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Previous: DEFINED ASSET FUNDS CORPORATE INCOME FUND INSD SER 16, 497, 1995-02-06 |
Next: NUVEEN VIRGINIA PREMIUM INCOME MUNICIPAL FUND 2, N-30D, 1995-02-06 |
<PAGE>
FOR YIELD, PRICE, LAST TRANSACTION,
AND CURRENT BALANCE, 24 HOURS,
7 DAYS A WEEK, CALL:
1-800-638-2587 toll free
625-7676 Baltimore area
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 distri-bution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Blue Chip
Growth Fund.
[logo]
BCG
Annual Report
[logo]
Blue Chip Growth
Fund
December 31, 1994
<PAGE>
Fellow Shareholders
The past year was challenging for equity funds, with the average growth fund
posting negative returns for the three and 12 months ended December 31. Your
Fund performed reasonably well in this environment with modest positive
returns. The Fund's performance for the year lagged that of the unmanaged
Standard & Poor's 500 Stock Index, but exceeded the Lipper peer group average
by a significant margin, as shown below.
Performance Comparison
Periods Ended
12/31/94
3 Months 12 Months
-------------------
Blue Chip Growth Fund 0.3% 0.8%
S&P 500 0.0 1.3
Lipper Growth Fund Average -1.3 -2.2
- ------------------------------------------------------------------
YEAR-END DISTRIBUTIONS
The Fund's Board of Directors declared a dividend of $0.11 per share and a
short-term capital gain distribution of $0.11 per share, payable December 29
to shareholders of record on December 27. You should already have received a
check or statement reflecting these distributions as well as your 1099-DIV
reporting them for tax purposes.
MARKET ENVIRONMENT
Rising interest rates and the threat of higher inflation impeded the
performance of both stocks and bonds in 1994. Short-term and long-term
interest rates increased substantially, spurring investor concerns that robust
U.S. economic growth would lead to increased inflation and continued monetary
tightening. The bankruptcy of Orange County, California, derivatives-related
losses, and the recent devaluation of the Mexican peso also weighed on the
financial markets.
All these factors challenged investors in 1994. Thirty-year U.S. Treasury
bonds provided their worst returns in recent history, and relatively flat
stock market performance masked substantial damage to many individual stocks.
For example, the price of the typical U.S. stock declined by more than 20%
during 1994.
PORTFOLIO REVIEW
Our focus remains on blue chip companies with the potential for above-average
earnings growth. The threat of inflation and higher interest rates, and,
ultimately, the possibility of an economic slowdown, has reinforced our belief
that steady growth companies should perform relatively well.
On December 31, your Fund held approximately 87.1% in common stocks and
12.9% in cash reserves. The largest industry and company holdings are provided
in tables following this letter.
Positive contributors to fourth quarter performance included
pharmaceutical, entertainment/leisure, and information processing stocks.
Pharmaceutical leaders PFIZER and SMITHKLINE BEECHAM performed well because
they have strong new products that should help them increase earnings in a
more competitive health care environment. In the entertainment/leisure area,
DISNEY and MCDONALD'S, noted as poor performers in our third quarter report,
both rebounded. We had made additional purchases at depressed prices based on
our positive view of each company's fundamentals. FIRST FINANCIAL MANAGEMENT,
a leading processor of credit card transactions, continues to benefit from
rapidly growing card usage. Positions in computer software leaders MICROSOFT
and AUTODESK also fared well.
<PAGE>
Shares of FEDERATED DEPARTMENT STORES, which had a strong third quarter,
and DAYTON HUDSON fell in the fourth quarter. Poor apparel sales, perhaps
related to mild fall weather, and lackluster Christmas sales caused most
retail stocks to perform poorly. However, sales and profits at Federated and
Dayton Hudson were near company estimates, and investors may not yet fully
recognize the favorable earnings growth outlook for each company. Federated,
now the largest U.S. department store company, will realize huge cost savings
from its integration of Macy's. Dayton Hudson's strong discount store
operations should provide more earnings visibility for the company as its
California operations improve. Major positions in NATIONSBANK and MELLON BANK
also underperformed the market as interest rates rose and investors trimmed
financial holdings during the quarter. However, selected financial holdings,
namely AMERICAN INTERNATIONAL GROUP and CHEMICAL BANK, did well in the fourth
quarter.
