Semiannual Report
Media &
Telecommunications
Fund
June 30, 2000
T. Rowe Price
Report Highlights
Media & Telecommunications Fund
o The first half of 2000 saw earlier gains interrupted by a sharp correction
and a return to more rational investment criteria.
o In a difficult environment, the fund posted a slim gain for the six months
that surpassed the S&P 500 and the Lipper average for similar funds;
12-month results remained robust.
o We made several significant changes to sector allocations, including a
shift into technology and telecom services segments.
o Despite some serious short-term concerns, we believe the fund offers
exciting opportunities for growth over the long term.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
Fellow Shareholders
The first six months of 2000 brought mixed results for the U.S. stock market.
The exuberance of 1999 continued into March before the market experienced a
massive correction. Since then, we have seen a welcome return to a more rational
investing environment where profits and returns on capital matter once again.
Media and telecommunications stocks declined overall, although your fund posted
a slim gain for the six months and is still up substantially for the 12 months
ended June 30.
Performance Comparison
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Periods Ended 6/30/00 6 Months 12 Months
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Media & Telecommunications
Fund 0.35% 49.16%
S&P 500 -0.43 7.24
Lipper Science & Technology
Funds Average 4.34 84.03
Lipper Telecommunications
Funds Average -2.99 32.43
In an extremely challenging period for many equities sectors, your fund managed
to provide a slightly positive return that exceeded the performance of the
unmanaged Standard & Poor's 500 Stock Index and the Lipper Telecommunications
Funds Average. The fund's return for the 12 months ended June 30, 2000, was also
well ahead of the S&P 500 and the Lipper average for peer group funds.
With this report, we are changing our Lipper benchmark since, as mentioned in
past reports, Lipper had originally placed the fund in the technology category
even though technology stocks ordinarily represent a minority portion of fund
assets. As a result, our performance often varied from the old Lipper average.
We are pleased that Lipper will be placing us in the new telecommunications
category, which is more reflective of funds that invest in our area of the
equities universe. (We will drop the Lipper Science & Technology Funds Average
from the table beginning with the annual report for the period ending December
31, 2000.)
MARKET ENVIRONMENT
Exuberance (rational or otherwise), fueled by a booming economy, great
fundamentals, and the growth of the so-called New Economy, has waned and been
replaced by a recognition that the traditional concepts of profitability, return
on capital, and valuation are important. Extreme market volatility has become a
fact of life, and the battle between the bulls and the bears is in full swing.
In this altered landscape, we have chosen to invest in companies with the best
fundamentals, highest long-term growth rates, and most important, strongest
management teams. Sound business models, profitability, good returns on capital,
and superior competitive positions are the keys to investing-and, of course,
valuation does matter.
The telecommunications, media, and technology sectors have been particularly
volatile. After explosive growth in 1999 and the first two months of 2000,
sanity returned to the marketplace. The financing window of the IPO and
high-yield markets has narrowed, but the financial fundamentals remained
incredibly strong across our entire universe of stocks. Much of the volatility
was caused first by the meltdown in stock valuations in March and April,
followed by growing concern about the sustainability of powerful economic growth
coupled with moderate inflation. Increased levels of competition and a
deteriorating pricing environment were also worrisome. Offsetting these
negatives, however, was the proliferation of new products and services that have
been driving demand, which has been fueling excellent revenue growth. The
rapidly declining technology costs for all players in our industries have
enhanced profit margins.
The Internet, particularly the dot-com segment, and the market for new entrants
into telecom services have been particularly hard hit, and their stocks have
fallen precipitously since their March highs. Many of these companies have
failed to meet expectations since they never did have good fundamentals except
for revenue growth. Most of them need further funding to cover continued losses.
In spite of the recent recovery of the tech-heavy Nasdaq Composite, many
high-risk companies have been unable to raise money and are likely to fail
eventually.
