Item 1. Report to Shareholders
T. Rowe Price Blue Chip Growth Fund
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Certified Financials
T. Rowe Price Blue Chip Growth Fund
- --------------------------------------------------------------------------------
Certified Financials (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Blue Chip Growth shares
6 Months Year
Ended Ended
6/30/03 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
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NET ASSET VALUE
Beginning of period $21.95 $28.97 $33.85 $36.34 $30.60 $24.17
Investment activities
Net investment
income (loss) - - (0.02) (0.03) 0.03 0.11
Net realized
and unrealized
gain (loss) 3.08 (7.02) (4.86) (0.84) 6.07 6.82
Total from
investment
activities 3.08 (7.02) (4.88) (0.87) 6.10 6.93
Distributions
Net investment income - - - - (0.03) (0.11)
Net realized gain - - - (1.62) (0.33) (0.39)
Total distributions - - - (1.62) (0.36) (0.50)
NET ASSET VALUE
End of period $25.03 $21.95 $28.97 $33.85 $36.34 $30.60
------ ------ ------ ------ ------ ------
Ratios/Supplemental Data
Total return^ 14.03% (24.23)% (14.42)% (2.53)% 20.00% 28.84%
Ratio of total
expenses to
average net
assets 0.99%+ 0.96% 0.96% 0.91% 0.91% 0.91%
Ratio of net
investment
income (loss)
to average
net assets 0.01%+ 0.00% (0.06)% (0.09)% 0.10% 0.43%
Portfolio
turnover rate 34.5%+ 46.2% 48.3% 50.9% 41.3% 34.5%
Net assets,
end of period
(in millions) $ 5,384 $ 4,482 $ 6,242 $ 7,113 $ 6,709 $ 4,330
^ 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.
+ Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Blue Chip Growth Fund
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Certified Financials (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Blue Chip Growth-Advisor shares
6 Months Year 3/31/00
Ended Ended Through
6/30/03 12/31/02 12/31/01 12/31/00
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NET ASSET VALUE
Beginning of period $ 21.97 $ 29.02 $ 33.91 $ 38.63
Investment activities
Net investment
income (loss) -- -- (0.01) 0.02++
Net realized and
unrealized gain
(loss) 3.08 (7.04) (4.88) (3.12)
Total from
investment
activities 3.08 (7.04) (4.89) (3.10)
Distributions
Net realized gain -- -- -- (1.62)
Tax return of capital -- (0.01) -- --
Total distributions -- (0.01) -- (1.62)
NET ASSET VALUE
End of period $ 25.05 $ 21.97 $ 29.02 $ 33.91
----------- ----------- ----------- -----------
Ratios/Supplemental
Data Total return^ 14.02% (24.26)% (14.42)% (8.15)%
Ratio of total
expenses to
average net assets 0.98%+ 0.99% 0.99% 0.69%+
Ratio of net
investment
income (loss)
to average
net assets 0.03%+ (0.01)% (0.04)% 0.25%+
Portfolio turnover
rate 34.5%+ 46.2% 48.3% 50.9%
Net assets,
end of period
(in thousands) $ 598,006 $ 538,571 $ 469,089 $ 2,831
++ The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout
the period. The per-share amounts for the investment activities of the
Advisor Class may be inconsistent with the aggregate amounts presented
elsewhere in the financial statements for the fund, due to the partial year
of operations for the Advisor Class and the timing of sales and redemptions
of shares in relation to fluctuating market values for the investment
portfolio.
^ 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.
+ Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Blue Chip Growth Fund
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Certified Financials (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
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Blue Chip Growth-R Class shares
6 Months 9/30/02
Ended Through
6/30/03 12/31/02
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NET ASSET VALUE
Beginning of period $ 21.93 $ 20.37
Investment activities
Net investment income (loss) (0.01)*++ (0.02)*
Net realized and unrealized gain (loss) 3.04 1.58++
Total from investment activities 3.03 1.56
NET ASSET VALUE
End of period $ 24.96 $ 21.93
--------------- ---------------
Ratios/Supplemental Data
Total return^ 13.82%* 7.66%*
Ratio of total expenses to
average net assets 1.35%+* 1.35%+*
Ratio of net investment income
(loss) to average net assets (0.32%)+* (0.28%)+*
Portfolio turnover rate 34.5%+ 46.2%
Net assets, end of period
(in thousands) $ 432 $ 108
* Excludes expenses in excess of a 1.35% contractual expense limitation in
effect through 4/30/04.
