- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
Semiannual Report
Blue Chip Growth Fund
- --------------------------------------------------------------------------------
June 30, 1998
- --------------------------------------------------------------------------------
REPORT HIGHLIGHTS
================================================================================
Blue Chip Growth Fund
* An excellent domestic economic environment powered blue chip stocks
higher, despite concerns about Asia's economic crisis.
* The Blue Chip Growth Fund's 6- and 12-month returns significantly
outpaced the Lipper Growth Funds Average and kept up with the surging S&P
500.
* Technology, consumer products, financial, and health care stocks were
among the fund's top performers while a few companies with disappointing
earnings detracted from fund results.
* Although valuations are high, market conditions continue to be favorable
for stocks.
<PAGE>
Fellow Shareholders
Recovering from early weakness stemming from the crisis in Asian
economies, the U.S. stock market generated strong gains in the first half of
1998. The market, as measured by the Standard & Poor's 500 Stock Index,
exhibited considerable volatility but could be on track for a fourth consecutive
annual gain exceeding 20%. The S&P 500 is up well over 100% in the last three
years and approximately 180% in the last five years.
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 6/30/98 6 Months 12 Months
Blue Chip Growth Fund 17.46% 29.75%
S&P 500 17.71 30.16
Lipper Growth Funds Average 15.10 25.38
================================================================================
Your fund benefited from this favorable environment. For the six months
ended June 30, 1998, the Blue Chip Growth Fund's 17.46% gains outdistanced the
15.10% results of the Lipper Growth Funds Average and essentially matched the
17.71% return of the unmanaged S&P 500. For the 12-month period, your fund
surpassed its peer group average and came quite close to equaling the S&P. We
are also pleased to note that the fund is celebrating its five-year anniversary,
and its cumulative return of 204% since inception bested the S&P by a wide
margin and put it in the top 5% of its peer group. The fund ranks 18 out of 338
funds in the Lipper Growth Funds category for the five-year period. (It ranks
302 out of 884 funds for the one-year time frame. Please see page 9 for
additional performance information.)
Market Environment
The environment for U.S. equities during the period continued to be
positive, with interest rates, mutual fund inflows, and corporate earnings all
remaining favorable. Long-term interest rates moderated yet again, falling below
5.5% recently, while both wholesale and consumer prices extended their benign
trend. Crop and related food prices were well behaved, and energy prices also
took a turn for the better with crude oil falling well below $15 per barrel.
Nonetheless, the equity market was troubled by developments in Asia.
Currency devaluations and banking system problems in Korea, Indonesia, Malaysia,
Thailand, and Japan caused a sharp slowdown in the region's economic growth and
prompted investors to reassess the stability and growth potential for Asia in
its entirety and for its trading partners. Investors concurrently questioned
whether the long expansion in the U.S. and the related earnings growth of
domestic and multinational companies could be affected.
<PAGE>
In fact, we noted a meaningful deterioration in growth for a number of
industry sectors and companies. Technology and capital equipment companies saw
demand soften in key Asian markets. Surprisingly, even some food companies, such
as HERSHEY FOODS (which has relatively insignificant Asian operations),
experienced earnings shortfalls. Investors also feared that a general slowdown
in economic activity and a flood of cheap imports triggered by the devaluation
of foreign currencies would result in severe pricing pressure-maybe even
deflation-in the U.S. The specialty chemicals sector proved sensitive to these
concerns, where even such stalwarts as DUPONT have seen sharp price competition.
Pressures emanating from Asia and aggravating factors in the domestic
markets, such as the General Motors strike, may continue to dampen growth in
some areas. However, they did not result in meaningful problems for corporate
profits or stock prices overall in the first half. Job growth in the U.S. was
strong with the unemployment rate below 5%. Housing starts and retail sales
remained solid. Perhaps most important, U.S. companies continued to improve
efficiency and lower costs in ways that should at least partially offset the
competitive pricing pressure experienced in many industries.
PORTFOLIO REVIEW
Your fund has less exposure to the technology sector than the average
growth fund, but its technology holdings performed very well in the first half
of 1998. This is particularly noteworthy given the uneven results in the sector
because of the Asian crisis. In the traditional technology area, MICROSOFT, BMC
SOFTWARE, CISCO SYSTEMS, and DELL COMPUTER were top contributors to fund
returns. NOKIA, a leading maker of wireless telephones and telecommunication
equipment, produced strong gains for the fund.
