Item 1. Report to Shareholders
T. Rowe Price Growth & Income Fund
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December 31, 2003
Certified Annual 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 & Income Fund
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Certified Annual Report
Performance Comparison
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This chart shows the value of a hypothetical $10,000 investment in the fund over
the past 10 fiscal year periods or since inception (for funds lacking 10-year
records). The result is compared with benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
[Graphic Omitted]
GROWTH & INCOME FUND
As of 12/31/03
Lipper Large-Cap Core Funds Index $24,271
Growth & Income Fund $24,101
S&P 500 Stock Index $28,563
S&P 500 Lipper Large-Cap Growth &
Stock Index Core Funds Index Income Fund
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12/93 $10,000 $10,000 $10,000
12/94 10,132 9,892 9,985
12/95 13,940 13,033 13,073
12/96 17,140 15,620 16,424
12/97 22,859 20,184 20,289
12/98 29,392 25,621 22,311
12/99 35,576 30,578 23,155
12/00 32,337 28,325 25,231
12/01 28,493 24,689 24,683
12/02 22,196 19,447 18,797
12/03 28,563 24,271 24,101
Average Annual Compound Total Return
Periods Ended 12/31/03 1 Year 5 Years 10 Years
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Growth & Income Fund 28.22% 1.56% 9.20%
S&P 500 Stock Index 28.68 -0.57 11.07
Lipper Large-Cap Core
Funds Index 24.80 -1.08 9.27
Returns do not reflect taxes that the shareholder may pay on fund distributions
or the redemption of fund shares. Past performance cannot guarantee future
results.
T. Rowe Price Growth & Income Fund
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Certified Annual Report
Dear Shareholder,
We are pleased to report that your fund returned 28.22% during the 12 months
ended December 31, 2003. The fund outpaced its Lipper Large-Cap Core Funds Index
and performed roughly in line with the S&P 500 Stock Index, as you can see from
the table on the previous page. The fund especially benefited from its
allocations to financial services and materials stocks, sectors that were
well-positioned for the rebounding economy.
As you know, the fund's investment objective is to provide long-term capital
growth, a reasonable level of current income, and increasing future income
through investments primarily in larger-cap, dividend-paying stocks. The fund
employs a value approach in selecting companies we expect will grow over time
and support a growing dividend payment, as well as some stocks that do not pay
dividends currently but offer prospects for appreciation and future dividends.
[Graphic Omitted]
Major Index Returns
Period Ended 12/31/03
12-Month Return
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S&P 500 Stock Index 29%
S&P MidCap 400 Index 36%
Russell 2000 Index 47%
Nasdaq Composite 50%
The Major Index Returns chart shows how various domestic stock markets performed
over the past 12 months. As you can see, domestic stocks registered solid
returns, with the technology-heavy Nasdaq Composite and the small-cap Russell
2000 showing the best results. Mid-cap stocks also outperformed large-cap
stocks, as represented by the S&P 500 Stock Index.
The Top 5 Sectors table shows how the fund's assets were allocated as of
December 31, 2003. Financial services stocks were the largest sector allocation
at 24.3% of net assets, down from 28.3% a year earlier. Our allocation to
consumer discretionary stocks rose to 14.5% from 8.9% at the end of 2002, while
our health care holdings dropped from 15.4% to 10.0%.
Top 5 Sectors
Percent of Net Assets
12/31/02 12/31/03
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Financials 28.4% 24.3%
Consumer Discretionary 8.9 14.5
Industrials and Business Services 8.8 11.3
Information Technology 11.7 11.1
Health Care 15.4 10.0
For comparison purposes, we have restated the historical weightings to
incorporate changes made to the sector and industry classification system.
The Best and Worst Contributors table shows the top- and bottom-five
contributors to the fund's performance during the year. Financial services
companies Citigroup and U.S. Bancorp were the top positive contributors, while
pharmaceutical company Schering-Plough was the worst detractor.