++ The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout
the period. This amount is inconsistent with the fund's aggregate gains and
losses because of the timing of sales and redemptions of fund shares in
relation to fluctuating market values for the investment portfolio.
^ 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.
+ Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Blue Chip Growth Fund
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Certified Financials (Unaudited) June 30, 2003
STATEMENT OF NET ASSETS Shares Value
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In thousands
COMMON STOCKS 100.0%
CONSUMER DISCRETIONARY 15.4%
AUTOMOBILES 0.4%
Harley-Davidson 680,000 $ 27,105
27,105
HOTELS, RESTAURANTS & LEISURE 1.5%
Carnival 1,240,000 40,312
International Game Technology * 220,000 22,512
MGM Mirage * 100,000 3,418
Starbucks * 880,000 21,578
87,820
MEDIA 9.3%
AOL Time Warner * 3,300,000 53,097
Clear Channel Communications * 2,350,000 99,617
Comcast, Class A, Special * 2,200,000 63,426
Disney 1,000,000 19,750
Echostar Communications, Class A * 1,600,000 55,392
Liberty Media, Class A * 3,250,000 37,570
Omnicom 500,000 35,850
Scripps, Class A 340,000 30,165
Univision Communications, Class A * 1,360,000 41,344
Viacom, Class B * 2,725,000 118,973
555,184
MULTILINE RETAIL 1.9%
Kohl's * 830,000 42,645
Target 1,940,000 73,410
116,055
SPECIALTY RETAIL 2.3%
Best Buy * 770,000 33,818
Home Depot 3,000,000 99,360
Weight Watchers * 100,000 4,549
137,727
Total Consumer Discretionary 923,891
CONSUMER STAPLES 5.9%
BEVERAGES 2.0%
Coca-Cola 1,500,000 $ 69,615
PepsiCo 1,180,000 52,510
122,125
FOOD & STAPLES RETAILING 1.7%
Sysco 830,000 24,933
Wal-Mart 1,475,000 79,163
Walgreen 10,000 301
104,397
FOOD PRODUCTS 0.3%
Campbell Soup 100,000 2,450
General Mills 370,000 17,542
19,992
HOUSEHOLD PRODUCTS 0.8%
Colgate-Palmolive 470,000 27,236
Procter & Gamble 220,000 19,620
46,856
PERSONAL PRODUCTS 0.6%
Estee Lauder, Class A 500,000 16,765
Gillette 500,000 15,930
32,695
TOBACCO 0.5%
Altria Group 640,000 29,082
29,082
Total Consumer Staples 355,147
ENERGY 3.9%
ENERGY EQUIPMENT & SERVICES 3.3%
Baker Hughes 1,700,000 57,069
BJ Services * 950,000 35,492
Schlumberger 1,400,000 66,598
Smith International * 950,000 34,903
194,062
OIL & GAS 0.6%
Exxon Mobil 1,000,000 35,910
35,910
Total Energy 229,972
FINANCIALS 24.0%
CAPITAL MARKETS 7.4%
Bank of New York 1,150,000 $ 33,062
Charles Schwab 2,320,000 23,409
Franklin Resources 340,000 13,284
Goldman Sachs Group 668,000 55,945
Legg Mason 385,000 25,006
Mellon Financial 2,350,000 65,212
Merrill Lynch 1,475,000 68,853
Morgan Stanley 1,120,000 47,880
Northern Trust 1,030,000 43,044
State Street 1,630,000 64,222
439,917
COMMERCIAL BANKS 3.7%
Bank of America 1,300,000 102,739
U.S. Bancorp 2,375,000 58,188
Wells Fargo 1,240,000 62,496
223,423
CONSUMER FINANCE 1.2%
American Express 550,000 22,995
SLM Corporation 1,176,000 46,064
69,059
DIVERSIFIED FINANCIAL SERVICES 4.2%
Citigroup 5,900,000 252,520
252,520
INSURANCE 5.6%
AMBAC 550,000 36,437
American International Group 2,000,000 110,360
Hartford Financial Services Group 860,000 43,310
Marsh & McLennan 1,600,000 81,712
Progressive Corporation 280,000 20,468
Travelers Property Casualty, Class A 2,660,000 42,294
334,581
THRIFTS & MORTGAGE FINANCE 1.9%
Fannie Mae 1,085,000 73,173
Freddie Mac 860,000 43,662
116,835
Total Financials 1,436,335
HEALTH CARE 18.9%
BIOTECHNOLOGY 2.0%
Amgen * 1,330,000 $88,365
MedImmune * 910,000 33,097
121,462
HEALTH CARE EQUIPMENT & SUPPLIES 1.6%
Biomet 10,000 287
Boston Scientific * 700,000 42,770
