T. Rowe Price
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Semiannual Report
Real Estate Fund
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June 30, 2000
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REPORT HIGHLIGHTS
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REAL ESTATE FUND
----------------
* Investors responded to attractive valuations in real estate stocks, and
your fund posted solid results.
* The fund's returns were ahead of both benchmarks for the 6- and 12-month
periods ended June 30 due to our focus on larger-cap stocks with relatively
high price/earnings multiples.
* We took advantage of weakness in quality REIT lodging stocks and establis
hed new positions in this sector.
* Our portfolio is positioned to capture further appreciation in real estate
stocks during the months ahead.
* We project increasing revenues, earnings, and dividends for the industry in
2000 and believe it is only a question of time before investors share our
enthusiasm for real estate stocks.
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UPDATES AVAILABLE
-----------------
For updates on T. Rowe Price funds following the end of each calendar
quarter, please see our Web site at www.troweprice.com.
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FELLOW SHAREHOLDERS
-------------------
The "longer term" arrived. In earlier reports, we discussed our
disappointment with the market's failure to reward the growing earnings,
distributions, and dividend coverage exhibited by our holdings. Though we were
frustrated, we were not deterred in our belief that investors in real estate
stocks would eventually be rewarded for their patience. We noted that compelling
valuations alone should suffice to spark renewed interest in our universe, and
this was evidently the case as investors found favor in real estate securities
during the first half of 2000. We are pleased to report that your fund provided
a solid return during the past six months.
<PAGE>
PERFORMANCE COMPARISON
----------------------
Period Ended 6/30/00 6 Months 12 Months
-------------------- -------- ---------
Real Estate Fund 16.23% 6.94%
Wilshire Real Estate
Securities Index 15.21 4.46
Lipper Real Estate
Funds Average 12.66 2.10
The fund participated fully in the rejuvenation of real estate stocks that
occurred during the first half, providing a total return of 16.23%, which
comfortably outpaced the Lipper Real Estate Funds Average and the Wilshire Real
Estate Securities Index. Real estate stocks, in general, far surpassed the
broader market as measured by the unmanaged Standard & Poor's 500 Stock Index,
which provided a slightly negative return over this same period, and they were
well ahead of the technology-heavy Nasdaq Composite Index, which declined by a
wider margin.
DIVIDEND DISTRIBUTION
---------------------
On June 27, 2000, your Board of Directors declared a second-quarter income
dividend of $0.10 per share, bringing the year-to-date total to $0.16. This
distribution was paid on June 29 to shareholders of record on June 27.
MARKET ENVIRONMENT
------------------
During the half year, real estate stocks with the highest price/earnings
multiples still provided the best returns, and larger-capitalization stocks also
tended to outperform. Both of these conditions benefited fund results, as we
were invested for the most part in higher-multiple, larger-cap holdings. It was
clear that investors were willing to pay a premium for quality organizations
with strong earnings. Given the capi tal-intensive nature of real estate, it is
our view that such companies generally achieve their larger-cap status primarily
through their ability to attr act additional investment capital from sources
that believe in their growth potential.
*********************************************************
While some investors chose to wait on
the sidelines for sentiment to shift, we
were pleased to see many of our
portfolio companies take the opportunity
to repurchase their shares at deep
discounts to fair value.
*********************************************************
<PAGE>
Uncertainty often breeds opportunity. While some investors chose to wait on
the sidelines for sentiment to shift, we were pleased to see many of our
portfolio companies take the opportunity to repurchase their s hares at deep
discounts to fair value. If there was anything positive about the long period
when the stocks of real estate companies languished, it was that many firms
developed a renewed appreciation for the scarcity and value of their own
precious capital. Various comp anies were tested during this time, and some fell
short of expectations. The difficult environment provided us with additional
data to measure the true value of many organizations and their management teams.
The higher-quality organizations tended to be better prepared during the
recent period of adversity. Backed by strong balance sheets, they were able to
seize opportunities and negotiate from strength. The real estate industry
depends to a great extent on the use of financial leverage. While we believe
leverage is important, we are aware of its inherent risks. Consequently, we look
for management that shares this view and proactively manages the balance sheet
prudently. Thus, when interest rates began to rise, we were generally pleased
with the strategies employed by our portfolio companies. Still, rising interest
rates tend to translate into higher expenses, and we were not surprised to see
some downward revisions of near-term earnings estimates for the industry.