For the 12-month period, the best performers were broadly dispersed among
several industries. Health care stocks, particularly the pharmaceutical
sector, enjoyed a good year. We purchased SmithKline Beecham, Pfizer, JOHNSON
& JOHNSON, SCHERING-PLOUGH, and UNITED HEALTHCARE at depressed prices, and
they subsequently generated strong gains. Consumer product giants GILLETTE and
PROCTER & GAMBLE also fared well. Information processing and technology
companies generally moved up, especially our holdings in Microsoft, Autodesk,
MOTOROLA, and First Financial Management. From the manufacturing sector,
DANAHER, a leading maker of tools and industrial controls, boosted Fund
performance. Despite the lackluster results of many financial stocks, our
shares of MONEY STORE and AMERICAN EXPRESS rose significantly.
The worst performers for the year emerged from various sectors.
Manufacturer ALLIEDSIGNAL underperformed the broader market, as did many
companies with cyclical earnings. Our fourth largest holding, GREAT LAKES
CHEMICAL, had a poor year but is beginning to rebound as its fundamentals
improve. Although not among our worst contributors, several declining
financial stocks, namely TRAVELERS, MELLON BANK, FREDDIE MAC, and BANKAMERICA,
collectively hurt Fund performance. PEPSICO had a poor year, but rebounded
modestly in the fourth quarter.
OUTLOOK
We begin 1995 with a generally positive outlook toward the U.S. equity
markets. Earnings are growing strongly at many U.S. companies, and the
valuations of many issues appear reasonable.
We recognize that the Federal Reserve will probably raise interest rates
at least once more in the next several months to fight off continuing signs of
accelerating inflation. However, the aggressive tone set by the Fed in 1994
could lead to some economic slowing, which would probably reduce the need for
much more tightening.
The peso devaluation could damage the economies of Mexico and, perhaps,
other Latin American countries. Your Fund currently has no direct exposure to
Mexican or Latin American stocks. We owned TELEFONOS DE MEXICO but,
fortunately, sold our position well before the currency problems cropped up.
Mexico's problems are also creating weakness in some of our U.S. consumer
product holdings. However, we believe the situation will be manageable for
most of these companies, as Mexico generally represents less than 5% of their
operating earnings.
Valuations in the stock market remain in the upper portion of their
historical ranges. Consequently, accelerating inflation, higher interest
rates, or other crises could result in a significant correction or increased
volatility in the equity markets. Such factors are inevitable aspects of
equity investing and can create opportunities to invest in solid companies at
attractive valuations.
<PAGE>
Most important for your Fund, we expect continued earnings growth for many
of our holdings regardless of the economic or interest rate environment. The
consistent compounding of earnings should continue to provide increasingly
attractive valuations for selected stocks. In the search for promising growth
stocks, we continue to target companies with leading market positions,
seasoned management, and strong financial fundamentals. We believe these blue
chip companies will provide the basis for above-average stock performance over
time.
Respectfully submitted,
[signature]
Thomas H. Broadus, Jr.
President and Chairman of the
Investment Advisory Committee
January 20, 1995
Sector Diversification*
December 31, 1994
Percent of
Net Assets
----------
Financial 17.9%
Consumer Nondurables 22.3
Consumer Services 13.2
Consumer Cyclicals 1.7
Technology 5.8
Capital Equipment 9.9
Business Services & Transportation 8.0
Energy 3.0
Process Industries 5.3
Reserves 12.9
- ---------------------------------------------------------
Total 100.0%
- ---------------------------------------------------------
*Sectors include securities listed as miscellaneous in the portfolio.