STRATEGY REVIEW
Media and telecommunications industries have been experiencing a considerable
amount of change, driven by dramatic developments in products, technology,
regulation, and finance. Within the first two categories, innovations are taking
place among Internet, data, wireless, and broadband industries, while recent
regulations and financing developments are enabling new companies to enter the
markets. Our portfolio investments are predominantly designed to participate in
these evolving themes, and we make stock selections with the view of obtaining
the highest levels of sustainable growth.
The fund is invested in three broad sectors: media, telecom services, and
technology. Since our holdings are concentrated in companies driving the changes
mentioned above, we have the heaviest exposure in technology and telecom
services-two areas where we have increased our weighting during the past six
months.
Sector Diversification
--------------------------------------------------------------------------------
Media 15
Telecom Services 40
Technology 41
Reserves 4
Based on net assets as of 6/30/00.
Portfolio positions in telecom services stocks are split nearly equally between
wireless and wireline companies. We increased our wireless holdings from 9% to
19% of assets through major purchases of Vodafone AirTouch, Sprint PCS, Western
Wireless, Nextel Communications, and China Telecom. The wireline investments are
almost exclusively in fully integrated providers best-positioned to benefit from
the growth in data and from their ability to leverage their investments in
network and distribution. These positions include WorldCom, NEXTLINK
Communications, McLeod USA, Time Warner Telecom, and Colt Telecom. We have
avoided most niche operators as well as the incumbent local exchange carriers.
Niche providers will have trouble evolving into profitable companies with good
returns on capital, while incumbent local carriers are not well-placed to make
the transition from their traditional geographically based voice monopolies to
the freewheeling world of data.
The technology investments rose from 26% to 41% over six months, and we
purchased stocks in this segment to try to capture the growth of wireless, data,
and optical networking. We believe the wireless industry has many years of good
growth ahead and will be sustained by the introduction of third-generation
systems. Investments here include the suppliers Nokia and LM Ericsson. Data
traffic has overtaken voice on the telecom networks, and the Internet and the
growth of Internet providers are triggering dramatic continued growth. Our
positions in this area include the Internet enablers Cisco Systems, Oracle,
VERITAS Software, and Ariba. Optical networking is allowing the telecom networks
to carry exponentially more traffic, and we have significant positions in
Corning, Nortel Networks, JDS Uniphase, and SDL. The underlying growth rates in
the technology segment are among the highest in the fund.
Media investments have been reduced due to concerns about the potential for a
slowing economy and a deceleration in advertising growth. Fortunately, the fund
had only modest exposure to Internet pure plays as two Internet names, Yahoo!
and DoubleClick, were among our worst performers in the period.
INVESTMENT OUTLOOK
The fund's returns since the lows of October 1998 were driven by a confluence of
events that are coming to a close. Fundamentals throughout much of the
investment universe were aided by a flow of easy capital into the markets. Money
raised through venture capital, IPOs, and the high-yield markets was the octane
fueling those fundamentals. Relative growth has also been enhanced by the
recovery from the Asian crises. These catalysts have largely disappeared.
Comparisons are getting substantially harder, and the "free money" atmosphere
has faded. We expect underlying growth to remain strong, but it is likely to
decelerate from its earlier, unsustainable level. In addition, supply has
started to catch up with demand in most telecom and technology end markets.
Despite these short-term concerns, we remain optimistic about the fund's
long-term prospects. Growth in the media and telecommunications industries
should be robust for many years to come. Dynamic change is coupled with dynamic
growth, and changes in our industries are having a broad, positive effect on the
entire economy. The fund has focused its investments in established New Economy
companies and other leaders within our evolving sectors, and we will continue to
emphasize those with the highest growth rates, best management teams, profitable
and sustainable business models, and good returns on capital. Volatility among
our stocks is probably here to stay, but we believe the fund offers exciting
opportunities for potential growth during the months and years ahead.
We appreciate your continuing support and confidence in T. Rowe Price.
