- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
SemiAnnual Report
Blue Chip Growth Fund
- --------------------------------------------------------------------------------
June 30, 1997
- --------------------------------------------------------------------------------
Report Highlights
================================================================================
Blue Chip Growth Fund
* Favorable economic data and strong corporate earnings in the first half
helped sustain strong performance in the stock market, especially in
large-cap, blue chip stocks.
* For the six-month period ended June 30, the fund's strong return
outperformed its Lipper peer group average but trailed the S&P 500. * Many
holdings in the consumer products, financial, and technology industries
contributed to performance. However, sharp losses in certain individual
stocks, such as 3Com, prevented even higher gains.
* The fund continued to build positions in some large existing holdings and
also initiated several positions.
* Although the stock market's pace must inevitably slow, positive economic
news and steady corporate earnings should continue to benefit investments
in well-managed, reasonably priced blue chip companies.
Fellow Shareholders
================================================================================
The U.S. stock market posted robust gains in the first half of 1997,
accentuating the consistent strength the market has demonstrated throughout the
past year. These gains were supported by economic data and market fundamentals
that were quite positive. Large-capitalization, blue chip stocks were among the
best performers.
<PAGE>
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 6/30/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Blue Chip Growth Fund 15.48% 32.59%
S&P 500 20.61 34.70
Lipper Growth Funds Average 14.28 23.96
================================================================================
In this favorable environment, your fund continued to perform reasonably
well. For the six months ended June 30, the Blue Chip Growth Fund outperformed
its peer group average but lagged the overall stock market, as measured by the
unmanaged Standard & Poor's 500 Stock Index. For the 12-month period, your fund
outpaced the peer group average significantly and trailed the S&P 500 by a
narrow margin.
MARKET ENVIRONMENT
================================================================================
The U.S. stock market surprised many investors with its consistent
strength. The S&P 500's double-digit percentage gain in the first half of 1997
comes on the heels of consecutive gains of more than 37% in 1995 and 22% in
1996. No immediate concerns appeared to interrupt this advance: inflation and
interest rate data, mutual fund inflows, and corporate earnings remained
favorable.
Long-term interest rates have begun to moderate, falling below 6.75%
recently. In prior letters we warned that economic growth might be accelerating
above the Federal Reserve's comfort level. While some data support this thesis,
other information, including slowing factory orders and retail sales, point to
an economy growing at a controlled pace. Crop and related food prices are
benign; certain food categories have even exhibited deflation. Energy prices
have also declined, with crude oil recently falling below $20 per barrel.
Although the interest rate environment has been beneficial, we remain
concerned about the inconsistent economic performance of our key trading
partners and a related risk to multinational companies' earnings. Japan's
economy is growing only slowly. Several European economies, including Germany,
are also struggling. However, even this risk could be diminishing, as many
economies have begun to improve.
We are aware that stock valuations already reflect much of this positive
news. However, we continue to find quality growth companies at reasonable
valuations.
<PAGE>
PORTFOLIO REVIEW
================================================================================
Consumer products stocks played a key role in the fund's performance.
Pharmaceutical stocks have been the standouts, with PFIZER the top contributor
to performance so far in 1997 and in the past 12 months. WARNER-LAMBERT, JOHNSON
& JOHNSON, MERCK, SMITHKLINE BEECHAM, SCHERING-PLOUGH, and AMERICAN HOME
PRODUCTS each generated meaningful gains for your fund. PEPSICO, PROCTER &
GAMBLE, COLGATE-PALMOLIVE, and PHILIP MORRIS are long-term holdings that boosted
performance. MEDTRONIC, the leading maker of cardiovascular devices, also
performed well. In the entertainment area, CARNIVAL and DISNEY were steady,
strong performers.
Financial stocks did well as interest rates moderated. Investors focused on
companies with consistent earnings growth and strong capital generation, which
helped finance significant share repurchases. TRAVELERS GROUP, MELLON BANK,
FREDDIE MAC, NORWEST, ACE LIMITED, AMERICAN EXPRESS, SALLIE MAE, and AMERICAN
INTERNATIONAL GROUP each added meaningfully to performance.
