Semiannual Report
Growth
Stock
Fund
June 30, 2000
T. Rowe Price
Report Highlights
--------------------------------------------------------------------------------
Growth Stock Fund
o Reality returned to the stock market, but your fund bucked the sell-off
and posted solid returns.
o The fund outpaced the S&P 500 and the Lipper Growth Funds Average due to
its focus on wireless communications, semiconductor, and pharmaceutical
stocks.
o Our belief that true value emerges over time bore fruit when market
sentiment shifted to financially sound companies in recent months.
o We added several new holdings to the portfolio and took profits in Yahoo!
and America Online.
o Stocks may feel some pressure short term, but we are optimistic about the
growth potential of our holdings.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
Fellow Shareholders
Some say the only thing that's constant is change, and we are inclined to agree
after observing the shifting landscape in the stock market during the past six
months. Last year ended on a note of Internet euphoria, but it faded in the new
year as investors rigorously evaluated corporate earnings and subsequently
reevaluated stock prices. In addition, several quarters of strong economic
growth fueled concerns about higher inflation and interest rates. In short, a
welcome realism returned to the stock market, although we are happy to report
that your fund bucked the downdraft and posted solid returns for the first half
of 2000.
Performance Comparison
--------------------------------------------------------------------------------
Periods Ended 6/30/00 6 Months 12 Months
--------------------------------------------------------------------------------
Growth Stock Fund 8.15% 21.70%
S&P 500 -0.43 7.24
Lipper Growth Funds
Average 3.04 19.61
The first half of the year was particularly volatile, highlighted by a
steep correction in April following a strong rally in the first quarter of
the year. However, in the face of the severe sell-off, which damaged many
equities sectors, your fund returned 8.15% for the six-month period, well
ahead of the unmanaged Standard & Poor's 500 Stock Index and the Lipper
Growth Funds Average. For the 12 months ended June 30, fund results far
surpassed the broad S&P 500 but were more in line with our peer group
average. Our strong return for the half year was driven by our investments
in wireless communications, semiconductor, and pharmaceutical companies.
MARKET ENVIRONMENT
Two trends emerged in the last six months that should reward your portfolio
over time. The first was a return to saner measures of valuation. The
second was a slight deceleration in economic growth. Benjamin Graham, one
of the most influential investment philosophers of the 20th century, once
said that in the short term the market is a voting machine, and in the long
term it is a weighing machine. He meant that short-term swings reflect the
passing whims of investors, while value finds its true level over time.
Since we are long-term investors who buy the stocks of companies we believe
in, we attempt to "weigh" the value of companies by using the best measure
we know of: current and future cash generation. There are times when the
short-term voting machine puts its faith in a different set of investment
characteristics, and last year was one of those times. During such periods,
long-term investors who understand the benefit of sound financial
underpinnings for a company can only scratch their heads and try to
position themselves for the eventual emergence of true value. Fortunately,
during the past six months, the market began to swing toward our view of
market valuations, and your portfolio was rewarded. While only time will
tell whether this trend will continue, we are confident that Ben Graham's
famous dictum is as valid today as it was in the early 1900s.
Portfolio Characteristics
--------------------------------------------------------------------------------
Growth Stock
Domestic
As of 6/30/00 Portfolio S&P 500
--------------------------------------------------------------------------------
Earnings Growth Rate
Past 5 Years 19.0% 15.4%
Projected 5 Years * 19.5 14.7
Dividend Growth Rate
Past 5 Years 13.0 11.0
Projected 5 Years * 10.0 10.5
Return on Equity
Past 5 Years 23.9 25.7
Long-Term Debt as
Percent of Capital 21.3 24.1
P/E Ratio (12-month forward
projected earnings) 36.7X 30.0X
* Forecasts are based on T. Rowe Price research and are in no way indicative
of future investment returns.
The economy appears to be cooling somewhat, and cost inflation seems to be
rising while market prices remain stable, except for oil and some petroleum
derivatives. When the waters get choppy and the sky grows dark, the premium
increases for a good captain with sound navigation skills to weather the
passing storm. We will not always get it right, but we are confident that
the companies in your portfolio are run exceedingly well and should
continue to shine in the coming months.
Outside of the U.S., economic growth appears to be increasing, while
political deregulation of the economy should keep inflation in check. We
view this as a positive sign for large-cap growth companies, since they
tend to be more global in nature than their smaller-cap brethren.
