Fellow Shareholders
For the six months ended June 30, 1994, your Fund, though delivering negative
returns, declined less than its peer group as represented by the Lipper Growth
Fund Average. Though the Fund lagged the unmanaged Standard & Poor's 500 Stock
Index for the three and six months, we are pleased to report that, for its
first full year in operation, the Fund's 12-month total return of 10.26%
substantially exceeded those of the S&P 500 (1.41%) and the Lipper Growth Fund
Average (0.97%).
While we are disappointed to report negative short-term returns, it is
important to remember that the growth stock universe has not performed
particularly well recently. The data below illustrate that growth funds
performed poorly on an absolute basis and relative to the broad stock market.
Investing in stocks, particularly the growth sector, involves accepting
volatility.
Performance Comparison
Periods Ended 6/30/94
3 Months 6 Months
______________________
Blue Chip Growth Fund -1.1% -3.6%
S&P 500 0.4 -3.4
Lipper Growth Fund Average -2.6 -6.0
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Market Environment
The equity and bond markets continued to be hampered by many of the factors
that hurt their returns in the first quarter of 1994, specifically, the threat
of higher inflation and a related increase in interest rates. Unsettled
political and economic conditions in several foreign nations (North Korea, for
example) also contributed to declines in both domestic and foreign markets.
Unfortunately, these concerns contributed to a substantial devaluation
of the U.S. dollar versus several key foreign currencies. A falling dollar
generally makes dollar-denominated assets less attractive to foreign
investors. Perhaps more important, the threat of further dollar devaluation
could prompt the Federal Reserve to increase interest rates again. Long-term
bond market rates have already risen by almost 200 basis points (from 5.8% to
over 7.6%) in the last year, and short-term rates have also risen
significantly. Additional increases in interest rates could have an adverse
effect on eco-nomic growth as well as the financial markets.
Portfolio Review
As of June 30, we maintained approximately 86% of portfolio assets in common
stocks and 14% in cash reserves. Financial and consumer-related stocks still
represent our largest industry concentrations.
In the current challenging market environment, we have continued to
focus on blue chip companies with the potential for above-average earnings
growth. We believe the recent decline creates selected opportunities in
several market sectors where we are maintaining or building positions,
including:
o Capital equipment and manufacturer stocks. Investors remained
apprehensive that interest rate increases might ultimately slow the
economy substantially and hurt the earnings of many of these companies.
As in the first quarter, we used market weakness to build positions, but
only in well-managed capital equipment and industrial companies which
should continue to show strong, sustainable earnings growth due to their
leadership positions and favorable cost structures. With these
companies, we pay careful attention to the balance of early- and
late-cycle businesses and to the mix of European versus domestic
business. European economic strength may help performance in 1995.
o Financial services. We have maintained our holdings in this area,
focusing on companies with manageable interest rate sensitivity and
strong projected earnings growth. Although our holdings have generally
outperformed the market thus far in 1994, additional increases in
interest rates could create a more challenging environment for banks and
other institutions.
In our opinion, certain U.S. multinational companies also possess the
leading market positions, seasoned management, and strong financial
fundamentals expected of blue chip investment candidates. They may be poised
to benefit from improved efficiency and consequent cost leadership. Also, some
of these U.S. multinationals have relatively low debt-to-equity ratios, and
several of the Fund's holdings have refinanced large portions of their
borrowings at relatively low, fixed rates. This will be especially beneficial
if interest rates continue to increase. Externally, they should benefit from
less restricted world trade, renewed global economic growth (particularly in
Europe), and the continued progress of developing countries, particularly in
Latin America and Asia.
