WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<TABLE> <S> <C>

<PAGE>

  STATEMENT OF ADDITIONAL INFORMATION
   The date of this Statement of Additional Information is May 1, 2001.

         T. ROWE PRICE BALANCED FUND, INC.
         T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
              T. Rowe Price Blue Chip Growth Fund-Advisor Class
         T. ROWE PRICE CAPITAL APPRECIATION FUND
         T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC.
         T. ROWE PRICE DEVELOPING TECHNOLOGIES FUND, INC.
         T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
         T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
         T. ROWE PRICE EQUITY INCOME FUND
              T. Rowe Price Equity Income Fund-Advisor Class
         T. ROWE PRICE FINANCIAL SERVICES FUND, INC.
         T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC.
         T. ROWE PRICE GROWTH & INCOME FUND, INC.
         T. ROWE PRICE GROWTH STOCK FUND, INC.
         T. ROWE PRICE HEALTH SCIENCES FUND, INC.
         T. ROWE PRICE INDEX TRUST, INC.
              T. Rowe Price Equity Index 500 Fund
              T. Rowe Price Extended Equity Market Index Fund
              T. Rowe Price Total Equity Market Index Fund
         T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC.
         T. ROWE PRICE MID-CAP GROWTH FUND, INC.
              T. Rowe Price Mid-Cap Growth Fund-Advisor Class
         T. ROWE PRICE MID-CAP VALUE FUND, INC.
         T. ROWE PRICE NEW AMERICA GROWTH FUND
         T. ROWE PRICE NEW ERA FUND, INC.
         T. ROWE PRICE NEW HORIZONS FUND, INC.
         T. ROWE PRICE REAL ESTATE FUND, INC.
         T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC.
              T. Rowe Price Science & Technology Fund-Advisor Class
         T. ROWE PRICE SMALL-CAP STOCK FUND, INC.
              T. Rowe Price Small-Cap Stock Fund-Advisor Class
         T. ROWE PRICE SMALL-CAP VALUE FUND, INC.
              T. Rowe Price Small-Cap Value Fund-Advisor Class
         T. ROWE PRICE VALUE FUND, INC.
              T. Rowe Price Value Fund-Advisor Class
                                       and
         INSTITUTIONAL EQUITY FUNDS, INC.
              Institutional Large-Cap Value Fund
              Institutional Small-Cap Stock Fund
              Institutional Mid-Cap Equity Growth Fund
 -------------------------------------------------------------------------------

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

   This Statement of Additional Information is not a prospectus but should be
   read in conjunction with the appropriate fund prospectus dated May 1, 2001,
   which may be obtained from T. Rowe Price Investment Services, Inc.
   ("Investment Services").
                                                                  C20-043 5/1/01
<PAGE>

   Each fund's financial statements for the year ended December 31, 2000, and
   the report of independent accountants are included in each fund's Annual
   Report and incorporated by reference into this Statement of Additional
   Information.

   If you would like a prospectus or an annual or semiannual shareholder report
   for a fund of which you are not a shareholder, please call 1-800-638-5660. A
   prospectus with more complete information, including management fees and
   expenses, will be sent to you. Please read it carefully.


<CAPTION>
                              TABLE OF CONTENTS
                              -----------------
                              Page                                       Page
                              ----                                       ----
<S>                           <C>   <C>
Capital Stock                   76       Legal Counsel                       77
------------------------------------     --------------------------------------
Code of Ethics                  63       Management of the Funds             29
------------------------------------     --------------------------------------
Custodian                       62       Net Asset Value Per Share           70
------------------------------------     --------------------------------------
Distributor for the Funds       61       Organization of the Funds           76
------------------------------------     --------------------------------------
Dividends and Distributions     70       Portfolio Management Practices      14
------------------------------------     --------------------------------------
Federal Registration of         77       Portfolio Transactions              63
Shares
------------------------------------     --------------------------------------
Independent Accountants         78       Pricing of Securities               69
------------------------------------     --------------------------------------
Investment Management           54       Principal Holders of                53
Services                                 Securities
------------------------------------     --------------------------------------
Investment Objectives and        2       Ratings of Corporate Debt           82
Policies                                 Securities
------------------------------------     --------------------------------------
Investment Performance          72       Risk Factors                         3
------------------------------------     --------------------------------------
Investment Program               6       Services by Outside Parties         60
------------------------------------     --------------------------------------
Investment Restrictions         27       Tax Status                          70
------------------------------------     --------------------------------------






 INVESTMENT OBJECTIVES AND POLICIES
 -------------------------------------------------------------------------------
   The following information supplements the discussion of each fund's
   investment objectives and policies discussed in each fund's prospectus.

   Shareholder approval is required to substantively change fund objectives.
   Unless otherwise specified, the investment programs and restrictions of the
   funds are not fundamental policies. Each fund's operating policies are
   subject to change by each Board of Directors/Trustees without shareholder
   approval. However, shareholders will be notified of a material change in an
   operating policy. Each fund's fundamental policies may not be changed without
   the approval of at least a majority of the outstanding shares of the fund or,
   if it is less, 67% of the shares represented at a meeting of shareholders at
   which the holders of 50% or more of the shares are represented. References to
   the following are as indicated:

                  Investment Company Act of 1940 ("1940 Act")
                  Securities and Exchange Commission ("SEC")
                  T. Rowe Price Associates, Inc. ("T. Rowe Price")
                  Moody's Investors Service, Inc. ("Moody's")
                  Standard & Poor's Corporation ("S&P")
                  Internal Revenue Code of 1986 ("Code")
                  T. Rowe Price International, Inc. ("T. Rowe Price
   International")

   Throughout this Statement of Additional Information, "the fund" is intended
   to refer to each fund listed on the cover page, unless otherwise indicated.


<PAGE>

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

   Because of its investment policy, the fund may or may not be suitable or
   appropriate for all investors. The fund is not a money market fund and is not
   an appropriate investment for those whose primary objective is principal
   stability. The fund will normally have substantially all (for the Balanced
   Fund 50-70% and for the Capital Appreciation Fund at least 50%) of its assets
   in equity securities (e.g., common stocks). This portion of the fund's assets
   will be subject to all of the risks of investing in the stock market. There
   is risk in every investment. The value of the portfolio securities of the
   fund will fluctuate based upon market conditions. Although the fund seeks to
   reduce risk by investing in a diversified portfolio, such diversification
   does not eliminate all risk. There can, of course, be no assurance that the
   fund will achieve its investment objective.

   Foreign Securities (All Funds other than Equity Index 500, Extended Equity
   Market, and Total Equity Market Funds)
   The fund may invest in U.S. dollar-denominated and non-U.S.
   dollar-denominated securities of foreign issuers.

   Risk Factors of Foreign Investing There are special risks in foreign
   investing. Certain of these risks are inherent in any mutual fund while
   others relate more to the countries in which the fund will invest.

  . Political and Economic Factors Individual foreign economies of some
   countries differ favorably or unfavorably from the United States' economy in
   such respects as growth of gross national product, rate of inflation, capital
   reinvestment, resource self-sufficiency, and balance of payments position.
   The internal politics of some foreign countries are not as stable as in the
   United States. For example, in 1991, the existing government in Thailand was
   overthrown in a military coup. In 1994-1995, the Mexican peso plunged in
   value setting off a severe crisis in the Mexican economy. Asia is still
   coming to terms with its own crisis and recessionary conditions sparked by
   widespread currency weakness in late 1997. In 1998, there was substantial
   turmoil in markets throughout the world. In 1999, the democratically elected
   government of Pakistan was overthrown by a military coup. The Russian
   government also defaulted on all its domestic debt. In addition, significant
   external political risks currently affect some foreign countries. Both Taiwan
   and China still claim sovereignty of one another and there is a demilitarized
   border and hostile relations between North and South Korea.

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

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

  . Investment and Repatriation Restrictions Foreign investment in the
   securities markets of certain foreign countries is restricted or controlled
   in varying degrees. These restrictions limit at times and preclude investment
   in certain of such countries and increase the cost and expenses of the fund.
   Investments by foreign investors are subject to a variety of restrictions in
   many developing countries. These restrictions may take the form of prior
   governmental approval, limits on the amount or type of securities held by
   foreigners, and limits on the types of companies in which foreigners may
   invest. Additional or different restrictions may be imposed


<PAGE>

   at any time by these or other countries in which the fund invests. In
   addition, the repatriation of both investment income and capital from several
   foreign countries is restricted and controlled under certain regulations,
   including in some cases the need for certain government consents. For
   example, capital invested in Chile normally cannot be repatriated for one
   year. In 1998, the government of Malaysia imposed currency controls which
   effectively made it impossible for foreign investors to convert Malaysian
   ringgits to foreign currencies.

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

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

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

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

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

  . Eastern Europe and Russia Changes occurring in Eastern Europe and Russia
   today could have long-term potential consequences. As restrictions fall, this
   could result in rising standards of living, lower manufacturing costs,
   growing consumer spending, and substantial economic growth. However,
   investment in most countries of Eastern Europe and Russia is highly
   speculative at this time. Political and economic reforms are too recent to
   establish a definite trend away from centrally planned economies and
   state-owned industries. The collapse of the ruble from its crawling peg
   exchange rate against the U.S. dollar has set back the path of reform for
   several years. In many of the countries of Eastern Europe and Russia, there
   is no stock exchange or formal market for securities. Such countries may also
   have government exchange controls, currencies with no


<PAGE>

   recognizable market value relative to the established currencies of western
   market economies, little or no experience in trading in securities, no
   financial reporting standards, a lack of a banking and securities
   infrastructure to handle such trading, and a legal tradition which does not
   recognize rights in private property. In addition, these countries may have
   national policies which restrict investments in companies deemed sensitive to
   the country's national interest. Further, the governments in such countries
   may require governmental or quasi-governmental authorities to act as
   custodian of the fund's assets invested in such countries, and these
   authorities may not qualify as a foreign custodian under the 1940 Act and
   exemptive relief from such Act may be required. All of these considerations
   are among the factors which cause significant risks and uncertainties to
   investment in Eastern Europe and Russia.

  . Latin America

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

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

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

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

  . Japan

   The fund's concentration of its investments in Japan means the fund will be
   more dependent on the investment considerations discussed above and may be
   more volatile than a fund which is broadly diversified geographically. To the
   extent any of the other funds also invest in Japan, such investments will be
   subject to these same factors. Additional factors relating to Japan include
   the following:

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

   Economy The Japanese economy languished for much of the last decade. Lack of
   effective governmental action in the areas of tax reform to reduce high tax
   rates, banking regulation to address enormous amounts of bad debt, and
   economic reforms to attempt to stimulate spending are among the factors cited
   as possible causes of Japan's economic problems. The yen has had a history of
   unpredictable and volatile movements against the dollar; a weakening yen
   hurts U.S. investors holding yen-denominated securities. Finally, the
   Japanese stock market has experienced wild swings in value and has often been
   considered significantly overvalued.

   Energy Japan has historically depended on oil for most of its energy
   requirements. Almost all of its oil is imported, the majority from the Middle
   East. In the past, oil prices have had a major impact on the domestic
   economy, but more recently Japan has worked to reduce its dependence on oil
   by encouraging energy


<PAGE>

   conservation and use of alternative fuels. In addition, a restructuring of
   industry, with emphasis shifting from basic industries to processing and
   assembly type industries, has contributed to the reduction of oil
   consumption. However, there is no guarantee this favorable trend will
   continue.

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



 INVESTMENT PROGRAM
 -------------------------------------------------------------------------------

                               Types of Securities

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


                               Hybrid Instruments

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

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

   The risks of investing in hybrid instruments reflect a combination of the
   risks of investing in securities, options, futures, and currencies. Thus, an
   investment in a hybrid instrument may entail significant risks that are not
   associated with a similar investment in a traditional debt instrument that
   has a fixed principal amount, is denominated in U.S. dollars, or bears
   interest either at a fixed rate or a floating rate determined by reference to
   a common, nationally published benchmark. The risks of a particular hybrid
   instrument will, of course,


<PAGE>

   depend upon the terms of the instrument, but may include, without limitation,
   the possibility of significant changes in the benchmarks or the prices of
   underlying assets to which the instrument is linked. Such risks generally
   depend upon factors which are unrelated to the operations or credit quality
   of the issuer of the hybrid instrument and which may not be readily foreseen
   by the purchaser, such as economic and political events, the supply and
   demand for the underlying assets, and interest rate movements. In recent
   years, various benchmarks and prices for underlying assets have been highly
   volatile, and such volatility may be expected in the future. Reference is
   also made to the discussion of futures, options, and forward contracts herein
   for a discussion of the risks associated with such investments.

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

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

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

   The various risks discussed above, particularly the market risk of such
   instruments, may in turn cause significant fluctuations in the net asset
   value of the fund. Accordingly, the fund will limit its investments in hybrid
   instruments to 10% of total assets. However, because of their volatility, it
   is possible that the fund's investment in hybrid instruments will account for
   more than 10% of the fund's return (positive or negative).


                        Illiquid or Restricted Securities

   Restricted securities may be sold only in privately negotiated transactions
   or in a public offering with respect to which a registration statement is in
   effect under the Securities Act of 1933 (the "1933 Act"). Where registration
   is required, the fund may be obligated to pay all or part of the registration
   expenses, and a considerable period may elapse between the time of the
   decision to sell and the time the fund may be permitted to sell a security
   under an effective registration statement. If, during such a period, adverse
   market conditions were to develop, the fund might obtain a less favorable
   price than prevailed when it decided to sell. Restricted securities will be
   priced at fair value as determined in accordance with procedures prescribed
   by the fund's Board of Directors/Trustees. If, through the appreciation of
   illiquid securities or the depreciation of liquid securities, the fund should
   be in a position where more than 15% of the value of its net assets is
   invested in illiquid assets, including restricted securities, the fund will
   take appropriate steps to protect liquidity.

   Notwithstanding the above, the fund may purchase securities which, while
   privately placed, are eligible for purchase and sale under Rule 144A under
   the 1933 Act. This rule permits certain qualified institutional buyers, such
   as the fund, to trade in privately placed securities even though such
   securities are not registered under the 1933 Act. T. Rowe Price, under the
   supervision of the fund's Board of Directors/Trustees, will


<PAGE>

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


                                    Warrants

   The fund may acquire warrants. Warrants can be highly volatile and have no
   voting rights, pay no dividends, and have no rights with respect to the
   assets of the corporation issuing them. Warrants basically are options to
   purchase securities at a specific price valid for a specific period of time.
   They do not represent ownership of the securities, but only the right to buy
   them. Warrants differ from call options in that warrants are issued by the
   issuer of the security which may be purchased on their exercise, whereas call
   options may be written or issued by anyone. The prices of warrants do not
   necessarily move parallel to the prices of the underlying securities.


                                 Debt Securities

   Balanced, Blue Chip Growth, Capital Appreciation, Capital Opportunity,
   Dividend Growth, Equity Income, Financial Services, Global Technology, Growth
   & Income, Health Sciences, Institutional Large-Cap Value, Institutional
   Small-Cap Stock, Media & Telecommunications, Mid-Cap Value, New Era, Real
   Estate, Small-Cap Stock, Small-Cap Value, and Value Funds

   Debt Obligations Although a majority of the fund's assets are invested in
   common stocks, the fund may invest in convertible securities, corporate and
   government debt securities, and preferred stocks which hold the prospect of
   contributing to the achievement of the fund's objectives. Yields on short-,
   intermediate-, and long-term securities are dependent on a variety of
   factors, including the general conditions of the money and bond markets, the
   size of a particular offering, the maturity of the obligation, and the credit
   quality and rating of the issuer. Debt securities with longer maturities tend
   to have higher yields and are generally subject to potentially greater
   capital appreciation and depreciation than obligations with shorter
   maturities and lower yields. The market prices of debt securities usually
   vary, depending upon available yields. An increase in interest rates will
   generally reduce the value of portfolio investments, and a decline in
   interest rates will generally increase the value of portfolio investments.
   The ability of the fund to achieve its investment objective is also dependent
   on the continuing ability of the issuers of the debt securities in which the
   fund invests to meet their obligations for the payment of interest and
   principal when due. The fund's investment program permits it to purchase
   below investment-grade securities. Since investors generally perceive that
   there are greater risks associated with investment in lower-quality
   securities, the yields from such securities normally exceed those obtainable
   from higher-quality securities. However, the principal value of lower-rated
   securities generally will fluctuate more widely than higher-quality
   securities. Lower-quality investments entail a higher risk of default-that
   is, the nonpayment of interest and principal by the issuer than
   higher-quality investments. Such securities are also subject to special
   risks, discussed below. Although the fund seeks to reduce risk by portfolio
   diversification, credit analysis, and attention to trends in the economy,
   industries, and financial markets, such efforts will not eliminate all risk.
   There can, of course, be no assurance that the fund will achieve its
   investment objective.

   After purchase by the fund, a debt security may cease to be rated or its
   rating may be reduced below the minimum required for purchase by the fund.
   Neither event will require a sale of such security by the fund. However, T.
   Rowe Price will consider such events in its determination of whether the fund
   should continue to


<PAGE>

   hold the security. To the extent that the ratings given by Moody's or S&P may
   change as a result of changes in such organizations or their rating systems,
   the fund will attempt to use comparable ratings as standards for investments
   in accordance with the investment policies contained in the prospectus.

   Special Risks of High-Yield Investing The fund may invest in low-quality
   bonds commonly referred to as "junk bonds." Junk bonds are regarded as
   predominantly speculative with respect to the issuer's continuing ability to
   meet principal and interest payments. Because investment in low- and
   lower-medium-quality bonds involves greater investment risk, to the extent
   the fund invests in such bonds, achievement of its investment objective will
   be more dependent on T. Rowe Price's credit analysis than would be the case
   if the fund were investing in higher-quality bonds. High-yield bonds may be
   more susceptible to real or perceived adverse economic conditions than
   investment-grade bonds. A projection of an economic downturn, or higher
   interest rates, for example, could cause a decline in high-yield bond prices
   because the advent of such events could lessen the ability of highly
   leveraged issuers to make principal and interest payments on their debt
   securities. In addition, the secondary trading market for high-yield bonds
   may be less liquid than the market for higher-grade bonds, which can
   adversely affect the ability of a fund to dispose of its portfolio
   securities. Bonds for which there is only a "thin" market can be more
   difficult to value inasmuch as objective pricing data may be less available
   and judgment may play a greater role in the valuation process.

   Fixed income securities in which the fund may invest include, but are not
   limited to, those described below.

  . U.S. Government Obligations Bills, notes, bonds, and other debt securities
   issued by the U.S. Treasury. These are direct obligations of the U.S.
   government and differ mainly in the length of their maturities.

  . U.S. Government Agency Securities Issued or guaranteed by U.S.
   government-sponsored enterprises and federal agencies. These include
   securities issued by the Federal National Mortgage Association, Government
   National Mortgage Association, Federal Home Loan Bank, Federal Land Banks,
   Farmers Home Administration, Banks for Cooperatives, Federal Intermediate
   Credit Banks, Federal Financing Bank, Farm Credit Banks, the Small Business
   Association, and the Tennessee Valley Authority. Some of these securities are
   supported by the full faith and credit of the U.S. Treasury; the remainder
   are supported only by the credit of the instrumentality, which may or may not
   include the right of the issuer to borrow from the Treasury.

  . Bank Obligations Certificates of deposit, bankers' acceptances, and other
   short-term debt obligations. Certificates of deposit are short-term
   obligations of commercial banks. A bankers' acceptance is a time draft drawn
   on a commercial bank by a borrower, usually in connection with international
   commercial transactions. Certificates of deposit may have fixed or variable
   rates. The fund may invest in U.S. banks, foreign branches of U.S. banks,
   U.S. branches of foreign banks, and foreign branches of foreign banks.

  . Short-Term Corporate Debt Securities Outstanding nonconvertible corporate
   debt securities (e.g., bonds and debentures) which have one year or less
   remaining to maturity. Corporate notes may have fixed, variable, or floating
   rates.

  . Commercial Paper and Commercial Notes Short-term promissory notes issued by
   corporations primarily to finance short-term credit needs. Certain notes may
   have floating or variable rates and may contain options, exercisable by
   either the buyer or the seller, that extend or shorten the maturity of the
   note.

  . Foreign Government Securities Issued or guaranteed by a foreign government,
   province, instrumentality, political subdivision, or similar unit thereof.

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

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


             When-Issued Securities and Forward Commitment Contracts

   The price of such securities, which may be expressed in yield terms, is fixed
   at the time the commitment to purchase is made, but delivery and payment take
   place at a later date. Normally, the settlement date occurs within 90 days of
   the purchase for when-issueds, but may be substantially longer for forwards.
   During the


<PAGE>

   period between purchase and settlement, no payment is made by the fund to the
   issuer and no interest accrues to the fund. The purchase of these securities
   will result in a loss if their value declines prior to the settlement date.
   This could occur, for example, if interest rates increase prior to
   settlement. The longer the period between purchase and settlement, the
   greater the risks are. At the time the fund makes the commitment to purchase
   these securities, it will record the transaction and reflect the value of the
   security in determining its net asset value. The fund will cover these
   securities by maintaining cash, liquid, high-grade debt securities, or other
   suitable cover as permitted by the SEC with its custodian bank equal in value
   to commitments for them during the time between the purchase and the
   settlement. Therefore, the longer this period, the longer the period during
   which alternative investment options are not available to the fund (to the
   extent of the securities used for cover). Such securities either will mature
   or, if necessary, be sold on or before the settlement date.

   To the extent the fund remains fully or almost fully invested (in securities
   with a remaining maturity of more than one year) at the same time it
   purchases these securities, there will be greater fluctuations in the fund's
   net asset value than if the fund did not purchase them.


                           Mortgage-Related Securities

   Balanced Fund

   Mortgage-related securities in which the fund may invest include, but are not
   limited to, those described below.

  . Mortgage-Backed Securities Mortgage-backed securities are securities
   representing an interest in a pool of mortgages. The mortgages may be of a
   variety of types, including adjustable rate, conventional 30-year fixed rate,
   graduated payment, and 15-year. Principal and interest payments made on the
   mortgages in the underlying mortgage pool are passed through to the fund.
   This is in contrast to traditional bonds where principal is normally paid
   back at maturity in a lump sum. Unscheduled prepayments of principal shorten
   the securities' weighted average life and may lower their total return. (When
   a mortgage in the underlying mortgage pool is prepaid, an unscheduled
   principal prepayment is passed through to the fund. This principal is
   returned to the fund at par. As a result, if a mortgage security were trading
   at a premium, its total return would be lowered by prepayments, and if a
   mortgage security were trading at a discount, its total return would be
   increased by prepayments.) The value of these securities also may change
   because of changes in the market's perception of the creditworthiness of the
   federal agency that issued them. In addition, the mortgage securities market
   in general may be adversely affected by changes in governmental regulation or
   tax policies.

  . U.S. Government Agency Mortgage-Backed Securities These are obligations
   issued or guaranteed by the United States government or one of its agencies
   or instrumentalities, such as the Government National Mortgage Association
   ("Ginnie Mae" or "GNMA"), the Federal National Mortgage Association ("Fannie
   Mae" or "FNMA") the Federal Home Loan Mortgage Corporation ("Freddie Mac" or
   "FHLMC"), and the Federal Agricultural Mortgage Corporation ("Farmer Mac" or
   "FAMC"). FNMA, FHLMC, and FAMC obligations are not backed by the full faith
   and credit of the U.S. government as GNMA certificates are, but they are
   supported by the instrumentality's right to borrow from the United States
   Treasury. U.S. Government Agency Mortgage-Backed Certificates provide for the
   pass-through to investors of their pro-rata share of monthly payments
   (including any prepayments) made by the individual borrowers on the pooled
   mortgage loans, net of any fees paid to the guarantor of such securities and
   the servicer of the underlying mortgage loans. Each of GNMA, FNMA, FHLMC, and
   FAMC guarantees timely distributions of interest to certificate holders. GNMA
   and FNMA guarantee timely distributions of scheduled principal. FHLMC has in
   the past guaranteed only the ultimate collection of principal of the
   underlying mortgage loan; however, FHLMC now issues mortgage-backed
   securities (FHLMC Gold PCS) which also guarantee timely payment of monthly
   principal reductions.

  . Ginnie Mae Certificates Ginnie Mae is a wholly owned corporate
   instrumentality of the United States within the Department of Housing and
   Urban Development. The National Housing Act of 1934, as amended (the "Housing
   Act"), authorizes Ginnie Mae to guarantee the timely payment of the principal
   of and interest on certificates that are based on and backed by a pool of
   mortgage loans insured by the Federal Housing Administration under the
   Housing Act, or Title V of the Housing Act of 1949 ("FHA Loans"), or
   guaranteed


<PAGE>

   by the Department of Veterans Affairs under the Servicemen's Readjustment Act
   of 1944, as amended ("VA Loans"), or by pools of other eligible mortgage
   loans. The Housing Act provides that the full faith and credit of the United
   States government is pledged to the payment of all amounts that may be
   required to be paid under any guaranty. In order to meet its obligations
   under such guaranty, Ginnie Mae is authorized to borrow from the United
   States Treasury with no limitations as to amount.

  . Fannie Mae Certificates Fannie Mae is a federally chartered and privately
   owned corporation organized and existing under the Federal National Mortgage
   Association Charter Act of 1938. FNMA Certificates represent a pro-rata
   interest in a group of mortgage loans purchased by Fannie Mae. FNMA
   guarantees the timely payment of principal and interest on the securities it
   issues. The obligations of FNMA are not backed by the full faith and credit
   of the U.S. government.

  . Freddie Mac Certificates Freddie Mac is a corporate instrumentality of the
   United States created pursuant to the Emergency Home Finance Act of 1970, as
   amended ("FHLMC Act"). Freddie Mac Certificates represent a pro-rata interest
   in a group of mortgage loans ("Freddie Mac Certificates") purchased by
   Freddie Mac. Freddie Mac guarantees timely payment of interest and principal
   on certain securities it issues and timely payment of interest and eventual
   payment of principal on other securities it issues. The obligations of
   Freddie Mac are obligations solely of Freddie Mac and are not backed by the
   full faith and credit of the U.S. government.

