Item 1. Report to Shareholders
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials
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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Lipper GNMA Funds Ave GNMA-Fund
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5/93 10 10
5/94 9.942 9.926
5/95 10.963 11.129
5/96 11.441 11.543
5/97 12.402 12.52
5/98 13.591 13.767
5/99 14.103 14.302
5/00 14.429 14.607
5/01 16.122 16.405
5/02 17.327 17.709
5/03 18.416 18.961
Average Annual Compound Total Return
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Periods Ended 5/31/03 1 Year 3 Years 5 Years 10 Years
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GNMA Fund 7.07% 9.08% 6.61% 6.61%
Citigroup GNMA
Index 6.17 8.94 6.98 7.01
Lipper GNMA Funds
Average 6.15 8.36 6.19 6.29
Returns do not reflect taxes that the shareholder may pay on fund distributions
or the redemption of fund shares. Past performance cannot guarantee future
results.
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials
Dear Shareholder,
We are pleased that your fund had a positive return of 7.07% during the 12
months ended May 31, 2003, surpassing the Lipper GNMA Funds Average of similarly
managed funds during the period, as shown in the table on the preceding page.
The fund's fiscal year was hampered by record prepayments as homeowners took
advantage of steadily declining rates to refinance their mortgages.
As you know, the fund seeks to provide high current income consistent with
maximum credit protection and moderate price fluctuation by investing at least
80% of net assets in mortgage-backed securities issued by the Government
National Mortgage Association (GNMA). GNMA guarantees the timely payment of
interest and principal on its securities, a guarantee backed by the U.S.
Treasury. The guarantee does not extend to the fund's share price, which will
fluctuate.
The Major Index Returns table shows how various quality bonds performed over the
fund's fiscal year. Higher-quality bonds such as Treasuries and investment-grade
corporate securities did slightly better than their lower-rated counterparts
over the 12-month period, while mortgage-backed bonds were the weakest
performers due to record prepayments.
Major Index Returns
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1 Year Ended 12-Month
5/31/03 Returns
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Lehman Brothers
U.S. Treasury
Securities Index 14.22%
Lehman Brothers
U.S. Aggregate
Index 11.58
Lehman Brothers
U.S. Credit Index 16.06
Lehman Brothers
Mortgage-Backed
Securities Index 6.42
CS First Boston
High Yield Index 13.25
Source: Lehman Brothers and CS First Boston
The Interest Rate Levels chart reflects the pattern of bond yields during the
same period. Yields declined in general as the economy remained sluggish, an
environment that benefits most higher-quality bonds with longer maturities but
also leads to higher mortgage prepayments.
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials
Interest Rate Levels
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Current Coupon GNMA 10-year Treasury Note
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5/31/02 6.23 5.04
6.08 4.80
5.79 4.46
8/31/02 5.35 4.14
5.15 3.59
5.25 3.89
11/30/02 5.42 4.21
5.02 3.81
5.19 3.96
2/28/03 4.87 3.69
4.97 3.80
4.87 3.84
5/31/03 4.33 3.37
The Portfolio Characteristics table shows various portfolio details as of May
31, 2003, compared with one year earlier. The weighted average maturity of the
portfolio contracted during the year, while the quality of the portfolio's
holdings remained stable at AAA. The fund's better performance than its
benchmarks was largely due to our focus on prepayment-protected securities and
the portfolio's somewhat longer duration. The distributions and yield fell from
the level of May 31, 2002, reflecting declining bond yields over the year.
However, the fund's price per share rose since bond prices move in the opposite
direction of yields.
Portfolio Characteristics
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Periods Ended 5/31/02 5/31/03
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Price Per Share $ 9.61 $ 9.89
30-Day Standardized
Yield to Maturity 4.81 3.41
Weighted Average Maturity (years) * 4.7 2.4
Weighted Average Quality ** AAA AAA
* Based on prepayment-adjusted life of GNMA securities.
** Based on T. Rowe Price research.
We thank you for your continued support.
