PAGE 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Section 240.14a-11(c) or
Section 240.14a-12
T. Rowe Price Growth & Income Fund, Inc.
_________________________________________________________________
(Name of Registrant as Specified in its Charter)
T. Rowe Price Growth & Income Fund, Inc.
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
_________________________________________________________
2) Aggregate number of securities to which transaction
applies:
_________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: (1)
_________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________
1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing,
1) Amount previously paid:
_________________________________________________________
2) Form, schedule, or Registration Statement no.:
_________________________________________________________
3) Filing party:
PAGE 2
_________________________________________________________
4) Date filed:
_________________________________________________________
PAGE 3
T. ROWE PRICE
_________________________________________________________________
T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore,
MD 21202
James S. Riepe
Managing Director
Dear Shareholder:
An annual meeting of shareholders of the T. Rowe Price
Growth & Income Fund, Inc. ("the Fund") will be held on
Wednesday, April 19, 1995, at 8:30 a.m., in the Fund's offices at
100 East Pratt Street in Baltimore. We are asking you to vote on
several matters and request that you vote your shares by
returning the enclosed proxy card even if you plan to join us for
the meeting.
The items to be voted on are outlined in the attached
notice, and details are included in the proxy statement. Among
the proposals is a recommendation by your Fund's Board of
Directors to increase the Fund's current management fee from
0.15% to 0.25% of total assets. I would like to take this
opportunity to give you some background on this proposed change
in the investment management agreement.
The Fund's current management fee was established in May
1987. Since then, the costs of hiring and retaining well-
qualified investment professionals and providing superior
administrative services have risen significantly. The discussion
beginning on page ___ of the proxy statement reviews the factors
considered by the Directors before recommending a higher
management fee.
Under the proposed fee schedule, the Fund's management fee
and total expense ratio remain below the average charged by
funds with similar investment objectives (as reported by Lipper
Analytical Services for the Growth & Income Fund category). T.
Rowe Price is firmly committed to offering low-cost investment
management services. To this end, none of our Funds imposes a
sales charge ("load") or 12b-1 fee. We are equally committed to
other important objectives: providing high-quality investment
management as well as services that make investing with T. Rowe
Price convenient and efficient.
We encourage you to vote your proxy now and return it in the
postage-paid envelope. Your early response will be appreciated and
could save your Fund the substantial costs associated with a follow-up
mailing. Your participation is extremely important.
Sincerely,
James S. Riepe
Director, Mutual Funds Division
CUSIP# 779551 10 0/FUND# 054
PAGE 4
T. ROWE PRICE GROWTH & INCOME FUND, INC.
Notice of Annual Meeting of Shareholders
April 19, 1995
An Annual Meeting of Shareholders of the T. Rowe Price
Growth & Income Fund, Inc. (the "Fund"), a Maryland corporation,
will be held on Wednesday, April 19, 1995, at 8:30 o'clock a.m.,
Eastern time, at the offices of the Fund, 100 East Pratt Street,
Baltimore, Maryland 21202. The following matters will be acted
upon at that time:
1. To elect 11 directors to serve until the next annual
meeting, if any, or until their successors shall have
been duly elected and qualified;
2. Approval of a proposal to adopt a new Investment
Management Agreement including an increase in the
management fee paid to the Fund's manager, T. Rowe
Price Associates, Inc.;
3. To ratify or reject the selection of the firm of Price
Waterhouse, LLP as the independent accountants for the
Fund for the fiscal year 1995; and
4. To transact such other business as may properly come
before the meeting and any adjournments thereof.
LENORA V. HORNUNG
Secretary
March 3, 1995
100 East Pratt Street
Baltimore, Maryland 21202
PAGE 5
_________________________________________________________________
YOUR VOTE IS IMPORTANT
Shareholders are urged to designate their choices on each of the
matters to be acted upon and to date, sign, and return the
enclosed proxy in the envelope provided, which requires no
postage if mailed in the United States. Your prompt return of
the proxy will help assure a quorum at the meeting and avoid the
additional Fund expense of further solicitation.
_________________________________________________________________
PAGE 6
T. ROWE PRICE GROWTH & INCOME FUND, INC.
Annual Meeting of Shareholders--April 19, 1995
PROXY STATEMENT
This statement is furnished in connection with the
solicitation of proxies by the T. Rowe Price Growth & Income
Fund, Inc. (the "Fund"), a Maryland corporation, for use at the
Annual Meeting of Shareholders of the Fund to be held on April
19, 1995, and at any adjournments thereof.
Shareholders are entitled to one vote for each full share,
and a proportionate vote for each fractional share, of the Fund
held as of the record date. Under Maryland law, shares owned by
two or more persons (whether as joint tenants, co-fiduciaries, or
otherwise) will be voted as follows, unless a written instrument
or court order providing to the contrary has been filed with the
Fund: (1) if only one votes, that vote will bind all; (2) if
more than one votes, the vote of the majority will bind all; and
(3) if more than one votes and the vote is evenly divided, the
vote will be cast proportionately.
In order to hold the meeting, a majority of the Fund's
shares entitled to be voted must have been received by proxy or
be present at the meeting. In the event that a quorum is present
but sufficient votes in favor of one or more of the Proposals are
not received by the time scheduled for the meeting, the persons
named as proxies may propose one or more adjournments of the
meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of
the shares present in person or by proxy at the session of the
meeting adjourned. The persons named as proxies will vote in
favor of such adjournment if they determine that such adjournment
and additional solicitation is reasonable and in the interests of
the Fund's shareholders.
The individuals named as proxies (or their substitutes) in
the enclosed proxy card (or cards if you have multiple accounts)
will vote in accordance with your directions as indicated thereon
if your proxy is received properly executed. You may direct the
proxy holders to vote your shares on a Proposal by checking the
appropriate box "For" or "Against," or instruct them not to vote
those shares on the Proposal by checking the "Abstain" box.
Alternatively, you may simply sign, date and return your proxy
card(s) with no specific instructions as to the Proposals. If
you properly execute your proxy card and give no voting
instructions with respect to a Proposal, your shares will be
voted FOR the Proposal. Any proxy may be revoked at any time
prior to its exercise by filing with the Fund a written notice of
revocation, by delivering a duly executed proxy bearing a later
date, or by attending the meeting and voting in person.
PAGE 7
Abstentions and "broker non-votes" (as defined below) are
counted for purposes of determining whether a quorum is present,
but do not represent votes cast with respect to any Proposal.
"Broker non-votes" are shares held by a broker or nominee for
which an executed proxy is received by the Fund, but are not
voted as to one or more Proposals because instructions have not
been received from the beneficial owners or persons entitled to
vote and the broker or nominee does not have discretionary voting
power.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE
MEETING IS SUFFICIENT TO APPROVE PROPOSAL 1 FOR THE FUND. A
MAJORITY OF THE SHARES PRESENT IN PERSON OR BY PROXY AT THE
MEETING IS SUFFICIENT TO APPROVE PROPOSAL 3 FOR THE FUND.
APPROVAL OF PROPOSAL 2 OF THE FUND REQUIRES THE AFFIRMATIVE VOTE
OF THE HOLDERS OF THE LESSER OF (A) 67% OF THE SHARES PRESENT AT
THE MEETING IN PERSON OR BY PROXY, OR (B) A MAJORITY OF THE
FUND'S OUTSTANDING SHARES.
