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
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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 Blue Chip
Growth Fund.
SemiAnnual Report
T. Rowe Price
Blue Chip Growth
Fund
June 30, 1995
T. Rowe Price
Invest With Confidence (registered trademark)
BCG
Fellow Shareholders
Rising corporate earnings and falling interest rates sparked a broad rally in
stocks in the second quarter, paced by highflying technology issues. Many
equity mutual funds could not keep up with the 20.2% first half return of the
unmanaged Standard & Poor's 500 Stock Index, which is dominated by large
companies. Based on the historical 10% return on stocks, the market has now
provided two years' worth of average gains in only six months.
Your fund enjoyed an excellent first half, essentially matching the S&P
500 and outperforming its peer group average. In the latest quarter, the fund
again produced strong absolute performance, but underperformed both benchmarks
because of its smaller exposure to surging technology stocks. In addition, we
are holding a relatively high level of cash due to substantial investor
inflows during the quarter.
Performance Comparison
Periods Ended 6/30/95
__________________________
3 Months 6 Months
____________ ___________
Blue Chip Growth Fund 7.7% 20.0%
S&P 500 9.6 20.2
Lipper Growth Fund Average 9.3 17.5
Market Environment
Despite worries last year about rising inflation, the economy slowed
dramatically in 1995, with declines in housing starts, auto sales, industrial
production, and other key measures. The softening economy drove interest rates
into a free fall, with the benchmark 30-year Treasury bond yield dropping 120
basis points since January to finish at 6.6% on June 30. The slowdown, coupled
with a stable rate of inflation, persuaded the Federal Reserve to lower the
federal funds target by one-quarter percentage point in early July, its first
reduction in nearly three years.
Recent economic signals have been mixed: industrial production remains
weak, with several months of declines followed by a slight uptick in June. But
retail sales rose strongly in May and June, led by automobiles and building
materials. A drop in the unemployment rate, to 5.6% in June, also indicated
underlying strength in the economy.
Current trade talks with Japan and continuing tension between the U.S.
and China also bear watching. Although both appear manageable, a deterioration
in either could lead to a reduction in trade and therefore slower economic
growth.
Portfolio Review
The prospects for blue chip growth stocks look good. During periods of slow
growth, investors typically seek growth stocks because their above-average
earnings are expected to outpace a sluggish economy. The fund is well
positioned to take advantage of these prospects. On June 30, it was invested
approximately 80% in common stocks and 20% in reserves. Our largest holdings
are listed in the table following this letter.
The fund's best performers in the quarter and the first half included
financial, entertainment/ leisure, pharmaceutical, consumer products,
information processing, and manufacturing stocks. Financial stocks, such as
Freddie Mac, Travelers, Citicorp, Chemical Banking, Norwest, and Fannie Mae,
received a boost from falling interest rates. McDonald's appreciated steadily
in the first half. Pharmaceutical stocks such as SmithKline Beecham,
Schering-Plough, Johnson & Johnson, and Pfizer, boasting solid fundamentals
and less vulnerability to an economic slowdown, also did well. Consumer
products companies Procter & Gamble and Philip Morris continued to show
improving core earnings and cash flow growth and were again investor
favorites. First Financial Management's already strong stock performance was
boosted by the announcement that it was being acquired by First Data, the
other major player in the credit card processing industry.
The fund's smattering of technology/telecommunications stocks, including
Microsoft, Vodafone, Adobe Systems, Motorola, and Hewlett-Packard, generated
significant gains. Although investors penalized many stocks in even moderately
cyclical businesses, our retailing and manufacturing holdings included some
stellar performers. Federated Department Stores continued to successfully
integrate Macy's and was a leading contributor to performance. The stock
prices of AlliedSignal, Honeywell, TRW, and DuPont increased as rising market
share and prudent cost management generated strong earnings gains.
Fortunately, few major holdings performed poorly during the quarter.
However, Great Lakes Chemical struggled to maintain its double-digit earnings
growth. The company's fundamentals are slowly improving, and we expect better
performance in the second half. Selected health care service stocks
(particularly the HMOs) came under pressure. Investors became concerned that
government reforms and increasing competition would result in pricing battles
and declining profit margins. Consequently, our holdings in United HealthCare
and PacifiCare Health Systems hampered the portfolio's overall performance.
However, we believe both companies are well managed and will play increasing
roles in providing service to Medicare patients and other price-conscious
customers.