  . Farmer Mac Certificates Farmer Mac is a federally chartered instrumentality
   of the United States established by Title VIII of the Farm Credit Act of
   1971, as amended ("Charter Act"). Farmer Mac was chartered primarily to
   attract new capital for financing of agricultural real estate by making a
   secondary market in certain qualified agricultural real estate loans. Farmer
   Mac provides guarantees of timely payment of principal and interest on
   securities representing interests in, or obligations backed by, pools of
   mortgages secured by first liens on agricultural real estate ("Farmer Mac
   Certificates"). Similar to Fannie Mae and Freddie Mac, Farmer Mac
   Certificates are not supported by the full faith and credit of the U.S.
   government; rather, Farmer Mac may borrow from the U.S. Treasury to meet its
   guaranty obligations.

   As discussed above, prepayments on the underlying mortgages and their effect
   upon the rate of return of a mortgage-backed security, is the principal
   investment risk for a purchaser of such securities, like the fund. Over time,
   any pool of mortgages will experience prepayments due to a variety of
   factors, including (1) sales of the underlying homes (including
   foreclosures), (2) refinancings of the underlying mortgages, and (3)
   increased amortization by the mortgagee. These factors, in turn, depend upon
   general economic factors, such as level of interest rates and economic
   growth. Thus, investors normally expect prepayment rates to increase during
   periods of strong economic growth or declining interest rates, and to
   decrease in recessions and rising interest rate environments. Accordingly,
   the life of the mortgage-backed security is likely to be substantially
   shorter than the stated maturity of the mortgages in the underlying pool.
   Because of such variation in prepayment rates, it is not possible to predict
   the life of a particular mortgage-backed security, but FHA statistics
   indicate that 25- to 30-year single family dwelling mortgages have an average
   life of approximately 12 years. The majority of Ginnie Mae Certificates are
   backed by mortgages of this type, and, accordingly, the generally accepted
   practice treats Ginnie Mae Certificates as 30-year securities which prepay in
   full in the 12th year. FNMA and Freddie Mac Certificates may have differing
   prepayment characteristics.

   Fixed rate mortgage-backed securities bear a stated "coupon rate" which
   represents the effective mortgage rate at the time of issuance, less certain
   fees to GNMA, FNMA, and FHLMC for providing the guarantee, and the issuer for
   assembling the pool and for passing through monthly payments of interest and
   principal.

   Payments to holders of mortgage-backed securities consist of the monthly
   distributions of interest and principal less the applicable fees. The actual
   yield to be earned by a holder of mortgage-backed securities is calculated by
   dividing interest payments by the purchase price paid for the mortgage-backed
   securities (which may be at a premium or a discount from the face value of
   the certificate).

   Monthly distributions of interest, as contrasted to semiannual distributions
   which are common for other fixed interest investments, have the effect of
   compounding and thereby raising the effective annual yield earned on
   mortgage-backed securities. Because of the variation in the life of the pools
   of mortgages which back various


<PAGE>

   mortgage-backed securities, and because it is impossible to anticipate the
   rate of interest at which future principal payments may be reinvested, the
   actual yield earned from a portfolio of mortgage-backed securities will
   differ significantly from the yield estimated by using an assumption of a
   certain life for each mortgage-backed security included in such a portfolio
   as described above.

  . Collateralized Mortgage Obligations (CMOs) CMOs are bonds that are
   collateralized by whole loan mortgages or mortgage pass-through securities.
   The bonds issued in a CMO deal are divided into groups, and each group of
   bonds is referred to as a "tranche." Under the traditional CMO structure, the
   cash flows generated by the mortgages or mortgage pass-through securities in
   the collateral pool are used to first pay interest and then pay principal to
   the CMO bondholders. The bonds issued under such CMO structure are retired
   sequentially as opposed to the pro-rata return of principal found in
   traditional pass-through obligations. Subject to the various provisions of
   individual CMO issues, the cash flow generated by the underlying collateral
   (to the extent it exceeds the amount required to pay the stated interest) is
   used to retire the bonds. Under the CMO structure, the repayment of principal
   among the different tranches is prioritized in accordance with the terms of
   the particular CMO issuance. The "fastest-pay" tranche of bonds, as specified
   in the prospectus for the issuance, would initially receive all principal
   payments. When that tranche of bonds is retired, the next tranche, or
   tranches, in the sequence, as specified in the prospectus, receive all of the
   principal payments until they are retired. The sequential retirement of bond
   groups continues until the last tranche, or group of bonds, is retired.
   Accordingly, the CMO structure allows the issuer to use cash flows of long
   maturity, monthly-pay collateral to formulate securities with short,
   intermediate and long final maturities and expected average lives.

   In recent years, new types of CMO tranches have evolved. These include
   floating rate CMOs, planned amortization classes, accrual bonds and CMO
   residuals. These newer structures affect the amount and timing of principal
   and interest received by each tranche from the underlying collateral. Under
   certain of these new structures, given classes of CMOs have priority over
   others with respect to the receipt of prepayments on the mortgages.
   Therefore, depending on the type of CMOs in which the fund invests, the
   investment may be subject to a greater or lesser risk of prepayment than
   other types of mortgage-related securities.

   The primary risk of any mortgage security is the uncertainty of the timing of
   cash flows. For CMOs, the primary risk results from the rate of prepayments
   on the underlying mortgages serving as collateral and from the structure of
   the deal (priority of the individual tranches). An increase or decrease in
   prepayment rates (resulting from a decrease or increase in mortgage interest
   rates) will affect the yield, average life and price of CMOs. The prices of
   certain CMOs, depending on their structure and the rate of prepayments, can
   be volatile. Some CMOs may also not be as liquid as other securities.

  . U.S. Government Agency Multi-class Pass-Through Securities Unlike
   Collateralized Mortgage Obligations (CMOs), U.S. Government Agency
   Multi-class Pass-Through Securities, which include FNMA Guaranteed REMIC
   Pass-Through Certificates and FHLMC Multi-Class Mortgage Participation
   Certificates, are ownership interests in a pool of Mortgage Assets. Unless
   the context indicates otherwise, all references herein to CMOs include
   multi-class pass-through securities.

  . Multi-Class Residential Mortgage Securities Such securities represent
   interests in pools of mortgage loans to residential home buyers made by
   commercial banks, savings and loan associations or other financial
   institutions. Unlike GNMA, FNMA and FHLMC securities, the payment of
   principal and interest on Multi-Class Residential Mortgage Securities is not
   guaranteed by the U.S. government or any of its agencies. Accordingly, yields
   on Multi-Class Residential Mortgage Securities have been historically higher
   than the yields on U.S. government mortgage securities. However, the risk of
   loss due to default on such instruments is higher since they are not
   guaranteed by the U.S. government or its agencies. Additionally, pools of
   such securities may be divided into senior or subordinated segments. Although
   subordinated mortgage securities may have a higher yield than senior mortgage
   securities, the risk of loss of principal is greater because losses on the
   underlying mortgage loans must be borne by persons holding subordinated
   securities before those holding senior mortgage securities.

  . Privately Issued Mortgage-Backed Certificates These are pass-through
   certificates issued by non-governmental issuers. Pools of conventional
   residential or commercial mortgage loans created by such issuers generally
   offer a higher rate of interest than government and government-related pools
   because there are no direct or indirect


<PAGE>

   government guarantees of payment. Timely payment of interest and principal of
   these pools is, however, generally supported by various forms of insurance or
   guarantees, including individual loan, title, pool and hazard insurance. The
   insurance and guarantees are issued by government entities, private insurance
   or the mortgage poolers. Such insurance and guarantees and the
   creditworthiness of the issuers thereof will be considered in determining
   whether a mortgage-related security meets the fund's quality standards. The
   fund may buy mortgage-related securities without insurance or guarantees if
   through an examination of the loan experience and practices of the poolers,
   the investment manager determines that the securities meet the fund's quality
   standards.

  . Stripped Mortgage-Backed Securities These instruments are a type of
   potentially high-risk derivative. They represent interests in a pool of
   mortgages, the cash flow of which has been separated into its interest and
   principal components. "IOs" (interest only securities) receive the interest
   portion of the cash flow while "POs" (principal only securities) receive the
   principal portion. IOs and POs are usually structured as tranches of a CMO.
   Stripped Mortgage-Backed Securities may be issued by U.S. government agencies
   or by private issuers similar to those described above with respect to CMOs
   and privately issued mortgage-backed certificates. As interest rates rise and
   fall, the value of IOs tends to move in the same direction as interest rates.
   The value of the other mortgage-backed securities described herein, like
   other debt instruments, will tend to move in the opposite direction compared
   to interest rates. Under the Code, POs may generate taxable income from the
   current accrual of original issue discount, without a corresponding
   distribution of cash to the fund.

   The cash flows and yields on IO and PO classes are extremely sensitive to the
   rate of principal payments (including prepayments) on the related underlying
   mortgage assets. In the case of IOs, prepayments affect the amount, but not
   the timing, of cash flows provided to the investor. In contrast, prepayments
   on the mortgage pool affect the timing, but not the amount, of cash flows
   received by investors in POs. For example, a rapid or slow rate of principal
   payments may have a material adverse effect on the prices of IOs or POs,
   respectively. If the underlying mortgage assets experience greater than
   anticipated prepayments of principal, an investor may fail to fully recoup
   its initial investment in an IO class of a stripped mortgage-backed security,
   even if the IO class is rated AAA or Aaa or is derived from a full faith and
   credit obligation. Conversely, if the underlying mortgage assets experience
   slower than anticipated prepayments of principal, the price on a PO class
   will be affected more severely than would be the case with a traditional
   mortgage-backed security.

   The staff of the SEC has advised the fund that it believes the fund should
   treat IOs and POs, other than government-issued IOs or POs backed by fixed
   rate mortgages, as illiquid securities and, accordingly, limit its
   investments in such securities, together with all other illiquid securities,
   to 15% of the fund's net assets. Under the staff's position, the
   determination of whether a particular government-issued IO or PO backed by
   fixed rate mortgages is liquid may be made on a case by case basis under
   guidelines and standards established by the fund's Board of
   Directors/Trustees. The fund's Board of Directors/Trustees has delegated to
   T. Rowe Price the authority to determine the liquidity of these investments
   based on the following guidelines: the type of issuer; type of collateral,
   including age and prepayment characteristics; rate of interest on coupon
   relative to current market rates and the effect of the rate on the potential
   for prepayments; complexity of the issue's structure, including the number of
   tranches; size of the issue and the number of dealers who make a market in
   the IO or PO.


                             Asset-Backed Securities

   The credit quality of most asset-backed securities depends primarily on the
   credit quality of the assets underlying such securities, how well the entity
   issuing the security is insulated from the credit risk of the originator or
   any other affiliated entities, and the amount and quality of any credit
   support provided to the securities. The rate of principal payment on
   asset-backed securities generally depends on the rate of principal payments
   received on the underlying assets, which in turn may be affected by a variety
   of economic and other factors. As a result, the yield on any asset-backed
   security is difficult to predict with precision and actual yield to maturity
   may be more or less than the anticipated yield to maturity. Asset-backed
   securities may be classified as pass-through certificates or collateralized
   obligations.

   Pass-through certificates are asset-backed securities which represent an
   undivided fractional ownership interest in an underlying pool of assets.
   Pass-through certificates usually provide for payments of principal and


<PAGE>

   interest received to be passed through to their holders, usually after
   deduction for certain costs and expenses incurred in administering the pool.

   Because pass-through certificates represent an ownership interest in the
   underlying assets, the holders thereof bear directly the risk of any defaults
   by the obligors on the underlying assets not covered by any credit support.

   Asset-backed securities issued in the form of debt instruments, also known as
   collateralized obligations, are generally issued as the debt of a special
   purpose entity organized solely for the purpose of owning such assets and
   issuing such debt. Such assets are most often trade, credit card or
   automobile receivables. The assets collateralizing such asset-backed
   securities are pledged to a trustee or custodian for the benefit of the
   holders thereof. Such issuers generally hold no assets other than those
   underlying the asset-backed securities and any credit support provided. As a
   result, although payments on such asset-backed securities are obligations of
   the issuers, in the event of defaults on the underlying assets not covered by
   any credit support, the issuing entities are unlikely to have sufficient
   assets to satisfy their obligations on the related asset-backed securities.


                            Real Estate and REIT Risk

   Primarily Real Estate Fund (but also any other fund investing in REITs)
   Investors in the fund may experience many of the same risks involved with
   investing in real estate directly. These risks include: declines in real
   estate values, risks related to local or general economic conditions,
   particularly lack of demand, overbuilding and increased competition,
   increases in property taxes and operating expenses, changes in zoning laws,
   heavy cash flow dependency, possible lack of availability of mortgage funds,
   obsolescence, losses due to natural disasters, condemnation of properties,
   regulatory limitations on rents and fluctuations in rental income, variations
   in market rental rates, and possible environmental liabilities. Real Estate
   Investment Trusts ("REITs") may own real estate properties (Equity REITs) and
   be subject to these risks directly, or may make or purchase mortgages
   (Mortgage REITs) and be subject to these risks indirectly through underlying
   construction, development, and long-term mortgage loans that may default or
   have payment problems.

   Equity REITs can be affected by rising interest rates that may cause
   investors to demand a high annual yield from future distributions which, in
   turn, could decrease the market prices for the REITs. In addition, rising
   interest rates also increase the costs of obtaining financing for real estate
   projects. Since many real estate projects are dependent upon receiving
   financing, this could cause the value of the Equity REITs in which the fund
   invests to decline.

   Mortgage REITs may hold mortgages that the mortgagors elect to prepay during
   periods of declining interest rates which may diminish the yield on such
   REITs. In addition, borrowers may not be able to repay mortgages when due
   which could have a negative effect on the fund.

   Some REITs have relatively small market capitalizations which could increase
   their volatility. REITs tend to be dependent upon specialized management
   skills and have limited diversification so they are subject to risks inherent
   in operating and financing a limited number of properties. In addition, when
   the fund invests in REITs, a shareholder will bear his proportionate share of
   fund expenses and, indirectly bear similar expenses of the REITs. REITs
   depend generally on their ability to generate cash flow to make distributions
   to shareholders. In addition, both equity and mortgage REITs are subject to
   the risks of failing to qualify for tax-free status of income under the Code
   or failing to maintain exemption from the 1940 Act.



 PORTFOLIO MANAGEMENT PRACTICES
 -------------------------------------------------------------------------------

                         Lending of Portfolio Securities

   Securities loans are made to broker-dealers, institutional investors, or
   other persons, pursuant to agreements requiring that the loans be
   continuously secured by collateral at least equal at all times to the value
   of the securities lent, marked to market on a daily basis. The collateral
   received will consist of cash, U.S. government


<PAGE>

   securities, letters of credit, or such other collateral as may be permitted
   under its investment program. While the securities are being lent, the fund
   will continue to receive the equivalent of the interest or dividends paid by
   the issuer on the securities, as well as interest on the investment of the
   collateral or a fee from the borrower. The fund has a right to call each loan
   and obtain the securities, within such period of time which coincides with
   the normal settlement period for purchases and sales of such securities in
   the respective markets. The fund will not have the right to vote on
   securities while they are being lent, but it will call a loan in anticipation
   of any important vote. The risks in lending portfolio securities, as with
   other extensions of secured credit, consist of possible delay in receiving
   additional collateral or in the recovery of the securities or possible loss
   of rights in the collateral should the borrower fail financially. Loans will
   only be made to firms deemed by T. Rowe Price to be of good standing and will
   not be made unless, in the judgment of T. Rowe Price, the consideration to be
   earned from such loans would justify the risk.


                         Interfund Borrowing and Lending

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


                              Repurchase Agreements

   The fund may enter into a repurchase agreement through which an investor
   (such as the fund) purchases a security (known as the "underlying security")
   from a well-established securities dealer or a bank that is a member of the
   Federal Reserve System. Any such dealer or bank will be on T. Rowe Price's
   approved list and have a credit rating with respect to its short-term debt of
   at least A1 by S&P, P1 by Moody's, or the equivalent rating by T. Rowe Price.
   At that time, the bank or securities dealer agrees to repurchase the
   underlying security at the same price, plus specified interest. Repurchase
   agreements are generally for a short period of time, often less than a week.
   Repurchase agreements which do not provide for payment within seven days will
   be treated as illiquid securities. The fund will only enter into repurchase
   agreements where (1) the underlying securities are of the type (excluding
   maturity limitations) which the fund's investment guidelines would allow it
   to purchase directly, (2) the market value of the underlying security,
   including interest accrued, will be at all times equal to or exceed the value
   of the repurchase agreement, and (3) payment for the underlying security is
   made only upon physical delivery or evidence of book-entry transfer to the
   account of the custodian or a bank acting as agent. In the event of a
   bankruptcy or other default of a seller of a repurchase agreement, the fund
   could experience both delays in liquidating the underlying security and
   losses, including: (a) possible decline in the value of the underlying
   security during the period while the fund seeks to enforce its rights
   thereto; (b) possible subnormal levels of income and lack of access to income
   during this period; and (c) expenses of enforcing its rights.


                          Reverse Repurchase Agreements

   Although the fund has no current intention of engaging in reverse repurchase
   agreements, the fund reserves the right to do so. Reverse repurchase
   agreements are ordinary repurchase agreements in which a fund is the seller
   of, rather than the investor in, securities, and agrees to repurchase them at
   an agreed upon time and price. Use of a reverse repurchase agreement may be
   preferable to a regular sale and later repurchase of the securities because
   it avoids certain market risks and transaction costs. A reverse repurchase
   agreement may be viewed as a type of borrowing by the fund, subject to
   Investment Restriction (1). (See "Investment Restrictions.")


                              Money Market Reserves

   It is expected that the fund will invest its cash reserves primarily in one
   or more money market funds established for the exclusive use of the T. Rowe
   Price family of mutual funds and other clients of T. Rowe Price. Currently,
   two such money market funds are in operation-T. Rowe Price Reserve Investment
   Fund ("RIF") and T. Rowe Price Government Reserve Investment Fund ("GRF"),
   each a series of the T. Rowe Price


<PAGE>

   Reserve Investment Funds, Inc. Additional series may be created in the
   future. These funds were created and operate under an Exemptive Order issued
   by the SEC (Investment Company Act Release No. IC-22770, July 29, 1997).

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

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

   Neither fund is insured or guaranteed by the U.S. government, and there is no
   assurance they will maintain a stable net asset value of $1.00 per share.

   All Funds except Equity Index 500, Extended Equity Market Index, and Total
   Equity Market Index Funds


                                     Options

   Options are a type of potentially high-risk derivative.


                          Writing Covered Call Options

   The fund may write (sell) American or European style "covered" call options
   and purchase options to close out options previously written by the fund. In
   writing covered call options, the fund expects to generate additional premium
   income which should serve to enhance the fund's total return and reduce the
   effect of any price decline of the security or currency involved in the
   option. Covered call options will generally be written on securities or
   currencies which, in T. Rowe Price's opinion, are not expected to have any
   major price increases or moves in the near future but which, over the long
   term, are deemed to be attractive investments for the fund.

   A call option gives the holder (buyer) the "right to purchase," and the
   writer (seller) has the "obligation to sell," a security or currency at a
   specified price (the exercise price) at expiration of the option (European
   style) or at any time until a certain date (the expiration date) (American
   style). So long as the obligation of the writer of a call option continues,
   he may be assigned an exercise notice by the broker-dealer through whom such
   option was sold, requiring him to deliver the underlying security or currency
   against payment of the exercise price. This obligation terminates upon the
   expiration of the call option, or such earlier time at which the writer
   effects a closing purchase transaction by repurchasing an option identical to
   that previously sold. To secure his obligation to deliver the underlying
   security or currency in the case of a call option, a writer is required to
   deposit in escrow the underlying security or currency or other assets in
   accordance with the rules of a clearing corporation.

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

   Portfolio securities or currencies on which call options may be written will
   be purchased solely on the basis of investment considerations consistent with
   the fund's investment objective. The writing of covered call options is a
   conservative investment technique believed to involve relatively little risk
   (in contrast to the writing of


<PAGE>

   naked or uncovered options, which the fund generally will not do), but
   capable of enhancing the fund's total return. When writing a covered call
   option, a fund, in return for the premium, gives up the opportunity for
   profit from a price increase in the underlying security or currency above the
   exercise price, but conversely retains the risk of loss should the price of
   the security or currency decline. Unlike one who owns securities or
   currencies not subject to an option, the fund has no control over when it may
   be required to sell the underlying securities or currencies, since it may be
   assigned an exercise notice at any time prior to the expiration of its
   obligation as a writer. If a call option which the fund has written expires,
   the fund will realize a gain in the amount of the premium; however, such gain
   may be offset by a decline in the market value of the underlying security or
   currency during the option period. If the call option is exercised, the fund
   will realize a gain or loss from the sale of the underlying security or
   currency. The fund does not consider a security or currency covered by a call
   to be "pledged" as that term is used in the fund's policy which limits the
   pledging or mortgaging of its assets. If the fund writes an uncovered option
   as described above, it will bear the risk of having to purchase the security
   subject to the option at a price higher than the exercise price of the
   option. As the price of a security could appreciate substantially, the fund's
   loss could be significant.

   The premium received is the market value of an option. The premium the fund
   will receive from writing a call option will reflect, among other things, the
   current market price of the underlying security or currency, the relationship
   of the exercise price to such market price, the historical price volatility
   of the underlying security or currency, and the length of the option period.
   Once the decision to write a call option has been made, T. Rowe Price, in
   determining whether a particular call option should be written on a
   particular security or currency, will consider the reasonableness of the
   anticipated premium and the likelihood that a liquid secondary market will
   exist for those options. The premium received by the fund for writing covered
   call options will be recorded as a liability of the fund in the portfolio of
   investments. This liability will be adjusted daily to the option's current
   market value, which will be the latest sale price at the time at which the
   net asset value per share of the fund is computed (close of the New York
   Stock Exchange), or, in the absence of such sale, the mean of the latest bid
   and asked prices. The option will be terminated upon expiration of the
   option, the purchase of an identical option in a closing transaction, or
   delivery of the underlying security or currency upon the exercise of the
   option.

   Closing transactions will be effected in order to realize a profit on an
   outstanding call option, to prevent an underlying security or currency from
   being called, or to permit the sale of the underlying security or currency.
   Furthermore, effecting a closing transaction will permit the fund to write
   another call option on the underlying security or currency with either a
   different exercise price or expiration date or both. If the fund desires to
   sell a particular security or currency from its portfolio on which it has
   written a call option, or purchased a put option, it will seek to effect a
   closing transaction prior to, or concurrently with, the sale of the security
   or currency. There is, of course, no assurance that the fund will be able to
   effect such closing transactions at favorable prices. If the fund cannot
   enter into such a transaction, it may be required to hold a security or
   currency that it might otherwise have sold. When the fund writes a covered
   call option, it runs the risk of not being able to participate in the
   appreciation of the underlying securities or currencies above the exercise
   price, as well as the risk of being required to hold on to securities or
   currencies that are depreciating in value. This could result in higher
   transaction costs. The fund will pay transaction costs in connection with the
   writing of options to close out previously written options. Such transaction
   costs are normally higher than those applicable to purchases and sales of
   portfolio securities.

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

   The fund will realize a profit or loss from a closing purchase transaction if
   the cost of the transaction is less or more than the premium received from
   the writing of the option. Because increases in the market price of a call
   option will generally reflect increases in the market price of the underlying
   security or currency, any loss


<PAGE>

   resulting from the repurchase of a call option is likely to be offset in
   whole or in part by appreciation of the underlying security or currency owned
   by the fund.

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


                           Writing Covered Put Options

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

   The fund would write put options only on a covered basis, which means that
   the fund would maintain in a segregated account cash, U.S. government
   securities, other liquid high-grade debt obligations, or other suitable cover
   as determined by the SEC, in an amount not less than the exercise price or
   the fund will own an option to sell the underlying security or currency
   subject to the option having an exercise price equal to or greater than the
   exercise price of the "covered" option at all times while the put option is
   outstanding. (The rules of a clearing corporation currently require that such
   assets be deposited in escrow to secure payment of the exercise price.)

   The fund would generally write covered put options in circumstances where T.
   Rowe Price wishes to purchase the underlying security or currency for the
   fund's portfolio at a price lower than the current market price of the
   security or currency. In such event the fund would write a put option at an
   exercise price which, reduced by the premium received on the option, reflects
   the lower price it is willing to pay. Since the fund would also receive
   interest on debt securities or currencies maintained to cover the exercise
   price of the option, this technique could be used to enhance current return
   during periods of market uncertainty. The risk in such a transaction would be
   that the market price of the underlying security or currency would decline
   below the exercise price less the premiums received. Such a decline could be
   substantial and result in a significant loss to the fund. In addition, the
   fund, because it does not own the specific securities or currencies which it
   may be required to purchase in exercise of the put, cannot benefit from
   appreciation, if any, with respect to such specific securities or currencies.

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


                             Purchasing Put Options

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

   The fund may purchase a put option on an underlying security or currency (a
   "protective put") owned by the fund as a defensive technique in order to
   protect against an anticipated decline in the value of the security or
   currency. Such hedge protection is provided only during the life of the put
   option when the fund, as the holder of the put option, is able to sell the
   underlying security or currency at the put exercise price regardless


<PAGE>

   of any decline in the underlying security's market price or currency's
   exchange value. For example, a put option may be purchased in order to
   protect unrealized appreciation of a security or currency where T. Rowe Price
   deems it desirable to continue to hold the security or currency because of
   tax considerations. The premium paid for the put option and any transaction
   costs would reduce any capital gain otherwise available for distribution when
   the security or currency is eventually sold.

   The fund may also purchase put options at a time when the fund does not own
   the underlying security or currency. By purchasing put options on a security
   or currency it does not own, the fund seeks to benefit from a decline in the
   market price of the underlying security or currency. If the put option is not
   sold when it has remaining value, and if the market price of the underlying
   security or currency remains equal to or greater than the exercise price
   during the life of the put option, the fund will lose its entire investment
   in the put option. In order for the purchase of a put option to be
   profitable, the market price of the underlying security or currency must
   decline sufficiently below the exercise price to cover the premium and
   transaction costs, unless the put option is sold in a closing sale
   transaction.