Twenty-Five Largest Holdings
December 31, 1994
Percent of
Net Assets
----------
Pfizer 2.0%
First Financial Management 1.9
NationsBank 1.7
Great Lakes Chemical 1.7
Federated Department Stores 1.7
Disney 1.7
McDonald's 1.7
GE 1.6
Philip Morris 1.6
SmithKline Beecham 1.6
AlliedSignal 1.5
PepsiCo 1.4
Mellon Bank 1.4
Hubbell 1.4
Procter & Gamble 1.4
Danaher 1.3
Travelers 1.3
Schering-Plough 1.3
Norwest 1.3
Alco Standard 1.3
American Express 1.3
Emerson Electric 1.3
Dayton Hudson 1.3
Albertson's 1.2
Money Store 1.2
- ---------------------------------------------------------
Total 37.1%
- ---------------------------------------------------------
<PAGE>
Fiscal-Year Performance Comparison
[chart]
A line graph compares the 12/31/94 value of a hypothetical $10,000 investment
made in the Blue Chip Growth Fund as its inception 6/30/93 and a similar
investment made concurrently in the S&P 500. At 12/31/94, the Fund investment
would have been worth $11,524 the Index investment would have been worth
$10,635.
Fiscal-Year Performance
Periods Ended December 31, 1994
1 Year Since Inception 6/30/93*
- ------- ------------------------
0.80% 9.88%
- --------------------------------
* Average Annual Compound Total Return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Portfolio Highlights
Three Months Ended December 31, 1994
TEN LARGEST PURCHASES
Cost
--------
Automatic Data Processing $363,113
Sun Healthcare* 331,875
Vodafone* 313,673
Foundation Health* 294,420
Sara Lee* 251,200
Columbia/HCA Healthcare 247,365
Emerson Electric 244,973
Sealed Air* 238,083
U. S. HealthCare* 224,053
Pfizer 222,880
- ----------------------------------------
TEN LARGEST SALES
Proceeds
--------
Campbell** $359,466
Telefonos de Mexico** 337,431
GM** 328,524
American Greetings** 324,250
Jones Apparel Group** 322,549
First Union** 316,077
Fred Myer** 295,523
Talbots** 237,210
J.C. Penney** 236,782
Sears** 232,897
- ----------------------------------------
*Position added
**Position eliminated
<PAGE>
Statement of Net Assets (Value in thousands)
T. Rowe Price Blue Chip Growth Fund / December 31, 1994
Common Stocks--87.1%
FINANCIAL--17.2%
Value
------
BANK & TRUST--7.6%
8,500 shs. BankAmerica................................... $336
12,000 Chemical Banking.............................. 430
10,000 KeyCorp....................................... 250
10,000 MBNA.......................................... 234
17,500 Mellon Bank................................... 536
15,000 NationsBank................................... 677
22,000 Norwest....................................... 514
2,977
INSURANCE--3.0%
4,400 American International Group.................. 431
5,000 Chubb......................................... 387
12,500 * Mid Ocean Limited............................. 341
1,159
FINANCIAL SERVICES--6.6%
17,000 American Express.............................. 501
15,000 Countrywide Credit............................ 195
6,000 Fannie Mae.................................... 437
9,000 Freddie Mac................................... 455
25,000 Money Store................................... 463
16,000 Travelers..................................... 520
2,571
TOTAL FINANCIAL 6,707
CONSUMER NONDURABLES--21.6%
COSMETICS--0.8%
4,000 Gillette...................................... 299
BEVERAGES--2.1%
5,000 Coca-Cola..................................... 257
15,500 PepsiCo....................................... 562
819
FOOD PROCESSING--0.7%
11,000 Sara Lee...................................... 278
HOSPITAL SUPPLIES/
HOSPITAL MANAGEMENT--3.0%
12,000 Columbia/HCA Healthcare....................... 438
8,500 * Foundation Health............................. 264
3,000 U. S. HealthCare.............................. 124
7,500 United HealthCare............................. 338
1,164
PHARMACEUTICALS--8.4%
2,500 shs. * Chiron........................................ $201
4,000 Eli Lilly..................................... 263
8,000 Johnson & Johnson............................. 438
10,000 Pfizer........................................ 772
14,500 * Roberts Pharmaceutical........................ 460
7,000 Schering-Plough............................... 518
18,000 SmithKline Beecham
equity units ADR............................ 617
3,269
HEALTHCARE SERVICES--1.0%
15,000 * Sun Healthcare................................ 380
MISCELLANEOUS CONSUMER PRODUCTS--5.6%
6,000 Colgate-Palmolive............................. 380