The most rewarding three- and six-month performers in the Fund included
certain financial, pharmaceutical, technology, capital equipment, and
chemical/energy stocks. In the financial sector, NationsBank and Federal
National Mortgage Association (Fannie Mae) provided strong returns relative to
the broader market. Pharmaceutical stocks Pfizer and SmithKline Beecham
rebounded significantly from poor first quarter results. Although the Fund
includes few technology holdings, a large position in Microsoft generated
solid gains. In the capital equipment area, Danaher again provided
above-average performance. We have also accumulated positions in selected
chemical and energy stocks, such as DuPont, Rohm & Haas, and Halliburton,
which have done well since we began purchasing them in late 1993 or early this
year.
We remain optimistic about our holdings of certain underperforming
stocks. Many investors sold cyclicals such as General Electric and Motorola,
believing the sector's interest rate sensitivity might make such companies
vulnerable to the possibility of an economic slowdown. However, we believe
strong company fundamentals override these market considerations. Travelers
underperformed as investors focused on slowing brokerage business, but the
company is aggressively managing costs and its stock currently sells at what
we believe is an attractive valuation. The stocks of Great Lakes Chemical and
PepsiCo dropped due to lowered earnings expectations. We believe that the
problems at Great Lakes Chemical are temporary, and, fortunately, much of our
position was accumulated after the stock had declined significantly.
Pep-siCo's problems are somewhat more difficult to evaluate. Strong
competition for its restaurant subsidiaries (particularly Pizza Hut) and in
the beverages business have sharply reduced earnings growth. We are carefully
evaluating PepsiCo's long-term prospects.
Outlook
We noted in our previous reports that increased inflation and interest rates
driven by a vigorous economy may lead to a further equity market correction in
both domestic and foreign markets. However, the ultimate rise in inflation
could be modest. Interest rate increases and other factors could result in a
slower growth in late 1994 or early 1995, helping maintain what is currently a
manageable level of inflation. Concurrently, prospects for strong earnings
growth at many companies may not be diminished materially. Any additional
decline in stock and bond prices could prove to be modest.
Since the length and severity of the current period of stock market
turbulence is difficult to predict, we continue to prudently seek out
companies with durable, sustainable earnings growth and reasonable stock
valuations. This approach should prove rewarding for our shareholders over
time.
Respectfully submitted,
Thomas H. Broadus, Jr.
President and Chairman of the
Investment Advisory Committee
July 25, 1994
Major Portfolio Changes
Three Months Ended June 30, 1994
PURCHASES
Cost
________
Great Lakes Chemical $403,747
Jones Apparel Group* 294,916
American International Group* 220,688
Standard Products 202,550
American Express* 189,335
TRW* 184,883
Bank of Suffolk* 170,000
Promus Companies 169,055
Procter & Gamble 161,930
Roberts Pharmaceutical 151,040
