-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EELVbXr6fddZmShbDJGvY0giIxA3BL002PzHDylvnR6VZl48O8Bgcn0Mu+oubnpZ 7zrd2ohQsQrcaG9KvcHDwA== 0000950109-96-005094.txt : 19960813 0000950109-96-005094.hdr.sgml : 19960813 ACCESSION NUMBER: 0000950109-96-005094 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE INDEX TRUST INC CENTRAL INDEX KEY: 0000858581 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05986 FILM NUMBER: 96608219 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 3015472000 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INSTITUTIONAL EQUITY FUNDS INC DATE OF NAME CHANGE: 19900227 N-30D 1 EQUITY INDEX FUND SEMI ANNUAL REPORT Semiannual Report Equity Index Fund ------------- June 30, 1996 ------------- [LOGO OF T. ROWE PRICE APPEARS HERE] Report Highlights ---------------------------------------- . Despite rising interest rates, the stock market continued its strong advance over the last six months, powered by robust inflows into equity mutual funds and a strengthening economy. . Your fund closely tracked the unmanaged S&P 500 for both the 6- and 12-month periods ended June 30. Fund assets increased significantly, which should help it track the index even more closely. . Consumer stocks performed well, led by a rebound in retail issues. Despite the economy's strength, only one cyclical sector, capital equipment, outpaced the index. Utility stocks were hurt by rising interest rates. . While the stock market is vulnerable to concerns about rising interest rates and slowing earnings growth, the economy remains fundamentally strong and the long- term picture seems positive for stocks. Fellow Shareholders Despite rising interest rates, the stock market continued its 1995 rally through the first half of this year, with the unmanaged Standard & Poor's 500 Stock Index returning 10.10%. The biggest financial news was the record flow of money into equity mutual funds, while the economy showed unexpected strength. - ---------------------- Performance Comparison - ----------------------
Periods Ended 6/30/96 6 Months 12 Months Equity Index Fund 9.93% 25.65% S&P 500 10.10 26.00
Your fund closely tracked the S&P 500 for the six months ended June 30, with a slight lag due to the expenses of managing the portfolio. Robust new inflows and the rising market increased fund assets to more than $600 million, which helped minimize the difference between fund and index performance because we were able to spread operating expenses over a larger base of assets. The fund also shadowed the index for the 12-month period, delivering strong gains on the strength of surging stock prices. Fund Distributions Your Board of Directors declared a first quarter dividend of $0.09 per share and a capital gain of $0.13 per share. These distributions were paid on March 28 to shareholders of record on March 26. The Board also declared a second quarter dividend of $0.09 per share, paid on June 27 to shareholders of record on June 25. In January 1997, you will receive your Form 1099-DIV reporting these distributions for tax purposes. Market Review Through most of 1995, stocks and bonds moved in tandem, as falling interest rates pushed up the prices of financial assets. So far this year, the markets have veered in different directions. Long-term interest rates rose about one percentage point through the first half, leading to negative returns on most bonds. Despite some deceleration in corporate profit growth and rising interest rates, stocks continued to 1 advance, albeit more slowly than their torrid pace of last year. The market was fueled mainly by strong flows of money into equity mutual funds, including yours. Market volatility also picked up, returning to historically normal levels after drifting lower over the past few years. Stock market volatility can be measured in many ways, but each generally describes the magnitude of short-term price fluctuations. If we compare the number of days in which the index has moved by more than 1%, either up or down, 1996 has so far been a fairly typical year, with about 15% of the trading days exceeding this threshold. In 1994, only 11% of the trading days showed index movements of more than 1%, and for 1995 the figure was less than 6%. Volatility by itself is neither good nor bad for investors. What's important is the ultimate level of stock prices, not the path taken to get there. Higher price fluctuations might make some investors uncomfortable, but with today's rapid dissemination of information and the ability of traders to act quickly upon it, volatility is here to stay. PORTFOLIO REVIEW Only nine changes were made to the S&P 500 in the first half, representing about 1% of total market value, one of the least active periods in recent memory. Even this low turnover is somewhat overstated because the three largest deletions -- Capital Cities/ABC, Chase Manhattan, and First Interstate Bancorp -- represented the consummation of mergers that were announced in 1995. Three of the additions to the index were technology companies, further indicating the importance of that sector. EMC manufactures computer data storage systems, Bay Networks is a leading provider of computer networking equipment, and General Instruments supplies communications systems. Other additions include Worldcom, the fourth-largest long-distance telephone provider; Case, which manufactures farm and construction equipment; Fifth Third Bancorp, a midwestern regional bank; Green Tree Financial, which finances the purchase of mobile homes; Aon, a diversified insurance company, and Tupperware, a manufacturer of plastic household containers. Across the broad U.S. stock market, growth stocks outperformed their value-oriented counterparts, and small-capitalization companies nosed out large-caps. Until the market's pullback in recent weeks, it was 2 generally a good period to take more risk. Stocks with a higher beta or volatility and more highly valued stocks performed best. With the economy growing strongly (at an annualized 2.3% in the first quarter and an estimated 4% in the second quarter), many expected the more economically sensitive sectors of the index to perform best. However, only one of the sectors with significant business cycle exposure, capital equipment lead by GE and AlliedSignal, outpaced the overall market during the first half. The other cyclical sectors lagged as companies had difficulty translating good overall economic conditions into good corporate performance. Analysts lowered earnings estimates significantly across such groups as basic materials and process industries, and the stocks suffered. - ------------------------------ Best Performing Market Sectors - ------------------------------
Periods Ended 6/30/96 6 Months 12 Months - --------------------------------------------- Capital Equipment 16.2% 33.5% .............................................. Consumer Nondurables 15.6 33.1 .............................................. Technology 14.4 19.4 .............................................. Consumer Services 13.2 15.0 .............................................. Energy 10.3 26.5 .............................................. Financial 9.8 31.2 .............................................. Consumer Cyclicals 8.3 16.1 .............................................. Health Care 8.0 38.4 .............................................. Process Industries 8.0 12.8 .............................................. Business Services and Transportation 6.9 18.7 .............................................. Basic Materials 1.2 1.2 .............................................. Utilities -1.0 21.0 ..............................................
