9 . Shares transferred to T.   Rowe Price or a third - party intermediary acting as a service provider when the age of the shares cannot be determined systematically ;*

1 0 . Shares redeemed in retirement plans or other products that restrict trading to no more frequently than once per quarter , if approved in writing by T.   Rowe Price.

* Subsequent exchanges of these shares into funds that assess redemption fees will subject such shares to the fee.

Redemption F ees on S hares H eld in R etirement P lans

If shares are held in a retirement plan, generally redemption fees will be assessed on shares redeemed by exchange only if they were originally purchased by exchange. However, redemption fees may apply to transac tions other than exchanges depending on how shares of the plan are held at T.   Rowe Price or how the fees are applied by your plan`s recordkeeper. To determine which of your transactions are subject to redemption fees , you should contact T.   Rowe Price or your plan recordkeeper.

Omnibus A ccounts

If your shares are held through an intermediary in an omnibus account, T. Rowe Price relies on the intermediary to assess the redemption fee on underlying shareholder accounts. T. Rowe Price seeks to identify intermediaries establishing omnibus accounts and to enter into agreements requiring the intermediary to assess the redemption fees. There are no assurances that T. Rowe Price will be successful in identifying all intermediaries or that the intermediaries will properly assess the fees. Intermediaries who are unable to implement redemption fees due to system limitations must either (1) implement short-term trading restrictions approved by T.   Rowe Price until they have the system capabilities to assess the fees or (2) set forth an implementation plan acceptable to T.   Rowe Price.

Certain intermediaries may not apply the exemptions listed above to the redemption fee policy; all redemptions by persons trading through such intermediaries may be subject to the fee. Certain intermediaries may exempt transactions not listed above from redemption fees, if approved by T.   Rowe Price. Persons redeeming shares th r ough an intermediary should check with the ir respective intermediary to determine which transactions are subject to the fees.

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. I nterest will not accrue on amounts represented by uncashed distribution s or redemption checks.

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The following table provides details on dividend payments :

Table 4     Dividend Payment Schedule  

Fund	Dividends
Money funds	P urchase s received by T.   Rowe Price by noon ET via wire begin to earn dividends on that day . Other shares nor mally begin to earn dividends on the business day after payment is received by T. Rowe Price .
	Declared daily and paid on the first business day of each month.
Bond funds	Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price .
	Declared daily and paid on the first business day of each month.
These stock funds only:	Declared quarterly, if any, in March, June, September, and December.
Balanced	Must be a shareholder on the dividend record date.
Dividend Growth
Equity Income
Equity Index 500
Growth & Income
Personal Strategy Balanced
Personal Strategy Income
Real Estate
Retirement Funds :
Retirement Income	Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price.
	Paid on the first business day of each month.
All others	Declared annually, if any, generally in December.
	Must be a shareholder on the dividend record date.
Tax-Efficient Balanced	Municipal Portion
	Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price.
	Paid on the last business day of March, June, Septem ber, and December.
	Equity Portion
	Declared annually, if any, generally in December.
	Must be a shareholder on the dividend record date.
Other stock funds	Declared annually, if any, generally in December.
	Must be a shareholder on the dividend record date.

Bond or money f und shares will earn dividends through the date of redemption . S hares redeemed on a Friday or prior to a holiday (other than wire redemptions for money funds received before noon ET) will continue 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.

If you purchase and sell your shares through an intermediary, consult your intermediary to determine when your shares begin and stop accruing dividends; the information described above may vary.

Capital G ain P ayments

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 from money 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 information for your tax filing needs on a timely basis .

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.

If you invest in the fund through a taxable account, y ou will generally be subject to tax when :

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

A fund makes a distribution to your account.

PAGE 25

Additional information about certain T.   Rowe Price funds is listed below:

Tax-Free and Municipal Funds
Regular monthly dividends (including those from 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-exempt dividends paid to Social Security recipients may increase the portion of benefits that is 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 dividend that should be included in your AMT calculation, 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. 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 dividends 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 and local income taxes. If the fund invests in certain "private activity" bonds, shareholders who are subject to the AMT must include income generated by those bonds in their AMT calculation. The portion of the fund`s income dividends that should be included in your AMT calculation, if any, will be reported to you in January.

For individual shareholders, a portion of ordinary dividends representing " qualified dividend income " 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 " qualif ied dividend income" in computing your taxes provided you have held the fund shares on which the dividend was paid for more than 60 days during the 12 1 -day period beginning 60 days before the ex-dividend date. Ordinary d ividends 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 capital gains, distributions from
certain 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 is expected to qualify for this lower rate.

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 international funds or the bond and money funds is expected to qualify for this deduction.

Taxes on F und R edemptions

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

In January, you will be sent Form 1099-B indicating the date and amount of each sale you made in the fund dur ing the prior year. This information will also be reported to the IRS. For most new accounts or those opened by exchange in 1984 or later, we will provide you with 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 identifica tion."

To help you maintain accurate records, we will 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 F und D istributions

In January, you will be sent Form 1099-DIV indicating the tax status of any income dividend and capital gain dis tributions 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 and local income taxes. Dividends from tax-free funds are expected to be tax-exempt.

