- --------------------------------------------------------------------------------
T. Rowe Price
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SemiAnnual Report
Equity Index Fund
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June 30, 1997
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Report Highlights
================================================================================
Equity Index Fund
* In an environment of positive economic news, strong corporate earnings
reports, and robust demand for equities, the S&P 500 achieved a 20.61%
return in the first half of 1997.
* The Equity Index Fund's first half return followed the S&P 500's gains very
closely.
* Stocks of numerous industries, including health care and capital equipment,
achieved outstanding gains. Much of the best performance came from large,
blue chip stocks.
* Although we currently see no drastic changes occurring in the equity
markets, we believe it is likely that market gains will moderate in coming
months from their extremely fast pace in the first half.
Fellow Shareholders
================================================================================
After the stellar gains of 1995 and 1996, few investors expected a 20% rise
in the Standard & Poor's 500 Stock Index during the first half of 1997. But
continued good news on the economy and strong cash flows into equities helped
push the market to new highs. The 17% advance of the unmanaged index in the
second quarter alone was its best quarterly performance in over 10 years and its
fourth-best since 1950.
<PAGE>
================================================================================
Performance Comparison
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Periods Ended 6/30/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Equity Index Fund 20.36% 34.29%
S&P 500 20.61 34.70
================================================================================
For the year to date and 12-month periods, the Equity Index Fund closely
tracked the S&P 500 Index. The small difference reflects the expenses of
managing the fund. During the current rally that began at year-end 1994, the
fund's gains have been extraordinary. Both the fund and the S&P 500 have
returned more than 100% in the past 30 months N the market's best showing since
the mid-1950s. (See page 8 for additional performance information.) In the past,
similar results have been seen during such unusual periods as the recovery from
the 1929 stock market crash and the euphoria over the end of World War II.
For several reasons, it has been difficult for active managers to beat the
S&P 500 during the last two and a half years. Active managers, for example, tend
to hold a larger portion of their assets in cash than index funds do. When the
market advances sharply, as it has recently, many active managers increase cash
reserves to protect themselves from a correction. Index funds by definition must
minimize cash at all times in order to track the market as closely as possible.
Also, for many quarters now, investors have gravitated toward large, liquid
stocks that are perceived to be safe havens in unpredictable markets. Many of
these, like COCA-COLA and PROCTER & GAMBLE, have produced strong earnings growth
and rewarded their investors with outstanding investment results. This trend has
greatly benefited S&P 500 index funds because these stocks represent a large
part of the index. While many active managers have held these stocks, they
typically have been underweighted relative to the market.
Low cash levels and an emphasis on large-cap stocks will not always be
winning qualities. In the future, we will almost certainly experience periods
where other strategies perform better, active managers as a group will benefit,
and index funds will lag.
Market Review
================================================================================
The S&P 500 hit the ground running in January and was up over 10% by
mid-February. It gave all those gains back in the spring, however, when a rate
increase by the Federal Reserve in late March triggered a 10% sell-off. When
further signs of inflation failed to materialize, however, the market took off
in a euphoric mid-April run.
<PAGE>
Continuing the trend of the past several years, large-cap stocks benefited
most in this ebullient period, strongly outperforming smaller issues. The widely
followed S&P 500 Index is capitalization weighted, meaning larger companies have
a greater influence on overall performance than smaller stocks. For example, GE,
the company with the largest market cap, makes up approximately 3% of the index.
A smaller company, such as TUPPERWARE, makes up only 0.03%. This technique of
index construction means that when stock market returns are differentiated due
to company size, the S&P 500 will perform much differently from the average
stock. For the first half of 1997, the S&P 500 advanced by 20.61%, but the
median stock outside of the S&P 500 rose only 8.8%.
This size effect could be found within the index as well. The 10 largest
stocks in the S&P 500, representing about 19% of the index, returned 28% on
average in the period.
Portfolio Review
================================================================================
Your fund changes holdings only when the composition of the index changes.
In terms of portfolio modifications, the first half of 1997 was a quiet period,
as the S&P 500 had few additions or deletions. Only eight changes were made to
the index, all of which were triggered by mergers of S&P 500 companies,
including DEAN WITTER and MORGAN STANLEY, and SBC COMMUNICATIONS and PACIFIC
TELESIS. Also, the long drawn-out battle for control of CONRAIL came to an end
as CSX CORPORATION and NORFOLK SOUTHERN agreed to jointly buy Conrail for $115 a
share and split up the railroad between them.
The additions were primarily from the technology and financial sectors and
represent only 0.7% of the S&P 500's total market value. The technology
companies added to the index were PARAMETRIC TECHNOLOGY, a leading developer of
software in the mechanical design automation industry; ADOBE SYSTEMS, a
developer of software used in the creation and display of electronic documents;
and EQUIFAX, a provider of data-processing services. The financial companies
added were CONSECO, a large insurance company; CHARLES SCHWAB, the largest
discount broker in the U.S. and a distributor of investment products; and
COUNTRYWIDE CREDIT, a provider of consumer mortgages. Rounding out the additions
were HEALTHSOUTH, a large provider of outpatient and rehabilitative health care
services, and CARDINAL HEALTH, a distributor of pharmaceuticals and health care
products.
