485BPOS 1 nef485bptc.htm Untitled Document

Registration Nos. 002-29866/811-1710

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933   /X/

      

 Post-Effective Amendment No. 87     /X/

and/or

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

 Amendment No. 44      /X/

T. ROWE PRICE NEW ERA FUND, 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

David Oestreicher

100 East Pratt Street, Baltimore, Maryland 21202
Name and Address of Agent for Service

Approximate Date of Proposed Public Offering May 1, 2015

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

// Immediately upon filing pursuant to paragraph (b)

/X / On May 1, 2015 pursuant to paragraph (b)

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

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

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

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

 If appropriate, check the following box:

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


  

 

PROSPECTUS

 

PRNEX

 

May 1, 2015

 
  

T. Rowe Price

New Era Fund

A fund seeking long-term capital growth through investments primarily in stocks of companies that own or develop natural resources and other basic commodities.

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


Table of Contents

    

1

Summary

 

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

 

New Era Fund 1

2

Information About Accounts
in T. Rowe Price Funds

 

Pricing Shares and Receiving Sale Proceeds 6

Useful Information on Distributions and Taxes 11

Transaction Procedures and Special Requirements 18

Administrative Fee Payments 22

Account Service Fee 22

3

More About the Fund

 

Organization and Management 24

More Information About the Fund and Its Investment Risks 26

Investment Policies and Practices 29

Disclosure of Fund Portfolio Information 35

Financial Highlights 36

4

Investing With T. Rowe Price

 

Account Requirements and Transaction Information 38

Opening a New Account 39

Purchasing Additional Shares 42

Exchanging and Redeeming Shares 43

Rights Reserved by the Funds 46

Information About Your Services 47

T. Rowe Price Brokerage 49

Investment Information 50

T. Rowe Price Privacy Policy 51


SUMMARY

Investment Objective

The fund seeks to provide long-term capital growth primarily through the common stocks of companies that own or develop natural resources and other basic commodities, and also through the stocks of selected nonresource growth companies.

Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.

Fees and Expenses of the Fund

  

Shareholder fees (fees paid directly from your investment)

Maximum sales charge (load) imposed on
purchases

NONE

  

Maximum deferred sales charge (load)

NONE

  

Redemption fee

NONE

  

Maximum account fee

$20a

Annual fund operating expenses
(expenses that you pay each year as a
percentage of the value of your investment)

Management fees

0.54%

  

Distribution and service (12b-1) fees

0.00%

  

Other expenses

0.11%

  

Total annual fund operating expenses

0.65%

a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee.

Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

    

1 year

3 years

5 years

10 years

$66

$208

$362

$810

Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the


  

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most recent fiscal year, the fund’s portfolio turnover rate was 61.9% of the average value of its portfolio.

Investments, Risks, and Performance

Principal Investment Strategies The fund will normally invest a minimum of two-thirds of its assets in the common stocks of natural resource companies. The earnings and tangible assets of natural resources companies may benefit from periods of accelerating inflation. We also invest in other growth companies that we believe have strong potential for earnings growth but do not own or develop natural resources. The relative percentages invested in resource and nonresource companies can vary depending on economic and monetary conditions and our outlook for inflation. The natural resource companies held by the fund typically own, develop, refine, service, or transport resources, including energy, metals, forest products, industrials, utilities, chemicals, real estate, and other basic commodities. In selecting natural resource stocks, we look for companies whose products can be produced and marketed profitably when both labor costs and prices are rising. In the mining area, for example, we might look for a company that we believe possesses the ability to expand production and maintain superior exploration programs and production facilities.

In pursuing its investment objective, the fund has the discretion to deviate from its normal investment criteria. These situations might arise when the fund’s management believes a security could increase in value for a variety of reasons, including an extraordinary corporate event, a new product introduction or innovation, a favorable competitive development, or a change in management.

At least half of the fund’s assets will be invested in stocks of U.S. issuers, but up to 50% of its total assets may be invested in international stocks.

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

Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows:

Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies.

Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising and falling prices. The value of a stock in which the fund invests may decline


  

Summary

3

due to general weakness in the stock market or because of factors that affect a particular company or industry.

Industry risk A fund that focuses its investments in specific industries or sectors is more susceptible to developments affecting those industries and sectors than a more broadly diversified fund. Because the fund invests a significant portion of its assets in natural resource-related companies, the fund may perform poorly during a downturn in certain industries. Natural resource-related companies can be adversely affected by, among other things, government regulation, global political and economic developments, energy and commodity prices, and the supply and demand for oil and gas.

International investing risk Investing in the securities of non-U.S. issuers involves special risks not typically associated with investing in U.S. issuers. International securities tend to be more volatile and less liquid than investments in U.S. securities and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, international investments are subject to settlement practices and regulatory and financial reporting standards that differ from those of the U.S. These risks are heightened for the fund’s investments in emerging markets.

Performance The bar chart showing calendar year returns and the average annual total returns 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 comparable market index. The fund’s past performance (before and after taxes) is 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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In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as a 401(k) account or individual retirement account. In some cases, the figure shown under “returns after taxes on distributions and sale of fund shares” may be higher than the figure shown under “returns before taxes” because the calculations assume the investor received a tax deduction for any loss incurred on the sale of shares.

             

Average Annual Total Returns

          

 

 

 

Periods ended

 

 

  

December 31, 2014

 

 

  

1 Year 

  

5 Years 

  

10 Years 

  

 

 

New Era Fund

         

 

 

 

Returns before taxes

-7.83 

%

2.64 

%

6.13 

%

 

 

 

Returns after taxes on distributions

-11.53 

 

 

1.07 

 

 

4.96 

 

 

 

 

 

Returns after taxes on distributions

 

 

 

 

 

 

 

 

 

 

 

 

and sale of fund shares

-2.11 

 

 

2.11 

 

 

5.07 

 

 

 

 

S&P 500 Index (reflects no deduction for fees, expenses, or taxes)

13.69 

 

 

15.45 

 

 

7.67 

 

 

 

 

Lipper Global Natural Resources Funds Index

-14.80 

 

 

-0.62 

 

 

5.26 

 

 

 


  

Summary

5

Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132.

Management

Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price)

    

Portfolio Manager

Title

Managed Fund Since

Joined Investment
Adviser

Shawn T. Driscoll

Chairman of Investment

Advisory Committee

2013

2006

Purchase and Sale of Fund Shares

The fund requires a $1,000 minimum initial investment, and a $100 minimum subsequent investment, for individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts. For all other accounts, the fund generally requires a $2,500 minimum initial investment and a $100 minimum subsequent investment. The investment minimums may be modified for financial intermediaries that submit orders on behalf of their customers.

You may purchase, redeem, or exchange fund shares by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary.

Tax Information

Any dividends or capital gains are declared and paid annually, usually in December. Redemptions or exchanges of fund shares and distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account (although you may be taxed upon withdrawal from such account).

Payments to Broker-Dealers and Other Financial Intermediaries

If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.


   

Information About Accounts in T. Rowe Price Funds

 

2

 
  

As a T. Rowe Price shareholder, you will want to know about the following policies and procedures that apply to Investor Class accounts in the T. Rowe Price family of funds.

PRICING SHARES AND RECEIVING SALE PROCEEDS

How and When Shares Are Priced

The share price, also called the “net asset value,” for the funds 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 net asset value, 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 portfolio holdings for which market quotations are readily available. Market values generally reflect the prices at which securities actually trade or represent prices that have been adjusted based on evaluations and information provided by the fund’s pricing services. If a market value for a security is not available or normal valuation procedures are deemed to be inappropriate, the fund will make a good faith effort to assign a fair value to the security by taking into account various factors that have been approved by the fund’s Board of Directors/Trustees. This value may differ from the value the fund receives upon sale of the securities. Amortized cost is used to price securities held by money funds and certain other debt securities held by a fund. Investments in other mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation.

Non-U.S. equity securities are valued on the basis of their most recent closing market prices at 4 p.m. ET, except under the circumstances described below. Most foreign markets close before 4 p.m. ET. For example, the most recent closing prices for securities traded in certain Asian markets may be as much as 15 hours old at 4 p.m. ET. If a fund determines that developments between the close of a foreign market and the close of the New York Stock Exchange 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. The fund may also fair value certain securities or a group of securities in other situations—for example, when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with closing market prices and information used for adjusting those prices and to value most fixed income


  

Information About Accounts in T. Rowe Price Funds

7

securities. 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. The fund also evaluates a variety of factors when assigning fair values to private placements and other restricted securities. Other mutual funds may adjust the prices of their securities by different amounts or assign different fair values than the fair value that the fund assigns to the same security.

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 or if you hold your account through an intermediary.

How Your Purchase, Sale, or Exchange Price Is Determined

If your request is received by T. Rowe Price in correct form by the close of the New York Stock Exchange (normally 4 p.m. ET), your transaction will be priced at that business day’s net asset value. If your request is received by T. Rowe Price after the close of the New York Stock Exchange, your transaction will be priced at the next business day’s net asset value.

The funds generally do not accept orders that request a particular day or price for a transaction or any other special conditions.

Fund shares may be purchased through various third-party intermediaries, including banks, brokers, and investment advisers. Where authorized by a fund, orders will be priced at the net asset value next computed after receipt by the intermediary. Contact your intermediary for trade deadlines and the applicable policies for purchasing, selling, or exchanging your shares, as well as initial and subsequent investment minimums. The intermediary may charge a fee for its services.

When authorized by the fund, certain financial institutions or retirement plans purchasing fund shares on behalf of customers or plan participants through T. Rowe Price Financial Institution Services or T. Rowe Price Retirement Plan Services may place a purchase order unaccompanied by payment. Payment for these shares must be received by the time designated by the fund (not to exceed the period established for settlement under applicable regulations). If payment is not received by this time, the order may be canceled. The financial institution or retirement plan is responsible for any costs or losses incurred by the fund or T. Rowe Price if payment is delayed or not received.

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. In the event of an emergency closing, a fund’s shareholders will receive the next share price calculated by the fund. There may be times when you are unable to contact us by telephone or access your account online due to extreme market activity, the unavailability of the T. Rowe Price


  

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8

website, or other circumstances. Should this occur, your order must still be placed and accepted by T. Rowe Price prior to the time the New York Stock Exchange closes to be priced at that business day’s net asset value. Under certain conditions, a money fund may accept and process purchase and redemption orders beyond the close of the New York Stock Exchange on days that the New York Stock Exchange closes early and does not reopen, and may accept orders on a business day that the New York Stock Exchange is unexpectedly closed.

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 in correct form by T. Rowe Price on a business day prior to the close of the New York Stock Exchange, proceeds are usually sent on the next business day. Proceeds can be mailed to you by check or sent electronically to your bank account by Automated Clearing House transfer or bank wire. Automated Clearing House is an automated method of initiating payments from, and receiving payments in, your financial institution account. Proceeds sent by Automated Clearing House transfer are usually credited to your account the second business day after the sale, and there are typically no fees associated with such payments. Proceeds sent by bank wire are usually credited to your account the next business day after the sale, although your financial institution may charge an incoming wire fee.

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. Under certain limited circumstances, the Board of Directors/Trustees of a money fund may elect to suspend redemptions and postpone payment of redemption proceeds in order to facilitate an orderly liquidation of the money fund.

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

Contingent Redemption Fee

Short-term trading can disrupt a fund’s investment program and create additional costs for long-term shareholders. For these reasons, certain T. Rowe Price funds, listed in the following table, assess a fee on redemptions (including exchanges out of a fund), which reduces the proceeds from such redemptions by the amounts indicated:

   

T. Rowe Price Funds With Redemption Fees

Fund

Redemption fee

Holding period

Africa & Middle East

2%

90 days or less

Asia Opportunities

2%

90 days or less

Credit Opportunities

2%

90 days or less

Diversified Small-Cap Growth

1%

90 days or less


  

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9

   

T. Rowe Price Funds With Redemption Fees

Fund

Redemption fee

Holding period

Emerging Europe

2%

90 days or less

Emerging Markets Bond

2%

90 days or less

Emerging Markets Corporate Bond

2%

90 days or less

Emerging Markets Local Currency Bond

2%

90 days or less

Emerging Markets Stock

2%

90 days or less

Equity Index 500

0.5%

90 days or less

European Stock

2%

90 days or less

Extended Equity Market Index

0.5%

90 days or less

Floating Rate

2%

90 days or less

Global Growth Stock

2%

90 days or less

Global High Income Bond

2%

90 days or less

Global Real Estate

2%

90 days or less

Global Stock

2%

90 days or less

High Yield

2%

90 days or less

Intermediate Tax-Free High Yield

2%

90 days or less

International Bond

2%

90 days or less

International Concentrated Equity

2%

90 days or less

International Discovery

2%

90 days or less

International Equity Index

2%

90 days or less

International Growth & Income

2%

90 days or less

International Stock

2%

90 days or less

Japan

2%

90 days or less

Latin America

2%

90 days or less

New Asia

2%

90 days or less

Overseas Stock

2%

90 days or less

Real Assets

2%

90 days or less

Real Estate

1%

90 days or less

Small-Cap Value

1%

90 days or less

Spectrum International

2%

90 days or less

Tax-Efficient Equity

1%

less than 365 days

Tax-Free High Yield

2%

90 days or less

Total Equity Market Index

0.5%

90 days or less

U.S. Bond Enhanced Index

0.5%

90 days or less

Redemption fees are paid to a fund to deter short-term trading, offset costs, and protect the fund’s long-term shareholders. Subject to the exceptions described on the


  

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following pages, all persons holding shares of a T. Rowe Price fund that imposes a redemption fee are subject to the fee, whether the person is holding shares directly with a T. Rowe Price fund; through a retirement plan for which T. Rowe Price serves as recordkeeper; or indirectly through an intermediary (such as a broker, bank, or investment adviser), recordkeeper for retirement plan participants, or other third party.

Computation of Holding Period

When an investor sells shares of a fund that assesses a redemption fee, T. Rowe Price will use the “first-in, first-out” method to determine the holding period for the shares sold. Under this method, the date of redemption or exchange will be compared with the earliest purchase date of shares held in the account. The day after the date of your purchase is considered Day 1 for purposes of computing the holding period. For a fund with a 365-day holding period, a redemption fee will be charged on shares sold before the end of the required holding period. For funds with a 90-day holding period, a redemption fee will be charged on shares sold on or before the end of the required holding period. For example, if you redeem your shares on or before the 90th day from the date of purchase, you will be assessed the redemption fee. If you purchase shares through an intermediary, consult your intermediary to determine how the holding period will be applied.

Transactions Not Subject to Redemption Fees

The T. Rowe Price funds will not assess a redemption fee with respect to certain transactions. As of the date of this prospectus, the following shares of T. Rowe Price funds will not be subject to redemption fees:

· Shares redeemed through an automated, systematic withdrawal plan;

· Shares redeemed through or used to establish certain rebalancing, asset allocation, wrap, and advisory programs, as well as non-T. Rowe Price fund-of-funds products, if approved in writing by T. Rowe Price;

· Shares purchased through the reinvestment of dividends or capital gain distributions;*

· Shares converted from one share class to another share class of the same fund;*

· Shares redeemed automatically by a fund to pay fund fees or shareholder account fees (e.g., for failure to meet account minimums);

· Shares purchased by rollover or changes of account registration within the same fund;*

· Shares redeemed to return an excess contribution from a retirement account;

· Shares of T. Rowe Price funds purchased by another T. Rowe Price fund and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that other shareholders of the investing T. Rowe Price fund are still subject to the policy);

· Certain transactions in defined benefit and nonqualified plans, subject to prior approval by T. Rowe Price;

· Shares that are redeemed in-kind;


  

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11

· 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;* and

· 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 Fees on Shares Held in Retirement Plans

If shares are held in a retirement plan, redemption fees generally will be assessed on shares redeemed by exchange only if they were originally purchased by exchange. However, redemption fees may apply to transactions 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 Accounts

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.

Certain intermediaries may not apply the exemptions previously listed 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 from redemption fees, if approved by T. Rowe Price. Persons redeeming shares through an intermediary should check with their respective intermediary to determine which transactions are subject to the fees.