Strong returns were found in consumer-oriented stocks. Shares of Philip Morris rose 17% after the tobacco company prevailed in an important court case. Coca-Cola rose 32% due to strong sales growth both domestically and abroad. Both stocks were among our top 10 contributors to performance over the last six months, as shown in the table following this letter. Retail stocks, which were pushed down sharply in 1995, bounced back after reports of improved sales growth. Surprisingly, technology stocks were the S&P 500's third-best sector, despite pockets of weakness across the group. Larger technology companies seemed to be doing better than smaller ones; the design and manufacture of innovative, high-quality products is becoming more complex and expensive, a trend that favors larger companies. Software giant Microsoft was one of the best performers, up 36% in the first half as the Windows engine began firing on all cylinders. 3 Utilities were our worst-performing sector. Rising interest rates almost always depress higher-yielding utilities, and the recent telecommunications bill raises the competitive threat for the telephone companies. Pacific Gas and Electric and NYNEX were among our 10 worst contributors. OUTLOOK The second quarter ended on a down note, with the S&P 500 falling about 1% in its last few weeks. After the quarter ended, the index fell another 3.6% in early July. Investors are clearly skittish about the path of interest rates and the apparent trouble corporations are having meeting earnings expectations. Given its long advance, the stock market is vulnerable to these concerns. Nevertheless, the economy seems fundamentally strong, and, over the long term, stocks have always appreciated when the economy grows. We believe most investors are better off sticking with a consistent investment strategy and ignoring short-term fluctuations in prices or speculation over recent financial news. Our goal is to provide a good vehicle for a consistent, long-term approach to equity investing. Respectfully submitted, /s/Richard T. Whitney Richard T. Whitney President and Chairman of the Investment Advisory Committee July 15, 1996 4 T. Rowe Price Equity Index Fund - -------------------------------------------------------------- - -------------------- Portfolio Highlights - --------------------
TWENTY-FIVE LARGEST HOLDINGS Percent of Net Assets 6/30/96 - -------------------------------------------------------------- GE 2.5% .............................................................. Coca-Cola 2.2 .............................................................. Exxon 1.9 .............................................................. AT&T 1.8 .............................................................. Philip Morris 1.5 - -------------------------------------------------------------- Royal Dutch Petroleum 1.4 .............................................................. Merck 1.4 .............................................................. Microsoft 1.3 .............................................................. Johnson & Johnson 1.2 .............................................................. Procter & Gamble 1.1 - -------------------------------------------------------------- Intel 1.1 .............................................................. Wal-Mart 1.0 .............................................................. PepsiCo 1.0 .............................................................. IBM 0.9 .............................................................. Hewlett-Packard 0.9 - -------------------------------------------------------------- American International Group 0.8 .............................................................. Bristol-Myers Squibb 0.8 .............................................................. Pfizer 0.8 .............................................................. Mobil 0.8 .............................................................. DuPont 0.8 - -------------------------------------------------------------- GTE 0.8 .............................................................. BellSouth 0.7 .............................................................. Disney 0.7 .............................................................. Citicorp 0.7 .............................................................. GM 0.7 - -------------------------------------------------------------- Total 28.8%
5 T. Rowe Price Equity Index Fund - ------------------------------------------------------------ - -------------------- Portfolio Highlights - ------------------------------------------------------------ CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended June 30, 1996 Ten Best Contributors Ten Worst Contributors - ------------------------------------------------------------ Coca-Cola 10c SBC Communications -2c .......................... ................................ GE 8 AT&T 1 .......................... ................................ Microsoft 7 Bay Networks * 1 .......................... ................................ Intel 4 Viacom 1 .......................... ................................ PepsiCo 4 Digital Equipment 1 .......................... ................................ Cisco Systems 4 Micron Technology 1 .......................... ................................ Philip Morris 3 NYNEX 1 .......................... ................................ Johnson & Johnson 3 United HealthCare 1 .......................... ................................ Exxon 3 Loral 1 .......................... ................................ Hewlett-Packard 3 Pacific Gas and Electric 1 - -------------------------- -------------------------------- Total 49c Total -11c
12 Months Ended June 30, 1996 Ten Best Contributors Ten Worst Contributors - -------------------------------------------------------------- GE 17c Micron Technology -2c .......................... ................................ Coca-Cola 14 Sears 1 .......................... ................................ Philip Morris 8 Bay Networks * 1 .......................... ................................ Johnson & Johnson 6 Apple Computer 1 .......................... ................................ Exxon 6 Wal-Mart 1 .......................... ................................ PepsiCo 6 Texas Instruments 1 .......................... ................................ Merck 6 Viacom 1 .......................... ................................ Microsoft 6 Loral 1 .......................... ................................ Cisco Systems 6 Silicon Graphics * 1 .......................... ................................ Royal Dutch Petroleum 6 Advanced Micro Devices 1 - -------------------------- -------------------------------- Total 81c Total -11c
* Position Added ** Position Eliminated 6 T. Rowe Price Equity Index Fund - --------------------------------------------------------------- - ---------------------- Performance Comparison - --------------------------------------------------------------- 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. [LINE GRAPH OF EQUITY INDEX FUND APPEARS 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 6/30/96 1 Year 3 Years 5 Years Inception Date ---------------------------------------------------------------------- Equity Index Fund 25.65% 16.86% 15.22% 14.37% 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. 7 T. Rowe Price Equity Index Fund - -------------------------------------------------------------------------------- Unaudited - -------------------- Financial Highlights For a share outstanding throughout each period - --------------------------------------------------------------------------------
6 Months Year Ended Ended 6/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 NET ASSET VALUE Beginning of period $ 17.21 $ 13.09 $ 13.48 $ 12.63 $ 12.10 $ 9.72 ...................................................................... Investment activities Net investment income 0.19 ** 0.39 * 0.36 * 0.32 * 0.32 * 0.34 * Net realized and unrealized gain (loss) 1.51 4.43 (0.23) 0.86 0.53 2.46 ...................................................................... Total from investment activities 1.70 4.82 0.13 1.18 0.85 2.80 ...................................................................... Distributions Net investment income (0.18) (0.40) (0.36) (0.32) (0.31) (0.34) Net realized gain (0.13) (0.30) (0.09) (0.01) (0.01) (0.08) Distributions in excess of net realized gain - - (0.07) - - - ...................................................................... Total distributions (0.31) (0.70) (0.52) (0.33) (0.32) (0.42) ...................................................................... NET ASSET VALUE End of period $ 18.60 $ 17.21 $ 13.09 $ 13.48 $ 12.63 $ 12.10 ---------------------------------------------------------------------- Ratios/Supplemental Data Total return 9.93% ** 37.16% * 1.01% * 9.42% * 7.19% * 29.21% * ...................................................................... Ratio of expenses to average net assets 0.40% **+ 0.45% * 0.45% * 0.45% * 0.45% * 0.45% * ...................................................................... Ratio of net investment income to average net assets 2.11% **+ 2.54% * 2.73% * 2.40% * 2.57% * 3.07% * ...................................................................... Portfolio turnover rate 1.3%+ 1.3% 1.3% 0.8% 0.1% 5.8% ...................................................................... Average commission rate paid $ 0.0292 - - - - - ...................................................................... Net assets, end of period (in thousands) $668,204 $457,256 $270,165 $166,994 $128,242 $22,069 ......................................................................