Consumer products stocks once again played a key role in the fund's
performance. Pharmaceutical stocks, for example, have been consistent standouts.
Most of these companies do not have significant exposure to Asian markets, and
the introduction of innovative products is providing unit growth, pricing
flexibility, and strong revenue and earnings growth. WARNER-LAMBERT, PFIZER,
SCHERING-PLOUGH, MERCK, and BRISTOL-MYERS SQUIBB each generated top-tier gains
for your fund.
[Include Sector Diversification chart here. Edgar description - A pie
chart based on net assets as of 6/30/98 with the following segments: Business
services & transportation, 13%. Capital equipment, process industries, and basic
materials, 7%. Technology, 11%. Consumer services and consumer cyclicals, 17%.
Financial, 21%. Energy and utilities, 5%. Consumer nondurables, 21%. Reserves,
5%.]
Retailing is another area that was relatively unaffected by events in
Asia. Discount food and drug retailers as a whole can be counted on for steady
earnings growth in most economic environments. Longtime holdings WAL-MART,
SAFEWAY, and CVS (a leading drug store chain) each have produced powerful
improvements in same store sales, efficiency, and earnings growth over the past
several years. They were stellar performers in the first half of 1998.
<PAGE>
Another area benefiting from the health of the American consumer is
entertainment. CARNIVAL and DISNEY produced steady, strong returns. Media giants
TIME WARNER and US WEST MEDIA, with significant cable interests, and TRIBUNE,
with significant newspaper and broadcasting operations, posted fine results.
Financial stocks performed well as interest rates moderated and investors
focused on companies with consistent earnings growth and strong capital
generation (funding significant share repurchases). Investors also became
somewhat more constructive on consumer credit bankruptcy, delinquency, and loss
trends. This helped our investments in CAPITAL ONE FINANCIAL, CHASE MANHATTAN,
and AMERICAN EXPRESS generate major contributions to the fund's bottom line.
Merger activity heated up in the consolidating financial services
industry. Our investments in TRAVELERS GROUP and CITICORP, which are merging to
form CITIGROUP, constitute a meaningful position that continued to perform well.
Citigroup will have access to 100 million consumers in 100 countries. Consistent
with its progenitors, the company should exhibit stringent cost controls, heavy
stock ownership by management, aggressive share repurchase, and above-average
return on equity. NATIONSBANK also posted good returns as investors began to
appreciate the integration of its recent Barnett Banks acquisition, the
impending merger with BankAmerica, and the resulting improvements in efficiency
and cash flow. MORGAN STANLEY DEAN WITTER DISCOVER, also a product of mergers,
did well. Morgan Stanley's heritage of superior international reach, first-rate
systems, high return on equity, and balance sheet strength is driving meaningful
market share gains and sharp advances in earnings power.
Manufacturing stock gains were steady but potent. TYCO INTERNATIONAL, the
leading provider of fire control and security systems and health care supplies,
was a top performer. Its acquisition of UNITED STATES SURGICAL (also a
significant fund holding) enhanced fund performance and should solidify Tyco's
position as a leading maker of hospital supplies. DANAHER, ALLIEDSIGNAL, and GE
also made meaningful contributions.
As always, some stocks produced disappointing results. As we have noted
in previous reports, the market has been rather unforgiving toward stocks of
companies posting disappointing results. CENDANT was our largest loser in the
first half of 1998 as accounting irregularities in its membership business
caused a catastrophic decline in the stock. Management continues to assert that
the issue is confined to one area and that its leading positions in hotel
franchising, residential real estate (through Century 21), and car rental
(through Avis) are unaffected. Although this holding has diminished
significantly in weight (we have been reluctant to add to it as a special audit
analyzes the accounting problems) , we have maintained a position and think it
will perform reasonably well over time.
<PAGE>
PHILIP MORRIS disappointed as efforts failed to formulate a constructive
plan to limit its exposure to tobacco litigation. Despite the company's
impressive food franchises (General Foods, Oscar Meyer, Post, and Kraft) and
other areas, we recognize that tobacco companies may be under siege for some
time. Consequently, we have kept a slightly below market weighting in Philip
Morris despite its attractive valuation and strong cash flow. STARWOOD HOTELS &
RESORTS, the leading operator of hotels in the U.S., was also a disappointment.
The company's status as a paired-share REIT (real estate investment trust)
proved to be problematic as legislation has challenged many of the tax
advantages once conferred upon this corporate structure. However, Starwood is
successfully integrating ITT (which owns Sheraton Hotels and Caesar's World
gaming) and should post continued strong operating results.
