Semiannual Report
Capital
Opportunity
Fund
June 30, 1997
T. Rowe Price
Report Highlights
Capital Opportunity Fund
o Stock market gains have been driven by relatively few
stocks, creating a challenging environment for your fund.
o During the past six months, your fund's return lagged the
S&P 500 and the Lipper benchmark. Our concentration in
smaller-cap stocks hurt performance.
o ADT, Centerior Energy, and other fund holdings were strong
performers. Other stocks, including Mercury Finance,
disappointed.
o We consider two turnaround situations, ADVO and McDermott
International, to be potentially rewarding for
shareholders.
o Investors should lower their expectations during the rest
of the year, but we believe stocks will produce attractive
returns over the long term.
Fellow Shareholders
Although major stock market indexes have posted record highs
regularly over the past year, these powerful results are due to
strong advances by a relatively small number of stocks. Given
our concentrated investment approach and current small-cap bias,
the recent stock market environment has proved especially
challenging for your fund.
Performance Comparison
Periods Ended 6/30/97 6 Months 12 Months
_______________________________________________________
Capital Opportunity Fund 3.87% 8.33%
S&P 500 20.61 34.70
Lipper Capital Appreciation
Funds Average 10.16 14.44
During the 6- and 12- month periods ended June 30, your fund
lagged both the average returns of comparable Lipper funds and
the unmanaged Standard & Poor's 500 Stock Index. Despite a
robust equity environment, especially for large-capitalization,
blue chip stocks such as those in the S&P 500, your fund
struggled due to its concentration in the smaller- and mid-cap
segments of the market, and also to disappointing returns from
several larger holdings.
MARKET ENVIRONMENT
Clearly, our cautiously optimistic outlook for the stock market
has proven to be too conservative in recent periods. The
impressive gains of the past two years continued into the first
half of 1997 as investors' appetite for stocks, especially for
those of large-capitalization companies with predictable
earnings growth and solid liquidity, seemed insatiable. During
the March-April period, the stock market experienced close to a
10% correction. It was triggered by several high-profile
earnings disappointments, by the specter of an overheating
economy that pressured the Federal Reserve to raise interest
rates, and by modest profit taking. Investors were quick to
dismiss their anxieties, however, and returned to their view of
a sell-off as a buying opportunity. Stocks regained their upward
momentum through the end of the period. Although stock market
performance over the past two years was dominated by large-cap
stocks, the market's rebound from the April lows was led by
smaller-cap shares (especially technology).
Over the past few years, the outlook for earnings growth and
interest rates has varied. This normally would have resulted in
increased volatility. However, volatility has been masked by
record cash flows into the equity markets primarily from
individuals, and also by strong demand from corporate buyers for
merger and acquisition activity and share repurchase programs.
With the economy expanding, inflation low, corporate profits
growing solidly, and interest rates fairly stable, the
environment for stocks has been almost ideal. It is unlikely
that a major correction will occur in the short term as long as
these elements remain in place.
STRATEGY REVIEW
Several stocks made strong contributions to positive fund
performance during the past six and 12 months. Two were
companies that have been major holdings during the past couple
of years: ADT, the leading residential and commercial security
concern, and Centerior Energy, an Ohio-based electric utility.
Share prices benefited from acquisition premiums as ADT was
acquired by Tyco and Centerior Energy agreed to merge with Ohio
Edison.
Source Services and McDermott International also were good
performers. The former provides temporary professional workers
specializing in the information/technology and financial areas
and is well positioned to benefit from the outsourcing taking
place in U.S. corporations. The shares of McDermott
International rallied as investors began to understand the
company's turnaround potential (a more detailed discussion
follows). The fund's largest holding, Catalina Marketing, a
leading in-store marketing company, is no stranger to
longer-term shareholders. Early this year, we reduced our
holdings after the stock price doubled. In April, a modestly
disappointing earnings forecast caused the shares to fall more
than 50%, and we took advantage of the pullback to reestablish
a major position in this high-quality growth company.
