Bond fund owners and
bond owners losing more than $250,000 to recover their losses on the Internet
WWW
Bond fund owners and bond owners
losing more than $250,000 in their investments due do to brokder
misconduct. Their bonds have become
illiquid or defaulted as a result of the sub-prime crisis. The ratings agencies reduce their ratings
from AAA to junk bond lowsl. The brokers
recomended these bond funds and bonds hedge funds as a "conservative fixed
income investment that can not probably lose money and is insured in the event
that it loses money." These bonds
have devaluated excessively due to the recent news and the run on the
investment banking companies, leaving investors with worthless paper. Some of these investors put the mony in
headge funds that keep trading and reselling papers to third parties causing
additional unreasonable losses. Such
investors, many of whome have retired and depend on these investments, may be
entitled to recover their losses. They
have to contact lawyers, who specialize in this area, and offer free
consultations and no fee if no recovery occurs.
Following are some examples as the Internet WWW (World Wide Web) reports
them:
http://stockam.wordpress.com/2008/03/10/waking-up-to-red-ticks/
No
relief for bulls
It
was bears day out, as they dominated throughout the trading session. After the
Sensex opened with a huge negative gap of over 300 points, unabated selling saw
the index slip below the 16k mark. Sensex closed at the lowest level since
September 18, 2007. The fall could be attributed to a melt down in the
global equity markets. Finally, the 30-share Sensex closed at 15,542 dropping
566 points. The NSE Nifty closed at 4,771 losing 149 points.
http://www.sec.gov/news/digest/06-11.txt
The
Commission's complaint, filed in the U.S. District Court for the District of
Columbia, alleges that, during the period 1997 through April 2001 Gobora
defrauded Merrill Lynch clients in two ways. The first scheme involved
"cherry picking" short term foreign exchange trades, with profitable
trades allocated by Gobora to favored clients, and losing trades given to
unfavored clients. The second scheme involved delaying the execution and
allocation of foreign exchange trades that were prompted by client trades of
foreign securities; if the market moved positively after a position was opened,
Gobora allocated the trade to favored clients, with the original client trading
the foreign exchange at the later, less favorable price. The Merrill Lynch
clients that were hurt by these schemes included several U.S. registered
investment companies.
The
amended complaint alleges, among other things, that the four principals of
Beacon Hill together implemented a fraudulent scheme that resulted in investors
losing more than $300 million. The allegations are that from at least the
beginning of 2002 through October 2002, Beacon Hill and its principals made
material misrepresentations to investors and engaged in other fraudulent
conduct. The misrepresentations concerned the methodology Beacon Hill used for
calculating the net asset values of the hedge funds it managed; the hedging and
trading strategy for the purportedly "market neutral" funds; and the
value and performance of the funds.
http://www.secinfo.com/dqd82.v9.htm
However,
if you cannot afford the risk of losing your entire investment in this
partnership, you should not purchase these partnership interests.
Signature(s)
- do not sign without familiarizing yourself with the information in the
Prospectus, including: (i) the fundamental risks and financial hazards of this
investment, including the risk of losing your entire investment; (ii) that the
Partnership is the first client account to trade in the Atlas Futures Fund
portfolio; (iii) the Partnership's substantial charges; (iv) the Partnership's
highly leveraged trading activities; (v) the lack of liquidity of the Units
including a lock-in period of twelve months; (vi) the existence of actual and
potential conflicts of interest in the structure and operation of the
Partnership; (vii) that Limited Partners may not take part in the management of
the Partnership; and (viii) the tax consequences of the Partnership.
http://www.newagebd.com/2006/jan/03/busi.html
Dhaka
stocks bounce back
STAFF CORRESPONDENT
Dhaka stocks bounced back with
index gaining 19.14 points Monday after a low start of the new year’s trading.
The Chittagong Stock Exchange, however, extended its losing streak on the
second day of 2006.
http://www.collectstocks.com/frofhoinde19.html
Reorganizing
Under Bankruptcy Protection: Early 2000s
LoRe continued the "mainstreaming" of Frederick's that Patterson had
begun, but the financial health of the company soon became the primary concern.
In June 2000 Knightsbridge sold the company to Wilshire Partners, a private
investment firm based in Newport Beach, California, for an undisclosed price.
At this time Frederick's was sagging under the crushing weight of a $70 million
debt load, most of which was a legacy of the Knightsbridge takeover, which was
devised as a leveraged buyout. It was also losing its long-running battle with
Victoria's Secret, whose sales neared the $3 billion mark by 1999--compared
with Frederick's approximate revenues of $145 million. Therefore, Frederick's
filed for Chapter 11 bankruptcy protection in July 2000 and secured new
financing enabling it to maintain operations and continue to revamp its product
lines and stores.
http://www.secinfo.com/dMMAy.tb.9.htm
If
the counterparty of the repurchase agreement defaults and does not repurchase
the underlying security, the Fund might incur a loss if the value of the
underlying security declines, and the Fund might incur disposition costs in
liquidating the underlying security. In addition, if the counterparty becomes
involved in bankruptcy proceedings, the Fund may be delayed or prevented from
obtaining the underlying security for its own purposes. In order to minimize
any such risk, the Fund will only engage in repurchase agreements with
recognized securities dealers and banks determined to present minimal credit
risk by the Adviser, under the direction and supervision of the Board of
Directors.
The
High Yield Bond Fund may invest up to 10% of its total assets in asset-backed
securities. The Everest Fund, Bond Fund, Money Market Fund and Large Cap Growth
Fund may invest without limitation in asset-backed securities whose
characteristics are consistent with the Fund's investment program and are not
further limited below. The credit quality of most asset-backed securities
depends primarily on the credit quality of the assets underlying such
securities, how well the entity issuing the security is insulated from the
credit risk of the originator of the debt obligations or any other affiliated
entities and the amount and quality of any credit support provided to the
securities. The rate of principal payment on asset-backed securities generally
depends on the rate of principal payments received on the underlying assets
which in turn may be affected by a variety of economic and other factors. As a
result, the yield on any asset-backed security is difficult to predict with
precision and actual yield to maturity may be more or less than the anticipated
yield to maturity. In addition, for asset-backed securities purchased at a
premium, the premium may be lost in the event of early pre-payment which may
result in a loss to the Fund.
http://www.marketwatch.com/tools/quotes/secarticle.asp?&sid=1762933&symb=MGI&guid=4247786&type=1
We
are subject to a number of risks relating to U.S. federal and state regulatory
requirements which could result in material settlements, fines or penalties or
changes in our business operations that may adversely affect our business,
financial condition and results of operations.
In
the United States, the money transfer business is subject to a variety of state
regulations. We are also subject to U.S. federal anti-money laundering laws and
the requirements of the Office of Foreign Assets Control, which prohibit us
from transmitting money to specified countries or on behalf of prohibited
individuals. If we were to inadvertently transmit money on behalf of, or
unknowingly conduct business with, a prohibited individual, we could be
required to pay significant damages, including fines and penalties. The USA
PATRIOT Act mandates several anti-money laundering requirements. Any
intentional or negligent violation of anti-money laundering laws by our
employees could lead to significant fines and/or penalties, and could limit our
ability to conduct business in some jurisdictions. The federal government or
the states may elect to impose additional anti-money laundering requirements.
Changes in laws, regulations or other industry practices and standards may
occur which could increase our compliance and other costs of doing business,
could require significant systems redevelopment, reduce the market for or value
of our products or services or render our products or services less profitable
or obsolete, and could have an adverse effect on our results of operations. If
onerous regulatory requirements were imposed on our agents, they could lead to
a loss of agents, which, in turn, could lead to a loss of retail business.
Failure
to comply with the laws and regulatory requirements of federal and state
regulatory authorities could result in, among other things, revocation of
required licenses or registrations, loss of approved status, termination of
contracts with banks or retail representatives, administrative enforcement actions
|
If
we lose key retail agents in our Global Funds Transfer segment,
...... million from the settlement of a lawsuit brought by Game
Financial Corporation. ... |
Headge Bond Funds losing multi $00,000
lawsuit
http://www.marketwatch.com/tools/quotes/secarticle.asp?&sid=1762933&symb=MGI&guid=4247786&type=1
our
business, financial condition and results of operations.
Our
business has in the past been, and may in the future continue to be, the
subject of class actions, regulatory actions, investigations or other
litigation. The outcome of class action lawsuits, regulatory actions or
investigations is difficult to assess or quantify. Plaintiffs in these types of
lawsuits may seek recovery of very large or indeterminate amounts, and the
magnitude of lawsuits and actions may remain unknown for substantial periods of
time. The cost to defend future lawsuits or investigations may be significant.
There may also be adverse publicity associated with lawsuits and investigations
that could decrease customer acceptance of our services. As a result,
litigation or investigations may adversely affect our business, financial
condition and results of operations.
http://icma.eprospectus.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?sessionId=oMawCP1sZQABS2h&ID=4372364
The state`s geographic
location renders it vulnerable to natural disasters such as hurricanes. The
state of Florida experienced severe hurricanes in mid-August and early
September 2004. Hurricane Charley, a category 4 hurricane, hit the state`s
southwest and central regions in mid-August. Hurricane Frances followed on the
heels of Charley, but was less severe as a category 2 hurricane. A third
hurricane, Hurricane Ivan, a category 3 hurricane, followed Hurricane Frances.
The damage from the hurricanes is estimated at $4 billion. Florida`s
non-reimbursable share of the total cost of the hurricanes is $676 million. The
major portion of the claims from the hurricanes is expected to be handled by
insurance companies and the Federal Emergency Management Agency. In 1996
Florida settled a lawsuit with the tobacco industry in which the state sought
to recover the costs associated with tobacco usage by Flo ridians. The total
amount expected to be collected from the tobacco companies through the
settlement is estimated to be around $13 billion over 25 years. This money will
be used for children`s health coverage, to reimburse the state for smoking
-related medical expenses, and for state enforcement efforts in reducing sales
of tobacco products. As of June 30, 2004, settlement collections of $4.2
billion have been reported by the state.
PAGE
1
<R>
PROSPECTUS
</R>
<R>
MAY
1, 2006
</R>
T.
Rowe Price
Industry-Focused
Equity Funds
A
family of stock funds seeking long-term capital growth by maintaining
industry-focused
portfolios.
The
Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
<R>
|
1 |
|
About
the Funds |
|
|
|
|
Objective,
Strategy, Risks, and Expenses |
1 |
|
|
|
Other
Information About the Funds |
19 |
|
|
|
|
|
|
2 |
|
Information
About Accounts in T. Rowe |
|
|
|
|
Pricing
Shares and Receiving |
24 |
|
|
|
Useful
Information on Distributions and Taxes |
30 |
|
|
|
Transaction
Procedures and |
36 |
|
|
|
Account
Maintenance and Small |
39 |
|
|
|
|
|
|
3 |
|
More
About the Funds |
|
|
|
|
Organization
and Management |
41 |
|
|
|
Understanding
Performance Information |
44 |
|
|
|
Investment
Policies and Practices |
45 |
|
|
|
Disclosure
of Fund Portfolio Information |
51 |
|
|
|
Financial
Highlights |
52 |
|
|
|
|
|
|
4 |
|
Investing
With T. Rowe Price |
|
|
|
|
Account
Requirements |
61 |
|
|
|
Opening
a New Account |
62 |
|
|
|
Purchasing
Additional Shares |
64 |
|
|
|
Exchanging
and Redeeming Shares |
65 |
|
|
|
Rights
Reserved by the Funds |
67 |
|
|
|
Information
About Your Services |
68 |
|
|
|
T.
Rowe Price Brokerage |
70 |
|
|
|
Investment
Information |
71 |
|
|
|
T.
Rowe Price Privacy Policy |
73 |
</R>
PAGE
3
T. Rowe Price
Industry
— Focused Equity
Funds
T. Rowe Price Developing Technologies Fund, Inc.
T. Rowe Price Financial Services
Fund, Inc.
T. Rowe Price Global Technology
Fund, Inc.
T. Rowe Price Health Sciences
Fund, Inc.
T. Rowe Price Media &
Telecommunications Fund, Inc.
T. Rowe Price New Era Fund, Inc.
T. Rowe Price Real Estate Fund,
Inc.
T. Rowe Price Science &
Technology Fund, Inc.
<R>
Founded in 1937
by the late
Thomas
Rowe Price, Jr.,
T. Rowe Price
Associates, Inc.
(T.
Rowe Price), and its affiliates managed $ 269.5 billion for more than nine
million
individual
and institutional
investor
accounts as of
December 31, 2005 . T. Rowe Price is the
funds` investment
manager.
</R>
Mutual fund
shares are not deposits or obligations of, or guaranteed by, any depository
institution. Shares are not insured by the FDIC, Federal Reserve, or any other
government agency, and are subject to investment risks, including possible loss of
the principal amount
invested.
About
the Funds 1
OBJECTIVE STRATEGY
RISKS AND EXPENSES
What
is each fund`s objective?
|
Fund |
Objective |
Expected
risk relative to one another |
|
|
Developing
Technologies |
|
Highest |
|
|
Financial
Services |
Long-term
growth of capital and a modest level of income. |
Higher |
|
|
Global
Technology |
Long-term
capital growth. |
Highest |
|
|
Health
Sciences |
Long-term
capital appreciation. |
Highest |
|
|
Media
& Telecommunications |
Long-term
capital growth through the common stocks of media, technology, and
telecommunications companies . |
Highest |
|
|
New
Era |
Long-term
capital growth primarily through the stocks of natural resource or basic
commodity companies and also selected nonresource growth companies . |
Moderate |
|
|
Real
Estate |
Long-term
growth through a combination of capital appreciation and current income. |
Moderate |
|
|
Science
& Technology |
Long-term
capital appreciation. |
Highest |
|
Table
1 Industry-Focused
Equity Funds Comparison Guide
What
is each fund`s principal investment strategy?
The
essential characteristics of each fund`s investment strategy are summarized
below. While each fund takes a unique approach, the funds share many
strategies. None of the funds have a restriction on market capitaliza tion —
shares outstanding multiplied by share price — although (as described below)
some concentrate assets on a particular market cap range.
Developing
Technologies
Fund
Normally
i nvests at least 80 % of net assets in common stocks of companies we expect to
generate a majority of their revenues from the advancement and use of
developing technologies. Our primary emphasis will be on emerging companies
that are developing new technologies and services with attractive long-term
growth pros pects, in our view. The portfolio may also contain stocks of
companies with more proven records of developing and marketing breakthroughs in
technology.
We
will invest across a broad range of small, medium, and large companies,
although our initial emphasis will
primarily be on emerging technology stocks with higher growth potential than
may be possible with established technology companies.
Stock
selection emphasizes a growth approach based on comprehensive re search that
evaluates a company ` s pros pects for above-average, sustainable earnings
growth.
The
fund may look for opportunities to invest in suitable developing technology
companies through initial public offerings (IPOs). The portfolio may include
companies that are not directly involved in technology research and development
but that should benefit from advances in the field.
Up
to 30% of assets may be invested in foreign stocks of companies in established
and developing countries.
Developing
technology companies . Some of the industries likely to be included in the
portfolio are :
communications
- voice, data, and wireless;
Internet
infrastructure - hardware, software, and networking equipment;
semiconductors
- components and equipment;
computers
- hardware and software; and
e-commerce
(companies doing business through the Internet) and data processing services.
PAGE
5
Financial
Services Fund
Normally
i nvests at least 80 % of net assets in the common stocks of companies in the
financial services industry. May also invest in companies deriving substantial
revenues ( at least 50% ) from conducting business with the industry, such as
providers of financial software .
Stock
selection is based on fundamental, bottom-up analysis that seeks to identify
companies with good appre ciation prospects.
<R>
May
use both growth and value approaches to stock selection. In the growth area,
the manager seeks companies with capable management, attractive business
niches, sound financial and accounting practices, and a demon strated ability
to increase revenues, earnings, and cash flow consistently. In the value area,
the manager will seek companies whose current stock prices appear undervalued
in terms of earnings, projected cash flow, or asset value per share ;
that have growth potential temporarily unrecognized by the market ; or
that may be temporarily out of favor.
</R>
Many
fund holdings are expected to pay a dividend.
Financial
services companies. For purposes of selecting investments, we define the
financial services industry broadly . I t includes (but is not limited to) the
following:
regional
and money - center banks;
insurance
companies;
home,
auto, and other specialty finance companies;
securities
brokerage firms and electronic trading networks;
investment
management firms;
publicly
traded, government-sponsored financial enterprises;
thrift
and savings banks;
financial
conglomerates;
foreign
financial services companies; and
electronic
transaction processors for financial services companies.
