- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
SemiAnnual Report
Growth Stock Fund
- --------------------------------------------------------------------------------
June 30, 1997
- --------------------------------------------------------------------------------
Report Highlights
================================================================================
Growth Stock Fund
o During the past six months, the stock market continued its advance into
record territory in an ideal environment of solid earnings growth and low
inflation.
o The Growth Stock Fund posted a robust return for the past six months,
surpassing the Lipper average for similar funds but lagging the S&P 500.
o Dollar-denominated returns from foreign securities, and the narrow base of
robust domestic stock performance, impaired fund results versus the broad
market.
o Portfolio holdings reflect our emphasis on companies with strong product
leadership and the successful use of free cash flow.
o Stock prices have entered unchartered waters, and we do not expect the
torrid returns of recent years to be sustained.
Fellow Shareholders
================================================================================
During the last six months, the unmanaged Standard & Poor's 500 Stock Index
continued its unprecedented advance, returning 20.61% following a 22.96% return
in 1996 and 37.58% in 1995. A near-perfect environment of solid earnings growth,
low inflation, and strong cash flow into mutual funds fueled the gains.
<PAGE>
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 6/30/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Growth Stock Fund 14.82% 29.79%
S&P 500 20.61 34.70
Lipper Growth Funds Average 14.28 23.96
================================================================================
Your fund returned 14.82% during the past six months and 29.79% during the
past 12 months. Performance trailed the S&P 500 but was slightly ahead of the
Lipper Growth Funds Average over the shorter period and significantly ahead of
the peer group average for the year. Relative performance against the broad
market was hindered by the strong appreciation of the dollar, which dampened
returns for U.S. investors in foreign securities. However, aside from the
currency factor, investments in foreign stocks posted similar returns to those
of the U.S. market.
MARKET ENVIRONMENT
If one could create an almost perfect environment for stocks, it would look
precisely like the scenario that has existed for the last few years in the U.S.
The economy continued to move forward at a brisk clip, and companies continued
to leverage this growth into far greater earnings than they have generated in
decades, due to productivity advances and a focus on "economic value added"
practices. This has occurred without the aid of accelerating price increases,
which has helped keep inflation in check, producing a favorable interest rate
environment.
Although the Federal Reserve stepped in and raised the federal funds rate
in March, long-term rates have remained low. Strong first quarter GDP growth
moderated in the second quarter, taking pressure off the Fed for a second rate
increase later in the spring. Although wage pressure is mounting somewhat,
companies so far have been able to deal with slightly higher labor costs through
the use of technological innovations that have lowered other operating expenses.
Conditions in the rest of the world were mixed. Europe's economies remained
sluggish except in the U.K. where business was strong. Latin American economies
continued to recover and inflation remained in check. Far Eastern stock markets
were dragged down by the commodity-related nature of most companies in the
region.
In this competitive global environment, where price advantages are
difficult to sustain and companies are expanding their reach, strong management
and product leadership have become increasingly important. We continue to
emphasize these types of companies in our selection of stocks for the fund.
INVESTMENT REVIEW
Over the first six months of 1997, your fund's return was strong in
absolute terms and relative to its peer group but lagged the S&P 500 Index.
<PAGE>
================================================================================
Portfolio Characteristics
- --------------------------------------------------------------------------------
Growth Stock
Domestic
As of 6/30/97 Portfolio S&P 500
- --------------------------------------------------------------------------------
Earnings Growth Rate
Past 5 Years 19.0% 15.1%
Projected 5 Years * 15.8 12.4
Dividend Growth Rate
Past 5 Years 9.1 8.8
Projected 5 Years * 12.0 10.5
Return on Equity
Past 5 Years 20.0 18.7
Projected 5 Years * 19.1 18.6
Long-Term Debt as
Percent of Capital 28.1 31.0
P/E Ratio (12-month forward
projected earnings) 21.8 X 18.7 X
* Forecasts are based on T. Rowe research and are in no way indicative of
future investment returns.
================================================================================
There are two main reasons why your fund trailed the overall market. First,
many international markets underperformed the U.S., especially in dollar terms.
Few overseas economies currently offer the strong growth with little inflation
that exists in the U.S. For example, the economy in the U.K. is growing
steadily, but rising interest rates and a subsequently strong currency hurt
stock market returns as well as the earnings of multinational growth companies.