Respectfully submitted,
James S. Riepe
Chairman
June 20, 2003
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials
Financial Highlights For a share outstanding throughout each period
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Year
Ended
5/31/03 5/31/02 5/31/01 5/31/00 5/31/99
NET ASSET
VALUE
Beginning
of period $ 9.61 $ 9.40 $ 8.92 $ 9.33 $ 9.57
Investment activities
Net investment
income (loss) 0.37 0.52 0.59 0.60 0.61
Net realized
and unrealized
gain (loss) 0.30 0.21 0.48 (0.41) (0.24)
Total from
investment
activities 0.67 0.73 1.07 0.19 0.37
Distributions
Net investment
income (0.39) (0.52) (0.59) (0.60) (0.61)
NET ASSET VALUE
End of period $ 9.89 $ 9.61 $ 9.40 $ 8.92 $ 9.33
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Ratios/Supplemental Data
Total return^ 7.07% 7.95% 12.31% 2.13% 3.88%
Ratio of total
expenses to
average net
assets 0.70% 0.69% 0.70% 0.71% 0.71%
Ratio of net
investment
income (loss)
to average
net assets 3.68% 5.33% 6.39% 6.61% 6.36%
Portfolio
turnover rate 385.8% 145.2% 71.2% 63.8% 86.7%
Net assets,
end of period
(in millions) $ 1,466 $ 1,223 $ 1,043 $ 1,052 $ 1,111
^ Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials May 31, 2003
Portfolio of Investments Par/Shares Value
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In thousands
U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES 100.3%
U.S. Government Guaranteed Obligations 100.3%
Government National Mortgage Assn.
2.212%, 2/16/10 $ 4,000 $ 3,980
4.50%, 4/15 - 5/15/18 42,330 43,759
5.50%, 11/15/17 - 3/15/33 174,241 182,460
6.00%, 11/15/08 - 3/20/33 211,742 222,289
6.50%, 12/15/14 - 3/15/33 149,937 157,637
6.625%, 1/15/40 9,850 11,318
6.73%, 9/15/30 19,536 22,558
6.75%, 2/15/41 9,892 10,780
7.00%, 3/15/13 - 7/15/32 158,017 166,863
7.37%, 8/15/33 9,367 10,385
7.50%, 3/15/07 - 9/15/32 78,261 83,478
8.00%, 3/15/14 - 3/15/30 36,444 39,780
8.50%, 12/15/04 - 6/20/29 7,794 8,601
8.75%, 6/15/17 29 32
9.00%, 5/15/09 - 9/15/24 3,520 3,919
9.25%, 2/20/16 - 5/15/21 718 801
9.50%, 6/15/09 - 12/15/24 1,950 2,164
9.75%, 8/15/16 - 2/15/21 447 503
10.00%, 2/15/16 - 3/15/26 7,104 7,968
10.25%, 3/20 - 9/20/16 23 26
10.50%, 2/15/13 - 10/15/21 680 766
10.75%, 2/15/16 - 1/15/18 225 255
11.00%, 2/15/10 - 9/20/20 487 547
11.50%, 4/15/10 - 7/20/20 1,002 1,133
12.00%, 10/15/10 - 7/15/15 1,100 1,254
12.25%, 1/20/14 - 7/20/15 75 86
12.50%, 4/15/10 - 1/20/16 584 668
12.75%, 10/20/13 - 2/20/15 79 90
13.00%, 1/15/11 - 9/20/15 349 401
13.50%, 5/15/10 - 1/15/15 253 288
Par/Shares Value
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CMO
5.00%, 8/16/28 $ 12,550 $ 12,982
6.00%, 2/20/28 - 5/20/29 53,900 56,234
6.50%, 10/20/27 - 3/20/32 34,448 36,445
7.00%, 5/16/24 5,073 5,110
Interest Only
6.50%, 1/20/30 - 8/20/30 + 24,833 726
8.00%, 6/16/23 + 267 8
Principal Only, 3/16/28 2,547 2,422
TBA
4.50%, 1/1/18 18,170 18,783
5.00%, 1/1/18 - 1/1/33 186,000 192,791
5.50%, 1/1/33 65,900 68,731
6.00%, 1/1/33 75,380 78,791
U.S. Department of Veteran Affairs
CMO
7.25%, 10/15/08 10,545 11,021
9.54%, 3/15/25 1,130 1,316
Total U.S. Government Guaranteed Obligations
(Cost $1,437,328) 1,470,149
U.S. GOVERNMENT OBLIGATIONS 2.1%
U.S. Treasury Obligations 2.1%
United States Treasury Notes,
2.625%, 5/15/08 29,900 30,386
Total U.S. Treasury Obligations (Cost $30,366) 30,386
REPURCHASE AGREEMENTS 3.4%
Credit Suisse First Boston, Tri-Party,
Dated 5/30/03, 1.32%
Delivery Value of $50,060 on 6/2/03 @ 50,000 50,000
Total Repurchase Agreements (Cost $50,000) 50,000
MONEY MARKET FUNDS 18.4%
T. Rowe Price Government
Reserve Investment Fund, 1.22% # ! 270,033 270,033
Total Money Market Funds (Cost $ 270,033) 270,033
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials
