coverage, to reimburse the state for smoking - related medical expenses, and for state enforcement efforts in reducing sales of tobacco products. As of June 30, 2002, settlement collections of $3.24 billion have been reported by the state.

In November 1994, state voters passed a proposal to limit state revenue growth to the average annual growth in personal income over the previous five years. This revenue cap excludes revenue to pay certain expenditures, including debt service. The limitation should not pose an onerous burden to the state`s financial performance. However, demand for governmental services continues to increase with increases in population.

Sectors Certain areas of potential investment concentration present unique risks. For example, a significant portion of the fund`s assets may be invested in health care issues. For over a decade, the hospital industry has been under significant pressure to reduce expenses and shorten the length of hospital stays, a phenomenon that has negatively affected the financial health of many hospitals. All hospitals are dependent on third-party reimbursement sources such as the federal Medicare and state Medicaid programs or private insurers. To the extent these payors reduce reimbursement levels, the individual hospitals may be affected. In the face of these pressures, the trend of hospital mergers and acquisitions has accelerated in recent years. These organizational changes present both risks and opportunities for the institutions involved. Because of the high proportion of elderly residents in Florida, Florida hospitals tend to be highly dependent on Medicare. In addition to the regulations imposed by Medicare, the state also regulates health care. A state board must approve the budgets of all Florida hospitals; certificates of need are required for all significant capital expenditures. The primary management objective is cost control. The inability of some hospitals to achieve adequate cost control while operating in a competitive environment has led to a number of hospital bond defaults.

The fund may from time to time invest in electric revenue issues that have exposure to or participate in nuclear power plants that could affect the issuer ` s financial performance. Such risks include unexpected outages or plant shutdowns, increased Nuclear Regulatory Commission surveillance, or inadequate rate relief. In addition, the financial performance of electric utilities may be impacted by increased competition and deregulation in the electric utility industry.

The fund may invest in private activity bond issues for corporate and nonprofit borrowers. Sold through various governmental conduits, these issues are backed solely by the revenues pledged by the respective borrowing corporations. No government support is implied.

Georgia Tax-Free Bond Fund

Risk Factors Associated wtih a Georgia Portfolio

The fund ` s concentration in the debt obligations of one state carries a higher risk than a portfolio that is geographically diversified. In addition to State of Georgia general obligations and state agency issues, the fund will invest in local bond issues, lease obligations , and revenue bonds, the credit quality and risk of which will vary according to each security ` s own structure and underlying economics.

Deb t The State of Georgia and its local governments issued $6.6 billion in municipal bonds in 2002, a 26.3% increase over 2001. As of May 15, 2003, the state was rated Aaa by Moody`s and AAA by S&P and Fitch. The state`s rating outlook was stable for each rating agency.

The State of Georgia currently has net direct obligations of approximately $6.6 billion. In 1973, a Constitutional Amendment authorizing the issuance of state general obligation (" GO ") bonds was implemented. Since the implementation of the amendment, the state has funded most of its capital needs through the issuance of GO bonds. Previously, capital requirements were funded through the issuance of bonds by 10 separate authorities and secured by lease rental agreements and annual state appropriations. Georgia`s Constitution permits the state to issue bonds for two types of public purposes: (1) general obligation debt and (2) guaranteed revenue debt. The Georgia Constitution imposes certain debt limits and controls. The state`s GO debt service cannot exceed 10% of total revenue receipts less refunds of the state treasury. The state`s GO bonds must have a maximum maturity of 25 years. On May 15, 2003, 66% of the state`s debt was scheduled to be amortized in 10 years or less. Maximum GO debt service requirements are well below the legal limit at 4% of fiscal year 2002 treasury receipts.

The state established "debt affordability" limits which provides that outstanding debt will not exceed 2.7% of personal income or that maximum annual debt service will not exceed 5% of the prior year`s revenues. The state`s near-term debt offerings are projected to maintain its total debt within these levels.

Economy The State of Georgia is the tenth most populous state with a population of approximately 8.6 million residents, increasing 4% since 2000. The state remains the fastest growing state on the eastern seaboard. The state`s economy underwent strong expansion between 1990 and 2000 including strong job growth in the services, high technology, and air transportation sectors. The recent recession that began in 2001 has slowed Georgia`s economy and has it performing at the pace of the national economy. The services sector continues as the state`s leading employment sector at 27.1% of its total employment. The state`s other leading employment sectors include the trade sector at 17.4%, government at 15.4%, and manufacturing at 14.3%. The Atlanta metropolitan statistical area continues to serve as the state`s economic center , capturing approximately 55% of the state`s employment. This area includes Atlanta, the state`s capitol, and 20 surrounding counties. The next largest metropolitan statistical area is the Columbus-Muscogee area.

The state`s moderate cost of living and research centers provided by its colleges and universities continue to attract a very skilled labor force. The state`s unemployment rate increased to 5.3% in the fourth quarter of calendar 2002, but declined to 4.6% at the end of March 2003 as the state showed signs of coming out of its economic slump. The state`s unemployment rate continues to be well below the nation`s average of 6%. The state`s per capita personal income levels are slightly below the U.S. average at 93.8%. The state`s income levels show more favorably when taking into account costs of living and quality of life indicators.

Financial The creditworthiness of the portfolio is largely dependent on the financial strength of the State of Georgia and its localities. The state`s strong economic performance has translated into its strong financial performance and the accumulation of substantial reserves.

At the close of fiscal year 2002, the state had almost $879 million of unreserved general fund reserves or about 5.7% of expenditures. In addition to this healthy unreserved general fund balance, the state had a revenue shortfall reserve of about $700 million and a reserve for Mid-year Adjustments of around $147 million. Such strong reserve levels allow financing flexibility and provide very strong safeguards against short-term economic swings. Through the first eight months of fiscal year 2003, the state`s revenue collections are down 3.4% and

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have been impacted by the slowing economy. The governor has mandated that state agencies cut 5% of their budgets for the fiscal year. The state does not anticipate utilizing its shortfall reserves to cure the pending deficit.

A significant portion of the portfolio`s assets is expected to be invested in the debt obligations of local governments and public authorities with investment-grade ratings of BBB or higher. While local governments in Georgia are primarily reliant on independent revenue sources, such as property taxes, they are not immune to budget shortfalls caused by cutbacks in state aid. The fund may purchase obligations issued by public authorities in Georgia which are not backed by the full faith and credit of the state and may or may not be subject to annual appropriations from the state`s general fund. Likewise, certain enterprises such as water and sewer systems or hospitals may be affected by changes in economic activity.

Sectors Certain areas of potential investment concentration present unique risks. A significant portion of the fund`s assets may be invested in health care issues. For over a decade, the hospital industry has been under significant pressure to reduce expenses and shorten the length of hospital stays, a phenomenon that has negatively affected the financial health of many hospitals. All hospitals are dependent on third-party reimbursement sources such as the federal Medicare and state Medicaid programs or private insurers. To the extent these payors reduce reimbursement levels, the individual hospitals may be affected. In the face of these pressures, the trend of hospital mergers and acquisitions has accelerated in recent years. These organizational changes present both risks and opportunities for the institutions involved.

The fund may from time to time invest in electric revenue issues that have exposure to or participate in nuclear power plants that could affect issuers` financial performance. Such risks include unexpected outages or plant shutdowns, increased Nuclear Regulatory Commission surveillance, or inadequate rate relief. In addition, the financial performance of electric utilities may be impacted by increased competition and deregulation of the electric utility industry.

Maryland Short-Term Tax-Free Bond, Maryland Tax-Free Bond, and Maryland Tax-Free Money Funds

Risk Factors Associated wtih a Maryland Portfolio

The fund s ` concentration in the debt obligations of one state carries a higher risk than a portfolio that is more geographically diversified. In addition to State of Maryland general obligation bonds and debt issued by state agencies, the fund s will invest in local bond issues, lease obligations , and revenue bonds, the credit quality and risk of which will vary according to each security`s own structure and underlying economics.

Debt The State of Maryland and its local governments issue two basic types of debt, with varying degrees of credit risk: general obligation bonds backed by the unlimited taxing power of the issuer and revenue bonds secured by specific pledged fees or charges for a related project. Included within the revenue bond sector are tax-exempt lease obligations that are subject to annual appropriations of a governmental body, usually with no implied tax or specific revenue pledge.

The State of Maryland disclosed in its fiscal year 2002 Comprehensive Annual Financial Report (" CAFR ") dated June 30, 2002, that it has approximately $3.6 billion in general obligation bonds outstanding. As of May 27, 2003, general obligation debt of the State of Maryland was rated Triple-A by Moody`s, S&P, and Fitch. There is no general debt limit imposed by the state constitution or public general laws. The state constitution imposes a 15-year maturity limit on state general obligation bonds. Although voters approved a constitutional amendment in 1982 permitting the state to borrow up to $100 million in short-term notes in anticipation of taxes and revenues, the state has not made use of this authority.

Many agencies of the state government are authorized to borrow money under legislation which expressly provides that the loan obligations shall not be deemed to constitute debt or a pledge of the faith and credit of the state. The Community Development Administration of the Department of Housing and Community Development, the Maryland Water Quality Financing Administration of the Department of Environment, the Maryland State Lottery Agency, certain state higher education institutions, the Maryland Stadium Authority, the Maryland Food Center Authority, and the Maryland Environmental Service have issued and have outstanding bonds of this type. The principal of and interest on bonds issued by these bodies are payable solely from

pledged revenues, principally fees generated from use of the facilities, enterprises financed by the bonds, or other dedicated fees.

Economy The Maryland Board of Revenue Estimates reports that, according to several measures, the state`s economy had outperformed the nation during the nationwide slowdown. The slowdown is apparent in reduced employment and personal income growth. However, the extent of the reduction has not been as severe in Maryland as in other states. One reason for this is Maryland`s limited exposure to the manufacturing sector, which has been hard hit by current economic conditions.

Financial To a large degree, the risk of the portfolio is dependent upon the financial strength of the State of Maryland and its localities. The state continues to demonstrate a conservative approach to managing its finances but has not been immune to the national economic downturn. Fiscal year 2002 concluded with a general fund operating deficit and the general fund balance declined from $2.5 billion to $1.6 billion, representing a still- solid 11% of general fund expenditures. The decline is attributable to the final year of a phased-in income tax reduction, a decrease in capital gains revenue and interest income, and increased spending for education, welfare and medical assistance services, as well as land preservation programs. Since this time, revenue growth has basically stalled and expenditures have risen. The Governor and l egislature have been working on resolving budget gaps for FY03 and FY04. Efforts are focused on a balanced approach, with limited use of one-time transfers from other funds, and maintaining sufficient reserves.

Sectors Investment concentration in a particular sector can present unique risks. A significant portion of the funds` assets may be invested in health care issues. For over a decade, the hospital industry has been under significant pressure to reduce expenses and shorten length of stay, a phenomenon which has negatively affected the financial health of some hospitals. All hospitals are dependent on third-party reimbursement mechanisms. At the present time, Maryland hospitals operate under a system in which reimbursement is determined by a state-administered set of rates and charges that applies to all payors. A federal waiver also allows this system to be applied to Medicare reimbursement rather than the Federal Diagnosis-Related Group ("DRG") system required elsewhere. In order to maintain this Medicare waiver, the cumulative rate of increase in Maryland hospital charges since the base year 1980 must remain below that of U.S. hospitals overall. From 1983 through 1992, the rate of increase for Maryland hospitals was below the national average; for the seven years from 1993 through 1999, Maryland hospital costs grew faster than the national rate, although the cumulative rate of increase since the base year is still below the national average. Any loss of the Medicare waiver in the future may have an adverse impact upon the credit quality of Maryland hospitals.

The funds may from time to time invest in electric revenue issues that have exposure to or participate in nuclear power plants that could affect the issuer`s financial performance. Such risks include delay in construction and operation due to increased regulation, unexpected outages or plant shutdowns, increased Nuclear Regulatory Commission surveillance, or inadequate rate relief. In addition, the financial performance of electric utilities may be impacted by increased competition and deregulation of the industry.

The funds may invest in private activity bond issues for corporate and nonprofit borrowers. S old through various governmental conduits , these issues are backed solely by the revenues pledged by the respective borrowing corporations. No governmental support is implied.

New Jersey Tax-Free Bond Fund

Risk Factors Associated wtih a New Jersey Portfolio

The fund`s concentration in the debt obligations of one state carries a higher risk than a portfolio that is more geographically diversified. In addition to State of New Jersey general obligation bonds and debt issued by state agencies , the fund will invest in local bond issues, lease obligations , and revenue bonds, the credit quality and risk of which will vary according to each security`s own structure and underlying economics.

Debt As of May 1, 2003, general obligation debt of the State is rated Aa2 by Moody`s, AA by S&P, and AA by Fitch. Over the past year, New Jersey`s credit rating has been lowered by Moody`s and Fitch from Aa1 and AA+, respectively. Moody`s outlook is negative , and Fitch has placed its rating on c redit w atch negative . This suggests that additional downgrades may occur. All three rating agencies have expressed concern over the extent of the State`s revenue shortfall during the national economic slowdown. The downgrades also reflect the belief that the State will need several years to return to budgetary balance.

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The State of New Jersey and its local governments issue two basic types of debt: general obligation bonds, which are backed by the unlimited taxing power of the issuer, and revenue bonds, which are secured by specific pledged fees or charges, often from a related project. Included within the revenue bond sector are tax-exempt lease obligations that are subject to annual appropriations of a governmental body, usually with no implied tax or specific revenue pledge. The credit risks of all vary with the obligation`s structure and ultimate obligor.

The State of New Jersey disclosed in its CAFR dated November 27, 2002 , for the fiscal year ending June 30, 2002, that approximately $17.2 billion in state long-term debt obligations were outstanding, an increase in bonded debt of $555.9 million. This debt figure includes state guarantees on the principal and interest payments on certain bonds issued by the New Jersey Sports and Exposition Authority and annual appropriations for installment obligations, capital leases, and certificates of participation. The state may also be required to provide appropriations to meet a deficiency in debt service payments for the South Jersey Port Corporation and the New Jersey Housing and Mortgage Finance Agency.

Many agencies of the state government are authorized to borrow money under legislation that expressly provides that the loan obligations shall not be deemed to constitute debt or a pledge of the faith and credit of the state. The New Jersey Building Authority, New Jersey Transportation Trust Fund Authority, New Jersey Economic Development Authority, New Jersey Educational Facilities Authority, New Jersey Health Care Facilities Financing Authority, New Jersey Highway Authority, New Jersey Housing and Mortgage Finance Agency, New Jersey Sports and Exposition Authority, New Jersey Transit Corporation, and New Jersey Turnpike Authority have outstanding bonds of this nature.

Economy While New Jersey employment increased by 27,200 during calendar year 2001, by December, the state`s employment picture closely resembled that of the nation as a whole. Total jobs peaked in February 2001 and declined steadily thereafter. Personal income is important to watch as nearly all debt, directly or indirectly, is paid from the income of individuals. Personal income grew an estimated 3% during calendar year 2001, but slowed to a 2%-2.5% rate of increase during the first half of 2002. Fewer employment opportunities, falling bonuses in the financial sector, and reduced wage increases in both private and public sector employment markets account for the decrease.

Financial To a large degree, the credit risk of the portfolio is linked to the financial strength of the State of New Jersey and its localities. Fiscal year 2002 was a disappointing year for the state, in that overall revenue collections were $387 million below those of 2001. Three taxes comprise over two-thirds of the state`s total receipts: the gross income tax, the sales and use tax, and the corporate business tax. The first two are roughly one-third each of total receipts. Economic weakness resulted in an anemic increase in sales tax collections, more than offset by substantial declines in gross income and corporate business taxes.

The state is anticipating slight economic growth in fiscal year 2003. Overall tax receipts are expected to climb somewhat, and the state has restructured its corporate business tax. However, there are many uncertainties in the economic outlook and a recovery has been predicted before and not materialized.

Sectors Investment concentration in a particular sector can present unique risks. A significant portion of the fund`s assets may be invested in health care issues. For over a decade, the hospital industry has been under significant pressure to reduce expenses and shorten patients` length of stay, a phenomenon which has negatively affected the financial health of many hospitals. While each hospital bond issue is separately secured by the individual hospital`s revenues, common to all hospitals is reliance to some degree on third-party reimbursement sources such as the federal Medicare or Medicaid programs and private insurers. An individual hospital may be affected to the extent these payors reduce their reimbursements. In the face of these pressures, the trend of hospital mergers and acquisitions has accelerated in recent years. These organizational changes present both risks and opportunities for the institutions involved.

The fund may invest in electric revenue issues which have exposure to or participate in nuclear power plants which could affect the issuer`s financial performance. Such risks include increased regulation and associated expense, unexpected outages or plant shutdowns, increased Nuclear Regulatory Commission surveillance, or inadequate rate relief. In addition, the financial performance of electric utilities may deteriorate from increased competition and deregulation in the industry.

The fund may invest in private activity bond issues for corporate and nonprofit borrowers. These issues sold through government conduits, such as the New Jersey Economic Development Authority and various local

issuers, are backed solely by the revenues pledged by the respective borrowing corporations. No governmental support is implied. In the past, a number of New Jersey Economic Development Authority issues have defaulted as a result of borrower financial difficulties.

The fund may participate in solid waste projects. A number of counties and utility authorities in the state have issued several billion dollars of bonds to fund incinerator projects and solid waste projects. A federal decision that struck down New Jersey`s system of solid waste flow control increases the potential risk of default absent a legislative solution or some form of subsidy from local or state governments.

New York Tax-Free Bond and New York Tax-Free Money Funds

Risk Factors Associated wtih a New York Portfolio

In addition to State of New York general obligation bonds and debt issued by state agencies, the funds will invest in local bond issues, lease obligations, and revenue bonds, the credit quality and risk of which will vary according to each security`s own structure and underlying economics. In spite of holding many different issuers, all will be entities in the State of New York. Concentration in the debt obligations of one state translates into higher risk than a portfolio that is more geographically diversified.

The funds` ability to maintain credit quality is primarily dependent upon the ability and willingness of New York issuers to meet their debt service obligations in a timely fashion. In 1975, the state, New York City, and other related issuers experienced serious financial difficulties that ultimately resulted in much lower credit ratings and loss of access to the public debt markets. A series of fiscal reforms and an improved economic climate allowed these entities to return to financial stability by the early 1980s. Credit ratings were reinstated or raised and access to the public credit markets restored. During the early 1990s, the state and the c ity confronted renewed fiscal pressure, though both experienced financial relief by the latter part of the decade from a strong national economy and high profits and bonus income in the financial services. The state and the city are again grappling with a very difficult budgetary environment. Revenues, particularly those associated with income taxes, have fallen far short of expectations, even as expenditures have continued to rise. The state and city project that an economic recovery will be underway by 2004, but their projections are subject to uncertainty, particularly in a rapidly changing geopolitical environment.

On September 11, 2001, hijackers flew two passenger jetliners into the World Trade Center. The attack destroyed the World Trade Center, damaged other buildings, and caused significant loss of life. The economic dislocation to the state and especially New York City has been substantial. In spite of additional federal and state money to offset the economic impact and for increased security, the c ity is still feeling the after effects of the attack. Some of the economic activity present before the attack may never return, as firms displaced by the event may choose to relocate to another state or do not recover.

New York State

The State of New York disclosed in its fiscal year 2002 CAFR dated July 19, 2002, that it had $4.14 billion in general obligation bonds outstanding. As of May 1, 2003, the state`s general obligation debt was rated AA by both S&P and Fitch and A2 by Moody`s. In addition, the state has entered into lease purchase agreements as well as contractual obligation financing arrangements with certain municipal entities to finance various capital projects totaling $32.36 million. A third important vehicle for the achievement of many state goals are its public benefit corporations. The public benefit corporations had outstanding $56 billion in debt as of fiscal year end 2002. After its fiscal crisis of the mid-70s, New York State maintained balanced operations on a cash basis, although by 1992 it had built up an accumulated general fund deficit of over $6 billion on a Generally Accepted Accounting Principles (" GAAP ") basis. This deficit consisted mainly of overdue tax refunds and payments due localities. To resolve its accumulated general fund deficit, the state established the Local Government Assistance Corporation (" LGAC ") in 1990. A total of approximately $5 billion in LGAC bonds have been issued. The proceeds of these bonds were used to provide the state`s assistance to localities and school districts, enabling the state to reduce its accumulated general fund deficit. As of fiscal year - end March 31, 2002, $4.6 billion of LGAC debt was outstanding.

Certain authorities are more heavily reliant on annual direct state support such as the Urban Development Authority (" UDC "), a public benefit corporation now known as the Empire State Development Corporation. In February 1975, the UDC defaulted on approximately $1 billion of short-term notes. The default was ultimately

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cured by the creation of the Project Finance Authority, through which the state provided assistance to the UDC, including support for debt service. Since then, there have been no other defaults by state authorities.

To a large degree, the risk of the portfolio is dependent on the financial strength of the State of New York and its localities. The state`s economy had been showing signs of reduced growth due to the national economic slowdown even before the events of September 11 occurred. During the first four months of 2002, while employment in the nation fell 1.2%, employment in New York State slipped 1.5%, ranking it 44th amongst all states. The state`s reliance on the securities industry, which though only 2.4% of all employment accounts for 12.4% of all wages, served it well during the boom years of the late 1990s, but haunted it during the down- sizing that came from 2001 and that continues even to 2003. Lay-offs throughout the state`s employment base shrank personal income tax revenues and increased social service costs. The state`s Comptroller reported a $3.4 billion operating deficit in its general fund in fiscal year 2002. The state faces substantial budget gaps for the 2004, 2005 , and 2006 fiscal years. With most reserves exhausted, the state`s leadership is struggling to match revenues to expenditures. As of this writing, the state still did not have a budget for the 2004 fiscal year, which began on 1 April, 2003, though discussions between the legislative and executive branches were in progress. Economic growth is projected to generally improve in calendar year 2004, but the state`s economic recovery is expected to lag the nation, as it has in the past.

New York City

The financial problems of New York City were acute between 1975 and 1979, highlighted by a payment moratorium on the City`s short-term obligations. The most important contribution to the city`s fiscal recovery was the creation of the Municipal Assistance Corporation (" MAC ") for the City of New York. Backed by sales, use, stock transfer, and other taxes, MAC issued bonds and used the proceeds to purchase city bonds and notes. Although investors shunned MAC bonds at first, the program has proven to be very successful.

The city has been hit hard by lay offs in the finance and securities sector. Some 160,000 jobs have been lost since December 2000 with 30,000 in 2002 alone. The unemployment rate in December 2002 was 8.2%, up from 7.1% the year before and higher than the state`s 6.3% and the nation`s 6%. The higher unemployment has resulted in additional cash flow needs for social services. Debt service as a percent of city expenditures is high and will grow higher over the next three years.

The city anticipates a slow recovery, lending a measure of conservativism to its forecasts. Personal income is expected to increase only 1.3% in 2003 after a loss of 0.9% in 2002. 2004 recovery is expected to be strong, though, at 5.4% and about 5% per year thereafter. More job losses are expected in 2003, another 57,000, but gains of 50,000 to 40,000 per year thereafter through 2007.

The c ity is currently anticipating a slight surplus in 2003, partially achieved by bonding out some of the costs associated with the World Trade Center tragedy. This surplus will alleviate somewhat fiscal year 2004`s anticipated $3 billion budget shortfall, but not those projected for 2005 and 2006. Most recent news from the state capital in Albany provides some reassurance, in that it appears that the city will receive permission to raise several local taxes to provide sufficient revenues for its increased expenditures.

As of May 1, 2003, general obligation debt of the city is rated A by S&P, A+ by Fitch, and A2 by Moody`s. Both Moody`s and S&P have placed the city`s credit rating on negative outlook.

Sectors A significant portion of the fund`s assets may be invested in health care issues. For over a decade, hospitals have been under significant pressure to reduce expenses and shorten patients` length of stay, which has negatively affected the financial health of many hospitals. While each hospital bond issue is secured by the individual hospital`s revenues, third-party reimbursement sources such as the Federal Medicare, state Medicaid programs, and private insurers are common to all hospitals. To the extent these third-party payors reduce their reimbursements for health services, individual hospitals will be affected. The state`s support for Medicaid and health services has receded. Under health care reforms implemented over the past five years, hospitals are permitted to negotiate inpatient payment rates with private payors. In addition, the federal balanced budget act of 1997 contains provisions to reduce Medicare expenditures. These pressures have accelerated a trend of hospital mergers and acquisitions and present risks and opportunities for health care institutions and fund investors.

The funds may invest in private activity bond issues issued for corporate and nonprofit borrowers. These issues, sold through various governmental conduits, are backed solely by the revenues pledged by the respective

borrowing corporations. No governmental support is implied. Obligations issued in other states through similar conduits have defaulted in the past as a result of borrower financial difficulties.

Virginia Tax-Free Bond Fund

Risk Factors Associated wtih a Virginia Portfolio

The fund ` s concentration in the debt obligations of one state carries a higher risk than a portfolio that is geographically diversified. In addition to Commonwealth of Virginia general obligations and agency issues, the fund will invest in local bond issues, lease obligations , and revenue bonds, the credit quality and risk of which will vary according to each security`s own structure and underlying economics.

Debt The Commonwealth of Virginia and its local governments issued $6.9 billion of municipal bonds in 2002, including general obligation debt backed by the unlimited taxing power of the issuer and revenue bonds secured by specific pledged fees or charges for an enterprise or project. Included within the revenue bond category are tax-exempt lease obligations that are subject to annual appropriations of a governmental body to meet debt service, usually with no implied tax or specific revenue pledge. Debt issued in 2002 was for a wide variety of public purposes, including transportation, housing, education, health care, and industrial development.

As of June 30, 2002, the Commonwealth of Virginia had $1.0 billion of outstanding general obligation bonds secured by the Commonwealth`s revenue and taxing power, a modest amount compared to many other states. Under state law, general obligation debt is limited to 1.15 times the average of the preceding three years` income tax and sales and use tax collections. The Commonwealth`s outstanding general obligation debt is well below that limit and approximately 75% of the debt service is actually met from revenue-producing capital projects such as universities and toll roads.

The Commonwealth also supports $2.6 billion in debt issued by the Virginia Public Building Authority, the Commonwealth Transportation Board, the Virginia College Building Authority, the Virginia Biotechnology Research Park Authority, the Virginia Port Authority, and the Innovative Technology Authority for transportation purposes. These bonds are not backed by the full faith and credit of the Commonwealth but instead are subject to annual appropriations from the Commonwealth`s General Fund.

In addition to the Commonwealth and public authorities described above, an additional $8.0 billion in bonds has been issued by special public authorities in Virginia that are not obligations of the Commonwealth. These bonds include debt issued by the Virginia Public School Authority, the Virginia Resources Authority, and the Virginia Housing Development Authority.

Economy The Commonwealth of Virginia has a population of approximately 7.2 million, making it the twelfth largest state. Since the 1930s the Commonwealth`s population has grown at a rate near or exceeding the national average. Stable to strong economic growth during the 1990s was led by the Northern Virginia area outside of Washington, D.C., where nearly a third of the Commonwealth`s population is concentrated. The next largest metropolitan area is the Norfolk-Virginia Beach-Newport News area, followed by the Richmond-Petersburg area, including the Commonwealth`s capital of Richmond. The Commonwealth`s economy is broadly based, with a large concentration in service and governmental jobs, followed by manufacturing. Virginia has significant concentrations of high - technology employers, predominantly in Northern Virginia. Per capita income exceeds national averages while unemployment figures have consistently tracked below national averages.

Financial To a large degree, the risk of the portfolio is dependent on the financial strength of the Commonwealth of Virginia and its localities. Virginia is rated AAA by Moody`s, S&P, and Fitch. While S&P and Fitch maintained stable outlooks, Moody`s revised its outlook to negative in December 2001. Moody`s outlook change was coincident with Virginia`s announcement of a sizable budget gap brought about by slowing revenues and rising expenditures. Governor Warner and the Virginia Assembly have since closed this budget gap by cutting expenditures and allowing transfers from the Revenue Stabilization Fund. In addition, the car tax relief

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program was frozen at 70%. The Revenue Stabilization Fund is specifically earmarked to cushion against such a slowdown as Virginia has recently experienced.

The Commonwealth`s budget is prepared on a biennial basis. From 1970 through 2000, the General Fund showed a positive balance for all of its two-year budgetary periods. The national recession and its negative effects on Virginia`s personal income tax collections did, however, force the Commonwealth to draw down its general fund balances in 1992, 2001 , and 2002. On June 30, 2002, the revenue stabilization fund totaled $472 million, representing 4% of revenues.

A significant portion of the fund`s assets is expected to be invested in the debt obligations of local governments and public authorities with investment -grade ratings of BBB or higher. While local governments in Virginia are primarily reliant on independent revenue sources such as property taxes, they are not immune to budget shortfalls caused by cutbacks in state aid. Likewise, certain enterprises such as toll roads or hospitals may be affected by changes in economic activity.

Sectors Certain areas of potential investment concentration present unique risks. A significant portion of the fund`s assets may be invested in health care issues. For over a decade, the hospital industry has been under significant pressure to reduce expenses and shorten length of stay, a phenomenon which has negatively affected the financial health of many hospitals. While each hospital bond issue is separately secured by the individual hospital`s revenues, third-party reimbursement sources such as the federal Medicare and state Medicaid programs or private insurers are common to all hospitals. To the extent these payors reduce reimbursement levels, the individual hospitals may be affected. In the face of these pressures, the trend of hospital mergers and acquisitions has accelerated in recent years. These organizational changes present both risks and opportunities for the institutions involved.

The fund may from time to time invest in electric revenue issues which have exposure to or participate in nuclear power plants which could affect the issuer ` s financial performance. Such risks include unexpected outages or plant shutdowns, increased Nuclear Regulatory Commission surveillance, or inadequate rate relief.

The fund may invest in private activity bond issues for corporate and nonprofit borrowers. These issues sold through various governmental conduits are backed solely by the revenues pledged by the respective borrowing corporations. No governmental support is implied.

All State Tax-Free Funds

Puerto Rico From time to time the funds invest in obligations of Puerto Rico and its public corporations, which are exempt from federal, state, and city or local income taxes. As of May 1, 2003, general obligation debt of the Commonwealth is rated Baa1 by Moody`s and A- by S&P. S&P`s outlook on the Commonwealth`s rating is negative. The majority of the Commonwealth`s debt is issued by the major public agencies that are responsible for many of the island`s public functions, such as water, wastewater, highways, electric power, and education. Most recent figures from the Commonwealth state that public sector debt, including public corporations, totals $30.4 billion. Though this amount would be exceptionally high for a state, the figure includes all debt that the Commonwealth issues for its municipalities. The Commonwealth monitors its debt issuance on an on going basis by comparing the rate of growth of its debt to the rate of growth of its gross product. The two have been fairly evenly matched over the past five years, with total debt increasing by 30.2% and gross product by 28.7%. Since debt authorized for fiscal year 2004 is $540 million, up from the $500 million authorized for 2003 , and because the economy is struggling through a slow period, the gap may widen further.

Annual real gross product growth of over 2% took place from 1997-2001, but slowed to 2.3% in 2001. Real GDP contracted by 0.2% in 2002. The Commonwealth forecasts slight expansion in 2003, accelerating to 2.5% in 2004. Growth can be attributed to a favorable and strong relationship with the United States, continuing economic development programs that are restructuring the economy, and increases in the level of federal transfers. The Commonwealth is vulnerable to an economic downturn in the U.S. because of its tight linkage to the mainland — 54% of all imports are from and 88% of all exports are to the mainland. Manufacturing, especially of pharmaceuticals, is very important, as it accounts for 40% of gross product and 14% of employment. Services, including tourism, are second, representing 39% of gross product and 48% of employment. Though hourly wages in the Commonwealth`s manufacturing sector were 67% of those of the mainland as of December 31, 2002, Puerto Rico still faces employment flight to less developed countries. Higher value-added manufacturing such as pharmaceuticals, which is 59% of manufacturing, has held its ground, but

more labor-intensive industries like textiles, tuna canning, and leather products have suffered. Overall manufacturing jobs fell 6.4% in 2002 as a result.

As mentioned above, tourism is very important to the Commonwealth. San Juan is the largest homeport for cruise ships in the Caribbean and the fourth largest in the world. Visitors ` expenditures were 3.5% of gross product in 2002 and 4% of gross product in 2001. The prominence of tourism represents another risk factor. After the September 11 tragedy, hotel occupancy rates fell to 64% from 70% in 2001. Occupancy rates are showing some recovery: there was a slight rise during the first seven months of the year even after annual growth of 3-4% per year in the number of rooms available for rent.