INVESTMENT REVIEW
Last year ended with extremely narrow stock leadership, but performance
broadened considerably in the first six months of 2000. In the growth
universe that we inhabit, pharmaceuticals and HMOs reversed their early
1999 declines with strong results. Optical infrastructure and
semiconductors drove the powerful move in the technology sector.
Biotechnology and associated equipment providers also posted strong
returns.
Sector Diversification
--------------------------------------------------------------------------------
Technology 44
Consumer Nondurables 15
Financial 13
Consumer Services 13
Energy 4
Conglomerates 3
Other 5
Reserves 3
Based on net assets as of 6/30/00.
The key to your fund's sound performance over the past six months was our
focus on several macroeconomic trends that we saw developing, and our
avoidance of problems specific to individual companies. As a result, your
portfolio performed well overall, although it was not devoid of blemishes.
During the last 12 months, we turned our attention to providers of cellular
equipment and services and built positions in Nextel Communications, Texas
Instruments, and Samsung Electronics. We invested in the explosive growth
of optical infrastructure with Corning, Nortel Networks, JDS Uniphase, and
SDL. We added Waters Corporation and MedImmune in the biotech area.
Around these core moves, we attempted to take advantage of the market's
fickleness by buying companies we like when their stock valuations finally
looked reasonable to us. Pursuing this theme, we added State Street to the
portfolio, bought and sold Yahoo! and America Online, and purchased newer
growth companies like Ariba and Siebel Systems when the market corrected in
early spring.
While we still struggle with the valuations and future prospects of many
New Economy companies, we do feel that change is constant and shifting
market currents need to be recognized. Accordingly, we will consider owning
more of these companies when their future appears clearer to us, and their
stock valuations have more solid financial underpinnings to support them.
(See the chart on the next page for the average P/E ratio of the fund's
U.S. stocks compared with that of the S&P 500.)
Growth Stock Fund P/E Relative to the S&P 500 P/E
6/75 1.429
1.320
1.439
1.349
1.320
1.330
1.295
1.218
1.224
1.207
1.215
1.219
1.263
1.193
1.145
1.090
1.118
1.061
1.025
1.088
6/80 1.111
1.195
1.295
1.313
1.312
1.426
1.267
1.235
1.186
1.286
1.483
1.522
1.424
1.500
1.473
1.264
1.233
1.103
1.185
1.196
6/85 1.216
1.171
1.226
1.204
1.163
1.122
1.106
1.108
1.000
1.063
1.024
0.992
1.066
1.105
1.191
1.207
1.153
1.209
1.028
1.000
6/90 1.035
0.944
0.985
1.072
1.007
1.026
1.144
1.152
1.019
1.019
1.122
1.054
1.055
1.072
1.149
1.086
1.118
1.170
1.316
1.196
6/95 1.145
1.130
1.133
1.147
1.090
1.120
1.085
1.074
1.016
1.025
0.950
0.986
1.005
0.967
1.019
1.019
1.046
1.086
1.067
1.111
6/00 1.26
This chart shows the history of the average (unweighted) price/earnings (P/E)
ratio of the fund's U.S. portfoliocompanies compared with the P/E ratio of the
S&P 500 Stock Index. The line labeled 1.0 represents the P/E ratioof the S&P 500
while the dark blue line is the fund's P/E. At the end of June, the fund's P/E
ratio was 1.26 versus 1.00 for the index, or 26% higher than the S&P 500's P/E
ratio.
OUTLOOK
As we enter the last six months of 2000, it seems to us that the long series of
rate hikes by the Federal Reserve is succeeding in slowing the economy from its
robust pace without tipping it into recession. Over the near term, with
uncertainty about the future of interest rates still in the air, stocks may
experience a bit of pressure. Longer term, however, a smooth transition to
slower growth will be beneficial. Risk was a word that was given little
consideration in 1999, but investors have rediscovered its meaning as we
progress through the year 2000.
We believe the U.S. economy will continue on its healthy path and that
inflation, while rising in recent months, should remain contained at an
acceptable level. We will continue to monitor the health of your holdings, and
we remain optimistic about their growth prospects.
As always, we will work diligently on your behalf in our search for attractive
investments, both here and abroad.