Manufacturing stocks were steady but potent holdings. In fact, CORNING,
GE, and ALLIEDSIGNAL were among the top five performers for the first six months
of 1997, and DUPONT also did well. In the energy sector, HALLIBURTON and MOBIL
were strong even though a recent decline in energy prices has dampened the
performance of many energy stocks.
Although your fund has less exposure to the technology sector than the
average growth fund, our technology holdings, including MICROSOFT, BMC SOFTWARE,
IBM, and CISCO SYSTEMS, generated strong gains.
We were able to find some sound investment ideas in the struggling retail
sector. Drugstore holding company REVCO was recently purchased by CVS, a leading
drugstore chain. CVS is generating very strong same-store sales gains, and the
stock has been performing well. Building products giant HOME DEPOT and
supermarket giant SAFEWAY both did well. Safeway's recent acquisition of Von's
Supermarkets is already adding to earnings, and it is emerging as a
well-managed, blue chip food retailer.
[Sector Diversificaton pie chart showing: Business Services and
Transportation - 9%; Capital Equipment, Process Industries, and Basic Materials
- - 8%; Technology - 11%; Consumer Services and Consumer Cyclicals - 14%;
Financial - 19%; Energy and Utilities - 7%; Consumer Nondurables - 23%; Reserves
- - 9%]
As always, some stocks produced disappointing results. In fact, the
volatility of the market in 1997 tended to ensure that our mistakes were
punished. 3COM was our largest loser, as Intel's pricing activity in the adapter
card market and a slowdown in several key businesses caused the stock to decline
sharply. However, the company's business has improved, and its recent merger
with U.S. Robotics should allow the combined company to thrive in the networking
market. We reestablished a modest position based on these developments, and the
stock has performed well recently.
<PAGE>
IKON OFFICE SOLUTIONS (formerly Alco Standard), a leading office products
company, failed to meet ambitious milestones for integrating its business and
achieving efficiencies. We think this company should be able to solve its
problems, but we are not adding significantly to our position until we see more
tangible signs of improvement.
BOSTON CHICKEN appeared to be one of the few restaurant companies with
strong growth. However, as is often the case in the restaurant industry, its
concept seems to be losing some appeal. We visited with management, and we
believe they offered an assessment of business prospects that later proved to be
overly optimistic. Thus, we sold our relatively small position well above
current prices, but not before incurring losses.
STRATEGY
================================================================================
Our investment strategy focuses on maintaining positions in core holdings
as long as the fundamentals remain strong and the valuations are reasonable.
Consequently, much of the fund's substantial cash flow continues to be invested
opportunistically in existing holdings. For example, additions to Philip Morris,
AlliedSignal, FIRST DATA, SARA LEE, and Mellon Bank were significant enough to
be listed in the 10 largest fund purchases table following this letter.
However, we did establish some new positions. MATTEL, the world's leading
toy maker, has powerful brands, such as Barbie and Hot Wheels, that have
produced strong growth for several decades. The company is successfully
integrating Fisher Price and Tyco Toys and generates very strong cash flow. We
purchased the stock early in 1997 when it was out of favor and it has been a
very solid performer. ST. PAUL COMPANIES is a high-quality property casualty
insurer with a dominant position in the medical malpractice insurance area. The
company is divesting lower-returning assets, controlling expenses well, and also
repurchasing stock. It is positioned to generate improved returns as the
property casualty insurance industry consolidates.
Other purchases include TEXACO, a leading oil and gas producer, which is
poised to increase production at an above-average rate relative to other oil and
gas producers. Efficiency improvements invarious aspects of its upstream and
downstream operations, combined with strong production, could result in
surprising earnings growth even if energy prices do not increase. New holding
TRIBUNE owns leading positions in the newspaper and broadcasting industries.
While its ownership of key newspapers, such as the Chicago Tribune, is well
recognized, its growing presence in televison broadcasting could drive
double-digit earnings growth for the next several years.
OUTLOOK
================================================================================
Stock valuations remain expensive by all conventional measures,
particularly the S&P's historically low dividend yield. We are also cautious
because the market and your fund have generated strong results for several
consecutive years.
<PAGE>
However, we realize that sound investing must be driven by the outlook for
the general investment environment, future company earnings, and careful
selection of stocks. Considering these factors, we believe the outlook for U.S.
stocks and your fund remains favorable:
* As we have consistently noted when interest rates have risen (or fallen) in
the past, the threat of inflation and Fed rate hikes are real but should be
kept in perspective. Economic data support the thesis that the economy is
growing at a solid pace.