In continental Europe, the interest rate environment was favorable, but economic
growth has so far been limited, and weakening currencies impaired
dollar-denominated returns. During the past six months, your fund's return from
international stocks was 9.7%.
Second, the top 50 stocks in the S&P 500 returned an average of 24.38%
while the bottom 450 were up only 16.62%. Although we own many of the larger
stocks in the index, this narrow base of strong performance affected funds with
a different stock weighting from the index as a whole. We maintained an
underweighting in the top-performing 50 stocks because of what we consider to be
extreme valuations in this group. Coca-Cola is just one example, with a stock
price trading in excess of 40 times current earnings at the end of June. While
Coca-Cola remains a great company, we believe its valuation is excessive and
that it would not be in the best interest of shareholders to include the stock
in the portfolio at this time.
<PAGE>
During the past six months, several portfolio holdings contributed strongly
to fund performance, including GE and BERKSHIRE HATHAWAY, two of our largest
positions. The fund was also helped by large weightings in pharmaceutical stocks
such as PFIZER, WARNER-LAMBERT, and NOVARTIS. Our technology investments,
including MICROSOFT, BMC SOFTWARE, ORACLE, and FIRST DATA, were also rewarding.
On the negative side, performance was hindered by BOSTON CHICKEN, where
earnings growth slowed, by acquisition problems at IKON OFFICE SOLUTIONS and
PACIFICARE HEALTH SYSTEMS, and also by several foreign holdings such as GRANADA.
PORTFOLIO MANAGEMENT
This is my first report to you since becoming chairman of your fund's
Investment Advisory Committee last February, and I would like to share my
approach to growth investing as well as my current perspective on the market.
Since I have been a long-standing member of the fund's Investment Advisory
Committee, you should expect more continuity than change.
Growth comes from two main areas: product leadership in fast-growing
markets, and the generation and successful deployment of free cash flow. In
finding new investments and in selling old ones, our focus will continue to be
on these areas.
Reflecting our focus on growth markets, we added to positions in Pfizer,
MEDTRONIC, 3COM, First Data, and ANALOG DEVICES. We also initiated positions in
MOTOROLA, PARAMETRIC TECHNOLOGY, CARNIVAL, CUC INTERNATIONAL, BAXTER
INTERNATIONAL, and JOHNSON & JOHNSON. Reflecting our focus on the generation and
deployment of cash, we added to PHILIP MORRIS and FAIRFAX FINANCIAL. In
addition, we initiated positions in HEALTHSOUTH, CITICORP, MATTEL, WAL-MART, and
TRIBUNE.
On a sector basis, we slightly lowered our weighting in financial stocks
and added to technology holdings. In all cases, we took advantage of attractive
prices to buy leading companies in their respective markets.
Among major sales, we had a small position in Boston Chicken at the end of
June, which we completely eliminated in July. We also eliminated APRIA
HEALTHCARE and CASCADE COMMUNICATIONS and reduced holdings in FREDDIE MAC, UNUM,
CIRCUIT CITY STORES, HASBRO, and DISNEY due to their high valuations or
weakening fundamentals. REVCO was eliminated from the portfolio when it was
merged into CVS.
OUTLOOK
Although investors have benefited from an ideal environment for stocks,
particularly those of large growth companies, it is important to realize that
stocks tend to rise with earnings and cash flow growth over time. While your
fund's investments are in companies offering both strong earnings and cash flow
growth, we believe the prices of many stocks have outpaced these growth rates.
Such strong performance is not likely to continue indefinitely, and we
anticipate more modest returns in the months ahead.
<PAGE>
[Chart showing the history of the average (unweighted) P/E ratio of the
fund's U.S. portfolio companies compared with the P/E ratio of the S&P 500 Stock
Index.]
As the fund's year-end report stated, the market has experienced annual
increases of 20% or more six times since 1900, but it has never appreciated 20%
or more for three consecutive years. The average return in the third year
following this type of growth has been a loss of 8%. At present, we are in
unchartered waters where caution is warranted.
We expect the economy to continue to moderate in the second half but we
still anticipate respectable growth. We believe your portfolio, which consists
of leading companies with both great management and high levels of free cash
flow, should continue to perform well over the long term.