Results can be heavily influenced by a small number of large
holdings.
Despite some successful investments over the past year, the fund
also had several disappointing ones that significantly affected
performance. As we discussed in previous reports, given the
fund's nondiversified charter and its concentrated investment
strategy, results can be heavily influenced by a small number of
large holdings.
Unfortunately, in January 1997 one of the fund's largest
holdings, Mercury Finance, a leading subprime consumer lender to
used car buyers, developed serious financial problems as a
result of management's fraudulent accounting practices, which
forced the company to restate financial results for the past few
years. Mercury Finance's stock fell 80% in value in six months.
T. Rowe Price has initiated a lawsuit aimed at recouping the
losses.
Fund positions in computer networking and gold companies, where
we had a high weighting, also hurt performance. The threat of
European central banks liquidating their gold reserves, combined
with low inflation and several well-publicized gold mining
frauds, created a poor environment for gold. Such holdings as
Dayton Mining, Battle Mountain Gold, and Prime Resources Group
were all affected.
PORTFOLIO FOCUS
In the past we discussed several individual stocks in some
detail, hoping to give shareholders a better understanding of
how we put the fund's investment approach to work. We would like
to highlight two stocks that have been poor performers in recent
years, but that we believe offer significant capital
appreciation potential over the next 12 to 18 months.
The first turnaround stock is ADVO, the country's largest
targeted direct mail marketing service company. The shares
suffered in recent years due to myriad factors that have
constrained the company's ability to generate solid and
consistent earnings growth. We believe a more favorable postal
rate structure in the future, along with a leaner operating cost
structure, a more focused sales effort, and several recent
management changes, should help ADVO expand its operating
margins and earnings power. In addition, the company has
announced a two million share repurchase program and is actively
buying its own stock at current price levels. We believe ADVO is
positioned for 20%-plus earnings growth over the next few years.
Selling at almost a 40% discount to this growth rate on a
calendar 1998 price/earnings basis, ADVO offers intriguing
risk/reward potential.
The second is McDermott International, a leading worldwide
energy services company that provides steam-generating and
environmental equipment for the U.S. government, along with
engineering and construction services to the utility, oil, and
gas industries. During the past decade, the stock significantly
underperformed the market since management lacked a commitment
to maximizing returns and the company's financial condition
deteriorated. Within the last six months, new management has
begun to restructure the organization, leverage its market share
position, and improve earnings and cash flow dynamics. We are
especially intrigued by the growth potential of the company's
energy service business, as its markets have begun to recover
after a 15-year downturn in oil and gas exploration. These
factors could lead to a substantial earnings turnaround over the
next few years.
OUTLOOK
The long-lived bull market shows little signs of tiring as the
primary drivers of higher stock prices remain in place: strong
flows into mutual funds, a stable-to-falling interest rate
environment as inflation remains subdued, and solid corporate
profit growth.
However, with the speed of the market's climb this year,
valuation levels measured by traditional benchmarks, including
dividend yield, price/earnings and price/book ratios, appear
somewhat stretched. With the Dow Jones Industrial Average
breaking through 8,000, it is unrealistic to expect the bull to
keep running at this pace without stopping to catch its breath.
We believe it is prudent to lower expectations for market
returns in the second half of the year, as a duplication of the
first half is unrealistic. However, despite our near-term
cautiousness, we believe equity markets will continue to offer
good returns over time.
As the Capital Opportunity Fund approaches its third
anniversary, we would like to thank shareholders for their
support and confidence. As always, we will continue to strive to
deliver attractive performance.