================================================================================
Performance By Sector
- --------------------------------------------------------------------------------
Periods Ended 6/30/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Health Care .................................... 31.7% 45.6%
Capital Equipment .............................. 28.6 45.6
Technology ..................................... 23.1 47.1
Financial ...................................... 22.7 48.8
Consumer Services .............................. 20.2 17.6
Process Industries ............................. 20.1 35.3
Consumer Nondurables ........................... 19.9 29.4
Energy ......................................... 17.4 34.1
Business Services and Transportation ........... 15.2 15.5
Consumer Cyclicals ............................. 10.8 16.0
Utilities ...................................... 6.9 6.7
Basic Materials ................................ 2.2 4.2
================================================================================
<PAGE>
The best-performing economic sector was health care. Drug stocks did
particularly well, led by such household names as BRISTOL-MYERS SQUIBB, PFIZER,
and ELI LILLY. Very large technology firms, after struggling in the first
quarter, also posted strong returns. DELL COMPUTER, a manufacturer of personal
computers for home and business, rose an astonishing 121%. The company has been
delivering consistently strong results and record revenues. MICROSOFT also did
well, as investors continued to see it as a major player in the future of
computers and the information age. 3Com was a notable loser during the first
half as its stock sank 39%. Intel waged a pricing war which took a bite out of
3Com's earnings, and the market reacted unfavorably to 3Com's merger with U.S.
Robotics. Smaller companies in the computer communications industry
underperformed as well.
Lack of evidence of inflation, and modestly lower interest rates, helped
push financial stocks up. The fund's large holdings in AMERICAN INTERNATIONAL
GROUP, a multinational insurance powerhouse, and NATIONSBANK were exceptional
performers. Utilities continued to lag, plagued by ongoing concerns over the
changes new legislation may impose on the industry's competitive landscape. Low
inflation and rumors of accelerated gold-reserve sales by central banks around
the world depressed gold prices and related stocks.
Outlook
================================================================================
Along with the S&P 500, your fund has benefited greatly from strong
conditions in the overall economy and the outstanding performance of many large
U.S. companies. Recent returns, however, have been extraordinary, and likely
cannot go on forever. Considering the high valuations of many S&P stocks, the
entire index is vulnerable to corporate earnings disappointments or disturbing
economic news. Market volatility did pick up in 1997, as evidenced by the brief
10% correction in March and early April.
It is important to remember that indexes can go down as well as up, and
after such an extended period of gains, investors may need to steel themselves
against a possible market retreat in the future. Although we currently see no
drastic changes taking shape in the equity market, it would not be surprising to
see index returns moderate. As a long-term equity investment, however, the
Equity Index Fund offers inexpensive access to the broad stock market, which has
historically provided strong long-term returns that have significantly outpaced
the rate of inflation.
Finally, we would like to introduce Kristen Culp, who has been a part of T.
Rowe Price's equity division since 1990 and a member of this fund's Investment
Advisory Committee since April 1992. In April 1995, she became executive vice
president of the Equity Index Fund.
<PAGE>
Respectfully submitted,
/s/
Richard T. Whitney
President and Chairman of the Investment Advisory Committee
/s/
Kristen F. Culp
Executive Vice President
July 22, 1997
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 6/30/97
Ten Best Contributors
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Microsoft 18c
GE .................................................................... 18
Coca-Cola ............................................................. 12
Exxon ................................................................. 11
Merck ................................................................. 10
Bristol-Myers Squibb .................................................. 9
Royal Dutch Petroleum ADR ............................................. 9
Wal-Mart .............................................................. 8
Pfizer ................................................................ 8
Procter & Gamble ...................................................... 8
Total ................................................................. 111c
Ten Worst Contributors
- --------------------------------------------------------------------------------
AT&T .................................................................. -3c
3Com .................................................................. 2
Pharmacia & Upjohn .................................................... 1
Barrick Gold .......................................................... 1
Ikon Office Solutions ................................................. 1
Fortune Brands ........................................................ 1
Viacom (Class B) ...................................................... 1
Silicon Graphics ...................................................... 1
Providian Financial -
GTE -
Total ................................................................. -11c
<PAGE>
12 Months Ended 6/30/97
Ten Best Contributors
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Microsoft ............................................................. 27c
GE .................................................................... 24
Intel ................................................................. 19
Merck ................................................................. 16
Coca-Cola ............................................................. 16
Exxon ................................................................. 15
IBM 15
Bristol-Myers Squibb .................................................. 12
Procter & Gamble ...................................................... 12
Royal Dutch Petroleum ADR ............................................. 12
Total ................................................................. 168c
Ten Worst Contributors
- --------------------------------------------------------------------------------
AT&T .................................................................. -5c
Dun & Bradstreet ...................................................... 2
Pharmacia & Upjohn .................................................... 2
Viacom (Class B) ...................................................... 1
Novell ................................................................ 1
Tele-Communications (Class A) ......................................... 1
Barrick Gold .......................................................... 1
Southern Company ...................................................... 1
Texas Utilities 1
Placer Dome -
