- --------------------------------------------------------------------------------
T. Rowe Price
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Semiannual Report
Growth Stock Fund
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June 30, 1998
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REPORT HIGHLIGHTS
================================================================================
Growth Stock Fund
* Stocks continued to deliver strong returns, but earnings growth has slowed
and valuations are high.
* Results for the past six and 12 months surpassed the Lipper average but
slightly lagged the S&P 500.
* Good performance versus our peers was helped by our exposure to robust
European stocks.
* Several major holdings benefited performance, but we trimmed some stocks in
favor of those with more attractive valuations.
* We believe our portfolio holdings will benefit from solid growth, but we
anticipate more moderate returns for the balance of the year.
<PAGE>
Fellow Shareholders
In the first half of 1998, U.S. stocks continued to deliver excellent
returns. However, the quality of their individual performances varied as
earnings growth slowed and problems in Asia worsened. While investors' appetite
for equities has driven valuations to high levels, this concern is eased
somewhat by the continued dominance of many U.S. companies in global markets and
strong economic growth with low inflation.
================================================================================
Performance Comparison
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Periods Ended 6/30/98 6 Months 12 Months
- --------------------------------------------------------------------------------
Growth Stock Fund 16.80% 28.75%
S&P 500 17.71 30.16
Lipper Growth
Funds Average 15.10 25.38
================================================================================
Your fund's return of 16.80% for the six months ended June 30, 1998, was
ahead of the Lipper Growth Funds Average but slightly behind the unmanaged
Standard & Poor's 500 Stock Index. Relative returns for the 12-month period
followed the same pattern, but absolute performance was robust. Most equity
funds had trouble keeping up with the broad market advance, which was led by a
narrow group of large-cap S&P 500 stocks. Many key portfolio holdings were
strong, although a few detracted from performance. The fund's exposure to the
surging European market benefited returns versus its peer group.
MARKET ENVIRONMENT
The Asian crisis took center stage in the first half and had a mixed effect
on U.S. companies. A reduced level of domestic exports and a slowdown in
activity for companies with Far East operations were the most serious negative
consequences. Also, component suppliers were hurt by lower trading volume, and
companies that sell global commodities suffered from falling prices. On a
positive note, the U.S. housing market and domestic consumers benefited from the
Asian tumult. Low interest rates led to increased home sales, which have boosted
the prices of homes in many regions, and also fueled a refinancing boom that
helped homeowners reduce their housing costs. Consumers enjoyed this benefit,
along with strong employment and growing wages.
The overall effect was lower earnings growth for U.S. companies, from
double-digit to low-single-digit levels. The general rise in share prices lifted
the price/earnings multiples of many stocks to historically high levels. Within
this positive movement, the bias was toward companies with little Far Eastern
exposure. This situation stands in sharp contrast to that of several years ago,
when a company's presence in Asia often raised the price/earnings multiple of
its stock. As one CEO recently joked in a meeting, "I used to be hard on my Far
East manager for growing his business too slowly. Now, however, since we have
very little exposure, I find him brilliant."
<PAGE>
INVESTMENT REVIEW
Several major holdings, including BERKSHIRE HATHAWAY, GE, and MICROSOFT,
contributed significantly to your fund's strong performance. Health care stocks,
such as WARNER-LAMBERT, PFIZER, and BRISTOL-MYERS SQUIBB, also added to returns.
On the international front, VODAFONE, NOKIA, RENTOKIL GROUP, FAIRFAX FINANCIAL,
and MANNESMANN rose strongly during the first half.
================================================================================
Portfolio Characteristics
- --------------------------------------------------------------------------------
Growth Stock
Domestic
As of 6/30/98 Portfolio S&P 500
- --------------------------------------------------------------------------------
Earnings Growth Rate
Past 5 Years 16.9% 15.7%
Projected 5 Years * 15.4 13.4
Dividend Growth Rate
Past 5 Years 13.3 10.8
Projected 5 Years * 12.5 11.0
Return on Equity
Past 5 Years 21.1 21.3
Long-Term Debt as
Percent of Capital 29.6 32.8
P/E Ratio (12-month forward
projected earnings) 23.4X 22.5X
* Forcasts are based on T. Rowe Price research and are in no way indicative
of future investment returns.