Value
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In thousands
Total Investments in Securities
124.2% of Net Assets (Cost $1,787,727) $1,820,568
Other Assets Less Liabilities (354,234)
NET ASSETS $1,466,334
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# Seven-day yield
+ Interest Only security for which the fund receives interest on notional
principal (par)
! Affiliated company - See Note 2.
@ Collateralized by U.S. government securities valued at $51,002,000 at May
31, 2003 - See Note 2.
CMO Collateralized Mortgage Obligation
TBA To Be Announced security was purchased on a forward commitment basis
The accompanying notes are an integral part of these financial statements.
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials May 31, 2003
Statement of Assets and Liabilities
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In thousands
Assets
Investments in securities, at value
Affiliated companies (cost $270,033) $ 270,033
Other companies (cost $ 1,517,694) 1,550,535
Total investments in securities 1,820,568
Receivable from securities sold 86,978
Other assets 9,030
Total assets 1,916,576
Liabilities
Payable for investment securities purchased 447,646
Other liabilities 2,596
Total liabilities 450,242
NET ASSETS $1,466,334
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Net Assets Consist of:
Undistributed net investment income (loss) $ (4,444)
Undistributed net realized gain (loss) 16,999
Net unrealized gain (loss) 32,841
Paid-in-capital applicable to 148,323,827 shares of
no par value shares of beneficial interest outstanding;
unlimited number of shares authorized 1,420,938
NET ASSETS $1,466,334
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NET ASSET VALUE PER SHARE $ 9.89
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials
Statement of Operations
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In thousands
Year
Ended
5/31/03
Investment Income (Loss)
Interest income
Interest $ 56,216
Income distributions from mutual funds 4,316
Total income 60,532
Expenses
Investment management 6,528
Shareholder servicing 2,530
Custody and accounting 367
Prospectus and shareholder reports 120
Registration 52
Legal and audit 16
Trustees 12
Miscellaneous 8
Total expenses 9,633
Net investment income (loss) 50,899
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 41,151
Futures (1,696)
Net realized gain (loss) 39,455
Change in net unrealized gain (loss) on securities 924
Net realized and unrealized gain (loss) 40,379
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 91,278
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials
Statement of Changes in Net Assets
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In thousands
Year
Ended
5/31/03 5/31/02
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 50,899 $ 59,997
Net realized gain (loss) 39,455 8,479
Change in net unrealized gain (loss) 924 17,201
Increase (decrease) in net assets
from operations 91,278 85,677
Distributions to shareholders
Net investment income (55,051) (60,967)
Capital share transactions *
Shares sold 492,751 311,301
Distributions reinvested 48,335 52,863
Shares redeemed (333,836) (208,770)
Increase (decrease) in net
assets from capital
share transactions 207,250 155,394
Net Assets
Increase (decrease) during period 243,477 180,104
Beginning of period 1,222,857 1,042,753
End of period $ 1,466,334 $ 1,222,857
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*Share information
Shares sold 50,166 32,597
Distributions reinvested 4,909 5,530
Shares redeemed (33,935) (21,927)
Increase (decrease) in shares outstanding 21,140 16,200
The accompanying notes are an integral part of these financial statements.
