Semiannual Report
Media &
Telecommunications Fund
June 30, 1998
T. Rowe Price
Report Highlights
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Media & Telecommunications Fund
o Media and telecommunications stocks posted solid returns during the past
six and 12 months, as content and distribution stocks continued their sharp
advances.
o The fund's returns were outstanding and significantly outpaced the S&P 500
and the Lipper peer group average for the 6- and 12-month periods ended
June 30, 1998.
o Record merger and acquisition activity, low interest rates, and strong
economic growth created a favorable environment for fund industries.
o The fund's largest allocations continued to be in content and distribution
stocks.
o While we remain optimistic about long-term developments in the media and
telecommunications industries, we caution investors that recent returns are
likely to moderate.
Fellow Shareholders
Media and telecommunications stocks posted solid gains in the first half of
1998, and your fund was particularly strong over the last 12 months as well.
Once again, content and distribution stocks were good performers. The general
market, represented by the unmanaged Standard & Poor's 500 Stock Index,
continued its robust surge after faltering in May.
Performance Comparison
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Periods Ended 6/30/98 6 Months 12 Months
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Media & Telecommunications
Fund 23.97% 47.13%
S&P 500 17.71 30.16
Lipper Science & Technology
Funds Average 20.98 22.70
Your fund's 23.97% return for six months and 47.13% gain for the 12 months ended
June 30, 1998, were significantly ahead of the S&P 500 and the Lipper Science &
Technology Funds Average, as shown in the table. Results compared well with
equity funds overall during the past year. Content and distribution stocks
continued to advance, while technology stocks were generally mixed. Our focus on
the stronger segments of our industry helped results versus the broad market and
the average gain for peer group funds.
MARKET ENVIRONMENT
The surprisingly strong performance of U.S. equities extended into the first
half of 1998. Low interest rates, solid mutual fund investment flows, and record
merger and acquisition activity helped power many stock indexes to record levels
in spite of a good, but fading, corporate profit picture. Two of the defining
characteristics of the domestic stock market over the last six months were the
continued superb performance of large-capitalization stocks and record merger
and acquisition activity. Investor preference for large-cap, blue chip companies
was illustrated by the divergent performance between the S&P 500 and the
small-cap Russell 2000 Index, which rose only 4.93% over six months.
The first half of 1998 will also be remembered for the staggering size and value
of the corporate deals-eight of the 10 largest ever assembled were announced
between January 1 and June 30, 1998. They spanned several industries and
included proposed mergers such as Travelers/Citicorp, Monsanto/American Home
Products, and Mercedes Benz/Chrysler. While the motives were numerous, the
transactions were driven by common themes, including market globalization,
deregulation, and the ability to use rising stock prices to achieve strategic
objectives. Asian economic weakness remained a concern, and the worst may not be
over. On the positive side, real interest rates are still low, inflation is
under control, and employment is strong.
The environment for media and telecommunications stocks continued to be
favorable in the first half. Profit growth was generally robust, the regulatory
environment benign, and financial markets accommodating. Merger and acquisition
activity also played a significant role in our industries, with mammoth mergers
proposed between AT&T and Telecom and Southwestern Bell and Ameritech. The
content and distribution sectors were significant beneficiaries of the
heightened "urge to merge" and of generally solid fundamental performances. Fund
holdings in media, advertising, and broadcasting stocks benefited from a robust
advertising environment and the strength of the domestic economy.
As mentioned, the environment for technology stocks was mixed. Capital intensive
areas such as semiconductors were hurt by dampened demand from Asia and delayed
product launches. The markets for software and telecommunications equipment
vendors were more benign, providing a positive tailwind for their stocks. As
usual, the backdrop for international holdings varied according to local market
and individual company performances.