USEFUL INFORMATION ON DISTRIBUTIONS AND TAXES

Each fund intends to qualify to be treated each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. In order to qualify, a fund must satisfy certain income, diversification, and distribution requirements. A regulated investment company is not subject to U.S. federal income tax at the portfolio level on income and gains from investments that are distributed to shareholders. However, if a fund were to fail to qualify as a regulated investment company and was ineligible to or otherwise did not cure such failure, the result would be fund-level taxation and, consequently, a reduction in income available for distribution to the fund’s shareholders.

To the extent possible, 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. Reinvesting distributions results in compounding, which allows you to receive dividends and capital gain distributions on an increasing number of shares.

Distributions not reinvested may be paid by check or transmitted to your bank account via Automated Clearing House or may be automatically purchased into another fund account. If the U.S. Postal Service cannot deliver your check, or if your check remains uncashed for six months, the fund reserves the right to reinvest your distribution check in your account at the net asset value on the day of the reinvestment and to reinvest all subsequent distributions in shares of the fund. Interest will not accrue on amounts represented by uncashed distributions or redemption checks.

The following table provides details on dividend payments:

  

Dividend Payment Schedule

Fund

Dividends

Money funds

· Purchases received by T. Rowe Price by 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 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:

· Balanced

· Dividend Growth

· Equity Income

· Equity Index 500

· Global Real Estate

· Growth & Income

· Personal Strategy Balanced

· Personal Strategy Income

· Real Estate

· Declared and paid quarterly, if any, in March, June, September, and December.

· Must be a shareholder on the dividend record date.

Other stock funds

· Declared and paid annually, if any, generally in December.

· Must be a shareholder on the dividend record date.


  

Information About Accounts in T. Rowe Price Funds

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Dividend Payment Schedule

Retirement, Spectrum, and Target Retirement Funds:

 

· Retirement Balanced and
Spectrum Income

· 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.

· All others

· Declared and paid annually, if any, generally in December.

· Must be a shareholder on the dividend record date.

Bond and money fund shares earn dividends through the date of redemption (except for wire redemptions from money funds prior to noon ET, which earn dividends through the calendar day prior to the date of redemption). Shares redeemed on a Friday or prior to a holiday 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. The funds do not pay dividends in fractional cents. Any dividend amount earned for a particular day on all shares held that is one-half of one cent or greater (for example, $0.016) will be rounded up to the next whole cent ($0.02), and any amount that is less than one-half of one cent (for example, $0.014) will be rounded down to the nearest whole cent ($0.01). Please note that if the dividend payable on all shares held is less than one-half of one cent for a particular day, no dividend will be earned for that day.

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

Capital Gain Payments

A capital gain or loss is the difference between the purchase and sale price of a security. 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 necessary, it is paid the following year.

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


  

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Tax Information

In most cases, you will be provided information for your tax filing needs no later than mid-February.

If you invest in the fund through a tax-deferred account, such as an individual 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. You may receive a Form 1099-R or other Internal Revenue Service forms, as applicable, if any portion of the account is distributed to you.

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

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

· The fund makes dividend or capital gain distributions.

Additional information about the taxation of dividends for 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.

· 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 of that particular state. For other funds, a small portion of your income dividend may be exempt from state and local income taxes.

· If a fund invests in certain “private activity” bonds that are not exempt from the alternative minimum tax, shareholders who are subject to the alternative minimum tax must include income generated by those bonds in their alternative minimum tax calculation. Private activity bonds issued in 2009 and 2010, and refunding bonds issued in 2009 and 2010 to refund private activity bonds that were issued from the beginning of 2004 to the end of 2008, are exempt from the alternative minimum tax. The portion of a fund’s income dividend that should be included in your alternative minimum tax calculation, if any, will be reported to you by mid-February on Form 1099-DIV.

For individual shareholders, a portion of ordinary dividends representing “qualified dividend income” received by the fund may be subject to tax at the lower rates applicable to long-term capital gains rather than ordinary income. You may report it as “qualified 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
121-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 capital gains, distributions from nonqualified foreign corporations, and dividends received by the fund from stocks that were on loan.


  

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Little, if any, of the ordinary dividends paid by the Global Real Estate Fund, 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 dividends 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 stock funds or the bond and money funds is expected to qualify for this deduction.

A 3.8% net investment income tax is imposed on net investment income, including interest, dividends, and capital gains of U.S. individuals with income exceeding $200,000 (or $250,000 if married filing jointly) and of estates and trusts.

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 in a taxable account is also a sale for tax purposes.

T. Rowe Price will make available to you Form 1099-B, if applicable, no later than mid-February, indicating the date and amount of each sale you made in the fund during the prior year. This information will also be reported to the Internal Revenue Service. 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. You may calculate the cost basis using other methods acceptable to the Internal Revenue Service, such as specific identification.

If you hold your fund through an intermediary, the intermediary is responsible for providing you with any necessary tax forms. You should contact your intermediary for the tax information that will be sent to you and reported to the Internal Revenue Service.

For mutual fund shares acquired after 2011, new tax regulations require us to
report the cost basis information to you and the Internal Revenue Service on
Form 1099-B using a cost basis method selected by you or, in the absence of such selected method, our default method if you acquire your shares directly from us. Our default method is average cost. If you acquire your fund shares through an intermediary after 2011, you should check with your intermediary regarding the applicable cost basis method. You should, however, note that the cost basis information reported to you may not always be the same as what you should report on your tax return because the rules applicable to the determination of cost basis on Form 1099-B may be different from the rules applicable to the determination of cost basis for reporting on your tax return. Therefore, you should save your transaction records to make sure the information reported on your tax return is accurate. To help you maintain accurate records, T. Rowe Price will make available to you a confirmation promptly following each transaction you make (except for systematic purchases and systematic redemptions) and a year-end statement detailing all of your


  

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transactions in each fund account during the year. If you hold your fund through an intermediary, the intermediary is responsible for providing you with transaction confirmations and statements.

Taxes on Fund Distributions

T. Rowe Price (or your intermediary) will make available to you, as applicable, no later than mid-February, a Form 1099-DIV, or other Internal Revenue Service forms, as required, indicating the tax status of any income dividends, dividends exempt from federal income taxes, and capital gain distributions made to you. This information will be reported to the Internal Revenue Service. Taxable distributions are generally taxable to you in the year in which they are paid. Your bond or money fund dividends for each calendar year will include dividends accrued up to the first business day of the next calendar year. 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 generally 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 for 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 for 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 distributions 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 foreign 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 returns of capital.

The tax status of certain distributions may be recharacterized on year-end tax forms, such as your Form 1099-DIV. Distributions made by a fund may later be recharacterized for federal income tax purposes—for example, from taxable ordinary income dividends to returns of capital, which are generally nontaxable but reduce your tax basis in the fund’s shares. Recharacterization of distributions may occur for a number of reasons, including the recharacterization of income received from underlying investments, such as REITs, and distributions that exceed taxable income due to losses from foreign currency transactions or other investment transactions. Certain funds, including international bond funds and funds that invest in REITs, are more likely to recharacterize a portion of their distributions as a result of their investments.

If the fund qualifies and elects to pass through nonrefundable foreign income 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


  

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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.

Taxable distributions are subject to tax whether reinvested in additional shares or received in cash.

If a fund holds Build America Bonds or other qualified tax credit bonds and elects to pass through the corresponding interest income and any available tax credits, you will need to report both the interest income and any such tax credits as taxable income. You may be able to claim the tax credits on your federal tax return as an offset to your income tax (including alternative minimum tax) liability, but the tax credits generally are not refundable. There is no assurance, however, that a fund will elect to pass through the income and credits.

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

 

Taxes on Fund Distributions

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.

· Payments received or gains realized on certain derivative transactions may result in taxable ordinary income or capital gains.

· To the extent the fund makes such investments, the likelihood of a taxable distribution will be increased.

Inflation Protected Bond Fund

· Inflation adjustments on Treasury inflation-protected securities that exceed deflation adjustments for the year will be distributed 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.

Tax Consequences of Hedging

Entering into certain transactions involving options, futures, swaps, and forward currency exchange contracts 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.

Tax Effect of Buying Shares Before an Income Dividend or Capital Gain Distribution

If you buy shares shortly before or on the record date—the date that establishes you as the person to receive the upcoming distribution—you may receive a portion of the


  

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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. In addition, 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.

TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS

Following these procedures helps assure timely and accurate transactions.

Purchase Conditions

Nonpayment If you pay with a check or Automated Clearing House 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 transfer agent, and the fund can redeem shares you own in this or another identically registered T. Rowe Price account as reimbursement. The funds and their agents have the right to reject or cancel any purchase, exchange, or redemption 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 Automated Clearing House 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 and Online Account Transactions You may access your account and conduct transactions using the telephone or the T. Rowe Price website. 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. Telephone conversations are recorded.

Large Redemptions Large redemptions (for example, $250,000 or more) 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 longer. Therefore, the fund reserves the right (without prior notice) to pay all or part


  

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of redemption proceeds with securities from the fund’s portfolio rather than in cash (“redemption in-kind”). If this occurs, the securities will be selected by the fund in its absolute discretion, and the redeeming shareholder or account will be responsible for disposing of the securities and bearing any associated costs.

Excessive and Short-Term Trading Policy

Excessive transactions and short-term trading can be harmful to fund shareholders in various ways, such as disrupting a fund’s portfolio management strategies, increasing a fund’s trading costs, and negatively affecting its performance. Short-term traders in funds that invest in foreign securities may seek to take advantage of developments overseas that could lead to an anticipated difference between the price of the funds’ shares and price movements in foreign markets. While there is no assurance that T. Rowe Price can prevent all excessive and short-term trading, the Boards of Directors/Trustees of the T. Rowe Price funds have adopted the following trading limits that are designed to deter such activity and protect the funds’ shareholders. The funds may revise their trading limits and procedures at any time as the Boards of Directors/Trustees deem necessary or appropriate to better detect short-term trading that may adversely affect the funds, to comply with applicable regulatory requirements, or to impose additional or alternative restrictions.

Subject to certain exceptions, each T. Rowe Price fund restricts a shareholder’s purchases (including through exchanges) into a fund account for a period of 30 calendar days after the shareholder has redeemed or exchanged out of that same fund account (the “30-Day Purchase Block”). The calendar day after the date of redemption is considered Day 1 for purposes of computing the period before another purchase may be made.

General Exceptions As of the date of this prospectus, the following types of transactions generally are not subject to the 30-Day Purchase Block:

· Shares purchased or redeemed in money funds and ultra short-term bond funds;

· Shares purchased or redeemed through a systematic purchase or withdrawal plan;

· Checkwriting redemptions from bond and money funds;

· Shares purchased through the reinvestment of dividends or capital gain distributions;

· Shares redeemed automatically by a fund to pay fund fees or shareholder account fees;

· Transfers and changes of account registration within the same fund;

· Shares purchased by asset transfer or direct rollover;

· Shares purchased or redeemed through IRA conversions and recharacterizations;

· Shares redeemed to return an excess contribution from a retirement account;

· Transactions in Section 529 college savings plans;

· Certain transactions in defined benefit and nonqualified plans, subject to prior approval by T. Rowe Price;

· Shares converted from one share class to another share class in the same fund; and


  

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· Shares of T. Rowe Price funds that are purchased by another T. Rowe Price fund, including shares purchased by T. Rowe Price fund-of-funds products, and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that shareholders of the investing T. Rowe Price fund are still subject to the policy).

Transactions in certain rebalancing, asset allocation, wrap programs, and other advisory programs, as well as non-T. Rowe Price fund-of-funds products, may also be exempt from the 30-Day Purchase Block, subject to prior written approval by T. Rowe Price.

In addition to restricting transactions in accordance with the 30-Day Purchase Block, T. Rowe Price may, in its discretion, reject (or instruct an intermediary to reject) any purchase or exchange into a fund from a person (which includes individuals and entities) whose trading activity could disrupt the management of the fund or dilute the value of the fund’s shares, including trading by persons acting collectively (e.g., following the advice of a newsletter). Such persons may be barred, without prior notice, from further purchases of T. Rowe Price funds for a period longer than 30 calendar days or permanently.

Intermediary Accounts If you invest in T. Rowe Price funds through an intermediary, you should review the intermediary’s materials carefully or consult with the intermediary directly to determine the trading policy that will apply to your trades in the funds as well as any other rules or conditions on transactions that may apply. If T. Rowe Price is unable to identify a transaction placed through an intermediary as exempt from the excessive trading policy, the 30-Day Purchase Block may apply.

Intermediaries may maintain their underlying accounts directly with the fund, although they often establish an omnibus account (one account with the fund that represents multiple underlying shareholder accounts) on behalf of their customers. When intermediaries establish omnibus accounts in the T. Rowe Price funds, T. Rowe Price is not able to monitor the trading activity of the underlying shareholders. However, T. Rowe Price monitors aggregate trading activity at the intermediary (omnibus account) level in an attempt to identify activity that indicates potential excessive or short-term trading. If it detects suspicious trading activity, T. Rowe Price may contact the intermediary and may request personal identifying information and transaction histories for some or all underlying shareholders (including plan participants, if applicable). If T. Rowe Price believes that excessive or short-term trading has occurred, it will instruct the intermediary to impose restrictions to discourage such practices and take appropriate action with respect to the underlying shareholder, including restricting purchases for 30 calendar days or longer. There is no assurance that T. Rowe Price will be able to properly enforce its excessive trading policies for omnibus accounts. Because T. Rowe Price generally relies on intermediaries to provide information and impose restrictions for omnibus accounts, its ability to monitor and deter excessive trading will be dependent upon the intermediaries’ timely performance of their responsibilities.


  

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T. Rowe Price may allow an intermediary or other third party to maintain restrictions on trading in the T. Rowe Price funds that differ from the 30-Day Purchase Block. An alternative excessive trading policy would be acceptable to T. Rowe Price if it believes that the policy would provide sufficient protection to the T. Rowe Price funds and their shareholders that is consistent with the excessive trading policy adopted by the funds’ Boards of Directors/Trustees.

Retirement Plan Accounts If shares are held in a retirement plan, generally the
30-Day Purchase Block applies only to shares redeemed by a participant-directed exchange to another fund. However, the 30-Day Purchase Block may apply to transactions other than exchanges depending on how shares of the plan are held at T. Rowe Price or the excessive trading policy applied by your plan’s recordkeeper. An alternative excessive trading policy may apply to the T. Rowe Price funds where a retirement plan has its own policy deemed acceptable to T. Rowe Price. You should contact T. Rowe Price or your plan recordkeeper to determine which of your transactions are subject to the funds’ 30-Day Purchase Block or an alternative policy.

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

Keeping Your Account Open

Due to the relatively high cost to a fund of maintaining small accounts, we ask you to maintain an account balance of at least $1,000 ($10,000 for Summit Funds). If, for any reason, your balance is below this amount for three months or longer, we have the right to redeem your account at the then-current net asset value after giving you 60 days to increase your balance. This could result in a taxable gain.

Signature Guarantees

A Medallion signature guarantee is designed to protect you and the T. Rowe Price funds 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 file.

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

· Establishing certain services after the account is opened.

The signature guarantee must be obtained from a financial institution that is a participant in a Medallion signature guarantee program. You can obtain a Medallion signature guarantee from most banks, savings institutions, broker-dealers, and other guarantors acceptable to T. Rowe Price. When obtaining a Medallion signature guarantee, please discuss with the guarantor the dollar amount of your proposed


  

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transaction. It is important that the level of coverage provided by the guarantor’s stamp covers the dollar amount of the transaction or it may be rejected. We cannot accept guarantees from notaries public or organizations that do not provide reimbursement in the case of fraud.

ADMINISTRATIVE FEE PAYMENTS 

The funds may make payments to retirement plan recordkeepers, broker-dealers, and other financial intermediaries (at a rate of up to 0.15% of average daily net assets per year) for transfer agency, recordkeeping, and other administrative services that they provide on behalf of the funds. These administrative services may include services such as maintaining account records for each customer; transmitting net purchase and redemption orders; delivering shareholder confirmations, statements, and tax forms; and providing support to respond to customers’ questions regarding their accounts. These payments are reflected in the “Other expenses” line that appears in a fund’s fee table in Section 1.