Sincerely,
John F. Wakeman
Chairman of the Investment Advisory Committee
July 23, 1997
T. Rowe Price Capital Opportunity Fund
Portfolio Highlights
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/97
_______________________________________________________
Catalina Marketing 4.7%
Centerior Energy 4.1
First Data 3.6
OEA 3.2
BISYS Group 2.9
_______________________________________________________
Mid Ocean Limited 2.9
Source Services 2.8
La Quinta Inns 2.7
Ikon Office Solutions 2.7
McDermott International 2.7
_______________________________________________________
HFS 2.6
Great Lakes Chemical 2.4
Warnaco Group 2.3
BE Aerospace 2.1
USA Waste Services 2.1
_______________________________________________________
American List 2.1
ADVO 2.0
Enserch Exploration 2.0
Reynolds Metals 1.9
Analogic 1.8
_______________________________________________________
Prime Resources Group 1.8
American Stores 1.8
General Nutrition 1.8
Harleysville Group 1.8
Safeway 1.8
_______________________________________________________
Total 62.6%
T. Rowe Price Capital Opportunity Fund
Portfolio Highlights
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 6/30/97
Ten Best Contributors
_______________________________________________________
General Nutrition 17(cents)
Source Services 15
ADT 14
Catalina Marketing 13
McDermott International * 12
American List * 10
First Data 10
Palmer Wireless 10
PepsiCo 9
Petrolite ** 8
_______________________________________________________
Total 118(cents)
Ten Worst Contributors
_______________________________________________________
Mercury Finance - 34(cents)
Dayton Mining 17
Boston Chicken 16
Scholastic ** 11
Tupperware ** 11
OEA 8
American Pad & Paper 8
3Com ** 7
Ikon Office Solutions 7
Exide ** 6
Ten Worst Contributors
_______________________________________________________
Total - 125(cents)
12 Months Ended 6/30/97
Ten Best Contributors
_______________________________________________________
Centerior Energy 26(cents)
ADT 24
Catalina Marketing 22
General Nutrition 17
Cooper Cameron * 16
Source Services * 14
Eckerd *** 14
Biogen ** 14
Revco *** 13
McDermott International * 12
_______________________________________________________
Total 172(cents)
Ten Worst Contributors
_______________________________________________________
Mercury Finance * - 31(cents)
Apria Healthcare 17
Dayton Mining 16
United HealthCare ** 13
Boston Chicken 13
Alliance Entertainment ** 13
Aerial Communications ** 13
Global Pharmaceutical 11
Continental Waste Industries ** 9
Sybase ** 8
_______________________________________________________
Total - 144(cents)
* Position added
** Position eliminated
*** Acquired by another company
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. The index return
does not reflect expenses, which have been deducted from the
fund's return.
Performance Comparison
as of 6/30/97
<TABLE>
<CAPTION>
Capital
S&P 500 Index Opportunity Fund
<S> <C> <C>
11/30/94 $ 10,000 $ 10,000
6/30/95 12,200 13,210
6/30/96 15,372 17,108
6/30/97 20,705 18,532
</TABLE>
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 6/30/97 1 Year Inception Date
__________________________________________________________
Capital Opportunity Fund 8.33% 26.99% 11/30/94
Investment return and principal value represent past performance
and will vary. Shares may be worth more or less at redemption
than at original purchase.
T. Rowe Price Capital Opportunity Fund
Unaudited
For a share outstanding throughout each period
Financial Highlights
6 Months Year 11/30/94
Ended Ended Through
6/30/97 12/31/96 12/31/95 12/31/94
NET ASSET VALUE
Beginning of
period $ 15.75 $ 14.13 $ 10.43 $ 10.00
Investment activities
Net investment
income 0.01 -* 0.01* 0.02*
Net realized and
unrealized gain
(loss) 0.60 2.36 4.83 0.41
Total from
investment
activities 0.61 2.36 4.84 0.43
Distributions
Net investment
income - - (0.01) -
Net realized gain - (0.74) (1.13) -
Total distributions - (0.74) (1.14) -
NET ASSET VALUE
End of period $ 16.36 $ 15.75 $ 14.13 $ 10.43
Ratios/Supplemental Data
Total return 3.87% 16.76%* 46.51%* 4.30%*
Ratio of expenses to
average net assets 1.35%! 1.35%* 1.35%* 1.35%*!
Ratio of net investment
income to average
net assets 0.11%! 0.02%* 0.08%* 2.71%*!