Medtronic 680,000 32,619
St. Jude Medical * 130,000 7,475
Stryker 170,000 11,793
94,944
HEALTH CARE PROVIDERS & SERVICES 5.3%
AmerisourceBergen 160,000 11,096
Cardinal Health 575,000 36,973
HCA 100,000 3,204
UnitedHealth Group 3,850,000 193,462
Wellpoint Health Networks * 820,000 69,126
313,861
PHARMACEUTICALS 10.0%
Abbott Laboratories 1,475,000 64,546
Allergan 70,000 5,397
Biovail * 1,060,000 49,884
Eli Lilly 400,000 27,588
Forest Labs * 770,000 42,157
Johnson & Johnson 1,670,000 86,339
Pfizer 7,700,000 262,955
Wyeth 1,360,000 61,948
600,814
Total Health Care 1,131,081
INDUSTRIALS & BUSINESS SERVICES 7.4%
Aerospace & Defense 0.2%
General Dynamics 170,000 12,325
12,325
Air Freight & Logistics 0.5%
UPS, Class B 470,000 29,939
29,939
COMMERCIAL SERVICES & SUPPLIES 1.7%
Apollo Group, Class A * 1,180,000 $ 72,877
Cendant * 1,450,000 26,564
99,441
INDUSTRIAL CONGLOMERATES 3.4%
3M 25,000 3,224
GE 3,850,000 110,418
Tyco International 4,850,000 92,053
205,695
MACHINERY 1.6%
Danaher 1,400,000 95,270
95,270
Total Industrials & Business Services 442,670
INFORMATION TECHNOLOGY 20.1%
COMMUNICATIONS EQUIPMENT 2.6%
Cisco Systems * 6,920,000 115,495
Nokia ADR 1,450,000 23,823
QUALCOMM 430,000 15,373
154,691
COMPUTER & PERIPHERALS 1.7%
Dell Computer * 2,320,000 74,147
IBM 100,000 8,250
Lexmark International, Class A * 275,000 19,462
101,859
INTERNET SOFTWARE & SERVICES 2.1%
InterActiveCorp * 1,900,000 75,183
Yahoo! * 1,540,000 50,450
125,633
IT SERVICES 5.1%
Accenture, Class A * 1,300,000 23,517
Affiliated Computer Services, Class A * 1,300,000 59,449
Automatic Data Processing 10,000 339
First Data 3,700,000 153,328
Fiserv * 920,000 32,761
Paychex 610,000 17,879
SunGard Data Systems * 590,000 15,287
302,560
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT 4.1%
Analog Devices * 1,700,000 $ 59,194
Applied Materials * 2,250,000 35,685
Intel 1,200,000 24,941
KLA-Tencor * 430,000 19,991
Maxim Integrated Products 1,900,000 64,961
QLogic * 460,000 22,232
Texas Instruments 860,000 15,136
Xilinx * 160,000 4,049
246,189
SOFTWARE 4.5%
Adobe Systems 500,000 16,035
Intuit * 610,000 27,163
Microsoft 7,550,000 193,356
Symantec * 550,000 24,123
VERITAS Software * 300,000 8,601
269,278
Total Information Technology 1,200,210
TELECOMMUNICATION SERVICES 2.9%
WIRELESS TELECOMMUNICATION SERVICES 2.9%
Nextel Communications, Class A * 3,400,000 61,472
Vodafone ADR 5,680,000 111,612
Total Telecommunication Services 173,084
Total Miscellaneous Common Stocks 1.5% 89,148
Total Common Stocks (Cost $5,202,738) 5,981,538
SHORT-TERM INVESTMENTS 0.3%
MONEY MARKET FUND 0.3%
T. Rowe Price Reserve Investment Fund, 1.16% # 21,074,684 21,075
Total Short-Term Investments (Cost $21,075) 21,075
Value
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In thousands
Total Investments in Securities
100.3% of Net Assets (Cost $5,223,813) $ 6,002,613
Other Assets Less Liabilities (20,242)
NET ASSETS $ 5,982,371
-----------
Net Assets Consist of:
Undistributed net investment income (loss) $ 339
Undistributed net realized gain (loss) (1,197,061)
Net unrealized gain (loss) 778,800
Paid-in-capital applicable to 239,018,376 shares
of $0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized 6,400,293
NET ASSETS $ 5,982,371
-----------
NET ASSET VALUE PER SHARE
Blue Chip Growth shares
($5,383,932,790/215,132,422 shares outstanding) $ 25.03
-----------
Blue Chip Growth-Advisor Class shares
($598,006,302/23,868,646 shares outstanding) $ 25.05
-----------
Blue Chip Growth-R Class shares
($432,022/17,308 shares outstanding) $ 24.96
-----------
# Seven-day yield
* Non-income producing
