<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
Semiannual Report
Capital Appreciation Fund
- --------------------------------------------------------------------------------
June 30, 1999
- --------------------------------------------------------------------------------
REPORT HIGHLIGHTS
================================================================================
CAPITAL APPRECIATION FUND
- -------------------------
* Stocks made further progress in the first half, but bond returns were
undercut by rising interest rates.
* Investor interest broadened to include cyclical stocks -- a
development that benefited the fund in the second quarter.
* Returns were solid for the six-month period but, reflecting our
substantial nonequity holdings, lagged the broad market and peer group
average.
* Top contributors included natural resources and energy companies,
while bonds and tobacco-related stocks were weak.
* We remain cautious in view of the market's high valuations and the
likelihood of higher interest rates by year-end.
================================================================================
FELLOW SHAREHOLDERS
================================================================================
There was occasional turbulence, but by and large the financial weather
made for smooth flying and comfortable returns during the first half of 1999.
Conditions improved markedly for the Capital Appreciation Fund in the second
quarter when investors finally shifted their attention from a handful of blue
chip growth stocks to a much broader range, including value and basic industry
stocks --- staples of your fund's portfolio.
================================================================================
<PAGE>
PERFORMANCE COMPARISON
----------------------
Periods Ended 6/30/99 6 Months 12 Months
--------------------- -------- ---------
Capital Appreciation Fund 8.77% 8.70%
S&P 500 12.38 22.76
Lipper Capital Appreciation
Funds Average 13.68 20.04
================================================================================
The fund rose a solid 8.77% during the six-month period, with results in
the second quarter (a gain of 10.53%) exceeding the S&P 500 Stock Index's return
for the same period and more than offsetting the fund's small loss in the first
quarter. The resurgence in cyclical stocks largely powered results. Our bond
holdings held up rather well against the headwind of weak fixed income markets
but were, nevertheless, a modest drag on performance. The 12-month return was
below your fund's average annual gains of the past five and 10 years, 14.85% and
12.39%, respectively, and reflected the extended exile of value-oriented stocks.
All things considered, we accomplished our flight plan's goals. We remain a
unique mutual fund focused on minimizing your risk of loss while maintaining
exposure to the long-term advantage of equity investing.
================================================================================
MARKET ENVIRONMENT
================================================================================
About one year ago, financial markets unexpectedly hit a wind shear of
hedge fund problems. The Federal Reserve took timely corrective action, dropping
interest rates three times by small increments and organizing a bailout of an
otherwise doomed major investor group. Today a reversal of these Fed actions is
probably under way. We have had one small rate increase and if, as expected,
U.S. economic growth continues strong while foreign economies also expand, we
anticipate more. Remember, the Fed is a conservative organization accustomed to
moving cautiously, and one small turn of the rudder is more likely to represent
a course shift than an isolated adjustment.
<PAGE>
This upward move in interest rates had a particularly negative effect on
fixed income markets, where bonds of long maturity (over 20 years) had very poor
performance over the past six months. Equities, on the other hand, have done
quite well so far in 1999 despite the higher rates. Typical of the last several
years, large growth stocks and technology-related companies, especially those
with Internet connections, soared into the wild blue yonder. Small companies
continued to generate positive but lower returns for the first half, despite a
surge in the second quarter. We saw investor interest tilt toward several
long-out-of-favor industry groups, including natural resources and mid-size
energy companies. Given our forecast of a moderately strong world economy, it's
reasonable that this trend could continue.
So far inflation, at least as measured by traditional windsock instruments,
shows no sign of picking up. The "wealth effect" of a stock market boom, rising
home prices, and even a tight U.S. labor market have not significantly boosted
prices. Offsets are many: the benefits of vigorous foreign competition, improved
government finances, successful Fed monetary management, and improved consumer
buying advantages related to the Internet.
============================================================
<PAGE>
INFORMATION ON YEAR-END DISTRIBUTIONS
-------------------------------------
To help you with tax planning, we try to give you
a good idea of the per-share income and capital
gain amounts our funds may distribute near
year-end. In late October, we will provide
estimates of these amounts, which will be paid on
December 16, 1999, to shareholders of record on
December 14. These preliminary numbers will be
included in The Price Report mailing to
shareholders in late October and will also be
available on our Web siteNwww.troweprice.com. We
hope that these preliminary numbers will be useful
to you in approximating the income and capital
gains taxes you may pay on distributions to
taxable accounts. If your fund distributed any
capital gains earlier in 1999, you can find the
amounts on your statements and should include them
in your tax planning calculations. Please keep in
mind that the numbers are not final and are likely
to be revised before the December 14 declaration
and record date. As the fall progresses, you may
want to check our Web site for revisions. If you
would like information on tax matters relating to
mutual funds, please visit our Web site to
download our Insights report, Tax Information for
Mutual Fund Investors, or call 1-800-225-5132 to
request a copy.