Respectfully submitted,
Robert N. Gensler
Chairman of the Investment Advisory Committee
July 21, 2000
T. Rowe Price Media & Telecommunications Fund
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Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/00
Cisco Systems 4.8%
WorldCom 4.0
Nokia 2.9
Vodafone AirTouch 2.7
Sprint PCS 2.6
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Western Wireless 2.3
Corning 2.3
LM Ericsson 2.3
NEXTLINK Communications 2.2
Nortel Networks 1.9
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China Telecom 1.8
Oracle 1.8
Nextel Communications 1.8
McLeod USA 1.8
America Online 1.7
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Flextronics International 1.6
Time Warner Telecom 1.6
Telesp Celular 1.6
Pegasus Communications 1.5
COLT Telecom 1.5
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Charter Communications 1.5
US West 1.5
JDS Uniphase 1.4
Siebel Systems 1.4
3Com 1.3
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Total 51.8%
Note: Table excludes reserves.
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 6/30/00
Ten Best Contributors
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Corning* 64(cents)
Nuance Communications* 39
3Com 38
Oracle 35
Analog Devices 33
Verio*** 32
Cisco Systems 28
SDL* 26
Nortel Networks 25
Choice One Communications* 23
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Total 343(cents)
Ten Worst Contributors
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Rhythms NetConnections* -46(cents)
Yahoo! 42
Millicom International Cellular* 42
DoubleClick* 37
Microsoft 28
NTL 24
Vodafone AirTouch*** 23
Xpedior* 22
QUALCOMM*** 21
Liberate Technologies* 21
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Total -306(cents)
12 Months Ended 6/30/00
Ten Best Contributors
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Oracle 109(cents)
Omnipoint** 93
Pegasus Communications 72
Corning* 64
Cisco Systems 59
Analog Devices* 54
Yahoo!* 53
VERITAS Software* 49
Sprint PCS 44
McLeod USA* 43
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Total 640(cents)
Ten Worst Contributors
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Rhythms NetConnections* -46(cents)
Millicom International Cellular* 42
DoubleClick* 37
Xpedior* 22
QUALCOMM*** 21
Liberate Technologies* 21
Metamor Worldwide*** 18
Clearnet Communications* 15
Vodafone AirTouch*** 15
Commerce One* 14
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Total -251(cents)
* Position added
** Position eliminated
*** Position added and 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 benchmarks, which may include
a broad-based market index and a peer group average or index. Market
indexes do not include expenses, which are deducted from fund returns as
well as mutual fund averages and indexes.
MEDIA & TELECOMMUNICATIONS FUND
---------------------------------------------------------------------------
As of 6/30/00
Lipper Media &
S&P 500 Telecommunications Telecommunications
Index Funds Average Fund
10/13/93 10,000 10,000 10,000
6/94 9,823 9,212 8,485
6/95 12,385 10,436 11,694
6/96 15,605 12,753 14,748
6/97 21,019 15,061 15,189
6/98 27,359 20,940 22,348
6/99 33,585 30,243 31,647
6/00 36,018 35,474 47,206
Average Annual Compound Total Return
--------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Since Inception
Periods Ended 6/30/00 1 Year 3 Years 5 Years Inception Date
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Media &
Telecommunication 49.16% 45.93% 32.19% 26.01% 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
--------------------------------------------------------------------------------
6 Months Year
Ended Ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 39.99 $ 22.54 $ 17.40 $ 15.22 $ 17.99 $ 13.44
Investment activities
Net investment
income (loss) 0.45 (0.05) (0.07) (0.01) (0.11) (0.04)
Net realized and
unrealized
gain (loss) (0.31) 20.72 6.07 4.22 0.36 5.79
Total from
investment
activities 0.14 20.67 6.00 4.21 0.25 5.75
Distributions
Net investment income -- -- -- -- -- (0.07)
Net realized gain -- (3.22) (0.86) (2.05) (3.09) (1.13)
Total distributions -- (3.22) (0.86) (2.05) (3.09) (1.20)
Share repurchases -- -- -- 0.02 0.07 --
NET ASSET VALUE
End of period $ 40.13 $ 39.99 $ 22.54 $ 17.40 $ 15.22 $ 17.99
-------- -------- -------- -------- -------- --------
Ratios/Supplemental Data
Total
return(diamond)@ 0.35% 93.09% 35.14% 28.05% 1.78% 43.29%
Ratio of total
expenses to average
net assets 0.93%! 0.93% 1.03% 1.21% 1.22% 1.25%
Ratio of net
investment
income (loss)
to average
net assets 2.41%! (0.24)% (0.38)% (0.06)% (0.55)% (0.25)%
Portfolio
turnover rate 193.7%! 57.6% 48.9% 38.6% 102.9% 118.9%
Net assets,
end of period
(in thousands) $1,187,059 $930,147 $246,088 $133,913 $222,556 $268,782
(diamond) 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.
