<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
Semiannual Report
Growth & Income Fund
- --------------------------------------------------------------------------------
June 30, 1999
- --------------------------------------------------------------------------------
REPORT HIGHLIGHTS
================================================================================
GROWTH & INCOME FUND
- ---------------------
* U.S. stocks continued to advance, driven by the economy's sustained
strength.
* Market leadership changed during the second quarter, with large-cap
cyclicals and smaller-cap stocks supplanting blue chip growth stocks.
* The fund's six-month return exceeded the S&P 500 and peer group
average, but its 12-month return lagged, reflecting the previous
dominance of growth stocks.
* We expect market volatility to pick up, but the fund's conservative
approach should serve shareholders well.
================================================================================
FELLOW SHAREHOLDERS
================================================================================
The stock market advanced strongly in the first half of 1999 in response to
a very favorable domestic economy and expectations that corporate profit gains
would accelerate accordingly. The market was also cheered by signs of
improvement in areas of the global economy that had been worrisome last year.
Economic strength and expectations of a more restrictive monetary policy by the
Federal Reserve led to rising interest rates during the period, but this
normally unfavorable development did not impede the stock market advance. On
June 30, the Fed increased the federal funds rate by one-quarter of a percentage
point but simultaneously announced a change from a "tightening" bias to a
"neutral" bias. This eased fears that the Fed would raise rates again soon.
================================================================================
PERFORMANCE COMPARISON
----------------------
Periods Ended 6/30/99 6 Months 12 Months
--------------------- -------- ---------
Growth & Income Fund 12.61% 13.99%
S&P 500 12.38 22.76
Lipper Growth & Income
Funds Average 10.93 14.48
================================================================================
<PAGE>
Your fund did well in this environment, returning 12.61% for the six-month
period. Results compared favorably with the broad market represented by the
Standard & Poor's 500 Stock Index and exceeded the average growth and income
fund by a comfortable margin. In large part this performance reflected a more
favorable sentiment toward the value and yield-oriented stocks emphasized by our
more conservative investment approach. For the 12-month period, the fund's
return of about 14% was only slightly below its peer group average but,
reflecting the market's previous domination by blue chip growth stocks, trailed
the broad market by a wide margin. One-year performance was similar to the
fund's 10-year average annual return of 14.76% but lower than its robust average
annual return of 20.96% for the past five years, as shown in the table on page
7.
================================================================================
DIVIDEND DISTRIBUTION
================================================================================
On June 25, your Board of Directors declared a second quarter income
dividend of $0.12 per share to shareholders of record on that date. This brought
total dividend distributions to $0.24 per share for 1999. You should have
already received your check or statement reflecting this distribution.
================================================================================
PORTFOLIO REVIEW
================================================================================
The stock market environment was certainly favorable and may have appeared
relatively calm, but there were some significant crosscurrents beneath the
surface. The first quarter was much like last year with only a very narrow list
of large growth companies performing well. Then, during the second quarter a
dramatic rotation to value stocks took place -- particularly stocks of the more
cyclical industrial and commodity-related companies -- as the global economy
showed improvement.
============================================================
INFORMATION ON YEAR-END DISTRIBUTIONS
-------------------------------------
To help you with tax planning, we try to give you
a good idea of the per-share income and capital
gain amounts our funds may distribute near
year-end. In late October, we will provide
estimates of these amounts, which will be paid on
December 16, 1999, to shareholders of record on
December 14. These preliminary numbers will be
included in The Price Report mailing to
shareholders in late October and will also be
available on our Web site---www.troweprice.com. We
hope that these preliminary numbers will be useful
to you in approximating the income and capital
gains taxes you may pay on distributions to
taxable accounts. If your fund distributed any
capital gains earlier in 1999, you can find the
amounts on your statements and should include them
<PAGE>
in your tax planning calculations. Please keep in
mind that the numbers are not final and are likely
to be revised before the December 14 declaration
and record date. As the fall progresses, you may
want to check our Web site for revisions. If you
would like information on tax matters relating to
mutual funds, please visit our Web site to
download our Insights report, Tax Information for
Mutual Fund Investors, or call 1-800-225-5132 to
request a copy.