ACCOUNT SERVICE FEE 

In an effort to help offset the disproportionately high costs incurred by the funds in connection with servicing lower-balance accounts, an annual $20 account service fee (paid to T. Rowe Price Services, Inc., or one of its affiliates) is charged to certain fund accounts with a balance below $10,000. The determination of whether a fund account is subject to the account service fee is based on account balances and services selected for accounts as of the last business day of August. The fee will be charged to an account with a balance below $10,000 for any reason, including market fluctuation and recent redemptions. The fee, which is automatically deducted from an account by redeeming fund shares, is typically charged to accounts in early September each calendar year. Such redemption may result in a taxable gain or loss to you.

The account service fee generally does not apply to fund accounts that are held through an intermediary, participant accounts in employer-sponsored retirement plans for which T. Rowe Price Retirement Plan Services provides recordkeeping services, or money funds that are used as a T. Rowe Price Brokerage sweep account. Regardless of a particular fund account’s balance on the last business day of August, the account service fee is automatically waived for accounts that satisfy any of the following conditions:


  

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· Any accounts for which the shareholder has elected to receive electronic delivery of all of the following: account statements, transaction confirmations, prospectuses, and shareholder reports;

· Any accounts of a shareholder with at least $50,000 in total assets with T. Rowe Price (for this purpose, total assets includes investments in T. Rowe Price mutual funds, except for those held through a retirement plan for which T. Rowe Price Retirement Plan Services provides recordkeeping services; T. Rowe Price Brokerage; and T. Rowe Price variable annuities); or

· Any accounts of a shareholder who is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client (enrollment in these programs generally requires T. Rowe Price assets of at least $100,000—visit troweprice.com or call 1-800-537-1098 for more information).

T. Rowe Price reserves the right to authorize additional waivers for other types of accounts or to modify the conditions for assessment of the account service fee. Fund shares held in a T. Rowe Price individual retirement account, Education Savings Account, or small business retirement plan account (including certain 403(b) plan accounts) are subject to the account service fee and may be subject to additional administrative fees when distributing all fund shares from such accounts.


   

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ORGANIZATION AND MANAGEMENT

How is the fund organized?

The fund was incorporated in Maryland in 1968 and is an “open-end management investment company,” or mutual fund. Mutual funds pool money received from shareholders and invest it to try to achieve specified objectives.

Shareholders have benefitted from T. Rowe Price’s investment management experience since 1937.

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.

· 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.

Do T. Rowe Price funds have annual shareholder meetings?

The funds are not required to hold regularly scheduled shareholder meetings. To avoid unnecessary costs to fund shareholders, shareholder meetings are only held when certain matters, such as changes in fundamental policies or elections of directors, must be decided. In addition, shareholders representing at least 10% of all eligible votes may call a special meeting 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 or make available to you proxy materials that explain the matters to be decided and include instructions on voting by mail, telephone, or the Internet.

Who runs the fund?

General Oversight

The fund is governed by a Board of Directors (the “Board”) that meets regularly to review fund investments, performance, expenses, and other business affairs. The Board elects the fund’s officers. At least 75% of Board members are independent of T. Rowe Price and its affiliates (the “Firm”).


  

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All decisions regarding the purchase and sale of fund investments are made by T. Rowe Price—specifically by the fund’s portfolio manager.

Investment Adviser

T. Rowe Price is the fund’s investment adviser and oversees the selection of the fund’s investments and management of the fund’s portfolio. T. Rowe Price is a SEC-registered investment adviser that provides investment management services to individual and institutional investors, and sponsors and serves as adviser and sub-adviser to registered investment companies, institutional separate accounts, and common trust funds. The address for T. Rowe Price is 100 East Pratt Street, Baltimore, Maryland 21202. As of December 31, 2014, the Firm had approximately $747 billion in assets under management and provided investment management services for more than 9 million individual and institutional investor accounts.

Portfolio Management

T. Rowe Price has established an Investment Advisory Committee with respect to the fund. The committee chairman has day-to-day responsibility for managing the fund’s portfolio and works with the committee in developing and executing the fund’s investment program. The members of the committee are as follows: Shawn T. Driscoll, Chairman, Syed H. Ali, Ryan N. Burgess, Richard de los Reyes, Eric L. DeVilbiss, Christopher Driessen, Donald J. Easley, Mark S. Finn, Ryan S. Hedrick, Shinwoo Kim, Ryan Martyn, Heather K. McPherson, Christian O’Neill, Timothy E. Parker, Craig J. Pennington, Vivek Rajeswaran, Thomas A. Shelmerdine, David J. Wallack, and John M. Williams. The following information provides the year that the chairman first joined the Firm and the chairman’s specific business experience during the past five years (although the chairman may have had portfolio management responsibilities for a longer period). Mr. Driscoll has been chairman of the committee since 2013. He joined the Firm in 2006 and his investment experience dates from 2003. During the past five years, he has served as an equity research analyst and then a portfolio manager (beginning in 2013). The Statement of Additional Information provides additional information about the portfolio manager’s compensation, other accounts managed by the portfolio manager, and the portfolio manager’s ownership of fund shares.

The Management Fee

The management 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 investment management complex, is calculated daily based on the combined net assets of all T. Rowe Price funds (except the Spectrum Funds, Retirement Funds, Target Retirement Funds, TRP Reserve Investment Funds, and any index or private label mutual funds). The group fee schedule (in the following table) 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%

Next $40 billion

0.290%

Next $60 billion

0.285%

Next $80 billion

0.280%

Next $100 billion

0.275%

Thereafter

* Represents a blended group fee rate containing various breakpoints.

The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. On December 31, 2014, the annual group fee rate was 0.29%. The individual fund fee, also applied to the fund’s average daily net assets, is 0.25%.

The expenses shown in the fee table in Section 1 are generally based on a fund’s prior fiscal year. In periods of market volatility, assets may decline significantly, causing total annual fund operating expenses to become higher than the numbers shown in the fee table.

A discussion about the factors considered by the Board and its conclusions in approving the fund’s investment management contract with T. Rowe Price appears in the fund’s semiannual report to shareholders for the period ended June 30.

Fund Operations and Shareholder Services

T. Rowe Price provides accounting services to the T. Rowe Price funds. T. Rowe Price Services, Inc. acts as the transfer and dividend disbursing agent and provides shareholder and administrative services to the funds. T. Rowe Price Retirement Plan Services, Inc. provides recordkeeping, sub-transfer agency, and administrative services for certain types of retirement plans investing in the funds. These companies receive compensation from the funds for their services. The funds may also pay third-party intermediaries for performing shareholder and administrative services for underlying shareholders in omnibus accounts. All such fees are included in the fees and expenses table under “Other expenses” and in the funds’ financial statements.

MORE INFORMATION ABOUT THE FUND AND ITS INVESTMENT RISKS

Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. If you are willing to accept the risks of investing in U.S. and foreign companies whose earnings are especially influenced by worldwide economic and monetary conditions in pursuit of long-term capital growth, the fund could be appropriate for you. This fund should not represent your complete investment program or be used for short-term trading purposes.


  

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Equity investors should have a long-term investment horizon and be willing to wait out bear markets.

The fund is designed to help protect investors against inflation and to provide a way to participate in the global demand for natural resources. By investing in companies that may prosper in periods of high inflation or strong global demand by raising prices while controlling costs, the fund hopes to provide significant long-term capital appreciation.

Foreign stock markets may offer increasing opportunities for natural resource-related investments for several reasons. First, the worldwide trend toward privatization of government-owned enterprises, many of which involve commodities, opens up new areas for private investors. Second, the exploration and development of natural resources has been expanding faster outside the U.S. than within, and some countries that previously refused to accept outside capital now welcome it. Finally, the demand for natural resources in many emerging markets is expected to grow over time.

As with any mutual fund, there is no guarantee the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money when you sell your shares of the fund. Some particular risks affecting the fund include the following:

As with all equity funds, this fund’s share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political, social, or economic developments in the U.S. or abroad, 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 by the fund may prove incorrect, resulting in losses or poor performance even in a rising market. Also, the fund’s investment approach could fall out of favor with the investing public, resulting in lagging performance versus other types of stock funds.

Securities of companies in the same industry may decline in price at the same time due to industry-specific developments since these companies may share common characteristics and are more likely to react similarly to industry-specific market or economic developments.

The fund is less diversified than most stock funds and could therefore experience sharp price declines when conditions are unfavorable to its sector. For instance, since the fund attempts to invest in companies that may benefit from accelerating inflation, low inflation could lessen returns. The rate of earnings growth of natural resource companies may be irregular since these companies are strongly affected by natural forces, global economic cycles, and international politics. For example, stock prices of energy companies can fall sharply when oil prices fall, and real estate companies can be influenced by interest rates and other factors.


  

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Foreign stock holdings may lose value because of, among other things, declining foreign currencies or adverse political or economic events overseas. Because the fund is permitted to invest a significant portion of its assets in foreign securities, it generally carries more risk than a fund that invests strictly in U.S. assets. Foreign securities tend to be more volatile than U.S. securities and are subject to less liquid trading markets, governmental interference, and regulatory and accounting standards and settlement practices that differ from the U.S. The fund could experience losses based solely on the weakness of foreign currencies in which the fund’s holdings are denominated versus the U.S. dollar, and changes in the exchange rates between such currencies and the U.S. dollar. While currency risk may be somewhat reduced because many commodities markets are U.S. dollar based, the overall risks of foreign investing still affect the fund’s investments in foreign securities as well as investments in any U.S. companies with significant overseas investments or operations. These risks are heightened for the fund’s investments in companies that earn revenues from, or have operations in, emerging markets.

One of the principal tools used to try to reduce the fund’s overall risk level is our intensive research when evaluating a company’s prospects and selecting investments for the fund’s portfolio.

Additional strategies and risks While most assets will be invested in common stocks, the fund may employ other strategies that are not considered part of the fund’s principal investment strategies. From time to time, the fund may invest in securities other than common stocks and use derivatives that are consistent with its investment program. For instance, the fund may invest, to a limited extent, in futures contracts. Any investments in futures would typically serve as an efficient means of gaining exposure to certain markets, or as a tool to manage cash flows into and out of the fund and maintain liquidity while being invested in the market. To the extent the fund invests in futures, it could be exposed to potential volatility and losses greater than direct investments in the contract’s underlying assets.

The use of futures or other derivatives, if any, exposes the fund to risks that are different from, and potentially greater than, investments in more traditional securities. Changes in the value of a derivative may not properly correlate with changes in the value of the underlying asset, reference rate, or index and may not move in the direction anticipated by the portfolio manager. Derivatives can also be illiquid and difficult to value, the fund could be exposed to significant losses if a counterparty becomes insolvent or is unable to meet its obligations under the contract, and there is the possibility that limitations or trading restrictions may be imposed by an exchange or government regulation.

Recent regulations have changed the requirements related to the use of certain derivatives. Some of these new regulations have limited the availability of certain derivatives and made their use by funds more costly. It is expected that additional changes to the regulatory framework will occur, but the extent and impact of additional new regulations are not certain at this time.


  

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The Statement of Additional Information contains more detailed information about the fund and its investments, operations, and expenses.

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 restrictions and risks described in the Statement of Additional Information.

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.” Portfolio managers also follow certain “operating policies” that can be changed without shareholder approval.

Fund holdings in certain kinds of investments cannot exceed maximum percentages as set forth in this prospectus and the Statement of Additional Information. For instance, there are limitations regarding fund investments in certain types of derivatives. 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 a significantly greater 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.

Certain investment restrictions, such as a required minimum or maximum investment in a particular type of security, are measured at the time a fund purchases a security. The status, market value, maturity, credit quality, or other characteristics of a fund’s securities may change after they are purchased, and this may cause the amount of a fund’s assets invested in such securities to exceed the stated maximum restriction or fall below the stated minimum restriction. If any of these changes occur, it would not be considered a violation of the investment restriction and will not require the sale of an investment if it was proper at the time the investment was made (this exception does not apply to a fund’s borrowing policy). However, purchases by a fund during the time it is above or below the stated percentage restriction would be made in compliance with applicable restrictions.

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

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


  

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Types of Portfolio Securities

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 holdings and investment management practices.

Diversification As a 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.

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

Common and Preferred Stocks

Stocks represent shares of ownership in a company. Generally, preferred stocks have a specified dividend rate and rank after bonds and before common stocks in their 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. Unlike common stock, preferred stock does not ordinarily carry voting rights. While most preferred stocks pay a dividend, a fund may decide to purchase preferred stock where the issuer has suspended, or is in danger of suspending, payment of its dividend.

Convertible Securities and Warrants

Investments may be made in debt or preferred equity securities that are convertible into, or exchangeable for, equity securities at specified times in the future and according to a certain exchange ratio. Convertible bonds are typically callable by the issuer, which could in effect force conversion before the holder would otherwise choose. 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 than common stock. Some convertible securities combine higher or lower current income with options and other features. Warrants are options to buy, directly from the issuer, a stated number of shares of common stock at a specified price anytime during the life of the warrants (generally, two or more years). Warrants have no voting rights, pay no dividends, and can be highly volatile. In some cases, the redemption value of a warrant could be zero.


  

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Foreign Securities

Investments may be made in foreign securities. Foreign securities could include nondollar-denominated securities traded outside of the U.S. and dollar-denominated securities of foreign issuers traded in the U.S. Investing in foreign securities involves special risks that can increase the potential for losses. These include: exposure to potentially adverse local, political, social, and economic developments such as war, political instability, hyperinflation, currency devaluations, and overdependence on particular industries; government interference in markets such as nationalization and exchange controls, expropriation of assets, or imposition of punitive taxes; the imposition of international trade and capital barriers, and other protectionist or retaliatory measures; potentially lower liquidity and higher volatility; possible problems arising from accounting, disclosure, settlement, and regulatory practices and legal rights that differ from U.S. standards; and the chance that fluctuations in foreign exchange rates will decrease the investment’s value (favorable changes can increase its value). These risks are heightened for a fund’s investments in emerging markets. A fund may purchase American Depositary Receipts and Global Depositary Receipts, which are certificates evidencing ownership of shares of a foreign issuer. American Depositary Receipts and Global Depositary Receipts trade on established markets and are alternatives to directly purchasing the underlying foreign securities in their local markets and currencies. Such investments are subject to many of the same risks associated with investing directly in foreign securities.

Operating policy Fund investments in foreign securities are limited to 50% of total assets. Subject to the overall limit on fund investments in foreign securities, there is no limit on the amount of foreign investments that may be made in emerging markets.

Debt Instruments

The fund may invest in bonds and debt securities of any type, including municipal securities, without restrictions on quality or rating. Investments in a company also may be made through a privately negotiated note or loan, including loan assignments and participations. These investments will be made in companies, municipalities, or entities that meet fund investment criteria. Such investments may have a fixed, variable, or floating interest rate. The price of a bond or fixed rate debt security usually fluctuates with changes in interest rates, generally rising when interest rates fall and falling when interest rates rise. Investments involving below investment-grade issuers or borrowers can be more volatile and have greater risk of default than investment-grade bonds. Certain of these investments may be illiquid and holding a loan could expose the fund to the risks of being a direct lender.

Operating policy Fund investments in noninvestment-grade debt instruments, which could include “junk” bonds and loans, are limited to 10% of total assets. Fund investments in convertible securities are not subject to this limit.


  

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Futures and Options

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 (when the investor purchases the option), or the obligation (when 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, foreign currencies, and credit quality; as an efficient means of increasing or decreasing a fund’s exposure to a specific part or broad segment of the U.S. market or a foreign market; in an effort to enhance income; to improve risk-adjusted returns; 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, futures, and financial indexes. A fund may choose to continue a futures contract by “rolling over” an expiring futures contract into an identical contract with a later maturity date. This could increase the fund’s transaction costs and portfolio turnover rate.

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

Operating policies Initial margin deposits on futures and premiums on options used for non-hedging purposes will not exceed 5% of a fund’s net asset value. The total market value of securities covering 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.

Hybrid Instruments

Hybrid 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, security, or securities index. Such instruments may or may not bear interest or pay dividends. 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.