The Commonwealth`s economy is also vulnerable to oil prices since 99% of its energy generating capacity is oil- fired. To address this issue, the Electric Power Authority recently completed a natural gas plant and a coal-fired facility, which, together, should reduce oil`s share of capacity to 70%.

For many years, U.S. companies operating in Puerto Rico were eligible to receive a special tax credit available under Section 936 of the federal tax code. Section 936 entitled certain corporations to credit income derived from business activities in the Commonwealth against their United States corporate income tax and spurred significant expansion in capital intensive manufacturing. However, federal tax legislation passed in 1993 and 1996 decreased the tax benefits and will eliminate them altogether in the 2006 tax year. At present, the impact of the phase outs over the short and long term is impossible to forecast.

The Commonwealth and the United States are tied to each other politically as well as economically. The Commonwealth came under U.S. sovereignty pursuant to the Treaty of Paris signed in 1898, which ended the Spanish-American War. Puerto Ricans have been citizens of the U.S. since 1917. Since 1952, Puerto Ricans have had their own constitution, approved in a special referendum by the people of Puerto Rico and by the U.S. Congress and President. The future political status of the Commonwealth within the United States remains unclear, though. The U.S. House of Representatives voted in March 1998 in favor of a political status act and Puerto Rico held a referendum later that year to determine whether it would preserve its Commonwealth status or transition to becoming a state, but, of the voting options available, a majority of voters opted for the choice labeled "None of the Above."

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INVESTMENT PROGRAM

Types of Securities

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

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, the funds may wish to take advantage of 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 funds 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 funds 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 funds 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.

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.

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 funds 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

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 1933 Act. Where registration is required, the fund may be obligated to pay all or part of the registration expenses, and a considerable period may elapse between the time of the decision to sell and the time the fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the fund might obtain a less favorable price than prevailed when it decided to sell. Restricted securities will be priced at fair value as determined in accordance with procedures prescribed by the funds` Boards. If, through the appreciation of illiquid securities or the depreciation of liquid securities, the funds should be in a position where more than the allowable amount of its net assets is invested in illiquid assets, including restricted securities, the funds will take appropriate steps to protect liquidity.

Notwithstanding the above, the funds 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 funds, to trade in privately placed securities even though such securities are not registered under the 1933 Act. The liquidity of these securities is monitored based on a variety of factors.

Debt Securities

U.S. Government Obligations Bills, notes, bonds, and other debt securities issued by the U.S. Treasury. These are direct obligations of the U.S. government and differ mainly in the length of their maturities.

U.S. Government Agency Securities Issued or guaranteed by U.S. government-sponsored enterprises and federal agencies. These include securities issued by the Federal National Mortgage Association ( "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 U.S. 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 funds 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.

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Corporate Debt Securities Outstanding corporate debt securities (e.g., bonds and debentures) . Corporate notes may have fixed, variable, or floating rates.

Short-Term Corporate Debt Securities Outstanding nonconvertible corporate debt securities (e.g., bonds and debentures) which have one year or less remaining to maturity. Corporate notes may have fixed, variable, or floating rates.

Commercial Paper and Commercial Notes Short-term promissory notes issued by corporations primarily to finance short-term credit needs. Certain notes may have floating or variable rates and may contain options, exercisable by either the buyer or the seller, that extend or shorten the maturity of the note.

Foreign Government Securities Issued or guaranteed by a foreign government, province, instrumentality, political subdivision, or similar unit thereof.

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

Funding Agreements Obligations of indebtedness negotiated private ly between the funds and an insurance company. Often such instruments will have maturities with unconditional put features, exercisable by the funds, requiring return of principal within one year or less.

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

Mortgage-Related Securities

Mortgage-Backed Securities Mortgage-backed securities are securities representing an interest in a pool of mortgages. The mortgages may be of a variety of types, including adjustable rate, conventional 30-year fixed rate, graduated payment, and 15-year. Principal and interest payments made on the mortgages in the underlying mortgage pool are passed through to the funds. This is in contrast to traditional bonds where principal is normally paid back at maturity in a lump sum. Unscheduled prepayments of principal shorten the securities` weighted average life and may lower their total return. (When a mortgage in the underlying mortgage pool is prepaid, an unscheduled principal prepayment is passed through to the funds. This principal is returned to the funds at par. As a result, if a mortgage security were trading at a premium, its total return would be lowered by prepayments, and if a mortgage security were trading at a discount, its total return would be increased by prepayments.) The value of these securities also may change because of changes in the market`s perception of the creditworthiness of the federal agency that issued them. In addition, the mortgage securities market in general may be adversely affected by changes in governmental regulation or tax policies.

U.S. Government Agency Mortgage-Backed Securities These are obligations issued or guaranteed by the U.S. government or one of its agencies or instrumentalities, such as GNMA, FNMA, the Federal Home Loan Mortgage Corporation ( "Freddie Mac" or "FHLMC" ), and the Federal Agricultural Mortgage Corporation ( "Farmer Mac" or "FAMC" ). FNMA, FHLMC, and FAMC obligations are not backed by the full faith and credit of the U.S. government as GNMA certificates are, but they are supported by the instrumentality`s right to borrow from the U.S. Treasury. U.S. Government Agency Mortgage-Backed Certificates provide for the pass- through to investors of their pro-rata share of monthly payments (including any prepayments) made by the individual borrowers on the pooled mortgage loans, net of any fees paid to the guarantor of such securities and the servicer of the underlying mortgage loans. Each of GNMA, FNMA, FHLMC, and FAMC guarantees timely distributions of interest to certificate holders. GNMA and FNMA guarantee timely distributions of scheduled principal. FHLMC has in the past guaranteed only the ultimate collection of principal of the underlying mortgage loan; however, FHLMC now issues mortgage-backed securities (FHLMC Gold PCS) which also guarantee timely payment of monthly principal reductions.

GNMA Certificates GNMA is a wholly owned corporate instrumentality of the United States within the Department of Housing and Urban Development. The National Housing Act of 1934, as amended (the "Housing Act" ), authorizes GNMA to guarantee the timely payment of the principal of and interest on certificates that are based on and backed by a pool of mortgage loans insured by the Federal Housing Administration under the Housing Act, or Title V of the Housing Act of 1949 ( "FHA Loans" ), or guaranteed by the Department of Veterans Affairs under the Servicemen`s Readjustment Act of 1944, as amended ( "VA Loans" ), or by pools of other eligible mortgage loans. The Housing Act provides that the full faith and credit of

the U.S. government is pledged to the payment of all amounts that may be required to be paid under any guaranty. In order to meet its obligations under such guaranty, GNMA is authorized to borrow from the U.S. Treasury with no limitations as to amount.

FNMA Certificates FNMA is a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act of 1938. FNMA Certificates represent a pro-rata interest in a group of mortgage loans purchased by FNMA. FNMA guarantees the timely payment of principal and interest on the securities it issues. The obligations of FNMA are not backed by the full faith and credit of the U.S. government.

FHLMC Certificates FHLMC is a corporate instrumentality of the United States created pursuant to the Emergency Home Finance Act of 1970, as amended ( "FHLMC Act" ). FHLMC Certificates represent a pro-rata interest in a group of mortgage loans purchased by FHLMC. FHLMC guarantees timely payment of interest and principal on certain securities it issues and timely payment of interest and eventual payment of principal on other securities it issues. The obligations of FHLMC are obligations solely of FHLMC and are not backed by the full faith and credit of the U.S. government.

FAMC Certificates FAMC is a federally chartered instrumentality of the United States established by Title VIII of the Farm Credit Act of 1971, as amended ( "Charter Act" ). FAMC was chartered primarily to attract new capital for financing of agricultural real estate by making a secondary market in certain qualified agricultural real estate loans. FAMC provides guarantees of timely payment of principal and interest on securities representing interests in, or obligations backed by, pools of mortgages secured by first liens on agricultural real estate. Similar to FNMA and FHLMC, FAMC Certificates are not supported by the full faith and credit of the U.S. government; rather, FAMC may borrow from the U.S. Treasury to meet its guaranty obligations.

As discussed above, prepayments on the underlying mortgages and their effect upon the rate of return of a mortgage-backed security is the principal investment risk for a purchaser of such securities, like the funds. Over time, any pool of mortgages will experience prepayments due to a variety of factors, including (1) sales of the underlying homes (including foreclosures), (2) refinancings of the underlying mortgages, and (3) increased amortization by the mortgagee. These factors, in turn, depend upon general economic factors, such as level of interest rates and economic growth. Thus, investors normally expect prepayment rates to increase during periods of strong economic growth or declining interest rates, and to decrease in recessions and rising interest rate environments. Accordingly, the life of the mortgage-backed security is likely to be substantially shorter than the stated maturity of the mortgages in the underlying pool. Because of such variation in prepayment rates, it is not possible to predict the life of a particular mortgage-backed security, but FHA statistics indicate that 25- to 30-year single family dwelling mortgages have an average life of approximately 12 years. The majority of GNMA Certificates are backed by mortgages of this type, and, accordingly, the generally accepted practice treats GNMA Certificates as 30-year securities which prepay in full in the 12th year. FNMA and FHLMC Certificates may have differing prepayment characteristics.

Fixed - rate mortgage-backed securities bear a stated "coupon rate" which represents the effective mortgage rate at the time of issuance, less certain fees to GNMA, FNMA, and FHLMC for providing the guarantee, and the issuer for assembling the pool and for passing through monthly payments of interest and principal.

Payments to holders of mortgage-backed securities consist of the monthly distributions of interest and principal less the applicable fees. The actual yield to be earned by a holder of mortgage-backed securities is calculated by dividing interest payments by the purchase price paid for the mortgage-backed securities (which may be at a premium or a discount from the face value of the certificate).

Monthly distributions of interest, as contrasted to semiannual distributions which are common for other fixed interest investments, have the effect of compounding and thereby raising the effective annual yield earned on mortgage-backed securities. Because of the variation in the life of the pools of mortgages which back various mortgage-backed securities, and because it is impossible to anticipate the rate of interest at which future principal payments may be reinvested, the actual yield earned from a portfolio of mortgage-backed securities will differ significantly from the yield estimated by using an assumption of a certain life for each mortgage- backed security included in such a portfolio as described above.

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

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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, 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.

In recent years, new types of CMO tranches have evolved. These include floating-rate CMOs, planned amortization classes, accrual bonds, and CMO residuals. These newer structures affect the amount and timing of principal and interest received by each tranche from the underlying collateral. Under certain of these new structures, given classes of CMOs have priority over others with respect to the receipt of prepayments on the mortgages. Therefore, depending on the type of CMOs in which the funds invest, the investment may be subject to a greater or lesser risk of prepayment than other types of mortgage-related securities.

The primary risk of any mortgage security is the uncertainty of the timing of cash flows. For CMOs, the primary risk results from the rate of prepayments on the underlying mortgages serving as collateral and from the structure of the deal (priority of the individual tranches). An increase or decrease in prepayment rates (resulting from a decrease or increase in mortgage interest rates) will affect the yield, average life, and price of CMOs. The prices of certain CMOs, depending on their structure and the rate of prepayments, can be volatile. Some CMOs may also not be as liquid as other securities.

U.S. Government Agency Multi- C lass Pass-Through Securities Unlike CMOs, U.S. Government Agency Multi- C lass Pass-Through Securities, which include FNMA Guaranteed Real Estate Mortgage Investment Conduit Pass-Through Certificates and FHLMC Multi-Class Mortgage Participation Certificates, are ownership interests in a pool of m ortgage a ssets. Unless the context indicates otherwise, all references herein to CMOs include multi-class pass-through securities.

Multi-Class Residential Mortgage Securities Such securities represent interests in pools of mortgage loans to residential home buyers made by commercial banks, savings and loan associations, or other financial institutions. Unlike GNMA, FNMA, and FHLMC securities, the payment of principal and interest on Multi-Class Residential Mortgage Securities is not guaranteed by the U.S. government or any of its agencies. Accordingly, yields on Multi-Class Residential Mortgage Securities have been historically higher than the yields on U.S. government mortgage securities. However, the risk of loss due to default on such instruments is higher since they are not guaranteed by the U.S. government or its agencies. Additionally, pools of such securities may be divided into senior or subordinated segments. Although subordinated mortgage securities may have a higher yield than senior mortgage securities, the risk of loss of principal is greater because losses on the underlying mortgage loans must be borne by persons holding subordinated securities before those holding senior mortgage securities.

Privately Issued Mortgage-Backed Certificates These are pass-through certificates issued by nongovernmental issuers. Pools of conventional residential or commercial mortgage loans created by such issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government guarantees of payment. Timely payment of interest and principal of these pools is, however, generally supported by various forms of insurance or guarantees, including individual loan, title, pool, and hazard insurance. The insurance and guarantees are issued by government entities, private insurance, or the mortgage poolers. Such insurance and guarantees and the creditworthiness of the issuers thereof will be considered in determining whether a mortgage-related security meets the funds` quality standards. The funds may buy mortgage-related securities without insurance or guarantees if through an examination of the loan experience and practices of the poolers, the investment manager determines that the securities meet the funds` quality standards.

Stripped Mortgage-Backed Securities These instruments are a type of potentially high-risk derivative. They represent interests in a pool of mortgages, the cash flow of which has been separated into its interest and principal components. Interest only securities ("IOs") receive the interest portion of the cash flow while principal only securities ("POs") receive the principal portion. IOs and POs are usually structured as tranches of a CMO. Stripped Mortgage-Backed Securities may be issued by U.S. government agencies or by private issuers similar to those described above with respect to CMOs and privately issued mortgage-backed certificates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. The value of the other mortgage-backed securities described herein, like other debt instruments, will tend to move in the opposite direction compared to interest rates. Under the Code, POs may generate taxable income from the current accrual of original issue discount, without a corresponding distribution of cash to the funds.

The cash flows and yields on IO and PO classes are extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets. In the case of IOs, prepayments affect the amount, but not the timing, of cash flows provided to the investor. In contrast, prepayments on the mortgage pool affect the timing, but not the amount, of cash flows received by investors in POs. For example, a rapid or slow rate of principal payments may have a material adverse effect on the prices of IOs or POs, respectively. If the underlying mortgage assets experience greater than anticipated prepayments of principal, investors may fail to fully recoup their initial investment in an IO class of a stripped mortgage-backed security, even if the IO class is rated AAA or Aaa or is derived from a full faith and credit obligation. Conversely, if the underlying mortgage assets experience slower than anticipated prepayments of principal, the price on a PO class will be affected more severely than would be the case with a traditional mortgage-backed security.

The staff of the SEC has advised the funds that it believes the funds should treat IOs and POs, other than government-issued IOs or POs backed by fixed-rate mortgages, as illiquid securities and, accordingly, limit its investments in such securities, together with all other illiquid securities, to 15% of the funds` net assets. Under the staff`s position, the determination of whether a particular government-issued IO or PO backed by fixed-rate mortgages is liquid may be made on a case by case basis under guidelines and standards established by the funds` Boards . The funds` Boards have delegated to T. Rowe Price the authority to determine the liquidity of these investments based on the following guidelines: the type of issuer; type of collateral, including age and prepayment characteristics; rate of interest on coupon relative to current market rates and the effect of the rate on the potential for prepayments; complexity of the issue`s structure, including the number of tranches; and size of the issue and the number of dealers who make a market in the IO or PO.

Adjustable Rate Mortgage Securities ( " ARMs " ) ARMs, like fixed - rate mortgages, have a specified maturity date, and the principal amount of the mortgage is repaid over the life of the mortgage. Unlike fixed - rate mortgages, the interest rate on ARMs is adjusted at regular intervals based on a specified, published interest rate "index" such as a Treasury rate index. The new rate is determined by adding a specific interest amount, the "margin," to the interest rate of the index. Investment in ARM securities allows the funds to participate in changing interest rate levels through regular adjustments in the coupons of the underlying mortgages, resulting in more variable current income and lower price volatility than longer-term fixed - rate mortgage securities. ARM securities are a less effective means of locking in long-term rates than fixed - rate mortgages since the income from adjustable rate mortgages will increase during periods of rising interest rates and decline during periods of falling rates.

Other Mortgage-Related Securities G overnmental, government-related, or private entities may create mortgage loan pools offering pass-through investments in addition to those described above. The mortgages underlying these securities may be alternative mortgage instruments, that is, mortgage instruments whose principal or interest payments may vary or whose terms to maturity may differ from customary long-term fixed-rate mortgages. As new types of mortgage-related securities are developed and offered to investors, the investment manager will, consistent with the funds` objectives, policies, and quality standards, consider making investments in such new types of securities.

Asset-Backed Securitie s

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

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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.

The credit quality of most asset-backed securities depends primarily on the credit quality of the assets underlying such securities, how well the entity issuing the security is insulated from the credit risk of the originator or any other affiliated entities, and the amount and quality of any credit support provided to the securities. The rate of principal payment on asset-backed securities generally depends on the rate of principal payments received on the underlying assets, which in turn may be affected by a variety of economic and other factors. As a result, the yield on any asset-backed security is difficult to predict with precision and actual yield to maturity may be more or less than the anticipated yield to maturity. Asset-backed securities may be classified as pass-through certificates or collateralized obligations.

Pass-through certificates are asset-backed securities which represent an undivided fractional ownership interest in an underlying pool of assets. Pass-through certificates usually provide for payments of principal and interest received to be passed through to their holders, usually after deduction for certain costs and expenses incurred in administering the pool.

Because pass-through certificates represent an ownership interest in the underlying assets, the holders thereof directly bear the risk of any defaults by the obligors on the underlying assets not covered by any credit support.

Asset-backed securities issued in the form of debt instruments, also known as collateralized obligations, are generally issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Such assets are most often trade, credit card, or automobile receivables. The assets collateralizing such asset-backed securities are pledged to a trustee or custodian for the benefit of the holders thereof. Such issuers generally hold no assets other than those underlying the asset-backed securities and any credit support provided. As a result, although payments on such asset-backed securities are obligations of the issuers, in the event of defaults on the underlying assets not covered by any credit support , the issuing entities are unlikely to have sufficient assets to satisfy their obligations on the related asset-backed securities.

Methods of Allocating Cash Flows While many asset-backed securities are issued with only one class of security, many asset-backed securities are issued in more than one class, each with different payment terms. Multiple class asset-backed securities are issued for two main reasons. First, multiple classes may be used as a method of providing credit support. This is accomplished typically through creation of one or more classes whose right to payments on the asset-backed security is made subordinate to the right to such payments of the remaining class or classes. Second, multiple classes may permit the issuance of securities with payment terms, interest rates, or other characteristics differing both from those of each other and from those of the underlying assets. Examples include so-called "strips" (asset-backed securities entitling the holder to disproportionate interests with respect to the allocation of interest and principal of the assets backing the security) and securities with a class or classes having characteristics which mimic the characteristics of non-asset-backed securities, such as floating interest rates (i.e., interest rates which adjust as a specified benchmark changes) or scheduled amortization of principal.

Asset-backed securities in which the payment streams on the underlying assets are allocated in a manner different than those described above may be issued in the future. The funds may invest in such asset-backed securities if such investment is otherwise consistent with its investment objectives and policies and with the investment restrictions of the funds.

Types of Credit Support Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, such securities may contain elements of credit support. Such credit support falls into two classes: liquidity protection and protection against ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that scheduled payments on the underlying pool are made in a timely fashion. Protection against ultimate

default ensures ultimate payment of the obligations on at least a portion of the assets in the pool. Such protection may be provided through guarantees, insurance policies, or letters of credit obtained from third parties , "external credit enhancement," through various means of structuring the transaction , "internal credit enhancement," or through a combination of such approaches. Examples of asset-backed securities with credit support arising out of the structure of the transaction include "senior-subordinated securities" (multiple class asset-backed securities with certain classes subordinate to other classes as to the payment of principal thereon, with the result that defaults on the underlying assets are borne first by the holders of the subordinated class) and asset-backed securities that have "reserve funds" (where cash or investments, sometimes funded from a portion of the initial payments on the underlying assets, are held in reserve against future losses) or that have been "over collateralized" (where the scheduled payments on, or the principal amount of, the underlying assets substantially exceeds that required to make payment of the asset-backed securities and pay any servicing or other fees). The degree of credit support provided on each issue is based generally on historical information respecting the level of credit risk associated with such payments. Depending upon the type of assets securitized, historical information on credit risk and prepayment rates may be limited or even unavailable. Delinquency or loss in excess of that anticipated could adversely affect the return on an investment in an asset-backed security.

Automobile Receivable Securities The funds may invest in asset-backed securities which are backed by receivables from motor vehicle installment sales contracts or installment loans secured by motor vehicles ( "Automobile Receivable Securities" ). Since installment sales contracts for motor vehicles or installment loans related thereto ( "Automobile Contracts" ) typically have shorter durations and lower incidences of prepayment, Automobile Receivable Securities generally will exhibit a shorter average life and are less susceptible to prepayment risk.

Most entities that issue Automobile Receivable Securities create an enforceable interest in their respective Automobile Contracts only by filing a financing statement and by having the servicer of the Automobile Contracts, which is usually the originator of the Automobile Contracts, take custody thereof. In such circumstances, if the servicer of the Automobile Contracts were to sell the same Automobile Contracts to another party, in violation of its obligation not to do so, there is a risk that such party could acquire an interest in the Automobile Contracts superior to that of the holders of Automobile Receivable Securities. Also, although most Automobile Contracts grant a security interest in the motor vehicle being financed, in most states the security interest in a motor vehicle must be noted on the certificate of title to create an enforceable security interest against competing claims of other parties. Due to the large number of vehicles involved, however, the certificate of title to each vehicle financed, pursuant to the Automobile Contracts underlying the Automobile Receivable Security, usually is not amended to reflect the assignment of the seller`s security interest for the benefit of the holders of the Automobile Receivable Securities. Therefore, there is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on the securities. In addition, various state and federal securities laws give the motor vehicle owner the right to assert against the holder of the owner`s Automobile Contract certain defenses such owner would have against the seller of the motor vehicle. The assertion of such defenses could reduce payments on the Automobile Receivable Securities.

Credit Card Receivable Securities The funds may invest in asset-backed securities backed by receivables from revolving credit card agreements ( "Credit Card Receivable Securities" ). Credit balances on revolving credit card agreements ( "Accounts" ) are generally paid down more rapidly than are Automobile Contracts. Most of the Credit Card Receivable Securities issued publicly to date have been p ass- t hrough c ertificates. In order to lengthen the maturity of Credit Card Receivable Securities, most such securities provide for a fixed period during which only interest payments on the underlying Accounts are passed through to the security holder and principal payments received on such Accounts are used to fund the transfer to the pool of assets supporting the related Credit Card Receivable Securities of additional credit card charges made on an Account. The initial fixed period usually may be shortened upon the occurrence of specified events which signal a potential deterioration in the quality of the assets backing the security, such as the imposition of a cap on interest rates. The ability of the issuer to extend the life of an issue of Credit Card Receivable Securities thus depends upon the continued generation of additional principal amounts in the underlying account during the initial period and the non- occurrence of specified events. An acceleration in cardholders` payment rates or any other event which shortens the period during which additional credit card charges on an Account may be transferred to the pool of assets supporting the related Credit Card Receivable Security could shorten the weighted average life and yield of the Credit Card Receivable Security.

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Credit card holders are entitled to the protection of a number of state and federal consumer credit laws, many of which give such holder the right to set off certain amounts against balances owed on the credit card, thereby reducing amounts paid on Accounts. In addition, unlike most other asset-backed securities, Accounts are unsecured obligations of the cardholder.

Other Assets The fund s may invest in a sset-backed securities backed by assets other than those described above, including, but not limited to, home equity loans, small business loans and accounts receivable, equipment leases, commercial real estate loans, boat loans, and manufacturing housing loans. The funds may invest in such securities in the future if such investment is otherwise consistent with their investment objectives and policies.

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

Real Estate and R e al Estate Investment Trust ( " REIT s " )

In vestments in REITS may experience many of the same risks involved with investing in real estate directly. These risks include: declines in real estate values, risks related to local or general economic conditions, particularly lack of demand, overbuilding and increased competition, increases in property taxes and operating expenses, changes in zoning laws, heavy cash flow dependency, possible lack of availability of mortgage funds, obsolescence, losses due to natural disasters, condemnation of properties, regulatory limitations on rents and fluctuations in rental income, variations in market rental rates, and possible environmental liabilities. REITs may own real estate properties (Equity REITs) and be subject to these risks directly, or may make or purchase mortgages (Mortgage REITs) and be subject to these risks indirectly through underlying construction, development, and long-term mortgage loans that may default or have payment problems.

Equity REITs can be affected by rising interest rates that may cause investors to demand a high annual yield from future distributions which, in turn, could decrease the market prices for the REITs. In addition, rising interest rates also increase the costs of obtaining financing for real estate projects. Since many real estate projects are dependent upon receiving financing, this could cause the value of the Equity REITs in which the funds invest to decline.

Mortgage REITs may hold mortgages that the mortgagors elect to prepay during periods of declining interest rates , which may diminish the yield on such REITs. In addition, borrowers may not be able to repay mortgages when due , which could have a negative effect on the funds.

Some REITs have relatively small market capitalizations which could increase their volatility. REITs tend to be dependent upon specialized management skills and have limited diversification so they are subject to risks inherent in operating and financing a limited number of properties. In addition, when the funds invest in REITs, a shareholder will bear his proportionate share of fund expenses and indirectly bear similar expenses of the REITs. REITs depend generally on their ability to generate cash flow to make distributions to shareholders. In addition, both E quity and M ortgage REITs are subject to the risks of failing to qualify for tax-free status of income under the Code or failing to maintain exemption from the 1940 Act.

Collateralized Bond or Loan Obligations

Collateralized Bond Obligations ( "CBOs" ) are bonds collateralized by corporate bonds, mortgages, or asset- backed securities and Collateralized Loan Obligations ( "CLOs" ) are bonds collateralized by bank loans. CBOs and CLOs are structured into tranches, and payments are allocated such that each tranche has a predictable cash flow stream and average life. CBOs are fairly recent entrants to the fixed-income market. Most CBOs issued to date have been collateralized by high-yield bonds or loans, with heavy credit enhancement.

Loan Participations and Assignments

Loan participations and assignments (collectively "participations" ) will typically be participating interests in loans made by a syndicate of banks, represented by an agent bank which has negotiated and structured the loan, to corporate borrowers to finance internal growth, mergers, acquisitions, stock repurchases, leveraged buyouts, and other corporate activities. Such loans may also have been made to governmental borrowers, especially governments of developing countries which is referred to as Loans to Developing Countries debt ( "LDC debt" ). LDC debt will involve the risk that the governmental entity responsible for the repayment of the debt may be unable or unwilling to do so when due. The loans underlying such participations may be secured or unsecured, and the funds may invest in loans collateralized by mortgages on real property or which have no collateral. The

loan participations themselves may extend for the entire term of the loan or may extend only for short "strips" that correspond to a quarterly or monthly floating-rate interest period on the underlying loan. Thus, a term or revolving credit that extends for several years may be subdivided into shorter periods.

The loan participations in which the funds will invest will also vary in legal structure. Occasionally, lenders assign to another institution both the lender`s rights and obligations under a credit agreement. Since this type of assignment relieves the original lender of its obligations, it is called a novation. More typically, a lender assigns only its right to receive payments of principal and interest under a promissory note, credit agreement, or similar document. A true assignment shifts to the assignee the direct debtor-creditor relationship with the underlying borrower. Alternatively, a lender may assign only part of its rights to receive payments pursuant to the underlying instrument or loan agreement. Such partial assignments, which are more accurately characterized as "participating interests," do not shift the debtor-creditor relationship to the assignee, who must rely on the original lending institution to collect sums due and to otherwise enforce its rights against the agent bank which administers the loan or against the underlying borrower.

There may not be a recognizable, liquid public market for loan participations. To the extent this is the case, the funds would consider the loan participation as illiquid and subject to the funds` restriction on investing no more than 15% of their net assets in illiquid securities.

Where required by applicable SEC positions, the funds will treat both the corporate borrower and the bank selling the participation interest as an issuer for purposes of its fundamental investment restriction on diversification.

Various service fees received by the funds from loan participations may be treated as non-interest income depending on the nature of the fee (commitment, takedown, commission, service , or loan origination). To the extent the service fees are not interest income, they will not qualify as income under Section 851(b) of the Code. Thus the sum of such fees plus any other nonqualifying income earned by the funds cannot exceed 10% of total income.

Trade Claims

Trade claims are non-securitized rights of payment arising from obligations other than borrowed funds. Trade claims typically arise when, in the ordinary course of business, vendors and suppliers extend credit to a company by offering payment terms. Generally, when a company files for bankruptcy protection, payments on these trade claims cease and the claims are subject to compromise along with the other debts of the company. Trade claims typically are bought and sold at a discount reflecting the degree of uncertainty with respect to the timing and extent of recovery. In addition to the risks otherwise associated with low-quality obligations, trade claims have other risks, including the possibility that the amount of the claim may be disputed by the obligor.

Over the last few years a market for the trade claims of bankrupt companies has developed. Many vendors are either unwilling or lack the resources to hold their claim through the extended bankruptcy process with an uncertain outcome and timing. Some vendors are also aggressive in establishing reserves against these receivables, so that the sale of the claim at a discount may not result in the recognition of a loss.

Trade claims can represent an attractive investment opportunity because these claims typically are priced at a discount to comparable public securities. This discount is a reflection of both a less liquid market, a smaller universe of potential buyers, and the risks peculiar to trade claim investing. It is not unusual for trade claims to be priced at a discount to public securities that have an equal or lower priority claim.

As noted above, investing in trade claims does carry some unique risks which include:

Establishing the Amount of the Claim Frequently, the supplier`s estimate of its receivable will differ from the customer`s estimate of its payable. Resolution of these differences can result in a reduction in the amount of the claim. This risk can be reduced by only purchasing scheduled claims (claims already listed as liabilities by the debtor) and seeking representations from the seller.

Defenses to Claims The debtor has a variety of defenses that can be asserted under the bankruptcy code against any claim. Trade claims are subject to these defenses, the most common of which for trade claims relates to preference payments. (Preference payments are all payments made by the debtor during the 90 days prior to the filing. These payments are presumed to have benefited the receiving creditor at the expense of the other creditors. The receiving creditor may be required to return the payment unless it can show the payments were

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received in the ordinary course of business.) While none of these defenses can result in any additional liability of the purchaser of the trade claim, they can reduce or wipe out the entire purchased claim. This risk can be reduced by seeking representations and indemnification from the seller.

Documentation/Indemnification Each trade claim purchased requires documentation that must be negotiated between the buyer and seller. This documentation is extremely important since it can protect the purchaser from losses such as those described above. Legal expenses in negotiating a purchase agreement can be fairly high. Additionally, it is important to note that the value of an indemnification depends on the seller`s credit.

Volatile Pricing Due to Illiquid Market There are only a handful of brokers for trade claims and the quoted price of these claims can be volatile. Generally, it is expected that t rade c laims would be considered illiquid investments.

No Current Yield/Ultimate Recovery Trade claims are almost never entitled to earn interest. As a result, the return on such an investment is very sensitive to the length of the bankruptcy, which is uncertain. Although not unique to trade claims, it is worth noting that the ultimate recovery on the claim is uncertain and there is no way to calculate a conventional yield to maturity on this investment. Additionally, the exit for this investment is a plan of reorganization which may include the distribution of new securities. These securities may be as illiquid as the original trade claim investment.

Tax Issue Although the issue is not free from doubt, it is likely that t rade c laims would be treated as non- securities investments. As a result, any gains would be considered "nonqualifying" under the Code. The funds may have up to 10% of their gross income (including capital gains) derived from nonqualifying sources.

Zero - Coupon and Pay-in-Kind Bonds

A zero-coupon security has no cash coupon payments. Instead, the issuer sells the security at a substantial discount from its maturity value. The interest received by the investor from holding this security to maturity is the difference between the maturity value and the purchase price. The advantage to the investor is that reinvestment risk of the income received during the life of the bond is eliminated. However, zero-coupon bonds, like other bonds, retain interest rate and credit risk and usually display more price volatility than those securities that pay a cash coupon.

Pay-in-Kind ( "PIK" ) Instruments are securities that pay interest in either cash or additional securities, at the issuer`s option, for a specified period. PIKs, like zero - coupon bonds, are designed to give an issuer flexibility in managing cash flow. PIK bonds can be either senior or subordinated debt and trade flat (i.e., without accrued interest). The price of PIK bonds is expected to reflect the market value of the underlying debt plus an amount representing accrued interest since the last payment. PIK s are usually less volatile than zero-coupon bonds, but more volatile than cash pay securities.

