<PAGE>
Fund Profile
October 1, 1998
T. Rowe Price Equity Income Fund
A stock fund seeking substantial dividend income and long-term capital growth.
This profile summarizes key information about the fund that is included in the
fund's prospectus. The fund's prospectus includes additional information about
the fund, including a more detailed description of the risks associated with
investing in the fund that you may want to consider before you invest. You may
obtain the prospectus and other information about the fund at no cost by
calling 1-800-638-5660, or by visiting our Web site at www.troweprice.com.
1. What is the fund's objective?
To provide substantial dividend income as well as long-term growth of capital
through investments in the common stocks of established companies.
As with any mutual fund, there can be no guarantee the fund will achieve its
objective.
o This fund should not represent your complete investment program or be used
for short-term trading purposes.
2. What is the fund's investment strategy?
We will normally invest at least 65% of the fund's assets in the common
stocks of well-established companies paying above-average dividends. T. Rowe
Price believes that income can contribute significantly to total return over
time and expects the fund's yield to exceed that of the S&P 500 Stock Index.
Dividends can also help reduce the fund's volatility during periods of market
turbulence and help offset losses when stock prices are falling.
We typically employ a "value" approach in selecting investments. Our in-house
research team seeks companies that appear to be undervalued by various
measures and may be temporarily out of favor, but have good prospects for
capital appreciation and dividend growth.
In selecting investments, we generally look for companies with the following:
. An established operating history.
. Above-average dividend yield relative to the S&P 500.
. Low price/earnings ratio relative to the S&P 500.
. A sound balance sheet and other positive financial characteristics.
. Low stock price relative to a company's underlying value as measured by
assets, cash flow or business franchises.
Most of the fund's assets will be invested in U.S. common stocks. We may also
invest in other securities, including foreign securities, convertibles,
warrants, preferred stocks, corporate and government debt, futures, and
options, in keeping with the fund's objective.
3. What are the main risks of investing in the fund?
As with all stock funds, this fund's share price can fall because of weakness
in the broad market, a particular industry, or specific holdings. The market
as a whole can decline for many reasons, including adverse political or
economic developments here or abroad, changes in investor psychology, or
heavy institutional selling. The prospects for an industry or company may
deteriorate because of a variety of factors, including disappointing earnings
or changes in the competitive environment. In addition, our assessment of
companies held in the fund may prove incorrect, resulting in losses or poor
performance even in a rising market.
The fund's emphasis on stocks of established companies paying high dividends,
and its potential investments in fixed-income securities, may limit its
potential for appreciation in a broad market advance. Such securities may
also be hurt when interest rates rise sharply. The fund's value approach
carries the risks that the market will not recognize a security's intrinsic
value for a long time, or that a stock judged to be undervalued may actually
be appropriately priced.
To the extent the fund invests in foreign securities, it is also subject to
the risk that some holdings may lose value because of declining foreign
currencies or adverse political or economic events overseas.
Note: You may obtain additional information about the fund's investments and
recent strategy in the annual and semiannual reports, which are available
free by calling 1-800-638-5660.
4. How has the fund performed in the past?
The bar chart, which shows the fund's actual performance for each of the last
10 calendar years, indicates risk by illustrating how much returns can differ
from one year to the next. Although the fund has experienced no losses, its
returns, as shown below, have reflected changes in prevailing interest rates.
The fund can also experience short-term performance swings, as shown below by
the best and worst calendar quarter returns during the years depicted in the
chart. Of course, the fund's past performance is no guarantee of its future
returns.
<TABLE>
Equity Income Fund
<CAPTION>
Calendar Year Total Returns
--------------------------------
<S> <C>
1988 27.60%
1989 13.74
1990 -6.79
1991 25.30
1992 14.13
1993 14.84
1994 4.53
1995 33.35
1996 20.40
1997 28.82
--------------------------------
</TABLE>
Quarter Ended Total Return
Best Quarter xx/xx/xx x.xx%
Worst Quarter xx/xx/xx x.xx%
The fund's return for the 9 months ended 9/30/98 was _______%.