   The fund will not commit more than 5% of its assets to premiums when
   purchasing put and call options. The premium paid by the fund when purchasing
   a put option will be recorded as an asset of the fund in the portfolio of
   investments. This asset will be adjusted daily to the option's current market
   value, which will be the latest sale price at the time at which the net asset
   value per share of the fund is computed (close of New York Stock Exchange),
   or, in the absence of such sale, the mean of the latest bid and asked prices.
   This asset will be terminated upon expiration of the option, the selling
   (writing) of an identical option in a closing transaction, or the delivery of
   the underlying security or currency upon the exercise of the option.


                             Purchasing Call Options

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

   Call options may be purchased by the fund for the purpose of acquiring the
   underlying securities or currencies for its portfolio. Utilized in this
   fashion, the purchase of call options enables the fund to acquire the
   securities or currencies at the exercise price of the call option plus the
   premium paid. At times the net cost of acquiring securities or currencies in
   this manner may be less than the cost of acquiring the securities or
   currencies directly. This technique may also be useful to the fund in
   purchasing a large block of securities or currencies that would be more
   difficult to acquire by direct market purchases. So long as it holds such a
   call option rather than the underlying security or currency itself, the fund
   is partially protected from any unexpected decline in the market price of the
   underlying security or currency and in such event could allow the call option
   to expire, incurring a loss only to the extent of the premium paid for the
   option.

   The fund will not commit more than 5% of its assets to premiums when
   purchasing call and put options. The fund may also purchase call options on
   underlying securities or currencies it owns in order to protect unrealized
   gains on call options previously written by it. A call option would be
   purchased for this purpose where tax considerations make it inadvisable to
   realize such gains through a closing purchase transaction. Call options may
   also be purchased at times to avoid realizing losses.


                        Dealer (Over-the-Counter) Options

   The fund may engage in transactions involving dealer options. Certain risks
   are specific to dealer options. While the fund would look to a clearing
   corporation to exercise exchange-traded options, if the fund were to purchase
   a dealer option, it would rely on the dealer from whom it purchased the
   option to perform if the option were exercised. Failure by the dealer to do
   so would result in the loss of the premium paid by the fund as well as loss
   of the expected benefit of the transaction.


<PAGE>

   Exchange-traded options generally have a continuous liquid market while
   dealer options have none. Consequently, the fund will generally be able to
   realize the value of a dealer option it has purchased only by exercising it
   or reselling it to the dealer who issued it. Similarly, when the fund writes
   a dealer option, it generally will be able to close out the option prior to
   its expiration only by entering into a closing purchase transaction with the
   dealer to which the fund originally wrote the option. While the fund will
   seek to enter into dealer options only with dealers who will agree to and
   which are expected to be capable of entering into closing transactions with
   the fund, there can be no assurance that the fund will be able to liquidate a
   dealer option at a favorable price at any time prior to expiration. Until the
   fund, as a covered dealer call option writer, is able to effect a closing
   purchase transaction, it will not be able to liquidate securities (or other
   assets) or currencies used as cover until the option expires or is exercised.
   In the event of insolvency of the contra party, the fund may be unable to
   liquidate a dealer option. With respect to options written by the fund, the
   inability to enter into a closing transaction may result in material losses
   to the fund. For example, since the fund must maintain a secured position
   with respect to any call option on a security it writes, the fund may not
   sell the assets which it has segregated to secure the position while it is
   obligated under the option. This requirement may impair a fund's ability to
   sell portfolio securities or currencies at a time when such sale might be
   advantageous.

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

   Equity Index 500, Extended Equity Market Index, and Total Equity Market Index
   Funds


                                     Options

   Options are a type of potentially high-risk derivative.

   The only option activity the funds currently may engage in is the purchase of
   S&P 500 call options for the Equity Index 500 Fund, or the purchases of call
   options on any indices that may be consistent with the investment programs
   for the Extended Equity Market Index and Total Equity Market Index Funds.
   Such activity is subject to the same risks described above under "Purchasing
   Call Options." However, the funds reserve the right to engage in other
   options activity.

   All Funds


                                Futures Contracts

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

   Transactions in Futures

   The fund may enter into futures contracts including stock index, interest
   rate, and currency futures ("futures" or "futures contracts").

   The New Era Fund may also enter into futures contracts on commodities related
   to the types of companies in which it invests, such as oil and gold futures.
   The Equity Index 500, Extended Equity Market Index, and Total Equity Market
   Index Funds may only enter into stock index futures which are appropriate for
   their investment programs to provide an efficient means of maintaining
   liquidity while being invested in the market, to facilitate trading, or to
   reduce transaction costs. They will not use futures for hedging purposes.
   Otherwise the nature of such futures and the regulatory limitations and risks
   to which they are subject are the same as those described below.

   Stock index futures contracts may be used to provide a hedge for a portion of
   the fund's portfolio, as a cash management tool, or as an efficient way for
   T. Rowe Price to implement either an increase or decrease in portfolio market
   exposure in response to changing market conditions. The fund may purchase or
   sell futures contracts with respect to any stock index. Nevertheless, to
   hedge the fund's portfolio successfully, the fund


<PAGE>

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

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

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

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

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

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

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

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


<PAGE>

   If the price of an open futures contract changes (by increase in the case of
   a sale or by decrease in the case of a purchase) so that the loss on the
   futures contract reaches a point at which the margin on deposit does not
   satisfy margin requirements, the broker will require an increase in the
   margin. However, if the value of a position increases because of favorable
   price changes in the futures contract so that the margin deposit exceeds the
   required margin, the broker will pay the excess to the fund.

   These subsequent payments, called "variation margin," to and from the futures
   broker, are made on a daily basis as the price of the underlying assets
   fluctuate, making the long and short positions in the futures contract more
   or less valuable, a process known as "marking to market."

   Although certain futures contracts, by their terms, require actual future
   delivery of and payment for the underlying instruments, in practice most
   futures contracts are usually closed out before the delivery date. Closing
   out an open futures contract purchase or sale is effected by entering into an
   offsetting futures contract sale or purchase, respectively, for the same
   aggregate amount of the identical securities and the same delivery date. If
   the offsetting purchase price is less than the original sale price, the fund
   realizes a gain; if it is more, the fund realizes a loss. Conversely, if the
   offsetting sale price is more than the original purchase price, the fund
   realizes a gain; if it is less, the fund realizes a loss. The transaction
   costs must also be included in these calculations. There can be no assurance,
   however, that the fund will be able to enter into an offsetting transaction
   with respect to a particular futures contract at a particular time. If the
   fund is not able to enter into an offsetting transaction, the fund will
   continue to be required to maintain the margin deposits on the futures
   contract.

   For example, the S&P's 500 Stock Index is made up of 500 selected common
   stocks, most of which are listed on the New York Stock Exchange. The S&P 500
   Index assigns relative weightings to the common stocks included in the Index,
   and the Index fluctuates with changes in the market values of those common
   stocks. In the case of futures contracts on the S&P 500 Index, the contracts
   are to buy or sell 250 units. Thus, if the value of the S&P 500 Index were
   $150, one contract would be worth $37,500 (250 units x $150). The stock index
   futures contract specifies that no delivery of the actual stocks making up
   the index will take place. Instead, settlement in cash occurs. Over the life
   of the contract, the gain or loss realized by the fund will equal the
   difference between the purchase (or sale) price of the contract and the price
   at which the contract is terminated. For example, if the fund enters into a
   futures contract to buy 250 units of the S&P 500 Index at a specified future
   date at a contract price of $150 and the S&P 500 Index is at $154 on that
   future date, the fund will gain $1,000 (250 units x gain of $4). If the fund
   enters into a futures contract to sell 250 units of the stock index at a
   specified future date at a contract price of $150 and the S&P 500 Index is at
   $152 on that future date, the fund will lose $500 (250 units x loss of $2).


               Special Risks of Transactions in Futures Contracts

  . Volatility and Leverage The prices of futures contracts are volatile and are
   influenced, among other things, by actual and anticipated changes in the
   market and interest rates, which in turn are affected by fiscal and monetary
   policies and national and international political and economic events.

   Most United States futures exchanges limit the amount of fluctuation
   permitted in futures contract prices during a single trading day. The daily
   limit establishes the maximum amount that the price of a futures contract may
   vary either up or down from the previous day's settlement price at the end of
   a trading session. Once the daily limit has been reached in a particular type
   of futures contract, no trades may be made on that day at a price beyond that
   limit. The daily limit governs only price movement during a particular
   trading day and therefore does not limit potential losses, because the limit
   may prevent the liquidation of unfavorable positions. Futures contract prices
   have occasionally moved to the daily limit for several consecutive trading
   days with little or no trading, thereby preventing prompt liquidation of
   futures positions and subjecting some futures traders to substantial losses.

   Margin deposits required on futures trading are low. As a result, a
   relatively small price movement in a futures contract may result in immediate
   and substantial loss, as well as gain, to the investor. For example, if at
   the time of purchase, 10% of the value of the futures contract is deposited
   as margin, a subsequent 10% decrease in the value of the futures contract
   would result in a total loss of the margin deposit, before any deduction for


<PAGE>

   the transaction costs, if the account were then closed out. A 15% decrease
   would result in a loss equal to 150% of the original margin deposit, if the
   contract were closed out. Thus, a purchase or sale of a futures contract may
   result in losses in excess of the amount invested in the futures contract.

  . Liquidity The fund may elect to close some or all of its futures positions
   at any time prior to their expiration. The fund would do so to reduce
   exposure represented by long futures positions or short futures positions.
   The fund may close its positions by taking opposite positions which would
   operate to terminate the fund's position in the futures contracts. Final
   determinations of variation margin would then be made, additional cash would
   be required to be paid by or released to the fund, and the fund would realize
   a loss or a gain.

   Futures contracts may be closed out only on the exchange or board of trade
   where the contracts were initially traded. Although the fund intends to
   purchase or sell futures contracts only on exchanges or boards of trade where
   there appears to be an active market, there is no assurance that a liquid
   market on an exchange or board of trade will exist for any particular
   contract at any particular time. In such event, it might not be possible to
   close a futures contract, and in the event of adverse price movements, the
   fund would continue to be required to make daily cash payments of variation
   margin. However, in the event futures contracts have been used to hedge the
   underlying instruments, the fund would continue to hold the underlying
   instruments subject to the hedge until the futures contracts could be
   terminated. In such circumstances, an increase in the price of underlying
   instruments, if any, might partially or completely offset losses on the
   futures contract. However, as described next, there is no guarantee that the
   price of the underlying instruments will, in fact, correlate with the price
   movements in the futures contract and thus provide an offset to losses on a
   futures contract.

  . Hedging Risk A decision of whether, when, and how to hedge involves skill
   and judgment, and even a well-conceived hedge may be unsuccessful to some
   degree because of unexpected market behavior, market or interest rate trends.
   There are several risks in connection with the use by the fund of futures
   contracts as a hedging device. One risk arises because of the imperfect
   correlation between movements in the prices of the futures contracts and
   movements in the prices of the underlying instruments which are the subject
   of the hedge. T. Rowe Price will, however, attempt to reduce this risk by
   entering into futures contracts whose movements, in its judgment, will have a
   significant correlation with movements in the prices of the fund's underlying
   instruments sought to be hedged.

   Successful use of futures contracts by the fund for hedging purposes is also
   subject to T. Rowe Price's ability to correctly predict movements in the
   direction of the market. It is possible that, when the fund has sold futures
   to hedge its portfolio against a decline in the market, the index, indices,
   or instruments underlying futures might advance and the value of the
   underlying instruments held in the fund's portfolio might decline. If this
   were to occur, the fund would lose money on the futures and also would
   experience a decline in value in its underlying instruments. However, while
   this might occur to a certain degree, T. Rowe Price believes that over time
   the value of the fund's portfolio will tend to move in the same direction as
   the market indices used to hedge the portfolio. It is also possible that, if
   the fund were to hedge against the possibility of a decline in the market
   (adversely affecting the underlying instruments held in its portfolio) and
   prices instead increased, the fund would lose part or all of the benefit of
   increased value of those underlying instruments that it has hedged, because
   it would have offsetting losses in its futures positions. In addition, in
   such situations, if the fund had insufficient cash, it might have to sell
   underlying instruments to meet daily variation margin requirements. Such
   sales of underlying instruments might be, but would not necessarily be, at
   increased prices (which would reflect the rising market). The fund might have
   to sell underlying instruments at a time when it would be disadvantageous to
   do so.

   In addition to the possibility that there might be an imperfect correlation,
   or no correlation at all, between price movements in the futures contracts
   and the portion of the portfolio being hedged, the price movements of futures
   contracts might not correlate perfectly with price movements in the
   underlying instruments due to certain market distortions. First, all
   participants in the futures market are subject to margin deposit and
   maintenance requirements. Rather than meeting additional margin deposit
   requirements, investors might close futures contracts through offsetting
   transactions, which could distort the normal relationship between the
   underlying instruments and futures markets. Second, the margin requirements
   in the futures market are less


<PAGE>

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


                          Options on Futures Contracts

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

   Options (another type of potentially high-risk derivative) on futures are
   similar to options on underlying instruments except that options on futures
   give the purchaser the right, in return for the premium paid, to assume a
   position in a futures contract (a long position if the option is a call and a
   short position if the option is a put), rather than to purchase or sell the
   futures contract, at a specified exercise price at any time during the period
   of the option. Upon exercise of the option, the delivery of the futures
   position by the writer of the option to the holder of the option will be
   accompanied by the delivery of the accumulated balance in the writer's
   futures margin account which represents the amount by which the market price
   of the futures contract, at exercise, exceeds (in the case of a call) or is
   less than (in the case of a put) the exercise price of the option on the
   futures contract. Purchasers of options who fail to exercise their options
   prior to the exercise date suffer a loss of the premium paid.

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


          Special Risks of Transactions in Options on Futures Contracts

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


                    Additional Futures and Options Contracts

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


<PAGE>

                           Foreign Futures and Options

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

   All Funds except Equity Index 500, Extended Equity Market Index, and Total
   Equity Market Index Funds


                          Foreign Currency Transactions

   A forward foreign currency exchange contract involves an obligation to
   purchase or sell a specific currency at a future date, which may be any fixed
   number of days from the date of the contract agreed upon by the parties, at a
   price set at the time of the contract. These contracts are principally traded
   in the interbank market conducted directly between currency traders (usually
   large, commercial banks) and their customers. A forward contract generally
   has no deposit requirement, and no commissions are charged at any stage for
   trades.

   The fund may enter into forward contracts for a variety of purposes in
   connection with the management of the foreign securities portion of its
   portfolio. The fund's use of such contracts would include, but not be limited
   to, the following:

   First, when the fund enters into a contract for the purchase or sale of a
   security denominated in a foreign currency, it may desire to "lock in" the
   U.S. dollar price of the security. By entering into a forward contract for
   the purchase or sale, for a fixed amount of dollars, of the amount of foreign
   currency involved in the underlying security transactions, the fund will be
   able to protect itself against a possible loss resulting from an adverse
   change in the relationship between the U.S. dollar and the subject foreign
   currency during the period between the date the security is purchased or sold
   and the date on which payment is made or received.

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


<PAGE>

   to overall diversification strategies. However, T. Rowe Price believes that
   it is important to have the flexibility to enter into such forward contracts
   when it determines that the best interest of the fund will be served.

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

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

   If the fund retains the portfolio security and engages in an offsetting
   transaction, the fund will incur a gain or a loss (as described below) to the
   extent that there has been movement in forward contract prices. If the fund
   engages in an offsetting transaction, it may subsequently enter into a new
   forward contract to sell the foreign currency. Should forward prices decline
   during the period between the fund's entering into a forward contract for the
   sale of a foreign currency and the date it enters into an offsetting contract
   for the purchase of the foreign currency, the fund will realize a gain to the
   extent the price of the currency it has agreed to sell exceeds the price of
   the currency it has agreed to purchase. Should forward prices increase, the
   fund will suffer a loss to the extent of the price of the currency it has
   agreed to purchase exceeds the price of the currency it has agreed to sell.

   The fund's dealing in forward foreign currency exchange contracts will
   generally be limited to the transactions described above. However, the fund
   reserves the right to enter into forward foreign currency contracts for
   different purposes and under different circumstances. Of course, the fund is
   not required to enter into forward contracts with regard to its foreign
   currency-denominated securities and will not do so unless deemed appropriate
   by T. Rowe Price. It also should be realized that this method of hedging
   against a decline in the value of a currency does not eliminate fluctuations
   in the underlying prices of the securities. It simply establishes a rate of
   exchange at a future date. Additionally, although such contracts tend to
   minimize the risk of loss due to a decline in the value of the hedged
   currency, at the same time, they tend to limit any potential gain which might
   result from an increase in the value of that currency.

   Although the fund values its assets daily in terms of U.S. dollars, it does
   not intend to convert its holdings of foreign currencies into U.S. dollars on
   a daily basis. It will do so from time to time, and there are costs
   associated with currency conversion. Although foreign exchange dealers do not
   charge a fee for conversion, they do realize a profit based on the difference
   (the "spread") between the prices at which they are buying and selling
   various currencies. Thus, a dealer may offer to sell a foreign currency to
   the fund at one rate, while offering a lesser rate of exchange should the
   fund desire to resell that currency to the dealer.


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

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

   Transactions that are considered Section 1256 contracts will be considered to
   have been closed at the end of the fund's fiscal year and any gains or losses
   will be recognized for tax purposes at that time. Such gains or losses from
   the normal closing or settlement of such transactions will be characterized
   as 60% long-term capital gain (taxable at a maximum rate of 20%) or loss and
   40% short-term capital gain or loss regardless of the holding period of the
   instrument (ordinary income or loss for foreign exchange contracts). The fund
   will be required to distribute net gains on such transactions to shareholders
   even though it may not have closed the transaction and received cash to pay
   such distributions.

   Options, futures, and forward foreign exchange contracts, including options
   and futures on currencies, which offset a foreign dollar-denominated bond or
   currency position may be considered straddles for tax purposes, in which case
   a loss on any position in a straddle will be subject to deferral to the
   extent of unrealized gain in


<PAGE>

   an offsetting position. The holding period of the securities or currencies
   comprising the straddle will be deemed not to begin until the straddle is
   terminated. The holding period of the security offsetting an "in-the-money
   qualified covered call" option on an equity security will not include the
   period of time the option is outstanding.

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

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

   As a result of the "Taxpayer Relief Act of 1997," entering into certain
   options, futures contracts, or forward contracts may result in the
   "constructive sale" of offsetting stocks or debt securities of the fund.



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


                              Fundamental Policies

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

   (1) Borrowing Borrow money except that the fund may (i) borrow for
       non-leveraging, temporary, or emergency purposes; and (ii) engage in
       reverse repurchase agreements and make other investments or engage in
       other transactions, which may involve a borrowing, in a manner consistent
       with the fund's investment objective and program, provided that the
       combination of (i) and (ii) shall not exceed 33/1//\\/3/\\% of the value
       of the fund's total assets (including the amount borrowed) less
       liabilities (other than borrowings) or such other percentage permitted by
       law. Any borrowings which come to exceed this amount will be reduced in
       accordance with applicable law. The fund may borrow from banks, other
       Price Funds, or other persons to the extent permitted by applicable law;

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

   (3) (a)
       Industry Concentration (All Funds except Health Sciences, Financial
       Services, and Real Estate Funds) Purchase the securities of any issuer
       if, as a result, more than 25% of the value of the fund's total assets
       would be invested in the securities of issuers having their principal
       business activities in the same industry;

       (b)
       Industry Concentration (Health Sciences, Financial Services, and Real
       Estate Funds) Purchase the securities of any issuer if, as a result, more
       than 25% of the value of the fund's total assets would be invested in the
       securities of issuers having their principal business activities in the
       same industry; provided, however, that (i) the Health Sciences Fund will
       invest more than 25% of its total assets in


<PAGE>

       the health sciences industry as defined in the fund's prospectus; (ii)
       the Financial Services Fund will invest more than 25% of its total assets
       in the financial services industry as defined in the fund's prospectus;
       (iii) the Real Estate Fund will invest more than 25% of its total assets
       in the real estate industry as defined in the fund's prospectus.

   (4) Loans Make loans, although the fund may (i) lend portfolio securities and
       participate in an interfund lending program with other Price Funds
       provided that no such loan may be made if, as a result, the aggregate of
       such loans would exceed 33/1//\\/3/\\% of the value of the fund's total
       assets; (ii) purchase money market securities and enter into repurchase
       agreements; and (iii) acquire publicly distributed or privately placed
       debt securities and purchase debt;

   (5) Percent Limit on Assets Invested in Any One Issuer Purchase a security
       if, as a result, with respect to 75% of the value of its total assets,
       more than 5% of the value of the fund's total assets would be invested in
       the securities of a single issuer, except securities issued or guaranteed
       by the U.S. government or any of its agencies or instrumentalities;

   (6) Percent Limit on Share Ownership of Any One Issuer Purchase a security
       if, as a result, with respect to 75% of the value of the fund's total
       assets, more than 10% of the outstanding voting securities of any issuer
       would be held by the fund (other than obligations issued or guaranteed by
       the U.S. government, its agencies or instrumentalities);

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

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

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


                                      NOTES

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

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

       For purposes of investment restriction (3), U.S., state, or local
       governments, or related agencies or instrumentalities, are not considered
       an industry. Industries are determined by reference to the
       classifications of industries set forth in the fund's semiannual and
       annual reports. It is the position of the Staff of the SEC that foreign
       governments are industries for purposes of this restriction.

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


                               Operating Policies

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

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

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

   (3) Futures Contracts Purchase a futures contract or an option thereon, if,
       with respect to positions in futures or options on futures which do not
       represent bona fide hedging, the aggregate initial margin and premiums on
       such options would exceed 5% of the fund's net asset value;


<PAGE>

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

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

   (6) Margin Purchase securities on margin, except (i) for use of short-term
       credit necessary for clearance of purchases of portfolio securities and
       (ii) it may make margin deposits in connection with futures contracts or
       other permissible investments;

   (7) Mortgaging Mortgage, pledge, hypothecate or, in any manner, transfer any
       security owned by the fund as security for indebtedness except as may be
       necessary in connection with permissible borrowings or investments and
       then such mortgaging, pledging, or hypothecating may not exceed
       33/1//\\/3/\\% of the fund's total assets at the time of borrowing or
       investment;

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

   (9) Options, etc. Invest in puts, calls, straddles, spreads, or any
       combination thereof, except to the extent permitted by the prospectus and
       Statement of Additional Information;

   (10) Short Sales Effect short sales of securities; or

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

   For Blue Chip Growth, Capital Opportunity, Developing Technologies,
   Diversified Small-Cap Growth, Financial Services, Global Technology, Health
   Sciences, Media & Telecommunications, Mid-Cap Value, Real Estate, and Value
   Funds:

   Notwithstanding anything in the above fundamental and operating restrictions
   to the contrary, the fund may invest all of its assets in a single investment
   company or a series thereof in connection with a "master-feeder" arrangement.
   Such an investment would be made where the fund (a "Feeder"), and one or more
   other funds with the same investment objective and program as the fund,
   sought to accomplish its investment objective and program by investing all of
   its assets in the shares of another investment company (the "Master"). The
   Master would, in turn, have the same investment objective and program as the
   fund. The fund would invest in this manner in an effort to achieve the
   economies of scale associated with having a Master fund make investments in
   portfolio companies on behalf of a number of Feeder funds.



 MANAGEMENT OF THE FUNDS
 -------------------------------------------------------------------------------
   The officers and directors/trustees of the fund are listed below. Unless
   otherwise noted, the address of each is 100 East Pratt Street, Baltimore,
   Maryland 21202. Except as indicated, each has been an employee of T. Rowe
   Price for more than five years. In the list below, the fund's
   directors/trustees who are considered "interested persons" of T. Rowe Price
   as defined under Section 2(a)(19) of the 1940 Act are noted with an asterisk
   (*). These directors/trustees are referred to as inside directors by virtue
   of their officership, directorship, and/or employment with T. Rowe Price.

   All Funds


                       Independent Directors/Trustees/(a)/

   DONALD W. DICK, JR., 1/27/43, Principal, EuroCapital Advisors, LLC, an
   acquisition and management advisory firm; formerly (5/89-6/95) Principal,
   Overseas Partners, Inc., a financial investment firm; formerly  (6/65-3/89)
   Director and Vice President, Consumer Products Division, McCormick & Company,
   Inc.,


<PAGE>

   international food processors; Director, Waverly, Inc., Baltimore, Maryland;
   Address: EuroCapital Advisors, LLC, Southern Isle-14, 3001 SE Island Point
   Lane, Stuart, Florida 34996

   DAVID K. FAGIN, 4/9/38, Director, Western Exploration and Development, Ltd.
   (7/97 to present); Director, Dayton Mining Corporation (6/98 to present);
   Chairman and President, Nye Corporation (6/88 to present); Director, Nescor
   Corporation (6/94 to present); Director of Canyon Resources, Corp.; formerly:
   Chairman    (5/92 to 12/97) and Chief Executive Officer (5/92 to 5/96) of
   Golden Star Resources Ltd.; formerly: President, Chief Operating Officer, and
   Director, Homestake Mining Company (5/86 to 7/91); Address: 33 Glenmoor
   Drive, Englewood, Colorado 80110-7115

   HANNE M. MERRIMAN, 11/16/41, Retail Business Consultant; Director, Ann Taylor
   Stores Corporation, Central Illinois Public Service Company, Ameren Corp.,
   Finlay Enterprises, Inc., The Rouse Company, State Farm Mutual Automobile
   Insurance Company and USAirways Group, Inc.; Address: 3201 New Mexico Avenue,
   N.W., Suite 350, Washington, D.C. 20016

   HUBERT D. VOS, 8/2/33, Owner/President, Stonington Capital Corporation, a
   private investment company; Address: 1114 State Street, Suite 247, P.O. Box
   90409, Santa Barbara, California 93190-0409

   PAUL M. WYTHES, 6/23/33, Founding Partner of Sutter Hill Ventures, a venture
   capital limited partnership, providing equity capital to young high
   technology companies throughout the United States; Director, Teltone
   Corporation and InterVentional Technologies Inc.; Address: 755 Page Mill
   Road, Suite A200, Palo Alto, California 94304-1005

  (a) Unless otherwise indicated, the Independent Directors/Trustees have been
     at their respective companies for at least five years.