================================================================================
On the debit side, results were hurt by PHILIP MORRIS as the expected
tobacco settlement did not materialize. Hong Kong entertainment and leisure
stock HUTCHISON WHAMPOA and Brazilian telecommunication stock TELEBRAS also
performed poorly. We added to these positions after their prices fell, since we
feel these companies are very well placed in their markets and carry attractive
valuations.
Our biggest disappointment was CENDANT, which was negatively affected by
accounting irregularities in the first quarter. While we always attempt to
uncover these problems before they occur, we failed to anticipate the full
extent of the situation and reduced our exposure to the stock because of
continuing uncertainty surrounding the company.
PORTFOLIO MANAGEMENT
As has been true in recent years, the key drivers of stock market returns
in the first half were the large consistent growth companies. Investors
continued to be rewarded for buying and holding such stocks as GE, Pfizer,
MERCK, Microsoft, CISCO SYSTEMS, Lucent Technologies, and Coca-Cola.
[edgar description: insert sector diversification pie chart somewhere in
here showing Foreign 18%, Technology 18%, Consumer Nondurables 16%, Financial
14%, Consumer Services 9%, Capital Equipment 8%, Other 10%, Reserves 7%]
<PAGE>
While these are still great companies, their stock valuations are
historically high. We believe we can benefit shareholders over time by
selectively lowering our exposure to high-flying stocks when their prices rise
to such lofty levels. We still hold many of these new "nifty fifty" stocks in
the fund but currently find more attractive investments in other areas. We
assume an element of risk in straying away from the stocks that have continued
to lead the broad market higher, and we do so with some degree of reluctance as
we do not want to reduce the quality of our holdings. As Warren Buffett, the
chairman of one of our larger holdings, Berkshire Hathaway, stated once in an
annual letter to shareholders, it is better "to buy good businesses at a fair
price rather than fair businesses at a good price."
We agree, and during the period we added some fine companies to the
portfolio at what we believe to be attractive prices. In technology we added
several holdings, including TELLABS and CIENA, which announced a merger after we
bought them. We are excited about this combination and believe it offers
exceptional growth from the profitable sale of telecommunications equipment. We
also purchased AIRTOUCH COMMUNICATIONS, a company with a tremendous portfolio of
international cellular licenses and strong growth potential.
[Chart showing the history of the average (unweighted) P/E ratio of the
fund's U.S. portfolio companies companies compared with the P/E ratio of the S&P
500 Stock Index.]
We continued to favor pharmaceuticals, and besides adding to many existing
holdings, we initiated a position in ELI LILLY after concern about its new drug
Evista drove the share price down. The long-term outlook for the drug and the
company is excellent, in our view.
We also added several strong retailers: the shares of AUTOZONE have lost
value over the last few years and should begin to benefit from industry
consolidation and more rational store expansion by the auto parts industry; RITE
AID offers exciting growth prospects in the drugstore sector and should benefit
from consolidation in the industry.
On the sales side, we trimmed many large holdings, including Berkshire
Hathaway. We still feel comfortable about the long-term potential for the stock,
but its price had been increasing faster than its intrinsic value. We also cut
back on Pfizer and DISNEY. Among foreign stocks, we reduced our holdings in
Rentokil Group and Vodafone. Again, the fundamentals remain solid, but
valuations had risen too swiftly.
We become seriously concerned when broader fundamental issues develop
around fund holdings. For this reason we sold positions in IKON OFFICE
SOLUTIONS, ASM LITHOGRAPHY, and COMPAQ COMPUTER when company fundamentals
deteriorated.
<PAGE>
OUTLOOK
The U.S. economy should continue to grow, although at a more moderate pace
than in the first half, and a pickup in inflation does not appear likely at this
time. However, we are becoming increasingly concerned about high stock
valuations and a slowing in earnings growth. As we have stressed before, over
time the valuation of companies should rise with the growth in earnings and cash
flow.
In the environment we foresee for the second half of the year, we believe
our portfolio holdings are well positioned to benefit from solid growth in both
earnings and cash flow. However, in view of our concerns about current stock
valuations, we anticipate more moderate gains through the balance of 1998.