The costs of the meeting, including the solicitation of
proxies, will be paid by the Fund. Persons holding shares as
nominees will be reimbursed, upon request, for their reasonable
expenses in sending solicitation materials to the principals of
the accounts. In addition to the solicitation of proxies by
mail, directors, officers, and/or employees of the Fund or of its
investment manager, T. Rowe Price Associates, Inc. ("T. Rowe
Price"), may solicit proxies in person or by telephone.
The approximate date on which this Proxy Statement and form
of proxy are first being mailed to shareholders is March 3, 1995.
PAGE 8
1. ELECTION OF DIRECTORS
The Fund's Board of Directors has nominated the eleven (11)
persons listed below for election as directors, each to hold
office until the next annual meeting (if any) or his or her
successor is duly elected and qualified. Each of the nominees is
a member of the present Board of Directors of the Fund and has
served in that capacity since originally elected. A shareholder
using the enclosed proxy form can vote for all or any of the
nominees of the Board of Directors or withhold his or her vote
from all or any of such nominees. If the proxy card is properly
executed but unmarked, it will be voted for all of the nominees.
Each of the nominees has agreed to serve as a director if
elected; however, should any nominee become unable or unwilling
to accept nomination or election, the persons named in the proxy
will exercise their voting power in favor of such other person or
persons as the Board of Directors of the Fund may recommend.
There are no family relationships among these nominees.
PAGE 9
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Year Owned, Shares
of Directly Beneficially
Original or Owned
Name, Address Election Indirectly, Directly
and Date of Birth Principal as as of as of
of Nominee Occupations(1) Director 12/31/94(2) 12/31/94
_________________________________________________________________
Leo C. Bailey Retired; Director/ 1994
3396 S. Placita Trustee of 21 other
Fabula T. Rowe Price Funds/
Green Valley, Trusts
AZ 85614
3/3/24
*Stephen W. President and 1988
Boesel member of the
100 East Pratt Executive Committee
Street of the Fund; Managing
Baltimore, MD Director, T. Rowe
21202 Price Associates, Inc.
12/28/44
Donald W. Dick, Partner, Overseas 1982
Jr. Partners, Inc., a
111 Pavonia financial investment
Ave., 3rd Floor firm; formerly
Jersey City, NJ (6/65-3/89) Director
07310 and Vice President-
1/27/43 Consumer Products
Division, McCormick &
Company, Inc.,
international food
processors; Director/
Trustee, Waverly Press,
Inc. and 21 other
T. Rowe Price Funds/Trusts
David K. Fagin Chairman, Chief 1994
One Norwest Executive Officer and Director,
Center Golden Star Resources, Ltd.;
1700 Lincoln formerly (1986-7/91)
Street President, Chief Operating
Suite 1950 Officer and Director,
Denver, CO Homestake Mining Company;
80203 Director/Trustee of 18
4/9/38 other T. Rowe Price
Funds/Trusts
PAGE 10
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Year Owned, Shares
of Directly Beneficially
Original or Owned
Name, Address Election Indirectly, Directly
and Date of Birth Principal as as of as of
of Nominee Occupations(1) Director 12/31/94(2) 12/31/94
_________________________________________________________________
Addison Lanier Financial 1994
2300 Carew management; President
Tower, and Director, Thomas
441 Vine Street Emery's Sons, Inc. and
Cincinnati, OH Emery Group, Inc.;
45202-2913 Director/Trustee, Scinet
1/12/24 Development and Holdings,
Inc. and 21 other T. Rowe
Price Funds/Trusts
John K. Major Chairman of the 1982
126 E. 26 Board and President,
Place, KCMA Incorporated,
Tulsa, OK Tulsa, Oklahoma;
74114-2422 Director/Trustee of
8/3/24 18 other T. Rowe Price
Funds/Trusts
Hanne M. Retail business 1994
Merriman consultant; formerly,
655 15th Street President and Chief
Suite 300 Operating officer (1991-92),
Washington, Nan Duskin, Inc., a women's
D.C. 20005 specialty store, Director
11/16/41 (1984-90) and Chairman
(1989-90) Federal Reserve Bank
of Richmond, and President and
Chief Executive Officer
(1988-89), Honeybee, Inc.,
a division of Spiegel, Inc.;
Director, Central Illinois
Public Service Company, CIPSCO
Incorporated, The Rouse Company,
State Farm Mutual Automobile
Insurance Company and USAir
Group, Inc., Director/Trustee of
18 other T. Rowe Price
Funds/Trusts
PAGE 11
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Year Owned, Shares
of Directly Beneficially
Original or Owned
Name, Address Election Indirectly, Directly
and Date of Birth Principal as as of as of
of Nominee Occupations(1) Director 12/31/94(2) 12/31/94
_________________________________________________________________
*James S. Riepe Chairman of the 1982
100 East Pratt Board and member
Street of the Executive
Baltimore, MD Committee of the
21202 Fund; Managing
6/25/43 Director, T. Rowe
Price Associates, Inc.;
President and Director,
T. Rowe Price Investment
Services, Inc.; Chairman
of the Board, T. Rowe
Price Services, Inc., T.
Rowe Price Trust Company,
T. Rowe Price Retirement
Plan Services, Inc., and the
following T. Rowe Price Funds:
Spectrum (since inception),
Balanced (since inception),
and Mid-Cap Growth (since
inception); Vice President of
the following T. Rowe Price
Funds/Trusts: New Era, New America
Growth, Prime Reserve,
International, and
Institutional International
(since inception); Vice President
and Director/Trustee of 24
other T. Rowe Price Funds/Trusts;
Director, T. Rowe Price Tax-Free
Insured Intermediate Bond Fund,
Inc. (since inception) and
Rhone-Poulenc Rorer, Inc.
*M. David Testa Managing Director, 1994
100 East Pratt T. Rowe Price
Street Associates, Inc.;
Baltimore, MD Chairman of the
21202 Board, Rowe Price-
4/22/44 Fleming International,
Inc. and the following T. Rowe
Price Funds: Growth Stock,
PAGE 12
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Year Owned, Shares
of Directly Beneficially
Original or Owned
Name, Address Election Indirectly, Directly
and Date of Birth Principal as as of as of
of Nominee Occupations(1) Director 12/31/94(2) 12/31/94
_________________________________________________________________
International, and Institutional
International (since inception);
Vice President and
Director, T. Rowe Price
Trust Company and T. Rowe
Price Balanced Fund, Inc.
(since inception); Director of
the following T. Rowe Price
Funds: Dividend Growth (since
inception) and Blue Chip Growth
(since inception); Vice President,
T. Rowe Price Spectrum
Fund, Inc. (since inception)
Hubert D. Vos President, 1994
1114 State Stonington Capital Corporation,
Street a private investment company;
Suite 247 Director/Trustee of 18 other
Santa Barbara, T. Rowe Price Funds/Trusts
CA
93190-0409
8/2/33
Paul M. Wythes Founding General 1982
755 Page Mill Partner, Sutter
Road Hill Ventures, a venture
Suite A200 capital limited partnership
Palo Alto, CA providing equity capital
94304 to young high technology
6/23/33 companies throughout the
United States; Director/Trustee,
Teltone Corporation,
Interventional Technologies,
Inc., Stuart Medical, Inc. and
18 other T. Rowe Price Funds/
Trusts
*Nominees considered "interested persons" of T. Rowe Price.
(1) Except as otherwise noted, each individual has held the
office indicated, or other offices in the same company, for
PAGE 13
the last five years.
(2) In addition to the shares owned beneficially and of record
by each of the nominees, the amounts shown reflect the
proportionate interests of Messrs. Boesel, Riepe and Testa
in 2,764 shares of the Fund which are owned by a wholly-
owned subsidiary of the Fund's investment manager, T. Rowe
Price, and Mr. Boesel's interest in 3,284 shares owned by
the T. Rowe Price Associates, Inc. Profit Sharing Trust.