Outlook
Equity valuations are now expensive by several measures, particularly the
dividend yield of the S&P 500, which is in the top decile of its historic
valuation range. Nevertheless, we believe the outlook for U.S. stocks remains
favorable for several reasons:
o In our first quarter report, we noted that any slowing of the economy
would probably reduce the need for further monetary tightening. In fact,
the economy lost more steam than expected, prodding the Fed to loosen
somewhat. When the Fed sets a new course, it usually sticks to it. Thus,
short-term interest rates are not expected to increase significantly in
the near term and could continue to moderate.
o Earnings are growing strongly at many U.S. companies, and the valuations
of selected stocks are still reasonable.
o Although the dividend yield of the market is low, many companies
(particularly U.S. multinationals) are poised for strong dividend
growth. Also, many companies continue to repurchase shares instead of
increasing dividends as a more tax efficient way to return capital to
shareholders.
Because most equity valuations remain high, a significant correction is
possible. It could be set off by increased inflation and interest rates, or by
an unforeseen crisis. This is the inevitable risk of stock market investing,
but it can create opportunities to invest in quality companies at good
valuations.
Most important, the earnings of our overall portfolio holdings, in our
view, will continue to grow regardless of what happens with the economy and
interest rates. The consistent growth of earnings should provide increasingly
attractive valuations for selected stocks. As always, we continue to target
blue chip companies with leading market positions in growing industries,
seasoned management, and strong financial fundamentals. We believe these
companies will generate the consistent, durable earnings growth that usually
leads to above-average stock performance.
Respectfully submitted,
Thomas H. Broadus, Jr.
President and Chairman of
the Investment Advisory
Committee
Larry J. Puglia
Executive Vice President
July 19, 1995
Twenty-Five Largest Holdings
June 30, 1995
Percent of
Company Net Assets
___________________________________ _________________
First Financial Management 1.8%
Philip Morris 1.6
Pfizer 1.5
Federated Department Stores 1.5
SmithKline Beecham 1.5
Freddie Mac 1.4
AlliedSignal 1.3
Vodafone 1.3
McDonald's 1.3
Mellon Bank 1.3
GE 1.2
NationsBank 1.2
Travelers 1.2
Great Lakes Chemical 1.2
Money Store 1.2
Disney 1.1
Corning 1.1
Schering-Plough 1.1
American Express 1.1
Schlumberger 1.1
Columbia/HCA Healthcare 1.1
Norwest 1.1
Procter & Gamble 1.1
Dayton Hudson 1.1
DuPont 1.1
________________________________________________________________
Total 31.5%
Average Annual Compound Total Return
Periods ended June 30, 1995
1 Year Since Inception on 6/30/93
_______ ___________________________
25.41% 17.59%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
Major Portfolio Changes
Three Months Ended June 30, 1995
PURCHASES
Cost (000)
__________
IBM* $666
PMI Group* 653
Catalina Marketing* 481
Compaq Computer* 356