Total ................................................................. -15c
================================================================================
<PAGE>
================================================================================
Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/97
GE .......................................................... 3.1%
Coca-Cola ................................................... 2.4
Exxon ....................................................... 2.2
Microsoft ................................................... 2.2
Merck ....................................................... 1.8
Royal Dutch Petroleum ....................................... 1.7
Intel ....................................................... 1.7
Philip Morris ............................................... 1.6
Procter & Gamble ............................................ 1.4
IBM ......................................................... 1.3
Johnson & Johnson ........................................... 1.2
Bristol-Myers Squibb ........................................ 1.2
Pfizer ...................................................... 1.1
Wal-Mart .................................................... 1.1
DuPont ...................................................... 1.0
American International Group ................................ 1.0
Eli Lilly ................................................... 0.9
PepsiCo 0.8
Hewlett-Packard 0.8
AT&T ........................................................ 0.8
SBC Communications .......................................... 0.8
Citicorp .................................................... 0.8
Mobil ....................................................... 0.8
Disney ...................................................... 0.8
Gillette .................................................... 0.8
- --------------------------------------------------------------------------------
Total ....................................................... 33.3%
================================================================================
<PAGE>
================================================================================
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 a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
[Equity Index Fund SEC chart shown here]
================================================================================
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
================================================================================
Since Inception
Periods Ended 6/30/97 1 Year 3 Years 5 Years Inception Date
- --------------------------------------------------------------------------------
Equity Index Fund 34.29% 28.49% 19.32% 16.93% 3/30/90
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
<TABLE>
Unaudited For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
6 Months Year
Ended Ended
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
Beginning of period ............... $ 20.34 $ 17.21 $ 13.09 $ 13.48 $ 12.63 $ 12.10
Investment activities
Net investment income ......... 0.17** 0.38** 0.39* 0.36* 0.32* 0.32*
Net realized and
unrealized gain (loss) ........ 4.01 3.47 4.43 (0.23) 0.86 0.53
Total from
investment activities ......... 4.18 3.85 4.82 0.13 1.18 0.85
Distributions
Net investment income ......... (0.16) (0.38) (0.40) (0.36) (0.32) (0.31)
Net realized gain ............. (0.15) (0.34) (0.30) (0.09) (0.01) (0.01)
Distributions in excess
of net realized gain .......... -- -- -- (0.07) -- --
Total distributions ........... (0.31) (0.72) (0.70) (0.52) (0.33) (0.32)
NET ASSET VALUE
End of period ..................... $ 24.21 $ 20.34 $ 17.21 $ 13.09 $ 13.48 $ 12.63
Ratios/Supplemental Data
Total return ...................... 20.36%** 22.65%** 37.16%* 1.01%* 9.42%* 7.19%*
Ratio of expenses to
average net assets ................ 0.40%**+ 0.40%** 0.45%* 0.45%* 0.45%* 0.45%*
Ratio of net investment
income to average
net assets ........................ 0.82%**+ 2.05%** 2.54%* 2.73%* 2.40%* 2.57%*
Portfolio turnover rate ........... 0.9%+ 1.3% 1.3% 1.3% 0.8% 0.1%
Average commission
rate paid ......................... $ 0.0150 $ 0.0183 -- -- -- --
Net assets, end of period
(in millions) ..................... $ 1,311 $ 808 $ 457 $ 270 $ 167 $ 128
====================================================================================================================================
<FN>
* Excludes expenses in excess of a 0.45% voluntary expense limitation in effect through 12/31/95.
** Excludes expenses in excess of a 0.40% voluntary expense limitation in effect through 12/31/97.
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited June 30, 1997
================================================================================
Statement of Net Assets
Shares/Par Value
In thousands
Common Stocks & Warrants 98.5%
INDUSTRIAL 75.3%
GE ........................................... 623,670 $40,772
Coca-Cola .................................... 471,367 31,817
Exxon ........................................ 471,506 28,998
Microsoft * .................................. 227,516 28,774
Merck ........................................ 229,125 23,714
Royal Dutch Petroleum ADR .................... 407,080 22,135
Intel ........................................ 155,628 22,036
Philip Morris ................................ 461,140 20,463
Procter & Gamble ............................. 127,909 18,067
IBM .......................................... 194,246 17,519
Johnson & Johnson ............................ 252,052 16,226
Bristol-Myers Squibb ......................... 189,642 15,361
Pfizer ....................................... 122,665 14,658
Wal-Mart ..................................... 430,790 14,566
DuPont ....................................... 213,983 13,454
Eli Lilly .................................... 105,211 11,501
PepsiCo ...................................... 292,398 10,983
Hewlett-Packard .............................. 193,077 10,812
AT&T ......................................... 308,161 10,805
Mobil ........................................ 148,932 10,407
Disney ....................................... 127,768 10,253
Gillette ..................................... 105,758 10,021
Abbott Laboratories .......................... 147,141 9,822
American Home Products ....................... 121,844 9,321
Chevron ...................................... 123,907 9,161
Lucent Technologies .......................... 121,338 8,744
Motorola ..................................... 112,735 8,568
Cisco Systems * .............................. 125,538 8,431
Ford Motor ................................... 223,088 8,422
Amoco ........................................ 93,677 8,144
3M ........................................... 78,724 8,030
GM ........................................... 142,380 7,929
Boeing ....................................... 136,215 7,228
Schering-Plough .............................. 139,453 6,676
Unilever N.V. ADR ............................ 30,362 $6,619
Oracle * ..................................... 127,903 6,439
Warner-Lambert ............................... 51,423 6,389
Home Depot ................................... 91,936 6,338
McDonald's ................................... 130,245 6,292
Schlumberger ................................. 46,668 5,833
<PAGE>