ADR American Depository Receipts
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Blue Chip Growth Fund
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Certified Financials (Unaudited)
STATEMENT OF OPERATIONS
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In thousands
6 Months
Ended
6/30/03
Investment Income (Loss)
Income
Dividend $ 26,337
Income distributions from mutual funds 119
Securities lending 31
Total income 26,487
Expenses
Investment management 16,536
Shareholder servicing
Blue Chip Growth shares 8,368
Blue Chip Growth-Advisor Class shares 289
Distribution
Blue Chip Growth-Advisor Class shares 732
Blue Chip Growth-R Class shares 1
Prospectus and shareholder reports
Blue Chip Growth shares 270
Custody and accounting 137
Registration 51
Directors 18
Legal and audit 17
Miscellaneous 4
Total expenses 26,423
Expenses paid indirectly (275)
Net expenses 26,148
Net investment income (loss) 339
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (216,184)
Foreign currency transactions (231)
Net realized gain (loss) (216,415)
Change in net unrealized gain (loss) on securities 948,242
Net realized and unrealized gain (loss) 731,827
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 732,166
---------
The accompanying notes are an integral part of these financial statements
T. Rowe Price Blue Chip Growth Fund
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Certified Financials (Unaudited)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/03 12/31/02
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 339 $ (111)
Net realized gain (loss) (216,415) (475,496)
Change in net unrealized gain (loss) 948,242 (1,152,131)
Increase (decrease) in net
assets from operations 732,166 (1,627,738)
Distributions to shareholders
Tax return of capital
Blue Chip Growth-Advisor Class shares - (245)
Capital share transactions *
Shares sold
Blue Chip Growth shares 644,243 1,093,942
Blue Chip Growth-Advisor Class shares 98,111 251,622
Blue Chip Growth-R Class shares 308 100
Distributions reinvested
Blue Chip Growth-Advisor Class shares - 244
Shares redeemed
Blue Chip Growth shares (393,843) (1,355,267)
Blue Chip Growth-Advisor Class shares (118,963) (53,645)
Blue Chip Growth-R Class shares (28) -
Increase (decrease) in net assets from
capital share transactions 229,828 (63,004)
Net Assets
Increase (decrease) during period 961,994 (1,690,987)
Beginning of period 5,020,377 6,711,364
End of period $5,982,371 $5,020,377
---------- ----------
6 Months Year
Ended Ended
6/30/03 12/31/02
*Share information
Shares sold
Blue Chip Growth shares 28,342 43,856
Blue Chip Growth-Advisor Class shares 4,341 10,496
Blue Chip Growth-R Class shares 13 5
Distributions reinvested
Blue Chip Growth-Advisor Class shares - 11
Shares redeemed
Blue Chip Growth shares (17,434) (55,121)
Blue Chip Growth-Advisor Class shares (4,988) (2,158)
Blue Chip Growth-R Class shares (1) -
Increase (decrease) in shares outstanding 10,273 (2,911)
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price Blue Chip Growth Fund
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Certified Financials (Unaudited) June 30, 2003
NOTES TO FINANCIAL STATEMENTS
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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Blue Chip Growth Fund, Inc. (the fund) is registered under
the Investment Company Act of 1940 (the 1940 Act) as a diversified,
open-end management investment company. The fund seeks to provide long-term
capital growth. Income is a secondary objective. The fund has three classes
