<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
Annual Report
Equity Income Fund
- --------------------------------------------------------------------------------
December 31, 1999
- --------------------------------------------------------------------------------
REPORT HIGHLIGHTS
================================================================================
EQUITY INCOME FUND
- ------------------
* The S&P 500 soared to its fifth straight year of returns above 20%, but
more stocks declined than advanced in a frustrating year for value stocks
and your fund.
* Fund performance faded in the second half after outperforming the S&P 500
and the Lipper average in the first half; results surpassed Lipper for the
year.
* Rising interest rates and a focus on technology hurt conservative
investments such as low P/E and high-dividend stocks.
* Despite the sluggish performance, the portfolio contained its share of
winners, and we added to several positions.
* While the broad market looks frothy, we are optimistic about value stocks,
many of which are at their lowest valuation levels in 25 years.
================================================================================
UPDATES AVAILABLE
- -----------------
For updates on T. Rowe Price funds following the end of each calendar
quarter, please see our Web site at www.troweprice.com.
================================================================================
FELLOW SHAREHOLDERS
- -------------------
The last year of the millennium will be remembered as the year the S&P 500
continued its unprecedented five-year streak of returns in excess of 20%, but
also as the year in which more S&P 500 stocks declined than advanced. It was
unquestionably a disappointing year for value stocks and your fund with its
conservative orientation. Without trying to dodge any bullets, some factors that
affected us were beyond our control, but with the benefit of hindsight, there
are some stocks we could have avoided in favor of others.
<PAGE>
********************************************************************************
PERFORMANCE COMPARISON
----------------------
Periods Ended 12/31/99 6 Months 12 Months
---------------------- -------- ---------
Equity Income Fund -7.75% 3.82%
S&P 500 7.71 21.04
Lipper Equity
Income Funds Average -5.09 3.34
********************************************************************************
As we reported in our last letter, the fund enjoyed a very strong first six
months of the year, outperforming both the S&P 500 and the Lipper universe of
comparably managed funds. However, during the second half of 1999, we struggled
relative to the broad market and generated a total return of 3.82% for the year
ended December 31, 1999, slightly ahead of our new Lipper peer group average,
which we are introducing in this report. The name remains the same, but the peer
group category is composed of a slightly different universe of funds.
Previously, Lipper assigned a fund to a category based on its objective as
outlined in the prospectus. The new categories are based on the major
characteristics of each fund's actual portfolio holdings, such as market
capitalizatio n, price/earnings and other valuation ratios, earnings growth
rates, etc.
As you check the fund's results in the Performance Comparison table, we
would like to call your attention to the big gap between equity income funds and
the S&P 500. We will comment in detail about this issue in the Portfolio
Strategy section.
DIVIDEND DISTRIBUTIONS
- ----------------------
On December 14, your Board of Trustees declared a fourth quarter income
dividend of $0.14, bringing the total for 1999 to $0.53. On the same day, a
$1.74 capital gain distribution was declared of which $0.20 was short term and
$1.54 long term. The dividend and capital gain distributions were paid on
December 16, 1999, to shareholders of record on December 14. You should have
received your check or statement reflecting them as well as Form 1099-DIV
summarizing this information for 1999 tax purposes.
PORTFOLIO STRATEGY
- ------------------
In terms of overall market environment, 1999 was characterized by a
pronounced investor preference for growth stocks and an advance led by a
relatively small number of companies. The business press and general media have
consistently focused on the market's daily gyrations along with the most
dramatic and volatile issues traded, usually the latest "dot-com" wonders.
Time's "Person of the Year" award went to the CEO of a well-known but highly
unprofitable Internet company.
<PAGE>
*****************************************************************
[Security Diversification pie chart
showing Business Services and
Transportation 3%, Capital Equipment,
Process Industries, and Basic Materials
14%, Technology 4%, Consumer Services
and Cyclicals 12%, Financial 16%, Energy
and Utilities 28%, Consumer Nondurables
18%, and Reserves 5%.
Based on net assets as of 12/31/99.]
******************************************************************
It is hard to imagine that in the context of such robust stock market
performance, more than half of the stocks in the S&P 500 declined in value while
the rest advanced, in some cases significantly. Most of the excitement centered
on the Nasdaq Composite dominated by technology stocks, which enjoyed the lion's
share of gains last year. The major factor behind our lagging relative
performance was our underweighting in technology, a sector that nearly doubled
in value in 1999. We would not normally expect to hold large positions in this
sector, since the lofty valuations of most technology shares exclude them as
candidates for purchase. In terms of market breadth, some of the most highly
valued companies provided a disproportionate amount of the S&P 500's return,
with only seven companies accounting for half of it.
Value investing was rendered even more challenging by a deteriorating
interest rate environment. As fixed income investors can testify, bond returns
were mostly negative as interest rates rose throughout the year. Similarly, it
was difficult to profit from investments in stocks with above-average dividend
yields since they, too, suffered as rates climbed. It is revealing to examine
what took place in the universe of stocks with low price/earnings ratios and
high dividends. The data show that, perversely, the lower the price/earnings
ratio and the higher the yield, the more difficult the going in 1999 -- the
opposite of what one would expect. In fact, the lowest P/E and highest-yielding
stocks in the S&P 500 actually fell. Our performance suffered, since these are
precisely the kinds of stocks we hold in our portfolio. These factors were
especially detrimental during the second half of the year. However, every cloud
has a silver lining. Because of their weak performance in 1999, value stocks are
currently extremely attractive as they are selling at the greatest
price/earnings discount to the general market in 25 years.