* Earnings growth continues to be very strong at many high-quality U.S.
companies, and the valuations of selected companies remain reasonable.
* Topnotch, entrepreneurial management and sound business models at many of
our holdings are major positives. Through careful management of costs and
proper incentives, many of these management teams have improved the
competitiveness of their businesses and also the durability and
predictability of earnings.
* Many of our holdings generate significant amounts of free cash flow.
Shareholder-oriented management can be trusted to use this cash to
repurchase shares or make acquisitions in a manner that often enhances
stock performance over time.
While the environment appears favorable, changes in inflation, interest
rates, and other key determinants of stock performance are notoriously difficult
to predict. Significant surprises do occur. There is also the risk that stock
valuations already reflect much of the favorable news.
Consequently, we are attempting to invest your money with the knowledge
that the market will not always go up. We strive to manage risk by investing in
well-managed companies whose strong fundamentals and leading market positions
are not particularly sensitive to changes in the economic environment. We also
seek to buy these companies at reasonable valuations. Over the long term, we
believe this approach will provide superior investment results.
Respectfully submitted,
/s/
Larry J. Puglia
President and Chairman of the Investment Advisory Committee
/s/
Thomas H. Broadus, Jr.
Executive Vice President
July 22, 1997
<PAGE>
===============================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
MAJOR PORTFOLIO CHANGES
Listed in descending order of size
6 Months Ended 6/30/97
Ten Largest Purchases
- --------------------------------------------------------------------------------
Philip Morris
Mattel *
St. Paul Companies *
Texaco *
Tribune *
US West Media *
AlliedSignal
First Data
Sara Lee
Mellon Bank
Ten Largest Sales
- --------------------------------------------------------------------------------
3Com
Tupperware **
CPC International **
Crown Cork & Seal
LM Ericsson **
Reynolds & Reynolds **
PMI Group **
Unisource Worldwide **
Delta Air Lines **
Schlumberger **
* Position added
** Position eliminated
================================================================================
<PAGE>
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/97
AlliedSignal ............................................. 1.4%
Pfizer ................................................... 1.3
First Data ............................................... 1.3
Travelers Group .......................................... 1.3
Philip Morris ............................................ 1.3
ACE Limited .............................................. 1.3
Mellon Bank .............................................. 1.3
Merck .................................................... 1.2
Johnson & Johnson ........................................ 1.2
Corning .................................................. 1.1
Freddie Mac .............................................. 1.1
GE ....................................................... 1.1
Mobil .................................................... 1.1
Citicorp ................................................. 1.0
Norwest .................................................. 1.0
SBC Communications ....................................... 1.0
Disney ................................................... 1.0
BMC Software ............................................. 1.0
Sara Lee ................................................. 1.0
Fannie Mae ............................................... 0.9
Travelers Property Casualty .............................. 0.9
Danaher .................................................. 0.9
IBM ...................................................... 0.9
Warnaco Group ............................................ 0.9
Great Lakes Chemical ..................................... 0.9
- --------------------------------------------------------------------------------
Total .................................................... 27.4%
================================================================================
<PAGE>
================================================================================
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.