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

Currency Derivatives

Funds that invest in foreign securities may attempt to hedge their exposure to potentially unfavorable currency changes. The primary means of doing this is through the use of forward currency exchange contracts, which are contracts between


  

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two counterparties to exchange one currency for another on a future date at a specified exchange rate. However, futures, swaps, and options on foreign currencies may also be used. In certain circumstances, a fund may use currency derivatives to substitute a different currency for the currency in which the investment is denominated, a strategy known as proxy hedging. If a fund were to engage in any of these foreign currency transactions, it could serve to protect the fund’s foreign securities from adverse currency movements relative to the U.S. dollar, although the fund may also use currency derivatives in an effort to gain exposure to a currency expected to appreciate in value versus other currencies. As a result, a fund could be invested in a currency without holding any securities denominated in that currency. Such transactions involve, among other risks, the risk that anticipated currency movements will not occur, which could reduce a fund’s total return. There are certain markets, including many emerging markets, where it is not possible to engage in effective foreign currency hedging.

Investments in Other Investment Companies

A fund may invest in other investment companies, including open-end funds, closed-end funds, and exchange-traded funds.

A fund may purchase the securities of another investment company to temporarily gain exposure to a portion of the market while awaiting purchase of securities or as an efficient means of gaining exposure to a particular asset class. The fund might also purchase shares of another investment company to gain exposure to the securities in the investment company’s portfolio at times when the fund may not be able to buy those securities directly. Any investment in another investment company would be consistent with the fund’s objective and investment program.

The risks of owning another investment company are generally similar to the risks of investing directly in the securities in which that investment company invests. However, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the fund’s performance. In addition, because closed-end funds and exchange-traded funds trade on a secondary market, their shares may trade at a premium or discount to the actual net asset value of their portfolio securities and their shares may have greater volatility if an active trading market does not exist.

As a shareholder of an investment company not sponsored by T. Rowe Price, the fund must pay its pro-rata share of that investment company’s fees and expenses. The fund’s investments in non-T. Rowe Price investment companies are subject to the limits that apply to investments in other funds under the Investment Company Act of 1940 or under any applicable exemptive order.

A fund may also invest in certain other T. Rowe Price funds as a means of gaining efficient and cost-effective exposure to certain asset classes, provided the investment is consistent with the fund’s investment program and policies. Such an investment could allow the fund to obtain the benefits of a more diversified portfolio than might


  

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otherwise be available through direct investments in the asset class, and will subject the fund to the risks associated with the particular asset class. Examples of asset classes in which other T. Rowe Price mutual funds concentrate their investments include high yield bonds, inflation-linked securities, floating rate loans, international bonds, emerging market bonds, stocks of companies involved in activities related to real assets, and emerging market stocks. If the fund invests in another T. Rowe Price fund, the management fee paid by the fund will be reduced to ensure that the fund does not incur duplicate management fees as a result of its investment.

Illiquid Securities

Some fund holdings may be considered illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold in the ordinary course of business within seven days at approximately the prices at which they are valued. The determination of liquidity involves a variety of factors. Illiquid securities may include private placements that are sold directly to a small number of investors, usually institutions. Unlike public offerings, such securities are not registered with the SEC. Although certain of these securities may be readily sold (for example, under Rule 144A of the Securities Act of 1933) and therefore deemed liquid, others may have resale restrictions and be considered illiquid. The sale of illiquid securities may involve substantial delays and additional costs, and a fund may only be able to sell such securities at prices substantially less than what it believes they are worth.

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

Types of Investment Management Practices

Reserve Position

A certain portion of fund assets may be held in reserves. Fund reserve positions can consist of: 1) shares of a T. Rowe Price internal money fund or short-term bond fund; 2) short-term, high-quality U.S. and foreign dollar-denominated money market securities, including repurchase agreements; and 3) U.S. dollar or non-U.S. dollar currencies. For temporary, defensive purposes, there is no limit on a fund’s holdings in reserves. If a fund has significant holdings in reserves, it could compromise the fund’s ability to achieve its objectives. The reserve position provides flexibility in meeting redemptions, paying expenses and managing cash flows into a fund, and can serve as a short-term defense during periods of unusual market volatility. Non-U.S. dollar reserves are subject to currency risk.

Borrowing Money and Transferring Assets

A fund may borrow from banks, other persons, 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 and the Statement of Additional Information. Such borrowings may be collateralized with fund assets, subject to restrictions.

Fundamental policy Borrowings may not exceed 331/3% of total assets.


  

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Operating policy A fund will not transfer portfolio securities as collateral except as necessary in connection with permissible borrowings or investments, and then such transfers may not exceed 331/3% of total assets. A fund will not purchase additional securities when borrowings exceed 5% of total assets.

Lending of Portfolio Securities

A fund may lend its securities to broker-dealers, other institutions, or other persons to earn additional income. Risks include the potential insolvency of the broker-dealer or other borrower that could result in delays in recovering 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 as well as expected.

Fundamental policy The value of loaned securities may not exceed 331/3% of total assets.

Portfolio Turnover

Turnover is an indication of frequency of trading. A fund will not generally trade in securities for short-term profits, but when circumstances warrant, securities may be purchased and sold without regard to the length of time held. Each time a fund purchases or sells a security, it incurs a cost. This cost is reflected in its 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 a 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.

DISCLOSURE OF FUND PORTFOLIO INFORMATION

Each T. Rowe Price fund’s portfolio holdings are disclosed on a regular basis in its semiannual and annual shareholder reports, and on Form N-Q, which is filed with the SEC within 60 days of the fund’s first and third fiscal quarter-end. The money funds also file detailed month-end portfolio holdings information with the SEC each month. Such information will be made available to the public 60 days after the end of the month to which the information pertains. In addition, the funds disclose their calendar quarter-end portfolio holdings on troweprice.com 15 calendar days after each quarter. Under certain conditions, up to 5% of a fund’s holdings may be included in this portfolio list without being individually identified. Generally, securities would not be individually identified if they are being actively bought or sold and it is determined that the quarter-end disclosure of the holding could be harmful to the fund. A security will not be excluded for these purposes from a fund’s quarter-end holdings disclosure for more than one year. Money funds also disclose their month-end portfolio holdings on troweprice.com five business days after each month. The quarter-end portfolio holdings will remain on the website for one year


  

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and the month-end money fund portfolio holdings will remain on the website for six months. Each fund also discloses its 10 largest holdings on troweprice.com on the seventh business day after each month-end. These holdings are listed in alphabetical order along with the aggregate percentage of the fund’s total assets that these 10 holdings represent. Each monthly top 10 list will remain on the website for six months. A description of T. Rowe Price’s policies and procedures with respect to the disclosure of portfolio information is available in the Statement of Additional Information and through troweprice.com.

FINANCIAL HIGHLIGHTS

The Financial Highlights table, 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 investment in the fund (assuming reinvestment of all dividends and distributions and no payment of any applicable account or redemption fees). The financial statements in the annual report were audited by the fund’s independent registered public accounting firm, PricewaterhouseCoopers LLP.


  

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Financial Highlights

           
 

Year ended December 31

 

2010

 

2011

 

2012

 

2013

 

2014

 

Net asset value,
beginning of period

$43.63

 

$52.16

 

$42.05

 

$41.91

 

$44.42

 

Income From Investment Operations

Net investment income*

0.45

 

0.34

 

0.51

 

0.39

 

0.41

 

Net gains or losses on
securities (both realized
and unrealized)

8.67

 

(8.32

)

1.16

 

6.03

 

(4.32

)

Total from investment
operations

9.12

 

(7.98

)

1.67

 

6.42

 

(3.91

)

Less Distributions

Dividends (from net
investment income)

(0.45

)

(0.38

)

(0.53

)

(0.25

)

(0.42

)

Distributions (from
capital gains)

(0.14

)

(1.75

)

(1.28

)

(3.66

)

(5.64

)

Returns of capital

 

 

 

 

 

Total distributions

(0.59

)

(2.13

)

(1.81

)

(3.91

)

(6.06

)

Net asset value,
end of period

$52.16

 

$42.05

 

$41.91

 

$44.42

 

$34.45

 

Total return

20.96

%

(15.10

)%

4.01

%

15.72

%

(7.83

)%

Ratios/Supplemental Data

Net assets, end of period
(in millions)

$5,751

 

$4,535

 

$4,440

 

$4,338

 

$3,611

 

Ratio of expenses to
average net assets

0.67

%

0.67

%

0.67

%

0.66

%

0.65

%

Ratio of net income to
average net assets

1.02

%

0.68

%

1.19

%

0.87

%

0.90

%

Portfolio turnover rate

26.7

%

26.5

%

37.5

%

54.6

%

61.9

%

* Per share amounts calculated using average shares outstanding method.


   

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ACCOUNT REQUIREMENTS AND TRANSACTION INFORMATION
   
  

If you are purchasing fund shares through a third-party intermediary, contact the intermediary for information regarding its policies on purchasing, exchanging, and redeeming fund shares, as well as initial and subsequent investment minimums.

   

Tax Identification
Number

 

We must have your correct Social Security number or employer 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 Internal Revenue Service fine. If this information is not received within 60 days after your account is established, your account may be redeemed at the fund’s then-current net asset value.

   

Transaction Confirmations

 

We send immediate confirmations for most of your fund transactions. However, certain transactions, such as systematic purchases and systematic redemptions, dividend reinvestments, checkwriting redemptions for money funds, and transactions in money funds used as a T. Rowe Price Brokerage sweep account, do not receive an immediate transaction confirmation but are reported on your account statement. Please review transaction confirmations and account statements as soon as you receive them and promptly report any discrepancies to Shareholder Services by calling
1-800-225-5132.

   

Employer-Sponsored
Retirement Plans and
Institutional Accounts

 

Transaction procedures in the following sections may not apply to employer-sponsored retirement plans and institutional accounts. For procedures regarding employer-sponsored retirement plans, please call T. Rowe Price Trust Company or consult your plan administrator. For institutional account procedures, please call your designated account manager or service representative. For information on all retirement plans, please call 1-800-492-7670.


  

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OPENING A NEW ACCOUNT
   
  

$2,500 minimum initial investment; $1,000 for individual retirement accounts, certain small business retirement accounts, and Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts ($25,000 minimum initial investment for Summit Funds only); purchases through an intermediary or certain employer-sponsored retirement plans may be subject to different minimums

   

Important Information
About Opening an Account

 

Pursuant to federal law, all financial institutions must obtain, verify, and record information that identifies each person or entity that opens an account. This information is needed not only for the account owner and any other person who opens the account, but also for any person who has authority to act on behalf of the account.

   
  

When you open an account, you will be asked for the name, residential U.S. street address, date of birth, and Social Security number or employer identification number for each account owner and person(s) opening an account on behalf of others, such as custodians, agents, trustees, or other authorized signers. Corporate and other institutional accounts require documents showing the existence of the entity (such as articles of incorporation or partnership agreements) 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 at
1-800-638-5660.

   
  

We do not accept third-party checks for initial purchases; however, we do accept third-party checks for subsequent purchases. In addition, T. Rowe Price does not accept purchases by cash, traveler’s checks, or credit card checks.

   
  

We will use this information to verify the identity of the person(s)/entity opening the account. We will not be able to open your account until we receive all of this information. If we are unable to verify your identity, we are authorized to take any action permitted by law. (See Rights Reserved by the Funds.)


  

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The funds are generally available only to investors residing in the United States. In addition, purchases in state tax-free funds are limited to investors living in states where the fund is available for sale. The address of record on your account must be located in one of these states, or you will be restricted from purchasing fund shares. Contact Investor Services for more information.

   

Account Registration

 

If you own other T. Rowe Price funds, you should consider registering any new account identically to your existing accounts so you can exchange shares among them easily. (The name(s) of the account owner(s) and the account type must be identical.)

   
  

For joint accounts or other types of accounts owned or controlled by more than one party, either owner/party has complete 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 may 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
Mail Code 17300
4515 Painters Mill Road
Owings Mills, MD 21117-4903

   
  

Note: Please use the correct address to avoid a delay in opening your new account.

   

By Wire

 

Visit us online at troweprice.com, under the Help – FAQ section, or call Investor Services for an account number and wire transfer instructions.


  

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

   
  

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

   
  

Note: Although the purchase will be made, services may not be established and Internal Revenue Service penalty withholding may occur until we receive a signed New Account form.

   

Online

 

You can open a new mutual fund account online. Go to troweprice.com/newaccount to choose the type of account you wish to open.

   
  

To open an account electronically, you must be a U.S. citizen residing in the U.S. or a resident alien and not subject to Internal Revenue Service backup withholding. Additionally, you must provide consent to receive certain documents electronically.

   
  

You will have the option of providing your bank account information that will enable you to make electronic funds transfers to and from your bank account. To set up this banking service online, additional steps will be taken to verify your identity.

   

By Exchange

 

Visit us online at troweprice.com, or call Shareholder 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, please see Transaction Procedures and Special Requirements—Excessive and Short-Term Trading.

   

In Person

 

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


  

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PURCHASING ADDITIONAL SHARES
   
  

$100 minimum per fund account for all additional purchases, including those made through Automatic Asset Builder (all funds except Summit Funds); $100 minimum per fund account for additional purchases through Automatic Asset Builder and $1,000 for all other additional purchases (Summit Funds); purchases through an intermediary or certain employer-sponsored retirement plans may be subject to different minimums

   

By Automated
Clearing House

 

Visit us online at troweprice.com, under the Help – FAQ section, or call Shareholder Services if you have established electronic transfers using the Automated Clearing House system.

   

By Wire

 

Go to troweprice.com, under the Help – FAQ section, or call Shareholder Services for wire transfer instructions. T. Rowe Price must receive the wire by the close of the New York Stock Exchange (normally 4 p.m. ET) to receive that day’s share price. There is no assurance that you will receive the share price for the same day you initiated the wire from your financial institution.

   

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 purchase and your fund account number.

3. Please use the correct address to avoid a delay in processing your transaction and 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

(To send mail directly to T. Rowe Price via private carriers and overnight services, see previous section.)


  

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Your transaction will receive the share price for the business day that the request is received by T. Rowe Price prior to the close of the New York Stock Exchange (normally 4 p.m. ET) (not the day the request is received at the P.O. Box).

   

Systematic Purchases

 

To automatically transfer money to your account from a bank account or through payroll deductions, complete the appropriate section of the New Account form when opening a new account or complete the Account Services form to add the service to an existing account.

EXCHANGING AND REDEEMING SHARES
   

Exchange Service

 

You can move money from one account to an existing, identically registered account or open a new identically registered account. For taxable accounts, an exchange from one fund to another is considered a sale and purchase for tax purposes. (Exchanges into a state tax-free fund are limited to investors living in states where the fund is available.) For exchange policies, please see Transaction Procedures and Special Requirements—Excessive and Short-Term Trading Policy.

   

Redemptions

 

Redemption proceeds can be mailed to your account address, sent by Automated Clearing House transfer to your bank, or wired to your bank (provided your bank information is already on file). Redemption proceeds of less than $5,000 sent by wire are subject to a $5 fee paid to the fund. Please note that large purchase and redemption requests initiated through automated services, including the National Securities Clearing Corporation, may be rejected and, in such instances, the transaction must be placed by contacting a service representative.


  

T. Rowe Price

44

   
  

If you request to redeem a specific dollar amount, and the market value of your account is less than the amount of your request, your redemption will not be processed and you will need to submit a new redemption request in proper form. If you change your address on an account, proceeds will not be mailed to the new address for 15 calendar days after the address change, unless we receive a signature guaranteed letter of instruction.

   
  

Some of the T. Rowe Price funds may impose a redemption fee. Check the fund’s prospectus under Contingent Redemption Fee in Pricing Shares and Receiving Sale Proceeds. The fee is paid to the fund.

   
  

You can set up systematic redemptions and have the proceeds automatically sent via check or electronic transfer. For redemptions by check or electronic transfer, please see Information About Your Services.

   

Online

 

Visit us online at troweprice.com. Customers can electronically exchange shares between identically registered T. Rowe Price accounts and electronically redeem shares from their mutual fund accounts.

   

By Phone

 

You can call Shareholder Services at 1-800-225-5132 to place your transaction. If you find our phones busy during unusually volatile markets, please consider placing your order online through troweprice.com.