Texaco ....................................... 50,213 5,461
World Com .................................... 169,426 5,416
Kimberly-Clark ............................... 105,914 5,269
COMPAQ Computer * ............................ 52,154 5,176
Time Warner .................................. 106,224 5,125
Columbia/HCA Healthcare ...................... 127,486 5,012
MCI .......................................... 130,433 4,993
Monsanto ..................................... 112,561 4,847
Xerox ........................................ 61,037 4,814
Eastman Kodak ................................ 62,599 4,804
Emerson Electric ............................. 83,410 4,593
AlliedSignal ................................. 53,776 4,517
Campbell ..................................... 88,582 4,429
Northern Telecom ............................. 48,360 4,401
Chrysler ..................................... 133,428 4,378
Atlantic Richfield ........................... 61,298 4,321
Sprint ....................................... 81,782 4,304
Dow Chemical ................................. 45,351 3,951
Sears ........................................ 73,246 3,937
Anheuser-Busch ............................... 93,181 3,908
Dell Computer * .............................. 32,910 3,864
Caterpillar .................................. 35,706 3,834
Computer Associates .......................... 68,695 3,825
Lockheed Martin .............................. 36,811 3,812
First Data ................................... 85,447 3,754
Sara Lee ..................................... 89,950 3,744
United Technologies .......................... 44,681 3,709
Medtronic .................................... 45,158 3,658
Colgate-Palmolive ............................ 54,957 3,586
Kellogg ...................................... 39,768 3,405
Pharmacia & Upjohn ........................... 96,958 3,369
Heinz ........................................ 69,960 3,227
NIKE ......................................... 54,251 $ 3,167
Texas Instruments ............................ 36,048 3,030
Amgen ........................................ 50,861 2,955
ConAgra ...................................... 45,851 2,940
Seagram ...................................... 69,921 2,814
3Com * ....................................... 62,177 2,796
International Paper .......................... 57,504 2,793
Waste Management ............................. 85,804 2,756
Westinghouse ................................. 119,044 2,753
McDonnell Douglas ............................ 39,800 2,726
Baxter International ......................... 51,308 2,681
AirTouch Communications * .................... 96,462 2,641
Deere ........................................ 48,073 2,638
Gannett ...................................... 26,562 2,623
Automatic Data Processing .................... 54,839 2,577
Sun Microsystems * ........................... 68,525 2,550
CPC International ............................ 27,071 2,499
Walgreen ..................................... 46,308 2,483
Alcoa ........................................ 32,668 2,462
<PAGE>
Archer Daniels Midland ....................... 103,397 2,430
Rockwell International ....................... 41,015 2,420
Corning ...................................... 43,037 2,394
Applied Materials * .......................... 33,723 2,387
J.C. Penney .................................. 45,492 2,374
U S WEST Media * ............................. 117,048 2,370
Illinois Tool Works .......................... 46,772 2,336
Raytheon ..................................... 44,890 2,289
Marsh & McLennan ............................. 31,606 2,256
Boston Scientific * .......................... 36,654 2,252
Tyco International ........................... 31,834 2,214
Dayton Hudson ................................ 41,201 2,191
Phillips Petroleum ........................... 49,718 2,175
May Department Stores ........................ 45,815 2,165
Textron ...................................... 31,583 2,096
The Gap ...................................... 53,323 2,073
Viacom (Class B) * ........................... 67,472 2,024
General Mills ................................ 31,020 2,020
CUC International * .......................... 77,228 1,993
PPG Industries ............................... 33,925 $ 1,972
Pitney Bowes ................................. 27,913 1,940
Weyerhaeuser ................................. 37,166 1,933
Toys "R" Us * ................................ 54,196 1,897
Goodyear Tire & Rubber ....................... 29,816 1,888
Tellabs * .................................... 33,820 1,888
Halliburton .................................. 23,748 1,882
United HealthCare ............................ 36,031 1,874
Tele-Communications (Class A) * .............. 125,851 1,868
Unocal ....................................... 47,915 1,860
Mattel ....................................... 54,133 1,834
EMC * ........................................ 46,075 1,797
Honeywell .................................... 23,603 1,791
Avon ......................................... 25,333 1,788
Albertson's .................................. 48,331 1,764
Air Products and Chemicals ................... 21,380 1,737
HFS * ........................................ 29,569 1,715
AMP .......................................... 41,020 1,713
Tenet Healthcare * ........................... 57,111 1,688
Seagate Technology * ......................... 47,279 1,664
Praxair ...................................... 29,506 1,652
CVS .......................................... 31,915 1,636
Ralston Purina ............................... 19,900 1,636
Hershey Foods ................................ 29,231 1,617
Occidental Petroleum ......................... 63,891 1,601
HealthSouth * ................................ 64,203 1,601
Micron Technology * .......................... 39,990 1,597
USX-Marathon ................................. 54,654 1,578
Barrick Gold ................................. 70,936 1,561
Aon .......................................... 29,980 1,551
<PAGE>
Wrigley ...................................... 22,530 1,509
Georgia-Pacific .............................. 17,583 1,501
Tenneco ...................................... 32,900 1,487
Alcan Aluminum ............................... 42,532 1,475
Service Corp. International .................. 44,340 1,458
Marriott International ....................... 23,660 1,452
Kroger * ..................................... 48,674 1,412
American Stores .............................. 27,695 1,367
Browning-Ferris .............................. 40,861 $ 1,359
Federated Department Stores * ................ 38,387 1,334
Comcast (Class A Special) .................... 62,464 1,333
TRW .......................................... 23,451 1,332
ITT * ........................................ 21,813 1,332
Costco Companies * ........................... 40,318 1,327
Crown Cork & Seal ............................ 24,667 1,318
Clorox ....................................... 9,950 1,313
Cognizant .................................... 32,363 1,311
Eaton ........................................ 14,968 1,307
Masco ........................................ 30,970 1,293
Dover ........................................ 20,923 1,287
Pioneer Hi-Bred .............................. 15,893 1,271
Dresser Industries ........................... 33,966 1,265