@ Based on net asset value, for periods prior and subsequent to
conversion to open-end status on 7/25/97.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Media & Telecommunications Fund
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Unaudited June 30, 2000
Statement of Net Assets Shares Value
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In thousands
Common Stocks 95.8%
TECHNOLOGY 40.4%
3Com * 278,000 $ 16,011
Altera * 77,000 7,847
Analog Devices * 209,000 15,884
Applied Micro Circuits * 67,000 6,616
Ariba * 125,000 12,258
Cisco Systems * 897,000 56,988
Commerce One * 101,800 4,629
Corning 102,000 27,527
CTS 62,500 2,813
Dell Computer * 306,000 15,099
Flextronics International * 283,000 19,447
Harmonic Lightwaves * 257,000 6,011
JDS Uniphase * 138,000 16,538
Liberate Technologies * 202,000 5,927
LM Ericsson (Class B) ADR 468,000 9,375
LM Ericsson (Class B) (SEK) 892,000 17,648
Maxim Integrated Products * 196,000 13,310
Microsoft * 164,000 13,115
Nokia ADR 683,000 34,107
Nortel Networks 339,000 23,137
Nuance Communications * 145,000 12,017
Oracle * 257,000 21,596
Samsung Electronics GDR (144a) * 60,000 11,790
SDL * 46,000 13,120
Siebel Systems * 99,000 16,196
Solectron * 368,700 15,439
Tellabs * 181,000 12,393
TeraBeam _ss.* 450,132 1,688
Texas Instruments 171,000 11,746
USInternetworking * 355,000 7,244
VERITAS Software * 137,000 15,477
Vitria Technology * 103,000 6,299
Xpedior * 757,000 10,432
Total Technology 479,724
MEDIA 15.3%
America Online * 383,000 $ 20,203
AMFM * 136,000 9,384
AT&T Liberty Media Group * 486,000 11,785
Charter Communications (Class A) * 1,079,000 17,770
Comcast (Class A Special) * 287,000 11,632
DoubleClick * 373,000 14,221
E-Stamp (144a) * 242,482 271
Infinity Broadcasting (Class A) * 326,500 11,897
Lamar Advertising * 30,100 1,305
NTL * 184,000 11,023
Pegasus Communications * 370,000 18,118
SFX Entertainment (Class A) * 205,000 9,289
TMP Worldwide * 196,000 14,461
United International Holdings * 323,000 15,110
Yahoo! * 119,000 14,745
Total Media 181,214
TELECOM SERVICES 40.1%
Allegiance Telecom * 219,000 14,023
AT&T (Class B) * 404,000 13,382
Carrier 1 International * 518,000 5,989
China Telecom ADR * 122,000 21,693
China Unicom * 507,000 10,774
Choice One Communications * 322,000 13,152
Clearnet Communications * 434,000 12,125
Colt Telecom Group (GBP) * 539,000 18,008
Crown Castle International * 243,000 8,862
FLAG Telecom Holdings * 237,000 3,540
ICG Communications * 516,000 11,433
McLeod USA * 1,035,000 21,444
Millicom International Cellular * 380,400 13,302
Nextel Communications * 351,000 21,466
NEXTLINK Communications * 704,000 26,686
Partner Communications * 1,240,000 11,703
Pinnacle Holdings * 171,000 9,170
PSINet * 384,800 $ 9,656
Quest Communications 207,000 17,750
Rhythms NetConnections * 918,000 11,532
Sprint PCS * 522,000 31,059
Telesp Celular ADR 412,000 18,488
Time Warner Telecom (Class A) * 298,300 19,240
U.S. Cellular * 122,400 7,711
GTE 254,000 15,811
Vodafone AirTouch (GBP) 7,940,000 32,378
Western Wireless * 511,000 27,834
WorldCom * 1,045,000 47,972
Total Telecom Services 476,183
Total Common Stocks (Cost $966,122) 1,137,121
Preferred Stocks 0.4%
Kestrel
Solutions +(miscellaneous footnote symbol)* 345,357 4,500
Total Preferred Stocks (Cost $4,500) 4,500
Short-Term Investments 2.2%
Money Market Funds 2.2%
Government Reserve Investment Fund, 6.27% # 25,954,623 25,955
Total Short-Term Investments (Cost $25,955) 25,955
Total Investments in Securities
98.4% of Net Assets (Cost $996,577) $1,167,576
Other Assets Less Liabilities 19,483
NET ASSETS 1,187,059
---------
Net Assets Consist of:
Accumulated net investment income -
net of distributions $ 13,317
Accumulated net realized gain/loss -
net of distributions 199,646
Net unrealized gain (loss) 171,000
Paid-in-capital applicable to 29,582,120 shares
of $0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized 803,096
NET ASSETS $1,187,059