                                    Officers

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

   PATRICIA B. LIPPERT, 1/12/53, Secretary-Assistant Vice President, T. Rowe
   Price and T. Rowe Price Investment Services, Inc.

   JOSEPH A. CARRIER, 12/30/60, Treasurer-Vice President, T. Rowe Price and T.
   Rowe Price Investment Services, Inc.

   DAVID S. MIDDLETON, 1/18/56, Controller-Vice President, T. Rowe Price and T.
   Rowe Price Trust Company

   Balanced Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director and Vice President-Director and
   Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.; Chartered
   Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director and Vice President-Vice Chairman of the
   Board, Chief Investment Officer, Director, and Managing Director, T. Rowe
   Price; Vice Chairman of the Board, Managing Director, and Director, T. Rowe
   Price Group, Inc.; Vice President and Director, T. Rowe Price Trust Company;
   Director, T. Rowe Price International; Chartered Financial Analyst

   RICHARD T. WHITNEY, 5/7/58, President-Managing Director, T. Rowe Price and T.
   Rowe Price Group, Inc.; Vice President, T. Rowe Price International and T.
   Rowe Price Trust Company; Chartered Financial Analyst

   STEPHEN W. BOESEL, 12/28/44, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company
   and T. Rowe Price Retirement Plan Services, Inc.


<PAGE>

   WENDY R. DIFFENBAUGH, 10/2/53, Vice President-Assistant Vice President, T.
   Rowe Price

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   NATHANIEL S. LEVY, 07/13/62, Vice President-Vice President, T. Rowe Price

   RAYMOND A. MILLS, PHD, 12/3/60, Vice President-Assistant Vice President, T.
   Rowe Price; formerly Principal Systems Engineer at TASC, Inc.

   EDMUND M. NOTZON, 10/1/45, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company;
   Chartered Financial Analyst

   MARK J. VASELKIV, 7/22/58, Vice President-Managing Director and Vice
   President, T. Rowe Price and T. Rowe Price Group, Inc.

   Blue Chip Growth Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   LARRY J. PUGLIA, 8/25/60, President-Managing Director, T. Rowe Price and T.
   Rowe Price Group, Inc.; Chartered Financial Analyst

   BRIAN W.H. BERGHUIS, 12/12/58, Vice President-Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   DONALD J. EASLEY, 11/28/71, Vice President-Investment Analyst in the Equity
   Research Division; T. Rowe Price; Credit Analyst with The Bank of New York

   ROBERT N. GENSLER, 10/18/57, Vice President-Vice President, T. Rowe Price

   ERIC M. GERSTER, 3/23/71, Vice President-Employee, T. Rowe Price; formerly
   Associate with J.P. Morgan

   JILL L. HAUSER, 6/23/58, Vice President-Vice President, T. Rowe Price

   STEPHEN C. JANSEN, 12/12/68, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Investment Analyst at Schroder & Co.

   KRIS H. JENNER, M.D., 2/5/62, Vice President-Vice President, T. Rowe Price;
   formerly with the Laboratory of Biological Cancer, The Brigham & Women's
   Hospital, Harvard Medical School

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   CHRISTOPHER R. LEONARD, 1/11/73, Vice President-Employee, T. Rowe Price;
   formerly Research Associate with Morgan Stanley Dean Witter

   ROBERT W. SHARPS, 6/10/71, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Senior Consultant at KPMG Peat Marwick; Chartered Financial
   Analyst

   ROBERT W. SMITH, 4/11/61, Vice President-Managing Director, T. Rowe Price and
   T. Rowe Price Group, Inc.; Vice President, T. Rowe Price International


<PAGE>

   WILLIAM J. STROMBERG, 3/10/60, Vice President-Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   Capital Appreciation Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Trustee-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Trustee and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Trustee and Vice President-Vice Chairman of the
   Board, Chief Investment Officer, Director, and Managing Director, T. Rowe
   Price; Vice Chairman of the Board, Managing Director, and Director, T. Rowe
   Price Group, Inc.; Vice President and Director, T. Rowe Price Trust Company;
   Director, T. Rowe Price International; Chartered Financial Analyst

   RICHARD P. HOWARD, 9/16/46, President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   ARTHUR B. CECIL III, 9/15/42, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   STEPHANIE C. CLANCY, 12/19/64, Vice President-Vice President, T. Rowe Price

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   CHARLES A. MORRIS, 1/3/63, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   CHARLES M. OBER, 4/20/50, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   BRIAN C. ROGERS, 6/27/55, Vice President-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust
   Company; Chartered Financial Analyst

   DAVID J. WALLACK, 7/2/60, Vice President-Vice President, T. Rowe Price

   Capital Opportunity Fund

  *  JOHN H. LAPORTE, JR., 7/26/45, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   WILLIAM J. STROMBERG, 3/10/60, President-Managing Director, T. Rowe Price and
   T. Rowe Price Group, Inc.; Chartered Financial Analyst

   MICHAEL W. HOLTON, 9/25/68, Vice President-Vice President, T. Rowe Price;
   formerly Research Analyst at Bowles, Hollowell, Conner and Company; Chartered
   Financial Analyst

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   RICHARD T. WHITNEY, 5/7/58, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price International
   and T. Rowe Price Trust Company; Chartered Financial Analyst


<PAGE>

   Developing Technologies Fund

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   CHARLES A. MORRIS, 1/3/63, President-Managing Director, T. Rowe Price and T.
   Rowe Price Group, Inc.; Chartered Financial Analyst

   MICHAEL F. SOLA, 7/21/69, Executive Vice President-Vice President, T. Rowe
   Price; formerly Systems Analyst/Programmer at SRA Corporation; Chartered
   Financial Analyst

   GIRI DEVULAPALLY, 11/18/67, Vice President-Employee, T. Rowe Price; formerly
   Senior Consultant with Anderson Consulting

   ROBERT N. GENSLER, 10/18/57, Vice President-Vice President, T. Rowe Price

   ERIC M. GERSTER, 3/23/71, Vice President-Employee, T. Rowe Price; formerly
   Associate with J.P. Morgan

   JILL L. HAUSER, 6/23/58, Vice President-Vice President, T. Rowe Price

   TERRAL M. JORDAN, 8/13/45, Vice President-Vice President, T. Rowe Price

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   MARK R. SCHLARBAUM, 12/23/69, Vice President-Vice President, T. Rowe Price

   JUSTIN THOMSON, 1/14/68, Vice President-Vice President, T. Rowe Price
   International; (1998 to present) Small Cap Co-Ordinator, T. Rowe Price
   International; formerly (1991-1998) Portfolio Manager; G. T. Capital/
   Invesco; Address: 60 Queen Victoria Street, London EC4N 4TZ, England

   Diversified Small-Cap Growth Fund

  *  JOHN H. LAPORTE, JR., 7/26/45, Director and Vice President-Director and
   Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.; Chartered
   Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   RICHARD T. WHITNEY, 5/7/58, President-Managing Director, T. Rowe Price and T.
   Rowe Price Group, Inc.; Vice President, T. Rowe Price International and T.
   Rowe Price Trust Company; Chartered Financial Analyst

   PAUL J. WOJCIK, 11/28/70, Executive Vice President-Assistant Vice President,
   T. Rowe Price; formerly Senior Programmer/Analyst at Fidelity Investments;
   Chartered Financial Analyst

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   DONALD J. PETERS, 7/3/59, Vice President-Vice President, T. Rowe Price


<PAGE>

   Dividend Growth Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   THOMAS J. HUBER, 9/23/66, President-Vice President, T. Rowe Price; formerly
   Corporate Banking Officer with NationsBank; Chartered Financial Analyst

   ARTHUR B. CECIL III, 9/15/42, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   STEPHANIE C. CLANCY, 12/19/64, Vice President-Vice President, T. Rowe Price

   GIRI DEVULAPALLY, 11/18/67, Vice President-Employee, T. Rowe Price; formerly
   Senior Consultant with Anderson Consulting

   DONALD J. EASLEY, 11/28/71, Vice President-Investment Analyst in the Equity
   Research Division; T. Rowe Price; Credit Analyst with The Bank of New York

   MICHAEL W. HOLTON, 9/25/68, Vice President-Vice President, T. Rowe Price;
   formerly Research Analyst at Bowles, Hollowell, Conner and Company; Chartered
   Financial Analyst

   STEPHEN C. JANSEN, 12/12/68, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Investment Analyst at Schroder & Co.

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   DAVID M. LEE, 11/13/62, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst; formerly Marketing Representative at IBM

   DONALD J. PETERS, 7/3/59, Vice President-Vice President, T. Rowe Price

   LARRY J. PUGLIA, 8/25/60, Vice President-Managing Director, T. Rowe Price and
   T. Rowe Price Group, Inc.; Chartered Financial Analyst

   WILLIAM J. STROMBERG, 3/10/60, Vice President-Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   DAVID J. WALLACK, 7/2/60, Vice President-Vice President, T. Rowe Price

   CHRISTINA T. WYSKIEL, 12/14/71, Vice President-Employee, T. Rowe Price;
   formerly Health Care Investment Banking Associate with S.G. Cowen Securities
   Corporation

   Equity Income Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Trustee-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Trustee and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International


<PAGE>

  *  M. DAVID TESTA, 4/22/44, Trustee-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   BRIAN C. ROGERS, 6/27/55, President-Director and Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust
   Company; Chartered Financial Analyst

   STEPHEN W. BOESEL, 12/28/44, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company
   and T. Rowe Price Retirement Plan Services, Inc.

   ANDREW M. BROOKS, 2/16/56, Vice President-Vice President, T. Rowe Price

   ARTHUR B. CECIL III, 9/15/42, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   GIRI DEVULAPALLY, 11/18/67, Vice President-Employee, T. Rowe Price; formerly
   Senior Consultant with Anderson Consulting

   RICHARD P. HOWARD, 9/16/46, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   JOHN D. LINEHAN, 1/21/65, Vice President-Employee, T. Rowe Price; formerly
   Vice President at E.T. Petroleum and Delaney Petroleum

   WILLIAM J. STROMBERG, 3/10/60, Vice President-Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   Financial Services Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   ANNA M. DOPKIN, 9/5/67, President-Assistant Vice President, T. Rowe Price;
   formerly Analyst at Goldman Sachs; Chartered Financial Analyst

   STEPHEN W. BOESEL, 12/28/44, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company
   and T. Rowe Price Retirement Plan Services, Inc.

   ABIGAIL J. FULTON, 12/19/69, Vice President-Financial Services Analyst, T.
   Rowe Price; Analyzed international financial services companies at Montgomery
   Asset Management, Deutsche Bank and Merrill Lynch International

   MICHAEL W. HOLTON, 9/25/68, Vice President-Vice President, T. Rowe Price;
   formerly Research Analyst at Bowles, Hollowell, Conner and Company; Chartered
   Financial Analyst

   SUSAN J. KLEIN, 4/18/50, Vice President-Employee, T. Rowe Price

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company


<PAGE>

   LARRY J. PUGLIA, 8/25/60, Vice President-Managing Director, T. Rowe Price and
   T. Rowe Price Group, Inc.; Chartered Financial Analyst

   ROBERT W. SHARPS, 6/10/71, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Senior Consultant, KPMG Peat Marwick; Chartered Financial
   Analyst

   WILLIAM J. STROMBERG, 3/10/60, Vice President-Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   J. DAVID WAGNER, 2/25/74, Vice President-Investment Analyst in the Equity
   Research Division, T. Rowe Price; Associate Analyst with National Economic
   Research Associates, Inc.

   Global Technology Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   CHARLES A. MORRIS, 1/3/63, President-Managing Director, T. Rowe Price and T.
   Rowe Price Group, Inc.; Chartered Financial Analyst

   ARCHANA BASI, 3/11/73, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Analyst with Andersen Consulting

   STEPHANIE C. CLANCY, 12/19/64, Vice President-Vice President, T. Rowe Price

   GIRI DEVULAPALLY, 11/18/67, Vice President-Employee, T. Rowe Price; formerly
   Senior Consultant with Anderson Consulting

   ROBERT N. GENSLER, 10/18/57, Vice President-Vice President, T. Rowe Price

   ERIC M. GERSTER, 3/23/71, Vice President-Employee, T. Rowe Price; formerly
   Associate with J.P. Morgan

   JILL L. HAUSER, 6/23/58, Vice President-Vice President, T. Rowe Price

   STEPHEN C. JANSEN, 12/12/68, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Investment Analyst at Schroder & Co.

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   THOMAS O. MURTHA, 7/29/53, Vice President-Vice President, T. Rowe Price and
   T. Rowe Price International

   D. JAMES PREY III, 11/26/59, Vice President-Vice President, T. Rowe Price

   Growth & Income Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International


<PAGE>

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   ROBERT W. SHARPS, 6/10/71, President-Assistant Vice President, T. Rowe Price;
   formerly Senior Consultant with KPMG Peat Marwick; Chartered Financial
   Analyst

   STEPHEN W. BOESEL, 12/28/44, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company
   and T. Rowe Price Retirement Plan Services, Inc.

   ARTHUR B. CECIL III, 9/15/42, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   GIRI DEVULAPALLY, 11/18/67, Vice President-Employee, T. Rowe Price; formerly
   Senior Consultant with Anderson Consulting

   BRUCE E. EMERY, 3/27/72, Vice President-Investment Analyst in the Equity
   Research Division, T. Rowe Price; Senior Financial Analyst for LaSalle
   Partners, Inc.; Portfolio Administrator, Brinson Partners, Inc.

   MICHAEL W. HOLTON, 9/25/68, Vice President-Vice President, T. Rowe Price;
   formerly Research Analyst at Bowles, Hollowell, Conner and Company; Chartered
   Financial Analyst

   STEPHEN C. JANSEN, 12/12/68, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Investment Analyst at Schroder & Co.

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   KAREN M. REGAN, 4/16/67, Vice President-Equity Trading Assistant, T. Rowe
   Price

   ROBERT W. SMITH, 4/11/61, Vice President-Managing Director, T. Rowe Price and
   T. Rowe Price Group, Inc.; Vice President, T. Rowe Price International

   R. CANDLER YOUNG, 9/28/71, Vice President-Employee, T. Rowe Price; formerly
   Equity Research Analyst at Donaldson, Lufkin & Jenrette

   Growth Stock Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   ROBERT W. SMITH, 4/11/61, President-Managing Director, T. Rowe Price and T.
   Rowe Price Group, Inc.; Vice President, T. Rowe Price International

   BRIAN W.H. BERGHUIS, 12/12/58, Vice President-Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   ANNA M. DOPKIN, 9/5/67, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Analyst at Goldman Sachs; Chartered Financial Analyst

   JOHN R. FORD, 11/25/57, Vice President-Director, T. Rowe Price International;
   Chartered Financial Analyst; Address: 60 Queen Victoria Street, London EC4N
   4TZ, England


<PAGE>

   ROBERT N. GENSLER, 10/18/57, Vice President-Vice President, T. Rowe Price

   ERIC M. GERSTER, 3/23/71, Vice President-Employee, T. Rowe Price; formerly
   Associate with J.P. Morgan

   JILL L. HAUSER, 6/23/58, Vice President-Vice President, T. Rowe Price

   STEPHEN C. JANSEN, 12/12/68, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Investment Analyst at Schroder & Co.

   KRIS H. JENNER, M.D., 2/5/62, Vice President-Vice President, T. Rowe Price;
   formerly with the Laboratory of Biological Cancer, The Brigham & Women's
   Hospital, Harvard Medical School

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   CHARLES A. MORRIS, 1/3/63, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   THOMAS O. MURTHA, 7/29/53, Vice President-Vice President, T. Rowe Price and
   T. Rowe Price International

   LARRY J. PUGLIA, 8/25/60, Vice President-Managing Director, T. Rowe Price and
   T. Rowe Price Group, Inc.; Chartered Financial Analyst

   CAROL G. BARTHA, 1/4/42, Assistant Vice President-Employee, T. Rowe Price

   Health Sciences Fund

  *  JOHN H. LAPORTE, JR., 7/26/45, Director and Vice President-Director and
   Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.; Chartered
   Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   KRIS H. JENNER, M.D., 2/5/62, President-Vice President, T. Rowe Price;
   formerly with the Laboratory of Biological Cancer, The Brigham & Women's
   Hospital, Harvard Medical School

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   CHRISTOPHER R. LEONARD, 1/11/73, Vice President-Employee, T. Rowe Price;
   formerly Research Associate with Morgan Stanley Dean Witter

   CHARLES G. PEPIN, 4/23/66, Vice President-Vice President, T. Rowe Price

   DARRELL M. RILEY, 2/18/58, Vice President-Vice President, T. Rowe Price

   MARK R. SCHLARBAUM, 12/23/69, Vice President-Vice President, T. Rowe Price

   CHRISTINA T. WYSKIEL, 12/14/71, Vice President-Employee, T. Rowe Price;
   formerly Health Care Investment Banking Associate with S.G. Cowen Securities
   Corporation

   Index Trust

  *  JAMES A.C. KENNEDY, 8/17/53, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst


<PAGE>

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   RICHARD T. WHITNEY, 5/7/58, President-Managing Director, T. Rowe Price and T.
   Rowe Price Group, Inc.; Vice President, T. Rowe Price International and T.
   Rowe Price Trust Company; Chartered Financial Analyst

   E. FREDERICK BAIR, 12/11/69, Vice President-Employee, T. Rowe Price; formerly
   equity trader at Legg Mason

   WENDY R. DIFFENBAUGH, 10/2/53, Vice President-Assistant Vice President, T.
   Rowe Price

   ANN M. HOLCOMB, 1/16/72, Vice President-Employee, T. Rowe Price

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   RAYMOND A. MILLS, PHD, 12/3/60, Vice President-Assistant Vice President, T.
   Rowe Price; formerly Principal Systems Engineer at TASC, Inc.

   MARY C. MUNOZ, 12/2/62, Vice President-Assistant Vice President, T. Rowe
   Price

   Institutional Equity Funds

  *  JAMES A.C. KENNEDY, 8/17/53, Director and Vice President-Director and
   Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.; Chartered
   Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Chairman of the Board-Vice Chairman of the Board
   and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.; Chairman
   of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director and President-Vice Chairman of the Board,
   Chief Investment Officer, Director, and Managing Director, T. Rowe Price;
   Vice Chairman of the Board, Managing Director, and Director, T. Rowe Price
   Group, Inc.; Vice President and Director, T. Rowe Price Trust Company;
   Director, T. Rowe Price International; Chartered Financial Analyst

   BRIAN W.H. BERGHUIS, 12/12/58, Executive Vice President-Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   GREGORY A. MCCRICKARD, 10/19/58, Executive Vice President-Managing Director,
   T. Rowe Price and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price
   Trust Company; Chartered Financial Analyst

   BRIAN C. ROGERS, 6/27/55, Executive Vice President-Director and Managing
   Director, T. Rowe Price and T. Rowe Price Group, Inc.; Vice President, T.
   Rowe Price Trust Company; Chartered Financial Analyst

   MARCY L. ARNOLD, 8/5/59, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Assistant Vice President, Underwriting at Connie Lee
   Insurance Company

   PRESTON G. ATHEY, 7/17/49, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company;
   Chartered Financial Analyst

   MARC L. BAYLIN, 11/17/67, Vice President-Vice President, T. Rowe Price;
   formerly Financial Analyst at Rausher Pierce Refsnes; Chartered Financial
   Analyst

   STEPHEN W. BOESEL, 12/28/44, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company
   and T. Rowe Price Retirement Plan Services, Inc.


<PAGE>

   KARA M. CHESEBY, 10/9/63, Vice President-Vice President, T. Rowe Price;
   formerly Vice President at Legg Mason Wood Walker; Chartered Financial
   Analyst

   STEPHANIE C. CLANCY, 12/19/64, Vice President-Vice President, T. Rowe Price

   ANNA M. DOPKIN, 9/5/67, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Analyst at Goldman Sachs; Chartered Financial Analyst

   HUGH M. EVANS III, 5/17/66, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   ROBERT N. GENSLER, 10/18/57, Vice President-Vice President, T. Rowe Price

   MICHAEL W. HOLTON, 9/25/68, Vice President-Vice President, T. Rowe Price;
   formerly Research Analyst at Bowles, Hollowell, Conner and Company; Chartered
   Financial Analyst

   RICHARD P. HOWARD, 9/16/46, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   THOMAS J. HUBER, 9/23/66, Vice President-Vice President, T. Rowe Price;
   formerly Corporate Banking Officer with NationsBank; Chartered Financial
   Analyst

   KRIS H. JENNER, M.D., 2/5/62, Vice President-Vice President, T. Rowe Price;
   formerly with the Laboratory of Biological Cancer, The Brigham & Women's
   Hospital, Harvard Medical School

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   JOHN D. LINEHAN, 1/21/65, Vice President-Employee, T. Rowe Price; formerly
   Vice President at E.T. Petroleum and Delaney Petroleum; Associate at Bankers
   Trust

   ROBERT J. MARCOTTE, 3/6/62, Vice President-Vice President, T. Rowe Price

   JOSEPH M. MILANO, 9/14/72, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Research Assistant with Brookings Institution

   CHARLES G. PEPIN, 4/23/66, Vice President-Vice President, T. Rowe Price

   ROBERT W. SHARPS, 6/10/71, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Senior Consultant at KPMG Peat Marwick; Chartered Financial
   Analyst

   MICHAEL F. SOLA, 7/21/69, Vice President-Vice President, T. Rowe Price;
   formerly Systems Analyst/ Programmer at SRA Corporation; Chartered Financial
   Analyst

   JOHN F. WAKEMAN, 11/25/62, Vice President-Vice President, T. Rowe Price

   DAVID J. WALLACK, 7/2/60, Vice President-Vice President, T. Rowe Price

   RICHARD T. WHITNEY, 5/7/58, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price International
   and T. Rowe Price Trust Company; Chartered Financial Analyst

   Media & Telecommunications Fund

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   ROBERT N. GENSLER, 10/18/57, President-Vice President, T. Rowe Price


<PAGE>

   ARCHANA BASI, 3/11/73, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Analyst with Andersen Consulting

   GIRI DEVULAPALLY, 11/18/67, Vice President-Employee, T. Rowe Price; formerly
   Senior Consultant with Anderson Consulting

   BRUCE E. EMERY, 3/27/72, Vice President-Investment Analyst in the Equity
   Research Division, T. Rowe Price; Senior Financial Analyst for LaSalle
   Partners, Inc.; Portfolio Administrator, Brinson Partners, Inc.

   ERIC M. GERSTER, 3/23/71, Vice President-Employee, T. Rowe Price; formerly
   Associate with J.P. Morgan

   STEPHEN C. JANSEN, 12/12/68, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Investment Analyst at Schroder & Co.

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   D. JAMES PREY III, 11/26/59, Vice President-Vice President, T. Rowe Price

   ROBERT W. SMITH, 4/11/61, Vice President-Managing Director, T. Rowe Price and
   T. Rowe Price Group, Inc.; Vice President, T. Rowe Price International

   DEAN TENERELLI, 12/7/64, Vice President-Vice President, T. Rowe Price
   International; formerly Director, Equity Telecom Asset Research for Credit
   Suisse; Partner/Co-Portfolio Manager, Artisan Partners

   DALE E. WEST, 1/21/69, Vice President-Vice President, T. Rowe Price
   International, formerly Equity Analyst, Dodge & Cox; U.S. Foreign Service
   Officer

   Mid-Cap Growth Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JOHN H. LAPORTE, JR., 7/26/45, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

   BRIAN W.H. BERGHUIS, 12/12/58, President-Managing Director, T. Rowe Price and
   T. Rowe Price Group, Inc.; Chartered Financial Analyst

   JOHN F. WAKEMAN, 11/25/62, Executive Vice President-Vice President, T. Rowe
   Price

   MARC L. BAYLIN, 11/17/67, Vice President-Vice President, T. Rowe Price;
   formerly Financial Analyst at Rausher Pierce Refsnes; Chartered Financial
   Analyst

   ANNA M. DOPKIN, 9/5/67, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Analyst at Goldman Sachs; Chartered Financial Analyst

   ROBERT N. GENSLER, 10/18/57, Vice President-Vice President, T. Rowe Price

   ERIC M. GERSTER, 3/23/71, Vice President-Employee, T. Rowe Price; formerly
   Associate with J.P. Morgan

   KRIS H. JENNER, M.D., 2/5/62, Vice President-Vice President, T. Rowe Price;
   formerly with the Laboratory of Biological Cancer, The Brigham & Women's
   Hospital, Harvard Medical School

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   ROBERT J. MARCOTTE, 3/6/62, Vice President-Vice President, T. Rowe Price


<PAGE>

   JOSEPH M. MILANO, 9/14/72, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Research Assistant with Brookings Institution

   MICHAEL F. SOLA, 7/21/69, Vice President-Vice President, T. Rowe Price;
   formerly Systems Analyst/ Programmer at SRA Corporation; Chartered Financial
   Analyst

   R. CANDLER YOUNG, 9/28/71, Vice President-Employee, T. Rowe Price; formerly
   Equity Research Analyst at Donaldson, Lufkin & Jenrette

   Mid-Cap Value Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director and Vice President-Director and
   Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.; Chartered
   Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   GREGORY A. MCCRICKARD, 10/19/58, President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company;
   Chartered Financial Analyst

   MARCY L. ARNOLD, 8/5/59, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Assistant Vice President, Underwriting at Connie Lee
   Insurance Company

   PRESTON G. ATHEY, 7/17/49, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company;
   Chartered Financial Analyst

   BRACE C. BROOKS, 1/10/67, Vice President-Equity Investment Analyst, T. Rowe
   Price; Equity Analyst, Johnston, Lemon & Co.

   KARA M. CHESEBY, 10/9/63, Vice President-Vice President, T. Rowe Price;
   formerly Vice President at Legg Mason Wood Walker; Chartered Financial
   Analyst

   DAVID R. GIROUX, 6/8/75, Vice President-Employee, T. Rowe Price; formerly
   Commercial Credit Analyst with Hillsdale National Bank

   RICHARD P. HOWARD, 9/16/46, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   JOSEPH M. MILANO, 9/14/72, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Research Assistant with Brookings Institution

   CHARLES G. PEPIN, 4/23/66, Vice President-Vice President, T. Rowe Price

   J. DAVID WAGNER, 2/25/74, Vice President-Investment Analyst in the Equity
   Research Division, T. Rowe Price; Associate Analyst with National Economic
   Research Associates, Inc.