Best and Worst Contributors
12 Months Ended 12/31/03
Best Contributors
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Citigroup
U.S. Bancorp
Alcoa
J.P. Morgan Chase
Home Depot
Worst Contributors
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Schering-Plough
AT&T **
Verizon Communications
Concord EFS **
Baxter International **
** Position eliminated
Finally, I'm sure you are aware that mutual fund companies have recently come
under scrutiny for their trading policies. The investigations have led to
allegations that executives of several mutual fund companies permitted or
engaged in improper mutual fund trading. In addition, certain intermediaries
that process fund transactions are alleged to have assisted some investors in
executing improper mutual fund trades. I want T. Rowe Price shareholders to know
that we emphatically
condemn the abuses that have been revealed or alleged against other firms in our
industry. Our firm has not entered and will not enter into any agreements with
any investors or intermediaries that authorize after-hours trading or excessive
short-term trading in any of our funds. T. Rowe Price investors can be assured
that our firm unequivocally opposes illegal or inappropriate trading of any
nature and has policies and procedures in place designed to protect the best
interests of our long-term shareholders. No T. Rowe Price executives or
portfolio managers or investment personnel of the T. Rowe Price mutual funds
have engaged in any inappropriate trading of T. Rowe Price mutual funds. You may
find out more about our trading policies and the steps we take to protect your
interests by visiting our Web site (troweprice.com). These policies are also
spelled out in your fund's prospectus.
We thank you for your continued support.
Respectfully,
James S. Riepe
Chairman
January 20, 2004
T. Rowe Price Growth & Income Fund
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Certified Annual Report
Financial Highlights For a share outstanding throughout each period
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Year
Ended
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
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NET ASSET VALUE
Beginning of period $ 17.11 $ 22.82 $ 24.44 $ 24.44 $ 26.25
Investment activities
Net investment
income (loss) 0.19 0.17 0.25 0.34 0.49
Net realized and
unrealized gain (loss) 4.61 (5.57) (0.83) 1.83 0.46
Total from
investment activities 4.80 (5.40) (0.58) 2.17 0.95
Distributions
Net investment income (0.19) (0.16) (0.26) (0.34) (0.51)
Net realized gain - (0.15) (0.78) (1.83) (2.25)
Total distributions (0.19) (0.31) (1.04) (2.17) (2.76)
NET ASSET VALUE
End of period $ 21.72 $ 17.11 $ 22.82 $ 24.44 $ 24.44
-----------------------------------------------------
Ratios/Supplemental Data
Total return^ 28.22% (23.84)% (2.17)% 8.97% 3.78%
Ratio of total expenses to
average net assets 0.82% 0.81% 0.81% 0.77% 0.77%
Ratio of net investment
income (loss) to average
net assets 1.02% 0.84% 1.08% 1.35% 1.78%
Portfolio turnover rate 40.5% 44.7% 65.9% 80.3% 20.3%
Net assets, end of period
(in millions) $ 1,964 $ 1,675 $ 2,394 $ 2,989 $ 3,440
^ 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 accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth & Income Fund
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Certified Annual Report December 31, 2003
Portfolio of Investments (ss.) Shares Value
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($ 000s)
COMMON STOCKS 98.1%
CONSUMER DISCRETIONARY 14.5%
Automobiles 0.9%
Harley-Davidson 385,000 18,299
18,299
Hotels, Restaurants & Leisure 1.5%
Carnival 250,000 9,932
MGM Mirage * 500,000 18,805
28,737
Household Durables 1.2%
Newell Rubbermaid 1,002,000 22,816
22,816
Leisure Equipment & Products 0.7%
Eastman Kodak 525,000 13,477
13,477
Media 7.4%
Cablevision Systems, Class A * 615,000 14,385
Clear Channel Communications 515,000 24,117
Disney 755,000 17,614
New York Times, Class A 450,000 21,505
News Corporation ADR 432,000 13,068
Time Warner * 1,210,000 21,768
Viacom, Class B 733,000 32,531
144,988
Multiline Retail 0.7%
Family Dollar Stores 280,000 10,047
