<PAGE>
Semiannual Report
NEW
INCOME
FUND
-------------------
NOVEMBER 30, 1999
-------------------
T. ROWE PRICE
<PAGE>
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
New Income Fund
. Rising interest rates and falling bond prices caused weak results for bond
funds during the six-month period ended November 30.
. Returns were basically flat for the period, exceeding the Lipper peer group
average but not the market index.
. We continued to emphasize corporate and mortgage-backed securities for their
superior yields.
. High yields and the likelihood that inflation will remain in check provide a
constructive fundamental backdrop for the bond market.
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.
<PAGE>
FELLOW SHAREHOLDERS
A robust U.S. economy and improving global growth pushed interest rates higher
and bond prices lower during the past six months. The Federal Reserve raised key
short-term interest rates three times to prevent the buildup of inflationary
pressures. Bond funds delivered weak total returns for the 6- and 12-month
periods ended November 30, but the New Income Fund performed well compared with
its Lipper peer group average.
MARKET ENVIRONMENT
- --------------------
INTEREST RATE LEVELS
- --------------------------------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
30-year Treasury Bond 5-Year Treasury Note 1-Year Treasury Bill
--------------------- -------------------- --------------------
<S> <C> <C> <C>
11/30/98 5.21 4.62 4.59
5.12 4.59 4.59
5.12 4.56 4.51
Feb-99 5.49 5.11 4.82
5.63 5.12 4.72
5.58 5.15 4.73
May-99 5.8 5.51 4.93
6.11 5.88 5.14
6.05 5.75 5.07
Aug-99 6.08 5.86 5.29
6.09 5.81 5.24
6.3 6.09 5.51
Nov-99 6.22 6.03 5.65
</TABLE>
The possibility of synchronized global growth and investor concerns that
this might lead to higher inflation contributed to making 1999 the most
difficult year for bonds since 1994. Third quarter GDP growth was revised
upward to 5.5%, and the unemployment rate remained at a 30-year low of 4.1%.
International economies also continued to improve, and this was reflected in
stronger U.S. exports and firmer commodity and import prices. While there
are some signs of higher costs, the extent to which consumer price inflation
has been held in check is remarkable. Improved productivity and efficiency
enabled by new technology, and a reduction in pricing power caused by
increased global competition, have set the stage for continued low
inflation. These trends, combined with the Fed's sound monetary policy, are
very positive for bonds in the long term.
As shown in the chart, yields on one-year Treasury notes rose 72 basis
points in the six months ended November 30 and more than a full percentage
point over the past year (100 basis points equal one percentage point).
Yields on 30-year bonds rose 42 basis points for the six
1
<PAGE>
- -------------------
BOND MARKET RETURNS
- --------------------------------------------------------------------------------
[GRAPH]
Periods Ending 11/30/99
6 Months 12 Months
-------- ---------
Treasury 0.4 -1.63
Mortgage 1.33 2.68
AAA 1.13 -0.06
BBB 0.06 -0.19
BBB/BB 0.29 2.44
Source: Salomon Smith Barney
months and a full percentage point over the year. The fact that short-term
rates rose more than long-term rates, especially in the last six months as
the Fed was tightening, indicates the market's confidence in the Fed's
commitment to fighting inflation.
Mortgage-backed securities outperformed most other sectors in the 6- and 12-
month periods, as shown in the bar chart, helped by the fact that they are
less sensitive to interest rates than Treasuries and have topnotch credit
quality. The rise in rates caused homeowner refinancing, and therefore
mortgage prepayments, to decline. This helped to stabilize cash flows and
moderate volatility for mortgage securities. In addition, the mortgage
sector was recovering from volatility and a lack of liquidity early in the
period that had driven the yield advantage of mortgage securities over
Treasuries to an extreme level. From September on, this yield advantage, or
risk premium, diminished.
Corporate bonds were hampered by heavy new issuance during the summer, as
companies sought to issue debt ahead of the fourth quarter and its attendant
uncertainties about Y2K. This sector was also hurt by major investment
banks' desire to keep their bond inventories low ahead of the New Year. AAA
bonds performed best among corporates in the past six months--the opposite
of what one would normally expect in an environment of rising interest
rates. Over the full year, split-rated bonds (those rated BBB by one rating
agency but just BB by another) did best, which is to be expected since these
marginally investment-grade bonds are more sensitive to corporate profits
than to interest rates. Split-rated bonds were also rebounding from
depressed levels following the 1998 crisis. Asset-backed bonds were
relatively strong, while Yankee bonds also held up reasonably well. (Yankee
bonds are issued by foreign borrowers but denominated in U.S. dollars.)