   

By Mail

 

For each account involved, provide the account name and 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 one of the following addresses:


  

Investing With T. Rowe Price

45

   
  

For nonretirement and individual retirement 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
Mail Code 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
Mail Code 17479
4515 Painters Mill Road
Owings Mills, MD 21117-4903

   
  

For requests that are not sent via private carriers or overnight services, your transaction will receive the share price for the business day that the request is received by T. Rowe Price prior to the close of the New York Stock Exchange (normally 4 p.m. ET) (not the day the request is received at the P.O. Box).

   
  

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. Individual retirement account distributions may be requested in writing or by telephone; please call Shareholder Services to obtain an Individual Retirement Account Distribution form or an Individual Retirement Account Shareholder Services form to authorize the telephone redemption service.


  

T. Rowe Price

46

RIGHTS RESERVED BY THE FUNDS
   
  

T. Rowe Price funds and their agents, in their sole discretion, reserve the following rights: (1) to waive or lower investment minimums; (2) to accept initial purchases by telephone; (3) to refuse any purchase or exchange order; (4) to cancel or rescind any purchase or exchange order placed through an intermediary no later than the business day after the order is received by the intermediary (including, but not limited to, orders deemed to result in excessive trading, market timing, or 5% ownership); (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 regarding the ownership of the account, or a legal claim against an account, upon initial notification to T. Rowe Price of a shareholder’s death until T. Rowe Price receives required documentation in good order, or if there is reason to believe a fraudulent transaction may occur; (7) to otherwise modify the conditions of purchase and modify or terminate any services at any time; (8) to waive any wire, small account, maintenance, or fiduciary fees charged to a group of shareholders; (9) to act on instructions reasonably believed to be genuine; (10) to involuntarily redeem an account at the net asset value calculated the day the account is redeemed, in cases of threatening conduct, suspected fraudulent or illegal activity, or if the fund or its agent is unable, through its procedures, to verify the identity of the person(s) or entity opening an account; and (11) for money funds, to suspend redemptions and postpone the payment of proceeds to facilitate an orderly liquidation of the fund.


  

Investing With T. Rowe Price

47

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 of which you receive automatically and others that you must authorize or request when you open a new account. Signing up for services during the new account process is the most effective way to authorize services that you will need to manage your account in a secure and efficient manner. You can open a new account by visiting us online at troweprice.com/newaccount or by calling an Investment Services Specialist at 1-800-638-5660. If you already have accounts and wish to learn more about available services or conducting online transactions, please visit us at troweprice.com. For additional questions on existing accounts, you may contact Shareholder Services at 1-800-225-5132.

   

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, and 401(k)s. For information on individual retirement accounts or our no-load variable annuity (for existing variable annuity contract holders), call Investor Services. For information on all other retirement plans, please call 1-800-492-7670.

   

Investing for College
Expenses

 

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

   
  

529 Plans
T. Rowe Price manages three 529 plans that are available directly to investors: the T. Rowe Price College Savings Plan (a national plan sponsored by the Education Trust of Alaska), the Maryland College Investment Plan, and the University of Alaska College Savings Plan. Account earnings are federal income tax-free when used for qualified expenses. For more information on the T. Rowe Price College Savings Plan (national plan), call 1-800-369-3641; Maryland College Investment Plan, call 1-888-4MD-GRAD

(1-888-463-4723); and University of Alaska College Savings Plan, call 1-866-277-1005.


  

T. Rowe Price

48

   

Automated Services

 

Online Account Access
You can sign up online to conduct account transactions through our website at troweprice.com.

   


 

Tele*AccessSM

1-800-638-2587
24-hour service via a toll-free number enables you to access information on fund performance, prices, distributions, account balances, and your latest transactions.

  

Plan Account Line

1-800-401-3279
This 24-hour service is similar to Tele*AccessSM but is designed specifically to meet the needs of retirement plan investors.

   

By Telephone and
In Person

 

Purchase, redeem, or exchange shares by calling one of our service representatives or by visiting one of our Investor Center locations listed on the back cover.

   

Electronic Transfers

 

By Automated Clearing House
This free service allows you to move as little as $100 or as much as $250,000 between your bank account and fund account using the Automated Clearing House system. Enter instructions via your personal computer or call Shareholder Services.

   
  

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

 

You may write an unlimited number of free checks on any money fund and certain 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 that you and we must report to the Internal Revenue Service.


  

Investing With T. Rowe Price

49

   

Automatic Investing

 

Automatic Asset Builder
You can instruct us to automatically transfer money 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. Each systematic purchase must be at least $100 per fund account to be eligible for the Automatic Asset Builder service. Minimum initial purchase requirements will still apply.

   
  

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 a Brokerage Account

1-800-638-5660

For Existing
Brokerage Customers

1-800-225-7720

 

Open your account online at troweprice.com/brokerage. Investments available through our Brokerage service include stocks, options, bonds, and other securities at commission savings 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.

   
  

Investor Information
Access our online research tools that can help you to 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 automatically be reinvested in additional shares of the same securities free of charge. Most securities listed on national securities 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 FINRA/SIPC.


  

T. Rowe Price

50

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 website at troweprice.com.

   
  

If your account has no activity in it for a certain period of time, T. Rowe Price may be required to transfer your account to the appropriate state under its abandoned property laws.

   
  

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, MD 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
Funds Guide and Required Minimum Distribution (RMD) Guide.


  

Investing With T. Rowe Price

51

T. ROWE PRICE PRIVACY POLICY

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

You may provide information when communicating or transacting 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.

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 services to best meet your investing needs. We may also share that information with companies that perform administrative 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 Trust Company; and the T. Rowe Price Funds.


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, or account information

Tele*AccessSM

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 website

Baltimore Area

Downtown

105 East Lombard
Street

Owings Mills

Three Financial Center
4515 Painters Mill Road

Colorado Springs

Financial Center One
2260 Briargate Parkway

Tampa

4211 W. Boy Scout
Boulevard
8th Floor

Washington, D.C. Area

Downtown

1717 K Street, N.W.
Suite A-100

Tysons Corner

1600 Tysons Boulevard
Suite 150
McLean, Virginia

A Statement of Additional Information for the T. Rowe Price family of funds, which includes additional information about the funds, has been filed with the SEC and is incorporated by reference into this prospectus. Further information about fund investments, including a review of market conditions and the manager’s recent investment strategies and their impact on performance during the past fiscal year, 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. These documents and updated performance information are available through troweprice.com.

Fund information and Statements of Additional Information are also available from the Public Reference Room of the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-551-8090. 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. 20549-1520.

  

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

  

1940 Act File No. 811-1710

F41-040 5/1/15


  

STATEMENT OF ADDITIONAL INFORMATION

 

This is the Statement of Additional Information for all of the funds listed below. It is divided into two parts (Part I and Part II). Part I primarily 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 (“Price Funds”).

The date of this Statement of Additional Information (“SAI”) is May 1, 2015.

T. ROWE PRICE BALANCED FUND, INC. (RPBAX)

T. ROWE PRICE BLUE CHIP GROWTH FUND, INC. (TRBCX)

T. Rowe Price Blue Chip Growth Fund–Advisor Class (PABGX)

T. Rowe Price Blue Chip Growth Fund–R Class (RRBGX)

T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST

California Tax-Free Bond Fund (PRXCX)

California Tax-Free Money Fund (PCTXX)

T. ROWE PRICE CAPITAL APPRECIATION FUND (PRWCX)

T. Rowe Price Capital Appreciation Fund–Advisor Class (PACLX)

T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC. (PRCOX)

T. Rowe Price Capital Opportunity Fund–Advisor Class (PACOX)

T. Rowe Price Capital Opportunity Fund–R Class (RRCOX)

T. ROWE PRICE CORPORATE INCOME FUND, INC. (PRPIX)

T. ROWE PRICE CREDIT OPPORTUNITIES FUND (PRCPX)

T. Rowe Price Credit Opportunities Fund–Advisor Class (PAOPX)

T. ROWE PRICE DIVERSIFIED MID-CAP GROWTH FUND, INC. (PRDMX)

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

T. ROWE PRICE DIVIDEND GROWTH FUND, INC. (PRDGX)

T. Rowe Price Dividend Growth Fund–Advisor Class (TADGX)

T. ROWE PRICE EQUITY INCOME FUND (PRFDX)

T. Rowe Price Equity Income Fund–Advisor Class (PAFDX)

T. Rowe Price Equity Income Fund–R Class (RRFDX)

T. ROWE PRICE FINANCIAL SERVICES FUND, INC. (PRISX)

T. ROWE PRICE FLOATING RATE FUND, INC. (PRFRX)

T. Rowe Price Floating Rate Fund–Advisor Class (PAFRX)

T. ROWE PRICE GLOBAL ALLOCATION FUND, INC. (RPGAX)

T. Rowe Price Global Allocation Fund–Advisor Class (PAFGX)

T. ROWE PRICE GLOBAL REAL ESTATE FUND, INC. (TRGRX)

T. Rowe Price Global Real Estate Fund–Advisor Class (PAGEX)

T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC. (PRGTX)

T. ROWE PRICE GNMA FUND (PRGMX)

T. ROWE PRICE GROWTH & INCOME FUND, INC. (PRGIX)

T. ROWE PRICE GROWTH STOCK FUND, INC. (PRGFX)

T. Rowe Price Growth Stock Fund–Advisor Class (TRSAX)

T. Rowe Price Growth Stock Fund–R Class (RRGSX)

T. ROWE PRICE HEALTH SCIENCES FUND, INC. (PRHSX)

T. ROWE PRICE HIGH YIELD FUND, INC. (PRHYX)

T. Rowe Price High Yield Fund–Advisor Class (PAHIX)

T. ROWE PRICE INDEX TRUST, INC.

T. Rowe Price Equity Index 500 Fund (PREIX)

T. Rowe Price Extended Equity Market Index Fund (PEXMX)

T. Rowe Price Total Equity Market Index Fund (POMIX)

T. ROWE PRICE INFLATION FOCUSED BOND FUND, INC.

T. ROWE PRICE INFLATION PROTECTED BOND FUND, INC. (PRIPX)

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

T. Rowe Price Institutional Large-Cap Core Growth Fund (TPLGX)

T. Rowe Price Institutional Large-Cap Growth Fund (TRLGX)

T. Rowe Price Institutional Large-Cap Value Fund (TILCX)

T. Rowe Price Institutional Mid-Cap Equity Growth Fund (PMEGX)

C00-042 5/1/15


T. Rowe Price Institutional Small-Cap Stock Fund (TRSSX)

T. Rowe Price Institutional U.S. Structured Research Fund (TRISX)

T. ROWE PRICE INSTITUTIONAL INCOME FUNDS, INC.

T. Rowe Price Institutional Core Plus Fund (TICPX)

 T. Rowe Price Institutional Core Plus Fund–F Class (PFCPX)

T. Rowe Price Institutional Credit Opportunities Fund (TRXPX)

T. Rowe Price Institutional Floating Rate Fund (RPIFX)

 T. Rowe Price Institutional Floating Rate Fund–F Class (PFFRX)

T. Rowe Price Institutional Global Multi-Sector Bond Fund (RPGMX)

T. Rowe Price Institutional High Yield Fund (TRHYX)

T. Rowe Price Institutional Long Duration Credit Fund (RPLCX)

T. ROWE PRICE INSTITUTIONAL INTERNATIONAL FUNDS, INC.

T. Rowe Price Institutional Africa & Middle East Fund (TRIAX)

T. Rowe Price Institutional Emerging Markets Bond Fund (TREBX)

T. Rowe Price Institutional Emerging Markets Equity Fund (IEMFX)

T. Rowe Price Institutional Frontier Markets Equity Fund (PRFFX)

T. Rowe Price Institutional Global Focused Growth Equity Fund (TRGSX)

T. Rowe Price Institutional Global Growth Equity Fund (RPIGX)

T. Rowe Price Institutional Global Value Equity Fund (PRIGX)

T. Rowe Price Institutional International Bond Fund (RPIIX)

T. Rowe Price Institutional International Concentrated Equity Fund (formerly T. Rowe Price Institutional Concentrated International Equity) (RPICX)

T. Rowe Price Institutional International Core Equity Fund (TRCEX)

T. Rowe Price Institutional International Growth Equity Fund (PRFEX)

T. ROWE PRICE INTERMEDIATE TAX-FREE HIGH YIELD FUND, INC. (PRIHX)

T. Rowe Price Intermediate Tax-Free High Yield Fund–Advisor Class (PRAHX)

T. ROWE PRICE INTERNATIONAL FUNDS, INC.

T. Rowe Price Africa & Middle East Fund (TRAMX)

T. Rowe Price Asia Opportunities Fund (TRAOX)

T. Rowe Price Asia Opportunities Fund–Advisor Class (PAAOX)

T. Rowe Price Emerging Europe Fund (TREMX)

T. Rowe Price Emerging Markets Bond Fund (PREMX)

T. Rowe Price Emerging Markets Corporate Bond Fund (TRECX)

T. Rowe Price Emerging Markets Corporate Bond Fund–Advisor Class (PACEX)

T. Rowe Price Emerging Markets Local Currency Bond Fund (PRELX)

T. Rowe Price Emerging Markets Local Currency Bond Fund–Advisor Class (PAELX)

T. Rowe Price Emerging Markets Stock Fund (PRMSX)

T. Rowe Price European Stock Fund (PRESX)

T. Rowe Price Global Growth Stock Fund (RPGEX)

 T. Rowe Price Global Growth Stock Fund–Advisor Class (PAGLX)

T. Rowe Price Global High Income Bond Fund (RPIHX)

 T. Rowe Price Global High Income Bond Fund–Advisor Class (PAIHX)

T. Rowe Price Global Industrials Fund (RPGIX)

T. Rowe Price Global Stock Fund (PRGSX)

 T. Rowe Price Global Stock Fund–Advisor Class (PAGSX)

T. Rowe Price Global Unconstrained Bond Fund (RPIEX)

 T. Rowe Price Global Unconstrained Bond Fund–Advisor Class (PAIEX)

T. Rowe Price International Bond Fund (RPIBX)

 T. Rowe Price International Bond Fund–Advisor Class (PAIBX)

T. Rowe Price International Concentrated Equity Fund (PRCNX)

 T. Rowe Price International Concentrated Equity Fund–Advisor Class (PRNCX)

T. Rowe Price International Discovery Fund (PRIDX)

T. Rowe Price International Growth & Income Fund (TRIGX)

 T. Rowe Price International Growth & Income Fund–Advisor Class (PAIGX)

 T. Rowe Price International Growth & Income Fund–R Class (RRIGX)

T. Rowe Price International Stock Fund (PRITX)

 T. Rowe Price International Stock Fund–Advisor Class (PAITX)

 T. Rowe Price International Stock Fund–R Class (RRITX)

T. Rowe Price Japan Fund (PRJPX)

2


T. Rowe Price Latin America Fund (PRLAX)

T. Rowe Price New Asia Fund (PRASX)

T. Rowe Price Overseas Stock Fund (TROSX)

T. ROWE PRICE INTERNATIONAL INDEX FUND, INC.

T. Rowe Price International Equity Index Fund (PIEQX)

T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC. (PRMTX)