----------
NET ASSET VALUE PER SHARE $ 40.13
----------
# Seven-day yield
* Non-income producing
+ Securities contain some restrictions as to public
resale-total of such securities at period-end amounts to
0.5% of net assets.
miscellaneous
footote symbol) Private placement
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 1.0% of net assets.
ADR American Depository Receipt
GBP British sterling
GDR Global Depository Receipt
SEK Swedish krona
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
6/30/00
Investment Income (Loss)
Income
Dividend $ 17,360
Interest 1,063
Total income 18,423
Expenses
Investment management 3,680
Shareholder servicing 1,213
Custody and accounting 80
Registration 74
Prospectus and shareholder reports 60
Legal and audit 7
Directors 5
Miscellaneous 2
Total expenses 5,121
Expenses paid indirectly (15)
Net expenses 5,106
Net investment income (loss) 13,317
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 185,993
Foreign currency transactions (46)
Net realized gain (loss) 185,947
Change in net unrealized gain or loss on securities (200,387)
Other assets and liabilities
denominated in foreign currencies 1
Change in net unrealized gain or loss (200,386)
Net realized and unrealized gain (loss) (14,439)
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ (1,122)
----------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Media & Telecommunications Fund
--------------------------------------------------------------------------------
Unaudited
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/00 12/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 13,317 $ (1,137)
Net realized gain (loss) 185,947 78,834
Change in net unrealized gain or loss (200,386) 283,821
Increase (decrease) in net
assets from operations (1,122) 361,518
Distributions to shareholders
Net realized gain -- (65,787)
Capital share transactions *
Shares sold 477,009 484,784
Distributions reinvested -- 59,343
Shares redeemed (218,975) (155,799)
Increase (decrease) in net
assets from capital
share transactions 258,034 388,328
Net Assets
Increase (decrease) during period 256,912 684,059
Beginning of period 930,147 246,088
End of period $1,187,059 $ 930,147
-----------------------
*Share information
Shares sold 11,756 15,813
Distributions reinvested -- 1,628
Shares redeemed (5,431) (5,100)
Increase (decrease) in
shares outstanding 6,325 12,341
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Media & Telecommunications Fund
--------------------------------------------------------------------------------
Unaudited June 30, 2000
Notes to Financial Statements
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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 fund seeks long-term capital growth by investing primarily in
the common stocks of media, technology, and telecommunications companies.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation - Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day the
valuations are made. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Listed securities not traded on a
particular day and securities regularly traded in the over-the-counter
market are valued at the mean of the latest bid and asked prices. Other
equity securities are valued at a price within the limits of the latest bid
and asked prices deemed by the Board of Directors, or by persons delegated
by the Board, best to reflect fair value.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
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 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. Expenses paid
indirectly reflect credits earned on daily uninvested cash balances at the
custodian and are used to reduce the fund's custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $1,302,947,000 and $1,032,680,000, respectively, for
the six months ended June 30, 2000.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income.