============================================================
Allow me a small digression. While we see significant consumer benefits, we
are skeptical of most Internet companies as investments, despite the seemingly
easy fortunes being created daily. Today's terrific growth is being artificially
boosted by (1) a sales tax exemption that is unlikely to last indefinitely, and
(2) the equity market's willingness to fund operating losses. Throughout
financial history business success has led to stock market success, not vice
versa. As for the Internet stocks, my blunt opinion is that eventually some of
their stockholders who were drawn into the whirlwind of their rising prices will
be the financial equivalent of Pacific island gooney birds that get sucked into
jet engines. This is probably an accident waiting to happen, and when it does
the larger equity market will also lose some altitude.
================================================================================
PORTFOLIO HIGHLIGHTS
================================================================================
Seven of the fund's top contributors to performance were natural resources
or energy holdings, as shown in the table on page 7. MACMILLAN BLOEDEL, a
Canadian forest products producer, led the way boosting Capital Appreciation's
price by $0.24 per share over the last six months. This large holding
appreciated over 75% as a result of (1) improving prices for lumber and related
investor enthusiasm for similar companies, (2) strong new management that
continues to fix its operating problems, and (3) a favorable merger plan.
<PAGE>
DOMTAR, a similarly situated company, although not a merger beneficiary, was
another major contributor. The strong performance of our energy holdings ---
AMERADA HESS, MITCHELL ENERGY & DEVELOPMENT, KERR-MCGEE, MURPHY OIL, and TEXACO
- --- was partially the result of improved world oil prices (thanks to OPEC) and
partially a snapback from diving stock prices late in 1998. While generally
inclined to stick with these resource holdings going forward we have done some
selective selling. Specifically, ATLANTIC RICHFIELD, a long-held position, was
eliminated after its price ran up, and several holdings were trimmed as they
reached intermediate price objectives.
Negative contributors to performance were headed by LOEWS and PHILIP
MORRIS, two companies selling far below our perception of their value but
tainted by tobacco litigation uncertainties. Considering the suffering we have
endured with these two, I doubt our eventual payout will merit a "victory roll,"
but we nevertheless expect significant gains from today's price levels.
TENNESSEE VALLEY AUTHORITY bonds were our third-worst contributors to
performance. This large position fell about one-third as much as similar
maturity Treasury securities because of their unique features, which are
discussed in more detail later. We may well add to this holding
opportunistically.
[Pie chart showing Security Diversification Bonds 13%, common stockd 54%,
Convertibles 26%, Preferred Stocks 1%, Reserves 6%.
Our allocation between asset classes stayed reasonably consistent over the
past six months.
The equity percentage increased modestly from 51% to 54% with our largest
purchases being UNISOURCE ENERGY, ROUSE, NIAGARA MOHAWK HOLDINGS, and MACMILLAN
BLOEDEL. Other miscellaneous highlights include a substantial merger-induced
gain by NINE WEST convertible bonds, and expanding exposure to health care
through a number of convertible purchases.
================================================================================
BONDS ET CETERA
================================================================================
Managing our nonequity holdings is more than just achieving portfolio
balance and risk reduction, although these are very important. We actively
pursue numerous strategies in choosing securities within these asset classes,
with the goal of enhancing our returns over time and lowering risk. Our
checklist for bond purchases includes a number of strictures, including the
following:
1. We start by thinking of how much we are likely to lose on a
security if we misread the fundamentals or the financial
environment. For example, the longer a bond has before maturity
the more it will fluctuate both up and down as interest rates
change. We favor bonds with less than seven years to maturity.
2. We are not overly enamored of an investment's stated yield. A
high yield is too often a properly negative assessment of risk by
other investors. We would rather have high quality, unless there
is significant reward potential.
<PAGE>
3. When we do take risk --- for example, several years ago CLEVELAND
ELECTRIC preferred stock was a large position --- we want more
than a high yield. We want, if successful, the possibility of a
large capital gain. Therefore, our purchases of risky nonequity
securities tend to be at significant discounts to prices paid by
original investors in these securities.
4. We put a higher emphasis on avoiding loss than most investors.
Therefore, we will willingly sacrifice a small amount of return,
often stated yield, to know that large losses are very unlikely.
For example, many of our positions have features (typically
called puts) that enable us to sell them back to their issuers in
the next few years at reasonable predetermined prices. The
Tennessee Valley Authority bonds enjoy these provisions.
5. Convertible bonds and preferreds represent about half of our
nonequity assets. When considering these securities, we are
careful to buy only those where we, not the issuer, control the
conversion decision. Too often investors regret giving away that
power when a poorly performing stock is forced upon them in
exchange for what they thought was a strong high-yielding
security.
Two reminders concerning nonequities: first, their returns are seldom
competitive with a good stock; and second, bonds are inherently less risky than
equities even though their volatility over the last 30 years has been relatively
high. They represent a valuable tool in managing the portfolio.