PERFORMANCE REVIEW
Our investment approach was unchanged. We used secular themes as guides to
identify promising investment areas and to select individual stocks based on
company fundamentals and share valuations. Media and telecommunications
companies and businesses are dynamic, a fact that leads us to continually
reassess our expectations against changes in fundamentals and valuations. The
secular themes we attempt to exploit include:
o The consolidation of the broadcasting and outdoor advertising industries
being led by companies such as CBS, Clear Channel Communications, and
Outdoor Systems.
o Growth in networked communications infrastructure that should continue to
drive demand for products from Cisco Systems, Network Associates, and
Ascend Communications.
o The increased use of wireless distribution systems for voice, video, and
data transmission that should be favorable for holdings such as Nokia,
PanAmSat, and QUALCOMM.
o The growth in electronic commerce and entertainment that should benefit
America Online, E*TRADE, and Sterling Commerce.
o The global demand for quality entertainment that should drive demand for
products from Disney, Telecom Liberty Media, and Time Warner.
o The increasing pervasiveness of technology in communications and
entertainment that should benefit Analog Devices, Maxim Integrated
Products, and Xilinx.
Sector Allocation pie chart
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Other and
Distribution Content Reserves International Technology
30% 29% 9% 14% 18%
We made minimal changes to the fund's sector diversification in the first half
(see chart) but did make a few changes in individual holdings. The percentage of
assets in the content sector fell from 31% at the end of December to 29% on June
30; distribution stocks fell from 32% to 30%; technology rose from 16% to 18%;
international was flat at 14%; and reserves and other assets went from 7% to 9%
of assets.
Media and entertainment holdings rose as we initiated positions in News Corp.,
Rupert Murdoch's global media conglomerate; Premier Parks, the largest operator
of regional theme parks in the U.S.; and SFX Entertainment, the leading
promoter, producer, and venue operator in the live entertainment industry.
Information-related holdings fell when we reduced our shares of Cendant and
Gartner Group. As mentioned, content stocks were solid performers, and major
contributors included America Online, Time Warner, and Telecom Liberty Media.
However, the content sector was not without its laggards, including A.H. Belo
and Cendant.
We made minor changes in distribution holdings in the second half, initiating
new positions in Chancellor Media and Emmis Broad-casting, two radio and
television station operators, and Western Wireless, an emerging player in the
wireless communications field. We reduced holdings in cable television operators
Cox Communications, Comcast, and Time Warner after the announcement of the
AT&T/Telecom deal helped drive stock prices to rich valuations. The distribution
sector contributed solidly to first half performance. Significant holdings here
included outdoor advertisers Outdoor Systems, Lamar Advertising, and Universal
Outdoor Holdings, which was acquired by Clear Channel Communications. Cable TV
system operators Comcast and Cox Communications and the combined holdings in
WorldCom and MCI were also significant contributors.
Technology holdings increased due to improved performance and additional
investments in the sector. We initiated new positions in Dell Computer, a PC
manufacturer, and communications equipment manufacturers QUALCOMM and Tellabs.
Positive contributors included Microsoft, BMC Software, and Cisco Systems. Among
the laggards were semiconductor manufacturers Analog Devices, Maxim Integrated
Products, and Xilinx.
International holdings were unchanged as a percentage of total assets. We also
initiated positions in foreign shares with purchases of ALCATEL ALSTHOM, a
communications equipment manufacturer; Imax, the owner and operator of
specialized movie theaters; and Global TeleSystems Group, a European alternative
communications services provider. International holdings helped first half
performance significantly. Major contributors included Nokia, Vodafone, and
Cellular Communications International. Laggards included TV Azteca and Central
European Media Enterprises.
INVESTMENT OUTLOOK
We have long believed that technological advances, deregulation, and receptive
financial markets are key drivers of media and telecommunications company
fundamentals and stocks. We expect these factors to lead to the creation of new
products and services, the convergence of traditional voice, video, and data
networks, and the consolidation of industries as participants seek to benefit
from economies of scale. The proposed $38 billion AT&T/Telecom merger is a good
example of how these influences are affecting large companies in traditionally
stable industries. This pending merger was driven by the competitive threats to
each company's core businesses and by the ability to leverage advanced
communications technologies. We expect merger and acquisition activity to
continue as companies seek to take advantage of strategic opportunities created
by the confluence of technology, deregulation, and the currency of rising stock
prices. Profit growth and low inflation are also positive near-term factors.