For federal income tax purposes, these types of bonds will require the recognition of gross income each year even though no cash may be paid to the funds until the maturity or call date of the bond. The funds will nonetheless be required to distribute substantially all of this gross income each year to comply with the Internal Revenue Code, and such distributions could reduce the amount of cash available for investment by the funds.

Adjustable Rate Securities

Generally, the maturity of a security is deemed to be the period remaining until the date (noted on the face of the instrument) on which the principal amount must be paid or , in the case of an instrument called for redemption, the date on which the redemption payment must be made. However, certain securities may be issued with demand features or adjustable interest rates that are reset periodically by predetermined formulas or indexes in order to minimize movements in the principal value of the investment in accordance with Rule 2a-7 under the 1 940 Act . Such securities may have long-term maturities, but may be treated as a short-term investment under certain conditions. Generally, as interest rates decrease or increase, the potential for capital appreciation or depreciation on these securities is less than for fixed rate obligations. These securities may take a variety of forms, including variable rate, floating rate, and put option securities.

Variable Rate Securities Variable rate instruments are those whose terms provide for the adjustment of their interest rates on set dates and which, upon such adjustment, can reasonably be expected to have a market value that approximates its par value. A variable rate instrument, the principal amount of which is scheduled to be paid in 397 days or less, is deemed to have a maturity equal to the period remaining until the next readjustment

of the interest rate. A variable rate instrument which is subject to a demand feature entitles the purchaser to receive the principal amount of the underlying security or securities, either (i) upon notice of no more than 30 days or (ii) at specified intervals not exceeding 397 days and upon no more than 30 days` notice, is deemed to have a maturity equal to the longer of the period remaining until the next readjustment of the interest rate or the period remaining until the principal amount can be recovered through demand.

When-Issued Securities and Forward Commitment Contracts

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 funds to the issuer and no interest accrues to the funds. 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 funds make 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 funds 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 funds (to the extent of the securities used for cover). Such securities either will mature or, if necessary, be sold on or before the settlement date.

To the extent the fund s remain 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 funds` net asset value than if the funds did not purchase them.

Municipal Securities

Subject to the investment objectives and programs described in the prospectus and the additional investment restrictions described in this Statement of Additional Information, the funds` portfolios may consist of any combination of the various types of municipal securities described below or other types of municipal securities that may be developed. The amount of the funds` assets invested in any particular type of municipal security can be expected to vary.

The term "municipal securities" means obligations issued by or on behalf of states, territories, and possessions of . the United States and the District of Columbia and their political subdivisions, agencies , and instrumentalities, . as well as certain other persons and entities, the interest from which is exempt from federal . income tax. In determining the tax-exempt status of a municipal security, the funds rely on the opinion of the issuer`s bond counsel at the time of the issuance of the security. However, it is possible this opinion could be overturned, and , as a result, the interest received by the funds from such a security might not be exempt from federal income tax.

Municipal securities are classified by maturity as notes, bonds, or adjustable rate securities.

Municipal Notes

Municipal notes generally are used to provide short-term operating or capital needs and generally have maturities of one year or less. Municipal notes include:

Tax Anticipation Notes Tax anticipation notes are issued to finance working capital needs of municipalities. Generally, they are issued in anticipation of various seasonal tax revenue, such as income, property, use , and business taxes, and are payable from these specific future taxes.

Revenue Anticipation Notes Revenue anticipation notes are issued in expectation of receipt of revenue s, such as sales taxes, toll revenues , or water and sewer charges, that are used to pay off the notes .

Bond Anticipation Notes Bond anticipation notes are issued to provide interim financing until long-term financing can be arranged. In most cases, the long-term bonds then provide the money for the repayment of the notes.

Tax-Exempt Commercial Paper Tax-exempt commercial paper is a short-term obligation with a stated maturity of 270 days or less. It is issued by state and local governments or their agencies to finance seasonal working capital need s or as short-term financing in anticipation of longer-term financing.

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Municipal Bonds Municipal bonds, which meet longer-term capital needs and generally have maturities of more than one year when issued, have two principal classifications: general obligation bonds and revenue bonds. Two additional categories of potential purchases are lease revenue bonds and pre refunded/escrowed to maturity bonds. Another type of municipal bond is referred to as an i ndustrial d evelopment b ond.

General Obligation Bonds Issuers of general obligation bonds include states, counties, cities, towns, and special districts. The proceeds of these obligations are used to f und a wide range of public projects, including construction or improvement of schools, public buildings, highways and roads, and general projects not supported by user fees or specifically identified revenues. The basic security behind general obligation bonds is the issuer`s pledge of its full faith and credit and taxing power for the payment of principal and interest. The taxes that can be levied for the payment of debt service may be limited or unlimited as to the rate or amount of special assessments. In many cases voter approval is required before an issuer may sell this type of bond.

Revenue Bonds The principal security for a revenue bond is generally the net revenues derived from a particular facility or enterprise or , in some cases, the proceeds of a special charge or other pledged revenue source. Revenue bonds are issued to finance a wide variety of capital projects including: electric, gas, water , and sewer systems; highways, bridges, and tunnels; port and airport facilities; colleges and universities; and hospitals. Revenue bonds are sometimes used to finance various privately operated facilities provided they meet certain tests established for tax-exempt status.

Although the principal security behind these bonds may vary, many provide additional security in the form of a mortgage or debt service reserve fund. Some authorities provide further security in the form of the state`s ability (without obligation) to make up deficiencies in the debt service reserve fund. Revenue bonds usually do not require prior voter approval before they may be issued.

Lease Revenue Bonds Municipal borrowers may also finance capital improvements or purchases with tax- exempt leases. The security for a lease is generally the borrower`s pledge to make annual appropriations for lease payments. The lease payment is treated as an operating expense subject to appropriation risk and not a full faith and credit obligation of the issuer. Lease revenue bonds are generally considered less secure than a general obligation or revenue bond and often do not include a debt service reserve fund. To the extent the funds` Boards determine such securities are illiquid, they will be subject to the funds` limit on illiquid securities. There have also been certain legal challenges to the use of lease revenue bonds in various states.

The liquidity of such securities will be determined based on a variety of factors which may include, among others: (1) the frequency of trades and quotes for the obligation; (2) the number of dealers willing to purchase or sell the security and the number of other potential buyers; (3) the willingness of dealers to undertake to make a market in the security; (4) the nature of the marketplace trades, including the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer; and (5) the rating assigned to the obligation by an established rating agency or T. Rowe Price.

Pre refunded/Escrowed to Maturity Bonds Certain municipal bonds have been refunded with a later bond issue from the same issuer. The proceeds from the later issue are used to defease the original issue. In many cases the original issue cannot be redeemed or repaid until the first call date or original maturity date. In these cases, the refunding bond proceeds typically are used to buy U.S. Treasury securities that are held in an escrow account until the original call date or maturity date. The original bonds then become "pre refunded" or "escrowed to maturity" and are considered high-quality investments. While still tax-exempt, the security is the proceeds of the escrow account. To the extent permitted by the S E C and the Internal Revenue Service, a funds` investment in such securities refunded with U.S. Treasury securities will, for purposes of diversification rules applicable to the funds, be considered an investment in U. S. Treasury securities.

Private Activity Bonds Under current tax law all municipal debt is divided broadly into two groups: governmental purpose bonds and private activity bonds. Governmental purpose bonds are issued to finance traditional public purpose projects such as public buildings and roads. Private activity bonds may be issued by a state or local government or public authority but principally benefit private users and are considered taxable unless a specific exemption is provided.

The tax code currently provides exemptions for certain private activity bonds such as not-for-profit hospital bonds, small-issue industrial development revenue bonds , and mortgage subsidy bonds, which may still be issued as tax-exempt bonds. Some, but not all, private activity bonds are subject to alternative minimum tax.

Industrial Development Bonds Industrial development bonds are considered m unicipal b onds if the interest paid is exempt from federal income tax. They are issued by or on behalf of public authorities to raise money to finance various privately operated facilities for business and manufacturing, housing, sports, and pollution control. These bonds are also used to finance public facilities such as airports, mass transit systems, ports, and parking. The payment of the principal and interest on such bonds is dependent solely on the ability of the facility`s user to meet its financial obligations and the pledge, if any, of real and personal property so financed as security for such payment.

Participation Interests The funds may purchase from third parties participation interests in all or part of specific holdings of municipal securities. The purchase may take different forms: in the case of short-term securities, the participation may be backed by a liquidity facility that allows the interest to be sold back to the third party (such as a trust, broker , or bank) for a predetermined price of par at stated intervals. The seller may receive a fee from the funds in connection with the arrangement.

In the case of longer-term bonds, the fund s may purchase interests in a pool of municipal bonds or a single municipal bond or lease without the right to sell the interest back to the third party.

The fund s will not purchase participation interests unless a satisfactory opinion of counsel or ruling of the Internal Revenue Service has been issued that the interest earned from the municipal securities on which the fund s hold participation interests is exempt from federal income tax to the fund s. However, there is no guarantee the IRS would treat such interest income as tax-exempt.

When-Issued Securities

New issues of municipal securities are often offered on a when-issued basis; that is, delivery and payment for the securities normally takes place 15 to 45 days or more after the date of the commitment to purchase. The payment obligation and the interest rate that will be received on the securities are each fixed at the time the buyer enters into the commitment. The funds will only make a commitment to purchase such securities with the intention of actually acquiring the securities. However, the funds may sell these securities before the settlement date if it is deemed advisable as a matter of investment strategy. The funds will maintain cash , high- grade marketable debt securities , or other suitable cover with its custodian bank equal in value to commitments for when-issued securities. Such securities either will mature or, if necessary, be sold on or before the settlement date. Securities purchased on a when-issued basis and the securities held in the funds` portfolios are subject to changes in market value based upon the public perception of the creditworthiness of the issuer and changes in the level of interest rates (which will generally result in similar changes in value, i.e., both experiencing appreciation when interest rates decline and depreciation when interest rates rise). Therefore, to the extent the funds remains fully invested or almost fully invested at the same time that it has purchased securities on a when-issued basis, there will be greater fluctuations in its net asset value than if it solely set aside cash to pay for when-issued securities. In the case of the m oney f und s , this could increase the possibility that the market value of the funds` assets could vary from $1.00 per share. In addition, there will be a greater potential for the realization of capital gains, which are not exempt from federal income tax. When the time comes to pay for when-issued securities, the funds will meet their obligations from then-available cash flow, sale of securities , or, although it would not normally expect to do so, from sale of the when-issued securities themselves (which may have a value greater or less than the payment obligation). The policies described in this paragraph are not fundamental and may be changed by the funds upon notice to shareholders.

Residual Interest Bonds are a type of high-risk derivative. The fund s may purchase municipal bond issues that are structured as two-part, residual interest bond and variable rate security offerings. The issuer is obligated only to pay a fixed amount of tax-free income that is to be divided among the holders of the two securities. The interest rate for the holders of the variable rate securities will be determined by an index or auction process held approximately every seven to 35 days while the bondholders will receive all interest paid by the issuer minus the amount given to the variable rate security holders and a nominal auction fee. Therefore, the coupon of the residual interest bonds, and thus the income received, will move inversely with respect to short-term, 7 - to 35- day tax-exempt interest rates. There is no assurance that the auction will be successful and that the variable rate security will provide short-term liquidity. The issuer is not obligated to provide such liquidity. In general, these securities offer a significant yield advantage over standard municipal securities, due to the uncertainty of the shape of the yield curve (i.e., short-term versus long-term rates) and consequent income flows.

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Unlike many adjustable rate securities, residual interest bonds are not necessarily expected to trade at par and in fact present significant market risks. In certain market environments, residual interest bonds may carry substantial premiums or be at deep discounts. This is a relatively new product in the municipal market with limited liquidity to date.

The fund s may invest in other types of derivative instruments as they become available.

For the purpose of fund s investment restrictions, the identification of the "issuer" of municipal securities which are not general obligation bonds is made by T. Rowe Price, on the basis of the characteristics of the obligation as described above, the most significant of which is the source of fund s for the payment of principal and interest on such securities.

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

Forwards

In some cases, t he funds may purchase bonds on a when-issued basis with longer - than - standard settlement dates, in some cases exceeding one to two years. In such cases, the fund s must execute a receipt evidencing the obligation to purchase the bond on the specified issue date, and must segregate cash internally to meet that forward commitment. Municipal "forwards" typically carry a substantial yield premium to compensate the buyer for the risks associated with a long when-issued period, including: shifts in market interest rates that could materially impact the principal value of the bond, deterioration in the credit quality of the issuer, loss of alternative investment options during the when-issued period, changes in tax law or issuer actions that would affect the exempt interest status of the bonds and prevent delivery, failure of the issuer to complete various steps required to issue the bonds, and limited liquidity for the buyer to sell the escrow receipts during the when- issued period.

New Income and Short-Term Bond Funds

Industry Concentration

When the market for corporate debt securities is dominated by issues in the gas utility, gas transmission utility, electric utility, telephone utility, or petroleum industry, the funds will as a matter of fundamental policy concentrate 25% or more, but not more than 50%, of their total assets, in any one such industry, if the funds have cash for such investment (i.e., the funds will not sell portfolio securities to raise cash) and, if in T. Rowe Price`s judgment, the return available and the marketability, quality, and availability of the debt securities of such industry justifies such concentration in light of the funds` investment objectives. Domination would exist with respect to any one such industry, when, in the preceding 30-day period, more than 25% of all new-issue corporate debt offerings (within the four highest grades of Moody`s or S&P`s and with maturities of 10 years or less) of $25,000,000 or more consisted of issues in such industry. Although the funds will normally purchase corporate debt securities in the secondary market as opposed to new offerings, T. Rowe Price believes that the new issue-based dominance standard, as defined above, is appropriate because it is easily determined and represents an accurate correlation to the secondary market. Investors should understand that concentration in any industry may result in increased risk. Investments in any of these industries may be affected by environmental conditions, energy conservation programs, fuel shortages, difficulty in obtaining adequate return on capital in financing operations and large construction programs, and the ability of the capital markets to absorb debt issues. In addition, it is possible that the public service commissions which have jurisdiction over these industries may not grant future increases in rates sufficient to offset increases in operating expenses. These industries also face numerous legislative and regulatory uncertainties at both federal and state government levels. Management believes that any risk to the funds which might result from concentration in any industry will be minimized by the funds` practice of diversifying their investments in other respects. The funds` policy with respect to industry concentration is a fundamental policy. (For investment restriction on industry concentration, see "Investment Restrictions").

Money Funds

Determination of Maturity of Money Market Securities

The funds may only purchase securities which at the time of investment have remaining maturities of 397 calendar days or less. The other funds may also purchase money market securities. In determining the maturity of money market securities, funds will follow the provisions of Rule 2a-7 under the 1940 Act .

Prime Reserve, Summit Cash Reserves, and Reserve Investment Funds

First Tier Money Market Securities Defined

At least 95% of the funds` total assets will be maintained in first tier money market securities. First tier money market securities are those which are described as First Tier Securities under Rule 2a-7 of the 1940 Act . These include any security with a remaining maturity of 397 days or less that is rated (or that has been issued by an issuer that is rated with respect to a class of short-term debt obligations, or any security within that class that is comparable in priority and security with the security) by any two nationally recognized statistical rating organizations (or if only one NRSRO has issued a rating, that NRSRO) in the highest rating category for short- term debt obligations (within which there may be sub-categories). First Tier Securities also include unrated securities comparable in quality to rated securities, as determined by T. Rowe Price pursuant to written guidelines established in accordance with Rule 2a-7 under the 1940 Act under the supervision of the funds` Boards.

PORTFOLIO MANAGEMENT PRACTICES

Swap Agreements

A number of t he fund s may enter into interest rate, index, total return, credit, and, to the extent they may invest in foreign currency-denominated securities, currency rate swap agreements. The fund s may also enter into options on swap agreements (" swap options ") on the types of swaps listed above.

Swap agreements are two - party contracts entered into primarily by institutional investors for a specified period of time. In a standard swap transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on a particular predetermined investment, index, or currency. The gross returns to be exchanged or swapped between the parties are generally calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a basket of securities representing a particular index. A swap option is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement at some designated future time on specified terms. The fund s may write (sell) and purchase put and call swap options.

One example of the use of swaps within the fund s may be to manage the interest rate sensitivity of the fund s . The fund s might receive or pay a fixed-rate interest rate of a particular maturity and pay or receive a floating rate in order to increase or decrease the duration of the fund s . Or, the fund s may buy or sell swap options to effect the same result. The fund s may also replicate a security by selling it, placing the proceeds in cash deposits, and receiving a fixed rate in the swap market.

Another example is the use of credit default swaps to buy or sell credit protection. A default swap is a bilateral contract that enables an investor to buy or sell protection against a defined-issuer credit event. The seller of credit protection against a security or basket of securities receives an up-front or periodic payment to compensate against potential default event(s). The fund s may enhance income by selling protection or protect credit risk by buying protection. Market supply and demand factors may cause distortions between the cash securities market and the default swap market. The credit protection market is still relatively new and should be considered illiquid.

Most swap agreements entered into by the fund s would calculate the obligations of the parties to the agreement on a "net basis." Consequently, the funds ` current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). The funds ` current obligations under a net

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swap agreement will be accrued daily (offset against any amounts owed to the fund s ) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by assets determined to be liquid by T. Rowe Price.

The use of swap agreements by the fund s entails certain risks. Interest rate and currency swaps could result in losses if interest rate or currency changes are not correctly anticipated by the fund s . Total return swaps could result in losses if the reference index, security, or investments do not perform as anticipated by the fund s . Credit default swaps could result in losses if the fund s do not correctly evaluate the creditworthiness of the company on which the credit default swap is based.

The fund s will generally incur a greater degree of risk when it writes a swap option than when it purchases a swap option. When the fund s purchase a swap option it risks losing only the amount of the premium they have paid should they decide to let the option expire unexercised. However, when the fund s write a swap option they will become obligated, upon exercise of the option, according to the terms of the underlying agreement.

Because swaps are two - party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, the fund s bear the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The fund s will enter into swap agreements only with counterparties that meet certain standards of creditworthiness. The swaps market is a relatively new market and is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the funds ` ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

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

Lending of Portfolio Securities

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 the funds ` investment program. The collateral, in turn, is invested in short-term securities. While the securities are being lent, the funds making the loan 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 s employ an agent to implement their securities lending program and the agent receives a fee from the fund s for its services. The funds have 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 funds 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 to be of good standing and will not be made unless, in the judgment of T. Rowe Price , the consideration to be earned from such loans would justify the risk. Additionally, the fund s bear 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.

Interfund Borrowing and Lending

The fund s are part ies to an exemptive order received from the SEC on December 8, 1998, amended on November 23, 1999, that permits them to borrow money from and/or lend money to other funds in the T. Rowe Price complex. 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 equitable treatment of all participating funds. The program is subject to the oversight and periodic review of the Boards of the Price Funds.

Repurchase Agreements

The fund s may enter into a repurchase agreement s through which an investor (such as the fund s ) purchase securit ies (known as the "underlying security" ) from well-established securities dealer s or bank s that are member s 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 funds will enter into repurchase agreements only where (1) the underlying securities are of the type (excluding maturity limitations) which the funds` 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 funds 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 funds seek 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.

Reverse Repurchase Agreements

Although the fund s h ave no current intention of engaging in reverse repurchase agreements, th ey reserve the right to do so. Reverse repurchase agreements are ordinary repurchase agreements in which a fund is the seller of, rather than the investor in, securities and agrees to repurchase them at an agreed upon time and price. Use of a reverse repurchase agreement may be preferable to a regular sale and later repurchase of the securities because it avoids certain market risks and transaction costs. A reverse repurchase agreement may be viewed as a type of borrowing by the funds, subject to Investment Restriction (1). (See "Investment Restrictions.")

Money Market Reserves

T he fund s may invest their 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 .

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

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

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 .

High Yield and Institutional High Yield Funds

Short Sales

The fund s may make short sales for hedging purposes to protect the m against companies whose credit is deteriorating. Short sales are transactions in which the funds sell a security they do not own in anticipation of a decline in the market value of that security. The funds` short sales would be limited to situations where the funds own a debt security of a company and would sell short the common or preferred stock or another debt security at a different level of the capital structure of the same company. No securities will be sold short if, after the effect is given to any such short sale, the total market value of all securities sold short would exceed 2% of the value of the funds` net assets.

To complete a short-sale transaction, the funds must borrow the security to make delivery to the buyer. The funds then are obligated to replace the security borrowed by purchasing it at the market price at the time of replacement. The price at such time may be more or less than the price at which the security was sold by the fund. Until the security is replaced, the funds are required to pay to the lender amounts equal to any dividends or interest which accrue during the period of the loan. To borrow the security, the funds also may be required

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to pay a premium, which would increase the cost of the security sold. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet margin requirements, until the short position is closed out.

Until the funds replace a borrowed security in connection with a short sale, the funds will: (a) maintain daily a segregated account, containing cash, U.S. government securities, or other suitable cover as permitted by the SEC, at such a level that (i) the amount deposited in the account plus the amount deposited with the broker as collateral will equal the current value of the security sold short and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time it was sold short; or (b) otherwise cover its short position.

The funds will incur a loss as a result of the short sale if the price of the security sold short increases between the date of the short sale and the date on which the funds replace the borrowed security. The funds will realize a gain if the security sold short declines in price between those dates. This result is the opposite of what one would expect from a cash purchase of a long position in a security. The amount of any gain will be decreased, and the amount of any loss increased, by the amount of any premium, dividends, or interest the funds may be required to pay in connection with a short sale. Any gain or loss on the security sold short would be separate from a gain or loss on the funds security being hedged by the short sale.

The Taxpayer Relief Act of 1997 requires a mutual fund to recognize gain upon entering into a constructive sale of stock, a partnership interest, or certain debt positions occurring after June 8, 1997. A constructive sale is deemed to occur if the funds enter into a short sale, an offsetting notional principal contract, or a futures or forward contract which is substantially identical to the appreciated position. Some of the transactions in which the funds are permitted to invest may cause certain appreciated positions in securities held by the funds to qualify as a "constructive sale," in which case it would be treated as sold and the resulting gain subjected to tax or, in the case of a mutual fund, distributed to shareholders. If this were to occur, the funds would be required to distribute such gains even though it would receive no cash until the later sale of the security. Such distributions could reduce the amount of cash available for investment by the funds. Because these rules do not apply to "straight" debt transactions, it is not anticipated that they will have a significant impact on the funds; however, the effect cannot be determined until the issuance of clarifying regulations.

All funds

Warrants

Warrants can be highly volatile and have no voting rights, pay no dividends, and have no rights with respect to the assets of the corporation issuing them. Warrants basically are options to purchase securities at a specific price valid for a specific period of time. They do not represent ownership of the securities, but only the right to buy them. Warrants differ from call options in that warrants are issued by the issuer of the security which may be purchased on their exercise, whereas call options may be written or issued by anyone. The prices of warrants do not necessarily move parallel to the prices of the underlying securities.

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

Options

Options are a type of potentially high-risk derivative. The fund s have no current intention of investing in options on securities, although they reserve the right to do so. Appropriate disclosure would be added to each funds ` prospectus and Statement of Additional Information when and if the fund s decide to invest in options.

Writing Covered Call Options

The fund s may write (sell) American or European style "covered" call options and purchase options to close out options previously written . In writing covered call options, the fund s expect to generate additional premium income , which should serve to enhance the funds` total return and reduce the effect of any price decline of the security or currency involved in the option. Covered call options will generally be written on securities or currencies which, in T. Rowe Price `s opinion, are not expected to have any major price increases or moves in the near future but which, over the long term, are deemed to be attractive investments for the funds.

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 obligation terminates upon the expiration of the call option or such earlier time at which the writer effects a closing purchase transaction by repurchasing an option identical to that previously sold. To secure his obligation to deliver the underlying security or currency in the case of a call option, a writer is required to deposit in escrow the underlying security or currency or other assets in accordance with the rules of a clearing corporation.

The fund s generally will write only covered call options. This means that the fund s 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 s will write a call option that is not covered as indicated above but where the fund s 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 funds to the risks of writing uncovered options.

Portfolio securities or currencies on which call options may be written will be purchased solely on the basis of investment considerations consistent with the funds` investment objectives. 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 funds generally will not do) but capable of enhancing the funds` total return. When writing a covered call option, the funds, in return for the premium, give 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 funds have no control over when they may be required to sell the underlying securities or currencies, since they may be assigned an exercise notice at any time prior to the expiration of its obligation as a writer. If a call option the funds have written expires, the funds 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 funds will realize a gain or loss from the sale of the underlying security or currency. The funds do not consider a security or currency covered by a call to be "pledged" as that term is used in the funds` policy , which limits the pledging or mortgaging of 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 funds` loss could be significant.

The premium received is the market value of an option. The premium the funds will receive from writing a call option will reflect, among other things, the current market price of the underlying security or currency, the relationship of the exercise price to such market price, the historical price volatility of the underlying security or currency, and the length of the option period. Once the decision to write a call option has been made, T. Rowe Price , in determining whether a particular call option should be written on a particular security or currency, will consider the reasonableness of the anticipated premium and the likelihood that a liquid secondary market will exist for those options. The premium received by the funds for writing covered call options will be recorded as a liability of the fund s. 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 values per share of the funds are 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.

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 funds to write another call option on the underlying security or currency with either a different exercise price or expiration date or both. If the funds desire to sell a particular security or currency from their portfolios on which they have written a call option, or purchased a put option, they 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 funds will be able to effect such closing transactions at

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favorable prices. If the funds cannot enter into such a transaction, they may be required to hold a security or currency that they might otherwise have sold. When the funds write a covered call option, they run 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 funds 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 funds 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 funds 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 their portfolios. In such cases, additional costs may be incurred.

The funds 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 funds.

The funds 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 funds` total assets. In calculating the 25% limit, the funds 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 funds may write American or European style covered put options and purchase options to close out options previously written by the funds. 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.

The funds would write put options only on a covered basis . This means that the funds 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 funds will own an option to sell the underlying security or currency subject to the option having an exercise price equal to or greater than the exercise price of the "covered" option at all times while the put option is outstanding. (The rules of a clearing corporation currently require that such assets be deposited in escrow to secure payment of the exercise price.)

The funds would generally write covered put options in circumstances where T. Rowe Price wishes to purchase the underlying security or currency for the funds` portfolios at a price lower than the current market price of the security or currency. In such event the funds 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 funds 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 funds. In addition, the funds, because they do not own the specific securities or currencies which they may be required to purchase in exercise of the put, cannot benefit from appreciation, if any, with respect to such specific securities or currencies.

The funds 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 funds` total assets. In

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

The premium received by the fund s for writing covered put options will be recorded as a liability of the fund s . 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 s 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 funds may purchase American or European style put options. As the holder of a put option, the funds have 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 funds may enter into closing sale transactions with respect to such options, exercise them, or permit them to expire. The funds may purchase put options for defensive purposes in order to protect against an anticipated decline in the value of their securities or currencies. An example of such use of put options is provided next.

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

The funds may also purchase put options at a time when they do not own the underlying security or currency. By purchasing put options on a security or currency they do not own, the funds seek 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 funds will lose their 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.

The funds will not commit more than 5% of total assets to premiums when purchasing put options. The premium paid by the funds when purchasing a put option will be recorded as an asset of the funds 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 values per share of the funds are 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.

Purchasing Call Options

The funds may purchase American or European style call options. As the holder of a call option, the funds have 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 funds may enter into closing sale transactions with respect to such options, exercise them, or permit them to expire. The funds may purchase call options for the purpose of increasing its current return or avoiding tax consequences which could reduce their current return. The funds may also purchase call options in order to acquire the underlying securities or currencies. Examples of such uses of call options are provided next.

Call options may be purchased by the funds for the purpose of acquiring the underlying securities or currencies for their portfolios. Utilized in this fashion, the purchase of call options enables the funds 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 funds 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

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option , rather than the underlying security or currency itself, the funds are partially protected from any unexpected decline in the market price of the underlying security or currency and in such event could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option.

The funds may also purchase call options on underlying securities or currencies they own in order to protect unrealized gains on call options previously written by them. 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.

The fund s will not commit more than 5% of total assets to premiums when purchasing call and put options. The premium paid by the fund s when purchasing a call option will be recorded as an asset of the fund s 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 s per share of the fund s are computed (close of New York Stock Exchange), or, in the absence of such sale, the mean of closing bid and ask prices.

Dealer (Over-the-Counter) Options

The funds may engage in transactions involving dealer options. Certain risks are specific to dealer options. While the funds would look to a clearing corporation to exercise exchange-traded options, if the funds 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 funds as well as loss of the expected benefit of the transaction.

Exchange-traded options generally have a continuous liquid market , while dealer options have none. Consequently, the funds 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 funds write 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 funds originally wrote the option. While the funds 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 funds, there can be no assurance that the funds will be able to liquidate a dealer option at a favorable price at any time prior to expiration. Until the funds, as a covered dealer call option writer, are able to effect a closing purchase transaction, they 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 funds may be unable to liquidate a dealer option. With respect to options written by the funds, the inability to enter into a closing transaction may result in material losses to the funds. For example, since the funds must maintain a secured position with respect to any call option on a security it writes, the funds may not sell the assets it has segregated to secure the position while it is obligated under the option. This requirement may impair a funds` ability to sell portfolio securities or currencies at a time when such sale might be advantageous.

The staff of the SEC has taken the position that purchased dealer options and the assets used to secure the written dealer options are illiquid securities. The funds may treat the cover used for written Over-the-Counter ( "OTC" ) options as liquid if the dealer agrees that the funds 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.

Interest Rate Transactions

I nterest rate transactions , such as interest rate swaps and the purchase or sale of interest rate caps and floors , may be used to preserve a return or spread on a particular investment or portion of a portfolio, to create synthetic securities, or to structure transactions designed for other purposes.

Interest rate swaps involve the exchange b y the fund s with third parties of its respective commitments to pay or receive interest, e.g., an exchange of floating-rate payments for fixed-rate payments. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a contractually based principal amount from the party selling the interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a contractually based principal amount from the party selling the interest rate floor. In circumstances in which T. Rowe Price anticipates that interest rates will

decline, the funds might, for example, enter into an interest rate swap as the floating rate payor. In the case where the fund s purchase such an interest rate swap, if the floating rate payments fell below the level of the fixed-rate payment set in the swap agreement, the fund s counterparties would pay the funds` amounts equal to interest computed at the difference between the fixed and floating rates over the national principal amount. Such payments would offset or partially offset the decrease in the payments the fund s would receive in respect of floating-rate assets being hedged. In the case of purchasing an interest rate floor, if interest rates declined below the floor rate, the fund s would receive payments from the counterparties which would wholly or partially offset the decrease in the payments they would receive in respect of the financial instruments being hedged.

The fund s will usually enter into interest rate swaps on a net basis, i.e., the two payment streams are netted out, with the fund s receiving or paying, as the case may be, only the net amount of the two payments. The net amount of the excess, if any, of the funds` obligations over its entitlements with respect to each interest rate swap will be accrued on a daily basis and an amount of cash or high-quality liquid securities having an aggregate net asset value at least equal to the accrued excess will be maintained in an account by the funds` custodian. If the fund s enter into an interest rate swap on other than a net basis, the fund s would maintain an account in the full amount accrued on a daily basis of the funds` obligations with respect to the swap. To the extent the funds sell (i.e., writes) caps and floors, it will maintain in an account cash or high-quality liquid debt securities having an aggregate net asset value at least equal to the full amount, accrued on a daily basis, of the funds` obligations with respect to any caps or floors. The funds will not enter into any interest rate swap, cap , or floor transaction unless the unsecured senior debt or the claims - paying ability of the counterparty thereto is rated at least A by S&P. T. Rowe Price will monitor the creditworthiness of counterparties on an ongoing basis. If there is a default by the other parties to such a transaction, the funds will have contractual remedies pursuant to the agreements related to the transaction.

The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. T. Rowe Price has determined that, as a result, the swap market has become relative ly liquid. The fund s may enter into interest rate swaps only with respect to positions held in their portfolios. Interest rate swaps do not involve the delivery of securities or other underlying assets or principal. Accordingly, the risk of loss with respect to interest rate swaps is limited to the net amount of interest payments that the fund s are contractually obligated to make. If the other parties to interest rate swaps default, the funds` risk of loss consists of the net amount of interest payments that the fund s are contractually entitled to receive. Since interest rate swaps are individually negotiated, the fund s expect to achieve an acceptable degree of correlation between their right to receive interest on loan interests and their right and obligation to receive and pay interest pursuant to interest rate swaps.

The aggregate purchase price of caps and floor s held by the funds may not exceed 10% of total assets. The fund s may sell (i.e., write) caps and floors without limitation, subject to the account coverage requirement described above.