============================================================
This change in trend benefited your fund since many of the yield- oriented
stocks that we like are in these sectors. Reflecting the strong economy and some
commodity price increases, the energy, basic materials, and process industries
were the most important contributors to fund performance in the first half, with
most of the gains coming late in the period. In addition, merger and acquisition
activity had a favorable impact. Several of the companies eliminated from the
portfolio (FRONTIER, WASTE MANAGEMENT, AMP) were takeover targets and had posted
nice price gains by the time of sale.
[Pie chart Sector Diversification: energy 13%, fiancial 16%, consumer 34%,
process industries 9%, utilities 9%, business services and transportation 8%,
reserves 2%, other 9%. [wrap above paragraph around table.]
We were somewhat more active than usual in adding new holdings to the
portfolio. In part this reflected the market's greater volatility, which can
provide good long-term opportunities when stock prices are under pressure.
Companies such as BANK OF AMERICA, XL CAPITAL, GALILEO INTERNATIONAL, and
BRISTOL-MYERS SQUIBB are successful corporations with good long-term fundamental
prospects whose stocks had been hurt by events we believe are relatively
short-term in nature. In contrast, many of the sales were of outstanding
companies that were successful investments in the portfolio but whose relative
valuations were no longer compelling for us.
This process of recycling proceeds from sales of successful holdings into
situations we believe are more undervalued is an ongoing feature of our
portfolio management activities. It results in overall valuations -- such as
dividend yields and price/earnings ratios -- that are more conservative than
those of the overall stock market, as shown in the Financial Profile table on
the next page.
================================================================================
<PAGE>
SUMMARY AND OUTLOOK
================================================================================
FINANCIAL PROFILE
-----------------
Growth &
As of 6/30/99 Income Fund S&P 500
------------- ----------- -------
Current Yield 2.2% 1.2%
Price/Book Ratio 4.2X 6.6X
Price/Earnings Ratio
(1999 estimated EPS) 21.7X 29.9X
Historical Beta
(based on monthly
returns for 5 years) 0.74 1.00
================================================================================
The performance of the equity market and your fund has been quite favorable
during the first half of the year. Although it's premature to conclude that
value and yield-oriented stocks are in a sustained improving trend, we find
recent developments encouraging. We do expect the general market to be more
volatile reflecting the higher level of interest rates, the generous level of
market valuation, and the extremely short-term focus of many investors. In this
type of environment, your fund should be relatively well positioned based upon
its more conservative value approach.
Respectfully submitted,
/s/
Stephen W. Boesel
President and Chairman of the Investment Advisory Committee
July 22, 1999
================================================================================
T. Rowe Price Growth & Income Fund
- ----------------------------------
PORTFOLIO HIGHLIGHTS
--------------------
TWENTY-FIVE LARGEST HOLDINGS
----------------------------
Percent of
Net Assets
6/30/99
- --------------------------------------------------------
USX-Marathon 3.1%
- --------------------------------------------------------
BP Amoco 3.0
- --------------------------------------------------------
Corning 2.6
- --------------------------------------------------------
GE 2.4
- --------------------------------------------------------
Chase Manhattan 2.0
- --------------------------------------------------------
<PAGE>
Amerada Hess 1.9
- --------------------------------------------------------
Browning-Ferris 1.9
- --------------------------------------------------------
Reader's Digest 1.8
- --------------------------------------------------------
Eastman Kodak 1.8
- --------------------------------------------------------
St. Paul Companies 1.7
- --------------------------------------------------------
Pfizer 1.7
- --------------------------------------------------------
AlliedSignal 1.6
- --------------------------------------------------------
Household International 1.6
- --------------------------------------------------------
American Home Products 1.5
- --------------------------------------------------------
Hercules 1.4
- --------------------------------------------------------
H&R Block 1.4
- --------------------------------------------------------
Fannie Mae 1.4
- --------------------------------------------------------
Dayton Hudson 1.4
- --------------------------------------------------------
Dow Chemical 1.3
- --------------------------------------------------------
International Flavors & Fragrances 1.3
- --------------------------------------------------------
AT&T 1.3
- --------------------------------------------------------
Texaco 1.3
- --------------------------------------------------------
Fort James 1.3
- --------------------------------------------------------
FirstEnergy 1.3
- --------------------------------------------------------
Pall 1.3
- --------------------------------------------------------
Total 43.3%
Note: Table excludes reserves.