PAGE 14
The directors of the Fund who are officers or employees of
T. Rowe Price receive no remuneration from the Fund and officers
of the fund receive no renumeration from the Fund. For the year
ended December 31, 1994, this group of directors received from
the Fund directors' fees aggregating $27,432, including expenses.
Those nominees indicated by an asterisk (*) are persons who, for
purposes of Section 2(a)(19) of the Investment Company Act of
1940 are considered "interested persons" of T. Rowe Price. Each
such nominee is deemed to be an "interested person" by virtue of
his officership, directorship and/or employment with T. Rowe
Price. Messrs. Bailey, Dick, Fagin, Lanier, Major, Vos, Wythes
and Ms. Merriman are the independent directors of the Fund. The
following table provides the amount of renumeration received by
the Fund's directors for the fiscal year ended December 31, 1994.
_________________________________________________________________
Total
Pension or Estimated Comp-
Aggregate Retirement Annual ensation
Comp- Benefits Benefits from Fund
ensation Accrued as Upon and Fund
Name of from the Part of Retire- Group Paid
Person Fund Fund Expensesa menta to Directorsc
_________________________________________________________________
Leo C. Bailey $3,429 - - $64,583
Stephen W. Boeselbc - - - -
Donald W. Dick, Jr. 3,429 - - 64,833
David K. Fagin 3,429 - - 53,833
Addison Lanier 3,429 - - 64,583
John K. Major 3,429 - - 54,583
Hanne M. Merriman 3,429 - - 42,083
James S. Riepebc - - - -
M. David Testabc - - - -
Hubert D. Vos 3,429 - - 54,583
Paul M. Wythes 3,429 - - 54,333
_________________________________________________________________
a The directors of the Fund do not receive any pensions or
retirement benefits from the Fund or T. Rowe Price.
b The directors of the Fund who are officers or employees of
T. Rowe Price receive no renumeration from the Fund.
PAGE 15
c The directors' fees set forth in the above table for
calendar year 1994 are based on the following fee schedule
applicable to all independent directors of the T. Rowe Price
funds: a fee of $25,000 per year as the initial fee for the first
Price Fund/Trust on which a director serves; a fee of $5,000 for
each of the second, third, and fourth Price Funds/Trusts on which
a director serves; a fee of $2,500 for each of the fifth and
sixth Price Funds/Trusts on which a director serves; and a fee of
$1,000 for each of the seventh and any additional Price
Funds/Trusts on which a director serves. The fund group included
64 funds at December 31, 1994.
PAGE 16
The Price Funds have established a Joint Audit Committee,
which is comprised of at least one independent director
representing each of the Funds. Messrs. Bailey and Vos,
directors of the Fund, are members of the Committee. The other
members are Anthony W. Deering and F. Pierce Linaweaver. These
directors also receive a fee of $500 for each Committee meeting
attended. The Audit Committee holds two regular meetings during
each fiscal year (and two such meetings were held in 1994), at
which time it meets with the independent accountants of the Price
Funds to review: (1) the services provided; (2) the findings of
the most recent audit; (3) management's response to the findings
of the most recent audit; (4) the scope of the audit to be
performed; (5) the accountants' fees; and (6) any accounting
questions relating to particular areas of the Price Funds'
operations or the operations of parties dealing with the Price
Funds, as circumstances indicate.
The Board of Directors of the Fund has an Executive
Committee consisting of the interested directors of the Fund
which is authorized to assume all the powers of the Board to
manage the Fund, in the intervals between meetings of the Board,
except the powers prohibited by statute from being delegated.
The Board of Directors of the Fund has a Nominating
Committee, which is comprised of all the Price Fund's independent
directors. The Nominating Committee, which functions only in an
advisory capacity, is responsible for reviewing and recommending
to the full Board candidates for election as independent
directors to fill vacancies on the Fund's Board of Directors.
The Nominating Committee will consider written recommendations
from shareholders for possible nominees. Shareholders should
submit their recommendations to the Secretary of the Fund.
Members of the Nominating Committee met informally during the
last full fiscal year, but the Committee as such held no formal
meetings.
The Board of Directors held six meetings during the last
full fiscal year. Each director standing for reelection attended
75% or more of the aggregate of (i) the total number of meetings
of the Board of Directors (held during the period for which he or
she was a director) and (ii) the total number of meetings held by
all committees of the Board on which he or she served.
PAGE 17
2. PRESENT AND PROPOSED INVESTMENT MANAGEMENT AGREEMENTS
On February 28, 1995, the Board of Directors of the Fund,
including the directors who are not "interested persons" of T.
Rowe Price or the Fund, unanimously voted to approve a new
management agreement between the Fund and T. Rowe Price (the
"Proposed Agreement"), which is identical to the Fund's present
investment advisory agreement (the "Present Agreement") except
with respect to the Individual Fund Fee, which is a component of
the Management Fee described on page __. If the Proposed
Agreement is approved by the shareholders of the Fund, it will
become effective on May 1, 1995. If the Proposed Agreement is
not approved by the shareholders of the Fund, the Present
Agreement will continue in effect through April 30, 1996.
Present Agreement
The Present Agreement was approved by the shareholders of
the Fund on April 21, 1987 and became effective on May 1, 1987.
At that time the present fee structure described below was
adopted. By its terms, the Present Agreement will continue in
effect from year to year as long as it is approved annually by
the Fund's Board of Directors (at a meeting called for that
purpose) or by vote of a majority of the Fund's outstanding
shares. In either case, renewal of the Present Agreement must be
approved by a majority of the Fund's independent directors. The
Present Agreement is subject to termination without penalty on 60
days' written notice by either party to the other and will
terminate automatically in the event of assignment.
Under the Present Agreement, T. Rowe Price provides the Fund
with discretionary investment services. Specifically, T. Rowe
Price is responsible for supervising and directing the
investments of the Fund in accordance with the Fund's investment
objective, program, and restrictions as provided in its
prospectus and Statement of Additional Information. T. Rowe
Price is also responsible for effecting all securities
transactions on behalf of the Fund, including the negotiation of
commissions and the allocation of principal business and
portfolio brokerage. In addition to these services, T. Rowe
Price provides the Fund with certain corporate administrative
services, including: maintaining the Fund's corporate existence,
corporate records, and registering and qualifying Fund shares
under federal and state laws; monitoring the financial,
accounting, and administrative functions of the Fund; maintaining
liaison with the agents employed by the Fund, such as the Fund's
custodian and transfer agent; assisting the Fund in the
coordination of such agents' activities; and permitting T. Rowe
Price's employees to serve as officers, directors, and committee
members of the Fund without cost to the Fund.
The Present Agreement also provides that T. Rowe Price, its
directors, officers, employees, and certain other persons
PAGE 18
performing specific functions for the Fund will only be liable to
the Fund for losses resulting from willful misfeasance, bad
faith, gross negligence, or reckless disregard of duty.