<PAGE>
********************************************************************************
FINANCIAL PROFILE
-----------------
Equity
As of 12/31/99 Income Fund S&P 500
-------------- ----------- -------
Current Yield 2.7% 1.1%
Price/Book Ratio 3.5 8.1
Price/Earnings Ratio
(2000 estimated EPS) 17.5 28.1
Historical Beta
(based on monthly
returns for 5 years) 0.66 1.00
********************************************************************************
Despite the setback for value stocks, a number of investments were
successful for us. The fund benefited from several companies involved in mergers
and acquisitions, and further activity in 2000 should help performance. Our
winners included BCE, CITIGROUP, REYNOLDS METALS, DOW JONES, and US WEST.
However, other solid companies were disappointing, including our holdings in
BANK ONE, NATIONAL CITY, HEINZ, and WASTE MANAGEMENT, which struggled through
the year and largely offset our more profitable investments. We took advantage
of market volatility by adding new positions and beefing up existing holdings.
Among our purchases were DISNEY, AMERICAN HOME PRODUCTS, LOCKHEED MARTIN,
UNILEVER, and XEROX. In our view, these companies possess far more value and
appreciation potential than the market is currently giving them credit for.
Our preference for high-yielding, lower P/E companies is evident in the
Financial Profile table, and it has been a consistent cornerstone of our
investment approach since the fund commenced operations in 1985. Given the wide
variations in performance among companies and sectors over the last two years,
we believe investors will eventually recognize the exciting opportunities that
exist in our segment of the market. We are not alone in our frustration with
recent market trends; th e managers of many companies we hold in the portfolio
have told us about their own disappointment with their firms' stock performance.
Many of them are actively working to enhance shareholder value through share
repurchase programs, cost-cutting measures, and strategically rethinking their
business models. This type of activity bodes well for value stocks in coming
years.
SUMMARY AND OUTLOOK
- -------------------
Based on most historical measures, the equity market appears somewhat
expensive, as it has for some time now. The market's overall price/earnings
ratio is approaching 30 and the average dividend yield is barely above one
percent. A review of aggregate market value relative to GDP and other valuation
measures suggests at least some degree of overvaluation. Many individual
investors have focused almost exclusively on maximum short-term returns with
little regard for traditional long-term financial goals or sensitivity to risk.
<PAGE>
We expect the Fed to maintain its monetary stance in favor of tightening
with a view toward restraining inflation in a rapidly growing economy. While the
economic news and low rate of inflation continue to be positive, it's difficult
to envision an even more positive environment for stocks than we have so far
experienced. These factors prompt us to remain cautious in our expectations for
2000. However, since so many sectors were left behind in the great bull market
of the past couple of years, many interesting opportunities have become
available in the midst of the general euphoria.
In particular, we believe value stocks offer good potential for
appreciation especially when compared with some of the more extended sectors of
the market. The best strategy when our investment style has been out of sync
with the overall market has been to stick to basics and concentrate on companies
with below-average price/earning ratios and above-average dividend yields. We
will continue to manage the fund in our traditionally conservative style.
As always, we appreciate your confidence in T. Rowe Price and your
continued support.
Respectfully submitted,
/s/
Brian C. Rogers
President and Chairman of the Investment Advisory Committee
January 21, 2000
================================================================================
T. ROWE PRICE EQUITY INCOME FUND
- --------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
TWENTY-FIVE LARGEST HOLDINGS
- ----------------------------
Percent of
Net Assets
12/31/99
- ------------------------------------------------------------
Exxon Mobil 3.4%
- ------------------------------------------------------------
SBC Communications 1.9
- ------------------------------------------------------------
International Paper 1.8
- ------------------------------------------------------------
Mellon Financial 1.8
- ------------------------------------------------------------
Atlantic Richfield 1.7
- ------------------------------------------------------------
BP Amoco 1.7
- ------------------------------------------------------------
GTE 1.6
- ------------------------------------------------------------
<PAGE>
American Home Products 1.5
- ------------------------------------------------------------
ALLTEL 1.5
- ------------------------------------------------------------
Citigroup 1.5
- ------------------------------------------------------------
Kimberly-Clark 1.4
- ------------------------------------------------------------
General Mills 1.4
- ------------------------------------------------------------
Chevron 1.3
- ------------------------------------------------------------
BCE 1.3
- ------------------------------------------------------------
DuPont 1.2
- ------------------------------------------------------------
Fleet Boston Financial 1.2
- ------------------------------------------------------------
Bell Atlantic 1.2
- ------------------------------------------------------------
3M 1.2
- ------------------------------------------------------------
Disney 1.2
- ------------------------------------------------------------
Pharmacia & Upjohn 1.2
- ------------------------------------------------------------
Royal Dutch Petroleum 1.2
- ------------------------------------------------------------
US West 1.2
- ------------------------------------------------------------
Texaco 1.1
- ------------------------------------------------------------
Fannie Mae 1.1
- ------------------------------------------------------------
American General 1.1
- ------------------------------------------------------------
Total 36.7%
Note: Table excludes reserves.