Ingersoll-Rand ............................... 20,369 1,258
Sysco ........................................ 34,186 1,248
Hilton ....................................... 46,925 1,246
Fortune Brands ............................... 33,034 1,233
Newell ....................................... 30,824 1,221
Guidant ...................................... 14,273 1,213
Cardinal Health .............................. 20,955 1,200
Lowes ........................................ 32,105 1,192
Quaker Oats .................................. 26,384 1,184
Rite Aid ..................................... 23,667 1,180
Genuine Parts ................................ 34,471 1,168
Freeport McMoRan Copper and Gold (Class B) ... 37,452 1,166
Becton, Dickinson ............................ 22,988 1,164
Union Carbide ................................ 24,606 1,158
Union Pacific Resources ...................... 46,318 1,152
Newmont Mining ............................... 29,005 1,131
Kmart * ...................................... 92,231 1,130
Tribune ...................................... 23,142 1,112
Baker Hughes ................................. 28,319 1,096
Cooper Industries ............................ 21,984 1,094
The Limited .................................. 53,469 1,083
Computer Sciences * .......................... 14,995 1,081
McGraw-Hill .................................. 18,329 1,078
Rohm & Haas .................................. 11,933 1,075
Digital Equipment * .......................... 30,315 $ 1,074
Burlington Resources ......................... 24,292 1,072
Equifax ...................................... 28,554 1,062
V. F ......................................... 12,430 1,058
Phelps Dodge ................................. 12,344 1,052
International Flavors & Fragrances ........... 20,801 1,050
<PAGE>
Winn-Dixie ................................... 27,967 1,042
Parametric Technology * ...................... 24,398 1,038
Reynolds Metals .............................. 14,361 1,023
R. R. Donnelly ............................... 27,734 1,016
Bay Networks * ............................... 38,162 1,014
Champion International ....................... 18,022 996
UST .......................................... 35,534 986
Inco ......................................... 32,728 984
Times Mirror (Class A) ....................... 17,686 977
Northrop ..................................... 11,122 977
Amerada Hess ................................. 17,412 967
Eastman Chemical ............................. 15,111 960
Advanced Micro Devices * ..................... 26,527 955
Sherwin-Williams ............................. 30,418 939
Nucor ........................................ 16,577 937
Thermo Electron * ............................ 27,249 926
Case ......................................... 13,372 921
Interpublic Group ............................ 14,624 897
General Dynamics ............................. 11,904 893
Allegheny Teledyne ........................... 32,929 889
Parker Hannifin .............................. 14,642 889
New York Times (Class A) ..................... 17,877 885
LSI Logic * .................................. 27,429 878
Hercules ..................................... 18,147 869
Cabletron Systems * .......................... 30,565 865
Fluor ........................................ 15,493 855
Laidlaw (Class B) ............................ 61,435 849
Knight-Ridder ................................ 17,264 847
National Semiconductor * ..................... 27,600 845
Dun & Bradstreet ............................. 31,463 826
Rubbermaid ................................... 27,556 820
Whirlpool .................................... 14,767 806
W.R. Grace ................................... 14,569 $ 803
Morton International ......................... 26,149 789
Western Atlas * .............................. 10,713 785
Dow Jones .................................... 19,125 769
TJX .......................................... 29,112 768
Avery Dennison ............................... 19,028 763
W. W. Grainger ............................... 9,546 746
Nordstrom .................................... 14,886 730
Dillard Department Stores (Class A) .......... 20,963 726
Placer Dome .................................. 44,274 725
Dana ......................................... 18,876 717
Willamette Industries ........................ 10,229 716
PACCAR ....................................... 15,396 715
Humana * ..................................... 30,381 703
St. Jude Medical * ........................... 17,950 700
Pennzoil ..................................... 9,120 700
AutoZone * ................................... 29,552 696
Hasbro ....................................... 24,403 692
<PAGE>
Sigma Aldrich ................................ 19,334 677
Perkin-Elmer ................................. 8,253 657
Circuit City Stores .......................... 18,241 649
Stanley Works ................................ 16,204 648
Wendy's International ........................ 24,649 639
Ashland ...................................... 13,758 638
Union Camp ................................... 12,752 638
Harcourt General ............................. 13,366 637
Great Lakes Chemical ......................... 12,139 636
General Instrument * ......................... 25,320 633
Black & Decker ............................... 17,016 633
Ceridian * ................................... 14,957 632
Johnson Controls ............................. 15,381 632
Harris ....................................... 7,495 630
H&R Block .................................... 19,428 627
Brown-Forman (Class B) ....................... 12,762 623
Raychem ...................................... 8,362 622
Liz Claiborne ................................ 13,316 621
James River .................................. 16,696 618
Woolworth * .................................. 25,645 615
Ikon Office Solutions ........................ 24,675 $ 615
Tandy ........................................ 10,987 615
Ecolab ....................................... 12,799 611
Westvaco ..................................... 18,949 596
Mead ......................................... 9,503 592
Pall ......................................... 25,247 587
Armstrong World .............................. 7,957 584
Brunswick .................................... 18,669 583
Kerr-McGee ................................... 9,099 577
USX-U.S. Steel ............................... 16,425 576
FMC * ........................................ 7,245 576
ITT Industries ............................... 22,318 575
Thomas & Betts ............................... 10,838 570
Temple-Inland ................................ 10,377 560
Deluxe Corp. ................................. 16,414 560
Engelhard .................................... 25,997 544
Mallinkrodt .................................. 14,222 540
United States Surgical ....................... 14,392 536
Whitman ...................................... 21,144 535
Reebok ....................................... 11,430 534
Maytag ....................................... 20,089 525
DSC Communications * ......................... 23,126 515
Cummins Engine ............................... 7,210 509
Nalco Chemical ............................... 13,142 508
Adobe Systems ................................ 14,368 504