SALES
Proceeds
_________
UNUM** $327,224
TJX 249,139
U.S. HealthCare** 244,394
EXEL** 233,702
Forest Laboratories** 174,984
Geon** 165,198
Green Tree Financial** 146,410
Novell* 118,438
Storage USA** 104,496
Lubrizol** 103,330
* Position added
** Position eliminated
Twenty-Five Largest Holdings
June 30, 1994
Percent of
Company Net Assets
_______________________________________ __________
GE 1.8%
Pfizer 1.7
AlliedSignal 1.7
NationsBank 1.7
Mellon Bank 1.6
Federated Department Stores 1.6
Disney 1.6
McDonald's 1.5
Great Lakes Chemical 1.5
SmithKline Beecham 1.4
First Financial Management 1.4
Danaher 1.3
Fannie Mae 1.3
Microsoft 1.3
Dayton Hudson 1.3
Money Store 1.3
Teleflex 1.3
Travelers 1.2
Philip Morris 1.2
Albertson's 1.2
Halliburton 1.2
PepsiCo 1.2
Schering-Plough 1.2
Hubbell 1.2
American Greetings 1.2
_____________________________________________________________________________
Total 34.9%
Statement of Net Assets (Value in thousands)
T. Rowe Price Blue Chip Growth Fund / June 30, 1994 (Unaudited)
Common Stocks - 85.0%
BASIC MATERIALS - 0.6%
Value
______
METALS - 0.6%
2,000 shs. Alcoa . . . . . . . . . . . . . . . . . . . . . . $ 146
2,000 Inco. . . . . . . . . . . . . . . . . . . . . . . 49
Total Basic Materials 195
BUSINESS SERVICES & TRANSPORTATION - 5.6%
COMPUTER SERVICE & SOFTWARE - 4.6%
5,500 Autodesk. . . . . . . . . . . . . . . . . . . . . 272
10,000 * Autotote (Class A). . . . . . . . . . . . . . . . 158
8,000 First Financial Management. . . . . . . . . . . . 444
8,000 * Microsoft . . . . . . . . . . . . . . . . . . . . 412
7,000 SEI . . . . . . . . . . . . . . . . . . . . . . . 128
1,414
DISTRIBUTION SERVICES - 1.0%
5,500 Alco Standard . . . . . . . . . . . . . . . . . . 314
Total Business Services & Transportation 1,728
CAPITAL EQUIPMENT - 9.3%
ELECTRICAL EQUIPMENT - 3.0%
12,000 GE. . . . . . . . . . . . . . . . . . . . . . . . 559
6,500 Hubbell (Class B) . . . . . . . . . . . . . . . . 361
920
MACHINERY - 6.3%
17,000 * Coltec Industries . . . . . . . . . . . . . . . . 317
10,000 Danaher . . . . . . . . . . . . . . . . . . . . . 417
15,000 Greenfield Industries . . . . . . . . . . . . . . 293
6,300 * Reliance Electric (Class A) . . . . . . . . . . . 114
12,000 Teleflex. . . . . . . . . . . . . . . . . . . . . 392
10,000 TriMas. . . . . . . . . . . . . . . . . . . . . . 230
5,500 * Varity. . . . . . . . . . . . . . . . . . . . . . 200
1,963
Total Capital Equipment 2,883
CONSUMER CYCLICALS - 4.7%
AUTOMOBILES & RELATED - 3.3%
4,000 Chrysler. . . . . . . . . . . . . . . . . . . . . 189
6,000 GM. . . . . . . . . . . . . . . . . . . . . . . . 301
12,000 Standard Products . . . . . . . . . . . . . . . . 351
3,000 TRW . . . . . . . . . . . . . . . . . . . . . . . 193
1,034
BUILDING & REAL ESTATE - 0.7%
12,000 shs. McArthur/Glen Realty. . . . . . . . . . . . . . . $ 209
MISCELLANEOUS CONSUMER
DURABLES - 0.7%
6,500 Corning . . . . . . . . . . . . . . . . . . . . . 212
Total Consumer Cyclicals 1,455
CONSUMER NONDURABLES - 18.9%
BEVERAGES - 1.7%
4,000 Coke. . . . . . . . . . . . . . . . . . . . . . . 163
12,000 PepsiCo . . . . . . . . . . . . . . . . . . . . . 367
530
COSMETICS - 0.8%
4,000 Gillette. . . . . . . . . . . . . . . . . . . . . 260
FOOD PROCESSING - 0.9%