[Blue Chip Growth Fund SEC chart shown 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 6/30/97 1 Year 3 Years Inception Date
- --------------------------------------------------------------------------------
Blue Chip Growth Fund 32.59% 28.59% 23.74% 6/30/93
Investment return represents past performance and will vary. Shares may be
worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
<TABLE>
Unaudited For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
<CAPTION>
<S> <C> <C> <C> <C> <C>
6 Months Year 6/30/93
Ended Ended Through
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93
NET ASSET VALUE
Beginning of period ..................... $ 19.06 $ 15.09 $ 11.11 $ 11.24 $ 10.00
Investment activities
Net investment income ............... 0.07 0.14 0.16* 0.12* 0.05*
Net realized and
unrealized gain (loss) .............. 2.88 4.05 4.05 (0.03) 1.38
Total from
investment activities ............... 2.95 4.19 4.21 0.09 1.43
Distributions
Net investment income ............... -- (0.14) (0.15) (0.10) (0.05)
Net realized gain ................... -- (0.08) (0.08) (0.12) (0.14)
Total distributions ................. -- (0.22) (0.23) (0.22) (0.19)
NET ASSET VALUE
End of period ........................... $ 22.01 $ 19.06 $ 15.09 $ 11.11 $ 11.24
Ratios/Supplemental Data
Total return ............................ 15.48% 27.75% 37.90%* 0.80%* 14.32%*
Ratio of expenses to
average net assets ...................... 1.01%+ 1.12% 1.25%* 1.25%* 1.25%*+
Ratio of net investment
income to average
net assets .............................. 0.86%+ 0.87% 1.27%* 1.05%* 0.80%*+
Portfolio turnover rate ................. 24.8%+ 26.3% 38.1% 75.0% 89.0%+
Average commission
rate paid ............................... $ 0.0553 $ 0.0544 -- -- --
Net assets, end of period
(in millions) ........................... $ 1,171 $ 540 $ 146 $ 39 $ 25
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Excludes expenses in excess of a 1.25% voluntary expense limitation in effect through 12/31/96.
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited June 30, 1997
================================================================================
Statement of Net Assets
Shares/Par Value
In thousands
Common Stocks 91.1%
FINANCIAL 18.5%
Bank and Trust 6.3%
BANC ONE ........................................ 175,000 $8,477
BankBoston ...................................... 64,000 4,612
Chase Manhattan ................................. 110,000 10,677
Citicorp ........................................ 100,000 12,056
Mellon Bank ..................................... 325,000 14,666
NationsBank ..................................... 95,000 6,127
Norwest ......................................... 210,000 11,812
Wells Fargo ..................................... 21,000 5,660
74,087
Insurance 5.4%
ACE Limited ..................................... 200,000 14,775
American International Group .................... 45,000 6,722
EXEL ............................................ 115,000 6,066
Mid Ocean Limited ............................... 155,000 8,128
St. Paul Companies .............................. 112,000 8,540
Travelers Property Casualty (Class A) ........... 275,000 10,965
UNUM ............................................ 195,000 8,190
63,386
Financial Services 6.8%
American Express ................................ 130,000 9,685
Fannie Mae ...................................... 255,000 11,124
Freddie Mac ..................................... 375,000 12,891
Green Tree Financial ............................ 115,000 4,097
H&R Block ....................................... 180,000 5,805
Household International ......................... 59,000 6,929
Money Store ..................................... 250,000 7,148
Sallie Mae ...................................... 50,000 6,350
Travelers Group ................................. 240,333 15,156
79,185
Total Financial ................................. 216,658
UTILITIES 1.9%
Telephone Services 1.9%
ALLTEL .......................................... 150,000 5,015
AT&T ............................................ 75,000 $ 2,630
SBC Communications .............................. 185,000 11,447
Sprint .......................................... 50,000 2,631
Total Utilities 21,723
<PAGE>
CONSUMER NONDURABLES 22.3%
Cosmetics 0.2%
Gillette ........................................ 30,000 2,843
2,843
Beverages 1.0%
Coca-Cola ....................................... 10,000 675
PepsiCo ......................................... 285,000 10,705
11,380
Food Processing 3.0%
Heinz ........................................... 145,000 6,688
Interstate Bakeries ............................. 70,000 4,152
McCormick ....................................... 100,000 2,531
Nabisco Holdings (Class A) ...................... 140,000 5,583
Ralston Purina .................................. 59,000 4,849
Sara Lee ........................................ 270,000 11,239
35,042
Hospital Supplies/Hospital Management 3.2%
Boston Scientific * ............................. 125,000 7,680
Columbia/HCA Healthcare ......................... 180,000 7,076
HealthSouth * ................................... 290,000 7,232