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials May 31, 2003
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 (the 1940 Act) 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 exclusively in securities backed by the full faith and
credit of the U.S. government and instruments linked to these securities.
The accompanying financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, which
require the use of estimates made by fund management.
Valuation
Investments are valued at the close of the New York Stock Exchange (NYSE),
normally 4 p.m. ET, each day that the NYSE is open for business. Debt securities
are generally traded in the over-the-counter market. Securities with original
maturities of one year or more are valued at prices 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 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 bid-side 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. Purchased and written options on
futures contracts are valued at the last sale price. Financial futures contracts
are valued at closing settlement prices.
Other investments and those 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 are amortized for financial reporting
purposes.
Expenses Paid Indirectly
Credits earned on temporarily uninvested cash balances at the custodian are used
to reduce the fund's custody charges.
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.
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.
Futures Contracts
During the year ended May 31, 2003, the fund was a party to futures contracts,
which provide for the future sale by one party and purchase by another of a
specified amount of a specific financial instrument at an agreed upon price,
date, time, and place. Risks arise from possible illiquidity of the futures
market and from movements in security values and/or interest rates.
Options
Call and put options on futures contracts give the holder the right to purchase
or sell, respectively, a particular futures contract at a specified price on a
certain date. Risks arise from possible illiquidity of the options market and
from movements in underlying futures prices
Repurchase Agreements
All repurchase agreements are fully collateralized by U.S. government
securities. Collateral is in the possession of the fund's custodian or, for
tri-party agreements, the custodian designated by the agreement. Collateral is
evaluated daily to ensure that its market value exceeds the delivery value of
the repurchase agreements at maturity. Although risk is mitigated by the
collateral, the fund could experience a delay in recovering its value and a
possible loss of income or value if the counter-party fails to perform in
accordance with the terms of the agreement.
Affiliated Companies
The fund may invest in certain securities that are considered affiliated
companies. As defined by the 1940 Act, an affiliated company is one in which the
fund owns 5% or more of the outstanding voting securities. At May 31, 2003, the
value of affiliated companies totaled $270,033,000, representing 18.4% of the
value of the fund's investments in securities. For the year then ended,
$4,316,000 (7.1%) of interest income reflected in the accompanying financial
statements resulted from transactions with affiliated companies.
Other
Purchases and sales of U.S. government securities aggregated $5,602,511,000 and
$5,355,904,000, respectively, for the year ended May 31, 2003.
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 to
shareholders all of its taxable income and gains. Federal income tax regulations
differ from generally accepted accounting principles; therefore, distributions
determined in accordance with tax regulations may differ significantly in amount
or character from net investment income and realized gains for financial
reporting purposes. Financial reporting records are adjusted for permanent
book/tax differences to reflect tax character. Temporary differences are not
adjusted.
Distributions during the year ended May 31, 2003 totaled $55,051,000 and were
characterized as ordinary income for tax purposes. At May 31, 2003, the
tax-basis components of net assets were as follows:
Unrealized appreciation $39,142,000
Unrealized depreciation (8,121,000)
Net unrealized appreciation (depreciation) 31,021,000
Undistributed ordinary income 14,375,000
Paid-in capital 1,420,938,000
Net assets $1,466,334,000
--------------
Pursuant to federal income tax regulations applicable to investment companies,
the fund has elected to treat net capital losses realized between November 1 and
May 31 of each year as occurring on the first day of the following tax year.
