Fund Profile
T. Rowe Price
Equity Income Fund
Important
Information
About This Fund
As of 12/31/97
This profile contains key information about the fund. If you
would like more information before you invest, please consult
the fund's prospectus. For details about the fund's holdings or
recent investment strategies, please review the fund's most
recent annual or semiannual report. The prospectus and reports
may be obtained at no cost by calling 1-800-638-5660.
Invest With Confidence
T. Rowe Price
Fund Profile
1. What is the fund's goal?
The fund seeks to provide substantial dividend income and
also long-term capital appreciation.
2. What is the fund's investment strategy?
This conservative stock fund uses a "value" strategy in
selecting investments. It seeks out stocks whose prices
appear low relative to their potential. Value investors
hope to realize capital appreciation as other investors
recognize a stock's intrinsic value and drive its price
higher.
The fund invests primarily in the common stocks of
established U.S. companies that pay above-average
dividends. However, it may also invest in bonds, preferred
stocks, and convertible securities, as well as foreign and
other securities, in keeping with its investment goal. Most
holdings will provide income.
The fund expects to generate a yield higher than that of
the S&P 500 Stock Index.
3. What is the fund's risk/reward potential?
Risk:
o The Equity Income Fund is primarily a stock fund; like
all stock investments, it exposes the investor to
potential drops in stock prices.
o In bull markets, this fund's focus on income-producing
securities could dampen its performance.
o The market's long rise over time has been punctuated
by declines; even in rising markets, the share prices
of the most profitable companies can fall.
o The fund's price will fluctuate; there is no assurance
you will be able to sell your shares at a profit.
Reward:
o Shareholders will participate in the long-term growth
potential of investing in common stocks.
o Advantages of the fund's focus on income:
- for stocks, dividends are normally a more stable
component of total return than capital
appreciation;
- securities that pay higher levels of income tend
to fluctuate less in price than those paying
little or no income;
- the compounding effect of reinvested dividends
can substantially increase investment returns
over time.
4. How can I tell if the fund is appropriate for me?
The fund is designed for individuals seeking a conservative
approach to investing in stocks - one that provides income
in addition to the prospects of capital appreciation over
time.
Because of its long-term orientation, the fund is
appropriate for both regular and tax-deferred accounts
(IRAs and Keoghs).
All investors in the fund should be willing to ride out
inevitable market downturns, which may last for extended
periods.
5. What fees or expenses will I pay?
This fund is 100% no load. There are no fees or charges to
buy or sell fund shares, reinvest dividends, or exchange
into other T. Rowe Price funds. There are no 12b-1
marketing fees.
Annual fund expenses as a
percentage of average net assets
Management fee 0.59%
Other expenses 0.26%
_______________________________
Total fund expenses 0.85%
These costs are deducted from the fund's total assets before the
daily share price is calculated and before distributions are
made. You do not pay them directly.
Sample expenses over time
(assuming $1,000 investment earning
5% annual return):
1 year 3 years 5 years 10 years
_________________________________________________________________
$9 $27 $47 $105
This is an illustration only; actual expenses and returns will vary.
6. How has the fund performed in the past?
The bar chart shows the fund's actual performance for each of the last
10 calendar years through December 31, 1997. It indicates the relative
volatility of returns from one year to the next.
The fund's average annual compound total returns for various holding
periods through 12/31/97 are compared with its Lipper peer group
average in the other chart. These average returns smooth out the
year-to-year variations in actual returns. Of course, the fund's past
performance is no guarantee of its future returns.
Calendar Year Total Returns
EIF
'88 27.6
'89 13.7
'90 -6.8
'91 25.3
'92 14.1
'93 14.8
'94 4.5
'95 33.4
'96 20.4
'97 28.82
Average Annual Compound
Total Returns as of 12/31/97
Fund Lipper Average*
1 year 28.82% 27.51%
5 years 19.95% 17.01%
10 years 16.99% 14.66%
*Lipper Equity Income Funds Average
These figures include changes in principal value, reinvested dividends, and
capital gain distributions. Investment return and principal value will vary,
and shares may be worth more or less at redemption than at original purchase.
7. Who manages the fund?
The fund is managed by T. Rowe Price Associates. Founded in 1937, T.
Rowe Price and its affiliates manage over $120 billion for
approximately six million individual and institutional investor
accounts. The company offers a comprehensive range of stock, bond, and
money market funds directly to the investing public.Brian Rogers has
day-to-day responsibility for the fund and has managed investments for
T. Rowe Price since 1983.
8. How can I purchase shares?
Fill out and return the New Account Form in the postpaid envelope,
along with your check for a minimum of $2,500 or more ($1,000 or more
for retirement plans and gifts or transfers to minors) or $50 if
investing through Automatic Asset Builder. You can also open an account
by bank wire or by exchanging from another T. Rowe Price fund.
9. How can I sell shares or close my account?
You may redeem or sell any portion of your account on any business day.
Simply write to us or call.
We also offer easy exchange among our entire family of domestic and
international funds. Restrictions may apply in special circumstances,
and some redemption requests need a signature guarantee.
10. When will I receive distributions?
The fund distributes income quarterly and net capital gains, if any,
at year-end. Income and short-term gains are taxable at ordinary income
rates, and long-term gains are taxable at the current capital gains
rate. Distributions are reinvested automatically in additional shares
unless you choose another option, such as receiving a check.
11. What services are available?
A wide range, including but not limited to:
o easy exchanges;
o retirement plans for individuals and large and small businesses
(e.g., IRA, SEP, Keogh, 401(k), 403(b), etc.);
o automated information and transaction services by telephone or
personal computer;
o electronic transfers between your fund and bank accounts;
o automatic investing and automatic exchange;
o discount brokerage.
To Open an Account
Investor Services
1-800-638-5660
For Existing Accounts
Shareholder Services
1-800-225-5132
For Yields and Prices
Tele*Access(registered trademark)
1-800-638-2587
24 hours, 7 days
For Information via the Internet
www.troweprice.com
T. Rowe Price OnLine
Call us at 1-800-541-3036 for more information on this complete financial
management service.
T. Rowe Price
100 East Pratt Street
Baltimore, MD 21202
Invest With Confidence
T. Rowe Price
F71-042 12/31/97
T. Rowe Price Investment Services, Inc., Distributor
