<PAGE>
Annual Report
GNMA
FUND
MAY 31, 2000
[LOGO OF T. ROWE PRICE]
T. ROWE PRICE
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Report Highlights
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GNMA Fund
. The strong economy and rising interest rates posed challenges for
fixed-income investors,but mortgage-backed bonds delivered positive though
modest returns.
. Fund results for the 6- and 12-month periods were ahead of the Lipper
average for competing funds.
. Our holdings of higher-coupon bonds helped performance relative to the
competition.
. The growing yield advantage of GNMAs over comparable Treasuries attracted
investors toward the end of the period.
. The Fed may tighten further, but we remain optimistic about the appeal of
mortgage-backed securities through the rest of 2000.
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.
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FELLOW SHAREHOLDERS
The year ended May 31, 2000, was difficult for fixed-income investors. Strong
economic growth triggered fears of inflation, which prompted the Federal Reserve
to raise key short-term interest rates six times since June 1999. Despite
falling bond prices and rising yields, mortgage-backed securities managed to
deliver positive, though modest, returns for the past six months and year.
MARKET ENVIRONMENT
During the past six months, the yield on 10-year Treasury bonds
rose eight basis points from 6.19% to 6.27%, while the two-year
Treasury yield rose 66 basis points from 6.01% to 6.67%. (One
hundred basis points equal one percent.) Meanwhile, the 30-year
Treasury bond actually rallied, pushing its yield down 29 basis
points from 6.30% to 6.01% at the end of May. The U.S. Treasury,
flush with cash from a buoyant economy and positive tax receipts,
decided to reduce the country's level of outstanding debt by
buying 30-year bonds, which drove their prices higher. Together,
these shifts in interest rates created an inverted yield curve,
with shorter-term rates exceeding long-term rates. In the past,
this has sometimes signaled the onset of slower growth or, more
rarely, a recession, but the factors just described were
responsible for this latest occurrence.
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INTEREST RATE LEVELS
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[GRAPH]
Current 10-Year
Coupon GNMA Treasury Note
5/31/99 7.05 5.62
7.27 5.78
7.61 5.9
Aug-99 7.77 5.97
7.48 5.88
7.51 6.02
Nov-99 7.64 6.19
7.83 6.44
8.14 6.67
Feb-00 8.01 6.41
7.77 6
8 6.21
5/31/00 8 6.27
In our segment of the fixed-income market, the 30-year mortgage
rate rose from 7.75% last November to 8.62% at the end of the
period, after reaching a two-year high of 8.64% earlier in May.
When compared with the yield on 10-year Treasuries, the current
coupon GNMA had a yield advantage of 173 basis points at the end
of May
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versus only 145 basis points in November. (Mortgage-backed bonds
are normally compared with 10-year Treasuries, since the average
life of a 30-year mortgage is closest to them in maturity because
of home sales and prepayments.) The yield differential had grown
as wide as 189 basis points in April due to a couple of factors.
The Fed's continuing program of monetary tightening had driven
rates generally higher throughout the fixed-income market, with
the exception of long-term Treasury bonds. The government's
buyback of 30-year Treasuries led to concerns about a dwindling
supply of these bonds, prompting investors to increase their
purchases of longer-term Treasuries, which resulted in the
widening gap in yields. Later in the period, however, the
relatively attractive yields on mortgage-backed bonds enticed
investors back and enabled GNMAs to generate positive returns.
PERFORMANCE AND STRATEGY REVIEW
For the 6- and 12-month periods ended May 31, 2000, the fund
returned 1.67% and 2.13%, respectively, modestly ahead of the
Lipper GNMA Funds Average in both periods. The fund's share price
declined $0.15 to $8.92 since the end of November, but the
dividend of $0.30 per share more than offset this and pushed the
total return into positive territory.