However, in the longer ru n, higher rates can be a positive factor when they
dampen new supply, which poses one of the major real estate risks.
PORTFOLIO REVIEW
----------------
As discussed in past reports, we have historically been underweighted in
the lodging sector due to our concerns about new supply. This strategy has been
fruitful, as lodging stocks have declined substantially and provided some of the
weakest performance among real estate stocks in general. However, opportunities
have surfaced in the wake of the precipitous sell-off, and as we entered the new
year we discovered some solid lodging stocks that met our strict investment
criteria.
INDUSTRY DIVERSIFICATION
------------------------
Percent of Net Assets
12/31/99 6/30/00
-------- -------
Apartment/Residential 18% 18%
Office 16 16
Office and Industrial 14 14
Diversified 13 12
Shopping Center 8 8
Industrial 8 8
Lodging and Leisure 6 10
Regional Mall 5 5
Reserves 5 3
Manufactured Housing 3 2
Self-Storage 2 2
Other Real Estate 2 2
Services - -
Total 100% 100%
<PAGE>
In keeping with our theme of investing in strong assets, strong markets,
and strong management teams, we were attracted to the double-digit yields
offered by several lodging REITs and subsequently purchased shares in companies
whose yields we felt were sustainable under the likeliest scenarios. We
established a new position in MERISTAR HOSPITALITY, a lodging REIT that invests
in upscale, full-service hotels in major urban and resort locations under
internationally known brands. Also added were shares of INNKEEPERS USA TRUST,
which has a large concentration of Residence Inns in its portfolio. We also
initiated a position in MARRIOTT INTERNATIONAL, a company we believe is an
extraordinary manager of lodging assets.
Your fund was nicely rewarded for its position in CORNERSTONE PROPERTIES
when that company was acquired by EQUITY OFFICE PROPERTIES. The latter company
had already been our largest holding, and it grew following the acquisition. We
are believers in the value of the Cornerstone assets and are confident that
Equity Office will benefit further by acquiring them.
OUTLOOK
-------
Though real estate stocks flourished in the first half of the year, we are
optimistic about the potential for further appreciation in the group. Stock
performance for our sector has not yet returned to the levels seen in 1997
despite the recent rally, yet these companies have continued to provide
admirable compound annual earnings growth. Rising interest rates pose some
issues, but we do not foresee major problems, especially among our portfolio
holdings with stronger balance sheets. We anticipate continued earnings growth
as well as dividend increases. Additionally, REITs in particular do not appear
to be richly priced relative to their net asset values. We remain optimistic and
are committed to providing our shareholders with a portfolio that we believe can
capture additional upside potential in the months ahead.
Respectfully submitted,
/s/
David M. Lee
Chairman of the Investment Advisory Committee
July 21, 2000
<PAGE>
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T. Rowe Price Real Estate Fund
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PORTFOLIO HIGHLIGHTS
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TWENTY-FIVE LARGEST HOLDINGS
----------------------------
Percent of
Net Assets
6/30/00
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Equity Office Properties 5.7%
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Starwood Hotels & Resorts Worldwide 4.5
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Reckson Associates Realty 4.4
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Vornado Realty Trust 3.3
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Simon Property Group 3.3
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Duke-Weeks Realty 3.2
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Spieker Properties 3.2
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Mack-Cali Realty 3.0
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Equity Residential Properties Trust 2.8
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Arden Realty 2.8
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Kimco Realty 2.7
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Boston Properties 2.7
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Kilroy Realty 2.6
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Trizec Hahn 2.6
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Cousins Properties 2.6
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ProLogis Trust 2.6
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Post Properties 2.3
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Apartment Investment & Management 2.3
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<PAGE>
AMB Property 2.2
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Avalonbay Communities 2.2
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Archstone Communities Trust 2.2
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Gables Residential Trust 2.0
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Smith Charles Residential Realty 2.0
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Camden Property Trust 2.0
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Crescent Real Estate Equities 2.0
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Total 71.2%
Note: Table excludes reserves.