Global
Technology Fund
Normally
i nvests at least 80 % of net assets in the common stocks of companies we
expect to generate a majority of their revenues from the development,
advancement, and use of technology. Our primary emphasis is on the common
stocks of what we consider to be leading technology companies around the world.
We will normally seek to invest a minimum of 30% of the portfolio in
established and emerging foreign markets and the balance in the U.S. However,
the amount of the fund invested in foreign securities will vary and could be
substantially less than 30%, depending on the manager`s view of opportunities
overseas versus those in the U.S.
The
growth of the Internet and the widespread availability of communications
services are breaking down regional boundaries. Therefore, we will seek to
invest across a broad range of global enterprises.
Stock
selection generally reflects a growth approach based on intensive research that
assesses a company`s fun damental prospects for above-average earnings.
Holdings
can range from small, unseasoned companies developing new technologies to blue
chip firms with established track records of developing and marketing
technology. Investments may also include companies that should benefit from
technological advances even if they are not directly involved in research and
development.
The
fund may invest in suitable technology companies through initial public offerings
(IPOs).
Global
technology companies. Some of the industries and companies likely to be
included in the portfolio are:
communications
- voice, data, and wireless;
Internet
infrastructure - hardware, software, and networking equipment;
semiconductors
- components and equipment;
computer
- hardware and software;
e-commerce
(companies doing business through the Internet) and data processing services;
and
media
and entertainment.
Health
Sciences Fund
Normally
i nvests at least 80 % of net assets in the common stocks of companies engaged
in the research, devel opment, production, or distribution of products or
services related to health care, medicine, or the life sciences (collectively
termed "health sciences").
While
the fund can invest in companies of any size, the majority of fund assets are
expected to be invested in large- and mid-capitalization companies.
The
fund will use fundamental, bottom-up analysis that seeks to identify high-
quality companies and the most
compelling investment opportunities.
In
general, the fund will follow a growth investment strategy, seeking companies
whose earnings are expected to grow faster than inflation and the economy in
general. When stock valuations seem unusually high, however, a
"value" approach that gives preference to seemingly undervalued
companies may be emphasized.
Health
sciences companies. We divide the health sciences industry into four main
areas:
pharmaceuticals;
health
care services companies;
products
and devices providers; and
biotechnology
firms.
Our
allocation among these four areas will vary depending on the relative potential
we see within each area and the outlook for the overall health sciences sector.
Media
& Telecommunications Fund
Normally
i nvests at least 80% of net assets in the common stocks of media and
telecommunications companies.
Generally,
the fund invests in companies in the large- to mid-capitalization range.
Stock
selection is based on fundamental, bottom-up analysis that seeks to identify
companies with good appre ciation prospects.
May
use both growth and value approaches to stock selection. In the growth area,
the manager seeks companies with capable management, attractive business
niches, sound financial and accounting practices, and a demon strated ability
to increase revenues, earnings, and cash flow consistently. In the value area,
the manager seeks companies whose current stock prices appear undervalued in
terms of earnings, projected cash flow, or asset value per share, that have
growth potential temporarily unrecognized by the market, or whose stock prices
may be temporarily depressed.
<R>
Fund
investments may be in U.S. or non-U.S. companies, and may also include futures
and options as well as other investments in keeping with the fund`s
objective.
</R>
Media
and telecommunications companies. These include companies engaged in any facet
of media and telecommu nications, including:
publishing;
movies;
cable
TV;
telephones;
cellular
services; and
technology
and equipment.
New
Era Fund
Normally
invests a minimum of two-thirds of fund assets in the common stocks of natural
resource companies whose earning s and tangible assets could benefit from
accelerating inflation.
Will
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.
PAGE
7
When
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 with the ability
to expand production and maintain superior exploration programs and production
facilities.
At
least half of fund assets will be invested in U.S. securities, but up to 50% of
total assets may be invested in foreign securities.
Natural
resource companies. The fund`s natural resource holdings typically own,
develop, refine, service, or trans port resources , including:
energy;
metals;
forest
products;
real
estate; and
other
basic commodities.
Real
Estate Fund
Normally
invests at least 80% of net assets in the equity securities of real estate
companies.
Our
definition of real estate companies is broad and includes those that derive at
least 50% of revenues or prof its from, or commit at least 50% of assets to, real
estate activities.
Up
to 20% of fund assets may be invested in companies deriving a substantial
portion of revenues or profits from servicing real estate firms, as well as in
companies unrelated to the real estate business.
The
fund will not own real estate directly.
Stock
selection is based on fundamental, bottom-up analysis that generally seeks to
identify high-quality compa nies with both good appreciation prospects and
income-producing potential.
Factors
considered by the portfolio manager in selecting stocks include one or more of
the following : relative valuation ; free cash flow ; undervalued assets ;
quality and experience of management ; type of real estate owned ; and the
nature of a company`s real estate activities.
<R>
Real
estate companies. The fund is likely to maintain a significant portion of
assets in real estate investment trusts (REITs). REITs pool money to invest in
properties (equity REITs) or mortgages (mortgage REITs). The fund gener ally
invests in equity REITs. Other investments in the real estate industry
may include:
</R>
real
estate operating companies, brokers, developers, and builders of residential,
commercial, and industrial properties;
property
management firms;
finance,
mortgage, and mortgage servicing firms;
construction
supply and equipment manufacturing companies; and
firms
dependent on real estate holdings for revenues and profits, including lodging,
leisure, timber, mining, and agriculture companies.
Science
& Technology Fund
Normally
i nvests at least 80 % of net assets in the common stocks of companies expected
to benefit from the development, advancement, and use of science and /or
technology.
Holdings
can range from small , unseasoned companies developing new technologies to blue
chip firms with established track records of developing and marketing
technology.
May
also invest in companies that should benefit from technological advances even
if they are not directly involved in research and development.
Stock
selection generally reflects a growth approach based on intensive research that
assesses a company`s fun damental prospects for above-average earnings.
The
fund may invest in suitable technology companies through initial public
offerings (IPOs).
<R>
Science
and technology companies. Some of the companies likely to be included in
the portfolio operate in such industries as :
</R>
electronics,
including hardware, software, and components;
communications;
e-commerce
(companies doing business through the Internet);
information
services;
media;
life
sciences and health care;
environmental
services;
chemicals
and synthetic materials; and
defense
and aerospace.
PAGE
9
All
funds
In
pursuing its investment objective, each fund`s management has the discretion to
purchase some securities that do not meet its normal investment criteria, as
described above, when it perceives an unusual opportunity for gain. These
special situations might arise when the fund`s management believes a security
could increase in value for a variety of reasons , including a change in
management, an extraordinary corporate event, or a temporary imbalance in the
supply of or demand for the securities.
<R>
While
most assets will be invested in U.S. common stocks (except as noted above
for the Global Technology and Media & Telecommunications Funds)
, other securities may also be purchased, including foreign stocks, futures, and
options, in keeping with fund objectives.
</R>
Securities
may be sold for a variety of reasons, such as to secure gains, limit losses, or
redeploy assets into more promising opportunities.
<R>
Certain
i
nvestment restrictions, such as a required minimum or maximum investment in
a particular type of security, are measured at the time each fund
purchases a security. The status, market value, maturity, credit qual ity,
or other characteristics of each fund`s securities may change after they are
purchased, and this may cause the amount of each fund`s assets invested
in such securities to exceed the stated maximum restriction or fall below the
stated minimum restriction. If this occurs, it would not be considered a
violation of the investment restric tion. However, purchases by
the fund during the time it is above or below the stated percentage restriction
would be made in compliance with applicable restrictions.
</R>
For
details about each fund`s investment program, please see the Investment
Policies and Practices section.
What
are the main risks of investing in the funds?
As
with all equity funds, each 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 or economic
developments here or abroad, changes in investor psychology, or heavy
institutional selling. The pros pects for an industry or company may
deteriorate because of a variety of factors, including disappointing earnings
or changes in the competitive environment. In addition, our assessment of
companies held in the funds may prove incorrect, resulting in losses or poor
performance even in a rising market. Finally, each fund`s investment approach
could fall out of favor with the investing public, resulting in lagging
performance versus other types of stock funds.
The
funds are exposed to additional risks, such as those associated with the
qualities of the industries they invest in, that could adversely affect their
share prices. These risks are summarized as follows.
Developing
Technologies
Fund
An
investment in the fund entails substantial risk. Technology
stocks are particular ly volatile and subject to greater price swings, up and
down, than the broad market. Therefore, the prospects for superior gains are
balanced by the possibility of above-average losses.
It
is possible that companies whose products and services first appear promising
may not succeed over the long term; they may succumb to intense competition or
could quickly become obsolete in a rapidly developing mar ketplace.
Earnings
projections for developing companies that are not met can result in sharp price
declines. This is true even in a generally rising stock market environment.
A
portfolio focused primarily on these types of stocks is likely to be much more
volatile than one with broader diversification that includes investments in
diverse economic sectors. These risks are increased by significant exposure to
smaller, unseasoned (those with less than a three-year operating history), and
newly public compa nies. These companies may not have established products,
experienced management, or an earnings history , and their stocks may lack
liquidity .
<R>
Foreign
stock holdings may lose value because of declining foreign currencies ,
political instability, economic decline, illiquid markets, and governmental
interference associated with various foreign markets, especially developing one
s.
</R>
Financial
Services Fund
Since
the fund will be concentrated in the financial services industry, it will be
less diversified than stock funds investing in a broader range of industries
and, therefore, could experience significant volatility. Generally, the fund
represents greater potential risk than a more diversified fund, although the
dividends paid by financial ser vices companies moderate this risk to some
extent.
Financial
services companies may be hurt when interest rates rise sharply, although not
all companies are affected equally. The stocks may also be vulnerable to
rapidly rising inflation.
Many
companies in this field can possess growth characteristics, but the industry is
not generally perceived to be dynamic or aggressive, which could dampen fund
performance compared with more aggressive funds.
The
fund`s investments in growth stocks could result in greater volatility because
of the generally higher valua tions of these stocks. The fund`s use of the
value approach carries the risks that the market will not recognize a
security`s intrinsic value for a long time or that a stock judged to be
undervalued may actually be appropriately priced.
Global
Technology Fund
Since
this fund is focused on technology industries, it is less diversified than stock
funds investing in a broader range of industries and, therefore, could
experience significant volatility.
Technology
stocks historically have experienced unusually wide price swings, both up and
down. The potential for wide variation in performance reflects the special
risks common to companies in the rapidly changing field of technology. For
example, products or services that at first appear promising may not prove
commercially suc cessful or may become obsolete quickly. Earnings
disappointments and intense competition for market share can result in sharp
price declines.
The
level of risk will rise to the extent that the fund has significant exposure to
smaller, unseasoned (those with less than a three-year operating history), and
newly public companies. These companies may not have estab lished products,
experienced management, or an earnings history, and their stocks may lack
liquidity and be very volatile.
Since
the fund can invest a sizable portion of its assets in foreign securities, it
will be subject to the risk that some holdings will lose value because of
declining foreign currencies, political instability, economic decline, illiquid
markets, and governmental interference associated with various foreign markets,
especially developing ones.
Health
Sciences Fund
Since
this fund is concentrated in the health sciences industry, it is less
diversified than stock funds investing in a broader range of industries and,
therefore, could experience significant volatility. It may invest a
considerable portion of assets in companies in the same business, such as
pharmaceuticals, or in related businesses, such as hospital management and
managed care.
Developments
that could adversely affect the fund`s share price include: i ncreased
competition withi n the health care industry , chang es in legislation and
government regulation, reductions in government funding , p roduct lia bility
or other litigation , and the obsolescence of popular products .
Growth
stocks can have steep declines if their earnings disappoint investors. The
value approach carries the risk that the market will not recognize a security`s
intrinsic value for a long time or that a stock judged to be under valued may
actually be appropriately priced.
The
level of risk will be increased to the extent that the fund has significant
exposure to smaller or unseasoned companies (those with less than a three-year
operating history) , which may not have established products or more
experienced managemen t.
Media
& Telecommunications Fund
Since
the fund is focused on the media and telecommunications industries, it is less
diversified than stock funds investing in a broader range of industries and,
therefore, could experience significant volatility .
Companies
in these industries are subject to the risks of rapid obsolescence, lack of
investor or consumer accep tance, lack of standardization or compatibility with
existing technologies, an unfavorable regulatory environ ment, intense
competition, and a dependency on patent and copyright protection. Likewise, if
the portfolio has
PAGE
11
substantial
exposure to mid-cap companies, it would be subject to the greater volatility of
those stocks com pared with larger companies .
Growth
stocks can have steep declines if their earnings disappoint investors. The
value approach carries the risk that the market will not recognize a security`s
intrinsic value for a long time or that a stock judged to be under valued may
actually be appropriately priced.
<R>
Foreign
stock holdings may lose value because of declining foreign currencies,
political instability, economic decline, illiquid markets, and governmental
interference associated with various foreign markets, especially developing
ones.
</R>
New
Era Fund
The
fund is less diversified than most stock funds and could therefore experience
sharp price declines when con ditions 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 are
influenced by interest rates and other factors.
<R>
The
fund`s investments in foreign securities, or even in U.S. companies with significant
overseas investments may lose value because of declining foreign
currencies or adverse political or economic events overseas . Currency
risks may be somewhat reduced because many commodities markets are dollar
based, but exposure to foreign political and economic risk is heightened by
investments in companies with operations in emerging markets.
</R>
Real
Estate Fund
The
fund is concentrated in the real estate industry and, as a result, is less
diversified than stock funds investing in a broader range of industries.
Therefore, its price could fall in value when trends are perceived as
unfavorable for the real estate industry, although the income offered by some
real estate companies may help moderate this risk. For example, changes in the
tax laws, overbuilding, environmental issues, the quality of property manage
ment (in the case of REITs), and other factors could hurt the fund.
Real
estate is affected by general economic conditions. When growth is slowing,
demand for property decreases and prices may decline. Rising interest rates,
which drive up mortgage and financing costs, can restrain con struction and
buying and selling activity and may reduce the appeal of real estate
investments.
If
the portfolio has substantial exposure to small companies, it would be subject
to the greater volatility of small- cap stocks.
Science
& Technology Fund
Companies
in the rapidly changing fields of science and technology often face unusually
high price volatility, in terms of both gains and losses. Products or services
that at first appear promising may not prove commercially successful or may
become obsolete quickly. Earnings disappointments and intense competition for
market share can result in sharp price declines. A portfolio focused primarily
on these stocks is therefore likely to be much more volatile than one with
broader diversification that invest s in more sectors of the economy .
The
level of risk will rise to the extent that the fund has significant exposure to
smaller , unseasoned (those with less than a three-year operating history) ,
and newly public companies. T hese companies may not have estab lished products
, experienced management , or an earnings history , and their stocks may lack liquidity
and be very volatile .
All
funds
<R>
Foreign
stock holdings may lose value because of declining foreign currencies or
adverse political or economic events overseas. Investments in futures and
options, if any, are subject to additional volatility and potential losses.
</R>
As
with any mutual fund, there can be no guarantee the funds will achieve their
objectives.
Each
fund`s share price may decline , so when you sell your shares, you may lose money .
How
can I tell which fund is most appropriate for me?
Consider
your investment goals, your time horizon for achieving them, and your tolerance
for risk. If you can accept the risks of investing in a single industry, one or
more of the following may be an appropriate way to incorporate additional
exposure to a particular industry into a diversified portfolio :
Developing
Technologies Fund could be an appropriate part of your overall investment
strategy if you seek a very aggressive approach to capital growth through
investments in companies involved with newer, developing technologies and can
accept the potential for extreme volatility.
Financial
Services Fund could be an appropriate part of your overall investment strategy
if you seek the potential for significant capital growth and wish to
participate in the growth prospects of the financial services sector.
Global
Technology Fund could be an appropriate part of your overall investment
strategy if you seek an aggressive approach to capital growth through
investment in worldwide technology stocks and can accept the potential for
above-average price fluctuations.
Health
Sciences Fund could be an appropriate part of your overall investment strategy
if you seek an aggressive approach to capital growth through investment in
health sciences stocks and can accept the potential for above- average price
fluctuations.
Media
& Telecommunications Fund could be an appropriate part of your overall
investment strategy if you are willing to accept the risks of investing in a
limited group of industries in pursuit of long-term capital growth.