Medtronic ....................................... 95,000 7,695
Vencor * ........................................ 180,000 7,605
37,288
Pharmaceuticals 7.6%
American Home Products .......................... 130,000 9,945
Amgen ........................................... 64,000 3,718
Eli Lilly ....................................... 55,000 6,012
Johnson & Johnson ............................... 210,000 13,519
Merck ........................................... 136,000 14,076
Pfizer .......................................... 127,000 15,176
Schering-Plough ................................. 187,000 8,953
SmithKline Beecham ADR .......................... 115,000 10,537
Warner-Lambert .................................. 58,000 7,206
89,142
Health Care Services 0.7%
PacifiCare Health Systems (Class B) * ........... 50,000 3,192
United HealthCare ............................... 92,000 4,784
7,976
<PAGE>
Miscellaneous Consumer Products 6.6%
Colgate-Palmolive ............................... 100,000 6,525
CUC International * ............................. 310,825 8,023
Jones Apparel Group * ........................... 75,000 3,581
Mattel .......................................... 280,000 9,485
Newell .......................................... 150,000 5,944
NIKE ............................................ 10,000 584
Philip Morris ................................... 335,000 14,866
Procter & Gamble ................................ 53,000 7,486
Richfood Holdings ............................... 185,000 4,810
Service Corp. ................................... 200,000 6,575
Stanley Works ................................... 125,000 5,000
Unilever N.V. ADR ............................... 20,000 4,360
77,239
Total Consumer Nondurables ...................... 260,910
CONSUMER SERVICES 11.1%
General Merchandisers 1.5%
Wal-Mart ........................................ 185,000 6,255
Warnaco Group (Class A) ......................... 340,000 10,838
17,093
Specialty Merchandisers 4.5%
American Stores ................................. 140,000 6,912
Circuit City Stores ............................. 40,000 1,423
CVS ............................................. 110,262 5,651
Federated Department Stores * ................... 185,000 6,429
General Nutrition * ............................. 250,000 6,984
Home Depot ...................................... 100,000 6,894
Kohl's * ........................................ 100,000 5,294
McKesson ........................................ 25,000 1,937
Safeway * ....................................... 195,000 8,994
The Gap ......................................... 50,000 1,944
52,462
Entertainment and Leisure 2.4%
Carnival (Class A) ADR .......................... 190,000 7,838
Disney .......................................... 142,000 11,395
ITT * ........................................... 34,000 2,076
McDonald's ...................................... 145,000 7,005
28,314
Media and Communications 2.7%
R. R. Donnelly .................................. 125,000 4,578
Time Warner ..................................... 160,000 7,720
Tribune ......................................... 160,000 7,690
U S West Media * ................................ 340,000 6,885
Vodafone ADR .................................... 100,000 4,844
31,717
Total Consumer Services 129,586
<PAGE>
CONSUMER CYCLICALS 2.5%
Automobiles and Related 0.2%
Lear * .......................................... 50,000 2,219
2,219
Building and Real Estate 0.1%
Patriot American Hospitality, REIT .............. 50,000 1,275
1,275
Miscellaneous Consumer Durables 2.2%
Corning ......................................... 235,000 13,072
Eastman Kodak ................................... 100,000 7,675
Masco ........................................... 130,000 5,427
26,174
Total Consumer Cyclicals ........................ 29,668
TECHNOLOGY 10.5%
Electronic Components 2.9%
Altera * ........................................ 82,000 4,144
Intel ........................................... 73,000 10,336
Linear Technology ............................... 82,000 4,236
Maxim Integrated Products * ..................... 105,000 5,965
Motorola ........................................ 79,000 6,004
Xilinx * ........................................ 61,000 2,991
33,676
Electronic Systems 1.6%
ADT * ........................................... 220,000 7,260
Hewlett-Packard ................................. 60,000 3,360
Honeywell ....................................... 61,000 4,628
Nokia ADR ....................................... 44,000 3,245
18,493
Information Processing 1.7%
COMPAQ Computer * ............................... 68,000 6,749
Dell Computer * ................................. 25,000 2,935
IBM ............................................. 121,000 10,913
20,597
Telecommunications Equipment 2.0%
3Com * .......................................... 82,000 3,687
Cisco Systems * ................................. 140,000 9,402
Lucent Technologies ............................. 55,000 3,964
MCI ............................................. 130,000 4,977
Tellabs * ....................................... 25,000 1,395