Over the long term, we are optimistic about the secular opportunities provided
by the media and telecommunications industries . . .
While this is a generally good time for the industry, we are not without our
concerns. Asian countries are important production centers and end markets. A
prolonged economic downturn will have negative consequences regardless of the
strength of the domestic economy. The current advertising cycle has been
remarkable in terms of its duration and overall strength. Although signs are
still positive, we are not complacent about the cyclical nature of the business.
Finally, valuations generally are at historic highs, reflecting the confluence
of positive factors mentioned. One of our major concerns is that superior
investment returns are generally attained through fundamental improvement and
enhanced valuations. Valuations reflect investor sentiment, which tends to
fluctuate more than underlying fundamentals. Investor sentiment has started to
reach overly optimistic levels as stock valuations have risen. We are also
troubled by the increased intrusion of the federal government into corporate
business practices, especially in the technology area. Our response has been to
selectively take profits and to increase positions in companies in which we see
a favorable trade-off between corporate fundamentals and stock valuations.
Over the long term, we are optimistic about the secular opportunities provided
by the media and telecommunications industries, and we will continue to invest
in companies with superior growth prospects, good business models, strong
management, and solid financial resources. Events over the past year, including
Microsoft's investments in the cable industry, the commercial deployment of
advanced voice, video, and data networks, and the numerous telecommunications
mergers have validated our views. We continue to expect technological advances,
such as the deployment of high speed, wide bandwidth networks, to influence
communication, education, and business. However, we caution investors that
changes will be evolutionary, not revolutionary, and stock returns are likely to
moderate from the robust returns of the past year.
Once again, we would like to thank our shareholders, particularly those who have
held shares since the fund converted to open-end status last July. We appreciate
your continuing support and reaffirm our commitment to seizing long-term
investment opportunities on your behalf.
Respectfully submitted,
Brian D. Stansky
Chairman of the Investment Advisory Committee
July 24, 1998
T. Rowe Price Media & Telecommunications Fund
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Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/98
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Outdoor Systems 2.9%
Telecom Liberty Media 2.4
Clear Channel Communications 2.4
Cellular Communications 2.1
Chancellor Media 2.1
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Sterling Commerce 1.9
Premier Parks 1.8
Young Broadcasting 1.8
America Online 1.7
Synopsys 1.7
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BMC Software 1.7
Nokia 1.7
Emmis Broadcasting 1.7
Jacor Communications 1.6
Lamar Advertising 1.6
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Sinclair Broadcasting Group 1.6
QUALCOMM 1.6
First Data 1.5
Microsoft 1.5
Metro Networks 1.5
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Vodafone 1.5
Knight-Ridder 1.4
Time Warner 1.4
SFX Entertainment 1.4
Network Associates 1.3
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Total 43.8%
T. Rowe Price Media & Telecommunications Fund
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Portfolio Highlights
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CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 6/30/98
Ten Best Contributors
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America Online 31(cents)
Outdoor Systems 30
Nokia 24
Telecom Liberty Media 22
Cellular Communications International 19
MetroNet Communications 16
Young Broadcasting 16
Vodafone 15
BMC Software 15
Microsoft 15
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Total 203(cents)
Ten Worst Contributors
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Cendant -13(cents)
TV Azteca 13
Security Dynamics Technologies 10
SmarTalk TeleServices 10
Grupo Iusacell** 8
A.H. Belo 4
Imax* 3
Central European Enterprises 3
CIENA** 3
Analog Devices 2
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Total -69(cents)
12 Months Ended 6/30/98
Ten Best Contributors
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Outdoor Systems 54(cents)
America Online 48
Telecom Liberty Media 38
Cellular Communications International 31
Universal Outdoor Holdings 31
Cox Communications 27
Lamar Advertising 26
Vodafone 25
Comcast 22
BMC Software 22
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Total 324(cents)
Ten Worst Contributors
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Security Dynamics Technologies -11(cents)
TV Azteca* 10
3Com** 8
Grupo Iusacell** 7
First Data 6
Xilinx 6
CMP Media** 5
Ascend Communications 5
Oracle** 4
FlexTech** 4
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Total -66(cents)
* Position added
** Position eliminated
T. Rowe Price Media & Telecommunications Fund
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Performance Comparison
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This chart shows the value of a hypothetical $10,000 investment in the fund over
the past 10 fiscal year periods or since inception (for funds lacking 10-year
records). The result is compared with a broad-based average or index. The index
return does not reflect expenses, which have been deducted from the fund's
return.