T. ROWE PRICE MID-CAP GROWTH FUND, INC. (RPMGX)

T. Rowe Price Mid-Cap Growth Fund–Advisor Class (PAMCX)

T. Rowe Price Mid-Cap Growth Fund–R Class (RRMGX)

T. ROWE PRICE MID-CAP VALUE FUND, INC. (TRMCX)

T. Rowe Price Mid-Cap Value Fund–Advisor Class (TAMVX)

T. Rowe Price Mid-Cap Value Fund–R Class (RRMVX)

T. ROWE PRICE MULTI-SECTOR ACCOUNT PORTFOLIOS, INC. (“Multi-Sector Account Portfolios”)

T. Rowe Price Emerging Markets Corporate Multi-Sector Account Portfolio

T. Rowe Price Emerging Markets Local Multi-Sector Account Portfolio

T. Rowe Price Floating Rate Multi-Sector Account Portfolio

T. Rowe Price High Yield Multi-Sector Account Portfolio

T. Rowe Price Investment-Grade Corporate Multi-Sector Account Portfolio

T. Rowe Price Mortgage-Backed Securities Multi-Sector Account Portfolio

T. ROWE PRICE NEW AMERICA GROWTH FUND (PRWAX)

T. Rowe Price New America Growth Fund–Advisor Class (PAWAX)

T. ROWE PRICE NEW ERA FUND, INC. (PRNEX)

T. ROWE PRICE NEW HORIZONS FUND, INC. (PRNHX)

T. ROWE PRICE NEW INCOME FUND, INC. (PRCIX)

T. Rowe Price New Income Fund–Advisor Class (PANIX)

T. Rowe Price New Income Fund–R Class (RRNIX)

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

T. Rowe Price Personal Strategy Balanced Fund (TRPBX)

T. Rowe Price Personal Strategy Growth Fund (TRSGX)

T. Rowe Price Personal Strategy Income Fund (PRSIX)

T. ROWE PRICE PRIME RESERVE FUND, INC. (PRRXX)

T. ROWE PRICE REAL ASSETS FUND, INC. (PRAFX)

T. ROWE PRICE REAL ESTATE FUND, INC. (TRREX)

T. Rowe Price Real Estate Fund–Advisor Class (PAREX)

T. ROWE PRICE RESERVE INVESTMENT FUNDS, INC. (“TRP Reserve Funds”)

T. Rowe Price Government Reserve Investment Fund (“TRP Government Reserve
Investment Fund”)

T. Rowe Price Reserve Investment Fund (“TRP Reserve Investment Fund”)

T. Rowe Price Short-Term Government Reserve Fund

T. Rowe Price Short-Term Reserve Fund

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

T. Rowe Price Retirement 2005 Fund (TRRFX)

 T. Rowe Price Retirement 2005 Fund–Advisor Class (PARGX)

 T. Rowe Price Retirement 2005 Fund–R Class (RRTLX)

T. Rowe Price Retirement 2010 Fund (TRRAX)

 T. Rowe Price Retirement 2010 Fund–Advisor Class (PARAX)

 T. Rowe Price Retirement 2010 Fund–R Class (RRTAX)

T. Rowe Price Retirement 2015 Fund (TRRGX)

 T. Rowe Price Retirement 2015 Fund–Advisor Class (PARHX)

 T. Rowe Price Retirement 2015 Fund–R Class (RRTMX)

T. Rowe Price Retirement 2020 Fund (TRRBX)

 T. Rowe Price Retirement 2020 Fund–Advisor Class (PARBX)

 T. Rowe Price Retirement 2020 Fund–R Class (RRTBX)

T. Rowe Price Retirement 2025 Fund (TRRHX)

 T. Rowe Price Retirement 2025 Fund–Advisor Class (PARJX)

 T. Rowe Price Retirement 2025 Fund–R Class (RRTNX)

T. Rowe Price Retirement 2030 Fund (TRRCX)

 T. Rowe Price Retirement 2030 Fund–Advisor Class (PARCX)

 T. Rowe Price Retirement 2030 Fund–R Class (RRTCX)

3


T. Rowe Price Retirement 2035 Fund (TRRJX)

 T. Rowe Price Retirement 2035 Fund–Advisor Class (PARKX)

 T. Rowe Price Retirement 2035 Fund–R Class (RRTPX)

T. Rowe Price Retirement 2040 Fund (TRRDX)

 T. Rowe Price Retirement 2040 Fund–Advisor Class (PARDX)

 T. Rowe Price Retirement 2040 Fund–R Class (RRTDX)

T. Rowe Price Retirement 2045 Fund (TRRKX)

 T. Rowe Price Retirement 2045 Fund–Advisor Class (PARLX)

 T. Rowe Price Retirement 2045 Fund–R Class (RRTRX)

T. Rowe Price Retirement 2050 Fund (TRRMX)

 T. Rowe Price Retirement 2050 Fund–Advisor Class (PARFX)

 T. Rowe Price Retirement 2050 Fund–R Class (RRTFX)

T. Rowe Price Retirement 2055 Fund (TRRNX)

 T. Rowe Price Retirement 2055 Fund–Advisor Class (PAROX)

 T. Rowe Price Retirement 2055 Fund–R Class RRTVX)

T. Rowe Price Retirement 2060 Fund (TRRLX)

 T. Rowe Price Retirement 2060 Fund–Advisor Class (TRRYX)

 T. Rowe Price Retirement 2060 Fund–R Class (TRRZX)

T. Rowe Price Retirement Balanced Fund (formerly T. Rowe Retirement Income Fund) (TRRIX)

 T. Rowe Price Retirement Balanced Fund–Advisor Class (formerly T. Rowe Retirement Income  Fund–Advisor Class) (PARIX)

 T. Rowe Price Retirement Balanced Fund–R Class (formerly T. Rowe Retirement Income Fund– R Class) (RRTIX)

T. Rowe Price Target Retirement 2005 Fund (TRARX)

 T. Rowe Price Target Retirement 2005 Fund–Advisor Class (PANRX)

T. Rowe Price Target Retirement 2010 Fund (TRROX)

 T. Rowe Price Target Retirement 2010 Fund–Advisor Class (PAERX)

T. Rowe Price Target Retirement 2015 Fund (TRRTX)

 T. Rowe Price Target Retirement 2015 Fund–Advisor Class (PAHRX)

T. Rowe Price Target Retirement 2020 Fund (TRRUX)

 T. Rowe Price Target Retirement 2020 Fund–Advisor Class (PAIRX)

T. Rowe Price Target Retirement 2025 Fund (TRRVX)

 T. Rowe Price Target Retirement 2025 Fund–Advisor Class (PAJRX)

T. Rowe Price Target Retirement 2030 Fund (TRRWX)

 T. Rowe Price Target Retirement 2030 Fund–Advisor Class (PAKRX)

T. Rowe Price Target Retirement 2035 Fund (RPGRX)

 T. Rowe Price Target Retirement 2035 Fund–Advisor Class (PATVX)

T. Rowe Price Target Retirement 2040 Fund (TRHRX)

 T. Rowe Price Target Retirement 2040 Fund–Advisor Class (PAHHX)

T. Rowe Price Target Retirement 2045 Fund (RPTFX)

 T. Rowe Price Target Retirement 2045 Fund–Advisor Class (PAFFX)

T. Rowe Price Target Retirement 2050 Fund (TRFOX)

 T. Rowe Price Target Retirement 2050 Fund–Advisor Class (PAOFX)

T. Rowe Price Target Retirement 2055 Fund (TRFFX)

 T. Rowe Price Target Retirement 2055 Fund–Advisor Class (PAFTX)

T. Rowe Price Target Retirement 2060 Fund (TRTFX)

 T. Rowe Price Target Retirement 2060 Fund–Advisor Class (TRTGX)

T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC. (PRSCX)

T. Rowe Price Science & Technology Fund–Advisor Class (PASTX)

T. ROWE PRICE SHORT-TERM BOND FUND, INC. (PRWBX)

T. Rowe Price Short-Term Bond Fund–Advisor Class (PASHX)

T. Rowe Price Ultra Short-Term Bond Fund (TRBUX)

T. ROWE PRICE SMALL-CAP STOCK FUND, INC. (OTCFX)

T. Rowe Price Small-Cap Stock Fund–Advisor Class (PASSX)

T. ROWE PRICE SMALL-CAP VALUE FUND, INC. (PRSVX)

T. Rowe Price Small-Cap Value Fund–Advisor Class (PASVX)

4


T. ROWE PRICE SPECTRUM FUND, INC. (“Spectrum Funds”)

Spectrum Growth Fund (PRSGX)

Spectrum Income Fund (RPSIX)

Spectrum International Fund (PSILX)

T. ROWE PRICE STATE TAX-FREE INCOME TRUST

Georgia Tax-Free Bond Fund (GTFBX)

Maryland Short-Term Tax-Free Bond Fund (PRMDX)

Maryland Tax-Free Bond Fund (MDXBX)

Maryland Tax-Free Money Fund (TMDXX)

New Jersey Tax-Free Bond Fund (NJTFX)

New York Tax-Free Bond Fund (PRNYX)

New York Tax-Free Money Fund (NYTXX)

Virginia Tax-Free Bond Fund (PRVAX)

T. ROWE PRICE STRATEGIC INCOME FUND, INC. (PRSNX)

T. Rowe Price Strategic Income Fund–Advisor Class (PRSAX)

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

T. Rowe Price Summit Cash Reserves Fund (TSCXX)

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

T. Rowe Price Summit Municipal Money Market Fund (TRSXX)

T. Rowe Price Summit Municipal Intermediate Fund (PRSMX)

T. Rowe Price Summit Municipal Intermediate Fund–Advisor Class (PAIFX)

T. Rowe Price Summit Municipal Income Fund (PRINX)

T. Rowe Price Summit Municipal Income Fund–Advisor Class (PAIMX)

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

T. Rowe Price Tax-Efficient Equity Fund (PREFX)

T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC. (PTEXX)

T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC. (PRFHX)

T. Rowe Price Tax-Free High Yield Fund–Advisor Class (PATFX)

T. ROWE PRICE TAX-FREE INCOME FUND, INC. (PRTAX)

T. Rowe Price Tax-Free Income Fund–Advisor Class (PATAX)

T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC. (PRFSX)

T. Rowe Price Tax-Free Short-Intermediate Fund–Advisor Class (PATIX)

T. Rowe Price Tax-Free Ultra Short-Term Bond Fund (PRTUX)

T. ROWE PRICE U.S. BOND ENHANCED INDEX FUND, INC. (PBDIX)

T. ROWE PRICE U.S. LARGE-CAP CORE FUND, INC. (TRULX)

T. Rowe Price U.S. Large-Cap Core Fund–Advisor Class (PAULX)

T. ROWE PRICE U.S. TREASURY FUNDS, INC. (“U.S. Treasury Funds”)

U.S. Treasury Intermediate Fund (PRTIX)

U.S. Treasury Long-Term Fund (PRULX)

U.S. Treasury Money Fund (PRTXX)

T. ROWE PRICE VALUE FUND, INC. (TRVLX)

T. Rowe Price Value Fund–Advisor Class (PAVLX)

Mailing Address:

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

This SAI 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 Registered Public Accounting Firm are included in each fund’s annual or semiannual report and incorporated by reference into this SAI. The Global High Income Bond Fund, Global High Income Bond Fund—Advisor Class, Global Unconstrained Bond Fund, Global Unconstrained Bond Fund—Advisor Class, Intermediate Tax-Free High Yield Fund, Intermediate Tax-Free High Yield Fund–Advisor Class, Retirement 2060 Fund, Retirement

5


2060 Fund—Advisor Class, Retirement 2060 Fund—R Class, Short-Term Government Reserve Fund, Target Retirement 2060 Fund, Target Retirement 2060 Fund—Advisor Class, and Tax–Free Ultra Short–Term Bond Fund have not been in operation long enough to have complete financial statements.

If you would like a prospectus or an annual or semiannual shareholder report for a fund, please visit troweprice.com or call 1-800-638-5660 and it will be sent to you at no charge. Please read this material carefully.

6


PART I – TABLE OF CONTENTS

Page

  

Management of the Funds

15

Principal Holders of Securities

92

 

Investment Management Agreements

152

Third Party Arrangements

175

Page

  

Distributor for the Funds

182

Portfolio Transactions

186

Independent Registered Public

 

Accounting Firm

215

Part II

216

References to the following are as indicated:

Internal Revenue Code of 1986, as amended (“Code”)

Internal Revenue Service (“IRS”)

Investment Company Act of 1940, as amended (“1940 Act”)

Moody’s Investors Service, Inc. (“Moody’s”)

Securities Act of 1933, as amended (“1933 Act”)

Securities and Exchange Commission (“SEC”)

Securities Exchange Act of 1934, as amended (“1934 Act”)

Standard & Poor’s Corporation (“S&P”)

T. Rowe Price Associates, Inc. (“T. Rowe Price”)

T. Rowe Price Hong Kong Limited (“Price Hong Kong”)

T. Rowe Price International Ltd (“T. Rowe Price International”)

T. Rowe Price Singapore Private Ltd. (“Price Singapore”)

Advisor Class

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

F Class

The F Class is a share class of its respective T. Rowe Price fund and is not a separate mutual fund. The F Class shares are designed to be sold only through financial advisors and certain third-party intermediaries, including brokers, banks, insurance companies, retirement plan recordkeepers, and other financial intermediaries that provide various distribution and administrative services. F Class shares are not intended to be offered by intermediaries through a mutual fund “supermarket” platform.

R Class

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

Inflation Focused Bond Fund, Multi-Sector Account Portfolios, and TRP Reserve Funds

These funds are not available for direct purchase by members of the public. Shares of these funds may only be purchased by or on behalf of mutual funds, section 529 college savings plans, or certain institutional client accounts for which T. Rowe Price or one of its affiliates has discretionary investment authority.

Institutional Funds

The Institutional Funds have a $1,000,000 initial investment minimum (except for their F Class shares) and are designed for institutional investors. Institutional investors typically include banks, pension and other retirement plans, and trust and investment companies.

7


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

Africa & Middle East

International Equity

Oct 31

Oct 31

Apr 30

March 1

Asia Opportunities

International Equity

Oct 31

Oct 31

Apr 30

March 1

Asia Opportunities Fund–Advisor Class

International Equity

Oct 31

Oct 31

Apr 30

March 1

Balanced

Asset Allocation

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

Aug 30

July 1

California Tax-Free Money

State Tax-Free Money

Feb 28

Feb 28

Aug 30

July 1

Capital Appreciation

Equity

Dec 31

Dec 31

June 30

May 1

Capital Appreciation Fund–Advisor Class

Equity

Dec 31

Dec 31

June 30

May 1

Capital Opportunity

Equity

Dec 31

Dec 31

June 30

May 1

Capital Opportunity Fund–Advisor Class

Equity

Dec 31

Dec 31

June 30

May 1

Capital Opportunity Fund–R Class

Equity

Dec 31

Dec 31

June 30

May 1

Corporate Income

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Credit Opportunities

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Credit Opportunities Fund–Advisor Class

Taxable Bond

May 31

May 31

Nov 30

Oct 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

Dividend Growth Fund–Advisor Class

Equity

Dec 31

Dec 31

June 30

May 1

Emerging Europe

International Equity

Oct 31

Oct 31

Apr 30

March 1

Emerging Markets Bond

International Bond

Dec 31

Dec 31

June 30

May 1

Emerging Markets Corporate Bond

International Bond

Dec 31

Dec 31

June 30

May 1

Emerging Markets Corporate Bond–Advisor Class

International Bond

Dec 31

Dec 31

June 30

May 1

Emerging Markets Corporate Multi-Sector Account Portfolio

International Bond

Dec 31

Dec 31

June 30

May 1

Emerging Markets Local Currency Bond

International Bond

Dec 31

Dec 31

June 30

May 1

Emerging Markets Local Currency Bond Fund–Advisor Class

International Bond

Dec 31

Dec 31

June 30

May 1

Emerging Markets Local Multi-Sector Account Portfolio

International Bond

Dec 31

Dec 31

June 30

May 1

8


      

Fund

Fund Category

Fiscal Year End

Annual Report Date

Semiannual Report Date

Prospectus Date

Emerging Markets Stock

International Equity

Oct 31

Oct 31

Apr 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

Apr 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

Floating Rate

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Floating Rate Fund–Advisor Class

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Floating Rate Multi-Sector Account Portfolio

Taxable Bond

Feb 28

Feb 28

Aug 30

July 1

Georgia Tax-Free Bond

State Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

Global Allocation

Asset Allocation

Oct 31

Oct 31

Apr 30

March 1

Global Allocation Fund–Advisor Class

Asset Allocation

Oct 31

Oct 31

Apr 30

March 1

Global Growth Stock

International Equity

Oct 31

Oct 31

Apr 30

March 1

Global Growth Stock Fund–Advisor Class

International Equity

Oct 31

Oct 31

Apr 30

March 1

Global High Income Bond

International Bond

Dec 31

Dec 31

June 30

May 1

Global High Income Bond Fund–Advisor Class

International Bond

Dec 31

Dec 31

June 30

May 1

Global Industrials

International Equity

Dec 31

Dec 31

June 30

May 1

Global Real Estate

International Equity

Dec 31

Dec 31

June 30

May 1

Global Real Estate Fund–Advisor Class

International Equity

Dec 31

Dec 31

June 30

May 1

Global Stock

International Equity

Oct 31

Oct 31

Apr 30

March 1

Global Stock Fund–Advisor Class

International Equity

Oct 31

Oct 31

Apr 30

March 1

Global Technology

Equity

Dec 31

Dec 31

June 30

May 1

Global Unconstrained Bond

International Bond

Dec 31

Dec 31

June 30

May 1

Global Unconstrained Bond Fund–Advisor Class

International Bond

Dec 31

Dec 31

June 30

May 1

GNMA

Taxable Bond

May 31

May 31

Nov 30

Oct 1

TRP 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

High Yield Multi-Sector Account Portfolio

Taxable Bond

Feb 28

Feb 28

Aug 30

July 1

Inflation Focused Bond

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Inflation Protected Bond

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Institutional Africa & Middle East