================================================================================
OUTLOOK
================================================================================
Portfolio managers are a lot like pilots N there are old ones and there are
bold ones, but there are very few old, bold ones. This oldster still takes the
occasional calculated risk but admits to a continued cautious outlook. Yes, the
economy looks good, but as discussed in past letters the stock market's
valuation measures --- high price/earnings ratios, low yields, and others ---
look very expensive. To this continuing risk has now been added the likelihood
that interest rates will rise in the coming six months. Historically, such
increases have hurt financial markets before slowing the real economy, which is
what we believe is the Fed's goal. We are also troubled by a conviction that
financial accounting is being shamelessly manipulated, and by the suspicion that
despite 16 years of flawless performance the Fed just might once make a serious
mistake, causing the economy or financial markets to stall rather than just slow
down. In this regard, an impending year 2000 election campaign reduces
flexibility and further increases the likelihood of a misstep. Finally, to end
this white-knuckle litany there is always the possibility that some unknowable
factor --- maybe even Y2K or fear of same --- will impact securities markets.
<PAGE>
Why then is more than half of the fund invested in common stocks ---
generally considered the riskiest of financial assets? Principally because we
are buying individual securities where we hope our expertise enables us to
benefit from specific company factors or swings of investor enthusiasm beyond
the general trends in broad markets. Second, while we see plenty of clouds ---
and few silver linings --- the horizon is not just one impenetrable squall line.
New inventions, improved business approaches, and the application of knowledge
are ongoing; the American economy is strong, and the march of human progress
continues. Finally, there is no automatic pilot that can factor in all relevant
data and manage a portfolio to assured success. Investors will constant ly be
getting unexpected information and opportunities in the future. We intend to do
our best as circumstances change and will strive to continue providing
substantial participation in the long-term rise of the stock market with only
about half the risk.
We are pleased to have you with us as fellow shareholders.
Respectfully submitted,
/s/
Richard P. Howard
President and Chairman of the Investment Advisory Committee
July 20, 1999
================================================================================
T. Rowe Price Capital Appreciation Fund
- ---------------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
- --------------------------------------------------------
6 Months Ended 6/30/99
TEN BEST CONTRIBUTORS TEN WORST CONTRIBUTORS
- --------------------- ----------------------
MacMillan Bloedel 24 cents Loews -9 cents
Amerada Hess 12 Philip Morris 5
Mitchell Energy & Development 8 Tennessee Valley 4
Mandalay Resort Group *** 7 FirstEnergy/Cleveland Electric 3
Domtar 6 Thomas Nelson 2
U.S. Cellular 5 Washington Post 2
Kerr-McGee 4 Octel 1
Murphy Oil 4 Kansas City Power & Light 1
Texaco 3 Overseas Shipholding Group 1
Polaroid 3 Johns Manville 1
Total 76 cents Total -29 cents
<PAGE>
12 Months Ended 6/30/99
TEN BEST CONTRIBUTORS TEN WORST CONTRIBUTORS
- --------------------- ----------------------
MacMillan Bloedel 22 cents Tennessee Valley -5 cents
Kerr-McGee 8 Octel 4
Amerada Hess 7 Thomas Nelson 3
U.S. Cellular 7 Overseas Shipholding Group 3
Corning ** 6 Chris-Craft 3
Mandalay Resort Group *** 5 Meredith 3
Domtar 5 Loews 2
Niagara Mohawk Holdings 4 Washington Post 2
Mitchell Energy & Development * 4 Newmont Mining 2
Great Lakes Chemical 3 New York Times 2
Total 71 cents Total -29 cents
* Position added
** Position eliminated
*** Formerly Circus Circus
================================================================================
T. Rowe Price Capital Appreciation Fund
- ---------------------------------------
PORTFOLIO HIGHLIGHTS
--------------------
PERFORMANCE CONTRIBUTIONS
-------------------------
6 Months Ended 6/30/99
Cents-Per-Share Percent of
Contribution Net Assets
Sector 6/30/99 6/30/99
------ ------- -------
Basic Materials .................................. 7 9%
Business Services and Transportation ............. 3 3
Capital Equipment ................................ -- --
Consumer Cyclicals ............................... 6 5
Consumer Nondurables ............................. -2 9
Consumer Services ................................ 16 14
Energy ........................................... 35 11
Financial ........................................ -9 11
Process Industries ............................... 32 8
Technology ....................................... 3 2
Utilities ........................................ -1 16
U.S. Governments/Options ......................... 6 4
Miscellaneous .................................... -- 2
Reserves and Income .............................. 20 6
Total Portfolio .................................. 116 100%
================================================================================
<PAGE>
T. Rowe Price Capital Appreciation Fund
- ---------------------------------------
PORTFOLIO HIGHLIGHTS
--------------------
TWENTY-FIVE LARGEST HOLDINGS
----------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/99
- --------------------------------------------------------------------------
Tennessee Valley Authority 6.2%
- --------------------------------------------------------------------------
Loews 5.4
- --------------------------------------------------------------------------
Amerada Hess 4.7
- --------------------------------------------------------------------------
MacMillan Bloedel 3.4
- --------------------------------------------------------------------------
Niagara Mohawk 3.3
- --------------------------------------------------------------------------
Rouse 2.8
- --------------------------------------------------------------------------
Washington Post 2.6
- --------------------------------------------------------------------------
Homestake Mining 2.5
- --------------------------------------------------------------------------
Times Mirror 2.2
- --------------------------------------------------------------------------
Inco 2.1
- --------------------------------------------------------------------------
FirstEnergy/Cleveland Electric 2.1
- --------------------------------------------------------------------------
Chris-Craft 2.0
- --------------------------------------------------------------------------
Newmont Mining 1.9
- --------------------------------------------------------------------------
Texaco 1.9
- --------------------------------------------------------------------------
New York Times 1.9
- --------------------------------------------------------------------------
Union Pacific Capital Trust 1.8
- --------------------------------------------------------------------------
Murphy Oil 1.8
- --------------------------------------------------------------------------
Mitchell Energy & Development 1.5
- --------------------------------------------------------------------------
Great Lakes Chemical 1.5
- --------------------------------------------------------------------------
Philip Morris 1.5
- --------------------------------------------------------------------------
Lonmin Finance 1.3
- --------------------------------------------------------------------------
Chiron 1.3
- --------------------------------------------------------------------------
Mandalay Resort Group 1.2
- --------------------------------------------------------------------------
U.S. Cellular LYONS 1.2
- --------------------------------------------------------------------------
Domtar 1.1
- --------------------------------------------------------------------------
Total 59.2%
Note: Table excludes reserves.