<PAGE>
================================================================================
T. ROWE PRICE EQUITY INCOME FUND
- --------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
MAJOR PORTFOLIO CHANGES
- -----------------------
Listed in descending order of size
6 Months Ended 12/31/99
TEN LARGEST PURCHASES
- ---------------------
Waste Management
- -----------------------------------
Xerox *
- -----------------------------------
Disney
- -----------------------------------
UNUMProvident *
- -----------------------------------
Unilever NV
- -----------------------------------
Lockheed Martin
- -----------------------------------
American Home Products
- -----------------------------------
Fort James
- -----------------------------------
USWest
- -----------------------------------
Rite Aid *
- -----------------------------------
<PAGE>
TEN LARGEST SALES
- -----------------
Browning-Ferris **
- -----------------------------------
Honeywell International
- -----------------------------------
GE **
- -----------------------------------
Nalco Chemical **
- -----------------------------------
Transamerica **
- -----------------------------------
ALLTEL
- -----------------------------------
Telebras **
- -----------------------------------
Dow Chemical
- -----------------------------------
Hewlett-Packard
- -----------------------------------
Chase Manhattan
- -----------------------------------
* Position added
** Position eliminated
================================================================================
T. ROWE PRICE EQUITY INCOME FUND
- --------------------------------
PERFORMANCE COMPARISON
- ----------------------
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
[SEC chart showing, As of 12/31/99
Equity Income Fund $37,525; S&P500
$53,278 and Lipper Equity Income
Funds Average $32,181]
<PAGE>
AVERAGE ANNUAL COMPOUND TOTAL RETURN
- ------------------------------------
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Periods Ended 12/31/99 1 Year 3 Years 5 Years 10 Years
---------------------- ------ ------- ------- --------
Equity Income Fund 3.82% 13.47% 18.59% 14.14%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
T. ROWE PRICE EQUITY INCOME FUND For a share outstanding throughout each period
- --------------------------------
FINANCIAL HIGHLIGHTS
- --------------------
Year
Ended
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
-------- -------- -------- -------- --------
NET ASSET VALUE
Beginning of period $ 26.32 $ 26.07 $ 22.5 $ 20.01 $ 15.98
- --------------------------------------------------------------------------------
Investment activities
Net investment income(loss) 0.54 0.61 0.66 0.64 0.66
Net realized and
unrealized gain (loss) 0.45 1.74 5.67 3.38 4.56
- --------------------------------------------------------------------------------
Total from
investment activities 0.99 2.35 6.33 4.02 5.22
- --------------------------------------------------------------------------------
Distributions
Net investment income (0.53) (0.61) (0.66) (0.65) (0.65)
Net realized gain (1.97) (1.49) (2.14) (0.84) (0.54)
- --------------------------------------------------------------------------------
Total distributions (2.50) (2.10) (2.80) (1.49) (1.19)
- --------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 24.81 $ 26.32 $ 26.07 $ 22.54 $ 20.01
Ratios/Supplemental Data
Total return** 3.82% 9.23% 28.82% 20.40% 33.35%
- --------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.77% 0.77% 0.79% 0.81% 0.85%
- --------------------------------------------------------------------------------
<PAGE>
Ratio of net investment
income (loss) to average
net assets 1.95% 2.26% 2.67% 3.08% 3.69%
- --------------------------------------------------------------------------------
Portfolio turnover rate 21.8% 22.6% 23.9% 25.0% 21.4%
- --------------------------------------------------------------------------------
Net assets, end of period
(in millions) $12,321 $13,495 $12,771 $ 7,818 $5,215
- --------------------------------------------------------------------------------
** Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE EQUITY INCOME FUND December 31, 1999
- --------------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------
Shares Value
In thousands
COMMON STOCKS 95.2%
- --------------------------------------------------------------------------------
FINANCIAL 15.4%
- ----------------
BANK AND TRUST 7.9%
Bank of America 1,400,000 $ 70,263
- --------------------------------------------------------------------------------
Bank One 2,750,000 88,172
- --------------------------------------------------------------------------------
Chase Manhattan 500,000 38,844
- --------------------------------------------------------------------------------
Firstar 2,000,000 42,100
- --------------------------------------------------------------------------------
Fleetboston Financial 4,276,600 148,879
- --------------------------------------------------------------------------------
J. P. Morgan 1,000,000 126,625
- --------------------------------------------------------------------------------
KeyCorp 1,200,000 26,550
- --------------------------------------------------------------------------------
Mellon Financial 6,401,600 218,054
- --------------------------------------------------------------------------------
Mercantile Bankshares 2,175,900 69,561
- --------------------------------------------------------------------------------
National City 2,000,000 47,375
- --------------------------------------------------------------------------------
Wells Fargo 2,250,000 90,984
- --------------------------------------------------------------------------------
967,407
- --------------------------------------------------------------------------------
<PAGE>
INSURANCE 4.9%
American General 1,828,600 138,745
- --------------------------------------------------------------------------------
Chubb 1,500,000 84,469
- --------------------------------------------------------------------------------
Lincoln National 1,600,000 64,000
- --------------------------------------------------------------------------------
SAFECO 2,500,000 62,109
- --------------------------------------------------------------------------------
St. Paul Companies 3,869,450 130,352
- --------------------------------------------------------------------------------
Unumprovident 2,750,000 88,172
- --------------------------------------------------------------------------------
XL Capital (Class A) 814,000 42,226
- --------------------------------------------------------------------------------
610,073
- --------------------------------------------------------------------------------
FINANCIAL SERVICES 2.6%
Citigroup 3,225,000 179,189
- --------------------------------------------------------------------------------
Fannie Mae 2,250,000 140,484
- --------------------------------------------------------------------------------
319,673
- --------------------------------------------------------------------------------
Total Financial 1,897,153
- --------------------------------------------------------------------------------
UTILITIES 14.2%
- --------------------------------------------------------------------------------
TELEPHONE 9.5%
ALLTEL 2,200,000 181,912
- --------------------------------------------------------------------------------
AT&T 1,125,000 57,094
- --------------------------------------------------------------------------------
BCE ADR 1,816,600 163,835
- --------------------------------------------------------------------------------
Bell Atlantic 2,400,000 $ 147,750
- --------------------------------------------------------------------------------
BellSouth 1,000,000 46,812
- --------------------------------------------------------------------------------
GTE 2,800,000 197,575
- --------------------------------------------------------------------------------
SBC Communications 4,782,617 233,152