* 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. The accompanying notes are an integral part of these financial statements. 8 T. Rowe Price Equity Index Fund - --------------------------------------------------------------- Unaudited June 30, 1996 - ----------------------- Statement of Net Assets Shares/Par Value - --------------------------------------------------------------- In thousands
Common & Preferred Stocks 89.0% INDUSTRIAL 67.8% GE 196,332 $ 16,983 ............................................................... Coca-Cola 296,444 14,489 ............................................................... Exxon 145,997 12,684 ............................................................... AT&T 188,669 11,697 ............................................................... Philip Morris 98,674 10,262 ............................................................... Royal Dutch Petroleum ADR 63,015 9,689 ............................................................... Merck 145,304 9,390 ............................................................... Microsoft * 69,700 8,368 ............................................................... Johnson & Johnson 157,436 7,793 ............................................................... Procter & Gamble 80,719 7,315 ............................................................... Intel 96,808 7,109 ............................................................... Wal-Mart 270,022 6,852 ............................................................... PepsiCo 185,262 6,554 ............................................................... IBM 63,962 6,332 ............................................................... Hewlett-Packard 60,152 5,993 ............................................................... Bristol-Myers Squibb 59,649 5,368 ............................................................... Pfizer 74,656 5,329 ............................................................... Mobil 46,444 5,208 ............................................................... DuPont 65,324 5,169 ............................................................... Disney 78,788 4,954 ............................................................... GM 87,911 4,604 ............................................................... Chevron 76,680 4,524 ............................................................... Ford Motor 137,214 4,442 ............................................................... American Home Products 73,450 4,416 ............................................................... Motorola 69,248 4,354 ............................................................... Amoco 58,513 4,235 ............................................................... Eli Lilly 64,820 4,213 ............................................................... Abbott Laboratories 92,923 4,042 ............................................................... McDonald's 81,612 3,815 ............................................................... Cisco Systems * 66,300 3,758 ............................................................... Boeing 40,464 3,525 ............................................................... 3M 49,446 3,412 ............................................................... Gillette 52,160 3,253 ............................................................... Eastman Kodak 40,119 3,119 ............................................................... Home Depot 56,112 3,030 ...............................................................
9 T. Rowe Price Equity Index Fund - --------------------------------------------------------------- Shares/Par Value - --------------------------------------------------------------- In thousands
Oracle Systems* 76,621 $ 3,022 ................................................................ Columbia/HCA Healthcare 52,410 2,797 ................................................................ Chrysler 44,892 2,783 ................................................................ Unilever N.V. ADR 18,787 2,726 ................................................................ Schering-Plough 43,212 2,712 ................................................................ Pharmacia & Upjohn 59,269 2,630 ................................................................ Texaco 31,094 2,608 ................................................................ Kimberly-Clark 32,696 2,526 ................................................................ Schlumberger 28,392 2,392 ................................................................ Emerson Electric 26,432 2,389 ................................................................ Atlantic Richfield 18,972 2,248 ................................................................ Anheuser-Busch 29,956 2,247 ................................................................ Dow Chemical 29,482 2,241 ................................................................ Sears 45,830 2,228 ................................................................ Monsanto 68,085 2,213 ................................................................ Sprint 51,075 2,145 ................................................................ First Data 26,200 2,086 ................................................................ Campbell 29,294 2,065 ................................................................ Xerox 38,277 2,048 ................................................................ MCI 79,830 2,041 ................................................................ Computer Associates 28,397 2,023 ................................................................ Lockheed Martin 23,560 1,979 ................................................................ AlliedSignal 33,214 1,897 ................................................................ Kellogg 25,575 1,873 ................................................................ WMX Technologies 57,029 1,868 ................................................................ Sara Lee 57,024 1,846 ................................................................ Time Warner 45,393 1,782 ................................................................ Warner-Lambert 31,888 1,754 ................................................................ NIKE 16,838 1,730 ................................................................ Amgen* 31,242 1,683 ................................................................ Viacom (Class B)* 42,544 1,654 ................................................................ United Technologies 14,313 1,646 ................................................................ AirTouch Communications* 58,189 1,644 ................................................................ Northern Telecom 29,855 1,623 ................................................................ Caterpillar 23,258 1,576 ................................................................ COMPAQ Computer* 31,220 1,538 ................................................................ Baxter International 32,469 1,534 ................................................................ Medtronic 27,296 1,529 ................................................................ Seagram 43,953 1,478
10 T. Rowe Price Equity Index Fund - ---------------------------------------------------------------
Shares/Par Value - --------------------------------------------------------------- In thousands Raytheon 28,438 $ 1,468 ................................................................ RockWell 25,503 1,460 ................................................................ Colgate-Palmolive 17,085 1,448 ................................................................ J.C. Penney 26,614 1,397 ................................................................ Tele-Communications (Class A) 76,997 1,391 ................................................................ Heinz 43,398 1,318 ................................................................ Sun Microsystems* 22,282 1,312 ................................................................ Automatic Data Processing 33,856 1,308 ................................................................ Phillips Petroleum 30,902 1,294 ................................................................ May Department Stores 29,342 1,284 ................................................................ International Paper 34,802 1,283 ................................................................ ConAgra 28,189 1,279 ................................................................ McDonnell Douglas 26,304 1,276 ................................................................ Dun & Bradstreet 19,965 1,248 ................................................................ World Com* 22,500 1,245 ................................................................ Deere 30,874 1,235 ................................................................ CPC International 17,135 1,234 ................................................................ Albertson's 29,644 1,227 ................................................................ Alcoa 20,962 1,203 ................................................................ Archer Daniels Midland 62,225 1,190 ................................................................ Gannett 16,432 1,163 ................................................................ Barrick Gold 41,600 1,128 ................................................................ PPG Industries 22,996 1,121 ................................................................ Texas Instruments 22,202 1,107 ................................................................ The Gap 33,870 1,088 ................................................................ Tenneco 20,900 1,069 ................................................................ United HealthCare 20,600 1,040 ................................................................ Corning 27,002 1,036 ................................................................ AMP 25,606 1,027 ................................................................ General Mills 18,742 1,021 ................................................................ Weyerhaeuser 23,902 1,016 ................................................................ U S WEST Media* 55,486 1,013 ................................................................ U.S. Healthcare 18,000 989 ................................................................ Unocal 29,029 980 ................................................................ Walgreen 28,932 969 ................................................................ American Brands 21,336 968 ................................................................ Illinois Tool Works 13,846 936 ................................................................ Mattel 32,457 929 ................................................................ Occidental Petroleum 37,421 926 ................................................................