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T. Rowe Price Real Estate Fund
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PORTFOLIO HIGHLIGHTS
--------------------
MAJOR PORTFOLIO CHANGES
-----------------------
LISTED IN DESCENDING ORDER OF SIZE
----------------------------------
6 Months Ended 6/30/00
TEN LARGEST PURCHASES
---------------------
Equity Office Properties
Marriott *
Mack-Cali Realty
Equity Residential Properties Trust
Simon Property Group
Boston Properties
Vornado Realty Trust
Spieker Properties
Starwood Hotels & Resorts Worldwide
Reckson Associates Realty
<PAGE>
TEN LARGEST SALES
-----------------
Cornerstone Properties **
Marriott
Colonial Properties Trust
Starwood Hotels & Resorts Worldwide
Crescent Real Estate Equities
VailResorts
Centerpoint Properties
Manufactured Home Communities
Sun Communities
Spieker Properties
* Position added
** Acquired by another company
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T. Rowe Price Real Estate 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.
Wilshire Real Estate Lipper Real Estate
Securities Index Funds Average Real Estate Fund
---------------- ------------- ----------------
10/31/97 10,000 10,000 10,000
6/98 9,875 9,865 10,561
6/99 9,195 9,294 9,854
9/00 9,605 9,397 10,538
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.
Since Inception
Periods Ended 6/30/00 1 Year Inception Date
--------------------- ------ --------- ----
Real Estate Fund 6.94% 1.99% 10/31/97
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
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<PAGE>
T. Rowe Price Real Estate Fund
------------------------------
Unaudited For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
--------------------
6 Months Year 10/31/97
Ended Ended Through
6/30/00 12/31/99 12/31/98 12/31/97
NET ASSET VALUE
Beginning of period $ 8.11 $ 8.68 $ 10.69 $ 10.00
--------------------------------------------------------------------------------
Investment activities
Net investment income (loss) 0.21* 0.37* 0.38* 0.08*
Net realized and unrealized
gain (loss) 1.10 (0.49) (1.97) 0.70
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Total from investment
activities 1.31 (0.12) (1.59) 0.78
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Distributions
Net investment income (0.16) (0.37) (0.40) (0.09)
Return of capital - (0.08) (0.04) -
--------------------------------------------------------------------------------
Total distributions (0.16) (0.45) (0.44) (0.09)
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Redemption fees
added to paid-in-capital - - 0.02 -
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NET ASSET VALUE
End of period $ 9.26 $ 8.11 $ 8.68 $ 10.69
======== ========== ========= =========
Ratios/Supplemental Data
Total return ** 16.23%* (1.23)%* (14.86)%* 7.82%*
--------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.00%*+ 1.00%* 1.00%* 1.00%*+
--------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 5.37%*+ 4.22%* 4.07%* 6.07%*+
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Portfolio turnover rate 16.2%+ 26.9% 56.8% 8.4%
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Net assets, end of period
(in thousands) $ 37,197 $ 24,725 $ 27,599 $ 7,259
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** 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 and payment of no redemption or account fees.
* Excludes expenses in excess of a 1.00% voluntary expense limitation in
effect through 12/31/01.
+ Annualized
The accompanying notes are an integral part of these financial statements.