of shares: Blue Chip Growth (Blue Chip Growth class), offered since June
30, 1993, Blue Chip Growth--Advisor Class (Advisor Class), offered since
March 31, 2000, and Blue Chip Growth--R Class (R Class), offered since
September 30, 2002). Advisor Class shares are offered only through brokers
and other financial intermediaries, and R Class shares are only available
to small retirement plans serviced by intermediaries. The Advisor Class and
R Class each operate under separate Board-approved Rule 12b-1 plans,
pursuant to which each class compensates financial intermediaries for
distribution and certain administrative services. Each class has exclusive
voting rights on matters related solely to that class, separate voting
rights on matters that relate to all classes, and, in all other respects,
the same rights and obligations as the other classes.
The accompanying financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America,
which require the use of estimates made by fund management.
Valuation
Investments are valued at the close of the New York Stock Exchange (NYSE),
normally 4 p.m. ET, each day that the NYSE is open for business. Equity
securities listed or regularly traded on a securities exchange or in the
over-the-counter market are valued at the last quoted sale price, or
official closing price for certain markets, at the time the valuations are
made. A security that 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 are
valued at the mean of the latest bid and ask prices for domestic securities
and the last quoted sale price for international securities.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
Other investments and those 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.
Most foreign markets close before the NYSE. Developments that could affect
the values of securities that occur between the close of a foreign market
and the close of the NYSE normally will not be reflected in security
valuations. However, if such developments are so significant that they
will, in the judgment of the officers of the fund, clearly and materially
affect the value of securities, the previous closing prices may be adjusted
to reflect the fair value of the securities as of the close of the NYSE, as
determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
Currency Translation
Assets, including investments, and liabilities denominated in foreign
currencies are translated into U.S. dollar values each day at the
prevailing exchange rate, using the mean of the bid and ask prices of such
currencies against U.S. dollars as quoted by a major bank. Purchases and
sales of securities, income, and expenses are translated into U.S. dollars
at the prevailing exchange rate on the date of the transaction. The effect
of changes in foreign currency exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and
losses.
Class Accounting
The Advisor Class and R Class each pay distribution and administrative
expenses in the form of Rule 12b-1 fees, in an amount not exceeding 0.25%
and 0.50%, respectively, of the class's average net assets. Shareholder
servicing, prospectus, and shareholder report expenses incurred by each
class are charged directly to the class to which they relate. Expenses
common to all classes, investment income, and realized and unrealized gains
and losses are allocated to the classes based upon the relative daily net
assets of each class. Income distributions are declared and paid by each
class on an annual basis. Capital gain distributions, if any, are declared
and paid by the fund, typically on an annual basis.