11 T. Rowe Price Equity Index Fund - ---------------------------------------------------------------
Shares/Par Value - --------------------------------------------------------------- In thousands Boston Scientific* 20,500 $ 923 ................................................................ Toys "R" Us* 32,116 915 ................................................................ Westinghouse 48,757 914 ................................................................ ITT Corporation* 13,741 910 ................................................................ 3Com* 19,100 873 ................................................................ Dayton Hudson 8,431 869 ................................................................ Goodyear Tire & Rubber 17,952 866 ................................................................ Pitney Bowes 17,866 853 ................................................................ Marsh & McLennan 8,612 831 ................................................................ W. R. Grace 11,499 815 ................................................................ Honeywell 14,906 812 ................................................................ Federated Department Stores* 23,800 812 ................................................................ Alcan Aluminum 26,603 811 ................................................................ Ralston Purina 12,551 805 ................................................................ Textron 9,948 795 ................................................................ Marriott International 14,760 793 ................................................................ Digital Equipment* 17,447 785 ................................................................ UST 22,698 777 ................................................................ Service Corp. 13,494 776 ................................................................ Praxair 18,140 766 ................................................................ Georgia-Pacific 10,769 765 ................................................................ Air Products and Chemicals 13,119 758 ................................................................ Freeport McMoRan Copper and Gold (Class B) 23,700 755 ................................................................ CUC International* 21,100 749 ................................................................ Halliburton 13,455 747 ................................................................ Sysco 21,473 735 ................................................................ Tyco International 17,944 731 ................................................................ The Limited 33,735 725 ................................................................ Hercules 13,107 724 ................................................................ Browning-Ferris 24,962 724 ................................................................ Avon 15,822 714 ................................................................ American Stores 17,254 712 ................................................................ Tellabs* 10,400 696 ................................................................ TRW 7,727 694 ................................................................ Wrigley 13,658 690 ................................................................ Lowes 19,000 686 ................................................................ USX-Marathon 33,881 682 ................................................................ Alco Standard 14,960 677 ................................................................ Placer Dome 28,114 671 ................................................................
12 T. Rowe Price Equity Index Fund - ---------------------------------------------------------------
Shares/Par Value - --------------------------------------------------------------- In thousands Kmart 53,998 $ 668 ................................................................ Hershey Foods 9,086 667 ................................................................ Crown Cork & Seal 14,767 665 ................................................................ Genuine Parts 14,399 659 ................................................................ Morton International 17,416 649 ................................................................ Aon 12,700 645 ................................................................ Burlington Resources 14,900 641 ................................................................ Union Carbide 16,108 640 ................................................................ Applied Materials * 21,000 639 ................................................................ Hilton 5,676 639 ................................................................ Fluor 9,697 634 ................................................................ Dresser Industries 21,455 633 ................................................................ R. R. Donnelley 18,081 631 ................................................................ Micron Technology 24,200 626 ................................................................ Winn-Dixie 17,616 623 ................................................................ Becton, Dickinson 7,750 622 ................................................................ International Flavors & Fragrances 13,043 621 ................................................................ Dover 13,360 616 ................................................................ Novell * 43,640 603 ................................................................ Amerada Hess 10,894 584 ................................................................ Cabletron Systems * 8,500 583 ................................................................ Kroger * 14,642 578 ................................................................ Masco 18,995 575 ................................................................ Eastman Chemical 9,429 574 ................................................................ Times Mirror (Class A) 13,167 573 ................................................................ Newell 18,552 568 ................................................................ Newmont Mining 11,498 568 ................................................................ Ingersoll-Rand 12,813 561 ................................................................ Clorox 6,229 552 ................................................................ Bay Networks * 21,400 551 ................................................................ Tribune 7,527 547 ................................................................ Baker Hughes 16,579 545 ................................................................ McGraw-Hill 11,796 540 ................................................................ Eaton 9,188 539 ................................................................ Quaker Oats 15,766 538 ................................................................ Cooper Industries 12,707 527 ................................................................ Nucor 10,272 520 ................................................................ Comcast (Class A Special) 28,200 518 ................................................................ Pioneer Hi-Bred 9,800 518 ................................................................