2
<PAGE>
- ----------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
Periods Ended 11/30/99 6 Months 12 Months
- -------------------------------------------------------------------------------
New Income Fund -0.03% -0.39%
Lehman Aggregate Bond Index 0.72 -0.04
Lipper Average of Corporate Bond Funds A-Rated -0.19 -1.73
PERFORMANCE REVIEW
Your fund's returns for the 6- and 12-month periods ended November 30,
though fractionally negative, exceeded the results of the Lipper peer group
average, as shown in the table. Performance lagged the unmanaged Lehman
Aggregate Bond Index partly due to the impact of fund expenses, which the
index does not incur. Results versus the index were also affected by our
longer duration strategy. (Duration is a measure of a bond fund's
sensitivity to interest rates; for example, a duration of five years means
the fund's share price will rise or fall about 5% for each
one-percentage-point fall or rise in interest rates.) We shortened the
fund's duration from 5.5 years in early summer to five years at the end of
the period, which is short-to-neutral versus our benchmarks. The fund's
share price fell $0.26 over the past six months, and $0.69 over the past
year, to $8.24 on November 30. This decline offset income of $0.26 and
$0.52, respectively, for both periods. The fund's six-month dividend yield
rose to 6.22% from 6.09% on May 31.
The fund's corporate bond holdings are focused on medium-quality securities.
While a few of these underperformed, we remain confident in the sector and
in our approach. In fact, since the end of the reporting period, the
relative performance of medium-quality corporate bonds has improved
significantly due to increased market liquidity and reduced Y2K concerns.
Our allocations to mortgage-backed securities and to Treasury inflation
protected securities (TIPS) aided results, as did the dramatic recovery over
the past 12 months in Latin American Yankee bonds.
STRATEGY
The composition of the fixed income market continues to change. The overall
level of Treasury issues outstanding is declining due to the federal budget
surplus, and the relative importance of corporates, agencies, and mortgages
in the market is growing. These changes have increased the yield advantages
of the latter three sectors relative to Treasuries. This should prove
beneficial to the fund, which is managed
3
<PAGE>
- ------------------------
SECURITY DIVERSIFICATION
- --------------------------------------------------------------------------------
[CHART]
U.S. Treasuries 12%
Cash and Other 9%
U.S. Agency Obligations 6%
Corporate Bonds and Convertibles 35%
Mortgage-Backed Securities 29%
Asset-Backed Securities 9%
Based on net assets as of 11/30/99.
with a consistent belief that selecting securities based on intensive credit
research, especially in corporate bonds and mortgages, will produce superior
returns over the long term. We maintain a diversified portfolio to reduce
the impact of disappointments from any individual holdings.
We currently have large weightings in corporates and mortgages. Both sectors
should outperform as market liquidity improves into 2000. Our positive
outlook for corporates reflects restrained fourth quarter issuance plus
light dealer inventories, few signs of a slowing economy, and generally
strong equity markets (which allow companies to pay for acquisitions in
stock instead of issuing new debt). Investment-grade corporate bonds
currently appear undervalued. Though their yields have declined a bit due to
improved liquidity, they remain high relative to Treasuries. Mortgage yields
also remain attractive in spite of the sector's third quarter rally. The
fundamentals in the mortgage market are excellent, with refinancing
decreasing, supply falling, and mortgage rates close to their two-year high.
We expect banks and agencies (such as Fannie Mae), which have been sidelined
recently, to step up their purchases of mortgage-backed securities after the
New Year. Mortgages offer an appealing combination of high-quality yield
enhancement and good liquidity.
Yankee bonds also offer some promising total return opportunities, at the
cost of higher volatility, however. Within the portfolio, our primary Yankee
sector exposure is in Latin America. We also have significant holdings of
asset-backed securities and have benefited as these have outperformed
Treasuries in recent months. With issuance expected to drop off in December,
these types of bonds should continue to do well, though the scope for
further outperformance is now more limited.
As mentioned, we are maintaining a slightly defensive posture on duration,
and we have also upgraded the liquidity and quality of portfolio holdings.
In addition, the fund maintained a 5% to 10% cash position due to the
potential for market illiquidity.
4
<PAGE>
OUTLOOK
WE DO NOT EXPECT INFLATION OR LONG-TERM INTEREST RATES TO RISE SIGNIFICANTLY ...