- --------------------------------------------------------------------------------
U S West 2,000,000 144,000
- --------------------------------------------------------------------------------
1,172,130
- --------------------------------------------------------------------------------
<PAGE>
ELECTRIC UTILITIES 4.7%
DQE 1,750,000 60,594
- --------------------------------------------------------------------------------
Duke Energy 1,850,000 92,732
- --------------------------------------------------------------------------------
Entergy 1,500,000 38,625
- --------------------------------------------------------------------------------
FirstEnergy 2,959,965 67,154
- --------------------------------------------------------------------------------
Niagara Mohawk * 1,949,500 27,171
- --------------------------------------------------------------------------------
Reliant Energy 2,150,000 49,181
- --------------------------------------------------------------------------------
Scottish Power ADR 1,798,000 50,344
- --------------------------------------------------------------------------------
Southern 3,500,000 82,250
- --------------------------------------------------------------------------------
Teco Energy 1,600,000 29,700
- --------------------------------------------------------------------------------
Unicom 2,300,000 77,050
- --------------------------------------------------------------------------------
574,801
- --------------------------------------------------------------------------------
Total Utilities 1,746,931
- --------------------------------------------------------------------------------
CONSUMER NONDURABLES 17.8%
- --------------------------------------------------------------------------------
COSMETICS 1.0%
International Flavors & Fragrances 3,300,000 124,575
- --------------------------------------------------------------------------------
124,575
- --------------------------------------------------------------------------------
BEVERAGES 1.7%
Anheuser-Busch 1,700,000 120,488
- --------------------------------------------------------------------------------
Brown-Forman (Class B) 1,500,000 85,875
- --------------------------------------------------------------------------------
206,363
- --------------------------------------------------------------------------------
<PAGE>
FOOD PROCESSING 6.3%
Campbell 2,000,000 77,375
- --------------------------------------------------------------------------------
General Mills 4,750,000 169,812
- --------------------------------------------------------------------------------
Heinz 2,800,000 111,475
- --------------------------------------------------------------------------------
Hershey Foods 2,250,000 106,875
- --------------------------------------------------------------------------------
Kellogg 1,900,000 58,544
- --------------------------------------------------------------------------------
McCormick 2,920,400 86,882
- --------------------------------------------------------------------------------
Quaker Oats 1,400,000 91,875
- --------------------------------------------------------------------------------
Unilever (EUR) 1,400,000 77,340
- --------------------------------------------------------------------------------
780,178
- --------------------------------------------------------------------------------
HOSPITAL SUPPLIES AND HOSPITAL MANAGEMENT 1.3%
Abbott Laboratories 2,250,000 $ 81,703
- --------------------------------------------------------------------------------
Becton, Dickinson 1,000,000 26,750
- --------------------------------------------------------------------------------
Smith & Nephew (GBP) 5,340,700 51,542
- --------------------------------------------------------------------------------
159,995
- --------------------------------------------------------------------------------
PHARMACEUTICALS 3.2%
American Home Products 4,832,900 190,597
- --------------------------------------------------------------------------------
Merck 800,000 53,650
- --------------------------------------------------------------------------------
Pharmacia & Upjohn 3,250,000 146,250
- --------------------------------------------------------------------------------
390,497
- --------------------------------------------------------------------------------
<PAGE>
MISCELLANEOUS CONSUMER PRODUCTS 4.3%
Armstrong World 1,800,000 60,075
- --------------------------------------------------------------------------------
Fortune Brands 1,800,000 59,513
- --------------------------------------------------------------------------------
Hasbro 2,879,200 54,885
- --------------------------------------------------------------------------------
Philip Morris 3,900,000 90,431
- --------------------------------------------------------------------------------
PPG Industries 1,300,000 81,331
- --------------------------------------------------------------------------------
Stanley Works 2,750,000 82,844
- --------------------------------------------------------------------------------
UST 4,000,000 100,750
- --------------------------------------------------------------------------------
529,829
- --------------------------------------------------------------------------------
Total Consumer Nondurables 2,191,437
- --------------------------------------------------------------------------------
CONSUMER SERVICES 6.6%
- --------------------------------------------------------------------------------
GENERAL MERCHANDISERS 0.8%
J.C. Penney 1,700,000 33,894
- --------------------------------------------------------------------------------
May Department Stores 1,850,000 59,662
- --------------------------------------------------------------------------------
93,556
- --------------------------------------------------------------------------------
SPECIALTY MERCHANDISERS 1.1%
Rite Aid 3,000,000 33,563
- --------------------------------------------------------------------------------
Toys "R" Us * 5,000,000 71,562
- --------------------------------------------------------------------------------
Tupperware 1,800,000 30,488
- --------------------------------------------------------------------------------
135,613
- --------------------------------------------------------------------------------
ENTERTAINMENT AND LEISURE 2.0%
Disney 5,000,000 146,250
- --------------------------------------------------------------------------------
Hilton 4,900,000 47,162
- --------------------------------------------------------------------------------
Reader's Digest (Class A) 1,900,000 55,575
- --------------------------------------------------------------------------------
248,987
- --------------------------------------------------------------------------------
<PAGE>
MEDIA AND COMMUNICATIONS 2.7%
Dow Jones 1,200,000 $ 81,600
- --------------------------------------------------------------------------------
Dun & Bradstreet 2,500,000 73,750
- --------------------------------------------------------------------------------
Knight-Ridder 2,100,000 124,950
- --------------------------------------------------------------------------------
R.R. Donnelley * 2,300,000 57,069
- --------------------------------------------------------------------------------
337,369
- --------------------------------------------------------------------------------
Total Consumer Services 815,525
- --------------------------------------------------------------------------------
CONSUMER CYCLICALS 5.5%
- --------------------------------------------------------------------------------
AUTOMOBILES AND RELATED 1.8%
Dana 1,200,000 35,925
- --------------------------------------------------------------------------------
Genuine Parts 3,000,000 74,437
- --------------------------------------------------------------------------------
GM 711,100 51,688
- --------------------------------------------------------------------------------
TRW 1,250,000 64,922