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PERFORMANCE COMPARISON
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Periods Ended 5/31/00 6 Months 12 Months
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GNMA Fund 1.67% 2.13%
Lipper GNMA Funds Average 1.43 2.04
Early in the period, we built an overweighted position in 7.5%
and 8% GNMAs, which worked in our favor as securities with higher
coupons outperformed those with lower coupons. We eliminated all
Treasury holdings from the portfolio, which turned out to be
premature as Treasuries have done well so far this year. However,
we believe the relatively attractive yields available on GNMAs
will benefit results during the coming months. In addition, we
sold some older bonds with low coupons selling at a discount to
par value, and bought less-seasoned securities with somewhat
higher coupons, which contributed positively to performance. In
March we sold some of the 8% bonds mentioned earlier and
repurchased 6.5% bonds at more attractive prices.
Liquid securities generally outperformed structured products
(collateralized mortgage obligations or CMOs, project loans, and
construction
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loans) except in December. We swapped one of our permanent
project loans for a new construction project loan, which helped
performance. Our sale of some structured securities improved the
fund's overall liquidity and aided results as these bonds
continued to weaken so far this year. In April we bought some
15-year GNMA bonds, which we felt were undervalued relative to
30-year securities.
Refinancing risk was not an issue during this period of rising
mortgage rates, since homeowners usually refinance their
mortgages when rates decline. As usual, we will continue to look
for new opportunities in the mortgage-backed securities market in
an effort to increase the fund's overall value.
OUTLOOK
With the fed funds rate 175 basis points higher today than it was
a year ago, there have been some signs that the economy may be
starting to slow somewhat. To date, inflation appears to be
contained at an acceptable level, but the Fed will surely remain
vigilant in its efforts to keep it from accelerating without
pushing the economy into a recession.
While we are still uncertain about whether the Fed's series of
rate hikes is coming to an end, we believe that the yield
advantage provided by mortgage-backed securities is extremely
attractive. In addition, there is little refinancing risk in this
current environment, and mortgage-backed bonds continue to be one
of the most liquid sectors of the fixed-income market. With all
of these factors in place, we remain optimistic about prospects
for GNMAs through the remainder of the year.
Thank you for investing with T. Rowe Price.
Respectfully submitted,
/s/ Deborah L. Boyer
Deborah L. Boyer
Chairman of the Investment Advisory Committee
June 23, 2000
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T. ROWE PRICE GNMA FUND
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PORTFOLIO HIGHLIGHTS
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KEY STATISTICS
11/30/99 5/31/00
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Price Per Share $9.07 $8.92
Dividends Per Share
For 6 months 0.30 0.30
For 12 months 0.60 0.60
Dividend Yield *
For 6 months 6.69% 6.76%
For 12 months 6.83 6.89
30-Day Standardized Yield 6.49 6.72
Weighted Average Maturity (years)** 9.0 8.9
Weighted Average Effective Duration (years) 5.0 4.9
Weighted Average Quality *** AAA AAA
* Dividends earned and reinvested for the periods indicated are annualized
and divided by the fund's net asset value per share at the end of the
period.
** Based on prepayment-adjusted life of GNMA securities.
*** Based on T. Rowe Price research.
SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
11/30/99 5/31/00
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GNMA Securities 98% 99%
Other Government Agency Securities 3 1
Short-Term Obligations 2 1
U.S. Treasury Obligations 1 -
Other Assets Less Liabilities - 4 - 1
Total 100% 100%
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T. ROWE PRICE GNMA FUND
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PERFORMANCE COMPARISON
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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.