Bond investors had to contend in 1999 with rising interest rates due to the
strong economy and, at the same time, poor performance from corporate bonds,
which usually benefit from robust growth. This latter development is
attributable primarily to concerns about potential economic and market
disruption caused by the Y2K computer bug. Of late, the market appears to
have concluded that this will not have a material impact in the U.S., and
certain types of bonds have begun to perform better.
We do not expect inflation or long-term interest rates to rise significantly
from current levels, though another Fed rate hike appears likely in the
first quarter of 2000. Economic growth should moderate eventually, to an
annual GDP growth rate of 3.5% or slightly lower. U.S. consumer demand will
likely slow, since mortgage refinancing (a source of spendable cash) has
dried up and because the recent rise in oil prices will act like a tax
increase on consumers. Given the Fed's proactive stance and the positive
influence of technological advancements, including the Internet, we expect
inflation to remain at 3% or lower. In that environment, the higher yields
available on corporate and mortgage securities remain very attractive.
In sum, 2000 should be a more favorable year for bond investors, and the New
Income Fund is well positioned to deliver results more in line with its
long-term average.
Thank you for investing with T. Rowe Price.
Respectfully submitted,
/s/ William T. Reynolds
William T. Reynolds
Director, Fixed Income Division
December 20, 1999
5
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
KEY STATISTICS
5/31/99 11/30/99
---------------------------------------------------------------------------
Price Per Share $ 8.50 $ 8.24
Dividends Per Share
For 6 months 0.26 0.26
For 12 months 0.54 0.52
Dividend Yield *
For 6 months 6.09% 6.22%
For 12 months 6.34 6.25
30-Day Standardized Yield 6.06 6.58
Weighted Average Maturity (years) 10.3 9.9
Weighted Average Effective Duration (years) 5.3 5.0
Weighted Average Quality ** AA AA
* 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 T. Rowe Price research.
6
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
5/31/99 11/30/99
----------------------------------------------------------------------------
Mortgage-Backed Securities 24% 29%
Money Markets 11 13
U.S. Treasury Obligations 10 12
Asset-Backed Securities 14 9
U.S. Government Agency Obligations 6 6
Banking 5 5
Petroleum 5 4
Telecommunications 3 3
Electric Utilities 3 3
Building and Real Estate 2 2
Beverages 3 2
Foreign 2 2
Automobiles and Related 1 2
Entertainment and Leisure 1 2
Investment Dealers 2 2
All Other 8 8
Other Assets Less Liabilities -- -4
----------------------------------------------------------------------------
Total 100% 100%
7
<PAGE>
T. ROWE PRICE NEW 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.
NEW INCOME FUND
----------------------------------------------------------------------------
[CHART]
As of 11/30/99
Lehman Aggregate
Bond Index New Income Fund New Income Fund
---------- --------------- ---------------
Nov-89 10,000 10,000 10,000
Nov-90 10,758 10,764 10,764
Nov-91 12,308 12,180 12,180
Nov-92 13,399 13,111 13,111
Nov-93 14,858 14,442 14,442
Nov-94 14,403 14,069 14,069
Nov-95 16,945 16,542 16,542
Nov-96 17,973 17,392 17,392
Nov-97 19,331 18,598 18,598
Nov-98 21,158 19,595 19,595
Nov-99 21,149 19,518 19,518
- ------------------------------------
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 11/30/99 1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------------------------
New Income Fund -0.39% 3.92% 6.77% 6.92%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
8
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
Unaudited
- --------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
11/30/99 5/31/99 5/31/98 5/31/97 5/31/96 5/31/95
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 8.50 $ 9.09 $ 8.77 $ 8.70 $ 8.97 $ 8.65
Investment activities
Net investment income 0.26 0.54 0.57 0.58 0.60 0.58
Net realized and
unrealized gain (loss) (0.26) (0.45) 0.36 0.07 (0.27) 0.34
Total from
investment activities -- 0.09 0.93 0.65 0.33 0.92
Distributions
Net investment income (0.26) (0.54) (0.57) (0.58) (0.60) (0.58)
Net realized gain -- (0.14) (0.04) -- -- (0.02)
Total distributions (0.26) (0.68) (0.61) (0.58) (0.60) (0.60)
---------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 8.24 $ 8.50 $ 9.09 $ 8.77 $ 8.70 $ 8.97
---------------------------------------------------------------------------
Ratios/Supplemental Data
Total return* (0.03)% 1.02% 10.84% 7.70% 3.70% 11.13%
Ratio of total expenses to
average net assets 0.71%+ 0.72% 0.71% 0.74% 0.75% 0.78%
Ratio of net investment
income to average
net assets 6.17%+ 6.16% 6.31% 6.65% 6.66% 6.95%
Portfolio turnover rate 60.7%+ 94.3% 147.3% 87.1% 35.5% 54.1%
---------------------------------------------------------------------------
Net assets, end of period
(in millions) $ 1,848 $ 1,942 $ 2,076 $ 1,711 $ 1,634 $ 1,566
---------------------------------------------------------------------------
</TABLE>
* 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.
