July 15, 2005 | |
Laura Hatch and Tony Burak | |
Securities and Exchange Commission | |
Division of Investment Management | |
Office of Disclosure | |
Mail Stop 0505 | |
Washington, DC 20549 | |
RE: | T. Rowe Price Funds |
October 31, 2004 and December 31, 2004 Annual Reports | |
Dear Ms. Hatch and Mr. Burak: | |
Following are responses to the comments/questions we discussed on May 13, 2005, related | |
to the October 31, 2004 and December 31, 2004 annual reports for the T. Rowe Price | |
funds. |
1. | Manager Commentary(N-1A, Item 21(d)(1)) |
The hypothetical expense example presented in the shareholder reports of the variable | |
annuity funds should state that the example does not include any fees or expenses | |
imposed at the contract level. | |
Management Response:Beginning with the June 30, 2005 reporting cycle, the | |
hypothetical expense example presented in shareholder reports of T. Rowe Price | |
variable annuity funds will include language stating that, “Figures do not reflect fees at | |
the insurance product or contract level; if those fees were included, expenses would be | |
higher.” | |
2. | Statement of Assets and Liabilities(Reg. S-X, Rule 6-04(11)) |
Disclose separately on theStatement of Assets and Liabilities“deposits for securities | |
loaned” as prescribed by S-X 6-04(11). | |
Management Response:Beginning with the February 28, 2005 reporting cycle, all T. | |
Rowe Price funds began to present separately on the face of theStatement of Assets and | |
Liabilitiesthe liability to return securities lending collateral. Previously, such amounts | |
had been presented separately only if the balance exceeded 5% of the fund’s net assets. | |
Additionally, the footnotes to the financial statements state the total value of securities | |
loaned and the nature of the collateral received. | |
3. | Statement of Operations(Reg. S-X, Rule 6-07) |
On theStatement of Operations, state separately dividend and interest income from | |
investments in affiliated companies. |
Management Response:Beginning with the June 30, 2005 reporting cycle, T. Rowe | |
Price funds will disclose dividend and interest income from investments in affiliated | |
companies separately in accordance with Regulation S-X, Rule 6-07. | |
4. | Statement of Operations (Reg. S-X, Rule 6-07) |
The manager of the Personal Strategy Balanced Portfolio charges an all-inclusive | |
management and administrative fee, which it reduced by $38,000 during the year ended | |
December 31, 2004 related to the fund’s investment in T. Rowe Price Institutional High | |
Yield Fund. This fee reduction should be presented separately on theStatement of | |
Operationsas a decrease in total expenses. | |
Management Response:TheStatement of Operationsof the Personal Strategy | |
Balanced Portfolio erroneously reflected a net presentation of the fund’s management | |
fee. It is the policy of T. Rowe Price funds that the management fee should be | |
presented gross on theStatement of Operationsand any contractual management fee | |
reduction should be presented separately as a reduction to arrive at total expenses. | |
Total expenses were reported accurately and the expense ratios in the financial | |
highlights were calculated and presented correctly. | |
5. | Manager Commentary |
The Average Annual Compound Total Return Since Inception for the MSCI EAFE | |
Index presented in the annual report of the International Growth & Income Fund does | |
not agree to the return recalculated using the plot points in theGrowth of $10,000 | |
performance comparison chart. | |
Management Response:The inception date of the International Growth & Income | |
Fund is December 21, 1998. It is the policy of T. Rowe Price funds that since- | |
inception performance information for a fund’s benchmark should be presented from | |
the date of fund inception, when such information is available for the benchmark. The | |
Average Annual Compound Total Return Since Inception for the MSCI EAFE Index | |
presented in the fund’s annual report was calculated for the period from December 21, | |
1998 (inception date of the fund) to October 31, 2004; however, the tickmark | |
accompanying the performance calculation erroneously stated, “. for the period | |
12/31/98 to 10/31/04.” We have enhanced our financial statement review process to | |
include a procedure to verify that the periods disclosed in the tickmark explanations for | |
since-inception benchmark data presented in the annual report are appropriate. | |
6. | Manager Commentary |
The Average Annual 5-Year and 10-Year Compound Total Returns for the Citigroup | |
Non-U.S. Extended Market Index presented in the T. Rowe Price International | |
Discovery Fund do not agree to the returns recalculated using the plot points in the | |
Growth of $10,000performance comparison chart. | |
Management Response:The Average Annual 5-Year and 10-Year Compound Total | |
Returns presented for the Citigroup Non-U.S. Extended Market Index presented in the | |
International Discovery Fund annual report were accurate; however, the plot points for | |
theGrowth of $10,000performance comparison chart as of October, 2002, October, | |
2003 and October, 2004 were misstated due to inaccurate data points in our internal |
statistical reporting database. We have corrected the data in our internal statistical | |
reporting database and enhanced our period-end review process to include a procedure | |
to verify that all performance data contained in our internal statistical reporting | |
database agrees to the performance data provided by the benchmark organization. | |
7. | Statement of Assets and Liabilities |
The value of affiliated companies in theStatement of Assets and Liabilitiesof New | |
Asia Fund does not agree to the total value of investments in affiliated companies | |
presented in the affiliate schedule following thePortfolio of Investments. | |
Management Response:The value of the three affiliated companies presented in the | |
affiliate schedule following thePortfolio of Investmentswas misclassified as | |
unaffiliated on theStatement of Assets and Liabilities. We have enhanced our financial | |
statement review checklist to include a procedure to verify that the value of investments | |
in affiliated companies as reflected on theStatement of Assets and Liabilitiesagrees | |
with the total value of affiliated companies held at period-end shown in the affiliate | |
schedule. |
In connection with responding to your comments, T. Rowe Price acknowledges that: | |
• | the fund is responsible for the adequacy and accuracy of the disclosure in the filings; |
• | staff comments or changes to disclosure in response to staff comments in the filings |
reviewed by the staff do not foreclose the Commission from taking any action with | |
respect to the filing; and | |
• | the fund may not assert staff comments as a defense in any proceedings initiated by |
the Commission or any person under the federal securities laws of the United States. | |
If you have any additional questions after reviewing or would like to discuss any of the | |
responses further, I can be reached at (410) 345-2014 or via email at | |
neil_kotras@troweprice.com. | |
Sincerely, | |
Neil Kotras | |
Investment Treasury | |
cc: Joe Carrier | |
Forrest Foss | |
Cathy Mathews |