Respectfully submitted,
Robert W. Smith
Chairman of the Investment Advisory Committee
July 21, 2000
T. Rowe Price Growth Stock Fund
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Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/00
----------------------------------------------------------------------------
Pfizer 3.3%
Cisco Systems 2.7
Microsoft 2.5
Tyco International 1.9
GE 1.8
----------------------------------------------------------------------------
Citigroup 1.8
Intel 1.7
Freddie Mac 1.7
Dell Computer 1.7
WorldCom 1.7
----------------------------------------------------------------------------
Corning 1.7
Oracle 1.6
Vodafone 1.6
Flextronics International 1.3
Nextel Communications 1.3
----------------------------------------------------------------------------
Safeway 1.3
JDS Uniphase 1.2
Eli Lilly 1.2
Baxter International 1.2
Viacom 1.2
----------------------------------------------------------------------------
Wal-Mart 1.2
Nortel Networks 1.2
Royal Dutch Petroleum 1.1
Applied Materials 1.1
ACE Limited 1.1
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Total 40.1%
Note: Table excludes reserves.
T. Rowe Price Growth Stock Fund
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MAJOR PORTFOLIO CHANGES
(Listed in descending order of size)
6 Months Ended 6/30/00
Ten Largest Purchases
---------------------------------------------------------------------------
AT&T*
Nortel Networks*
Pharmacia & Upjohn***
Siebel Systems*
NEXTLINK Communications*
WorldCom
Samsung Electronics*
Ariba*
Sprint PCS*
Microsoft
Ten Largest Sales
---------------------------------------------------------------------------
3Com**
MediaOne Group***
AT&T**
Telecom Italia Mobile**
Lucent Technologies**
Computer Associates
Corning
Citrix Systems**
Tyco International
Citigroup
* Position added
** Position eliminated
*** Acquired by another company
T. Rowe Price Growth Stock Fund
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Performance Comparison
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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 benchmarks, which may include
a broad-based market index and a peer group average or index. Market
indexes do not include expenses, which are deducted from fund returns as
well as mutual fund averages and indexes.
Growth Stock Fund - SECchart
---------------------------------------------------------------------------
S&P Stock Growth Stock
Index Fund
6/30/90 10,000 10,000
6/91 10,739 10,093
6/92 12,180 111,507
6/93 13,840 13,201
6/94 14,034 14,127
6/95 17,694 17,203
6/96 22,294 20,863
6/97 30,030 27,078
6/98 39,088 34,862
6/99 47,983 41,279
6/00 51,459 50,237
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 6/30/00 1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------------
Growth Stock Fund 21.70% 22.88% 23.90% 17.52%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
T. Rowe Price Growth Stock Fund
Unaudited
For a share outstanding throughout each period
Financial Highlights
--------------------------------------------------------------------------------
6 Months Year
Ended Ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 33.27 $ 32.07 $ 28.99 $ 26.18 $ 23.35 $ 18.75
Investment activities
Net investment
income (loss) 0.02 0.11 0.22 0.23 0.19 0.23
Net realized and
unrealized gain
(loss) 2.69 6.61 7.38 6.65 4.89 5.57
Total from
investment activities 2.71 6.72 7.60 6.88 5.08 5.80
Distributions
Net investment
income -- (0.10) (0.25) (0.20) (0.19) (0.23)
Net realized gain -- (5.42) (4.27) (3.87) (2.06) (0.97)
Total distributions -- (5.52) (4.52) (4.07) (2.25) (1.20)
NET ASSET VALUE
End of period $ 35.98 $ 33.27 $ 32.07 $ 28.99 $ 26.18 $ 23.35
----------------------------------------------------------
Ratios/Supplemental Data