+ Annualized
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
Unaudited November 30, 1999
<TABLE>
<CAPTION>
- --------------------------
PORTFOLIO OF INVESTMENTS Par/Shares Value
- -------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
CORPORATE BONDS AND NOTES 33.4%
Airlines 0.8%
Qantas Airways, (144a), 7.75%, 6/15/09 $ 15,000 $ 14,778
-----------
14,778
-----------
Automobiles and Related 1.6%
DaimlerChrysler North America, Sr. Notes,
6.90%, 9/1/04 7,000 6,984
Delphi Automotive Systems, 6.50%, 5/1/09 10,000 9,210
Hertz, 7.00%, 1/15/28 15,000 13,372
-----------
29,566
-----------
Banking 4.7%
Banco Generale, Sr. Sub. Notes, (144a), 7.70%, 8/1/02 10,000 9,727
Banco Latinoamericano, (144a)
6.55%, 4/15/03 7,900 7,576
6.69%, 12/23/99 10,000 9,998
Banco Santiago, Sub. Notes, 7.00%, 7/18/07 12,755 11,384
Bank United, 8.875%, 5/1/07 5,000 4,766
FCB /NC Capital Trust I, 8.05%, 3/1/28 12,000 10,613
Imperial Bank, Sub. Notes, 8.50%, 4/1/09 9,265 8,712
Natexis, (144a), 8.44%, 12/29/49 13,990 13,116
Riggs National, 9.65%, 6/15/09 10,000 10,298
-----------
86,190
-----------
Beverages 1.7%
Diageo Capital, Sr. Notes, 6.625%, 6/24/04 3,000 2,906
Panamerican Beverages, Sr. Notes, 7.25%, 7/1/09 15,000 12,843
Pepsi Bottling, Sr. Notes, (144a), 5.625%, 2/17/09 16,500 14,798
-----------
30,547
-----------
Broadcasting 1.0%
Hearst-Argyle Television, 7.50%, 11/15/27 20,000 18,366
-----------
18,366
-----------
Building and Real Estate 1.7%
BRE Properties, 7.125%, 2/15/13 10,000 8,759
Hospitality Properties Trust, Sr. Notes, 7.00%, 3/1/08 10,000 8,604
Rouse, 8.00%, 4/30/09 15,000 14,083
-----------
31,446
-----------
</TABLE>
10
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
- ------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Cable Operators 0.8%
Tele-Communications, 7.875%, 8/1/13 $ 15,000 $ 15,507
------------
15,507
------------
Electric Utilities 2.7%
AEP Resources, Sr. Notes, (144a), 6.50%, 12/1/03 15,000 14,429
Alabama Power, Sr. Notes, 5.35%, 11/15/03 10,000 9,409
DTE Capital, (144a), 7.11%, 11/15/38 15,000 14,606
South Carolina Electric & Gas, 1st Mtg. Bonds
6.125%, 3/1/09 12,000 11,158
------------
49,602
------------
Entertainment and Leisure 1.5%
International Speedway, Sr. Notes, (144a)
7.875%, 10/15/04 10,000 9,946
Royal Caribbean Cruises, Sr. Notes, 6.75%, 3/15/08 20,000 18,648
------------
28,594
------------
Finance and Credit 0.3%
Countrywide Home Loans, Sr. Sub Notes
6.85%, 6/15/04 6,000 5,878
------------
5,878
------------
Food Processing 0.4%
Flowers Industries, 7.15%, 4/15/28 10,000 7,472
------------
7,472
------------
Foreign 1.6%
Bundesrepublic, 6.50%, 7/4/27 (EUR) 27,000 29,642
------------
29,642
------------
Health Care 0.4%
Beckman Instruments, Sr. Notes, 7.45%, 3/4/08 8,615 7,767
------------
7,767
------------
Insurance 1.0%
Jefferson Pilot Capital Trust, (144a), 8.14%, 1/15/46 10,000 9,365
Trenwick Capital Trust I, 8.82%, 2/1/37 10,500 9,110
------------
18,475
------------
Investment Dealers 1.5%
Goldman Sachs Group, 6.625%, 12/1/04 10,000 9,607
Paine Webber Group, MTN, 6.72%, 4/1/08 20,000 18,781
------------
28,388
------------
Media and Communications 1.3%
J Seagram & Sons, Sr. Notes, 6.80%, 12/15/08 24,500 23,198
------------
23,198
------------
</TABLE>
11
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
- ---------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Other Finance 0.8%
FMR, (144a), 7.49%, 6/15/19 $ 15,700 $ 15,475
--------------
15,475
--------------
Paper and Paper Products 0.4%
Celulosa Arauco Y Constitucion, 7.20%, 9/15/09 7,500 6,849
--------------
6,849