Kohl's * 105,300 4,732
14,779
Specialty Retail 2.1%
Home Depot 800,000 28,392
TJX 580,000 12,789
41,181
Total Consumer Discretionary 284,277
CONSUMER STAPLES 7.1%
Beverages 1.7%
Coca-Cola 325,000 16,494
PepsiCo 365,000 17,016
33,510
Food & Staples Retailing 1.9%
Sysco 565,000 21,035
Wal-Mart 325,000 17,241
38,276
Food Products 1.2%
Campbell Soup 420,000 11,256
General Mills 270,000 12,231
23,487
Personal Products 0.7%
Gillette 350,000 12,856
12,856
Tobacco 1.6%
Altria Group 575,000 31,291
31,291
Total Consumer Staples 139,420
ENERGY 7.0%
Energy Equipment & Services 3.1%
Baker Hughes 620,000 19,939
Schlumberger 255,000 13,954
Transocean * 1,090,000 26,171
60,064
Oil & Gas 3.9%
Amerada Hess 270,000 14,356
BP ADR 420,000 20,727
ChevronTexaco 210,000 18,141
Exxon Mobil 315,000 12,915
Royal Dutch Petroleum ADS 210,000 11,002
77,141
Total Energy 137,205
FINANCIALS 24.2%
Capital Markets 8.4%
Bank of New York 505,000 16,726
Charles Schwab 800,000 9,472
Franklin Resources 245,000 12,755
Goldman Sachs Group 180,000 17,771
J.P. Morgan Chase 925,000 33,975
Mellon Financial 925,000 29,702
Morgan Stanley 426,000 24,653
State Street 380,000 19,790
164,844
Commercial Banks 3.2%
Comerica 420,000 23,545
U.S. Bancorp 1,320,000 39,310
62,855
Consumer Finance 1.7%
American Express 380,000 18,327
SLM Corporation 400,000 15,072
33,399
Diversified Financial Services 3.0%
Citigroup 995,000 48,297
Principal Financial Group 332,000 10,979
59,276
Insurance 6.6%
American International Group 321,000 21,276
Berkshire Hathaway, Class A * 130 10,952
China Life Insurance ADR * 38,000 1,253
Marsh & McLennan 433,400 20,756
Prudential 200,000 8,354
SAFECO 338,000 13,158
St. Paul Companies 320,000 12,688
Travelers Property Casualty, Class A 1,048,000 17,585
UnumProvident 740,000 11,670
XL Capital, Class A 145,000 11,245
128,937
Real Estate 0.5%
Equity Residential, REIT 375,000 11,066
11,066
Thrifts & Mortgage Finance 0.8%
Fannie Mae 60,000 4,504
Freddie Mac 200,000 11,664
16,168
Total Financials 476,545
HEALTH CARE 10.0%
Biotechnology 0.4%
MedImmune * 300,200 7,625
7,625
Health Care Equipment & Supplies 1.5%
Guidant 258,000 15,531
Medtronic 300,000 14,583
30,114
Health Care Providers & Services 0.8%
HCA 180,000 7,733
UnitedHealth Group 160,000 9,309
17,042
Pharmaceuticals 7.3%
Abbott Laboratories 182,000 8,481
Bristol-Myers Squibb 340,000 9,724
Forest Laboratories * 287,000 17,737
Johnson & Johnson 165,000 8,524
Merck 285,000 13,167
Pfizer 1,496,000 52,854
Schering-Plough 750,000 13,042
Wyeth 455,000 19,315
142,844
Total Health Care 197,625
INDUSTRIALS & BUSINESS SERVICES 11.3%
Aerospace & Defense 2.4%
Honeywell International 440,000 14,709
Lockheed Martin 349,000 17,939
Northrop Grumman 157,000 15,009
47,657
Air Freight & Logistics 1.3%
UPS, Class B 340,000 25,347
25,347
Airlines 1.1%
JetBlue Airways * 405,000 10,740
Ryanair Holdings ADR * 212,000 10,736
21,476
Building Products 1.0%
Masco 740,000 20,283
20,283
Industrial Conglomerates 2.3%
General Electric 1,085,000 33,613
Tyco International 425,000 11,263
44,876
Machinery 1.2%
Danaher 245,000 22,479
22,479
Road & Rail 2.0%
Burlington Northern Santa Fe 555,000 17,954
Union Pacific 305,000 21,192
39,146
Total Industrials & Business Services 221,264
INFORMATION TECHNOLOGY 11.1%
Communications Equipment 1.8%
Cisco Systems * 950,000 23,076
Nokia ADR 700,000 11,900
34,976
Computer & Peripherals 2.0%
Dell * 325,000 11,037
Hewlett-Packard 600,000 13,782
Lexmark International, Class A * 180,000 14,155
38,974
Internet Software & Services 0.4%
InterActiveCorp * 262,000 8,890
8,890
IT Services 0.8%
Accenture, Class A * 333,000 8,764
First Data 150,400 6,180
14,944
Semiconductor & Semiconductor Equipment 3.8%
Analog Devices 402,000 18,352
Applied Materials * 445,000 9,990
Maxim Integrated Products 409,000 20,368
Xilinx * 670,000 25,956
74,666
Software 2.3%
Adobe Systems 292,000 11,475
Microsoft 1,235,000 34,012
45,487
Total Information Technology 217,937
MATERIALS 7.4%
Chemicals 3.4%
Dow Chemical 670,000 27,852
DuPont 340,000 15,603
Potash Corp./Saskatchewan 265,000 22,917
66,372
Metals & Mining 3.3%
Alcoa 740,000 28,120
Newmont Mining 300,000 14,583
