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Tax considerations for year-end investing

Thank you for your interest in T. Rowe Price mutual funds. This page provides estimates of the distributions our funds may pay out near the end of 2009 and useful information on related tax issues. We hope it will help you make well-informed investment decisions.

Why we provide information about year-end distributions

Like most other mutual funds, T. Rowe Price funds plan to distribute all income and net capital gains realized by a fund to shareholders each year. If you invest shortly before a fund distributes gains, you may, in effect, receive a portion of your investment back as a taxable distribution. When this happens, unless you hold shares in a tax-deferred account, such as an IRA, you may have to pay income or capital gains tax on the distribution. In certain cases—especially if a fund is expecting a large distribution—it may make sense to wait until after a fund has distributed its gains before you invest.

Keeping taxes in perspective

Although tax considerations often will play an important role in your investment decisions, they should not be the deciding factors in your overall investment strategy. You always will want to try to maximize your investment returns—in light of your time horizon, investment objectives, and tolerance for risk—but an investment decision that minimizes taxes could be to your advantage.

Our estimates of dividend and capital gain distributions for 2009

T. Rowe Price funds that have year-end distributions will declare them on the dates shown in the tables below, depending on the fund. Anyone owning shares at the close of business on these dates will receive the distribution. Except for investments held in tax-deferred accounts, such as IRAs, investors holding shares on the record date will have to report the distribution amounts on their tax returns. Although the income generated by municipal bond funds is free of federal and possibly state and local taxes, any capital gains paid by these funds are subject to federal and, usually, state and local taxes. If you wait until after the record date to invest, you will not receive 2009 year-end distributions.

The tables below offers an estimate of the dividends and net capital gains
T. Rowe Price funds expect to distribute based on information currently available. Income amounts are shown only for funds that distribute their income once a year. The actual distribution amounts will be different from those shown because they will be based on 12 months of actual fund activity and may reflect additional tax adjustments. You may consult our Web site for final numbers in December (troweprice.com/taxplanning). The actual distribution amounts will be available on the next business day after the payment date.

Distribution Information
Record and
declaration dates
Shareholders must own shares on the record date to be eligible to receive a declared distribution. Funds announce the amount of the dividend to be paid to investors on the declaration date.
Ex-dividend and reinvestment dates Each fund's share price (net asset value) is reduced by the amount of the per share distribution on this date. Distribution amounts are reinvested in fund shares on this date for shareholders who elect this option.
Payment dates Fund distributions are paid to shareholders of record on this date.

You can obtain actual distribution amounts for each fund on the next business day after the payment date on our Web site at troweprice.com/taxplanning or by calling Tele*AccessSM 800-638-2587.

Income dividends

Ordinary income dividends generally are taxed at the investor's marginal income tax rate; however, all or a portion may be taxed at the lower rates applicable to qualified dividend income discussed below.

Qualified dividend income

To the extent a fund receives qualified dividends from stocks it holds, it can designate all or a portion of the dividends it pays as qualifying for taxation at a rate of 15% (0% for investors in the 15% or 10% tax bracket). This designation applies to your taxable ordinary income, which includes both income dividends and short-term capital gain distributions. To estimate this amount for any of the funds listed in the tables below, multiply the estimated qualified dividend percentage by the sum of the income dividends and short-term capital gain distribution for that fund.

Capital gains taxes

Gains distributed by mutual funds are short-term or long-term depending on how long a particular investment was held by a fund. Short-term gains are taxed at the same rate as ordinary income (at the taxpayer's marginal income tax rate). Most long-term gains are subject to a maximum rate of 15% (0% for investors in the 15% or 10% tax bracket).

Confused about taxes? T. Rowe Price can help.

T. Rowe Price provides shareholders various tax form packages and offers tools for dealing with the tax consequences of investments. Our shareholders will receive a single package in late January (or, in some cases, mid-February) containing one or more of the following forms, as required, along with supplementary information relevant to each shareholder's particular holdings:

1099-DIV
1099-INT
1099-B with average cost and capital gain/loss information (if available)
1099-R

In addition:

1099-Q (Qualified Education Program Payments) will be mailed in late January.
Form 5498-ESA (Coverdell Education Savings Account Contributions) will be mailed in April.
Form 5498 (IRA Account Contributions) will be mailed in May.

For additional information about taxes, visit the tax planning section of our Web site for tax calculators, tax planning worksheets, and tax consideration guides at troweprice.com/taxplanning.

Contact information

To open a mutual fund or Brokerage account, call 800-225-5123.

For questions related to existing accounts, call:
800-225-5132

For 24-hour automated account information, yields, and prices, call:
Tele*AccessSM 800-638-2587

Visit our Web site at:
troweprice.com
This information has been prepared by T. Rowe Price for informational purposes only. T. Rowe Price (including T. Rowe Price Group, Inc., and its affiliates) and its associates do not provide legal or tax advice. Any tax-related discussion contained on this page is not intended or written to be used, and cannot be used, for the purpose of: (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this publication.

Note: Amounts shown are not final. Please check our Web site in December for final distribution numbers (troweprice.com/taxplanning).