Total return(diamond) 8.15% 22.15% 27.41% 26.57% 21.70% 30.97%
Ratio of total expenses
to average net assets 0.73%! 0.74% 0.74% 0.75% 0.77% 0.80%
Ratio of net investment
income (loss) to average
net assets 0.13%! 0.31% 0.67% 0.75% 0.74% 1.09%
Portfolio
turnover rate 77.5%! 55.8% 54.8% 40.9% 49.0% 42.5%
Net assets, end of period
(in millions) $ 6,043 $ 5,672 $ 5,041 $ 3,988 $3 ,431 $ 2,762
(diamond) Total return reflects the rate that an investor would have earned on
an investment in the fund during each period, assuming reinvestment
of all distributions.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth Stock Fund
--------------------------------------------------------------------------------
Unaudited June 30, 2000
Statement of Net Assets Shares/Per Value
--------------------------------------------------------------------------------
In Thousands
Common Stocks 96.8%
FINANCIAL 12.6%
Bank and Trust 2.7%
Bank of New York 1,060,000 $ 49,290
Chase Manhattan 262,500 12,091
Firstar 2,200,000 46,337
Mellon Financial 950,000 34,616
Wells Fargo 600,000 23,250
165,584
Insurance 2.0%
ACE Limited 2,400,000 67,200
Hartford Financial Services Group 600,000 33,562
Mutual Risk Management 585,332 10,134
PartnerRe 237,209 8,406
119,302
Financial Services 7.9%
AMBAC Financial Group 200,000 10,963
Associates First Capital (Class A) 1,206,500 26,920
Capital One Financial 955,000 42,617
Citigroup 1,816,300 109,432
Fairfax Financial Holdings (CAD) * 70,400 7,706
Fannie Mae 920,400 48,033
Freddie Mac 2,525,000 102,263
Kansas City Southern Industries 380,000 33,701
Morgan Stanley Dean Witter 500,000 41,625
Providian Financial 280,000 25,200
State Street 260,000 27,576
476,036
Total Financial 760,922
UTILITIES 1.7%
Telephone 1.7%
WorldCom * 2,185,400 100,324
Total Utilities 100,324
CONSUMER NONDURABLES 14.5%
Beverages 1.4%
Coca-Cola 500,000 $ 28,719
PepsiCo 1,251,300 55,604
84,323
Hospital Supplies/Hospital Management 3.1%
Baxter International 1,000,000 70,312
UnitedHealth Group 704,300 60,394
Wellpoint Health Networks * 780,000 56,501
187,207
Biotechnology 1.8%
Amgen * 250,000 17,570
Genetech * 295,000 50,740
MedImmune * 543,900 40,232
108,542
Pharmaceuticals 7.4%
American Home Products 800,000 47,000
Bristol-Myers Squibb 434,600 25,316
Eli Lilly 725,000 72,409
Merck 290,000 22,221
Pfizer 4,111,250 197,340
Pharmacia 1,018,000 52,618
Schering-Plough 670,000 33,835
450,739
Miscellaneous Consumer Products 0.8%
Gillette 450,000 15,722
Philip Morris 1,150,900 30,571
46,293
Total Consumer Nondurables 877,104
CONSUMER SERVICES 12.8%
Restaurants 0.1%
McDonald's 200,000 6,588
6,588
General Merchandisers 2.6%
Circuit City Stores 600,000 19,913
Kroger * 1,599,400 35,287
Safeway * 1,675,400 $ 75,602
Target 425,000 24,650
155,452
Specialty Merchandisers 3.7%
CVS 1,297,100 51,884
Home Depot 1,080,000 53,933
Lowes 625,000 25,664
Wal-Mart 1,210,000 69,726
Wal-Mart de Mexico ADR * 1,000,000 23,875
225,082
Entertainment and Leisure 1.0%
MGM Grand + * 1,300,773 39,698
Starwood Hotels & Resorts Worldwide, REIT 640,900 20,869
60,567
Media and Communications 5.4%
AT&T Liberty Media * 1,740,000 42,195
Clear Channel Communications * 469,100 35,182
Comcast (Class A Special) * 1,575,000 63,837
Infinity Broadcasting (Class A) * 1,005,700 36,645
Omnicom 430,000 38,297
Time Warner 320,000 24,320
Viacom (Class B) * 1,030,750 70,284
VNU (EUR) 327,900 16,936
327,696
Total Consumer Services 775,385
CONSUMER CYCLICALS 0.2%
Building and Real Estate 0.2%
Masco 724,700 13,090
Total Consumer Cyclicals 13,090
TECHNOLOGY 41.1%
Networking 2.7%
Cisco Systems * 2,551,400 162,094
162,094
Electronic Components 8.1%
Altera * 575,000 58,596
Atmel * 450,000 16,594
Intel 775,000 $ 103,583
Kyocera (JPY) 159,000 26,958