--------------
Petroleum 4.3%
Conoco, Sr. Notes, 5.90%, 4/15/04 6,990 6,718
PDVSA Finance, 7.50%, 11/15/28 20,290 14,237
Union Texas Petroleum, 7.00%, 4/15/08 20,000 19,047
YPF Sociedad Anonima
7.25%, 3/15/03 20,000 19,456
10.00%, 11/2/28 17,925 19,556
--------------
79,014
--------------
Retail 0.3%
Rite Aid, 7.70%, 2/15/27 8,125 4,712
--------------
4,712
--------------
Savings and Loan 0.5%
Dime Bancorp, Sr. Notes, 6.375%, 1/30/01 10,000 9,900
--------------
9,900
--------------
Service 0.3%
Waste Management, STEP, 7.70%, 10/1/02 5,300 4,999
--------------
4,999
--------------
Supermarkets 0.4%
Kroger, Sr. Notes, 6.34%, 6/1/01 8,000 7,910
--------------
7,910
--------------
Telecommunications 2.9%
Sprint, 6.125%, 11/15/08 21,600 19,907
US West Capital Funding, (144a), 6.875%, 8/15/01 15,000 14,982
WorldCom, 6.40%, 8/15/05 18,500 17,939
--------------
52,828
--------------
Transportation, Other 0.5%
Federal Express, ETC, 8.25%, 1/15/19 9,950 9,816
--------------
9,816
--------------
Total Corporate Bonds and Notes (Cost $669,086) 616,919
--------------
</TABLE>
12
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
- ---------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
ASSET-BACKED SECURITIES 9.4%
Airlines 0.5%
Atlas Air, 7.63%, 1/2/15 $ 10,000 $ 9,233
--------------
9,233
--------------
Auto-Backed 2.1%
CIT RV Trust
5.78%, 7/15/08 10,000 9,931
6.35%, 4/15/11 13,375 13,307
Onyx Acceptance Grantor Trust
5.78%, 2/15/03 5,000 4,941
5.83%, 3/15/04 10,000 9,771
--------------
37,950
--------------
Credit Card-Backed 3.1%
Citibank Credit Card Master Trust I, 6.65%, 11/15/06 16,750 16,630
First USA Credit Card Master Trust, 6.059%, 12/19/99 7,048 7,000
MBNA Master Credit Card Trust II
5.65%, 2/15/06 10,000 9,508
6.20%, 12/15/99 ++ 5,250 5,207
6.95%, 1/16/07 ++ 10,000 9,925
World Financial Network Credit Master Trust
5.711%, 12/15/99 8,500 8,483
--------------
56,753
--------------
Home Equity Loans-Backed 2.8%
Chase Funding Mortgage Loan, 6.59%, 5/25/28 5,053 4,718
GE Capital Mortgage Services, REMIC
6.465%, 6/25/28 14,207 13,843
Money Store Home Equity Trust
6.985%, 10/15/16 6,000 5,933
7.91%, 5/15/24 13,159 13,269
Option One Mortgage Loan Trust, 5.92%, 5/25/29 10,000 9,807
UCFC Home Equity Loan Trust, 7.325%, 1/10/27 5,000 4,957
52,527
Receivables-Backed 0.9%
Case Equipment Loan Trust, 5.77%, 8/15/05 6,000 5,865
First Sierra Equipment Contract Trust, 5.73%, 9/15/04 10,000 9,934
--------------
15,799
--------------
Total Asset-Backed Securities (Cost $185,912) 172,262
--------------
</TABLE>
13
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
- -----------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
EQUITY AND CONVERTIBLE SECURITIES 0.8%
Banking 0.0%
Silicon Valley Bancshares, Pfd., 8.25% 30 $ 638
------------
638
------------
Building and Real Estate 0.8%
Equity Residential Properties Trust, REIT, Cv. Pfd.,
7.25% 350 6,654
Reckson Associates Realty, Cv. Pfd., (Series A), 7.625% 429 8,427
------------
15,081
------------
Total Equity and Convertible Securities (Cost $18,134) 15,719
------------
NON-U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES 6.4%
Commercial Mortgage-Backed 2.3%
Heller Financial, 6.847%, 5/15/31 $ 10,000 9,700
LB Commercial Conduit Mortgage Trust, 6.78%, 4/15/09 10,000 9,600
PNC Mortgage Acceptance, 7.33%, 10/10/09 10,000 10,003
Prudential Securities, 6.074%, 1/15/08 14,430 13,822
------------
43,125
------------
Whole Loans-Backed 4.1%
BA Mortgage Securities, 7.00%, 7/25/28 20,600 19,815
CWMBS, 6.75%, 11/25/23 6,021 5,682
GE Capital Mortgage Services, REMIC, 6.75%, 8/25/28 13,962 13,276