Nucor 405,000 22,680
65,383
Paper & Forest Products 0.7%
International Paper 300,000 12,933
12,933
Total Materials 144,688
TELECOMMUNICATION SERVICES 3.5%
Diversified Telecommunication Services 1.7%
BellSouth 420,000 11,886
Verizon Communications 638,000 22,381
34,267
Wireless Telecommunication Services 1.8%
Nextel Communications, Class A * 475,000 13,328
Vodafone ADR 870,000 21,785
35,113
Total Telecommunication Services 69,380
UTILITIES 1.9%
Electric Utilities 1.2%
Pinnacle West Capital 255,000 10,205
PPL 306,000 13,388
23,593
Multi-Utilities & Unregulated Power 0.7%
Duke Energy 670,000 13,701
13,701
Total Utilities 37,294
Total Miscellaneous Common Stocks 0.1% 1,594
Total Common Stocks (Cost $1,499,202) 1,927,229
SHORT-TERM INVESTMENTS 1.7%
Money Market Fund 1.7%
T. Rowe Price Reserve Investment Fund, 1.13% # 32,878,169 32,878
Total Short-Term Investments (Cost $32,878) 32,878
Total Investments in Securities
99.8% of Net Assets (Cost $1,532,080) $1,960,107
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(ss.) Denominated in U.S. dollars unless otherwise noted
# Seven-day yield
* Non-income producing
ADR American Depository Receipts
ADS American Depository Shares
REIT Real Estate Investment Trust
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth & Income Fund
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Certified Annual Report December 31, 2003
Statement of Assets and Liabilities
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($ 000s)
Assets
Investments in securities, at value (cost $1,532,080) $ 1,960,107
Other assets 16,442
Total assets 1,976,549
Liabilities
Total liabilities 12,803
NET ASSETS $ 1,963,746
-------------
Net Assets Consist of:
Undistributed net investment income (loss) $ 769
Undistributed net realized gain (loss) (22,602)
Net unrealized gain (loss) 428,027
Paid-in-capital applicable to 90,424,580 shares of
$0.01 par value capital stock outstanding;
500,000,000 shares authorized 1,557,552
NET ASSETS $ 1,963,746
-------------
NET ASSET VALUE PER SHARE $ 21.72
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth & Income Fund
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Certified Annual Report
Statement of Operations
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($ 000s)
Year
Ended
12/31/03
Investment Income (Loss)
Income
Dividend $ 32,234
Interest 104
Securities lending 21
Total income 32,359
Expenses
Investment management 10,016
Shareholder servicing 4,019
Custody and accounting 153
Prospectus and shareholder reports 139
Registration 41
Legal and audit 19
Directors 13
Miscellaneous 15
Total expenses 14,415
Net investment income (loss) 17,944
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities 68,162
Change in net unrealized gain (loss) on securities 362,223
Net realized and unrealized gain (loss) 430,385
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 448,329
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth & Income Fund
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Certified Annual Report
Statement of Changes in Net Assets
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($ 000s)
Year
Ended
12/31/03 12/31/02
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Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 17,944 $ 16,659
Net realized gain (loss) 68,162 (90,688)
Change in net unrealized gain (loss) 362,223 (487,984)
Increase (decrease) in net assets from operations 448,329 (562,013)
Distributions to shareholders
Net investment income (17,748) (16,086)
Net realized gain - (15,649)
Decrease in net assets from distributions (17,748) (31,735)
Capital share transactions *
Shares sold 147,726 165,471
Distributions reinvested 17,038 30,623
Shares redeemed (306,791) (321,591)
Increase (decrease) in net assets from capital
share transactions (142,027) (125,497)
Net Assets
Increase (decrease) during period 288,554 (719,245)
Beginning of period 1,675,192 2,394,437
End of period $ 1,963,746 $ 1,675,192
-------------------------
*Share information
Shares sold 7,948 8,456
Distributions reinvested 897 1,537
Shares redeemed (16,348) (16,976)