As always, 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 24, 1998
<PAGE>
T. Rowe Price Growth Stock Fund
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================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/98
- --------------------------------------------------------------------------------
GE ......................................................... 2.6%
Freddie Mac ................................................ 2.5
Berkshire Hathaway ......................................... 2.4
Danaher .................................................... 1.7
Bristol-Myers Squibb ....................................... 1.7
Tyco International ......................................... 1.6
Microsoft .................................................. 1.5
Royal Dutch Petroleum ...................................... 1.5
AlliedSignal ............................................... 1.5
Fannie Mae ................................................. 1.3
PartnerRe Holdings ......................................... 1.3
BMC Software ............................................... 1.2
Norwest .................................................... 1.2
Philip Morris .............................................. 1.2
WorldCom ................................................... 1.2
USA Waste Services ......................................... 1.2
Fairfax Financial .......................................... 1.2
Pfizer ..................................................... 1.2
Merck ...................................................... 1.2
Travelers Group ............................................ 1.1
ACE Limited ................................................ 1.1
Tribune .................................................... 1.1
Safeway .................................................... 1.1
UNUM ....................................................... 1.0
NationsBank ................................................ 1.0
Total ...................................................... 35.6%
================================================================================
<PAGE>
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
MAJOR PORTFOLIO CHANGES
Listed in descending order of size
6 Months Ended 6/30/98
Ten Largest Purchases
- --------------------------------------------------------------------------------
CBS *
Crescent Real Estate Equities *
Intel
Omnicom *
Bristol-Myers Squibb
AutoZone *
AirTouch Communications *
Hasbro *
Tellabs *
Adobe Systems *
Ten Largest Sales
- --------------------------------------------------------------------------------
Berkshire Hathaway
COMPAQ Computer **
Nokia
Interpublic Group **
Network Associates
Rentokil Group
ASM Lithography **
TriMas ***
Zeneca Group
Dillards **
* Position added
** Position eliminated
*** Acquired by another company
<PAGE>
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
[ Growth Stock SEC graph shown here]
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.
================================================================================
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 6/30/98 1 Year 3 Years 5 Years 10 Years
Growth Stock Fund 28.75% 26.55% 21.44% 16.53%
================================================================================
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>
T. Rowe Price Growth Stock Fund
- ------------------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
6 Months Year
Ended Ended
6/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ...................... $ 28.99 $ 26.18 $ 23.35 $ 18.75 $ 20.42 $ 18.66
Investment activities
Net investment income ............ 0.12 0.23 0.19 0.23 0.18 0.17
Net realized and
unrealized gain (loss) ........... 4.75 6.65 4.89 5.57 (0.01) 2.72
Total from
investment activities ............ 4.87 6.88 5.08 5.80 0.17 2.89
Distributions
Net investment income ............ -- (0.20) (0.19) (0.23) (0.18) (0.14)
Net realized gain ................ -- (3.87) (2.06) (0.97) (1.66) (0.99)
Total distributions .............. -- (4.07) (2.25) (1.20) (1.84) (1.13)
NET ASSET VALUE
End of period ............................ $ 33.86 $ 28.99 $ 26.18 $ 23.35 $ 18.75 $ 20.42
Ratios/Supplemental Data
Total returns ............................ 16.80% 26.57% 21.70% 30.97% 0.89% 15.56%
Ratio of expenses to
average net assets ....................... 0.74%+ 0.75% 0.77% 0.80% 0.81% 0.82%
Ratio of net investment
income to average
net assets ............................... 0.77%+ 0.75% 0.74% 1.09% 0.91% 0.86%
Portfolio turnover rate .................. 26.4% 40.9% 49.0% 42.5% 54.0% 35.3%
Net assets, end of period
(in millions) ............................ $ 4,677 $ 3,988 $ 3,431 $ 2,762 $ 2,068 $ 1,976
<FN>
s 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.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
================================================================================
Portfolio of Investments