New
Era Fund could be an appropriate part of your overall investment strategy 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.
Real
Estate Fund could be an appropriate part of your overall investment strategy if
you are willing to accept the risks of investing in this industry in an effort
to achieve long-term capital growth and income.
Science
& Technology Fund could be an appropriate part of your overall investment
strategy if you seek an aggressive approach to capital growth through
investment in science and technology stocks and can accept the potential for
above-average price fluctuations.
The
fund or funds you select should not represent your complete investment program
or be used for short-term
trading
purposes.
Each
fund can be used in both regular and tax-deferred accounts, such as IRAs.
Equity
investors should have a long-term investment horizon and be willing to wait out
bear markets.
How
has each fund performed in the past?
The
bar charts showing calendar year returns and the average annual total return s
table indicate risk by illustrat ing how much returns can differ from one year
to the next and how fund performance compares with that of a comparable market
index. Fund past returns (before and after taxes) are not necessarily an
indication of future performance.
The
funds can also experience short-term performance swings, as shown by the best
and worst calendar quarter returns during the years depicted .
In
addition, the average annual total return s table shows hypothetical after-tax
returns to suggest how taxes paid by the shareholder may influence returns.
Actual after-tax returns depend on each investor`s situation and may differ
from those shown. After-tax returns are not relevant if the shares are held in
a tax-deferred account, such as a 401(k) or IRA. During periods of fund losses,
the post-liquidation after-tax return may exceed the fund`s other returns
because the loss generates a tax benefit that is factored into the result.
PAGE
13
|
|
|
|
|
|
|
The fund began as the closed-end New Age
Media Fund
and
converted to open-end status on July 25, 1997, operating under a different
expense structure. |
|
|
|
|
<R>
Table 2 Average Annual Total Returns
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Developing
Technologies Fund |
|
|
|
|
||||
|
Returns
before taxes |
3.78
% |
-9.24 |
-14.12
% |
8/31/00 |
|
|||
|
Returns
after taxes on distributions |
3.78 |
-9.24 |
-14.19 |
|
|
|||
|
Returns
after taxes on distributions and sale of fund shares |
2.46 |
-7.61 |
-11.33 |
|
|
|||
|
S
&P 500 Index |
4.91 |
0.54 |
-2.02 |
|
|
|||
|
Lipper
Science & Technology Funds Index |
5.37 |
-8.68 |
-16.89 |
|
|
|||
|
Financial
Services Fund |
|
|
|
|
||||
|
Returns
before taxes |
5.10 |
7.00 |
14.46 |
9/30/96 |
|
|||
|
Returns
after taxes on distributions |
2.79 |
5.71 |
13.15 |
|
|
|||
|
Returns
after taxes on distributions and sale of fund shares |
6.35 |
5.73 |
12.44 |
|
|
|||
|
S&P
500 Index |
4.91 |
0.54 |
8.35 |
|
|
|||
|
Lipper
Financial Services Funds Index |
5.93 |
5.50 |
11.68 |
|
|
|||
|
Global
Technology Fund |
|
|
|
|
||||
|
Returns
before taxes |
10.91 |
-3.87 |
-8.98 |
9/29/00 |
|
|||
|
Returns
after taxes on distributions |
10.91 |
-3.87 |
-8.98 |
|
|
|||
|
Returns
after taxes on distributions and sale of fund shares |
7.09 |
-3.25 |
-7.38 |
|
|
|||
|
MSCI
AC World Index - Information Technology |
7.05 |
-5.98 |
-11.93 |
|
|
|||
|
Health
Sciences Fund |
|
|
|
|
||||
|
Returns
before taxes |
13.53 |
4.21 |
14.10 |
12/29/95 |
|
|||
|
Returns
after taxes on distributions |
12.68 |
3.93 |
12.83 |
|
|
|||
|
Returns
after taxes on distributions and sale of fund shares |
9.70 |
3.52 |
11.92 |
|
|
|||
|
S&P
500 Index |
4.91 |
0.54 |
9.07 |
|
|
|||
|
Lipper
Health/ Biotechnology Funds Index |
11.48 |
1.44 |
11.32
a |
|
|
|||
|
Media
& Telecommunications Fund |
|
|
|
|
||||
|
Returns
before taxes |
18.15 |
9.18 |
14.73 |
10/13/93 |
|
|||
|
Returns
after taxes on distributions |
18.15 |
9.18 |
12.47 |
|
|
|||
|
Returns
after taxes on distributions and sale of fund shares |
11.80 |
7.99 |
11.75 |
|
|
|||
|
S&P
500 Index |
4.91 |
0.54 |
9.07 |
|
|
|||
|
Lipper
Telecommunications Funds Average |
6.52 |
-6.73 |
6.87 |
|
|
|||
|
New
Era Fund |
|
|
|
|
||||
|
Returns
before taxes |
29.88 |
15.06 |
13.84 |
1/20/69 |
|
|||
|
Returns
after taxes on distributions |
28.64 |
14.25 |
11.93 |
|
|
|||
|
Returns
after taxes on distributions and sale of fund shares |
20.97 |
12.91 |
11.21 |
|
|
|||
|
S
&P 500 Index |
4.91 |
0.54 |
9.07 |
|
|
|||
|
Lipper
Natural Resources Funds Index |
46.41 |
15.18 |
14.80 |
|
|
|||
|
Real
Estate Fund |
|
|
|
|
||||
|
Returns
before taxes |
14.54 |
19.38 |
13.92 |
10/31/97 |
|
|||
|
Returns
after taxes on distributions |
12.79 |
17.49 |
12.08 |
|
|
|||
|
Returns
after taxes on distributions and sale of fund shares |
9.61 |
15.84 |
11.06 |
|
|
|||
|
Dow
Jones Wilshire Real Estate Securities Index |
14.07 |
19.04 |
12.44 |
|
|
|||
|
Lipper
Real Estate Funds Index |
12.27 |
18.36 |
11.40 |
|
|
|||
|
Science
& Technology Fund |
|
|
|
|
||||
|
Returns
before taxes |
2.46 |
-11.26 |
1.87 |
9/30/87 |
|
|||
|
Returns
after taxes on distributions |
2.46 |
-11.26 |
0.44 |
|
|
|||
|
Returns
after taxes on distributions and sale of fund shares |
1.60 |
-9.19 |
1.47 |
|
|
|||
|
S&
P 500 Index |
4.91 |
0.54 |
9.07 |
|
|
|||
|
Lipper
Science & Technology Funds Index |
5.37 |
-8.68 |
5.79 |
|
|
|||
</R>
PAGE
15
Returns
are based on changes in principal value, reinvested dividends , and capital
gain distributions, if any. Returns before taxes do not reflect effects of any
income or capital gains taxes. Taxes are computed using the highest federal
income tax rate. The after-tax returns reflect the rates applicable to ordinary
and qualified dividends and capital gain s effective in 2003 . The returns do
not reflect the impact of state and local taxes. Returns after taxes on
distributions reflect the taxed return on the payment of dividends and capital
gains. Returns after taxes on distributions and sale of fund shares assume the
shares were sold at period - end and, therefore, are also adjusted for any
capital gains or losses incurred by the shareholder. Market indexes do not
include expenses, which are deducted from fund returns, or taxes.
S&P 500 Index tracks the
stocks of 500 U.S. companies.
MSCI AC World Index — Information
Technology tracks the performance of information technology stocks held in the
MSCI AC World Index, which is a capitaliza tion-weighted index of stocks from
developed and emerging markets worldwide.
Dow Jones Wilshire Real
Estate Securities Index is a market capitalization-weighted index comp o sed of publicly
traded real estate investment trusts and real estate operating companies.
a Since 12/31/95.
What fees and expenses will I
pay?
<R>
The funds are 100% no load. The
Developing Technologies and Real Estate Fund s charge a 1.00% redemption fee,
payable to the fund, on shares purchased and held for 90 days or
less . There are no other fees or charges to buy or sell fund shares,
reinvest dividends, or exchange into other T. Rowe Price funds. There
are no 12b 1 fees.
</R>
<R> Table 3
Fees and Expenses of the Funds*
|
|
|
|
|
|
|
|
|
|
|||||
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|
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|||||
|
|
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|
|
|
|
|
||||||
|
Developing
Technologies |
1.00 % |
0.91 % |
0.86 % |
1.77 % |
0.27 % b |
1.50 % b |
|
|
|||||
|
Financial
Services |
— |
0.66 |
0.27 |
0.93 |
— |
— |
|
|
|||||
|
Global
Technology |
— |
0.76 |
0.74 |
1.50 b |
— |
— |
|
|
|||||
|
Health
Sciences |
— |
0.66 |
0.25 |
0.91 |
— |
— |
|
|
|||||
|
Media
& Telecommunications |
— |
0.66 |
0.26 |
0.92 |
— |
— |
|
|
|||||
|
New
Era |
— |
0.56 |
0.12 |
0.68 |
— |
— |
|
|
|||||
|
Real
Estate |
1.00 |
0.61 |
0.24 |
0.85 |
— |
— |
|
|
|||||
|
Science
& Technology |
— |
0.66 |
0.34 |
1.00 |
— |
— |
|
|
|||||
</R>
PAGE
17
* Redemption proceeds of less than
$5,000 sent by wire are subject to a $5 fee paid to the fund. Accounts with
less than a $2,000 balance (with certain excep tions) are subject to a $10 fee.
See Account Maintenance and Small Account Fees.
<R>
a On shares purchased and held for 90 days or less
(details under Contingent Redemption Fee in Pricing Shares and Receiving Sale
Proceeds)
.
</R>
<R>
b Effective May 1, 2005 , T. Rowe Price has
contractually obligated itself to waive fees and bear any expenses through
April 30, 200
7 , that would
cause the
ratio
of expenses to average net assets to exceed 1.50%. Fees waived or expenses paid
or assumed under this agreement are subject to reimbursement to T. Rowe Price by the
fund whenever the fund`s expense ratio is below 1.50% . H owever, no
reimbursement will be made after April 30, 200 9 , or three years after the waiver
or payment, whichever is sooner, or if it would result in the expense
ratio exceeding 1.50%. The fund operated under a previous expense limitation for
which T.
Rowe Price may be
reimbursed.
</R>
<R>
Example. The following
table gives you an idea of how expense ratios may translate into dollars and
helps you to compare the cost of investing in these funds with that of other
mutual funds. Although your actual costs may be higher or lower, the table
shows how much you would pay if operating expenses remain the same, the expense
limitation currently in place is not renewed (if applicable), you invest
$10,000, earn a 5% annual return, hold the investment for the following periods
, and then redeem:
</R>
<R>
|
|
|
|
|
|
|
|
Developing
Technologies |
$
153 |
$
522 |
$
925 |
$
2,054 |
|
|
Financial
Services |
95 |
296 |
515 |
1,143 |
|
|
Global
Technology |
153 |
474 |
818 |
1,791 |
|
|
Health
Sciences |
93 |
290 |
504 |
1,120 |
|
|
Media
& Telecommunications |
94 |
293 |
509 |
1,131 |
|
|
New
Era |
69 |
218 |
379 |
847 |
|
|
Real
Estate |
87 |
271 |
471 |
1,049 |
|
|
Science
& Technology |
102 |
318 |
552 |
1,225 |
|
</R>
OTHER ).&/2-!4)/. ABOUT THE
FUNDS
What are some of the funds`
potential rewards?
Developing Technologies Fund
<R>
The fund`s program reflects the view of
T. Rowe Price that companies benefiting from developing technologies offer
significant opportunities for outstanding long-term growth. As the information
revolution continues to overshadow the industrial revolution, new companies are
emerging that will become the blue chip technology leaders of the
future. Companies offering innovative new products and services in a dynamic
marketplace driven by entrepreneurial energy can enjoy exceptional growth,
which is often reflected in rapidly rising stock prices. Of course, the greater
potential for growth is accompanied by a greater potential for loss and sharp
stock price volatility.
</R>
Financial Services Fund
The fund`s investment program
reflects the view of T. Rowe Price that several trends in financial
services offer opportunities for significant long-term capital appreciation.
For investors who currently have a broad exposure to equities, the fund
provides a way to focus on an area of the economy undergoing substantial change
as well as
rapid growth in a number of
fields, such as asset management. The potential rewards of investing in such a
focused fund include higher returns than the overall market. However, the fund
also has the potential for greater losses than the overall market if these
sectors do not perform well.
Global Technology Fund
The fund`s program reflects the
view of T. Rowe Price that companies benefiting from rapid advances in
technol ogy throughout the world offer significant opportunities for superior
long-term growth. Leading global compa nies providing
cutting-edge products and services enjoy
the potential for exceptional growth, which is often reflected in rap idly
rising stock prices.
Health Sciences Fund
<R>
The fund`s program reflects the view of
T. Rowe Price that rapid advances in the health care, medicine, and life
sciences fields offer substantial opportunities for superior long-term capital
appreciation. The health care field is experiencing unprecedented change, and
there have been significant efforts by consumers, corporations, insur ers, and
governments to slow escalating costs. At the same time, the aging of the
American population could result in a higher portion of gross domestic product
being spent on health care and medicine in the future. Industry consolidation,
the shift from medical treatment to prevention, quicker approval of new drugs,
the pos sible restructuring of Medicare/Medicaid, and the prolonging of life
through new technology are major forces transforming health sciences companies.
These factors could present favorable prospects over the long term for
companies that can provide quality products and services at a competitive
price.
</R>
Media & Telecommunications
Fund
T. Rowe Price believes
that trends in the media and telecommunications industries offer opportunities
for signifi cant long-term capital appreciation. For investors who currently
have a broad exposure to equities, the fund pro vides a way to invest in the
media and telecommunications field — an area of the economy undergoing
substantial change with the potential for rapid growth.
The fund may benefit from
companies operating in the following areas:
Media These companies
create, own, and distribute various forms of printed, visual, and audio
content, as well
as
information databases that they sell or lease to others. Examples include
newspaper, magazine, and book publishers, movie and television studios,
advertising agencies, radio and television broadcasters, as well as cable television and
direct satellite broadcast system operators.
Telecommunications Services These companies
own and operate both wired and wireless networks that transport both voice and
data traffic. Examples include incumbent providers of domestic and
international telephone ser vices, regional and long distance operators, new
entrants into the telecom industry including competitive local exchange
carriers, broadband service providers, and data services companies, as well as
cellular wireless opera
tors.
Technology These companies
provide the underlying enabling technologies for the dynamic changes taking
place
in
the media and telecommunications industries. They manufacture hardware,
software, or components or pro vide services used by media and telecommunications products
and services. Examples include telecommunica tions equipment vendors, semiconductor
manufacturers, software developers, hardware suppliers, and information
technology
services
companies.
New Era Fund
The fund is designed to 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.
<R>
Foreign stock markets may offer increasing
opportunities for natural resource-related investments for several rea sons. 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
is 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.
</R>
PAGE
19
Real Estate Fund
The stocks of companies engaged
in the real estate area could provide significant long-term total return. At
differ ent times, the market may favor one type of real estate investment over
another, and the fund`s flexible invest ment charter enables it to seek
opportunities wherever they exist in the industry. Both capital appreciation
(or depreciation) and current income should be important components of total
return, and the contribution made by each at any time will depend on the
composition of the portfolio and market conditions.
Other potential benefits include:
Diversification While the
long-term returns from real estate stocks have been attractive, periods of
strong perfor
mance
have not always coincided with those of the broad market. Therefore, real
estate stocks may provide ben eficial diversification when combined with other
stocks and asset classes in an investment portfolio;
Current income Many real estate
stocks, including REITs, pay relatively high dividends, which could serve to cushion a
portfolio`s overall return in a general market decline; and
Inflation hedge Historically,
real estate has tended to appreciate during times of accelerating inflation.
There
fore,
a fund investing in real estate companies may provide a hedge against
inflation.
Science & Technology Fund
The fund`s program reflects the
view of T. Rowe Price that rapid advances in science and technology
offer substantial opportunities for superior long-term capital appreciation. As
leading-edge products and services gain acceptance, the companies behind them
often enjoy exceptional growth. This growth is often reflected in rising stock
prices. Of course, these stocks can be extremely volatile, as noted earlier in
the risk discussion.
Additional Information regarding
the Real Estate Fund
What is a REIT?
The fund may invest a substantial
portion of its assets in real estate investment trusts or REITs, which are
pooled investment vehicles that typically invest directly in real estate, in
mortgages and loans collateralized by real estate, or in a combination of the
two. "Equity" REITs invest primarily in real estate that produces
income from rentals. "Mortgage" REITs invest primarily in mortgages
and derive their income from interest payments.