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 substantial cash flow the fund has received continues
to be invested opportunistically in existing holdings. For example, additions to
Bristol-Myers Squibb, NationsBank, FREDDIE MAC, USA WASTE SERVICES, ORACLE,
WORLDCOM, and RAYTHEON were significant enough to be included in the 10 largest
purchases of the fund for the past six months.
We did establish some substantial new positions, none of which should be
particularly affected by the developments in Asia. TELLABS, for example, is a
leading producer of telecommunications equipment. The company has consistently
generated strong revenue and profit growth, and recent acquisitions provide
broader product positioning in proprietary, innovative technologies poised for
growth. HASBRO is a leading toymaker with dominant positions in a number of key
areas. Its boardgame franchise (including Monopoly and Trivial Pursuit) and
brands such as Tonka and Mr. Potato Head continue to sell well. However, new
products such as Teletubbies, co-promotions with the Star Wars movies, and a
bevy of interactive electronic games should drive consistent growth for the next
several years. CBS has transformed itself into a leading provider of radio and
television broadcasting services. Although investors continue to focus on
challenges for the television network, the larger and much more profitable radio
broadcasting business continues to thrive.
OUTLOOK
Broadly speaking, our outlook for the stock market and for your fund has
not changed appreciably in the past six months. We have some concerns about
stock valuations, which have risen for several consecutive years and are still
expensive by all conventional valuation measures. We are also cautious because
the problems in Asia have the potential to hurt earnings growth for some
multinational companies.
<PAGE>
However, we believe the outlook for the general investment environment
and future company earnings remains favorable and careful selection of stocks
will benefit long-term investment results. This view is supported by several
positive factors:
* Inflation and interest rate trends are positive, and the economy is
growing at a moderate pace.
* Earnings growth is very strong at many high-quality U.S. companies, and
the valuations of selected companies remain reasonable.
* Select blue chip stocks have sound business models and topnotch,
entrepreneurial management that can be relied upon to act in
shareholders' interests.
We believe we can enhance returns and lower risk over time by investing
in "all season" growth companies that can generate earnings growth regardless of
the economic or interest rate environment and by buying such companies at
reasonable valuations. We appreciate your continued support in this endeavor.
Respectfully submitted,
/s/
Larry J. Puglia
President and Chairman of the Investment Advisory Committee
/s/
Thomas H. Broadus, Jr.
Executive Vice President
July 23, 1998
<PAGE>
T. Rowe Price Blue Chip Growth Fund
- --------------------------------------------------------------------------------
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/98
Travelers Group 1.6%
Bristol-Myers Squibb ...................................... 1.6
Tyco International ........................................ 1.5
Freddie Mac ............................................... 1.5
Microsoft ................................................. 1.4
- --------------------------------------------------------------------------------
AlliedSignal .............................................. 1.4
Warner-Lambert ............................................ 1.4
Pfizer .................................................... 1.3
Danaher ................................................... 1.3
Merck ..................................................... 1.2
- --------------------------------------------------------------------------------
Safeway ................................................... 1.2
NationsBank ............................................... 1.2
Fannie Mae ................................................ 1.1
WorldCom .................................................. 1.1
USA Waste Services ........................................ 1.1
- --------------------------------------------------------------------------------
GE ........................................................ 1.1
ACE Limited ............................................... 1.0
American Express .......................................... 1.0
BMC Software .............................................. 1.0
Philip Morris ............................................. 1.0
- --------------------------------------------------------------------------------
Tribune ................................................... 1.0
Norwest ................................................... 1.0
CVS ....................................................... 1.0
United HealthCare ......................................... 1.0
SBC Communications ........................................ 0.9
- --------------------------------------------------------------------------------
Total ..................................................... 29.9%
================================================================================
<PAGE>
T. Rowe Price Blue Chip Growth Fund
- --------------------------------------------------------------------------------
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
MAJOR PORTFOLIO CHANGES
Listed in descending order of size
6 Months Ended 6/30/98
Ten Largest Purchases
- --------------------------------------------------------------------------------
Bristol-Myers Squibb
Tellabs *
Hasbro *
NationsBank
