Item 1. Report to Shareholders
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
June 30, 2004
Certified Semiannual Report
This report is certified under the Sarbanes-Oxley Act of 2002, which requires
that public companies, including mutual funds, affirm that the information
provided in their annual and semiannual shareholder reports fully and fairly
represents their financial position.
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Investor Class
6 Months Year
Ended Ended
6/30/04 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
NET ASSET VALUE
Beginning
of period $ 24.33 $ 18.58 $ 24.18 $ 27.20 $ 33.27 $ 32.07
Investment
activities
Net investment
income (loss) 0.03 0.06 0.05 0.09 0.07 0.11
Net realized
and unrealized
gain (loss) 0.59 5.74 (5.61) (2.76) 0.21 6.61
Total from
investment
activities 0.62 5.80 (5.56) (2.67) 0.28 6.72
Distributions
Net investment
income - (0.05) (0.04) (0.08) (0.07) (0.10)
Net realized
gain - - - (0.27) (6.28) (5.42)
Total
distributions - (0.05) (0.04) (0.35) (6.35) (5.52)
NET ASSET VALUE
End of period $ 24.95 $ 24.33 $ 18.58 $ 24.18 $ 27.20 $ 33.27
--------------------------------------------------------------
Ratios/
Supplemental
Data
Total return^ 2.55% 31.23% (23.00)% (9.79)% 0.27% 22.15%
Ratio of total
expenses to
average net assets 0.74%! 0.76% 0.77% 0.77% 0.73% 0.74%
Ratio of net
investment income
(loss) to average
net assets 0.26%! 0.29% 0.23% 0.34% 0.20% 0.31%
Portfolio
turnover rate 32.2%! 35.0% 46.9% 64.1% 74.3% 55.8%
Net assets,
end of period
(in millions) $ 6,559 $ 5,651 $ 3,728 $ 4,685 $ 5,428 $ 5,672
^ 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
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Advisor Class
6 Months Year
Ended Ended
6/30/04 12/31/03 12/31/02
NET ASSET VALUE
Beginning of period $ 24.23 $ 18.54 $ 24.18
Investment activities
Net investment income 0.03 0.05 0.01*
Net realized and unrealized gain (loss) 0.56 5.69 (5.61)
Total from investment activities 0.59 5.74 (5.60)
Distributions
Net investment income - (0.05) (0.04)
NET ASSET VALUE
End of period $ 24.82 $ 24.23 $ 18.54
-------------------------------
Ratios/Supplemental Data
Total return^ 2.43% 30.97% (23.16)%*
Ratio of total expenses
to average net assets 0.92%! 0.92% 1.10%*
Ratio of net investment income
(loss) to average net assets 0.10%! 0.15% 0.00%*
Portfolio turnover rate 32.2%! 35.0% 46.9%
Net assets, end of period
(in thousands) $ 221,395 $ 90,856 $ 541
^ 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.
* Excludes expenses in excess of a 1.10% contractual expense limitation in
effect through 4/30/06.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
R Class
6 Months Year 9/30/02
Ended Ended Through
6/30/04 12/31/03 12/31/02
NET ASSET VALUE
Beginning of period $ 24.19 $ 18.56 $ 17.20
Investment activities
Net investment income 0.02 0.05 (0.01)
Net realized and unrealized gain (loss) 0.54 5.62 1.41**
Total from investment activities 0.56 5.67 1.40
Distributions
Net investment income - (0.04) (0.04)
NET ASSET VALUE
End of period $ 24.75 $ 24.19 $ 18.56
-------------------------------
Ratios/Supplemental Data
Total return^ 2.32% 30.56% 8.14%
Ratio of total expenses
to average net assets 1.21%! 1.21% 1.26%!
Ratio of net investment income
(loss) to average net assets (0.18)%! (0.14)% (0.17)%!
Portfolio turnover rate 32.2%! 35.0% 46.9%
Net assets, end of period
(in thousands) $ 50,747 $ 12,778 $ 108
^ 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.