We welcome all new shareholders to the Growth Stock Fund, and we will
continue to work diligently on your behalf in our search for attractive ideas,
both here and abroad.
Respectfully submitted,
/s/
Robert W. Smith
Chairman of the Investment Advisory Committee
July 18, 1997
<PAGE>
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/97
Berkshire Hathaway ........................................ 3.1%
Freddie Mac ............................................... 3.0
GE ........................................................ 2.9
Royal Dutch Petroleum ..................................... 2.1
Danaher ................................................... 1.8
ACE Limited ............................................... 1.7
First Data ................................................ 1.7
PartnerRe Holdings ........................................ 1.5
Philip Morris ............................................. 1.5
AlliedSignal .............................................. 1.4
Pfizer .................................................... 1.4
Fannie Mae ................................................ 1.3
Hutchison Whampoa ......................................... 1.3
Microsoft ................................................. 1.3
BMC Software .............................................. 1.2
Oracle .................................................... 1.2
Norwest ................................................... 1.2
UNUM ...................................................... 1.2
Novartis .................................................. 1.1
Disney .................................................... 1.1
Corning ................................................... 1.1
PepsiCo ................................................... 1.0
Fairfax Financial ......................................... 1.0
Merck ..................................................... 1.0
Columbia/HCA Healthcare ................................... 1.0
- --------------------------------------------------------------------------------
Total ..................................................... 38.1%
================================================================================
<PAGE>
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
MAJOR PORTFOLIO CHANGES
Listed in descending order of size
6 Months Ended 6/30/97
Ten Largest Purchases
- --------------------------------------------------------------------------------
Citicorp *
Parametric Technology *
Tribune *
Merck
Philip Morris
Mobil *
Newmont Mining
World Com *
Johnson & Johnson *
Sara Lee *
Ten Largest Sales
- --------------------------------------------------------------------------------
Freddie Mac
Revco ***
Heinz **
Fund American Enterprises **
Tupperware **
Circuit City Stores
Cooper Cameron
UNUM
Electronic Data Systems
Berkshire Hathaway
* Position added
** Position eliminated
*** Acquired by another company
================================================================================
<PAGE>
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
[Growth Stock 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 6/30/97 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Growth Stock Fund 29.79% 24.22% 18.67% 12.63%
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>
<TABLE>
Unaudited
- ------------------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
6 Months Year
Ended Ended
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
NET ASSET VALUE
Beginning of period ............... $ 26.18 $ 23.35 $ 18.75 $ 20.42 $ 18.66 $ 18.75
Investment activities
Net investment income ......... 0.11 0.19 0.23 0.18 0.17 0.18
Net realized and
unrealized gain (loss) ........ 3.77 4.89 5.57 (0.01) 2.72 0.94
Total from
investment activities ......... 3.88 5.08 5.80 0.17 2.89 1.12
Distributions
Net investment income ......... -- (0.19) (0.23) (0.18) (0.14) (0.18)
Net realized gain ............. -- (2.06) (0.97) (1.66) (0.99) (1.03)
Total distributions ........... -- (2.25) (1.20) (1.84) (1.13) (1.21)
NET ASSET VALUE
End of period ..................... $ 30.06 $ 26.18 $ 23.35 $ 18.75 $ 20.42 $ 18.66
Ratios/Supplemental Data
Total return ...................... 14.82% 21.70% 30.97% 0.89% 15.56% 5.99%
Ratio of expenses to
average net assets ................ 0.76%+ 0.77% 0.80% 0.81% 0.82% 0.83%
Ratio of net investment
income to average
net assets ........................ 0.81%+ 0.74% 1.09% 0.91% 0.86% 0.94%
Portfolio turnover rate ........... 45.6%+ 49.0% 42.5% 54.0% 35.3% 27.4%
Average commission
rate paid ......................... $ 0.0110 $ 0.0426 -- -- -- --
Net assets, end of period
(in millions) ..................... $ 3,963 $ 3,431 $ 2,762 $ 2,068 $ 1,976 $ 1,946
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited June 30, 1997
================================================================================