GNMA FUND
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[GRAPH]
Salomon Smith Barney Lipper GNMA
GNMA Fund GNMA Index Funds Average
5/31/90 10,000 10,000 10,000
5/31/91 11,301 11,387 11,227
5/31/92 12,663 12,864 12,528
5/31/93 13,756 14,112 13,687
5/31/94 13,654 14,120 13,613
5/31/95 15,309 15,717 15,024
5/31/96 15,878 16,564 15,675
5/31/97 17,222 18,105 16,993
5/31/98 18,938 19,834 18,625
5/31/99 19,674 20,816 19,344
5/31/00 20,094 21,502 19,801
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AVERAGE ANNUAL COMPOUND TOTAL RETURN
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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 5/31/00 1 Year 3 Years 5 Years 10 Years
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GNMA Fund 2.13% 5.27% 5.59% 7.23%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
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T. ROWE PRICE GNMA FUND
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FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
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Year
Ended
5/31/00 5/31/99 5/31/98 5/31/97 5/31/96
NET ASSET VALUE
Beginning of period $ 9.33 $ 9.57 $ 9.30 $ 9.19 $ 9.51
Investment activities
Net investment income (loss) 0.60 0.61 0.63 0.65 0.67
Net realized and
unrealized gain (loss) (0.41) (0.24) 0.27 0.11 (0.32)
Total from
investment activities 0.19 0.37 0.90 0.76 0.35
Distributions
Net investment income (0.60) (0.61) (0.63) (0.63) (0.67)
Tax return of capital -- -- -- (0.02) --
Total distributions (0.60) (0.61) (0.63) (0.65) (0.67)
NET ASSET VALUE
End of period $ 8.92 $ 9.33 $ 9.57 $ 9.30 $ 9.19
Ratios/Supplemental Data
Total return# 2.13% 3.88% 9.97% 8.46% 3.72%
Ratio of total expenses to
average net assets 0.71% 0.71% 0.70% 0.74% 0.74%
Ratio of net investment
income (loss) to average
net assets 6.61% 6.36% 6.67% 6.98% 7.04%
Portfolio turnover rate 63.8% 86.7% 120.6% 115.9% 113.6%
Net assets, end of period
(in millions) $ 1,052 $ 1,111 $ 1,123 $ 944 $ 904
# 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.
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T. ROWE PRICE GNMA FUND May 31, 2000
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STATEMENT OF NET ASSETS Par/Shares Value
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In thousands
U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 100.5%
U.S. Government Guaranteed Obligations 100.5%
Government National Mortgage Assn.
I
Zero Coupon, 3/16/28 $ 8,001 $ 5,133
6.00%, 1/15/26 - 2/15/29 69,967 63,926
6.50%, 12/15/23 - 3/15/29 185,019 173,190
7.00%, 4/15/17 - 3/15/29 265,968 255,420
7.50%, 3/15/07 - 2/15/29 237,506 233,882
8.00%, 3/15/14 - 3/15/30 99,867 100,385
8.50%, 12/15/04 - 12/15/21 15,741 16,075
9.00%, 6/15/18 - 5/15/24 9,913 10,294
9.50%, 8/15/09 - 12/15/24 4,286 4,478
10.00%, 10/15/15 - 7/15/24 17,670 18,743
10.50%, 3/15/13 - 10/15/21 1,551 1,678
11.00%, 2/15/10 - 6/15/19 371 405
11.50%, 11/15/10 - 7/15/20 1,725 1,899
12.00%, 5/15/11 - 5/15/15 2,291 2,540
12.50%, 6/15/10 - 1/15/15 782 873
13.00%, 4/15/11 - 2/15/15 337 378
13.50%, 5/15/10 - 9/15/14 625 702
II
6.50%, 3/20/26 - 11/20/28 17,734 16,553
7.00%, 8/20/29 7,422 7,096
8.00%, 10/20/24 - 6/20/29 16,105 16,085
8.50%, 7/20/16 - 6/20/29 7,721 7,859
10.00%, 9/20/16 - 5/20/25 626 660
11.00%, 8/20/14 - 7/20/20 711 771
11.50%, 12/20/13 - 7/20/20 650 714
12.50%, 10/20/13 - 1/20/16 86 96
13.00%, 10/20/13 - 9/20/15 310 348
Construction Loan, I
6.625%, 5/1/28 9,308 8,359
6.73%, 1/1/29 18,232 16,801
6.75%, 3/1 - 5/1/29 18,043 16,365
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T. ROWE PRICE GNMA FUND
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Par/Shares Value
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Government National Mortgage Assn. In thousands
GPM, I
8.75%, 6/15/17 - 11/15/21 $ 285 $ 293