Freddie Mac
CBS *
USA Waste Services
Oracle
WorldCom
Raytheon
Ten Largest Sales
- --------------------------------------------------------------------------------
SmithKline Beecham **
Lockheed Martin **
COMPAQ Computer
Vodafone
St. Paul Companies **
IBM
Hubbell **
Texaco **
Mattel
American International Group
* Position added
** Position eliminated
================================================================================
<PAGE>
T. Rowe Price Blue Chip Growth Fund
- --------------------------------------------------------------------------------
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the
fund over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
[Blue Chip Growth Fund SEC graph 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 6/30/98 1 Year 3 Years 5 Years Inception Date
Blue Chip Growth Fund 29.75% 30.06% 24.92% 24.92% 6/30/93
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
================================================================================
<PAGE>
<TABLE>
T. Rowe Price Blue Chip Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
6 Months Year 6/30/93
Ended Ended Through
6/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ...................... $ 24.17 $ 19.06 $ 15.09 $ 11.11 $11.24 $10.00
Investment activities
Net investment income ............ 0.06 0.13 0.14 0.16* 0.12* 0.05*
Net realized and
unrealized gain (loss) ........... 4.16 5.12 4.05 4.05 (0.03) 1.38
Total from
investment activities ............ 4.22 5.25 4.19 4.21 0.09 1.43
Distributions
Net investment income ............ -- (0.12) (0.14) (0.15) (0.10) (0.05)
Net realized gain ................ -- (0.02) (0.08) (0.08) (0.12) (0.14)
Total distributions .............. -- (0.14) (0.22) (0.23) (0.22) (0.19)
NET ASSET VALUE
End of period ............................ $ 28.39 $ 24.17 $ 19.06 $ 15.09 $11.11 $11.24
Ratios/Supplemental Data
Total return^ ............................ 17.46% 27.56% 27.75% 37.90%* 0.80%* 14.32%*
Ratio of expenses to
average net assets ....................... 0.91%+ 0.95% 1.12% 1.25%* 1.25%* 1.25%*+
Ratio of net investment
income to average
net assets ............................... 0.49%+ 0.86% 0.87% 1.27%* 1.05%* 0.80%*+
Portfolio turnover rate .................. 17.8% 23.7% 26.3% 38.1% 75.0% 89.0%+
Net assets, end of period
(in millions) ............................ $ 3,320 $ 2,345 $ 540 $ 146 $ 39 $ 25
<FN>
^ Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming
reinvestment of all distributions.
* 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>
T. Rowe Price Blue Chip Growth Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
================================================================================
Portfolio of Investments
- --------------------------------------------------------------------------------
Shares/Par Value
In thousands
Common Stocks 94.9%
FINANCIAL 21.0%
Bank and Trust 9.4%
BANC ONE ......................................... 550,000 $ 30,697
BankBoston ....................................... 460,000 25,587
Chase Manhattan .................................. 407,000 30,728
Citicorp ......................................... 200,000 29,850
First Union ...................................... 475,000 27,669
Mellon Bank ...................................... 440,000 30,635
National City .................................... 110,000 7,810
NationsBank ...................................... 500,000 38,250
Norwest .......................................... 880,000 32,890
U.S. Bancorp ..................................... 680,000 29,240
Washington Mutual ................................ 271,000 11,763
Wells Fargo ...................................... 50,000 18,450
313,569
Insurance 3.7%
ACE Limited ...................................... 880,000 34,320
Allstate ......................................... 25,000 2,289
American International Group ..................... 31,000 4,526
EXEL ............................................. 310,000 24,122
Hartford Financial Services ...................... 25,000 2,859
Mid Ocean Limited ................................ 200,000 15,700
Travelers Property Casualty (Class A) ............ 500,000 21,438
UNUM ............................................. 290,000 16,095
121,349
Financial Services 7.9%
American Express ................................. 300,000 34,200
Associates First Capital (Class A) ............... 127,000 9,763
Capital One Financial ............................ 155,000 19,249
Fannie Mae ....................................... 622,000 37,787
Freddie Mac ...................................... 1,030,000 48,474
Household International .......................... 440,000 21,890
Morgan Stanley Dean Witter Discover .............. 190,000 17,361
SLM Holding ...................................... 425,000 20,825
Travelers Group .................................. 890,499 53,987
263,536
Total Financial .................................. 698,454
<PAGE>
UTILITIES 1.9%
Telephone Services 1.9%
ALLTEL ........................................... 250,000 $11,625
AT&T ............................................. 350,000 19,994
SBC Communications ............................... 770,000 30,800
Total Utilities .................................. 62,419
CONSUMER NONDURABLES 21.1%
Cosmetics 0.3%
Gillette ......................................... 176,000 9,977
9,977
Beverages 0.7%
PepsiCo .......................................... 560,000 23,065
23,065
Food Processing 2.1%
Dean Foods ....................................... 100,000 5,494
Heinz ............................................ 210,000 11,786
Hershey Foods .................................... 160,000 11,040
Interstate Bakeries .............................. 70,000 2,323