Statement of Net Assets
- --------------------------------------------------------------------------------
Shares/Par Value
In thousands
Common Stocks & Warrants 92.2%
FINANCIAL 20.3%
Bank and Trust 5.7%
Banca Fideuram (ITL) ............................ 5,260,000 $ 17,192
Cho Hung Bank (KRW) ............................. 1,008,908 6,703
Citicorp ........................................ 300,000 36,169
Lippo Bank (IDR) ................................ 5,000 5
Maculan (ATS) ................................... 3,999 46
Mellon Bank ..................................... 250,000 11,281
Northern Trust .................................. 540,000 26,140
Norwest ......................................... 825,000 46,406
Societe Generale (FRF) .......................... 75,000 8,372
Societe Generale de Surveillance (CHF) .......... 7,320 15,643
Toronto- Dominion Bank (CAD) .................... 750,000 22,267
Wells Fargo ..................................... 140,000 37,730
227,954
Insurance 6.9%
ACE Limited ..................................... 930,000 68,704
Erie Indemnity .................................. 190,600 7,433
EXEL ............................................ 447,400 23,600
Leucadia National ............................... 275,000 8,508
PartnerRe Holdings .............................. 1,255,409 47,863
PartnerRe Holdings, Warrants, 11/04/00 *++ ...... 531,665 11,654
St. Paul Companies .............................. 300,000 22,875
UNUM ............................................ 1,100,000 46,200
Zurich Reinsurance .............................. 900,000 35,550
272,387
Financial Services 7.7%
AMBAC ........................................... 400,000 30,550
Fairfax Financial (CAD) * ....................... 109,400 31,689
Fairfax Financial (144a) (CAD) * ................ 28,500 8,255
Fannie Mae ...................................... 1,220,400 53,240
Freddie Mac ..................................... 3,500,000 120,312
H&R Block ....................................... 1,100,000 35,475
Travelers Group ................................. 428,400 27,016
306,537
Total Financial ................................. 806,878
UTILITIES 0.1%
Telephone 0.1%
Telecom Italia Mobile (ITL) ..................... 2,000,000 $ 6,433
Total Utilities ................................. 6,433
<PAGE>
CONSUMER NONDURABLES 19.7%
Beverages 1.3%
LVMH (FRF) ...................................... 40,000 10,754
PepsiCo ......................................... 1,100,000 41,319
52,073
Food Processing 0.7%
Hershey Foods ................................... 100,000 5,531
Sara Lee ........................................ 550,000 22,894
28,425
Hospital Supplies/Hospital Management 3.5%
Baxter International ............................ 431,000 22,520
Boston Scientific * ............................. 450,000 27,647
Columbia/HCA Healthcare ......................... 1,000,000 39,312
HealthSouth * ................................... 1,150,000 28,678
Medtronic ....................................... 251,000 20,331
138,488
Biotechnology 1.2%
Biogen * ........................................ 350,000 11,867
Genentech * ..................................... 600,000 35,363
47,230
Pharmaceuticals 6.7%
Ares-Serono (CHF) ............................... 2,500 3,622
Astra (SEK) ..................................... 1,600,000 28,233
Johnson & Johnson ............................... 410,000 26,394
Merck ........................................... 380,000 39,330
Novartis (CHF) .................................. 28,000 44,762
Pfizer .......................................... 455,000 54,372
Warner-Lambert .................................. 275,000 34,169
Zeneca Group (GBP) .............................. 1,000,000 33,073
263,955
Miscellaneous Consumer Products 6.3%
Corning ......................................... 791,500 44,027
CUC International * ............................. 1,000,000 $ 25,813
Hasbro .......................................... 262,500 7,448
Mattel .......................................... 800,000 27,100
Philip Morris ................................... 1,300,900 57,727
Procter & Gamble ................................ 165,000 23,306
Service Corp. ................................... 636,500 20,925
Tomkins (GBP) ................................... 5,400,000 23,561
Unilever N.V. ADR ............................... 90,000 19,620
249,527
Total Consumer Nondurables ...................... 779,698
CONSUMER SERVICES 9.1%
Restaurants 0.4%
Boston Chicken * 64,300 898
McDonald's ...................................... 250,000 12,078
Outback Steakhouse * ............................ 200,000 4,832
17,808
<PAGE>
General Merchandisers 0.4%
Circuit City Stores 400,000 14,225
14,225
Specialty Merchandisers 2.0%