Maxim Integrated Products * 882,800 59,948
Philips Electronics (EUR) * 1,409,200 66,461
PMC-Sierra * 160,100 28,443
Samsung Electronics (KRW) 117,900 39,017
Sony (JPY) 331,000 30,883
Texas Instruments 823,800 56,585
487,068
Electronic Systems 6.9%
Applied Materials * 750,000 67,992
Dell Computer * 2,050,000 101,155
Flextronics International * 1,150,000 79,027
Hewlett-Packard 300,000 37,462
Lexmark International (Class A) * 127,700 8,588
PE Biosystems 267,200 17,602
Solectron * 1,520,000 63,650
Waters * 357,200 44,583
420,059
Specialized Computer 0.5%
Sun Microsystems * 355,000 32,294
32,294
Aerospace and Defense 0.4%
United Technologies 375,000 22,078
22,078
Computer Services 4.4%
America Online * 1,220,000 64,355
Automatic Data Processing 950,000 50,884
Ceridian * 850,000 20,453
Computer Associates 350,000 17,916
Concord EFS * 1,050,000 27,300
First Data 1,180,000 58,558
Yahoo! * 230,200 28,523
267,989
Computer Software 8.1%
Ariba * 494,600 48,502
BMC Software * 1,150,000 41,939
Electronic Arts * 358,400 26,152
Microsoft * 1,875,000 $ 149,941
Oracle * 1,150,000 96,636
Peregrine Systems * 290,000 10,096
Siebel Systems * 320,000 52,350
Softbank (JPY) 65,800 8,930
VERITAS Software * 470,000 53,095
487,641
Wireless & Alternative Telecommunications 4 1%
Nextel Communications * 1,240,000 75,834
NEXTLINK Communications * 920,000 34,874
Sprint PCS * 700,000 41,650
Vodafone Airtouch (GBP) 18,500,000 75,439
Vodafone Airtouch PLC ADR 494,000 20,470
248,267
Telecom Equipment 5.9%
Corning 370,100 99,881
JD Uniphase * 611,000 73,224
LM Ericsson (Class B) (SEK) 1,572,000 31,101
Nokia ADR 1,070,000 53,433
Nortel Networks 1,020,000 69,615
SDL * 96,700 27,581
354,835
Total Technology 2,482,325
CAPITAL EQUIPMENT 2.4%
Electrical Equipment 1.8%
GE 2,070,000 109,710
109,710
Machinery 0.6%
Danaher 500,000 24,719
Teleflex 335,400 12,431
37,150
Total Capital Equipment 146,860
BUSINESS SERVICES AND
TRANSPORTATION 1.0%
Distribution Services 0.3%
Compass Group (GBP) 1,500,000 $ 19,757
19,757
Miscellaneous Business Services 0.7%
Randstad Holdings (EUR) 1,054,800 39,022
39,022
Total Business Services and Transportation 58,779
ENERGY 3.8%
Energy Services 0.9%
Baker Hughes 1,600,000 51,200
51,200
Integrated Petroleum - International 2.9%
Chevron 600,000 50,887
Exxon Mobil 740,687 58,144
Royal Dutch Petroleum 1,105,000 68,027
177,058
Total Energy 228,258
PROCESS INDUSTRIES 0.3%
Paper and Paper Products 0.3%
Kimberly-Clark 320,000 18,360
Total Process Industries 18,360
MISCELLANEOUS 6.4%
Conglomerates 3.0%
Hutchison Whampoa (HKD) 4,400,000 55,314
Tomkins (GBP) 4,140,100 13,437
Tyco International 2,440,100 115,600
184,351
Other Miscellaneous Common Stocks 3.4% 204,244
Total Miscellaneous 388,595
Total Common Stocks (Cost $3,713,067) 5,850,002
Convertible Bonds 0.2%
E*Trade, (144a), 6.00%, 2/1/07 $14,000,000 $ 12,705
Total Convertible Bonds (Cost $14,000) 12,705
Short-Term Investments 3.1%
Money Market Funds 3.1%
Reserve Investment Fund, 6.68%, # ! 187,254,089 187,254
Total Short-Term Investments (Cost $187,254) 187,254
Total Investments in Securities
100.1% of Net Assets (Cost $3,914,321) $6,049,961
Other Assets Less Liabilities (6,973)
NET ASSETS $6,042,988
----------
Net Assets Consist of:
Accumulated net investment income -
net of distributions $ 4,741
Accumulated net realized gain/loss -
net of distributions 788,695
Net unrealized gain (loss) 2,135,687
Paid-in-capital applicable to 167,957,624 shares
of $1.00 par value capital stock outstanding;
200,000,000 shares authorized 3,113,865
NET ASSETS $6,042,988
----------
NET ASSET VALUE PER SHARE $ 35.98
----------
# Seven-day yield
! Affiliated company
* Non-income producing
+ Private placement
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
0.2% of net assets.