Bausch & Lomb ................................ 10,510 495
Silicon Graphics * ........................... 32,823 492
American Greetings (Class A) ................. 13,265 492
ALZA (Class A) * ............................. 16,828 488
Andrew * ..................................... 17,230 483
<PAGE>
Cyprus Amax Minerals ......................... 19,314 473
Tandem Computers * ........................... 22,904 464
Mercantile Stores ............................ 7,361 463
National Service Industries .................. 9,418 459
Oryx Energy * ................................ 21,627 457
Polaroid ..................................... 8,201 455
Fruit of the Loom (Class A) * ................ 14,680 455
Novell * ..................................... 65,650 454
Tupperware ................................... 12,390 $ 452
Crane ........................................ 10,787 451
Bemis ........................................ 10,108 437
B. F. Goodrich ............................... 9,980 432
Snap-On ...................................... 10,792 425
Timken ....................................... 11,838 421
Rowan * ...................................... 14,901 420
Supervalu .................................... 12,081 417
Sun Company .................................. 13,204 409
Louisiana Pacific ............................ 19,250 407
Echlin ....................................... 11,131 401
Tektronix .................................... 6,649 399
Biomet ....................................... 21,188 395
Manor Care ................................... 12,092 394
Owens Corning ................................ 9,142 394
C. R. Bard ................................... 10,676 388
Pep Boys ..................................... 11,319 386
General Signal ............................... 8,813 384
Allergan ..................................... 12,002 382
Moore ........................................ 19,164 377
Giant Food (Class A) ......................... 11,558 374
Louisiana Land & Exploration ................. 6,489 371
Harnischfeger ................................ 8,808 366
Autodesk ..................................... 9,412 361
Millipore .................................... 7,917 348
Boise Cascade ................................ 9,776 345
Homestake Mining ............................. 25,853 338
Harrah's Entertainment * ..................... 18,440 337
McDermott International ...................... 11,438 334
Apple Computer * ............................. 22,780 324
Meredith ..................................... 10,769 312
Beverly Enterprises * ........................ 19,062 310
Cooper Tire .................................. 14,014 308
Worthington Industries ....................... 16,659 306
Scientific-Atlanta ........................... 13,823 302
Foster Wheeler ............................... 7,022 284
Stone Container .............................. 19,412 278
Helmerich & Payne ............................ 4,821 278
Unisys * ..................................... 35,861 $ 273
Alberto Culver ............................... 9,753 273
Aeroquip-Vickers ............................. 5,684 269
Santa Fe Energy Resources * .................. 18,155 267
Darden Restaurants ........................... 29,316 266
<PAGE>
Potlatch ..................................... 5,809 263
Briggs & Stratton ............................ 5,125 256
King World Productions ....................... 7,267 254
Navistar * ................................... 14,501 250
Centex ....................................... 6,120 249
Battle Mountain Gold (Class A) ............... 42,726 243
Shared Medical Systems ....................... 4,505 243
Inland Steel Industries ...................... 9,262 242
Bethlehem Steel * ............................ 22,665 237
EG&G ......................................... 10,262 231
ASARCO ....................................... 7,408 227
Data General * ............................... 8,516 221
A & P ........................................ 8,085 220
Coors (Class B) .............................. 8,246 218
Safety-Kleen ................................. 12,544 212
Jostens ...................................... 7,839 207
Russell ...................................... 6,975 207
Longs Drug Stores ............................ 7,345 192
Springs Industries ........................... 3,646 192
Cincinnati Milacron .......................... 7,239 188
Amdahl * ..................................... 21,264 186
Fleetwood .................................... 6,193 185
Ball ......................................... 5,960 179
John H. Harland .............................. 7,374 168
Echo Bay Mines ............................... 26,186 147
Kaufman & Broad .............................. 8,370 147
Giddings & Lewis ............................. 6,304 131
Stride Rite .................................. 9,918 128
Fleming Companies ............................ 6,955 125
Pulte ........................................ 3,255 112
NACCO Industries (Class A) ................... 1,279 72
Intergraph * ................................. 7,496 63
Charming Shoppes * ........................... 11,723 61
Armco * ...................................... 14,593 $ 57
Morrison Knudsen, Warrants, 3/11/03 * ........ 7 0
Total Industrial ............................. 987,695
UTILITIES 7.0%
SBC Communications ........................... 173,635 10,744
BellSouth .................................... 187,776 8,708
GTE .......................................... 181,112 7,946
Ameritech .................................... 104,296 7,086
Bell Atlantic ................................ 83,288 6,319
NYNEX ........................................ 83,490 4,811
U S WEST Communications ...................... 90,308 3,403
Duke Power ................................... 68,456 3,282
Southern Company ............................. 129,840 2,840
Edison International ......................... 79,876 1,987
Enron ........................................ 48,543 1,981
PG&E ......................................... 77,947 1,890
FPL Group .................................... 34,321 1,581
<PAGE>
American Electric Power ...................... 35,260 1,481
Texas Utilities .............................. 42,451 1,462
Consolidated Edison .......................... 45,771 1,347
Williams Companies ........................... 30,462 1,333
Dominion Resources ........................... 35,410 1,297
PacifiCorp ................................... 56,919 1,252
Entergy ...................................... 44,207 1,210
ALLTEL ....................................... 36,038 1,205
Public Service Enterprise .................... 44,841 1,121
Coastal ...................................... 20,761 1,104
CINergy ...................................... 30,808 1,073
Carolina Power & Light ....................... 29,536 1,060
Houston Industries ........................... 44,205 948
Consolidated Natural Gas ..................... 17,498 942
Unicom ....................................... 40,032 891
PECO Energy .................................. 41,586 873
Central and South West ....................... 40,955 870
GPU .......................................... 23,782 853
Sonat ........................................ 16,476 844
BGE .......................................... 29,015 $ 774
DTE Energy ................................... 26,996 746