   New America Growth Fund

  *  JOHN H. LAPORTE, JR., 7/26/45, Trustee and Vice President-Director and
   Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.; Chartered
   Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Trustee and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc.,


<PAGE>

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

  *  M. DAVID TESTA, 4/22/44, Trustee-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   MARC L. BAYLIN, 11/17/67, President-Vice President, T. Rowe Price; formerly
   Financial Analyst at Rausher Pierce Refsnes; Chartered Financial Analyst

   BRIAN W.H. BERGHUIS, 12/12/58, Vice President-Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   GIRI DEVULAPALLY, 11/18/67, Vice President-Employee, T. Rowe Price; formerly
   Senior Consultant with Anderson Consulting

   ERIC M. GERSTER, 3/23/71, Vice President-Employee, T. Rowe Price; formerly
   Associate with J.P. Morgan

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   ROBERT J. MARCOTTE, 3/6/62, Vice President-Vice President, T. Rowe Price

   JOSEPH M. MILANO, 9/14/72, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Research Assistant with Brookings Institution

   ROBERT W. SMITH, 4/11/61, Vice President-Managing Director, T. Rowe Price and
   T. Rowe Price Group, Inc.; Vice President, T. Rowe Price International

   CHRISTINA T. WYSKIEL, 12/14/71, Vice President-Employee, T. Rowe Price;
   formerly Health Care Investment Banking Associate with S.G. Cowen Securities
   Corporation

   R. CANDLER YOUNG, 9/28/71, Vice President-Employee, T. Rowe Price; formerly
   Equity Research Analyst at Donaldson, Lufkin & Jenrette

   New Era Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director and Vice President-Director and
   Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.; Chartered
   Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   CHARLES M. OBER, 4/20/50, President-Vice President, T. Rowe Price; Chartered
   Financial Analyst

   MARCY L. ARNOLD, 8/5/59, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Assistant Vice President, Underwriting at Connie Lee
   Insurance Company

   HUGH M. EVANS III, 5/17/66, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   RICHARD P. HOWARD, 9/16/46, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   LEWIS M. JOHNSON, 9/20/69, Vice President-Investment Analyst in the Equity
   Division, T. Rowe Price; Interned, Capital Research & Management Company


<PAGE>

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   DAVID M. LEE, 11/13/62, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst; formerly Marketing Representative at IBM

   JOHN D. LINEHAN, 1/21/65, Vice President-Employee, T. Rowe Price; formerly
   Vice President at E.T. Petroleum and Delaney Petroleum; Associate at Bankers
   Trust

   New Horizons Fund

  *  JOHN H. LAPORTE, JR., 7/26/45, Director and President-Director and Managing
   Director, T. Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial
   Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   MARC L. BAYLIN, 11/17/67, Vice President-Vice President, T. Rowe Price;
   formerly Financial Analyst at Rausher Pierce Refsnes; Chartered Financial
   Analyst

   BRIAN W.H. BERGHUIS, 12/12/58, Vice President-Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   ANNA M. DOPKIN, 9/5/67, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Analyst at Goldman Sachs; Chartered Financial Analyst

   ROBERT N. GENSLER, 10/18/57, Vice President-Vice President, T. Rowe Price

   ERIC M. GERSTER, 3/23/71, Vice President-Employee, T. Rowe Price; formerly
   Associate with J.P. Morgan

   JILL L. HAUSER, 6/23/58, Vice President-Vice President, T. Rowe Price

   KRIS H. JENNER, M.D., 2/5/62, Vice President-Vice President, T. Rowe Price;
   formerly with the Laboratory of Biological Cancer, The Brigham & Women's
   Hospital, Harvard Medical School

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   JOSEPH M. MILANO, 9/14/72, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Research Assistant with Brookings Institution

   CHARLES A. MORRIS, 1/3/63, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   CHARLES G. PEPIN, 4/23/66, Vice President-Vice President, T. Rowe Price

   PHILIP W. RUEDI, 7/2/71, Vice President-Employee, T. Rowe Price; formerly
   Investment Banking Analyst with John Nuveen and Co.

   MARK R. SCHLARBAUM, 12/23/69, Vice President-Vice President, T. Rowe Price

   MICHAEL F. SOLA, 7/21/69, Vice President-Vice President, T. Rowe Price;
   formerly Systems Analyst/ Programmer at SRA Corporation; Chartered Financial
   Analyst

   J. DAVID WAGNER, 2/25/74, Vice President-Investment Analyst in the Equity
   Research Division, T. Rowe Price; Associate Analyst with National Economic
   Research Associates, Inc.


<PAGE>

   JOHN F. WAKEMAN, 11/25/62, Vice President-Vice President, T. Rowe Price

   CHRISTINA T. WYSKIEL, 12/14/71, Vice President-Employee, T. Rowe Price;
   formerly Health Care Investment Banking Associate with S.G. Cowen Securities
   Corporation

   FRANCIES W. HAWKS, 2/2/44, Assistant Vice President-Assistant Vice President,
   T. Rowe Price

   Real Estate Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   DAVID M. LEE, 11/13/62, President-Vice President, T. Rowe Price; Chartered
   Financial Analyst; formerly Marketing Representative at IBM

   STEPHEN W. BOESEL, 12/28/44, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company
   and T. Rowe Price Retirement Plan Services, Inc.

   ANNA M. DOPKIN, 9/5/67, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Analyst at Goldman Sachs; Chartered Financial Analyst

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   CHARLES M. OBER, 4/20/50, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   KAREN M. REGAN, 4/16/67, Vice President-Equity Trading Assistant, T. Rowe
   Price

   BRIAN C. ROGERS, 6/27/55, Vice President-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust
   Company; Chartered Financial Analyst

   WILLIAM J. STROMBERG, 3/10/60, Vice President-Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   Science & Technology Fund

  *  JOHN H. LAPORTE, JR., 7/26/45, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   CHARLES A. MORRIS, 1/3/63, President-Managing Director, T. Rowe Price and T.
   Rowe Price Group, Inc.; Chartered Financial Analyst

   MICHAEL F. SOLA, 7/21/69, Executive Vice President-Vice President, T. Rowe
   Price; formerly Systems Analyst/Programmer at SRA Corporation; Chartered
   Financial Analyst


<PAGE>

   GIRI DEVULAPALLY, 11/18/67, Vice President-Employee, T. Rowe Price; formerly
   Senior Consultant with Anderson Consulting

   DONALD J. EASLEY, 11/28/71, Vice President-Investment Analyst in the Equity
   Research Division; T. Rowe Price; Credit Analyst with The Bank of New York

   BRUCE E. EMERY, 3/27/72, Vice President-Investment Analyst in the Equity
   Research Division, T. Rowe Price; Senior Financial Analyst for LaSalle
   Partners, Inc.; Portfolio Administrator, Brinson Partners, Inc.

   ROBERT N. GENSLER, 10/18/57, Vice President-Vice President, T. Rowe Price

   ERIC M. GERSTER, 3/23/71, Vice President-Employee, T. Rowe Price; formerly
   Associate with J.P. Morgan

   JILL L. HAUSER, 6/23/58, Vice President-Vice President, T. Rowe Price

   TERRAL M. JORDAN, 8/13/45, Vice President-Vice President, T. Rowe Price

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   D. JAMES PREY III, 11/26/59, Vice President-Vice President, T. Rowe Price

   Small-Cap Stock Fund

  *  JOHN H. LAPORTE, JR., 7/26/45, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   GREGORY A. MCCRICKARD, 10/19/58, President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company;
   Chartered Financial Analyst

   MARCY L. ARNOLD, 8/5/59, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Assistant Vice President, Underwriting at Connie Lee
   Insurance Company

   PRESTON G. ATHEY, 7/17/49, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company;
   Chartered Financial Analyst

   HUGH M. EVANS III, 5/17/66, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   KRIS H. JENNER, M.D., 2/5/62, Vice President-Vice President, T. Rowe Price;
   formerly with the Laboratory of Biological Cancer, The Brigham & Women's
   Hospital, Harvard Medical School

   JAMES A.C. KENNEDY, 8/17/53, Vice President-Director and Managing Director,
   T. Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   JOSEPH M. MILANO, 9/14/72, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Research Assistant with Brookings Institution

   CURT J. ORGANT, 1/5/68, Vice President-Associate Analyst in the Equity
   Research Division, T. Rowe Price; formerly Senior Financial Analyst, DAP
   Products, Inc.

   CHARLES G. PEPIN, 4/23/66, Vice President-Vice President, T. Rowe Price


<PAGE>

   MICHAEL F. SOLA, 7/21/69, Vice President-Vice President, T. Rowe Price;
   formerly Systems Analyst/ Programmer at SRA Corporation; Chartered Financial
   Analyst

   RICHARD T. WHITNEY, 5/7/58, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price International
   and T. Rowe Price Trust Company; Chartered Financial Analyst

   Small-Cap Value Fund

  *  JOHN H. LAPORTE, JR., 7/26/45, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   PRESTON G. ATHEY, 7/17/49, President-Managing Director, T. Rowe Price and T.
   Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company;
   Chartered Financial Analyst

   HUGH M. EVANS III, 5/17/66, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   SUSAN J. KLEIN, 4/18/50, Vice President-Employee, T. Rowe Price

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   GREGORY A. MCCRICKARD, 10/19/58, Vice President-Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust
   Company; Chartered Financial Analyst

   JOSEPH M. MILANO, 9/14/72, Vice President-Assistant Vice President, T. Rowe
   Price; formerly Research Assistant with Brookings Institution

   CHARLES G. PEPIN, 4/23/66, Vice President-Vice President, T. Rowe Price

   DAVID J. WALLACK, 7/2/60, Vice President-Vice President, T. Rowe Price

   FRANCIES W. HAWKS, 2/2/44, Assistant Vice President-Assistant Vice President,
   T. Rowe Price

   Value Fund

  *  JAMES A.C. KENNEDY, 8/17/53, Director-Director and Managing Director, T.
   Rowe Price and T. Rowe Price Group, Inc.; Chartered Financial Analyst

  *  JAMES S. RIEPE, 6/25/43, Director and Vice President-Vice Chairman of the
   Board and Managing Director, T. Rowe Price and T. Rowe Price Group, Inc.;
   Chairman of the Board, T. Rowe Price Investment Services, Inc., T. Rowe Price
   Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of
   the Board, President, and Trust Officer, T. Rowe Price Trust Company;
   Director, T. Rowe Price International

  *  M. DAVID TESTA, 4/22/44, Director-Vice Chairman of the Board, Chief
   Investment Officer, Director, and Managing Director, T. Rowe Price; Vice
   Chairman of the Board, Managing Director, and Director, T. Rowe Price Group,
   Inc.; Vice President and Director, T. Rowe Price Trust Company; Director, T.
   Rowe Price International; Chartered Financial Analyst

   BRIAN C. ROGERS, 6/27/55, President-Director and Managing Director, T. Rowe
   Price and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust
   Company; Chartered Financial Analyst

   STEPHEN W. BOESEL, 12/28/44, Vice President-Managing Director, T. Rowe Price
   and T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company
   and T. Rowe Price Retirement Plan Services, Inc.


<PAGE>

   ANDREW M. BROOKS, 2/16/56, Vice President-Vice President, T. Rowe Price

   KARA M. CHESEBY, 10/9/63, Vice President-Vice President, T. Rowe Price;
   formerly Vice President at Legg Mason Wood Walker; Chartered Financial
   Analyst

   DAVID R. GIROUX, 6/8/75, Vice President-Employee, T. Rowe Price; formerly
   Commercial Credit Analyst with Hillsdale National Bank

   MICHAEL W. HOLTON, 9/25/68, Vice President-Vice President, T. Rowe Price;
   formerly Research Analyst at Bowles, Hollowell, Conner and Company; Chartered
   Financial Analyst

   RICHARD P. HOWARD, 9/16/46, Vice President-Vice President, T. Rowe Price;
   Chartered Financial Analyst

   J. JEFFREY LANG, 1/10/62, Vice President-Assistant Vice President, T. Rowe
   Price; Vice President, T. Rowe Price Trust Company

   JOHN D. LINEHAN, 1/21/65, Vice President-Employee, T. Rowe Price; formerly
   Vice President at E.T. Petroleum and Delaney Petroleum

   DAVID J. WALLACK, 7/2/60, Vice President-Vice President, T. Rowe Price


                               Compensation Table

   The funds do not pay pension or retirement benefits to their independent
   officers or directors/trustees. Also, any director/trustee of a fund who is
   an officer or employee of T. Rowe Price or T. Rowe Price International does
   not receive any remuneration from the fund.


<CAPTION>
Name of Person,                   Aggregate Compensation from                   Total Compensation from Fund and
Position                          Fund(a)                                       Fund Complex Paid to Directors/
--------------------------------  --------------------------------------------  Trustees(b)
----------------------------------------------------------------------------------------------------------------------------------
                                                                                ---------------------------------------------------
-
<S>                               <C>                                           <C>
Balanced Fund
Donald W. Dick, Jr., Director                                      $1,896                                               $80,000
David K. Fagin, Director                                            1,540                                                65,000
Hanne M. Merriman, Director                                         1,540                                                65,000
Hubert D. Vos, Director                                             1,588                                                67,000
Paul M. Wythes, Director                                            1,943                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Blue Chip Growth Fund
Donald W. Dick, Jr., Director                                      $3,752                                               $80,000
David K. Fagin, Director                                            3,048                                                65,000
Hanne M. Merriman, Director                                         3,048                                                65,000
Hubert D. Vos, Director                                             3,142                                                67,000
Paul M. Wythes, Director                                            3,846                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Capital Appreciation Fund
Donald W. Dick, Jr., Director                                      $1,436                                               $80,000
David K. Fagin, Director                                            1,167                                                65,000
Hanne M. Merriman, Director                                         1,167                                                65,000
Hubert D. Vos, Director                                             1,203                                                67,000
Paul M. Wythes, Director                                            1,472                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Capital Opportunity Fund
Donald W. Dick, Jr., Director                                      $1,181                                               $80,000
David K. Fagin, Director                                              960                                                65,000
Hanne M. Merriman, Director                                           960                                                65,000
Hubert D. Vos, Director                                               989                                                67,000
Paul M. Wythes, Director                                            1,211                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Developing Technologies Fund(c)
Donald W. Dick, Jr., Director                                           $1,115                                          $80,000
David K. Fagin, Director                                              906                                                65,000
Hanne M. Merriman, Director                                           906                                                65,000
Hubert D. Vos, Director                                               934                                                67,000
Paul M. Wythes, Director                                            1,143                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Diversified Small-Cap Growth Fund
Donald W. Dick, Jr., Director                                      $1,176                                               $80,000
David K. Fagin, Director                                              956                                                65,000
Hanne M. Merriman, Director                                           956                                                65,000
Hubert D. Vos, Director                                               985                                                67,000
Paul M. Wythes, Director                                            1,206                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Dividend Growth Fund
Donald W. Dick, Jr., Director                                      $1,439                                               $80,000
David K. Fagin, Director                                            1,169                                                65,000
Hanne M. Merriman, Director                                         1,169                                                65,000
Hubert D. Vos, Director                                             1,205                                                67,000
Paul M. Wythes, Director                                            1,475                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Equity Income Fund
Donald W. Dick, Jr., Trustee                                       $4,957                                               $80,000
David K. Fagin, Trustee                                             4,028                                                65,000
Hanne M. Merriman, Trustee                                          4,028                                                65,000
Hubert D. Vos, Director                                             4,152                                                67,000
Paul M. Wythes, Trustee                                             5,081                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Equity Index 500 Fund
Donald W. Dick, Jr., Director                                      $2,859                                               $80,000
David K. Fagin, Director                                            2,323                                                65,000
Hanne M. Merriman, Director                                         2,323                                                65,000
Hubert D. Vos, Director                                             2,395                                                67,000
Paul M. Wythes, Director                                            2,931                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Extended Equity Market Index Fund
Donald W. Dick, Jr., Director                                      $1,173                                               $80,000
David K. Fagin, Director                                              953                                                65,000
Hanne M. Merriman, Director                                           953                                                65,000
Hubert D. Vos, Director                                               983                                                67,000
Paul M. Wythes, Director                                            1,203                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Financial Services Fund
Donald W. Dick, Jr., Director                                      $1,212                                               $80,000
David K. Fagin, Director                                              985                                                65,000
Hanne M. Merriman, Director                                           985                                                65,000
Hubert D. Vos, Director                                             1,015                                                67,000
Paul M. Wythes, Director                                            1,243                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Global Technology Fund(c)
Donald W. Dick, Jr., Director                                           $1,235                                          $80,000
David K. Fagin, Director                                            1,003                                                65,000
Hanne M. Merriman, Director                                         1,003                                                65,000
Hubert D. Vos, Director                                             1,034                                                67,000
Paul M. Wythes, Director                                            1,265                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Growth & Income Fund
Donald W. Dick, Jr., Director                                      $2,302                                               $80,000
David K. Fagin, Director                                            1,871                                                65,000
Hanne M. Merriman, Director                                         1,871                                                65,000
Hubert D. Vos, Director                                             1,928                                                67,000
Paul M. Wythes, Director                                            2,360                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Growth Stock Fund
Donald W. Dick, Jr., Director                                      $3,257                                               $80,000
David K. Fagin, Director                                            2,646                                                65,000
Hanne M. Merriman, Director                                         2,646                                                65,000
Hubert D. Vos, Director                                             2,728                                                67,000
Paul M. Wythes, Director                                            3,338                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Health Sciences Fund
Donald W. Dick, Jr., Director                                           $1,351                                          $80,000
David K. Fagin, Director                                            1,098                                                65,000
Hanne M. Merriman, Director                                         1,098                                                65,000
Hubert D. Vos, Director                                             1,132                                                67,000
Paul M. Wythes, Director                                            1,385                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Institutional Large-Cap Value Fund(c)
Donald W. Dick, Jr., Director                                           $1,157                                          $80,000
David K. Fagin, Director                                              940                                                65,000
Hanne M. Merriman, Director                                           940                                                65,000
Hubert D. Vos, Director                                               969                                                67,000
Paul M. Wythes, Director                                            1,186                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Institutional Mid-Cap Equity Growth Fund
Donald W. Dick, Jr., Director                                      $1,254                                               $80,000
David K. Fagin, Director                                            1,019                                                65,000
Hanne M. Merriman, Director                                         1,019                                                65,000
Hubert D. Vos, Director                                             1,051                                                67,000
Paul M. Wythes, Director                                            1,286                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Institutional Small-Cap Stock Fund(c)
Donald W. Dick, Jr., Director                                           $1,181                                          $80,000
David K. Fagin, Director                                              960                                                65,000
Hanne M. Merriman, Director                                           960                                                65,000
Hubert D. Vos, Director                                               989                                                67,000
Paul M. Wythes, Director                                            1,211                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Media & Telecommunications Fund
Donald W. Dick, Jr., Director                                      $1,537                                               $80,000
David K. Fagin, Director                                            1,249                                                65,000
Hanne M. Merriman, Director                                         1,249                                                65,000
Hubert D. Vos, Director                                             1,287                                                67,000
Paul M. Wythes, Director                                            1,576                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Mid-Cap Growth Fund
Donald W. Dick, Jr., Director                                      $3,234                                               $80,000
David K. Fagin, Director                                            2,628                                                65,000
Hanne M. Merriman, Director                                         2,628                                                65,000
Hubert D. Vos, Director                                             2,709                                                67,000
Paul M. Wythes, Director                                            3,315                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Mid-Cap Value Fund
Donald W. Dick, Jr., Director                                      $1,222                                               $80,000
David K. Fagin, Director                                              993                                                65,000
Hanne M. Merriman, Director                                           993                                                65,000
Hubert D. Vos, Director                                             1,024                                                67,000
Paul M. Wythes, Director                                            1,253                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
New America Growth Fund
Donald W. Dick, Jr., Trustee                                       $1,816                                               $80,000
David K. Fagin, Trustee                                             1,475                                                65,000
Hanne M. Merriman, Trustee                                          1,475                                                65,000
Hubert D. Vos, Trustee                                              1,521                                                67,000
Paul M. Wythes, Trustee                                             1,861                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
New Era Fund
Donald W. Dick, Jr., Director                                      $1,536                                               $80,000
David K. Fagin, Director                                            1,248                                                65,000
Hanne M. Merriman, Director                                         1,248                                                65,000
Hubert D. Vos, Director                                             1,286                                                67,000
Paul M. Wythes, Director                                            1,574                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
New Horizons Fund
Donald W. Dick, Jr., Director                                      $3,604                                               $80,000
David K. Fagin, Director                                            2,928                                                65,000
Hanne M. Merriman, Director                                         2,928                                                65,000
Hubert D. Vos, Director                                             3,018                                                67,000
Paul M. Wythes, Director                                            3,694                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Real Estate Fund
Donald W. Dick, Jr., Director                                      $1,156                                               $80,000
David K. Fagin, Director                                              939                                                65,000
Hanne M. Merriman, Director                                           939                                                65,000
Hubert D. Vos, Director                                               968                                                67,000
Paul M. Wythes, Director                                            1,185                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Science & Technology Fund
Donald W. Dick, Jr., Director                                      $5,952                                               $80,000
David K. Fagin, Director                                            4,836                                                65,000
Hanne M. Merriman, Director                                         4,836                                                65,000
Hubert D. Vos, Director                                             4,984                                                67,000
Paul M. Wythes, Director                                            6,100                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Small-Cap Stock Fund
Donald W. Dick, Jr., Director                                      $1,747                                               $80,000
David K. Fagin, Director                                            1,419                                                65,000
Hanne M. Merriman, Director                                         1,419                                                65,000
Hubert D. Vos, Director                                             1,463                                                67,000
Paul M. Wythes, Director                                            1,791                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Small-Cap Value Fund
Donald W. Dick, Jr., Director                                      $1,595                                               $80,000
David K. Fagin, Director                                            1,296                                                65,000
Hanne M. Merriman, Director                                         1,296                                                65,000
Hubert D. Vos, Director                                             1,336                                                67,000
Paul M. Wythes, Director                                            1,635                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Total Equity Market Index Fund
Donald W. Dick, Jr., Director                                      $1,221                                               $80,000
David K. Fagin, Director                                              992                                                65,000
Hanne M. Merriman, Director                                           992                                                65,000
Hubert D. Vos, Director                                             1,023                                                67,000
Paul M. Wythes, Director                                            1,251                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-
Value Fund
Donald W. Dick, Jr., Director                                      $1,445                                               $80,000
David K. Fagin, Director                                            1,174                                                65,000
Hanne M. Merriman, Director                                         1,174                                                65,000
Hubert D. Vos, Director                                             1,210                                                67,000
Paul M. Wythes, Director                                            1,481                                                82,000
-----------------------------------------------------------------------------------------------------------------------------------
-






<PAGE>



<PAGE>



<PAGE>



<PAGE>

 (a) Amounts in this column are based on accrued compensation for fiscal year
   2000.

 (b) Amounts in this column are based on compensation received for the
   calendar year 2000. The T. Rowe Price complex included 95 funds as of
   December 31, 2000.

 (c) Expenses estimated for the fiscal year ended December 31, 2000.


<PAGE>

   All Funds

   The fund's Executive Committee, consisting of the fund's interested
   directors/trustees, has been authorized by its respective Board of
   Directors/Trustees to exercise all powers of the Board to manage the funds in
   the intervals between meetings of the Board, except the powers prohibited by
   statute from being delegated.



 PRINCIPAL HOLDERS OF SECURITIES
 -------------------------------------------------------------------------------
   As of March 30, 2001, the officers and directors/trustees of the fund, as a
   group, owned less than 1% of the outstanding shares of the fund.

   As of March 30, 2001, the following shareholders of record owned more than 5%
   of the outstanding shares of the fund:

   Institutional Mid-Cap Equity Growth Fund: Atlantic Trust Company NA, Nominee
   Account, 100 Federal Street, 37th Floor, Boston, Massachusetts 02110-1802;
   Pell Rudman Trust Co. NA, Nominee Acct., Attn.: Mutual Funds, 100 Federal
   St., 37th Fl., Boston, Massachusetts 02110-1802; Stichting Pensioenfonds, Van
   de Koninklijke Nedlloyd, P.O. Box 1982, 3000 BZ Rotterdam, The Netherlands;
   CIBC World Markets Agt. for CIBC, Mellon Trust Co. Tr., Nexfor Master
   Investment Trust Funds, 161 Bay St., P.O. Box 500, Toronto, Ontario Canada
   M5J2S8; Band & Co., c/o Firstar Bank, P.O. Box 1787, Milwaukee Wisconsin
   53201-1787; Bankers Trust Co., FBO Arch Coal Inc., #191470, P.O. Box 9014,
   Church Street Station, New York, New York 10008; Wendel & Co. A/C 842494, c/o
   The Bank of New York, Attn.: Mutual Funds/Reorg. Dept., P.O. Box 1066, Wall
   Street Station, New York, New York 10286-0001;


   Institutional Small-Cap Stock Fund: Y & R Career Compensation Plan, Attn.:
   David Ottignon, Chase Manhattan Bank, 4 New York Plaza IASD - 2nd Floor, New
   York, New York 10004-2413; Burlington Resources Inc., 5051 Westheimer Road,
   Suite 1400, Houston, Texas 77056-5686; Brookline Contributory Ret. Sys., 333
   Washington Street, Brooklyn, Massachusetts 02445-6853; Northern Trust Co.
   Tr., Illinois Tool Works, Pension Trust U/A DTD 1/8/90, Attn.: Robert T.
   Callahan, 3600 West Lake Avenue, Glenview, Illinois 60025-1215; Sigler & Co.
   Cust., Smithsonian Institution, Chas Manhattan Bank, Mark R. Pensec, AVP, 4
   New York Plaza, 2nd Floor, New York, New York 10004-2413*; Goucher College
   Endowment Fund, Mercantile Safe Deposit & Trust, 1021 Dulaney Valley Road,
   Towson, Maryland 21204-2780;

   * Sigler & Co Cust owns 31.53% of the outstanding shares of the fund. The
     large number of shares held by this person will allow it to significantly
     influence the outcome of any matters subject to a shareholder vote.