11,000 Mattel........................................ 276
10,000 Newell........................................ 210
11,000 Philip Morris................................. 633
5,000 PPG Industries................................ 186
8,500 Procter & Gamble.............................. 527
2,212
TOTAL CONSUMER NONDURABLES 8,421
CONSUMER SERVICES--13.2%
GENERAL MERCHANDISERS--1.9%
7,000 Dayton Hudson................................. 495
12,000 Wal-Mart...................................... 255
750
SPECIALTY MERCHANDISERS--5.0%
16,000 Albertson's................................... 464
34,000 * Federated Department Stores................... 655
7,500 Nordstrom..................................... 315
8,500 The Gap....................................... 259
8,500 * Toys "R" Us................................... 259
1,952
ENTERTAINMENT & LEISURE--4.5%
10,000 * Brinker....................................... 181
14,000 Disney........................................ 646
22,000 McDonald's.................................... 643
10,000 * Promus Companies.............................. 310
1,780
MEDIA & COMMUNICATIONS--1.8%
10,000 Time Warner................................... 352
10,000 Vodafone ADR.................................. 336
688
TOTAL CONSUMER SERVICES 5,170
<PAGE>
CONSUMER CYCLICALS--1.5%
AUTOMOBILES & RELATED--1.5%
5,000 shs. Chrysler $245
5,000 TRW........................................... 330
575
TOTAL CONSUMER CYCLICALS 575
TECHNOLOGY--5.1%
ELECTRONIC COMPONENTS--1.5%
6,000 Motorola...................................... 347
4,000 * Xilinx........................................ 237
584
ELECTRONIC SYSTEMS--1.4%
2,000 Hewlett-Packard............................... 200
11,000 Honeywell..................................... 346
546
TELECOMMUNICATIONS--0.7%
5,000 LM Ericsson (Class B) ADR..................... 276
AEROSPACE & DEFENSE--1.5%
17,000 AlliedSignal.................................. 578
TOTAL TECHNOLOGY 1,984
CAPITAL EQUIPMENT--9.9%
ELECTRONIC EQUIPMENT--4.3%
8,000 Emerson Electric.............................. 500
12,500 GE............................................ 637
10,000 Hubbell (Class B)............................. 533
1,670
MACHINERY --5.6%
10,000 * Coltec Industries............................. 171
10,000 Danaher....................................... 523
15,000 Greenfield Industries......................... 360
12,000 Teleflex...................................... 426
20,000 TriMas........................................ 400
8,500 * Varity........................................ 308
2,188
TOTAL CAPITAL EQUIPMENT 3,858
BUSINESS SERVICES & TRANSPORTATION--8.0%
COMPUTER SERVICE & SOFTWARE--4.9%
8,000 Autodesk...................................... 317
7,500 Automatic Data Processing..................... 439
12,000 First Financial Management.................... 739
7,000 * Microsoft..................................... 428
1,923
DISTRIBUTION SERVICES--1.3%
8,000 shs. Alco Standard................................. $502
TRANSPORTATION SERVICES--0.5%
15,000 * Oxford Resources (Class A).................... 180
MISCELLANEOUS BUSINESS SERVICES--0.6%
7,000 * Sealed Air.................................... 254
RAILROADS--0.7%
3,700 CSX........................................... 257
TOTAL BUSINESS SERVICES & TRANSPORTATION 3,116
ENERGY--2.5%
ENERGY SERVICES--2.5%
12,500 * Enterra....................................... 238
12,000 Halliburton................................... 397
7,000 Schlumberger.................................. 353
988
TOTAL ENERGY 988
PROCESS INDUSTRIES--4.8%
DIVERSIFIED CHEMICALS--0.9%
6,000 DuPont........................................ 338
SPECIALTY CHEMICALS--3.0%
11,500 Great Lakes Chemical.......................... 655
8,000 Morton International.......................... 228
5,000 Rohm & Haas................................... 286
1,169
PAPER & PAPER PRODUCTS--0.9%
18,000 Albany International (Class A)................ 346
TOTAL PROCESS INDUSTRIES 1,853
MISCELLANEOUS--3.3% 1,291
TOTAL COMMON STOCKS (COST $32,894) 33,963
Short-Term Investments--12.7%
CERTIFICATES OF DEPOSIT--2.5%
$1,000,000 Societe Generale, 5.80%, 3/1/95............... 1,000
COMMERCIAL PAPER--7.6%
1,000,000 Preferred Receivables
Funding, 6.00%, 2/2/95...................... 990
994,000 President & Fellows Harvard
College, 6.00%, 1/3/95...................... 993
1,000,000 U.S. West Communications,