The Present Agreement provides that the Fund will bear all
expenses of its operations not specifically assumed by T. Rowe
Price. However, T. Rowe Price will reimburse the Fund for any
expenses (excluding interest, taxes, brokerage, other
expenditures which are capitalized in accordance with generally
accepted accounting principles, and extraordinary expenses) which
in any year exceed the limits prescribed by any state in which
the Fund's shares are qualified for sale. Presently, the most
restrictive expense ratio limitation imposed by any state is 2.5%
of the first $30 million of the Fund's average daily net assets,
2% of the next $70 million of such assets, and 1.5% of net assets
in excess of $100 million. For the purpose of determining
whether the Fund is entitled to reimbursement, the expenses of
the Fund are calculated on a monthly basis. If the Fund is
entitled to reimbursement, that month's management fee will be
reduced or postponed, with any adjustment made after the end of
the year. For the fiscal years ended December 31, 1994, 1993,
and 1992, the ratios of operating expenses to average net assets
of the Fund were 0.81%, 0.83%, and 0.85%, respectively.
For its services to the Fund under the Present Agreement, T.
Rowe Price is paid a management fee ("Management Fee") consisting
of two elements: a "group" fee ("Group Fee") and an "individual"
fund fee ("Individual Fund Fee"). The Group Fee varies and is
based on the combined net assets of all of the Price Funds
distributed by T. Rowe Price Investment Services, Inc., other
than institutional or "private label" products, and Funds managed
and sponsored by T. Rowe Price (excluding T. Rowe Price Index
Trust, Inc.) or by Rowe Price-Fleming International, Inc. (Price-
Fleming)(excluding Institutional International Funds, Inc.). The
Fund pays, as its portion of the Group Fee as described below, an
amount equal to the ratio of its daily net assets to the daily
net assets of all the Price Funds. The Fund pays a flat
Individual Fund Fee of .15% based on the net assets of the Fund.
At December 31, 1994, the net assets of the Fund were
$1,228,926,304 and, for the year then ended, T. Rowe Price
received management fees paid by the Fund of $5,983,540.
Group Fee Rate Schedule at various asset levels of the Combined
Price Funds:
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
PAGE 19
0.330% Next $10 billion
0.320% Next $10 billion
0.310% Thereafter
The fund's portion of the group fee is determined by the ratio of
its daily net assets to the daily net assets of all the Price
funds described above. Based on combined Price fund's assets of
approximately $36 billion at December 31, 1994, the Group Fee was
0.34%.
In addition to the services provided under the Present
Agreement, T. Rowe Price Services, Inc. ("Price Services"), and
T. Rowe Price Retirement Services ("Retirement Services"), each a
wholly-owned subsidiary of T. Rowe Price, perform certain non-
advisory services for the Fund under separate service contracts.
T. Rowe Price also provides certain accounting services for the
Fund. Specifically,
(i) Price Services provides certain transfer agency and other
shareholder administrative and communication services for all
accounts, for which the Fund paid Price Services fees totaling
$738,637 for the fiscal year ended December 31, 1994,(ii)
Retirement Services performs certain subaccounting and record
keeping services with respect to shareholder accounts in certain
retirement plans for which the Fund paid retirement services fees
totalling $1,672,319 for the same period, and (iii) T. Rowe
Price calculates the daily share price and maintains the
portfolio and general accounting records of the Fund, for which
the Fund paid T. Rowe Price fees totaling $85,468 for the same
period. All such fees are reviewed annually by the Fund's
Directors in connection with renewal of the service contracts
involving these entities. The services provided by these entities
will continue to be provided whether or not the proposed
agreement is approved.
The T. Rowe Price Trust Company (the "Trust Company"), a
wholly-owned subsidiary of T. Rowe Price, serves as trustee and
custodian for certain IRA, Keogh, and other prototype plans which
utilize the Price Funds as investment options. For these
services, the Trust Company charges each such shareholder account
a fiduciary fee. During 1994, the aggregate of such fees totaled
approximately $_________ (of this amount, approximately
$____________ were paid with respect to Fund accounts). In
addition, Price Services provides administrative services to
certain defined contribution retirement plans. During 1994,
Price Services received fees from all plans utilizing such
services in the amount of $_________.
The distributor for the Price Funds, T. Rowe Price
Investment Services, Inc., makes available to shareholders of the
Price Funds a discount brokerage service. During 1994, this
service generated net commissions totaling $_________.
PAGE 20
Proposed Agreement
The Proposed Agreement is identical in every respect to the
Present Agreement except for the proposed increase in the
Individual Fund Fee rate from .15% to .25% of the Fund's net
assets. As such, the total management fee will increase from
.49% to .59% based on the Effective Group Fee Rate of .34% as of
December 31, 1994.
T. Rowe Price acts as Investment Advisor to over 60 mutual
funds. The management fees of the funds having similar
investment objectives to those of the Fund and the amount of the
adviser's compensation are set forth in the chart below.
Net Assets of
Fund at Individual Fees Waived
Name of Fund December 31, 1994 Fund Fee or Reduced
_________________________________________________________________
Growth & Income Fund 1,228,926,303 0.15% No
Dividend Growth Fund 4,855,278 0.20% Yes*
Equity Income Fund 3,203,851,473 0.25% No
Value Fund 8,849,923 0.35% Yes**
_________________________________________________________________
* In the interest of limiting the expenses of Dividend Growth
Fund during its initial period of operations, T. Rowe Price
agreed to bear any expenses through December 31, 1994, which
would cause the fund's ratio of expenses to average net assets to
exceed 1.00%. Expenses paid or assumed under this agreement are
subject to reimbursement to R. Rowe Price by the fund whenever
the fund's expense ratio is below 1.00%; however, no
reimbursement will be made after December 31, 1996, or if it
would result in the expense ratio exceeding 1.00%. Effective
January 1, 1995, T. Rowe Price agreed to increase the expense
limitation from 1.00% to 1.10% for a period of two years from
January 1, 1995. Fees waived or expenses paid are assumed under
this agreement are subject to reimbursement to T. Rowe Price by
the fund whenever the fund's expense ratio is below 1.10%;
however, no reimbursement will be made after December 31, 1998,
or if it would result in the expense ratio exceeding 1.10% for
the fund.
** To limit the fund's expenses during its initial period of
operations, T. Rowe Price has agreed to waive its fees and bear
any expenses through December 31, 1996, to the extent such fees
or expenses would cause the fund's ratio of expenses to average
net assets to exceed 1.10%. Fees waived or expenses paid or
assumed under this agreement are subject to reimbursement to T.
Rowe Price by the fund whenever the fund's expense ratio is below
the previously stated ratio; however, no reimbursement will be
PAGE 21
made after December 31, 1998, or if it would result in the
expense ratio exceeding the previously stated.
Matters Considered by the Board of Directors
In determining whether or not it was appropriate to approve
the Proposed Agreement and to recommend approval to shareholders,
the Board considered various matters and written materials
provided by T. Rowe Price and the Fund's legal counsel, Shereff,
Friedman, Hoffman & Goodman, L.L.P. ("Fund's legal counsel").
The nature of the matters to be considered and standards to be
used by the Board in reaching its decision were reviewed with the
Fund's legal counsel.
In reaching its decision to approve the adoption of the
Proposed Agreement and the increase in the Fund's Individual Fund
Fee Rate, the Fund's Board evaluated extensive data provided to
it by T. Rowe Price and considered such factors as it deemed
reasonably necessary, including: (1) the nature and quality of
the services rendered and the results achieved by T. Rowe Price
in the areas of investment performance; (2) the payments received
by T. Rowe Price and its affiliates from all sources involving
both the Fund and the other Price Funds; (3) extensive financial,
personnel, and structural information as to the Price
organization, including the costs borne by, and profitability of,
T. Rowe Price and its affiliates in providing services of all
types to the Fund, the other Price Funds and with respect to T.
