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In most states, mutual fund dividends from interest on direct U.S. government securities are exempt from state and local taxes. To determine this amount for each of your funds, multiply the “% of dividends from U.S. government securities” (shown below in Column 1) by the amount for that fund in Box 1a of your Form 1099-DIV.

Check the specific requirements for your state. For example, some states only allow exemptions on dividends for those funds holding a minimum percentage, usually 50%, of government securities at the end of each quarter. We indicate in Column 3, below, whether any of your investments meet this requirement.

State Intangible Property Tax

If you pay state intangible property tax on the value of your fund, you may be able to exclude a portion of such value attributable to the fund’s investments in U.S. government securities. To determine this amount, multiply the “% of fund held in U.S. government securities on December 31, 2009” (shown below in Column 2) by the total value of your shares at year end. Consult your tax advisor or your state tax office for more information.

Interest on Direct U.S. Government Securities Tables
T. Rowe Price Domestic Stock Funds
  Column 1
% of Dividends
from U.S.
Government
Securities
Column 2
% of Funds Held
in U.S. Government
Securities on
December 31, 2009
Column 3
U.S. Government
Securities are at
Least 50% of Holdings
at each Quarter End
Balanced 3% 7% No
Blue Chip Growth No
Capital Appreciation 1% No
Capital Opportunity 1% No
Diversified Mid-Cap Growth N/A No
Diversified Small-Cap Growth N/A No
Dividend Growth No
Equity Income No
Equity Index 500 No
Extended Equity Market Index 1% No
Financial Services No
Growth & Income No
Growth Stock No
Health Sciences N/A No
Media & Telecommunications 2% No
Mid-Cap Growth 3% No
Mid-Cap Value No
New America Growth N/A No
New Era No
New Horizons No
Personal Strategy Balanced 1% 5% No
Personal Strategy Growth 2% No
Personal Strategy Income 1% 6% No
Real Estate No
Science & Technology N/A 4% No
Small-Cap Stock No
Small-Cap Value No
Tax-Efficient Balanced1 N/A N/A
Tax-Efficient Equity2 N/A No
Tax-Efficient Growth3 N/A N/A
Total Equity Market Index 1% No
U.S. Large-Cap Core No
Value No

T. Rowe Price Taxable Bond Funds
  Column 1
% of Dividends
from U.S.
Government
Securities
Column 2
% of Funds Held
in U.S. Government
Securities on
December 31, 2009
Column 3
U.S. Government
Securities are at
Least 50% of Holdings
at each Quarter End
Corporate Income 1% No
Emerging Markets Bond No
GNMA 4% No
High Yield 1% No
Inflation Protected Bond 86% 91% Yes
International Bond 1% No
New Income 3% 15% No
Prime Reserve 3% 2% No
Short-Term Bond 2% 5% No
Strategic Income 1% 3% No
Summit Cash Reserves 3% 2% No
Summit GNMA 3% No
U.S. Bond Index 14% 27% No
U.S. Treasury Intermediate 50% 89% Yes
U.S. Treasury Long-Term 50% 91% Yes
U.S. Treasury Money 78% 79% No

T. Rowe Price International Stock Funds
  Column 1
% of Dividends
from U.S.
Government
Securities
Column 2
% of Funds Held
in U.S. Government
Securities on
December 31, 2009
Column 3
U.S. Government
Securities are at
Least 50% of Holdings
at each Quarter End
Africa & Middle East No
Emerging Europe & Mediterranean No
Emerging Markets Stock No
European Stock No
Global Large-Cap Stock No
Global Real Estate No
Global Stock No
Global Technology N/A 2% No
International Discovery No
International Equity Index No
International Growth & Income No
International Stock No
Japan No
Latin America No
New Asia No
Overseas Stock No

T. Rowe Price Retirement and Spectrum Funds
  Column 1
% of Dividends
from U.S.
Government
Securities
Column 2
% of Funds Held
in U.S. Government
Securities on
December 31, 2009
Column 3
U.S. Government
Securities are at
Least 50% of Holdings
at each Quarter End
Retirement 2005 1% 5% No
Retirement 2010 1% 4% No
Retirement 2015 1% 3% No
Retirement 2020 1% 3% No
Retirement 2025 1% 2% No
Retirement 2030 1% 1% No
Retirement 2035 1% No
Retirement 2040 1% No
Retirement 2045 1% No
Retirement 2050 1% No
Retirement 2055 1% No
Retirement Income 2% 5% No
Spectrum Growth No
Spectrum Income 1% 5% No
Spectrum International No

T. Rowe Price Institutional Funds
  Column 1
% of Dividends
from U.S.
Government
Securities
Column 2
% of Funds Held
in U.S. Government
Securities on
December 31, 2009
Column 3
U.S. Government
Securities are at
Least 50% of Holdings
at each Quarter End
Institutional Africa & Middle East No
Institutional Core Plus 3% 11% No
Institutional Emerging Markets Bond No
Institutional Emerging Markets Equity No
Institutional Floating Rate 1% No
Institutional Foreign Equity No
Institutional Global Equity No
Institutional Global Large-Cap Equity No
Institutional High Yield 1% No
Institutional International Bond No
Institutional Large-Cap Core Growth No
Institutional Large-Cap Growth No
Institutional Large-Cap Value 1% No
Institutional Mid-Cap Equity Growth N/A 1% No
Institutional Small-Cap Stock No
Institutional U.S. Structured Research 10% No

T. Rowe Price Variable Annuity Portfolios
  Column 1
% of Dividends
from U.S.
Government
Securities
Column 2
% of Funds Held
in U.S. Government
Securities on
December 31, 2009
Column 3
U.S. Government
Securities are at
Least 50% of Holdings
at each Quarter End
Blue Chip Growth Portfolio N/A No
Equity Income Portfolio No
Equity Index 500 Portfolio No
Health Sciences Portfolio N/A No
International Stock Portfolio No
Limited-Term Bond Portfolio 3% 6% No
Mid-Cap Growth Portfolio N/A 3% No
New America Growth Portfolio N/A No
Personal Strategy Balanced Portfolio 2% 5% No
Prime Reserve Portfolio 2% 2% No

1Fund merged into Balanced Fund on August 31, 2009.

2Formerly Tax-Efficient Multi-Cap Growth Fund.

3Fund merged into Tax-Efficient Equity Fund on August 31, 2009.

Percentages are the same for all fund classes (Investor, Advisor, R, and II).

N/A is indicated where a fund did not pay a dividend or short-term capital gain, or pass through a foreign tax expense in 2009.

A dash indicates that the fund paid a dividend or short-term capital gain in 2009, but no income was from government securities.

Copyright 2010, T. Rowe Price Investment Services, Inc., Distributor. All rights reserved.