Ralston Purina ................................... 124,000 14,485
Sara Lee ......................................... 430,000 24,053
69,181
Hospital Supplies/Hospital Management 3.4%
Abbott Laboratories .............................. 290,000 11,854
Arterial Vascular Engineering * .................. 200,000 7,144
Boston Scientific * .............................. 50,000 3,581
Guidant .......................................... 155,000 11,053
HealthSouth * .................................... 980,000 26,154
Medtronic ........................................ 140,000 8,925
Steris * ......................................... 115,000 7,313
Tenet Healthcare * ............................... 340,000 10,625
United States Surgical ........................... 610,000 27,831
114,480
Pharmaceuticals 8.2%
American Home Products ........................... 565,000 29,239
Bristol-Myers Squibb ............................. 460,000 52,871
Eli Lilly ........................................ 170,000 11,231
Johnson & Johnson ................................ 325,000 $ 23,969
Merck ............................................ 307,000 41,061
Pfizer ........................................... 392,000 42,606
Schering-Plough .................................. 290,000 26,571
Warner-Lambert ................................... 665,000 46,134
273,682
<PAGE>
Biotechnology 0.5%
Biogen * ........................................ 325,000 15,925
15,925
Health Care Services 1.0%
United HealthCare ................................ 500,000 31,750
31,750
Miscellaneous Consumer Products 4.9%
Colgate-Palmolive ................................ 239,000 21,032
Hasbro ........................................... 541,000 21,268
Mattel ........................................... 300,000 12,694
Newell ........................................... 340,000 16,936
Philip Morris .................................... 851,000 33,508
Procter & Gamble ................................. 150,000 13,660
Service Corp. International ...................... 505,000 21,652
Stanley Works .................................... 100,000 4,156
Unifi ............................................ 235,000 8,049
Unilever N.V. ADR ................................ 106,000 8,367
161,322
Total Consumer Nondurables ....................... 699,382
CONSUMER SERVICES 13.7%
General Merchandisers 3.1%
Dayton Hudson .................................... 232,000 11,252
Fred Meyer * ..................................... 578,600 24,590
Neiman-Marcus * .................................. 290,000 12,597
Wal-Mart ......................................... 485,000 29,464
Warnaco Group (Class A) .......................... 610,000 25,887
103,790
Specialty Merchandisers 4.5%
CVS .............................................. 830,524 32,339
Federated Department Stores * .................... 200,000 10,763
General Nutrition * .............................. 460,000 $ 14,346
Home Depot ....................................... 280,000 23,257
Kohl's * ......................................... 200,000 10,375
Rite Aid ......................................... 475,000 17,842
Safeway * ........................................ 1,009,000 41,054
149,976
Entertainment and Leisure 3.1%
Carnival (Class A) ............................... 775,000 30,709
Disney ........................................... 250,000 26,266
Hilton ........................................... 500,000 14,250
McDonald's ....................................... 232,000 16,008
MediaOne Group * ................................. 335,000 14,719
101,952
<PAGE>
Media and Communications 3.0%
CBS .............................................. 590,000 18,732
R.R. Donnelly .................................... 110,000 5,033
Time Warner ...................................... 350,000 29,903
Tribune .......................................... 485,000 33,374
Valassis Communications * ........................ 200,000 7,712
Vodafone ADR ..................................... 40,000 5,043
99,797
Total Consumer Services .......................... 455,515
CONSUMER CYCLICALS 2.7%
Automobiles and Related 0.6%
Federal-Mogul .................................... 200,000 13,500
SPX * ............................................ 115,000 7,403
20,903
Building and Real Estate 1.3%
Crescent Real Estate Equities, REIT .............. 485,000 16,308
Starwood Hotels & Resorts, REIT .................. 565,000 27,297
43,605
Miscellaneous Consumer Durables 0.8%
Masco ............................................ 425,000 25,712
25,712
Total Consumer Cyclicals ......................... 90,220
TECHNOLOGY 11.2%
Electronic Components 1.9%
EMC * ............................................ 370,000 $16,581
Intel ............................................ 280,000 20,746
Linear Technology ................................ 170,000 10,253
Maxim Integrated Products * ...................... 406,000 12,878
Texas Instruments ................................ 25,000 1,458
61,916
Electronic Systems 1.5%
Hewlett-Packard .................................. 275,000 16,466
Honeywell ........................................ 150,000 12,534
Nokia ADR ........................................ 310,000 22,494
51,494
Information Processing 1.0%
COMPAQ Computer .................................. 300,000 8,513
Dell Computer * .................................. 140,000 12,989
IBM .............................................. 103,000 11,826
33,328
Office Automation 0.3%
Ceridian * ....................................... 110,000 6,462
Xerox ............................................ 25,000 2,541
9,003
<PAGE>
Specialized Computer 0.2%
Sun Microsystems * ............................... 130,000 5,651