DuPont 331
UNUM* 301
Dillard Department Stores* 273
Eastman Kodak 271
Emerson Electric 267
PacifiCare Health Systems 258
SALES
Proceeds (000)
_______________
Rohm & Haas** $573
Foundation Health** 440
Chubb** 394
AnnTaylor Stores** 357
Wal-Mart** 288
Mid Ocean Limited** 278
Sybase** 254
Promus Companies 169
Brunswick 163
Xilinx 135
*Position added
**Position eliminated
Statement of Net Assets
T. Rowe Price Blue Chip Growth Fund / June 30, 1995 (Unaudited)
(values in thousands)
Common Stocks - 79.9%
FINANCIAL - 16.1%
Value
________
BANK & TRUST - 7.1%
12,000 shs. BankAmerica . . . . . . . . . . . . . . $ 632
12,000 Chemical Banking. . . . . . . . . . . . 567
12,500 Citicorp. . . . . . . . . . . . . . . . 723
6,000 First Interstate. . . . . . . . . . . . 482
10,000 MBNA. . . . . . . . . . . . . . . . . . 338
24,000 Mellon Bank . . . . . . . . . . . . . . 999
17,500 NationsBank . . . . . . . . . . . . . . 938
30,000 Norwest . . . . . . . . . . . . . . . . 862
5,541
INSURANCE - 2.2%
5,000 American International Group. . . . . . 570
19,200 PMI Group . . . . . . . . . . . . . . . 833
7,000 UNUM. . . . . . . . . . . . . . . . . . 328
1,731
FINANCIAL SERVICES - 6.8%
25,000 American Express. . . . . . . . . . . . 878
20,000 Countrywide Credit. . . . . . . . . . . 420
8,000 Fannie Mae. . . . . . . . . . . . . . . 755
6,000 Franklin Resources. . . . . . . . . . . 267
16,000 Freddie Mac . . . . . . . . . . . . . . 1,100
25,000 Money Store . . . . . . . . . . . . . . 897
21,000 Travelers . . . . . . . . . . . . . . . 919
5,236
Total Financial 12,508
UTILITIES - 0.6%
TELEPHONE - 0.6%
8,500 AT&T. . . . . . . . . . . . . . . . . . 452
Total Utilities 452
CONSUMER NONDURABLES - 15.7%
COSMETICS - 0.5%
9,400 Gillette. . . . . . . . . . . . . . . . 419
BEVERAGES - 1.4%
5,000 Coke. . . . . . . . . . . . . . . . . . 319
16,000 PepsiCo . . . . . . . . . . . . . . . . 730
1,049
FOOD PROCESSING - 0.5%
14,000 Sara Lee. . . . . . . . . . . . . . . . 399
HOSPITAL SUPPLIES/HOSPITAL
MANAGEMENT - 2.5%
20,000 shs. Columbia/HCA Healthcare . . . . . . . . $ 865
10,000 * PacifiCare Health Systems
(Class B) . . . . . . . . . . . . . . 509
14,000 United HealthCare . . . . . . . . . . . 579
1,953
PHARMACEUTICALS - 5.9%
6,500 Eli Lilly . . . . . . . . . . . . . . . 510
12,000 Johnson & Johnson . . . . . . . . . . . 812
2,500 Merck . . . . . . . . . . . . . . . . . 123
12,500 Pfizer. . . . . . . . . . . . . . . . . 1,155
20,000 Schering-Plough . . . . . . . . . . . . 882
25,000 SmithKline Beecham ADR. . . . . . . . . 1,131
4,613
MISCELLANEOUS CONSUMER
PRODUCTS - 4.9%
15,000 Brunswick . . . . . . . . . . . . . . . 255
8,000 Colgate-Palmolive . . . . . . . . . . . 585
13,750 Mattel. . . . . . . . . . . . . . . . . 358
18,000 Newell. . . . . . . . . . . . . . . . . 441
12,000 P & G . . . . . . . . . . . . . . . . . 862
17,000 Philip Morris . . . . . . . . . . . . . 1,264
3,765
Total Consumer Nondurables 12,198
CONSUMER SERVICES - 10.9%
GENERAL MERCHANDISERS - 1.5%
12,000 Dayton Hudson . . . . . . . . . . . . . 861
10,000 Dillard Department Stores
(Class A) . . . . . . . . . . . . . . 294
1,155
SPECIALTY MERCHANDISERS - 3.3%