   New America Growth Fund: Wilmington Trust Co. TR, FBO Continental Airlines
   Inc., DCP Plan A/C  #49277-0, c/o Mutual Funds, P.O. Box 8971, Wilmington,
   Delaware 19899-8971;

   New Horizons Fund: Allfirst Trust Co. NA Cust. FBO City of New York Deferred
   Compensation Plan, c/o Great-West Recordkeeper, 8515 E. Orchard Rd., Ste.
   2T2, Englewood, Colorado 80111-5037;

   Small-Cap Stock Fund: Norwest Bank Co. NA TR, FBO State of Minn. Def. Comp.
   Plan, Minn. State Def. Comp. Plan Trust, c/o Great West Life Recordkeeper,
   8515 E. Orchard Rd., Attn.: 2T2, Englewood, Colorado 80111-5037;


   Blue Chip Growth Fund: T. Rowe Price Ret Plan Svcs Tr Blue Chip Growth Fund,
   Attn.: Asset Reconciliations, P.O. Box 17215, Baltimore, Maryland
   21297-1215**;

   ** T. Rowe Price Retirement Plan Services is a wholly owned subsidiary of T.
      Rowe Price Associates, Inc., which is a wholly owned subsidiary of T. Rowe
      Price Group, Inc., each a Maryland corporation. T. Rowe Price Retirement
      Plan Services owns 38.67% of the outstanding shares of the fund. T. Rowe
      Price Retirement Plan Services is not the beneficial owner of these
      shares. Such shares are held of record by T. Rowe Price Retirement Plan
      Services and are voted by various retirement plans and retirement
      participants.



<PAGE>


   Blue Chip Growth, Growth & Income, Growth Stock, Mid-Cap Value***, New Era,
   and New Horizons Funds: Pirateline & Co., T. Rowe Price Associates, Attn.:
   Fund Accounting Dept., 100 East Pratt Street, Baltimore, Maryland 21202-1009;

   *** Pirateline & Co owns 51.72% of the outstanding shares of the fund through
      the Spectrum Fund. Shares of the fund held by the Spectrum Fund are echo
      voted by Spectrum Fund in the same proportion as the shares of the fund
      are voted by its non-Spectrum Fund shareholders.


   Capital Appreciation, Financial Services, Mid-Cap Growth, New Era, Science &
   Technology, Small-Cap Stock, and Value Funds: Charles Schwab & Co. Inc.,
   Reinvest. Account, Attn.: Mutual Funds Dept., 101 Montgomery St., San
   Francisco, California 94104-4122;

   Growth & Income and Science & Technology Funds: Manulife Financial USA, 200
   Bloor St. East 7E Floor, Toronto, Ontario Canada M4WIE5, Attn.: Rosie Chuck,
   SRS Accounting.



 INVESTMENT MANAGEMENT SERVICES
 -------------------------------------------------------------------------------
   Services
   Under the Management Agreement, T. Rowe Price provides the fund with
   discretionary investment services. Specifically, T. Rowe Price is responsible
   for supervising and directing the investments of the fund in accordance with
   the fund's investment objectives, program, and restrictions as provided in
   its prospectus and this Statement of Additional Information. T. Rowe Price is
   also responsible for effecting all security transactions on behalf of the
   fund, including the negotiation of commissions and the allocation of
   principal business and portfolio brokerage. In addition to these services, T.
   Rowe Price provide the fund with certain corporate administrative services,
   including: maintaining the fund's corporate existence and corporate records;
   registering and qualifying fund shares under federal laws; monitoring the
   financial, accounting, and administrative functions of the fund; maintaining
   liaison with the agents employed by the fund such as the fund's custodian and
   transfer agent; assisting the fund in the coordination of such agents'
   activities; and permitting T. Rowe Price's employees to serve as officers,
   directors/trustees, and committee members of the fund without cost to the
   fund.

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

   All Funds except Equity Index 500, Extended Equity Market Index, Total Equity
   Market Index, and Institutional Mid-Cap Equity Growth Funds

   Management Fee
   The fund pays T. Rowe Price a fee ("Fee") which consists of two components: a
   Group Management Fee ("Group Fee") and an Individual Fund Fee ("Fund Fee").
   The Fee is paid monthly to T. Rowe Price on the first business day of the
   next succeeding calendar month and is calculated as described next.

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


<PAGE>


<CAPTION>
<S>      <C>     <C>
         0.480%  First $1 billion  0.360%  Next $2 billion   0.310%  Next $16 billion
         ------------------------------------------------------------------------------
         0.450%  Next $1 billion   0.350%  Next $2 billion   0.305%  Next $30 billion
         ------------------------------------------------------------------------------
         0.420%  Next $1 billion   0.340%  Next $5 billion   0.      Thereafter
                                                             295
                                                             %
         ------------------------------------------------------------------------------
         0.390%  Next $1 billion   0.330%  Next $10 billion

         ----------------------------------------------------
         0.370%  Next $1 billion   0.320%  Next $10 billion






   For the purpose of calculating the Group Fee, the Price Funds include all the
   mutual funds distributed by Investment Services, (excluding the T. Rowe Price
   Spectrum Funds, and any institutional, index, or private label mutual funds).
   For the purpose of calculating the Daily Price Funds' Group Fee Accrual for
   any particular day, the net assets of each Price Fund are determined in
   accordance with the funds' prospectus as of the close of business on the
   previous business day on which the fund was open for business.

   The monthly Fund Fee ("Monthly Fund Fee") is the sum of the daily Fund Fee
   accruals ("Daily Fund Fee Accruals") for each month. The Daily Fund Fee
   Accrual for any particular day is computed by multiplying the fraction of one
   (1) over the number of calendar days in the year by the individual Fund Fee
   Rate and multiplying this product by the net assets of the fund for that day,
   as determined in accordance with the fund's prospectus as of the close of
   business on the previous business day on which the fund was open for
   business. The individual fund fees of each fund are listed in the following
   chart:


<CAPTION>
<S>                                <C>
Balanced Fund                         0.15%
Blue Chip Growth Fund                 0.30%
Capital Appreciation Fund             0.30%
Capital Opportunity Fund              0.35%
Developing Technologies Fund          0.60%
Diversified Small-Cap Growth Fund     0.35%
Dividend Growth Fund                  0.20%
Equity Income Fund                    0.25%
Financial Services Fund               0.35%
Global Technology Fund                0.45%
Growth & Income Fund                  0.25%
Growth Stock Fund                     0.25%
Health Sciences Fund                  0.35%
Media & Telecommunications Fund       0.35%
Mid-Cap Growth Fund                   0.35%
Mid-Cap Value Fund                    0.35%
New America Growth Fund               0.35%
New Era Fund                          0.25%
New Horizons Fund                     0.35%
Real Estate Fund                      0.30%
Science & Technology Fund             0.35%
Small-Cap Stock Fund                  0.45%
Small-Cap Value Fund                  0.35%
Value Fund                            0.35%






<PAGE>

   The following chart sets forth the total management fees, if any, paid to T.
   Rowe Price by each fund, during the last three years:

<CAPTION>
                       Fund                               2000            1999             1998
                       ----                               ----            ----             ----
<S>                                                  <C>             <C>
Balanced                                              $ 9,675,000     $ 9,154,000      $ 6,809,000
Blue Chip Growth*                                      45,037,000      34,536,000       19,869,000
Capital Appreciation                                    4,963,000       5,793,000        3,939,000
Capital Opportunity                                       686,000         763,000          991,000
Developing Technologies                                         0             (a)              (a)
Diversified Small-Cap Growth                              679,000         292,000          325,000
Dividend Growth                                         4,010,000       6,522,000        5,482,000
Equity Income*                                         58,470,000      75,676,000       77,394,000
Equity Index 500                                        6,234,000       8,301,000        4,169,000
Extended Equity Market Index**                            354,000         131,000           50,000
Financial Services                                      1,388,000       1,266,000        1,582,000
Global Technology                                         274,000             (a)              (a)
Growth & Income                                        18,013,000      20,605,000       20,258,000
Growth Stock                                           33,072,000      29,222,000       25,573,000
Health Sciences                                         4,403,000       2,038,000        1,926,000
Institutional Large-Cap Value                                   0             (a)              (a)
Institutional Mid-Cap Equity Growth                     1,896,000       1,238,000          633,000
Institutional Small-Cap Stock                             432,000             (a)              (a)
Media & Telecommunications                              7,174,000       3,144,000        1,301,000
Mid-Cap Growth*                                        39,493,000      27,412,000       16,692,000
Mid-Cap Value                                           1,495,000       1,427,000        1,596,000
New America Growth                                     11,988,000      13,511,000       12,703,000
New Era                                                 6,223,000       6,131,000        7,211,000
New Horizons                                           45,642,000      33,020,000       33,743,000
Real Estate                                               589,000             (b)              (b)
Science & Technology*                                  89,979,000      47,361,000       24,865,000
Small-Cap Stock*                                       15,623,000      10,276,000        7,791,000
Small-Cap Value*                                        8,294,000       9,213,000       13,021,000
Total Equity Market Index**                               863,000         512,000          111,000
Value*                                                  5,644,000       5,699,000        5,176,000
-----------------------------------------------------------------------------------------------------



  (a) Prior to commencement of operations.

  (b) Due to the fund's expense limitation in effect at that time, no
     management fees were paid by the fund to T. Rowe Price.

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

  ** All-inclusive fee including Investment Management Fees and
     Administrative Expenses.

   The Management Agreement between the fund and T. Rowe Price provides that the
   fund will bear all expenses of its operations not specifically assumed by T.
   Rowe Price.

   The following chart sets forth expense ratio limitations and the periods for
   which they are effective. For each, T. Rowe Price has agreed to bear any fund
   expenses (other than interest, taxes, brokerage, and other expenditures that
   are capitalized in accordance with generally accepted accounting principles
   and extraordinary expenses) which would cause the fund's ratio of expenses to
   average net assets to exceed the indicated percentage limitations. The
   expenses borne by T. Rowe Price are subject to reimbursement by the


<PAGE>

   fund through the indicated reimbursement date, provided no reimbursement will
   be made if it would result in the fund's expense ratio exceeding its
   applicable limitation.


<CAPTION>
                                                 Expense       Reimbursement
         Fund             Limitation Period      -------       -------------
         ----             -----------------       Ratio            Date
------------------------------------------------  -----            ----
                                                Limitation
                                                ----------
                                                -------------------------------
<S>                     <C>                     <C>
Blue Chip Growth        March 31, 2000 -
Fund-Advisor Class      December 31, 2001                   December 31, 2003
Developing              August 31, 2000 -
Technologies            December 31, 2002         1.50%     December 31, 2004
Diversified Small-Cap   January 1, 1999 -
Growth(a)               December 31, 2000                   December 31, 2002
Equity Income           March 31,
Fund-Advisor Class      2000-December 31, 2001              December 31, 2003
                        January 1, 2001 -
Equity Index 500(b)(c)  December 31, 2002                   December 31, 2004
                        September 30, 1996 -
Financial Services      December 31, 1998                   December 31, 2000
                        September 29, 2000 -
Global Technology       December 31, 2002         1.50%     December 31, 2004
Institutional           March 31, 2000 -
Large-Cap Value         December 31, 2001                   December 31, 2003
Institutional           March 31, 2000 -
Small-Cap Stock         December 31, 2001                   December 31, 2003
Mid-Cap Growth          March 31, 2000 -
Fund-Advisor Class      December 31, 2001                   December 31, 2003
                        January 1, 2000 -
Real Estate(d)          December 31, 2001                   December 31, 2003
Science & Technology    March 31, 2000 -
Fund-Advisor Class      December 31, 2001                   December 31, 2003
Small-Cap Stock         March 31, 2000 -
Fund-Advisor Class      December 31, 2001                   December 31, 2003
Small-Cap Value         March 31, 2000 -
Fund-Advisor Class      December 31, 2001                   December 31, 2003
Value Fund-Advisor      March 31, 2000 -                    December 31, 2003
Class                   December 31, 2001
-------------------------------------------------------------------------------




 (a) The Diversified Small-Cap Growth Fund previously operated under a
   1.25% limitation that expired December 31, 1998. The reimbursement
   period for this limitation extended through December 31, 2000.

 (b) The Equity Index 500 Fund previously operated under a 0.40% limitation
   that expired December 31, 1999. The reimbursement period for this
   limitation extends through December 31, 2001.

 (c) The Equity Index 500 Fund previously operated under a 0.35% limitation
   that expired December 31, 2000. The reimbursement period for this
   limitation extends through December 31, 2002.

 (d) The Real Estate Fund previously operated under a 1.00% limitation that
   expired December 31, 1999. The reimbursement period for this limitation
   extends through December 31, 2001.


   Each of the above-referenced fund's Management Agreement also provides that
   one or more additional expense limitations periods (of the same or different
   time periods) may be implemented after the expiration of the current expense
   limitation, and that with respect to any such additional limitation period,
   the fund may reimburse T. Rowe Price, provided the reimbursement does not
   result in the fund's aggregate expenses exceeding the additional expense
   limitation.

   Pursuant to the Diversified Small-Cap Growth Fund's previous expense
   limitation, $66,000 of previously unaccrued management fees were accrued as
   expenses of the fund during the year ended December 31, 2000. Additionally,
   $114,000 of unaccrued fees remain subject to reimbursement by the fund
   through December 31, 2002.

   Pursuant to the Equity Index 500 Fund's previous expense limitation, $681,000
   of management fees were not accrued by the fund for the year ended December
   31, 2000. Additionally, $1,272,000 of unaccrued fees remain subject to
   reimbursement by the fund through December 31, 2001, and $681,000 through
   December 31, 2002.

   Pursuant to the Real Estate Fund's current expense limitation, $144,000 of
   management fees were not accrued by the fund for the year ended December 31,
   2000. Additionally, $488,000 of unaccrued fees remain subject to
   reimbursement by the fund through December 31, 2001, and $144,000 through
   December 31, 2003.


<PAGE>

   Pursuant to the Value Fund-Advisor Class's current expense limitation, $51 of
   other fund expenses were borne by the manager for the period ended December
   31, 2000.

   Pursuant to the Developing Technologies Fund's current expense limitation,
   $43,000 of management fees were not accrued by the fund for the period ended
   December 31, 2000, and $34,000 of other fund expenses were borne by the
   manager. Additionally, $77,000 of unaccrued fees remain subject to
   reimbursement by the fund through December 31, 2004.

   Pursuant to the Institutional Large-Cap Value Fund's current expense
   limitation, $9,000 of management fees were not accrued by the fund for the
   period ended December 31, 2000, and $68,000 of other fund expenses were borne
   by the manager.

   Pursuant to the Institutional Small-Cap Stock Fund's current expense
   limitation, $76,000 of management fees were not accrued by the fund for the
   period ended December 31, 2000.


                                 Management Fee

   Equity Index 500 Fund
   The fund pays T. Rowe Price an annual investment management fee in monthly
   installments of 0.15% of the average daily net asset value of the fund.

   Extended Equity Market Index and Total Equity Market Index Funds
   The Management Agreement between each fund and T. Rowe Price provides that
   each fund pays T. Rowe Price an annual all-inclusive fee of 0.40%. The
   agreement also provides that T. Rowe Price will pay all expenses of each
   fund's operations, except interest, taxes, brokerage commissions, and other
   charges incident to the purchase, sale or lending of the fund's portfolio
   securities, directors' fees and expenses (including counsel fees and
   expenses) and such non-recurring or extraordinary expenses that may arise,
   including the costs of actions, suits or proceedings to which the fund is a
   party and the expenses the fund may incur as a result of its obligation to
   provide indemnification to its officers, directors and agents. However, the
   Board of Directors for the funds reserves the right to impose additional fees
   against shareholder accounts to defray expenses which would otherwise be paid
   by T. Rowe Price under the management agreement. The Board does not
   anticipate levying such charges; such a fee, if charged, may be retained by
   the fund or paid to T. Rowe Price.

   Institutional Large-Cap Value Fund
   The fund pays T. Rowe Price an annual investment management fee in monthly
   installments of 0.55% of the average daily net asset value of the fund.

   Institutional Small-Cap Stock Fund
   The fund pays T. Rowe Price an annual investment management fee in monthly
   installments of 0.65% of the average daily net asset value of the fund.

   Institutional Mid-Cap Equity Growth Fund
   The fund pays T. Rowe Price an annual investment management fee in monthly
   installments of 0.60% of the average daily net asset value of the fund.

   Blue Chip Growth, Equity Income, Growth & Income, Growth Stock, Mid-Cap
   Value, New Era, and New Horizons Funds

   T. Rowe Price Spectrum Fund, Inc.
   The funds listed above are a party to a Special Servicing Agreement
   ("Agreement") between and among T. Rowe Price Spectrum Fund, Inc. ("Spectrum
   Fund"), T. Rowe Price, and various other T. Rowe Price funds which, along
   with such fund, are funds in which Spectrum Fund invests (collectively all
   such funds "Underlying Price Funds").

   Each Agreement provides that, if the Board of Directors/Trustees of any
   Underlying Price Fund determines that such Underlying Fund's share of the
   aggregate expenses of Spectrum Fund is less than the estimated savings to the
   Underlying Price Fund from the operation of Spectrum Fund, the Underlying
   Price Fund will bear those expenses in proportion to the average daily value
   of its shares owned by Spectrum Fund, provided


<PAGE>

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

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

   T. Rowe Price Services, Inc., a wholly owned subsidiary of T. Rowe Price,
   acts as the fund's transfer and dividend disbursing agent and provides
   shareholder and administrative services. Services for certain types of
   retirement plans are provided by T. Rowe Price Retirement Plan Services,
   Inc., also a wholly owned subsidiary. The address for each is 100 East Pratt
   St., Baltimore, MD 21202. Additionally, T. Rowe Price, under a separate
   agreement with the funds, provides accounting services to the funds.

   The funds paid the expenses shown in the following table for the fiscal year
   ended December 31, 2000, to T. Rowe Price and its affiliates.


<CAPTION>
                               Transfer Agent and    Retirement     Accounting
            Fund              Shareholder Services  Subaccounting    Services
            ----              --------------------    Services       --------
                                                      --------
<S>                           <C>                   <C>
Balanced                           $  801,000        $ 4,699,000     $ 85,000
Blue Chip Growth                    5,763,000         11,211,000       75,000
Blue Chip Growth
Fund-Advisor Class                         --                 --           --
Capital Appreciation                  666,000            875,000       64,000
Capital Opportunity                   233,000             27,000       64,000
Developing Technologies                 6,000           --             21,000
Diversified Small-Cap Growth          238,000              2,000       64,000
Dividend Growth                     1,165,000            427,000       64,000
Equity Income                       7,734,000          9,826,000       95,000
Equity Income Fund-Advisor
Class                                      --                 --           --
Equity Index 500                    3,448,000          4,521,000       65,000
Extended Equity Market Index               --                 --           --
Financial Services                    391,000             11,000       64,000
Global Technology                      52,000           --             21,000
Growth & Income                     2,493,000          2,451,000       84,000
Growth Stock                        3,098,000          4,622,000      104,000
Health Sciences                     1,234,000            120,000       64,000
Institutional Large-Cap
Value                                      --                 --       48,000
Institutional Mid-Cap Equity
Growth                                  9,000                 --       64,000
Institutional Small-Cap
Stock                                      --                 --       48,000
Media & Telecommunications          1,758,000            244,000       64,000
Mid-Cap Growth                      3,286,000          4,780,000       75,000
Mid-Cap Growth Fund-Advisor
Class                                      --                 --           --
Mid-Cap Value                         490,000             19,000       64,000
New America Growth                  1,319,000          2,232,000       64,000
New Era                               978,000            232,000       64,000
New Horizons                        3,957,000          7,312,000       84,000
Real Estate                            96,000              3,000       64,000
Science & Technology                9,822,000          8,529,000       75,000
Science & Technology
Fund-Advisor Class                         --                 --           --
Small-Cap Stock                     1,239,000            896,000       95,000
Small-Cap Stock Fund-Advisor
Class                                      --                 --           --
Small-Cap Value                       994,000          1,194,000       75,000
Small-Cap Value Fund-Advisor
Class                                      --                 --           --
Total Equity Market Index                  --                 --           --
Value                                 952,000            498,000       75,000
Value Fund-Advisor Class                   --                 --           --
-------------------------------------------------------------------------------






<PAGE>

 SERVICES BY OUTSIDE PARTIES
 -------------------------------------------------------------------------------
   The shares of some fund shareholders are held in omnibus accounts maintained
   by various third parties, including retirement plan sponsors, insurance
   companies, banks and broker-dealers. The fund has adopted an administrative
   fee payment ("AFP") program that authorizes the fund to make payments to
   these third parties. The payments are made for transfer agent, recordkeeping,
   and other administrative services provided by, or on behalf of, the third
   parties with respect to such shareholders and the omnibus accounts. Under the
   AFP program, the funds paid the amounts set forth below to various third
   parties in calendar year 2000.


<CAPTION>
<S>                              <C>
Balanced Fund                     $   95,507
Blue Chip Growth Fund                766,654
Capital Appreciation Fund             18,431
Capital Opportunity Fund               2,090
Dividend Growth Fund                  15,995
Equity Income Fund                 1,076,371
Equity Index 500 Fund                106,884
Financial Services Fund                7,730
Growth & Income Fund                 579,648
Growth Stock Fund                    138,292
Health Sciences Fund                  20,624
Media & Telecommunications Fund        6,322
Mid-Cap Growth Fund                1,275,695
Mid-Cap Value Fund                       944
New America Growth Fund              215,966
New Era Fund                          30,275
New Horizons Fund                  1,218,605
Science & Technology Fund          1,437,715
Small-Cap Stock Fund                 498,293
Small-Cap Value Fund                 114,221
Value Fund                            13,700






<PAGE>

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


<CAPTION>
<S>                                      <C>
Blue Chip Growth Fund-Advisor Class       $    1,188
Equity Income Fund-Advisor Class                 384
Mid-Cap Growth Fund-Advisor Class              1,096
Science & Technology Fund-Advisor Class    1,221,808
Small-Cap Stock Fund-Advisor Class             3,524
Small-Cap Value Fund-Advisor Class               693
Value Fund-Advisor Class                          48





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


 DISTRIBUTOR FOR THE FUNDS
 -------------------------------------------------------------------------------
   Investment Services, a Maryland corporation formed in 1980 as a wholly owned
   subsidiary of T. Rowe Price, serves as the fund's distributor. Investment
   Services is registered as a broker-dealer under the Securities Exchange Act
   of 1934 and is a member of the National Association of Securities Dealers,
   Inc. The offering of the fund's shares is continuous.

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

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

   The Underwriting Agreement provides that Investment Services will pay all
   fees and expenses in connection with: printing and distributing prospectuses
   and reports for use in offering and selling fund shares; preparing, setting
   in type, printing, and mailing all sales literature and advertising;
   Investment Services' federal and state registrations as a broker-dealer; and
   offering and selling shares, except for those fees and expenses specifically
   assumed by the fund. Investment Services' expenses are paid by T. Rowe Price.

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

   Blue Chip Growth, Equity Income, Mid-Cap Growth, Science & Technology,
   Small-Cap Stock, Small-Cap Value, Value Advisor Classes


                   Distribution and Shareholder Services Plan

   The fund Directors/Trustees adopted a Plan pursuant to Rule 12b-1 on February
   9, 2000 with respect to each Advisor Class. Each Plan provides that the
   Advisor Class may compensate Investment Services or such other persons as the
   fund or Investment Services designates, to finance any or all of the
   distribution, shareholder servicing, maintenance of shareholder accounts,
   and/or other administrative services with respect to Advisor Class shares. It
   is expected that most, if not all, payments under the Plan will be made
   (either directly, or


<PAGE>

   indirectly through Investment Services) to brokers, dealers, banks, insurance
   companies, and intermediaries other than Investment Services. Under the Plan,
   each Advisor Class pays a fee at the annual rate of up to 0.25% of that
   class's average daily net assets. Normally, the full amount of the fee is
   paid to the intermediary on shares sold through that intermediary. However, a
   lesser amount may be paid based on the level of services provided.
   Intermediaries may use the payments for, among other purposes, compensating
   employees engaged in sales and/or shareholder servicing of the Advisor Class,
   as well as for a wide variety of other purposes associated with supporting,
   distributing, and servicing the Advisor Class shares. The amount of fees paid
   by an Advisor Class during any year may be more or less than the cost of
   distribution and other services provided to the Advisor Class and its
   investors. NASD rules limit the amount of annual distribution and service
   fees that may be paid by a mutual fund and impose a ceiling on the cumulative
   distribution fees paid. The Plan complies with these rules.

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

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

   The Plan continues until March 31, 2002. The Plan is renewable thereafter
   from year to year with respect to each fund, so long as its continuance is
   approved at least annually (1) by the vote of a majority of the fund
   Directors/Trustees and (2) by a vote of the majority of the Rule 12b-1
   Directors/Trustees, cast in person at a meeting called for the purpose of
   voting on such approval. The Plan may not be amended to increase materially
   the amount of fees paid by any Advisor Class thereunder unless such amendment
   is approved by a majority vote of the outstanding shares of such Advisor
   Class and by the fund Directors/Trustees in the manner prescribed by Rule
   12b-1 under the 1940 Act. The Plan is terminable with respect to an Advisor
   Class at any time by a vote of a majority of the Rule 12b-1
   Directors/Trustees or by a majority vote of the outstanding shares in the
   Advisor Class.

   The following payments for the period ended December 31, 2000 were made to
   third party intermediaries, including broker-dealers and insurance companies,
   for the distribution, shareholder servicing, maintenance of shareholder
   accounts and/or other administration services under the 12b-1 Plan.


<CAPTION>
<S>                                      <C>
Science & Technology Fund-Advisor Class   $1,094,000




   All Funds


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

   The fund (other than Equity Index 500, Extended Equity Market Index, and
   Total Equity Market Index Funds) has entered into a Custodian Agreement with
   The Chase Manhattan Bank, London, pursuant to which portfolio securities
   which are purchased outside the United States are maintained in the custody
   of various foreign branches of The Chase Manhattan Bank and such other
   custodians, including foreign banks and


<PAGE>

   foreign securities depositories as are approved in accordance with
   regulations under the 1940 Act. The address for The Chase Manhattan Bank,
   London is Woolgate House, Coleman Street, London, EC2P 2HD, England.