International Equity

Oct 31

Oct 31

Apr 30

March 1

9


      

Fund

Fund Category

Fiscal Year End

Annual Report Date

Semiannual Report Date

Prospectus Date

Institutional Core Plus

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Institutional Core Plus-F Class

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Institutional Credit Opportunities

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Institutional Emerging Markets Bond

International Bond

Dec 31

Dec 31

June 30

May 1

Institutional Emerging Markets Equity

International Equity

Oct 31

Oct 31

Apr 30

March 1

Institutional Floating Rate

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Institutional Floating Rate-F Class

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Institutional Frontier Markets Equity

International Equity

Oct 31

Oct 31

Apr 30

March 1

Institutional Global Focused Growth Equity

International Equity

Oct 31

Oct 31

Apr 30

March 1

Institutional Global Growth Equity

International Equity

Oct 31

Oct 31

Apr 30

March 1

Institutional Global Multi-Sector Bond

International Bond

May 31

May 31

Nov 30

Oct 1

Institutional Global Value Equity

International Equity

Oct 31

Oct 31

Apr 30

March 1

Institutional High Yield

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Institutional International Bond

International Bond

Dec 31

Dec 31

June 30

May 1

Institutional International Concentrated Equity

International Equity

Oct 31

Oct 31

Apr 30

March 1

Institutional International Core Equity

International Equity

Oct 31

Oct 31

Apr 30

March 1

Institutional International Growth Equity

International Equity

Oct 31

Oct 31

Apr 30

March 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 Long Duration Credit

Taxable Bond

May 31

May 31

Nov 30

Oct 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

Institutional U.S. Structured Research

Equity

Dec 31

Dec 31

June 30

May 1

Intermediate Tax-Free High Yield

Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

Intermediate Tax-Free High Yield–Advisor Class

Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 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 Concentrated Equity Fund

International Equity

Oct 31

Oct 31

Apr 30

March 1

International Concentrated Equity Fund–Advisor Class

International Equity

Oct 31

Oct 31

Apr 30

March 1

10


      

Fund

Fund Category

Fiscal Year End

Annual Report Date

Semiannual Report Date

Prospectus Date

International Discovery

International Equity

Oct 31

Oct 31

Apr 30

March 1

International Equity Index

International Equity

Oct 31

Oct 31

Apr 30

March 1

International Growth & Income

International Equity

Oct 31

Oct 31

Apr 30

March 1

International Growth & Income Fund–Advisor Class

International Equity

Oct 31

Oct 31

Apr 30

March 1

International Growth & Income Fund–R Class

International Equity

Oct 31

Oct 31

Apr 30

March 1

International Stock

International Equity

Oct 31

Oct 31

Apr 30

March 1

International Stock Fund–Advisor Class

International Equity

Oct 31

Oct 31

Apr 30

March 1

International Stock Fund–R Class

International Equity

Oct 31

Oct 31

Apr 30

March 1

Investment-Grade Corporate Multi-Sector Account Portfolio

Taxable Bond

Feb 28

Feb 28

Aug 30

July 1

Japan

International Equity

Oct 31

Oct 31

Apr 30

March 1

Latin America

International Equity

Oct 31

Oct 31

Apr 30

March 1

Maryland Short-Term Tax-Free Bond

State Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

Maryland Tax-Free Bond

State Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

Maryland Tax-Free Money

State Tax-Free Money

Feb 28

Feb 28

Aug 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

Mortgage-Backed Securities Multi-Sector Account Portfolio

Taxable Bond

Feb 28

Feb 28

Aug 30

July 1

New America Growth

Equity

Dec 31

Dec 31

June 30

May 1

New America Growth Fund–Advisor Class

Equity

Dec 31

Dec 31

June 30

May 1

New Asia

International Equity

Oct 31

Oct 31

Apr 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

Taxable Bond

May 31

May 31

Nov 30

Oct 1

New Income Fund–R Class

Taxable Bond

May 31

May 31

Nov 30

Oct 1

New Jersey Tax-Free Bond

State Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

New York Tax-Free Bond

State Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

New York Tax-Free Money

State Tax-Free Money

Feb 28

Feb 28

Aug 30

July 1

Overseas Stock

International Equity

Oct 31

Oct 31

Apr 30

March 1

Personal Strategy Balanced

Asset Allocation

May 31

May 31

Nov 30

Oct 1

11


      

Fund

Fund Category

Fiscal Year End

Annual Report Date

Semiannual Report Date

Prospectus Date

Personal Strategy Growth

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Personal Strategy Income

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Prime Reserve

Taxable Money

May 31

May 31

Nov 30

Oct 1

Real Assets Fund

Equity

Dec 31

Dec 31

June 30

May 1

Real Estate

Equity

Dec 31

Dec 31

June 30

May 1

Real Estate Fund–Advisor Class

Equity

Dec 31

Dec 31

June 30

May 1

TRP Reserve Investment

Taxable Money

May 31

May 31

Nov 30

Oct 1

Retirement 2005

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2005 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2005 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2010

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2010 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2010 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2015

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2015 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2015 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2020

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2020 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2020 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2025

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2025 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2025 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2030

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2030 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2030 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2035

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2035 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2035 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2040

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2040 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2040 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2045

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2045 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2045 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2050

Asset Allocation

May 31

May 31

Nov 30

Oct 1

12


      

Fund

Fund Category

Fiscal Year End

Annual Report Date

Semiannual Report Date

Prospectus Date

Retirement 2050 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2050 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2055

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2055 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2055 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2060

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2060 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement 2060 Fund–R Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement Balanced

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement Balanced Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Retirement Balanced Fund–R Class

Asset Allocation

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

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Short-Term Bond Fund–Advisor Class

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Short-Term Government Reserve

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Short-Term Reserve

Taxable 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

Asset Allocation

Dec 31

Dec 31

June 30

May 1

Spectrum Income

Asset Allocation

Dec 31

Dec 31

June 30

May 1

Spectrum International

Asset Allocation

Dec 31

Dec 31

June 30

May 1

Strategic Income

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Strategic Income Fund–Advisor Class

Taxable Bond

May 31

May 31

Nov 30

Oct 1

Summit Cash Reserves

Taxable Money

Oct 31

Oct 31

Apr 30

March 1

Summit Municipal Income

Tax-Free Bond

Oct 31

Oct 31

Apr 30

March 1

Summit Municipal Income–Advisor Class

Tax-Free Bond

Oct 31

Oct 31

Apr 30

March 1

Summit Municipal Intermediate

Tax-Free Bond

Oct 31

Oct 31

Apr 30

March 1

Summit Municipal Intermediate–Advisor Class

Tax-Free Bond

Oct 31

Oct 31

Apr 30

March 1

Summit Municipal Money Market

Tax-Free Money

Oct 31

Oct 31

Apr 30

March 1

Target Retirement 2005

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2005 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2010

Asset Allocation

May 31

May 31

Nov 30

Oct 1

13


      

Fund

Fund Category

Fiscal Year End

Annual Report Date

Semiannual Report Date

Prospectus Date

Target Retirement 2010 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2015

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2015 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2020

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2020 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2025

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2025 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2030

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2030 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2035

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2035 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2040

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2040 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2045

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2045 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2050

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2050 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2055

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2055 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2060

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Target Retirement 2060 Fund–Advisor Class

Asset Allocation

May 31

May 31

Nov 30

Oct 1

Tax-Efficient Equity

Equity

Feb 28

Feb 28

Aug 30

July 1

Tax-Exempt Money

Tax-Free Money

Feb 28

Feb 28

Aug 30

July 1

Tax-Free High Yield

Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

Tax-Free High Yield–Advisor Class

Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

Tax-Free Income

Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

Tax-Free Income Fund–Advisor Class

Tax Free Bond

Feb 28

Feb 28

Aug 30

July 1

Tax-Free Short-Intermediate

Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

Tax-Free Short-Intermediate–Advisor Class

Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

Tax-Free Ultra Short-Term Bond

Tax-Free Bond

Feb 28

Feb 28

Aug 30

July 1

Total Equity Market Index

Index Equity

Dec 31

Dec 31

June 30

May 1

U.S. Bond Enhanced Index

Index Bond

Oct 31

Oct 31

Apr 30

March 1

U.S. Large-Cap Core

Equity

Dec 31

Dec 31

June 30

May 1

U.S. Large-Cap Core Fund–Advisor Class

Equity

Dec 31

Dec 31

June 30

May 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

Ultra Short-Term Bond

Taxable Bond

May 31

May 31

Nov 30

Oct 1

14


      

Fund

Fund Category

Fiscal Year End

Annual Report Date

Semiannual Report Date

Prospectus Date

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

Aug 30

July 1

MANAGEMENT OF THE FUNDS

The officers and directors (the term “director” is used to refer to directors or trustees, as applicable) of the Price Funds are listed on the following pages. Unless otherwise noted, the address of each is 100 East Pratt Street, Baltimore, Maryland 21202.

Each fund is overseen by a Board of Directors/Trustees (“Board”) that meets regularly to review a wide variety of matters affecting or potentially affecting the funds, including performance, investment programs, compliance matters, advisory fees and expenses, service providers, and business and regulatory affairs. The Boards elect the funds’ officers and are responsible for performing various duties imposed on them by the 1940 Act, the laws of Maryland or Massachusetts, and other applicable laws. At least 75% of each Board’s members are independent of T. Rowe Price and its affiliates. The directors who are also employees or officers of T. Rowe Price are considered to be inside or interested directors because of their relationships with T. Rowe Price and its affiliates. Each inside director and officer (except as indicated in the tables setting forth the directors’ and officers’ principal occupations during the past five years) has been an employee of T. Rowe Price or its affiliates for five or more years. The Boards normally hold five regularly scheduled formal meetings during each calendar year. Although the Boards have direct responsibility over various matters (such as approval of advisory contracts and review of fund performance), each Board also exercises certain of its oversight responsibilities through several committees that it has established and which report back to the full Board. The Boards believe that a committee structure is an effective means to permit directors to focus on particular operations or issues affecting the funds, including risk oversight. Each Board currently has three standing committees, a Committee of Independent Directors, a Joint Audit Committee, and an Executive Committee, which are described in greater detail in the following paragraphs.

Edward C. Bernard, an inside director, serves as the Chairman of the Board of each fund. The independent directors of each fund have designated a Lead Independent Director, who functions as a liaison between the Chairman of the Board and the other independent directors. The Lead Independent Director presides at all executive sessions of the independent directors, reviews and provides input on Board meeting agendas and materials, and typically represents the independent directors in discussions with T. Rowe Price management. Anthony W. Deering currently serves as Lead Independent Director of each Board. Each fund’s Board has determined that its leadership and committee structure is appropriate because the Board believes that it sets the proper tone for the relationship between the fund, on the one hand, and T. Rowe Price or its affiliates and the fund’s other principal service providers, on the other, and facilitates the exercise of the Board’s independent judgment in evaluating and managing the relationships. In addition, the structure efficiently allocates responsibility among committees and the full Board. The same independent directors currently serve on the Boards of all of the Price Funds. This approach is designed to provide effective governance by exposing the independent directors to a wider range of business issues and market trends, allowing the directors to better share their knowledge, background and experience, and permitting the Boards to operate more efficiently, particularly with respect to matters common to all Price Funds.

The Committee of Independent Directors, which consists of all of the independent directors of the funds, is responsible for, among other things, seeking, reviewing and selecting candidates to fill vacancies on each fund’s Board, periodically evaluating the compensation payable to the independent directors, and performing certain functions with respect to the governance of the funds. The Lead Independent Director serves as chairman of the committee. The committee will consider written recommendations from shareholders for possible nominees for director. Shareholders should submit their recommendations to the secretary of the funds. The committee met six times in 2014 in conjunction with the full Board.

15


The Joint Audit Committee consists of only independent directors. The current members of the committee are Bruce W. Duncan, Robert J. Gerrard, Jr., Paul F. McBride, Cecilia E. Rouse, and John G. Schreiber. Mr. Gerrard serves as chairman of the committee and Mr. Duncan is considered a financial expert. The Joint Audit Committee oversees the pricing processes for the Price Funds and holds three regular meetings during each fiscal year. Two of the meetings include the attendance of the independent registered public accounting firm of the Price Funds as the Joint Audit Committee reviews: (1) the services provided; (2) the findings of the most recent audits; (3) management’s response to the findings of the most recent audits; (4) the scope of the audits to be performed; (5) the accountants’ fees; and (6) any accounting questions relating to particular areas of the Price Funds’ operations or the operations of parties dealing with the Price Funds, as circumstances indicate. A third meeting is devoted primarily to a review of the risk management program of the funds’ investment adviser. The Joint Audit Committee met three times in 2014.

The Executive Committee, which consists of each fund’s inside directors, has been authorized by its respective Board to exercise all powers of the Boards of the funds in the intervals between regular meetings of the Boards, except for those powers prohibited by statute from being delegated. All actions of the Executive Committee must be approved in advance by one independent director and reviewed after the fact by the full Board. The Executive Committee for each fund does not hold regularly scheduled meetings. The Executive Committee did not need to take any action on behalf of any funds during 2014.

Like other mutual funds, the funds are subject to risks, including investment, compliance, operational, and valuation risks, among others. The Boards oversee risk as part of their oversight of the funds. Risk oversight is addressed as part of various Board and committee activities. The Board, directly or through its committees, interacts with and reviews reports from, among others, the investment adviser or its affiliates, the funds’ Chief Compliance Officer, the funds’ independent registered public accounting firm, legal counsel, and internal auditors for T. Rowe Price or its affiliates, as appropriate, regarding risks faced by the funds and the risk management programs of the investment adviser and certain other service providers. Also, the Joint Audit Committee receives periodic reports from members of the advisers’ Risk Management Oversight Committee on the significant risks inherent to the advisers’ business, including aggregate investment risks, reputational risk, business continuity risk, and operational risk. The actual day-to-day risk management functions with respect to the funds are subsumed within the responsibilities of the investment adviser, its affiliates that serve as investment sub-advisers to the funds, and other service providers (depending on the nature of the risk) that carry out the funds’ investment management and business affairs. Although the risk management policies of T. Rowe Price and its affiliates, and the funds’ other service providers, are reasonably designed to be effective, those policies and their implementation vary among service providers over time, and there is no guarantee that they will always be effective. Not all risks that may affect the funds can be identified. Processes and controls developed may not eliminate or mitigate the occurrence or effects of all risks, and some risks may be simply beyond any control of the funds, T. Rowe Price and its affiliates, or other service providers.

Each director’s experience, qualifications, attributes, or skills, on an individual basis and in combination with those of the other directors, has led to the conclusion that each director should serve on the Boards of the Price Funds. Attributes common to all directors include the ability to review critically, evaluate, question, and discuss information provided to them, to interact effectively with the funds’ management and counsel and the various service providers to the funds, and to exercise reasonable business judgment in the performance of their duties as directors. In addition, the actual service and commitment of the directors during their tenure on the funds’ Boards is taken into consideration in concluding that each should continue to serve. A director’s ability to perform his or her duties effectively may have been attained through his or her educational background or professional training; business, consulting, public service, or academic positions; experience from service as a director of the Price Funds, public companies, non-profit entities, or other organizations; or other experiences. Each director brings a diverse perspective to the Boards. Set forth below is a brief discussion of the specific experience, qualifications, attributes, or skills of each director that led to the conclusion that he or she should serve as a director.