16,000 Albertson's . . . . . . . . . . . . . . 476
44,000 * Federated Department Stores . . . . . . 1,133
16,000 * General Nutrition . . . . . . . . . . . 558
10,000 The Gap . . . . . . . . . . . . . . . . 349
2,516
ENTERTAINMENT & LEISURE - 3.4%
16,000 Disney. . . . . . . . . . . . . . . . . 890
7,500 * Harrah's Entertainment. . . . . . . . . 210
26,000 McDonald's. . . . . . . . . . . . . . . 1,017
3,750 * Promus Hotel. . . . . . . . . . . . . . 82
10,000 * Viacom (Class B). . . . . . . . . . . . 464
2,663
MEDIA & COMMUNICATIONS - 2.7%
12,000 shs. * Catalina Marketing. . . . . . . . . . . $ 643
10,000 Time Warner . . . . . . . . . . . . . . 411
27,000 Vodafone ADR. . . . . . . . . . . . . . 1,023
2,077
Total Consumer Services 8,411
CONSUMER CYCLICALS - 3.5%
AUTOMOBILES & RELATED - 0.8%
7,500 TRW . . . . . . . . . . . . . . . . . . 599
MISCELLANEOUS CONSUMER DURABLES - 2.7%
27,000 Corning . . . . . . . . . . . . . . . . 884
12,000 Eastman Kodak . . . . . . . . . . . . . 727
20,000 Harley-Davidson . . . . . . . . . . . . 488
2,099
Total Consumer Cyclicals 2,698
TECHNOLOGY - 7.5%
ELECTRONIC COMPONENTS - 1.0%
8,500 Motorola. . . . . . . . . . . . . . . . 570
2,500 * Xilinx. . . . . . . . . . . . . . . . . 235
805
ELECTRONIC SYSTEMS - 1.4%
5,000 Hewlett-Packard . . . . . . . . . . . . 372
16,000 Honeywell . . . . . . . . . . . . . . . 690
1,062
INFORMATION PROCESSING - 1.5%
10,000 * COMPAQ Computer . . . . . . . . . . . . 454
7,000 IBM . . . . . . . . . . . . . . . . . . 672
1,126
OFFICE AUTOMATION - 0.9%
20,000 * Ceridian. . . . . . . . . . . . . . . . 738
TELECOMMUNICATIONS - 1.4%
20,000 LM Ericsson (Class B) ADR . . . . . . . 401
30,000 MCI . . . . . . . . . . . . . . . . . . 658
1,059
AEROSPACE & DEFENSE - 1.3%
23,000 AlliedSignal. . . . . . . . . . . . . . 1,024
Total Technology 5,814
CAPITAL EQUIPMENT - 7.0%
ELECTRICAL EQUIPMENT - 3.4%
12,000 Emerson Electric. . . . . . . . . . . . 858
17,000 GE. . . . . . . . . . . . . . . . . . . 958
15,000 Hubbell (Class B) . . . . . . . . . . . 848
2,664
MACHINERY - 3.6%
21,000 shs. Danaher . . . . . . . . . . . . . . . . $ 635
16,000 Greenfield Industries . . . . . . . . . 460
15,000 Teleflex. . . . . . . . . . . . . . . . 645
22,000 TriMas. . . . . . . . . . . . . . . . . 506
12,000 * Varity. . . . . . . . . . . . . . . . . 528
2,774
Total Capital Equipment 5,438
BUSINESS SERVICES & TRANSPORTATION - 7.3%
COMPUTER SERVICE & SOFTWARE - 4.6%
12,000 Adobe Systems . . . . . . . . . . . . . 699
7,500 Automatic Data Processing . . . . . . . 472
16,000 First Financial Management. . . . . . . 1,368
7,000 * Microsoft . . . . . . . . . . . . . . . 633
8,000 * SunGard Data Systems. . . . . . . . . . 420
3,592
DISTRIBUTION SERVICES - 1.0%
10,000 Alco Standard . . . . . . . . . . . . . 799
TRANSPORTATION SERVICES - 0.3%
12,000 * Oxford Resources (Class A). . . . . . . 210
MISCELLANEOUS BUSINESS SERVICES - 0.9%
12,500 Browning-Ferris . . . . . . . . . . . . 451
5,000 * Sealed Air. . . . . . . . . . . . . . . 220
671
AIRLINES - 0.5%
5,500 * AMR . . . . . . . . . . . . . . . . . . 410
Total Business Services & Transportation 5,682