13 T. Rowe Price Equity Index Fund - --------------------------------------------------------------- Shares/Par Value - --------------------------------------------------------------- In thousands
Phelps Dodge 8,192 $ 511 ................................................................ Tenet Healthcare* 23,606 505 ................................................................ Rubbermaid 18,506 504 ................................................................ Melville 12,425 503 ................................................................ Rohm & Haas 7,883 495 ................................................................ EMC* 26,500 493 ................................................................ PriceCostco* 22,927 493 ................................................................ Computer Sciences* 6,516 487 ................................................................ Dillard Department Stores (Class A) 13,297 485 ................................................................ Dow Jones 11,399 476 ................................................................ Champion International 11,398 476 ................................................................ Great Lakes Chemical 7,598 473 ................................................................ Silicon Graphics* 19,410 466 ................................................................ Sherwin-Williams 9,958 463 ................................................................ General Dynamics 7,456 462 ................................................................ W. W. Grainger 5,922 459 ................................................................ Northrop 6,687 456 ................................................................ Inco 14,034 453 ................................................................ V. F. 7,481 446 ................................................................ Whirlpool 8,693 431 ................................................................ Harcourt General 8,600 430 ................................................................ Interpublic Group 9,134 428 ................................................................ Nordstrom 9,598 426 ................................................................ Circuit City Stores 11,512 416 ................................................................ Knight-Ridder 5,722 415 ................................................................ DSC Communications* 13,652 410 ................................................................ General Instrument* 14,200 410 ................................................................ Union Camp 8,289 404 ................................................................ Case Corporation 8,400 403 ................................................................ H&R Block 12,285 401 ................................................................ LSI Logic* 15,100 393 ................................................................ Ceridian* 7,769 392 ................................................................ Reynolds Metals 7,491 390 ................................................................ Engelhard 16,960 390 ................................................................ Black & Decker 9,995 386 ................................................................ Willamette Industries 6,500 386 ................................................................ Raychem 5,257 378 ................................................................ Hasbro 10,500 375 ................................................................
14 T. Rowe Price Equity Index Fund - --------------------------------------------------------------- Shares/Par Value - --------------------------------------------------------------- In thousands
Andrew * 6,878 $ 372 ................................................................ Kerr-McGee 6,085 370 ................................................................ New York Times (Class A) 11,351 370 ................................................................ Dana 11,938 370 ................................................................ Parker Hannifin 8,668 367 ................................................................ Western Atlas * 6,287 366 ................................................................ Westvaco 12,011 359 ................................................................ Tandy 7,460 353 ................................................................ WoolWorth * 15,631 352 ................................................................ Laidlaw (Class B) 34,600 350 ................................................................ Mallinckrodt Group 8,949 348 ................................................................ Avery Dennison 6,292 345 ................................................................ ITT Industries 13,741 345 ................................................................ Deluxe Corp. 9,721 345 ................................................................ Harrah's Entertainment * 12,199 345 ................................................................ Humana * 19,100 341 ................................................................ Johnson Controls 4,893 340 ................................................................ Mead 6,381 331 ................................................................ Pall 13,553 327 ................................................................ Brown-Forman (Class B) 8,101 324 ................................................................ Dial 10,974 314 ................................................................ Stanley Works 10,496 312 ................................................................ Temple-Inland 6,647 311 ................................................................ Sigma Aldrich 5,800 309 ................................................................ Tupperware * 7,244 306 ................................................................ Apple Computer 14,488 303 ................................................................ Liz Claiborne 8,649 299 ................................................................ Whitman 12,301 297 ................................................................ Ashland 7,484 297 ................................................................ Allergan 7,549 296 ................................................................ Reebok 8,800 296 ................................................................ Rite Aid 9,780 291 ................................................................ Manor Care 7,345 289 ................................................................ TJX 8,474 286 ................................................................ FMC * 4,358 284 ................................................................ Bausch & Lomb 6,680 284 ................................................................ Louisiana Pacific 12,696 281 ................................................................ Harris 4,604 281 ................................................................
15 T. Rowe Price Equity Index Fund - --------------------------------------------------------------- Shares/Par Value - --------------------------------------------------------------- In thousands
Homestake Mining 16,210 $ 278 ................................................................ USX-U.S. Steel 9,727 276 ................................................................ St. Jude Medical * 8,236 275 ................................................................ Echlin 7,085 268 ................................................................ Sun Company 8,833 268 ................................................................ Maytag 12,755 266 ................................................................ ALZA (Class A) * 9,630 264 ................................................................ Wendys 13,946 260 ................................................................ Owens Corning * 6,020 259 ................................................................ Merchantile Stores 4,375 256 ................................................................ James River 9,695 256 ................................................................ Pennzoil 5,511 255 ................................................................ Supervalu 8,024 253 ................................................................ Armstrong World 4,360 251 ................................................................ Ecolab 7,548 249 ................................................................ Cyprus Amax Minerals 10,996 249 ................................................................ Nalco Chemical 7,884 248 ................................................................ Giant Food 6,918 248 ................................................................ Pep Boys 7,277 247 ................................................................ Polaroid 5,395 246 ................................................................ Perkin-Elmer 5,051 244 ................................................................ Teledyne 6,580 238 ................................................................ American Greetings (Class A) 8,690 237 ................................................................ Varity * 4,888 235 ................................................................ B. F. Goodrich 6,254 234 ................................................................ Louisiana Land & Exploration 4,009 231 ................................................................ National Semiconductor * 14,873 231 ................................................................ Fruit of the Loom (Class A) * 8,900 227 ................................................................ Brunswick 11,339 227 ................................................................ C. R. Bard 6,643 226 ................................................................ Cooper Tire 10,129 225 ................................................................ Snap-On 4,733 224 ................................................................ Moore 11,858 224 ................................................................ National Service Industries 5,712 223 ................................................................ PACCAR 4,557 223 ................................................................ Millipore 5,316 223 ................................................................ Worthington Industries 10,633 221 ................................................................ Bemis 6,285 220 ................................................................ Foster Wheeler 4,827 217 ................................................................