8,500 Campbell. . . . . . . . . . . . . . . . . . . . . 292
HOSPITAL SUPPLIES/HOSPITAL
MANAGEMENT - 1.8%
7,000 Abbott Laboratories . . . . . . . . . . . . . . . 203
2,500 Columbia / HCA Healthcare . . . . . . . . . . . . 94
5,500 United HealthCare . . . . . . . . . . . . . . . . 252
549
MISCELLANEOUS CONSUMER
PRODUCTS - 7.4%
12,000 American Greetings (Class A). . . . . . . . . . . 360
5,500 Colgate-Palmolive . . . . . . . . . . . . . . . . 286
10,000 * Jones Apparel Group . . . . . . . . . . . . . . . 283
12,000 Mattel. . . . . . . . . . . . . . . . . . . . . . 304
7,500 Philip Morris . . . . . . . . . . . . . . . . . . 386
10,000 Phillips-Van Heusen . . . . . . . . . . . . . . . 251
4,000 PPG Industries. . . . . . . . . . . . . . . . . . 150
5,500 Procter & Gamble. . . . . . . . . . . . . . . . . 294
2,314
PHARMACEUTICALS - 6.3%
7,000 Johnson & Johnson . . . . . . . . . . . . . . . . 300
8,500 Pfizer. . . . . . . . . . . . . . . . . . . . . . 537
14,000 * Roberts Pharmaceutical. . . . . . . . . . . . . . 291
6,000 Schering-Plough . . . . . . . . . . . . . . . . . 367
16,000 SmithKline Beecham equity
units, ADR. . . . . . . . . . . . . . . . . . 450
1,945
Total Consumer Nondurables 5,890
CONSUMER SERVICES - 12.7%
ENTERTAINMENT & LEISURE - 4.0%
12,000 shs. Disney. . . . . . . . . . . . . . . . . . . . . . $ 500
16,000 McDonald's. . . . . . . . . . . . . . . . . . . . 462
6,000 * Promus Companies. . . . . . . . . . . . . . . . . 178
7,500 * Shoney's. . . . . . . . . . . . . . . . . . . . . 114
1,254
GENERAL MERCHANDISERS - 3.4%
5,000 Dayton Hudson . . . . . . . . . . . . . . . . . . 405
5,000 Sears . . . . . . . . . . . . . . . . . . . . . . 240
8,000 TJX . . . . . . . . . . . . . . . . . . . . . . . 175
10,000 Wal-Mart. . . . . . . . . . . . . . . . . . . . . 242
1,062
MEDIA & COMMUNICATIONS - 0.7%
6,000 Time Warner . . . . . . . . . . . . . . . . . . . 211
SPECIALTY MERCHANDISERS - 4.6%
14,000 Albertson's . . . . . . . . . . . . . . . . . . . 385
25,000 * Federated Department Stores . . . . . . . . . . . 500
10,000 Talbots . . . . . . . . . . . . . . . . . . . . . 300
7,500 * Toys "R" Us . . . . . . . . . . . . . . . . . . . 245
1,430
Total Consumer Services 3,957
ENERGY - 2.1%
ENERGY SERVICES - 2.1%
11,000 Halliburton . . . . . . . . . . . . . . . . . . . 371
5,000 Schlumberger. . . . . . . . . . . . . . . . . . . 296
Total Energy 667
FINANCIAL - 17.8%
BANK & TRUST - 9.4%
6,500 BankAmerica . . . . . . . . . . . . . . . . . . . 297
8,000 Chemical Banking. . . . . . . . . . . . . . . . . 308
8,000 Cole Taylor Financial Group . . . . . . . . . . . 110
7,000 First Union . . . . . . . . . . . . . . . . . . . 323
5,000 Integra Financial . . . . . . . . . . . . . . . . 234
10,000 KeyCorp . . . . . . . . . . . . . . . . . . . . . 319
9,000 Mellon Bank . . . . . . . . . . . . . . . . . . . 506
10,000 NationsBank . . . . . . . . . . . . . . . . . . . 514
12,000 Norwest . . . . . . . . . . . . . . . . . . . . . 314
2,925
FINANCIAL SERVICES - 5.7%
7,000 American Express. . . . . . . . . . . . . . . . . 180
5,000 * Bank Of Suffolk . . . . . . . . . . . . . . . . . 87
15,000 Countrywide Credit. . . . . . . . . . . . . . . . 216
1,500 Freddie Mac . . . . . . . . . . . . . . . . . . . 91
5,000 shs. Fannie Mae. . . . . . . . . . . . . . . . . . . . $ 417