ENERGY - 3.3%
ENERGY SERVICES - 3.3%
22,000 * BJ Services . . . . . . . . . . . . . . 500
14,000 Camco International . . . . . . . . . . 327
14,000 Halliburton . . . . . . . . . . . . . . 501
14,000 Schlumberger. . . . . . . . . . . . . . 870
20,000 * Smith International . . . . . . . . . . 335
Total Energy 2,533
PROCESS INDUSTRIES - 3.8%
DIVERSIFIED CHEMICALS - 1.1%
12,500 DuPont. . . . . . . . . . . . . . . . . 859
SPECIALTY CHEMICALS - 1.1%
15,000 Great Lakes Chemical. . . . . . . . . . 904
PAPER & PAPER PRODUCTS - 1.6%
25,000 shs. Albany International (Class A). . . . . $ 597
12,500 Scott Paper . . . . . . . . . . . . . . 619
1,216
Total Process Industries 2,979
BASIC MATERIALS - 0.6%
METALS - 0.6%
8,500 Nucor . . . . . . . . . . . . . . . . . 455
Total Basic Materials 455
Miscellaneous Common Stocks - 3.6% 2,807
Total Common Stocks (Cost $50,845) 61,975
Short-Term Investments - 21.6%
BANK NOTES - 1.3%
$1,000,000 Fifth Third Bank,
6.21%, 10/27/95 . . . . . . . . . . . 1,000
CERTIFICATES OF DEPOSIT - 5.2%
1,000,000 Bank of Nova Scotia,
6.02%, 7/7/95 . . . . . . . . . . . . 1,000
1,000,000 Bayerische Hypotheken,
6.04%, 8/7/95 . . . . . . . . . . . . 1,000
1,000,000 Credit Suisse, 6.27%, 10/12/95. . . . . 1,001
1,000,000 Swiss Bank, 6.01%, 7/21/95. . . . . . . 1,000
4,001
COMMERCIAL PAPER - 15.1%
$ 1,000,000 Caisse des Depots et
Consignations, 4(2),
5.95%, 7/27/95. . . . . . . . . . . . $ 994
4,000 Cargill Financial Services,
6.10%, 7/3/95 . . . . . . . . . . . . 4
1,000,000 Delaware Funding,
5.90%, 8/18/95. . . . . . . . . . . . 987
1,000,000 Falcon Asset Securitization,
5.97%, 7/13/95. . . . . . . . . . . . 993
1,000,000 Fleet Mortgage Group,
6.00%, 7/21/95. . . . . . . . . . . . 995
1,000,000 General Electric Capital,
6.04%, 7/21/95. . . . . . . . . . . . 983
450,000 Kellogg Company,
5.94%, 7/31/95. . . . . . . . . . . . 447
1,000,000 Kingdom of Sweden,
6.025%, 9/25/95 . . . . . . . . . . . 974
1,000,000 Preferred Receivables Funding,
5.95%, 8/9/95 . . . . . . . . . . . . 992
1,400,000 Province of Quebec,
5.82%, 9/26/95. . . . . . . . . . . . 1,380
1,000,000 U.S. Bancorp, 5.92%, 8/14/95. . . . . . 991
1,000,000 UBS Finance (Delaware),
6.25%, 7/3/95 . . . . . . . . . . . . 1,000
1,000,000 Yorkshire Building Society,
6.00%, 7/5/95 . . . . . . . . . . . . 989
11,729
Total Short-Term Investments (Cost $16,730) 16,730
Total Investments in Securities - 101.5% of Net Assets
(Cost $67,575) 78,705
Other Assets Less Liabilities . . . . . . . . . . . . . . . . (1,168)
________
Net Assets Consist of: Value
________
Accumulated net investment income -
net of distributions. . . . . . . . . $ 466
Accumulated realized gains/loss -
net of distributions. . . . . . . . . (305)
Net unrealized gain (loss) . . . . . . . . 11,130
Paid-in-capital applicable to
5,817,897 shares of $0.0001 par
value capital stock outstanding;
1,000,000,000 shares
authorized. . . . . . . . . . . . . . 66,246
________
NET ASSETS . . . . . . . . . . . . . . . . $ 77,537
_________
_________
NET ASSET VALUE PER SHARE. . . . . . . . . $13.33
______
______
* 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.