23,425
Aerospace and Defense 2.3%
AlliedSignal .................................... 195,000 16,380
Boeing .......................................... 68,000 3,608
Lockheed Martin ................................. 65,000 6,732
26,720
Total Technology ................................ 122,911
<PAGE>
CAPITAL EQUIPMENT 4.5%
Electrical Equipment 2.7%
Emerson Electric ................................ 68,000 3,744
GE .............................................. 195,000 12,748
Hubbell (Class B) ............................... 170,000 7,480
Tyco International .............................. 120,000 8,348
32,320
Machinery 1.8%
Danaher ......................................... 215,000 $ 10,925
Teleflex ........................................ 320,000 10,000
20,925
Total Capital Equipment ......................... 53,245
BUSINESS SERVICES AND
TRANSPORTATION 8.1%
Computer Service and Software 6.3%
Ascend Communications * ......................... 75,000 2,946
Automatic Data Processing ....................... 150,000 7,050
BMC Software * .................................. 205,000 11,365
Electronic Data Systems ......................... 100,000 4,100
First Data ...................................... 345,106 15,163
Microsoft * ..................................... 58,000 7,335
National Data ................................... 110,000 4,764
Oracle * ........................................ 135,000 6,796
Parametric Technology * ......................... 92,000 3,913
SunGard Data Systems * .......................... 135,000 6,278
Synopsys * ...................................... 100,000 3,691
73,401
Distribution Services 0.3%
Ikon Office Solutions ........................... 160,000 3,990
3,990
Environmental 0.4%
USA Waste Services * ............................ 135,000 5,214
5,214
Miscellaneous Business Services 0.6%
Omnicom ......................................... 50,000 3,081
Wallace Computer Services ....................... 110,200 3,313
6,394
Railroads 0.5%
Burlington Northern Santa Fe .................... 64,000 5,752
5,752
Total Business Services and Transportation ...... 94,751
<PAGE>
ENERGY 4.3%
Energy Services 1.3%
BJ Services * ................................... 50,000 $ 2,681
Cooper Cameron * ................................ 130,000 6,078
Halliburton ..................................... 86,000 6,815
15,574
Integrated Petroleum-Domestic 1.3%
Atlantic Richfield .............................. 74,000 5,217
British Petroleum ADR ........................... 136,000 10,183
15,400
Integrated Petroleum - International 1.7%
Mobil ........................................... 179,000 12,508
Texaco .......................................... 64,000 6,960
19,468
Total Energy .................................... 50,442
PROCESS INDUSTRIES 2.9%
Diversified Chemicals 1.1%
Dow Chemical .................................... 22,000 1,917
DuPont .......................................... 118,000 7,419
Monsanto ........................................ 82,000 3,531
12,867
Specialty Chemicals 0.9%
Great Lakes Chemical ............................ 205,000 10,737
10,737
Paper and Paper Products 0.9%
Kimberly-Clark .................................. 200,000 9,950
9,950
Total Process Industries ........................ 33,554
BASIC MATERIALS 1.1%
Mining 0.6%
Newmont Mining .................................. 185,000 7,215
7,215
Miscellaneous Materials 0.5%
Crown Cork & Seal ............................... 115,000 $ 6,145
6,145
Total Basic Materials ........................... 13,360
Total Miscellaneous Common Stock 3.4% ........... 39,755
Total Common Stocks (Cost $ 847,638)............. 1,066,563
<PAGE>
Short-Term Investments 9.7%
Certificates of Deposit 4.3%
ABN AMRO, (London), 5.81%, 8/29/97 .................... $5,000,000 5,001
Australia & New Zealand Banking, 5.76%, 12/18/97 ...... 5,000,000 5,000
Banque Nationale de Paris, 5.74%, 7/28/97 ............. 5,000,000 5,000
Caisse Nationale de Credit Agricole, (London),
5.63%, 8/11/97 ........................................ 5,000,000 5,000
Deutsche Bank AG New York, 6.00%, 7/29/97 ............. 5,000,000 5,001
Suntrust Bank, 5.79%, 12/4/97 ......................... 5,000,000 5,000
Svenska Handlesbanken, 5.68 - 5.705%, 7/7 - 10/1/97 ... 10,000,000 10,001
Union Bank of California, 5.55%, 7/11/97 .............. 5,000,000 5,000
World Savings Bank, 5.57%, 7/8/97 ..................... 5,000,000 5,000
50,003
Commercial Paper 5.0%
Bank Of New York, 5.52%, 7/10/97 ........................ 5,000,000 4,993
Banque Nationale de Paris, 5.55%, 7/14/97 ............... 5,000,000 4,990
Beta Finance, 4(2), 5.56%, 8/8/97 ....................... 5,000,000 4,971
Finova Capital, 4(2), 5.60 - 5.62%, 7/24 - 9/9/97 ....... 10,000,000 9,927
Halifax Building Society, 5.54%, 7/14/97 ................ 5,000,000 4,990
Island Finance of Puerto Rico, 5.60%, 9/9/97 ............ 5,000,000 4,945
Preferred Receivables Funding, 5.54%, 7/17/97 ........... 5,000,000 4,988
RTZ America, 4(2), 5.57%, 7/14/97 ....................... 5,000,000 4,990
Westdeutsche Landesbank, 5.53%, 7/10/97 ................. 5,000,000 4,993