23,500 Money Store . . . . . . . . . . . . . . . . . . . 394
12,000 Travelers . . . . . . . . . . . . . . . . . . . . 387
1,772
INSURANCE - 2.7%
2,500 American International Group. . . . . . . . . . . 217
4,000 Chubb . . . . . . . . . . . . . . . . . . . . . . 306
12,500 * Mid Ocean Limited . . . . . . . . . . . . . . . . 314
837
Total Financial 5,534
PROCESS INDUSTRIES - 4.0%
DIVERSIFIED CHEMICALS - 0.9%
5,000 DuPont. . . . . . . . . . . . . . . . . . . . . . 292
PAPER & PAPER PRODUCTS - 0.6%
10,000 Albany International (Class A). . . . . . . . . . 189
SPECIALTY CHEMICALS - 2.5%
8,500 Great Lakes Chemical. . . . . . . . . . . . . . . 460
5,000 Rohm & Haas . . . . . . . . . . . . . . . . . . . 311
771
Total Process Industries 1,252
TECHNOLOGY - 4.0%
AEROSPACE & DEFENSE - 1.7%
15,000 Allied-Signal . . . . . . . . . . . . . . . . . . 520
ELECTRONIC COMPONENTS - 0.9%
6,000 Motorola. . . . . . . . . . . . . . . . . . . . . 267
ELECTRONIC SYSTEMS - 0.8%
8,000 Honeywell . . . . . . . . . . . . . . . . . . . . 248
TELECOMMUNICATIONS - 0.6%
4,000 LM Ericsson . . . . . . . . . . . . . . . . . . . 198
Total Technology 1,233
UTILITIES - 1.9%
TELEPHONE - 1.9%
6,000 Telmex, ADR . . . . . . . . . . . . . . . . . . . 335
6,000 U. S. WEST. . . . . . . . . . . . . . . . . . . . 251
Total Utilities 586
Miscellaneous Stocks - 3.4% 1,051
Total Common Stocks (Cost - $26,730) 26,431
Miscellaneous Bonds - 0.8% (Cost - $250) 244
T. Rowe Price Blue Chip Growth Fund / Statement of Net Assets
Short-Term Investments - 15.6%
BANK NOTE - 1.6%
$500,000 Huntington National Bank, VR, 4.41%, 4/6/95 . . . $ 500
COMMERCIAL PAPER - 10.8%
550,000 Arco Coal Australia, 4(2),
4.42%, 9/6/94 . . . . . . . . . . . . . . . . . 544
500,000 Asset Securitization Cooperative, 4(2),
4.43%, 9/8/94 . . . . . . . . . . . . . . . . . 494
500,000 BASF, 4.00%, 8/10/94. . . . . . . . . . . . . . . 492
500,000 Bell Atlantic Financial Services,
4.47%, 8/22/94. . . . . . . . . . . . . . . . . 495
540,000 Harvard University, 4.30%, 7/1/94 . . . . . . . . 540
800,000 Unilever Capital, 4(2), 4.53%, 7/5/94 . . . . . . 794
3,359
MEDIUM-TERM NOTES - 3.2%
500,000 Ciesco L.P. (144a), VR, 3.970%, 10/25/94. . . . . 500
500,000 Morgan Stanley Group, VR, 4.662%, 3/15/95 . . . . 500
1,000
Total Short-Term Investments (Cost - $4,859) 4,859
Total Investments in Securities -
101.4% (Cost - $31,839) 31,534
Other Assets Less Liabilities - (1.4)% . . . . . . . . . . . . . $ (443)
Net Assets Consisting of:
Accumulated net investment
income - net of distributions. . . . . . . . . . . . $ 151
Accumulated realized gains/losses -
net of distributions . . . . . . . . . . . . . . . . 566
Net unrealized depreciation of
investments. . . . . . . . . . . . . . . . . . . . . (305)
Paid-in-capital applicable to 2,869,025
shares of $0.0001 par value capital
stock outstanding; 1,000,000,000
shares authorized. . . . . . . . . . . . . . . . . . 30,679
________
Net Assets - 100.0%. . . . . . . . . . . . . . . . . . $31,091
________
________
Net Asset Value Per Share $ 10.84
_______
_______
* Non-income producing
144a Security was purchased pursuant to Rule 144a under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at period-end amounts
to 1.6% of net assets.