- --------------------------------------------------------------------------------
226,972
- --------------------------------------------------------------------------------
BUILDING AND REAL ESTATE 2.1%
Rouse 2,500,000 53,125
- --------------------------------------------------------------------------------
Simon DeBartolo Group, REIT 3,489,532 80,041
- --------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, REIT 3,855,200 90,597
- --------------------------------------------------------------------------------
Vornado Realty Trust, REIT 1,000,000 32,500
- --------------------------------------------------------------------------------
256,263
- --------------------------------------------------------------------------------
<PAGE>
MISCELLANEOUS CONSUMER DURABLES 1.6%
Eastman Kodak 2,000,000 132,500
- --------------------------------------------------------------------------------
Whirlpool 1,000,000 65,063
- --------------------------------------------------------------------------------
197,563
- --------------------------------------------------------------------------------
Total Consumer Cyclicals 680,798
- --------------------------------------------------------------------------------
TECHNOLOGY 4.0%
- --------------------------------------------------------------------------------
ELECTRONIC SYSTEMS 0.9%
Hewlett-Packard 1,000,000 113,938
- --------------------------------------------------------------------------------
113,938
- --------------------------------------------------------------------------------
INFORMATION PROCESSING 0.5%
COMPAQ Computer 2,000,000 54,125
- --------------------------------------------------------------------------------
54,125
- --------------------------------------------------------------------------------
OFFICE AUTOMATION 0.7%
Xerox 3,750,000 85,078
- --------------------------------------------------------------------------------
85,078
- --------------------------------------------------------------------------------
AEROSPACE AND DEFENSE 1.9%
Boeing 2,000,000 $ 83,125
- --------------------------------------------------------------------------------
Honeywell International 631,250 36,415
- --------------------------------------------------------------------------------
Lockheed Martin 5,250,000 114,844
- --------------------------------------------------------------------------------
234,384
- --------------------------------------------------------------------------------
Total Technology 487,525
- --------------------------------------------------------------------------------
CAPITAL EQUIPMENT 0.9%
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 0.4%
Hubbell (Class B) 2,100,000 57,225
- --------------------------------------------------------------------------------
57,225
- --------------------------------------------------------------------------------
<PAGE>
MACHINERY 0.5
Cooper Industries 1,500,000 60,656
- --------------------------------------------------------------------------------
60,656
- --------------------------------------------------------------------------------
Total Capital Equipment 117,881
- --------------------------------------------------------------------------------
BUSINESS SERVICES AND TRANSPORTATION 3.4%
- --------------------------------------------------------------------------------
RAILROADS 2.0%
Burlington Northern Santa Fe 1,241,700 30,111
- --------------------------------------------------------------------------------
Norfolk Southern 5,100,000 104,550
- --------------------------------------------------------------------------------
Union Pacific 2,700,000 117,788
- --------------------------------------------------------------------------------
252,449
- --------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES 1.4%
GATX 700,000 23,625
- --------------------------------------------------------------------------------
H&R Block 1,570,600 68,714
- --------------------------------------------------------------------------------
Waste Management 4,520,000 77,687
- --------------------------------------------------------------------------------
170,026
- --------------------------------------------------------------------------------
Total Business Services and Transportation 422,475
- --------------------------------------------------------------------------------
ENERGY 14.2%
- --------------------------------------------------------------------------------
ENERGY SERVICES 0.9%
Baker Hughes 5,500,000 115,844
- --------------------------------------------------------------------------------
115,844
- --------------------------------------------------------------------------------
EXPLORATION AND PRODUCTION 1.0%
Unocal 3,500,000 117,469
- --------------------------------------------------------------------------------
117,469
- --------------------------------------------------------------------------------
<PAGE>
INTEGRATED PETROLEUM - DOMESTIC 3.6%
Amerada Hess 2,187,800 $ 124,157
- --------------------------------------------------------------------------------
Atlantic Richfield 2,400,000 207,600
- --------------------------------------------------------------------------------
Phillips Petroleum 1,100,000 51,700
- --------------------------------------------------------------------------------
USX-Marathon 2,500,000 61,719
- --------------------------------------------------------------------------------
445,176
- --------------------------------------------------------------------------------
INTEGRATED PETROLEUM - INTERNATIONAL 8.7%
BP Amoco ADR 3,499,026 207,536
- --------------------------------------------------------------------------------
Chevron 1,900,000 164,587
- --------------------------------------------------------------------------------
Exxon Mobil 5,142,277 414,275
- --------------------------------------------------------------------------------
Royal Dutch Petroleum ADR 2,400,000 145,050
- --------------------------------------------------------------------------------
Texaco 2,600,000 141,213
- --------------------------------------------------------------------------------
1,072,661
- --------------------------------------------------------------------------------
Total Energy 1,751,150
- --------------------------------------------------------------------------------
PROCESS INDUSTRIES 11.1%
- --------------------------------------------------------------------------------
DIVERSIFIED CHEMICALS 3.0%
Dow Chemical 900,000 120,263
- --------------------------------------------------------------------------------
DuPont 2,300,000 151,512
- --------------------------------------------------------------------------------
Hercules 3,392,600 94,569
- --------------------------------------------------------------------------------
366,344
- --------------------------------------------------------------------------------
SPECIALTY CHEMICALS 3.4%
3M 1,500,000 146,812
- --------------------------------------------------------------------------------
CK Witco 2,487,760 33,274
- --------------------------------------------------------------------------------
Great Lakes Chemical 2,200,000 84,013
- --------------------------------------------------------------------------------
Imperial Chemical ADR 1,350,000 57,459
- --------------------------------------------------------------------------------
Pall 4,300,000 92,719
- --------------------------------------------------------------------------------
414,277
- --------------------------------------------------------------------------------
<PAGE>
PAPER AND PAPER PRODUCTS 2.9%
Consolidated Papers 2,500,000 79,531
- --------------------------------------------------------------------------------
Fort James 4,000,000 109,500
- --------------------------------------------------------------------------------
Kimberly-Clark 2,684,100 175,138
- --------------------------------------------------------------------------------
364,169