Spread Option Transactions

The funds may purchase from and sell to securities dealers covered spread options. Such covered spread options are not presently exchange listed or traded. The purchase of a spread option gives the funds the right to put, or sell, a security that it owns at a fixed-dollar spread or fixed-yield spread in relationship to another security that the funds do not own, but which is used as a benchmark. The risk to the funds in purchasing covered spread options is the cost of the premium paid for the spread options and any transaction costs. In addition, there is no assurance that closing transactions will be available. The purchase of spread options will be used to protect the funds against adverse changes in prevailing credit-quality spreads, i.e., the yield spread between high-quality and lower-quality securities. Such protection is only provided during the life of the spread option. The security covering the spread option will be maintained in a segregated account by the funds` custodian. The funds do not consider a security covered by a spread option to be "pledged" as that term is used in the funds` policy limiting the pledging or mortgaging of their assets. The funds may also buy and sell uncovered spread options. Such options would be used for the same purposes and be subject to similar risks as covered spread options. However, in an uncovered spread option, the funds would not own either of the securities involved in the spread.

Futures Contracts

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

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Transactions in Futures

The fund s may enter into futures contracts including stock index, interest rate, and currency futures ( "futures" or "futures contracts" ).

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 funds. I nterest rate or currency futures can be sold as an offset against the effect of expected increases in interest rates or currency exchange rates and purchase d as an offset against the effect of expected declines in interest rates or currency exchange rates.

Futures can also be used as an efficient means of regulating the funds` exposure to the market .

Index Funds may only enter into futures contracts that are appropriate for their investment programs to provide an efficient means of maintaining liquidity while being invested in the market, to facilitate trading, or to reduce transaction costs. They will not use futures for hedging purposes. Otherwise the nature of such futures and the regulatory limitations and risks to which they are subject are the same as those described below.

Stock index futures contracts may be used to provide a hedge for a portion of the funds ` portfolio s , as a cash management tool, or as an efficient way to implement either an increase or decrease in portfolio market exposure in response to changing market conditions. The funds may purchase or sell futures contracts with respect to any stock index. Nevertheless, to hedge the funds ` portfolio s successfully, the fund s must sell futures contracts with respect to indices or subindices whose movements will have a significant correlation with movements in the prices of the funds ` portfolio securities.

The fund s will enter into futures contracts that are traded on national (or foreign) futures exchanges and are standardized as to maturity date and underlying financial instrument. A public market exists in futures contracts covering various taxable fixed - income securities as well as municipal bonds. Futures exchanges and trading in the United States are regulated under the Commodity Exchange Act by the C F T C . 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 funds` objectives in these areas.

Regulatory Limitations

If the funds purchase or sell 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 funds after taking into account unrealized profits and unrealized losses on any such contracts they have 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 Boards without a shareholder vote and does not limit the percentage of the funds` assets at risk to 5%.

In instances involving the purchase of futures contracts or the writing of call or put options thereon by the funds, 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 funds 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 the funds` assets to cover or identified accounts could impede portfolio management or the funds` 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 funds would comply with such new restrictions.

Trading in Futures Contracts

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

or purchasing a contract or holding a long position. Entering into a contract to sell is commonly referred to as selling a contract or holding a short position.

Unlike when the funds purchase or sell a security, no price would be paid or received by the funds upon the purchase or sale of a futures contract. Upon entering into a futures contract, and to maintain the funds` open positions in futures contracts, the funds 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.

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 s ( "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 fluctuates, 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 s 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 s .

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 funds realize a gain; if it is more, the funds realize a loss. Conversely, if the offsetting sale price is more than the original purchase price, the funds realize a gain; if it is less, the funds realize a loss. The transaction costs must also be included in these calculations. There can be no assurance, however, that the funds will be able to enter into an offsetting transaction with respect to a particular futures contract at a particular time. If the funds are not able to enter into an offsetting transaction, the funds 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 funds.

Settlement of a stock index futures contract may or may not be in the underlying security. If not in the underlying security, then settlement will be made in cash, equivalent over time to the difference between the contract price and the actual price of the underlying asset (as adjusted by a multiplier) at the time the stock index futures contract expires.

For example, the S&P 500 Stock Index is made up of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The S&P 500 Index assigns relative weightings to the common stocks included in the Index, and the Index fluctuates with changes in the market values of those common stocks. In the case of futures contracts on the S&P 500 Index, the contracts are to buy or sell 250 units. Thus, if the value of the S&P 500 Index were $150, one contract would be worth $37,500 (250 units x $150). The stock index futures contract specifies that no delivery of the actual stocks making up the index will take place. Instead, settlement in cash occurs. Over the life of the contract, the gain or loss realized by the funds will equal the difference between the purchase (or sale) price of the contract and the price at which the contract is terminated. For example, if the funds enter into a futures contract to buy 250 units of the S&P 500 Index at a specified future date at a contract price of $150 and the S&P 500 Index is at $154 on that future date, the funds will gain $1,000 (250 units x gain of $4). If the funds enter into a futures contract to sell 250 units of the stock index at a specified future date

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at a contract price of $150 and the S&P 500 Index is at $152 on that future date, the funds will lose $500 (250 units x loss of $2).

Summit Municipal Intermediate and Summit Municipal Income Funds

It is possible that hedging activities of funds investing in municipal securities will occur primarily through the use of municipal bond index futures contracts since the uniqueness of that index contract should better correlate with the portfolio and thereby be more effective. However, there may be times when it is deemed in the best interest of shareholders to engage in the use of U.S. Treasury bond futures, and the funds reserve the right to use U.S. Treasury bond futures at any time. Use of these futures could occur, as an example, when both the U.S. Treasury bond contract and municipal bond index futures contract are correlating well with municipal bond prices, but the U.S. Treasury bond contract is trading at a more advantageous price making the hedge less expensive with the U.S. Treasury bond contract than would be obtained with the municipal bond index futures contract.

All f unds (other than the Money Funds)

Special Risks of Transactions in Futures Contracts

Volatility and Leverage The prices of futures contracts are volatile and are influenced, among other things, by actual and anticipated changes in the market and interest rates, which in turn are affected by fiscal and monetary policies and national and international political and economic events.

Most U.S. 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.

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.

Liquidity The funds may elect to close some or all of their futures positions at any time prior to their expiration. The funds would do so to reduce exposure represented by long futures positions or short futures positions. The funds may close their position by taking opposite positions , which would operate to terminate the funds` 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 funds, and the funds would realize a loss or a gain.

Futures contracts may be closed out only on the exchange or board of trade where the contracts were initially traded. Although the funds intend to purchase or sell futures contracts only on exchanges or boards of trade where there appears to be an active market, there is no assurance that a liquid market on an exchange or board of trade will exist for any particular contract at any particular time. In such event, it might not be possible to close a futures contract, and in the event of adverse price movements, the funds 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 funds 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.

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 funds of futures contracts as a hedging device. One risk arises because of the imperfect correlation between movements in the prices of the futures contracts and movements in the prices of the underlying instruments which are the subject of the hedge. T. Rowe Price will, however, attempt to reduce this risk by entering into futures contracts whose movements, in its judgment, will have a significant correlation with movements in the prices of the funds` underlying instruments sought to be hedged.

Successful use of futures contracts by the funds for hedging purposes is also subject to T. Rowe Price `s ability to correctly predict movements in the direction of the market. It is possible that, when the funds have sold futures to hedge their portfolios 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 funds` portfolios might decline. If this were to occur, the funds would lose money on the futures and also would experience a decline in value in their underlying instruments. However, while this might occur to a certain degree, T. Rowe Price believes that over time the value of the funds` portfolios will tend to move in the same direction as the market indices used to hedge the portfolio. It is also possible that, if the funds were to hedge against the possibility of a decline in the market (adversely affecting the underlying instruments held in their portfolios) and prices instead increased, the funds 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 their futures positions. In addition, in such situations, if the funds have 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 funds might have to sell underlying instruments at a time when it would be disadvantageous to do so.

In addition to the possibility that there might be an imperfect correlation, or no correlation at all, between price movements in the futures contracts and the portion of the portfolio being hedged, the price movements of futures contracts might not correlate perfectly with price movements in the underlying instruments due to certain market distortions. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors might close futures contracts through offsetting transactions, which could distort the normal relationship between the underlying instruments and futures markets. Second, the margin requirements in the futures market are less onerous than margin requirements in the securities markets and, as a result, the futures market might attract more speculators than the securities markets. 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 might not result in a successful hedging transaction over a very short time period.

Options on Futures Contracts

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 on its primary exchange at the time at which the net asset value per share of the fund s are computed (close of New York Stock Exchange), or, in the absence of such sale, the mean of closing bid and ask prices.

Writing a put option on a futures contract serves as a partial hedge against an increase in the value of securities the funds intend to acquire. If the futures price at expiration of the option is above the exercise price, the funds will retain the full amount of the option premium , which provides a partial hedge against any increase that may have occurred in the price of the debt securities the funds intend to acquire. If the futures price when the option

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is exercised is below the exercise price, however, the funds will incur a loss, which may be wholly or partially offset by the decrease in the price of the securities the funds intend to acquire.

Funds investing in municipal securities may trade in municipal bond index option futures or similar options on futures developed in the future. In addition, the funds may trade in options on futures contracts on U.S. government securities and any U.S. government securities futures index contract which might be developed.

From time to time , a single order to purchase or sell futures contracts (or options thereon) may be made on behalf of a fund and other T. Rowe Price fund s. Such aggregated orders would be allocated among the fund and the other T. Rowe Price fund s in a fair and non discriminatory manner.

Call and put options may be purchased or written on financial indices as an alternative to options on futures.

Special Risks of Transactions in Options on Futures Contracts

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 funds 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 funds seek 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, their 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.

In the event no such market exists for a particular contract in which the funds maintain a position, in the case of a written option, the funds would have to wait to sell the underlying securities or futures positions until the option expires or is exercised. The funds would be required to maintain margin deposits on payments until the contract is closed. Options on futures are treated for accounting purposes in the same way as the analogous option on securities are treated.

In addition, the correlation between movements in the price of options on futures contracts and movements in the price of the securities hedged can only be approximate. This risk is significantly increased when an option on a U.S. government securities future or an option on some type of index future is used as a proxy for hedg ing a portfolio consisting of other types of securities . Another risk is that if the movements in the price of options on futures contract s and the value of the call increase by more than the increase in the value of the securities held as cover, the funds may realize a loss on the call , which is not completely offset by the appreciation in the price of the securities held as cover and the premium received for writing the call.

The successful use of options on futures contracts requires special expertise and techniques different from those involved in portfolio securities transactions. 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 behavior or interest rate trends. During periods when municipal securities market prices are appreciating, the funds may experience poorer overall performance than if it had not entered into any options on futures contracts.

General Considerations Transactions by the funds in options on futures will be subject to limitations established by each of the exchanges, boards of trade , or other trading facilities governing the maximum number of options in each class which may be written or purchased by a single investor or group of investors acting in concert,

regardless of whether the options are written on the same or different exchanges, boards of trade , or other trading facilities or are held or written in one or more accounts or through one or more brokers. Thus, the number of contracts which the funds may write or purchase may be affected by contracts written or purchased by other investment advisory clients of T. Rowe Price. An exchange, board s of trade , or other trading facility may order the liquidations of positions found to be in excess of these limits, and it may impose certain other sanctions.

Additional Futures and Options Contracts

Although the fund s ha ve 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 funds trade 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 funds for foreign futures or foreign options transactions may not be provided the same protections as funds received for transactions on U.S. futures exchanges. In addition, the price of any foreign futures or foreign options contract and, therefore, the potential profit and loss thereon may be affected by any variance in the foreign exchange rate between the time the funds` orders are placed and the time they are liquidated, offset , or exercised.

U.S. Treasury Intermediate and U.S. Treasury Long-Term Funds

Limitations on Futures and Options

The funds will not purchase a futures contract or 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 positions would exceed 5% of the funds` net asset value. In addition, neither of the funds will enter into a futures transaction if it would be obligated to purchase or deliver amounts that would exceed 15% of the funds` total assets .

The funds will not write a covered call option if, as a result, the aggregate market value of all portfolio securities covering call options or subject to delivery under put options exceeds 15% of the market value of the funds` total assets.

The funds will not write a covered put option if, as a result, the aggregate market value of all portfolio securities subject to such put options or covering call options exceeds 15% of the market value of the funds` total assets.

The funds have no current intention of investing in options on securities. However, they reserve the right to do so in the future and could be subject to the following limitations: the funds may invest up to 15% of total assets in premiums on put options and 15% of total assets in premiums on call options. The total amount of the funds` total assets invested in futures and options will not exceed 15% of the funds` total assets.

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 funds may .

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enter into forward contracts for a variety of purposes in connection with the management of the foreign . securities portion of their portfolios . . The funds` use of such contracts would include, but not be limited to, the following:

First, when the funds enter into a contract for the purchase or sale of a security denominated in a foreign currency, they 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 funds will be able to protect themselves against a possible loss resulting from an adverse change in the relationship between the U.S. dollar and the subject foreign currency during the period between the date the security is purchased or sold and the date on which payment is made or received.

Second, when T. Rowe Price believes that one currency may experience a substantial movement against another currency, including the U.S. dollar, it may enter into a forward contract to sell or buy the amount of the former foreign currency, approximating the value of some or all of the funds` portfolio securities denominated in such foreign currency. Alternatively, where appropriate, the funds may hedge all or part of their 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 funds 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 funds. 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 believes that it is important to have the flexibility to enter into such forward contracts when it determines that the best interest of the funds will be served.

Third, the funds may use forward contracts when the funds wish to hedge out of the dollar into a foreign currency in order to create a synthetic bond or money market instrument — the security would be issued in U.S. dollars but the dollar component would be transformed into a foreign currency through a forward contract.

The funds may enter into forward cont r acts for any other purpose consistent with the funds` investment objectives and programs. However, the funds 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 funds` 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 funds may net offsetting positions.

At the maturity of a forward contract, the funds may sell the portfolio security and make delivery of the foreign currency, or they 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 funds retain the portfolio security and engages in an offsetting transaction, the funds will incur a gain or a loss (as described below) to the extent that there has been movement in forward contract prices. If the funds engage 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 funds` 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 funds will realize a gain to the extent the price of the currency they have agreed to sell exceeds the price of the currency they have agreed to purchase. Should forward prices increase, the funds will suffer a loss to the extent the price of the currency they have agreed to purchase exceeds the price of the currency they have agreed to sell.

The funds` dealing in forward foreign currency exchange contracts will generally be limited to the transactions described above. However, the funds reserve the right to enter into forward foreign currency contracts for different purposes and under different circumstances. Of course, the funds are not required to enter into forward contracts with regard to their foreign currency-denominated securities and will not do so unless deemed appropriate by T. Rowe Price . It also should be realized that this method of hedging against a decline in

the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange at a future date. Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time, they tend to limit any potential gain which might result from an increase in the value of that currency.

Although the funds value their assets daily in terms of U.S. dollars, they do not intend to convert their holdings of foreign currencies into U.S. dollars on a daily basis. They 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 between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the funds at one rate, while offering a lesser rate of exchange should the funds desire to resell that currency to the dealer.

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

The fund s may enter into certain options, futures, forward foreign exchange contracts, and swaps, including options and futures on currencies . The entering into of such transactions can affect the timing and character of the income and gains realized by the funds and the timing and character of fund distributions .

Such contracts which qualify as Section 1256 contracts will be considered to have been closed at the end of the funds` fiscal years 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 15%) 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 funds 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.

Certain options, futures, forward foreign exchange contracts, and swaps, including options, futures and forward exchange contracts 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. For securities which were held for one year or less at inception of the straddle, the holding period may be deemed not to begin until the straddle is terminated. If securities comprising a straddle have been held for more than one year at inception of the straddle, losses on offsetting positions may be treated as entirely long-term even if the offsetting positions have been held for less than one year.

In order for the funds to continue to qualify for federal income tax treatment as a regulated investment company, at least 90% of their 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.

Entering into certain options, futures contracts, forward foreign exchange , or swaps contracts may result in the "constructive sale" of offsetting stocks or debt securities of the funds. In such case the funds will be required to realize gain, but not loss, on the sale of such positions as if the position were sold on that date.

For certain options, futures, forward foreign exchange contracts, or sweaps, the IRS has not issued comprehensive rules relating to the timing and character of income and gains realized on such contracts. Although not anticipated, it is possible that final rules could result in changes to the amounts recorded by the funds, potentially impacting the tax results of the funds.

SPECIAL CONSIDERATIONS (spectrum and retirement funds)

Prospective investors should consider that certain underlying Price funds may engage in the following:

Foreign Currency Transactions Enter into foreign currency transactions. Since investments in foreign companies will usually involve currencies of foreign countries, and the International funds, as well as certain other underlying Price funds, will hold funds in bank deposits in foreign custodians during the completion of investment programs, the value of the assets of the underlying Price funds as measured in U.S. dollars may be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control

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regulations, and these underlying Price funds may incur costs in connection with conversions between various currencies. The underlying Price funds will generally conduct their foreign currency exchange transactions either on a spot (i.e., cash) basis at the prevailing rate in the foreign currency exchange market, or through entering into forward contracts to purchase or sell foreign currencies. The underlying Price funds will generally not enter into a forward contract with a term of greater than one year. Although foreign currency transactions will be used primarily to protect the underlying Price funds from adverse currency movements, they also involve the risk that anticipated currency movements will not be accurately predicted.

Lending Portfolio Securities Lend portfolio securities for the purpose of realizing additional income. The underlying Price funds may lend securities to broker-dealers or institutional investors. Any such loan will be continuously secured by collateral at least equal to the value of the security loaned. Such lending could result in delays in receiving additional collateral or in the recovery of the securities or possible loss of rights in the collateral should the borrower fail financially.

Futures Contracts and Options (types of potentially high-risk derivatives) Enter into interest rate, stock index, or currency futures contracts. Certain underlying Price funds may enter into such contracts (or options thereon), or a combination of such contracts, (1) as a hedge against changes in prevailing levels of interest rates, price movements, or currency exchange rates in the underlying Price funds` portfolios in order to establish more definitely the effective return on securities or currencies held or intended to be acquired by such underlying Price funds; (2) as an efficient means of adjusting the underlying Price funds` exposure to the markets; or (3) to adjust the duration of the underlying Price funds` portfolios. Initial margin deposits and premiums on options used for non-hedging purposes will not equal more than 5% of each underlying Price funds` net asset value. Certain underlying Price funds may also purchase and sell call and put options on securities, currencies, and financial and stock indices. The aggregate market value of each fund`s currencies or portfolio securities covering call or put options will not exceed 25% of the net assets. Futures contracts and options can be highly volatile and could result in reduction of underlying Price funds` total returns , and the underlying Price funds` attempt to use such investments for hedging purposes may not be successful.

INVESTMENT RESTRICTIONS

Fundamental policies may not be changed without the approval of the lesser of (1) 67% of the funds` shares present at a meeting of shareholders if the holders of more than 50% of the outstanding shares are present in person or by proxy or (2) more than 50% of the funds` outstanding shares. Other restrictions in the form of operating policies are subject to change by the funds` Boards 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 funds. Calculation of the funds` total assets for compliance with any of the following fundamental or operating policies or any other investment restrictions set forth in the funds` prospectuses or SAI will not include cash collateral held in connection with securities lending activities.

Fundamental Policies

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

(a) Borrowing (All funds except Spectrum Funds) Borrow money except that the funds 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 funds` investment objectives and programs, provided that the combination of (i) and (ii) shall not exceed 33xb6 / xb8 % of the value of the funds` 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 funds may borrow from banks, other Price Funds, or other persons to the extent permitted by applicable law;

(b) Borrowing (Spectrum Funds) Borrow money, except the funds may borrow from banks or other Price Funds as a temporary measure for extraordinary or emergency purposes, and then only in amounts not exceeding 30% of total assets valued at market. The funds will not borrow in order to increase income (leveraging), but only to facilitate redemption requests which might otherwise require untimely

disposition of portfolio securities. Interest paid on any such borrowings will reduce net investment income;

(a) Commodities (All funds except Spectrum Growth and Spectrum Income Funds) Purchase or sell physical commodities , except that the funds (other than the Money Funds) may enter into futures contracts and options threon;

(b) Commodities ( Spectrum Growth and Spectrum Income Funds) Purchase or sell commodities or commodity or futures contracts ;

Equity Securities (Summit Municipal Funds) Purchase equity securities or securities convertible into equity securities;

(a) Industry Concentration (All funds except Health Sciences, High Yield, International Bond, International Equity Index, Financial Services, New Income, Prime Reserve, Real Estate, Reserve Investment, Retirement, Short-Term Bond, Spectrum, and Summit Cash Reserves Funds) Purchase the securities of any issuer if, as a result, more than 25% of the value of the funds` total assets would be invested in the securities of issuers having their principal business activities in the same industry .

(b) Industry Concentration (Financial Services, Health Sciences, and Real Estate Funds) Purchase the securities of any issuer if, as a result, more than 25% of the value of the funds` total assets would be invested in the securities of issuers having their principal business activities in the same industry, provided, however, that (i) the Health Sciences Fund will invest more than 25% of its total assets in the health sciences industry as defined in the fund`s prospectus; (ii) the Financial Services Fund will invest more than 25% of its total assets in the financial services industry as defined in the fund`s prospectus; and (iii) the Real Estate Fund will invest more than 25% of its total assets in the real estate industry as defined in the fund`s prospectus;

(c) Industry Concentration ( High Yield 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;

(d) 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;

(e) Industry Concentration (International Equity Index 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, except that the fund will invest more than 25% of the value of its total assets in issuers having their principal business activities in the same industry to the extent necessary to replicate the index that the fund uses as its benchmark as set forth in its prospectus;

(f) Industry Concentration (New Income 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 invest more than 25% of its total assets, but not more than 50%, in any one of the gas utility, gas transmission utility, electric utility, telephone utility, and petroleum industries under certain circumstances, and further provided that this limitation does not apply to securities of the banking industry including, but not limited to, certificates of deposit and banker`s acceptances;

(g) Industry Concentration (Prime Reserve , Reserve Investment , and Summi t Cash Reserves Funds) Purchase the securities of any issuer if, as a result, more than 25% of the value of the funds` total assets would be invested in the securities of issuers having their principal business activities in the same industry; provided, however, that this limitation does not apply to securities of the banking industry including, but not limited to, certificates of deposit and banker`s acceptances;

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(h) Industry Concentration (Short-Term 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 invest more than 25% of its total assets in the securities of the banking industry including, but not limited to, bank certificates of deposit and banker`s acceptances when the fund`s position in issues maturing in one year or less equals 35% or more of the fund`s total assets; provided, further, that the fund will invest more than 25% of its total assets, but not more than 50%, in any one of the gas utility, gas transmission utility, electric utility, telephone utility, and petroleum industries under certain circumstances;

(i) Concentration (Retirement and Spectrum Funds ) Concentrate in any industry except that the funds will concentrate (invest more than 25% of total assets) in the mutual fund industry;

(a) Loans (All funds except Retirement and Spectrum Funds) Make loans, although the funds 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 funds` 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;

(b) Loans (Retirement and Spectrum Funds) Make loans, although the funds may purchase money market securities and enter into repurchase agreements;

Margin (Spectrum Funds) Purchase securities on margin, except for use of short-term credit necessary for clearance of purchases of portfolio securities;

Mortgaging (Spectrum Funds) Mortgage, pledge, hypothecate , or, in any manner, transfer any security owned by the funds as security for indebtedness , except as may be necessary in connection with permissible borrowings, in which event such mortgaging, pledging, or hypothecating may not exceed 30% of the funds` total assets, valued at market;

Percent Limit on Assets Invested in Any One Issuer (All funds except Emerging Europe & Mediterranean, . Institutional Large-Cap Growth Fund, Latin America, New Asia, and State Tax-Free Funds not including . California Funds) . Purchase a security if, as a result, with respect to 75% of the value of the funds` total assets, more than 5% of the value of the funds` total assets would be invested in the securities of a single issuer, except securities issued or guaranteed by the U.S. government , its agencies , or instrumentalities;

Percent Limit on Share Ownership of Any One Issuer (All funds except Emerging Europe & Mediterranean, . Institutional Large-Cap Growth Fund, Latin America, New Asia, and State Tax-Free Funds not including . California Funds) . Purchase a security if, as a result, with respect to 75% of the value of the funds` total assets, more than 10% of the outstanding voting securities of any issuer would be held by the funds (other than obligations issued or guaranteed by the U.S. government , its agencies , or instrumentalities;

(a) Real Estate (All funds except Retirement and Spectrum Funds) 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 funds from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business);

(b) Real Estate (Retirement and Spectrum Funds) Purchase or sell real estate, including limited partnership interests therein, unless acquired as a result of ownership of securities or other instruments (although the funds may purchase money market securities secured by real estate or interests therein, or issued by companies or investment trusts which invest in real estate or interests therein);

(a) Senior Securities (All funds except Spectrum Funds) Issue senior securities except in compliance with the 1940 Act;

(b) Senior Securities (Spectrum Funds) Issue senior securities;

Short Sales (Spectrum Funds) Effect short sales of securities;

Taxable Securities (State T ax- F ree and Tax-Free F unds ) During periods of normal market conditions, purchase any security if, as a result, less than 80% of the funds` income would be exempt from federal

and , if applicable, any state, city, or local income tax. Normally, the funds will not purchase a security if, as a result, more than 20% of the funds` income would be subject to the AMT; or

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

NOTES

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

Money funds With respect to investment restriction (1), the funds have no current intention of engaging in any borrowing transactions.

All funds except Retirement and Spectrum Funds With respect to investment restriction (2), the funds do not consider currency contracts or hybrid investments to be commodities.

All funds except Retirment and Spectrum Funds For purposes of investment restriction ( 4 ):

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

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 for the International Equity Funds, equity securities of the Tax-Efficient Funds, International Bond Funds, and Equity Funds except Developing Technologies, Global Technology, Media & Telecommunications, New Era, Science & Technology Funds. For all other funds, the industries are determined by reference to industry classifications set forth in their semiannual and annual reports.

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 I nternational B ond F unds , Stae Tax-Free, Tax-Efficient, Tax Free Funds will not invest more than 25% of total assets in the securities of any single foreign governmental issuer. For purposes of this restriction, governmental entities are considered separate issuers.

The High Yield, New Income, and Short-Term Bond Funds have no current intention of concentrating their investments .

All funds except Summit Icome and U.S. Bond Index Funds For purposes of investment restriction (5), the funds 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.

All funds except Spectrum Funds For purposes of investment restriction ( 8), the funds will treat bonds which are refunded with escrowed U.S. government securities as U.S. government securities.

Taxable Bond and Money Funds For purposes of investment restriction (9) the funds will consider a repurchase agreement fully collateralized with U.S. government securities to be U.S. government securities.

With respect to investment restriction (11), unde r the 1940 Act , an open - end investment company can borrow money from a bank provided that immediately after such borrowing there is asset coverage of at least 300% for all borrowings. If the asset coverage falls below 300%, the company must, within three business days, reduce the amount of its borrowings to satisfy the 300% requirement.

For purposes of investment restriction (13), the funds measure the amount of their income from taxable securities, including AMT securities, over the course of the funds` taxable year.

Operating Policies

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

Borrowing (All funds except Spectrum Funds) Purchase additional securities when money borrowed

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exceeds 5% of total assets;

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

(a) Equity Securities (All Taxable Bond Funds, except High Yield , Institutional High Yield, and New Income Funds) Purchase any equity security or security convertible into an equity security except as set forth in its prospectus and operating policy on investment companies;

(b) Equity Securities (High Yield Fund and Institutional High Yield ) Invest more than 20% of the funds` total assets in equity securities (including up to 10% in warrants);

(d) Equity Securities ( State Tax- Free and T ax- F ree F unds ) Purchase any equity security or security convertible into an equity security , provided that the funds (other than the Money Funds) may invest up to 10% of total assets in equity securities , which pay tax-exempt dividends and which are otherwise consistent with the funds` investment objectives and, further provided, that Money Funds may invest up to 10% of total assets in equity securities of other tax-free open-end money market funds;

Forward Currency Contracts (Retirement and Spectrum Funds) Purchase forward currency contracts , although the fund s reserve the right to do so in the future;

(a) Futures Contracts (All funds except Retirement and Spectrum Funds) 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 funds` net asset value;

(b) Futures (Retirement and Spectrum International Funds) Purchase futures , although the fund s reserve the right to do so in the future ;

Illiquid Securities Purchase illiquid securities if, as a result, more than 15% (10% for Spectrum and Money Funds) of net assets would be invested in such securities;

Investment Companies (All funds except Retirement and Spectrum Funds) Purchase securities of open- end or closed-end investment companies except (i) in compliance with the 1940 Act; (ii) securities of the Reserve Investment Funds; (iii) in the case of all funds except International, State-Tax-Free, Summit Income, Summit Municipal, Tax-Free, U.S. Bond Index F unds, securities of the Institutional High Yield Fund; (iv) in the case of the Money Funds, only securities of other money market funds; (v) in the case of the State Tax-Free and Tax-Free Funds, only securities of other tax-free money market funds;

Margin (All funds except Spectrum Funds) Purchase securities on margin, except (i) for use of short-term credit necessary for clearance of purchases of portfolio securities and (ii) they may make margin deposits in connection with futures contracts or other permissible investments;

Mortgaging (All funds except Spectrum Funds) Mortgage, pledge, hypothecate, or, in any manner, transfer any security owned by the funds as security for indebtedness , except as may be necessary in connection with permissible borrowings or investments , and then such mortgaging, pledging, or hypothecating may not exceed 33xb6 / xb8 % of the funds` total assets at the time of borrowing or investment;

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 funds would be invested in such programs;

(a) Options, etc. (All funds except Retirement and Spectrum Funds) Invest in puts, calls, straddles, spreads, or any combination thereof, except to the extent permitted by the funds` prospectuses and SAI;

(b) Options (Retirement Funds) Invest in options although the funds reserve the right to do so in the future;

(a) Short Sales (All funds except High Yield and Institutional High Yield F unds) Effect short sales of securities;

(b) Short Sales (High Yield and Institutional High Yield Funds ) Effect short sales of securities, other than as set forth in their prospectuses and SAI;

(a) Warrants (All funds except Retirement, Spectrum, State Tax-Free, and T ax- F ree F unds) Invest in warrants if, as a result thereof, more than 10% (2% for Summit Municipal Income, Summit Municipal Intermediate, Tax-Efficent Funds) of the value of the net assets of the funds would be invested in warrants; and

(b) Warrants ( Money, Retirement, and Spectrum Funds) Invest in warrants.

NOTES

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

Summit Income, Summit Municipal, and U.S. Bond Index Funds With respect to investment restriction (7) the funds have no current intention of purchasing the securities of other investment companies. Duplicate fees could result from such pruchases.

If a fund is subject to an 80% name test as set forth in it`s prospectus, it will be based on the fund`s net assets plus any borrowings for investment purposes.

Blue Chip Growth, Capital Opportunity, Developing Technologies, Diversified Small-Cap Growth, Financial Services, Global Technology, Health Sciences, High Yield, Institutional High Yield, Media & Telecommunications, Mid-Cap Value, Personal Strategy, Real Estate, Summit Income, Summit Municipal, U.S. Bond Index, and Value Funds

Notwithstanding anything in the above fundamental and operating restrictions to the contrary, the funds may invest all of their assets in a single investment company or a series thereof in connection with a "master-feeder" arrangement. Such an investment would be made where the funds (a "Feeder" ), and one or more other funds with the same investment objective and program as the funds, sought to accomplish their investment objectives and programs by investing all of their assets in the shares of another investment company (the "Master" ). The Master would, in turn, have the same investment objective and program as the funds. The funds would invest in this manner in an effort to achieve the economies of scale associated with having a Master fund make investments in portfolio companies on behalf of a number of Feeder funds.

International Funds

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 F oreign Investment Companies. The funds are subject to certain percentage limitations under the 1940 Act 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.

Retirement and Spectrum Funds

T here is no limit on the amount the funds may own of the total outstanding voting securities of registered investment companies which are members of the Price Funds . The funds, in accordance with their prospectuses, may invest more than 5% of their total assets in any one or more of the Price Funds . The funds may invest more than 10% of their total assets, collectively, in registered investment companies which are members of the Price Funds.

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 funds` 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

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system of the Depository Trust Corporation , or any central depository system allowed by federal law . In addition, funds investing in municipal securities are authorized to maintain certain of their securities, in particular, variable rate demand note s , in uncertificated form, in the proprietary deposit systems of various dealers in municipal securities. State Street Bank`s main office is at 225 Franklin Street, Boston, Massachusetts 02110. State Street Bank maintains shares of the Retirement and Spectrum Funds in the book entry system of the funds` transfer agent, T. Rowe Price Services, Inc.