Norwest Asset Securities, 6.75%, 10/25/28 11,868 11,035
Residential Accredited Loans
6.75%, 7/25/28 7,500 7,148
7.25%, 11/25/27 10,044 9,777
Residential Funding, 6.50%, 3/25/29 9,930 8,854
------------
75,587
------------
Total Non-U.S. Government Mortgage-Backed Securities (Cost $115,620) 118,712
------------
U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES 22.8%
U.S. Government Agency Obligations 10.6%
Federal Home Loan Mortgage
5.50%, 10/15/20 2,091 2,046
6.50%, 11/1/04 - 6/1/24 39,415 37,794
7.00%, 8/15/09 - 6/1/25 43,836 42,914
7.50%, 3/1/24 4,770 4,954
8.00%, 6/1/08 44 44
</TABLE>
14
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
- ------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Federal Home Loan Mortgage
10.50%, 2/1/01 - 8/1/20 $ 396 $ 428
11.00%, 1/1/16 - 7/1/20 203 225
11.50%, 6/1/01 1 0
REMIC, 6.50%, 3/15/23 10,810 10,329
TBA, 7.50%, 1/1/29 55,250 55,000
Federal National Mortgage Assn.
6.50%, 2/1/26 33,712 32,168
8.75%, 3/1/10 5 5
TBA, 6.50%, 1/1/29 10,000 9,538
-----------
195,445
-----------
U.S. Government Guaranteed Obligations 12.2%
Government National Mortgage Assn.
I
6.50%, 4/15/23 - 1/15/28 32,786 31,383
7.00%, 4/15/22 - 5/15/29 91,578 89,704
7.50%, 8/15/16 - 8/15/28 22,313 22,306
8.00%, 7/15/16 - 10/15/27 34,591 35,357
8.50%, 9/15/16 - 7/15/23 7,414 7,707
9.00%, 1/15/09 - 11/15/19 908 962
9.50%, 6/15/09 - 3/15/25 407 434
11.00%, 12/15/09 - 1/15/21 7,614 8,459
11.50%, 3/15/10 - 10/15/15 1,162 1,307
II
7.00%, 12/20/23 - 5/20/28 19,828 19,391
8.50%, 9/20/26 40 41
9.00%, 6/20/16 - 2/20/18 684 725
GPM, I, 10.25%, 4/15/16 - 11/15/20 982 1,077
Principal Only, 3/16/28 9,302 6,441
-----------
225,294
-----------
Total U.S. Government Mortgage-Backed Securities (Cost $426,528) 420,739
-----------
U.S. GOVERNMENT OBLIGATIONS/AGENCIES 18.5%
U.S. Government Agency Obligations 6.4%
Federal Home Loan Mortgage, 5.00%, 2/15/01 10,060 9,926
Federal National Mortgage Assn.
5.125%, 2/13/04 40,000 37,882
5.75%, 2/15/08 60,000 56,085
</TABLE>
15
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
- ---------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Tennessee Valley Authority, 6.235%, 7/15/45 $ 14,934 $ 14,933
------------
118,826
------------
U.S. Treasury Obligations 12.1%
U.S. Treasury Bonds
5.25%, 11/15/28 4,500 3,800
5.50%, 8/15/28 46,000 40,218
6.50%, 11/15/26 41,300 41,221
U.S. Treasury Inflation-Indexed Notes
3.375%, 1/15/07 36,025 34,285
3.625%, 7/15/02 27,379 27,185
U.S. Treasury Notes
5.50%, 7/31/01 20,000 19,852
6.875%, 5/15/06 16,500 17,024
7.00%, 7/15/06 38,000 39,474
------------
223,059
------------
Total U.S. Government Obligations/Agencies (Cost $360,888) 341,885
------------
OPTIONS PURCHASED 0.0%
10 Yr. U.S. Treasury, Call, 3/17/00 @ $100 300 98
------------
Total Options Purchased (Cost $229) 98
------------
MONEY MARKET FUNDS 12.5%
Reserve Investment Fund, 5.65% #+ 231,243 231,243
------------
Total Money Market Funds (Cost $231,243) 231,243
------------
</TABLE>
16
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
103.8% of Net Assets (Cost $2,007,640) $ 1,917,577
Other Assets Less Liabilities (69,557)
-------------
NET ASSETS $ 1,848,020
-------------
# Seven-day yield 144a Security was purchased pursuant to
+ Affiliated company Rule 144a under the Securities Act
++ Private placement of 1933 and may not be resold
ETC Equipment Trust Certificate subject to that rule except to
EUR Euro qualified institutional buyers -
GPM Graduated Payment Mortgage total of such securities at period-
MTN Medium Term Note end amounts to 9.7% of net assets.