CVS ............................................. 221,050 11,329
Home Depot ...................................... 300,000 20,681
Kohl's * ........................................ 300,200 15,892
Tag Heuer ADR * ................................. 910,600 13,716
Wal-Mart ........................................ 500,000 16,906
78,524
Health Care Services 0.2%
PacifiCare Health Systems (Class B) * 100,000 6,384
6,384
Entertainment and Leisure 2.9%
Carnival (Class A) ADR .......................... 500,000 20,625
Disney .......................................... 550,000 44,138
Hutchison Whampoa (HKD) ......................... 6,000,000 51,889
116,652
Media and Communications 3.2%
Elsevier (NLG) .................................. 1,700,000 28,407
Granada (GBP) ................................... 1,400,000 18,418
Schibsted (NOK) ................................. 670,000 13,255
Total Access Communications ..................... 300,000 1,392
Tribune ......................................... 700,000 33,644
VNU (NLG) ....................................... 700,000 15,477
Wolters Kluwer (NLG) ............................ 125,000 15,220
125,813
Total Consumer Services 359,406
CONSUMER CYCLICALS 1.8%
Building and Real Estate 1.8%
Masco ........................................... 650,000 27,137
Security Capital, (144a) * ...................... 965,000 14,379
Starwood Lodging, REIT .......................... 750,000 32,016
Total Consumer Cyclicals ........................ 73,532
TECHNOLOGY 16.7%
Networking 2.0%
3Com * .......................................... 580,000 26,082
Ascend Communications * ......................... 325,000 12,766
Cisco Systems * ................................. 550,000 36,936
FORE Systems * .................................. 200,000 2,719
78,503
<PAGE>
Electronic Components 3.6%
Analog Devices * ................................ 666,666 17,708
Intel ........................................... 250,000 35,399
Linear Technology ............................... 491,800 25,405
Maxim Integrated Products * ..................... 526,000 29,883
Molex (Class A) ................................. 375,000 13,043
Motorola ........................................ 200,000 15,200
Xilinx * ........................................ 160,000 7,845
144,483
Electronic Systems 1.0%
Dell Computer * ................................. 90,000 10,566
Hewlett-Packard ................................. 485,000 27,160
37,726
Computer Services 2.4%
Automatic Data Processing ....................... 500,000 23,500
Autotote (Class A) * ............................ 37,131 47
Electronic Data Systems ......................... 80,200 3,288
First Data ...................................... 1,526,942 $ 67,090
93,925
Computer Software 4.6%
BMC Software * .................................. 850,000 47,122
Microsoft * ..................................... 395,000 49,955
Oracle * ........................................ 925,000 46,568
Parametric Technology * ......................... 720,000 30,623
PLATINUM technology * ........................... 701,700 9,385
183,653
Telecommunications 2.8%
Cox Communications (Class A) * .................. 700,000 16,800
Lucent Technologies ............................. 125,000 9,008
Telecomunicacoes Brazil ADR ..................... 100,000 15,175
Vodafone (GBP) .................................. 2,600,000 12,686
Vodafone ADR .................................... 500,000 24,219
World Com ....................................... 1,000,000 31,968
109,856
Aerospace and Defense 0.3%
Boeing .......................................... 260,000 13,796
13,796
Total Technology ................................ 661,942
CAPITAL EQUIPMENT 9.3%
Electrical Equipment 4.7%
AlliedSignal .................................... 665,000 55,860
GE .............................................. 1,750,000 114,406
Getronics (NLG) * ............................... 430,000 13,889
184,155
<PAGE>
Capital Equipment 0.8%
Tyco International 449,000 31,234
31,234
Machinery 3.8%
Danaher ......................................... 1,400,000 71,137
Mannesmann (DEM) ................................ 39,500 17,597
S I G Schweis (CHF) ............................. 6,000 18,185
Teleflex ........................................ 817,800 25,556
TriMas .......................................... 700,000 19,688
152,163
Total Capital Equipment ......................... 367,552
BUSINESS SERVICES AND
TRANSPORTATION 4.9%
Distribution Services 0.4%
Ikon Office Solutions 662,700 16,526
16,526
Miscellaneous Business Services 3.2%
ADT * ........................................... 368,200 12,150
Assa-Abloy (Class B) (SEK) ...................... 350,000 7,149
Corporate Express * ............................. 750,000 10,805
Interpublic Group ............................... 400,000 24,525