Portfolio turnover
rate 87.8%! 107.3% 136.9% 134.5%!
Average commission
rate paid $ 0.0458 $ 0.0338 - -
Net assets, end of
period
(in thousands) $ 109,843 $125,077 $ 61,923 $ 2,437
* Excludes expenses in excess of a 1.35% voluntary expense
limitation in effect through 12/31/96.
! Annualized.
The accompanying notes are an integral part of these financial
statements.
T. Rowe Price Capital Opportunity Fund
Unaudited
June 30, 1997
Statement of Net Assets
Shares/Par Value
In thousands
Common Stocks 92.0%
FINANCIAL 4.9%
Insurance 4.6%
Harleysville Group 51,140 $ 1,947
Mid Ocean Limited 60,000 3,146
5,093
Financial Services 0.3%
Mercury Finance 137,500 335
335
Total Financial 5,428
UTILITIES 5.8%
Telephone 1.7%
Palmer Wireless * 110,000 1,863
1,863
Electric Utilities 4.1%
Centerior Energy 400,000 4,475
4,475
Total Utilities 6,338
CONSUMER NONDURABLES 7.6%
Beverages 1.4%
PepsiCo 42,500 1,596
1,596
Pharmaceuticals 0.4%
Global Pharmaceutical * 115,000 453
453
Health Care Services 0.8%
Apria Healthcare * 46,700 829
829
Miscellaneous Consumer Products 5.0%
CUC International * 75,000 1,936
Mattel 40,000 1,355
Richfood Holdings 30,000 780
Stanley Works 35,000 1,400
5,471
Total Consumer Nondurables 8,349
CONSUMER SERVICES 20.3%
General Merchandisers 2.3%
Warnaco Group (Class A) 80,000 $ 2,550
2,550
Specialty Merchandisers 5.4%
American Stores 40,000 1,975
General Nutrition * 70,000 1,956
Safeway * 42,000 1,937
5,868
Entertainment and Leisure 5.9%
Boston Chicken * 45,200 631
HFS * 50,000 2,900
La Quinta Inns 135,000 2,953
6,484
Media and Communications 6.7%
ADVO * 137,000 2,226
Catalina Marketing * 107,500 5,174
7,400
Total Consumer Services 22,302
TECHNOLOGY 7.2%
Electronic Components 1.8%
Analogic 58,600 2,011
2,011
Electronic Systems 1.5%
ADT * 50,000 1,650
1,650
Telecommunications Equipment 0.6%
Cascade Communications * 25,000 690
690
Aerospace and Defense 3.3%
OEA 90,000 3,555
3,555
Total Technology 7,906
BUSINESS SERVICES AND TRANSPORTATION 21.5%
Computer Service and Software 3.6%
First Data 89,000 $ 3,910
3,910
Distribution Services 3.5%
Ikon Office Solutions 117,400 2,928
JP Foodservice * 30,000 862
3,790
Environmental 2.1%
USA Waste Services * 60,000 2,317
2,317
Transportation Services 2.1%
BE Aerospace * 74,600 2,355
2,355
Miscellaneous Business Services 10.2%
American List 75,000 2,259
BISYS Group * 75,000 3,148
Corporate Express * 100,000 1,441
Interim Services * 30,000 1,335
Source Services * 115,000 3,069
11,252
Total Business Services and
Transportation 23,624
ENERGY 8.3%
Integrated Petroleum - Domestic 0.6%
Hanover Compressor * 35,000 682
682
Energy Services 4.4%
Cooper Cameron * 40,000 1,870
McDermott International 100,000 2,919
4,789
Exploration and Production 3.3%
Enserch Exploration * 200,000 2,188
Weatherford Enterra * 36,500 1,405
3,593
Total Energy 9,064
PROCESS INDUSTRIES 5.3%
Specialty Chemicals 3.9%
Great Lakes Chemical 50,000 $ 2,619
Lyondell Petrochemical 75,000 1,636
4,255
Paper and Paper Products 1.4%
American Pad & Paper * 93,000 1,569
1,569
Total Process Industries 5,824
BASIC MATERIALS 6.3%
Metals 1.9%
Reynolds Metals 30,000 2,137
2,137
Mining 4.4%
Battle Mountain Gold (Class A) 200,000 1,138
Dayton Mining * 443,000 1,689
Prime Resources Group (CAD) 275,000 1,991
4,818
Total Basic Materials 6,955
Miscellaneous Common Stocks 4.8% 5,271
Total Common Stocks
(Cost $85,636) 101,061
Convertible Bonds 0.3%
ENSERCH, Sub. Deb., 6.375%,