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



 PORTFOLIO TRANSACTIONS
 -------------------------------------------------------------------------------
   Investment or Brokerage Discretion
   Decisions with respect to the purchase and sale of portfolio securities on
   behalf of the fund are made by T. Rowe Price. T. Rowe Price is also
   responsible for implementing these decisions, including the negotiation of
   commissions and the allocation of portfolio brokerage and principal business
   and the use of affiliates to assist in routing orders for execution.


                      How Brokers and Dealers Are Selected

   Equity Securities
   In purchasing and selling equity securities, it is T. Rowe Price's policy to
   obtain quality execution at the most favorable prices through responsible
   brokers and dealers and at competitive commission rates where such rates are
   negotiable. However, under certain conditions, the fund may pay higher
   brokerage commissions in return for brokerage and research services. As a
   general practice, over-the-counter orders are executed with market-makers. In
   selecting among market-makers, T. Rowe Price generally seeks to select those
   it believes to be actively and effectively trading the security being
   purchased or sold. In selecting broker-dealers to execute the fund's
   portfolio transactions, consideration is given to such factors as the price
   of the security, the rate of the commission, the size and difficulty of the
   order, the reliability, integrity, financial condition, general execution and
   operational capabilities of competing brokers and dealers, their expertise in
   particular markets and brokerage and research services provided by them. It
   is not the policy of T. Rowe Price to seek the lowest available commission
   rate where it is believed that a broker or dealer charging a higher
   commission rate would offer greater reliability or provide better price or
   execution.

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


<PAGE>

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


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

   On a continuing basis, T. Rowe Price seeks to determine what levels of
   commission rates are reasonable in the marketplace for transactions executed
   on behalf of the fund. In evaluating the reasonableness of commission rates,
   T. Rowe Price considers: (a) historical commission rates; (b) rates which
   other institutional investors are paying, based on available public
   information; (c) rates quoted by brokers and dealers; (d) the size of a
   particular transaction, in terms of the number of shares, dollar amount, and
   number of clients involved; (e) the complexity of a particular transaction in
   terms of both execution and settlement; (f) the level and type of business
   done with a particular firm over a period of time; and (g) the extent to
   which the broker or dealer has capital at risk in the transaction.


       Descriptions of Research Services Received From Brokers and Dealers

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

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

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


              Commissions to Brokers Who Furnish Research Services

   Certain brokers and dealers who provide quality brokerage and execution
   services also furnish research services to T. Rowe Price. With regard to the
   payment of brokerage commissions, T. Rowe Price has adopted a brokerage
   allocation policy embodying the concepts of Section 28(e) of the Securities
   Exchange Act of 1934, which permits an investment adviser to cause an account
   to pay commission rates in excess of those another broker or dealer would
   have charged for effecting the same transaction, if the adviser determines in
   good faith that the commission paid is reasonable in relation to the value of
   the brokerage and research services provided. The determination may be viewed
   in terms of either the particular transaction involved or the


<PAGE>

   overall responsibilities of the adviser with respect to the accounts over
   which it exercises investment discretion. Accordingly, while T. Rowe Price
   cannot readily determine the extent to which commission rates or net prices
   charged by broker-dealers reflect the value of their research services, T.
   Rowe Price would expect to assess the reasonableness of commissions in light
   of the total brokerage and research services provided by each particular
   broker. T. Rowe Price may receive research, as defined in Section 28(e), in
   connection with selling concessions and designations in fixed price offerings
   in which the funds participate.


                         Internal Allocation Procedures

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

   Each year, T. Rowe Price assesses the contribution of the brokerage and
   research services provided by brokers or dealers, and attempts to allocate a
   portion of its brokerage business in response to these assessments. Research
   analysts, counselors, various investment committees, and the Trading
   Department each seek to evaluate the brokerage and research services they
   receive from brokers or dealers and make judgments as to the level of
   business which would recognize such services. In addition, brokers or dealers
   sometimes suggest a level of business they would like to receive in return
   for the various brokerage and research services they provide. Actual
   brokerage received by any firm may be less than the suggested allocations but
   can, and often does, exceed the suggestions, because the total business is
   allocated on the basis of all the considerations described above. In no case
   is a broker or dealer excluded from receiving business from T. Rowe Price
   because it has not been identified as providing research services.


                                  Miscellaneous

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

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

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

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


<PAGE>

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


                            Trade Allocation Policies

   T. Rowe Price has developed written trade allocation guidelines for its
   Equity, Municipal, and Taxable Fixed Income Trading Desks. Generally, when
   the amount of securities available in a public offering or the secondary
   market is insufficient to satisfy the volume or price requirements for the
   participating client portfolios, the guidelines require a pro-rata allocation
   based upon the amounts initially requested by each portfolio manager. In
   allocating trades made on combined basis, the Trading Desks seek to achieve
   the same net unit price of the securities for each participating client.
   Because a pro-rata allocation may not always adequately accommodate all facts
   and circumstances, the guidelines provide for exceptions to allocate trades
   on an adjusted, pro-rata basis. Examples of where adjustments may be made
   include: (i) reallocations to recognize the efforts of a portfolio manager in
   negotiating a transaction or a private placement; (ii) reallocations to
   eliminate deminimis positions; (iii) priority for accounts with specialized
   investment policies and objectives; and (iv) reallocations in light of a
   participating portfolio's characteristics (e.g., industry or issuer
   concentration, duration, and credit exposure).


                                      Other

   For the years 2000, 1999, and 1998, the total brokerage commissions paid by
   each fund, including the discounts received by securities dealers in
   connection with underwritings, and the percentage of these commissions paid
   to firms which provided research, statistical, or other services to T. Rowe
   Price in connection with the management of each fund, or, in some cases, to
   each fund, was as shown on the next page.


<CAPTION>
                               2000                1999                1998
         Fund           Commissions    %    Commissions    %    Commissions     %
         ----           -----------    -    -----------    -    -----------     -
<S>                     <C>          <C>
Balanced                $   399,000  11.5%  $   720,000  10.6%  $1,050,595     4.6%
Blue Chip Growth          7,485,000  58.5     7,088,000  45.8    5,418,392    43.0
Capital Appreciation      1,305,000  32.5     1,142,000  38.4    1,630,383    45.7
Capital Opportunity         121,000  24.5       298,000  28.9      355,413    32.6
Developing
Technologies                 42,000   3.1             *     *            *       *
Diversified Small-Cap
Growth                      105,000   1.3        75,000   1.5       94,322     0.5
Dividend Growth           1,070,000  72.0     1,420,000  57.5    1,936,978    59.4
Equity Income             8,687,000  47.3     9,653,000  45.3    6,883,655    35.2
Equity Index 500            331,000   0.8       378,000     0      258,633     0.5
Extended Equity Market
Index                        51,000   0.0        27,000   0.4       27,382     0.2
Financial Services          348,000  56.3       507,000  20.1      756,976     2.0
Global Technology           362,000  15.9             *     *            *       *
Growth & Income           6,522,000  57.4     2,428,000  35.8    2,272,536    28.4
Growth Stock             10,878,000  41.3     8,923,000  42.5    8,459,575    42.0
Health Sciences           2,560,000  30.3       593,000  33.1      333,803    54.8
Institutional
Large-Cap Value               3,000  58.9             *     *            *       *
Institutional Mid-Cap
Equity Growth               547,000  25.1       654,000  34.7      255,381    29.4
Institutional
Small-Cap Stock             128,000  41.4             *     *            *       *
Media &
Telecommunications        3,517,000  36.5     2,041,000  12.9      740,649     9.1
Mid-Cap Growth            8,893,000  22.9    12,136,000  35.1    5,757,447    34.8
------------------------------------------------------------------------------------
Mid-Cap Value               272,000  61.8       303,000  37.1      391,302    46.7
New America Growth        3,730,000  29.1     4,556,000  17.1    4,150,396    14.2
New Era                   2,352,000  32.5     2,122,000  52.3    1,871,968    57.9
New Horizons             13,876,000   3.8    12,816,000   4.2    8,448,650     5.0
Real Estate                  51,000  27.8        59,000  37.4      162,606    13.8
Science & Technology     13,388,000  39.5     9,172,000  33.9    4,348,665    31.3
Small-Cap Stock           2,214,000  38.4     2,851,000  26.6    1,829,514    20.7
Small-Cap Value             891,000  49.5       998,000  46.1    1,488,300    32.1
Total Equity Market
Index                        30,000   0.0        45,000     0       28,271     0.2
Value                     1,330,000  74.6     1,847,000  52.0    1,876,931    75.7
------------------------------------------------------------------------------------






<PAGE>

 (*) Prior to commencement of operations.

   On December 31, 2000, the Balanced Fund held common stock of Goldman Sachs
   Group, UBS, Chase Manhattan, and Morgan Stanley Dean Witter, with values of
   $2,674,000, $5,251,000, $9,320,000, and $11,063,000, respectively. The fund
   also held bonds of Goldman Sachs Group, Lehman Brothers, Morgan Stanley, and
   UBS, with values of $4,181,000, $1,535,000, $3,986,000, and $1,021,000,
   respectively. On December 31, 1999, the fund held common stock of Goldman
   Sachs and Morgan Stanley, with values of $2,355,000 and $9,964,000,
   respectively. The fund also held bonds of Morgan Stanley, Lehman Brothers,
   and Paine Webber, with values of $3,853,000, $5,278,000, and $3,650,000,
   respectively. In 1998, J.P. Morgan and Lehman Brothers were among the fund's
   regular brokers or dealers as defined in Rule 10b-1 under the 1940 Act.

   On December 31, 2000, the Blue Chip Growth Fund held common stock of Charles
   Schwab, Goldman Sachs Group, and Morgan Stanley Dean Witter, with values of
   $14,188,000, $22,457,000, and $64,985,000, respectively. On December 31,
   1999, the fund held common stock of Goldman Sachs, Bank America, and Morgan
   Stanley, with values of $11,425,000, $23,588,000, and $57,957,000,
   respectively. In 1998, Chase Manhattan and Morgan Stanley were among the
   fund's regular brokers or dealers as defined in Rule 10b-1 under the 1940
   Act.

   On December 31, 2000, the Equity Income Fund held common stock of J.P. Morgan
   with a value of $142,330,000. On December 31, 1999, the fund held common
   stock in J.P. Morgan, with a value of $126,625,000. In 1998, Bankers Trust,
   Chase Manhattan, J.P. Morgan, and Morgan Stanley were among the fund's
   regular brokers or dealers as defined in Rule 10b-1 under the 1940 Act.

   On December 31, 2000, the Equity Index 500 Fund held common stock of Bank
   America, Chase Manhattan, Morgan Stanley Dean Witter, and J.P. Morgan, with
   values of $25,682,000, $20,472,000, $30,539,000, and $9,253,000,
   respectively. On December 31, 1999, the fund held common stock of Lehman
   Brothers, with a value of $4,130,000. In 1998, Bankers Trust, Citicorp, Chase
   Manhattan, J.P. Morgan, and Merrill Lynch were among the fund's regular
   brokers or dealers as defined in Rule 10b-1 under the 1940 Act.

   On December 31, 2000, the Financial Services Fund held common stock of
   Goldman Sachs Group, Merrill Lynch, and Morgan Stanley Dean Witter, with
   values of $12,373,000, $1,023,000, and $10,699,000, respectively. On December
   31, 1999, the fund held common stock of Goldman Sachs, with a value of
   $2,261,000. In 1998, Chase Manhattan, First Chicago NBD, Morgan Stanley, and
   Nations Bank Montgomery were among the fund's regular brokers or dealers as
   defined in Rule 10b-1 under the 1940 Act.

   On December 31, 2000, the Growth and Income Fund held common stock of Bear
   Stearns, Bank of America, and Morgan Stanley Dean Witter, with values of
   $7,096,000, $12,845,000, and $33,285,000, respectively. On December 31, 1999,
   the fund held common stock of Bear Stearns and Morgan Stanley Dean Witter,
   with values of $22,156,000 and $28,550,000, respectively. In 1998, Chase
   Manhattan and Citicorp were among the fund's regular brokers or dealers as
   defined in Rule 10b-1 under the 1940 Act.


<PAGE>

   On December 31, 2000, the Growth Stock Fund held common stock of Morgan
   Stanley Dean Witter, with a value of $42,002,000. On December 31, 1999, the
   fund held common stock of Mellon Bank with a value of $19,703,000.

   On December 31, 2000, the Total Market Index Fund held common stock of Morgan
   Stanley Dean Witter, Goldman Sachs Group, Bank of America, J.P. Morgan, Chase
   Manhattan, Knight Trading Group, and Investment Technology Group, with values
   of $1,252,000, $214,000, $1,043,000, $381,000, $822,000, $22,000, and
   $17,000, respectively. On December 31, 1999, the fund held common stock of
   Goldman Sachs, Lehman Brothers, and Donaldson, Lufkin and Jenrette, with
   values of $151,000, $119,000, and $73,000, respectively.

   On December 31, 2000, the Extended Equity Market Index Fund held common stock
   of Goldman Sachs Group, Investment Technology Group, and Knight Trading
   Group, with values of $364,000, $38,000, and $46,000, respectively. On
   December 31, 1999, the fund held common stock of Donaldson, Lufkin &
   Jenrette, with a value of $68,000.

   On December 31, 2000, the Personal Strategy Balanced Portfolio held common
   stock of Goldman Sachs Group and Morgan Stanley Dean Witter, with values of
   $64,000 and $174,000, respectively. The fund held bonds in Goldman Sachs
   Group, Lehman Brothers Holdings, and Morgan Stanley Dean Witter, with values
   of $418,000, $258,000, and $211,000, respectively. On December 31, 1999, the
   fund held common stock of Goldman Sachs and Morgan Stanley, with values of
   $19,000 and $114,000, respectively. The fund also held bonds of Paine Webber,
   with a value of $730,000.

   On December 31, 1999, the Equity Income Portfolio held common stock of
   Goldman Sachs and Morgan Stanley, with values of $565,000 and $47,000,
   respectively.

   On December 31, 2000, the Value Fund held common stock of Bank of America,
   with a value of $8,028,000. On December 31, 1999, the fund held common stock
   of Bank of America, with a value of $7,528,000.

   On December 31, 2000, the Capital Opportunity Fund held common stock of
   FleetBoston Financial, Goldman Sachs Group, and Morgan Stanley Dean Witter,
   with values of $447,000, $332,000, and $699,000, respectively. On December
   31, 1999, the fund held common stock of Bank of America and Morgan Stanley,
   with values of $703,000 and $879,000, respectively.

   On December 31, 1999, the Diversified Small-Cap Growth Fund held common stock
   of Investment Technology, with a value of $144,000.

   On December 31, 2000, the Dividend Growth Fund held common stock of Chase
   Manhattan and Morgan Stanley Dean Witter, with values of $3,181,000 and
   $3,566,000, respectively.

   On December 31, 2000, the New America Growth Portfolio held common stock of
   Goldman Sachs Group and Morgan Stanley Dean Witter, with values of $770,000
   and $2,417,000, respectively.

   On December 31, 2000, the New America Growth Fund held common stocks of
   Goldman Sachs Group and Morgan Stanley Dean Witter, with values of
   $10,694,000 and $33,681,000, respectively.

   The portfolio turnover rate for each fund for the years ended 2000, 1999, and
   1998, was as follows:

<CAPTION>
               Fund                     2000          1999           1998
               ----                     ----          ----           ----
<S>                                  <C>           <C>
Balanced                                 16.5%         20.7%          12.5%
Blue Chip Growth                         50.9          41.3           34.5
Capital Appreciation                     32.4          28.3           52.6
Capital Opportunity                      64.7         133.1           73.8
Developing Technologies(b)              232.6           (a)            (a)
Diversified Small-Cap Growth             66.0          49.4           39.8
Dividend Growth                          35.7          37.8           37.3
Equity Income                            21.9          21.8           22.6
Equity Index 500                          9.1           5.2            4.7
Extended Equity Market Index             30.5          23.4           26.3
Financial Services                       32.5          37.1           46.8
Global Technology                       123.6           (a)            (a)
Growth & Income(c)                       80.3          20.3           20.5
Growth Stock                             74.3          55.8           54.8
Health Sciences                         110.6          81.9           85.7
Institutional Large-Cap Value            58.4           (a)            (a)
Institutional Mid-Cap Equity Growth      67.5          55.4           52.8
Institutional Small-Cap Stock            15.8           (a)            (a)
Media & Telecommunications(b)           197.5          57.6           48.9
Mid-Cap Growth                           53.6          53.3           46.7
Mid-Cap Value                            31.9          26.8           32.0
New America Growth(d)                    81.4          39.7           45.6
New Era                                  28.5          32.5           23.1
New Horizons                             47.2          44.7           41.2
Real Estate                              19.0          26.9           56.8
Science & Technology                    134.1         128.0          108.9
Small-Cap Stock                          32.8          42.3           25.9
Small-Cap Value                          14.4           7.3           17.3
Total Equity Market Index                 7.6           3.2            1.9
Value                                    55.9          67.8           72.1
-------------------------------------------------------------------------------





<PAGE>

    (a) Prior to commencement of operations.

    (b) The funds' high portfolio turnover was due to extreme volatility in
       the companies in which the funds invest.

    (c) The increase in the funds' portfolio turnover rate from 1999 to
       2000 was the result of the fund's new portfolio manager emphasizing
       a greater balance between growth and value stocks and significant
       market volatility.

    (d) The increase in the fund's portfolio turnover rate from 1999 to
       2000 was primarily the result of the fund's decision effective May
       1, 2000 to adopt a broader investment focus and invest in companies
       believed to be in the fastest growing sectors of the economy. This
       involved selling some existing holdings and replacing them with
       other ones.

   All Funds


 PRICING OF SECURITIES
 -------------------------------------------------------------------------------
   Equity securities listed or regularly traded on a securities exchange are
   valued at the last quoted sales price at the time the valuations are made. A
   security that is listed or traded on more than one exchange is valued at the
   quotation on the exchange determined to be the primary market for such
   security. Listed securities not traded on a particular day and securities
   regularly traded in the over-the-counter market are valued at the mean of the
   latest bid and asked prices. Other equity securities are valued at a price
   within the limits of the latest bid and asked prices deemed by the Board of
   Directors/Trustees, or by persons delegated by the Board, best to reflect
   fair value.

   Debt securities are generally traded in the over-the-counter market and are
   valued at a price deemed best to reflect fair value as quoted by dealers who
   make markets in these securities or by an independent pricing service.
   Short-term debt securities are valued at their amortized cost in local
   currency which, when combined with accrued interest, approximates fair value.


<PAGE>

   Investments in mutual funds are valued at the closing net asset value per
   share of the mutual fund on the day of valuation. In the absence of a last
   sale price, purchased and written options are valued at the mean of the
   latest bid and asked prices, respectively.

   For the purposes of determining the fund's net asset value per share, the
   U.S. dollar value of all assets and liabilities initially expressed in
   foreign currencies is determined by using the mean of the bid and offer
   prices of such currencies against U.S. dollars quoted by a major bank.

   Assets and liabilities for which the above valuation procedures are
   inappropriate or are deemed not to reflect fair value, are stated at fair
   value as determined in good faith by or under the supervision of the officers
   of the fund, as authorized by the Board of Directors/Trustees.

   All Funds


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

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



 DIVIDENDS AND DISTRIBUTIONS
 -------------------------------------------------------------------------------
   Unless you elect otherwise, the fund's capital gain distributions, final
   quarterly dividend (Balanced, Dividend Growth, Equity Income, Equity Index
   500, Growth & Income, Mid-Cap Value, and Real Estate Funds) and annual
   dividend (other funds), if any, will be reinvested on the reinvestment date
   using the NAV per share of that date. The reinvestment date normally precedes
   the payment date by one day, although the exact timing is subject to change
   and can be as great as 10 days.



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

   A portion of the dividends paid by the fund may be eligible for the
   dividends-received deduction applicable to corporate shareholders. Long-term
   capital gain distributions paid from the fund is never eligible for the
   dividend received deduction. For tax purposes, it does not make any
   difference whether dividends and capital gain distributions are paid in cash
   or in additional shares. Each fund must declare dividends by December 31 of
   each year equal to at least 98% of ordinary income (as of December 31) and
   capital gains (as of October 31)


<PAGE>

   in order to avoid a federal excise tax and distribute within 12 months 100%
   of ordinary income and capital gains as of December 31 to avoid a federal
   income tax.

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

   If, in any taxable year, the fund should not qualify as a regulated
   investment company under the Code: (1) the fund would be taxed at normal
   corporate rates on the entire amount of its taxable income, if any, without
   deduction for dividends or other distributions to shareholders; and (2) the
   fund's distributions to the extent made out of the fund's current or
   accumulated earnings and profits would be taxable to shareholders as ordinary
   dividends (regardless of whether they would otherwise have been considered
   capital gain dividends) and the fund may qualify for the 70% deduction for
   dividends received by corporations.


                        Taxation of Foreign Shareholders

   The Code provides that dividends from net income will be subject to U.S. tax.
   For shareholders who are not engaged in a business in the U.S., this tax
   would be imposed at the rate of 30% upon the gross amount of the dividends in
   the absence of a Tax Treaty providing for a reduced rate or exemption from
   U.S. taxation. Distributions of net long-term capital gains realized by the
   fund are not subject to tax unless the foreign shareholder is a nonresident
   alien individual who was physically present in the U.S. during the tax year
   for more than 182 days.

   All Funds except Equity Index 500, Extended Equity Market Index, and Total
   Equity Market Index Funds

   To the extent the fund invests in foreign securities, the following would
   apply:


                      Passive Foreign Investment Companies

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

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


                        Foreign Currency Gains and Losses

   Foreign currency gains and losses, including the portion of gain or loss on
   the sale of debt securities attributable to foreign exchange rate
   fluctuations, are taxable as ordinary income. If the net effect of these
   transactions is a gain, the ordinary income dividend paid by the fund will be
   increased. If the result is a loss, the income dividend paid by the fund will
   be decreased, or to the extent such dividend has already been paid, it may be
   classified as a return of capital. Adjustments to reflect these gains and
   losses will be made at the end of the fund's taxable year.


<PAGE>

   All Funds


 INVESTMENT PERFORMANCE
 -------------------------------------------------------------------------------

                            Total Return Performance

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

<CAPTION>
                  Cumulative Performance Percentage Change
                           1 Yr.     5 Yrs.   10 Yrs.    % Since     Inception
          Fund             -----     ------   -------    -------     ---------
          ----             Ended     Ended     Ended    Inception      Date
                           -----     -----     -----    ---------      ----
                          12/31/00  12/31/00  12/31/00   12/31/00
                          --------  --------  --------   --------
<S>                       <C>       <C>
Balanced                    2.09%    77.93%   224.11%   44,449.99%   12/31/39
Blue Chip Growth           -2.53    145.58     --          290.27    06/30/93
Blue Chip Growth
Fund-Advisor Class         --        --        --           -8.15    03/31/00
Capital Appreciation       22.17     87.81    267.48       512.71    06/30/86
Capital Opportunity        -6.32     62.08     --          147.67    11/30/94
Developing Technologies    --        --        --          -27.89    08/31/00
Diversified Small-Cap
Growth                     -8.29     --        --           29.92    06/30/97
Dividend Growth            10.06    101.69     --          224.16    12/30/92
Equity Income              13.12     98.96    355.40       789.60    10/31/85
Equity Income
Fund-Advisor Class         --        --        --           16.62    03/31/00
Equity Index 500           -9.30    128.80    380.42       381.92    03/30/90
Extended Equity Market
Index                     -15.58     --        --           26.77    01/30/98
Financial Services         36.76     --        --          148.84    09/30/96
Global Technology          --        --        --          -25.70    09/29/00
Growth & Income             8.97     93.00    332.32       890.02    12/21/82
Growth Stock                0.27    140.37    420.49    33,476.77    04/11/50
Health Sciences            52.19    204.37     --          204.37    12/29/95
Institutional Large-Cap
Value                      --        --        --           15.57    03/31/00
Institutional Mid-Cap
Equity Growth               7.86     --        --          125.24    07/31/96
Institutional Small-Cap
Stock                      --        --        --            7.03    03/31/00
Media &
Telecommunications(a)     -25.11    154.69     --          252.30    10/13/93
Mid-Cap Growth              7.43    139.64     --          432.59    06/30/92
Mid-Cap Growth
Fund-Advisor Class         --        --        --           -2.22    03/31/00
Mid-Cap Value              22.75     --        --           90.46    06/28/96
New America Growth        -10.53     72.84    382.59       752.74    09/30/85
New Era                    20.37     81.29    211.03     2,526.11    01/20/69
New Horizons               -1.86     77.53    468.74    10,106.07    06/03/60
Real Estate                31.92     --        --           19.61    10/31/97
Science & Technology      -34.19    118.76    831.03     1,079.85    09/30/87
Science & Technology
Fund-Advisor Class         --        --        --          -41.06    03/31/00
Small-Cap Stock            16.49    101.08    403.52    38,818.08    06/01/56
Small-Cap Stock
Fund-Advisor Class         --        --        --            6.79    03/31/00
Small-Cap Value            19.77     69.08    331.09       334.43    06/30/88
Small-Cap Value
Fund-Advisor Class         --        --        --           15.77    03/31/00
Total Equity Market
Index                     -10.33     --        --           36.15    01/30/98
Value                      15.75    124.23     --          223.32    09/30/94
Value Fund-Advisor Class   --        --        --           15.11    03/31/00
-------------------------------------------------------------------------------





<PAGE>

 (a) The 5-year and inception figures are based partly on the fund's
   performance as a closed-end investment company traded on the New York
   Stock Exchange until July 28, 1997, when it was converted to an open-end
   mutual fund.