** The amount presented is calculated pursuant to a methodology prescribed
by the Securities and Exchange Commission for a share outstanding
throughout the period. This amount is inconsistent with the fund's
aggregate gains and losses because of the timing of sales and redemptions
of fund shares in relation to fluctuating market values for the investment
portfolio.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited) June 30, 2004
PORTFOLIO OF INVESTMENTS (1) Shares Value
- --------------------------------------------------------------------------------
(Cost and value in $ 000s)
COMMON STOCKS 97.3%
CONSUMER DISCRETIONARY 19.5%
Automobiles 0.8%
Harley-Davidson 843,400 52,240
52,240
Hotels, Restaurants & Leisure 4.0%
Carnival 1,647,900 77,451
Compass (GBP) 7,830,000 47,766
International Game Technology 2,570,000 99,202
MGM Mirage * 356,873 16,752
Starbucks * 725,000 31,523
272,694
Internet & Catalog Retail 1.0%
eBay * 745,000 68,503
68,503
Media 8.5%
British Sky Broadcast (GBP) 3,210,000 36,197
Clear Channel Communications 1,360,000 50,252
Comcast, Class A * 2,415,000 66,678
EchoStar Communications, Class A * 2,455,000 75,491
Liberty Media, Class A * 8,122,400 73,020
Liberty Media International, Series A * 426,120 15,809
News Corporation ADR 1,570,000 51,622
Scripps, Class A 470,000 49,350
Sogecable (EUR) * 710,000 28,670
Time Warner * 1,600,000 28,128
Univision Communications, Class A * 1,356,800 43,323
Viacom, Class B 1,705,524 60,921
579,461
Multiline Retail 2.2%
Family Dollar Stores 1,250,000 38,025
Target 2,678,900 113,773
151,798
Specialty Retail 2.6%
Best Buy 1,378,500 69,945
Home Depot 2,555,000 89,936
Kingfisher (GBP) 3,670,000 19,045
178,926
Textiles, Apparel, & Luxury Goods 0.4%
Hermes (EUR) 137,528 27,491
27,491
Total Consumer Discretionary 1,331,113
CONSUMER STAPLES 5.2%
Beverages 1.3%
Coca-Cola 1,370,000 69,157
PepsiCo 435,000 23,438
92,595
Food & Staples Retailing 3.1%
Sysco 1,038,000 37,233
Wal-Mart 1,675,000 88,373
Wal-Mart de Mexico (MXN) 3,925,000 11,638
Wal-Mart de Mexico ADR 590,000 17,497
Walgreen 1,510,000 54,677
209,418
Personal Products 0.3%
Gillette 425,000 18,020
18,020
Tobacco 0.5%
Altria Group 754,800 37,778
37,778
Total Consumer Staples 357,811
ENERGY 4.0%
Energy Equipment & Services 2.2%
Baker Hughes 2,210,000 83,206
Schlumberger 1,050,000 66,686
149,892
Oil & Gas 1.8%
ChevronTexaco 565,000 53,172
Exxon Mobil 1,581,374 70,229
123,401
Total Energy 273,293
FINANCIALS 19.0%
Capital Markets 6.6%
AmeriTrade * 1,800,000 20,430
Charles Schwab 1,663,400 15,985
Credit Suisse Group (CHF) * 1,425,000 50,653
Goldman Sachs Group 430,000 40,489
Mellon Financial 1,864,900 54,698
Merrill Lynch 1,325,000 71,523
Northern Trust 1,000,000 42,280
State Street 2,049,000 100,483
UBS (CHF) 760,000 53,575
450,116
Commercial Banks 0.8%
U.S. Bancorp 2,000,000 55,120
55,120
Consumer Finance 2.6%
American Express 1,745,000 89,658
MBNA 650,000 16,764
SLM Corporation 1,715,000 69,372
175,794
Diversified Financial Services 3.6%
Citigroup 5,230,000 243,195
243,195
Insurance 3.9%
ACE 900,000 38,052
American International Group 1,980,000 141,134