Columbia Gas System .......................... 11,019 719
Northern States Power ........................ 13,773 713
Union Electric ............................... 18,863 711
Frontier ..................................... 31,683 632
Ohio Edison .................................. 28,148 614
PP&L Resources ............................... 29,780 594
Pacific Enterprises .......................... 16,976 571
Noram Energy ................................. 24,388 372
NICOR ........................................ 10,095 362
ENSERCH ...................................... 14,880 331
Niagara Mohawk * ............................. 32,747 280
Peoples Energy ............................... 7,412 277
ONEOK ........................................ 5,610 181
Eastern Enterprises .......................... 3,623 126
Total Utilities .............................. 91,747
FINANCIAL 14.9%
American International Group ................. 88,737 13,255
Citicorp ..................................... 87,064 10,497
Fannie Mae ................................... 205,487 8,964
NationsBank .................................. 138,693 8,946
BankAmerica .................................. 134,431 8,679
Chase Manhattan .............................. 82,820 8,039
Travelers Group .............................. 120,540 7,602
American Express ............................. 89,551 6,672
Allstate ..................................... 82,991 6,058
BANC ONE ..................................... 109,111 5,285
First Union .................................. 54,435 5,035
Morgan Stanley Dean Witter Discover .......... 108,605 4,677
<PAGE>
Wells Fargo .................................. 17,275 4,656
Freddie Mac .................................. 133,450 4,587
Norwest ...................................... 70,619 3,972
Merrill Lynch ................................ 62,695 3,738
J. P. Morgan ................................. 34,851 3,638
First Chicago NBD ............................ 60,066 3,634
Bank of New York ............................. 73,218 $ 3,185
Fleet Financial Group ........................ 49,751 3,147
Aetna ........................................ 28,367 2,904
General Re ................................... 15,644 2,847
PNC Bank ..................................... 63,219 2,631
CIGNA ........................................ 14,289 2,536
KeyCorp ...................................... 42,554 2,378
SunTrust ..................................... 42,222 2,325
MBNA ......................................... 62,954 2,306
CoreStates Financial ......................... 42,543 2,287
National City ................................ 42,522 2,232
Mellon Bank .................................. 49,280 2,224
First Bank Systems ........................... 25,615 2,187
Household International ...................... 18,607 2,185
Chubb ........................................ 32,511 2,174
American General ............................. 45,432 2,169
Loews ........................................ 20,969 2,099
Barnett Banks ................................ 39,764 2,088
BankBoston ................................... 27,802 2,003
Hartford Financial Services .................. 22,616 1,871
U. S. Bancorp ................................ 28,759 1,845
Wachovia ..................................... 30,987 1,807
Fifth Third Bancorp .......................... 19,848 1,628
Great Western Financial ...................... 26,319 1,415
Comerica ..................................... 20,551 1,397
Charles Schwab ............................... 33,110 1,347
Conseco ...................................... 36,146 1,337
Bankers Trust New York ....................... 15,110 1,315
Lincoln National ............................. 19,870 1,279
St. Paul Companies ........................... 16,138 1,231
Transamerica ................................. 12,839 1,201
UNUM ......................................... 28,042 1,178
Salomon ...................................... 21,068 1,172
SAFECO ....................................... 24,421 1,141
Republic New York ............................ 10,329 1,110
MGIC Investment .............................. 22,376 1,073
MBIA ......................................... 8,401 948
Torchmark .................................... 13,148 937
Jefferson Pilot .............................. 13,013 909
Green Tree Financial ......................... 25,222 $ 899
H. F. Ahmanson ............................... 20,695 890
Golden West Financial ........................ 11,452 802
Beneficial ................................... 10,022 712
Countrywide Credit ........................... 19,644 613
USF&G ........................................ 23,299 559
Providian Financial .......................... 17,337 557
Total Financial .............................. 195,014
<PAGE>
TRANSPORTATION 1.3%
Union Pacific ................................ 46,502 3,278
Burlington Northern Santa Fe ................. 29,110 2,616
Norfolk Southern ............................. 23,797 2,398
CSX .......................................... 41,234 2,288
AMR * ........................................ 17,383 1,608
Federal Express * ............................ 21,771 1,257
Delta ........................................ 13,962 1,145
Southwest Airlines ........................... 26,539 687
USAir * ...................................... 14,260 499
Ryder System ................................. 14,011 462
Caliber Systems .............................. 5,974 223
Total Transportation ......................... 16,461
Total Common Stocks & Warrants
(Cost $905,767) ......................... 1,290,917
Short-Term Investments 1.6%
Certificates of Deposit 0.8%
Deutsche Bank, 6.00%, 7/29/97 ................ 5,000,000 5,000
Union Bank of California, 5.55%, 7/11/97 ..... 5,000,000 5,000
10,000
Commercial Paper 0.6%
Asset Securitization Cooperative, 4(2),
5.53%, 7/21/97 .......................... 5,000,000 4,985
UBS Finance (Delaware), 6.05%, 7/1/97 ........ 3,150,000 3,150
8,135
U.S. Government Obligations 0.2%
U.S. Treasury Bills, 5.07 - 5.37%,
9/18 - 10/16/97 ......................... 3,000,000 2,961
2,961
Total Short-Term Investments (Cost $ 21,096).. 21,096
Total Investments in Securities
100.1% of Net Assets (Cost $926,863) ......... $1,312,013
Futures Contracts
In thousands
Contract Unrealized
Expiration Value Gain (Loss)
__________ ________ __________
Long, 48 Standard & Poor's 500 Stock Index
contracts, $3,000,000 of U.S. Treasury Bills
pledged as initial margin 9/97 $21,366 $ 695
Net payments (receipts) of variation
margin to date (840)
Variation margin receivable (payable)
on open futures contracts (145)
<PAGE>
Other Assets Less Liabilities (542)
NET ASSETS .................................. $ 1,311,326
Net Assets Consist of:
Accumulated net investment income -
net of distributions ......................... $ 511
Accumulated net realized gain/loss -
net of distributions ......................... 8,625
Net unrealized gain (loss) ................... 385,845
Paid-in-capital applicable to 54,165,110
shares of $0.01 par value capital stock
outstanding; 1,000,000,000
shares authorized ............................ 916,345
NET ASSETS ................................... $ 1,311,326
NET ASSET VALUE PER SHARE .................... $ 24.21
* Non-income producing
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors."