4/1/02 $ 400,000 401
Total Convertible Bonds
(Cost $399) 401
Short Term Investments 13.0%
Repurchase Agreements** 3.9%
Investments in Repurchase
Agreements through a Joint Account
Dated 6/30/97, 5.80%,
Delivery Value of 4,272,000
on 7/1/97 4,271,615 4,271
4,271
U.S. Government Obligations 9.1%
Federal Home Loan Mortgage, 5.43 -
5.44%, 7/7 - 7/14/97 10,000,000 9,986
9,986
Total Short-Term Investments
(Cost $14,257) 14,257
Total Investments in Securities
105.3% of Net Assets (Cost $100,292) $ 115,719
Other Assets Less Liabilities (5,876)
NET ASSETS $ 109,843
____________
Net Assets Consist of:
Accumulated net investment
income - net of distributions $ 61
Accumulated net realized gain/loss
- net of distributions 4,008
Net unrealized gain (loss) 15,428
Paid-in-capital applicable to 6,714,818
shares of $0.0001 par value
capital stock outstanding;
1,000,000,000 shares authorized 90,346
NET ASSETS $ 109,843
____________
NET ASSET VALUE PER SHARE $ 16.36
____________
* Non-income producing
** Fully collateralized by U.S. government securities
CAD Canadian dollar
The accompanying notes are an integral part of these financial
statements.
T. Rowe Price Capital Opportunity Fund
Unaudited
Statement of Operations
In thousands
6 Months
Ended
6/30/97
Investment Income
Income
Dividend $ 455
Interest 337
Total income 792
Expenses
Investment management 425
Shareholder servicing 198
Custody and accounting 42
Registration 25
Prospectus and shareholder reports 17
Legal and audit 7
Directors 4
Miscellaneous 7
Reimbursed to manager 6
Total expenses 731
Net investment income 61
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 3,003
Foreign currency transactions (13)
Net realized gain (loss) 2,990
Change in net unrealized gain or loss
Securities 599
Other assets and liabilities
denominated in foreign currencies 1
Change in net unrealized gain or loss 600
Net realized and unrealized gain (loss) 3,590
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 3,651
________
The accompanying notes are an integral part of these financial
statements.
T. Rowe Price Capital Opportunity Fund
Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
6/30/97 12/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income $ 61 $ 19
Net realized gain (loss) 2,990 4,575
Change in net unrealized
gain or loss 600 8,698
Increase (decrease) in net
assets from operations 3,651 13,292
Distributions to shareholders
Net realized gain - (5,624)
Capital share transactions*
Shares sold 16,459 109,851
Distributions reinvested - 5,285
Shares redeemed (35,344) (59,650 )
Increase (decrease) in net
assets from capital
share transactions (18,885) 55,486
Net Assets
Increase (decrease) during period (15,234) 63,154
Beginning of period 125,077 61,923
End of period $ 109,843 $ 125,077
_______________________
*Share information
Shares sold 1,073 7,015
Distributions reinvested - 339
Shares redeemed (2,297) (3,798)
Increase (decrease) in
shares outstanding (1,224) 3,556
The accompanying notes are an integral part of these financial
statements.
T. Rowe Price Capital Opportunity Fund
Unaudited
June 30, 1997
Notes to Financial Statements
Note 1 - Significant Accounting Policies
T. Rowe Price Capital Opportunity Fund, Inc. (the fund) is
registered under the Investment Company Act of 1940 as a
nondiversified, open-end management investment company and
commenced operations on November 30, 1994.