Edward C. Bernard has been an inside director, and Chairman of the Board, of all the Price Funds for the past 8 years. Mr. Bernard has more than 25 years of experience in the investment management industry, all of which have been with T. Rowe Price. In addition to his responsibilities with T. Rowe Price and the Price

16


Funds, Mr. Bernard served as chairman (from 2009 to 2011) and is currently the vice chairman of the board of governors of the Investment Company Institute, the national trade association for the mutual fund industry.

William R. Brody has been an independent director of the Price Funds for the past 5 years. Dr. Brody has substantial experience in the public health and research fields, as well as academia. He previously served as President of the Johns Hopkins University, as well as on the boards of John Hopkins University, Johns Hopkins Health System, Salk Institute for Biological Studies, IBM, and Novartis. He has also served on the boards of a number of other private companies and non-profit entities, including Kool Smiles, Novamed, Stanford University, and the Commonwealth Fund, which funds health services research.

Anthony W. Deering has been an independent director of the Price Funds for more than 30 years. He currently serves as the Lead Independent Director and was a member of the Joint Audit Committee until September 2014. Mr. Deering brings a wealth of financial services and investment management experience to the Boards. He is the former chair and chief executive officer of the Rouse Company and has also served on the boards of a number of public companies, including Deutsche Bank North America, Vornado Realty Trust, Brixmor Real Estate Investment Trust, Mercantile Bank, and Under Armour. He has also served on the boards of a number of private companies and non-profit entities, including the Investment Company Institute, Baltimore Museum of Art, Parks & People Foundation, The Rouse Company Foundation, and The Charlesmead Foundation among others.

Donald W. Dick, Jr. has been an independent director of the Price Funds for more than 30 years. He has significant investment and business experience from serving as a principal in a private equity firm and has previously served on the boards of manufacturing, construction, publishing, and advertising companies in the U.S. and Europe.

Bruce W. Duncan has substantial experience in the fields of commercial real estate and property management. He currently serves as chief executive officer and director of First Industrial Realty Trust and has held a variety of senior roles and board positions with Starwood Hotels & Resorts. He has been an independent director of the Price Funds since October 2013 and, in September 2014, he became a member of the Joint Audit Committee.

Robert J. Gerrard, Jr. has been an independent director of certain Price Funds since 2012 (and all Price Funds since October 2013), and currently serves as a member of the Joint Audit Committee. He has substantial legal and business experience in the industries relating to communications and interactive data services. He has served on the board and compensation committee for Syniverse Holdings and as general counsel to Scripps Networks.

Michael C. Gitlin had been an inside director of the domestic fixed income Price Funds since 2010, but he resigned from T. Rowe Price and as a director of the Price Funds effective January 23, 2015. He joined T. Rowe Price in 2007, where he initially served as the Global Head of Trading until becoming the Director of Fixed Income in 2009. Prior to joining T. Rowe Price, he held several roles in the securities industry, including Head of U.S. Equity Sales at Citigroup Global Markets. On February 3, 2015, Edward A. Wiese was elected to replace Mr. Gitlin as an inside director of the domestic fixed income Price Funds.

Karen N. Horn has been an independent director of the Price Funds for more than 10 years. Ms. Horn has substantial experience in the financial services industry and the arts. She is a limited partner and senior managing director of Brock Capital Group, and has served on the boards of a number of public companies, including Eli Lilly, Simon Property Group, the Federal National Mortgage Association, and Norfolk Southern. She has also served on the boards of a number of private companies and non-profit entities, including the National Bureau of Economic Research, Council on Foreign Relations, and the Florence Griswold Museum.

Paul F. McBride has served in various management and senior leadership roles with the Black & Decker Corporation and General Electric Company. He led businesses in the materials, industrial, and consumer durable segments. He also has significant global experience. He has served on the boards of a number of private and non-profit entities, including Dunbar Armored, Vizzia Technologies, Gilman School, and Living Classrooms Foundation. He has been an independent director of the Price Funds since October 2013, and in September 2014, he became a member of the Joint Audit Committee.

17


Brian C. Rogers has been an inside director of the domestic equity and international Price Funds for more than 20 years. Mr. Rogers has served in a variety of senior leadership roles since joining T. Rowe Price in 1982. Prior to that, he was employed by Bankers Trust Company. In addition to his various offices held with T. Rowe Price and its affiliates, he is a Chartered Financial Analyst and serves as the portfolio manager of the Equity Income Fund and Equity Income Portfolio, and as a member of the T. Rowe Price Asset Allocation Committee.

Cecilia E. Rouse has been an independent director of certain Price Funds since 2012 (and all Price Funds since October 2013), and became a member of the Joint Audit Committee in September 2014. Dr. Rouse has extensive experience in the fields of higher education and economic research. She has served in a variety of roles at Princeton University, including as a dean, professor, and leader of economic research. She has also served on the board of MDRC, a non-profit education and social policy organization dedicated to improving programs and policies that affect the poor, and as a member of numerous entities, including the American Economic Association, National Bureau of Economic Research, National Academy of Education, and the Association of Public Policy and Management Policy Council.

John G. Schreiber has been an independent director of the Price Funds for more than 20 years and currently serves as a member of the Joint Audit Committee. He has significant experience investing in real estate transactions and brings substantial financial services and investment management experience to the boards. He is the President of Centaur Capital Partners, Inc. and is a Partner and Co-Founder of Blackstone Real Estate Advisors. He previously served as chairman and chief executive officer of JMB Urban Development Co. and Executive Vice President of JMB Realty Corporation. Mr. Schreiber currently serves on the boards of JMB Realty Corporation, Brixmor Shopping Centers, Hilton Worldwide, Blackstone Mortgage Trust, and Hudson Pacific Properties, and is a past board member of Urban Shopping Centers, Inc., Host Hotels & Resorts, Inc., The Rouse Company, General Growth Properties, and AMLI Residential Properties Trust.

Mark R. Tercek has been an independent director of the Price Funds for the past 5 years and served as chairman of the Joint Audit Committee until September 2014. He brings substantial financial services experience to the boards. He was a managing director of Goldman Sachs and is currently president and chief executive officer of The Nature Conservancy.

Edward A. Wiese was elected as an inside director of the domestic fixed income Price Funds on February 3, 2015, replacing Michael C. Gitlin. Mr. Wiese is a Chartered Financial Analyst with over 30 years of investment experience, all of which have been with T. Rowe Price. He currently serves as the Director of Fixed Income for T. Rowe Price and as the Chairperson of the T. Rowe Price Fixed Income Steering Committee, as well as a portfolio manager for various short-term bond and low duration domestic bond strategies.

In addition, the following tables provide biographical information for the directors, along with their principal occupations and any directorships they have held of public companies and other investment companies during the past five years.

Independent Directors(a)

   

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

Principal Occupation(s)
During Past 5 Years

Directorships
of Public Companies and Other Investment Companies During Past 5 Years

William R. Brody, M.D., Ph.D.

1944

165 portfolios

President and Trustee, Salk Institute for Biological Studies (2009 to present); Director, BioMed Realty Trust (2013 to present)

Novartis, Inc. (2009 to 2014); IBM (2007 to present)

18


   

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

Principal Occupation(s)
During Past 5 Years

Directorships
of Public Companies and Other Investment Companies During Past 5 Years

Anthony W. Deering

1945

165 portfolios

Chairman, Exeter Capital, LLC, a private investment firm (2004 to present); Director, Brixmor Real Estate Investment Trust (2012 to present); Director and Advisory Board Member, Deutsche Bank North America (2004 to present)

Under Armour (2008 to present); Brixmor Real Estate Investment Trust (2012 to present); Vornado Real Estate Investment Trust (2004 to 2012); Deutsche Bank North America (2004 to present)

Donald W. Dick, Jr.

1943

165 portfolios

Principal, EuroCapital Partners, LLC, an acquisition and management advisory firm (1995 to present)

None

Bruce W. Duncan

1951

165 portfolios

President, Chief Executive Officer, and Director, First Industrial Realty Trust, owner and operator of industrial properties (2009 to present); Chairman of the Board (2005 to present) and Director (1999 to present), Starwood Hotels & Resorts, hotel and leisure company

None

Robert J. Gerrard, Jr.

1952

165 portfolios

Chairman of Compensation Committee, Syniverse Holdings, Inc., a provider of wireless voice and data services for telecommunications companies (2008 to 2011); Advisory Board Member, Pipeline Crisis/Winning Strategies, a collaborative working to improve opportunities for young African Americans (1997 to present)

None

Karen N. Horn

1943

165 portfolios

Limited Partner and Senior Managing Director, Brock Capital Group, an advisory and investment banking firm (2004 to present)

Eli Lilly and Company (1987 to present); Simon Property Group (2004 to present); Norfolk Southern (2008 to present)

Paul F. McBride

1956

165 portfolios

Former Company Officer and Senior Vice President, Human Resources and Corporate Initiatives, Black & Decker Corporation (2004 to 2010)

None

Cecilia E. Rouse, Ph.D.

1963

165 portfolios

Dean, Woodrow Wilson School (2012 to present); Professor and Researcher, Princeton University (1992 to present); Director, MDRC, a nonprofit education and social policy research organization (2011 to present); Member of National Academy of Education (2010 to present); Research Associate, National Bureau of Economic Research’s Labor Studies Program (2011 to present); Member of President’s Council of Economic Advisers (2009 to 2011); Chair of Committee on the Status of Minority Groups in the Economic Profession, American Economic Association (2012 to present)

None

19


   

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

Principal Occupation(s)
During Past 5 Years

Directorships
of Public Companies and Other Investment Companies During Past 5 Years

John G. Schreiber

1946

165 portfolios

Owner/President, Centaur Capital Partners, Inc., a real estate investment company (1991 to present); Cofounder and Partner, Blackstone Real Estate Advisors, L.P. (1992 to present); Director, Blackstone Mortgage Trust, a real estate finance company (2012 to present); Director and Chairman of the Board, Brixmor Property Group, Inc. (2013 to present); Director, Hilton Worldwide (2013 to present); Director, Hudson Pacific Properties (2014 to present)

General Growth Properties, Inc. (2010 to 2013)

Mark R. Tercek

1957

165 portfolios

President and Chief Executive Officer, The Nature Conservancy (2008 to present)

None

(a) All information about the independent directors was current as of December 31, 2014, except for the number of portfolios overseen, which is current as of the date of this SAI.

Inside Directors(a)

The following persons are considered inside directors of the funds because they also serve as employees of T. Rowe Price or its affiliates. No more than two inside directors serve as directors of any fund.

The Boards invite nominations from the funds’ investment adviser for persons to serve as inside directors, and the Board reviews and approves these nominations. Each of the current inside directors is a senior executive officer of T. Rowe Price and T. Rowe Price Group, Inc., as well as certain of their affiliates. Mr. Bernard has served as a director of all Price Funds and has been Chairman of the Board for all Price Funds since 2006. Mr. Gitlin had served as a director of certain Price Funds since 2010, but he resigned as director on January 23, 2015. Mr. Rogers has served as director of certain Price Funds since 2006. Mr. Wiese has served as director of certain Price Funds since February 3, 2015, at which point he was elected to succeed Mr. Gitlin. For each fund, the two inside directors serve as members of the fund’s Executive Committee. In addition, specific experience with respect to the inside directors’ occupations and directorships of public companies and other investment companies are set forth in the following table.

   

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

Principal Occupation(s)
During Past 5 Years

Directorships
of Public Companies

Edward C. Bernard

1956

165 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, Director, and President, T. Rowe Price Investment Services, Inc.; Chairman of the Board and Director, T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of the Board, Chief Executive Officer, Director, and President, T. Rowe Price International and T. Rowe Price Trust Company

Chairman of the Board, all funds

None

20


   

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

Principal Occupation(s)
During Past 5 Years

Directorships
of Public Companies

Michael C. Gitlin(b)

1970

0 portfolios

Vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International

President, Multi-Sector Account Portfolios

None

Brian C. Rogers; CFA, CIC

1955

111 portfolios

Chief Investment Officer, Director, and Vice President, T. Rowe Price; Chairman of the Board, Chief Investment Officer, Director, and Vice President, T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company

President, Equity Income Fund and Institutional Equity Funds; Vice President, Personal Strategy Funds, Retirement Funds, Spectrum Funds, and Value Fund

None

Edward A. Wiese; CFA

1959

54 portfolios

Director and Vice President, T. Rowe Price Trust Company; Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International

President, Short-Term Bond Fund and Multi-Sector Account Portfolios; Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, Summit Municipal Funds, Tax-Exempt Money Fund, and Tax-Free Short-Intermediate Fund

None

(a) All information about the inside directors (other than Mr. Wiese) was current as of December 31, 2014 (the information about Mr. Wiese was current as of February 4, 2015), except for the number of portfolios overseen, which is current as of the date of this SAI.

(b) Michael C. Gitlin resigned as director effective January 23, 2015, and Edward A. Wiese was elected to replace him as inside director on February 3, 2015.

Funds-of-Funds Arrangements

The Board is responsible for overseeing the business and affairs of the Funds-of-Funds, which consists of the following: Spectrum Growth Fund, Spectrum Income, and Spectrum International Fund (collectively the “Spectrum Funds”); Retirement 2005 Fund, Retirement 2010 Fund, Retirement 2015 Fund, Retirement 2020 Fund, Retirement 2025 Fund, Retirement 2030 Fund, Retirement 2035 Fund, Retirement 2040 Fund, Retirement 2045 Fund, Retirement 2050 Fund, Retirement 2055 Fund, Retirement 2060 Fund and Retirement Balanced Fund (collectively the “RDFs”); and Target Retirement 2005 Fund, Target Retirement 2010 Fund, Target Retirement 2015 Fund, Target Retirement 2020 Fund, Target Retirement 2025 Fund, Target Retirement 2030 Fund, Target Retirement 2035 Fund, Target Retirement 2040 Fund, Target Retirement 2045 Fund, Target Retirement 2050 Fund, Target Retirement 2055 Fund, and Target Retirement 2060 Fund (collectively the “TRFs”). The Spectrum Funds, RDFs, and TRFs are referred to collectively as “Funds-of-Funds” and each fund individually a “Fund-of-Fund,” and where the policies that apply to both the RDFs and TRFs are identical, the RDFs and TRFs will be referred to collectively as “Retirement Funds.

In exercising their responsibilities, the Boards, among other things, will refer to the policies, conditions, and guidelines included in an Exemptive Application (and accompanying Notice and Order) originally granted by the SEC in connection with the creation and operation of the Spectrum Funds. The RDFs and TRFs rely on this same Exemptive Application and Order because the order was designed to cover any Fund-of-Funds arrangements that operate in a similar manner to the Spectrum Funds.

21


In connection with the Exemptive Order, the various Price Funds in which the Funds-of-Funds invest (collectively, the “underlying Price Funds”) have entered into Special Servicing Agreements with T. Rowe Price and each respective Spectrum Fund, RDF, and/or TRF in which they invest. The Special Servicing Agreements provide that each underlying Price Fund in which a Fund-of-Funds invests will bear its proportionate share of the expenses of that Fund-of-Funds if, and to the extent that, the underlying Price Fund’s savings from the operation of the Fund-of-Funds exceed these expenses. T. Rowe Price has agreed to bear any expenses of each Fund-of-Fund that exceed the estimated savings to each of the underlying Price Funds. As a result, the Funds-of-Funds do not pay an investment management fee and will effectively pay no operating expenses at the Fund-of-Fund level, although shareholders of the Funds-of-Funds will still indirectly bear their proportionate share of the expenses of each underlying Price Fund in which the Fund-of-Funds invests.

A majority of the directors of the Funds-of-Funds are independent of T. Rowe Price and its affiliates. However, the directors and officers of the Funds-of-Funds and certain directors and officers of T. Rowe Price and its affiliates also serve in similar positions with most of the 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 they have structured the Funds-of-Funds to avoid these concerns. However, a situation could conceivably 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 funds and the directors and officers of T. Rowe Price will carefully analyze the situation and take all steps they believe reasonable to minimize and, where possible, eliminate the potential conflict.

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 (or that of the corporation or trust of which the fund is a part).

            
  

Independent Directors

Corporation/Trust

Number of portfolios

Brody

Deering

Dick

Duncan

Gerrard

Horn

McBride

Rouse

Schreiber

Tercek