T. Rowe Price maintains a Redemption Fee Policy to help protect mutual funds and the funds' shareholders from short-term trading, which can disrupt a fund's investment program and create additional costs for long-term shareholders. Redemption fees are paid to the fund to deter this kind of trading activity.
- What is a Redemption Fee?
- What is T. Rowe Price's Redemption Fee Policy?
- Which Funds are Subject to the Redemption Fee?
- How Does the Redemption Fee Work?
- Are Any Transactions Not Subject to the Redemption Fee Policy?
- I Hold Shares in a Retirement Plan. Does the Redemption Fee Apply?
- I Hold Shares Through an Intermediary. Does the Redemption Fee Apply?
- Who Should I Call If I Have a Question About the Redemption Policy?
A redemption fee is a charge that some funds collect from shareholders to discourage short-term trading or early withdrawals (also known as market timing). Market timing can have a negative effect on a fund's long-term investors. Short-term trading generally involves shareholders who purchase and then redeem shares in a short period of time (often between 30 days and one year). A redemption fee typically is used to defray fund costs associated with a shareholder's redemption and is paid directly to the fund, not to a broker. The SEC generally limits redemption fees to 2%.
The T. Rowe Price redemption fee is charged as a percentage of the amount redeemed on shares held for less than the required holding period. The trade day after the trade date of your purchase is considered Day 1 for purposes of computing the holding period. For example, if the fund in which you invest requires a holding period of 90 days or less and charges 2% for shares held less than 91 days, then you will be charged 2% of the share price on that day using the "first-in, first-out" method. If the share price is $10.00 and you redeemed 100 shares, then you will be charged $20 for the early redemption based on the earliest shares purchased.
Subject to the exceptions described below, all persons holding shares of a T. Rowe Price fund that imposes a redemption fee are subject to the fee, whether the person is holding shares directly with a T. Rowe Price fund, through a retirement plan for which T. Rowe Price serves as recordkeeper, or indirectly through an intermediary, such as a broker, bank, investment adviser, recordkeeper for retirement plan participants, or any other third party.
The following T. Rowe Price funds assess a fee on redemptions (including exchanges), which reduces the proceeds from such redemptions by the amounts indicated:
|T. Rowe Price Funds With Redemption Fees|
|Fund||Redemption Fee||Holding Period|
|Africa & Middle East||2%||90 days or less|
|Asia Opportunities||2%||90 days or less|
|Credit Opportunities||2%||90 days or less|
|Diversified Small-Cap Growth||1%||90 days or less|
|Emerging Europe||2%||90 days or less|
|Emerging Markets Bond||2%||90 days or less|
|Emerging Markets Corporate Bond||2%||90 days or less|
|Emerging Markets Local Currency Bond||2%||90 days or less|
|Emerging Markets Stock||2%||90 days or less|
|Equity Index 500||0.5%||90 days or less|
|European Stock||2%||90 days or less|
|Extended Equity Market Index||0.5%||90 days or less|
|Floating Rate||2%||90 days or less|
|Global Growth Stock||2%||90 days or less|
|Global Real Estate||2%||90 days or less|
|Global Stock||2%||90 days or less|
|High Yield||2%||90 days or less|
|Intermediate Tax-Free High Yield||2%||90 days or less|
|International Bond||2%||90 days or less|
|International Discovery||2%||90 days or less|
|International Equity Index||2%||90 days or less|
|International Growth & Income||2%||90 days or less|
|International Stock||2%||90 days or less|
|Japan||2%||90 days or less|
|Latin America||2%||90 days or less|
|New Asia||2%||90 days or less|
|Overseas Stock||2%||90 days or less|
|Real Assets||2%||90 days or less|
|Real Estate||1%||90 days or less|
|Small-Cap Value||1%||90 days or less|
|Spectrum International||2%||90 days or less|
|Tax-Efficient Equity||1%||less than 365 days|
|Tax-Free High Yield Fund||2%||90 days or less|
|Total Equity Market Index||0.5%||90 days or less|
|U.S. Bond Enhanced Index||0.5%||90 days or less|
When an investor sells shares of a fund that assesses a redemption fee, T. Rowe Price will use the "first-in, first-out" method to determine the holding period for the shares sold. Under this method, the trade date of redemption or exchange will be compared with the earliest purchase date of shares held in the account. The day after the date of your purchase is considered Day 1 for purposes of computing the holding period. A redemption fee will be charged on shares sold on or before the end of the required holding period. For example, if you have shares in a fund with a 90-day holding period and you redeem your shares on or before the 90th day from Day 1, you will be assessed the redemption fee.
If you purchase shares through an intermediary, consult your intermediary to determine how the holding period will be applied.
The T. Rowe Price funds will not assess a redemption fee with respect to certain transactions. The following shares of T. Rowe Price funds will not be subject to redemption fees:
- Shares redeemed via an automated, systematic withdrawal plan;
- Shares redeemed through or used to establish certain rebalancing or asset allocation programs or fund-of-funds products, if approved in writing by T. Rowe Price;
- Shares purchased by the reinvestment of dividends or capital gain distributions;1
- Shares converted from one share class to another share class of the same fund;1
- Shares redeemed by a fund (e.g., for failure to meet account minimums or to cover other account fees);
- Shares purchased by rollover and changes of account registration within the same fund;1
- Shares redeemed to return an excess contribution in an individual retirement account;
- Shares of T. Rowe Price funds purchased by certain other T. Rowe Price funds or accounts managed by T. Rowe Price (please note that other shareholders of the T. Rowe Price fund are still subject to the policy);
- Shares that are redeemed in-kind;
- Shares transferred to T. Rowe Price or a third-party intermediary acting as a service provider when the age of the shares cannot be determined systematically;1 and
- Shares redeemed in retirement plans or other products that restrict trading to no more frequently than once per quarter, if approved in writing by T. Rowe Price.
If shares are held in a retirement plan, redemption fees generally will be assessed on shares redeemed by exchange only if they were originally purchased by exchange. However, redemption fees may apply to transactions other than exchanges depending on how shares of the plan are held at T. Rowe Price or how the fees are applied by your plan's recordkeeper. To determine which of your transactions are subject to redemption fees, you should contact T. Rowe Price or your plan recordkeeper.
If your shares are held through an intermediary in an omnibus account, T. Rowe Price relies on the intermediary to assess the redemption fee on underlying shareholder accounts. T. Rowe Price seeks to identify intermediaries establishing omnibus accounts and to enter into agreements requiring the intermediary to assess the redemption fees. There are no assurances that T. Rowe Price will be successful in identifying all intermediaries or that the intermediaries will properly assess the fees. Certain intermediaries may not apply the exemptions previously listed to the redemption fee policy; all redemptions by persons trading through such intermediaries may be subject to the fee. Certain intermediaries may exempt transactions not listed from redemption fees, if approved by T. Rowe Price. Persons redeeming shares through an intermediary should check with their respective intermediary to determine which transactions are subject to the fees.
Please call customer service at 1-800-225-5132 to discuss any questions or concerns you have regarding this policy.