Rowe Price's other investment advisory services; (4) a comparison
of the overall profitability of T. Rowe Price to the
profitability of other investment advisers; (5) a comparison of
the Management Fees that the Fund has paid under the Present
Agreement with the Management Fees that the Fund would have paid
under the Proposed Agreement had it been in effect during the
most recent fiscal year; (6) information concerning the Fund's
expense ratios on both an existing and pro forma basis; (7)
information as to the management fees charged the other Price
Funds as well as T. Rowe Price's other advisory clients; (8)
competitive industry fee structures and expense ratios; (9) the
organizational capabilities and financial condition of T. Rowe
Price; and 10) the fall-out benefits which T. Rowe Price and its
affiliates may have received from T. Rowe Price's relationship to
the Fund.
The effect of the proposed increase in the Fund's Individual
Fund Fee Rate is set forth below, by showing what the Individual
Fund Fee would have been for the most recent year if the higher
rate had been in effect.
PAGE 22
12 Months Ended
Dec. 31, 1994
__________________
($ Millions)
Effective Management Fee Rate
-Present agreement 0.49%
-Proposed agreement 0.59%
-Percentage change 20.3%
Expense Ratio
-Present agreement 0.81%
-Proposed agreement 0.91%
-Percentage change 12.4%
Management Fee
-Present agreement $5,984,000
-Proposed agreement $7,196,318
-Difference between
aggregate amounts $1,212,318
-Percentage change 20.3%
Average Net Assets of
the Fund $1,212,000
If approved, the Proposed Agreement will continue in effect
until April 30, 1996, and thereafter from year to year as long as
it is approved annually by the Board of Directors of the Fund at
a meeting called for that purpose or by a vote of the Fund's
outstanding shares. If the Proposed Agreement is not approved by
the shareholders, the Board has approved the extension of the
Present Agreement through April 30, 1996, so as to assure
continuity of the management process.
3. RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT
ACCOUNTANTS
The selection by the Board of Directors of the firm of Price
Waterhouse, LLP as the independent accountants for the Fund for
the fiscal year ending December 31, 1995 is to be submitted for
ratification or rejection by the shareholders at the Meeting.
The firm of Price Waterhouse, LLP has served the Fund as
independent accountants since inception. The independent
accountants have advised the Fund that they have no direct or
material indirect financial interest in the Fund.
Representatives of the firm of Price Waterhouse, LLP are expected
to be present at the Meeting and will be available to make a
statement, if they desire to do so, and to respond to appropriate
questions which the shareholders may wish to address to them.
PAGE 23
INVESTMENT MANAGER
The Fund's investment manager is T. Rowe Price, a Maryland
corporation, 100 East Pratt Street, Baltimore, Maryland 21202.
The principal executive officer of T. Rowe Price is George J.
Collins, who together with Mr. Riepe, Thomas H. Broadus, Jr.,
James E. Halbkat, Jr., Carter O. Hoffman, Henry H. Hopkins,
George A. Roche, John W. Rosenblum, Robert L. Strickland, M.
David Testa, and Philip C. Walsh, constitute its Board of
Directors. The address of each of these persons, with the
exception of Messrs. Halbkat, Rosenblum, Strickland and Walsh, is
100 East Pratt Street, Baltimore, Maryland 21202, and, with the
exception of Messrs. Halbkat, Rosenblum, Strickland, and Walsh,
all are employed by T. Rowe Price. Mr. Halbkat is President of
U.S. Monitor Corporation, a provider of public response systems,
P.O. Box 23109, Hilton Head Island, South Carolina 29925. Mr.
Rosenblum, whose address is P.O. Box 6550, Charlottesville,
Virginia 22906, is the Taylor Murphy Professor at the University
of Virginia, and a director of: Chesapeake Corporation, a
manufacturer of paper products; Cadmus Communications Corp., a
provider of printing and communication services; Comdial
Corporation, a manufacturer of telephone systems for businesses;
and Cone Mills Corporation, a textiles producer. Mr. Strickland
is Chairman of Lowe's Companies, Inc., a retailer of specialty
home supplies, 604 Two Piedmont Plaza Building, Winston-Salem,
North Carolina 27104. Mr. Walsh, whose address is Blue Mill
Road, Morristown, New Jersey 07960, is a consultant to Cyprus
Amax Minerals Company, Englewood, Colorado, and a director of
Piedmont Mining Company, Charlotte, North Carolina.
The officers of the Fund (other than the nominees for
election as directors) and their positions with T. Rowe Price are
as follows:
_________________________________________________________________
Position Position with
Officer with Fund T. Rowe Price
_________________________________________________________________
Andrew M. Brooks Vice President Vice President
Arthur B. Cecil, III Vice President Vice President
Brent W. Clum Vice President Vice President
Henry H. Hopkins Vice President Managing Director
Gregory A. McCrickard Vice President Vice President
Larry J. Puglia Vice President Vice President
Richard T. Whitney Vice President Vice President
Lenora V. Hornung Secretary Vice President
Carmen F. Deyesu Treasurer Vice President
David S. Middleton Controller Vice President
Roger L. Fiery, III Assistant Vice Vice President
President
Patricia S. Butcher Assistant Secretary Assistant Vice
PAGE 24
President
Edward T. Schneider Assistant Vice Assistant Vice
President President
Ingrid I. Vordemberge Assistant Vice Employee
President
The Fund has an Underwriting Agreement with T. Rowe Price
Investment Services, Inc. ("Investment Services"), a Transfer
Agency Agreement with T. Rowe Price Services, Inc. ("Price
Services") and an Agreement with T. Rowe Price Retirement Plan
Services, Inc. Each of these entities is a wholly-owned
subsidiary of T. Rowe Price. The address of each is 100 East
Pratt Street, Baltimore, Maryland 21202. In addition, the Fund
has an Agreement with T. Rowe Price to perform fund accounting
services. James S. Riepe, Chairman of the Board of the Fund, is
Chairman of the Board of Price Services and Retirement Services
and President and Director of Investment Services. Henry H.
Hopkins, a Vice President of the Fund, is a Vice President and
Director of both Investment Services and Price Services and a
Vice President of Retirement Services. Edward T. Schneider, an
Assistant Vice President of the Fund, is a Vice President of
Price Services. Certain officers of the Fund own shares of the
common stock of T. Rowe Price, its only class of securities.
The following information pertains to transactions involving
common stock of T. Rowe Price, par value $.20 per share
("Stock"), during the period January 1, 1994 through December 31,
1994. There were no transactions during the period by any
director or officer of the Fund, or any director or officer of T.
Rowe Price which involved more than 1% of the outstanding Stock
of T. Rowe Price. These transactions did not involve, and should
not be mistaken for, transactions in the stock of the Fund.
During the period, the holders of certain options purchased
a total of 387,392 shares of Stock at varying prices from $0.75
to $28.13 per share. Pursuant to the terms of T. Rowe Price's
Employee Stock Purchase Plan, eligible employees of T. Rowe Price
and its subsidiaries purchased an aggregate of 101,053 shares of
Stock at fair market value. Such shares were purchased in the
open market during this period for employees' accounts.
T. Rowe Price's Board of Directors has approved the
repurchase of shares of its Stock in the open market. During
1994, T. Rowe Price purchased 892,500 shares of Stock under this
plan, leaving 539,500 shares of Stock authorized for future
repurchase at December 31, 1994.
During the period, T. Rowe Price issued 1,231,500 common
stock options with an exercise price of $32.25 per share to
certain employees under terms of the 1990 and 1993 Stock
Incentive Plans.
PAGE 25
OTHER BUSINESS
The management of the Fund knows of no other business which
may come before the meeting. However, if any additional matters
are properly presented at the meeting, it is intended that the
persons named in the enclosed proxy, or their substitutes, will
vote such proxy in accordance with their judgment on such
matters.