- --------------------------------------------------------------------------------
FOREST PRODUCTS 1.8%
International Paper 3,920,400 221,257
- --------------------------------------------------------------------------------
221,257
- --------------------------------------------------------------------------------
Total Process Industries 1,366,047
- --------------------------------------------------------------------------------
BASIC MATERIALS 2.1%
- --------------------------------------------------------------------------------
METALS 1.5%
Inco * 1,900,000 $ 44,650
- --------------------------------------------------------------------------------
Phelps Dodge 1,000,000 67,125
- --------------------------------------------------------------------------------
Reynolds Metals 1,000,000 76,625
- --------------------------------------------------------------------------------
188,400
- --------------------------------------------------------------------------------
MINING 0.6%
Newmont Mining 2,750,000 67,375
- --------------------------------------------------------------------------------
67,375
- --------------------------------------------------------------------------------
Total Basic Materials 255,775
- --------------------------------------------------------------------------------
Total Common Stocks (Cost $9,419,467) 11,732,697
<PAGE>
SHORT-TERM INVESTMENTS 5.5%
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS 5.5%
Reserve Investment Fund, 6.16%, #+ 674,904,533 674,905
- --------------------------------------------------------------------------------
Total Short-Term Investments (Cost $674,905) 674,905
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
100.7% of Net Assets (Cost $10,094,372) $ 12,407,602
OTHER ASSETS LESS LIABILITIES (86,389)
NET ASSETS $ 12,321,213
- -----------------------------------------------------------------
# Seven-day yield
+ Affiliated company
* Non-income producing
ADR American Depository Receipt
REIT Real Estate Investment Trust
GBP British sterling
EUR Euro
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE EQUITY INCOME FUND December 31, 1999
- --------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------
In thousands
ASSETS
Investments in securities, at value
Affiliated companies (cost $674,905) $ 674,905
Other companies (cost $9,419,467) 11,732,697
----------
Total investments in securities 12,407,602
Other assets 45,045
----------
Total assets 12,452,647
LIABILITIES
Total liabilities 131,434
----------
NET ASSETS $ 12,321,213
----------
<PAGE>
NET ASSETS CONSIST OF:
Accumulated net investment income - net of distributions $ 1,761
Accumulated net realized gain/loss - net of distributions 308,372
Net unrealized gain (loss) 2,313,238
Paid-in-capital applicable to 496,633,485 shares of no par
value capital stock outstanding; unlimited shares authorized 9,697,842
----------
NET ASSETS $ 12,321,213
----------
NET ASSET VALUE PER SHARE $ 24.81
----------
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE EQUITY INCOME FUND
- --------------------------------
STATEMENT OF OPERATIONS
- -----------------------
In thousands
Year
Ended
12/31/99
-------------
INVESTMENT INCOME (LOSS)
Income
Dividend $ 328,337
Interest (including $32,235 from affiliated companies) 32,572
- --------------------------------------------------------------------------------
Total income 360,909
- --------------------------------------------------------------------------------
Expenses
Investment management 75,676
Shareholder servicing 25,058
Prospectus and shareholder reports 1,113
Custody and accounting 453
Registration 73
Trustees 34
Legal and audit 28
Miscellaneous 83
- --------------------------------------------------------------------------------
Total expenses 102,518
Expenses paid indirectly (38)
- --------------------------------------------------------------------------------
Net expenses 102,480
- --------------------------------------------------------------------------------
Net investment income (loss) 258,429
- --------------------------------------------------------------------------------
<PAGE>
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss)
Securities 1,122,226
Foreign currency transactions (102)
- --------------------------------------------------------------------------------
Net realized gain (loss) 1,122,124
- --------------------------------------------------------------------------------
Change in net unrealized gain or loss
Securities (885,678)
Other assets and liabilities
denominated in foreign currencies 5
- --------------------------------------------------------------------------------
Change in net unrealized gain or loss (885,673)
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 236,451
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 494,880
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE EQUITY INCOME FUND
- --------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
Year
Ended
12/31/99 12/31/98
-------- --------
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 258,429 $ 305,713
Net realized gain (loss) 1,122,124 784,665
Change in net unrealized gain or loss (885,673) 68,428
- --------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 494,880 1,158,806
- --------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (254,140) (309,762)
Net realized gain (931,329) (730,134)
- --------------------------------------------------------------------------------
Decrease in net assets from distributions (1,185,469) (1,039,896)
- --------------------------------------------------------------------------------
Capital share transactions *
Shares sold 2,127,388 3,094,274
Distributions reinvested 1,142,884 1,005,143
Shares redeemed (3,753,520) (3,494,462)
- --------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions (483,248) 604,955
- --------------------------------------------------------------------------------
<PAGE>
Net Assets
Increase (decrease) during period (1,173,837) 723,865
Beginning of period 13,495,050 12,771,185
- --------------------------------------------------------------------------------
End of period $12,321,213 $ 13,495,050
================================================================================
*Share information
Shares sold 78,259 115,398
Distributions reinvested 45,473 38,342
Shares redeemed (139,811) (130,881)
- --------------------------------------------------------------------------------
Increase (decrease) in shares outstanding (16,079) 22,859
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE EQUITY INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS December 31, 1999
- -----------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------
T. Rowe Price Equity Income Fund (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company and commenced operations on October 31, 1985.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company industry;
these principles may require the use of estimates by fund management.
VALUATION Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day the valuations are
made. A security which is listed or traded on more than one exchange is valued
at the quotation on the exchange determined to be the primary market for such
security. Listed securities not traded on a particular day and securities
regularly traded in the over-the-counter market are valued at the mean of the
latest bid and asked prices. Other equity securities are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Trustees, or by persons delegated by the Board, best to reflect fair value.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Trustees.
<PAGE>
AFFILIATED COMPANIES As defined by the Investment Company Act of 1940, an
affiliated company is one in which the fund owns at least 5% of
the outstanding voting securities.
CURRENCY TRANSLATION Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such transactions.
The effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and losses.