Increase (decrease) in shares outstanding (7,503) (6,983)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Growth & Income Fund
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Certified Annual Report
Notes to Financial Statements
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Growth & Income Fund, Inc. (the fund) is registered under the
Investment Company Act of 1940 (the 1940 Act) as a diversified, open-end
management investment company and commenced operations on December 21, 1982. The
fund seeks to provide long-term capital growth, a reasonable level of current
income, and increasing future income through investments primarily in
dividend-paying common stocks.
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 official closing price for certain markets, at the
time the valuations are made. 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 ask prices for domestic
securities and the last quoted sale price for international securities.
Debt securities are generally traded in the over-the-counter market. Securities
with original maturities of one year or more are valued at prices furnished by
dealers who make markets in such securities or by an independent pricing
service, which considers yield or price of bonds of comparable quality, coupon,
maturity, and type, as well as prices quoted by dealers who make markets in such
securities. Securities with original maturities of less than one year are valued
at amortized cost in local currency, which approximates fair value when combined
with accrued interest.
Investments in mutual funds are valued at the mutual fund's closing net asset
value per share on the day of valuation.
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.
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 $140,000 for the
year ended December 31, 2003. 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 on a quarterly
basis. Capital gain distributions, if any, are typically declared and paid 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.
Securities Lending
The fund lends its securities to approved brokers to earn additional income. It
receives as collateral cash and U.S. government securities valued at 102% to
105% of the value of the securities on loan. Cash collateral is invested in a
money market pooled trust managed by the fund's lending agent in accordance with
investment guidelines approved by fund management. Collateral is maintained over
the life of the loan in an amount not less than the value of
loaned securities, as determined at the close of fund business each day; any
additional collateral required due to changes in security values is delivered to
the fund the next business day. Although 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 the securities.
Securities lending revenue recognized by the fund consists of earnings on
invested collateral and borrowing fees, net of any rebates to the borrower and
compensation to the lending agent. At December 31, 2003, there were no
securities on loan.
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $691,328,000 and $824,416,000, respectively, for the year ended
December 31, 2003.
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 significantly 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.
Distributions during the year ended December 31, 2003 totaled $17,748,000 and
were characterized as ordinary income for tax purposes. At December 31, 2003,
the tax-basis components of net assets were as follows:
- --------------------------------------------------------------------------------
Unrealized appreciation $ 490,106,000
Unrealized depreciation (62,079,000)
Net unrealized appreciation (depreciation) 428,027,000
Undistributed ordinary income 769,000
Capital loss carryforwards (22,602,000)
Paid-in capital 1,557,552,000
Net assets $ 1,963,746,000
------------------
The fund intends to retain realized gains to the extent of available capital
loss carryforwards for federal income tax purposes. In 2003, the fund utilized
$68,162,000 of capital loss carryforwards. As of December 31, 2003, the fund had
$22,602,000 of capital loss carryforwards that expire in 2010.