Consequently, $651,000 of realized losses reflected in the accompanying
financial statements will not be recognized for tax purposes until 2004. Federal
income tax regulations require the fund to defer recognition of capital losses
realized on certain covered option and futures transactions; accordingly,
$1,170,000 of realized losses reflected in the accompanying financial statements
have not been recognized for tax purposes as of May 31, 2003. The fund intends
to retain realized gains to the extent of available capital loss carryforwards
for federal income tax purposes. In 2003, the fund utilized $12,084,000 of
capital loss carryforwards.
For the year ended May 31, 2003, the fund recorded the following permanent
reclassifications to reflect tax character. Reclassifications to paid-in capital
relate primarily to a tax practice that treats a portion of the proceeds from
each redemption of capital shares as a distribution of taxable net investment
income and/or realized capital gain. Reclassifications between income and gain
relate primarily to the character of paydown gains and losses on asset-backed
securities. Results of operations and net assets were not affected by these
reclassifications.
Undistributed net investment income $5,080,000
Undistributed net realized gain (10,063,000)
Paid-in capital 4,983,000
At May 31, 2003, the cost of investments for federal income tax purposes was
$1,789,547,000.
NOTE 4 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The
investment management agreement between the fund and the manager provides for an
annual investment management fee, which is computed daily and paid monthly. The
fee consists of an individual fund fee, equal to 0.15% of the fund's average
daily net assets, and the fund's pro-rata share of a group fee. The group fee is
calculated based on the combined net assets of certain mutual funds sponsored by
Price Associates (the group) applied to a graduated fee schedule, with rates
ranging from 0.48% for the first $1 billion of assets to 0.295% for assets in
excess of $120 billion. The fund's portion of the group fee is determined by the
ratio of its net assets to those of the group. At May 31, 2003, the effective
annual group fee rate was 0.32%, and investment management fee payable totaled
$578,000.
In addition, the fund has entered into service agreements with Price
Associates and two wholly owned subsidiaries of Price Associates
(collectively, Price). Price Associates computes the daily share price and
maintains the financial records of the fund. T. Rowe Price Services, Inc.
provides shareholder and administrative services in its capacity as the fund's
transfer and dividend disbursing agent. T. Rowe Price Retirement Plan
Services, Inc. provides subaccounting and recordkeeping services for certain
retirement accounts invested in the fund. Expenses incurred pursuant to these
service agreements totaled $1,273,000 for the year ended May 31, 2003, of which
$117,000 was payable at period-end.
The fund is also one of several mutual funds sponsored by Price Associates
(underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum
Funds) may invest. The Spectrum Funds do not invest in the underlying Price
funds for the purpose of exercising management or control. Pursuant to special
servicing agreements, expenses associated with the operation of the Spectrum
Funds are borne by each underlying Price fund to the extent of estimated savings
to it and in proportion to the average daily value of its shares owned by the
Spectrum Funds. Expenses allocated under these agreements are reflected as
shareholder servicing expense in the accompanying financial statements. For the
year ended May 31, 2003, the fund was allocated $852,000 of Spectrum Funds'
expenses, of which $469,000 related to services provided by Price and $40,000
was payable at period-end. At May 31, 2003, approximately 27% of the outstanding
shares of the fund were held by the Spectrum Funds.
The fund may invest in T. Rowe Price Reserve Investment Fund and T. Rowe Price
Government Reserve Investment Fund (collectively, the Reserve Funds), open-end
management investment companies managed by Price Associates. The Reserve Funds
are offered as cash management options only to mutual funds, trusts, and other
accounts managed by Price Associates and/or 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,
2003, totaled $4,316,000.
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials
Report of Independent Auditors
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To the Board of Trustees and Shareholders of T. Rowe Price GNMA Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of T. Rowe Price GNMA Fund (the
"Fund") at May 31, 2003, 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 of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States of
America, 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, 2003 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
June 18, 2003
T. Rowe Price GNMA Fund
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Certified Shareholder Report and Financials
Tax Information (Unaudited) for the Tax Year Ended 5/31/03
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We are providing this information as required by the Internal Revenue Code. The
amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund's distributions to shareholders included:
o $5,777,000 from short-term capital gains,
o $3,000 from long-term capital gains, subject to the 20% rate gains category.