================================================================================
<PAGE>
T. Rowe Price Capital Appreciation 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 a broad-based average or index. An
index return does not reflect expenses, which have been deducted from the fund's
return.
[Capital Appreciation Fund SEC chart shown here]
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 6/30/99 1 Year 3 Years 5 Years 10 Years
- --------------------- ------ ------- ------- --------
Capital Appreciation Fund 8.70% 13.45% 14.85% 12.39%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------- Unaudited
For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
6 Months Year
Ended Ended
6/30/99 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
------- -------- -------- -------- -------- --------
NET ASSET VALUE
Beginning of period $ 13.22 $ 14.71 $ 14.47 $ 13.67 $ 12.10 $ 12.66
- ------------------------------------------------------------------------------------------------------
Investment activities
Net investment income 0.22 0.49 0.50 0.60 0.43 0.35
Net realized and
unrealized gain (loss) 0.94 0.34 1.82 1.70 2.30 0.13
- ------------------------------------------------------------------------------------------------------
Total from
investment activities 1.16 0.83 2.32 2.30 2.73 0.48
- ------------------------------------------------------------------------------------------------------
Distributions
Net investment income - (0.50) (0.50) (0.60) (0.44) (0.35)
Net realized gain - (1.82) (1.58) (0.90) (0.72) (0.69)
- ------------------------------------------------------------------------------------------------------
Total distributions - (2.32) (2.08) (1.50) (1.16) (1.04)
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE
======================================================================================================
End of period $ 14.38 $ 13.22 $ 14.71 $ 14.47 $ 13.67 $ 12.10
==Ratios/Supplemental=Data============================================================================
Total return* 8.77% 5.77% 16.20% 16.82% 22.57% 3.80%
- ------------------------------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.90%+ 0.62% 0.64% 0.76% 0.97% 1.10%
- ------------------------------------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 3.05%+ 3.04% 3.17% 4.07% 3.28% 2.91%
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate 30.8%+ 52.6% 48.3% 44.2% 47.0% 43.6%
- ------------------------------------------------------------------------------------------------------
Net assets, end of period
(in millions) $ 960 $ 1,004 $ 1,060 $ 960 $ 864 $ 655
- ------------------------------------------------------------------------------------------------------
</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.
================================================================================
<PAGE>
T. Rowe Price Capital Appreciation Fund
- ---------------------------------------
Unaudited June 30, 1999
STATEMENT OF NET ASSETS
- -----------------------
Shares/Par Value
In thousands
COMMON STOCKS 53.3%
FINANCIAL==6.8%==
Bank and Trust 0.2%
Bank fuer International Zahlung (CHF) 300 $ 1,622
- --------------------------------------------------------------------------------
1,622
- --------------------------------------------------------------------------------
Insurance 4.7%
Loews 500,000 39,563
- --------------------------------------------------------------------------------
Unitrin 145,000 5,913
- --------------------------------------------------------------------------------
45,476
- --------------------------------------------------------------------------------
Financial Services 1.9%
Leucadia National 385,000 9,769
- --------------------------------------------------------------------------------
White Mountain Insurance Group 60,000 8,460
- --------------------------------------------------------------------------------
18,229
- --------------------------------------------------------------------------------
Total Financial 65,327
- --------------------------------------------------------------------------------
UTILITIES==6.7%==
Electric Utilities 6.7%
FirstEnergy 525,000 16,275
- --------------------------------------------------------------------------------
Kansas City Power & Light 415,000 10,583
- --------------------------------------------------------------------------------
Nevada Power 70,000 1,750
- --------------------------------------------------------------------------------
Niagara Mohawk * 1,900,000 30,519
- --------------------------------------------------------------------------------
Unisource Energy * 475,000 5,670
- --------------------------------------------------------------------------------
Total Utilities 64,797
- --------------------------------------------------------------------------------
CONSUMER=NONDURABLES==4.3%
Food Processing 0.5%
McCormick 145,000 4,577
- --------------------------------------------------------------------------------
4,577
- --------------------------------------------------------------------------------
<PAGE>
Hospital Supplies/Hospital Management 1.0%
Smith & Nephew (GBP) 3,214,360 9,728
- --------------------------------------------------------------------------------
9,728
- --------------------------------------------------------------------------------
Pharmaceuticals 0.1%
Schering-Plough 30,000 1,590
- --------------------------------------------------------------------------------
1,590
- --------------------------------------------------------------------------------
Health Care Services 0.4%
Aetna 40,000 $ 3,577
- --------------------------------------------------------------------------------
3,577
- --------------------------------------------------------------------------------
Miscellaneous Consumer Products 2.3%
Philip Morris 350,000 14,065