Hartford Financial Services 811,100 55,755
Saint Paul Companies 857,496 34,763
269,704
Thrifts & Mortgage Finance 1.5%
Fannie Mae 970,400 69,248
Freddie Mac 515,000 32,599
101,847
Total Financials 1,295,776
HEALTH CARE 13.0%
Biotechnology 2.0%
Amgen * 1,430,000 78,035
Genentech * 240,000 13,488
Gilead Sciences * 635,000 42,545
134,068
Health Care Equipment & Supplies 2.2%
Biomet 750,000 33,330
Boston Scientific * 785,000 33,598
Guidant 545,000 30,455
Medtronic 1,065,000 51,887
149,270
Health Care Providers & Services 4.2%
Cardinal Health 319,300 22,367
UnitedHealth Group 2,549,300 158,694
WellPoint Health Networks * 945,000 105,849
286,910
Pharmaceuticals 4.6%
Forest Laboratories * 1,019,700 57,746
Johnson & Johnson 1,295,000 72,131
Pfizer 4,218,000 144,593
Teva Pharmaceutical ADR 290,000 19,514
Wyeth 675,000 24,408
318,392
Total Health Care 888,640
INDUSTRIALS & BUSINESS SERVICES 8.4%
Air Freight & Logistics 1.0%
UPS, Class B 920,000 69,156
69,156
Commercial Services & Supplies 2.3%
Apollo Group, Class A * 815,000 71,956
Cendant 3,300,000 80,784
152,740
Industrial Conglomerates 3.9%
GE 5,220,000 169,128
Tyco International 2,953,100 97,866
266,994
Machinery 1.2%
Danaher 1,570,000 81,405
81,405
Total Industrials & Business Services 570,295
INFORMATION TECHNOLOGY 23.6%
Communications Equipment 3.6%
Cisco Systems * 3,950,000 93,615
Corning * 3,000,000 39,180
Juniper Networks * 1,575,000 38,698
QLogic * 850,000 22,601
QUALCOMM 320,000 23,354
Research In Motion * 399,200 27,321
244,769
Computers & Peripherals 1.6%
Dell * 3,150,000 112,833
112,833
Internet Software & Services 2.3%
InterActiveCorp * 2,244,200 67,640
Yahoo! *^ 2,393,800 86,967
154,607
IT Services 4.9%
Accenture, Class A * 3,185,000 87,524
Affiliated Computer Services, Class A * 1,528,400 80,913
First Data 1,200,800 53,460
Fiserv * 1,785,000 69,419
Infosys Technologies (INR) 150,000 18,010
SunGard Data Systems * 985,200 25,615
334,941
Semiconductor & Semiconductor Equipment 3.9%
Analog Devices 650,000 30,602
Applied Materials * 1,725,000 33,844
Intel 2,575,000 71,070
Maxim Integrated Products 533,400 27,961
Samsung Electronics (KRW) 98,360 40,604
Semiconductor Manufacturing ADR * 134,000 1,438
STMicroelectronics (EUR) 1,700,000 37,336
Xilinx 810,000 26,981
269,836
Software 7.3%
Adobe Systems 1,271,100 59,106
Intuit * 1,150,000 44,367
Mercury Interactive * 800,000 39,864
Microsoft 8,015,000 228,908
Oracle * 1,000,000 12,011
Red Hat * 695,000 15,964
SAP (EUR) 320,000 53,113
VERITAS Software * 1,600,000 44,320
497,653
Total Information Technology 1,614,639
MATERIALS 1.7%
Metals & Mining 1.7%
BHP Billiton (AUD) 1,750,000 15,264
Nucor 705,000 54,116
Rio Tinto (Ordinary shares) (GBP) 1,960,000 47,116
Total Materials 116,496
TELECOMMUNICATION SERVICES 2.9%
Wireless Telecommunication Services 2.9%
China Mobile (Hong Kong) (HKD) 100 0
Crown Castle International * 2,642,100 38,971
Nextel Communications, Class A * 3,445,300 91,852
Vodafone ADR 1,250,300 27,631
Vodafone Group (GBP) 18,050,000 39,513
Total Telecommunication Services 197,967
Total Common Stocks (Cost $5,102,593) 6,646,030
OPTIONS WRITTEN 0.0%
Yahoo!