The tax treatment of a capital gain distribution is determined by how long the fund held the portfolio securities, not how long you held the 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 one year 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 capital loss must be reclassified as a long-term capital loss to the extent of any long-term capital gain distribution s 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, 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.

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 meet the requirements to pass through foreign income taxes paid.

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

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 the year will be distributed to you as a short-term capital gain resulting in ordinary income . In computing the distribution amount, the fund cannot reduce inflation adjustments by short- or long-term capital 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 being treated as a return of capital.
Retirement and Spectrum Funds
Distributions by the underlying funds and changes in asset allocations may result in taxable distributions of ordinary income or capital gains.

PAGE 27

Tax C onsequences of H edging

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.

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

Tax E ffect of B uying S hares B efore a n I ncome D ividend or C apital G ain D istribution

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.

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. D ollars

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

Sale (Redemption) Conditions

Holds on I mmediate R edemptions: 10-day H old

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 SM , and O nline A ccount T ransactions

You may access your account or conduct transactions using the telephone or Tele*Access SM , or online . The T.   Rowe Price funds and their agents use reasonable procedures to verify the identity of the shareholder. If these procedures are
followed, the funds and their agents are not liable for any losses that may occur from acting on unauthorized instructions. A confirmation is sent promptly after a transaction. Please review it carefully and contact T.   Rowe Price immediately about any transaction you believe to be unauthorized. 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 (without prior notice) to pay the difference between the redemption amount and the lesser of the two previously men tioned figures with securities from the fund `s portfolio . You will be responsible for disposing of the securities and bearing any associated costs. The securities you receive will be selected by the fund in its absolute discretion.

Excessive and Short-Term Trading

T.   Rowe Price may bar excessive and short-term traders from purchasing shares.

Excessive or short-term trading in fund shares may disrupt management of a fund and raise its costs. Short-term traders in funds investing in foreign securities may seek to take advantage of an anticipated difference between the price of the fund`s shares and price movements in overseas markets (see Pricing Shares and Receiving Sale Proceeds   —   How and W hen S hares A re P riced ). While there is no assurance that T.   Rowe Price can prevent all excessive and short-term trading, the Board of Directors/Trustees of each fund has adopted the policy set forth below to deter such activity. Persons trading directly with T.   Rowe Price or indirectly through intermediaries in violation of this policy or persons believed to be short-term traders may be barred for 90   calendar days or perma nently from further purchases of T.   Rowe Price funds . Purchase transactions placed by such persons are subject to rejection without notice.

All persons purchasing shares held directly with a T.   Rowe Price fund, or through a retirement plan for which T.   Rowe Price serves as recordkeeper, who make more than one purchase and one sale or one sale and one pur chase involving the same fund within any 90-day calendar period will violate the policy.

All persons purchasing fund shares held through an intermediary, including a broker, bank, investment adviser, recordkeeper, insurance company, or other third party, and who hold the shares for less than 90 calendar days will violate the policy.

Omnibus A ccounts

Intermediaries often establish omnibus accounts in the T.   Rowe Price funds for their customers. In such situa tions, T.   Rowe Price cannot always 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 or short term trading. If it detects suspicious trading activity, T.   Rowe Price contacts the intermediary to determine whether the excessive trading policy has been violated and, if so, asks the intermediary to take action with respect to the underlying shareholder .

Retirement P lans

If shares are held in a retirement plan, generally the fund`s excessive trading policy only applies to shares pur chased and redeemed by exchange. However, the policy may apply to transactions other than exchanges depending on how shares of the plan are held at T.   Rowe Price or how the excessive trading policy is applied by your plan`s recordkeeper. To determine which of your transactions are subject to the fund`s excessive trading policy , you should contact T.   Rowe Price or your plan recordkeeper.

Exceptions to P olicy

The following types of transactions are exempt from this policy: 1) trades solely in money funds (exchanges between a money fund and a nonmoney fund are not exempt); 2) systematic purchases and redemptions (see Information About Your Services); and 3) checkwriting redemptions f r o m bond and money funds .

In addition, transactions in automated nondiscretionary rebalancing programs , nondiscretionary asset alloca tion programs , or fund - of - fund s products may be exempt from the excessive trading policy subject to prior writ ten approval by designated persons at T.   Rowe Price.

T.   Rowe Price may modify the 90-day policy set forth above (for example, in situations where a retirement plan or retirement plan recordkeeper has restriction s on trading that differ from the T.   Rowe Price fund`s policy). These modifications would be authorized only if the fund believes that the modified policy would provide pro tection to the fund that is reasonably equivalent to the fund`s regula r p olicy.

There is no guarantee that T. Rowe Price will be able to detect or prevent excessive or short-term trading.

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.

PAGE 29

Signature Guarantees

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.

Account Maintenance and Small Account Fees

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 automatically 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.

Account Maintenance Fee (Index Funds only)     An annual $10 account maintenance fee is charged on a quarterly basis ($2.50 per quarter) 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 reason, including market fluctuations, redemptions, or exchanges. 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 .