5.45%, 1/26/95.............................. 987
2,970
<PAGE>
MEDIUM-TERM NOTES --2.6%
$500,000 Huntington National Bank,
VR, 6.05%, 4/6/95 $500
500,000 Morgan Stanley Group,
VR, 6.475%, 3/15/95......................... 500
1,000
TOTAL SHORT-TERM INVESTMENTS (COST $4,970) 4,970
- -----------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES--99.8%
(COST $37,864) 38,933
- -----------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES .................................. $45
NET ASSETS CONSISTING OF:
Accumulated realized gains/losses--
net of distributions................ $10
Net unrealized gain................... 1,069
Paid-in-capital applicable to
3,508,919 shares of $0.0001 par value
capital stock outstanding;
1,000,000,000 shares authorized....... 37,899
--------
NET ASSETS $38,978
--------
--------
NET ASSET VALUE PER SHARE $11.11
--------
--------
- -----------------------------------------------------------------------
* Non-income producing
VR Variable rate
Statement of Operations
T. Rowe Price Blue Chip Growth Fund / Year Ended December 31, 1994
(Amounts in thousands)
INVESTMENT INCOME
Income
Dividends........................................ $516
Interest......................................... 221
-----------
Total income..................................... 737
-----------
Expenses
Shareholder servicing............................ 122
Custody and accounting........................... 99
Investment management............................ 76
Registrations.................................... 30
Legal and auditing............................... 28
Prospectus and shareholder reports............... 18
Directors........................................ 9
Proxy and annual meeting......................... 6
Miscellaneous.................................... 13
-----------
Total expenses................................... 401
-----------
Net investment income ............................. 336
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on securities ................... 43
Change in net unrealized gain or loss
on securities ................................. (116)
-----------
Net realized and unrealized loss................... (73)
-----------
INCREASE IN NET ASSETS FROM OPERATIONS............. $263
-----------
-----------
- ---------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of Changes in Net Assets
T. Rowe Price Blue Chip Growth Fund
From June 30, 1993
Year Ended (Commencement of
December 31, Operations) to
1994 December 31, 1993
------------ ------------------
(Amounts in thousands)
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income ....................... $336 $67
Net realized gain............................ 43 703
Change in net unrealized gain or loss ....... (116) 1,185
------------ ------------------
Increase in net assets from operations....... 263 1,955
------------ ------------------
Distributions to shareholders
Net investment income........................ (347) (106)
Net realized gain............................ (405) (298)
------------ ------------------
Decrease in net assets from distributions.... (752) (404)
------------ ------------------
Capital share transactions/1/
Shares sold.................................. 24,029 25,060
Distributions reinvested..................... 719 389
Shares redeemed.............................. (9,992) (2,492)
------------ ------------------
Increase in net assets from capital share
transactions................................. 14,756 22,957
------------ ------------------
Net equalization............................... 60 43
------------ ------------------
Increase in net assets......................... 14,327 24,551
NET ASSETS
Beginning of period............................ 24,651 100
------------ ------------------
End of period.................................. $38,978 $24,651
------------ ------------------
------------ ------------------
- -------------------------------------------------------------------------------
/1/Capital share transactions (number of shares)
Shares sold.................................. 2,138 2,377
Distributions reinvested..................... 65 35
Shares redeemed.............................. (888) (228)
------------ ------------------
Increase in capital shares outstanding....... 1,315 2,184
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
Notes to Financial Statements
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.