- --------------------------------------------------------------------------------
Reebok 435,000 8,102
- --------------------------------------------------------------------------------
22,167
- --------------------------------------------------------------------------------
Total Consumer Nondurables 41,639
- --------------------------------------------------------------------------------
CONSUMER=SERVICES==10.6%==
General Merchandisers 0.6%
J.C. Penney 125,000 6,070
- --------------------------------------------------------------------------------
6,070
- --------------------------------------------------------------------------------
Specialty Merchandisers 1.5%
Petrie Stores Liquidation Trust * 2,585,000 6,382
- --------------------------------------------------------------------------------
Toys "R" Us * 375,000 7,758
- --------------------------------------------------------------------------------
14,140
- --------------------------------------------------------------------------------
Entertainment and Leisure 1.5%
Mandalay Resort Group * 565,000 11,936
- --------------------------------------------------------------------------------
Reader's Digest (Class B) 59,000 2,212
- --------------------------------------------------------------------------------
14,148
- --------------------------------------------------------------------------------
Media and Communications 7.0%
Chris-Craft * 406,000 19,133
- --------------------------------------------------------------------------------
Meredith 140,000 4,848
- --------------------------------------------------------------------------------
New York Times (Class A) 485,000 17,854
- --------------------------------------------------------------------------------
Washington Post (Class B) 47,000 25,274
- --------------------------------------------------------------------------------
67,109
- --------------------------------------------------------------------------------
Total Consumer Services 101,467
- --------------------------------------------------------------------------------
<PAGE>
CONSUMER=CYCLICALS==1.3%==
Building and Real Estate 0.6%
Rouse 230,000 5,836
- --------------------------------------------------------------------------------
5,836
- --------------------------------------------------------------------------------
Miscellaneous Consumer Durables 0.7%
Polaroid 250,000 6,906
- --------------------------------------------------------------------------------
6,906
- --------------------------------------------------------------------------------
Total Consumer Cyclicals 12,742
- --------------------------------------------------------------------------------
BUSINESS SERVICES AND TRANSPORTATION 1.4%
Transportation Services 0.6%
Overseas Shipholding Group 455,000 $ 5,858
- --------------------------------------------------------------------------------
5,858
- --------------------------------------------------------------------------------
Railroads 0.8%
Canadian Pacific 315,000 7,501
- --------------------------------------------------------------------------------
7,501
- --------------------------------------------------------------------------------
Total Business Services and Transportation 13,359
- --------------------------------------------------------------------------------
ENERGY==10.7%=
Exploration and Production 1.5%
Mitchell Energy & Development (Class A) 25,000 483
- --------------------------------------------------------------------------------
Mitchell Energy & Development (Class B) 770,000 14,149
- --------------------------------------------------------------------------------
14,632
- --------------------------------------------------------------------------------
Integrated Petroleum - Domestic 7.3%
Amerada Hess 760,000 45,220
- --------------------------------------------------------------------------------
Kerr-McGee 165,000 8,281
- --------------------------------------------------------------------------------
Murphy Oil 345,000 16,840
- --------------------------------------------------------------------------------
70,341
- --------------------------------------------------------------------------------
Integrated Petroleum - International 1.9%
Texaco 290,000 18,125
- --------------------------------------------------------------------------------
18,125
- --------------------------------------------------------------------------------
Total Energy 103,098
- --------------------------------------------------------------------------------
<PAGE>
PROCESS=INDUSTRIES==8.3%==
Specialty Chemicals 3.4%
Great Lakes Chemical 315,000 14,509
- --------------------------------------------------------------------------------
Imperial Chemical ADR 225,000 8,944
- --------------------------------------------------------------------------------
Octel * + 764,000 9,550
- --------------------------------------------------------------------------------
33,003
- --------------------------------------------------------------------------------
Forest Products 4.5%
Domtar 1,145,000 10,877
- --------------------------------------------------------------------------------
Macmillan Bloedel (CAD) 1,800,000 32,569
- --------------------------------------------------------------------------------
43,446
- --------------------------------------------------------------------------------
Building and Construction 0.4%
Johns Manville 260,000 $ 3,380
- --------------------------------------------------------------------------------
3,380
- --------------------------------------------------------------------------------
Total Process Industries 79,829
- --------------------------------------------------------------------------------
BASIC=MATERIALS==2.7%==
Mining 2.7%
Homestake Mining 790,000 6,468
- --------------------------------------------------------------------------------