================================================================================
<PAGE>
T. Rowe Price Growth & Income Fund
- ----------------------------------
PORTFOLIO HIGHLIGHTS
--------------------
MAJOR PORTFOLIO CHANGES
Listed in descending order of size
6 Months Ended 6/30/99
TEN LARGEST PURCHASES TEN LARGEST SALES
- --------------------- -----------------
USX-Marathon Frontier **
Eastman Kodak KeyCorp **
Bank of America * Georgia-Pacific **
XLCapital * Waste Management **
St. Paul Companies Corning
Campbell * American Express
Galileo International * Dayton Hudson
Network Associates * Exide **
J.C. Penney Entergy **
Bristol-Myers Squibb * AMP **
* Position added
** Position eliminated
================================================================================
T. Rowe Price Growth & Income Fund
- ----------------------------------
PERFORMANCE COMPARISON
----------------------
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index. An
index return does not reflect expenses, which have been deducted from the fund's
return.
[Growth & Income Fund SEC chart shown here]
AVERAGE ANNUAL COMPOUND TOTAL RETURN
------------------------------------
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Periods Ended 6/30/99 1 Year 3 Years 5 Years 10 Years
- --------------------- ------ ------- ------- --------
Growth & Income Fund 13.99% 20.48% 20.96% 14.76%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
T. Rowe Price Growth & Income Fund
- ---------------------------------- Unaudited
For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
6 Months Year
Ended Ended
6/30/99 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
NET ASSET VALUE
Beginning of period $ 26.25 $ 26.36 $ 22.63 $ 19.18 $ 15.63 $ 16.57
- --------------------------------------------------------------------------------------------------
Investment activities
Net investment income 0.24 0.55 0.55 0.52 0.58 0.50
Net realized and
unrealized gain (loss) 3.05 2.00 4.71 4.34 4.16 (0.53)
- --------------------------------------------------------------------------------------------------
Total from
investment activities 3.29 2.55 5.26 4.86 4.74 (0.03)
- --------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.24) (0.53) (0.56) (0.51) (0.59) (0.49)
Net realized gain (0.10) (2.13) (0.97) (0.90) (0.60) (0.42)
- --------------------------------------------------------------------------------------------------
Total distributions (0.34) (2.66) (1.53) (1.41) (1.19) (0.91)
- --------------------------------------------------------------------------------------------------
NET ASSET VALUE
==================================================================================================
End of period $ 29.20 $ 26.25 $ 26.36 $ 22.63 $ 19.18 $ 15.63
Ratios/Supplemental=Data
Total return* 12.61% 9.96% 23.53% 25.64% 30.92% (0.15)%
- --------------------------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.78%+ 0.77% 0.78% 0.82% 0.84% 0.81%
- --------------------------------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 1.73%+ 2.03% 2.22% 2.53% 3.31% 3.08%
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate 22.4%+ 20.5% 15.7% 13.5% 26.2% 25.6%
- --------------------------------------------------------------------------------------------------
Net assets, end of period
(in millions) $ 3,826 $ 3,563 $ 3,447 $ 2,489 $ 1,748 $ 1,229
- --------------------------------------------------------------------------------------------------
</TABLE>
* Total return reflects the rate that an investor would have earned
on an investment in the fund during each period, assuming
reinvestment of all distributions.