Mutual Risk Management .......................... 738,666 33,886
Reuters ADR ..................................... 125,000 7,879
Securitas (Class B) (SEK) ....................... 400,000 11,273
USA Waste Services * ............................ 450,000 17,381
125,048
Environmental 0.6%
Rentokil Initial (GBP) .......................... 7,000,000 24,550
24,550
Airlines 0.7%
Swire Pacific (Class A) (HKD) ................... 3,000,000 27,010
27,010
Total Business Services and Transportation ...... 193,134
ENERGY 3.8%
Energy Services 1.0%
Cooper Cameron * ................................ 150,000 7,013
Halliburton ..................................... 200,000 15,850
Schlumberger .................................... 150,000 18,750
41,613
Integrated Petroleum - International 2.8%
Mobil ........................................... 400,000 27,950
Royal Dutch Petroleum ADR ....................... 1,500,000 81,562
109,512
Total Energy .................................... 151,125
<PAGE>
PROCESS INDUSTRIES 2.0%
Specialty Chemicals 0.9%
Great Lakes Chemical 698,300 36,573
36,573
Paper and Paper Products 1.1%
Kimberly-Clark .................................. 640,000 31,840
Kimberly-Clark Mexico (Class A) (MXN) ........... 2,550,000 10,171
42,011
Total Process Industries ........................ 78,584
BASIC MATERIALS 0.7%
Metals 0.0%
Rustenburg Platinum ADR 58 1
1
Mining 0.7%
Newmont Mining .................................. 700,000 27,300
27,300
Total Basic Materials ........................... 27,301
MISCELLANEOUS 3.8%
Conglomerates 3.3%
Berkshire Hathaway (Class A) * .................. 2,600 122,720
Hagemeyer (NLG) ................................. 150,000 7,749
130,469
Other Miscellaneous Securities 0.5%
Other Miscellaneous Common Stocks ............... 20,756
20,756
Total Miscellaneous ............................. 151,225
Total Common Stocks & Warrants (Cost $2,065,148) 3,656,810
Preferred Stocks 0.4%
Banco Bradesco (BRL) ............................ 1,599,434,539 16,046
Total Preferred Stocks (Cost $6,118) ........... 16,046
Short-Term Investments 7.9%
Certificates of Deposit 1.0%
First Tennessee Bank, 5.70%, 7/17/97 ............ $10,000,000 10,000
Morgan Guaranty, 5.90%, 9/30/97 ................. 10,000,000 10,005
Union Bank Treasury Division, 5.55%, 7/11/97 .... 10,000,000 10,000
World Savings Bank, 5.57%, 7/8/97 ............... 10,000,000 10,000
40,005
<PAGE>
Commercial Paper 6.3%
Allied Signal, 4(2), 5.58%, 7/15/97 $ ............... 10,000,000 $ 9,978
Asset Securitization Cooperative, 4(2)
5.57%, 7/14/97 .............................. 10,000,000 9,980
Associates First Capital, 5.57%, 8/7/97 ............. 10,000,000 9,943
Bank Of New York, 5.52 - 5.53%, 7/10 - 7/28/97 ...... 20,000,000 19,945
Beta Finance, 4(2), 5.58%, 9/19/97 .................. 10,000,000 9,876
BT Securities, 5.57%, 8/25/97 ....................... 10,000,000 9,915
Corporate Asset Funding, 4(2), 5.53%, 7/21/97 ....... 10,000,000 9,969
Countrywide Funding, 5.60%, 7/22/97 ................. 10,000,000 9,967
Delaware Funding, 4(2), 5.57%, 7/16/97 .............. 10,000,000 9,977
Falcon Asset Securitization, 4(2), 5.57%, 9/22/97 ... 10,000,000 9,871
FCAR Owner Trust Series I, 5.53%, 7/10/97 ........... 10,000,000 9,986
Finova Capital, 5.60%, 9/9/97 ....................... 10,000,000 9,891
Ford Credit Europe, 5.57%, 7/14/97 .................. 10,000,000 9,980
GMAC, 5.32%, 8/29/97 ................................ 10,000,000 9,913
International Lease Finance, 5.50%, 7/7/97 .......... 10,000,000 9,991
Island Finance of Puerto Rico, 5.57%, 8/22/97 ....... 10,000,000 9,919
Jefferson Pilot, 5.55%, 7/22/97 ..................... 10,000,000 9,968
Merrill Lynch, 5.56 - 5.58%, 7/9 - 8/20/97 .......... 30,000,000 29,864
National Rural Utilities Cooperative Finance
5.55%, 9/8/97 ............................... 10,000,000 9,894
Investments in Commercial Paper through a Joint Account
6.05 - 6.20%, 7/1/97 ........................ 32,766,160 32,766
251,593
Medium-Term Notes 0.3%
PHH, VR, 5.69%, 7/10/97 10,000,000 10,000
10,000
Structured Investment Vehicles 0.3%
Short Term Card Account Trust, VR, (144a)
5.71%, 7/15/97 .......................... 10,000,000 10,000
10,000
Total Short-Term Investments (Cost $ 311,598).. 311,598
Total Investments in Securities
100.5% of Net Assets (Cost $2,382,864) .......... $ 3,984,454
Other Assets Less Liabilities ................... (21,767)
NET ASSETS ...................................... $ 3,962,687
Net Assets Consist of:
Accumulated net investment income -
net of distributions ............................ $ 14,636
Accumulated net realized gain/loss -
net of distributions ............................ 248,937
Net unrealized gain (loss) ...................... 1,601,523
Paid-in-capital applicable to 131,843,819