- --------------------------------------------------------------------------------
Shares/Par Value
In thousands
Common Stocks and Warrants 92.5%
FINANCIAL 17.1%
Bank and Trust 5.7%
BANC ONE ......................................... 400,000 $ 22,325
Citicorp ......................................... 260,000 38,805
First Union ...................................... 650,000 37,863
Mellon Bank ...................................... 225,000 15,666
NationsBank ...................................... 610,625 46,713
Northern Trust ................................... 180,000 13,719
Norwest .......................................... 1,550,000 57,931
Wells Fargo ...................................... 85,000 31,365
264,387
Insurance 4.1%
ACE Limited ...................................... 1,350,000 52,650
Aetna ............................................ 100,000 7,612
PartnerRe Holdings ............................... 825,409 42,096
PartnerRe Holdings, Warrants, 11/4/00 * .......... 531,665 18,210
Travelers Property Casualty (Class A) ............ 550,000 23,581
UNUM ............................................. 850,000 47,175
191,324
Financial Services 7.3%
AMBAC ............................................ 450,000 26,325
Fairfax Financial (CAD) * ........................ 140,500 54,804
Fannie Mae ....................................... 1,020,400 61,989
Freddie Mac ...................................... 2,520,000 118,597
H&R Block ........................................ 300,000 12,638
SLM Holding ...................................... 325,000 15,925
Travelers Group .................................. 882,600 53,508
343,786
Total Financial .................................. 799,497
CONSUMER NONDURABLES 16.4%
Beverages 0.9%
PepsiCo .......................................... 1,050,000 43,247
43,247
<PAGE>
Food Processing 0.6%
Sara Lee ......................................... 500,000 $27,969
27,969
Hospital Supplies/Hospital Management 2.0%
HealthSouth * .................................... 1,700,000 45,369
United HealthCare ................................ 721,600 45,821
91,190
Biotechnology 1.3%
Biogen * ......................................... 575,000 28,175
Genentech * ...................................... 500,000 33,937
62,112
Pharmaceuticals 8.0%
American Home Products ........................... 800,000 41,400
Bristol-Myers Squibb ............................. 684,800 78,709
Eli Lilly ........................................ 350,000 23,122
Johnson & Johnson ................................ 465,000 34,294
Merck ............................................ 405,000 54,169
Novartis (CHF) ................................... 13,000 21,668
Pfizer ........................................... 500,000 54,344
Warner-Lambert ................................... 645,000 44,747
Zeneca Group (GBP) ............................... 520,000 22,331
374,784
Miscellaneous Consumer Products 3.6%
Cendant * ........................................ 800,000 16,700
Gillette ......................................... 360,000 20,408
Hasbro ........................................... 650,000 25,553
Mattel ........................................... 307,300 13,003
Philip Morris .................................... 1,425,900 56,145
Procter & Gamble ................................. 230,000 20,944
Service Corp. International ...................... 336,500 14,427
167,180
Total Consumer Nondurables ....................... 766,482
CONSUMER SERVICES 10.3%
Restaurants 0.4%
McDonald's ....................................... 250,000 17,250
17,250
General Merchandisers 1.5%
Circuit City Stores .............................. 148,000 $ 6,938
Fred Meyer * ..................................... 299,700 12,737
Safeway * ........................................ 1,260,000 51,266
70,941
<PAGE>
Specialty Merchandisers 3.8%
AutoZone * ....................................... 950,000 30,341
CVS .............................................. 692,100 26,949
Home Depot ....................................... 450,000 37,378
Kohl's * ......................................... 200,000 10,375
Rite Aid ......................................... 400,000 15,025
Tag Heuer (CHF) .................................. 44,195 4,195
Tag Heuer ADR .................................... 1,060,600 9,943
Wal-Mart ......................................... 700,000 42,525
176,731
Health Care Services 0.5%
Tenet Healthcare * ............................... 817,400 25,544
25,544
Entertainment and Leisure 2.0%
Carnival (Class A) ............................... 740,000 29,322
Disney ........................................... 350,000 36,772
Hilton ........................................... 750,000 21,375
Mirage Resorts * ................................. 300,000 6,394
93,863
Media and Communications 2.1%
CBS .............................................. 1,150,000 36,512
Schibsted (NOK) .................................. 583,800 9,826
Tribune .......................................... 750,000 51,609