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<PAGE>
T. Rowe Price Real Estate Fund
------------------------------
Unaudited June 30, 2000
STATEMENT OF NET ASSETS In thousands
----------------------- Shares Value
------ -----
COMMON STOCKS 97.0%
REAL ESTATE 94.9%
Apartment/Residential 17.9%
Apartment Investment & Management, REIT 19,500 $ 843
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Archstone Communities Trust, REIT 38,500 811
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Avalonbay Communities, REIT 19,500 814
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Camden Property Trust, REIT 25,500 749
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Equity Residential Properties Trust, REIT 23,000 1,058
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Gables Residential Trust, REIT 29,500 762
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Post Properties, REIT 19,500 858
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Smith Charles Residential Realty 20,000 760
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6,655
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Diversified 12.2%
Colonial Properties Trust, REIT 5,000 137
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Cousins Properties, REIT 25,500 982
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Crescent Real Estate Equities, REIT 36,500 748
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Security Cap U.S. Realty, ADR, REIT * 24,000 431
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Trizec Hahn 55,000 983
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Vornado Realty Trust, REIT 35,500 1,234
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4,515
<PAGE>
Industrial 8.0%
AMB Property 36,500 833
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Centerpoint Properties Trust, REIT 15,000 611
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EastGroup Properties, REIT 26,500 558
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ProLogis Trust, REIT 45,500 970
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2,972
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Lodging & Leisure 8.3%
Marriott (Class A) 15,000 541
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Meristar Hospitality, REIT 19,500 409
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Starwood Hotels & Resorts Worldwide, REIT 51,500 1,677
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Vail Resorts * 29,000 473
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3,100
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Manufactured Housing 2.1%
Manufactured Home Communities, REIT 20,500 491
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Sun Communities, REIT 9,000 301
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792
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Office 15.9%
Arden Realty, REIT 44,000 $ 1,034
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Boston Properties, REIT 26,000 1,004
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CarrAmerica Realty, REIT 25,500 676
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Equity Office Properties, REIT 76,500 2,108
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Mack-Cali Realty, REIT 43,000 1,105
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5,927
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<PAGE>
Office & Industrial 13.5%
Duke Realty Investments, REIT 54,000 1,208
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Kilroy Realty, REIT 38,000 986
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Reckson Associates Realty (Class B), REIT 8,500 216
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Reckson Associates Realty, REIT 60,000 1,425
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Spieker Properties, REIT 26,000 1,196
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5,031
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Other Real Estate 2.0%
Catellus Development * 49,000 735
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735
-------------------------------------------------------------------------------
Regional Mall 5.0%
CBL & Associates Properties, REIT 26,000 649
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Simon DeBartolo Group, REIT 55,000 1,220
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1,869
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Self Storage 1.9%
Public Storage, REIT 30,000 703
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703
-------------------------------------------------------------------------------
Shopping Center 8.1%
Federal Realty Investment Trust, REIT 33,000 660
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JP Realty, REIT 36,500 650
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Kimco Realty, REIT 24,500 1,005
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Weingarten Realty Investors, REIT 17,000 686
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3,001
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Total Real Estate 35,300
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Total Miscellaneous Common Stocks 2.1% 780
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Total Common Stocks (Cost $36,687) 36,080
===============================================================================
<PAGE>
SHORT-TERM INVESTMENTS 3.3%
Money Market Funds 3.3%
Reserve Investment Fund, 6.68% # 1,222,388 1,222
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Total Short-Term Investments (Cost $1,222) 1,222
Total Investments in Securities
100.3% of Net Assets (Cost $37,909) $ 37,302
Other Assets Less Liabilities (105)
NET ASSETS $ 37,197
Net Assets Consist of:
Accumulated net investment income -
net of distributions $ 181
Accumulated net realized gain/loss -
net of distributions (3,763)
Net unrealized gain (loss) (607)
Paid-in-capital applicable to 4,019,046
shares of $0.0001 par value capital stock
outstanding; 1,000,000,000 shares authorized 41,386
NET ASSETS $ 37,197
NET ASSET VALUE PER SHARE $ 9.26
# Seven-day yield
* Non-income producing
REIT Real Estate Investment Trust
ADR American Depository Receipt
The accompanying notes are an integral part of these financial statements.
===============================================================================
<PAGE>
T. Rowe Price Real Estate Fund
------------------------------
Unaudited
In thousands
STATEMENT OF OPERATIONS
-----------------------
6 Months
Ended
6/30/00
Investment Income (Loss)
Income
Dividend $ 861
Interest 41
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Total income 902
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Expenses
Shareholder servicing 45
Custody and accounting 44
Investment management 15
Registration 15
Prospectus and shareholder reports 10
Legal and audit 7
Directors 4
Miscellaneous 2
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Total expenses 142
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Net investment income (loss) 760
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Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities (326)
Change in net unrealized gain or loss on securities 3,848
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Net realized and unrealized gain (loss) 3,522
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INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 4,282
The accompanying notes are an integral part of these financial statements.