Call, 10/16/04 @ $35 * (150,000) (585)
Call, 7/17/04 @ $30 * (140,000) (917)
Total Options Written (Cost $(466)) (1,502)
SHORT-TERM INVESTMENTS 3.0%
Money Market Fund 3.0%
T. Rowe Price Reserve Investment Fund, 1.16% # 207,062,792 207,063
Total Short-Term Investments (Cost $207,063) 207,063
Total Investments in Securities
100.3% of Net Assets (Cost $5,309,190) $ 6,851,591
------------
(1) Denominated in U.S. dollars unless otherwise noted
# Seven-day yield
* Non-income producing
^ All or a portion of this security is pledged to cover written call options
at June 30, 2004
ADR American Depository Receipts
AUD Australian dollar
CHF Swiss franc
EUR Euro
GBP British pound
HKD Hong Kong dollar
INR Indian rupee
KRW South Korean won
MXN Mexican peso
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited) June 30, 2004
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
(In thousands except shares and per share amounts)
Assets
Investments in securities, at value (cost $5,309,190) $ 6,851,591
Other assets 117,595
Total assets 6,969,186
Liabilities
Total liabilities 137,927
NET ASSETS $ 6,831,259
----------------
Net Assets Consist of:
Undistributed net investment income (loss) $ 9,439
Undistributed net realized gain (loss) (504,465)
Net unrealized gain (loss) 1,542,411
Paid-in-capital applicable to 273,889,647 shares
of $1.00 par value capital stock outstanding;
300,000,000 shares authorized 5,783,874
NET ASSETS $ 6,831,259
----------------
NET ASSET VALUE PER SHARE
Investor Class
($6,559,116,042/262,919,912 shares outstanding) $ 24.95
----------------
Advisor Class
($221,395,467/8,919,013 shares outstanding) $ 24.82
----------------
R Class
($50,747,070/2,050,722 shares outstanding) $ 24.75
----------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
($ 000s)
6 Months
Ended
6/30/04
Investment Income (Loss)
Income
Dividend $ 31,573
Interest 9
Total income 31,582
Expenses
Investment management 17,795
Shareholder servicing
Investor Class 4,973
Advisor Class 67
R Class 22
Rule 12b-1 fees
Advisor Class 188
R Class 79
Custody and accounting 235
Registration 109
Prospectus and shareholder reports
Investor Class 78
Advisor Class 5
R Class 1
Legal and audit 15
Directors 7
Miscellaneous 5
Total expenses 23,579
Net investment income (loss) 8,003
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
($ 000s)
6 Months
Ended
6/30/04
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 96,885
Written options 374
Foreign currency transactions (1,035)
Net realized gain (loss) 96,224
Change in net unrealized gain (loss)
Securities 52,595
Written options (1,036)
Other assets and liabilities
denominated in foreign currencies (8)
Change in net unrealized gain (loss) 51,551
Net realized and unrealized gain (loss) 147,775
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 155,778
-------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
($ 000s)
6 Months Year
Ended Ended
6/30/04 12/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 8,003 $ 13,215
Net realized gain (loss) 96,224 57,706
Change in net unrealized gain (loss) 51,551 1,191,741
Increase (decrease) in net
assets from operations 155,778 1,262,662
Distributions to shareholders
Net investment income
Investor Class - (11,488)
Advisor Class - (176)
R Class - (18)
Decrease in net assets from distributions - (11,682)
Capital share transactions *
Shares sold
Investor Class 1,244,779 1,268,712
Advisor Class 155,190 94,726
R Class 41,752 12,947
Distributions reinvested
Investor Class - 10,776
Advisor Class - 135
R Class - 17
Shares redeemed
Investor Class (488,549) (597,262)
Advisor Class (28,264) (14,046)
R Class (4,338) (1,154)
Increase (decrease) in net assets
from capital share transactions 920,570 774,851
Net Assets
Increase (decrease) during period 1,076,348 2,025,831
Beginning of period 5,754,911 3,729,080
End of period $ 6,831,259 $ 5,754,911
----------------------------------
(Including undistributed net investment income
of $9,439 at 6/30/04 and $1,436 at 12/31/03)
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
($ 000s)
6 Months Year
Ended Ended
6/30/04 12/31/03
*Share information
Shares sold
Investor Class 50,372 60,056
Advisor Class 6,315 4,336
R Class 1,699 574
Distributions reinvested
Investor Class - 459
Advisor Class - 6
R Class - 1
Shares redeemed
Investor Class (19,773) (28,816)
Advisor Class (1,146) (621)
R Class (176) (52)
Increase (decrease) in shares outstanding 37,291 35,943
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited) June 30, 2004
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 (the 1940 Act) as a diversified, open-end
management investment company. The fund seeks to provide long-term capital
growth and, secondarily, increasing dividend income through investments in the
common stocks of well-established growth companies. The fund has three classes
of shares: the Growth Stock Fund original share class, referred to in this
report as the Investor Class, offered since April 11, 1950, Growth Stock
Fund--Advisor Class (Advisor Class), offered since December 31, 2001, and Growth
Stock Fund--R Class (R Class), offered since September 30, 2002. Advisor Class
shares are sold only through brokers and other financial intermediaries, and R
Class shares are available to retirement plans serviced by intermediaries. The
Advisor Class and R Class each operate under separate Board-approved Rule 12b-1
plans, pursuant to which each class compensates financial intermediaries for
distribution, shareholder servicing, and/or certain administrative services.