All funds that can invest in foreign securities have entered into a Custodian Agreement with JPMorgan Chase Bank, London, pursuant to which portfolio securities which 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.

CODE OF ETHICS

The funds, their investment adviser (T. Rowe Price International for international funds and T. Rowe Price for all others funds), and their 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 Access Persons 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; a change has occurred in T. Rowe Price`s rating of the security within seven calendar days prior to the date of the proposed transaction; or the security is subject to internal trading restrictions. In addition, A ccess P ersons 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 Boards of the funds. The Boards also review the administration of the Code of Ethics on an annual basis.

PRICING OF SECURITIES

Equity, International Bond, International Equity, Personal Strategy, Taxable Bond, Tax-Efficient, and Tax-Free Bond Funds

Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price, or official closing price for certain markets, at the time the valuations are made. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the latest bid and ask prices for domestic securities and the last quoted sale price for international 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.

Equity, International Equity, and Personal Strategy Funds

Debt securities with original maturities less than one year are valued at amortized cost in local currency, w hich approximates fair value when combined with accrued interest.

GNMA, International Bond, Taxable Bond, and U.S. Bond Index Funds

Debt 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.

Summit Municipal Income, Summit Municipal Intermediate, and Tax-Free Bond Funds

Debt securities with original maturities less than one year are valued at 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.

Retirement and Spectrum Funds

The underlying Price funds held by each fund are valued at the ir closing net asset value per share on the day of valuation.

Equity, International Equity, International Bond, and Spectrum International Funds

Trading in the portfolio securities of the funds, or underlying Price funds in the case of Spectrum International Fund, may take place in various foreign markets on certain days (such as Saturday) when the funds or underlying funds are not open for business and do not calculate their net asset value. As a result, net asset values may be significantly affected by trading on days when shareholders cannot make transactions. In addition, trading in the funds` or underlying funds` portfolio securities may not occur on days when the funds are open.

The Japan Fund, one of the underlying Price funds in which the Spectrum International Fund can invest, is not open on certain days when the Spectrum International Fund is open. On such days, securities of the Japan Fund held by the Spectrum International Fund are valued in accordance with procedures adopted by the Board . These procedures call for the Spectrum International Fund to direct that the net asset value for the Japan Fund be calculated in the same manner and using the same system of procedures and controls as are used in the normal daily calculation of the Japan Fund`s net asset value , except that securities are valued at the most recent yen- denominated closing prices in the Japanese market (which may be one or more days previous to the valuation d ate of the Spectrum International Fund ).

Most foreign markets close before the NYSE. Normally, developments that could affect the values of securities that occur between the close of a foreign market and the close of the NYSE will not be reflected in security valuations used by the funds to compute its share price. However, if developments are so significant that they will, in the judgment of the funds, clearly and materially affect security values, such valuations may be adjusted to reflect the estimated fair value of the securities as of the close of the NYSE, as determined in good faith by the T. Rowe Price Valuation Committee, established by the funds` Boards.

Money Funds

Securities are valued at amortized cost.

All funds except Money Funds

Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. P urchased and written options are valued at the mean of the closing bid and ask prices. Options on futures contracts are valued at the last sale price. Financial futures contracts are valued at closing settlement prices.

Assets , including investments, 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. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the dates of such transactions.

All funds

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 the T. Rowe Price Valuation Committee, established by the funds` Boards .

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Prime Reserve and Reserve Investment Funds

Prime Money Market Securities Defined

Prime money market securities are those which are described as First Tier Securities under Rule 2a-7 of the 1940 Act. These include any security with a remaining maturity of 397 days or less that is rated (or that has been issued by an issuer that is rated with respect to a class of short-term debt obligations, or any security within that class that is comparable in priority and security with the security) by any two nationally recognized statistical rating organizations (NRSROs) (or if only one NRSRO has issued a rating, that NRSRO) in the highest rating category for short-term debt obligations (within which there may be sub-categories). First Tier Securities also include unrated securities comparable in quality to rated securities, as determined by T. Rowe Price under the supervision of the funds` Boards.

NET ASSET VALUE PER SHARE

The purchase and redemption price of the funds` shares is equal to the funds` net asset value per share or share price. The funds determine their net asset value per share by subtracting their liabilities (including accrued expenses and dividends payable) from their total assets (the market value of the securities the funds hold 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 funds, other than the Japan Fund, is calculated as of the close of trading on the New York Stock Exchange ( "NYSE" ) every day the NYSE is open for trading. The net asset value per share of the Japan Fund is calculated as of the close of trading on the NYSE each day the NYSE and the Tokyo Stock Exchange ( "TSE") are both open. 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. The TSE is scheduled to be closed on the following weekdays in 20 0 4 : January 1, 2, and 12; 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 as well as the following weekdays in 2005: January 3 and 10; February 11; March 21; April 29; May 3, 4, and 5; July 18; September 19 and 23; October 10; November 3 and 23; December 23 . If the TSE closes on dates not listed , the Japan Fund will not be priced on those dates.

Determination of net asset value (and the offering, sale, redemption, and repurchase of shares) for the funds , may be suspended at times (a) during which the NYSE is closed, other than customary weekend and holiday , closings, , or in the case of the Japan Fund, either the NYSE or TSE is closed,

(b) during which trading on the NYSE is restricted, (c) during which an emergency exists as a result of which disposal by the funds of securities owned by them are not reasonably practicable or it is not reasonably practicable for the funds fairly to determine the value of their net assets, or (d) during which a governmental body having jurisdiction over the funds may by order permit such a suspension for the protection of the funds` 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.

Maintenance of Money Funds` Net Asset Value p er Share at $1.00

It is the policy of the funds to attempt to maintain a net asset value of $1.00 per share by using the amortized cost method of valuation permitted by Rule 2a-7 under the 1940 Act. Under this method, securities are valued by reference to the funds` acquisition costs as adjusted for amortization of premium or accumulation of discount , rather than by reference to their market value. Under Rule 2a-7:

(a) The Board s must establish written procedures reasonably designed, taking into account current market conditions and the funds` investment objectives, to stabilize the funds` net asset value per share, as computed for the purpose of distribution, redemption , and repurchase, at a single value;

(b) The funds must (i) maintain a dollar weighted average portfolio maturity appropriate to their objective of maintaining a stable price per share, (ii) not purchase any instrument with a remaining maturity greater than 397 days, and (iii) maintain a dollar weighted average portfolio maturity of 90 days or less;

(c) The funds must limit their purchase of portfolio instruments, including repurchase agreements, to those U.S. dollar-denominated instruments which the funds` Boards determine present minimal credit risks and which are eligible securities as defined by Rule 2a-7; and

(d) The Board s must determine that (i) it is in the best interest of the funds and the shareholders to maintain a stable net asset value per share under the amortized cost method; and (ii) the funds will continue to use the amortized cost method only so long as the Boards believe that it fairly reflects the market - based net asset value per share.

Although the funds believe that they will be able to maintain their net asset value at $1.00 per share under most conditions, there can be no absolute assurance that they will be able to do so on a continuous basis. If the funds` net asset value per share declined, or was expected to decline, below $1.00 (rounded to the nearest one cent), the Boards of the funds might temporarily reduce or suspend dividend payments in an effort to maintain the net asset value at $1.00 per share. As a result of such reduction or suspension of dividends, an investor would receive less income during a given period than if such a reduction or suspension had not taken place. Such action could result in an investor receiving no dividend for the period during which he holds his shares and in his receiving, upon redemption, a price per share lower than that which he paid. On the other hand, if the funds` net asset value per share were to increase, or were anticipated to increase , above $1.00 (rounded to the nearest one cent), the Board s of the funds might supplement dividends in an effort to maintain the net asset value at $1.00 per share.

DIVIDENDS AND DISTRIBUTIONS

Unless you elect otherwise, capital gain distributions, final quarterly dividend s and annual dividend s , if any, will be reinvested on the reinvestment date using the net asset value per share s o n 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 funds intend to qualify as a "regulated investment company" under Subchapter M of the Code.

In order to be subject to the special tax benefits applicable to regulated investment companies the funds will be required to distribute the sum of 90% of their investment company taxable income and 90% of their net tax- exempt income each year. In order to avoid federal income tax, the funds must distribute all of their investment company taxable income and realized long-term capital gains for each fiscal year of the funds within 12-months after the end of the fiscal year. To avoid federal excise tax the funds 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) and distribute such amounts prior to February 1 of the following calendar year. Shareholders will be required to include such distributions in their income tax calculations and for such purpose, it does not make any difference whether dividends and capital gain distributions are paid in cash or in additional shares.

For individual shareholders, a portion of the funds` ordinary dividends representing qualified they received may be subject to tax at the lower rate applicable to long-term capital gains, rather than ordinary income. Qualified dividends are dividends received from domestic and qualified foreign corporations. It excludes dividends representing payments in lieu of dividends related to loaned securities, dividends received on certain hedged positions and dividends on securities the funds have not held more than 60 days during the 120-day period beginning 60 days before the stock became ex-dividend (90 and 180 days for certain preferred stock). Individual shareholders can only apply the lower rate to the qualified portion of the funds` dividends if they have held the shares in the funds on which the dividends were paid for this same holding period surrounding the ex-dividend date of the funds` dividends. Little, if any, of the ordinary dividends from the Tax-Free, Taxable Bond and Taxable Money Funds is expected to qualify for this lower rate.

For corporate shareholders, a portion of the funds` ordinary dividends are eligible for the 70% deduction for dividends received by corporations to the extent the funds` income consists of dividends paid by U.S. corporations. This deduction does not include dividends representing payments in lieu of dividends related to loaned securities, dividends received on certain hedged positions and dividends on securities the funds have not held more than 45 days during the 90-day period beginning 45 days before the stock became ex-dividend (90 and 180 days for certain preferred stock). Little, if any, of the ordinary dividends from the Tax-Free,

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International (except Global Stock Fund), Taxable Bond, and Taxable Money Funds are expected to qualify for this deduction. Long-term capital gain distributions paid from the funds are never eligible for the dividends- received deduction.

At the time of your purchase of shares (except in Money Funds), the funds` net asset value may reflect undistributed income, capital gains, or net unrealized appreciation of securities held by the funds. A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable as either dividend or capital gain distributions. The funds may be able to reduce the amount of such distributions by utilizing their capital loss carry-overs, if any. For federal income tax purposes, the funds are permitted to carry forward their net realized capital losses, if any, for eight years and realize net capital gains up to the amount of such losses without being required to pay taxes on, or distribute, such gains.

If, in any taxable year, the funds should not qualify as a regulated investment company under the Code: (1) the funds would be taxed at normal corporate rates on the entire amount of their taxable income, if any, without a deduction for dividends or other distributions to shareholders; and (2) the funds` distributions, to the extent made out of the funds` 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 funds may qualify for the 70% deduction for dividends received by corporations. However, for the Spectrum International Fund, the dividends will not be eligible for the 70% deduction for dividends received by corporations, if, as expected, none of the fund`s income consists of dividends paid by U.S. corporations; (3) foreign tax credits would not "pass through" to shareholders.

Taxation of Foreign Shareholders

The Code 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 funds 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 United States, 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 funds are not subject to tax unless the foreign shareholder is engaged in a business in the United States and the gains are connected with that business, or the shareholder is a nonresident alien individual who was physically present in the United States during the tax year for more than 182 days.

Retirement and Spectrum Funds

Distributions by the underlying Price funds, redemptions of shares in the underlying Price funds and changes in asset allocations may result in taxable ordinary income or capital gains. In addition, the funds will generally not be able to currently offset gains realized by one underlying Price fund in which the funds invest against losses realized by another underlying Price fund. These factors could affect the amount, timing, and character of distributions to shareholders.

State Tax-Free and Tax-Free Funds

The funds anticipate that substantially all of the dividends to be paid by each fund will be exempt from federal income taxes. If any portion of the funds` dividends is not exempt from federal income taxes, you will receive a Form 1099-DIV stating the taxable portion. The funds will also advise you of the percentage of your dividends, if any, which should be included in the computation of alternative minimum tax. Social Security recipients who receive interest from tax-exempt securities may have to pay taxes on a portion of their Social Security benefit.

Because the interest on municipal securities is tax - exempt, any interest on money you borrow that is directly or indirectly used to purchase fund shares is not deductible. (See Section 265 (a) (2) of the Internal Revenue Code.) Further, entities or persons that are "substantial users" (or persons related to "substantial users") of facilities financed by industrial development bonds should consult their tax advisers before purchasing shares of the funds. The income from such bonds may not be tax - exempt for such substantial users.

Florida Intermediate Tax-Free Fund

Although Florida does not have a state income tax, it does impose an intangible s 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 January 1, the exemption applies only to the portion of assets (if any) invested in U.S. government obligations .

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 .

Equity, International Bond, International Equity, Personal Strategy, Taxable Bond, and Taxable Money Funds

I ncome received by the fund s 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 funds ` total assets at the close of the taxable year comprise securities issued by foreign corporations or governments, the fund s may file an election with the Internal Revenue Service to "pass through" to the funds ` shareholders the amount of any foreign income taxes paid by the fund s . There can be no assurance that the funds will be able to do so. 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 s ; (2) treat their pro-rata share of foreign taxes 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.

Foreign Currency Gains and Losses

Foreign currency gains and losses, including the portion of gain or loss on the sale of debt securities attributable to foreign exchange rate fluctuations, are taxable as ordinary income. If the net effect of these transactions is a gain, the ordinary income dividend paid by the funds will be increased. If the result is a loss, the income dividend paid by the funds 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 funds` taxable year.

Passive Foreign Investment Companies

The funds 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 funds` 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 funds held the investment. In addition, the funds 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.

To avoid such tax interest, the funds intend 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 extend of any gains resulting from these deemed sales for prior taxable years. Such gains and losses will be treated as ordinary income. The funds will be required to distribute any resulting income, even though they have not sold the security and received cash to pay such distributions.

CAPITAL STOCK (Maryland corporations)

All funds except Capital Appreciation, Equity Income, GNMA, New America Growth, and State Tax- Free Funds

All of the funds, other than those listed immediately above are organized as Maryland corporations or series thereof. The funds ` Charters authorize the Boards to classify and reclassify any and all shares which are then unissued, including unissued shares of capital stock into any number of classes or series ; each class or series consisting of such number of shares and having such designations, such powers, preferences, rights, qualifications, limitations, and restrictions as shall be determined by the Boards 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,

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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 Boards 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 have authorized to issue without shareholder approval.

Except to the extent that the fund s` Boards might provide that holders of shares of a particular class are entitled to vote as a class on specified matters presented for a vote of the holders of all shares entitled to vote on such matters, there would be no right of class vote unless and to the extent that such a right might be construed to exist under Maryland law. The d irectors have provide d that as to any matter with respect to which a separate vote of any class is required by the 1940 Act , such requirement as to a separate vote by that class shall apply in lieu of any vot ing requirements established by the Maryland General Corporation Law. Otherwise, holders of each class of capital stock are not entitled to vote as a class on any matter. Accordingly, the preferences, rights, and other characteristics attaching to any class of shares might be altered or eliminated, or the class might be combined with another class or classes, by action approved by the vote of the holders of a majority of all the shares of all classes entitled to be voted on the proposal, without any additional right to vote as a class by the holders of the capital stock or of another affected class or classes.

Shareholders are entitled to one vote for each full share held (and fractional votes for fractional shares held) and will vote in the election of or removal of directors (to the extent hereinafter provided) and on other matters submitted to the vote of shareholders. There will normally be no meetings of shareholders for the purpose of electing directors unless and until such time as less than a majority of the directors holding office have been elected by shareholders, at which time the directors then in office will call a shareholders` meeting for the election of directors . Except as set forth above, the directors shall continue to hold office and may appoint successor directors . Voting rights are not cumulative, so that the holders of more than 50% of the shares voting in the election of directors can, if they choose to do so, elect all the directors of the funds, in which event the holders of the remaining shares will be unable to elect any person as a director . As set forth in the By-Laws of the Corporation s, a special meeting of shareholders of the Corporation s shall be called by the secretary of the Corporation s 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 C orporation s the reasonably estimated costs of preparing and mailing the notice of the meeting. The Corporation s, however, will otherwise assist the shareholders seeking to hold the special meeting in communicating to the other shareholders of the C orporation s to the extent required by Section 16(c) of the 1940 Act.

The series (and classes) set forth below have been established by the Boards under the Articles of Incorporation of the indicated C orporations. Each represents a separate pool of assets of the Corporations ` shares and has different objectives and investment policies. The Articles of Incorporation also provide that the Board s may issue additional series of shares. Each share of each fund represents an equal proportionate share in that fund with each other share and is entitled to such dividends and distributions of income belonging to that fund as are declared by the directors. In the event of the liquidation of a fund, each share is entitled to a pro-rata share of the net assets of that fund. Classes represent separate shares in the fund s but share the same portfolio s as the indicated fund s . Each fund is registered with the SEC under the 1940 Act as an open-end investment company, commonly known as a "mutual fund. "

Maryland Corporations
T. Rowe Price Balanced Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc. T. Rowe Price Blue Chip Growth — Advisor Class T. Rowe Price Blue Chip Growth — R Class
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 Mid-Cap Growth Fund , Inc.
T. Rowe Price Diversified Small-Cap Growth Fund, Inc.
T. Rowe Price Dividend Growth Fund, Inc.
T. Rowe Price Financial Services Fund, Inc.
T. Rowe Price Global Technology Fund, Inc.
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc. T. Rowe Price Growth Stock Fund — Advisor Class T. Rowe Price Growth Stock Fund — R Class
T. Rowe Price Health Sciences Fund, Inc.
T. Rowe Price High Yield Fund, Inc. T. Rowe Price High Yield Fund — Advisor Class
T. Rowe Price Index Trust, Inc. T. Rowe Price Equity Index 500 Fund T. Rowe Price Extended Equity Market Index Fund T. Rowe Price Total Equity Market Index Fund
T. Rowe Price Inflation Protected Bond Fund , Inc.
T. Rowe Price Institutional Equity Funds, Inc. T. Rowe Price Institutional Large-Cap Core Growth Fund T. Rowe Price Institutional Large-Cap Growth Fund T. Rowe Price Institutional Large-Cap Value fund T. Rowe Price Institutional Mid-Cap Equity Growth Fund T. Rowe Price Institutional Small-Cap Stock 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 Emerging Europe & Mediterranean Fund T. Rowe Price Emerging Markets Bond Fund T. Rowe Price Emerging Markets Stock Fund T. Rowe Price European Stock Fund T. Rowe Price Global Stock Fund T. Rowe Price International Bond Fund T. Rowe Price International Bond Fund — Advisor Class T. Rowe Price International Discovery Fund T. Rowe Price International Growth & Income Fund T. Rowe Price International Growth & Income Fund — Advisor Class T. Rowe Price International Growth & Income Fund — R Class T. Rowe Price International Stock Fund T. Rowe Price International Stock Fund — Advisor Class T. Rowe Price International Stock Fund — R Class T. Rowe Price J apan Fund T. Rowe Price Latin America Fund T. Rowe Price New Asia Fund
T. Rowe Price International Index Fund, Inc. T. Rowe Price International Equity Index Fund
T. Rowe Price Media & Telecommunications Fund, Inc.
T. Rowe Price Mid-Cap Growth Fund, Inc. T. Rowe Price Mid-Cap Growth Fund — Advisor Class T. Rowe Price Mid-Cap Growth Fund — R Class
T. Rowe Price Mid-Cap Value Fund, Inc. T. Rowe Price Mid-Cap Value Fund — Advisor Class T. Rowe Price Mid-Cap Value Fund — R Class
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc. T. Rowe Price New Income Fund — Advisor Class T. Rowe Price New Income Fund — R Class
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 2005 Fund T. Rowe Price Retirement 2010 Fund T. Rowe Price Retirement 2010 Fund — Advisor Class T. Rowe Price Retirement 2010 Fund — R Class T. Rowe Price Retirement 2015 Fund T. Rowe Price Retirement 2020 Fund T. Rowe Price Retirement 2020 Fund — Advisor Class T. Rowe Price Retirement 2020 Fund — R Class T. Rowe Price Retirement 2025 Fund T. Rowe Price Retirement 2030 Fund T. Rowe Price Retirement 2030 Fund — Advisor Class T. Rowe Price Retirement 2030 Fund — R Class T. Rowe Price Retirement 2035 Fund T. Rowe Price Retirement 2040 Fund T. Rowe Price Retirement 2040 Fund — Advisor Class T. Rowe Price Retirement 2040 Fund — R Class T. Rowe Price Retirement Income Fund T. Rowe Price Retirement Income Fund — Advisor Class T. Rowe Price Retirement Income Fund — R Class
T. Rowe Price Science & Technology Fund, Inc. T. Rowe Price Science & Technology Fund — Advisor Class
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Small-Cap Stock Fund, Inc. T. Rowe Price Small-Cap Stock Fund — Advisor Class
T. Rowe Price Small-Cap Value Fund, Inc., Inc. T. Rowe Price Small-Cap Value Fund — Advisor Class
T. Rowe Price Spectrum Fund, Inc. Spectrum Growth Fund Spectrum Income Fund Spectrum International Fund
T. Rowe Price 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 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 Income Fund — Advisor Class
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 Value Fund, Inc. T. Rowe Price Value Fund — Advisor Class

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Balanced Fund

On August 31, 1992, the T. Rowe Price Balanced Fund acquired substantially all of the assets of the Axe- Houghton Fund B, a series of Axe-Houghton Funds, Inc. As a result of this acquisition, the SEC requires that the historical performance information of the Balanced Fund be based on the performance of Fund B. Therefore, all performance information of the Balanced Fund prior to September 1, 1992, reflects the performance of Fund B and investment managers other than T. Rowe Price. Performance information after August 31, 1992, reflects the combined assets of the Balanced Fund and Fund B.

Media & Telecommunications Fund

On July 28, 1997, the fund converted its status from a closed-end fund to an open-end mutual fund. Prior to the conversion the fund was known as New Age Media Fund, Inc.

Small-Cap Stock Fund

Effective May 1, 1997, the fund`s name was changed from the T. Rowe Price OTC Fund to the T. Rowe Price Small-Cap Stock Fund.

Equity Index 500 Fund

Effective January 30, 1998, the fund`s name was changed from T. Rowe Price Equity Index Fund to the T. Rowe Price Equity Index 500 Fund.

ORGANIZATION OF THE FUND (Massachusetts business trusts)

Capital Appreciation, Equity Income, GNMA, New America Growth, State Tax-Free Funds

For tax and business reasons, the se funds were organi zed as Massachusetts b usiness trusts . Each fund is registered with the SEC under the 1940 Act as a n open-end investment compan y , commonly known as a "mutual fund. "

The Declaration of Trust permits the Boards to issue an unlimited number of full and fractional shares of a single class. The Declaration of Trust also provides that the Board s may issue additional series or classes of shares.

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Each share represents an equal proportionate beneficial interest in the funds. In the event of the liquidation of the funds, each share is entitled to a pro-rata share of the net assets of the funds.

Shareholders are entitled to one vote for each full share held (and fractional votes for fractional shares held) and will vote in the election of or removal of trustees (to the extent hereinafter provided) and on other matters submitted to the vote of shareholders. There will normally be no meetings of shareholders for the purpose of electing trustees unless and until such time as less than a majority of the trustees holding office have been elected by shareholders, at which time the trustees then in office will call a shareholders` meeting for the election of trustees. Pursuant to Section 16(c) of the 1940 Act, holders of record of not less than two-thirds of the outstanding shares of the funds may remove a trustee by a vote cast in person or by proxy at a meeting called for that purpose. Except as set forth above, the trustees shall continue to hold office and may appoint successor trustees. Voting rights are not cumulative, so that the holders of more than 50% of the shares voting in the election of trustees can, if they choose to do so, elect all the trustees of the Trusts, in which event the holders of the remaining shares will be unable to elect any person as a trustee. No amendments may be made to the Declaration of Trust without the affirmative vote of a majority of the outstanding shares of the Trusts.

Shares have no preemptive or conversion rights; the right of redemption and the privilege of exchange are described in the prospectus. Shares are fully paid and nonassessable, except as set forth below. The Trusts may be terminated (i) upon the sale of their assets to another open-end management investment company, if approved by the vote of the holders of two-thirds of the outstanding shares of the Trusts, or (ii) upon liquidation and distribution of the assets of the Trusts, if approved by the vote of the holders of a majority of the outstanding shares of the Trusts. If not so terminated, the Trusts will continue indefinitely.

Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the funds. However, the Declaration of Trust disclaims shareholder liability for acts or obligations of the funds and requires that notice of such disclaimer be given in each agreement, obligation, or instrument entered into or executed by the funds or a t rustees. The Declaration of Trust provides for indemnification from fund property for all losses and expenses of any shareholder held personally liable for the obligations of the funds. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the funds themselves would be unable to meet their obligations, a possibility which T. Rowe Price believes is remote. Upon payment of any liability incurred by the funds, the shareholders of the funds paying such liability will be entitled to reimbursement from the general assets of the funds. The t rustees intend to conduct the operations of the funds in such a way as to avoid, as far as possible, ultimate liability of the shareholders for liabilities of such funds.

The series and classes set forth below have been established by the Boards under the Declaration of Trust of the indicated trusts .

Massachusetts Business Trusts
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 Equity Income Fund T. Rowe Price Equity Income Fund — Advisor Class T. Rowe Price Equity Income Fund — R Class
T. Rowe Price GNMA Fund
T. Rowe Price New America Growth Fund
T. Rowe Price State Tax-Free Income Trust Florida Intermediate Tax-Free Fund Georgia Tax-Free Bond Fund Maryland Short-Term Tax-Free Bond Fund Maryland Tax-Free Bond Fund Maryland Tax-Free Money Fund New Jersey Tax-Free Bond Fund New York Tax-Free Bond Fund New York Tax-Free Money Fund Virginia Tax-Free Bond Fund

T. ROWE PRICE PROXY VOTING — PROCESS AND POLICIES

As an investment adviser to its clients, T. Rowe Price analyzes the proxy statements of issuers whose stock is owned by the investment companies that it sponsors and serves as investment adviser.

Proxy Administration

The T. Rowe Price Proxy Committee develops positions on all major corporate issues, creates guidelines, and oversees the voting process. The Proxy Committee, composed of portfolio managers, investment operations managers, and internal legal counsel, analyzes proxy policies based on whether they would adversely affect shareholders` interests and make a company less attractive to own. In evaluating proxy policies each year, the Proxy Committee relies upon our own fundamental research, independent research provided by third parties, and information presented by company managements and shareholder groups.

Once the Proxy Committee establishes its recommendations, they are distributed to the firm`s portfolio managers as voting guidelines. Ultimately, the chairperson of each fund`s Investment Advisory Committee is responsible for deciding and voting on the proxy proposals of companies in his or her fund . When portfolio managers cast votes that are counter to the Proxy Committee`s guidelines, they are required to document their reasons in writing to the Proxy Committee. Annually, the Proxy Committee and the funds` B oards review T. Rowe Price`s proxy voting process, policies, and voting records.

T. Rowe Price has retained Institutional Shareholder Services, an expert in the proxy voting and corporate governance area, to provide proxy advisory and voting services. These services include in-depth research, analysis, and voting recommendations as well as vote execution, reporting, auditing and consulting assistance for the handling of proxy voting responsibility and corporate governance-related efforts. While the Proxy Committee relies upon ISS research in establishing T. Rowe Price`s voting guidelines — many of which are consistent with ISS positions — T. Rowe Price may deviate from ISS recommendations on general policy issues or specific proxy proposals.

Fiduciary Considerations

T. Rowe Price`s decisions with respect to proxy issues are made in light of the anticipated impact of the issue on the desirability of investing in the portfolio company. Proxies are voted solely in the interests of f und shareholders . Practicalities involved with international investing may make it impossible at times, and at other times disadvantageous, to vote proxies in every instance.

Consideration Given Management Recommendations

When determining whether to invest in a particular company, one of the key factors T. Rowe Price considers is the quality and depth of its management. As a result, T. Rowe Price believes that recommendations of management on most issues should be given weight in determining how proxy issues should be voted.

T. Rowe Price Voting Policies

Specific voting guidelines have been established by the Proxy Committee for recurring issues that appear on proxies . The following is a summary of the more significant T. Rowe Price policies:

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Election of Directors

T. Rowe Price generally supports slates with a majority of independent directors and nominating committees chaired by an independent board member. T. Rowe Price withhold s votes for inside directors serving on compensation and audit committees and for directors who miss more than one-fourth of the scheduled board meetings.

Executive Compensation

The goal of T. Rowe Price is to assure that a company`s equity-based compensation plan is aligned with shareholders` long-term interests. While it evaluate s most plans on a case-by-case basis, T. Rowe Price generally opposes compensation packages that provide what it view s as excessive awards to a few senior executives or that contain excessively dilutive stock option plans. T. Rowe Price base s its review on criteria such as the costs associated with the plan, plan features, dilution to shareholders and comparability to plans in the company`s peer group. T. Rowe Price generally oppose s plans that give a company the ability to reprice options.

Anti-takeover and Corporate Governance Issues

T. Rowe Price generally opposes anti-takeover measures and other proposals designed to limit the ability of shareholders to act on possible transactions. When voting on corporate governance proposals, T. Rowe Price will consider the dilutive impact to shareholders and the effect on shareholder rights.

Social and Corporate Responsibility Issues

T. Rowe Price generally votes with a company`s management on social issues unless they have substantial economic implications for the company`s business and operations that have not been adequately addressed by management.

Monitoring and Resolving Conflicts of Interest

The Proxy Committee is also responsible for monitoring and resolving possible material conflicts between the interests of T. Rowe Price and those of its clients with respect to proxy voting. Since T. Rowe Price`s voting guidelines are pre-determined by the Proxy Committee using recommendations from ISS, an independent third party, application of the T. Rowe Price guidelines by fund portfolio managers to vote fund proxies should in most instances adequately address any possible conflicts of interest. However, for proxy votes inconsistent with T. Rowe Price guidelines, the Proxy Committee reviews all such proxy votes in order to determine whether the portfolio manager`s voting rationale appears reasonable. The Proxy Committee also assesses whether any business or other relationships between T. Rowe Price and a portfolio company could have influenced an inconsistent vote on that company`s proxy. Issues raising possible conflicts of interest are referred to designated members of the Proxy Committee for immediate resolution.

Retirement and Spectrum Funds

The funds own shares in underlying T. Rowe Price funds. If an underlying T. Rowe Price fund has a shareholder meeting, the Retirement and Spectrum Funds normally would vote their shares in the underlying fund in the same proportion as the votes of the other shareholders of the underlying fund. This is known as "echo voting" and is designed to avoid any potential for a conflict of interest.

federal registration of shares

The funds` shares (except for Government Reserve Investment and Reserve Investment Funds) are registered for sale under the 1933 Act. Registration of the funds` shares are not required under any state law, but the funds are required to make certain filings with and pay fees to the states in order to sell their shares in the states.

legal counsel

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

RATINGS OF COMMERCIAL PAPER

Moody`s Investors Service, Inc. P-1 superior capacity for repayment. P-2 strong capacity for repayment. P-3 acceptable capacity for repayment of short-term promissory obligations.

Standard & Poor`s Corporation A-1 highest category, degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. A-2 satisfactory capacity to pay principal and interest. A-3 adequate capacity for timely payment, but are more vulnerable to adverse effects of changes in circumstances than higher-rated issues. B and C speculative capacity to pay principal and interest.

Fitch IBCA, Inc. F-1+ exceptionally strong credit quality, strongest degree of assurance for timely payment. F-1 very strong credit quality. F-2 good credit quality, having a satisfactory degree of assurance for timely payment. F-3 fair credit quality, assurance for timely payment is adequate , but adverse changes could cause the securities to be rated below investment grade.

Moody`s Investors Service, Inc. The rating of Prime-1 is the highest commercial paper rating assigned by Moody`s. Among the factors considered by Moody`s in assigning ratings are the following: valuation of the management of the issuer; economic evaluation of the issuer`s industry or industries and an appraisal of speculative-type risks which may be inherent in certain areas; evaluation of the issuer`s products in relation to competition and customer acceptance; liquidity; amount and quality of long-term debt; trend of earnings over a period of 10 years; financial strength of the parent company and the relationships which exist with the issuer; and recognition by the management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations. These factors are all considered in determining whether the commercial paper is rated P1, P2, or P3.

Standard & Poor`s Corporation Commercial paper rated A (highest quality) by S&P has the following characteristics: liquidity ratios are adequate to meet cash requirements; long-term senior debt is rated "A" or better, although in some cases "BBB" credits may be allowed. The issuer has access to at least two additional channels of borrowing. Basic earnings and cash flow have an upward trend with allowance made for unusual circumstances. Typically, the issuer`s industry is well established and the issuer has a strong position within the industry. The reliability and quality of management are unquestioned. The relative strength or weakness of the above factors determines whether the issuer`s commercial paper is rated A1, A2, or A3.