Statement of Operations
T. Rowe Price Blue Chip Growth Fund / Six Months Ended June 30, 1995
(Unaudited)
(in thousands)
INVESTMENT INCOME
Income
Dividend. . . . . . . . . . . . . . . . . . . . . $ 414
Interest. . . . . . . . . . . . . . . . . . . . . 329
______
Total income. . . . . . . . . . . . . . . . . . . 743
______
Expenses
Investment management . . . . . . . . . . . . . . 126
Shareholder servicing . . . . . . . . . . . . . . 120
Custody and accounting. . . . . . . . . . . . . . 52
Registration. . . . . . . . . . . . . . . . . . . 24
Legal and audit . . . . . . . . . . . . . . . . . 12
Prospectus and shareholder reports. . . . . . . . 10
Organization. . . . . . . . . . . . . . . . . . . 5
Directors . . . . . . . . . . . . . . . . . . . . 4
Miscellaneous . . . . . . . . . . . . . . . . . . 6
______
Total expenses. . . . . . . . . . . . . . . . . . 359
______
Net investment income. . . . . . . . . . . . . . . . 384
______
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on securities . . . . . . . (315)
Change in net unrealized gain or loss
on securities . . . . . . . . . . . . . . . . . . 10,062
______
Net realized and unrealized gain (loss). . . . . . . 9,747
______
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS. . $10,131
______
______
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)
(in thousands)
Six Months Ended Year Ended
June 30, 1995 Dec. 31, 1994
_________________ ______________
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income . . . . . . . . . $ 384 $ 336
Net realized gain (loss). . . . . . . . (315) 43
Change in net unrealized gain or
loss. . . . . . . . . . . . . . . . . 10,062 (116)
__________ _________
Increase (decrease) in net assets from
operations. . . . . . . . . . . . . . 10,131 263
__________ _________
Distributions to shareholders
Net investment income . . . . . . . . . - (347)
Net realized gain . . . . . . . . . . . - (405)
__________ _________
Decrease in net assets from
distributions . . . . . . . . . . . . - (752)
Capital share transactions*
Shares sold . . . . . . . . . . . . . . 41,695 24,029
Distributions reinvested. . . . . . . . - 719
Shares redeemed . . . . . . . . . . . . (13,349) (9,992)
__________ _________
Increase (decrease) in net assets from
capital share transactions. . . . . . 28,346 14,756
__________ _________
Net equalization . . . . . . . . . . . . . . 82 60
__________ _________
Increase (decrease) in net assets. . . . . . 38,559 14,327
NET ASSETS
Beginning of period. . . . . . . . . . . . . 38,978 24,651
__________ _________
End of period. . . . . . . . . . . . . . . . $ 77,537 $ 38,978
__________ _________
__________ _________
*Share information
Shares sold . . . . . . . . . . . . . . 3,398 2,138
Distributions reinvested. . . . . . . . - 65
Shares redeemed . . . . . . . . . . . . (1,089) (888)
__________ _________
Increase (decrease) in shares
outstanding . . . . . . . . . . . . . 2,309 1,315
__________ _________
__________ _________
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Blue Chip Growth Fund / June 30, 1995 (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 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.
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 securities,
aggregated $28,520,000 and $10,256,000, respectively, for the six months ended
June 30, 1995.
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, 1995, the aggregate cost of investments for federal income
tax and financial reporting purposes was $67,575,000 and net unrealized gain
aggregated $11,130,000, of which $11,321,000 related to appreciated
investments and $191,000 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, of which $26,000 was payable at June 30, 1995. 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 June 30, 1995, and for the six months 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.
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through December 31, 1996 which would cause the
fund's ratio of expenses to average net assets to exceed 1.25%. Thereafter
through December 31, 1998, 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,
$57,000 of management fees were not accrued by the fund for the six months
ended June 30, 1995. Additionally, $213,000 of unaccrued management fees and
expenses related to a previous expense limitation are subject to reimbursement
through December 31, 1996.
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 $126,000 for the six
months ended June 30, 1995, of which $22,000 was payable at period-end.
Financial Highlights
T. Rowe Price Blue Chip Growth Fund (Unaudited)
For a share outstanding throughout each period
_______________________________________________
From June 30, 1993
Six Months (Commencement of
Ended Year Ended Operations)
June 30, 1995 Dec. 31, 1994 to Dec. 31, 1993
______________ _____________ ________________
NET ASSET VALUE,
BEGINNING OF
PERIOD . . . . . . . . $11.11 $11.24 $10.00
_________ _________ __________
Investment Activities
Net investment
income . . . . . . 0.07* 0.12* 0.05*
Net realized and
unrealized gain
(loss) . . . . . . 2.15 (0.03) 1.38
_________ _________ __________
Total from Investment
Activities . . . . . 2.22 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. . . . . $13.33 $11.11 $11.24
_________ _________ __________
_________ _________ __________
RATIOS / SUPPLEMENTAL DATA
Total Return . . . . . 20.0%* 0.8%* 14.3%*
Ratio of Expenses to
Average Net
Assets . . . . . . . 1.25%!* 1.25%* 1.25%!*
Ratio of Net Investment
Income to Average
Net Assets . . . . . 1.34%!* 1.05%* 0.80%!*
Portfolio Turnover
Rate . . . . . . . . 43.0%! 75.0% 89.0%!
Net Assets, End of Period
(in thousands) . . . . $77,537 $38,978 $24,651
! Annualized.
* Excludes expenses in excess of a 1.25% voluntary expense limitation in
effect through December 31, 1996.