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 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.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term and U.S.
Government securities, aggregated $34,407,000 and $20,440,000, respectively,
for the year ended December 31, 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.
In order for the Fund's capital accounts and distributions to shareholders
to reflect the tax character of certain transactions, $49,000 of undistributed
net investment income was reclassified as an increase to paid-in-capital
during the year ended December 31, 1994. The results of operations and net
assets were not affected by the reclassification.
At December 31, 1994, the aggregate cost of investments for federal income
tax and financial reporting purposes was $37,864,000 and net unrealized gain
aggregated $1,069,000, of which $2,349,000 related to appreciated investments
and $1,280,000 to depreciated investments.
For federal income tax purposes the Fund paid distributions from net
long-term capital gains of $34,000. This amount may differ from that cited
elsewhere in this report due to differences in the calculation for financial
reporting and federal income tax purposes.
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between the Fund and T. Rowe Price
Associates, Inc. (the Manager) provides for an annual investment management
fee, of which $3,000 was payable at December 31, 1994. The fee is computed
daily and paid monthly, and consists 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. At December 31, 1994, and for the year then ended, the effective
annual Group Fee rate was 0.34%. The Fund pays a pro rata share of the Group
Fee based on the ratio of its net assets to those of the Group.
<PAGE>
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through December 31, 1994, which would cause the
Fund's ratio of expenses to average net assets to exceed 1.25%. Thereafter
through December 31, 1996, 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 1.25%. Pursuant to this agreement,
$130,000 of management fees for the year ended December 31, 1994, and $83,000
of 1993 management fees and expenses were not accrued by the Fund and remain
subject to future reimbursement.
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.
(TRPS) 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 $157,000 for
the year ended December 31, 1994, of which $11,000 was payable at year end.
Financial Highlights
T. Rowe Price Blue Chip Growth Fund
From June 30, 1993
Year Ended (Commencement of
December 31, Operations) to
1994 December 31, 1993
------------ ------------------
NET ASSET VALUE, BEGINNING OF PERIOD........... $11.24 $10.00
------------ ------------------
Investment Activities
Net investment income........................ 0.12* 0.05*
Net realized and unrealized gain (loss)...... (0.03) 1.38
------------ ------------------
Total from Investment Activities............. 0.09 1.43
------------ ------------------
Distributions
Net investment income........................ (0.10) (0.05)
Net realized gain............................ (0.12) (0.14)
------------ ------------------
Total Distributions.......................... (0.22) (0.19)
------------ ------------------
NET ASSET VALUE, END OF PERIOD................. $11.11 $11.24
------------ ------------------
------------ ------------------
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return................................... 0.8%* 14.3%*
Ratio of Expenses to Average Net Assets........ 1.25%* 1.25%*[dagger]
Ratio of Net Investment Income to Average
Net Assets.................................. 1.05%* 0.80%*[dagger]
Portfolio Turnover Rate........................ 75.0% 89.0%[dagger]
Net Assets, End of Period (in thousands)....... $38,978 $24,651
- -------------------------------------------------------------------------------
[dagger] Annualized
* Excludes expenses in excess of a 1.25% voluntary expense limitation in
effect through December 31, 1994.
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
T. Rowe Price Blue Chip Growth Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the selected per
share data and information (which appears under the heading "Financial
Highlights") present fairly, in all material respects, the financial position
of the T. Rowe Price Blue Chip Growth Fund, Inc. at December 31, 1994, and the
results of its operations, the changes in its net assets and the selected per
share data and information for each of the fiscal periods presented, in
conformity with generally accepted accounting principles. These financial
statements and selected per share data and information (hereafter referred to
as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1994 by correspondence with
custodians and brokers and, where appropriate, the application of alternative
auditing procedures for unsettled security transactions, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 19, 1995
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