At December 31, 2003, the cost of investments for federal income tax purposes
was $1,532,080,000.
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 December 31,
2003, the effective annual group fee rate was 0.32%, and investment management
fee payable totaled $257,000.
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 price 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 fund. Expenses incurred pursuant to these service agreements
totaled $2,833,000 for the year ended December 31, 2003, of which $257,000 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) have invested. The Spectrum Funds do not invest in the underlying Price
funds for the purpose of exercising management or control. Pursuant to a special
servicing agreement, expenses associated with the operation of the Spectrum
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 Funds. Expenses allocated under this agreement are reflected as
shareholder servicing expense in the accompanying financial statements. For the
year ended December 31, 2003, the fund was allocated $482,000 of Spectrum Funds'
expenses, of which $345,000 related to services provided by Price and $27,000
was payable at period-end. At December 31, 2003, approximately 9% of the
outstanding shares of the fund were held by the Spectrum 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 only to mutual funds,
trusts, and other accounts managed by Price Associates and/or its affiliates,
and are not available to the public. The Reserve Funds pay no investment
management fees. During the year ended December 31, 2003, dividend income from
the Reserve Funds totaled $603,000.
T. Rowe Price Growth & Income Fund
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Certified Annual Report
Report of Independent Auditors
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To the Board of Directors and Shareholders of
T. Rowe Price Growth & Income Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of T. Rowe Price Growth & Income Fund,
Inc. (the "Fund") at December 31, 2003, and the results of its operations, the
changes in its net assets and the financial highlights for each of the fiscal
periods presented, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 2003 by correspondence with the custodian, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 26, 2004
T. Rowe Price Growth & Income Fund
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Certified Annual Report
Tax Information (Unaudited) for the Tax Year Ended 12/31/03
- --------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code. The
amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
For corporate shareholders, $17,944,000 of the fund's income and short-term
capital gains qualified for the dividends-received deduction.
For taxable non-corporate shareholders, $17,944,000 of the fund's income and
short-term capital gains represents qualified dividend income subject to the 15%
rate category.
Information on Proxy Voting
- --------------------------------------------------------------------------------
A description of the policies and procedures that the T. Rowe Price Growth &
Income 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.
T. Rowe Price Growth & Income Fund
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Certified Annual Report
About the Fund's Directors and Officers
- --------------------------------------------------------------------------------
Your fund is governed by a Board of Directors that meets regularly to review
investments, performance, expenses, and other business matters, and is
responsible for protecting the interests of shareholders. The majority of the
fund's directors are independent of T. Rowe Price Associates, Inc. (T. Rowe
Price); "inside" directors are officers of T. Rowe Price. The Board of Directors
elects the fund's officers, who are listed in the final table. The business
address of each director and officer is 100 East Pratt Street, Baltimore, MD
21202. The Statement of Additional Information includes additional information
about the fund directors and is available without charge by calling a T. Rowe
Price representative at 1-800-225-5132.
Independent Directors
Name
(Date of Birth) Principal Occupation(s) During Past 5 Years
Year Elected* and Directorships of Other Public Companies
Anthony W. Deering Director, Chairman of the Board, President,
(1/28/45) and Chief Executive Officer, The Rouse
2001 Company, real estate developers; Director,
Mercantile Bank (4/03 to present)
Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC,
(1/27/43) an acquisition and management advisory firm
1982
David K. Fagin Director, Golden Star Resources Ltd., Canyon
(4/9/38) Resources Corp. (5/00 to present), and Pacific
1994 Rim Mining Corp. (2/02 to present); Chairman and
President, Nye Corp.