Expenses Paid Indirectly
Certain security trades are directed to brokers who have agreed to rebate a
portion of the related commission to the fund to pay fund expenses.
Additionally, credits earned on temporarily uninvested cash balances at the
custodian are used to reduce the fund's custody charges. Total expenses in
the accompanying statement of operations are presented before reduction for
rebates and credits, which totaled $274,000 and $1,000, respectively, for
the six months ended June 30, 2003.
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.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Securities Lending
The fund lends its securities to approved brokers to earn additional
income. It receives as collateral cash and U.S. government securities
valued at 102% to 105% of the value of the securities on loan. Cash
collateral is invested in a money market pooled trust managed by the fund's
lending agent in accordance with investment guidelines approved by fund
management. Collateral is maintained over the life of the loan in an amount
not less than the value of loaned securities, as determined at the close of
fund business each day; any additional collateral required due to changes
in security values is delivered to the fund the next business day. Although
risk is mitigated by the collateral, the fund could experience a delay in
recovering its securities and a possible loss of income or value if the
borrower fails to return the securities. Securities lending revenue
recognized by the fund consists of earnings on invested collateral and
borrowing fees, net of any rebates to the borrower and compensation to the
lending agent. At June 30, 2003, there were no securities on loan.
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $1,155,270,000 and $921,670,000, respectively, for
the six months ended June 30, 2003.
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 to
shareholders all of its taxable income and gains. Federal income tax
regulations differ from generally accepted accounting principles;
therefore, distributions determined in accordance with tax regulations may
differ in amount or character from net investment income and realized gains
for financial reporting purposes. Financial reporting records are adjusted
for permanent book/tax differences to reflect tax character. Temporary
differences are not adjusted. The amount and character of tax-basis
distributions and composition of net assets are finalized at fiscal
year-end; accordingly, tax-basis balances have not been determined as of
June 30, 2003.
For tax purposes, the fund has elected to treat net capital losses realized
between November 1 and December 31 of each year as occurring on the first
day of the following tax year; consequently, $62,477,000 of realized losses
recognized for financial reporting purposes in the year ended December 31,
2002 were recognized for tax purposes on January 1, 2003. Further, the fund
intends to retain realized gains to the extent of available capital loss
carryforwards. As of December 31, 2002, the fund had $918,169,000 of unused
capital loss carryforwards, of which $485,133,000 expire in 2009, and
$433,036,000 expire in 2010.
At June 30, 2003, the cost of investments for federal income tax purposes
was $5,223,813,000. Net unrealized gain aggregated $778,800,000 at
period-end, of which $1,076,861,000 related to appreciated investments and
$298,061,000 related to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The
investment management agreement between the fund and the manager provides
for an annual investment management fee, which is computed daily and paid
monthly. The fee consists of an individual fund fee, equal to 0.30% of the
fund's average daily net assets, and the fund's pro-rata share of a group
fee. The group fee is calculated based on the combined net assets of
certain mutual funds sponsored by Price Associates (the group) applied to a
graduated fee schedule, with rates ranging from 0.48% for the first $1
billion of assets to 0.295% for assets in excess of $120 billion. The
fund's portion of the group fee is determined by the ratio of its net
assets to those of the group. At June 30, 2003, the effective annual group
fee rate was 0.32%, and investment management fee payable totaled
$3,063,000.
Through December 31, 2003 for the Advisor Class and through April 30, 2004
for the R Class, the manager is required to bear any expenses, excluding
interest, taxes, brokerage commissions, and extraordinary expenses that
would cause the class's ratio of total expenses to average net assets
(expense ratio) to exceed 1.05% and 1.35%, respectively.
Thereafter, through December 31, 2005 for the Advisor Class and through
April 30, 2006 for the R Class, each class is required to reimburse the
manager for these expenses, provided that its average net assets have grown
or expenses have declined sufficiently to allow reimbursement without
causing its expense ratio to exceed 1.05% and 1.35%, respectively. This
agreement had no impact on the fund's total expenses during the six months
ended June 30, 2003.