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/97
- --------------------------------------------------------------------------------
Investment Income
Income
Dividend ................................................. $ 9,331
Interest ................................................. 1,309
Total income ............................................. 10,640
Expenses
Shareholder servicing .................................... 967
Investment management .................................... 873
Custody and accounting ................................... 102
Registration ............................................. 78
Prospectus and shareholder reports ....................... 43
Legal and audit .......................................... 7
Directors ................................................ 6
Miscellaneous ............................................ 9
Total expenses ........................................... 2,085
Net investment income ........................................ 8,555
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ............................................... 981
Futures .................................................. 7,833
Net realized gain (loss) ................................. 8,814
Change in net unrealized gain or loss
Securities ............................................... 180,660
Futures .................................................. 785
Change in net unrealized gain or loss .................... 181,445
Net realized and unrealized gain (loss) ...................... 190,259
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ....................................... $198,814
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/97 12/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income ........................... $ 8,555 $ 13,302
Net realized gain (loss) ........................ 8,814 11,658
Change in net unrealized gain or loss ........... 181,445 109,832
Increase (decrease) in net assets from operations 198,814 134,792
Distributions to shareholders
Net investment income ........................... (8,044) (13,495)
Net realized gain ............................... (4,213) (12,009)
Decrease in net assets from distributions ....... (12,257) (25,504)
Capital share transactions *
Shares sold ..................................... 437,583 357,516
Distributions reinvested ........................ 11,883 24,913
Shares redeemed ................................. (132,405) (141,657)
Redemption fees received ........................ 53 28
Increase (decrease) in net assets from capital
share transactions .............................. 317,114 240,800
Net equalization .................................... -- 311
Net Assets
Increase (decrease) during period ................... 503,671 350,399
Beginning of period ................................. 807,655 457,256
End of period ....................................... $ 1,311,326 $ 807,655
*Share information
Shares sold ..................................... 19,850 19,435
Distributions reinvested ........................ 529 1,282
Shares redeemed ................................. (5,928) (7,579)
Increase (decrease) in shares outstanding ....... 14,451 13,138
================================================================================
The accompanying notes are an integral part of these financial statements.
Unaudited June 30, 1997
================================================================================
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
================================================================================
T. Rowe Price Equity Index 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 March 30, 1990.
<PAGE>
VALUATION Equity securities are valued at the last quoted sales price on
the day the valuations are made. A security which is listed or traded on more
than one exchange is valued at the quotation on the exchange determined to be
the primary market for such security. Listed securities not traded on a
particular day and securities regularly traded in the over-the-counter market
are valued at the mean of the latest bid and asked prices.
Short-term debt securities are valued at their amortized cost which, when
combined with accrued interest, approximates fair value. Financial futures
contracts are valued at closing settlement prices.
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.
PREMIUMS AND DISCOUNTS Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
OTHER Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles. Effective Janurary 1, 1997, the fund
discontinued its practice of equalization. The results of operations and net
assets were not affected by this change. Payments ("variation margin") made or
received by the fund to settle the daily fluctuations in the value of futures
contracts are recorded as unrealized gains or losses until the contracts are
closed. Unrealized gains and losses on futures contracts are included in Change
in net unrealized gain or loss in the accompanying financial statements.
NOTE 2 - INVESTMENT TRANSACTIONS
================================================================================
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
FUTURES CONTRACTS At June 30, 1997, the fund was a party to futures
contracts, which provide for the future sale by one party and purchase by
another of a specified amount of a specific financial instrument at an agreed
upon price, date, time, and place. Risks arise from possible illiquidity of the
futures market and from movements in security values.
<PAGE>
SECURITIES LENDING The fund lends its securities to approved brokers to
earn additional income and takes cash and U.S. Treasury securities as collateral
to secure the loans. Collateral is maintained at not less than 100% of the value
of loaned securities. At June 30, 1997, the value of securities on loan was
$29,556,000. Although the risk is mitigated by the collateral, the fund could
experience a delay in recovering its securities and a possible loss of income or
value if the borrower fails to return them.
OTHER Purchases and sales of portfolio securities, other than short-term
securities, aggregated $318,479,000 and $4,359,000, respectively, for the six
months ended June 30, 1997.
NOTE 3 - FEDERAL INCOME TAXES
================================================================================
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
At June 30, 1997, the aggregate cost of investments for federal income tax
and financial reporting purposes was $926,863,000, and net unrealized gain
aggregated $385,150,000, of which $392,989,000 related to appreciated
investments and $7,839,000 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 $191,000 was payable at June 30, 1997. The fee is computed daily and
paid monthly, and is equal to 0.20% of average daily net assets.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through December 31, 1997, which would cause the
fund's ratio of expenses to average net assets to exceed 0.40%. Thereafter,
through December 31, 1999, the fund is required to reimburse the manager for
these expenses, provided that average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing the fund's ratio of
expenses to average net assets to exceed 0.40%. Pursuant to this agreement,
$168,00 0 of management fees were not accrued by the fund for the six months
ended June 30, 1997. Additionally, $445,000, and $370,000 of unaccrued
management fees related to previous expense limitations are subject to
reimbursement through December 31, 1997 and December 31, 1999, respectively.
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 $909,000 for the six months
ended June 30, 1997, of which $140,000 was payable at period-end.
<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 Equity Index Fund.
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. F50-051 6/30/97