GENERAL INFORMATION
As of December 31, 1994, there were 78,602,452 shares of the
capital stock of the Fund outstanding, each with a par value of
$.01. Of those shares, approximately 19,747,559, representing
25% of the outstanding stock, were registered to the T. Rowe
Price Trust Company as Trustee for participants in the T. Rowe
Price Funds Retirement Plan for Self-Employed (Keogh), as Trustee
for participants in T. Rowe Price Funds 401(k) plans, as
Custodian for participants in the T. Rowe Price Funds Individual
Retirement Account (IRA), as Custodian for participants in
various 403(b)(7) plans, and as Custodian for various Profit
Sharing and Money Purchase plans. The T. Rowe Price Trust
Company has no beneficial interest in such accounts, nor in any
other account for which it may serve as trustee or custodian.
As of December 31, 1994, approximately 7,238,105 shares of
the Fund, representing 9% of the outstanding stock were owned by
Pirateline & Co., Attn: Mark White, Spectrum Growth Account,
State Street Bank & Trust Co., 1776 Heritage Drive-4W, North
Quincy, Massachusetts 02171-2197.
As of December 31, 1994, approximately 78,395 shares of the
Fund, representing approximately 0.1% of the outstanding stock,
were owned by various private counsel clients of T. Rowe Price,
as to which T. Rowe Price has discretionary authority.
Accordingly, such shares are deemed to be owned beneficially by
T. Rowe Price only for the limited purpose as that term is
defined in Rule 13d-3 under the Securities Exchange Act of 1934.
T. Rowe Price disclaims actual beneficial ownership
of such shares. In addition, as of December 31, 1994, a wholly-
owned subsidiary of T. Rowe Price owned directly 61,995 shares of
the Fund representing approximately 0.08% of the outstanding
stock.
As of December 31, 1994, the officers and directors of the
Fund, as a group, beneficially owned, directly or indirectly,
_______ shares, representing approximately _.__% of the Fund's
outstanding stock. The ownership of the officers and directors
reflects their proportionate interests, if any, in 61,995 shares
of the Fund which are owned by a wholly-owned subsidiary of the
Fund's investment manager, T. Rowe Price, and their interests in
PAGE 26
14,665 shares owned by the T. Rowe Price Associates, Inc. Profit
Sharing Trust.
A COPY OF THE ANNUAL REPORT OF THE FUND FOR THE YEAR ENDED
DECEMBER 31, 1994, INCLUDING FINANCIAL STATEMENTS WAS MAILED TO
ALL SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON THAT DATE.
HOWEVER, A COPY OF THIS REPORT WILL BE PROVIDED, WITHOUT CHARGE,
TO ANY SHAREHOLDER UPON REQUEST. PLEASE CALL 1-800-225-5132 TO
REQUEST SUCH A REPORT.
ANNUAL MEETINGS
Under Maryland General Corporation Law, any corporation
registered under the Investment Company Act of 1940 ("the Act")
is not required to hold an annual meeting in any year in which
the Act does not require action by shareholders on the election
of directors. The Board of Directors of the Fund has determined
that in order to avoid the significant expense associated with
holding annual meetings, including legal, accounting, printing
and mailing fees incurred in preparing proxy materials, the Fund
will take advantage of these Maryland law provisions.
Accordingly, no annual meetings shall be held in any year in
which a meeting is not otherwise required to be held by the Act
for the election of Directors unless the Board of Directors
otherwise determines that there should be an annual meeting.
However, special meetings will be held in accordance with
applicable law or when otherwise determined by the Board of
Directors. The Fund's By-Laws reflect this policy.
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal to be included
in the Proxy Statement for the next Annual Meeting, and if such
Annual Meeting is held in April, 1996, such proposal must be
submitted in writing and received by the Corporation's Secretary
at its Baltimore office prior to November 10, 1995.
PAGE 27
T. ROWE PRICE (LOGO) PROXY
_______________________________________________________________
INSTRUCTIONS:
1. Cast your vote by checking the appropriate boxes on the
reverse side. If you do not check a box, your vote will be
cast FOR that proposal.
2. Sign and date the card below.
3. Please return the signed card promptly using the enclosed
postage paid envelope, even if you will be attending the
meeting.
4. Please do not enclose checks or any other correspondence.
Please fold and detach card at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
T. ROWE PRICE GROWTH & INCOME FUND, INC.
MEETING: 8:30 A.M. EASTERN TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stephen W. Boesel and James S.
Riepe, as proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as
designated below, all shares of stock of the Fund, which the
undersigned is entitled to vote at the Meeting of Shareholders to
be held on Wednesday, April 19, 1995, at the time indicated
above, at the offices of the Fund, 100 East Pratt Street,
Baltimore, Maryland 21202, and at any and all adjournments
thereof, with respect to the matters set forth below and
described in the Notice of Meeting and Proxy Statement dated
March 3, 1995, receipt of which is hereby acknowledged.
Please sign exactly as name
appears. Only authorized officers
should sign for corporations. For
information as to the voting of
stock registered in more than one
name, see page ___ of the Notice of
Meeting and Proxy Statement.
Dated: __________________, 1995
___________________________________
___________________________________
Signature(s)
CUSIP#779551100/fund#054
(Front)
PAGE 28
T. ROWE PRICE (LOGO) WE NEED YOUR PROXY VOTE BEFORE APRIL 19,
1995
_________________________________________________________________
Please refer to the Proxy Statement discussion of each of these
matters.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
Please fold and detach card at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
1. Election of FOR all nominees / /WITHHOLD AUTHORITY / /1.
directors. listed below (except to vote for all
as marked to the nominees listed below
contrary)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL
NOMINEE STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST
BELOW.)
Leo C. Bailey Stephen W. Boesel Donald W. Dick, Jr.
David K. Fagin Addison Lanier John K. Major Hanne M. Merriman
James S. Riepe M. David Testa Hubert D. Vos Paul M. Wythes
2. Approve a new Investment Management Agreement between T. Rowe
Price and the Fund.
FOR / / AGAINST / /ABSTAIN / / 2.
3. Ratify the selection of Price Waterhouse, LLP as independent
accountants. FOR / / AGAINST / /ABSTAIN / / 3.
4. I authorize the Proxies, in their discretion, to vote upon
such other business as may properly come before the meeting.
CUSIP#779551100/fund#054
(BACK)
PAGE 1
EXHIBIT A
INVESTMENT MANAGEMENT AGREEMENT
Between
T. ROWE PRICE GROWTH & INCOME FUND, INC.
and
T. ROWE PRICE ASSOCIATES, INC.
INVESTMENT MANAGEMENT AGREEMENT, made as of May 1, 1995, by
and between T. ROWE PRICE GROWTH & INCOME FUND, INC., a Maryland
corporation (hereinafter called the "Fund"), and T. ROWE PRICE
ASSOCIATES, INC., a corporation organized and existing under the
laws of the State of Maryland (hereinafter called the "Manager").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end
management investment company and is registered as such under the
federal Investment Company Act of 1940, as amended (the "Act");
and
WHEREAS, the Manager is engaged principally in the business
of rendering investment supervisory services and is registered as
an investment adviser under the federal Investment Advisers Act
of 1940, as amended; and
WHEREAS, the Fund desires the Manager to render investment
supervisory services to the Fund in the manner and on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual promises hereinafter set forth, the parties hereto agree
as follows:
1. Duties and Responsibilities of Manager.
A. Investment Management Services. The Manager shall act
as investment manager and shall supervise and direct the
investments of the Fund in accordance with the Fund's investment
objectives, program and restrictions as provided in its
prospectus, as amended from time to time, and such other
limitations as the Fund may impose by notice in writing to the
Manager. The Manager shall obtain and evaluate such information
relating to the economy, industries, businesses, securities
markets and securities as it may deem necessary or useful in the
PAGE 2
discharge of its obligations hereunder and shall formulate and
implement a continuing program for the management of the assets
and resources of the Fund in a manner consistent with its
investment objectives. In furtherance of this duty, the Manager,
as agent and attorney-in-fact with respect to the Fund, is
authorized, in its discretion and without prior consultation with
the Fund, to:
(i) buy, sell, exchange, convert, lend, and
otherwise trade in any stocks, bonds, and other
securities or assets; and
(ii) place orders and negotiate the commissions (if
any) for the execution of transactions in securities
with or through such brokers, dealers, underwriters
or issuers as the Manager may select.