The types of properties owned, and
sometimes managed, by REITs include:
|
office buildings |
health care facilities |
|
apartments and condominiums |
manufactured housing |
|
retail properties |
self-storage facilities |
|
industrial and commercial sites |
leisure properties |
|
hotels and resorts |
special use facilities |
REITs usually specialize in a
particular type of property and may concentrate their investments in particular
geo
graphical
areas. For this reason and others,
a fund investing in REITs provides
investors with an efficient, low-cost means of diversifying among various types of property
in different regions.
Important note on tax reporting
for the Real Estate Fund
Distributions from the Real
Estate Fund will not be included in your consolidated 1099-DIV that we send to
you in January of each year. The Real Estate Fund`s distributions will be
reported on a separate 1099-DIV mailed to you in February. The reasons for this
are:
A sizable portion of the dividends
paid by REITs may represent a return of capital. Consequently, a portion of the fund`s
distributions may also represent a return of capital. Return of capital
distributions are not taxable to you, but you must deduct them from the
cost basis of your investment in the fund. Returns of capital are listed as
"nontaxable distributions" on Form 1099 DIV.
REITs typically have not indicated
what proportion of their dividends represent return of capital in time to allow the fund to meet
its January 31 deadline for 1099-DIV reporting. Therefore, to ensure accurate
and complete tax
information,
we will send you a separate 1099-DIV for this fund in February (subject to
approval by the IRS).
Is there other information I can review before
making a decision?
Investment Policies and Practices
in Section 3 discusses various types of portfolio securities the funds may pur
chase as well as types of management practices the funds may use.
With one quick sign - up, you can take
advantage of our Electronic Delivery program and begin to receive updated fund reports and
prospectuses online rather than through the mail. Log on to your account at
troweprice.com for
more
information today.
PAGE
21
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 the T. Rowe Price family of stock, bond, and money market
funds.
0RICING 3HARES AND 2ECEIVING 3ALE
0ROCEEDS
<R>
How and W hen S hares A re P riced
</R>
<R>
The share price (also called "net
asset value" or NAV per share) for all funds except the Japan Fund is
calculated at the close of the New York Stock Exchange, normally 4 p.m. ET,
each day that the exchange is open for business. (See the following section for
information on the Japan Fund.) To calculate the NAV, the fund`s assets are
valued and totaled, liabilities are subtracted, and the balance, called net
assets, is divided by the number of shares outstanding. Market values are used
to price stocks and bonds. Market values represent the prices at which
securities actually trade or evaluations based on the judgment of the fund`s
pricing services. If a market value for a security is not available, the fund
will make a good faith effort to assign a fair value to the security. 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 market funds.
Investments in mutual funds are valued at the closing NAV per share of the
mutual fund on the day of valuation.
</R>
Non-U.S. equity securities are valued on the
basis of the
ir most recent
closing market prices at 4 p.m. ET except under the circumstances described
below
.
Most foreign markets close before 4 p.m . For securities primarily traded in the Far
East, for example, the most recent closing prices may be as much as 15 hours
old at 4
p.m. If a fund determines
that
developments between the close
of the foreign market and 4 p.m. ET will, in its judgment, materially affect
the value of
some
or all of
the
fund`s securities, the fund will adjust the previous closing prices to reflect what it
believes to be the fair value of the securities as of 4 p.m. ET. In deciding whether
to make
these adjustments, the
fund reviews a variety of factors, including developments in foreign markets, the performance
of U.S. securities
markets
,
and the performance of instruments trading in U.S. markets that represent
foreign
securities
and baskets of foreign securities . A fund may also fair value securities in other
situations, for example,
when
a particular foreign market is closed but the fund is open. The fund uses
outside pricing services to provide it with closing market prices and
information used for adjusting those prices. The fund cannot predict how often it will use
closing prices and how often it will adjust those prices. As a means of
evaluating its fair value process, the fund routinely compares closing
market prices, the next day`s opening prices in the same markets, and adjusted prices.
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
.
<R>
How Y our P urchase, S ale, or E xchange P rice I s D etermined
</R>
If we receive your request in
correct form by 4 p.m. ET, your transaction will be priced at that business
day`s NAV. If we receive it after 4 p.m., it will be priced at the next
business day`s NAV.
We cannot accept orders that
request a particular day or price for your transaction or any other special
conditions.
Fund shares may be purchased
through various third-party intermediaries including banks, brokers, and invest ment advisers.
Where authorized by a fund, orders will be priced at the NAV next computed
after receipt by the
intermediary.
Consult your intermediary to determine when your orders will be priced. The
intermediary may
charge
a fee for its services.
Note: The time at which
transactions and shares are priced and the time until which orders are accepted
may be
changed
in case of an emergency or if the New York Stock Exchange closes at a time
other than 4 p.m. ET.
Japan Fund: Pricing and
Transactions
The Japan Fund`s share price is
calculated at the close of the New York Stock Exchange, normally 4 p.m. ET, on
days when both it and the Tokyo Stock Exchange are open. The fund will not
price shares or process orders on any day when either the New York or Tokyo
Stock Exchange is closed. Orders received on such days will be pro cessed the
next day the fund computes a NAV. As a result , you may experience a delay in
purchasing or redeem ing fund shares.
Exchanges: If you wish to
exchange into the Japan Fund on a day the New York Stock Exchange is open but
the
Tokyo
Stock Exchange is closed, the exchange out of the other T. Rowe Price fund will be
processed on that day,
but
Japan Fund shares will not be purchased until the day the Japan Fund reopens.
If you wish to exchange out of the Japan Fund on a day when the New York Stock
Exchange is open but the Tokyo Stock Exchange is closed, the exchange will
be delayed until the Japan Fund reopens.
<R>
The Tokyo Stock Exchange is scheduled to
be closed on the following days: In 2006 — January 2, 3, and 9; February 11;
March 21; April 29; May 3, 4,
and 5; July 17; September 1 8 and 23; October
9; November 3 and 23;
and Decemb er 2 3. In 2007 — January 2, 3, and 8; February
11; March 21; April 29; May 3, 4, and 5; July 16; September 17
and 23; October 8; November 3 and 23; and December 23. If the Tokyo
Stock Exchange closes on dates not listed, the fund will not be priced on those dates.
</R>
<R>
How Y ou C an R eceive the P roceeds F rom a S ale
</R>
When filling out the New Account
Form, you may wish to give yourself the widest range of options for receiving proceeds from a
sale.
If your request is received by 4
p.m. ET (on a business day) in correct form, proceeds are usually sent on the
next business day. Proceeds can be sent to you by mail or to your bank account
by Automated Clearing House (ACH) transfer or bank wire. ACH is an automated
method of initiating payments from, and receiving payments in, your financial
institution account. Proceeds sent by ACH transfer are usually credited the
second business day after the sale. Proceeds sent by bank wire should be
credited to your account the first business day after the sale.
Exception: Under certain
circumstances and when deemed to be in a fund`s best interest, your proceeds
may not
be
sent for up to seven calendar days after we receive your redemption request.
If for some reason we cannot
accept your request to sell shares, we will contact you.
Contingent Redemption Fee
Short-term trading can disrupt a
fund`s investment program and create additional costs for long-term sharehold
ers. For these reasons, certain T. Rowe Price funds, listed below,
assess a fee on redemptions (including exchanges) of fund shares held for less
than the period shown, which reduces the proceeds from such redemp tions by the
amounts indicated:
|
|
|
|
|
||
|
|
|
|
|
|
|
|
Developing
Technologies |
1% |
90 days /3 months |
|
|
|
|
Diversified
Small-Cap Growth |
1% |
90 days /3 months |
|
|
|
|
Emerging
Europe & Mediterranean |
2 % |
90 days /3 months |
|
|
|
|
Emerging
Markets Bond |
2% |
90 days /3 months |
|
|
|
|
Emerging
Markets Stock |
2 % |
90 days /3 months |
|
|
|
|
Equity
Index 500 |
0 .5 % |
90 days /3 months |
|
|
|
|
European
Stock |
2% |
90 days /3 months |
|
|
|
|
Extended
Equity Market Index |
0 .5 % |
90 days /3 months |
|
|
|
|
Global
Stock |
2% |
90 days /3 months |
|
|
|
|
High
Yield |
1% |
90 days /3 months |
|
|
|
|
International
Bond |
2% |
90 days /3 months |
|
|
|
|
International
Discovery |
2 % |
90 days /3 months |
|
|
|
|
International
Equity Index |
2 % |
90 days /3 months |
|
|
|
|
International
Growth & Income |
2% |
90 days /3 months |
|
|
|
|
International
Stock |
2% |
90 days /3 months |
|
|
|
|
Japan |
2% |
90 days /3 months |
|
|
|
|
Latin
America |
2 % |
90 days /3 months |
|
|
|
|
New
Asia |
2% |
90 days /3 months |
|
|
|
|
Real
Estate |
1 % |
90 days /3 months |
|
|
|
|
Small-Cap
Value |
1 % |
90 days /3 months |
|
|
|
|
Spectrum
International |
2% |
90 days /3 months |
|
|
|
|
Tax-Efficient
Balanced |
1 % |
1 year |
|
|
|
|
Tax-Efficient
Growth |
1 % |
1 year |
|
|
|
|
Tax-Efficient
Multi-Cap Growth |
1 % |
1 year |
|
|
|
|
Total
Equity Market Index |
0 .5 % |
90 days /3 months |
|
|
|
|
U.S.
Bond Index |
0 .5 % |
90 days /3 months |
|
|
|
PAGE
23
<R>
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 following pages,
a ll 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. R owe Price fund, through a retirement plan for which
T. Rowe Price serves as recordkeeper, or indirectly through an
intermediary, such as a broker, bank, investment adviser, recordkeeper for
retirement plan participants, or any other third party .
</R>
<R>
* Computation of H olding P eriod
</R>
W hen an investor sells shares of
a fund that assesses a redemption fee, T. Rowe Price will use the
"first-in, first- out" (FIFO) 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. A
redemption fee will be charged on shares sold before the end of the required
holding period.
If you purchase shares held
directly with T. Rowe Price, the holding period is three months. For example,
if you
purchase
shares on March 1 and redeem before June 1 , you will be assessed the
redemption fee.
If you purchase shares through a
retirement plan for which T. Rowe Price serves as recordkeeper, the holding period is 90
days.
For
example,
if
you
redee m your shares on
or before the 90th day from the date of purchas e, you will be assessed the redemption
fee
.
<R>
If you purchas e shares through
an intermediary,
consult
your intermediary to determine how the holding period ( 90 days versus
three months)
will
be applied.
</R>
<R>
Transactions N ot S ubject to R edemption F ees
</R>
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:
1. Shares redeemed via a n automated systematic withdrawal
plan
;
2. Shares redeemed through or used to
establish
an
automat
ed ,
nondiscretionary rebalancing or asset alloca tion program , if approved in writing by T. Rowe Price;
3. Shares purchased by the
reinvestment of dividends or capital gain distributions; *
<R>
4. Shares converted from one share class to
another share class of the same fund; *
</R>
<R>
5 . Shares redeemed by a fund ( e.g. , for failure to
meet account minimums or
to
cover various fees
such
as fiduciary fees) ;
</R>
<R>
6 . Shares purchased by rollover and changes of
account registration within the same fund;*
</R>
<R>
7 . Shares redeemed to return an excess
contribution in an IRA account;
</R>
<R>
8 . Shares purchased by a fund-of-fund s product, if
approved in writing by T.
Rowe Price;
</R>
<R>
9 . Shares transferred to T. Rowe Price or a
third
- party
intermediary acting as a service provider when the age of the shares cannot be
determined
systematically ;*
</R>
<R>
1 0 . Shares redeemed in retirement plans or
other products that restrict trading to no more frequently than once per quarter , if approved in
writing by T.
Rowe Price.
</R>
<R>
* Subsequent exchanges of these shares into funds that
assess redemption fees will subject such shares to the fee.
</R>
<R>
Redemption F ees on S hares H eld in R etirement P lans
</R>
<R>
If shares are held in a retirement plan,
generally redemption fees will be assessed only on shares redeemed by exchange
that 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.
</R>
<R>
Omnibus A ccounts
</R>
<R>
If your shares are held through an
intermediary in an omnibus account, T. Rowe Price relies on the intermedi ary
to assess the redemption fee on underlying shareholder accounts. T. Rowe Price
seeks to identify intermedi aries 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.
</R>
<R>
Certain intermediaries may not apply the
exemptions listed above to the redemption fee policy; all redemptions by persons
trading through such intermediaries may be subject to the fee. Certain
intermediaries may exempt transactions not listed above from redemption fees,
if approved by T.
Rowe Price. Persons redeeming
shares
th r ough an
intermediary should check with the ir respective intermediary to determine
which transactions are
subject
to the fees.
</R>
<R>
Implementatio n
</R>
<R>
Recordkeepers for retirement plan
participants who are unable to implement redemption fees due to system lim itations
must either (1) implement short-term trading restrictions approved by T.
Rowe Price until they have the system capabilities to assess the fees
or (2) set forth an implementation plan acceptable to T. Rowe
Price. Any person purchasing shares through a retirement plan recordkeep er
sh ould check with the ir recordkeeper to determine when purchases will be
subject to redemption fees.
</R>
<R>
If you held or purchased shares of the Tax-Efficient
Growth Fund
or
Tax-Efficient Multi-Cap Growth Fund prior to January 1, 2005, these shares are subject to the terms for
holding periods and early
redemption
as set forth in the
prospectu s in effect when
the shares were originally purchased. For example, shares of these funds purchased on
December 31, 2004, would be subject to a two -year holding period and 2%
redemption fee if sold within two year s ; shares of these fund s purchased on
January
3 , 2005, would be subject
to the new
one-year holding period
and a 2% redemption fee if sold within the one-year hold ing period.
</R>
PAGE
25
5SEFUL )NFORMATION ON
$ISTRIBUTIONS AND 4AXES
All net investment income and
realized capital gains are distributed to shareholders.
Dividends and Other Distributions
Dividend and capital gain
distributions are reinvested in additional fund shares in your account unless
you select another option on your New Account Form. Reinvesting distributions
results in compounding , that is, receiving income dividends and capital gain
distributions on a rising number of shares.
Distributions not reinvested are
paid by check or transmitted to your bank account via ACH. If the Post Office cannot deliver
your check, or if your check remains uncashed for six months, the fund reserves
the right to
reinvest
your distribution check in your account at the NAV on the day of the
reinvestment and to reinvest all subsequent distributions in shares of
the fund.
I nterest will not accrue on amounts
represented by uncashed
distribution s or redemption
checks.
The following table provides details
on dividend payments
:
<R> Table 4
Dividend Payment Schedule
|
|
|
|
|
Money market funds |
P urchase s received by T. Rowe
Price by noon ET via wire begin to earn dividends on that day . Other shares
nor mally begin to earn dividends on the business day after payment is
received by T. Rowe Price . |
|
|
|
Declared daily and paid on the first
business day of each month. |
|
|
Bond funds |
Shares normally begin to earn
dividends on the business day after payment is received by T. Rowe Price . |
|
|
|
Declared daily and paid on the first
business day of each month. |
|
|
These stock funds only: |
Declared quarterly, if any, in March,
June, September, and December. |
|
|
Balanced |
Must be a shareholder on the dividend
record date. |
|
|
Dividend Growth |
|
|
|
Equity Income |
|
|
|
Equity Index 500 |
|
|
|
Growth & Income |
|
|
|
Personal Strategy Balanced |
|
|
|
Personal Strategy Income |
|
|
|
Real Estate |
|
|
|
Retirement Funds : |
|
|
|
Retirement Income |
Shares normally begin to earn dividends on the
business
day after
payment is received by T. Rowe Price. |
|
|
|
Paid on the first business day of each month. |
|
|
All others |
Declared annually, if any, generally in December. |
|
|
|
Must be a shareholder on the dividend record date. |
|
|
Tax-Efficient Balanced |
Municipal
Portion |
|
|
|
Shares normally begin to earn
dividends on the business day after payment is received by T. Rowe Price. |
|
|
|
Paid on the last business day of
March, June, Septem ber, and December. |
|
|
|
Equity
Portion |
|
|
|
Declared annually, if any, generally
in December. |
|
|
|
Must be a shareholder on the dividend
record date. |
|
|
Other stock funds |
Declared annually, if any, generally
in December. |
|
|
|
Must be a shareholder on the dividend
record date. |
|
</R>
<R>
Bond or money f und shares will earn
dividends through the date of redemption . S hares redeemed on a Friday or
prior to a holiday (other than wire redemptions for money funds received before
noon ET) will continue to earn dividends until the next business day. Generally,
if you redeem all of your bond or money fund shares at any time during the
month, you will also receive all dividends earned through the date of
redemption in the same check. When you redeem only a portion of your bond or
money fund shares, all dividends accrued on those shares will be reinvested, or
paid in cash, on the next dividend payment date.