9.00%, 5/15/09 119 121
9.25%, 10/15/16 - 3/15/21 2,394 2,493
9.50%, 10/15/09 1,210 1,253
9.75%, 4/15/16 - 2/15/21 1,091 1,151
10.75%, 2/15/16 - 4/15/19 400 436
11.00%, 9/15/10 77 83
11.50%, 2/15/13 34 37
12.00%, 10/15/10 - 1/15/13 150 166
12.25%, 5/15/14 - 2/15/15 93 104
12.50%, 4/15/10 - 10/15/11 242 268
12.75%, 11/15/13 - 12/15/14 142 161
GPM, II
9.25%, 2/20/16 58 60
9.75%, 3/20/21 31 32
10.25%, 3/20 - 9/20/16 26 27
11.00%, 9/20/13 - 1/20/14 32 34
12.25%, 6/20/14 - 10/20/15 61 68
12.75%, 10/20/13 - 2/20/15 106 118
Project Loan, I
6.70%, 4/15/34 2,382 2,173
7.37%, 8/15/33 9,579 9,226
8.00%, 11/15/17 5,648 5,687
REMIC
6.50%, 10/20/27 9,849 8,762
7.00%, 5/16/24 8,400 8,017
7.50%, 7/16/12 6,180 6,049
Interest Only, 8.00%, 6/16/23** 3,644 637
TBA, I
Construction Loan, 6.625%, 7/3/00 714 641
Construction Loan, 6.73%, 7/3/00 1,591 1,467
Construction Loan, 6.75%, 12/29/00 - 4/30/01 3,986 3,604
8.00%, 1/15/30 10,000 10,025
U.S. Department of Veteran Affairs
REMIC
VR, 9.56%, 3/15/25 2,376 2,500
7.25%, 10/15/08 10,545 10,331
Total U.S. Government Mortgage-Backed
Securities (Cost $1,092,274) 1,057,732
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T. ROWE PRICE GNMA FUND
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Par/Shares Value
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MONEY MARKET FUNDS 0.6%
Government Reserve Investment Fund, 6.08% # 5,751 $ 5,751
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Total Money Market Funds (Cost $5,751) 5,751
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Total Investments in Securities
101.1% of Net Assets (Cost $1,098,025) $ 1,063,483
Other Assets Less Liabilities (11,325)
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NET ASSETS $ 1,052,158
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Net Assets Consist of:
Accumulated net investment income - net of distributions $ (5,445)
Accumulated net realized gain/loss - net of distributions (25,975)
Net unrealized gain (loss) (34,542)
Paid-in-capital applicable to 117,899,114 no par
value shares of beneficial interest outstanding;
unlimited number of shares authorized 1,118,120
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NET ASSETS $ 1,052,158
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NET ASSET VALUE PER SHARE $ 8.92
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** For Interest Only securities, par amount represents notional principal on
which the fund receives interest.
# Seven-day yield
GPM Graduated Payment Mortgage
REMIC Real Estate Mortgage Investment Conduit
TBA To be announced security was purchased on a forward commitment basis.
VR Variable Rate
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T. ROWE PRICE GNMA FUND
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STATEMENT OF OPERATIONS
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In thousands
Year
Ended
5/31/00
Investment Income (Loss)
Interest income $ 79,353
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Expenses
Investment management 5,086
Shareholder servicing 2,079
Custody and accounting 341
Prospectus and shareholder reports 90
Registration 21
Legal and audit 17
Trustees 9
Miscellaneous 8
Total expenses 7,651
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Net investment income (loss) 71,702
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Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities (14,162)
Change in net unrealized gain or loss on securities (35,173)
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Net realized and unrealized gain (loss) (49,335)
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INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 22,367
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The accompanying notes are an integral part of these financial statements.