OTHER Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles. Expenses paid indirectly reflect credits earned
on daily uninvested cash balances at the custodian and are used to reduce the
fund's custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
- --------------------------------
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $2,746,375,000 and $4,213,670,000, respectively, for the
year ended December 31, 1999.
NOTE 3 - FEDERAL INCOME TAXES
- -----------------------------
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
At December 31, 1999, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$10,094,372,000. Net unrealized gain aggregated $2,313,230,000 at period-end, of
which $3,190,281,000 related to appreciated investments and $877,051,000 to
depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
- -----------------------------------
The investment management agreement between the fund and T. Rowe Price
Associates, Inc. (the manager) provides for an annual investment management fee,
of which $6,028,000 was payable at December 31, 1999. The fee is computed daily
and paid monthly, and consists of an individual fund fee equal to 0.25% of
average daily net assets and a group fee. The group fee is based on the combined
assets of certain mutual funds sponsored by the manager or Rowe Price-Fleming
International, Inc. (the group). The group fee rate ranges from 0.48% for the
first $1 billion of assets to 0.295% for assets in excess of $120 billion. At
December 31, 1999, and for the year then ended, the effective annual group fee
rate was 0.32%. The fund pays a pro-rata share of the group fee based on the
ratio of its net assets to those of the group.
<PAGE>
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund receives
certain other services. The manager computes the daily share price and maintains
the financial records of the fund. T. Rowe Price Services, Inc. is the fund's
transfer and dividend disbursing agent and provides shareholder and
administrative services to the fund. T. Rowe Price Retirement Plan Services,
Inc. provides subaccounting and recordkeeping services for certain retirement
accounts invested in the fund. The fund incurred expenses pursuant to these
related party agreements totaling approximately $18,827,000 for the year ended
Decemb er 31, 1999, of which $1,744,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual
funds (underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum)
may invest. Spectrum does not invest in the underlying funds for the purpose of
exercising management or control. Expenses associated with the operation of
Spectrum are borne by each underlying fund to the extent of estimated savings to
it and in proportion to the average daily value of its shares owned by Spectrum,
pursuant to special servicing agreements between and among Spectrum, the
underlying funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum
International, Rowe Price-Fleming International. Spectrum Growth Fund and
Spectrum Income Fund held approximately 5.7% of the outstanding shares of the
fund at December 31, 1999. For the year then ended, the fund was allocated
$1,617,000 of Spectrum expenses, $152,000 of which was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve Funds
are offered as cash management options only to mutual funds and other accounts
managed by T. Rowe Price and its affiliates and are not available to the public.
The Reserve Funds pay no investment management fees. Distributions from the
Reserve Funds to the fund for the year ended December 31, 1999, totaled
$32,235,000 and are reflected as interest income in the accompanying Statement
of Operations.
<PAGE>
================================================================================
T. ROWE PRICE EQUITY INCOME FUND
- --------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
T. ROWE PRICE EQUITY INCOME FUND
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of T. Rowe Price Equity Income Fund
(the "Fund") at December 31, 1999, and the results of its operations, the
changes in its net assets and the financial highlights for each of the fiscal
periods presented, in conformity with accounting principles generally accepted
in the United States. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with custodians, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 20, 2000
<PAGE>
================================================================================
T. ROWE PRICE EQUITY INCOME FUND
- --------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 12/31/99
- -----------------------------------------------------------
We are providing this information as required by the Internal Revenue Code.
The amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund's distributions to shareholders included:
* $113,684,000 from short-term capital gains,
* $817,645,000 from long-term capital gains, subject to the 20%
rate gains category,
For corporate shareholders, $291,348,000 of the fund's distributed income
and short-term capital gains qualified for the dividends-received deduction.
================================================================================
T. ROWE PRICE SHAREHOLDER SERVICES
- ----------------------------------
INVESTMENT SERVICES AND INFORMATION
- -----------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
---------------------------------------
BY PHONE 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
IN PERSON Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
----------------
CHECKING Available on most fixed income funds ($500 minimum).
AUTOMATIC INVESTING From your bank account or paycheck.
AUTOMATIC WITHDRAWAL Scheduled, automatic redemptions.
DISTRIBUTION OPTIONS Reinvest all, some, or none of your distributions.
AUTOMATED 24-HOUR SERVICES Including Tele*Access [RegistrationMark] and the
T. Rowe Price Web site on the Internet. Address: www.troweprice.com
BROKERAGE SERVICES*
-------------------
<PAGE>
INDIVIDUAL INVESTMENTS Stocks, bonds, options, precious metals, and other
securities at a savings -over full-service commission rates. **
INVESTMENT INFORMATION
----------------------
COMBINED STATEMENT Overview of all your accounts with T. Rowe Price.
SHAREHOLDER REPORTS Fund managers' reviews of their strategies and results.
T. ROWE PRICE REPORT Quarterly investment newsletter discussing markets and
financial strategies.
PERFORMANCE UPDATE Quarterly review of all T. Rowe Price fund results.
INSIGHTS Educational reports on investment strategies and financial
markets.
INVESTMENT GUIDES Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a September 1999 survey for representative-assisted
stock trades. Services vary by firm, and commissions may vary
depending on size of order.
================================================================================
T. Rowe Price Mutual Funds
- --------------------------
STOCK FUNDS
- -----------
DOMESTIC
- --------
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
<PAGE>
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total Equity Market Index
Value
INTERNATIONAL/GLOBAL
- --------------------
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
- ----------
DOMESTIC TAXABLE
- ----------------
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
DOMESTIC TAX-FREE
- -----------------
California Tax-Free Bond
Florida Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
<PAGE>
INTERNATIONAL/GLOBAL
- --------------------
Emerging Markets Bond
Global Bond
International Bond
MONEY MARKET FUNDS
- ------------------
TAXABLE
- -------
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
TAX-FREE
- --------
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
- -------------------
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
- ---------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
funds.
Please call for a prospectus. Read it carefully before investing.