B. Financial, Accounting, and Administrative Services.
The Manager shall maintain the corporate existence and corporate
records of the Fund; maintain the registrations and
qualifications of Fund shares under federal and state law;
monitor the financial, accounting, and administrative functions
of the Fund; maintain liaison with the various agents employed by
the Fund (including the Fund's transfer agent, custodian,
independent accountants and legal counsel) and assist in the
coordination of their activities on behalf of the Fund.
C. Reports to Fund. The Manager shall furnish to or
place at the disposal of the Fund such information, reports,
evaluations, analyses and opinions as the Fund may, at any time
or from time to time, reasonably request or as the Manager may
deem helpful to the Fund.
D. Reports and Other Communications to Fund
Shareholders. The Manager shall assist the Fund in developing
all general shareholder communications, including regular
shareholder reports.
E. Fund Personnel. The Manager agrees to permit
individuals who are officers or employees of the Manager to serve
(if duly elected or appointed) as officers, directors, members of
any committee of directors, members of any advisory board, or
members of any other committee of the Fund, without remuneration
from or other cost to the Fund.
F. Personnel, Office Space, and Facilities of Manager.
The Manager at its own expense shall furnish or provide and pay
the cost of such office space, office equipment, office
personnel, and office services as the Manager requires in the
performance of its investment advisory and other obligations
under this Agreement.
PAGE 3
2. Allocation of Expenses.
A. Expenses Paid by Manager.
(1) Salaries and Fees of Officers. The Manager shall
pay all salaries, expenses, and fees of the officers and
directors of the Fund who are affiliated with the
Manager.
(2) Assumption of Fund Expenses by Manager. The
payment or assumption by the Manager of any expense of
the Fund that the Manager is not required by this
Agreement to pay or assume shall not obligate the Manager
to pay or assume the same or any similar expense of the
Fund on any subsequent occasion.
B. Expenses Paid by Fund. The Fund shall bear all
expenses of its organization, operations, and business not
specifically assumed or agreed to be paid by the Manager as
provided in this Agreement. In particular, but without limiting
the generality of the foregoing, the Fund shall pay:
(1) Custody and Accounting Services. All expenses of
the transfer, receipt, safekeeping, servicing and
accounting for the Fund's cash, securities, and other
property, including all charges of depositories,
custodians, and other agents, if any;
(2) Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts, including
all charges of the Fund's transfer, shareholder
recordkeeping, dividend disbursing, redemption, and other
agents, if any;
(3) Shareholder Communications. All expenses of
preparing, setting in type, printing, and distributing
reports and other communications to shareholders;
(4) Shareholder Meetings. All expenses incidental to
holding meetings of Fund shareholders, including the
printing of notices and proxy material, and proxy
solicitation therefor;
(5) Prospectuses. All expenses of preparing, setting
in type, and printing of annual or more frequent
revisions of the Fund's prospectus and of mailing them to
shareholders;
(6) Pricing. All expenses of computing the Fund's
net asset value per share, including the cost of any
equipment or services used for obtaining price
quotations;
PAGE 4
(7) Communication Equipment. All charges for
equipment or services used for communication between the
Manager or the Fund and the custodian, transfer agent or
any other agent selected by the Fund;
(8) Legal and Accounting Fees and Expenses. All
charges for services and expenses of the Fund's legal
counsel and independent auditors;
(9) Directors' Fees and Expenses. All compensation
of directors, other than those affiliated with the
Manager, and all expenses incurred in connection with
their service;
(10)Federal Registration Fees. All fees and expenses
of registering and maintaining the registration of the
Fund under the Act and the registration of the Fund's
shares under the Securities Act of 1933, as amended (the
"'33 Act"), including all fees and expenses incurred in
connection with the preparation, setting in type,
printing, and filing of any registration statement and
prospectus under the '33 Act or the Act, and any
amendments or supplements that may be made from time to
time;
(11)State Registration Fees. All fees and expenses
of qualifying and maintaining qualification of the Fund
and of the Fund's shares for sale under securities laws
of various states or jurisdictions, and of registration
and qualification of the Fund under all other laws
applicable to the Fund or its business activities
(including registering the Fund as a broker-dealer, or
any officer of the Fund or any person as agent or
salesman of the Fund in any state);
(12)Issue and Redemption of Fund Shares. All
expenses incurred in connection with the issue,
redemption, and transfer of Fund shares, including the
expense of confirming all share transactions, and of
preparing and transmitting the Fund's stock certificates;
(13)Bonding and Insurance. All expenses of bond,
liability, and other insurance coverage required by law
or deemed advisable by the Fund's board of directors;
(14)Brokerage Commissions. All brokers' commissions
and other charges incident to the purchase, sale, or
lending of the Fund's portfolio securities;
(15)Taxes. All taxes or governmental fees payable by
or with respect of the Fund to federal, state, or other
governmental agencies, domestic or foreign, including
stamp or other transfer taxes;
PAGE 5
(16)Trade Association Fees. All fees, dues, and
other expenses incurred in connection with the Fund's
membership in any trade association or other investment
organization; and
(17)Nonrecurring and Extraordinary Expenses. Such
nonrecurring expenses as may arise, including the costs
of actions, suits, or proceedings to which the Fund is a
party and the expenses the Fund may incur as a result of
its legal obligation to provide indemnification to its
officers, directors, and agents.
3. Management Fee. The Fund shall pay the Manager a fee
("Fee") which will consist of two components: a Group Management
Fee ("Group Fee") and an Individual Fund Fee ("Fund Fee"). The
Fee shall be paid monthly to the Manager on the first business
day of the next succeeding calendar month and shall be calculated
as follows:
A. Group Fee. The monthly Group Fee ("Monthly Group
Fee") shall be the sum of the daily Group Fee accruals ("Daily
Group Fee Accruals") for each month. The Daily Group Fee Accrual
for any particular day will be computed by multiplying the Price
Funds' group fee accrual as determined below ("Daily Price Funds'
Group Fee Accrual") by the ratio of the Fund's net assets for
that day to the sum of the aggregate net assets of the Price
Funds for that day. The Daily Price Funds' Group Fee Accrual for
any particular day shall be calculated by multiplying the
fraction of one (1) over the number of calendar days in the year
by the annualized Daily Price Funds' Group Fee Accrual for that
day as determined in accordance with the following schedule:
Price Funds' Annual Group
Base Fee Rate for Each Level of Assets
_____________________________________
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
0.330% Next $10 billion
0.320% Next $10 billion
0.310% Next $20 billion
0.305% Thereafter
The Price Funds shall include all the mutual funds
distributed by T. Rowe Price Investment Services, Inc., excluding
institutional or private label mutual funds. For the purpose of
calculating the Daily Price Funds' Group Fee Accrual for any
PAGE 6
particular day, the net assets of each Price Fund shall be
determined in accordance with the Fund's prospectus as of the
close of business on the previous business day on which the Fund
was open for business.