</R>
If you purchase and sell your
shares through an intermediary, consult your intermediary to determine when your shares begin
and stop accruing dividends; the information described above may vary.
<R>
Capital G ain P ayments
</R>
If a fund has net capital gains
for the year (after subtracting any capital losses), they are usually declared
and paid in December to shareholders of record on a specified date that month.
If a second distribution is neces sary, it is paid the following year.
Capital gain payments are not
expected
from money market
funds, which are managed to maintain a constant share price.
A capital gain or loss is the
difference between the purchase and sale price of a security.
Tax Information
You will be sent timely
information for your tax filing needs.
If you invest in the fund through
a tax-deferred retirement account, you will not be subject to tax on dividends and
distributions from the fund or the sale of fund shares if those amounts remain
in the tax-deferred account.
If you invest in the fund through
a taxable account,
y ou will generally be
subject to tax when
:
You sell fund shares, including an
exchange from one fund to another.
A fund makes a distribution to
your account.
Additional information about
certain T.
Rowe Price funds
is listed below:
<R>
|
Tax-Free and Municipal Funds |
|
|
Regular monthly dividends (including
those from the state - specific tax-free funds) are expected to be exempt
from federal income taxes. Exemption is not guaranteed, since the fund has
the right under certain conditions to invest in nonexempt securities. You
must report your total tax-free income on IRS Form 1040. The IRS uses this
information to help determine the tax status of any Social Security payments
you may have received dur ing the year. Tax-exempt dividends paid to Social
Security recipients may increase the portion of benefits that is subject to
tax. For state - specific funds, the monthly dividends you receive are
expected to be exempt from state and local income tax. For other funds, a
small portion of your income dividend may be exempt from state and local
income taxes. If the funds invest in certain "private activity"
bonds, shareholders who are subject to the alternative minimum tax (AMT) must
include income generated by those bonds in their AMT calculation. The portion
of the fund`s income dividend that should be included in your AMT calculation,
if any, will be reported to you in January. |
|
|
Tax-Efficient Balanced Fund |
|
|
The fund intends to invest a
sufficient portion of its assets in municipal bonds and notes so that it may
qualify to pay tax-exempt dividends, which will be exempt from federal income
tax. The fund may not always qualify to pay tax-exempt dividends. The amount
of such dividends will be reported to you on your calendar year-end
statement. You must report your total tax-exempt income on IRS Form 1040.
This information is used by the IRS to help determine the tax status of any
Social Security payments you may have received during the year. Tax-exempt
dividends paid to Social Security recipients may increase the portion of
benefits that are subject to tax. A small portion of your income dividend may
also be exempt from state and local income taxes. |
|
|
Tax-Efficient Balanced Fund
(continued) |
|
|
If the fund invests in certain
"private activity" bonds, shareholders who are subject to the AMT must
include income generated by those bonds in their AMT calculation. The portion
of the fund`s income dividends that should be included in your AMT
calculation, if any, will be reported to you in January. |
|
|
Florida Intermediate Tax-Free Fund |
|
|
Florida does not have a state income
tax but does impose an intangibles property tax that applies to shares of
mutual funds. A fund organized as a business trust and invested at least 90%
in Florida municipal obliga tions, U.S. government obligations, and certain
other designated securities on January 1 is exempt from the tax. If a
fund`s portfolio is less than 90% invested in exempt securities on January
1, the exemp tion applies only to the portion of assets (if any) invested in
U.S. government obligations. The fund is organized as a business trust and
will make every effort to have at least 90% of its portfolio invested in
exempt securities on January 1 and expects that the entire value of
all fund shares will be exempt from the intangibles tax. Exemption is not
guaranteed , since the fund has the right under certain conditions to invest
in nonexempt securities. |
|
</R>
PAGE
27
For individual shareholders, a
portion of ordinary dividends representing " qualified dividend income
" received by the fund may be subject to tax at the lower rate applicable
to long-term capital gains, rather than ordinary income. You may report it as
" qualif ied dividend income" in computing your taxes provided you
have held the fund shares on which the dividend was paid for more than 60 days
during the 12 1 -day period beginning 60 days before the ex-dividend date.
Ordinary d ividends that do not qualify for this lower rate are generally tax
able at the investor ` s marginal income tax rate. This includes the portion of
ordinary dividends derived from interest, short-term capital gains,
distributions from
certain nonqualified foreign
corporations, and dividends received by the fund from stocks that were on loan.
Little, if any, of the ordinary dividends paid by the Real Estate Fund or the
bond and money funds is expected to qualify for this lower rate.
For corporate shareholders, a
portion of
ordinary
dividends may be eligible for the 70% deduction for divi dends received by
corporations to the extent the fund`s income consists of dividends paid by U.S.
corporations.
Little,
if any, of
the ordinary
dividends
paid
by the
international
funds or the
bond and money funds is expected to qualify for
this deduction.
PAGE
29
<R>
Taxes on F und R edemptions
</R>
When you sell shares in any fund,
you may realize a gain or loss. An exchange from one fund to another is also a
sale for tax purposes.
In January, you will be sent Form
1099-B indicating the date and amount of each sale you made in the fund dur ing the prior
year. This information will also be reported to the IRS. For most new accounts
or those opened by
exchange
in 1984 or later, we will provide you with the gain or loss on the shares you
sold during the year based on the average cost single category
method. This information is not reported to the IRS, and you do not have to use it. You may
calculate the cost basis using other methods acceptable to the IRS, such as
"specific identifica
tion."
To help you maintain accurate
records, we
will send you a
confirmation promptly following each transaction you make (except for
systematic purchases and redemptions) and a year-end statement detailing all
your transactions
in
each fund account during the year.
<R>
Taxes on F und D istributions
</R>
In January, you will be sent Form
1099-DIV indicating the tax status of any income dividend and capital gain dis
tributions made to you. This information will also be reported to the IRS.
Distributions are generally taxable to you in the year in which they are paid.
You will be sent any additional information you need to determine your taxes on
fund distributions, such as the portion of your dividends, if any, that may be
exempt from state and local income taxes. Dividends from tax-free funds are
expected to be tax-exempt.
The tax treatment of a capital
gain distribution is determined by how long the fund held the portfolio
securities,
not
how long you held
the shares in the
fund. Short-term (one year or less) capital gain distributions are taxable at the same rate
as ordinary income
, and gains on
securities held more than
one
year
are
taxed at
the
lower rates
applicable
to long-term capital gains . If you realized a loss on the sale or exchange of
fund shares that you held
six
months or less, your short-term capital loss must be reclassified as a long-term capital loss to the
extent of any
long-term
capital gain distribution
s received during
the period you held the shares. If you realize d a loss on the sale or exchange
of tax-free fund shares held six months or less, your capital loss is reduced
by the tax-exempt
dividends
received on those shares.
For
funds investing in foreign securities, distributions resulting from the sale of certain
foreign currencies, currency contracts, and the currency portion of gains on
debt securities are taxed as ordinary income. Net foreign currency losses may cause
monthly or quarterly dividends to be reclassified as a return of
capital.
If the fund qualifies and elects
to pass through nonrefundable foreign taxes paid to foreign governments during the year, your
portion of such taxes will be reported to you as taxable income. However, you
may be able to
claim
an
offsetting credit or deduction on your
tax return for those amounts. There can be no assurance that a fund will meet the
requirements to pass through foreign income taxes paid.
The following table provides additional details on distributions for certain funds :
<R> Table 5
Taxes on F und D istributions
|
Tax-Free and Municipal Funds |
|
|
Gains realized on the sale of market
discount bonds with maturities beyond one year may be treated as ordinary
income and cannot be offset by other capital losses. To the extent the fund
invests in these securities, the likelihood of a taxable gain distribution
will be increased. |
|
|
Tax-Efficient Balanced Fund |
|
|
Gains realized on the sale of market
discount bonds with maturities beyond one year may be treated as ordinary
income and cannot be offset by other capital losses. To the extent the fund
invests in these securities, the likelihood of a taxable gain distribution will
be increased. |
|
|
Inflation Protected Bond Fund |
|
|
Inflation adjustments on Treasury
inflation-protected securities exceeding deflation adjust ments for the year
will be distributed to you as a short-term capital gain resulting in ordinary
income . In computing the distribution amount, the fund cannot reduce
inflation adjustments by short- or long-term capital losses from the sales of
securities. Net deflation adjustments for a year may result in all or a
portion of dividends paid earlier in the year being treated as a return of
capital. |
|
|
Retirement and Spectrum Funds |
|
|
Distributions by the underlying funds
and changes in asset allocations may result in taxable distributions of
ordinary income or capital gains. |
|
</R>
<R>
Tax C onsequences of H edging
</R>
Entering into certain options,
futures, swaps, and forward foreign exchange contracts and transactions may
result in the application of the mark-to-market and straddle provisions of the
Internal Revenue Code. These provisions could result in the fund being required
to distribute gains on such transactions even though it did not close the
contracts during the year or receive cash to pay such distributions. The fund
may not be able to reduce its distributions for losses on such transactions to the
extent of unrealized gains in offsetting positions.
Distributions are taxable whether
reinvested in additional shares or received in cash.
<R>
Tax E ffect of B uying S hares B efore a n I ncome D ividend or C apital G ain D istribution
</R>
If you buy shares shortly before
or on the "record date" — the date that establishes you
as the person to receive the upcoming distribution — you may
receive a
portion of the money you just invested
in the form of a taxable distribution. Therefore, you may wish to find out a
fund`s record date before investing. Of course, a fund`s share price may, at
any time, reflect undistributed capi tal gains or income and unrealized
appreciation, which may result in future taxable distributions. Such distribu
tions can occur even in a year when the fund has a negative return.
4RANSACTION 0ROCEDURES AND
3PECIAL 2EQUIREMENTS
Following these procedures helps
assure timely and accurate transactions.
Purchase Conditions
Nonpayment
If you pay with a check or ACH
transfer that does not clear or if your payment is not received in a timely
manner , your purchase may be canceled. You will be responsible for any losses
or expenses incurred by the fund or trans fer agent, and the fund can redeem
shares you own in this or another identically registered T. Rowe Price
account as reimbursement. The fund and its agents have the right to reject or
cancel any purchase, exchange, or redemp tion due to nonpayment.
<R>
U.S. D ollars
</R>
All purchases must be paid for in
U.S. dollars; checks must be drawn on U.S. banks.
Sale (Redemption) Conditions
<R>
Holds on I mmediate R edemptions:
10-day
H old
</R>
If you sell shares that you just
purchased and paid for by check or ACH transfer, the fund will process your
redemption but will generally delay sending you the proceeds for up to 10
calendar days to allow the check or transfer to clear. If, during the clearing
period, we receive a check drawn against your newly purchased shares , it will
be returned marked "uncollected." (The 10-day hold does not apply to
purchases paid for by bank wire or automatic purchases through your paycheck.)
<R>
Telephone, Tele*Access ® , and O nline A ccount T ransactions
</R>
You may access your account or
conduct transactions using the telephone or Tele*Access, or online . The T.
Rowe Price funds and their agents use reasonable procedures to verify the
identity of the shareholder. If these proce dures are
PAGE
31
followed, the funds and their
agents are not liable for any losses that may occur from acting on unauthorized
instructions. A confirmation is sent promptly after a transaction. Please
review it carefully and contact T. Rowe Price immediately about any
transaction you believe to be unauthorized. T elephone conversations are
recorded.
Redemptions over $250,000
<R>
Large redemptions can adversely affect a
portfolio manager`s ability to implement a fund`s investment strategy by
causing the premature sale of securities that would otherwise be held. If, in
any 90-day period, you redeem (sell) more than $250,000, or your sale amounts
to more than 1% of fund net assets, the fund has the right (without prior
notice) to pay the difference between the redemption amount and the lesser
of the two previ ously mentioned figures with securities from the fund `s
portfolio . You will be responsible for disposing of the securities
and bearing any associated costs. The securities you receive will be selected
by the fund in its absolute discretion.
</R>
Excessive and Short-Term
Trading
T. Rowe Price may bar excessive and short-term
traders
from
purchasing shares.
<R>
Excessive or short-term trading in fund
shares may disrupt management of a fund and raise its costs. Short-term traders
in funds investing in foreign securities may seek to take advantage of
an anticipated difference between the price of the fund`s shares and price
movements in overseas markets (see Pricing Shares and Receiving Sale Proceeds
— "How and W hen S hares A
re P riced"). While there is no assurance that T. Rowe Price
can prevent all excessive and short-term trading, the Board of
Directors/Trustees of each fund has adopted the policy set forth below to deter
such activity. Persons trading directly with T. Rowe Price or indirectly
through intermediaries in violation of this policy or persons believed to be
short-term traders may be barred for 90 calendar days or perma nently
from further purchases of T. Rowe Price funds .
Purchase transactions placed by such persons are subject to rejection without
notice.
</R>
<R>
All persons purchasing shares held
directly with a T.
Rowe Price fund,
or through a retirement plan for which T. Rowe Price serves as recordkeeper, who
make more than
one
purchase and one sale or one sale and one pur chase involving the
same fund within any 90-day calendar period will violate the policy.
</R>
<R>
All persons purchasing fund shares held
through an intermediary, including a broker, bank, investment adviser, recordkeeper,
insurance company, or other third party, and who hold the shares for less than
90 calendar days
will
violate the policy.
</R>
<R>
Omnibus A ccounts
</R>
<R>
Intermediaries often establish omnibus
accounts in the T. Rowe Price funds for their customers. In such situa
tions, T. Rowe Price cannot always monitor trading activity by
individual shareholders. However, T. Rowe Price reviews trading activity
at the omnibus account level and looks for activity that indicates potential
excessive or short term trading. If it detects suspicious trading activity, T.
Rowe Price contacts the intermediary to deter mine whether the excessive
trading policy has been violated and, if so, asks the intermediary to take
action with respect to the underlying shareholder .
</R>
<R>
Retirement P lans
</R>
<R>
If shares are held in a retirement plan,
generally the fund`s excessive trading policy only applies to shares pur chased and
redeemed by exchange. However, the policy may apply to transactions other than
exchanges depending on how shares of the plan are held at T.
Rowe Price or how the excessive trading policy is applied by your
plan`s recordkeeper. To determine which of your transactions are subject to the
fund`s excessive trading policy , you should contact T.
Rowe Price or your plan recordkeeper.
</R>
<R>
Exceptions to P olicy
</R>
<R>
The following types of transactions are
exempt from this policy: 1) trades
solely in money market funds (exchanges
between a money fund and a
nonmoney fund are not exempt); 2)
systematic purchases and redemptions
(see Information About Your Services); and
3) checkwriting redemptions
f r o m bond and money funds .
</R>
<R>
In addition, transactions in
automated
nondiscretionary
rebalancing
programs , nondiscretionary asset alloca tion programs , or fund - of - fund s products may be exempt
from the excessive trading policy subject to prior writ ten approval by
designated persons at
T. Rowe Price.
</R>
<R>
T. Rowe Price may modify the 90-day
policy set forth above (for example, in situations where a retirement plan or retirement
plan recordkeeper has
restriction s on trading that differ from the T. Rowe Price fund`s
policy).
These
modifications would be authorized only if the fund believes that the modified
policy
would provide pro tection to the
fund that is
reasonably equivalent to the
fund`s regula
r p olicy.
</R>
<R>
There is no guarantee that T. Rowe Price
will
be
able to
detect
or prevent excessive or short-term trading.
</R>
Keeping Your Account Open
Due to the relatively high cost
to a fund of maintaining small accounts, we ask you to maintain an account bal
ance of at least $1,000 ($10,000 for Summit Funds). If your balance is below
this amount for three months or longer, we have the right to close your account
after giving you 60 days to increase your balance.
Signature Guarantees
A signature guarantee is designed
to protect you and the
T. Rowe Price fu nds from fraud by
verifying your
signature.