Valuation Equity securities 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.
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. Short-term debt securities
are valued at amortized cost which, when combined with accrued
interest, approximates fair value.
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.
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.
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.
Repurchase Agreements The fund, and other affiliated funds,
may transfer uninvested cash into a joint account, the daily
aggregate balance of which is invested in one or more overnight
repurchase agreements. All repurchase
agreements purchased by the joint account satisfy the fund's
criteria as to quality, yield, and liquidity and are fully
collateralized by U.S. government securities. Collateral is in
the possession of the fund's custodian and is evaluated daily to
ensure that its market value exceeds the delivery value of the
repurchase agreements at maturity. Although risk is mitigated by
the collateral, the fund could experience a delay in recovering
its value and a possible loss of income or value if the
counterparty fails to perform in accordance with the terms of
the agreement.
Other Purchases and sales of portfolio securities, other than
short-term securities, aggregated $43,326,000 and $57,753,000,
respectively, for the six months ended June 30, 1997.
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, 1997, the aggregate cost of investments for federal
income tax and financial reporting purposes was $100,292,000,
and net unrealized gain aggregated $15,427,000, of which
$19,712,000 related to appreciated investments and $4,285,000 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 $71,000 was payable at June
30, 1997. The fee is computed daily and paid monthly, and
consists of an individual fund fee equal to 0.45% 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, 1997, and
for the six months then ended, the effective annual group fee
rate was 0.33%. The fund pays a pro-rata share of the group fee
based on the ratio of its net assets to those of the group.
Under the terms of a previous investment management agreement,
the manager was required to bear any expenses through December
31, 1996, which would cause the fund's ratio of expenses to
average net assets to exceed 1.35%. Thereafter, through December
31, 1998, the fund is required to reimburse the manager for
these expenses, provided that average net assets have grown or
expenses have declined sufficiently to allow reimbursement
without causing the fund's ratio of expenses to average net
assets to exceed 1.35%. Pursuant to this agreement, $9,000 of
unaccrued 1994-1995 fees and expenses were repaid during the six
months ended June 30, 1997, and $148,000 remains subject to
reimbursement through December 31, 1998.
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 $182,000 for the
six months ended June 30, 1997, of which $40,000 was payable at
period-end.
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(registered
trademark) and T. Rowe Price OnLine.
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 your T. Rowe Price accounts.
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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Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
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 Government 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.
** Formerly the OTC Fund.
Please call for a prospectus. Read it carefully before you
invest or send money. 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.
Discount Brokerage
A Division of T. Rowe Price Investment Services, Inc., Member
NASD/SIPC
This low-cost service gives you the opportunity to easily
consolidate all your investments with one company. Through T.
Rowe Price Discount Brokerage, you can buy and sell individual
securities -stocks, bonds, options, and others -at considerable
commission savings over full-service brokers.* We also provide
a wide range of services, including:
Automated Telephone and Computer Services You can enter trades,
access quotes, and review account information 24 hours a day,
seven days a week. Any trades executed through these programs
save you an additional 10% on commissions.**
Investor Information A variety of informative reports, such as
our Brokerage Insights series, S&P Market Month newsletter, and
select stock reports, can help you better evaluate economic
trends and investment opportunities.
Dividend Reinvestment Service Virtually all stocks held in
customer accounts are eligible for this service, free of charge.
* Based on a February 1997 telephone survey that compared our
commission rates on stock transactions of various sizes
with those of other full-service and discount brokerages.
Commission rates will vary based on size and nature of
trades. Services vary by firm. For additional information
concerning our commission rates and services, call
1-800-638-5660.
** Discount applies to our current commission schedule;
subject to our $35 minimum commission.
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 Capital Opportunity 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.RowePrice, Invest With Confidence(registered trademark)
T. Rowe Price Investment Services, Inc., Distributor.
F08-051 6/30/97
