<PAGE>
T.ROWE PRICE LOGO
T. Rowe Price Growth & Income Fund, Inc., 100 East Pratt Street, Baltimore, MD
21202
James S. Riepe
Chairman of the Board
Fellow 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. Of particular importance is a
recommendation by your Fund's Board of Directors to increase the Fund's
current management fee from 0.49% to 0.59%.
It is important to note that 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 providing both high quality investment management and convenient
shareholder services in a cost-effective fashion. None of our funds imposes a
sales charge or asset-based sales fee (so-called 12b-1 fees). The proposed
management fee rate of 0.59% is below the average rate of 0.66% that Lipper
calculates is charged to comparable funds. And, the Fund's pro forma total
expense ratio of 0.91% remains significantly below the 1.21% average total
expense ratio for such funds.
The Fund's current management fee structure was established in May 1987.
Although the Fund's assets, and in, turn the management fees have risen since
then, the costs of hiring and retaining qualified investment professionals and
providing high quality administrative services have also risen significantly.
A more complete discussion of the factors considered by the Directors in
recommending the higher proposed management fee rate begins on page 12 of the
proxy statement.
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,
SIG
James S. Riepe
Chairman of the Board
CUSIP# 779551 10 0/FUND# 054
<PAGE>
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
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>
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.
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 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.
<PAGE>
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.
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>
<TABLE>
<CAPTION>
Fund Shares All Other
Beneficially Price Funds'
Owned, Shares
Year of Directly or Beneficially
Name, Address, and Date Original Indirectly, Owned
of Birth Election as as of Directly as
of Nominee Principal Occupations/(1)/ Director 12/31/94/(2)/ of 12/31/94
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leo C. Bailey Retired; Director/Trustee of 21 other T. Rowe Price Funds/Trusts 1994 -- 222,843
3396 S. Placita
Fabula
Green Valley,
AZ 85614
3/3/24
*Stephen W. Boesel President and member of the Executive Committee of the Fund; 1988 2,867 89,022
100 East Pratt Street Managing Director, T. Rowe Price Associates, Inc.
Baltimore, MD 21202
12/28/44
Donald W. Dick, Jr. Partner, Overseas Partners, Inc., a financial investment firm; 1982 391 124,840
111 Pavonia formerly (6/65-3/89) Director and Vice President-Consumer
Ave., 3rd Floor Products Division, McCormick & Company, Inc., international food
Jersey City, NJ 07310 processors; Director/Trustee, Waverly Press, Inc. and 21 other T.
1/27/43 Rowe Price Funds/Trusts
David K. Fagin Chairman, Chief Executive Officer and Director, Golden Star 1994 -- 22,843
One Norwest Center Resources, Ltd.; formerly (1986-7/91) President, Chief Operating
1700 Lincoln Street Officer and Director, Homestake Mining Company; Director/Trustee
Suite 1950 of 18 other T. Rowe Price Funds/Trusts
Denver, CO 80203
4/9/38
Addison Lanier Financial management; Manager, Thomas Emery's Sons, LLC, 1994 -- 43,835
2300 Carew Tower Alternative Asset Holdings, LLC, President, Emery Group, Inc.;
441 Vine Street Director, Scinet Development and Holdings, Inc. and 21 other T.
Cincinnati, OH 45202-2913 Rowe Price Funds/Trusts
1/12/24
John K. Major Chairman of the Board and President, KCMA Incorporated, Tulsa, 1982 1,306 59,435
126 E. 26 Place Oklahoma; Director/Trustee of 18 other T. Rowe Price Funds/Trusts
Tulsa, OK 74114-2422
8/3/24
Hanne M. Merriman Retail business consultant; formerly, President and Chief 1994 -- 3,903
655 15th Street Operating officer (1991-92), Nan Duskin, Inc., a women's
Suite 300 specialty store, Director (1984-90) and Chairman (1989-90)
Washington, DC 20005 Federal Reserve Bank of Richmond, and President and Chief
11/16/41 Executive Officer (1988-89), Honeybee, Inc., a division of
Spiegel, Inc.; Director, Ann Taylor Stores, 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
*James S. Riepe Chairman of the Board and member of the Executive Committee of 1982 12,747 660,653
100 East Pratt Street the Fund; Managing Director, T. Rowe Price Associates, Inc.;
Baltimore, MD 21202 President and Director, T. Rowe Price Investment Services, Inc.;
6/25/43 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, T. Rowe Price Associates, Inc.; Chairman of 1994 -- 570,584
100 East Pratt Street the Board, Rowe Price-Fleming International, Inc. and the
Baltimore, MD 21202 following T. Rowe Price Funds: Growth Stock, International, and
4/22/44 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, Stonington Capital Corporation, a private investment 1994 -- 11,375
1114 State Street company; Director/Trustee of 18 other T. Rowe Price Funds/Trusts
Suite 247
Santa Barbara, CA
93190-0409
8/2/33
Paul M. Wythes Founding General Partner, Sutter Hill Ventures, a venture capital 1982 505 51,903
755 Page Mill Road limited partnership providing equity capital to young high
Suite A200 technology companies throughout the United States;
Palo Alto, CA 94304 Director/Trustee, Teltone Corporation, Interventional
6/23/33 Technologies, Inc., Stuart Medical, Inc. and 18 other T. Rowe
Price Funds/Trusts
<FN>
* 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 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.