You may need to have your
signature guaranteed in certain situations, such as:
Written requests : ( 1) to redeem over
$100,000
; or ( 2) to wire
redemption
proceeds when prior bank account
authorization is not on file .
Remitting redemption proceeds to
any person, address, or bank account not on record.
Transferring redemption proceeds
to a
T. Rowe Price fund account with
a different registration (name or owner ship) from yours.
Establishing certain services
after the account is opened.
You can obtain a signature
guarantee from most banks, savings institutions,
broker-dealers, and other guarantors
acceptable to
T. Rowe Price . We cannot
accept guarantees from notaries public or organizations that do not provide
reimbursement in the case of fraud.
!CCOUNT -AINTENANCE AND 3MALL
!CCOUNT &EES
Small Account Fee (all funds
except Index Funds)
Because of the disproportionately high costs of servicing
accounts with low balances, a $10 fee, paid to T. Rowe Price Services,
the funds` transfer agent, will automati cally be deducted from nonretirement
accounts with balances falling below a minimum amount. The valuation of
accounts and the deduction are expected to take place during the last five
business days of September. The fee will be deducted from accounts with
balances below $2,000, except for UGMA/UTMA accounts, for which the minimum is
$500. The fee will be waived for any investor whose T. Rowe Price mutual
fund accounts total $25,000 or more. Accounts employing automatic investing
(e.g., payroll deduction, automatic purchase from a bank account, etc.) are
also exempt from the charge. The fee does not apply to IRAs and other
retirement plan accounts that utilize a prototype plan sponsored by T.
Rowe Price, but a separate custodial or administrative fee may apply to such
accounts.
PAGE
33
<R>
Account Maintenance Fee (Index Funds
only)
An annual $10
account maintenance fee is charged on a quarterly basis ($2.50 per
quarter) usually during the last week of a calendar quarter . On the day of
the assessment,
accounts
with balances below $10,000 will be charged the fee. Please note that the fee
will be charged to
accounts
that fall below $10,000 for any reason, including market fluctuations,
redemptions, or exchanges. The fee will apply to IRA accounts. The fee does not
apply to retirement plans directly registered with T. Rowe Price Services or accounts
maintained by intermediaries through NSCC ® Networking .
</R>
More About the
Funds 3
/RGANIZATION AND -ANAGEMENT
How are the funds organized?
Each of the funds is incorporated
in Maryland as a n , " open-end investment company," or mutual fund.
The Developing Technologies Fund was incorporated in 2000; Financial Services
Fund in 1996; the Global Technol ogy Fund in 2000; the Health Sciences Fund in
1995; the New Era Fund in 1968; the Real Estate Fund in 1997; the Science &
Technology Fund in 1987; and the Media & Telecommunications Fund in 1993.
In 1997, the Media & Telecommunications Fund was converted from a
closed-end investment company. Mutual funds pool money received from shareholders
and invest it to try to achieve specified objectives.
<R>
Shareholders benefit from T. Rowe Price`s 6 9 years of
investment management experience.
</R>
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 annual meetings and, to avoid unnecessary costs to fund shareholders, do
not do so except when certain matters, such as a change in fundamental
policies, must be decided. In addition, shareholders representing at least 10%
of all eligible votes may call a special meeting, if they wish, for the purpose
of voting on the removal of any fund director or trustee.
If a meeting is held and you cannot
attend, you can vote by proxy. Before the meeting, the fund will send you proxy
materials that explain the issues to be decided and include instructions on
voting by mail or telephone, or on the Internet.
Who runs the funds?
General Oversight
Each fund is governed by a Board
of Directors/Trustees that meets regularly to review fund investments, perfor
mance, expenses, and other business affairs. The Board elects the fund
officers. At least 75% of Board members are independent of T. Rowe Price
.
All decisions regarding the
purchase and sale of fund investments are made by T. Rowe Price — specifically by
each
fund`s
portfolio managers
.
Portfolio Management
Each fund has an Investment
Advisory Committee. The committee chairman has day-to-day responsibility for
managing the portfolio and works with the committee in developing and executing
the fund`s investment pro gram. The members of each advisory committee are
listed below. The Statement of Additional Information pro vides additional
information about the portfolio managers ` compensation, other accounts managed
by the portfolio manager s , and the portfolio managers ` ownership of
securities in the fund s .
<R>
Developing Technologies Fund Jeffrey
Rottinghaus
,
Chairman,
Kennard W. Allen, Laurie M. Bertner, David J. Eiswert, Henry M. Ellenbogen, Hugh M. Evans III, Michael F. Sola , Joshua K. Spencer, Chirag Vasavada, and Wenhua Zhang. Mr. Rottinghaus has been chairman
of the fund`s committee since 2005 . He joined T. Rowe Price in 2001 and
has been managing investments since that time.
</R>
PAGE
35
<R>
Financial Services Fund Michael W. Holton,
Chairman, Jeffrey
W . Arricale, D. Kyle Cerminara, Anna M. Dopkin, Christopher T. Fortune, Hwee J. Ng, Joseph
Rohm,
Federico
Santilli
, Gabriel Solomon , Eric L. Veiel, and J. David Wagner. Mr. Holton was
elected chairman of the fund`s committee in 2002. He joined T. Rowe Price in 1995 as
a research analyst.
</R>
<R>
Global Technology Fund Jeffrey
Rottinghaus
,
Chairman,
Kennard W. Allen, R. Scott Berg, David J. Eiswert , May Foo, Robert N. Gensler, Hiroaki Owaki, Michael F. Sola, Joshua K. Spencer, Chirag Vasavada, and Wenhua Zhang. Mr. Rottinghaus was
appointed chairman of the fund`s committee in 2006. He joined T. Rowe Price in 2001 and has been
managing investments since that time .
</R>
<R>
Health Sciences Fund Kris H. Jenner, M.D.,
D. Phil., Chairman, Laurie M. Bertner, G. Mark Bussard,
M.D.,
John H. Laporte, Jay S. Markowitz , M.D. , Jason Nogueira, Charles G. Pepin, Gregory S. Pinsky, John C.A. Sherman , and Taymour
Tamaddon
.
Dr.
Jenner has been chairman of the
fund`s committee
since 2000. He joined T. Rowe Price as an
analyst in 1997 and has been managing investments since 1998.
</R>
<R>
Media & Telecommunications Fund P. Robert Bartolo
and
Henry M. Ellenbogen, Co- c hairm e n, Ulle Adamson, Kara Cheseby, David J. Eiswert, May Foo , Joseph B. Fath, Robert N. Gensler, Jean Medecin,
Curt
J. Organt, Robert W. Smith, Christopher S. Whitehouse, Ernest C. Yeung , and Wenhua Zhang . P. Robert Bartolo and Henry M. Ellenbogen
have been co-chairmen of the fund`s committee since 2005. Mr. Bartolo joined T. Rowe Price in
2002 and has been managing investments since that time . Mr. Ellenbogen joined T. Rowe Price in 2001 and has
been managing investments since that time .
</R>
<R>
New Era Fund Charles M. Ober,
Chairman,
Mark S. Finn, David M. Lee, John D. Linehan, Heather K. McPherson, Christian M. O`Neill, Timothy E. Parker, and David J. Wallack. Mr. Ober has been
chairman of the
fund`s
committee since 1997. He joined T. Rowe Price in 1980 and has been
managing investments since 1987.
</R>
<R>
Real Estate Fund David M. Lee, Chairman, Richard
Clattenburg
,
Anna
M. Dopkin, Joseph B. Fath, Thomas J. Huber, Charles M. Ober, and Theodore E. Robson . Mr. Lee has been
chairman of the fund`s committee since 1997. He joined T. Rowe Price in
1993 as a research analyst and has been managing investments since 1996.
</R>
<R>
Science & Technology Fund Michael F. Sola,
Chairman,
Kennard W. Allen, Donald J. Easley, David J. Eiswert, Henry M. Ellenbogen, Robert N. Gensler, Jill L. Hauser, Jeff rey Rottinghaus , Joshua K. Spencer, Chirag Vasavada, and Wenhua Zhang . Mr. Sola has been chairman of the
fund`s committee
since 2002 . He joined T. Rowe Price in
1994 as an investment analyst and has been managing investments since 1997.
</R>
The Management Fee
<R>
This fee has two parts —
an "individual fund fee," which reflects a fund`s particular
characteristics, and a "group fee." The group fee, which is designed
to reflect the benefits of the shared resources of the T. Rowe Price
invest ment management complex, is calculated daily based on the combined net
assets of all T. Rowe Price funds (except the Spectrum Funds, Retirement
Funds, TRP Reserve Investment Funds, and any index or private label
mutual funds). The group fee schedule (shown below) is graduated, declining as
the asset total rises, so share holders benefit from the overall growth in
mutual fund assets.
</R>
Group Fee Schedule
|
0.334%* |
First $50 billion |
|
|
|
|
|
|
0.305% |
Next $30 billion |
|
|
|
|
|
|
0.300% |
Next $40 billion |
|
|
|
|
|
|
0.295% |
Next $40 billion |
|
|
|
|
|
|
0.29 0 % |
Thereafter |
|
* Represents a blended group fee
rate containing various break points.
<R>
Each fund`s group fee is determined
by applying the group fee rate to the fund`s average daily net assets. A t December
31, 2005 , the effective annual group fee rate was 0.31%.
The individual fund fees are as follows: Developing Technologies Fund, 0.60%;
Financial Services Fund, Health Sciences Fund, Media & Telecommuni cations
Fund, and Science & Technology Fund, 0.35%; Global Technology Fund, 0.45%;
New Era Fund, 0.25%; and Real Estate Fund, 0.30%.
</R>
<R>
A discussion about the factors and
conclusions considered by the Board in approving each fund`s investment management
contract with
T. Rowe Price appears in each
fund`s
semiannual report to
shareholders for the
period
end
ed June 30.
</R>
<R>
Fund Operations and Shareholder Services
</R>
<R>
T. Rowe Price Associates 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 administra tive 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 the funds ` financial statements
.
</R>
5NDERSTANDING 0ERFORMANCE
)NFORMATION
This section should help you
understand the terms used to describe fund performance. You will come across them
in shareholder reports you receive from us, in our educational and
informational materials, in T. Rowe Price advertisements, and in the
media.
Total Return
This tells you how much an
investment has changed in value over a given period. It reflects any net
increase or decrease in the share price and assumes that all dividends and
capital gains (if any) paid during the period were reinvested in additional
shares. Therefore, total return numbers include the effect of compounding.
Advertisements may include
cumulative or average annual total return figures, which may be compared with
var
ious
indices, other performance measures, or other mutual funds.
Cumulative Total Return
This is the actual return of an
investment for a specified period. A cumulative return does not indicate how
much the value of the investment may have fluctuated during the period.
For example, an investment could have a 10-year positive cumulative return
despite experiencing some negative years during that time.
Average Annual Total Return
This is always hypothetical and
should not be confused with actual year-by-year results. It smooths out all the
variations in annual performance to tell you what constant year-by-year
return would have produced the invest ment`s actual cumulative return. This
gives you an idea of an investment`s annual contribution to your portfo lio,
provided you held it for the entire period.
)NVESTMENT 0OLICIES AND 0RACTICES
This section takes a detailed
look at some of the types of fund securities and the various kinds of
investment practices that may be used in day-to-day portfolio management. Fund
investments are subject to further restric tions and risks described in the
Statement of Additional Information.
Shareholder approval is required
to substantively change fund objectives . Shareholder approval is also required to change certain
investment restrictions noted in the following section as "fundamental
policies." The managers also follow certain "operating policies" that can be changed
without shareholder approval. Shareholders will receive at least 60 days` prior notice
of any change in the policy requiring the funds to normally invest at least 80% of net assets
in the respective companies and industries as set forth in the funds` investment
strategies.
Fund investment
restrictions and policies apply at the time of purchase . A later change
in circumstances will not
require
the sale of an investment if it was proper at the time it was made. (This exception
does not apply to the
funds`
borrowing policy
. )
Fund holdings of certain kinds of
investments cannot exceed maximum percentages of total assets, which are set forth in this
prospectus. For instance, fund investments in certain derivatives are limited to
10% of total assets.
While
these restrictions provide a useful level of detail about fund investments,
investors should not view them
PAGE
37
as an accurate gauge of the
potential risk of such investments. For example, in a given period, a 5% investment in derivatives could have
significantly more of an impact on a fund`s share price than its weighting in
the portfolio.
The
net effect of a particular investment depends on its volatility and the size of
its overall return in relation to the performance of all other fund investments.
Changes in fund holdings, fund
performance, and the contribution of various investments are discussed in the shareholder
reports sent to you.
Fund managers have considerable
leeway in choosing investment strategies and selecting securities they believe will help achieve
fund objectives.
Types of Portfolio Securities
In seeking to meet their
investment objectives, fund investments may be made in any type of security or
instru ment (including certain potentially high-risk derivatives described in
this section) whose investment characteris tics are consistent with their
investment programs. The following pages describe various types of fund
securities and investment management practices.
Fundamental
policy
Each fund will
not purchase a security if, as a result, with respect to 75% of its total
assets,
more
than 5% of its total assets would be invested in securities of a single issuer,
or if more than 10% of the out standing voting securities of the issuer would be
held by the fund.
Industry Concentration
<R>
The Financial Services Fund has a
fundamental policy requiring it to concentrate (invest more than 25% of total
assets) in the financial services industry as defined in this prospectus.
</R>
<R>
Operating policy In accordance
with SEC rules, the
fund will not purchase
the security of any company which in its most recent fiscal year derived more
than 15% of its gross revenues from securities-related activities (defined by the SEC as
activities as a broker, dealer, underwriter, or investment adviser) if,
immediately after such pur chase, the fund:
</R>
<R>
would own more than 5% of any class of
equity securities of the company;
</R>
<R>
would own more than 10% of the
outstanding principal amount of the company`s debt securities; or
</R>
<R>
would have invested more than 5% of total assets in
securities of such company.
</R>
<R>
The Health Sciences Fund has a fundamental
policy requiring it to concentrate (invest more than 25% of total assets) in the
health sciences industry as defined in this prospectus.
</R>
<R>
The Real Estate Fund has a fundamental
policy requiring it to concentrate (invest more than 25% of total assets) in the
real estate industry as defined in this prospectus.
</R>
All funds
Fund investments are primarily in
common stocks and, to a lesser degree, other types of securities as described
below.
Common and Preferred Stocks
Stocks represent shares of
ownership in a company. Generally, preferred stock has a specified dividend and
ranks after bonds and before common stocks in its claim on income for dividend
payments and on assets should the company be liquidated. After other claims are
satisfied, common stockholders participate in company profits on a pro-rata
basis; profits may be paid out in dividends or reinvested in the company to
help it grow. Increases and decreases in earnings are usually reflected in a
company`s stock price, so common stocks generally have the great est
appreciation and depreciation potential of all corporate securities. While most
preferred stocks pay a divi dend, preferred stock may be purchased where the
issuer has omitted, or is in danger of omitting, payment of its dividend. Such
investments would be made primarily for their capital appreciation potential.
Convertible Securities and
Warrants
Investments may be made in debt
or preferred equity securities convertible into, or exchangeable for, equity
securities. Traditionally, convertible securities have paid dividends or
interest at rates higher than common stocks but lower than nonconvertible
securities. They generally participate in the appreciation or depreciation of
the underlying stock into which they are convertible, but to a lesser degree.
Some convertibles combine higher or lower current income with options and other
features. Warrants are options to buy a stated number of shares of common stock
at a specified price anytime during the life of the warrants (generally, two or
more years). War rants can be highly volatile, have no voting rights, and pay
no dividends.
Foreign Securities
Investments may be made in
foreign securities. These include nondollar-denominated securities traded
outside of the U.S. and dollar-denominated securities of foreign issuers traded
in the U.S. (such as ADRs and ADSs). Investing in foreign securities involves
special risks that can increase the potential for losses. These include :
exposure to potentially adverse local, political, 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 ; 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 investments in developing countries, and there is no limit on
the amount of fund foreign investments that may be made in such countries.
Operating policy
for the
Developing
Technologies
,
Financial Services
, and Science &
Technology
Funds Fund investments
in foreign securities are limited to 30% of total assets.
Operating policy
for the
Global
Technology and Media & Telecommunications Funds There is no limit
on fund investments
in foreign securities.
Operating policy
for the
Health
Sciences Fund
Fund investments
in foreign securities are limited to 35% of total assets.
Operating policy
for the
New
Era Fund
Fund investments
in foreign securities are limited to 50% of total assets.