Each class has exclusive voting rights on matters related solely to that class,
separate voting rights on matters that relate to all classes, and, in all other
respects, the same rights and obligations as the other classes.
The accompanying financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, which
require the use of estimates made by fund management.
Valuation
The fund values its investments and computes its net asset value per share at
the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day
that the NYSE is open for business. Equity securities listed or regularly traded
on a securities exchange or in the over-the-counter market are valued at the
last quoted sale price or, for certain markets, the official closing price at
the time the valuations are made, except for OTC Bulletin Board securities,
which are valued at the mean of the latest bid and asked prices. A security that
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 are valued at the mean of the latest
bid and asked prices for domestic securities and the last quoted sale price for
international securities.
Investments in mutual funds are valued at the mutual fund's closing net asset
value per share on the day of valuation. Purchased and written options are
valued at the mean of the closing bid and asked prices.
Other investments and those 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 the T. Rowe Price Valuation Committee,
established by the fund's Board of Directors.
Most foreign markets close before the close of trading on the NYSE. If the fund
determines that developments between the close of a foreign market and the close
of the NYSE will, in its judgment, materially affect the value of some or all of
its portfolio securities, which in turn will affect the fund's share price, the
fund will adjust the previous closing prices to reflect the fair value of the
securities as of the close of the NYSE, as determined in good faith by the T.
Rowe Price Valuation Committee, established by the fund's Board of Directors. A
fund may also fair value securities in other situations, such as when a
particular foreign market is closed but the fund is open. In deciding whether to
make fair value adjustments, the fund reviews a variety of factors, including
developments in foreign markets, the performance of U.S. securities markets, and
the performance of instruments trading in U. S. markets that represent foreign
securities and baskets of foreign securities. The fund uses outside pricing
services to provide it with closing market prices and information used for
adjusting those prices. The fund cannot predict how often it will use closing
prices and how often it will adjust those prices. As a means of evaluating its
fair value process, the fund routinely compares closing market prices, the next
day's opening prices in the same markets, and adjusted prices.
Currency Translation
Assets, including investments, and liabilities denominated in foreign currencies
are translated into U.S. dollar values each day at the prevailing exchange rate,
using the mean of the bid and asked prices of such currencies against U.S.
dollars as quoted by a major bank. Purchases and sales of securities, income,
and expenses are translated into U.S. dollars at the prevailing exchange rate on
the date of the transaction. The effect of changes in foreign currency exchange
rates on realized and unrealized security gains and losses is reflected as a
component of security gains and losses.
Class Accounting
The Advisor Class and R Class each pay distribution, shareholder servicing,
and/or certain administrative expenses in the form of Rule 12b-1 fees, in an
amount not exceeding 0.25% and 0.50%, respectively, of the class's average daily
net assets. Shareholder servicing, prospectus, and shareholder report expenses
incurred by each class are charged directly to the class to which they relate.
Expenses common to all classes, investment income, and realized and unrealized
gains and losses are allocated to the classes based upon the relative daily net
assets of each class.