</TABLE>
<PAGE>
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
remuneration 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 remuneration received by the Fund's
directors for the fiscal year ended December 31, 1994.
Total
Pension or Comp-
Retirement Estimated ensation
Aggregate Benefits Annual from Fund
Comp- Accrued as Benefits and Fund
ensation Part of Upon Complex
Name of from the Fund Retire- Paid to
Person Fund Expenses/a/ ment/a/ Directors/c/
- ------------------------------------------------------------------
Leo C. Bailey $3,429 -- -- $64,583
Stephen W. Boesel/bc/ -- -- -- --
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. Riepe/bc/ -- -- -- --
M. David Testa/bc/ -- -- -- --
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 remuneration from the Fund.
/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 67 funds at December 31, 1994.
<PAGE>
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.
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 9. 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. The Present Agreement was
submitted to shareholders at that time for the purpose of adopting the present
fee structure described below. 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.
<PAGE>
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 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.) ("Combined Price Funds"). 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 Combined Price Funds.
The Fund pays a flat Individual Fund Fee of 0.15% 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.
<PAGE>
Current 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
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 Combined 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 $2,797,000 (of this amount, approximately $2,353,000 were paid
with respect to Fund accounts). In addition, Retirement Services provides
administrative services to certain defined contribution retirement plans.
During 1994, Retirement Services received fees from all plans utilizing such
services in the amount of $14,089,000.
<PAGE>
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
$5,396,000.
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 0.15% to 0.25% of the Fund's net assets. As such, the total management
fee will increase from 0.49% to 0.59% based on the Effective Group Fee Rate of
0.34% as of December 31, 1994.
T. Rowe Price acts as Investment Adviser to over 60 mutual funds. The
management fees of the funds having similar investment objectives based on
categories created by Lipper Analytical Services 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 53,596,908 0.20% Yes*
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 waive fees and bear
any expenses through December 31, 1994, which would cause the fund's ratio
of expenses to average net assets to exceed 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 or assumed under the agreements are subject to reimbursement
to T. Rowe Price by the fund whenever the fund's expense ratio is below
1.00% (for the original agreement or 1.10% for the new agreement); however,
no reimbursement will be made after December 31, 1996 (for the original
agreement) or after December 31, 1998 (for the new agreement).
** To limit Value 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 made after December 31, 1998, or if it would result in the expense ratio
exceeding the previously stated.
<PAGE>
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, LLP ("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.
In addition, the Directors considered the benefits received by T. Rowe
Price in the form of research services from broker dealers which effect
securities transactions for the T. Rowe Price Funds. Research services
received from brokers and dealers are supplemental to T. Rowe Price's own
research effort. As a practical matter, it would not be possible for T. Rowe
Price's Equity Research Division to generate all of the information presently
provided by brokers and dealers. T. Rowe Price pays cash for certain research
services received from external sources. T. Rowe Price also allocates
brokerage from the T. Rowe Price Funds for research services which are
available for cash. While receipt of research services from brokerage firms
has not reduced T. Rowe Price's normal research activities, the expenses of T.
Rowe Price could be materially increased if it attempted to generate such
additional information through its own staff. To the extent that research
services of value are provided by brokers or dealers, T. Rowe Price may be
relieved of expenses which it might otherwise bear.
The effect of the proposed increase in the Fund's Individual Fund Fee Rate
is set forth below, by showing what the combination of the Individual and
Group Fund Fee would have been for the most recent year if the higher rate had
been in effect.