Media & Telecommunications SEC chart
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Lipper Science & Media &
S&P 500 Technology Funds Telecommunications
Stock Index Average Fund
10/13/97 10,000 10,000 10,000
6/94 9,823 9,717 8,485
6/95 12,385 15,749 11,694
6/96 15,605 17,437 14,748
6/97 21,019 21,402 15,189
6/98 27,359 25,411 22,348
Average Annual Compound Total Return
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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 6/30/98 1 Year 3 Years Inception Date
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Media & Telecommunications Fund 47.13% 24.10% 18.60% 10/13/93
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Formerly the closed-end New Age Media Fund. Converted to open-end status on
7/25/97 and operates under a different expense structure.
T. Rowe Price Media & Telecommunications Fund
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Unaudited
Financial Highlights
For a share outstanding throughout each period
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6 Months Year 10/13/93
Ended Ended Through
6/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
NET ASSET VALUE
Beginning
of period $ 17.40 $ 15.22 $ 17.99 $ 13.44 $ 13.57 $ 13.93
Investment activities
Net investment
income (0.04) (0.01) (0.11) (0.04) (0.01) 0.01
Net realized and
unrealized gain
(loss) 4.21 4.22 0.36 5.79 (0.11) (0.37)
Total from
investment
activities 4.17 4.21 0.25 5.75 (0.12) (0.36)
Distributions
Net investment
income -- -- -- (0.07) (0.01) --
Net realized
gain -- (2.05) (3.09) (1.13) -- --
Total
distributions -- (2.05) (3.09) (1.20) (0.01) --
Share repurchases -- 0.02 0.07 -- -- --
NET ASSET VALUE
End of Period $ 21.57 $ 17.40 $ 15.22 $ 17.99 $ 13.44 $ 13.57
----------------------------------------------------------
Ratios/Supplemental Data
Total returnu@(C) 23.97% 28.05% 1.78% 43.29% (0.90)% (2.58)%
Ratio of
expenses to
average
net assets 1.03%! 1.21% 1.22% 1.25% 1.35% 1.30%!
Ratio of net
investment
income to average
net assets (0.41)%! (0.06)% (0.55)% (0.25)% (0.15)% 0.24%!
Portfolio
turnover rate 23.0% 38.6% 102.9% 118.9% 133.9% 58.7%!
Net assets,
end of period
(in thousands) $216,088 $133,913 $222,556 $268,782 $200,996 $202,911
(C) 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.