Rebates and Credits
Subject to best execution, the fund may direct certain security trades to
brokers who have agreed to rebate a portion of the related brokerage commission
to the fund in cash. Commission rebates are included in realized gain on
securities in the accompanying financial statements and totaled $179,000 for the
six months ended June 30, 2004. Additionally, the fund earns credits on
temporarily uninvested cash balances at the custodian that reduce the fund's
custody charges. Custody expense in the accompanying financial statements is
presented before reduction for credits.
Investment Transactions, Investment Income, and Distributions
Income and expenses are recorded on the accrual basis. Dividends received from
mutual fund investments are reflected as dividend income; capital gain
distributions are reflected as realized gain/loss. Dividend income and capital
gain distributions are recorded on the ex-dividend date. Investment transactions
are accounted for on the trade date. Realized gains and losses are reported on
the identified cost basis. Distributions to shareholders are recorded on the
ex-dividend date. Income distributions are declared and paid by each class on an
annual basis. Capital gain distributions, if any, are declared and paid by the
fund, typically on an annual basis.
Other
In the normal course of business, the fund enters into contracts that provide
general indemnifications. The fund's maximum exposure under these arrangements
is dependent on claims that may be made against the fund in the future and,
therefore, cannot be estimated; however, based on experience, the risk of
material loss from such claims is considered remote.
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.
Options
Call and put options give the holder the right to purchase or sell,
respectively, a security at a specified price on a certain date. Risks arise
from possible illiquidity of the options market and from movements in security
values. Options are reflected in the accompanying Portfolio of Investments at
market value. Transactions in options written and related premiums received
during the six months ended June 30, 2004, were as follows:
- --------------------------------------------------------------------------------
Number of
Contracts Premiums
Outstanding at beginning of period - $ -
Written 9,400 2,115,000
Exercised (1,000) (194,000)
Closed (5,500) (1,455,000)
Outstanding at end of period 2,900 $ 466,000
--------------------------
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $1,951,914,000 and $991,310,000, respectively, for the six months
ended June 30, 2004.
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 under Subchapter M of the
Internal Revenue Code and distribute to shareholders all of its taxable income
and gains. Federal income tax regulations differ from generally accepted
accounting principles; therefore, distributions determined in accordance with
tax regulations may differ in amount or character from net investment income and
realized gains for financial reporting purposes. Financial reporting records are
adjusted for permanent book/tax differences to reflect tax character. Financial
records are not adjusted for temporary differences. The amount and character of
tax-basis distributions and composition of net assets are finalized at fiscal
year-end; accordingly, tax-basis balances have not been determined as of June
30, 2004.
The fund intends to retain realized gains to the extent of available capital
loss carryforwards. As of December 31, 2003, the fund had $600,453,000 of unused
capital loss carryforwards, of which $352,727,000 expire in 2009, $236,038,000
expire in 2010, and $11,688,000 expire in 2011.
At June 30, 2004, the cost of investments for federal income tax purposes was
$5,309,190,000. Net unrealized gain aggregated $1,542,411,000 at period-end, of
which $1,606,424,000 related to appreciated investments and $64,013,000 related
to depreciated investments.
NOTE 4- RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The
investment management agreement between the fund and the manager provides for an
annual investment management fee, which is computed daily and paid monthly. The
fee consists of an individual fund fee, equal to 0.25% of the fund's average
daily net assets, and the fund's pro-rata share of a group fee. The group fee is
calculated based on the combined net assets of certain mutual funds sponsored by
Price Associates (the group) applied to a graduated fee schedule, with rates
ranging from 0.48% for the first $1 billion of assets to 0.295% for assets in
excess of $120 billion. The fund's portion of the group fee is determined by the
ratio of its average daily net assets to those of the group. At June 30, 2004,
the effective annual group fee rate was 0.31%, and investment management fee
payable totaled $3,098,000.