VR Variable rate
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.
Statement of Operations
T. Rowe Price Blue Chip Growth Fund / Six Months Ended June 30, 1994
(Unaudited)
Amounts in Thousands
_______________________
INVESTMENT INCOME
Income
Dividends. . . . . . . . . . . . . . . . . . . . $ 220
Interest . . . . . . . . . . . . . . . . . . . . 91
__________
Total income . . . . . . . . . . . . . . . . . . $ 311
Expenses
Shareholder servicing fees & expenses. . . . . . 58
Custodian and accounting fees & expenses . . . . 50
Investment management fees . . . . . . . . . . . 26
Legal & auditing fees. . . . . . . . . . . . . . 14
Registration fees & expenses . . . . . . . . . . 9
Prospectus & shareholder reports . . . . . . . . 8
Directors' fees & expenses . . . . . . . . . . . 5
Proxy & annual meeting . . . . . . . . . . . . . 1
Miscellaneous expenses . . . . . . . . . . . . . 5
__________
Total expenses . . . . . . . . . . . . . . . . . 176
__________
Net investment income. . . . . . . . . . . . . . . 135
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain. . . . . . . . . . . . . . . . . 194
Change in net unrealized appreciation
or depreciation . . . . . . . . . . . . . . . . (1,490)
__________
Net loss on investments. . . . . . . . . . . . . . (1,296)
__________
DECREASE IN NET ASSETS FROM OPERATIONS . . . . . . $ (1,161)
__________
__________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Blue Chip Growth Fund (Unaudited)
June 30, 1993
(Commencement
Six Months Ended of Operations) to
June 30, 1994 Dec. 31, 1993
________________ _______________
Amounts in Thousands
____________________________________
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income. . . . . . . . . . . $ 135 $ 67
Net realized gain on investments . . . . . 194 703
Change in net unrealized appreciation
or depreciation of investments . . . . . (1,490) 1,185
________ ________
Increase (decrease) in net assets
from operations. . . . . . . . . . . . . (1,161) 1,955
________ ________
Distributions to shareholders
Net investment income. . . . . . . . . . . - (106)
Net realized gain on investments . . . . . - (298)
________ ________
Decrease in net assets from
distributions to shareholders. . . . . . - (404)
________ ________
Capital share transactions
Sold 1,148 and 2,377 shares. . . . . . . . 12,927 25,060
Distributions reinvested of
0 and 35 shares. . . . . . . . . . . . . - 389
Redeemed 473 and 228 shares. . . . . . . . (5,342) (2,492)
________ ________
Increase in net assets from capital
share transactions . . . . . . . . . . . 7,585 22,957
________ ________
Net equalization . . . . . . . . . . . . . . 16 43
________ ________
Total increase . . . . . . . . . . . . . . . 6,440 24,551
NET ASSETS
Beginning of period. . . . . . . . . . . . 24,651 100
________ ________
End of period. . . . . . . . . . . . . . . $ 31,091 $ 24,651
________ ________
________ ________
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Blue Chip Growth Fund / June 30, 1994 (Unaudited)
Note 1 - Significant Accounting Policies
T. Rowe Price Blue Chip Growth Fund (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including Nasdaq) are valued at the last quoted sales price on the
day the valuations are made. A security which is listed or traded on more than
one exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and
are valued at a price deemed best to reflect fair value as quoted by dealers
who make markets in these securities or by an independent pricing service.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
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.
B) 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 an 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 which may differ from 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.
Note 2 - Portfolio Transactions
Purchases and sales of portfolio securities, other than short-term and U.S.