REIT Real Estate Investment Trust
REMIC Real Estate Mortgage Investment
Conduit STEP Stepped coupon note
for which the interest rate will
adjust on specified future
date(s).
TBA To be announced security was
purchased on a forward
commitment basis.
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
Unaudited November 30, 1999
- -----------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value
Affiliated companies (cost $231,243) $ 231,243
Other companies (cost $1,776,397) 1,686,334
-------------
Total investments in securities 1,917,577
Securities lending collateral 136,117
Other assets 42,591
-------------
Total assets 2,096,285
-------------
Liabilities
Obligation to return securities lending collateral 136,117
Payable for investment securities purchased 93,878
Other liabilities 18,270
-------------
Total liabilities 248,265
-------------
NET ASSETS $ 1,848,020
-------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 2,803
Accumulated net realized gain/loss - net of distributions (41,114)
Net unrealized gain (loss) (90,063)
Paid-in-capital applicable to 224,270,301 shares of
$1.00 par value capital stock outstanding;
300,000,000 shares authorized 1,976,394
-------------
NET ASSETS $ 1,848,020
-------------
NET ASSET VALUE PER SHARE $ 8.24
-------------
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
Unaudited
- -----------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
11/30/99
Investment Income
Income
Interest and dividend income $ 64,882
-----------
Expenses
Investment management 4,434
Shareholder servicing 2,047
Custody and accounting 126
Prospectus and shareholder reports 95
Legal and audit 11
Directors 6
Registration 3
Miscellaneous 7
-----------
Total expenses 6,729
Expenses paid indirectly (5)
-----------
Net expenses 6,724
-----------
Net investment income 58,158
-----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (24,176)
Futures (34)
Foreign currency transactions (151)
-----------
Net realized gain (loss) (24,361)
Change in net unrealized gain or loss on securities (33,822)
-----------
Net realized and unrealized gain (loss) (58,183)
-----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ (25)
-----------
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
Unaudited
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
11/30/99 5/31/99
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 58,158 $ 127,277
Net realized gain (loss) (24,361) (20,023)
Change in net unrealized gain or loss (33,822) (85,943)
Increase (decrease) in net assets from operations (25) 21,311
Distributions to shareholders
Net investment income (58,052) (127,389)
Net realized gain -- (33,390)
Decrease in net assets from distributions (58,052) (160,779)
Capital share transactions *
Shares sold 101,298 378,655
Distributions reinvested 54,033 118,923
Shares redeemed (191,007) (491,927)
Increase (decrease) in net assets from capital
share transactions (35,676) 5,651
Net Assets
Increase (decrease) during period (93,753) (133,817)
Beginning of period 1,941,773 2,075,590
End of period $ 1,848,020 $ 1,941,773
-----------------------------
* Share information
Shares sold 12,169 42,662
Distributions reinvested 6,501 13,507
Shares redeemed (22,942) (55,845)
Increase (decrease) in shares outstanding (4,272) 324
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
Unaudited November 30, 1999
- -----------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price New Income Fund, Inc. (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company and commenced operations on October 12, 1973.
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.
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 Directors, 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. In the absence of a last sale price,
purchased options are valued at the mean of the latest bid and asked prices.
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.
21
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
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 Directors.
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.
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.
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, which are used to reduce the
fund's custody charges.
22
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Noninvestment-Grade Debt Securities At November 30, 1999, the fund held
investments in noninvestment-grade debt securities, commonly referred to as
"high-yield" or "junk" bonds. A real or perceived economic downturn or higher
interest rates could adversely affect the liquidity or value, or both, of such
securities because such events could lessen the ability of issuers to make
principal and interest payments.
