June 19, 2000
To the Board of Directors and Shareholders of
T. Rowe Price New Income Fund, Inc.
In planning and performing our audit of the financial statements of
T. Rowe Price New Income Fund, Inc. (hereafter referred to as the "Fund")
for the year ended May 31, 2000, we considered its internal control,
including control activities for safeguarding securities, in order
to determine our auditing procedures for the purpose of expressing
our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on
internal control.
The management of the Fund is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally,
controls that are relevant to an audit pertain to the entity's
objective of preparing financial statements for external purposes
that are fairly presented in conformity with generally accepted
accounting principles. Those controls include the safeguarding
of assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or
fraud may occur and not be detected. Also, projection of any
evaluation of internal control to future periods is subject to
the risk that controls may become inadequate because of changes
in conditions or that the effectiveness of their design and
operation may deteriorate.
Our consideration of internal control would not necessarily disclose
all matters in internal control that might be material weaknesses
under standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the
design or operation of one or more of the internal control components
does not reduce to a relatively low level the risk that misstatements
caused by error or fraud in amounts that would be material in relation
to the financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters
involving internal control and its operation, including controls
for safeguarding securities, that we consider to be material weaknesses as
defined above as of May 31, 2000.
This report is intended solely for the information and use of
management, the Board of Directors of T. Rowe Price New Income Fund,
Inc., and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other then
these specified parties.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Baltimore, Maryland