B. Fund Fee. The monthly Fund Fee ("Monthly Fund Fee")
shall be the sum of the daily Fund Fee accruals ("Daily Fund Fee
Accruals") for each month. The Daily Fund Fee Accrual for any
particular day will be computed by multiplying the fraction of
one (1) over the number of calendar days in the year by the Fund
Fee Rate of 0.25% and multiplying this product by the net assets
of the Fund for that day, as determined in accordance with the
Fund's prospectus as of the close of business on the previous
business day on which the Fund was open for business.
C. Expense Limitation. It is understood that the
expenses of the Fund will not exceed any expense limitation
prescribed by any state in which the Fund's shares are qualified
for sale ("State Expense Limit"). Any Management Fees not paid
or expenses assumed by the Manager pursuant to a State Expense
Limit shall be subject to reimbursement provided that no such
reimbursement shall be made more than two years after the fiscal
year in which such fees were not paid or expenses assumed.
D. Proration of Fee. If this Agreement becomes
effective or terminates before the end of any month, the Fee for
the period from the effective date to the end of such month or
from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such
effectiveness or termination occurs.
4. Brokerage. Subject to the approval of the board of
directors of the Fund, the Manager, in carrying out its duties
under Paragraph 1.A., may cause the Fund to pay a broker-dealer
which furnishes brokerage or research services [as such services
are defined under Section 28(e) of the Securities Exchange Act of
1934, as amended (the "'34 Act")], a higher commission than that
which might be charged by another broker-dealer which does not
furnish brokerage or research services or which furnishes
brokerage or research services deemed to be of lesser value, if
such commission is deemed reasonable in relation to the brokerage
and research services provided by the broker-dealer, viewed in
terms of either that particular transaction or the overall
responsibilities of the Manager with respect to the accounts as
to which it exercises investment discretion (as such term is
defined under Section 3(a)(35) of the '34 Act).
5. Manager's Use of the Services of Others. The Manager
may (at its cost except as contemplated by Paragraph 4 of this
Agreement) employ, retain or otherwise avail itself of the
services or facilities of other persons or organizations for the
purpose of providing the Manager or the Fund with such
PAGE 7
statistical and other factual information, such advice regarding
economic factors and trends, such advice as to occasional
transactions in specific securities or such other information,
advice or assistance as the Manager may deem necessary,
appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to the Fund, or in the discharge
of Manager's overall responsibilities with respect to the other
accounts which it serves as investment manager.
6. Ownership of Records. All records required to be
maintained and preserved by the Fund pursuant to the provisions
of rules or regulations of the Securities and Exchange Commission
under Section 31(a) of the Act and maintained and preserved by
the Manager on behalf of the Fund are the property of the Fund
and will be surrendered by the Manager promptly on request by the
Fund.
7. Reports to Manager. The Fund shall furnish or
otherwise make available to the Manager such prospectuses,
financial statements, proxy statements, reports, and other
information relating to the business and affairs of the Fund as
the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this
Agreement.
8. Services to Other Clients. Nothing herein contained
shall limit the freedom of the Manager or any affiliated person
of the Manager to render investment supervisory and corporate
administrative services to other investment companies, to act as
investment manager or investment counselor to other persons,
firms or corporations, or to engage in other business activities;
but so long as this Agreement or any extension, renewal or
amendment hereof shall remain in effect or until the Manager
shall otherwise consent, the Manager shall be the only investment
manager to the Fund.
9. Limitation of Liability of Manager. Neither the
Manager nor any of its officers, directors, or employees, nor any
person performing executive, administrative, trading, or other
functions for the Fund (at the direction or request of the
Manager) or the Manager in connection with the Manager's
discharge of its obligations undertaken or reasonably assumed
with respect to this Agreement, shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates,
except for loss resulting from willful misfeasance, bad faith, or
gross negligence in the performance of its or his duties on
behalf of the Fund or from reckless disregard by the Manager or
any such person of the duties of the Manager under this
Agreement.
10. Use of Manager's Name. The Fund may use the name "T.
Rowe Price Growth & Income Fund, Inc." or any other name derived
PAGE 8
from the name "T. Rowe Price" only for so long as this Agreement
or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall
have succeeded to the business of the Manager as investment
manager. At such time as this Agreement or any extension,
renewal or amendment hereof, or such other similar agreement
shall no longer be in effect, the Fund will (by corporate action,
if necessary) cease to use any name derived from the name "T.
Rowe Price," any name similar thereto or any other name
indicating that it is advised by or otherwise connected with the
Manager, or with any organization which shall have succeeded to
the Manager's business as investment manager.
11. Term of Agreement. The term of this Agreement shall
begin on the date first above written, and unless sooner
terminated as hereinafter provided, this Agreement shall remain
in effect through April 30, 1996. Thereafter, this Agreement
shall continue in effect from year to year, subject to the
termination provisions and all other terms and conditions hereof,
so long as: (a) such continuation shall be specifically approved
at least annually by the board of directors of the Fund or by
vote of a majority of the outstanding voting securities of the
Fund and, concurrently with such approval by the board of
directors or prior to such approval by the holders of the
outstanding voting securities of the Fund, as the case may be, by
the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the directors of the
Fund who are not parties to this Agreement or interested persons
of any such party; and (b) the Manager shall not have notified
the Fund, in writing, at least 60 days prior to April 30, 1995 or
prior to April 30th of any year thereafter, that it does not
desire such continuation. The Manager shall furnish to the Fund,
promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.
12. Amendment and Assignment of Agreement. This
Agreement may not be amended or assigned without the affirmative
vote of a majority of the outstanding voting securities of the
Fund, and this Agreement shall automatically and immediately
terminate in the event of its assignment.
13. Termination of Agreement. This Agreement may be
terminated by either party hereto, without the payment of any
penalty, upon 60 days' prior notice in writing to the other
party; provided, that in the case of termination by the Fund such
action shall have been authorized by resolution of a majority of
the directors of the Fund who are not parties to this Agreement
or interested persons of any such party, or by vote of a majority
of the outstanding voting securities of the Fund.
PAGE 9
14. Miscellaneous.
A. Captions. The captions in this Agreement are
included for convenience of reference only and in no way define
or delineate any of the provisions hereof or otherwise affect
their construction or effect.
B. Interpretation. Nothing herein contained shall be
deemed to require the Fund to take any action contrary to its
Articles of Incorporation or By-Laws, or any applicable statutory
or regulatory requirement to which it is subject or by which it
is bound, or to relieve or deprive the board of directors of the
Fund of its responsibility for and control of the conduct of the
affairs of the Fund.
C. Definitions. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the Act shall be
resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested person," "assignment," and "affiliated person," as
used in Paragraphs 2, 8, 10, 11, and 12 hereof, shall have the
meanings assigned to them by Section 2(a) of the Act. In
addition, where the effect of a requirement of the Act reflected
in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized and their respective seals to be hereunto
affixed, as of the day and year first above written.
Attest: T. ROWE PRICE
GROWTH & INCOME FUND, INC.
______________________ By:_________________________________
Assistant Secretary President
PAGE 10
Attest: T. ROWE PRICE ASSOCIATES, INC.
_______________________ By:_________________________________
Assistant Secretary Managing Director