+ Annualized
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Growth & Income Fund
- ---------------------------------- Unaudited
June 30, 1999
STATEMENT OF NET ASSETS
- -----------------------
Common Stocks and Warrants 96.6%
FINANCIAL 15.6%
Bank and Trust 4.6%
Bank of America 500,000 $ 36,656
- -------------------------------------------------------------------------------
Bank One 595,239 35,454
- -------------------------------------------------------------------------------
Chase Manhattan 900,000 77,962
- -------------------------------------------------------------------------------
Golden State Bancorp, Warrants, 1/1/01 * 480,800 639
- -------------------------------------------------------------------------------
National City 400,000 26,200
- -------------------------------------------------------------------------------
176,911
- -------------------------------------------------------------------------------
Insurance 4.5%
American General 600,000 45,225
- -------------------------------------------------------------------------------
St. Paul Companies 2,100,000 66,806
- -------------------------------------------------------------------------------
Travelers Property Casualty (Class A) 800,000 31,300
- -------------------------------------------------------------------------------
XL Capital (Class A) 500,000 28,250
- -------------------------------------------------------------------------------
171,581
- -------------------------------------------------------------------------------
Financial Services 6.5%
American Express 250,000 32,531
- -------------------------------------------------------------------------------
Bear Stearns 493,595 23,076
- -------------------------------------------------------------------------------
Citigroup 924,655 43,921
- -------------------------------------------------------------------------------
Fannie Mae 800,000 54,700
- -------------------------------------------------------------------------------
Household International 1,297,322 61,461
- -------------------------------------------------------------------------------
Morgan Stanley Dean Witter 300,000 30,750
- -------------------------------------------------------------------------------
246,439
- -------------------------------------------------------------------------------
Total Financial 594,931
- -------------------------------------------------------------------------------
UTILITIES 8.9%
Telephone 3.7%
AT&T 900,000 50,231
- -------------------------------------------------------------------------------
GTE 400,000 30,300
- -------------------------------------------------------------------------------
<PAGE>
SBC Communications 768,022 44,546
- -------------------------------------------------------------------------------
Telebras ADR 200,000 13
- -------------------------------------------------------------------------------
Telebras ADR 200,000 18,037
- -------------------------------------------------------------------------------
143,127
- -------------------------------------------------------------------------------
Electric Utilities 5.2%
DQE 400,000 16,050
- -------------------------------------------------------------------------------
FirstEnergy 1,575,000 48,825
- -------------------------------------------------------------------------------
GPU 769,100 $32,446
- -------------------------------------------------------------------------------
Niagara Mohawk * 1,000,000 16,063
- -------------------------------------------------------------------------------
PacifiCorp 1,000,000 18,375
- -------------------------------------------------------------------------------
Texas Utilities 500,000 20,625
- -------------------------------------------------------------------------------
Unicom 1,200,000 46,275
- -------------------------------------------------------------------------------
198,659
- -------------------------------------------------------------------------------
Total Utilities 341,786
- -------------------------------------------------------------------------------
CONSUMER NONDURABLES 19.8%
Cosmetics 1.3%
International Flavors & Fragrances 1,142,900 50,716
- -------------------------------------------------------------------------------
50,716
- -------------------------------------------------------------------------------
Beverages 2.0%
Anheuser-Busch 380,600 26,999
- -------------------------------------------------------------------------------
Brown-Forman (Class B) 220,000 14,341
- -------------------------------------------------------------------------------
PepsiCo 900,000 34,819
- -------------------------------------------------------------------------------
76,159
- -------------------------------------------------------------------------------
Food Processing 4.2%
Campbell 500,000 23,187
- -------------------------------------------------------------------------------
General Mills 500,000 40,187
- -------------------------------------------------------------------------------
Heinz 300,000 15,038
- -------------------------------------------------------------------------------
McCormick 226,600 7,152
- -------------------------------------------------------------------------------
Ralston Purina 1,300,000 39,569
- -------------------------------------------------------------------------------
Sara Lee 1,550,000 35,166
- -------------------------------------------------------------------------------
160,299
- -------------------------------------------------------------------------------
<PAGE>
Hospital Supplies/Hospital Management 1.4%
Abbott Laboratories 400,000 18,200
- -------------------------------------------------------------------------------
Baxter International 246,400 14,938
- -------------------------------------------------------------------------------
Smith & Nephew (GBP) 6,700,000 20,277
- -------------------------------------------------------------------------------
53,415