16 T. Rowe Price Equity Index Fund - --------------------------------------------------------------- Shares/Par Value - --------------------------------------------------------------- In thousands
General Signal 5,596 $ 212 ................................................................ United States Surgical 6,728 209 ................................................................ Advanced Micro Devices * 15,307 209 ................................................................ Boise Cascade 5,663 207 ................................................................ Darden Restaurants 18,542 199 ................................................................ Biomet * 13,520 193 ................................................................ Santa Fe Pacific Gold 13,558 192 ................................................................ Cummins Engine 4,718 190 ................................................................ Harnischfeger 5,693 189 ................................................................ Oryx Energy * 10,982 178 ................................................................ Tektronix 3,972 178 ................................................................ Thomas & Betts 4,614 173 ................................................................ Fleetwood 5,510 171 ................................................................ Shared Medical Systems 2,647 171 ................................................................ Tandem Computers * 13,726 170 ................................................................ Autodesk 5,572 166 ................................................................ Echo Bay Mines 14,860 160 ................................................................ King World Productions * 4,380 159 ................................................................ Bethlehem Steel * 13,204 157 ................................................................ Stone Container 11,180 154 ................................................................ Alberto Culver 3,311 154 ................................................................ Amdahl * 14,080 151 ................................................................ Rowan * 10,001 148 ................................................................ Crane 3,553 146 ................................................................ Unisys * 20,152 144 ................................................................ Timken 3,646 141 ................................................................ Scientific-Atlanta 9,042 140 ................................................................ Beverly Enterprises * 11,630 140 ................................................................ Briggs & Stratton 3,366 138 ................................................................ Potlatch 3,441 135 ................................................................ Meredith 3,222 135 ................................................................ McDermott International 6,409 134 ................................................................ ASARCO 4,608 127 ................................................................ Russell 4,585 127 ................................................................ Santa Fe Energy Resources * 10,521 125 ................................................................ EG&G 5,651 121 ................................................................ Safety-Kleen 6,808 119 ................................................................ A & P 3,596 118 ................................................................ Springs Industries 2,299 116
17 T. Rowe Price Equity Index Fund - --------------------------------------------------------------- Shares/Par Value - --------------------------------------------------------------- In thousands
TRINOVA 3,418 $ 114 ................................................................ Bally Entertainment * 4,143 114 ................................................................ Inland Steel Industries 5,747 113 ................................................................ Helmerich & Payne 2,963 109 ................................................................ Ogden 5,759 104 ................................................................ Longs Drug Stores 2,327 104 ................................................................ Alexander & Alexander 5,225 103 ................................................................ Ball 3,489 100 ................................................................ Cincinnati Milacron 4,146 100 ................................................................ Jostens 4,649 92 ................................................................ Centex 2,852 89 ................................................................ John H. Harland 3,602 89 ................................................................ Navistar * 8,829 87 ................................................................ Coors (Class B) 4,457 80 ................................................................ Pulte 2,706 72 ................................................................ Giddings & Lewis 4,226 69 ................................................................ Charming Shoppes 9,676 68 ................................................................ Intergraph * 5,485 67 ................................................................ Luby's Cafeterias 2,754 65 ................................................................ Fleming Companies 4,467 64 ................................................................ Armco * 12,443 62 ................................................................ NACCO Industries (Class A) 1,101 61 ................................................................ Ryan's Family Steak Houses * 6,363 59 ................................................................ Kaufman & Broad 4,079 59 ................................................................ Shoney's * 5,204 57 ................................................................ Community Psychiatric Centers * 5,488 52 ................................................................ Data General * 3,323 43 ................................................................ Outboard Marine 2,337 42 ................................................................ Stride Rite 4,702 39 ................................................................ Brown Group 2,102 37 ................................................................ Teledyne, $15 Cum. Preferred 94 2 ................................................................ Total Industrial 453,366 ................... UTILITIES 7.8% GTE 113,861 5,095 ................................................................ BellSouth 116,956 4,956 ................................................................ Ameritech 65,110 3,866 ................................................................ SBC Communications 71,708 3,532 ................................................................
18 T. Rowe Price Equity Index Fund - --------------------------------------------------------------- Shares/Par Value - --------------------------------------------------------------- In thousands
Bell Atlantic 51,464 $ 3,281 ................................................................ NYNEX 50,360 2,392 ................................................................ Southern Company 78,364 1,930 ................................................................ U S WEST Communications 55,486 1,769 ................................................................ Pacific Telesis 50,389 1,701 ................................................................ Duke Power 24,020 1,231 ................................................................ Enron 29,548 1,208 ................................................................ Pacific Gas and Electric 49,882 1,160 ................................................................ Texas Utilities 26,525 1,134 ................................................................ FPL Group 21,693 998 ................................................................ American Electric Power 22,021 939 ................................................................ Edison International 52,416 924 ................................................................ Dominion Resources 20,388 815 ................................................................ Consolidated Edison 27,721 811 ................................................................ Public Service Enterprise 28,783 788 ................................................................ Entergy 26,867 762 ................................................................ Houston Industries 30,856 760 ................................................................ PacifiCorp 33,529 746 ................................................................ Central and South West 24,161 701 ................................................................ Unicom 25,127 700 ................................................................ Carolina Power & Light 18,182 691 ................................................................ ALLTEL 22,200 683 ................................................................ PECO Energy 26,165 680 ................................................................ Williams Companies 12,030 595 ................................................................ CINergy 18,339 587 ................................................................ Panenergy 17,659 580 ................................................................ Consolidated Natural Gas 10,876 568 ................................................................ DTE Energy 17,056 527 ................................................................ Coastal 12,415 518 ................................................................ General Public Utilities 14,100 497 ................................................................ BGE 17,270 490 ................................................................ Union Electric 12,024 484 ................................................................ Sonat 10,074 453 ................................................................ PP&L Resources 18,600 439 ................................................................ Northern States Power 7,911 391 ................................................................ Ohio Edison 17,791 389 ................................................................ Columbia Gas System 5,990 312 ................................................................ Pacific Enterprises 9,877 293 ................................................................ ENSERCH 8,017 174 ................................................................
19 T. Rowe Price Equity Index Fund - --------------------------------------------------------------- Shares/Par Value - --------------------------------------------------------------- In thousands
NICOR 5,978 $ 170 ................................................................ Noram Energy 14,667 159 ................................................................ Peoples Energy 4,130 138 ................................................................ Niagara Mohawk 17,009 132 ................................................................ Eastern Enterprises 2,375 79 ................................................................ ONEOK 3,146 79 ................................................................ Total Utilities 52,307 ............. FINANCIAL 12.0% American International Group 55,838 5,507 ................................................................ Citicorp 57,080 4,716 ................................................................ Fannie Mae 128,332 4,299 ................................................................ Chase Manhattan 51,293 3,623 ................................................................ BankAmerica 43,476 3,293 ................................................................ NationsBank 34,788 2,874 ................................................................ Wells Fargo 11,659 2,785 ................................................................ Travelers Group 56,284 2,568 ................................................................ American Express 57,042 2,545 ................................................................ Allstate 52,750 2,407 ................................................................ First Union 33,071 2,013 ................................................................ J. P. Morgan 22,118 1,872 ................................................................ Freddie Mac 21,294 1,821 ................................................................ BANC ONE 53,511 1,819 ................................................................ First Chicago NBD 37,720 1,476 ................................................................ General Re 9,651 1,469 ................................................................ Norwest 41,552 1,449 ................................................................ Fleet Financial Group 31,337 1,363 ................................................................ Merrill Lynch 20,662 1,346 ................................................................ Bank of New York 23,500 1,204 ................................................................ PNC Bank 40,234 1,197 ................................................................ Dean Witter, Discover 19,822 1,135 ................................................................ Loews 13,900 1,096 ................................................................ KeyCorp 27,927 1,082 ................................................................ CIGNA 8,913 1,051 ................................................................ Chubb 20,504 1,023 ................................................................ First Bank Systems 17,200 998 ................................................................ SunTrust 26,800 992 ................................................................ Aetna 13,490 965 ................................................................