shares of $1.00 par value capital stock
outstanding; 200,000,000 shares authorized ...... 2,097,591
NET ASSETS ...................................... $ 3,962,687
NET ASSET VALUE PER SHARE ....................... $ 30.06
<PAGE>
* Non-income producing
++ Securities contain some restrictions as to public resale-total of such
securities at period-end amounts to 0.29% of net assets.
REIT Real Estate Investment Trust
VR Variable rate
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors."
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at period-end amounts to
0.82% of net assets.
ATS Austrian schilling
BRL Brazilian real
CAD Canadian dollar
CHF Swiss franc
DEM German deutschemark
FRF French franc
GBP British sterling
HKD Hong Kong dollar
IDR Indonesian rupia
ITL Italian lira
KRW S. Korean won
MXN Mexican peso
NLG Dutch guilder
NOK Norwegian krone
SEK Swedish krona
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited
================================================================================
Statement of Operations
In thousands
6 Months
Ended
6/30/97
Investment Income
Income
Dividend (net of foreign taxes of $ 1,229) ............... $ 21,668
Interest ................................................. 6,475
Total income ............................................. 28,143
Expenses
Investment management .................................... 10,334
Shareholder servicing .................................... 2,944
Custody and accounting ................................... 214
Prospectus and shareholder reports ....................... 118
Registration ............................................. 23
Legal and audit .......................................... 12
Directors ................................................ 12
Miscellaneous ............................................ 11
Total expenses ........................................... 13,668
Net investment income ........................................ 14,475
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ............................................... 219,031
Foreign currency transactions ............................ (258)
Net realized gain (loss) ................................. 218,773
Change in net unrealized gain or loss
Securities ............................................... 278,499
Other assets and liabilities
denominated in foreign currencies ........................ (56)
Change in net unrealized gain or loss .................... 278,443
Net realized and unrealized gain (loss) ...................... 497,216
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ....................................... $ 511,691
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/97 12/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income ........................ $ 14,475 $ 22,689
Net realized gain (loss) ..................... 218,773 226,082
Change in net unrealized gain or loss ........ 278,443 365,010
Increase (decrease) in net
assets from operations ....................... 511,691 613,781
Distributions to shareholders
Net investment income ........................ - (23,110)
Net realized gain ............................ - (250,078)
Decrease in net assets from distributions .... - (273,188)
Capital share transactions *
Shares sold .................................. 226,184 440,441
Distributions reinvested ..................... - 259,226
Shares redeemed .............................. (205,997) (371,279)
Increase (decrease) in net
assets from capital
share transactions ........................... 20,187 328,388
Net Assets
Increase (decrease) during period ................ 531,878 668,981
Beginning of period .............................. 3,430,809 2,761,828
End of period .................................... $ 3,962,687 $ 3,430,809
*Share information
Shares sold .................................. 8,329 17,612
Distributions reinvested ..................... - 9,845
Shares redeemed .............................. (7,541) (14,667)
Increase (decrease) in shares outstanding .... 788 12,790
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited June 30, 1997
================================================================================
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
T. Rowe Price Growth Stock 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 January 1, 1950.
VALUATION Equity securities are valued at the last quoted sales price on
the day the valuations are made. A security which is listed or traded on more
than one exchange is valued at the quotation on the exchange determined to be
the primary market for such security. Listed securities not traded on a
particular day and securities regularly traded in the over-the-counter market
are valued at the mean of the latest bid and asked prices.