- -------------------------------------------------------------------------------
Pharmaceuticals 5.7%
American Home Products 1,000,000 57,500
- -------------------------------------------------------------------------------
Bristol-Myers Squibb 300,000 21,131
- -------------------------------------------------------------------------------
Pfizer 600,000 65,850
- -------------------------------------------------------------------------------
Pharmacia & Upjohn 700,000 39,769
- -------------------------------------------------------------------------------
Warner-Lambert 500,000 34,688
- -------------------------------------------------------------------------------
218,938
- -------------------------------------------------------------------------------
Miscellaneous Consumer Products 5.2%
Colgate-Palmolive 352,500 $ 34,809
- -------------------------------------------------------------------------------
Newell Rubbermaid 600,000 27,900
- -------------------------------------------------------------------------------
Philip Morris 800,000 32,150
- -------------------------------------------------------------------------------
Procter & Gamble 400,000 35,700
- -------------------------------------------------------------------------------
Tomkins (GBP) 2,500,000 10,837
- -------------------------------------------------------------------------------
Unifi * 995,500 21,154
- -------------------------------------------------------------------------------
UST 1,200,000 35,100
- -------------------------------------------------------------------------------
197,650
- -------------------------------------------------------------------------------
Total Consumer Nondurables 757,177
- -------------------------------------------------------------------------------
CONSUMER SERVICES 6.4%
General Merchandisers 2.6%
Dayton Hudson 800,000 52,000
- -------------------------------------------------------------------------------
J.C. Penney 1,000,000 48,562
- -------------------------------------------------------------------------------
100,562
- -------------------------------------------------------------------------------
Specialty Merchandisers 2.0%
Albertson's 764,694 39,430
- -------------------------------------------------------------------------------
<PAGE>
Tupperware 1,373,900 35,034
- -------------------------------------------------------------------------------
74,464
- -------------------------------------------------------------------------------
Entertainment and Leisure 1.8%
Reader's Digest (Class A) 1,032,400 41,038
- -------------------------------------------------------------------------------
Reader's Digest (Class B) 786,400 29,490
- -------------------------------------------------------------------------------
70,528
- -------------------------------------------------------------------------------
Total Consumer Services 245,554
- -------------------------------------------------------------------------------
CONSUMER CYCLICALS 8.1%
Building and Real Estate 3.8%
CarrAmerica Realty, REIT 605,000 15,125
- -------------------------------------------------------------------------------
Federal Realty Investment Trust, REIT 1,275,000 29,245
- -------------------------------------------------------------------------------
Prologis Trust, REIT 327,272 6,627
- -------------------------------------------------------------------------------
Reckson Associates Realty, REIT 750,000 17,625
- -------------------------------------------------------------------------------
Rouse 599,500 15,212
- -------------------------------------------------------------------------------
Simon DeBartolo Group, REIT 841,000 21,341
- -------------------------------------------------------------------------------
Spieker Properties, REIT 200,000 7,775
- -------------------------------------------------------------------------------
Starwood Hotels & Resorts, REIT 775,000 23,686
- -------------------------------------------------------------------------------
United Dominion Realty Trust, REIT 657,900 7,731
- -------------------------------------------------------------------------------
144,367
- -------------------------------------------------------------------------------
Miscellaneous Consumer Durables 4.3%
Corning 1,400,000 $ 98,175
- -------------------------------------------------------------------------------
Eastman Kodak 1,000,000 67,750
- -------------------------------------------------------------------------------
165,925
- -------------------------------------------------------------------------------
Total Consumer Cyclicals 310,292
- -------------------------------------------------------------------------------
TECHNOLOGY 1.6%
Aerospace and Defense 1.6%
AlliedSignal 1,000,000 63,000
- -------------------------------------------------------------------------------
Total Technology 63,000
- -------------------------------------------------------------------------------
<PAGE>
CAPITAL EQUIPMENT 3.8%
Electrical Equipment 3.2%
GE 800,000 90,400
- -------------------------------------------------------------------------------
Hubbell (Class B) 710,000 32,216
- -------------------------------------------------------------------------------
122,616
- -------------------------------------------------------------------------------
Machinery 0.6%
Cooper Industries 455,907 23,707
- -------------------------------------------------------------------------------
23,707
- -------------------------------------------------------------------------------
Total Capital Equipment 146,323
- -------------------------------------------------------------------------------
BUSINESS SERVICES AND
TRANSPORTATION6.4%
Computer Service and Software 0.7%
Galileo International 500,000 26,719
- -------------------------------------------------------------------------------
26,719
- -------------------------------------------------------------------------------
Railroads 2.4%
Burlington Northern Santa Fe 1,500,000 46,500