In addition, the fund has entered into service agreements with Price
Associates and two wholly owned subsidiaries of Price Associates
(collectively, Price). Price Associates computes the daily share prices and
maintains the financial records of the fund. T. Rowe Price Services, Inc.
provides shareholder and administrative services in its capacity as the
fund's transfer and dividend disbursing agent. T. Rowe Price Retirement
Plan Services, Inc. provides subaccounting and recordkeeping services for
certain retirement accounts invested in the Blue Chip Growth class and R
Class. Expenses incurred pursuant to these service agreements totaled
$6,254,000 for the six months ended June 30, 2003, of which $1,267,000 was
payable at period-end.
Additionally, the fund is one of several mutual funds in which certain
college savings plans managed by Price Associates may invest. As approved
by the fund's Board of Directors, shareholder servicing costs associated
with each college savings plan are borne by the fund in proportion to the
average daily value of its shares owned by the college savings plan. For
the six months ended June 30, 2003, the Blue Chip Growth class was charged
$213,000 for shareholder servicing costs related to the college savings
plans, of which $170,000 was for services provided by Price and $46,000 was
payable at period-end. At June 30, 2003, approximately 1.9% of the
outstanding shares of the Blue Chip Growth class were held by college
savings plans.
The fund is also one of several mutual funds sponsored by Price Associates
(underlying Price funds) in which the T. Rowe Price Spectrum Funds
(Spectrum Funds) may invest. The Spectrum Funds do not invest in the
underlying Price funds for the purpose of exercising management or control.
Pursuant to special servicing agreements, expenses associated with the
operation of the Spectrum Funds are borne by each underlying Price fund to
the extent of estimated savings to it and in proportion to the average
daily value of its shares owned by the Spectrum Funds. Expenses allocated
under these agreements are reflected as shareholder servicing expense in
the accompanying financial statements. For the six months ended June 30,
2003, the Blue Chip Growth class was allocated $236,000 of Spectrum Funds'
expenses, of which $171,000 related to services provided by Price and
$150,000 was payable at period-end. At June 30, 2003, approximately 4.0% of
the outstanding shares of the Blue Chip Growth class were held by the
Spectrum Funds.
The fund may invest in the T. Rowe Price Reserve Investment Fund and T.
Rowe Price Government Reserve Investment Fund (collectively, the Reserve
Funds), open-end management investment companies managed by Price
Associates. The Reserve Funds are offered as cash management options only
to mutual funds, trusts, and other accounts managed by Price Associates
and/or 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, 2003, totaled $119,000.
NOTE 5 - INTERFUND BORROWING
Pursuant to the fund's prospectus, the fund may borrow up to 33 1/3% of its
total assets. The fund is party to an interfund borrowing agreement between
the fund and other T. Rowe Price-sponsored mutual funds, which permits it
to borrow or lend cash at rates beneficial to both the borrowing and
lending funds. Loans totaling 10% or more of a borrowing fund's total
assets are collateralized at 102% of the value of the loan; loans of less
than 10% are unsecured. During the six months ended June 30, 2003, the fund
had outstanding borrowings on 6 days, in the average amount of $11,200,000,
and at an average annual rate of 1.55%. There were no borrowings
outstanding at June 30, 2003.
Item 2. Code of Ethics.
Not required at this time.
Item 3. Audit Committee Financial Expert.
Not required at this time.
Item 4. Principal Accountant Fees and Services.
Not required at this time.
Item 5. Audit Committee of Listed Registrants.
Not required at this time.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. [Reserved]
Item 9. Controls and Procedures
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures within 90
days of this filing and have concluded that the registrant's disclosure controls
and procedures were effective, as of that date, in ensuring that information
required to be disclosed by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) The registrant's principal executive officer and principal financial officer
are aware of no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 10. Exhibits.
(a)(1) Not required at this time.
(a)(2) Separate certifications by the registrant's principal executive officer
and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(b) A certification by the registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940,
is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price Blue Chip Growth Fund, Inc.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date August 22, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date August 22, 2003
By /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date August 22, 2003