Operating policy
for the
Real
Estate Fund
Fund investments
in foreign securities are limited to 25% of total assets.
Hybrid Instruments
These instruments (a type of
potentially high-risk derivative) can combine the characteristics of
securities, futures, and options. For example, the principal amount,
redemption, or conversion terms of a security could be related to the market
price of some commodity, currency, or securities index. Such securities may
bear interest or pay dividends at below market or even relatively nominal
rates. Under certain conditions, the redemption value of a hybrid could be
zero.
Hybrids can have volatile prices
and limited liquidity, and their use may not be successful.
PAGE
39
Operating policy
Fund investments in hybrid instruments are limited to 10% of total assets.
<R>
Illiquid Securities
</R>
<R>
These securities include private
placements that are sold directly to a small number of investors, usually
institu tions. 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, others may have resale restrictions and be illiquid .
The sale of illiquid securities may involve substantial delays
and additional costs , and the fund may only be able to sell such
securities at prices substantially less than what the fund believes they are
worth .
</R>
Operating policy Fund investments
in illiquid
securities are limited to 15% of net assets.
Fixed-Income Securities (Global
Technology, Media & Telecommunications, New Era, and Real Estate Funds)
From time to time, the funds may
invest in debt securities of any type, including municipal securities, without
regard to quality or rating. Such securities would be purchased in companies,
municipalities, or entities that meet fund investment criteria . The price of a
bond fluctuates with changes in interest rates, generally rising when inter est
rates fall and falling when interest rates rise. Below investment grade bonds ,
or "junk bonds," can be more volatile and have a greater risk of
default than investment grade bonds.
<R>
Operating policies for the Global
Technology,
Media
& Telecommunications, New Era, and Real Estate Funds The funds may
purchase any type of noninvestment-grade debt security (or junk bond) including
those
in
default. The funds will not purchase this type of security if they would have
exceeded a limit regarding the per centage of total assets invested in such
securities. For the Media & Telecommunications and Global
Technology
Fund s , the limit is
5%; for the New Era and Real Estate Funds, the limit is 10%. F und investments in
convertible
securities
are not subject to this limit.
</R>
Types of Investment Management
Practices
Reserve Position
<R>
A certain portion of fund assets will be
held in money market reserves. Fund reserve positions are expected to consist
primarily of shares of one or both T. Rowe Price internal money market
funds. Short-term, high-quality U.S. and foreign dollar-denominated money
market securities, including repurchase agreements, may also be held. For
temporary, defensive purposes, there is no limit on fund investments in money
market reserves. Significant investments in reserves could compromise the
ability to achieve fund objectives . The reserve position provides flexibility
in meeting redemptions, paying expenses, and in the timing of new investments
and can serve as a short-term defense during periods of unusual market
volatility .
</R>
Borrowing Money and Transferring
Assets
Fund borrowings may be made from
banks and other T. Rowe Price funds for temporary emergency purposes to
facilitate redemption requests, or for other purposes consistent with fund
policies as set forth in this prospectus. Such borrowings may be collateralized
with fund assets, subject to restrictions.
Fundamental
policy
Borrowings may
not exceed
33 1 / 3 % of total assets.
Operating policy Fund transfers of
portfolio securities as collateral will not be made except as necessary in con nection with
permissible borrowings or investments, and then such transfers may not exceed 33 1 / 3 % of total assets. Fund
purchases of additional securities will not be made when borrowings exceed 5%
of total assets.
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 (where the investor purchases the option), or the obligation
(where the investor "writes" or sells the option), to buy or sell an
asset at a predetermined price in the future. Futures and options contracts may
be bought or sold for any number of reasons, including: to manage exposure to
changes in securities prices and foreign currencies; as an efficient means of
increasing or decreasing fund overall exposure to a specific part or broad
segment of the U.S. market or a foreign market; in an effort to enhance income;
to protect the value of portfolio securities; and to serve as a cash management
tool. Call or put options may be purchased or sold on securities, financial
indices, and foreign currencies.
Futures contracts and options may
not always be successful hedges; their prices can be highly volatile; using them could lower
fund total return; and the potential loss from the use of futures can exceed a
fund`s initial
investment
in such contracts.
Operating
policies
Futures: Initial
margin deposits
on
futures
and
premiums on options used for non-hedging purposes will not exceed 5% of net asset value.
Options on securities: The total market value of securities cover ing call or put
options may not exceed 25% of total assets. No more than 5% of total assets will
be committed to
premiums
when purchasing call or put options.
Exchange Traded Funds (ETFs)
These are a type of index fund
bought and sold on a securities exchange. An ETF trades like common stock and
represents a fixed portfolio of securities designed to track a particular
market index. A fund could purchase an ETF to temporarily gain exposure to a
portion of the U.S. or a foreign market while awaiting purchase of under lying
securities. The risks of owning an ETF generally reflect the risks of owning
the underlying securities they are designed to track, although lack of
liquidity in an ETF could result in it being more volatile and ETFs have
management fees that increase their costs.
Managing Foreign Currency Risk
Investors 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
"forwards" — contract s to exchange one currency for
another on some future date at a specified exchange rate. However, futures,
swaps, and options on these instru ments may also be used. In certain
circumstances, a different currency may be substituted 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 f oreign currency transactions , they
would be primarily to protect a fund`s foreign securities from adverse currency
movements relative to the dollar . Such transactions involve the risk that
anticipated currency move ments will not occur, which c ould reduce fund total
return . There are certain markets, including many emerging markets, where it
is not possible to engage in effective foreign currency hedging.
Lending of Portfolio Securities
Fund securities may be lent to
broker-dealers, other institutions, or other persons to earn additional income.
R isk s include the potential insolvency of the broker-dealer or other borrower
that could result in delays in recov ering securities and capital losses.
Additionally, losses could result from the reinvestment of collateral received
on loaned securities in investments that default or do not perform well .
Fundamental
policy
The value of
loaned securities may not exceed 33 1 / 3 % of total assets.
Portfolio Turnover
Turnover is an indication of
frequency of trading. We will not generally trade in securities for short-term
profits, but, when circumstances warrant, securities may be purchased and sold
without regard to the length of time held. Each time the fund purchases or
sells a security, it incurs a cost. This cost is reflected in the fund`s net
asset value but not in its operating expenses. The higher the turnover rate,
the higher the transaction costs and the greater the impact on the fund`s total
return. Higher turnover can also increase the possibility of taxable capital
gain distributions . The funds` portfolio turnover rates are shown in the
Financial Highlights table.
$ISCLOSURE OF &UND 0ORTFOLIO
)NFORMATION
<R>
Each fund`s portfolio holdings are
disclosed on a regular basis in its semi annual and annual reports to
shareholders , and on Form N-Q , which is filed with the SEC within 60 days of
the fund`s first and third fiscal quarter-end. In addition, each fund discloses
its calendar quarter-end portfolio holdings on troweprice.com 15 calendar days
after each quarter. Under certain conditions, up to 5% of each 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 funds. A security will not be
excluded from identification for more than one year. Each fund also
discloses its largest 10 holdings on troweprice.com seven days after each
month-end. These holdings are listed in alphabetical order along with the
aggregate percentage of each fund`s total assets th e y represent. The
</R>
PAGE
41
<R>
quarter-end portfolio will remain on the
Web site for one year. The top 10 list is replaced every six months. A
description of each fund`s p olicy and procedures with respect to the
disclosure of portfolio information is in the Statement of Additional
Information.
</R>
&INANCIAL (IGHLIGHTS
Table 6, which provides
information about each fund`s financial history, is based on a single share
outstanding throughout the periods shown. The table is part of each fund`s
financial statements, which are included in its annual report and are
incorporated by reference into the Statement of Additional Information
(available upon request). The total returns in the table represent the rate
that an investor would have earned or lost on an investment in each fund
(assuming reinvestment of all dividends and distributions and no payment of
account or [ if applicable ] redemption fees). The financial statements in the
annual reports were audited by the fund`s independent registered public
accounting firm , PricewaterhouseCoopers LLP.
<R> Table 6
Financial Highlights
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
Net asset value, beginning of
period |
$ 7.13 |
$ 4.95 |
$ 2.54 |
$ 4.12 |
$ 4.23 |
|
|
|||||
|
Income From
Investment Operations |
|
|
|
|
|
|
|
|||||
|
Net investment income |
(0.05 ) b |
(0.04 ) b |
(0.03 ) b |
(0.06 ) b |
(0.05 ) b |
|
|
|||||
|
Net gains or losses on securities
(both realized
and
unrealized) |
(2.13 ) |
(2.37 ) |
1.61 |
0.17 |
0.21 |
|
|
|||||
|
Total from investment operations |
(2.18 ) |
(2.41 ) |
1.58 |
0.11 |
0.16 |
|
|
|||||
|
Less
Distributions |
|
|
|
|
|
|
||||||
|
Dividends (from net investment
income) |
— |
— |
— |
— |
— |
|
|
|||||
|
Distributions (from capital gains) |
— |
— |
— |
— |
— |
|
|
|||||
|
Returns of capital |
— |
— |
— |
— |
— |
|
|
|||||
|
Total distributions |
— |
— |
— |
— |
— |
|
|
|||||
|
Net asset value, end of period |
$ 4.95 |
$ 2.54 |
$ 4.12 |
$ 4.23 |
$ 4.39 |
|
|
|||||
|
Total return |
(30.58 )% b |
(48.69 )% b |
62.20 % b |
2.67 % b |
3.78 % b |
|
|
|||||
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|||||
|
Net assets, end of period (in thousands) |
$ 26,647 |
$ 17,934 |
$ 46,194 |
$ 48,430 |
$ 41,942 |
|
|
|||||
|
Ratio of expenses to average net
assets |
1.50 % b |
1.50 % b |
1.50 % b |
1.50 % b |
1.50 % b |
|
|
|||||
|
Ratio of net income to average net
assets |
(1.27 )% b |
(1.36 )% b |
(1.34 )% b |
(1.38 )% b |
(1.26 )% b |
|
|
|||||
|
Portfolio turnover rate |
107.5 % |
81.5 % |
66.3 % |
79.0 % |
75.0 % |
|
|
|||||
</R>
<R>
a Per share amounts calculated using
average shares outstanding method.
</R>
<R>
b Excludes expenses in excess of a 1.50%
contractual expense limitation in effect through April 30, 2007.
</R>
PAGE
43
<R> Table 6
Financial Highlights (continued)
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
Net asset value, beginning of
period |
$ 21.38 |
$ 18.84 |
$ 16.75 |
$ 21.86 |
$ 23.50 |
|
|
|||||
|
Income From
Investment Operations |
|
|
|
|
|
|
|
|||||
|
Net investment income |
0.15 |
0.15 |
0.21 |
0.17 |
0.27 |
|
|
|||||
|
Net gains or losses on securities
(both realized
and
unrealized) |
(0.86 ) |
(2.05 ) |
5.64 |
2.74 |
0.97 |
|
|
|||||
|
Total from investment operations |
(0.71 ) |
(1.90 ) |
5.85 |
2.91 |
1 . 24 |
|
|
|||||
|
Less
Distributions |
|
|
|
|
|
|
||||||
|
Dividends (from net investment
income) |
(0.15 ) |
(0.13 ) |
(0.23 ) |
(0.17 ) |
(0.32 ) |
|
|
|||||
|
Distributions (from capital gains) |
(1.68 ) |
(0.06 ) |
(0.51 ) |
(1.10 ) |
(3.28 ) |
|
|
|||||
|
Returns of capital |
— |
— |
— |
— |
— |
|
|
|||||
|
Total distributions |
(1.83 ) |
(0.19 ) |
(0.74 ) |
(1.27 ) |
(3.60 ) |
|
|
|||||
|
Net asset value, end of period |
$ 18.84 |
$ 16.75 |
$ 21.86 |
$ 23.50 |
$ 21.14 |
|
|
|||||
|
Total return |
(3.13 )% |
(10.10 )% |
35.08 % |
13.42 % |
5.10 % |
|
|
|||||
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|||||
|
Net assets, end of period (in thousands) |
$ 308,635 |
$ 264,542 |
$ 371,595 |
$ 411,210 |
$ 393,791 |
|
|
|||||
|
Ratio of expenses to average net
assets |
0.97 % |
1.00 % |
0.97 % |
0.93 % |
0.93 % |
|
|
|||||
|
Ratio of net income to average net
assets |
0.69 % |
0.80 % |
1.16 % |
0.77 % |
1.21 % |
|
|
|||||
|
Portfolio turnover rate |
54.8 % |
49.7 % |
50.8 % |
35.5 % |
55.7 % |
|
|
|||||
</R>
<R>
a Per share amounts calculated using
average shares outstanding method.
</R>
<R> Table 6
Financial Highlights (continued)
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
Net asset value, beginning of
period |
$ 7.43 |
$ 4.75 |
$ 3.33 |
$ 4.99 |
$ 5.50 |
|
|
|||||
|
Income From
Investment Operations |
|
|
|
|
|
|
|
|||||
|
Net investment income |
(0.06 ) |
(0.05 ) b |
(0.05 ) b |
(0.02 ) |
(0.05 ) |
|
|
|||||
|
Net gains or losses on securities
(both realized
and
unrealized) |
(2.62 ) |
(1.37 ) |
1.71 |
0.53 |
0.65 |
|
|
|||||
|
Total from investment operations |
(2.68 ) |
(1.42 ) |
1.66 |
0.51 |
0.60 |
|
|
|||||
|
Less
Distributions |
|
|
|
|
|
|
||||||
|
Dividends (from net investment
income) |
— |
— |
— |
— |
— |
|
|
|||||
|
Distributions (from capital gains) |
— |
— |
— |
— |
— |
|
|
|||||
|
Returns of capital |
— |
— |
— |
— |
— |
|
|
|||||
|
Total distributions |
— |
— |
— |
— |
— |
|
|
|||||
|
Net asset value, end of period |
$ 4.75 |
$ 3.33 |
$ 4.99 |
$ 5.50 |
$ 6.10 |
|
|
|||||
|
Total return |
(36.07 )% |
(29.89 )% b |
49.85 % b |
10.22 % |
10.91 % |
|
|
|||||
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|||||
|
Net assets, end of period (in thousands) |
$ 84,120 |
$ 55,145 |
$ 84,764 |
$ 91,766 |
$ 122,182 |
|
|
|||||
|
Ratio of expenses to average net
assets |
1.50 % |
1.50 % b |
1.50 % b |
1.50 % |
1.50 % |
|
|
|||||
|
Ratio of net income to average net
assets |
(1.08 )% |
(1.15 )% b |
(1.17 )% b |
(0.45 )% c |
(0.94 )% |
|
|
|||||
|
Portfolio turnover rate |
189.2 % |
211.4 % |
151.4 % |
137.4 % |
96.4 % |
|
|
|||||
</R>
<R>
a Per share amounts calculated using
average shares outstanding method.
</R>
<R>
b Excludes expenses in excess of a 1.50% contractual expense
limitation in effect through April 30, 200 7 .
</R>
<R>
c Includes the effect of a one-time
special dividend (0
.72% of average net
assets) that is not expected to recur.
</R>
PAGE
45
<R> Table 6
Financial Highlights (continued)
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||
|
Net
asset value, beginning of period |
$ 21.70 |
$ 20.08 |
$ 14.51 |
$ 19.95 |
$ 23.11 |
|
|
||||
|
Income From
Investment Operations |
|
|
|
|
|
|
|||||
|
Net
investment income |
(0.11 ) |
(0.11 ) |
(0.11 ) |
(0.12 ) |
(0.15 ) |
|
|
||||
|
Net
gains or losses on securities (both realized and unrealized) |
(1.20 ) |
(5.46 ) |
5.55 |
3.28 |
3.27 |
|
|
||||
|
Total
from investment operations |
(1.31 ) |
(5.57 ) |
5.44 |
3.16 |
3.12 |
|
|
||||
|
Less
Distributions |
|
|
|
|
|
|
|||||
|
Dividends
(from net investment income) |
— |
— |
— |
— |
— |
|
|
||||
|
Distributions
(from capital gains) |
(0.31 ) |
— |
— |
— |
(1.16 ) |
|
|
||||
|
Returns
of capital |
— |
— |
— |
— |
— |
|
|
||||
|
Total
distributions |
(0.31 ) |
— |
— |
— |
(1.16 ) |
|
|
||||
|
Net
asset value, end of period |
$ 20.08 |
$ 14.51 |
$ 19.95 |
$ 23.11 |
$ 25.07 |
|
|
||||
|
Total
return |
(5.97 )% |
(27.74 )% |
37.49 % |
15.84 % |
13.53 % |
|
|
||||
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
|||||
|
Net
assets, end of period (in millions) |
$ 961 |
$ 678 |
$ 1,027 |
$ 1,329 |
$ 1,488 |
|
|
||||
|
Ratio
of expenses to average net assets |
1.02 % |
1.04 % |
1.00 % |
0.93 % |
0.91 % |
|
|
||||
|
Ratio
of net income to average net assets |
(0.60 )% |
(0.64 )% |
(0.64 )% |
(0.58 )% |
(0.64 )% |
|
|
||||
|
Portfolio
turnover rate |
74.6 % |
62.7 % |
44.8 % |
44.1 % |
55.7 % |
|
|
||||
</R>
<R>
a Per share amounts calculated using
average shares outstanding method.