- -------------------------------------------------------------------------------
Norfolk Southern 1,500,000 45,187
- -------------------------------------------------------------------------------
91,687
- -------------------------------------------------------------------------------
Miscellaneous Business Services 3.3%
Browning-Ferris 1,650,000 70,950
- -------------------------------------------------------------------------------
H&R Block 1,100,000 55,000
- -------------------------------------------------------------------------------
125,950
- -------------------------------------------------------------------------------
Total Business Services and Transportation 244,356
- -------------------------------------------------------------------------------
ENERGY 13.5%
Energy Services 2.0%
Baker Hughes 1,400,000 $ 46,900
- -------------------------------------------------------------------------------
Halliburton 636,000 28,779
- -------------------------------------------------------------------------------
75,679
- -------------------------------------------------------------------------------
Integrated Petroleum - Domestic 6.1%
Amerada Hess 1,200,000 71,400
- -------------------------------------------------------------------------------
<PAGE>
Atlantic Richfield 550,000 45,959
- -------------------------------------------------------------------------------
USX-Marathon 3,600,000 117,225
- -------------------------------------------------------------------------------
234,584
- -------------------------------------------------------------------------------
Integrated Petroleum - International 4.3%
BP Amoco ADR 1,061,666 115,191
- -------------------------------------------------------------------------------
Texaco 800,000 50,000
- -------------------------------------------------------------------------------
165,191
- -------------------------------------------------------------------------------
Exploration and Production 1.1%
Unocal 1,000,000 39,625
- -------------------------------------------------------------------------------
39,625
- -------------------------------------------------------------------------------
Total Energy 515,079
- -------------------------------------------------------------------------------
PROCESS INDUSTRIES8.5%
Diversified Chemicals 3.7%
Dow Chemical 400,000 50,750
- -------------------------------------------------------------------------------
DuPont 500,000 34,156
- -------------------------------------------------------------------------------
Hercules 1,400,000 55,038
- -------------------------------------------------------------------------------
139,944
- -------------------------------------------------------------------------------
Specialty Chemicals 2.5%
Great Lakes Chemical 1,000,000 46,063
- -------------------------------------------------------------------------------
Pall 2,200,000 48,812
- -------------------------------------------------------------------------------
94,875
- -------------------------------------------------------------------------------
Paper and Paper Products 2.3%
Fort James 1,300,000 49,237
- -------------------------------------------------------------------------------
Kimberly-Clark 700,000 39,900
- -------------------------------------------------------------------------------
89,137
- -------------------------------------------------------------------------------
Total Process Industries 323,956
- -------------------------------------------------------------------------------
<PAGE>
BASIC MATERIALS4.0%
Metals 3.1%
Alcoa 652,800 $ 40,392
- -------------------------------------------------------------------------------
Inco 2,000,000 36,000
- -------------------------------------------------------------------------------
Reynolds Metals 700,000 41,300
- -------------------------------------------------------------------------------
117,692
- -------------------------------------------------------------------------------
Mining 0.9%
Newmont Mining 1,800,000 35,775
- -------------------------------------------------------------------------------
35,775
- -------------------------------------------------------------------------------
Total Basic Materials 153,467
- -------------------------------------------------------------------------------
Total Common Stocks (Cost $2,259,967) 3,695,921
Preferred Stocks0.0%
Entergy-GSU (Series A) 2,660 271
- -------------------------------------------------------------------------------
Entergy-GSU (Series B) 12,063 611
- -------------------------------------------------------------------------------
Total Preferred Stocks (Cost $909) 882
Convertible Preferred Stocks0.6%
Union Pacific Capital Trust, 6.25% 400,000 20,797
- -------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Cost $18,123) 20,797
Convertible Bonds0.6%
Network Associates, Zero Coupon, 2/13/18 75,000,000 22,618
- -------------------------------------------------------------------------------
Total Convertible Bonds (Cost $22,660) 22,618
Corporate Bonds0.1%
Container Corp of America, Sr. Notes, 9.75%, 4/1/03 $5,000,000 5,244
- -------------------------------------------------------------------------------
Total Corporate Bonds (Cost $5,000) 5,244
Short-Term Investments3.2%
Money Market Funds 3.2%
Reserve Investment Fund, 5.05% # 123,809,478 123,809
- -------------------------------------------------------------------------------
Total Short-Term Investments (Cost $123,809) 123,809
Total Investments in Securities
101.1% of Net Assets (Cost $2,430,468) $ 3,869,271
Other Assets Less Liabilities (43,124)
<PAGE>
NET ASSETS $ 3,826,147
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 2,005
Accumulated net realized gain/loss - net of distributions 141,795
Net unrealized gain (loss) 1,438,803
Paid-in-capital applicable to 131,036,514 shares of $0.01 par
value capital stock outstanding; 500,000,000 shares authorized 2,243,544