@ Based on net asset value, for periods prior and subsequent to conversion to
open-end status on 7/25/97.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Media & Telecommunications Fund
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Unaudited June 30, 1998
Statement of Net Assets
Shares/Par Value
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In thousands
Common Stocks 91.3%
CONTENT 29.3%
A. H. Belo (Class A) 80,000 $ 1,950
America Online 35,000 3,710
Cendant * 75,000 1,566
Disney 25,000 2,627
DST Systems * 40,000 2,240
E*TRADE * 100,000 2,291
First Data 100,000 3,331
Gartner Group (Class A) * 24,300 850
Hasbro 60,000 2,359
Knight-Ridder 55,000 3,028
Meredith 60,000 2,816
New York Times (Class A) 30,000 2,378
News Corporation ADR 100,000 2,825
Omnicom 50,000 2,494
The Peterson Companies
(Class A) * 50,000 1,281
Premier Parks * 60,000 3,997
SFX Entertainment
(Class A) * 65,000 2,980
Sportsline USA * 55,000 2,009
Sterling Commerce * 85,000 4,122
Telecom Liberty Media
(Series A)* 135,000 5,244
Time Warner 35,000 2,990
Tribune 40,000 2,753
Valassis Communications * 50,000 1,928
Young & Rubicam * 50,000 1,600
Total Content 63,369
DISTRIBUTION 30.2%
BHC Communications (Class A) 10,000 1,403
Brightpoint * 165,000 2,387
CBS 90,000 2,857
Chancellor Media * 90,000 4,469
Clear Channel Communications * 46,900 5,118
Comcast (Class A Special) 70,000 2,842
Cox Communications (Class A) * 50,000 $ 2,422
Emmis Broadcasting (Class A) * 75,000 3,598
Jacor Communications * 60,000 3,544
Lamar Advertising * 97,500 3,479
MCI 40,000 2,324
Metro Networks * 75,000 3,227
Outdoor Systems * 225,000 6,300
Paging Network * 200,000 2,794
PanAmSat * 50,000 2,847
Pegasus Communications * 90,000 1,901
Sinclair Broadcast Group (Class A) 120,000 3,442
SmarTalk TeleServices * 150,100 2,129
Western Wireless * 120,000 2,389
WorldCom * 40,000 1,934
Young Broadcasting (Class A) * 60,000 3,904
Total Distribution 65,310
TECHNOLOGY 18.1%
Adobe Systems 60,000 2,550
Analog Devices * 100,000 2,456
Ascend Communications * 30,000 1,486
BMC Software * 70,000 3,638
Broderbund Software * 95,500 2,179
Cisco Systems * 25,000 2,302
Dell Computer * 15,000 1,392
Intel 30,000 2,223
Maxim Integrated Products * 60,000 1,903
Microsoft * 30,000 3,252
Network Associates * 60,000 2,871
QUALCOMM * 60,000 3,373
Security Dynamics Technologies * 100,000 1,803
Synopsys * 80,000 3,662
Tellabs * 27,500 1,969
Xilinx * 60,000 2,042
Total Technology 39,101
INTERNATIONAL 13.7%
ALCATEL ALSTHOM ADR 60,000 $ 2,441
Cellular Communications
International * 90,000 4,500
Central European Media
Enterprises (Class A) * 115,000 2,483
Getty Images * 110,000 2,444
Global Telesystems Group * 41,500 2,018
Imax * 100,000 2,269
MetroNet Communications * 100,000 2,813
Nokia ADR 50,000 3,628
Telebras ADR 20,500 2,238
TV Azteca ADR 150,000 1,622
Vodafone ADR 25,000 3,152
Total International 29,608
Total Common Stocks (Cost $129,186) 197,388
Preferred Stocks 0.3%
Crystal Dynamics (Series D) * 166,667 625
Total Preferred Stocks (Cost $1,250) 625
Short-Term Investments 9.5%
Money Market Funds 9.5%
Government Reserve Investment Fund,
5.48% # 20,510,149 20,510
Total Short-Term Investments
(Cost $20,510) 20,510
Total Investments in Securities
101.1% of Net Assets (Cost $150,946) $ 218,523
Other Assets Less Liabilities (2,435)
NET ASSETS $ 216,088
----------
Net Assets Consist of:
Accumulated net investment income
- - net of distributions $ (360)
Accumulated net realized gain/loss
- - net of distributions 13,964
Net unrealized gain (loss) 67,577
Paid-in-capital applicable to
10,019,487 shares of $0.0001
par value capital stock outstanding;
1,000,000,000 shares authorized 134,907
NET ASSETS $ 216,088
----------
NET ASSET VALUE PER SHARE $ 21.57
----------
# Seven-day yield
* Non-income producing
ADR American Depository Receipt
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Media & Telecommunications Fund
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Unaudited
Statement of Operations
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In thousands
6 Months
Ended
6/30/98
Investment Income
Income
Interest $ 320
Dividend (net of foreign taxes of $ 19) 240
Total income 560
Expenses
Investment management 589
Shareholder servicing 202
Custody and accounting 57
Prospectus and shareholder reports 23
Registration 10
Legal and audit 8
Directors 3
Miscellaneous 28
Total expenses 920
Net investment income (360)
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 10,935
Foreign currency transactions (2)
Net realized gain (loss) 10,933
Change in net unrealized gain or loss on securities 24,024
Net realized and unrealized gain (loss) 34,957
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 34,597