Lonrho Africa (GBP) 575,000 417
- --------------------------------------------------------------------------------
Newmont Mining 935,000 18,583
- --------------------------------------------------------------------------------
Total Basic Materials 25,468
- --------------------------------------------------------------------------------
Total Miscellaneous Common Stocks 0.5% 4,288
- --------------------------------------------------------------------------------
Total Common Stocks (Cost $408,369) 512,014
PREFERRED=STOCKS==1.5%=
Cleveland Electric (Series L), $1.88 Adj. 35,000 3,509
- --------------------------------------------------------------------------------
Entergy-GSU (Series B) 32,679 1,654
- --------------------------------------------------------------------------------
Kemper (Series E) 150,000 7,800
- --------------------------------------------------------------------------------
Niagara Mohawk (Series A), Adj. 14,000 357
- --------------------------------------------------------------------------------
Niagara Mohawk (Series B), Adj. 24,625 619
- --------------------------------------------------------------------------------
Niagara Mohawk (Series C), Adj. 16,000 401
- --------------------------------------------------------------------------------
Total Preferred Stocks (Cost $12,040) 14,340
<PAGE>
CONVERTIBLE=PREFERRED=STOCKS==4.3%=
Reckson Associates Realty (Series A), 7.625% 37,500 853
- --------------------------------------------------------------------------------
Rouse (Series B) 525,000 21,066
- --------------------------------------------------------------------------------
Union Pacific Capital Trust, 6.25% 325,000 16,898
- --------------------------------------------------------------------------------
Miscellaneous Convertible Preferred Stocks 2,228
- --------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Cost $43,314) 41,045
CONVERTIBLE=BONDS==21.5%==
Chiron, 1.90%, 11/17/00 $ 12,500,000 12,473
- --------------------------------------------------------------------------------
Exide, (144a), 2.90%, 12/15/05 2,660,000 1,608
- --------------------------------------------------------------------------------
Healthsouth, 3.25%, 4/1/03 11,000,000 9,288
- --------------------------------------------------------------------------------
Hilton Hotels, 5.00%, 5/15/06 11,000,000 10,065
- --------------------------------------------------------------------------------
Homestake Mining
5.50%, 6/23/00 $ 4,025,000 $ 3,909
- --------------------------------------------------------------------------------
Sub. Deb., (144a), 5.50%, 6/23/00 14,020,000 13,617
- --------------------------------------------------------------------------------
Inco, Deb. Notes
5.75%, 7/1/04 20,000,000 18,325
- --------------------------------------------------------------------------------
7.75%, 3/15/16 1,600,000 1,448
- --------------------------------------------------------------------------------
Kerr Mcgee, 7.50%, 5/15/14 1,000,000 994
- --------------------------------------------------------------------------------
Loews, 3.125%, 9/15/07 15,000,000 12,064
- --------------------------------------------------------------------------------
LONMIN Finance, 6.00%, 2/27/04 GBP 8,000,000 12,421
- --------------------------------------------------------------------------------
McKesson, Sub. Deb. Notes, 4.50%, 3/1/04 $ 3,250,000 2,876
- --------------------------------------------------------------------------------
Motorola, LYONs Zero Coupon, 9/27/13 5,100,000 5,432
- --------------------------------------------------------------------------------
National Semiconductor, 6.50%, 10/1/02 10,800,000 10,288
- --------------------------------------------------------------------------------
Nine West, 5.50%, 7/15/03 6,050,000 6,080
- --------------------------------------------------------------------------------
Ogden, Sub. Deb. Notes, 5.75%, 10/20/02 500,000 472
- --------------------------------------------------------------------------------
Pep Boys, Sub. Notes
LYONs Zero Coupon, 9/20/11 10,000,000 5,475
- --------------------------------------------------------------------------------
4.00%, 9/1/99 5,000,000 5,004
- --------------------------------------------------------------------------------
Phycor, 4.50%, 2/15/03 6,700,000 5,092
- --------------------------------------------------------------------------------
Potomac Electric Power, Deb. Notes, 5.00%, 9/1/02 5,000,000 4,900
- --------------------------------------------------------------------------------
<PAGE>
Roche Holdings, LYONs, (144a), Zero Coupon, 5/6/12 17,500,000 8,422
- --------------------------------------------------------------------------------
Teck, 3.75%, 7/15/06 10,500,000 7,599
- --------------------------------------------------------------------------------
Times Mirror, Zero Coupon, 4/15/17 45,000,000 21,293
- --------------------------------------------------------------------------------
U.S. Cellular, LYONs, Zero Coupon, 6/15/15 22,000,000 11,539
- --------------------------------------------------------------------------------
Wellpoint Health Networks, Zero Coupon, 7/2/19 7,800,000 5,499
- --------------------------------------------------------------------------------
Miscellaneous Convertible Bonds 10,648
- --------------------------------------------------------------------------------
Total Convertible Bonds (Cost $201,588) 206,831
CORPORATE/MUNICIPAL=BONDS==1.3%=
Bellsouth Telecommunications, Deb. Notes
5.85%, 11/15/45 7,000,000 7,005
- --------------------------------------------------------------------------------
Miscellaneous Municipal Bonds 5,583
- --------------------------------------------------------------------------------
Total Corporate/Municipal Bonds (Cost $13,056) 12,588
U.S.=GOVERNMENT=OBLIGATIONS/AGENCIES==11.7%==
Federal National Mortgage Assn.