<CAPTION>
                   Average Annual Compound Rates of Return
                            1 Yr.     5 Yrs.   10 Yrs.    % Since    Inception
          Fund              -----     ------   -------    -------    ---------
          ----              Ended     Ended     Ended    Inception     Date
                            -----     -----     -----    ---------     ----
                           12/31/00  12/31/00  12/31/00  12/31/00
                           --------  --------  --------  --------
<S>                        <C>       <C>
Balanced                     2.09%    12.22%    12.48%     10.52%    12/31/39
Blue Chip Growth            -2.53     19.68     --         19.90     06/30/93
Blue Chip Growth
Fund-Advisor Class          --        --        --         -8.15     03/31/00
Capital Appreciation        22.17     13.43     13.90      13.31     06/30/86
Capital Opportunity         -6.32     10.14     --         16.07     11/30/94
Developing Technologies     --        --        --        -27.89     08/31/00
Diversified Small-Cap
Growth                      -8.29     --        --          7.76     06/30/97
Dividend Growth             10.06     15.06     --         15.83     12/30/92
Equity Income               13.12     14.75     16.37      15.50     10/31/85
Equity Income
Fund-Advisor Class          --        --        --         16.62     03/31/00
Equity Index 500            -9.30     18.00     16.99      15.74     03/30/90
Extended Equity Market
Index                      -15.58     --        --          8.47     01/30/98
Financial Services          36.76     --        --         23.92     09/30/96
Global Technology           --        --        --        -25.70     09/29/00
Growth & Income              8.97     14.05     15.77      13.56     12/21/82
Growth Stock                 0.27     19.17     17.93      12.15     04/11/50
Health Sciences             52.19     24.93     --         24.90     12/29/95
Institutional Large-Cap
Value                       --        --        --         15.57     03/31/00
Institutional Mid-Cap
Equity Growth                7.86     --        --         20.18     07/31/96
Institutional Small-Cap
Stock                       --        --        --          7.03     03/31/00
Media &
Telecommunications(a)      -25.11     20.56     --         19.07     10/13/93
Mid-Cap Growth               7.43     19.10     --         21.74     06/30/92
Mid-Cap Growth
Fund-Advisor Class          --        --        --         -2.22     03/31/00
Mid-Cap Value               22.75     --        --         15.35     06/28/96
New America Growth         -10.53     11.57     17.05      15.09     09/30/85
New Era                     20.37     12.64     12.02      10.77     01/20/69
New Horizons                -1.86     12.16     18.98      12.07     06/03/60
Real Estate                 31.92     --        --          5.82     10/31/97
Science & Technology       -34.19     16.95     25.00      20.47     09/30/87
Science & Technology
Fund-Advisor Class          --        --        --        -41.06     03/31/00
Small-Cap Stock             16.49     14.99     17.54      14.31     06/01/56
Small-Cap Stock
Fund-Advisor Class          --        --        --          6.79     03/31/00
Small-Cap Value             19.77     11.08     15.73      12.47     06/30/88
Small-Cap Value
Fund-Advisor Class          --        --        --         15.77     03/31/00
Total Equity Market Index  -10.33     --        --         11.15     01/30/98
Value                       15.75     17.53     --         20.65     09/30/94
Value Fund-Advisor Class    --        --        --         15.11     03/31/00
-------------------------------------------------------------------------------





<PAGE>

 (a) The 5-year and inception figures are based partly on the fund's
   performance as a closed-end investment company traded on the New York
   Stock Exchange until July 28, 1997, when it was converted to an open-end
   mutual fund.


                         Outside Sources of Information

   From time to time, in reports and promotional literature: (1) the fund's
   total return performance, ranking, or any other measure of the fund's
   performance may be compared to any one or combination of the following: (a) a
   broad-based index, (b) other groups of mutual funds, including T. Rowe Price
   funds, tracked by independent research firm's ranking entities, or financial
   publications; (c) indices of securities comparable to those in which the fund
   invests; (2) the Consumer Price Index (or any other measure for inflation,
   government statistics, such as GNP may be used to illustrate investment
   attributes of the fund or the general economic, business, investment, or
   financial environment in which the fund operates; (3) various financial,
   economic, and market statistics developed by brokers, dealers, and other
   persons may be used to illustrate aspects of the fund's performance; (4) the
   effect of tax-deferred compounding on the fund's investment returns, or on
   returns in general in both qualified and nonqualified retirement plans or any
   other tax advantage product, may be illustrated by graphs, charts, etc.; and
   (5) the sectors or industries in which the fund invests may be compared to
   relevant indices or surveys in order to evaluate the fund's historical
   performance or current or potential value with respect to the particular
   industry or sector.


                               Other Publications

   From time to time, in newsletters and other publications issued by Investment
   Services, T. Rowe Price mutual fund portfolio managers may discuss economic,
   financial, and political developments in the U.S. and abroad and how these
   conditions have affected or may affect securities prices or the fund;
   individual securities within the fund's portfolio; and their philosophy
   regarding the selection of individual stocks, including why specific stocks
   have been added, removed, or excluded from the fund's portfolio.


                           Other Features and Benefits

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


                       No-Load Versus Load and 12b-1 Funds

   Many mutual funds charge sales fees to investors or use fund assets to
   finance distribution activities. These fees are in addition to the normal
   advisory fees and expenses charged by all mutual funds. There are several
   types


<PAGE>

   of fees charged which vary in magnitude and which may often be used in
   combination. A sales charge (or "load") can be charged at the time the fund
   is purchased (front-end load) or at the time of redemption (back-end load).
   Front-end loads are charged on the total amount invested. Back-end loads are
   charged either on the amount originally invested or on the amount redeemed.
   12b-1 plans allow for the payment of marketing and sales expenses from fund
   assets. These expenses are usually computed daily as a fixed percentage of
   assets.

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


                               Redemptions in Kind

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

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


                     Issuance of Fund Shares for Securities

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

   Balanced Fund

   On August 31, 1992, the T. Rowe Price Balanced Fund acquired substantially
   all of the assets of the Axe-Houghton Fund B, a series of Axe-Houghton Funds,
   Inc. As a result of this acquisition, the SEC requires that the historical
   performance information of the Balanced Fund be based on the performance of
   Fund B. Therefore, all performance information of the Balanced Fund prior to
   September 1, 1992, reflects the performance of Fund B and investment managers
   other than T. Rowe Price. Performance information after August 31, 1992,
   reflects the combined assets of the Balanced Fund and Fund B.

   Media & Telecommunications Fund

   On July 28, 1997, the fund converted its status from a closed-end fund to an
   open-end mutual fund. Prior to the conversion the fund was known as New Age
   Media Fund, Inc.

   Small-Cap Stock Fund

   Effective May 1, 1997, the fund's name was changed from the T. Rowe Price OTC
   Fund to the T. Rowe Price Small-Cap Stock Fund.

   Equity Index 500 Fund

   Effective January 30, 1998, the fund's name was changed from T. Rowe Price
   Equity Index Fund to the T. Rowe Price Equity Index 500 Fund.


<PAGE>

   All Funds except Capital Appreciation, Equity Income and New America Growth
   Funds


 CAPITAL STOCK
 -------------------------------------------------------------------------------
   The fund's Charter authorizes the Board of Directors/Trustees to classify and
   reclassify any and all shares which are then unissued, including unissued
   shares of capital stock into any number of classes or series, each class or
   series consisting of such number of shares and having such designations, such
   powers, preferences, rights, qualifications, limitations, and restrictions,
   as shall be determined by the Board subject to the 1940 Act and other
   applicable law. The shares of any such additional classes or series might
   therefore differ from the shares of the present class and series of capital
   stock and from each other as to preferences, conversions or other rights,
   voting powers, restrictions, limitations as to dividends, qualifications or
   terms or conditions of redemption, subject to applicable law, and might thus
   be superior or inferior to the capital stock or to other classes or series in
   various characteristics. The Board of Directors/Trustees may increase or
   decrease the aggregate number of shares of stock or the number of shares of
   stock of any class or series that the fund has authorized to issue without
   shareholder approval.

   Except to the extent that the fund's Board of Directors/Trustees might
   provide by resolution that holders of shares of a particular class are
   entitled to vote as a class on specified matters presented for a vote of the
   holders of all shares entitled to vote on such matters, there would be no
   right of class vote unless and to the extent that such a right might be
   construed to exist under Maryland law. The Charter contains no provision
   entitling the holders of the present class of capital stock to a vote as a
   class on any matter. Accordingly, the preferences, rights, and other
   characteristics attaching to any class of shares, including the present class
   of capital stock, might be altered or eliminated, or the class might be
   combined with another class or classes, by action approved by the vote of the
   holders of a majority of all the shares of all classes entitled to be voted
   on the proposal, without any additional right to vote as a class by the
   holders of the capital stock or of another affected class or classes.

   Shareholders are entitled to one vote for each full share held (and
   fractional votes for fractional shares held) and will vote in the election of
   or removal of directors/trustees (to the extent hereinafter provided) and on
   other matters submitted to the vote of shareholders. There will normally be
   no meetings of shareholders for the purpose of electing directors/trustees
   unless and until such time as less than a majority of the directors/trustees
   holding office have been elected by shareholders, at which time the
   directors/trustees then in office will call a shareholders' meeting for the
   election of directors/trustees. Except as set forth above, the
   directors/trustees shall continue to hold office and may appoint successor
   directors/trustees. Voting rights are not cumulative, so that the holders of
   more than 50% of the shares voting in the election of directors/trustees can,
   if they choose to do so, elect all the directors/trustees of the fund, in
   which event the holders of the remaining shares will be unable to elect any
   person as a director/trustee. As set forth in the By-Laws of the fund, a
   special meeting of shareholders of the fund shall be called by the Secretary
   of the fund on the written request of shareholders entitled to cast at least
   10% of all the votes of the fund entitled to be cast at such meeting.
   Shareholders requesting such a meeting must pay to the fund the reasonably
   estimated costs of preparing and mailing the notice of the meeting. The fund,
   however, will otherwise assist the shareholders seeking to hold the special
   meeting in communicating to the other shareholders of the fund to the extent
   required by Section 16(c) of the 1940 Act.

   Capital Appreciation, Equity Income, and New America Growth Funds


 ORGANIZATION OF THE FUNDS
 -------------------------------------------------------------------------------
   For tax and business reasons, the funds were organized as Massachusetts
   Business Trusts, and are registered with the SEC under the 1940 Act as
   diversified, open-end investment companies, commonly known as "mutual fund."

   The Declaration of Trust permits the Board of Trustees to issue an unlimited
   number of full and fractional shares of a single class. The Declaration of
   Trust also provides that the Board of Trustees may issue additional


<PAGE>

   series or classes of shares. Each share represents an equal proportionate
   beneficial interest in the fund. In the event of the liquidation of the fund,
   each share is entitled to a pro-rata share of the net assets of the fund.

   Shareholders are entitled to one vote for each full share held (and
   fractional votes for fractional shares held) and will vote in the election of
   or removal of trustees (to the extent hereinafter provided) and on other
   matters submitted to the vote of shareholders. There will normally be no
   meetings of shareholders for the purpose of electing trustees unless and
   until such time as less than a majority of the trustees holding office have
   been elected by shareholders, at which time the trustees then in office will
   call a shareholders' meeting for the election of trustees. Pursuant to
   Section 16(c) of the 1940 Act, holders of record of not less than two-thirds
   of the outstanding shares of the fund may remove a trustee by a vote cast in
   person or by proxy at a meeting called for that purpose. Except as set forth
   above, the trustees shall continue to hold office and may appoint successor
   trustees. Voting rights are not cumulative, so that the holders of more than
   50% of the shares voting in the election of trustees can, if they choose to
   do so, elect all the trustees of the Trust, in which event the holders of the
   remaining shares will be unable to elect any person as a trustee. No
   amendments may be made to the Declaration of Trust without the affirmative
   vote of a majority of the outstanding shares of the Trust.

   Shares have no preemptive or conversion rights; the right of redemption and
   the privilege of exchange are described in the prospectus. Shares are fully
   paid and nonassessable, except as set forth below. The Trust may be
   terminated (i) upon the sale of its assets to another diversified, open-end
   management investment company, if approved by the vote of the holders of
   two-thirds of the outstanding shares of the Trust, or (ii) upon liquidation
   and distribution of the assets of the Trust, if approved by the vote of the
   holders of a majority of the outstanding shares of the Trust. If not so
   terminated, the Trust will continue indefinitely.

   Under Massachusetts law, shareholders could, under certain circumstances, be
   held personally liable for the obligations of the fund. However, the
   Declaration of Trust disclaims shareholder liability for acts or obligations
   of the fund and requires that notice of such disclaimer be given in each
   agreement, obligation or instrument entered into or executed by the fund or a
   Trustee. The Declaration of Trust provides for indemnification from fund
   property for all losses and expenses of any shareholder held personally
   liable for the obligations of the fund. Thus, the risk of a shareholder
   incurring financial loss on account of shareholder liability is limited to
   circumstances in which the fund itself would be unable to meet its
   obligations, a possibility which T. Rowe Price believes is remote. Upon
   payment of any liability incurred by the fund, the shareholders of the fund
   paying such liability will be entitled to reimbursement from the general
   assets of the fund. The Trustees intend to conduct the operations of the fund
   in such a way so as to avoid, as far as possible, ultimate liability of the
   shareholders for liabilities of such fund.

   All Funds


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



 LEGAL COUNSEL
 -------------------------------------------------------------------------------
   Swidler Berlin Shereff Friedman, LLP, whose address is The Chrysler Building,
   405 Lexington Avenue, New York, New York 10174, is legal counsel to the fund.


<PAGE>

 INDEPENDENT ACCOUNTANTS
 -------------------------------------------------------------------------------
   PricewaterhouseCoopers LLP, 250 West Pratt Street, 21st Floor, Baltimore,
   Maryland 21201, are the independent accountants to the funds.

   The financial statements of the funds listed below for the period ended
   December 31, 2000, and the report of independent accountants are included in
   each fund's Annual Report for the period ended December 31, 2000. A copy of
   each Annual Report accompanies this Statement of Additional Information. The
   following financial statements and the report of independent accountants
   appearing in each Annual Report for the period ended December 31, 2000, are
   incorporated into this Statement of Additional Information by reference:


<CAPTION>
                          ANNUAL REPORT REFERENCES:
                                CAPITAL       FINANCIAL  NEW AMERICA  NEW ERA
                                APPRECIATION  SERVICES   GROWTH       -------
                                ------------  --------   ------
<S>                             <C>           <C>
Financial Highlights                 13          11          11          9
Statement of Net Assets,
December 31, 2000                  14-20        12-14       12-16       10-15
Statement of Operations, year
ended
December 31, 2000                    21          15          17          16
Statement of Changes in Net
Assets, years ended December
31, 2000 and
December 31, 1999                    22          16          18          17
Notes to Financial Statements,
December 31, 2000                  23-26        17-19       19-21       18-21
Report of Independent
Accountants                          27          20          22          22





<CAPTION>
                                    DIVIDEND  GROWTH   BLUE CHIP  CAPITAL
                                    GROWTH    STOCK    GROWTH     OPPORTUNITY
                                    ------    -----    ------     -----------
<S>                                 <C>       <C>
Financial Highlights                   9         9        12           9
Statement of Net Assets, December
31, 2000                             10-17     10-16     13-19        10-22
Statement of Operations, year
ended
December 31, 2000                      18       17        20           23
Statement of Changes in Net
Assets, years ended
December 31, 2000 and December 31,
1999                                   19       18        21           24
Notes to Financial Statements,
December 31, 2000                    20-22     19-22     22-26        25-28
Report of Independent Accountants      23       23        27           29





<CAPTION>
                                                  GROWTH
                                                  & INCOME
                                                  --------
<S>                                               <C>
Financial Highlights                                  10
Statement of Net Assets, December 31, 2000           11-18
Statement of Operations, year ended
December 31, 2000                                      19
Statement of Changes in Net Assets, years ended
December 31, 2000 and December 31, 1999                20
Notes to Financial Statements, December 31, 2000     20-24
Report of Independent Accountants                      25






<PAGE>


<CAPTION>
                                     VALUE    MID-CAP  REAL    MID-CAP EQUITY
                                     -----    VALUE    ESTATE  GROWTH
                                              -----    ------  ------
<S>                                  <C>      <C>
Financial Highlights                    8       10       8           6
Statement of Net Assets, December
31, 2000                              9-15     11-18    9-11         7-9
Statement of Operations, year ended
December 31, 2000                      16       19       12           10
Statement of Changes in Net Assets,
years ended
December 31, 2000 and December 31,
1999                                  17-18     20       13           11
Notes to Financial Statements,
December 31, 2000                     19-22    21-24   14-16        12-13
Report of Independent Accountants      23       25       17           14





<CAPTION>
                           DIVERSIFIED   EXTENDED      TOTAL EQUITY  HEALTH
                           SMALL-CAP     EQUITY        MARKET INDEX  SCIENCES
                           GROWTH        MARKET INDEX  ------------  --------
                           ------        ------------
<S>                        <C>           <C>
Financial Highlights            9             2             2           10
Statement of Net Assets,
December 31, 2000             10-23          3-83          3-61        11-16
Statement of Operations,
year ended
December 31, 2000               24            84            62           17
Statement of Changes in
Net Assets, years ended
December 31, 2000 and
December 31, 1999               25            85            63           18
Notes to Financial
Statements,
December 31, 2000             26-29         86-88         64-66        19-22
Report of Independent
Accountants                     30            89            67           23





<CAPTION>
                                        BALANCED  NEW       EQUITY   MID-CAP
                                        --------  HORIZONS  INCOME   GROWTH
                                                  --------  ------   ------
<S>                                     <C>       <C>
Financial Highlights                       9         11        8        11
Portfolio of Investments, December 31,
2000                                     10-36     12-22     9-15      12-18
Statement of Assets and Liabilities,
December 31, 2000                          37        23       16         19
Statement of Operations, year ended
December 31, 2000                          38        24       17         20
Statement of Changes in Net Assets,
years ended
December 31, 2000 and December 31,
1999                                       39        25      18-19     21-22
Notes to Financial Statements,
December 31, 2000                        40-43     26-29     20-23     23-26
Report of Independent Accountants          44        30       24         27






<PAGE>


<CAPTION>
                                            SMALL-CAP  MEDIA &     SCIENCE &
                                            STOCK      TELECOMMU-  TECHNOLOGY
                                            -----      NICATIONS   ----------
                                                       ---------
<S>                                         <C>        <C>
Financial Highlights                            9          9           10
Portfolio of Investments, December 31,
2000                                          10-20      10-12        11-14
Statement of Assets and Liabilities,
December 31, 2000                              21          13           15
Statement of Operations, year ended
December 31, 2000                              22          14           16
Statement of Changes in Net Assets, years
ended
December 31, 2000 and December 31, 1999        23          15           17
Notes to Financial Statements, December
31, 2000                                      24-27      16-18        18-21
Report of Independent Accountants              28          19           22





<CAPTION>
                                                        EQUITY     SMALL-CAP
                                                        INDEX 500  VALUE
                                                        ---------  -----
<S>                                                     <C>        <C>
Financial Highlights                                        2          8
Portfolio of Investments, December 31, 2000               3-22        9-18
Statement of Assets and Liabilities, December 31, 2000     23          19
Statement of Operations, year ended December 31, 2000      24          20
Statement of Changes in Net Assets, years ended
December 31, 2000 and December 31, 1999                    25         21-22
Notes to Financial Statements, December 31, 2000          26-29       23-26
Report of Independent Accountants                          30          27



<CAPTION>
                                                         GLOBAL
                                                         TECHNOLOGY
                                                         ----------
<S>                                                      <C>
Financial Highlights                                          8
Statement of Net Assets, December 31, 2000                   9-13
Statement of Operations, September 29, 2000
(commencement of operations) to December 31, 2000             14
Statement of Changes in Net Assets, September 29, 2000
(commencement of operations) to December 31, 2000             15
Notes to Financial Statements, December 31, 2000             16-19
Report of Independent Accountants                            20





<CAPTION>
                                                      DEVELOPING
                                                      TECHNOLOGIES
                                                      ------------
<S>                                                   <C>
Financial Highlights                                       9
Statement of Net Assets, December 31, 2000                10-13
Statement of Operations, August 31, 2000
(commencement of operations) to December 31, 2000           14
Statement of Changes in Net Assets, August 31, 2000
(commencement of operations) to December 31, 2000           15
Notes to Financial Statements, December 31, 2000          16-19
Report of Independent Accountants                          20






<PAGE>


<CAPTION>
                                             INSTITUTIONAL    INSTITUTIONAL
                                             LARGE-CAP VALUE  SMALL-CAP STOCK
                                             ---------------  ---------------
<S>                                          <C>              <C>
Financial Highlights                                5                5
Statement of Net Assets, December 31, 2000         6-8              6-10
Statement of Operations, March 31, 2000
(commencement of operations) to December
31, 2000                                            9                11
Statement of Changes in Net Assets, March
31, 2000 (commencement of operations) to
December 31, 2000                                  10                12
Notes to Financial Statements, December 31,
2000                                              11-12             13-14
Report of Independent Accountants                  13               15





<CAPTION>
                                           BLUE CHIP GROWTH     VALUE FUND--
                                           FUND--ADVISOR CLASS  ADVISOR CLASS
                                           -------------------  -------------
<S>                                        <C>                  <C>
Financial Highlights                               12                 8
Statement of Net Assets, December 31,
2000                                              13-19              9-15
Statement of Operations, year ended
December 31, 2000                                  20                 16
Statement of Changes in Net Assets, years
ended December 31, 2000 and December 31,
1999                                               21                17-18
Notes to Financial Statements, December
31, 2000                                          22-26              19-22
Report of Independent Accountants                  27                23






<CAPTION>
                                                 MID-CAP        SMALL-CAP STOCK
                                                 GROWTH FUND--  FUND--
                                                 ADVISOR CLASS  ADVISOR CLASS
                                                 -------------  -------------
<S>                                              <C>            <C>
Financial Highlights                                  11              9
Portfolio of Investments, December 31, 2000          12-18           10-20
Statement of Assets and Liabilities, December
31, 2000                                              19              21
Statement of Operations, year ended December
31, 2000                                              20              22
Statement of Changes in Net Assets, years ended
December 31, 2000 and December 31, 1999              21-22            23
Notes to Financial Statements, December 31,
2000                                                 23-26           24-27
Report of Independent Accountants                     27              28





<CAPTION>
                                             EQUITY INCOME   SMALL-CAP VALUE
                                             FUND--ADVISOR   FUND--ADVISOR
                                             CLASS           CLASS
                                             -----           -----
<S>                                          <C>             <C>
Financial Highlights                               8                8
Portfolio of Investments, December 31, 2000       9-15              9-18
Statement of Assets and Liabilities,
December 31, 2000                                  16                19
Statement of Operations, year ended
December 31, 2000                                  17                20
Statement of Changes in Net Assets, years
ended December 31, 2000 and December 31,
1999                                             18-19             21-22
Notes to Financial Statements, December 31,
2000                                             20-23             23-26
Report of Independent Accountants                  24                27





<PAGE>


<CAPTION>
                                                        SCIENCE &
                                                        TECHNOLOGY
                                                        FUND--ADVISOR
                                                        CLASS
                                                        -----
<S>                                                     <C>
Financial Highlights                                          10
Portfolio of Investments, December 31, 2000                  11-14
Statement of Assets and Liabilities, December 31, 2000         15
Statement of Operations, year ended December 31, 2000          16
Statement of Changes in Net Assets, years ended
December 31, 2000 and December 31, 1999                        17
Notes to Financial Statements, December 31, 2000             18-21
Report of Independent Accountants                              22






 RATINGS OF CORPORATE DEBT SECURITIES
 -------------------------------------------------------------------------------

                         Moody's Investors Service, Inc.

   Aaa-Bonds rated Aaa are judged to be of the best quality. They carry the
   smallest degree of investment risk and are generally referred to as "gilt
   edge."

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

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

   Baa-Bonds rated Baa are considered as medium-grade obligations, i.e., they
   are neither highly protected nor poorly secured. Interest payments and
   principal security appear adequate for the present but certain protective
   elements may be lacking or may be characteristically unreliable over any
   great length of time. Such bonds lack outstanding investment characteristics
   and in fact have speculative characteristics as well.

   Ba-Bonds rated Ba are judged to have speculative elements: their futures
   cannot be considered as well assured. Often the protection of interest and
   principal payments may be very moderate and thereby not well safeguarded
   during both good and bad times over the future. Uncertainty of position
   characterize bonds in this class.

   B-Bonds rated B generally lack the characteristics of a desirable investment.
   Assurance of interest and principal payments or of maintenance of other terms
   of the contract over any long period of time may be small.

   Caa-Bonds rated Caa are of poor standing. Such issues may be in default or
   there may be present elements of danger with respect to principal or
   interest.

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

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


                          Standard & Poor's Corporation

   AAA-This is the highest rating assigned by Standard & Poor's to a debt
   obligation and indicates an extremely strong capacity to pay principal and
   interest.


<PAGE>

   AA-Bonds rated AA also qualify as high-quality debt obligations. Capacity to
   pay principal and interest is very strong.

   A-Bonds rated A have a strong capacity to pay principal and interest,
   although they are somewhat more susceptible to the adverse effects of changes
   in circumstances and economic conditions.

   BBB-Bonds rated BBB are regarded as having an adequate capacity to pay
   principal and interest. Whereas they normally exhibit adequate protection
   parameters, adverse economic conditions or changing circumstances are more
   likely to lead to a weakened capacity to pay principal and interest for bonds
   in this category than for bonds in the A category.

   BB, B, CCC, CC, C-Bonds rated BB, B, CCC, CC, and C are regarded on balance,
   as predominantly speculative with respect to the issuer's capacity to pay
   interest and repay principal. BB indicates the lowest degree of speculation
   and C the highest degree of speculation. While such bonds will likely have
   some quality and protective characteristics, these are outweighed by large
   uncertainties or major risk exposures to adverse conditions.

   D-In default.


                                Fitch IBCA, Inc.

   AAA-High grade, broadly marketable, suitable for investment by trustees and
   fiduciary institutions, and liable to slight market fluctuation other than
   through changes in the money rate. The prime feature of a "AAA" bond is the
   showing of earnings several times or many times interest requirements for
   such stability of applicable interest that safety is beyond reasonable
   question whenever changes occur in conditions. Other features may enter, such
   as wide margin of protection through collateral, security or direct lien on
   specific property. Sinking funds or voluntary reduction of debt by call or
   purchase are often factors, while guarantee or assumption by parties other
   than the original debtor may influence their rating.

   AA-Of safety virtually beyond question and readily salable. Their merits are
   not greatly unlike those of "AAA" class but a bond so rated may be junior
   though of strong lien, or the margin of safety is less strikingly broad. The
   issue may be the obligation of a small company, strongly secured, but
   influenced as to rating by the lesser financial power of the enterprise and
   more local type of market.

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

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

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



</TABLE>