<PAGE>
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by SECURITY
BENEFIT LIFE INSURANCE COMPANY. In New York, it [#FSB201(11-96)] is issued by
FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
================================================================================
T. ROWE PRICE ADVISORY SERVICES AND RETIREMENT RESOURCES
- --------------------------------------------------------
ADVISORY SERVICES,RETIREMENT RESOURCES
--------------------------------------
T. Rowe Price is your full-service retirement specialist.
We have developed unique advisory services that can help
you meet the most difficult retirement challenges. Our
broad array of retirement plans is suitable for
individuals, the self-employed, small businesses,
corporations, and nonprofit organizations. We also provide
recordkeeping, communications, and investment management
services, and our educational materials, self-help
planning guides, and software tools are recognized as
among the industry's best. For information or to request
literature, call us at 1-800-638-5660, or visit our Web
site at WWW.TROWEPRICE.COM.
ADVISORY SERVICES
-----------------
T. ROWE PRICE RETIREMENT INCOME MANAGER [SM] helps
retirees or those within two years of retirement determine
how much income they can take in retirement. The program
uses extensive statistical analysis and the input of
financial planning professionals to suggest an income plan
that best meets your objectives.
T. ROWE PRICE ROLLOVER INVESTMENT SERVICE offers asset
allocation advice to those planning a major change in
their qualified retirement plans, such as a 401(k)
rollover from a previous employer or an IRA transfer.
<PAGE>
RETIREMENT RESOURCES AT T. ROWE PRICE
-------------------------------------
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
PLANNING AND INFORMATIONAL GUIDES
---------------------------------
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
INSIGHTS REPORTS
----------------
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
SOFTWARE PACKAGES
-----------------
T. Rowe Price Retirement Planning
AnalyzerTM CD-ROM or diskette $19.95.
To order, please call
1-800-541-5760. Also available
on the Internet for $9.95.
T. Rowe Price Variable Annuity AnalyzerTM
CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. ROWE PRICE IMMEDIATE VARIABLE ANNUITY (INCOME ACCOUNT)
INVESTMENT KITS
---------------
We will be happy to send you one of our easy-to-follow
investment kits when you are ready to invest in any T.
Rowe Price retirement vehicle, including IRAs, qualified
plans, small-business plans, or our no-load variable
annuities.
<PAGE>
================================================================================
T. ROWE PRICE INSIGHTS REPORTS
- ------------------------------
THE FUNDAMENTALS OF INVESTING
-----------------------------
Whether you are unsure how to get started or are saving for a specific
goal, such as retirement or college, the T. Rowe Price Insights series
can help you make informed investment decisions. These reports,
written in plain English about fundamental investment topics, can be
useful at every stage of your investment journey. They cover a range
of topics, from the basic, such as getting started with mutual funds,
to the more advanced, such as managing risk through diversification or
buying individual securities through a broker. To request one or more
Insights, call us at 1-800-638-5660.
INSIGHTS REPORTS
----------------
GENERAL INFORMATION
The ABCs of Giving
Back to Basics: The ABCs of Investing
The Challenge of Preparing for Retirement
Financial Planning After Retirement
Getting Started: Investing With Mutual Funds
The Roth IRA: A Review
Tax Information for Mutual Fund Investors
INVESTMENT STRATEGIES
---------------------
Conservative Stock Investing
Dollar Cost Averaging
Equity Index Investing
Growth Stock Investing
Investing for Higher Yield
Managing Risk Through Diversification
The Power of Compounding
Value Investing
<PAGE>
TYPES OF SECURITIES
-------------------
The Basics of International Stock Investing
The Basics of Tax-Free Investing
The Fundamentals of Fixed Income Investing
Global Bond Investing
Investing in Common Stocks
Investing in Emerging Growth Stocks
Investing in Financial Services Stocks
Investing in Health Care Stocks
Investing in High-Yield Municipal Bonds
Investing in Money Market Securities
Investing in Mortgage-Backed Securities
Investing in Natural Resource Stocks
Investing in Science and Technology Stocks
Investing in Small-Company Stocks
Understanding Derivatives
Understanding High-Yield "Junk" Bonds
BROKERAGE INSIGHTS
------------------
Combining Individual Securities With Mutual Funds
Getting Started: An Introduction to Individual Securities
What You Should Know About Bonds
What You Should Know About Margin and Short-Selling
What You Should Know About Options
What You Should Know About Stocks
T. Rowe Price Insights are also available for reading or downloading
on the Internet at WWW.TROWEPRICE.COM.
<PAGE>
================================================================================
FOR FUND AND ACCOUNT INFORMATION
OR TO CONDUCT TRANSACTIONS,
24 HOURS, 7 DAYS A WEEK
By touch-tone telephone
TELE*ACCESS 1-800-638-2587
By Account Access on the Internet
WWW.TROWEPRICE.COM/ACCESS
FOR ASSISTANCE
WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132
TO OPEN A BROKERAGE ACCOUNT
OR OBTAIN INFORMATION, CALL:
1-800-638-5660
INTERNET ADDRESS:
www.troweprice.com
PLAN ACCOUNT LINES FOR RETIREMENT
PLAN PARTICIPANTS:
The appropriate 800 number appears on
your retirement account statement.
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus appropriate
to the fund or funds covered in this
report.
WALK-IN INVESTOR CENTERS:
For directions, call 1-800-225-5132
or visit our Web site
<PAGE>
BALTIMORE AREA
DOWNTOWN
101 East Lombard Street
OWINGS MILLS
Three Financial Center
4515 Painters Mill Road
BOSTON AREA
386 Washington Street
Wellesley
COLORADO SPRINGS
4410 ArrowsWest Drive
LOS ANGELES AREA
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
TAMPA
4200 West Cypress Street
10th Floor
WASHINGTON, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price Investment Services, Inc., Distributor. F71-050 12/31/99