20 T. Rowe Price Equity Index Fund - ---------------------------------------------------------------
Shares/Par Value - --------------------------------------------------------------- In thousands CoreStates Financial 25,020 $ 963 ................................................................ Mellon Bank 16,587 945 ................................................................ National City 25,900 910 ................................................................ Morgan Stanley Group 18,200 894 ................................................................ Household International 11,580 880 ................................................................ Wachovia 20,100 879 ................................................................ American General 23,982 872 ................................................................ MBNA 26,248 748 ................................................................ Boatmen's Bancshares 18,446 738 ................................................................ ITT Hartford Group 13,741 732 ................................................................ Barnett Banks 11,338 692 ................................................................ Bankers Trust New York 9,319 688 ................................................................ Transamerica 8,084 655 ................................................................ Bank of Boston 13,144 651 ................................................................ Fifth Third Bancorp 11,900 641 ................................................................ U. S. Bancorp 17,705 638 ................................................................ Comerica 13,500 602 ................................................................ Lincoln National 12,226 565 ................................................................ Salomon 12,613 555 ................................................................ UNUM 8,500 529 ................................................................ SAFECO 14,926 529 ................................................................ St. Paul Companies 9,844 527 ................................................................ Green Tree Financial 16,100 503 ................................................................ Providian 11,118 477 ................................................................ Jefferson Pilot 8,347 431 ................................................................ Republic New York 6,600 411 ................................................................ Great Western Financial 16,097 384 ................................................................ Golden West Financial 6,818 382 ................................................................ H. F. Ahmanson 13,848 374 ................................................................ Torchmark 8,383 367 ................................................................ Beneficial 6,296 353 ................................................................ USF&G 13,228 217 ................................................................ USLIFE 4,082 134 ................................................................ Total Financial 79,854 ............... TRANSPORTATION 1.4% Union Pacific 24,129 1,686 ................................................................ Burlington Northern Santa Fe 17,852 1,444 ................................................................
21 T. Rowe Price Equity Index Fund - -------------------------------------------------------------------------------
Shares/Per Value - --------------------------------------------------------------------------------------------- In thousands Norfolk Southern 15,204 $ 1,288 ............................................................................................. CSX 24,726 1,193 ............................................................................................. AMR * 10,570 962 ............................................................................................. Conrail 9,124 606 ............................................................................................. Delta 7,191 597 ............................................................................................. Federal Express * 6,652 545 ............................................................................................. Southwest Airlines 16,800 489 ............................................................................................. Ryder System 9,333 262 ............................................................................................. Caliber Systems 4,582 156 ............................................................................................. USAir * 6,376 115 ............................................................................................. Consolidated Freightways 5,190 110 ............................................................................................. Yellow Corp 3,336 44 ............................................................................................. Total Transportation 9,497 ........... Total Common & Preferred Stocks (Cost $457,705) 595,024 ........... Short-Term Investments 10.8% U.S. Government Obligations 0.5% United States Treasury Bills, 5.005%, 8/1/96 $ 3,000,000 2,987 ............................................................................................. 2,987 ........... Commercial Paper 10.3% Southern, 4(2), 5.40%, 7/1/96 5,900,000 5,900 ............................................................................................. Corporate Asset Funding, 4(2), 5.35%, 7/18/96 5,440,000 5,426 ............................................................................................. UBS Finance (Delaware), 5.58%, 7/1/96 5,208,000 5,208 ............................................................................................. Preferred Receivables Funding, 5.32%, 7/9/96 5,000,000 4,994 ............................................................................................. Chubb Capital, 5.35%, 7/11/96 5,000,000 4,993 ............................................................................................. Delaware Funding, 4(2), 5.37%, 7/15/96 5,000,000 4,990 ............................................................................................. Heinz (H. J.), 4(2), 5.33%, 7/16/96 5,000,000 4,989 ............................................................................................. Delaware Funding, 4(2), 5.35%, 7/17/96 5,000,000 4,988 ............................................................................................. Corporate Asset Funding, 4(2), 5.31%, 7/18/96 5,000,000 4,987 ............................................................................................. Mobil Australia Finance, 4(2), 5.30%, 8/2/96 5,000,000 4,976 ............................................................................................. Korea Development Bank, 5.33%, 8/7/96 5,000,000 4,973 ............................................................................................. Bex America Finance, 5.32%, 7/9/96 4,900,000 4,894 ............................................................................................. BHF Finance (Delaware), 5.30%, 10/18/96 4,000,000 3,936 ............................................................................................. Beta Finance, 4(2), 5.28%, 7/31/96 3,720,000 3,704 ............................................................................................. 68,958 ........... Total Short-Term Investments (Cost $71,945) 71,945 ...........