MTN, 5.37%, 2/7/01 $ 5,000,000 $ 4,968
- --------------------------------------------------------------------------------
6.375%, 1/16/02 5,000,000 5,044
- --------------------------------------------------------------------------------
Tennessee Valley Authority
5.88%, 4/1/36 32,000,000 31,070
- --------------------------------------------------------------------------------
5.98%, 4/1/36 10,000,000 9,764
- --------------------------------------------------------------------------------
6.235%, 7/15/45 18,400,000 18,368
- --------------------------------------------------------------------------------
U.S. Treasury Notes
5.875%, 2/15/00 - 9/30/02 32,900,000 33,054
- --------------------------------------------------------------------------------
6.125%, 7/31/00 2,000,000 2,016
- --------------------------------------------------------------------------------
6.25%, 4/30 - 10/31/01 8,000,000 8,108
- --------------------------------------------------------------------------------
Total U.S. Government
Obligations/Agencies (Cost $114,504) 112,392
OPTIONS=PURCHASED==0.1%
Motorola
Contracts (for 100 shares each), Put, 10/16/99 @ $90.00 255 166
- -----------------------------------------------------------------------------
Contracts (for 100 shares each), Put, 1/22/00 @ $95.00 255 258
- --------------------------------------------------------------------------------
Schering Plough
Contracts (for 100 shares each), Put, 8/21/99 @ $60.00 300 248
- -----------------------------------------------------------------------------
<PAGE>
Weyerhaeuser
Contracts (for 100 shares each), Put, 1/22/00 @ $75.00 250 253
- ------------------------------------------------------------------------------
Total Options Purchased (Cost $1,313) 925
OPTIONS=WRITTEN==0.0%==
Weyerhaeuser
Contracts (for 100 shares each), Call, 1/22/00 @ $65.00 (260) (244)
- -----------------------------------------------------------------------------
Total Options Written (Cost $(175)) (244)
==SHORT-TERM=INVESTMENTS==6.1%=
Money Market Funds 6.1%
Reserve Investment Fund, 5.05% # 58,585,079 58,585
- --------------------------------------------------------------------------------
Total Short-Term Investments (Cost $58,585) 58,585
Total=Investments=in=Securities==
99.8% of Net Assets (Cost $852,594) $ 958,476
Other Assets Less Liabilities 1,751
NET ASSETS $ 960,227
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 14,096
Accumulated net realized gain/loss - net of distributions 54,612
Net unrealized gain (loss) 105,875
Paid-in-capital applicable to 66,751,955 shares of no par
value capital stock outstanding; unlimited shares authorized 785,644
NET ASSETS $ 960,227
NET ASSET VALUE PER SHARE $ 14.38
- --------------------------------------------------------------------------------
# Seven-day yield
+ Affiliated company
* Non-income producing
ADR American Depository Receipt
LYONs Liquid Yield Option Notes
MTN Medium term note
144a Security was purchased pursuant to Rule 144a under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at period-end amounts
to 2.5% of net assets.
CAD Canadian dollar
CHF Swiss franc
GBP British sterling
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------- Unaudited
STATEMENT OF OPERATIONS
- -----------------------
In thousands
6 Months
Ended
6/30/99
==Investment=Income==========================================================
Income
Interest $ 11,444
Dividend 7,215
- -----------------------------------------------------------------------------
Total income 18,659
- -----------------------------------------------------------------------------
Expenses
Investment management 2,930
Shareholder servicing 1,122
Custody and accounting 85
Prospectus and shareholder reports 77
Registration 36
Legal and audit 7
Trustees 4
Miscellaneous 4
- -----------------------------------------------------------------------------
Total expenses 4,265
Expenses paid indirectly (3)
- -----------------------------------------------------------------------------
Net expenses 4,262
- -----------------------------------------------------------------------------
Net investment income 14,397
- -----------------------------------------------------------------------------
==Realized=and=Unrealized=Gain=(Loss)========================================
Net realized gain (loss)
Securities 40,210
Foreign currency transactions (11)
- -----------------------------------------------------------------------------
Net realized gain (loss) 40,199
- -----------------------------------------------------------------------------
Change in net unrealized gain or loss
Securities 24,182
Written options (69)
Other assets and liabilities
denominated in foreign currencies (5)
- -----------------------------------------------------------------------------
Change in net unrealized gain or loss 24,108
- -----------------------------------------------------------------------------
Net realized and unrealized gain (loss) 64,307
- -----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
=============================================================================
ASSETS FROM OPERATIONS $ 78,704
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------- Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
6/30/99 12/31/98
==Increase=(Decrease)=in=Net=Assets============================================
Operations
Net investment income $ 14,397 $ 32,032
Net realized gain (loss) 40,199 124,608
Change in net unrealized gain or loss 24,108 (97,066)
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 78,704 59,574
- -------------------------------------------------------------------------------
Distributions to shareholders
Net investment income - (32,873)
Net realized gain - (119,687)
- -------------------------------------------------------------------------------
Decrease in net assets from distributions - (152,560)
- -------------------------------------------------------------------------------
Capital share transactions*
Shares sold 69,998 250,691
Distributions reinvested - 148,934
Shares redeemed (192,173) (362,823)
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions (122,175) 36,802
==Net=Assets===================================================================
Increase (decrease) during period (43,471) (56,184)
Beginning of period 1,003,698 1,059,882
- --------------------------------------------------------------------------------
End of period $ 960,227 $1,003,698
- --------------------------------------------------------------------------------
*Share information
Shares sold 5,200 16,549
Distributions reinvested - 11,361
Shares redeemed (14,350) (24,044)
- -------------------------------------------------------------------------------
Increase (decrease) in shares outstanding (9,150) 3,866
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Capital Appreciation Fund
- ---------------------------------------
Unaudited June 30, 1999
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
================================================================================
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
================================================================================
T. Rowe Price Capital Appreciation Fund, (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company and commenced operations on June 30, 1986.