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T. ROWE PRICE GNMA FUND
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STATEMENT OF CHANGES IN NET ASSETS
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In thousands
Year
Ended
5/31/00 5/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 71,702 $ 72,733
Net realized gain (loss) (14,162) 6,212
Change in net unrealized gain or loss (35,173) (34,385)
Increase (decrease) in net assets from operations 22,367 44,560
Distributions to shareholders
Net investment income (71,702) (72,733)
Capital share transactions*
Shares sold 209,346 211,218
Distributions reinvested 62,267 43,992
Shares redeemed (280,884) (239,415)
Increase (decrease) in net assets from capital
share transactions (9,271) 15,795
Net Assets
Increase (decrease) during period (58,606) (12,378)
Beginning of period 1,110,764 1,123,142
End of period $1,052,158 $ 1,110,764
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*Share information
Shares sold 23,137 22,140
Distributions reinvested 6,894 4,624
Shares redeemed (31,162) (25,120)
Increase (decrease) in shares outstanding (1,131) 1,644
The accompanying notes are an integral part of these financial statements.
11
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T. ROWE PRICE GNMA FUND
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May 31, 2000
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NOTES TO FINANCIAL STATEMENTS
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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price GNMA Fund (the fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment
company and commenced operations on November 26, 1985. The fund seeks high
current income consistent with maximum credit protection and moderate
price fluctuation by investing principally in mortgage-backed securities
issued by the Government National Mortgage Association (GNMA).
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 Debt securities are generally traded in the over-the-counter
market. Investments in securities with original maturities of one year or
more are stated at fair value as furnished by dealers who make markets in
such securities or by an independent pricing service, which considers
yield or price of bonds of comparable quality, coupon, maturity, and type,
as well as prices quoted by dealers who make markets in such securities.
Securities with original maturities of less than one year are stated at
fair value, which is determined by using a matrix system that establishes
a value for each security based on money market yields.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
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.
Premiums and Discounts Premiums and discounts on debt securities, other
than mortgage-backed securities (MBS), are amortized for both financial
reporting and tax purposes. Premiums and discounts on all MBS are
recognized upon disposition or principal repayment as gain or loss for
financial reporting purposes. For tax purposes, premiums and discounts on
MBS acquired on or before June 8, 1997, are recognized upon disposition or
principal repayment as ordinary income. For MBS acquired after June 8,
1997, premiums are recognized as gain or loss; discounts are recognized as
gain or loss, except to the extent of accrued market discount.
12
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T. ROWE PRICE GNMA FUND
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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. 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. Credits earned on daily
uninvested cash balances at the custodian are used to reduce the fund's
custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of U.S. government securities, aggregated $706,702,000
and $757,834,000, respectively, for the year ended May 31, 2000.
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. As of May 31, 2000, the fund has capital loss
carryforwards for federal income tax purposes of $13,774,000, of which
$1,569,000 expires in 2002, $1,748,000 in 2003, and $10,457,000 thereafter
through 2008. The fund intends to retain gains realized in future periods
that may be offset by available capital loss carryforwards.
At May 31, 2000, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$1,098,025,000. Net unrealized loss aggregated $34,542,000 at period-end,
of which $4,208,000 related to appreciated investments and $38,750,000 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 $414,000 was payable at May 31, 2000. The fee is
computed daily and paid monthly, and consists of an individual fund fee
equal to 0.15% of average daily net assets and a group fee. The group fee
is based on the com-
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T. ROWE PRICE GNMA FUND
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bined 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 May 31, 2000, 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.
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 $1,043,000 for the year ended May 31,
2000, of which $112,000 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 Income Fund held approximately 40.4%
of the outstanding shares of the fund at May 31, 2000. For the year then
ended, the fund was allocated $980,000 of Spectrum expenses, $100,000 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
May 31, 2000, totaled $1,295,000 and are reflected as interest income in
the accompanying Statement of Operations.
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T. ROWE PRICE GNMA FUND
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---------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
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To the Board of Trustees and Shareholders of
T. Rowe Price GNMA Fund
In our opinion, the accompanying statement of net assets 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 GNMA Fund (the "Fund") at May 31, 2000, 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 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
May 31, 2000 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
June 19, 2000
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T. ROWE PRICE SHAREHOLDER SERVICES
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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 and the T.
Rowe Price Web site on the Internet. Address:
www.troweprice.com
BROKERAGE SERVICES*
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.
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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
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
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.
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.
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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
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
[LOGO OF T. ROWE PRICE]
T. Rowe Price Investment Services, Inc., Distributor. F70-050 5/31/00