In the table, the fund's average annual compound total returns for the 1-, 5-
and 10-year periods ending December 31, 1997 are compared to the S&P 500
Stock Index and the Lipper Equity Income Funds Average. These average returns
smooth out the year-to-year variations in actual returns. Of course, the
fund's past performance is no guarantee of its future returns.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Returns
Periods ended December 31, 1997
-------------------------------------
1 year 5 years 10 years
<S> <C> <C> <C>
Equity Income Fund % % %
S&P 500 Stock Index % % %
Lipper Equity Income Funds Average % % %
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</TABLE>
These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
5. How can I tell if the fund is appropriate for me?
Consider your investment goals, your time horizon for achieving them, and
your tolerance for the inherent risk of common stock investments. If you seek
a relatively conservative equity investment that provides substantial
dividend income along with the potential for capital growth, the fund could
be an appropriate part of your overall investment strategy. The fund can be
used in both regular and tax-deferred accounts, such as IRAs.
o Equity investors should have a long-term investment horizon and be willing
to wait out market declines.
6. What fees or expenses will I pay?
The fund is 100% no load. There are no fees or charges to buy or sell fund
shares, reinvest dividends, or exchange into other T. Rowe Price funds. There
are no 12b-1 marketing fees.
<TABLE>
<CAPTION>
<S> <C>
Annual fund operating expenses
(expenses that are deducted from fund assets)
Management fee x.xx%
Other expenses x.xx%
Total annual fund operating x.xx%
expenses
------------------------------------------------------------------------------
</TABLE>
These are costs you pay indirectly because they are deducted from the fund's
total assets before the daily share price is calculated and distributions are
made.
To give you a rough idea of how expense ratios may translate into dollars,
the table below shows expenses you would pay assuming a $10,000 investment
earning a 5% annual return for the following periods:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 year 3 years 5 years 10 years
$64 $202 $351 $786
----------------------------------------------------
</TABLE>
This is an illustration only; actual expenses and returns will vary.
7. Who manages the fund?
The fund is managed by T. Rowe Price Associates. Founded in 1937, T. Rowe
Price and its affiliates manage investments for individual and institutional
accounts. The company offers a comprehensive array of stock, bond, and money
market funds directly to the investing public.
Brian C. Rogers manages the fund day-to-day and has been chairman of its
Investment Advisory Committee since 1993. He joined T. Rowe Price in 1982 and
has been managing investments since 1983.
8. How can I purchase shares?
Fill out and return the New Account Form in the postpaid envelope, along with
your check for a minimum of $2,500 or more ($1,000 or more for retirement
plans and gifts or transfers to minors) or $50 if investing through Automatic
Asset Builder. You can also open an account by bank wire or by exchanging
from another T. Rowe Price fund.
9. How can I sell shares or close my account?
You may redeem or sell any portion of your account on any business day.
Simply write to us or call. You can also access your account at any time via
Tele*Access or our web site. We also offer free exchange among our entire
family of domestic and international funds. Restrictions may apply in special
circumstances, and some redemption requests need a signature guarantee.
10. When will I receive distributions?
The fund distributes income quarterly and net capital gains, if any, at
year-end. Income and short-term gains are taxable at ordinary income rates,
and long-term gains are taxable at the current capital gains rate.
Distributions are reinvested automatically in additional shares unless you
choose another option, such as receiving a check.
11. What services are available?
A wide range, including but not limited to:
. retirement plans for individuals and large and small businesses;
. automated information and transaction services by telephone or computer;
. electronic transfers between fund and bank accounts;
. automatic investing and automatic exchange;
. discount brokerage.
To Open an Account
Investor Services
1-800-638-5660
For Existing Fund or Discount Brokerage Accounts
Shareholder Services
1-800-225-5132
For Fund Information and Account Transactions on the Internet
www.troweprice.com
For Yields, Prices and Account Transactions
Tele*Access/(R)/
1-800-638-2587
24 hours, 7 days
T. Rowe Price
100 East Pratt Street
Baltimore, MD 21202