97,947
Total Consumer Services .......................... 482,276
CONSUMER CYCLICALS 3.0%
Building and Real Estate 3.0%
Crescent Real Estate Equities, REIT .............. 1,000,000 33,625
Masco ............................................ 650,000 39,325
Security Capital U.S. Realty (Class A) * ......... 2,080,000 27,664
Starwood Hotels & Resorts, REIT .................. 800,600 38,679
Total Consumer Cyclicals ......................... 139,293
TECHNOLOGY 17.7%
Networking 0.9%
Ascend Communications * .......................... 285,000 $14,116
Cisco Systems * .................................. 316,900 29,185
43,301
Electronic Components 2.5%
Analog Devices * ................................. 1,416,666 34,797
Intel ............................................ 480,000 35,565
Linear Technology ................................ 210,000 12,666
Maxim Integrated Products * ...................... 872,000 27,659
Xilinx * ......................................... 170,000 5,785
116,472
<PAGE>
Electronic Systems 1.5%
Dell Computer * .................................. 185,000 17,165
EMC * ............................................ 640,000 28,680
Hewlett-Packard .................................. 350,000 20,956
Teradyne * ....................................... 50,000 1,337
68,138
Computer Services 1.9%
Automatic Data Processing ........................ 400,000 29,150
Cadence Design Systems * ......................... 700,000 21,875
First Data ....................................... 1,171,942 39,040
90,065
Computer Software 6.2%
Adobe Systems .................................... 395,200 16,796
BMC Software * ................................... 1,120,000 58,205
Microsoft * ...................................... 665,000 72,090
Network Associates * ............................. 600,000 28,706
Oracle * ......................................... 1,200,000 29,437
Parametric Technology * .......................... 1,600,000 43,350
PLATINUM technology * ............................ 401,700 11,486
Sterling Commerce * .............................. 565,000 27,403
287,473
Telecommunications 4.3%
AirTouch Communications * ........................ 550,000 32,141
AT&T ............................................. 270,000 15,424
Ciena * .......................................... 155,000 10,782
Cox Communications (Class A) * ................... 350,000 16,953
MCI .............................................. 600,000 $ 34,856
Nokia ADR ........................................ 50,000 3,628
Tellabs * ........................................ 450,000 32,217
WorldCom * ....................................... 1,160,000 56,079
202,080
Aerospace and Defense 0.4%
Raytheon (Class B) ............................... 325,000 19,216
19,216
Total Technology ................................. 826,745
CAPITAL EQUIPMENT 8.2%
Electrical Equipment 4.1%
AlliedSignal ..................................... 1,553,600 68,941
GE ............................................... 1,350,000 122,850
191,791
Capital Equipment 1.6%
Tyco International ............................... 1,202,450 75,754
75,754
<PAGE>
Machinery 2.5%
Danaher .......................................... 2,200,000 80,713
Honeywell ........................................ 80,000 6,685
Teleflex ......................................... 817,800 31,076
118,474
Total Capital Equipment .......................... 386,019
BUSINESS SERVICES AND
TRANSPORTATION 2.9%
Miscellaneous Business Services 2.9%
Mutual Risk Management ........................... 1,150,332 41,915
Omnicom .......................................... 800,000 39,900
USA Waste Services * ............................. 1,125,000 55,547
Total Business Services and Transportation ....... 137,362
ENERGY 3.5%
Energy Services 0.6%
Halliburton ...................................... 650,000 28,966
28,966
Integrated Petroleum - International 2.9%
Chevron .......................................... 250,000 $ 20,766
Mobil ............................................ 540,000 41,377
Royal Dutch Petroleum ADR ........................ 1,300,000 71,256
133,399
Total Energy ..................................... 162,365
PROCESS INDUSTRIES 0.6%
Paper and Paper Products 0.6%
Kimberly-Clark ................................... 600,000 27,525
Total Process Industries ......................... 27,525
BASIC MATERIALS 0.4%
Mining 0.4%
Newmont Mining ................................... 900,000 21,263
Total Basic Materials ............................ 21,263
MISCELLANEOUS 3.4%
Conglomerates 2.4%
Berkshire Hathaway (Class A) * ................... 1,420 111,193
111,193
Other Miscellaneous Common Stocks and Warrants 1.0% 48,251
Total Miscellaneous .............................. 159,444
<PAGE>
FOREIGN 9.0%
Europe 6.4%
Alcatel Alsthom (FRF) ............................ 50,000 10,181
ALCATEL ALSTHOM ADR .............................. 10,000 407
Banca Fideuram (ITL) ............................. 1,300,000 7,416
Cap Gemini (FRF) ................................. 40,000 6,286