5,651
Telecommunications Equipment 4.2%
AirTouch Communications * ........................ 340,000 19,869
Cisco Systems * .................................. 304,000 27,996
Lucent Technologies .............................. 25,000 2,080
MCI .............................................. 485,000 28,175
Tellabs * ........................................ 347,000 24,843
WorldCom * ....................................... 770,000 37,225
140,188
Aerospace and Defense 2.1%
AlliedSignal ..................................... 1,076,000 47,747
Boeing ........................................... 10,000 446
Raytheon (Class B) ............................... 375,000 22,172
70,365
Total Technology ................................. 371,945
CAPITAL EQUIPMENT 4.4%
Electrical Equipment 2.5%
GE ............................................... 395,000 $35,945
Tyco International ............................... 770,784 48,560
84,505
Machinery 1.9%
Cooper Industries ................................ 70,000 3,846
Danaher .......................................... 1,150,000 42,190
Teleflex ......................................... 425,000 16,150
62,186
Total Capital Equipment .......................... 146,691
BUSINESS SERVICES AND
TRANSPORTATION 11.9%
Computer Service and Software 7.3%
Adobe Systems .................................... 220,000 9,350
Automatic Data Processing ........................ 347,000 25,288
BMC Software * ................................... 650,000 33,780
Cadence Design Systems * ......................... 300,000 9,375
First Data ....................................... 740,106 24,655
Galileo International ............................ 407,000 18,340
Microsoft * ...................................... 444,000 48,132
Network Associates * ............................. 440,000 21,051
Oracle * ......................................... 640,000 15,700
Parametric Technology * .......................... 880,000 23,843
SunGard Data Systems * ........................... 350,000 13,431
242,945
Distribution Services 0.4%
U.S. Foodservice * ............................... 370,620 12,995
12,995
<PAGE>
Environmental 1.3%
Rentokil Group (GBP) ............................. 1,000,000 7,196
USA Waste Services * ............................. 730,000 36,044
43,240
Miscellaneous Business Services 2.0%
Cendant * ........................................ 650,000 13,569
Equifax .......................................... 235,000 8,533
H&R Block ........................................ 430,000 18,114
Omnicom .......................................... 475,000 $23,691
63,907
Railroads 0.9%
Burlington Northern Santa Fe ..................... 133,000 13,059
Norfolk Southern ................................. 590,000 17,589
30,648
Total Business Services and Transportation ....... 393,735
ENERGY 3.4%
Energy Services 1.2%
Camco International .............................. 167,000 13,005
Cooper Cameron * ................................. 200,000 10,200
Halliburton ...................................... 380,000 16,934
40,139
Integrated Petroleum-Domestic 1.1%
Atlantic Richfield ............................... 100,000 7,813
British Petroleum ADR ............................ 210,000 18,532
USX-Marathon ..................................... 250,000 8,578
34,923
Integrated Petroleum - International 1.1%
Chevron .......................................... 75,000 6,230
Mobil ............................................ 389,000 29,807
36,037
Total Energy ..................................... 111,099
PROCESS INDUSTRIES 2.0%
Diversified Chemicals 0.6%
DuPont ........................................... 167,000 12,462
Hercules ......................................... 160,000 6,580
19,042
Specialty Chemicals 0.4%
Great Lakes Chemical ............................. 325,000 12,817
12,817
Paper and Paper Products 1.0%
Fort James ....................................... 340,000 15,130
Kimberly-Clark ................................... 425,000 19,497
34,627
Total Process Industries ......................... 66,486
<PAGE>
BASIC MATERIALS 0.3%
Mining 0.2%
Newmont Mining ................................... 340,000 $ 8,032
8,032
Miscellaneous Materials 0.1%
Crown Cork & Seal ................................ 55,000 2,613
2,613
Total Basic Materials ............................ 10,645
Miscellaneous Common Stocks 1.3% ................ 42,750
Total Common Stocks (Cost $2,388,403) ........... 3,149,341
Short-Term Investments 5.2%
Money Market Funds 5.2%
Reserve Investment Fund, 5.69% # + ............... 173,687,851 173,688
Total Short-Term Investments (Cost $173,688) .... 173,688
Total Investments in Securities
100.1% of Net Assets (Cost $2,562,091) ........... $ 3,323,029
Other Assets Less Liabilities .................... (2,579)
NET ASSETS ....................................... $ 3,320,450
# Seven-day yield
+ Affiliated company
* Non-income producing
ADR American Depository Receipt
REIT Real Estate Investment Trust
GBP British sterling
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Blue Chip Growth Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
================================================================================
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value
Affiliated companies (cost $173,688) .................... $ 173,688
Other companies (cost $2,388,403) ....................... 3,149,341
Total investments in securities ......................... 3,323,029
Other assets .................................................... 15,805
Total assets .................................................... 3,338,834
Liabilities
Total liabilities ............................................... 18,384