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<PAGE>
T. Rowe Price Real Estate Fund
------------------------------
Unaudited
STATEMENT OF CHANGES IN NET ASSETS In thousands
----------------------------------
6 Months Year
Ended Ended
6/30/00 12/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 760 $ 1,117
Net realized gain (loss) (326) (2,691)
Change in net unrealized gain or loss 3,848 1,076
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Increase (decrease) in net assets from operations 4,282 (498)
------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (579) (1,117)
Return of capital - (247)
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Decrease in net assets from distributions (579) (1,364)
------------------------------------------------------------------------------
Capital share transactions *
Shares sold 14,077 11,954
Distributions reinvested 538 1,259
Shares redeemed (5,854) (14,236)
Redemption fees received 8 11
------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions 8,769 (1,012)
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Net Assets
Increase (decrease) during period 12,472 (2,874)
Beginning of period 24,725 27,599
------------------------------------------------------------------------------
End of period $ 37,197 $ 24,725
* Share information
Shares sold 1,604 1,384
Distributions reinvested 60 156
Shares redeemed (694) (1,672)
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Increase (decrease) in shares outstanding 970 (132)
The accompanying notes are an integral part of these financial statements.
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<PAGE>
T. Rowe Price Real Estate Fund
------------------------------
Unaudited June 30, 2000
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------
T. Rowe Price Real Estate 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 31, 1997. The fund seeks long-term
growth through a combination of capital appreciation and current income by
investing principally in the equity securities of real estate companies. The
accompanying financial statements are prepared in accordance with generally
accepted accounting principles for the investment company industry; these
principles may require the use of estimates by fund management.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day the valuations are
made. A security which is listed or traded on more than one exchange is valued
at the quotation on the exchange determined to be the primary market for such
security. Listed securities not traded on a particular day and securities
regularly traded in the over-the-counter market are valued at the mean of the
latest bid and asked prices. Other equity securities are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
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.
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.
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. Credits earned on daily uninvested cash balances
at the custodian are used to reduce the fund's custody charges.
<PAGE>
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $11,214,000 and $2,233,000, respectively, for the six
months ended June 30, 2000.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income. As of December 31, 1999, the fund had capital loss carryforwards
for federal income tax purposes of $3,423,000, of which $224,000 expires in
2006, and $3,199,000 in 2007. The fund intends to retain gains realized in
future periods that may be offset by available capital loss carryforwards.
At June 30, 2000, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled $37,909,000.
Net unrealized loss aggregated $607,000 at period-end, of which $1,427,000
related to appreciated investments and $2,034,000 to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between the fund and T. Rowe Price
Associates, Inc. (the manager) provides for an annual investment management fee,
of which $6,000 was payable at June 30, 2000. The fee is computed daily and paid
monthly, and consists of an individual fund fee equal to 0.30% 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
June 30, 2000, 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.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through December 31, 2001, which would cause the
fund's ratio of total expenses to average net assets to exceed 1.00%.
Thereafter, through December 31, 2003, the fund is required to reimburse the
manager for these expenses, provided that average net assets have grown or
expenses have declined sufficiently to allow reimbursement without causing the
fund's ratio of total expenses to average net assets to exceed 1.00%. Pursuant
to this agreement, $72,000 of management fees were not accrued by the fund for
the six months ended June 30, 2000. Pursuant to a previous agreement, $488,000
of unaccrued fees and expenses remain subject to reimbursement through December
31, 2001.
<PAGE>
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund receives
certain other services. The manager computes the daily share price and maintains
the financial records of the fund. T. Rowe Price Services, Inc. is the fund's
transfer and dividend disbursing agent and provides shareholder and
administrative services to the fund. T. Rowe Price Retirement Plan Services,
Inc. provides suba ccounting and recordkeeping services for certain retirement
accounts invested in the fund. The fund incurred expenses pursuant to these
related party agreements totaling approximately $66,000 for the six months ended
June 30, 2000, of which $11,000 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 June 30, 2000, totaled
$41,000 and are reflected as interest income in the accompanying Statem ent of
Operations.
================================================================================
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*AccessRegistration Mark and the
T. Rowe Price Web site on the Internet. Address: www.troweprice.com
<PAGE>
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 July 2000 survey for representative-assisted stock trades.