T. Rowe Price GNMA Fund
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About the Fund's Trustees and Officers
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Your fund is governed by a Board of Trustees that meets regularly to review
investments, performance, expenses, and other business matters, and is
responsible for protecting the interests of shareholders. The majority of the
fund's trustees are independent of T. Rowe Price Associates, Inc. (T. Rowe
Price); "inside" trustees are officers of T. Rowe Price. The Board of Trustees
elects the fund's officers, who are listed in the final table. The business
address of each trustee and officer is 100 East Pratt Street, Baltimore, MD
21202. The Statement of Additional Information includes additional information
about the fund trustees and is available without charge by calling a T. Rowe
Price representative at 1-800-225-5132.
Independent Trustees
Name
(Date of Birth) Principal Occupation(s) During Past 5 Years and
Year Elected* Directorships of Other Public Companies
Anthony W. Deering Director, Chairman of the Board, President, and
(1/28/45) Chief Executive Officer, The Rouse Company, real
1985 estate developers; Director, Mercantile Bank
(4/03 to present)
Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC, an
(1/27/43) acquisition and management advisory firm
2001
David K. Fagin Director, Golden Star Resources Ltd., Canyon
(4/9/38) Resources Corp. (5/00 to present), and Pacific
2001 Rim Mining Corp. (2/02 to present); Chairman and
President, Nye Corp.
F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates,
(8/22/34) Inc., consulting environmental and civil
1985 engineers
Hanne M. Merriman Retail Business Consultant; Director, Ann Taylor
(11/16/41) Stores Corp., Ameren Corp., Finlay Enterprises,
2001 Inc., The Rouse Company, and US Airways Group,
Inc.
John G. Schreiber Owner/President, Centaur Capital Partners, Inc.,
(10/21/46) a real estate investment company; Senior Advisor
1992 and Partner, Blackstone Real Estate Advisors,
L.P.; Director, AMLI Residential Properties
Trust, Host Marriott Corp., and The Rouse
Company
Hubert D. Vos Owner/President, Stonington Capital Corp., a
(8/2/33) private investment company
2001
Paul M. Wythes Founding Partner, Sutter Hill Ventures, a
(6/23/33) venture capital limited partnership, providing
2001 equity capital to young high-technology
companies throughout the United States;
Director, Teltone Corp.
*Each independent trustee oversees 105 T. Rowe Price portfolios and serves until
retirement, resignation, or election of a successor.
T. Rowe Price GNMA Fund
- --------------------------------------------------------------------------------
Inside Trustees
Name
(Date of Birth)
Year Elected*
[Number of T. Rowe
Price Portfolios Principal Occupation(s) During Past 5 Years and
Overseen] Directorships of Other Public Companies
William T. Reynolds Director and Vice President, T. Rowe Price and
(5/26/48) T. Rowe Price Group, Inc.; Director, T. Rowe
1997 Price Global Asset Management Limited
[37]
James S. Riepe Director and Vice President, T. Rowe Price; Vice
(6/25/43) Chairman of the Board, Director, and Vice
1985 President, T. Rowe Price Group, Inc.; Chairman
[105] of the Board and Director, T. Rowe Price Global
Asset Management Limited, T. Rowe Price Global
Investment Services Limited, T. Rowe Price
Investment Services, Inc., T. Rowe Price
Retirement Plan Services, Inc., and T. Rowe
Price Services, Inc.; Chairman of the Board,
Director, President, and Trust Officer, T. Rowe
Price Trust Company; Director, T. Rowe Price
International, Inc.; Chairman of the Board, GNMA Fund
M. David Testa Chief Investment Officer, Director, and Vice
(4/22/44) President, T. Rowe Price; Vice Chairman of the
1997 Board, Chief Investment Officer, Director, and
[105] Vice President, T. Rowe Price Group, Inc.;
Director, T. Rowe Price Global Asset Management
Limited and T. Rowe Price Global Investment
Services Limited; Chairman of the Board and
Director, T. Rowe Price International, Inc.;
Director and Vice President, T. Rowe Price Trust
Company
*Each inside trustee serves until retirement, resignation, or election of a
successor.