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price Media & Telecommunications Fund
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Unaudited
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/98 12/31/97
Increase (Decrease) in Net Assets
Operations
Net investment income $ (360) $ (104)
Net realized gain (loss) 10,933 25,048
Change in net unrealized
gain or loss 24,024 20,649
Increase (decrease) in net
assets from operations 34,597 45,593
Distributions to shareholders
Net realized gain -- (14,928)
Capital share transactions*
Shares sold 80,979 25,052
Distributions reinvested -- 9,488
Shares redeemed (33,401) (152,257)
Shares repurchased -- (1,591)
Increase (decrease) in
net assets from capital
share transactions 47,578 (119,308)
Net Assets
Increase (decrease)
during period 82,175 (88,643)
Beginning of period 133,913 222,556
End of period $ 216,088 $ 133,913
---------------------------------
*Share information
Shares sold 4,012 1,398
Distributions reinvested -- 554
Shares redeemed (1,689) (8,757)
Shares repurchased -- (126)
Increase (decrease)
in shares outstanding 2,323 (6,931)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Media & Telecommunications Fund
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Unaudited June 30, 1998
Notes to Financial Statements
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Media & Telecommunications 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 13, 1993.
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.
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.
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.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $75,912,000 and $38,464,000, respectively, for the six months ended
June 30, 1998.
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, 1998, the aggregate cost of investments for federal income tax and
financial reporting purposes was $150,946,000, and net unrealized gain
aggregated $67,577,000, of which $70,417,000 related to appreciated investments
and $2,840,000 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 $110,000 was payable at June 30, 1998. The fee is computed daily and
paid monthly, and consists of an individual fund fee equal to 0.35% 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, 1998, 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 $195,000 for the six months
ended June 30, 1998, of which $49,000 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, 1998, totaled
$314,000 and are reflected as interest income in the accompanying Statement of
Operations.
NOTE 5 - FUND CONVERSION TO OPEN-END STATUS
Pursuant to shareholder approval, the fund converted to an open-end management
investment company effective July 25, 1997. The primary effect of the conversion
is that fund shares are now redeemable, and are offered for sale, by the fund on
a continuous basis at per-share net asset value. Prior to the conversion, the
fund made repurchases of its shares in the open market, which had the effect of
increasing the net asset value per share of the remaining shares outstanding.
T. Rowe Price Shareholder Services
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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(registered trademark) and the
T. Rowe Price Web site on the Internet. Address: www.troweprice.com
DISCOUNT BROKERAGE*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over regular 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.
*A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
T. Rowe Price Mutual Funds
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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
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
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 Insured
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 Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Bond!
International Bond
MONEY MARKET FUNDS!!
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Formerly named Equity Index.
** Formerly the closed-end New Age Media Fund. Converted to open-end status
on 7/28/97.
*** Closed to new investors.
! Formerly named Global Government Bond.
!! Neither the funds nor their share prices are insured or guaranteed by the
U.S. government.
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.
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access(registered trademark):
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 Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
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 of the
T. Rowe Price Media &
Telecommunications Fund.
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
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor. F21-051 6/30/98