Estimated per share amounts as of 10/31/09 (excludes any gains paid earlier in 2009)

Group A
Declaration Date: December 10, 2009
Ex-Dividend and Reinvestment Date: December 11, 2009
Pay Date: December 14, 2009
Group B
Declaration Date: December 11, 2009
Ex-Dividend and Reinvestment Date: December 14, 2009
Pay Date: December 15, 2009
Group C
Declaration Date: December 14, 2009
Ex-Dividend and Reinvestment Date: December 15, 2009
Pay Date: December 16, 2009
Preliminary Year-End Distributions
  Per Share Amounts
T. Rowe Price Domestic Stock Funds Qualified Dividend
Percentage
(estimated)*
Income Dividends
(annual estimate)
Short-Term
Gains
Long-Term
Gains
Group A
Balanced 49% Paid quarterly
Dividend Growth 100% Paid quarterly
Equity Income 100% Paid quarterly
Equity Index 500 100% Paid quarterly
Extended Equity Market Index 79% $0.11
Growth & Income 100% Paid quarterly
Personal Strategy Balanced 50% Paid quarterly
Personal Strategy Growth 79% $0.28
Personal Strategy Income 30% Paid quarterly
Real Estate** Paid quarterly
Total Equity Market Index 98% $0.19
Group B
Blue Chip Growth 100% $0.01
Capital Appreciation 70% $0.38
Diversified Small-Cap Growth $0.0023
Growth Stock 100% $0.05
Mid-Cap Growth 100% $0.03
Mid-Cap Value 100% $0.18
Small-Cap Stock 100% $0.03 $0.04
Small-Cap Value** 79% $0.25 $0.08
U.S. Large-Cap Core 35% $0.02 $0.09
Value 100% $0.30
Group C
Capital Opportunity 100% $0.15
Financial Services 87% $0.10 $0.01
Media & Telecommunications 15% $0.45
New Era 100% $0.47 $0.09
New Horizons 100% $0.01
*Reflects the portion of income dividends and short-term capital gains that are eligible to be taxed as qualified dividends.

**For Real Estate, Small-Cap Value, and Global Real Estate Funds, shareholders should expect to receive in mid-February required tax reporting information, such as dividends reportable on Form 1099-DIV or sale or exchange of fund shares reportable on Form 1099-B. For all other funds, shareholders should expect to receive such information in late January.
Declaration Date: December 4, 2009
Ex-Dividend and Reinvestment Date: December 7, 2009
Pay Date: December 8, 2009
Year-End Distributions
  Per Share Amounts
T. Rowe Price Domestic Bond and Money Market Funds Qualified Dividend
Percentage
(estimated)*
Income Dividends
(annual estimate)
Short-Term
Gains
Long-Term
Gains
Inflation Protected Bond Paid monthly $0.08
Strategic Income 1% Paid monthly $0.06 $0.02
U.S. Treasury Intermediate Paid monthly $0.11 $0.03
U.S. Treasury Long-Term Paid monthly $0.39 $0.45
*Reflects the portion of income dividends and short-term capital gains that are eligible to be taxed as qualified dividends.
Declaration Date: December 15, 2009
Ex-Dividend and Reinvestment Date: December 16, 2009
Pay Date: December 17, 2009
Preliminary Year-End Distributions
  Per Share Amounts
T. Rowe Price International
Stock Funds
Qualified Dividend
Percentage
(estimated)*
Income Dividends
(annual estimate)
Short-Term
Gains
Long-Term
Gains
Africa & Middle East 11% $0.16
Emerging Markets Stock 100% $0.16
European Stock 100% $0.41
Global Large-Cap Stock 11% $0.09 $1.53 $0.02
Global Real Estate** 20% Paid quarterly $0.22
Global Stock 100% $0.14
International Discovery 60% $0.24 $0.30
International Equity Index 78% $0.24 $0.01
International Growth & Income 81% $0.25 $0.02
International Stock 100% $0.26
Japan 100% $0.03
Latin America 100% $0.31
New Asia 79% $0.08 $0.04
Overseas Stock 100% $0.16 $0.01
*Reflects the portion of income dividends and short-term capital gains that are eligible to be taxed as qualified dividends.

**For Real Estate, Small-Cap Value, and Global Real Estate Funds, shareholders should expect to receive in mid-February required tax reporting information, such as dividends reportable on Form 1099-DIV or sale or exchange of fund shares reportable on Form 1099-B. For all other funds, shareholders should expect to receive such information in late January.
Declaration Date: December 17, 2009
Ex-Dividend and Reinvestment Date: December 18, 2009
Pay Date: December 21, 2009
Preliminary Year-End Distributions
  Per Share Amounts
T. Rowe Price Retirement and Spectrum Funds Qualified Dividend
Percentage
(estimated)*
Income Dividends
(annual estimate)
Short-Term
Gains
Long-Term
Gains
Retirement 2005 25% $0.32
Retirement 2010 30% $0.38 $0.01
Retirement 2015 39% $0.23 $0.01
Retirement 2020 45% $0.29 $0.01 $0.02
Retirement 2025 52% $0.18 $0.03
Retirement 2030 62% $0.22 $0.01 $0.05
Retirement 2035 71% $0.14 $0.01 $0.04
Retirement 2040 73% $0.19 $0.01 $0.06
Retirement 2045 73% $0.13 $0.04
Retirement 2050 76% $0.10 $0.02
Retirement 2055 72% $0.11 $0.03
Retirement Income 16% Paid monthly
Spectrum Growth 93% $0.15 $0.01 $0.04
Spectrum Income 7% Paid monthly $0.03
Spectrum International 82% $0.19 $0.01
*Reflects the portion of income dividends and short-term capital gains that are eligible to be taxed as qualified dividends.
Copyright 2010, T. Rowe Price Investment Services, Inc., Distributor. All rights reserved.