The Advisor Class and R Class are also subject to a contractual expense
limitation through the limitation dates indicated in the table below. During the
limitation period, the manager is required to waive its management fee and
reimburse a class for any expenses, excluding interest, taxes, brokerage
commissions, and extraordinary expenses, that would otherwise cause the class's
ratio of total expenses to average net assets (expense ratio) to exceed its
expense limitation. Through the repayment date, each class is required to repay
the manager for expenses previously reimbursed and management fees waived to the
extent the class's net assets have grown or expenses have declined sufficiently
to allow repayment without causing the class's expense ratio to exceed its
expense limitation.
- --------------------------------------------------------------------------------
Advisor Class R Class
Expense Limitation 1.10% 1.35%
Limitation Date 4/30/06 4/30/06
Repayment Date 4/30/08 4/30/08
For the six months ended June 30, 2004, each class operated below its expense
limitation.
In addition, the fund has entered into service agreements with Price Associates
and two wholly owned subsidiaries of Price Associates (collectively, Price).
Price Associates computes the daily share prices and maintains the financial
records
of the fund. T. Rowe Price Services, Inc., provides shareholder and
administrative services in its capacity as the fund's transfer and dividend
disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides
subaccounting and recordkeeping services for certain retirement accounts
invested in the Investor Class and R Class. Expenses incurred pursuant to these
service agreements totaled $3,296,000 for the six months ended June 30, 2004, of
which $546,000 was payable at period-end.
The fund is also one of several mutual funds sponsored by Price Associates
(underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum
Funds) and T. Rowe Price Retirement Funds (Retirement Funds) may invest. Neither
the Spectrum Funds nor the Retirement Funds invest in the underlying Price funds
for the purpose of exercising management or control. Pursuant to separate,
special servicing agreements, expenses associated with the operation of the
Spectrum and Retirement Funds are borne by each underlying Price fund to the
extent of estimated savings to it and in proportion to the average daily value
of its shares owned by the Spectrum and Retirement Funds, respectively. Expenses
allocated under these agreements are reflected as shareholder servicing expenses
in the accompanying financial statements. For the six months ended June 30,
2004, the fund was allocated $287,000 of Spectrum Funds' expenses and $399,000
of Retirement Funds' expenses. Of these amounts, $476,000 related to services
provided by Price and $123,000 was payable at period-end. At June 30, 2004,
approximately 4.9% of the outstanding shares of the Investor Class were held by
the Spectrum Funds and 3.9% were held by the Retirement Funds.
The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe
Price Government Reserve Investment Fund (collectively, the Reserve Funds),
open-end management investment companies managed by Price Associates. The
Reserve Funds are offered as cash management options to mutual funds, trusts,
and other accounts managed by Price Associates and/or its affiliates, and are
not available for direct purchase by members of the public. The Reserve Funds
pay no investment management fees. During the six months ended June 30, 2004,
dividend income from the Reserve Funds totaled $856,000.
T. Rowe Price Growth Stock Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report
Information on Proxy Voting
- --------------------------------------------------------------------------------
A description of the policies and procedures that the T. Rowe Price Growth Stock
Fund uses to determine how to vote proxies relating to portfolio securities is
available, without charge, upon request by calling 1-800-225-5132. It also
appears in the fund's Statement of Additional Information (Form 485B), which can
be found on the SEC's Web site, www.sec.gov.
Item 2. Code of Ethics.
A code of ethics, as defined in Item 2 of Form N-CSR, applicable to its
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions is filed as an
exhibit to the registrant's annual Form N-CSR. No substantive amendments were
approved or waivers were granted to this code of ethics during the registrant's
most recent fiscal half-year.
Item 3. Audit Committee Financial Expert.
Disclosure required in registrant's annual Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Disclosure required in registrant's annual Form N-CSR.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable. The complete schedule of investments is included in Item 1 of
this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures within 90
days of this filing and have concluded that the registrant's disclosure controls
and procedures were effective, as of that date, in ensuring that information
required to be disclosed by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) The registrant's principal executive officer and principal financial officer
are aware of no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is filed
with the registrant's annual Form N-CSR.
(2) Separate certifications by the registrant's principal executive officer
and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(3) Written solicitation to repurchase securities issued by closed-end
companies: not applicable.
(b) A certification by the registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940,
is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price Growth Stock Fund, Inc.
By: /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date: August 16, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date: August 16, 2004
By: /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date: August 16, 2004