ADR American Depository Receipt
REIT Real Estate Investment Trust
CAD Canadian dollar
EUR Euro
GBP British sterling
HKD Hong Kong dollar
JPY Japanese yen
KRW South Korean won
SEK Swedish krona
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth Stock Fund
--------------------------------------------------------------------------------
Unaudited
Statement of Operations
--------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/00
Investment Income (Loss)
Income
Dividend $ 19,114
Interest (including $5,074,000 from affiliates) 5,557
Total income 24,671
Expenses
Investment management 16,196
Shareholder servicing 4,406
Custody and accounting 214
Prospectus and shareholder reports 107
Registration 18
Directors 9
Legal and audit 7
Miscellaneous 21
Total expenses 20,978
Expenses paid indirectly (5)
Net expenses 20,973
Net investment income (loss) 3,698
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 586,767
Foreign currency transactions (1,419)
Net realized gain (loss) 585,348
Change in net unrealized gain or loss
Securities (134,608)
Other assets and liabilities
denominated in foreign currencies 57
Change in net unrealized gain or loss (134,551)
Net realized and unrealized gain (loss) 450,797
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 454,495
----------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth Stock Fund
--------------------------------------------------------------------------------
Unaudited
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/00 12/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 3,698 $ 15,897
Net realized gain (loss) 585,348 818,030
Change in net unrealized gain or loss (134,551) 222,474
Increase (decrease) in net
assets from operations 454,495 1,056,401
Distributions to shareholders
Net investment income -- (14,697)
Net realized gain -- (795,142)
Decrease in net assets from distributions -- (809,839)
Capital share transactions *
Shares sold 392,015 572,132
Distributions reinvested -- 761,616
Shares redeemed (475,853) (949,227)
Increase (decrease) in net
assets from capital
share transactions (83,838) 384,521
Net Assets
Increase (decrease) during period 370,657 631,083
Beginning of period 5,672,331 5,041,248
End of period $6,042,988 $5,672,331
---------- ----------
*Share information
Shares sold 11,559 17,127
Distributions reinvested -- 24,481
Shares redeemed (14,069) (28,337)
Increase (decrease) in shares outstanding (2,510) 13,271
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth Stock Fund
--------------------------------------------------------------------------------
Unaudited June 30, 2000
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 fund
seeks long-term capital growth and, secondarily, increasing dividend income
by investing in the common stocks of well-established growth companies.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day the
valuations are made. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Listed securities not traded on a
particular day and securities regularly traded in the over-the-counter
market are valued at the mean of the latest bid and asked prices. Other
equity securities are valued at a price within the limits of the latest bid
and asked prices deemed by the Board of Directors, or by persons delegated
by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market.
Investments in securities are stated at fair value as furnished by dealers
who make markets in such securities or by an independent pricing service,
which considers yield or price of bonds of comparable quality, coupon,
maturity, and type, as well as prices quoted by dealers who make markets in
such securities.
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 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.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on the identified cost basis. Dividend income and
distributions to shareholders are recorded by the fund on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with federal income tax regulations and may differ from those determined in
accordance with generally accepted accounting principles. Expenses paid
indirectly reflect credits earned on daily uninvested cash balances at the
custodian and are used to reduce the fund's custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $2,167,873,000 and $2,256,791,000, respectively, for
the six months ended June 30, 2000.