Fitch IBCA, Inc. Fitch 1 — Highest grade Commercial paper assigned this rating is regarded as having the strongest degree of assurance for timely payment. Fitch 2 — Very good grade Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than the strongest issues.

RATINGS OF CORPORATE and municipal 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."

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.

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

Baa — Bonds rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present , but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

Ba — Bonds rated Ba are judged to have speculative elements: their futures cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

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B — Bonds rated B generally lack the characteristics of a desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

Caa — Bonds rated Caa are of poor standing. Such issues may be in default , or there may be present elements of danger with respect to repayment of principal or payment of interest.

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.

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 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.

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.

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.

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.

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.

RATINGS OF MUNICIPAL NOTES AND VARIABLE RATE SECURITIES

Moody`s Investors Service, Inc. VMIG1/MIG-1 the best quality. VMIG2/MIG-2 high quality, with margins of protection ample , though not so large as in the preceding group. VMIG3/MIG-3 favorable quality, with all security elements accounted for, but lacking the undeniable strength of the preceding grades. Market access for refinancing, in particular, is likely to be less well established. VMIG4/MIG-4 adequate quality , but there is specific risk.

Standard & Poor`s Corporation SP-1 very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 satisfactory capacity to pay interest and principal. SP-3 speculative capacity to pay principal and interest.

Fitch I BCA , Inc. F-1+ exceptionally strong credit quality, strongest degree of assurance for timely payment. F-1 very strong credit quality. F-2 good credit quality, having a satisfactory degree of assurance for timely payment. F-3 fair credit quality, assurance for timely payment is adequate , but adverse changes could cause the securities to be rated below investment grade.

Redemptions in Kind

The funds have filed a notice of election under Rule 18f-1 of the 1940 Act. This permits the funds to effect redemptions in kind and in cash as set forth in the funds` prospectuses.

In the unlikely event a shareholder were to receive an in-kind redemption of portfolio securities of the funds, 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 objectives and policies of the funds; (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.

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PART C

OTHER INFORMATION

Item 23. Exhibits

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(a)(1) Articles of Amendment and Restatement of T. Rowe Price International Funds, Inc., dated August 6 , 2001

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(a)(2) 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 )

(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)

(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 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)

(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)( 10 ) 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)( 11 ) 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)( 12 ) 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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(d)( 13 ) Investment Subadvisory Agreement between T. Rowe Price International, Inc. and T. Rowe Price Global Investment Services Limited , on behalf of T. Rowe Price International Discovery and T. Rowe Price Japan Funds, dated May 15, 2003 (electronically filed with Amendment No. 69 dated June 30, 2003)

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(e) Underwriting Agreement between Registrant and T. Rowe Price Investment Services, Inc., dated May 1, 2003 (electronically filed with Amendment No. 68 dated April 29, 2003)

(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 , September 4, 2002, July 23, 2003 , October 22, 2003, and February 4, 2004

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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,

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1994, May 31, 1995, November 1, 1995, July 31, 1996, July 23, 1997, September 3, 1997, October 29, 1997, December 15, 1998, October 6, 1999, February 9, 2000, April 19, 2000, July 18, 2000, October 25, 2000, July 24, 2001 , April 24, 2002 , July 24, 2002 , and July 23, 200 3

</R>

(h) Other Agreements

<R>

(h)(1) Transfer Agency and Service Agreement between T. Rowe Price Services, Inc. and T. Rowe Price Funds, dated January 1, 2003 , as amended July 23, 2003 , and October 22 , 2003

</R>

<R>

</R>

<R>

(h)(2) Agreement between T. Rowe Price Associates, Inc. and T. Rowe Price Funds for Fund Accounting Services, dated January 1, 2003 , as amended July 23, 2003 , and October 22 , 2003

</R>

<R>

</R>

<R>

(h)(3) Agreement between T. Rowe Price Retirement Plan Services, Inc. and the T. Rowe Price Funds, dated January 1, 2003 , as amended July 23, 2003 , and October 22 , 2003

</R>

<R>

</R>

(i) Inapplicable

(j) Other Opinions

(j)(1) Consent of Independent Accountants

(j)(2) Opinion of Counsel

(j) ( 3 ) Power of Attorney

<R>

(j) ( 4 ) Certificate of Vice President pursuant to Rule 306 of Regulation S-T for the T. Rowe Price International Stock Fund

</R>

(k) Inapplicable

(l) Inapplicable

(m)(1) Rule 12b-1 Plan for T. Rowe Price International Stock Fund — Advisor Class dated May 1, 2003 (electronically filed with Amendment No. 68 dated April 29, 2003)

(m)(2) Rule 12b-1 Plan for T. Rowe Price International Bond Fund — Advisor Class dated May 1, 2003 (electronically filed with Amendment No. 68 dated April 29, 2003)

(m)(3) Rule 12b-1 Plan for T. Rowe Price International Stock Fund — R Class dated May 1, 2003 (electronically filed with Amendment No. 68 dated April 29, 2003)

PAGE 361

(m)(4) Rule 12b-1 Plan for T. Rowe Price International Growth & Income Fund — Advisor Class dated May 1, 2003 (electronically filed with Amendment No. 68 dated April 29, 2003)

(m)(5) Rule 12b-1 Plan for T. Rowe Price International Growth & Income Fund — R C lass dated May 1, 2003 (electronically filed with Amendment No. 68 dated April 29, 2003)

(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)

(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)

(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)

(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)

(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)

(p) Code of Ethics, dated April 1, 200 2

Item 24. Persons Controlled by or Under Common Control With Registrant

None

Item 25. Indemnification

The Registrant maintains comprehensive Errors and Omissions and Officers and Directors insurance policies written by ICI Mutual. These policies provide coverage for T. Rowe Price Associates, Inc. ("Manager"), and its subsidiaries and affiliates as listed in Item 26 of this Registration Statement (with the exception of the T. Rowe Price Associates Foundation, Inc.), and all other investment companies in the T. Rowe Price family of mutual funds. In addition to the corporate insureds, the policies also cover the officers, directors, and employees of the Manager,

its subsidiaries, and affiliates. The premium is allocated among the named corporate insureds in accordance with the provisions of Rule 17d 1(d)(7) under the Investment Company Act of 1940.

General. The Charter of the Corporation provides that to the fullest extent permitted by Maryland or federal law, no director or officer of the Corporation shall be personally liable to the Corporation or the holders of Shares for money damages and each director and officer shall be indemnified by the Corporation; provided, however , that nothing therein shall be deemed to protect any director or officer of the Corporation against any liability to the Corporation of the holders of Shares to which such director or officer would otherwise be subject by reason of willful 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").

PAGE 363

Anything in this Article X to the contrary notwithstanding, no indemnification shall be made by the Corporation to any Indemnitee unless:

(a) there is a final decision on the merits by a court or other body before whom the Proceeding was brought that the Indemnitee was not liable by reason of Disabling Conduct; or

(b) in the absence of such a decision, there is a reasonable determination, based upon a review of the facts, that the Indemnitee was not liable by reason of Disabling Conduct, which determination shall be made by:

(i) the vote of a majority of a quorum of directors who are neither "interested persons" of the Corporation as defined in Section 2(a)(19) of the Investment Company Act, nor parties to the Proceeding; or

(ii) an independent legal counsel in a written opinion.

Anything in this Article X to the contrary notwithstanding, any advance of expenses by the Corporation to any Indemnitee shall be made only upon the undertaking by such Indemnitee to repay the advance unless it is ultimately determined that such Indemnitee is entitled to indemnification as above provided, and only if one of the following conditions is met:

(a) the Indemnitee provides a security for his undertaking; or

(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. ( "T. Rowe Price International" ) , a wholly owned subsidiary of T RP Finance , Inc. , was incorporated in Maryland in 1979 and provides investment counsel service with respect to foreign securities for institutional investors . In addition to managing private counsel client accounts, T. Rowe Price International also sponsors and serves as adviser and subadviser to U.S. and foreign 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 ( "Global Investment Services" ) an English c orporation, was incorporated in 2000, and a wholly owned subsidiary of T. Rowe Price Group , Inc . Global Investment Services provides investment management, sales, and client servicing to non-U.S. institutional and retail investors . Global Investment Services is an SEC registered investment adviser under the Investment Advisers Act of 1940 and is also registered with the U.K. Financial Services Authority.

</R>

PAGE 365

<R>

T. Rowe Price Global Asset Management Limited ( "Global Asset Management" ) , an English corporation, was incorporated in 1999, and is a wholly owned subsidiary of T. Rowe Price Group, Inc. Global Asset Management is an SEC registered investment adviser under the Investment Advisers Act of 1940. Global Asset Management is also registered with the U.K. 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.

</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, Director , and Vice President , T. Rowe Price Group , Inc. ; Director and Vice President, T. Rowe Price Associates, Inc. and T. Rowe Price Trust Company .

</R>

<R>

JAMES S. RIEPE, Director , T. Rowe Price International, Inc. ; 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 Global Investment Services 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.; Chief Financial Officer (acting) , Chairman of the Board, Director, and President, T. Rowe Price Group , Inc. ; Director and President,
T. Rowe Price Associates, Inc.

</R>

<R>

BRIAN C. ROGERS, Chief Investment Officer, Director, and Vice President, T. Rowe Price Group, Inc.; Chief Investment Officer and Vice President, T. Rowe Price Associates, Inc.; Vice President, T. Rowe Price Trust Company.

</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>

With the exception of Chiho Amano , Carol A. Bambrough, Toby Baker , Mark C.J. Bickford-Smith, Jose Costa Buck, Russell Burdett, Ann B. Cranmer, Dawn A. Day, Frederic Denjoy, Trevor Paul Denton, Vanessa Dekker, Frances Dydasco, Mark J.T. Edwards, Jeremy Ellis, Tara L. Ewens, Calum Ferguson, Jeremy M. Fisher, M. Campbell Gunn, Ada Harte, Pascal Hautcoeur, Laurence O. Linklater, Anh Lu,

</R>

<R>

J. Amanda Maskell, Andi McCann, Gonzalo Px87 ngaro, Jonathan M.A. Parr, Sally Patterson, Robert A. Revel-Chion, S. Leigh Robertson, Christopher J. Rothery, James B.M. Seddon, John Carl A. Sherman, Neil Smith, David Stanley, Miki Takeyama, Dean Tenerelli, Justin Thomson, Christine To, Connie Tse, Dale E. West, Clive Williams, 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 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.,

</R>

PAGE 367

<R>

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. , T. Rowe Price Inflation Protected Bond Fund, Inc. , and T. Rowe Price Diversified Mid-Cap Growth Fund, Inc.

</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.

(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
Stephen P. Ban	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
Walter J. Helmlinger	Vice President	None
Duane E. Higdon	Vice President	None
David A. Hueser	Vice President	None
Christopher A. Jarmush	Vice President	None
Thomas E. Kazmierczak, Jr.	Vice President	None
Cindy G. Knowlton	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
Barry Mike	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
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
Scott L. Sherman	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
Natalie C. Widdowson	Vice President	None
Barbara A. O`Connor	Treasurer	None
Barbara A. Van Horn	Secretary	None
Shane Baldino	Assistant Vice President	None
S. Olivia Barbee	Assistant Vice President	None
Richard J. Barna	Assistant Vice President	None
Catherine L. Berkenkemper	Assistant Vice President	None
Timothy P. Boia	Assistant Vice President	None
Martin P. Brown	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 A . Casson	Assistant Vice President	None
Renee L. Chapman	Assistant Vice President	None
Linsley G. Craig	Assistant Vice President	None
Peter A. DeLibro	Assistant Vice President	None
Jon D . Dry	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
Jason L. Gounaris	Assistant Vice President	None
David A.J. Groves	Assistant Vice President	None
Kristen L. Heerema	Assistant Vice President	None
Shawn M. Isaacson	Assistant Vice President	None
Suzanne M. Knoll	Assistant Vice President	None
Jennifer A. LaPorte	Assistant Vice President	None
Kimberly B. Lechner	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
John T. McGuigan	Assistant Vice President	None
Daniel M. Middelton	Assistant Vice President	None
Thomas R. Morelli	Assistant Vice President	None
Dana P. Morgan	Assistant Vice President	None
Paul Musante	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
Yani A. Peyton	Assistant Vice President	None
Gregory L. Phillips	Assistant Vice President	None
Naomi S. Prosha n	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
Mary G. Williams	Assistant Vice President	None
Timothy R. Yee	Assistant Vice President	None
James Zurad	Assistant Vice President	None

</R>

PAGE 369

(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.

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.

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 371

<R>

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 February 27, 2004 .

</R>

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

<R>

/s/James S. Riepe Chairman of the Board February 27, 2004

</R>

James S. Riepe (Chief Executive Officer)

<R>

/s/Joseph A. Carrier Treasurer (Chief February 27, 2004

</R>

Joseph A. Carrier Financial Officer)

<R>

* Director February 27, 2004

</R>

Anthony W. Deering

<R>

* Director February 27, 2004

</R>

Donald W. Dick, Jr.

<R>

* Director February 27, 2004

</R>

David K. Fagin

<R>

* Director February 27, 2004

</R>

<R>

Karen N. Horn

</R>

<R>

</R>

<R>

* Director February 27, 2004

</R>

F. Pierce Linaweaver

<R>

* Director February 27, 2004

</R>

John G. Schreiber

<R>

/s/M. David Testa Director and February 27, 2004

</R>

M. David Testa Vice President

<R>

*/s/Henry H. Hopkins Vice President and February 27, 2004

</R>

Henry H. Hopkins Attorney In Fact

ARTICLES OF RESTATEMENT

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

August 6, 2001

- 1 -

ARTICLES OF RESTATEMENT

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. ROWE PRICE INTERNATIONAL FUNDS, INC., a Maryland corporation (the "Cor poration") having its principal office in Baltimore City, Maryland, hereby certifies to the State Department of Assessments and Taxation of Maryland (the "SDAT" ) that:

FIRST: The Corporation desires to and does hereby restate its Charter as currently in effect. The Charter as currently in effect is found in the following Charter documents filed with the SDAT:

(1) Articles Supplementary as filed with the SDAT on June 25, 2001 (reclassifying shares of stock previously designated to the T. Rowe Price Global Bond Fund into undesignated shares of the Corporation);

(2) Articles Supplementary as filed with the SDAT on April 28, 2000 (establishing T. Rowe Price Emerging Europe & Mediterranean Fund);

(3) Articles Supplementary as filed with the SDAT on March 24, 2000 (establishing Advisor class for T. Rowe Price International Stock Fund and T. Rowe Price
International Bond Fund);

(4) Articles Supplementary as filed with the SDAT on December 1, 1998 (establishing T. Rowe Price International Growth & Income Fund);

(5) Articles of Amendment as filed with the SDAT on April 30, 1998 (changing the name of the T. Rowe Price Global Government Bond Fund to T. Rowe Price Global Bond Fund);

(6) Articles Supplementary as filed with the SDAT on March 31, 1997 (reclassifying shares of stock previously designated to the T. Rowe Price Short-Term Global Income Fund into undesignated shares of the Corporation);

(7) Articles of Amendment as filed with the SDAT on November 4, 1996 (as corrected by Certificate of Correction as filed with the SDAT on November 6, 1996) (reclassi fying shares of stock of T. Rowe Price Short-Term Global Income Fund into a
number of shares of T. Rowe Price Global Government Bond Fund);

(8) Articles Supplementary as filed with the SDAT on October 11, 1995 (establishing

T. Rowe Price Global Stock Fund);

(9) Articles Supplementary as filed with the SDAT on January 26, 1995 (establishing
T. Rowe Price Emerging Markets Stock Fund);

(10) Articles Supplementary as filed with the SDAT on November 3, 1994 (establishing T. Rowe Price Emerging Markets Bond Fund);

(11) Articles of Amendment as filed with the SDAT on June 7, 1994 (amending Article SEVENTH of the Charter);

(12) Articles Supplementary as filed with the SDAT on February 18, 1994 (increasing authorized capital stock of the Corporation);

(13) Articles Supplementary as filed with the SDAT on November 4, 1993 (establishing T. Rowe Price Latin America Fund);

(14) Articles of Transfer of the Over-the-Counter Securities Group, Inc. (Transferor) and T. Rowe Price International Funds, Inc. (Transferee), as filed with the SDAT on
September 2, 1992;

(15) Articles Supplementary as filed with the SDAT on May 6, 1992 (establishing
T. Rowe Price Short-Term Global Income Fund);

(16) Articles Supplementary as filed with the SDAT on October 18, 1991 (establishing the T. Rowe Price Japan Fund);

(17) Articles of Amendment as filed with the SDAT on May 1, 1991 (amending Article SEVENTH of Charter);

(18) Articles Supplementary as filed with the SDAT on March 4, 1991 (establishing the T. Rowe Price International Stock Fund, T. Rowe Price European Stock Fund, T. Rowe Price New Asia Fund, T. Rowe Price International Discovery Fund and T. Rowe Price International Bond Fund); and

(19) Articles of Amendment and Restatement as filed with the SDAT on February 16, 1990 (as corrected by Certificate of Correction as filed with the SDAT on May 1, 1991).

SECOND: The Charter of the Corporation as restated in its entirety is as follows:

* * * * * *

- 3 -

FIRST: The undersigned, Henry H. Hopkins and Patricia B. Lippert, each of whose post office address is 100 East Pratt Street, Baltimore, Maryland 21202, do hereby file the Char ter of said corporation as set forth below.

SECOND: The name of the Corporation is:

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

THIRD: The purposes for which the Corporation is formed are as follows:

(A) To operate as and carry on the business of an investment company, and exercise all the powers necessary and appropriate to the conduct of such operations.

(B) In general, to carry on any other business in connection with or incidental to the foregoing purpose, to have and exercise all the powers conferred upon corporations by the laws of the State of Maryland as in force from time to time, to do everything necessary, suitable or proper for the accomplishment of any purpose or the attainment of any object or the furtherance of any power not inconsistent with Maryland law, either alone or in association with others, and to take any action incidental or appurtenant to or growing out of or connected with the Corporation`s business or purposes, objects, or powers.

The Corporation shall have the power to conduct and carry on its business, or any part thereof, and to have one or more offices, and to exercise any or all of its corporate powers and rights, in the State of Maryland, in any other states, territories, districts, colonies, and dependen cies of the United States, and in any or all foreign countries.

The foregoing clauses shall be construed both as objects and powers, and the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the general powers of the Corporation.

FOURTH: The post office address of the principal office of the Corporation in the State of Maryland is:

100 East Pratt Street

Baltimore, Maryland 21202

The name and post office address of the resident agent of the Corporation in the State of Maryland is:

Henry H. Hopkins

100 East Pratt Street

Baltimore, Maryland 21202

Said resident agent is a citizen of the State of Maryland, and actually resides therein.

FIFTH: Capital Stock.

(A) General. The total number of shares of stock which the Corporation from time to time shall have authority to issue is Two Billion (2,000,000,000) shares, par value One Cent ($0.01) per share, amounting to an aggregate par value of Twenty Million Dollars ($20,000,000) and is duly divided and classified into the following series of Common Stock on the dates indicated in the parentheses following the names of the respective series: International Stock Fund (January 17, 1990), International Bond Fund (January 17, 1990), International Discovery Fund (January 17, 1990), European Stock Fund (January 17, 1990), New Asia Fund (July 18, 1990), Japan Fund (October 18, 1991), Latin America Fund (November 4, 1993), Emerging Markets Bond Fund (November 2, 1994), Emerging Markets Stock Fund (January 25, 1995), Global Stock Fund (October 11, 1995), Interna tional Growth & Income Fund (December 1, 1998), International Stock Fund — Advisor class (March 31, 2000), International Bond Fund — Advisor class (March 31, 2000), and Emerging Europe & Mediterranean Fund (April 28, 2000). Each such series and/or class shall consist, until further changed, of the lesser of (x) 2,000,000,000 shares or (y) the number of shares that could be issued by issuing all of the shares of any series and/or class currently or hereafter classified less the total number of shares then issued and outstanding in all of such series and/or class. All shares of each series have the powers, preferences, other special rights, qualifications, restrictions, and limitations set forth in the Charter. All such shares are subject, however, to the authority hereinafter granted to the Board of Directors to classify or reclassify any such shares, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any series that the Corpora tion has authority to issue, and to authorize that all such shares of stock be issued as shares of one or more series as the Board of Directors may determine. The International Stock Fund — Advisor class and the International Bond Fund — Advisor class shall represent the same interest in the Corporation and have identical voting, dividend, liquidation, and other rights with the Common Stock of the Corporation; provided, however, that notwithstand ing anything in the Charter of the Corporation to the contrary: 2

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2. This section has been revised to reflect action taken by the Corporation, and reflected in the subsequent articles supplementary (i) increasing the authorized shares of stock of the Corporation from 1,000,000,000 shares to 2,000,000,000 shares, par value $0.01 per share; (ii) establishing each series of shares of Common Stock of the Corporation; and
(iii) deleting language relating to the T. Rowe Price Global Bond Fund and T. Rowe Price Short-Term Global Income Fund, the shares of which were reclassified as undesignated shares of the Corporation.

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(i) Expenses uniquely related to the International Stock Fund — Advisor class and the International Bond Fund — Advisor class (including, without limitation, distribution expenses under a Rule 12b-1 plan and administrative expenses under an administration or service agreement, plan or other arrangement, however designated) shall be borne by that Class, and shall be appropriately reflected (in the manner determined by the Board of Directors) in the net asset value, dividends, distribution and liquidation rights of the shares of that Class, all as the Board of Directors may determine by resolution from time to time, and shall be described in the prospectus or statement of additional information for such Class as and to the extent required by the Investment Company Act of 1940, as amended, and the rules and regulations thereunder.

(ii) As to any matter with respect to which a separate vote of any Class is required by the Investment Company Act (including, without limitation, approval of any plan, agreement or other arrangement referred to in subsection (i) above), such requirement as to a separate vote by that Class shall apply in lieu of any voting requirements established by the Maryland General Corporation Law. As to any matter which does not affect the interest of the International Stock Fund and the International Bond Fund, only the holders of shares of the affected Class or Classes shall be entitled to vote.

(B) Creation of Series. The balance of shares of stock now or hereafter authorized but unissued may be issued as Common Stock or in one or more new series or one or more new classes, each consisting of such number of shares and having such designations, pow ers, preferences, rights, qualifications, limitations and restrictions as shall be fixed and determined from time to time by resolution or resolutions providing for the issuance of such shares adopted by the Board of Directors, to whom authority so to fix and determine the same is hereby expressly granted.

(C) Dividends and Distributions. Without limiting the generality of the foregoing, the dividends and distributions of investment income and capital gains with respect to Com mon Stock and any series or class that may hereafter be created shall be in such amount as may be declared from time to time by the Board of Directors, and such dividends and dis tributions may vary from series to series or class to class to such extent and for such pur poses as the Board of Directors may deem appropriate, including, but not limited to, the purpose of complying with requirements of regulatory or legislative authorities.

(D) Classification. The Board of Directors is hereby expressly granted authority to (1) classify or reclassify any unissued stock (whether now or hereafter authorized) from time

to time by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemp tion of the stock and (2) pursuant to such classification or reclassification to increase or decrease the number of authorized shares of any series or class, but the number of shares of any series or class shall not be decreased by the Board of Directors below the number of shares then authorized, provided however, that nothing herein shall prohibit the Board of Directors from increasing or decreasing the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

(E) Provisions for Series. In addition to other provisions of these Articles, the following provisions are applicable regarding any series of shares of stock of the Corporation estab lished and designated by paragraph (A) of this Article FIFTH and shall be applicable if the Board of Directors shall establish and designate additional series as provided in that para graph:

(i) Classification . The Board of Directors may classify or reclassify any unissued shares or any shares previously issued and reacquired of any series into one or more series that may be established and designated from time to time. The Corporation may hold as treasury shares (of the same or some other series), reissue for such consideration not less than the greater of the par value and the net asset value per share (as described in para graph (C)(iv) of Article SEVENTH hereof) and on such terms as they may determine, or cancel any shares of any series reacquired by the Corporation from time to time.

(ii) Assets Belonging to Series . All consideration received by the Corporation for the issue or sale of shares of a particular series, together with all assets in which such con sideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to that series for all purposes, subject only to the rights of creditors, and shall be so recorded upon the books of account of the Corpora tion. In the event that there are any assets, income, earnings, profits, and proceeds thereof, funds or payments which are not readily identifiable as belonging to any particular series, the Board of Directors shall allocate them among any one or more of the series established and designated from time to time in such manner and on such basis as they, in their sole discretion, deem fair and equitable. Each such allocation by the Board of Directors shall be conclusive and binding upon the shareholders of all series for all purposes.

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(iii) Liabilities Belonging to Series . The assets belonging to each particular series shall be charged with the liabilities of the Corporation in respect of that series and all expenses, costs, charges and reserves attributable to that series, and any general liabilities, expenses, costs, charges and reserves of the Corporation that are not readily identifiable as belonging to any particular series shall be allocated, and charged by the Board of Directors to and among any one or more of the series established and designated from time to time in such manner and on such basis as the Board of Directors, in their sole discretion, deem fair and equitable. Each allocation of liabilities, expenses, costs, charges and reserves by the Board of Directors shall be conclusive and binding upon the holders of all series for all purposes.

(iv) Dividends and Distributions . The power of the Corporation to pay dividends and make distributions shall be governed by paragraph (C) of this Article FIFTH with respect to any one or more series which represents the interests in separately managed components of the Corporation`s assets. Dividends and distributions on shares of a partic ular series may be paid with such frequency as the Board of Directors may determine, which may be daily or otherwise, pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Board of Directors may determine, to the holders of shares of that series, from such of the income and capital gains, accrued or realized, attributable to the assets belonging to that series, as the Board of Directors may determine, after providing for actual and accrued liabilities belonging to that series. All dividends and distributions on shares of a particular series shall be distributed pro rata to the holders of that series in proportion to the number of shares of that series held by such holders at the date and time of record established for the payment of such dividends or distributions.

(v) Equality . Subject to the provisions of this Article FIFTH, all shares of all series shall have identical rights and privileges, except insofar as variations thereof among series shall have been determined and fixed by the Board of Directors. Each share of any series shall represent an equal proportionate share in the assets of that series with each other share of that series. The Board of Directors may divide or combine the shares of any series into a greater or lesser number of shares of the series without thereby changing the propor tionate interests of the holders of such shares in the assets of that series.

(vi) Conversion or Exchange Rights . Subject to the compliance with the require ments of the Investment Company Act of 1940, the Board of Directors shall have the authority to provide that the holders of shares of any series shall have the right to convert

or exchange said shares for or into shares of one or more other series in accordance with such requirements and procedures as may be established by the Board of Directors.

(vii) Liquidation . In the event of the liquidation of a particular series, the sharehold ers of the series that has been established and designated and that is being liquidated shall be entitled to receive, when and as declared by the Board of Directors, the excess of the assets belonging to that series over the liabilities belonging to that series. The holders of shares of any series shall not be entitled thereby to any distribution upon liquidation of any other series. The assets that may be distributed to the shareholders of any series shall be distributed among such shareholders in proportion to the number of shares of that series held by each such shareholder and recorded on the books of the Corporation. The liquida tion of any particular series in which there are shares then outstanding may be authorized by an instrument in writing, without a meeting, signed by a majority of the Directors then in office, subject to the affirmative vote of "a majority of the outstanding voting securi ties" of that series, as the quoted phrase is defined in the Investment Company Act of 1940.

(viii) Voting . Each share of each series shall have equal voting rights with every other share of every other series, and all shares of all series shall vote as a single group except where a separate vote of any class or series is required by the Investment Company Act of 1940, the laws of the State of Maryland, the Charter, the By-Laws of the Corpora tion, or as the Board of Directors may determine in its sole discretion. Where a separate vote is required with respect to one or more classes or series, then the shares of all other classes or series shall 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 shall be entitled to vote.

SIXTH: Number of Directors. The number of directors of the Corporation shall be three (3), or such other number as may from time to time be fixed by the By-Laws of the Corpora tion, or pursuant to authorization contained in such By-Laws, but the number of directors shall never be less than (i) three (3) or (ii) the number of shareholders of the Corporation, whichever is less. There are currently five (5) directors in office whose names are as follows: Anthony W. Deering, Donald W. Dick, Jr., M. David Testa, Martin G. Wade and Paul M. Wythes.

SEVENTH: Regulation of the Powers of the Corporation and Its Directors and Share holders.

(A) Issue of the Corporation`s Shares.

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(i) General . All corporate powers and authority of the Corporation (except as at the time otherwise provided by statute, by the Charter or the By-Laws of the Corporation) shall be vested in and exercised by the Board of Directors. The Board of Directors shall have the power to determine or cause to be determined the nature, quality, character and composition of the portfolio of securities and investments of the Corporation or any series thereof, but the foregoing shall not limit the ability of the Board of Directors to delegate such power to a Committee of the Board of Directors or to an officer of the Corporation, or to enter into an investment advisory or management contract as described in paragraph (E)(vi) of this Article SEVENTH. The Board of Directors may from time to time issue and sell or cause to be issued and sold any of the Corporation`s authorized shares, including any additional shares which it hereafter authorizes and any shares redeemed or repur chased by the Corporation, except that only shares previously contracted to be sold may be issued during any period when the determination of net asset value is suspended pursuant to the provisions of paragraph (C)(iii) of this Article SEVENTH. All such authorized shares, when issued in accordance with the terms of this paragraph (A) shall be fully paid and nonassessable. No holder of any shares of the Corporation shall be entitled, by reason of holding or owning such shares, to any prior, preemptive or other right to subscribe to, purchase or otherwise acquire any additional shares of the Corporation subsequently issued for cash or other consideration or by way of a dividend or otherwise; and any or all of such shares of the Corporation, whether now or hereafter authorized or created, may be issued, or may be reissued or transferred if the same have been reacquired and have trea sury status to such persons, firms, corporations and associations, and for such lawful con sideration, and on such terms as the Board of Directors in its discretion may determine, without first offering the same, or any portion thereof, to any said holder. Voting power in the election of directors and for all other purposes shall be vested exclusively in the hold ers of the Corporation`s authorized and issued shares.

(ii) Price . No shares of the Corporation shall be issued or sold by the Corporation, except as a stock dividend distributed to shareholders, for less than an amount which would result in proceeds to the Corporation, before taxes payable by the Corporation in connection with such transaction, of at least the net asset value per share determined as set forth in paragraph (C) of this Article SEVENTH as of such time as the Board of Directors shall have by resolution theretofore prescribed. In the absence of a resolution of the Board of Directors applicable to the transaction, such net asset value shall be that next
determined after receipt of an unconditional purchase order.

(iii) On Merger or Consolidation . The Board of Directors, in its sole discretion, may permit shares of the Corporation to be issued for stock or assets of any kind. In this regard, in connection with the acquisition of any assets or stock of another person (as such term is defined in Section 2(a)(28) of the Investment Company Act of 1940), the Board of Directors may issue or cause to be issued shares of the Corporation and accept in payment therefor, in lieu of cash, such assets at their market value, or such stock at the market value of the assets held by such person, either with or without adjustment for contingent costs or liabilities, provided that the funds of the Corporation are permitted by law to be invested in such assets or stock.

(iv) Fractional Shares . The Board of Directors may issue and sell fractions of shares having pro rata all the rights of full shares, including, without limitation, the right to vote and to receive dividends.

(B) Redemption and Repurchase of the Corporation`s Shares.

(i) Redemption of Shares . The Corporation shall redeem its shares, subject to the conditions and at the price determined as hereinafter set forth, upon proper application of the record holder thereof at such office or agency as may be designated from time to time for that purpose by the Board of Directors. Any such application must be accompanied by the certificate or certificates, if any, evidencing such shares, duly endorsed or accompa nied by a proper instrument of transfer. The Board of Directors shall have power to deter mine or to delegate to the proper officers of the Corporation the power to determine from time to time the form and the other accompanying documents which shall be necessary to constitute a proper application for redemption.

(ii) Price . Except as provided in paragraph (B), clause (vii) of this Article
SEVENTH, such shares shall be redeemed at their net asset value determined as set forth in paragraph (C) of this Article SEVENTH as of such time as the Board of Directors shall have theretofore prescribed by resolution. In the absence of such resolution, the redemp tion price of shares deposited shall be the net asset value of such shares next determined as set forth in paragraph (C) of this Article SEVENTH after receipt of such application.