NET ASSETS ...................................................... $3,320,450
Net Assets Consist of:
Accumulated net investment income - net of distributions ........ $ 7,785
Accumulated net realized gain/loss - net of distributions ....... 61,551
Net unrealized gain (loss) ...................................... 760,938
Paid-in-capital applicable to 116,963,799 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized ................................. 2,490,176
NET ASSETS ...................................................... $3,320,450
NET ASSET VALUE PER SHARE ....................................... $ 28.39
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Blue Chip Growth Fund
- --------------------------------------------------------------------------------
Unaudited
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/98
Investment Income
Income
Dividend ............................................ $ 14,771
Interest ............................................ 5,237
Total income ........................................ 20,008
Expenses
Investment management ............................... 8,832
Shareholder servicing ............................... 3,728
Registration ........................................ 215
Prospectus and shareholder reports .................. 124
Custody and accounting .............................. 84
Legal and audit ..................................... 7
Directors ........................................... 7
Miscellaneous ....................................... 19
Total expenses ...................................... 13,016
Net investment income ....................................... 6,992
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities .......................................... 65,446
Foreign currency transactions ....................... (13)
Net realized gain (loss) ............................ 65,433
Change in net unrealized gain or loss ....................... 372,174
Net realized and unrealized gain (loss) ..................... 437,607
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ...................................... $ 444,599
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
T. Rowe Price Blue Chip Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
====================================================================================================================================
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
In thousands
6 Months Year
Ended Ended
6/30/98 12/31/97
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income .................................................... $ 6,992 $ 11,955
Net realized gain (loss) ................................................. 65,433 (3,900)
Change in net unrealized gain or loss .................................... 372,174 303,584
Increase (decrease) in net assets from operations ........................ 444,599 311,639
Distributions to shareholders
Net investment income .................................................... -- (11,113)
Net realized gain ........................................................ -- (1,852)
Decrease in net assets from distributions ................................ -- (12,965)
Capital share transactions *
Shares sold .............................................................. 813,512 1,862,992
Distributions reinvested ................................................. -- 12,659
Shares redeemed .......................................................... (282,216) (369,444)
Increase (decrease) in net assets from capital
share transactions ....................................................... 531,296 1,506,207
Net Assets
Increase (decrease) during period ................................................ 975,895 1,804,881
Beginning of period .............................................................. 2,344,555 539,674
End of period .................................................................... $ 3,320,450 $ 2,344,555
*Share information
Shares sold .............................................................. 30,651 85,107
Distributions reinvested ................................................. -- 535
Shares redeemed .......................................................... (10,707) (16,932)
Increase (decrease) in shares outstanding ................................ 19,944 68,710
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Blue Chip Growth Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
================================================================================
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.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company industry;
these principles may require the use of estimates by fund management.
VALUATION Equity securities listed or regularly traded on a securities
exchange 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. Other equity securities 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.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
For purposes of determining the fund's net asset value per share, the
U.S. dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
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.
AFFILIATED COMPANIES As defined by the Investment Company Act of 1940, an
affiliated company is one in which the fund owns at least 5% of the outstanding
voting securities.
CURRENCY TRANSLATION Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such transactions.
The effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and losses.
<PAGE>
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.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $1,082,264,000 and $476,608,000, respectively, for the
six months ended June 30, 1998.