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, 2000, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$3,914,321,000. Net unrealized gain aggregated 2,135,640,000 at period-end,
of which $2,261,548,000 related to appreciated investments and $125,908,000
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 $2,779,000 was payable at June 30, 2000. 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 0.295% for assets
in excess of $120 billion. At June 30, 2000, and for the six months then
ended, the effective annual group fee rate was 0.32%. The fund pays a
pro-rata share of the group fee based on the ratio of its net assets to
those of the group.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund
receives certain other services. The manager computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services,
Inc. is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price
Retirement Plan Services, Inc. provides subaccounting and recordkeeping
services for certain retirement accounts invested in the fund. The fund
incurred expenses pursuant to these related party agreements totaling
approximately $3,561,000 for the six months ended June 30, 2000, of which
$690,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual
funds (underlying funds) in which the T. Rowe Price Spectrum Funds
(Spectrum) may invest. Spectrum does not invest in the underlying funds for
the purpose of exercising management or control. Expenses associated with
the operation of Spectrum are borne by each underlying fund to the extent
of estimated savings to it and in proportion to the average daily value of
its shares owned by Spectrum, pursuant to special servicing agreements
between and among Spectrum, the underlying funds, T. Rowe Price, and, in
the case of T. Rowe Price Spectrum International, Rowe Price-Fleming
International. Spectrum Growth Fund held approximately 5.6% of the
outstanding shares of the fund at June 30, 2000. For the six months then
ended, the fund was allocated $356,000 of Spectrum expenses, $104,000 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, 2000, totaled $5,074,000 and are reflected as interest income in
the accompanying Statement of Operations.
During the six months ended June 30, 2000, the fund, in the ordinary course
of business, placed security purchase and sale orders aggregating
$21,488,000 with certain affiliates of the manager and paid commissions of
$22,000 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(registered trademark)
and the T. Rowe Price Web site on the Internet. Address: www.troweprice.com
BROKERAGE SERVICES*
Individual Investments - Stocks, bonds, options, precious metals, and other
securities at a savings over full-service commission rates.**
INVESTMENT INFORMATION
Combined Statement - Overview of all your accounts with T. Rowe Price.
Shareholder Reports - Fund managers' reviews of their strategies and
results.
T. Rowe Price Report - Quarterly investment newsletter discussing markets
and financial strategies.
Performance Update - Quarterly review of all T. Rowe Price fund results.
Insights Educational - reports on investment strategies and financial
markets.
Investment Guides - Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a July 2000 survey for representative-assisted stock trades.
Services vary by firm, and commissions may vary depending on size of
order.
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
Tax-Efficient Growth
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery*
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
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 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 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
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
* Closed to new investors.
! Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in the funds.
Please call for a prospectus, which contains complete information, including
fees and expenses. 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.
T. Rowe Price Advisory Services and Retirement Resources
--------------------------------------------------------------------------------
Advisory Services, Retirement Resources
T. Rowe Price is your full-service retirement specialist. We have developed
unique advisory services that can help you meet the most difficult
retirement challenges. Our broad array of retirement plans is suitable for
individuals, the self-employed, small businesses, corporations, and
nonprofit organizations. We also provide recordkeeping, communications, and
investment management services, and our educational materials, self-help
planning guides, and software tools are recognized as among the industry's
best. For information or to request literature, call us at 1-800-638-5660,
or visit our Web site at www.troweprice.com.
ADVISORY SERVICES
T. Rowe Price Retirement Income ManagerSM helps retirees or those within
two years of retirement determine how much income they can take in
retirement. The program uses extensive statistical analysis and the input
of financial planning professionals to suggest an income plan that best
meets your objectives.
T. Rowe Price Rollover Investment Service offers asset allocation advice to
those planning a major change in their qualified retirement plans, such as
a 401(k) rollover from a previous employer or an IRA transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
Planning and Informational Guides
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
Insights Reports
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
Software Packages
T. Rowe Price Retirement Planning
AnalyzerTM CD-ROM or diskette $19.95.
To order, please call 1-800-541-5760.
Also available on the Internet for $9.95.
T. Rowe Price Variable Annuity AnalyzerTM
CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. Rowe Price Immediate Variable
Annuity (Income Account)
Investment Kits
We will be happy to send you one of our
easy-to-follow investment kits when you
are ready to invest in any T. Rowe Price
retirement vehicle, including IRAs, quali-
fied plans, small-business plans, or our
no-load variable annuities.
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus appropriate
to the fund or funds covered in this
report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site.
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price Invest with Confidence (registered trademark)
T. Rowe Price Investment Services, Inc., Distributor. F40-051 6/30/00