Options Call and put options give the holder the right to purchase or sell,
respectively, a security at a specified price until a certain date. Risks arise
from possible illiquidity of the options market and from movements in security
values. Options are reflected in the accompanying Portfolio of Investments at
market value.
Securities Lending The fund lends its securities to approved brokers to earn
additional income and receives cash and U.S. government securities as collateral
against the loans. Cash collateral received is invested in a money market pooled
account by the fund's lending agent. Collateral is maintained over the life of
the loan in an amount not less than 100% of the value of loaned securities.
Although risk is mitigated by the collateral, the fund could experience a delay
in recovering its securities and a possible loss of income or value if the
borrower fails to return them. At November 30, 1999, the value of loaned
securities was $131,745,000; aggregate collateral consisted of $136,117,000 in
the securities lending collateral pool.
Other Purchases and sales of portfolio securities, other than short-term and
U.S. government securities, aggregated $210,435,000 and $195,641,000,
respectively, for the six months ended November 30, 1999. Purchases and sales of
U.S. government securities aggregated $315,666,000 and $319,905,000,
respectively, for the six months ended November 30, 1999.
23
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
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. The fund has capital loss carryforwards for federal income tax
purposes of $1,953,000, all of which expires in 2007. The fund intends to retain
gains realized in future periods that may be offset by available capital loss
carryforwards.
At November 30, 1999, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$2,007,640,000. Net unrealized loss aggregated $90,063,000 at period-end, of
which $4,012,000 related to appreciated investments and $94,075,000 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 $721,000 was payable at November 30, 1999. 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 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
November 30, 1999, and for the six months 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 $1,120,000 for the six months
ended November 30, 1999, of which $232,000 was payable at period-end.
24
<PAGE>
T. ROWE PRICE NEW INCOME FUND
- --------------------------------------------------------------------------------
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 39% of the outstanding shares of the fund at November 30, 1999.
For the six months then ended, the fund was allocated $820,000 of Spectrum
expenses, $169,000 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 six months ended November 30, 1999, totaled
$4,941,000 and are reflected as interest income in the accompanying Statement of
Operations.
25
<PAGE>
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(R) 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.
26
<PAGE>
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 portfoliosO 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.
27
<PAGE>
T. ROWE PRICE RETIREMENT PLANS AND RESOURCES
- --------------------------------------------------------------------------------
RETIREMENT PLANS AND RESOURCES
We recognize that saving for retirement is the number one investment goal for
most Americans. We can help you meet your retirement needs, whether you are
starting an IRA or designing a retirement program for your employees. T. Rowe
Price offers an assortment of retirement plans for individuals, the self-
employed, small businesses, corporations, and nonprofit organizations. We
provide recordkeeping, communications, and investment management services, as
well as a variety of educational materials, self-help planning guides, and
software tools to help you choose and implement a retirement plan appropriate
for you. For information or to request literature, call us at 1-800-638-5660.
IRAs AND QUALIFIED PLANS
Traditional IRA Money Purchase Pension
Roth IRA "Paired" Plans (Money Purchase
Rollover IRA Pension and Profit Sharing Plans)
SEP-IRA 401(k)
SIMPLE IRA 403(b)
Profit Sharing 457 Deferred Compensation
RETIREMENT RESOURCES AT T. ROWE PRICE
Planning and Informational Guides Investing for Retirement in Your
Minimum Required Distributions Guide 403(b) Account
Retirement Planning Kit The T. Rowe Price No-Load Variable
Retirees Financial Guide Annuity Information Kit
Tax Considerations for Investors
Insights Reports
Investment Kits
The Challenge of Preparing for
The IRA Investing Kit Retirement
Roth IRA Conversion Kit Financial Planning After Retirement
Rollover IRA Kit The Roth IRA: A Review
The T. Rowe Price SIMPLE IRA Plan Kit
The T. Rowe Price SEP-IRA Plan Software Packages
The Simplified Keogh Plan(R) From
T. Rowe Price T. Rowe Price Retirement Planning
The T. Rowe Price 401(k) Century Analyzer(TM) CD-ROM or diskette
Plan(R) (for small businesses) $19.95. To order, please call
Money Purchase Pension/Profit Sharing 1-800-541-5760. Also available
Plan Kit on the Internet for $9.95.
T. Rowe Price Variable Annuity
Analyzer(TM) CD-ROM or diskette,
free. To order, please call
1-800-469-5304.
Many of these resources are also available for viewing or ordering on the
Internet at www.troweprice.com.
28
<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
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.
29
<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
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. F43-051 11/30/99