- -------------------------------------------------------------------------------
NET ASSETS $ 3,826,147
NET ASSET VALUE PER SHARE $ 29.20
# Seven-day yield
* Non-income producing
ADR American Depository Receipt
REIT Real Estate Investment Trust
GBP British sterling
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price Growth & Income Fund
- ---------------------------------- Unaudited
STATEMENT OF OPERATIONS
----------------------- In thousands
6 Months
Ended
6/30/99
==Investment=Income===============================================
Income
Dividend $ 40,439
Interest 4,927
- ------------------------------------------------------------------
Total income 45,366
- ------------------------------------------------------------------
Expenses
Investment management 10,300
Shareholder servicing 3,393
Prospectus and shareholder reports 144
Custody and accounting 110
Registration 35
Legal and audit 7
Directors 7
Miscellaneous 14
- ------------------------------------------------------------------
Total expenses 14,010
Expenses paid indirectly (2)
- ------------------------------------------------------------------
Net expenses 14,008
- ------------------------------------------------------------------
Net investment income 31,358
- ------------------------------------------------------------------
<PAGE>
==Realized=and=Unrealized=Gain=(Loss)=============================
Net realized gain (loss)
Securities 140,964
Foreign currency transactions (9)
- ------------------------------------------------------------------
Net realized gain (loss) 140,955
Change in net unrealized gain or loss on securities 265,805
- ------------------------------------------------------------------
Net realized and unrealized gain (loss) 406,760
- ------------------------------------------------------------------
INCREASE (DECREASE) IN NET
==================================================================
ASSETS FROM OPERATIONS $ 438,118
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price Growth & Income Fund
- ---------------------------------- Unaudited
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------- In thousands
6 Months Year
Ended Ended
6/30/99 12/31/98
==Increase=(Decrease)=in=Net=Assets=============================================
Operations
Net investment income $ 31,358 $ 72,051
Net realized gain (loss) 140,955 248,790
Change in net unrealized gain or loss 265,805 14,493
- --------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 438,118 335,334
- --------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (31,835) (69,614)
Net realized gain (13,303) (271,171)
- --------------------------------------------------------------------------------
Decrease in net assets from distributions (45,138) (340,785)
- --------------------------------------------------------------------------------
Capital share transactions*
Shares sold 283,434 567,095
Distributions reinvested 43,940 333,198
Shares redeemed (457,364) (778,401)
- --------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions (129,990) 121,892
==Net=Assets====================================================================
<PAGE>
Increase (decrease) during period 262,990 116,441
Beginning of period 3,563,157 3,446,716
End of period $3,826,147 $3,563,157
*Share information
Shares sold 10,461 20,871
Distributions reinvested 1,594 12,745
Shares redeemed (16,773) (28,635)
- --------------------------------------------------------------------------------
Increase (decrease) in shares outstanding (4,718) 4,981
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price Growth & Income Fund
- ---------------------------------- Unaudited
June 30, 1999
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
================================================================================
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
================================================================================
T. Rowe Price Growth & Income Fund, Inc. (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company and commenced operations on December 21, 1982.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company industry;
these principles may require the use of estimates by fund management.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day the valuations are
made. A security which is listed or traded on more than one exchange is valued
at the quotation on the exchange determined to be the primary market for such
security. Listed securities not traded on a particular day and securities
regularly traded in the over-the-counter market are valued at the mean of the
latest bid and asked prices. Other equity securities are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
<PAGE>
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
Currency Translation Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such transactions.
The effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and losses.
Premiums and Discounts Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles. Expenses paid indirectly reflect credits earned
on daily, univested cash balances at the custodian, used to reduce the fund's
custody charges.
================================================================================
NOTE 2 - INVESTMENT TRANSACTIONS
================================================================================
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $393,547,000 and $474,568,000, respectively, for the six
months ended June 30, 1999.
================================================================================
NOTE 3 - FEDERAL INCOME TAXES
================================================================================
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
At June 30, 1999, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$2,430,468,000. Net unrealized gain aggregated $1,438,803,000 at period-end, of
which $1,482,324,000 related to appreciated investments and $43,521,000 to
depreciated investments.