Elsevier (NLG) ................................... 850,000 12,837
Getronics (NLG) .................................. 371,644 19,288
Granada (GBP) .................................... 1,400,000 25,760
Mannesmann (DEM) ................................. 230,000 23,657
Philips Electronics (NLG) ........................ 100,000 8,412
Rentokil Group (GBP) ............................. 3,700,000 26,627
S I G Schweis (CHF) .............................. 16,000 $ 13,049
Societe Generale (FRF) ........................... 79,917 16,616
Telecom Italia Mobile (ITL) ...................... 2,200,000 13,459
Tomkins (GBP) .................................... 6,460,000 35,082
Unilever N.V. ADR ................................ 100,000 7,894
VNU (NLG) + ...................................... 1,150,000 41,808
Vodafone (GBP) ................................... 632,500 8,032
Wolters Kluwer (NLG) ............................. 169,051 23,219
300,030
Far East 0.7%
Hutchison Whampoa (HKD) .......................... 6,142,200 32,423
32,423
Other Foreign 1.9%
Kimberly-Clark Mexico (Class a) (MXN) ............ 2,550,000 9,010
PETROBRAS ADR (144a) ............................. 550,000 10,175
Telebras ADR ..................................... 304,300 33,226
Toronto-Dominion Bank ............................ 650,000 29,453
TV Azteca ADR .................................... 515,000 5,569
87,433
Total Foreign .................................... 419,886
Total Common Stocks and Warrants (Cost $2,443,285) 4,328,157
Preferred Stocks 0.1%
Banco Bradesco (BRL) ............................. 600,000,000 5,032
Total Preferred Stocks (Cost $2,027) ............. 5,032
Short-Term Investments 7.9%
Money Market Funds 7.9%
Reserve Investment Fund, 5.69% + # ............... 368,146,643 368,147
Total Short-Term Investments (Cost $368,147) ..... 368,147
Total Investments in Securities
100.5% of Net Assets (Cost $2,813,459) ........... $ 4,701,336
Other Assets Less Liabilities .................... (24,206)
<PAGE>
NET ASSETS ....................................... $ 4,677,130
+ Affiliated company
* Non-income producing
# Seven-day yield
ADR American Depository Receipt
REIT Real Estate Investment Trust
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
0.22% of net assets.
BRL Brazilian real
CAD Canadian dollar
CHF Swiss franc
DEM German deutschemark
FRF French franc
GBP British sterling
HKD Hong Kong dollar
ITL Italian lira
MXN Mexican peso
NLG Dutch guilder
NOK Norwegian krone
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
================================================================================
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value
Affiliated companies (cost $387,510) .................... $ 409,955
Other companies (cost $2,425,949) ....................... 4,291,381
Total investments in securities ......................... 4,701,336
Other assets .................................................... 32,516
Total assets .................................................... 4,733,852
Liabilities
Total liabilities ............................................... 56,722
NET ASSETS ...................................................... $4,677,130
Net Assets Consist of:
Accumulated net investment income - net of distributions ........ $ 21,613
Accumulated net realized gain/loss - net of distributions ....... 523,300
Net unrealized gain (loss) ...................................... 1,887,874
Paid-in-capital applicable to 138,113,511 shares of
$1.00 par value capital stock outstanding;
200,000,000 shares authorized ................................... 2,244,343
NET ASSETS ...................................................... $4,677,130
NET ASSET VALUE PER SHARE ....................................... $ 33.86
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Unaudited
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/98
Investment Income
Income
Dividend ............................................. $ 22,564
Interest ............................................. 10,593
Total income ......................................... 33,157
Expenses
Investment management ................................ 12,544
Shareholder servicing ................................ 3,294
Custody and accounting ............................... 179
Prospectus and shareholder reports ................... 138
Registration ......................................... 21
Legal and audit ...................................... 11
Directors ............................................ 9
Miscellaneous ........................................ 26
Total expenses ....................................... 16,222
Net investment income ........................................ 16,935
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ........................................... 384,404
Foreign currency transactions ........................ (490)
Net realized gain (loss) ............................. 383,914