Government securities, aggregated $16,790,000 and $8,888,000 respectively, for
the six months ended June 30, 1994.
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, 1994, the aggregate cost of investments for federal income
tax and financial reporting purposes was $31,839,000 and net unrealized
depreciation aggregated $305,000, of which $983,000 related to appreciated
investments and $1,288,000 to depreciated investments.
Note 4 - Related Party Transactions
The investment management agreement between the Fund and T. Rowe Price
Associates, Inc. (the Manager) provides for an annual investment management
fee, computed daily and paid monthly, consisting of an Individual Fund Fee
equal to 0.30% of average daily net assets and a Group Fee. The Group Fee is
based on the combined assets of certain mutual funds sponsored by the Manager
or Rowe Price-Fleming International, Inc. (the Group). The Group Fee rate
ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in
excess of $34 billion. The effective annual Group Fee rate at June 30, 1994
and for the period then ended was 0.34%. The Fund pays a pro rata portion of
the Group Fee based on the ratio of the Fund's net assets to those of the
Group.
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through December 31, 1994,
Notes to Financial Statements
which would cause the Fund's ratio of expenses to average net assets to exceed
1.25%. Thereafter, the Fund is required to reimburse the Manager for these
expenses, provided average net assets have grown or expenses have declined
sufficiently so as not to cause the Fund's ratio of expenses to average net
assets to exceed 1.25% in any month, and that no such reimbursement shall be
made to the Manager after December 31, 1996. Pursuant to this agreement,
$65,000 of management fees were not accrued by the Fund for the six months
ended June 30, 1994. Additionally, $83,000 of unaccrued management fees and
expenses from 1993 are subject to future reimbursement.
T. Rowe Price Services, Inc. (TRPS) and Retirement Plan Services, Inc.
(RPS) are wholly owned subsidiaries of the Manager. TRPS provides transfer and
dividend disbursing agent functions and shareholder services for all accounts.
RPS provides subaccounting and recordkeeping services for certain retirement
accounts invested in the Fund. The Manager, under a separate agreement,
calculates the daily share price and maintains the financial records of the
Fund. For the six months ended June 30, 1994, the Fund incurred fees totalling
approximately $77,000 for these services provided by related parties. At June
30, 1994, these service fees payable were $16,000.
Financial Highlights
T. Rowe Price Blue Chip Growth Fund (Unaudited)
For a share outstanding throughout each period
_________________________________________________
June 30, 1993
(Commencement
Six Months Ended of Operations) to
June 30, 1994 Dec. 31, 1993
_________________________________________________
NET ASSET VALUE,
BEGINNING OF PERIOD. . . . . . . . . $ 11.24 $ 10.00
______ ______
Investment Activities
Net investment income. . . . . . . . 0.05* 0.05*
Net realized and
unrealized gain (loss) . . . . . . (0.45) 1.38
______ ______
Total from Investment
Activities . . . . . . . . . . . . . (0.40) 1.43
Distributions
Net investment income. . . . . . . . - (0.05)
Net realized gain. . . . . . . . . . - (0.14)
______ ______
Total Distributions. . . . . . . . . . - (0.19)
______ ______
NET ASSET VALUE, END OF PERIOD . . . . $ 10.84 $ 11.24
______ ______
______ ______
RATIOS / SUPPLEMENTAL DATA
Total Return . . . . . . . . . . . . . (3.6)% 14.3%
Ratio of Expenses to
Average Net Assets . . . . . . . . . 1.25%!* 1.25%!*
Ratio of Net Investment Income
to Average Net Assets . . . . . . . 0.96%! 0.80%!
Portfolio Turnover Rate. . . . . . . . 75.5%! 89.0%!
Net Assets, End of Period
(in thousands). . . . . . . . . . . $31,091 $24,651
! Annualized
* Excludes expenses in excess of a 1.25% voluntary expense limitation in
effect through December 31, 1994.
