Policy Changes Also Include Reduction in Redemption Holding Period for
Index Funds
BALTIMORE, April 27 /PRNewswire-FirstCall/ -- The Boards of Directors of
the T. Rowe Price Funds have authorized several new policies related to fund
redemption fees and holding periods, including:
-- The addition of a 2% redemption fee on shares of all T. Rowe Price
international funds that currently do not impose a redemption fee.
The fee applies to shares held for less than 90 days or one year,
depending on the fund. (Five of the 19 international funds already
have redemption fees.)
-- A reduction in the redemption fee holding period for shares of
T. Rowe Price index funds to 90 days from 180 days.
-- An increase in the International Equity Index Fund's redemption fee
to 2% from 1%, to make it consistent with the other international
funds.
-- The addition of a 1% redemption fee for shares held less than one
year in the T. Rowe Price Small-Cap Value Fund - Advisor Class and
T. Rowe Price High Yield Fund - Advisor Class. The same policy
already applies to the retail class of these funds.
These changes will go into effect June 1, 2004 for shares purchased
directly from T. Rowe Price and through T. Rowe Price Brokerage Advantage, as
well as for shares purchased through financial intermediaries.
All redemption fees collected will be paid to the funds and will reduce
proceeds that shareholders receive from the sale or exchange of shares subject
to redemption fees.
"While we have had redemption fees on 17 funds -- about one-fifth of our
total retail funds -- including some as far back as 1993, the Boards are
taking these actions as additional steps designed to deter short-term trading
and further protect the interests of our long-term shareholders," says James
Riepe, chairman of the fund boards. "Excessive short-term trading can disrupt
the management of a fund and raise its transaction costs. Thus, for many
years, T. Rowe Price has taken an active role in minimizing the negative
impact such trading can have on our funds. In addition to redemption fees,
other tools used have included monitoring of daily trading activity,
suspending purchase privileges, and using fair value pricing."
Shares purchased through reinvested distributions (dividends and capital
gains), shares held in participant-directed retirement plans or accounts, or
shares redeemed through designated systematic withdrawal plans continue to be
exempted from redemption fees. Shares currently held or purchased prior to
implementation of these new redemption fees and holding periods are not
subject to the new fees; however, these shares are subject to pre-existing
terms for holding periods and early redemption as outlined in each fund's
prospectus.
Intermediaries who cannot implement the new redemption fees by June 1,
2004 because of systems limitations may be permitted to delay, temporarily and
upon approval, the implementation of redemption fees. Regardless, all
intermediaries are expected to be able to implement the redemption fees by
December 31, 2004. Investors using an intermediary to purchase shares should
check with the respective intermediary to determine whether or not purchases
will be subject to the new redemption fees.
Founded in 1937, Baltimore-based T. Rowe Price (Nasdaq: TROW) is a global
investment management firm with $201 billion in assets under management as of
March 31, 2004. The firm provides a broad array of mutual funds, sub-advisory
services, and separate account management for individual and institutional
investors, retirement plans, and financial intermediaries. The company also
offers a variety of sophisticated investment planning and guidance tools.
T. Rowe Price's disciplined, risk-aware investment approach focuses on
diversification, style consistency, and fundamental research. More
information is available at http://www.troweprice.com.
SOURCE T. Rowe Price
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Related links:
http://www.troweprice.com
CONTACT:
Steven E. Norwitz, +1-410-345-2124, or Brian
J. Lewbart, +1-410-345-2242, both of T. Rowe Price
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