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. The fund has unused realized capital loss carryforwards for
federal income tax purposes of $2,275,000, which expire in 2005. The fund
intends to retain gains realized in future periods that may be offset by
available capital loss carryforwards.
At June 30, 1998, the aggregate cost of investments for federal income
tax and financial reporting purposes was $2,562,091,000, and net unrealized gain
aggregated $760,938,000, of which $786,716,000 related to appreciated
investments and $25,778,000 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 $1,621,000 was payable at June 30, 1998. 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, 1998, and for the six months then ended, the effective annual group fee rate
was 0.32%. 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>
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 $2,606,000 for the six months
ended June 30, 1998, of which $457,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual
funds (underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum)
may invest. Spectrum does not invest in the underlying funds for the purpose of
exercising management or control. Expenses associated with the operation of
Spectrum are borne by each underlying fund to the extent of estimated savings to
it and in proportion to the average daily value of its shares owned by Spectrum,
pursuant to special servicing agreements between and among Spectrum, the
underlying funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum
International, Rowe Price-Fleming International. Spectrum Growth Fund held
approximately 11.4% of the outstanding shares of the Blue Chip Growth Fund at
June 30, 1998. For the six months then ended, the fund was allocated $414,000 of
Spectrum expenses.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve Funds
are offered as cash management options only to mutual funds and other accounts
managed by T. Rowe Price and its affiliates and are not available to the public.
The Reserve Funds pay no investment management fees. Distributions from the
Reserve Funds to the fund for the six months ended June 30, 1998, totaled
$5,119,000 and are reflected as interest income in the accompanying Statement of
Operations.
<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.
INTERNET. T. Rowe Price Web site: www.troweprice.com All the
information and services available on Tele*Access are available on our
Web site, including transactions in your fund and Discount Brokerage
accounts (with preauthorized access).
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, mutual funds, 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 type. Detail pages itemize account transactions.
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 or CD-ROM 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 500*
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications**
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era New Horizons***
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value***
Spectrum Growth
Total Equity Market Index
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
Emerging Markets Bond
Global Bond +
International Bond
MONEY MARKET FUNDS ++
- --------------------------------------------------------------------------------
TAXABLE
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
TAX-FREE
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
<PAGE>
BLENDED ASSET FUNDS
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
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
* Formerly named Equity Index.
** Formerly the closed-end New Age Media Fund. Converted to open-end status on
7/28/97.
*** Closed to new investors.
+ Formerly named Global Government Bond.
++ Neither the funds nor their share prices are insured or guaranteed by the
U.S. government.
Please call for a prospectus. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued
by First Security Benefit Life Insurance Company of New York, White Plains,
NY. T. Rowe Price refers to the underlying portfolios' investment managers
and the distributors, T. Rowe Price Investment Services, Inc.; T. Rowe
Price Insurance Agency, Inc.; and T. Rowe Price Insurance Agency of Texas,
Inc. The Security Benefit Group of Companies and the T. Rowe Price
companies are not affiliated. The variable annuity may not be available in
all states. The contract has limitations. Call a representative for costs
and complete details of the coverage.
<PAGE>
T. Rowe Price Discount Brokerage
- --------------------------------------------------------------------------------
DISCOUNT BROKERAGE
A Division of T. Rowe Price Investment Services, Inc., Member NASD/SIPC
This low-cost service gives you the opportunity to easily consolidate all
your investments with one company. Through T. Rowe Price Discount
Brokerage, you can buy and sell individual securities-stocks, bonds,
options, and others-as well as mutual funds at considerable commission
savings over full-service brokers.* We also provide a wide range of
services, including:
AUTOMATED TELEPHONE and Internet Services You can enter trades, access
quotes, and review account information 24 hours a day, seven days a week.
Any trades executed through these programs provide additional savings on
commissions.**
INVESTOR INFORMATION A variety of informative reports, such as our
Brokerage Insights series, S&P Market Month newsletter, and select stock
reports, can help you better evaluate economic trends and investment
opportunities.
DIVIDEND REINVESTMENT Service Virtually all stocks held in customer
accounts are eligible for this service, free of charge.
* Based on an April 1998 survey for representative-assisted stock trades.
Services vary by firm, and commissions may vary by size of order.
** Discount applies to our current commission schedule. All trades subject to
a $35 minimum commission except equity trades placed through
Internet-Trader, which are subject to a $29.95 minimum commission.
<PAGE>
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
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.
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 6/30/98