</R>
<R> Table 6
Financial Highlights (continued)
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||
|
Net
asset value, beginning of period |
$ 21.65 |
$ 20.15 |
$ 14.43 |
$ 22.51 |
$ 28.34 |
|
|
||||
|
Income From
Investment Operations |
|
|
|
|
|
|
|||||
|
Net
investment income |
(0.09 ) |
(0.05 ) |
(0.09 ) |
(0.07 ) |
(0.04 ) |
|
|
||||
|
Net
gains or losses on securities (both realized and unrealized) |
(1.41 ) |
(5.67 ) |
8.17 |
5.99 |
5.20 |
|
|
||||
|
Total
from investment operations |
(1.50 ) |
(5.72 ) |
8.08 |
5.92 |
5.16 |
|
|
||||
|
Less
Distributions |
|
|
|
|
|
|
|||||
|
Dividends
(from net investment income) |
— |
— |
— |
— |
— |
|
|
||||
|
Distributions
(from capital gains) |
— |
— |
— |
— |
— |
|
|
||||
|
Returns
of capital |
— |
— |
— |
— |
— |
|
|
||||
|
Total
distributions |
— |
— |
— |
— |
— |
|
|
||||
|
Net
asset value, end of period |
$ 20.15 |
$ 14.43 |
$ 22.51 |
$ 28.43 |
$ 33.59 |
|
|
||||
|
Total
return |
(6.93 )% |
(28.39 )% |
55.99 % |
26.30 % |
18.15 % |
|
|
||||
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
|||||
|
Net
assets, end of period (in thousands) |
$ 674,518 |
$ 421,070 |
$ 665,182 |
$ 876,267 |
$ 1,035,074 |
|
|
||||
|
Ratio
of expenses to average net assets |
1.08 % |
1.15 % |
1.10 % |
0.96 % |
0.92 % |
|
|
||||
|
Ratio
of net income to average net assets |
(0.39 )% |
(0.31 )% |
(0.51 )% |
(0.30 )% |
(0.13 )% |
|
|
||||
|
Portfolio
turnover rate |
241.1 % |
184.9 % |
123.5 % |
107.6 % |
77.8 % |
|
|
||||
</R>
<R>
a Per share amounts calculated using
average shares outstanding method.
</R>
PAGE
47
<R> Table 6
Financial Highlights (continued)
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
Net
asset value, beginning of period |
$ 24.30 |
$ 22.24 |
$ 20.63 |
$ 27.22 |
$ 33.68 |
|
|
||||
|
Income From
Investment Operations |
|
|
|
|
|
|
|||||
|
Net
investment income |
0.27 |
0.23 |
0.25 |
0.24 |
0.39 |
|
|
||||
|
Net
gains or losses on securities (both realized and unrealized) |
(1.38 ) |
(1.64 ) |
6.59 |
7.91 |
9.72 |
|
|
||||
|
Total
from investment operations |
(1.11 ) |
(1.41 ) |
6.84 |
8.15 |
10.11 |
|
|
||||
|
Less
Distributions |
|
|
|
|
|
|
|||||
|
Dividends
(from net investment income) |
(0.27 ) |
(0.20 ) |
(0.25 ) |
(0.23 ) |
(0.37 ) |
|
|
||||
|
Distributions
(from capital gains) |
(0.68 ) |
— |
— |
(1.46 ) |
(2.32 ) |
|
|
||||
|
Returns
of capital |
— |
— |
— |
— |
— |
|
|
||||
|
Total
distributions |
(0.95 ) |
(0.20 ) |
(0.25 ) |
(1.69 ) |
(2.69 ) |
|
|
||||
|
Net
asset value, end of period |
$ 22.24 |
$ 20.63 |
$ 27.22 |
$ 33.68 |
$ 41.10 |
|
|
||||
|
Total
return |
(4.35 )% |
(6.34 )% |
33.20 % |
30.09 % |
29.88 % |
|
|
||||
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
|||||
|
Net
assets, end of period (in millions) |
$ 1,070 |
$ 985 |
$ 1,332 |
$ 2,148 |
$ 3,764 |
|
|
||||
|
Ratio
of expenses to average net assets |
0.72 % |
0.72 % |
0.72 % |
0.69 % |
0.68 % |
|
|
||||
|
Ratio
of net income to average net assets |
1.11 % |
1.03 % |
1.13 % |
0.87 % |
1.02 % |
|
|
||||
|
Portfolio
turnover rate |
17.9 % |
11.5 % |
17.7 % |
19.2 % |
35.7 % |
|
|
||||
</R>
<R>
a Per share amounts calculated using
average shares outstanding method.
</R>
<R> Table 6
Financial Highlights (continued)
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
Net
asset value, beginning of period |
$ 10.19 |
$ 10.54 |
$ 10.62 |
$ 13.65 |
$ 17.90 |
|
|
||||
|
Income From
Investment Operations |
|
|
|
|
|
|
|||||
|
Net
investment income |
0.42 b |
0.38 b |
0.36 |
0.43 |
0.34 |
|
|
||||
|
Net
gains or losses on securities (both realized and unrealized) |
0.46 |
0.19 c |
3.26 |
4.49 |
2.19 |
|
|
||||
|
Total
from investment operations |
0.88 |
0.57 |
3.62 |
4.92 |
2.53 |
|
|
||||
|
Less
Distributions |
|
|
|
|
|
|
|||||
|
Dividends
(from net investment income) |
(0.53 ) |
(0.47 ) |
(0.52 ) |
(0.49 ) |
(0.42 ) |
|
|
||||
|
Distributions
(from capital gains) |
— |
— |
(0.05 ) |
(0.18 ) |
(0.52 ) |
|
|
||||
|
Returns
of capital |
— |
(0.02 ) |
(0.02 ) |
— |
— |
|
|
||||
|
Total
distributions |
(0.53 ) |
(0.49 ) |
(0.59 ) |
(0.67 ) |
(0.94 ) |
|
|
||||
|
Redemption
fees added to paid-in-capital |
— |
— |
— |
— |
— |
|
|
||||
|
Net
asset value, end of period |
$ 10.54 |
$ 10.62 |
$ 13.65 |
$ 17.90 |
$ 19.49 |
|
|
||||
|
Total
return |
8.87 % b |
5.38 % b |
34.84 % |
36.82 % |
14.54 % |
|
|
||||
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
|||||
|
Net
assets, end of period (in thousands) |
$ 68,720 |
$ 131,736 |
$ 291,066 |
$ 641,014 |
$ 943,318 |
|
|
||||
|
Ratio
of expenses to average net assets |
1.00 % b |
1.00 % b |
1.00 % |
0.90 % |
0.85 % |
|
|
||||
|
Ratio
of net income to average net assets |
4.09 % b |
4.07 % b |
3.49 % |
2.74 % |
1.86 % |
|
|
||||
|
Portfolio
turnover rate |
37.2 % |
9.8 % |
4.5 % |
8.4 % |
18.3 % |
|
|
||||
</R>
<R>
a Per share amounts calculated using
average shares outstanding method.
</R>
<R>
b Excludes expenses in excess of a 0 .9 0% contractual
expense limitation in effect through April 30, 2006 , and expenses in
excess of
a 1.00% contractual expense
limitation in effect through December 31, 2003 .
</R>
<R>
c The amount presented is calculate
pursuant to a methodology prescribed by the Securities and Exchange Commission
for a share outstanding throughout the period . This amount is inconsistent with
the fund`s aggregate gains and losses because of the timing of sales and
redemptions of fund shares in relation to fluctuating market values for the
investment portfolio.
</R>
PAGE
49
<R> Table 6
Financial Highlights (continued)
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||
|
Net
asset value, beginning of period |
$ 35.57 |
$ 20.92 |
$ 12.43 |
$ 18.80 |
$ 19.10 |
|
|
||||
|
Income From
Investment Operations |
|
|
|
|
|
|
|||||
|
Net
investment income |
(0.18 ) |
(0.14 ) |
(0.11 ) |
(0.03 ) |
(0.09 ) |
|
|
||||
|
Net
gains or losses on securities (both realized and unrealized) |
(14.47 ) |
(8.35 ) |
6.48 |
0.33 |
0.56 |
|
|
||||
|
Total
from investment operations |
(14.65 ) |
(8.49 ) |
6.37 |
0.30 |
0.47 |
|
|
||||
|
Less
Distributions |
|
|
|
|
|
|
|||||
|
Dividends
(from net investment income) |
— |
— |
— |
— |
— |
|
|
||||
|
Distributions
(from capital gains) |
— |
— |
— |
— |
— |
|
|
||||
|
Returns
of capital |
— |
— |
— |
— |
— |
|
|
||||
|
Total
distributions |
— |
— |
— |
— |
— |
|
|
||||
|
Net
asset value, end of period |
$ 20.92 |
$ 12.43 |
$ 18.80 |
$ 19.10 |
$ 19.57 |
|
|
||||
|
Total
return |
(41.19 )% |
(40.58 )% |
51.25 % |
1.60 % |
2.46 % |
|
|
||||
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
|||||
|
Net
assets, end of period (in millions) |
$ 5,209 |
$ 2,839 |
$ 4,380 |
$ 3,905 |
$ 3,220 |
|
|
||||
|
Ratio
of expenses to average net assets |
1.00 % |
1.11 % |
1.09 % |
1.01 % |
1.00 % |
|
|
||||
|
Ratio
of net income to average net assets |
(0.73 )% |
(0.87 )% |
(0.73 )% |
(0.15 )% b |
(0.45 )% |
|
|
||||
|
Portfolio
turnover rate |
143.6 % |
60.8 % |
47.8 % |
54.5 % |
59.2 % |
|
|
||||
</R>
<R>
a Per share amounts calculated using
average shares outstanding method.
</R>
<R>
b Includes the effect of a one-time
special dividend (0.54% of average net assets) that is not expected to recur.
</R>
Investing With
T. Rowe Price 4
!CCOUNT 2EQUIREMENTS AND
4RANSACTION )NFORMATION
Tax Identification
Number
<R>
We must have your correct Social
Security 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 IRS fine. If this information is not received within 60 days after
your account is established, your account may be redeemed at the fund`s net
asset value ( NAV ) on the redemption date.
</R>
Transaction Confirmations
<R>
We send immediate confirmations for most
of your fund transactions, but some, such as systematic purchases , divi
dend reinvestments , and checkwriting redemptions for money funds , are
reported on your account statement. Please review confirmations and statements
as soon as you receive them and promptly report any discrepancies to Share
holder Services.
</R>
Employer-Sponsored Retirement
Plans and Institutional Accounts
T. Rowe Price
Trust Company
1-800-492-7670
Transaction procedures in the
following sections may not apply to employer-sponsored retirement plans and
institu tional accounts. For procedures regarding employer-sponsored retirement
plans, please call T. Rowe Price Trust Com pany or consult your plan
administrator. For institutional account procedures, please call your
designated account manager or service representative.
We do not accept third-party
checks, except for IRA
r ollover checks
that are properly endorsed. In addition, T. Rowe Price does not accept purchases
made by credit card check
,
cash
, or traveler ` s checks .
PAGE
51
/PENING A .EW !CCOUNT
$2,500 minimum initial investment;
$1,000 for retirement plans or gifts or transfers to minors (UGMA / UTMA) accounts ($25,000 minimum
initial investment for Summit Funds only)
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.
<R>
When you open an account, you will be
asked for the name, residential 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. Entities are also
required to provide documents such as articles of incorporation, partnership
agreements, trust documents, and other applicable records .
</R>
<R>
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.)
</R>
Account Registration
If you own other T. Rowe
Price funds, be sure to register any new account just like your existing
accounts so you can exchange among them easily. (The name and account type
would have to be identical.)
For joint accounts or other types
of accounts owned or controlled by more than one party, either owner/party has
com
plete
authority to act on behalf of all and give instructions concerning the account
without notice to the other party. T. Rowe Price may, in its sole
discretion
, require written
authorization from all owners/parties to act on the account for certain
transactions (for example, to transfer ownership).
By Mail
<R>
Please make your check payable to T.
Rowe Price Funds (otherwise it will be returned) , and send your check,
together with the New Account Form, to the appropriate address below:
</R>
via U.S. Postal Service
T. Rowe Price Account
Services
P.O. Box 17300
Baltimore, MD 21297-1300
via private carriers/overnight
services
T. Rowe Price Account
Services
Mailcode 17300
4515 Painters Mill Road
Owings Mills, MD 21117-4903
By Wire
Call Investor Services for an
account number and give the following wire information to your bank:
Receiving Bank: PNC Bank, N.A.
(Pittsburgh)
Receiving Bank ABA#: 043000096
Beneficiary: T. Rowe Price [ fund name ]
Beneficiary Account: 1004397951
Originator to Beneficiary Information
(OBI):
name of owner(s) and account number
In order to obtain an account
number, you must supply the name, date of birth, Social S ecurity or
employer identifi
cation
number
, and residential
or business street address for each owner on the account.
Complete a New Account Form and
mail it to one of the appropriate T. Rowe Price addresses listed under
"By Mail."
Note: Investment will
be made, but
services may not be established
and IRS penalty withholding may occur until we receive a signed New Account Form.
<R>
Online
</R>
<R>
You can open a new mutual fund account
online. Go to troweprice.com/newaccount , where you can choose the
type of account you wish to open.
</R>
<R>
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
IRS
backup withholding. Additionally, you must provide consent to receive certain
documents electronically.
</R>
<R>
You will have the option of providing
your bank account information that will enable you to make electronic funds transfer s (EFT) to and from
your bank account. To set up this banking service online, additional steps will
be taken to
verify
your identity.
</R>
By Exchange
Call Shareholder Services or use
Tele*Access or your personal computer (see Automated Services under Information
About Your Services). The new account will have the same registration as the
account from which you are exchanging. Services for the new account may be
carried over by telephone request if they are preauthorized on the existing
account. For limitations on exchanging, see the explanation of Excessive
Trading under Transaction Procedures and Special Requirements.
In Person
Drop off your New Account Form at
any location listed on the back cover and obtain a receipt.
0URCHASING !DDITIONAL 3HARES
$100 minimum additional purchase ($1,000 for
Summit Funds);
$50
minimum
for
retirement plans and gifts or transfers to minors (UGMA/UTMA) accounts; $50 minimum for Automatic Asset
Builde
r ( $ 100 for Summit Funds )
By ACH Transfer
Use Tele*Access or your personal
computer or call Shareholder Services if you have established electronic
transfers using the ACH system.
By Wire
<R>
Call Shareholder Services or use the
wire instructions listed in Account Requirements and Transaction
Information — Important
Information About Opening a n Account.
</R>
By Mail
1. Make your check payable to T.
Rowe Price Funds (otherwise it may be returned).
2. Mail the check to us at the
following address with either a fund reinvestment slip or a note indicating the
fund
you
want to buy and your fund account number.
3. Remember to provide your account
number and the fund name on the memo line of your check.
via U.S. Postal Service
T. Rowe Price Account
Services
P.O. Box 17300
Baltimore, MD 21297-1300
(For mail via private carriers
and overnight services, see previous section.)
By Automatic
Asset Builder
Fill out the Automatic Asset
Builder section on the New Account or Shareholder Services Form.
%XCHANGING AND 2EDEEMING 3HARES
Exchange Service
<R>
You can move money from one account to
an existing , identically registered account or open a new identically
regis tered account. Remember, exchanges are purchases and sales for tax
purposes. (Exchanges into a state tax-free fund are limited to investors living
in states where the fund is registered.) For exchange policies, please see
Transaction Proce dures and Special Requirements — Excessive and
Short-Term Trading.
</R>