Karen N. Horn Managing Director and President, Global Private
(9/21/43) Client Services, Marsh Inc.; Managing Director
2003 and Head of International Private Banking,
Bankers Trust; Director, Eli Lilly and Company
F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates,
(8/22/34) Inc., consulting environmental and civil engineers
2001
John G. Schreiber Owner/President, Centaur Capital Partners, Inc.,
(10/21/46) a real estate investment company; Senior Advisor
2001 and Partner, Blackstone Real Estate Advisors,
L.P.; Director, AMLI Residential Properties Trust,
Host Marriott Corp., and The Rouse Company
Hubert D. Vos** Owner/President, Stonington Capital Corp.,
(8/2/33) a private investment company
1994
Paul M. Wythes** Founding Partner, Sutter Hill Ventures, a
(6/23/33) venture capital limited partnership, providing
1982 equity capital to young high-technology
companies throughout the United States; Director,
Teltone Corp.
* Each independent director oversees 107 T. Rowe Price portfolios and serves
until retirement, resignation, or election of a successor.
** Retired from Board of Directors effective December 31, 2003.
Inside Directors
Name
(Date of Birth)
Year Elected*
[Number of T. Rowe Price Principal Occupation(s) During Past 5 Years and
Portfolios Overseen] Directorships of Other Public Companies
James A.C. Kennedy, CFA Director and Vice President, T. Rowe Price
(8/15/53) and T. Rowe Price Group, Inc.
1997
[39]
James S. Riepe Director and Vice President, T. Rowe Price;
(6/25/43) Vice Chairman of the Board, Director, and
1982 Vice President, T. Rowe Price Group, Inc.;
[107] Chairman of the Board and Director, T. Rowe Price
Global Asset Management Limited, T. Rowe Price
Global Investment Services Limited, T. Rowe Price
Investment Services, Inc., T. Rowe Price
Retirement Plan Services, Inc., and T. Rowe
Price Services, Inc.; Chairman of the Board,
Director, President, and Trust Officer, T. Rowe
Price Trust Company; Director, T. Rowe Price
International, Inc.; Chairman of the Board,
Growth & Income Fund
M. David Testa, CFA, CIC Chief Investment Officer, Director, and Vice
(4/22/44) President, T. Rowe Price; Vice Chairman of the
1994 Board, Chief Investment Officer, Director, and
[107] Vice President, T. Rowe Price Group, Inc.;
Chairman of the Board and Director, T. Rowe Price
International, Inc.; Director, T. Rowe Price
Global Asset Management Limited and T. Rowe Price
Global Investment Services Limited; Director and
Vice President, T. Rowe Price Trust Company
* Each inside director serves until retirement, resignation, or election of a
successor.
Officers
Name (Date of Birth)
Title and Fund(s) Served Principal Occupation(s)
Jeffrey A. Arricale, CPA (4/11/71) Vice President, T. Rowe Price; formerly
Vice President, Growth & Income Fund Manager, Assurance, KPMG LLP (to 1999);
student, The Wharton School, University
of Pennsylvania (to 2001)
Laurie M. Bertner (10/8/77) Vice President, T. Rowe Price; formerly
Vice President, Growth & Income Fund student, Emory University, Atlanta (to
2000); Financial Analyst, Legacy Asset
Management (to 2000)
Stephen V. Booth (6/21/61) Vice President, T. Rowe Price, T. Rowe
Vice President, Growth & Income Fund Price Group, Inc., and T. Rowe Price
Trust Company
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Officers (continued)
Name (Date of Birth)
Title and Fund(s) Served Principal Occupation(s)
Joseph A. Carrier (12/30/60) Vice President, T. Rowe Price, T. Rowe
Treasurer, Growth & Income Fund Price Group, Inc., and T. Rowe Price
Investment Services, Inc.
Arthur B. Cecil III, CFA (9/15/42) Vice President, T. Rowe Price and
Vice President, Growth & Income Fund T. Rowe Price Group, Inc.
Anna M. Dopkin, CFA (9/5/67) Vice President, T. Rowe Price and
President, Growth & Income Fund T. Rowe Price Group, Inc.
Roger L. Fiery III, CPA (2/10/59) Vice President, T. Rowe Price, T. Rowe
Vice President, Growth & Income Fund Price Group, Inc., T. Rowe Price
International, Inc., and T. Rowe Price
Trust Company
David R. Giroux, CFA (6/8/75) Vice President, T. Rowe Price and
Vice President, Growth & Income Fund T. Rowe Price Group, Inc.