At June 30, 2000, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$996,577,000. Net unrealized gain aggregated $170,999,000 at period-end, of
which $256,659,000 related to appreciated investments and $85,660,000 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 $645,000 was payable at June 30, 2000. The fee is computed
daily and paid monthly, and consists of an individual fund fee equal to
0.35% 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 0.295% for assets
in excess of $120 billion. At June 30, 2000, and for the six months then
ended, the effective annual group fee rate was 0.32%. The fund pays a
pro-rata share of the group fee based on the ratio of its net assets to
those of the group.
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 $1,041,000 for the six months ended June 30, 2000, of which
$209,000 was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve
Funds are offered as cash management options only to mutual funds and other
accounts managed by T. Rowe Price and its affiliates and are not available
to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the fund for the six months ended
June 30, 2000, totaled $1,013,000 and are reflected as interest income in
the accompanying Statement of Operations.
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
BROKERAGE SERVICES*
Individual Investments - Stocks, bonds, options, precious metals, and other
securities at a savings over full-service commission rates.**
INVESTMENT INFORMATION
Combined Statement - Overview of all your accounts with T. Rowe Price.
Shareholder Reports - Fund managers' reviews of their strategies and
results.
T. Rowe Price Report - Quarterly investment newsletter discussing markets
and financial strategies.
Performance Update - Quarterly review of all T. Rowe Price fund results.
Insights - Educational reports on investment strategies and financial
markets.
Investment Guides - Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a July 2000 survey for representative-assisted stock trades.
Services vary by firm, and commissions may vary depending on size of
order.
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
Tax-Efficient Growth
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery*
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term
Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Bond
International Bond
MONEY MARKET FUNDS!
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
* Closed to new investors.
! Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in the funds.
Please call for a prospectus, which contains complete information, including
fees and expenses. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY.
T. Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
T. Rowe Price Advisory Services and Retirement Resources
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Advisory Services, Retirement Resources
T. Rowe Price is your full-service retirement specialist. We have developed
unique advisory services that can help you meet the most difficult
retirement challenges. Our broad array of retirement plans is suitable for
individuals, the self-employed, small businesses, corporations, and
nonprofit organizations. We also provide recordkeeping, communications, and
investment management services, and our educational materials, self-help
planning guides, and software tools are recognized as among the industry's
best. For information or to request literature, call us at 1-800-638-5660,
or visit our Web site at www.troweprice.com.
ADVISORY SERVICES
T. Rowe Price Retirement Income ManagerSM helps retirees or those within
two years of retirement determine how much income they can take in
retirement. The program uses extensive statistical analysis and the input
of financial planning professionals to suggest an income plan that best
meets your objectives.
T. Rowe Price Rollover Investment Service offers asset allocation advice to
those planning a major change in their qualified retirement plans, such as
a 401(k) rollover from a previous employer or an IRA transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
Planning and Informational Guides
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
Insights Reports
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
Software Packages
T. Rowe Price Retirement Planning
AnalyzerTM CD-ROM or diskette $19.95.
To order, please call 1-800-541-5760.
Also available on the Internet for $9.95.
T. Rowe Price Variable Annuity AnalyzerTM
CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. Rowe Price Immediate Variable
Annuity (Income Account)
Investment Kits
We will be happy to send you one of our
easy-to-follow investment kits when you
are ready to invest in any T. Rowe Price
retirement vehicle, including IRAs, quali-
fied plans, small-business plans, or our
no-load variable annuities.
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus appropriate
to the fund or funds covered in this
report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site.
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price Invest With Confidence (registered trademark)
T. Rowe Price Investment Services, Inc., Distributor. F21-051 6/30/00