Change in net unrealized gain or loss
Securities ........................................... 269,425
Other assets and liabilities
denominated in foreign currencies .................... 39
Change in net unrealized gain or loss ................ 269,464
Net realized and unrealized gain (loss) ...................... 653,378
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ....................................... $ 670,313
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Unaudited
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/98 12/31/97
Increase (Decrease) in Net Assets
Operations
Net investment income .................... $ 16,935 $ 28,945
Net realized gain (loss) ................. 383,914 582,134
Change in net unrealized gain or loss .... 269,464 295,330
Increase (decrease) in net assets
from operations .......................... 670,313 906,409
Distributions to shareholders
Net investment income .................... -- (24,428)
Net realized gain ........................ -- (472,912)
Decrease in net assets from distributions -- (497,340)
Capital share transactions *
Shares sold .............................. 292,898 435,680
Distributions reinvested ................. -- 469,793
Shares redeemed .......................... (274,479) (756,953)
Increase (decrease) in net assets
from capital
share transactions ....................... 18,419 148,520
Net Assets
Increase (decrease) during period ................ 688,732 557,589
Beginning of period .............................. 3,988,398 3,430,809
End of period .................................... $ 4,677,130 $ 3,988,398
*Share information
Shares sold .............................. 9,152 14,940
Distributions reinvested ................. -- 16,507
Shares redeemed .......................... (8,611) (24,930)
Increase (decrease) in shares outstanding 541 6,517
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
================================================================================
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.
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.
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.
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.
AFFILIATED COMPANIES As defined by the Investment Company Act of 1940, an
affiliated company is one in which the fund owns at least 5% of the outstanding
voting securities.
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.
<PAGE>
OTHER Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $1,074,407,000 and $1,124,583,000, respectively, for the
six months ended June 30, 1998.
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, 1998, the aggregate cost of investments for federal income
tax and financial reporting purposes was $2,813,459,000, and net unrealized gain
aggregated $1,887,877,000, of which $1,926,112,000 related to appreciated
investments and $38,235,000 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 $2,154,000 was payable at June 30, 1998. 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% for the
first $1 billion of assets to 0.30% for assets in excess of $80 billion. At June
30, 1998, 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. (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. The fund incurred expenses pursuant to these
related party agreements totaling approximately $2,835,000 for the six months
ended June 30, 1998, of which $604,000 was payable at period-end.
<PAGE>
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 7.8 % of the outstanding shares of the Growth Stock Fund at June
30, 1998. For the six months then ended, the fund was allocated $413,000 of
Spectrum expenses, $165,000 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, 1998, totaled
$9,666,000 and are reflected as interest income in the accompanying Statement of
Operations.
During the six months ended June 30, 1998, the fund, in the ordinary
course of business, placed security purchase and sale orders aggregating
$5,502,000 with certain affiliates of the manager and paid commissions of
$28,000 related thereto.
<PAGE>
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE Shareholder service representatives are available from 8 a.m.
to 10 p.m. ET Monday through Friday and from 8:30 a.m. to 5 p.m. ET on
weekends. Call 1-800-225-5132 to speak directly with a representative
who will be able to assist you with your accounts.
IN PERSON Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. You
can also drop off applications or obtain prospectuses and other
literature at these centers.
AUTOMATED 24-HOUR SERVICES
TELE*ACCESS [REGISTRATION MARK] Call 1-800-638-2587 to obtain
information such as account balance, date and amount of your last
transaction, latest dividend payment, fund prices, and yields.
Additionally, you have the ability to request prospectuses,
statements, and account and tax forms; to reorder checks; and to
initiate purchase, redemption, and exchange orders for identically
registered accounts.