T. Rowe Price GNMA Fund
- --------------------------------------------------------------------------------
Officers
Name
(Date of Birth)
Title and Fund(s)
Served Principal Occupation(s)
Connice A. Bavely Vice President, T. Rowe Price and T. Rowe Price
(3/5/51) Group, Inc.
President, GNMA Fund
Stephen V. Booth Vice President, T. Rowe Price, T. Rowe Price
(6/21/61) Group, Inc., and T. Rowe Price Trust Company
Vice President, GNMA
Fund
Joseph A. Carrier Vice President, T. Rowe Price, T. Rowe Price
(12/30/60) Group, Inc., and T. Rowe Price Investment
Treasurer, GNMA Fund Services, Inc.
Roger L. Fiery III Vice President, T. Rowe Price, T. Rowe Price
(2/10/59) Group, Inc., T. Rowe Price International, Inc.,
Vice President, GNMA and T. Rowe Price Trust Company
Fund
Gregory S. Golczewski Vice President, T. Rowe Price and T. Rowe Price
(1/15/66) Trust Company
Vice President, GNMA
Fund
Henry H. Hopkins Director and Vice President, T. Rowe Price
(12/23/42) Group, Inc., T. Rowe Price Investment Services,
Vice President, GNMA Inc., T. Rowe Price Services, Inc., and
Fund T. Rowe Price Trust Company; Vice President,
T. Rowe Price, T. Rowe Price International, Inc.,
and T. Rowe Price Retirement Plan Services, Inc.
Keir R. Joyce Assistant Vice President, T. Rowe Price
(7/22/72)
Assistant Vice
President, GNMA Fund
Alan D. Levenson Vice President, T. Rowe Price and T. Rowe Price
(7/17/58) Group, Inc.
Vice President, GNMA
Fund
Patricia B. Lippert Assistant Vice President, T. Rowe Price and
(1/12/53) T. Rowe Price Investment Services, Inc.
Secretary, GNMA Fund
Edmund M. Notzon III Vice President, T. Rowe Price, T. Rowe Price
(10/1/45) Group, Inc., T. Rowe Price Investment Services,
Vice President, GNMA Inc., and T. Rowe Price Trust Company
Fund
John D. Wells Vice President, T. Rowe Price, T. Rowe Price
(6/29/60) Group, Inc., and T. Rowe Price Savings Bank
Vice President, GNMA
Fund
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Item 2. Code of Ethics.
Not required at this time.
Item 3. Audit Committee Financial Expert.
Not required at this time.
Item 4. Principal Accountant Fees and Services.
Not required at this time.
Item 5. Audit Committee of Listed Registrants.
Not required at this time.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. [Reserved]
Item 9. Controls and Procedures
(a) The registrant's Principal Executive Officer and Principal Financial Officer
have evaluated the registrant's disclosure controls and procedures within 90
days of this filing and have concluded that the registrant's disclosure controls
and procedures were effective, as of that date, in ensuring that information
required to be disclosed by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) At the date of filing this Form N-CSR, the registrant's Principal Executive
Officer and Principal Financial Officer are aware of no significant changes in
the registrant's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Item 10. Exhibits.
(a) Not required at this time.
(b) Separate certifications by the registrant's principal executive officer and
principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 and required by Rule 30a-2 under the Investment Company Act of 1940, are
attached.
A certification by the registrant's principal executive officer and principal
financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is
attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price GNMA Fund
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date July 13, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date July 13, 2003
By /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date July 09, 2003