22 T. ROWE PRICE EQUITY INDEX FUND - --------------------------------------------------------------------
Value - -------------------------------------------------------------------------------------------------- In thousands Total Investments in Securities 99.8% of Net Assets (Cost $529,650) $ 666,969 Futures Contracts In thousands Contract Unrealized Expiration Value Gain (Loss) ----------- ----------- ----------- Long, 216 Standard & Poor's 500 Stock Index contracts, $3,000,000 of U.S. Treasury Bills pledged as initial margin 9/96 $ 73,094 $ (378) Net payments (receipts) of variation margin to date 782 ........ Variation margin receivable 404 (payable) on open futures contracts 831 Other Assets Less Liabilities .............. $ 668,204 NET ASSETS -------------- Net Assets Consist of: Accumulated net investment income - net of distributions $ 308 Accumulated net realized gain/loss - net of distributions 5,683 Net unrealized gain (loss) 136,941 Paid-in-capital applicable to 35,920,550 shares of $0.01 par value capital stock outstanding; 1,000,000,000 shares authorized 525,272 .......... NET ASSETS $ 668,204 ---------- NET ASSET VALUE PER SHARE $ 18.60 ----------
* 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. 23 T. Rowe Price Equity Index Fund - ------------------------------------------------------------------------------- Unaudited Statement of Operations - ------------------------------------------------------------------------------- In thousands
6 Months Ended 6/30/96 Investment Income Income Dividend $ 5,833 Interest 1,290 .................. Total income 7,123 .................. Expenses Shareholder servicing 526 Investment management 400 Custody and accounting 95 Prospectus and shareholder reports 45 Registration 42 Legal and audit 12 Directors 8 Miscellaneous 7 .................. Total expenses 1,135 .................. Net investment income 5,988 .................. Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities 1,371 .................. Futures 3,550 .................. Net realized gain (loss) 4,921 .................. Change in net unrealized gain or loss Securities 42,605 .................. Futures (232) .................. Change in net unrealized gain or loss 42,373 .................. Net realized and unrealized gain (loss) 47,294 .................. INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 53,282 ------------------
The accompanying notes are an integral part of these financial statements. 24 T. Rowe Price Equity Index Fund - -------------------------------------------------------------------------------- Unaudited Statement of Changes in Net Assets - ------------------------------------------------------------------------------- In thousands
6 Months Year Ended Ended 6/30/96 12/31/95 Increase (Decrease) in Net Assets Operations Net investment income $ 5,988 $ 8,653 Net realized gain (loss) 4,921 14,145 Change in net unrealized gain or loss 42,373 81,378 ................................... Increase (decrease) in net assets from operations 53,282 104,176 ................................... Distributions to shareholders Net investment income (5,851) (9,122) Net realized gain (3,807) (7,691) ................................... Decrease in net assets from distributions (9,658) (16,813) ................................... Capital share transactions * Shares sold 216,063 159,642 Distributions reinvested 9,441 16,390 Shares redeemed (58,368) (76,638) Redemption fees received 17 12 ................................... Increase (decrease) in net assets from capital share transactions 167,153 99,406 ................................... Net equalization 171 322 ................................... Net Assets Increase (decrease) during period 210,948 187,091 Beginning of period 457,256 270,165 ................................... End of period $ 668,204 $ 457,256 ----------------------------------- Share information * Shares sold 12,061 10,147 Distributions reinvested 521 993 Shares redeemed (3,237) (5,197) ................................... Increase (decrease) in shares outstanding 9,345 5,943
The accompanying notes are an integral part of these financial statements. 25 T. Rowe Price Equity Index Fund - -------------------------------------------------------------------------------- Unaudited JUNE 30, 1996 - ----------------------------- 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. Valuation Equity securities listed or regularly traded on a securities exchange are valued at the last quoted sales price at the time 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 that are not traded on a particular day and securities that are 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 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. 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. The fund follows the practice of equalization under which undistributed net investment income per share is unaffected by fund shares sold or redeemed. Payments ("variation margin") made or received by the fund to settle the daily fluctuations in the value of futures contracts are recorded as unrealized gain or loss 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. 26 T. Rowe Price Equity Index Fund - -------------------------------------------------------------------------------- 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, 1996, 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. Securities Lending To earn additional income, the fund lends its securities to approved brokers. At June 30, 1996, the market value of securities on loan was $5,429,000, which was fully collateralized with cash. 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 $117,606,000 and $3,455,000, respectively, for the six months ended June 30, 1996. 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, 1996, the aggregate cost of investments for federal income tax and financial reporting purposes was $529,650,000, and net unrealized gain aggregated $137,319,000, of which $141,419,000 related to appreciated investments and $4,100,000 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 27 T. Rowe Price Equity Index Fund - ------------------------------------------------------------------------------- fee, of which $82,000 was payable at June 30, 1996. The fee, computed daily and paid monthly, 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, $167,000 of management fees were not accrued by the fund for the six months ended June 30, 1996. Additionally, $445,000 of unaccrued management fees related to a previous expense limitation are subject to reimbursement through December 31, 1997. 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 $499,000 for the six months ended June 30, 1996, of which $44,000 was payable at period-end. 28 T. Rowe Price Shareholder Services - ------------------------------------------------------------------------------- To help shareholders monitor their current investments and make decisions that accurately reflect their financial goals, T. Rowe Price offers a wide variety of information and services -- at no extra cost. KNOWLEDGEABLE SERVICE REPRESENTATIVES By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10 p.m. and weekends from 8:30 a.m. to 5 p.m. ET. In Person Available in T. Rowe Price Investor Centers. ACCOUNT SERVICES Checking Available on most fixed income funds. Automatic Investing From your bank account or paycheck. Automatic Withdrawal Scheduled, automatic redemptions. Distribution Options Reinvest all, some, or none of your distributions. Automated 24-Hour Services Including Tele*Access/(R)/ and T. Rowe Price OnLine. DISCOUNT BROKERAGE* Individual Securities Stocks, bonds, options, precious metals, and other securities at a savings over regular commission rates. INVESTMENT INFORMATION Combined Statement An overview of your T. Rowe Price accounts. Shareholder Reports Fund managers' reviews of their strategies and results. The T. Rowe Price Report A quarterly investment newsletter discussing markets and financial strategies. Performance Update Quarterly review of all T. Rowe Price fund results. Insights Educational reports on investment strategies and financial markets. Investment Guides Asset Mix Worksheet, College Planning Kit, Personal Strategy Planner, Retirees Financial Guide, and Retirement Planning Kit. *T. Rowe Price Discount Brokerage is a division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC. 29 For yield, price, last transaction, and current balance, 24 hours, 7 days a week, call: 1-800-638-2587 toll free For assistance with your existing fund account, call: Shareholder Service Center 1-800-225-5132 toll free 625-6500 Baltimore area T. Rowe Price 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. [T.ROWE PRICE LOGO APPEARS HERE] T. Rowe Price Investment Services, Inc., Distributor RPRTEXF 6/30/96 30 -----END PRIVACY-ENHANCED MESSAGE-----