Investments in Commercial Paper through a Joint Account
6.05 - 6.20%, 7/1/97 ........................... 9,157,723 9,158
58,945
Medium-Term Notes 0.4%
Morgan Stanley Group, VR, 6.05%, 9/17/98 ........ 5,000,000 5,012
5,012
Total Short-Term Investments (Cost $ 113,960) ... 113,960
Total Investments in Securities
100.8% of Net Assets (Cost $961,598) ............ $1,180,523
Other Assets Less Liabilities ................... (9,218)
NET ASSETS ...................................... $1,171,305
Net Assets Consist of:
Accumulated net investment income -
net of distributions ............................ $ 3,822
Accumulated net realized gain/loss -
net of distributions ............................ (450)
Net unrealized gain (loss) ...................... 218,925
Paid-in-capital applicable to 53,222,029
shares of $0.0001 par value capital
stock outstanding; 1,000,000,000 shares
authorized ...................................... 949,008
NET ASSETS ...................................... $1,171,305
NET ASSET VALUE PER SHARE ....................... $ 22.01
<PAGE>
* Non-income producing
REIT Real Estate Investment Trust
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.
Unaudited
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/97
Investment Income
Income
Dividend .................................................... $ 5,481
Interest .................................................... 2,816
Total income ................................................ 8,297
Expenses
Investment management ....................................... 2,779
Shareholder servicing ....................................... 1,341
Registration ................................................ 164
Prospectus and shareholder reports .......................... 98
Custody and accounting ...................................... 68
Legal and audit ............................................. 7
Directors ................................................... 5
Miscellaneous ............................................... 13
Total expenses .............................................. 4,475
Net investment income ........................................... 3,822
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities .......................... (2,260)
Change in net unrealized gain or loss on securities ............. 133,745
Net realized and unrealized gain (loss) ......................... 131,485
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS .......................................... $135,307
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/97 12/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income ........................... $ 3,822 $ 2,414
Net realized gain (loss) ........................ (2,260) 4,994
Change in net unrealized gain or loss ........... 133,745 62,004
Increase (decrease) in net assets from operations 135,307 69,412
Distributions to shareholders
Net investment income ........................... - (3,801)
Net realized gain ............................... - (2,192)
Decrease in net assets from distributions ....... - (5,993)
Capital share transactions *
Shares sold ..................................... 653,690 423,555
Distributions reinvested ........................ - 5,800
Shares redeemed ................................. (157,366) (101,053)
Increase (decrease) in net assets from capital
share transactions .............................. 496,324 328,302
Net equalization .................................... - 1,499
Net Assets
Increase (decrease) during period ................... 631,631 393,220
Beginning of period ................................. 539,674 146,454
End of period ....................................... $ 1,171,305 $ 539,674
*Share information
Shares sold ..................................... 32,762 24,262
Distributions reinvested ........................ - 302
Shares redeemed ................................. (7,850) (5,958)
Increase (decrease) in shares outstanding ....... 24,912 18,606
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited June 30, 1997
================================================================================
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
T. Rowe Price Blue Chip Growth 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 June 30, 1993.
VALUATION Equity securities 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. Listed securities not traded on a
particular day and securities 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 amortized 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.
PREMIUMS AND DISCOUNTS Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
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. Effective January 1, 1997, the fund discontinued
its practice of equalization. The results of operations and net assets were not
affected by this change.
NOTE 2 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
COMMERCIAL PAPER JOINT ACCOUNT The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
OTHER Purchases and sales of portfolio securities, other than short-term
securities, aggregated $549,029,000 and $98,303,000, respectively, for the six
months ended June 30, 1997.