(iii) Payment . Payment for such shares shall be made to the shareholder of record within seven (7) days after the date upon which proper application is received, subject to the provisions of paragraph (B)(iv) of this Article SEVENTH. Such payment shall be made in cash or other assets of the Corporation or both, as the Board of Directors shall

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prescribe.

(iv) Effect of Suspension of Determination of Net Asset Value . Except as provided in paragraph (B)(vii) of this Article SEVENTH, if, pursuant to paragraph (C)(iii) of this Article SEVENTH, the Board of Directors shall declare a suspension of the determination of net asset value, the rights of shareholders (including those who shall have applied for redemption pursuant to paragraph (B)(i) of this Article SEVENTH but who shall not yet have received payment) to have shares redeemed and paid for by the Corporation shall be suspended until the termination of such suspension is declared. Any record holder whose redemption right is so suspended may, during the period of such suspension, by appropri ate written notice of revocation to the office or agency where application was made, revoke his application and withdraw any share certificates which accompanied such appli cation. The redemption price of shares for which redemption applications have not been revoked shall be the net asset value of such shares next determined as set forth in para graph (C) of this Article SEVENTH after the termination of such suspension, and pay ment shall be made within seven (7) days after the date upon which the proper application was made plus the period after such application during which the determination of net asset value was suspended.

(v) Repurchase by Agreement . The Corporation may repurchase shares of the Cor poration directly, or through its principal underwriter or other agent designated for the purpose, by agreement with the owner thereof, at a price not exceeding the net asset value per share determined as of the time when the purchase or contract of purchase is made or the net asset value as of any time which may be later determined pursuant to paragraph (C) of this Article SEVENTH, provided payment is not made for the shares prior to the time as of which such net asset value is determined.

(vi) Corporation`s Option to Redeem Shares .

(a) Small Account . The Corporation shall have the right at any time and without prior notice to the shareholder to redeem for their then-current net asset value per share all shares that are held by a shareholder whose shares of the Corpo ration or of any and all series have an aggregate net asset value of less than $10,000, or such other amount as the Board of Directors may from time to time determine.

(b) Reimbursement . The Corporation shall have the right at any time and without prior notice to the shareholder to redeem shares in any account, including

any account of any series, for their then-current net asset value per share if and to the extent it shall be necessary to reimburse the Corporation or its principal underwriter or distributor for any loss sustained by the Corporation by reason of the failure of the shareholder in whose name such account is registered to make full payment for shares of the Corporation, or of any series thereof, purchased by such shareholder.

(c) Personal Holding Company . The Corporation shall have the right at any time and without prior notice to the shareholder to redeem shares in any account for their then-current net asset value per share if such redemption is, in the opinion of the Board of Directors, desirable in order to avoid the Corporation being taxed as a "personal holding company" within the meaning of the Internal Revenue Code of 1986, as amended.

(d) Notice . The right of redemption provided by each of the foregoing sub sections of this paragraph (B)(vi) of this Article SEVENTH shall be subject to such terms and conditions as the Board of Directors may from time to time approve, and subject to the Corporation`s giving general notice of its intention to avail itself of such right, either by publication in the Corporation`s prospectus or by such means as the Board of Directors shall determine.

(vii) Certain Provisions for Specific Series .

(a) Price for Certain Series . Shares of the New Asia Fund and the Interna tional Discovery Fund shall be redeemed at their net asset value determined as set forth in paragraph (C) of this Article SEVENTH as of such time as the Board of Directors shall have theretofore prescribed by resolution less such amounts not in excess of 2% of the net asset value of the shares redeemed, if any, as the Board of Directors shall from time to time determine to be appropriate in order to reduce the effect of disruptive redemption activity on the remaining shareholders of the fund and the management of its investment portfolio. All such amounts deducted shall be retained by the fund. In the absence of a resolution to the contrary, the redemption price of shares deposited shall be calculated using the net asset value of such shares next determined as set forth in paragraph (C) of this Article SEVENTH after receipt of such application.

(b) Effect of Suspension of Determination of Net Asset Value . In the case of the New Asia Fund and the International Discovery Fund, if, pursuant to para

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graph (C)(iii) of this Article SEVENTH, the Board of Directors shall declare a sus pension of the determination of net asset value, the rights of shareholders (including those who shall have applied for redemption pursuant to paragraph (B)(i) of this Article SEVENTH but who shall not yet have received payment) to have shares redeemed and paid for by the Corporation shall be suspended until the termination of such suspension is declared. Any record holder whose redemption right is so sus pended may, during the period of such suspension, by appropriate written notice of revocation to the office or agency where application was made, revoke his applica tion and withdraw any share certificates which accompanied such application. The redemption price of shares for which redemption applications have not been revoked shall be the net asset value of such shares next determined as set forth in paragraph (C) of this Article SEVENTH after the termination of such suspension, less such amounts not in excess of 2% of the net asset value of the shares redeemed, if any, as the Board of Directors shall from time to time determine to be appropriate in order to reduce the effect of disruptive redemption activity on the remaining shareholders of the fund and the management of its investment portfolio. All such amounts deducted shall be retained by the fund. Payment of the redemption price for such redemptions shall be made within seven (7) days after the date upon which the proper application was made plus the period after such application during which the determination of net asset value was suspended.

(i) By Whom Determined . The Board of Directors shall have the power and duty to determine from time to time the net asset value per share of the outstanding shares of the Corporation and of any such series of the Corporation. It may delegate such power and duty to one or more of the directors and officers of the Corporation, to the custodian or depository of the Corporation`s assets, or to another agent of the Corporation appointed for such purpose. Any determination made pursuant to this section by the Board of Direc tors, or its delegate, shall be binding on all parties concerned.

(ii) When Determined . The net asset value shall be determined at such times as the Board of Directors shall prescribe by resolution, provided that such net asset value shall be determined at least once each week as of the close of business on a business day. In the absence of a resolution of the Board of Directors, the net asset value shall be determined as of the close of trading on the New York Stock Exchange on each business day.

(iii) Suspension of Determination of Net Asset Value . The Board of Directors may declare a suspension of the determination of net asset value for the whole or any part of any period (a) during which the New York Stock Exchange is closed other than customary weekend and holiday closings, (b) during which trading on the New York Stock Exchange is restricted, (c) during which an emergency exists as a result of which disposal by the Corporation of securities owned by it is not reasonably practicable or it is not reasonably practicable for the Corporation fairly to determine the value of its net assets, or (d) during which a governmental body having jurisdiction over the Corporation may by order permit for the protection of the security holders of the Corporation. Such suspension shall take effect at such time as the Board of Directors shall specify, which shall not be later than the close of business on the business day next following the declaration, and thereafter there shall be no determination of net asset value until the Board of Directors shall declare the suspension at an end, except that the suspension shall terminate in any event on the first day on which (1) the condition giving rise to the suspension shall have ceased to exist and (2) no other condition exists under which suspension is authorized under this paragraph (C)(iii) of Article SEVENTH. Each declaration by the Board of Directors pursuant to this paragraph (C)(iii) of Article SEVENTH shall be consistent with such official rules and regulations, if any, relating to the subject matter thereof as shall have been promulgated by the Securities and Exchange Commission or any other governmental body having jurisdic tion over the Corporation and as shall be in effect at the time. To the extent not inconsis tent with such official rules and regulations, the determination of the Board of Directors shall be conclusive.

(iv) Computation of Net Asset Value .

(a) Net Asset Value Per Share . The net asset value of each share of the Cor poration (or, where applicable, of any series thereof) as of any particular time shall be the quotient obtained by dividing the value of the net assets of the Corporation (or, where applicable, such series) by the total number of shares of the Corporation (or, where applicable, such series) outstanding. Notwithstanding the above, the Board of Directors may determine to maintain the net asset value per share of any class or series at a designated constant dollar amount and in connection therewith may adopt procedures not inconsistent with the Investment Company Act of 1940 for the continuing declarations of income attributable to that class or series as
dividends payable in additional shares of that class or series at the designated con

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stant dollar amount and for the handling of any losses attributable to that class or series. Such procedures may provide that in the event of any loss, each shareholder shall be deemed to have contributed to the capital of the Corporation attributable to that class or series his pro rata portion of the total number of shares required to be cancelled in order to permit the net asset value per share of that class or series to be maintained, after reflecting such loss, at the designated constant dollar amount. Each shareholder of the Corporation shall be deemed to have agreed, by his investment in any class or series with respect to which the Board of Directors shall have adopted any such procedure, to make the contribution referred to in the preceding sentence in the event of any such loss.

(b) Net Asset Value of Corporation or Series . The value of the net assets of the Corporation (or of any series thereof) as of any particular time shall be the value of the assets of the Corporation (or of any such series) less its liabilities, determined and computed as prescribed by the Board of Directors.

(D) Compliance With Investment Company Act of 1940.

Notwithstanding any of the foregoing provisions of this Article SEVENTH, the Board of Directors may prescribe, in its absolute discretion, such other bases and times for determining the per share net asset value of the shares of the Corporation (or any series thereof) as it shall deem necessary or desirable to enable the Corporation to comply with any provision of the Investment Company Act of 1940, or any rule or regulation thereun der, including any rule or regulation adopted pursuant to Section 22 of the Investment Company Act of 1940 by the Securities and Exchange Commission or any securities asso ciation registered under the Securities Exchange Act of 1934, all as in effect now or as hereafter amended or added.

(E) Miscellaneous.

(i) Compensation of Directors . The Board of Directors shall have power from time to time to authorize payment of compensation to the directors for services to the Cor poration, including fees for attendance at meetings of the Board of Directors and of com mittees.

(ii) Inspection of Corporation`s Books . The Board of Directors shall have power from time to time to determine whether and to what extent, and at what times and places, and under what conditions and regulations the accounts and books of the Corporation

(other than the stock ledger) or any of them shall be open to the inspection of sharehold ers; and no shareholder shall have any right of inspecting any account, book or document of the Corporation except as at the time and to the extent required by applicable law, unless authorized by a resolution of the shareholders or the Board of Directors.

(iii) Name . The Corporation acknowledges that it is adopting its corporate name through permission of T. Rowe Price Associates, Inc., a Maryland corporation, and agrees that T. Rowe Price Associates, Inc. reserves to itself and any successor to its business the right to grant the nonexclusive right to use the name "T. Rowe Price" or any similar name to any other corporation or entity, including, but not limited to, any other corporation or entity including, but not limited to, any investment company of which T. Rowe Price Associates, Inc. or any subsidiary or affiliate thereof or any successor to the business of any thereof shall be the investment adviser.

(iv) Reservation of Right to Amend . The Corporation reserves the right to make any amendment of its Charter, now or hereafter authorized by law, including any amend ment which alters the contract rights, as expressly set forth in its Charter, of any outstand ing stock, and all rights herein conferred upon shareholders are granted subject to such reservation. The Board of Directors shall have the power to adopt, alter or repeal the By- Laws of the Corporation, except to the extent that the By-Laws otherwise provide, or as otherwise provided by applicable law.

(v) Determination of Net Profits, Dividends, Etc. The Board of Directors is expressly authorized to determine in accordance with generally accepted accounting prin ciples and practices what constitutes net profits, earnings, surplus, or net assets in excess of capital, and to determine what accounting periods shall be used by the Corporation or any series thereof for any purpose, whether annual or any other period, including daily; to set apart out of any funds of the Corporation or any series thereof such reserves for such purposes as it shall determine and to abolish the same; to declare and pay dividends and distributions in cash, securities, or other property from surplus or any funds legally avail able therefor, in such amounts and at such intervals (which may be as frequently as daily) or on such other periodic basis, as it shall determine; to declare such dividends or distribu tions by means of a formula or other method of determination, at meetings held less fre quently than the frequency of the effectiveness of such declarations; to establish payment dates for dividends or any other distributions on any basis, including dates occurring less frequently than the effectiveness of the declaration thereof; and to provide for the payment

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of declared dividends on a date earlier than the specified payment date in the case of shareholders of the Corporation redeeming their entire ownership of shares of the Corpo ration.

The Corporation intends to qualify as a "regulated investment company" under the Internal Revenue Code of 1986, or any successor or comparable statute thereto, and regulations promulgated thereunder. Inasmuch as the computation of net income and gains for federal income tax purposes may vary from the computation thereof on the books of the Corporation, the Board of Directors shall have the power, in its sole discretion, to dis tribute in any fiscal year as dividends, including dividends designated in whole or in part as capital gains distributions, amounts sufficient, in the opinion of the Board of Directors, to enable the Corporation to qualify as a regulated investment company and to avoid lia bility of the Corporation for federal income tax in respect of that year. However, nothing in the foregoing shall limit the authority of the Board of Directors to make distributions greater than or less than the amount necessary to qualify as a regulated investment com pany and to avoid liability of the Corporation for such tax.

(vi) Contracts . The Board of Directors may in its discretion from time to time enter into an exclusive or nonexclusive underwriting contract or contracts providing for the sale of the shares of Common Stock of the Corporation to net the Corporation not less than the amount provided for in paragraph (A)(ii) of this Article SEVENTH, whereby the Corpora tion may either agree to sell the shares to the other party to the contract or appoint such other party its sales agent for such shares (such other party being herein sometimes called the "underwriter"), and in either case, on such terms and conditions as may be prescribed in the By-Laws, if any, and such further terms and conditions as the Board of Directors may in its discretion determine not inconsistent with the provisions of this Article SEV ENTH or of the By-Laws; and such contract may also provide for the repurchase of shares of the Corporation by such other party as agent of the Corporation.

The Board of Directors may in its discretion from time to time enter into an investment advisory or management contract whereby the other party to such contract shall undertake to furnish to the Corporation or any series thereof such management, investment advisory, statistical and research facilities and services and such other facilities and services, if any, and all upon such terms and conditions, as the Board of Directors may in its discretion determine.

Any contract of the character described in the paragraphs above or for services

as custodian, transfer agent, or disbursing agent or related services may be entered into with any corporation, firm, trust, or association, although one or more of the directors or officers of the Corporation may be an officer, director, trustee, shareholder, or member of such other party to the contract, and no such contract shall be invalidated or rendered void able by reason of the existence of any such relationship, nor shall any person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Corporation under or by reason of said contract or accountable for any profit realized directly or indirectly therefrom, except as otherwise provided by applicable law. The same person (including a firm, corporation, trust, or association) may be the other party to con tracts entered into pursuant to the above paragraphs, and any individuals may be finan cially interested or otherwise affiliated with persons who are parties to any or all of the contracts mentioned in this paragraph.

Any contract entered into pursuant to the first two paragraphs of this paragraph (E)(vi) of this Article SEVENTH shall be consistent with and subject to the requirements of Section 15 of the Investment Company Act of 1940 (including any amendment thereof or other applicable Act of Congress hereafter enacted) with respect to its continuance in effect, its termination and the method of authorization and approval of such contract of renewal thereof.

(vii) Shareholder Voting . On each matter submitted to a vote of the shareholders, each holder of a share shall be entitled to one vote for each whole share and to a propor tionate fractional vote for each fractional share standing in his name on the books of the Corporation, except as otherwise provided in paragraph (E)(viii) of Article FIFTH. Not withstanding any provision of the laws of the State of Maryland requiring a greater pro portion than a majority of the votes of all classes or series or of any class or series of stock entitled to be cast, to take or authorize any action, such action may, subject to other appli cable provisions of law, the Charter and the By-Laws of the Corporation, be taken or authorized upon the concurrence of a majority of the aggregate number of the votes enti tled to be cast thereon.

EIGHTH: References in the Charter to the Investment Company Act of 1940 shall mean the published statute, the rules thereunder, and, where applicable, published cases and interpreta tive letters of the Securities and Exchange Commission.

* * * * * *

THIRD : The Board of Directors of the Corporation at a meeting or by a unanimous

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consent in writing in lieu of a meeting under xa4 2-408 of the Maryland General Corporation Law adopted a resolution that set forth and approved the foregoing restatement of the Charter.

[ Signatures on following page ]

IN WITNESS WHEREOF , T. Rowe Price International Funds, Inc. has caused these pre sents to be signed in its name and on its behalf by one of its Vice Presidents and attested by its Secretary.

ATTEST: T. ROWE PRICE INTERNATIONAL FUNDS, INC.

________________________________ By:___________________________

Patricia B. Lippert, Henry H. Hopkins,

Secretary Vice President

THE UNDERSIGNED , Vice President of the T. Rowe Price International Funds, Inc., who executed on behalf of the Corporation the foregoing Articles of Restatement to be the corporate act of the Corporation and hereby certifies to the best of his knowledge, information, and belief the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury.

________________________________

Henry H. Hopkins, Vice President

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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

AMENDMENT NO. 12

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 Large-Cap Core 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

AMENDMENT NO. 13

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, April 24, 2002, July 24, 2002, September 4, 2002, and July 23, 2003 between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of October 22, 2003, by adding thereto T. Rowe Price Diversified Mid-Cap Growth 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 MID-CAP GROWTH 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 Large-Cap Core 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

AMENDMENT NO. 14

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, April 24, 2002, July 24, 2002, September 4, 2002, July 23, 2003, and October 22, 2003 between State Street Bank and Trust Company and each of the Parties listed on Appendix A thereto is hereby further amended, as of February 4, 2004, by adding thereto T. Rowe Price Retirement Funds, Inc., on behalf of T. Rowe Price Retirement 2005 Fund, T. Rowe Price Retirement 2015 Fund, T. Rowe Price Retirement 2025 Fund, and T. Rowe Price Retirement 2035 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 MID-CAP GROWTH 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 Large-Cap Core 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 2005 Fund

T. Rowe Price Retirement 2010 Fund

T. Rowe Price Retirement 2015 Fund

T. Rowe Price Retirement 2020 Fund

T. Rowe Price Retirement 2025 Fund

T. Rowe Price Retirement 2030 Fund

T. Rowe Price Retirement 2035 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.

(c) Any Assets in the Accounts held by a Subcustodian will be subject only to 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.

(c) If the Bank credits the Deposit Account on a payable date, or at any time 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.

(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.

(c) The Customer authorizes the Bank to act under this Agreement 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.

(c) Access to Records. The Bank shall allow the Customer's independent public 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.

(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

(c) "eligible foreign securities depository" shall mean a securities 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

(c) "eligible foreign securities depository" shall mean a securities 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;

(c) In exchange for or upon conversion into other securities alone or other 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:

(c) The Bank hereby warrants to the Customer that in its opinion, after due inquiry, the established procedures to be followed by each of its branches, each branch of a qualified U.S. bank, each eligible foreign custodian and each eligible foreign securities depository holding 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 Schedule B

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 Agreement ") 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:

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 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.

/s/Alan P. Naughton

By :_________________________________

Alan P. Naughton

Vice President

EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO, SEPARATELY AND INDIVIDUALLY

/s/Carmen F. Deyesu

By: _________________________________

Carmen F. Deyesu

Treasurer

Attachment A

LIST OF CUSTOMERS

T. Rowe Price Value Fund, Inc.

T. Rowe Price Capital Opportunity Fund, Inc.

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Bond 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 Capital Opportunity Fund, Inc.

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Equity Income Fund

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price 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.

T. Rowe Price Value 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 Emerging Markets Bond 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 2

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 May 31, 1995 (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 and delete certain Customers as specified 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.

/s/Alan P. Naughton

By: _________________________________

Alan P. Naughton

Vice President

EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO, SEPARATELY AND INDIVIDUALLY

/s/Carmen F. Deyesu

By: _________________________________

Carmen F. Deyesu

Treasurer

Attachment A

LIST OF CUSTOMERS

Add the following Fund:

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Stock Fund

Delete the following Fund:

CUNA Mutual Funds, Inc. on behalf of:

CUNA Mutual Cornerstone 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 Capital Opportunity Fund, Inc.

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Equity Income Fund

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price 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 Emerging Markets Stock 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.

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.

T. Rowe Price Value 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 Emerging Markets Bond 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 2

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 1, 1995 (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:

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.

/s/Alan R. Naughton

By: _________________________________

Alan R. Naughton

Vice President

EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO, SEPARATELY AND INDIVIDUALLY

/s/Carmen F. Deyesu

By: _________________________________

Carmen F. Deyesu

Treasurer

Attachment A

LIST OF CUSTOMERS

Add the following Funds:

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Global Stock Fund

T. Rowe Price Corporate Income Fund, Inc.

T. Rowe Price Health & Life Sciences Fund, Inc.

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 Capital Opportunity Fund, Inc.

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Equity Income Fund

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price 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 Emerging Markets Stock Fund

T. Rowe Price Global Stock 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.

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.

T. Rowe Price Value Fund, Inc.

T. Rowe Price Health & Life Sciences 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 Emerging Markets Bond 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

T. Rowe Price Corporate Income Fund, Inc.

Attachment B
Schedule A
Page 1 of 2

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

The Global Custody Agreement of January 3, 1994, as amended April 18, 1994, August 15, 1994, November 28, 1994, May 31, 1995, and November 1, 1995 (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., which contracts have been assumed by operation of law by THE CHASE MANHATTAN BANK (the "Bank") is hereby further amended, as of July 31, 1996 (the "Amendment Agreement"). 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:

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

/s/Caroline Willson

By:_________________________________

Caroline Willson Vice President

EACH OF THE CUSTOMERS LISTED IN

ATTACHMENT A HERETO, SEPARATELY AND

INDIVIDUALLY

/s/Carmen F. Deyesu

By:________________________________

Carmen F. Deyesu

Treasurer

Attachment A

LIST OF CUSTOMERS

Add the following Funds:

T. Rowe Price Equity Series, Inc. on behalf of:

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price Financial Services Fund, Inc.

Institutional Equity Funds, Inc. on behalf of:

Mid-Cap Equity Growth Fund

T. Rowe Price Mid-Cap Value Fund, Inc.

T. Rowe Price Trust Company, as Trustee for the

International Common Trust Fund on behalf of:

Emerging Markets Equity Trust

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, 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 Capital Opportunity Fund, Inc.

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Equity Income Fund

T. Rowe Price Equity Series, Inc. on behalf of:

T. Rowe Price Equity Income Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Financial Services Fund, Inc.

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price Growth Stock Fund, Inc.

T. Rowe Price Health Sciences Fund, Inc.

Institutional Equity Funds, Inc. on behalf of:

Mid-Cap Equity Growth Fund

Institutional International Funds, Inc. on behalf of:

Foreign Equity Fund

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price Global 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 Mid-Cap Value Fund, Inc.

T. Rowe Price New America Growth Fund

T. Rowe Price New Era Fund, Inc.

T. Rowe Price New Horizons Fund, Inc.

T. Rowe Price 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.

T. Rowe Price Value Fund, Inc.

Income Funds

T. Rowe Price Corporate Income Fund, Inc.

T. Rowe Price High Yield Fund, Inc.

T. Rowe Price Income Series, Inc. on behalf of:

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Global Government Bond Fund

T. Rowe Price International Bond Fund

T. Rowe Price Short-Term Global Income Fund

T. Rowe Price New Income Fund, Inc.

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

T. Rowe Price Short-Term Bond Fund, Inc.

T. Rowe Price Short-Term U.S. Government Fund, Inc.

T. Rowe Price Summit Funds, Inc. on behalf of:

T. Rowe Price Summit Limited-Term Bond 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

Savings Plan

Common Trust Funds

T. Rowe Price Trust Company,

as Trustee for the International

Common Trust Fund on behalf of

the Underlying Trusts:

Emerging Markets Equity Trust

European Discovery Trust

Foreign Discovery Trust

Foreign Discovery Trust-Augment

Japan Discovery Trust

Latin America Discovery Trust

Pacific 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, dated July 17, 1997 to the January 3, 1994 Custody Agreement ("Agreement"), as amended July 31, 1996 ("Amendment Agreement"), by and between each of the Entities listed in Attachment B of the Amendment Agreement, separately and individually (each such entity hereinafter referred to as the "Customer"), and The Chase Manhattan Bank, N.A. whose obligations have since been adopted by The Chase Manhattan Bank ("Bank"), having a place of business at One Chase Manhattan Plaza, New York, N.Y. 10081

It is hereby agreed as follows:

Section 1. Except as modified hereby, the Agreement is confirmed in all respects. Capitalized terms used herein without definition shall have the meanings ascribed to them in the

Agreement.

Section 2. The Agreement is amended as follows by adding the following as new ' 15:

(a) "CMBI" shall mean Chase Manhattan Bank International, an indirect wholly-owned subsidiary of Bank, located in Moscow, Russia, and any nominee companies appointed by it.

(b) "International Financial Institution" shall mean any bank in the top 1,000 (together with their affiliated companies) as measured by "Tier 1" capital or any broker/dealer in the top 100 as measured by capital.

(d) "No-Action Letter" shall mean the response of the Securities and Exchange Commission's Office of Chief Counsel of Investment Management, dated April 18, 1995, in respect of the Templeton Russia Fund, Inc. (SEC Ref. No. 95-151-CC, File No. 811-8788) providing "no- action" relief under '17(f) of the Investment Company Act of 1940, as amended, and SEC Rule 17- f5 thereunder, in connection with custody of such Templeton Russia Fund, Inc.'s investments in Russian Securities.

(e) "Reasonable Care" shall mean the use of reasonable custodial practices under the applicable circumstances as measured by the custodial practices then prevailing in Russia of International Financial Institutions acting as custodians for their institutional investor clients in Russia.

(f) "Registrar Company" shall mean any entity providing share registration services to an issuer of Russian Securities.

(g) "Registrar Contact" shall mean a contract between CMBI and a Registrar Company (and as the same may be amended from time to time) containing, inter alia, the contractual provisions described at paragraphs (a)-(e) on pps. 5-6 of the No-Action Letter.

(h) "Russian Security" shall mean a Security issued by a Russian issuer.

(i) "Share Extract" shall mean: (i) an extract of its share registration books issued by a Registrar Company indicating an investor's ownership of a security; and (ii) a form prepared by CMBI or its agent in those cases where a Registrar Company in unwilling to issue a Share Extract.

Section 3. Section 6(a) of the Agreement is amended by adding the following at the end thereof: "With respect to Russia, payment for Russian Securities shall not be made prior to the issuance of the Share Extract relating to such Russian Security. Delivery of Russian Securities may be made in accordance with the customary or established securities trading or securities processing practices and procedures in Russia. Delivery of Russian Securities may also be made in any manner specifically required by Instructions acceptable to the Bank. Customer shall promptly supply such transaction and settlement information as may be requested by Bank or CMBI in connection with particular transactions."

Section 4. Section 8 of the Agreement is amended by adding a new paragraph to the end thereof as follows: "It is understood and agreed that Bank need only use its reasonable efforts with respect to performing the functions described in this '8 with respect to Russian Securities."

Section 5. Section 12(a)(i) of the Agreement is amended with respect to Russian custody by deleting the phrase "reasonable care" wherever it appears and substituting, in lieu thereof, the phrase "Reasonable Care."

Section 6. Section 12(a)(i) of the Agreement is further amended with respect to Russian custody by inserting the following at the end of the first sentence thereof: "provided that, with respect to Russian Securities, Bank's responsibilities shall be limited to safekeeping of relevant Share Extracts."

Section 7. Section 12(a)(i) of the Agreement is further amended with respect to Russian custody by inserting the following after the second sentence thereof: "In connection with the foregoing, neither Bank nor CMBI shall assume responsibility for, and neither shall be liable for, any action or inaction of any Registrar Company and no Registrar Company shall be, or shall be deemed to be, Bank, CMBI, a Subcustodian, a securities depository or the employee, agent or personnel of any of the foregoing. To the extent that CMBI employs agents to perform any of the functions to be performed by Bank or CMBI with respect to Russian Securities, neither Bank nor CMBI shall be responsible for any act, omission, default or for the solvency of any such agent unless the appointment of such agent was made with Negligence or in bad faith, or for any loss due to the negligent act of such agent except to the extent that such agent performs in a negligent manner which is the cause of the loss to the Customer and the Bank or CMBI failed to exercise reasonable care in monitoring such agent's performance where Customer has requested and Bank has agreed to accept such monitoring responsibility and except that where Bank or CMBI uses (i) an affiliated nominee or (ii) an agent to perform the share registration or share confirmation functions described in paragraphs (a)-(e) on pps. 5-6 of the No-Action Letter, and, to the extent applicable to CMBI, the share registration functions described on pps. 2-3 of the No-Action Letter, Bank and CMBI shall be liable to Customer as if CMBI were responsible for performing such services itself."

Section 8. Section 12(a)(ii) is amended with respect to Russian custody by deleting the word "negligently" and substituting, in lieu thereof, the word "Negligently."

Section 9. Section 12(a)(iii) is amended with respect to Russian custody by deleting the word "negligence" and substituting, in lieu thereof, the word "Negligence."

Section 10. Add a new Section 16 to the Agreement as follows:

(a) Bank will advise Customer (and will update such advice from time to time as changes occur) of those Registrar Companies with which CMBI has entered into a Registrar Contract. Bank shall cause CMBI both to monitor each Registrar Company and to promptly advise Customer when CMBI has actual knowledge of the occurrence of any one or more of the events described in paragraphs (i)-(v) on pps. 8-9 of the No-Action Letter with respect to a Registrar Company that serves in that capacity for any issuer the shares of which are held by Customer.

(b) Where Customer is considering investing in the Russian Securities of an issuer as to which CMBI does not have a Registrar Company, Customer may request that Bank ask that CMBI both consider whether it would be willing to attempt to enter into such a Registrar Contract and to advise Customer of its willingness to do so. Where CMBI has agreed to make such an attempt, Bank will advise Customer of the occurrence of any one or more or the events described in paragraphs (i)-(iv) on pps. 8-9 of the No-Action Letter of which CMBI has actual knowledge.

(c) Where Customer is considering investing in the Russian Securities of an issuer as to which CMBI has a Registrar Contract with the issuer's Registrar Company, Customer may advise Bank of its interest in investing in such issuer and, in such event, Bank will advise Customer of the occurrence of any one or more of the events described in paragraphs (i)-(v) on pps. 8-9 of the No- Action Letter of which CMBI has actual knowledge.

Section 11. Add a new Section 17 to the Agreement as follows: "Customer shall pay for and hold Bank and CMBI harmless from any liability or loss resulting from the imposition or assessment of any taxes (including, but not limited to, state, stamp and other duties) or other governmental charges, and any related expenses with respect to income on Russian Securities."

Section 12. Add a new Section 18 to the Agreement as follows: "Customer acknowledges and agrees that CMBI may not be able, in given cases and despite its reasonable efforts, to obtain a Share Extract from a Registrar Company and CMBI shall not be liable in any such even including with respect to any losses resulting from such failure."

Section 13. Add a new Section 19 to the Agreement as follows: "Customer acknowledges that it has received, reviewed and understands that Chase market report for Russia, including, but not limited to, the risks described therein."

Section 14. Add a new Section 20 to the Agreement as follows: "Subject to the cooperation of a Registrar Company, for at least the first two years following CMBI's first use of a Registrar Company, Bank shall cause CMBI to conduct share confirmations on at least a quarterly basis, although thereafter confirmations may be conducted on a less frequent basis if Customer's Board of Directors, in consultation with CMBI, determines it to be appropriate."

Section 15. Add a new Section 21 to the Agreement as follows: "Bank shall cause CMBI to prepare for distribution to Customer's Board of Directors a quarterly report identifying: (i) any concerns it has regarding the Russian share registration system that should be brought to the attention of the Board of Directors; and (ii) the steps CMBI has taken during the reporting period to ensure that Customer's interests continue to be appropriately recorded."

Section 16. Add a new Section 22 to the Agreement as follows: "Except as provided in new '16(b), the services to be provided by Bank hereunder will be provided only in relation to Russian Securities for which CMBI has entered into a Registrar Contract with the relevant Registrar Company."

*********************

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

for EACH CUSTOMER THE CHASE MANHATTAN

BANK

separately and individually

/s/Henry H. Hopkins /s/Helen C. Bairsto

Henry H. Hopkins Helen C. Bairsto

Vice President Vice President

AMENDMENT AGREEMENT

The Global Custody Agreement of January 3, 1994, as amended April 18, 1994, August 15, 1994, November 28, 1994, May 31, 1995, November 1, 1995, and July 31, 1996 (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., which contracts have been assumed by operation of law by THE CHASE MANHATTAN BANK (the "Bank") is hereby further amended, as of July 23, 1997 (the "Amendment Agreement"). 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 1 of Schedule A of the Custody Agreement ("Schedule A") shall be amended to add certain Customers as specified 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

By: /S/Caroline Willson

Caroline Willson

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

Add the following Funds:

T. Rowe Price Diversified Small-Cap Growth Fund, Inc.

T. Rowe Price Media & Telecommunications Fund, Inc.

T. Rowe Price Tax-Efficient Balanced Fund, Inc.

Change the name of the following Fund:

T. Rowe Price OTC Fund, Inc., on behalf of:

T. Rowe Price OTC Fund

Effective May 1, 1997, the fund name changed to:

T. Rowe Price Small-Cap Stock Fund, Inc.

Delete the following Fund:

T. Rowe Price International Funds, Inc., on behalf of:

T. Rowe Price Short-Term Global Income Fund

Attachment B
Schedule A
Page 1 of 3

LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO

GLOBAL CUSTODY AGREEMENT WITH

THE CHASE MANHATTAN BANK

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 Capital Opportunity Fund, Inc.