<PAGE>
12 Months Ended
Dec. 31, 1994
---------------
($ Millions)
EFFECTIVE MANAGEMENT FEE RATE
--Present agreement 0.49%
--Proposed agreement 0.59%
--Percentage change 20.4%
EXPENSE RATIO
--Present agreement 0.81%
--Proposed agreement 0.91%
--Percentage change 12.3%
MANAGEMENT FEE
--Present agreement $5,984,000
--Proposed agreement $7,196,000
--Difference between aggregate amounts $1,212,000
--Percentage change 20.3%
AVERAGE NET ASSETS OF THE FUND $1,212,000
Shown below is a comparison between all expenses and fees the Fund
incurred during its fiscal year ended December 31, 1994, and the fees and
expenses the Fund would have incurred had the proposed fee increase been in
effect.
- ------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Sales load "charge" on purchases NONE
Sales load "charge" on reinvested dividends NONE
Redemption fees NONE
Exchange fees NONE
- ------------------------------------------------------------
ANNUAL FUND EXPENSES Current Proposed
Management fee 0.49% 0.59%
Distribution fees (12b-1) NONE NONE
Total other (Shareholder servicing,
custodial, auditing, etc.)+ 0.32% 0.32%
TOTAL FUND EXPENSES+ 0.81% 0.91%
- ------------------------------------------------------------
+ The Fund charges a $5 fee for wire redemptions under $5,000, subject to
change without notice.
The following example illustrates, for both the existing fee schedule and
the proposed fee increase, the expenses you would incur on a $1,000
investment, assuming a 5% annual rate of return and redemption at the end of
each period shown. This is an illustration only. Actual expenses and
performance may be more or less than shown.
1 3 5 10
Year Years Years Years
- -------------------------------
Current $8 $26 $45 $100
Proposed $9 $29 $50 $112
<PAGE>
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.
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 and a Director of Hannaford Bros., Co., a food
retailer, 604 Two Piedmont Plaza Building, Winston-Salem, North Carolina
27104. Mr. Walsh, whose address is 200 East 66th Street, Apt. A-1005, New
York, New York, 10021, is a consultant to Cyprus Amax Minerals Company,
Englewood, Colorado, and a director of Piedmont Mining Company, Charlotte,
North Carolina.
<PAGE>
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 President Vice President
Patricia S. Butcher Assistant Secretary Assistant Vice President
Edward T. Schneider Assistant Vice President Assistant Vice President
Ingrid I. Vordemberge Assistant Vice President Employee
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.
<PAGE>
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.
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, 21,022 shares, representing
approximately 0.03% of the Fund's outstanding stock. The ownership of the
officers and directors reflects their proportionate interests, if any, in
4,155 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 14,665 shares
owned by the T. Rowe Price Associates, Inc. Profit Sharing Trust.
<PAGE>
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 T. ROWE
PRICE AT 1-800-225-5132 OR WRITE TO 100 EAST PRATT STREET, BALTIMORE, MARYLAND
21202 TO REQUEST THE 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>
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 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
<PAGE>
(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.
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.
<PAGE>
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 therefore;
(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;
(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;
<PAGE>
(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;
(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:
<PAGE>
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% 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 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.
<PAGE>
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
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.
<PAGE>
10. USE OF MANAGER'S NAME. The Fund may use the name "T. Rowe Price
Growth & Income Fund, Inc." or any other name derived 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>
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
Attest: T. ROWE PRICE ASSOCIATES, INC.
- ------------------------------------ BY: --------------------------------
Assistant Secretary MANAGING DIRECTOR
<PAGE>
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.
ANNUAL 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 Annual 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 Annual Meeting and Proxy
Statement dated March 3, 1995, receipt of which is hereby acknowledged.
Dated: -----------------------------------, 1995
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 2 of the Notice of Annual Meeting and Proxy
Statement.
------------------------------------------------
------------------------------------------------
Signature(s)
CUSIP#779551100/fund#054
<PAGE>
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.
- ------------------------------------------------------------------------------
PLEASE MARK BOXES IN BLUE OR BLACK INK. DO NOT USE RED INK.
1. Election of directors FOR all nominees [box] WITHHOLD AUTHORITY [box] 1.
listed below (except to vote for all nominees
as marked to the listed below
contrary)
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
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE WRITE
THE NOMINEE'S NAME ON THE LINE BELOW.)
- ----------------------------------------------------------------------------
2. Approve a new Investment Management Agreement between T. Rowe Price and
the Fund.
FOR [box] AGAINST [box] ABSTAIN [box]
3. Ratify the selection of Price Waterhouse LLP as independent accountants.
FOR [box] AGAINST [box] ABSTAIN [box]
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