Short-term debt securities are valued at amortized cost which, when
combined with accrued interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
CURRENCY TRANSLATION Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such transactions.
The effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and losses.
PREMIUMS AND DISCOUNTS Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
OTHER Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
<PAGE>
NOTE 2 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
COMMERCIAL PAPER JOINT ACCOUNT The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
OTHER Purchases and sales of portfolio securities, other than short-term
securities, aggregated $769,950,000 and $927,355,000, respectively, for the six
months ended June 30, 1997.
NOTE 3 - FEDERAL INCOME TAXES
- --------------------------------------------------------------------------------
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
At June 30, 1997, the aggregate cost of investments for federal income tax
and financial reporting purposes was $2,382,864,000, and net unrealized gain
aggregated $1,601,590,000, of which $1,634,775,000 related to appreciated
investments and $33,185,000 to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
The investment management agreement between the fund and T. Rowe Price
Associates, Inc. (the manager) provides for an annual investment management fee,
of which $1,849,000 was payable at June 30, 1997. The fee is computed daily and
paid monthly, and consists of an individual fund fee equal to 0.25% 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 Rowe Price-Fleming
International, Inc. (the group). The group fee rate ranges from 0.48% f or the
first $1 billion of assets to 0.30% for assets in excess of $80 billion. At June
30, 1997, and for the six months then ended, the effective annual group fee rate
was 0.33%. The fund pays a pro-rata share of the group fee based on the ratio of
its net assets to those of the group.
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. (TRPS) 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. Additionally, the fund is one of several T. Rowe
Price mutual funds (the underlying funds) in which the T. Rowe Price Spectrum
Growth Fund (Spectrum) invests. In accordance with an agreement among Spectrum,
the underlying funds, the manager, and TRPS, expenses from the operation of
Spectrum are borne by the underlying funds based on each underlying fund's
proportionate share of assets owned by Spectrum. The fund incurred expenses
pursuant to these related party agreements totaling approximately $2,642,000 for
the six months ended June 30, 1997, of which $407,000 was payable at period-end.
<PAGE>
During the six months ended June 30, 1997, the fund, in the ordinary course
of business, placed security purchase and sale orders aggregating $42,568,000
with certain affiliates of the manager and paid commissions of $218,000 related
thereto.
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 T.
Rowe Price OnLine.
DISCOUNT BROKERAGE*
INDIVIDUAL INVESTMENTS Stocks, bonds, options, precious metals, and other
securities at a savings over regular commission rates.
INVESTMENT INFORMATION
COMBINED STATEMENT Overview of your T. Rowe Price accounts.
SHAREHOLDER REPORTS Fund managers' reviews of their strategies and results.
T. ROWE PRICE REPORT Quarterly investment newsletter discussing markets and
financial strategies.
PERFORMANCE UPDATE Quarterly review of all T. Rowe Price fund results.
INSIGHTS EDUCATIONAL reports on investment strategies and financial
markets.
INVESTMENT GUIDES Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
<PAGE>
T. Rowe Price Mutual Funds
================================================================================
STOCK FUNDS
- --------------------------------------------------------------------------------
DOMESTIC
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
Value
INTERNATIONAL/GLOBAL
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
<PAGE>
BOND FUNDS
- --------------------------------------------------------------------------------
DOMESTIC TAXABLE
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
DOMESTIC TAX-FREE
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
INTERNATIONAL/GLOBAL
Global Government Bond
Emerging Markets Bond
International Bond
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
TAXABLE
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
TAX-FREE
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
<PAGE>
BLENDED ASSET FUNDS
- --------------------------------------------------------------------------------
Balanced
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
- --------------------------------------------------------------------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
** Formerly the OTC Fund.
Please call for a prospectus. Read it carefully before you invest or send money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
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 Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
<PAGE>
Internet address:
www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price Growth Stock Fund [Registration Mark].
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor. F40-051 6/30/97