Michael W. Holton (9/25/68) Vice President, T. Rowe Price and
Vice President, Growth & Income Fund T. Rowe Price Group, Inc.
Henry H. Hopkins (12/23/42) Director and Vice President, T. Rowe
Vice President, Growth & Income Fund Price Group, Inc., T. Rowe Price
Investment Services, Inc., T. Rowe
Price Services, Inc., and T. Rowe Price
Trust Company; Vice President, T. Rowe
Price, T. Rowe Price International,
Inc., and T. Rowe Price Retirement Plan
Services, Inc.
David M. Lee, CFA (11/13/62) Vice President, T. Rowe Price and
Vice President, Growth & Income Fund T. Rowe Price Group, Inc.
Patricia B. Lippert (1/12/53) Assistant Vice President, T. Rowe Price
Secretary, Growth & Income Fund and T. Rowe Price Investment Services,
Inc.
Karen M. Regan (4/16/67) Assistant Vice President, T. Rowe Price
Vice President, Growth & Income Fund
Jeffrey Rottinghaus, CPA (2/20/70) Vice President, T. Rowe Price; formerly
Vice President, Growth & Income Fund Information Technology Consultant,
Kelly-Lewey & Associates (to 1999);
student, The Wharton School, University
of Pennsylvania (to 2001)
Robert W. Sharps, CFA (6/10/71) Vice President, T. Rowe Price and
Vice President, Growth & Income Fund T. Rowe Price Group, Inc.
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Officers (continued)
Name (Date of Birth)
Title and Fund(s) Served Principal Occupation(s)
Robert W. Smith (4/11/61) Vice President, T. Rowe Price, T. Rowe
Vice President, Growth & Income Fund Price Group, Inc., and T. Rowe Price
International, Inc.
Julie L. Waples (5/12/70) Vice President, T. Rowe Price
Vice President, Growth & Income Fund
R. Candler Young (9/28/71) Vice President, T. Rowe Price and
Vice President, Growth & Income Fund T. Rowe Price Group, Inc.; formerly
Investment Banking Summer Associate,
Goldman Sachs & Company (to 1999)
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Item 2. Code of Ethics.
As of the end of the period covered by this report, the registrant has adopted 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. A copy of this code of
ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were
approved or waivers were granted to this code of ethics during the period
covered by this report.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors/Trustees has determined that Mr. David K.
Fagin qualifies as an audit committee financial expert, as defined in Item 3 of
Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form
N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
2003 2002
Audit Fees $11,373 $11,305
Audit-Related Fees 666 --
Tax Fees 2,954 2,737
All Other Fees 124 195
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, specifically the issuance of a report on internal
controls. Tax fees include amounts related to tax compliance, tax planning, and
tax advice. Other fees include the registrant's pro-rata share of amounts for
agreed-upon procedures in conjunction with service contract approvals by the
registrant's Board of Directors/Trustees.
(e)(1) The registrant's audit committee has adopted a policy whereby audit and
non-audit services performed by the registrant's principal accountant for the
registrant, its investment adviser, and any entity controlling, controlled by,
or under common control with the investment adviser that provides ongoing
services to the registrant require pre-approval in advance at regularly
scheduled audit committee meetings. If such a service is required between
regularly scheduled audit committee meetings, pre-approval may be authorized by
one audit committee member with ratification at the next scheduled audit
committee meeting. Waiver of pre-approval for audit or non-audit services
requiring fees of a de minimis amount is not permitted.
(2) No services included in (b) - (d) above were approved pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $719,000 and $671,000, respectively, and
were less than the aggregate fees billed for those same periods by the
registrant's principal accountant for audit services rendered to the T. Rowe
Price Funds.
(h) All non-audit services rendered in (g) above were pre-approved by the
registrant's audit committee. Accordingly, these services were considered by the
registrant's audit committee in maintaining the principal accountant's
independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. [Reserved]
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. 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 10. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is
attached.
(a)(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.
(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 & Income Fund, Inc.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date February 13, 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 February 13, 2004
By /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date February 13, 2004