<PAGE>
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, 1997, the aggregate cost of investments for federal income tax
and financial reporting purposes was $961,598,000, and net unrealized gain
aggregated $218,925,000, of which $224,530,000 related to appreciated
investments and $5,605,000 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 $580,000 was payable at June 30, 1997. 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 0.30% for assets in excess of $80 billion. At June
30, 1997, and for the six months then ended, the effective annual group fee rate
was 0.33%. The fund pays a pro-rata share of the group fee based on the ratio of
its net assets to those of the group.
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 $1,148,000 for the six months
ended June 30, 1997, of which $202,000 was payable at period-end.
<PAGE>
================================================================================
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
- --------------------------------------------------------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE Shareholder service representatives are available from 8 a.m. to
10 p.m. ET Monday through Friday and from 8:30 a.m. to 5 p.m. ET on weekends.
Call 1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
IN PERSON Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. You can also
drop off applications or obtain prospectuses and other literature at these
centers.
AUTOMATED 24-HOUR SERVICES
TELE*ACCESS [REGISTRATION MARK] Call 1-800-638-2587 to obtain information
such as account balance, date and amount of your last transaction, latest
dividend payment, fund prices, and yields. Additionally, you have the ability to
request prospectuses, statements, and account and tax forms; to reorder checks;
and to initiate purchase, redemption, and exchange orders for identically
registered accounts.
T.ROWE PRICE ONLINE Through a personal computer via dial-up modem, you can
replicate all the services available on Tele*Access plus conduct transactions in
your Discount Brokerage and Variable Annuity accounts.
Account Services
CHECKING Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield and Emerging Markets Bond Funds).
AUTOMATIC INVESTING Build your account over time by investing directly from
your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A $50 minimum
makes it easy to get started.
AUTOMATIC WITHDRAWAL If you need money from your fund account on a regular
basis, you can establish scheduled, automatic redemptions.
DIVIDEND AND CAPITAL GAINS PAYMENT Options Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
<PAGE>
DISCOUNT BROKERAGE*
INVESTMENTS AVAILABLE You can trade stocks, bonds, options, precious
metals, and other securities at a savings over regular commission rates.
TO OPEN AN ACCOUNT Call a shareholder service representative for more
information.
Investment Information
COMBINED STATEMENT A comprehensive overview of your T. Rowe Price accounts
is provided. The summary page gives you earnings by tax category, provides total
portfolio value, and lists your investments by typeNstock, bond, and money
market. Detail pages itemize account transactions by fund.
SHAREHOLDER REPORTS Portfolio managers review the performance of the funds
in plain language and discuss T. Rowe Price's economic outlook.
T. ROWE PRICE REPORT This is a quarterly newsletter with relevant articles
on market trends, personal financial planning, and T. Rowe Price's economic
perspective.
PERFORMANCE UPDATE This quarterly report reviews recent market developments
and provides comprehensive performance information for every T. Rowe Price fund.
INSIGHTS This library of information includes reports on mutual fund tax
issues, investment strategies, and financial markets.
DETAILED INVESTMENT GUIDES Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Diversifying Overseas: A Guide to International Investing,
Retirees Financial Guide, and Retirement Planning Kit (also available on disk
for PC use) can help you determine and reach your investment goals.
* A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
<PAGE>
================================================================================
T. Rowe Price Mutual Funds
================================================================================
STOCK FUNDS
- --------------------------------------------------------------------------------
DOMESTIC
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
Value
INTERNATIONAL/GLOBAL
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
<PAGE>
BOND FUNDS
- --------------------------------------------------------------------------------
DOMESTIC TAXABLE
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
DOMESTIC TAX-FREE
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
INTERNATIONAL/GLOBAL
Global Government Bond
Emerging Markets Bond
International Bond
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
TAXABLE
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
<PAGE>
TAX-FREE
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
- --------------------------------------------------------------------------------
Balanced
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
- --------------------------------------------------------------------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
** Formerly the OTC Fund.
Please call for a prospectus. Read it carefully before you invest or send money.
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access [Registration Mark]:
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
<PAGE>
Internet address:
www.troweprice.com
T. Rowe Price Associates
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 [Registration Mark].
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor. F93-051 6/30/97