<PAGE>
================================================================================
NOTE 4 - RELATED PARTY TRANSACTIONS
================================================================================
The investment management agreement between the fund and the manager
provides for an annual investment management fee, of which $1,777,000 was
payable at June 30, 1999. The fee is computed daily and paid monthly, and
consists of an individual fund fee equal to 0.25% of average daily net assets
and a group fee. The group fee is based on the combined assets of certain mutual
funds sponsored by the manager or Price Associates (the group). The group fee
rate ranges from 0.48% for the first $1 billion of assets to 0.30% for assets in
excess of $80 billion. At June 30, 1999, and for the six months then ended, the
effective annual group fee rate was 0.32%. The fund pays a pro-rata share of the
group fee based on the ratio of its net assets to those of the group.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund receives
certain other services. The manager computes the daily share price and maintains
the financial records of the fund. T. Rowe Price Services, Inc. is the fund's
transfer and dividend disbursing agent and provides shareholder and
administrative services to the fund. T. Rowe Price Retirement Plan Services,
Inc. provides subaccounting and recordkeeping services for certain retirement
accounts invested in the fund. The fund incurred expenses pursuant to these
related party agreements totaling approximately $2,256,000 for the six months
ended June 30, 1999, of which $456,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual
funds (underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum)
may invest. Spectrum does not invest in the underlying funds for the purpose of
exercising management or control. Expenses associated with the operation of
Spectrum are borne by each underlying fund to the extent of estimated savings to
it and in proportion to the average daily value of its shares owned by Spectrum,
pursuant to special servicing agreements between and among Spectrum, the
underlying funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum
International, Rowe Price-Fleming International. Spectrum Growth Fund held
approximately 10.0% of the outstanding shares of the fund at June 30, 1999. For
the six months then ended, the fund was allocated $456,000 of Spectrum expenses,
$79,000 of which was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve Funds
are offered as cash management options only to mutual funds and other accounts
managed by T. Rowe Price and its affiliates and are not available to the public.
The Reserve Funds pay no investment management fees. Distributions from the
Reserve Funds to the fund for the six months ended June 30, 1999, totaled
$3,278,000 and are reflected as interest income in the accompanying Statement of
Operations.
================================================================================
<PAGE>
T. Rowe Price Shareholder Services
- ----------------------------------
INVESTMENT SERVICES AND INFORMATION
- -----------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE 1-800-225-5132 Available Monday through Friday from 8
a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
IN PERSON Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
CHECKING Available on most fixed income funds ($500 minimum).
AUTOMATIC INVESTING From your bank account or paycheck.
AUTOMATIC WITHDRAWAL Scheduled, automatic redemptions.
DISTRIBUTION OPTIONS Reinvest all, some, or none of your
distributions.
AUTOMATED 24-HOUR SERVICES Including Tele*Access (Registration Mark)
and the T. Rowe Price Web site on the Internet. Address:
www.troweprice.com
BROKERAGE SERVICES*
INDIVIDUAL INVESTMENTS Stocks, bonds, options, precious metals,
and other securities at a savings over full-service commission
rates.**
INVESTMENT INFORMATION
COMBINED STATEMENT Overview of all your accounts with T. Rowe
Price.
SHAREHOLDER REPORTS Fund managers' reviews of their strategies
and results.
T. ROWE PRICE Report Quarterly investment newsletter discussing
markets and financial strategies.
PERFORMANCE UPDATE Quarterly review of all T. Rowe Price fund
results.
INSIGHTS Educational reports on investment strategies and
financial markets.
INVESTMENT GUIDES Asset Mix Worksheet, College Planning Kit,
Diversifying Overseas: A Guide to International Investing,
Personal Strategy Planner, Retirees Financial Guide, and
Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a January 1999 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary depending
on size of order.
================================================================================
<PAGE>
FOR YIELD, PRICE, LAST
TRANSACTION, CURRENT BALANCE,
OR TO CONDUCT TRANSACTIONS, 24
HOURS, 7 DAYS A WEEK, CALL
TELE*ACCESS [REGISTRATION
MARK:] 1-800-638-2587 toll
free
FOR ASSISTANCE WITH YOUR
EXISTING FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
TO OPEN A BROKERAGE ACCOUNT OR
OBTAIN INFORMATION, CALL:
1-800-638-5660 toll free
INTERNET ADDRESS:
www.troweprice.com
T. Rowe Price Associates 100
East Pratt Street Baltimore,
Maryland 21202 This report is
authorized for distribution
only to shareholders and to
others who have received a
copy of the prospectus
appropriate to the fund or
funds covered in this report.
INVESTOR CENTERS:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
4200 West Cypress St.
10th Floor
Tampa, FL 33607
4410 ArrowsWest Drive
Colorado Springs, CO 80907
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills, CA 91367
T. Rowe Price Investment Services, Inc., Distributor. F54-051 6/30/99