INTERNET. T. Rowe Price Web site: www.troweprice.com All the
information and services available on Tele*Access are available on our
Web site, including transactions in your fund and Discount Brokerage
accounts (with preauthorized access).
ACCOUNT SERVICES
CHECKING Write checks for $500 or more on any money market and most
bond fund accounts (except the High Yield and Emerging Markets Bond
Funds).
AUTOMATIC INVESTING Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder.
Additionally, Automatic Exchange enables you to set up systematic
investments from one fund account into another, such as from a money
fund into a stock fund. A $50 minimum makes it easy to get started.
AUTOMATIC WITHDRAWAL If you need money from your fund account on a
regular basis, you can establish scheduled, automatic redemptions.
DIVIDEND AND CAPITAL GAINS PAYMENT OPTIONS Reinvest all or some of
your distributions, or take them in cash. We give you maximum
flexibility and convenience.
<PAGE>
DISCOUNT BROKERAGE*
INVESTMENTS AVAILABLE You can trade stocks, bonds, options, precious
metals, mutual funds, and other securities at a savings over regular
commission rates.
TO OPEN AN ACCOUNT Call a shareholder service representative for more
information.
Investment Information
COMBINED STATEMENT A comprehensive overview of your T. Rowe Price
accounts is provided. The summary page gives you earnings by tax
category, provides total portfolio value, and lists your investments
by type. Detail pages itemize account transactions.
SHAREHOLDER REPORTS Portfolio managers review the performance of the
funds in plain language and discuss T. Rowe Price's economic outlook.
T. ROWE PRICE REPORT This is a quarterly newsletter with relevant
articles on market trends, personal financial planning, and T. Rowe
Price's economic perspective.
PERFORMANCE UPDATE This quarterly report reviews recent market
developments and provides comprehensive performance information for
every T. Rowe Price fund.
INSIGHTS This library of information includes reports on mutual fund
tax issues, investment strategies, and financial markets.
DETAILED INVESTMENT GUIDES Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Diversifying Overseas: A Guide to International
Investing, Retirees Financial Guide, and Retirement Planning Kit (also
available on disk or CD-ROM for PC use) can help you determine and
reach your investment goals.
*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 500*
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications**
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era New Horizons***
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value***
Spectrum Growth
Total Equity Market Index
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
Emerging Markets Bond
Global 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 Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
- --------------------------------------------------------------------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Formerly named Equity Index.
** Formerly the closed-end New Age Media Fund. Converted to open-end status on
7/28/97.
*** Closed to new investors.
+ Formerly named Global Government Bond.
++ Neither the funds nor their share prices are insured or guaranteed by the
U.S. government.
Please call for a prospectus. Read it carefully before investing.
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.
<PAGE>
T. Rowe Price Discount Brokerage
- --------------------------------------------------------------------------------
DISCOUNT BROKERAGE
A Division of T. Rowe Price Investment Services, Inc., Member NASD/SIPC
This low-cost service gives you the opportunity to easily consolidate all
your investments with one company. Through T. Rowe Price Discount
Brokerage, you can buy and sell individual securities-stocks, bonds,
options, and others-as well as mutual funds at considerable commission
savings over full-service brokers.* We also provide a wide range of
services, including:
AUTOMATED TELEPHONE and Internet Services You can enter trades, access
quotes, and review account information 24 hours a day, seven days a week.
Any trades executed through these programs provide additional savings on
commissions.**
INVESTOR INFORMATION A variety of informative reports, such as our
Brokerage Insights series, S&P Market Month newsletter, and select stock
reports, can help you better evaluate economic trends and investment
opportunities.
DIVIDEND REINVESTMENT Service Virtually all stocks held in customer
accounts are eligible for this service, free of charge.
* Based on an April 1998 survey for representative-assisted stock trades.
Services vary by firm, and commissions may vary by size of order.
** Discount applies to our current commission schedule. All trades subject to
a $35 minimum commission except equity trades placed through
Internet-Trader, which are subject to a $29.95 minimum commission.
<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 DISCOUNT BROKERAGE
ACCOUNT OR OBTAIN INFORMATION,
CALL: 1-800-638-5660 toll free
INTERNET ADDRESS:
www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price 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 6/30/98