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
Trustees, or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service.
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 and written 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.
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 Trustees.
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.
<PAGE>
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 are
amortized for both financial reporting and tax purposes.
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, used to
reduce the fund's custody charges.
================================================================================
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.
Options Call and put options give the holder the right to purchase or sell,
respectively, a security at a specified price on a certain date. Risks arise
from possible illiquidity of the options market and from movements in security
values. Options are reflected in the accompanying Statement of Net Assets at
market value. Transactions in options written and related premiums received
during the six months ended June 30, 1999, were as follows:
================================================================================
Number of
Contracts Premiums
--------- --------
Outstanding at beginning of period - $ -
Written 260 175,000
Outstanding at end of period 260 $ 175,000
================================================================================
Other Purchases and sales of portfolio securities, other than short-term
and U.S. government securities, aggregated $130,337,000 and $228,109,000,
respectively, for the six months ended June 30, 1999.
Purchases and sales of U.S. government securities aggregated $7,994,000 and
$30,000,000, respectively, for the six months ended June 30, 1999.
<PAGE>
================================================================================
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.
At June 30, 1999, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled $852,594,000.
Net unrealized gain aggregated $105,882,000 at period-end, of which $138,354,000
related to appreciated investments and $32,472,000 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 $484,000 was payable at June 30, 1999. 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 0.30% for assets in excess of $80 billion. At June
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 $989,000 for the six months
ended June 30, 1999, of which $216,000 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, 1999, totaled
$1,155,000 and are reflected as interest income in the accompanying Statement of
Operations.
During the six months ended June 30, 1999, the fund, in the ordinary course
of business, placed security purchase and sale orders aggregating $242,000 with
certain affiliates of the manager and paid commissions of $1,000 related
thereto.
<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 (Registration Mark)
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 January 1999 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
<PAGE>
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum 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
<PAGE>
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
- ----------------------------------------
<PAGE>
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.
** Formerly named Florida Insured Intermediate Tax-Free.
*** Formerly named Tax-Free Insured Intermediate Bond.
+ 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 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.
===========================================================================
<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
Roth IRA
Rollover IRA
SEP-IRA
SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase Pension and Profit Sharing Plans)
401(k)
403(b)
457 Deferred Compensation
<PAGE>
RETIREMENT RESOURCES AT T. ROWE PRICE
-------------------------------------
PLANNING AND INFORMATIONAL GUIDES
---------------------------------
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
INVESTMENT KITS
---------------
The IRA Investing Kit
Roth IRA Conversion Kit
Rollover IRA Kit
The T. Rowe Price SIMPLE IRA Plan Kit
The T. Rowe Price SEP-IRA Plan
The Simplified Keogh Plan [Registration Mark] From T. Rowe Price
The T. Rowe Price 401(k) Century Plan [Registration Mark] (for small
businesses)
Money Purchase Pension/Profit Sharing Plan Kit
Investing for Retirement in Your 403(b) Account
The T. Rowe Price No-Load Variable Annuity Information Kit
INSIGHTS REPORTS
----------------
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
<PAGE>
SOFTWARE PACKAGES
-----------------
T. ROWE PRICE RETIREMENT PLANNING ANALYZER [TM] 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 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.
===========================================================================
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.
<PAGE>
INSIGHTS REPORTS
----------------
GENERAL INFORMATION
The ABCs of Y2K
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
<PAGE>
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.
================================================================================
FOR YIELD, PRICE, LAST
TRANSACTION, CURRENT BALANCE,
OR TO CONDUCT TRANSACTIONS, 24
HOURS, 7 DAYS A WEEK, CALL
TELE*ACCESS [REGISTRATION
MARK:] 1-800-638-2587 toll
free
FOR ASSISTANCE WITH YOUR
EXISTING FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
TO OPEN A BROKERAGE ACCOUNT OR
OBTAIN INFORMATION, CALL:
1-800-638-5660 toll free
<PAGE>
INTERNET ADDRESS:
www.troweprice.com
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.
INVESTOR CENTERS:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
4200 West Cypress St.
10th Floor
Tampa, FL 33607
4410 ArrowsWest Drive
Colorado Springs, CO 80907
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills, CA 91367
T. Rowe Price Investment Services, Inc., Distributor. F72-051 6/30/99