T. Rowe Price Diversified Small-Cap Growth Fund, Inc.

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Equity Income Fund

T. Rowe Price Equity Series, Inc. on behalf of:

T. Rowe Price Equity Income Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Financial Services Fund, Inc.

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price Growth Stock Fund, Inc.

T. Rowe Price Health Sciences Fund, Inc.

Institutional Equity Funds, Inc. on behalf of:

Mid-Cap Equity Growth Fund

Institutional International Funds, Inc. on behalf of:

Foreign Equity Fund

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price Global 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

Attachment B
Schedule A
Page 2 of 3

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY AGREEMENT

Equity Funds

T. Rowe Price International Series, Inc. on behalf of:

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 Fund, Inc.

T. Rowe Price Science & Technology Fund, Inc.

T. Rowe Price Small-Cap Stock Fund, Inc.

T. Rowe Price Small-Cap Value Fund, Inc.

T. Rowe Price Value Fund, Inc.

Income Funds

T. Rowe Price Corporate Income Fund, Inc.

T. Rowe Price High Yield Fund, Inc.

T. Rowe Price Income Series, Inc. on behalf of:

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Global Government Bond Fund

T. Rowe Price International Bond Fund

T. Rowe Price New Income Fund, Inc.

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

T. Rowe Price Short-Term Bond Fund, Inc.

T. Rowe Price Short-Term U.S. Government Fund, Inc.

T. Rowe Price Summit Funds, Inc. on behalf of:

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Tax-Efficient Balanced Fund, Inc.

Attachment B
Schedule A
Page 3 of 3

APPLICABLE RIDERS TO

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:

Emerging Markets Equity Trust

European Discovery Trust

Foreign Discovery Trust

Foreign Discovery Trust - Augment

Japan Discovery Trust

Latin America Discovery Trust

Pacific Discovery Trust

New York City International Common Trust Fund

III. OTHER

RPFI International Partners, L.P. No Riders are applicable to the Customer listed under Section III of this Schedule A.

AMENDMENT, dated July 23, 1997, to the Custody Agreement ("Agreement"), dated January 3, 1994, between The Chase Manhattan Bank (as successor to The Chase Manhattan Bank, N.A.), having an office at 270 Park Avenue, New York, NY 10017-2070 and certain T. Rowe Price funds.

It is agreed as follows:

1. The third line of '8 of the Agreement is deleted and the following is inserted, in lieu thereof:

Bank shall provide proxy voting services in accordance with the terms of the proxy voting services rider ("Proxy Rider") annexed hereto as Exhibit 1. Proxy voting services may be provided by Bank or, in whole or in part, by one or more third parties appointed by Bank (which may be Affiliates of Bank).

2. Except as modified hereby, the Agreement is confirmed in all respects.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

EACH OF THE CUSTOMERS, INDIVIDUALLY THE CHASE MANHATTAN

AND SEPARATELY LISTED ON SECTION 1 OF BANK

SCHEDULE A HERETO

By:/s/Henry H. Hopkins By:/s/Helen C. Bairsto

Henry H. Hopkins Helen C. Bairsto

Vice President Vice President

EACH OF THE CUSTOMERS, INDIVIDUALLY AND

SEPARATELY LISTED ON SECTION 2 OF

SCHEDULE A HERETO

By:/s/Nancy M. Morris

Nancy M. Morris

Vice President

Exhibit 1

GLOBAL PROXY SERVICE RIDER

To Global Custody Agreement

Between

THE CHASE MANHATTAN BANK

AND

Certain T. ROWE PRICE FUNDS

dated 3rd January, 1994

1. Global Proxy Services ("Proxy Services") shall be provided for the countries listed in the procedures and guidelines ("Procedures") furnished to the Customer, as the same may be amended by Bank from time to time on prior notice to Customer. The Procedures are incorporated by reference herein and form a part of this Rider.

2. Proxy Services shall consist of those elements as set forth in the Procedures, and shall include (a) notifications ("Notifications") by Bank to Customer of the dates of pending shareholder meetings, resolutions to be voted upon and the return dates as may be received by Bank or provided to Bank by its Subcustodians or third parties, and (b) voting by Bank of proxies based on Customer directions. Original proxy materials or copies thereof shall not be provided. Notifications shall generally be in English and, where necessary, shall be summarized and translated from such non- English materials as have been made available to Bank or its Subcustodian. In this respect Bank=s only obligation is to provide information from sources it believes to be reliable and/or to provide materials summarized and/or translated in good faith. Bank reserves the right to provide Notifications, or parts thereof, in the language received. Upon reasonable advance request by Customer, backup information relative to Notifications, such as annual reports, explanatory material concerning resolutions, management recommendations or other material relevant to the exercise of proxy voting rights shall be provided as available, but without translation.

3. While Bank shall attempt to provide accurate and complete Notifications, whether or not translated, Bank shall not be liable for any losses or other consequences that may result from reliance by Customer upon Notifications where Bank prepared the same in good faith.

4. Notwithstanding the fact that Bank may act in a fiduciary capacity with respect to Customer under other agreements or otherwise under the Agreement, in performing Proxy Services

Bank shall be acting solely as the agent of Customer, and shall not exercise any discretion with regard to such Proxy Services.

5. Proxy voting may be precluded or restricted in a variety of circumstances, including, without limitation, where the relevant Securities are: (I) on loan; (ii) at registrar for registration or reregistration; (iii) the subject of a conversion or other corporate action; (iv) not held in a name subject to the control of Bank or its Subcustodian or are otherwise held in a manner which precludes voting; (v) not capable of being voted on account of local market regulations or practices or restrictions by the issuer; or (vi) held in a margin or collateral account.

6. Customer acknowledges that in certain countries Bank may be unable to vote individual proxies but shall only be able to vote proxies on a net basis (e.g., a net yes or no vote given the voting instructions received from all customers).

7. Customer shall not make any use of the information provided hereunder, except in connection with the funds or plans covered hereby, and shall in no event sell, license, give or otherwise make the information provided hereunder available, to any third party, and shall not directly or indirectly compete with Bank or diminish the market for Proxy Services by provision of such information, in whole or in part, for compensation or otherwise, to any third party.

8. The names of Authorized Persons for Proxy Services shall be furnished to Bank in accordance with '10 of the Agreement. Proxy Services fees shall be as separately agreed.

SCHEDULE A

SECTION 1

T. Rowe Price Balanced Fund, Inc.

T. Rowe Price Blue Chip Growth Fund, Inc.

T. Rowe Price Capital Appreciation Fund

T. Rowe Price Capital Opportunity Fund, Inc.

T. Rowe Price Corporate Income Fund, Inc.

T. Rowe Price 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. on behalf of:

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 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 Income Series, Inc. on behalf of:

T. Rowe Price Limited Term Bond Portfolio

Institutional Equity Funds, Inc. on behalf of:

Mid-Cap Equity Growth Fund

T. Rowe Price Media & Telecommunications Fund, Inc.

T. Rowe Price Mid-Cap Growth Fund, Inc.

T. Rowe Price Mid-Cap Value Fund, Inc.

T. Rowe Price New America Growth Fund, Inc.

T. Rowe Price New Era Fund, Inc.

T. Rowe Price New Horizons Fund, Inc.

T. Rowe Price New Income Fund, Inc.

T. Rowe Price Personal Strategy Funds, Inc. on behalf of:

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income 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 Summit Funds, Inc. on behalf of:

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Tax-Efficient Balanced Fund, Inc.

T. Rowe Price Value Fund, Inc.

SECTION 2

NYC International Common Trust Fund

AMENDMENT, dated October 29, 1997, to the Custody Agreement ("Agreement"), dated January 3, 1994, between The Chase Manhattan Bank (as successor to The Chase Manhattan Bank, N.A.), having an office at 270 Park Avenue, New York, NY 10017-2070 and certain T. Rowe Price funds.

It is agreed as follows:

1. The third line of '8 of the Agreement is deleted and the following is inserted, in lieu thereof:

2. Except as modified hereby, the Agreement is confirmed in all respects.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

EACH OF THE CUSTOMERS, INDIVIDUALLY THE CHASE MANHATTAN

AND SEPARATELY LISTED ON SECTION 1 OF BANK

SCHEDULE A HERETO

By:/s/Henry H. Hopkins By:/s/Helen C. Bairsto

Henry H. Hopkins Helen C. Bairsto

Vice President Vice President

EACH OF THE CUSTOMERS, INDIVIDUALLY AND

SEPARATELY LISTED ON SECTION 2 OF

SCHEDULE A HERETO

By:/s/Nancy M. Morris

Nancy M. Morris

Vice President

GLOBAL PROXY SERVICE RIDER

To Global Custody Agreement

Between

THE CHASE MANHATTAN BANK

AND

Certain T. ROWE PRICE FUNDS

dated 3rd January, 1994

4. Notwithstanding the fact that Bank may act in a fiduciary capacity with respect to Customer under other agreements or otherwise under the Agreement, in performing Proxy Services

Bank shall be acting solely as the agent of Customer, and shall not exercise any discretion with regard to such Proxy Services.

8. The names of Authorized Persons for Proxy Services shall be furnished to Bank in accordance with '10 of the Agreement. Proxy Services fees shall be as separately agreed.

SCHEDULE A

SECTION 1

T. Rowe Price Balanced Fund, Inc.

T. Rowe Price Blue Chip Growth Fund, Inc.

T. Rowe Price Capital Appreciation Fund

T. Rowe Price Capital Opportunity Fund, Inc.

T. Rowe Price Corporate Income Fund, Inc.

T. Rowe Price 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. on behalf of:

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 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 Income Series, Inc. on behalf of:

T. Rowe Price Limited Term Bond Portfolio

Institutional Equity Funds, Inc. on behalf of:

Mid-Cap Equity Growth Fund

T. Rowe Price Media & Telecommunications Fund, Inc.

T. Rowe Price Mid-Cap Growth Fund, Inc.

T. Rowe Price Mid-Cap Value Fund, Inc.

T. Rowe Price New America Growth Fund, Inc.

T. Rowe Price New Era Fund, Inc.

T. Rowe Price New Horizons Fund, Inc.

T. Rowe Price New Income Fund, Inc.

T. Rowe Price Personal Strategy Funds, Inc. on behalf of:

T. Rowe Price Personal Strategy Balanced Fund

T. Rowe Price Personal Strategy Growth Fund

T. Rowe Price Personal Strategy Income Fund

T. Rowe Price Real Estate Fund, Inc.

T. Rowe Price Science & Technology Fund, Inc.

T. Rowe Price Short-Term Bond Fund, Inc.

T. Rowe Price Short-Term U.S. Government Fund, Inc.

T. Rowe Price Small-Cap Stock Fund, Inc.

T. Rowe Price Small-Cap Value Fund, Inc.

T. Rowe Price Summit Funds, Inc. on behalf of:

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Tax-Efficient Balanced Fund, Inc.

T. Rowe Price Value Fund, Inc.

SECTION 2

NYC International Common Trust Fund

AMENDMENT AGREEMENT

The Global Custody Agreement of January 3, 1994, as amended April 18, 1994, August 15, 1994, November 28, 1994, May 31, 1995, November 1, 1995, July 31, 1996, and July 23, 1997 (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., which contracts have been assumed by operation of law by THE CHASE MANHATTAN BANK (the "Bank") is hereby further amended, as of October 29, 1997 (the "Amendment Agreement"). 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:

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

By: /s/Helen C. Bairsto

Helen C. Bairsto

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

Add the following Fund:

T. Rowe Price Real Estate Fund, Inc.

Attachment B
Schedule A
Page 1 of 3

LIST OF CUSTOMERS, EACH INDIVIDUALLY PARTIES TO

GLOBAL CUSTODY AGREEMENT WITH

THE CHASE MANHATTAN BANK

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 Capital Opportunity Fund, Inc.

T. Rowe Price Diversified Small-Cap Growth Fund, Inc.

T. Rowe Price Dividend Growth Fund, Inc.

T. Rowe Price Equity Income Fund

T. Rowe Price Equity Series, Inc. on behalf of:

T. Rowe Price Equity Income Portfolio

T. Rowe Price Mid-Cap Growth Portfolio

T. Rowe Price New America Growth Portfolio

T. Rowe Price Personal Strategy Balanced Portfolio

T. Rowe Price Financial Services Fund, Inc.

T. Rowe Price Growth & Income Fund, Inc.

T. Rowe Price Growth Stock Fund, Inc.

T. Rowe Price Health Sciences Fund, Inc.

Institutional Equity Funds, Inc. on behalf of:

Mid-Cap Equity Growth Fund

Institutional International Funds, Inc. on behalf of:

Foreign Equity Fund

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price Global 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

Attachment B
Schedule A
Page 2 of 3

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY

AGREEMENT

Equity Funds

T. Rowe Price International Series, Inc. on behalf of:

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 Fund, Inc.

T. Rowe Price Real Estate Fund, Inc.

T. Rowe Price Science & Technology Fund, Inc.

T. Rowe Price Small-Cap Stock Fund, Inc.

T. Rowe Price Small-Cap Value Fund, Inc.

T. Rowe Price Value Fund, Inc.

Income Funds

T. Rowe Price Corporate Income Fund, Inc.

T. Rowe Price High Yield Fund, Inc.

T. Rowe Price Income Series, Inc. on behalf of:

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Global Government Bond Fund

T. Rowe Price International Bond Fund

T. Rowe Price New Income Fund, Inc.

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

T. Rowe Price Short-Term Bond Fund, Inc.

T. Rowe Price Short-Term U.S. Government Fund, Inc.

T. Rowe Price Summit Funds, Inc. on behalf of:

T. Rowe Price Summit Limited-Term Bond Fund

T. Rowe Price Tax-Efficient Balanced Fund, Inc.

Attachment B
Schedule A
Page 3 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

Employee Savings Plan

Common Trust Funds

T. Rowe Price Trust Company, as Trustee for the

International Common Trust Fund on behalf of the Underlying Trusts:

Emerging Markets Equity Trust

European Discovery Trust

Foreign Discovery Trust

Foreign Discovery Trust - Augment

Japan Discovery Trust

Latin America Discovery Trust

Pacific Discovery Trust

New York City International Common Trust Fund

III. OTHER

RPFI International Partners, L.P. No Riders are

applicable to the

Customer listed under

Section III of this

Schedule A.

AMENDMENT AGREEMENT TO

RUSSIAN RIDER TO THE GLOBAL

CUSTODY AGREEMENT

AMENDMENT to Attachment B of Global Custody Agreement dated January 3, 1994, as amended July 23, 1997, is hereby further amended as of September 3, 1997.

NOW, THEREFORE, the parties hereto agree as follows:

1. Amendment. Amend Attachment B to consist of the following funds when pertaining to the Russian Rider dated July 17, 1997:

Institutional International Funds, Inc., on behalf of:

Foreign Equity Fund

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price European Stock Fund

T. Rowe Price Global Government Bond Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Bond 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

IN WITNESS WHEREOF, the parties have executed this Amendment Agreement as of the day and year first above written.

THE CHASE MANHATTAN BANK EACH OF THE PARTIES LISTED ABOVE

By: /s/Helen C. Bairsto By:/s/Henry H. Hopkins

Helen C. Bairsto Henry H. Hopkins

Vice President Vice President

AMENDMENT AGREEMENT

The Global Custody Agreement of 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, and October 29, 1997 (the "Custody Agreement"), by and between each of the Entities listed in Schedule A, as amended thereto, severally and not jointly (each such entity referred to hereinafter as the "Customer") and The Chase Manhattan Bank, N.A., which contracts have been assumed by operation of law by THE CHASE MANHATTAN BANK (the "Bank") is hereby further amended, as of December 15, 1998 (the "Amendment Agreement"). 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. Sections 1 and 3 of Schedule A of the Custody Agreement ("Schedule A") shall be amended to add or change certain Customers as specified in Attachment A hereto. The revised Schedule A incorporating these changes in the form attached 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

/s/Joseph M. Rondinelli

By: _____________________________________

Joseph M. Rondinelli

Vice President

EACH OF THE CUSTOMERS LISTED IN ATTACHMENT A HERETO, SEVERALLY
AND NOT JOINTLY

/s/Henry H. Hopkins

By: _____________________________________

Henry H. Hopkins

Vice President

Attachment A

LIST OF CUSTOMERS

Change the name of the following Fund:

T. Rowe Price Global Government Bond Fund

Effective May 1, 1998, the fund name changed to:

T. Rowe Price Global Bond Fund

Add the following Fund:

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price International Growth & Income Fund

Add the following Funds to the Russian Rider:

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price International Growth & Income Fund

RPFI International Partners, L.P.

Schedule A
Page 1 of 3

LIST OF CUSTOMERS, SEVERALLY AND NOT JOINTLY PARTIES TO

GLOBAL CUSTODY AGREEMENT WITH

THE CHASE MANHATTAN BANK

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. Global Proxy Service Rider

T. Rowe Price Blue Chip Growth Fund, Inc. Global Proxy Service Rider

T. Rowe Price Capital Appreciation Fund Global Proxy Service Rider

T. Rowe Price Capital Opportunity Fund, Inc. Global Proxy Service Rider

T. Rowe Price Diversified Small-Cap Growth Fund, Inc. Global Proxy Service Rider

T. Rowe Price Dividend Growth Fund, Inc. Global Proxy Service Rider

T. Rowe Price Equity Income Fund Global Proxy Service Rider

T. Rowe Price Equity Series, Inc. on behalf of:

T. Rowe Price Equity Income Portfolio

T. Rowe Price Mid-Cap Growth Portfolio Global Proxy Service Rider

T. Rowe Price New America Growth Portfolio Global Proxy Service Rider

T. Rowe Price Personal Strategy Balanced Portfolio Global Proxy Service Rider

T. Rowe Price Financial Services Fund, Inc. Global Proxy Service Rider

T. Rowe Price Growth & Income Fund, Inc. Global Proxy Service Rider

T. Rowe Price Growth Stock Fund, Inc. Global Proxy Service Rider

T. Rowe Price Health Sciences Fund, Inc. Global Proxy Service Rider

Institutional Equity Funds, Inc. on behalf of:

Mid-Cap Equity Growth Fund Global Proxy Service Rider

Institutional International Funds, Inc. on behalf of:

Foreign Equity Fund Russian Rider

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Stock Fund Russian Rider

T. Rowe Price European Stock Fund Russian Rider

T. Rowe Price Global Stock Fund Russian Rider

T. Rowe Price International Discovery Fund Russian Rider

T. Rowe Price International Growth & Income Fund Russian Rider

T. Rowe Price International Stock Fund Russian Rider

T. Rowe Price Japan Fund Russian Rider

T. Rowe Price Latin America Fund Russian Rider

T. Rowe Price New Asia Fund Russian Rider

Schedule A
Page 2 of 3

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY

AGREEMENT

T. Rowe Price International Series, Inc. on behalf of:

T. Rowe Price International Stock Portfolio Russian Rider

T. Rowe Price Media & Telecommunications Fund, Inc. Global Proxy Service Rider

T. Rowe Price Mid-Cap Growth Fund, Inc. Global Proxy Service Rider

T. Rowe Price Mid-Cap Value Fund, Inc. Global Proxy Service Rider

T. Rowe Price New America Growth Fund Global Proxy Service Rider

T. Rowe Price New Era Fund, Inc. Global Proxy Service Rider

T. Rowe Price New Horizons Fund, Inc. Global Proxy Service Rider

T. Rowe Price Real Estate Fund, Inc. Global Proxy Service Rider

T. Rowe Price Science & Technology Fund, Inc. Global Proxy Service Rider

T. Rowe Price Small-Cap Stock Fund, Inc. Global Proxy Service Rider

T. Rowe Price Small-Cap Value Fund, Inc. Global Proxy Service Rider

T. Rowe Price Value Fund, Inc. Global Proxy Service Rider

Income Funds

T. Rowe Price Corporate Income Fund, Inc. Global Proxy Service Rider

T. Rowe Price High Yield Fund, Inc. Global Proxy Service Rider

T. Rowe Price Income Series, Inc. on behalf of:

T. Rowe Price Limited-Term Bond Portfolio Global Proxy Service Rider

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Bond Fund Russian Rider

T. Rowe Price Global Bond Fund Russian Rider

T. Rowe Price International Bond Fund Russian Rider

T. Rowe Price New Income Fund, Inc. Global Proxy Service Rider

T. Rowe Price Personal Strategy Funds, Inc. on behalf of:

T. Rowe Price Personal Strategy Balanced Fund Global Proxy Service Rider

T. Rowe Price Personal Strategy Growth Fund Global Proxy Service Rider

T. Rowe Price Personal Strategy Income Fund Global Proxy Service Rider

T. Rowe Price Short-Term Bond Fund, Inc. Global Proxy Service Rider

T. Rowe Price Short-Term U.S. Government Fund, Inc. Global Proxy Service Rider

T. Rowe Price Summit Funds, Inc. on behalf of:

T. Rowe Price Summit Limited-Term Bond Fund Global Proxy Service Rider

T. Rowe Price Tax-Efficient Balanced Fund, Inc. Global Proxy Service Rider

Schedule A
Page 3 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 Employee Savings Plan

Common Trust Funds

T. Rowe Price Trust Company, as Trustee for the International

Common Trust Fund on behalf of the Underlying Trusts:

Emerging Markets Equity Trust

European Discovery Trust

Foreign Discovery Trust

Foreign Discovery Trust - Augment

Japan Discovery Trust

Latin America Discovery Trust

Pacific Discovery Trust

New York City International Common Trust Fund Global Proxy Service Rider

III. OTHER

RPFI International Partners, L.P. Russian Rider

AMENDMENT AGREEMENT

The Global Custody Agreement of 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 and December 15, 1998 (the "Custody Agreement") by and between each of the Entities listed in Schedule A, as amended thereto, severally and not jointly (each such entity referred to hereinafter as the "Customer") and The Chase Manhattan Bank, N.A., whose contracts have been assumed by THE CHASE MANHATTAN BANK (the "Bank") is hereby further amended, as of October 6, 1999 (the "Amendment Agreement"). 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. Sections I, II and III of Schedule A of the Custody Agreement ("Sched ule A") shall be amended to add or change certain Customers as specified in Attachment A hereto. The revised Schedule A incorporating these changes in the form attached shall supersede the existing Schedule A in its entirety.

2. Agreement. The Customer and Bank agree to be bound in all respects by all the terms and conditions of the Custody Agreement and shall be fully liable and responsible thereunder as a "Customer" and "Bank," respectively, as defined in the Custody Agreement.

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

/s/Joseph M. Rondinelli

By: ____________________________________

Joseph M. Rondinelli

Vice President

EACH OF THE CUSTOMERS LISTED IN

ATTACHMENT A HERETO, SEVERALLY

AND NOT JOINTLY

/s/Henry H. Hopkins

By: ____________________________________

Henry H. Hopkins

Vice President

Attachment A

Page 1 of 2

LIST OF CUSTOMERS

Change the name of the following Fund :

T. Rowe Price Tax-Efficient Balanced Fund, Inc.

Effective May 27, 1999, the fund name changed to:

T. Rowe Price Tax-Efficient Funds, Inc., on behalf of

T. Rowe Price Tax-Efficient Balanced Fund

Add the following Fund:

T. Rowe Price Tax-Efficient Funds, Inc., on behalf of:

T. Rowe Price Tax-Efficient Growth Fund

Add the following Trusts :

T. Rowe Price Trust Company, as Trustee for the International

Common Trust Fund, on behalf of the Underlying Trusts:

Foreign Discovery Trust - B

International Small-Cap Trust

Delete the following Trust :

New York City International Common Trust Fund

Add the following Funds/Trusts/Limited Partnerships to the Global Proxy Service Rider :

T. Rowe Price Equity Series, Inc.

T. Rowe Price Equity Income Portfolio

T. Rowe Price Tax-Efficient Funds, Inc., on behalf of

T. Rowe Price Tax-Efficient Growth Fund

Institutional International Funds, Inc., on behalf of

Foreign Equity Fund

Attachment A

Page 2 of 2

T. Rowe Price International Funds, Inc., on behalf of

T. Rowe Price Emerging Markets Stock Fund

T. Rowe Price Emerging Markets Bond Fund

T. Rowe Price European Stock Fund

T. Rowe Price Global Bond Fund

T. Rowe Price Global Stock Fund

T. Rowe Price International Bond Fund

T. Rowe Price International Discovery Fund

T. Rowe Price International Growth & Income Fund

T. Rowe Price International Stock Fund

T. Rowe Price 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 Trust Company, as Trustee for the International

Common Trust Fund on behalf of the Underlying Trusts:

Emerging Markets Equity Trust

European Discovery Trust

Foreign Discovery Trust

Foreign Discovery Trust - Augment

Foreign Discovery Trust - B

International Small-Cap Trust

Japan Discovery Trust

Latin America Discovery Trust

Pacific Discovery Trust

RPFI International Partners, L.P.

Schedule A

Page 1 of 3

LIST OF CUSTOMERS, SEVERALLY AND NOT JOINTLY PARTIES TO

GLOBAL CUSTODY AGREEMENT WITH

THE CHASE MANHATTAN BANK

DATED JANUARY 3, 1994

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY AGREEMENT

I. INVESTMENT COMPANIES/PORTFOLIOS The Mutual Fund Rider is applicable to

REGISTERED UNDER THE INVESTMENT all Customers listed under Section I of

COMPANY ACT OF 1940 this Schedule A.

Equity Funds

T. Rowe Price Balanced Fund, Inc. Global Proxy Service Rider

T. Rowe Price Blue Chip Growth Fund, Inc. Global Proxy Service Rider

T. Rowe Price Capital Appreciation Fund Global Proxy Service Rider

T. Rowe Price Capital Opportunity Fund, Inc. Global Proxy Service Rider

T. Rowe Price Diversified Small-Cap Growth Fund, Inc. Global Proxy Service Rider

T. Rowe Price Dividend Growth Fund, Inc. Global Proxy Service Rider

T. Rowe Price Equity Income Fund Global Proxy Service Rider

T. Rowe Price Equity Series, Inc. on behalf of:

T. Rowe Price Equity Income Portfolio Global Proxy Service Rider

T. Rowe Price Mid-Cap Growth Portfolio Global Proxy Service Rider

T. Rowe Price New America Growth Portfolio Global Proxy Service Rider

T. Rowe Price Personal Strategy Balanced Portfolio Global Proxy Service Rider

T. Rowe Price Financial Services Fund, Inc. Global Proxy Service Rider

T. Rowe Price Growth & Income Fund, Inc. Global Proxy Service Rider

T. Rowe Price Growth Stock Fund, Inc. Global Proxy Service Rider

T. Rowe Price Health Sciences Fund, Inc. Global Proxy Service Rider

Institutional Equity Funds, Inc. on behalf of:

Mid-Cap Equity Growth Fund Global Proxy Service Rider

Institutional International Funds, Inc. on behalf of:

Foreign Equity Fund Global Proxy Service and Russian Rider

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Stock Fund Global Proxy Service and Russian Rider

T. Rowe Price European Stock Fund Global Proxy Service and Russian Rider

T. Rowe Price Global Stock Fund Global Proxy Service and Russian Rider

T. Rowe Price International Discovery Fund Global Proxy Service and Russian Rider

T. Rowe Price International Growth & Income Fund Global Proxy Service and Russian Rider

T. Rowe Price International Stock Fund Global Proxy Service and Russian Rider

T. Rowe Price Japan Fund Global Proxy Service and Russian Rider

T. Rowe Price Latin America Fund Global Proxy Service and Russian Rider

T. Rowe Price New Asia Fund Global Proxy Service and Russian Rider

Schedule A

Page 2 of 3

APPLICABLE RIDERS TO

CUSTOMER GLOBAL CUSTODY AGREEMENT

T. Rowe Price International Series, Inc. on behalf of:

T. Rowe Price International Stock Portfolio Global Proxy Service and Russian Rider

T. Rowe Price Media & Telecommunications Fund, Inc. Global Proxy Service Rider

T. Rowe Price Mid-Cap Growth Fund, Inc. Global Proxy Service Rider

T. Rowe Price Mid-Cap Value Fund, Inc. Global Proxy Service Rider

T. Rowe Price New America Growth Fund Global Proxy Service Rider

T. Rowe Price New Era Fund, Inc. Global Proxy Service Rider

T. Rowe Price New Horizons Fund, Inc. Global Proxy Service Rider

T. Rowe Price Real Estate Fund, Inc. Global Proxy Service Rider

T. Rowe Price Science & Technology Fund, Inc. Global Proxy Service Rider

T. Rowe Price Small-Cap Stock Fund, Inc. Global Proxy Service Rider

T. Rowe Price Small-Cap Value Fund, Inc. Global Proxy Service Rider

T. Rowe Price Value Fund, Inc. Global Proxy Service Rider

Income Funds

T. Rowe Price Corporate Income Fund, Inc. Global Proxy Service Rider

T. Rowe Price High Yield Fund, Inc. Global Proxy Service Rider

T. Rowe Price Income Series, Inc. on behalf of:

T. Rowe Price Limited-Term Bond Portfolio Global Proxy Service Rider

T. Rowe Price International Funds, Inc. on behalf of:

T. Rowe Price Emerging Markets Bond Fund Global Proxy Service and Russian Rider

T. Rowe Price Global Bond Fund Global Proxy Service and Russian Rider

T. Rowe Price International Bond Fund Global Proxy Service and Russian Rider

T. Rowe Price New Income Fund, Inc. Global Proxy Service Rider

T. Rowe Price Personal Strategy Funds, Inc. on behalf of:

T. Rowe Price Personal Strategy Balanced Fund Global Proxy Service Rider

T. Rowe Price Personal Strategy Growth Fund Global Proxy Service Rider

T. Rowe Price Personal Strategy Income Fund Global Proxy Service Rider

T. Rowe Price Short-Term Bond Fund, Inc. Global Proxy Service Rider

T. Rowe Price Short-Term U.S. Government Fund, Inc. Global Proxy Service Rider

T. Rowe Price Summit Funds, Inc. on behalf of:

T. Rowe Price Summit Limited-Term Bond Fund Global Proxy Service Rider

T. Rowe Price Tax-Efficient Funds, Inc. on behalf of:

T. Rowe Price Tax-Efficient Balanced Fund Global Proxy Service Rider

T. Rowe Price Tax-Efficient Growth Fund Global Proxy Service Rider

Schedule A

Page 3 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 Employee Savings Plan

Common Trust Funds

T. Rowe Price Trust Company, as Trustee for the International

Common Trust Fund on behalf of the Underlying Trusts:

Emerging Markets Equity Trust Global Proxy Service Rider

European Discovery Trust Global Proxy Service Rider

Foreign Discovery Trust Global Proxy Service Rider

Foreign Discovery Trust - Augment Global Proxy Service Rider

Foreign Discovery Trust - B Global Proxy Service Rider

International Small-Cap Trust Global Proxy Service Rider

Japan Discovery Trust Global Proxy Service Rider

Latin America Discovery Trust Global Proxy Service Rider

Pacific Discovery Trust Global Proxy Service Rider

III. OTHER

RPFI International Partners, L.P. Global Proxy Service and Russian Rider

AMENDMENT AGREEMENT

The Global Custody Agreement of 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, December 15, 1998 and October 6, 1999 (the "Custody Agreement") by and between each of the Entities listed in Schedule A, as amended thereto, sever ally and not jointly (each such entity referred to hereinafter as the "Customer") and The Chase Manhattan Bank, N.A., whose contracts have been assumed by THE CHASE MANHATTAN BANK (the "Bank") is hereby further amended, as of February 9, 2000 (the "Amendment Agree ment"). 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:

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

/s/Joseph M. Rondinelli

By: ____________________________________

Joseph M. Rondinelli

Vice President

EACH OF THE CUSTOMERS LISTED IN

ATTACHMENT A HERETO, SEVERALLY

AND NOT JOINTLY

/s/Henry H. Hopkins

By: ____________________________________

Henry H. Hopkins

Vice President

Attachment A

Page 1 of 1

LIST OF CUSTOMERS

Add the following Funds:

Institutional Equity Funds, Inc., on behalf of:

Institutional Large-Cap Value Fund

Institutional Small-Cap Stock Fund

Add the following Funds to the Global Proxy Service Rider :

Institutional Equity Funds, Inc., on behalf of