Services vary by firm, and commissions may vary depending on size of
order.
================================================================================
<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
<PAGE>
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
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TAXABLE
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
<PAGE>
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, which contains complete information,
including fees and expenses. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
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<PAGE>
T. Rowe Price Advisory Services and Retirement Resources
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ADVISORY SERVICES, RETIREMENT RESOURCES
T. Rowe Price is your full-service retirement specialist. We have developed
unique advisory services that can help you meet the most difficult retirement
challenges. Our broad array of retirement plans is suitable for individuals, the
self-employed, small businesses, corporations, and nonprofit organizations. We
also provide recordkeeping, communications, and investment management services,
and our educational materials, self-help planning guides, and software tools are
recognized as among the industry's best. For information or to request
literature, call us at 1-800-638-5660, or visit our Web site at
WWW.TROWEPRICE.COM.
ADVISORY SERVICES
-----------------
T. ROWE PRICE RETIREMENT INCOME MANAGERsm helps retirees or those within
two years of retirement determine how much income they can take in retirement.
The program uses extensive statistical analysis and the input of financial
planning professionals to suggest an income plan that best meets your
objectives.
T. ROWE PRICE ROLLOVER INVESTMENT SERVICE offers asset allocation advice to
those planning a major change in their qualified retirement plans, such as a
401(k) rollover from a previous employer or an IRA transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
-------------------------------------
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
PLANNING AND INFORMATIONAL GUIDES
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
<PAGE>
INSIGHTS REPORTS
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
SOFTWARE PACKAGES
T. Rowe Price Retirement Planning
AnalyzerTM CD-ROM or diskette $19.95.
To order, please call 1-800-541-5760.
Also available on the Internet for $9.95.
T. Rowe Price Variable Annuity AnalyzerTM
CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. ROWE PRICE IMMEDIATE VARIABLE ANNUITY (INCOME ACCOUNT)
INVESTMENT KITS
We will be happy to send you one of our
easy-to-follow investment kits when you
are ready to invest in any T. Rowe Price
retirement vehicle, including IRAs,
qualified plans, small-business plans,
or our no-load variable annuities.
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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
<PAGE>
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.
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<PAGE>
T. Rowe Price Brokerage
-----------------------
BROKERAGE SERVICES
------------------
T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services,
Inc., Member NASD/SIPC.
T. Rowe Price Brokerage provides high-quality services and financial tools
you can use to manage your investments effectively and conveniently. We also
offer significant commission savings over full-service brokerages on a wide
range of individual securities and other investments.*
Internet and Automated Services You can enter trades, access quotes, and
review account information 24 hours a day, seven days a week, by telephone or
computer. We offer a flat-rate commission of $24.95 on stock trades placed
through our Internet-Trader service.**
Research Services To help you make informed investment decisions, we offer
access to several sources of data. You can research your investments using our
Online Research & News Service, provided by Thomson Investors Network, which
includes company profiles, intraday and 12-month interactive charting, and
analysts' ratings and earnings estimates. Using our Research On Call service,
you can request reports from Standard & Poor's, Vicker's, Lipper, and other
well-known research providers to be delivered by fax or by mail.
Dividend Reinvestment Service This service helps keep more of your money
working for you. Cash dividends (of $10 or greater) from your eligible
securities will be invested automatically in additional shares of the same
company, free of charge. Most stocks listed on national securities exchanges or
Nasdaq are eligible for this service.
* Based on a September 1999 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary depending on
size of order.
** $24.95 per trade for up to 1,000 shares plus an additional $.02 for
each share over 1,000 shares. Visit our Web site for a complete
commission schedule or call for rates on representative-assisted and
other non-Internet trades.
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FOR FUND AND ACCOUNT INFORMATION
OR TO CONDUCT TRANSACTIONS,
24 HOURS, 7 DAYS A WEEK
By touch-tone telephone
TELE*ACCESS 1-800-638-2587
By Account Access on the Internet
WWW.TROWEPRICE.COM/ACCESS
<PAGE>
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
T. Rowe Price Investment Services, Inc., Distributor. F12-051 6/30/00
